On April 12, 2010, the Food and Nutrition Service (FNS) published a direct final rule entitled, Supplemental Nutrition Assistance Program, Regulation Restructuring: Issuance Regulation Update and Reorganization To Reflect the End of Coupon Issuance Systems, that made changes to the SNAP regulations to account for the replacement of the paper coupon issuance system with the EBT system as the nationwide method of distributing benefits to program recipients. FNS published a direct final rule to expedite implementation of the rule's provision, while allowing public input. Comments were invited on the rule and the comment period ended on May 12, 2010.

FNS received one comment in response to the direct Final Rule that misinterpreted the intent of the rule. The comment addressed the new citation at 7 CFR 274.6(a)(3)(i) regarding replacement issuances for food lost in a household misfortune. The commenter believed that the regulation was changed to only allow benefits used for food purchased 10 days prior to the misfortune to be replaced. To the contrary, the new language merely removed obsolete coupon and authorization document references and now reads, “the report will be considered timely if it is made to the State agency within 10 days of the date food purchased with Program benefits is destroyed in a household misfortune.” The focus of this statement is on when households mustreportthe food loss, not on the date the food was purchased. Therefore, as required by the previous language, households must report the food loss within 10 days after the date the food was destroyed. The food must be food that was purchased with SNAP benefits. The date when the food was actually purchased has no bearing on the amount of the issuance replacement.

The Department's Office of the General Counsel reviewed the comment and clarification and determined that because the comment was based on a misreading of the language, it would not have to be considered a material comment that would prevent FNS from adopting the direct final rule as a final rule.

The Asian longhorned beetle (ALB,Anoplophora glabripennis), an insect native to China, Japan, Korea, and the Isle of Hainan, is a destructive pest of hardwood trees. It attacks many healthy hardwood trees, including maple, horse chestnut, birch, poplar, willow, and elm. In addition, nursery stock, logs, green lumber, firewood, stumps, roots, branches, and wood debris of half an inch or more in diameter are subject to infestation. The beetle bores into the heartwood of a host tree, eventually killing the tree. Immature beetles bore into tree trunks and branches, causing heavy sap flow from wounds and sawdust accumulation at tree bases. They feed on, and over-winter in, the interiors of trees. Adult beetles emerge in the spring and summer months from round holes approximately three-eighths of an inch in diameter (about the size of a dime) that they bore through branches and trunks of trees. After emerging, adult beetles feed for 2 to 3 days and then mate. Adult females then lay eggs in oviposition sites that they make on the branches of trees. A new generation of ALB is produced each year. If this pest moves into the hardwood forests of the United States, the nursery, maple syrup, and forest product industries could experience severe economic losses. In addition, urban and forest ALB infestations will result in environmental damage, aesthetic deterioration, and a reduction of public enjoyment of recreational spaces.

In an interim rule1 effective and published in theFederal Registeron June 17, 2010 (75 FR 34320-34322, Docket No. APHIS-2010-0004), we amended the Asian longhorned beetle regulations in 7 CFR part 301 by adding a portion of Worcester County, MA, to the list of quarantined areas, restricting the interstate movement of regulated articles from that area, and updating the list of regulated articles to include the Katsura tree (Cercidiphyllumspp).

Comments on the interim rule were required to be received on or before August 16, 2010. We did not receive any comments. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule without change.

This action also affirms the information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act.

Further, for this action, the Office of Management and Budget has waived its review under Executive Order 12866.

Current FSA regulations in 7 CFR part 707 govern certain farm related payments earned by persons who have died, disappeared, or been declared incompetent before the payment was made. Section 1611 of the 2008 Farm Bill (Pub. L. 110-246, 7 U.S.C. 8786) requires, with respect to persons who have died, that FSA clarify these regulations to describe the circumstances in which such payments will be made. This rule, however, addresses all three subjects covered in the part 707 regulations (death, disappearance, and a finding of incompetency). The 2008 Farm Bill also requires the Secretary of Agriculture to reconcile data with the Social Security Administration (SSA) to determine if persons receiving payments are alive. As discussed below, by the time the 2008 Farm Bill was enacted, FSA had implemented that required data reconciliation process and other procedures intended to address previous Government Accountability Office (GAO) concerns with payments on behalf of deceased persons.

This rule adds a new paragraph to § 707.3 to specify payment eligibility for estates and surviving family members of deceased persons. The new paragraph makes explicit that payment will not be made on behalf of a deceased person unless the payment was earned by that person before the person died and was requested by the person themselves or their authorized representative before they died or after their death by a person authorized by law, independent of these FSA regulations, to act for that person. The rules in part 707 specify to whom the payment will be made if there is a proper application, but that issue is separate from the question of whether the payment has been properly applied for by the deceased or someone authorized by law to act for the deceased before or after the death. Payment must have been requested before the person died or requested after the death by someone authorized by law (independently of the part 707 regulations) to act for the deceased.

Assuming a proper application for payment has been made, § 707.3 specifies the order of precedence for potential payees, which includes executors and surviving family members. That order is not changed in this rule. Again, that order of precedence applies only if there was a proper application for payment by someone authorized to act for the deceased (including the deceased prior to the death). For example, if a husband individually earned a disaster payment and applied for the payment before his death but the payment had not yet been made when the death occurred, there are some instances under § 707.3 in which the deceased's spouse could receive the payment under the terms of that section even though the spouse did not have the power under local law to act for the deceased. On the other hand, if the deceased had not applied for the payment, though had otherwise earned the payment, and there was no one legally authorized to act for the deceased, the payment rules of § 707.3 would not apply. They would only apply if someone could act for the deceased and then filed the application, at which point the payment rules of § 707.3 would apply. In this manner, the question of who can file the application and who can receive the payment can be two separate issues. One of those issues (the issue of who is legally authorized to act for the deceased) may have to be resolved independently of part 707. This is clarified in this rule for all matters covered in that part. Those three matters are death, disappearance, and a finding of incompetency. These amendments all clarify rather than change current FSA practice.

Also, because of changes in the 2008 Farm Bill on payment limitations, the term “person” is now taken to mean only individuals, as opposed to “entities,” and payments are attributed to individuals through corporations. The regulations in this rule only provide the clarifications noted above. The regulations in this rule do not cover the attribution of payments for payment limitation purposes. The amount of an actual payment eligibility would be covered by the regulations that cover the specific program in which the payment was earned and the general payment limitation regulations found in 7 CFR part 1400.

Section 1611 of the 2008 Farm Bill, the authority for this rule concerning prevention of improper payments to the deceased, uses the term “individual.” To be consistent with the payment limitation and attribution rules in 7 CFR part 1400 and with the existing 7 CFR part 707, and to provide needed clarity on payment eligibility, this rule uses the term “person” to mean an “individual.”

In addition to the specific amendments made in the rule, FSA has strengthened and will continue to strengthen data reconciliation procedures to ensure that payments made on behalf of deceased persons are not disbursed incorrectly. The rest of this preamble to the rule describes those activities and provides some background on why and how they were implemented.

The issuance of payments to deceased individuals was the subject of a 2007 GAO audit. In July 2007, the GAO released an audit report entitled “USDA Needs to Strengthen Controls to Prevent Improper Payments to Estates and Deceased Individuals” (GAO-07-818). Before the 2008 Farm Bill was enacted, FSA had already taken action to address the GAO audit. FSA started a data-matching process that compares program payment information to the SSA Death Master File (DMF), beginning with program payments issued in fiscal year (FY) 2007. In addition, FSA has strengthened documentation procedures at the State and local levels for outstanding payments earned by estates of deceased persons, to address GAO's concern that FSA was not following its own procedures requiring such documentation for payment to estates open more than two years after the date of death of the deceased person.

Review of the data-match report and of information on file in FSA offices revealed 121,527 payments in FY 2007 totaling $108 million were disbursed on behalf of persons identified as deceased prior to the date payment was made. The data reconciliation review showed that relatively few payments made on behalf of deceased persons (less than two percent of the total dollar value of such payments) had any indication of circumstances that warranted further review to ensure a greater certainty of the accuracy of the payments. While no instances of deliberate fraud were found, the rules in our handbooks are being clarified with respect to the question of the limited circumstances in which payments may appropriately be made to estates and to surviving relatives of deceased persons. Related changes are being made in part 707 with respect to payments earned by persons who have disappeared or have been declared incompetent.

Further review of payments “flagged” during the review found that most of these payments were in fact correct in amount and appropriately directed. The review revealed that not all personsidentified as dead were in fact deceased, and that where an entity that included a deceased shareholder received a payment, the total payment made to the entity was in most cases correct and appropriately made. In cases where the entity had failed to notify FSA in a timely fashion that a person or entity member had died, the payment to the entity was nearly always correct and the same amount as if the current entity member information had been timely received. Since many small entities are well below the payment limits specified in 7 CFR part 1400 for one person, the death of a person with an interest in an entity does not necessarily reduce the payment to such entity even if that death would otherwise reduce the overall number of potential payment eligibilities for the entity such as a general partnership. Where the data reconciliation review revealed erroneous payments for FY 2007, FSA immediately started collection procedures. To reduce the number of questionable payments going forward, FSA now provides county offices with a list of persons who have been identified as deceased as a result of the data reconciliation process.

The data reconciliation review found many cases in which FSA had appropriately made payments on behalf of deceased persons, but where the source of potential concern about the appropriateness of the payment was that the amount of time between the death and the payment was more than a year. For example, most of the FY 2007 payments made on behalf of deceased persons were for the Direct and Counter-cyclical Program, where counter-cyclical payments may be disbursed 18 months after the final enrollment period for the applicable year, so a person could have earned payments more than a year before the payments were issued for that crop. For disaster program benefits, the payment could be several years after the loss. In many cases, the program benefits had been requested by the person before the date of the person's death. In this rule, the regulations are made more explicit to specify that even if the payment was not requested before the death, the payment may still be applied for by a person authorized by law to act for the deceased. If a proper application is filed, then the payment rules of § 707.3 apply. As a practical matter, this means that if the deceased did not file an application before the time of death, the payment will likely go to the executor or administrator of the estate of the deceased for the benefit of the estate. Presumably the administrator or executor would be the only party authorized to act for the deceased. Section 707.3 provides that if there is an executor or administrator, then the payment will go to the estate. Payment to family members would only occur under § 707.3 if the payment was applied for prior to the death of the individual involved. The data reconciliation process also found that some payments that appeared to have been made to deceased persons were instead appropriately made to estates using the Social Security numbers of the deceased, or to trusts using Social Security numbers.

A few payments were found to be erroneous, and FSA took action to collect refunds of those payments. The causes of erroneous payments did not appear to be fraud, because while FSA did not have the correct or current information to determine payment eligibility, it did not appear that someone had deliberately provided FSA with information they knew was false. For example, the causes of erroneous or improper payments made on behalf of deceased persons for FY 2007 included the following:

• A person who had power of attorney for another person did not realize that person had died before the crop year for which the program payment applied, and that therefore the deceased person was not eligible for payment.

• FSA was not timely informed of a person's death, the formation of an estate for the deceased, or the settlement of an estate. The executor was not aware that FSA should have been notified, or the farm manager was not aware or informed of the death of an interest holder of the entity.

FSA has made the data reconciliation process and use of the SSA's DMF a part of its standard procedure for verifying payment eligibility. This is a change from previous procedures that depended on producers and their representatives to report producer deaths to FSA. For FY 2008 and subsequent years, quarterly reports of persons who have been identified as deceased based on the data reconciliation process have been made available to all FSA State and county offices. FSA offices are required to conduct additional data review and verification for such persons before issuing any payment, and must document in writing why the person, their estate, or their authorized representative is eligible for payment. These documentation procedures are specified in our updated handbooks.

These regulations are exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553), as specified in section 1601(c) of the 2008 Farm Bill, which requires that the regulations be promulgated and administered without regard to the notice and comment provisions of section 553 of title 5 of the United States Code or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and public participation in rulemaking.

The Office of Management and Budget (OMB) designated this rule as significant under Executive Order 12866 and, therefore, OMB reviewed this final rule. A cost benefit assessment of this rule is summarized below and is available from the contact listed above.

FSA analyzed payment records for FY 2007; as a result FSA categorized approximately $2 million in FY 2007 payments issued to the deceased as payments that were “issued in error,” but that were legitimate payments that would have been made correctly if paperwork had been updated. The “issued in error” categorization includes the instances where FSA was not informed of the original direct or indirect payment recipient's death. The FY 2007 analysis found no instances of use of identification numbers of deceased farmers to collect payments fraudulently, though the possibility remains that analysis of later years' results as they become available might uncover some such instances. These initial results suggest that FSA's institution of ongoing cross referencing of SSA data on the deceased and FSA payment records may result in some monetary recoveries for the Government, perhaps on the order of $1 million annually or less. The annual cost of acquiring SSA data on the deceased is just $6,000, but the cost of the time field staff dedicated to analyzing the reports could offset any amounts recovered. The largest benefit from the procedures clarified in this regulation will be FSA's enhanced ability to ensure that payments are being distributed in accordance with all laws and regulations.

This rule is not subject to the Regulatory Flexibility Act since FSA is not required to publish a notice of proposed rulemaking for this rule.

The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations for compliance with NEPA (7 CFR part 799). The changes in this rule to the eligibility requirements for deceased producers, required by the 2008 Farm Bill, that are identified in this final rule, are solely administrative. Therefore, FSA has determined that NEPA does not apply to this final rule and no environmental assessment or environmental impact statement will be prepared.

This program is not subject to Executive Order 12372, which requires consultation with State and local officials.Seethe notice related to 7 CFR part 3015, subpart V, published in theFederal Registeron June 24, 1983 (48 FR 29115).

This rule has been reviewed under Executive Order 12988. This rule is not retroactive and it does not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. Before any judicial action may be brought regarding the provisions of this rule the administrative appeal provisions of 7 CFR parts 11 and 780 must be exhausted.

The policies contained in this rule do not have any substantial direct effect on States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the states is not required.

This rule has been reviewed for compliance with Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” This Executive Order imposes requirements on the development of regulatory policies that have tribal implications or preempt tribal laws. The policies contained in this rule do not preempt Tribal law. This rule was included in the October through December, 2010, Joint Regional Consultation Strategy facilitated by USDA that consolidated consultation efforts of 70 rules from the 2008 Farm Bill. USDA sent senior level agency staff to seven regional locations and consulted with Tribal leadership in each region on the rules. When the consultation process is complete, USDA will analyze the feedback and then incorporate any required changes into the regulations.

This rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) for State, local, and Tribal governments or the private sector. In addition, CCC was not required to publish a notice of proposed rulemaking for this rule. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

In general, any rule designated by OMB under Executive Order 12866 as economically significant is also a major rule. As noted above, OMB designated this rule as significant, but not economically significant. As a result, this rule is not considered a major rule under SBREFA. Therefore, FSA is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review and this rule is effective on the date of publication in theFederal Register.

The regulations in this rule are exempt from the requirements of the Paperwork Reduction Act (44 U.S.C. chapter 35), as specified in section 1601(c)(2) of the 2008 Farm Bill, which provides that these regulations be promulgated and administered without regard to the Paperwork Reduction Act.

CCC is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

I. Background A. TILA and Regulation Z

Congress enacted the Truth in Lending Act (TILA) based on findings that economic stability would be enhanced and competition among consumer credit providers would be strengthened by the informed use of credit resulting from consumers' awareness of the cost of credit. One of the purposes of TILA is to provide meaningful disclosure of credit terms to enable consumers to compare credit terms available in the marketplace more readily and avoid the uninformed use of credit.

TILA's disclosures differ depending on whether credit is an open-end (revolving) plan or a closed-end (installment) loan. TILA also contains procedural and substantive protections for consumers. TILA is implemented by the Board's Regulation Z. An Official Staff Commentary interprets the requirements of Regulation Z. By statute, creditors that follow in good faith Board or official staff interpretations are insulated from civil liability, criminal penalties, and administrative sanction.

On July 30, 2008, Congress enacted the Mortgage Disclosure Improvement Act of 2008 (the MDIA).1 The MDIA amended TILA and requires transaction-specific TILA disclosures to be provided within three business days after an application for a closed-end mortgage loan is received and before the consumer has paid any fee (other than a fee for obtaining the consumer's credit history).2 Creditors also must mail or deliver these early TILA disclosures at least seven business days before consummation and provide corrected disclosures if the disclosed APR changes in excess of a specified tolerance. The consumer must receive the corrected disclosures no later than three business days before consummation. The MDIA also expanded coverage of Regulation Z's early disclosure requirement to include loans secured by a dwelling even when it is not the consumer's principal dwelling. The Board implemented these MDIA requirements in final rules published May 19, 2009, which became effective July 30, 2009 as required by the statute.See74 FR 23289; May 19, 2009 (MDIA Final Rule).

The MDIA also requires disclosure of payment examples if the loan's interest rate or payments can change, along with a statement that there is no guarantee the consumer will be able to refinance the transaction in the future. Under the statute, these provisions of the MDIA will become effective on January 30, 2011. On September 24, 2010, the Board published an interim rule to implement these requirements.See75 FR 58470; Sept. 24, 2010 (September 2010 Interim Rule). The Board is issuing this interim rule to make certain clarifying changes to provisions in the September 2010 Interim Rule.

The MDIA amended TILA to require creditors to disclose examples of rates and payments, including the maximum rate and payment, for loans with variable rates or payments. The act also requires creditors to disclose a statement that consumers should not assume they can refinance their loans. On July 23, 2009, the Board published a proposed rule to revise the disclosure rules for closed-end credit secured by real property or a consumer's dwelling.See74 FR 43232; Aug. 26, 2009 (2009 Closed-End Proposal). Among other things, the 2009 Closed-End Proposal included provisions to implement MDIA's new interest rate and payment disclosure requirements. Because the 2009 Closed-End Proposal is not expected to be finalized before the January 30, 2011 effective date of the MDIA disclosure requirements, the Board issued the September 2010 Interim Rule to provide creditors with the guidance necessary to comply by the statutory deadline. The September 2010 Interim Rule is substantially similar to the provisions of the 2009 Closed-End Proposal that implemented the interest rate and payment disclosure requirements of the MDIA.

Under the September 2010 Interim Rule, creditors will be required to disclose in a tabular format the contract interest rate together with the corresponding monthly payment, including an estimated amount for any escrows for taxes and property and/or mortgage insurance. Special disclosure requirements are imposed for adjustable-rate or step-rate loans to show the interest rate and payment at consummation, the maximum interest rate and payment at any time during the first five years after consummation, and the maximum interest rate and payment possible during the life of the loan. Additional special disclosures are required for loans with negatively-amortizing payment options, introductory interest rates, interest-only payments, and balloon payments. Finally, consistent with the statute, the September 2010 Interim Rule requires the disclosure of a statement that there is no guarantee the consumer will be able to refinance the loan with a new transaction in the future.

This interim rule clarifies the requirement in the September 2010 Interim Rule that, for adjustable-rate and step-rate loans, creditors disclose the maximum interest rate and payment during the first five years. As modified by this rule, creditors must base their disclosures on the first five years after the first regular periodic payment due date, rather than the first five years after consummation. The clarification is intended to ensure the disclosures are consistent with the manner in which payments are typically structured for adjustable-rate transactions that are “5/1 ARM” loans.

In addition, this interim rule clarifies the requirements for disclosing the payments on an “interest-only loan.” Under the September 2010 Interim Rule, for each interest rate disclosed, the creditor must disclose the earliest date that rate may apply and the corresponding periodic payment. For an interest-only loan, if the corresponding payment will be applied to both accrued interest and principal, the September 2010 Interim Rule further requires the creditor to disclose the earliest date that such payments will be required. This interim rule would eliminate the potential conflict from disclosing twodifferent dates in the same column, by clarifying that creditors should disclose the earliest date that the interest rate becomes effective rather than the date that the first payment is due under the new rate.

Also under this interim rule, the definition of “negative amortization loan” is being revised to clarify which transactions are covered by the special disclosure requirements for such loans. Those disclosures were designed to show consumers how their periodic payments could increase over time and to enable comparisons between the consequences for consumers of making “minimum” and “full” payments. The revision would clarify that these disclosures apply only to loans where consumers are allowed to make minimum payments that result in negative amortization. Thus, the revised definition of “negative amortization loan” excludes loan products that do not have a minimum required payment that results in negative amortization. For example, some loans that are designed for borrowers with seasonal employment require level, amortizing payments, but do not require payments in certain months; during months when no payment is made the accrued interest increases the loan balance. As clarified, the special disclosure requirements for negative amortization loans do not apply to the excluded loans, even though some negative amortization can occur because of the capitalization of accrued interest from time to time. Such loans will be disclosed under the rules for amortizing loans.

Finally, this interim rule clarifies how the provisions in the September 2010 Interim Rule apply to home construction loans. A new staff comment accompanying Appendix D clarifies that, when a construction loan secured by real property or a dwelling that may be permanently financed by the same creditor is disclosed as more than one transaction, the construction financing must be disclosed under the new rules for interest rate and payment summary tables. On the other hand, if the creditor discloses the construction and permanent financing as a single transaction, the summary table should reflect only the permanent financing, while the construction financing should be disclosed only with a statement outside the table that interest payments must be made and the timing of such payments.

TILA Section 105(a) directs the Board to prescribe regulations to carry out the Act's purposes. 15 U.S.C. 1604(a). TILA also authorizes the Board to issue regulations that contain such classifications, differentiations, or other provisions, or that provide for such adjustments and exceptions for any class of transactions, that in the Board's judgment are necessary or proper to effectuate the purposes of TILA, facilitate compliance with the act, or prevent circumvention or evasion.

The Administrative Procedures Act (APA), 5 U.S.C. 551et seq.,generally requires public notice before promulgation of regulations.See5 U.S.C. 553(b). The 2009 Closed-End Proposal provided the public with notice and an opportunity to comment on the Board's proposed disclosure changes, including the proposed interest rate and payment summary tables that would implement the MDIA. The September 2010 Interim Rule adopted only those provisions of the 2009 Closed-End Proposal that implement the MDIA requirements that will become effective on January 30, 2011. Accordingly, the Board believed that the September 2010 Interim Rule complied with the APA's public notice and opportunity to comment requirement. The Board adopted the provisions concerning interest rates and payments as an interim rule, rather than as a final rule, because the Board intended to conduct additional testing of these and other disclosure requirements, including quantitative testing, and may revise the interim provisions further in light of further testing results. The Board sought to permit further public comment while also giving the provisions effect so that creditors would have the guidance they need and the time to implement it by January 30, 2011, as discussed above.

For the same reasons, the Board is now implementing these clarifications by interim rule to ensure timely publication and effectiveness of the additional guidance it provides before the statutory requirements become effective. The additional guidance is needed to prevent compliance burdens that otherwise would result from certain conflicts and uncertainties in the existing provisions as implemented by the September 2010 Interim Rule.

Comments on the September 2010 Interim Rule raised additional issues that are not being addressed at this time. The Board believes that issuing a permanent final rule imposing further changes in creditors' disclosure so soon before the mandatory January 30, 2011 compliance date would impose undue burden on creditors. Accordingly, this interim rule is being published only to clarify certain issues that created uncertainty for creditors on how to comply with the September 2010 Interim Rule before the statutory effective date. Other comments received on the September 2010 Interim Rule, as well as this interim rule, can be taken into consideration before publication of a permanent final rule.

The September 2010 Interim Rule provided an overview of comments on the 2009 Closed-End Proposal.See75 FR 58470, 58472; Sept. 24, 2010. In response to the September 2010 Interim Rule, the Board received 36 comments. Most of those were from creditors and their trade associations and form-software vendors that provide creditors with systems to generate disclosures. They raised various practical concerns with the new requirements. The concerns addressed in this interim rule are described below.

Several commenters expressed concern about the requirement that the summary table for adjustable-rate and step-rate loans include the maximum rate applicable during the first five years after consummation. They noted that “5/1 ARM” loans typically provide for 60 regular periodic payments at the initial rate and that the rate typically does not adjust until at least the 61st full month after consummation. As a result, the payment summary table as prescribed in the September 2010 Interim Rule would not show the rate increase at the first adjustment of a typical “5/1 ARM” loan if the table is based on interest rate changes occurring during the first five years after consummation.

For interest-only loans, some commenters questioned the requirement that creditors disclose the earliest date on which the new interest rate can apply as well as the earliest date on which the corresponding payment would be due at the new rate. Because interest is paid in arrears on most mortgage transactions, those two dates are generally one month apart. Commenters noted that the structure of the table allows for only one date in each column.

Commenters also asked the Board to clarify whether certain types of loan products should be disclosed as “negative amortization loans.” They noted that some loan products have features that may result in the principal balance increasing even though the consumer does not have the right on each due date to choose between making a minimum payment that causesnegative amortization and making a larger payment. For example, some loans provide for regular, amortizing payments, but have irregular payment schedules and periods when no payment is due, during which accrued interest is added to the principal balance. Commenters also noted that some loans have rates that adjust without a corresponding adjustment in the periodic payment in order to maintain the consumer's payment at a level amount; if the interest rate increases during the loan term, the principal balance may increase. These commenters stated that such products cannot be disclosed as negative amortization loans under the September 2010 Interim Rule, which calls for parallel disclosures of the consumer's minimum payment and full payment options.

Many of the commenters asked how the requirements for the new rate and payment summary table in § 226.18(s) affect the guidance in Appendix D for disclosing multiple-advance construction loans. Most home construction loans are covered by § 226.18(s) because they are secured by real property or a dwelling. Specifically, commenters sought clarification on whether the guidance in Appendix D for disclosing the “repayment schedule” for a construction loan remains applicable or, alternatively, whether the requirements of § 226.18(s) override the existing guidance in Appendix D.

The Board is adopting this interim rule to address the foregoing four issues. The Board is also adopting minor, technical revisions to address other uncertainties raised by the commenters, as discussed below.

The Board is revising staff comment 18(h)-2 to clarify how to calculate the total of payments under § 226.18(h) for transactions secured by real property or a dwelling. Existing comment 18(h)-2 states that the total of payments is the sum of the payments disclosed under § 226.18(g). For transactions subject to § 226.18(s), however, no payment schedule will be disclosed under § 226.18(g). Accordingly, the Board is revising comment 18(h)-2 to provide that creditors should continue to follow the rules in § 226.18(g) and associated commentary, and comments 17(c)(1)-8 and -10 for adjustable-rate transactions, to calculate the total of payments for transactions secured by real property or a dwelling.

The Board is adopting new commentary language to clarify that references to “monthly” payments in the disclosures may be modified to reflect other periods when applicable, such as when payments are due quarterly instead of monthly. Section 226.18(s)(2)(i)(B)(1) provides that the interest rate at consummation must be disclosed and labeled “introductory rate and monthly payment.” Under §§ 226.18(s)(3)(i)(D) and 226.18(s)(3)(ii)(D), for each interest rate disclosed under § 226.18(s)(2), the creditor must also disclose the sum of the corresponding periodic payment and any estimated escrow payment, which must be labeled “total estimated monthly payment.” The Board has also published model clauses that use the word “monthly” in describing the disclosed payments.

Existing comment 18(s)(3)(i)(D)-1 provides that, if periodic payments are not due monthly, the creditor should use the appropriate term such as “quarterly” or “annually.” There is no similar guidance, however under the other provisions. The Board is revising comment 18(s)-1 to clarify that the same guidance applies to §§ 226.18(s)(2)(i)(B)(1) and 226.18(s)(3)(ii)(D), as well as the model clauses.

Maximum interest rate during first five years.The Board is revising § 226.18(s)(2)(i)(B)(2) to clarify the rule's application to adjustable-rate transactions that are “5/1 ARM” loans. As adopted in the September 2010 Interim Rule, § 226.18(s)(2)(i)(B)(2) requires disclosure of the maximum possible rate at any time during the first five years after consummation and the earliest date that rate may apply. As noted above, some commenters questioned whether the Board intended creditors to disclose the first adjustment for “5/1 ARMs” under this provision. Commenters stated the intent of the rule is unclear because the first rate adjustment generally occurs more than five years after consummation. For example, assuming a “5/1 ARM” loan is consummated on August 16, 2011, the first payment due date typically is October 1, 2011. The first rate adjustment then occurs on the due date of the 60th regular payment, September 1, 2016, which is more than five years after consummation. The Board intended that creditors disclose the first rate adjustment for a “5/1 ARM.” To ensure that the first rate adjustment will be disclosed for “5/1 ARMs,” the Board is revising § 226.18(s)(2)(i)(B)(2) to clarify that creditors should disclosure the maximum possible rate that will apply at any time during the first five years after the date on which the first regular periodic payment will be due, rather than after consummation.

Payment increases without regard to an interest rate adjustment.The Board is revising comment 18(s)(2)(i)(C)-1 to clarify that, for interest-only loans, creditors must disclose the change in the periodic payment when the consumer begins making payments that include principal as well as interest. Under § 226.18(s)(2)(i)(C), if an amortizing loan provides for a payment increase without regard to an interest rate adjustment (as described in § 226.18(s)(3)(i)(B)), the creditor must disclose an additional column showing the rate in effect at the time of such a payment increase and the date on which the payment increase will occur. Some commenters suggested that this additional column would not be required for an interest-only loan to show the change in the periodic payment when the consumer begins making payments that include principal. These commenters believe that, under the September 2010 Interim Rule, § 226.18(s)(3)(i)(B) does not apply to interest-only loans. In fact, the disclosure requirement of § 226.18(s)(2)(i)(C) applies to all amortizing loans, including interest-only loans, if the consumer's payment can increase in the manner described in § 226.18(s)(3)(i)(B), even if it is not the type of loan covered by § 226.18(s)(3)(i). In such a case, if the transaction is an interest-only loan, the creditor also must disclose the corresponding periodic payment pursuant to § 226.18(s)(3)(ii). The Board is revising comment 18(s)(2)(i)(C)-1 to clarify this point. The Board is also revising this comment to clarify that payment increases without regard to an interest rate increase do not include minor payment variations resulting solely from the fact that months have different numbers of days.

Escrows.The Board is revising § 226.18(s)(3)(i)(C) to clarify when creditors must disclose estimated payments for taxes and insurance. Under § 226.18(s)(3)(i)(C) and accompanying comment 18(s)(3)(i)(C)-1, an estimated payment amount for taxes and insurance must be disclosed if the creditor will establish an escrowaccount for such amounts, even if the escrow account is not required by the creditor. The regulation also states that the creditor must disclose that the escrow account is required if that is the case. Under the 2009 Closed-End Proposal, the statement that an escrow account is required would have been implemented in a separate part of the revised disclosure, outside of the interest rate and payment summary table. The inclusion of this requirement in the September 2010 Interim Rule, which implemented only the summary table, was an error. This requirement is being removed. Some commenters stated that the text of the regulation as implemented by the September 2010 Interim Rule could be read to suggest that the amounts for taxes and insurance should be disclosed only if the escrow account was required by the creditor. The Board's intent under the September 2010 Interim Rule, however, was to require disclosure of the estimated escrow payment if an escrow account will be established, whether the escrow account is required or not, as comment 18(s)(3)(i)(C)-1 indicates. Accordingly, the Board is revising the text of § 226.18(s)(3)(i)(C) to clarify the scope of the disclosure requirement.

The Board also is revising comment 18(s)(3)(i)(C)-1 to clarify how creditors should estimate the amounts for future taxes and insurance when such amounts must be disclosed in connection with changes in the periodic payment after consummation. Some commenters noted that estimating future taxes and insurance would be highly speculative. The September 2010 Interim Rule generally does not require creditors to make projections about future tax rates and insurance premiums. Creditors might be aware, however, of changes in mortgage insurance premiums that are based on the outstanding loan balance. Accordingly, the Board is revising comment 18(s)(3)(i)(C)-1 to clarify that, when escrow payments must be disclosed in multiple columns of the table, each column should use the same estimate for taxes and insurance except that the estimate should reflect changes in the periodic mortgage insurance premiums that are known to the creditor at the time the disclosure is made. The comment further explains that the estimated mortgage insurance premiums should be based on the declining principal balance that will occur as a result of changes to the interest rate that are assumed for purposes of disclosing those rates under § 226.18(s)(2) and accompanying commentary.

Payment date.The Board is revising § 226.18(s)(3)(ii)(B) to remove the requirement to disclose the earliest date on which the payment disclosed under that section will be required. Under the September 2010 Interim Rule, for each interest rate disclosed, the creditor must disclose the earliest date that rate may apply and the corresponding periodic payment. For an interest-only loan, if the corresponding payment will be applied to both accrued interest and principal, § 226.18(s)(3)(ii)(B) further requires the creditor to disclose the earliest date that such payments will be required. Commenters questioned the requirement for disclosing two different dates in the same column and the potential for confusion. Because interest is paid in arrears on most mortgage transactions, those two dates are generally one month apart; commenters also noted that the structure of the table allows for only one date in each column.

The date in each column is intended to be the earliest date the interest rate may apply, not the date that the corresponding payment will take effect. Accordingly, the Board is revising § 226.18(s)(3)(ii)(B) by removing the language that requires creditors to disclose “the earliest date that such payments will be required.” As revised, this interim rule clarifies that creditors should disclose the earliest date that the interest rate becomes effective rather than the date that the first payment is due under the new rate. Revised § 226.18(s)(3)(ii)(B) also clarifies that the itemized amounts disclosed as being applied to interest and principal when a consumer begins making principal and interest payments for an interest-only loan are those amounts for the first such payment.

“Negative amortization loans.”The Board is revising § 226.18(s)(7)(v) to clarify what types of loans are subject to the special disclosure requirements for “negative amortization loans.” As adopted by the September 2010 Interim Rule, § 226.18(s)(7)(v) defines “negative amortization” as the “payment of periodic payments that will result in an increase in the principal balance under the terms of the legal obligation.” The rule also defines a “negative amortization loan” as “a loan that permits payments resulting in negative amortization, other than a reverse mortgage subject to § 226.33.” Thus, some transactions that do not provide for multiple payment options, but that have repayment terms that may result in negative amortization, can be construed as negative amortization loans for purposes of the interest rate and payment summary table required by § 226.18(s). The special disclosure requirements for negative amortization loans and the model clause for such loans are intended to show consumers the effects of making minimum payments that result in negative amortization in comparison to the effects of making fully amortizing payments; the Board did not intend to apply those requirements to loans that do not provide for such minimum payments.

Accordingly, the Board is revising the definition of “negative amortization loan” in § 226.18(s)(7) to clarify which transactions are subject to the disclosure requirements for such loans in § 226.18(s)(2)(ii). Specifically, under the revised definition the special disclosures for “negative amortization loans” would apply only to loan products that have minimum required payments that result in negative amortization. For example, certain loans that are designed for borrowers with seasonal income require periodic amortizing payments but do not require the borrower to make payments in certain months; during months when no payment is made the accrued interest increases the principal balance. Also, some adjustable-rate loans provide for fixed periodic payments that do not adjust when the interest rate adjusts; in cases where the interest rate increases during the loan term, the additional accrued interest increases the principal balance. As clarified, the special disclosure requirements for negative amortization loans will not apply to such loans, even though the principal balance might increase during the loan term when accrued interest is capitalized. New comment 18(s)(7)-1 has been added to note that such loans will be disclosed under the rules for amortizing loans.

The revised definition will limit the meaning of “negative amortization loan” to loan products that can be disclosed meaningfully under the special rules for negative amortization loans. If a loan provides for a minimum periodic payment that causes negative amortization, creditors must disclose the corresponding fully amortizing payment in a parallel row of the table, as contemplated by §§ 226.18(s)(2)(ii) and 226.18(s)(4) and Model Clause H-4(G).

The Board is adopting a new comment under Appendix D to clarifythe impact of § 226.18(s) on the appendix's guidance for disclosing the “repayment schedule” when construction financing is secured by real property or a dwelling. A creditor that also might permanently finance the construction phase has the option of disclosing the construction and permanent phases as separate transactions or as a single transaction.See§ 226.17(c)(6)(ii). Part I of Appendix D provides guidance for disclosing the construction financing as a separate transaction, while Part II provides guidance on disclosing the construction and permanent financing as one transaction.

For loans secured by real property or a dwelling, if a creditor elects to disclose the construction and permanent phases as separate transactions, the construction phase must be disclosed in accordance with § 226.18(s), as adopted by the September 2010 Interim Rule and modified by this interim rule. Under § 226.18(s), the creditor must disclose the applicable interest rates and corresponding periodic payments during the construction phase in an interest rate and payment summary table. The provision in Appendix D, Part I.A.3, which allows the creditor to omit the number and amounts of any interest payments “in disclosing the payment schedule under § 226.18(g)” does not apply because the transaction is governed by § 226.18(s) rather than § 226.18(g). Also, because the construction phase is being disclosed as a separate transaction and its terms do not repay all principal, the creditor must disclose a balloon payment, pursuant to § 226.18(s)(5). This guidance is being added to the commentary as new comment App. D-6.

On the other hand, if the creditor elects to disclose the construction and permanent phases as a single transaction, the construction phase must be disclosed pursuant to Appendix D, Part II.C, which provides that the creditor shall disclose the repayment schedule without reflecting the number or amounts of payments of interest only that are made during the construction phase. Appendix D also provides, however, that creditors must disclose (outside of the table) the fact that interest payments must be made and the timing of such payments. The rate and payment summary table disclosed under § 226.18(s) must reflect only the permanent phase of the transaction. Therefore, in determining the rates and payments that must be disclosed in the columns of the table, creditors should apply the requirements of § 226.18(s) to the permanent phase only. For example, under § 226.18(s)(2)(i)(A) or § 226.18(s)(2)(i)(B)(1), as applicable, the creditor should disclose the interest rate corresponding to the first installment due under the permanent phase and not any rate applicable during the construction phase. This guidance is also reflected in new comment App. D-6.

This interim rule amends comment App. G and H-1 to provide that creditors may revise the column heading in Model Clause H-4(H) to reflect the column heading required by § 226.18(s)(2)(i)(C) of the regulation. Commenters noted a discrepancy between § 226.18(s)(2)(i)(C) and Model Clause H-4(H). Section 226.18(s)(2)(i)(C) states that the column heading must be labeled as “first adjustment” if the loan is an adjustable-rate mortgage or, otherwise, labeled as “first increase.” Due to a technical error, the heading in Model Clause H-4(H) is incorrectly labeled “maximum ever.” TILA Section 105(b) provides creditors with a safe harbor if they use any model form or clause published by the Board. Thus, use of Model Clause H-4(H) as published in the September 2010 Interim Rule is deemed to be in compliance with § 226.18(s)(2)(i)(C). Comment App. G and H-1 is being amended, however, to clarify that the same safe harbor is available to creditors that use the model clause but alter the column heading to read “first adjustment” or “first increase,” as applicable, in compliance with the literal requirement of § 226.18(s)(2)(i)(C).

In accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3506; 5 CFR Part 1320 Appendix A.1), the Board reviewed this interim rule under the authority delegated to the Board by the Office of Management and Budget (OMB). The Board also conducted such a review for the September 2010 Interim Rule.See75 FR 58470, 58479-80; Sept. 24, 2010. The Board believes that the technical revisions made by this interim rule do not alter the findings in the Board's previous PRA review. The revisions do not add to the disclosure requirements adopted in the September 2010 Interim Rule but, rather, only resolve uncertainties and clarify under certain circumstances which of those disclosure requirements apply to which types of mortgage loan products and how. Accordingly, for purposes of this interim rule, the Board refers to the findings of the PRA review set forth in the September 2010 Interim Rule.

The Board has a continuing interest in the public's opinion of the collection of information. Comments on the collection of information should be sent to Cynthia Ayouch, Acting Federal Reserve Board Clearance Officer, Division of Research and Statistics, Mail Stop 95-A, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0199), Washington, DC 20503.

In accordance with Section 4 of the Regulatory Flexibility Act (RFA), 5 U.S.C. 604, the Board published a final regulatory flexibility analysis for the amendments to Regulation Z in the September 2010 Interim Rule.See75 FR 58470, 58480-82; Sept. 24, 2010. For the reasons discussed above regarding the PRA, the Board believes that this interim rule does not affect the Board's prior regulatory flexibility analysis and that it therefore continues to apply for purposes of this interim rule. The Board notes, in fact, that the revisions this interim rule makes to the provisions of Regulation Z adopted in the September 2010 Interim Rule are for the purpose of resolving conflicts and uncertainties, thus facilitating compliance for creditors. Consequently, to the extent this interim rule has any effect on the Board's prior regulatory flexibility analysis, it is to reduce the overall impact of the September 2010 Interim Rule on all entities, including small entities.

The electronic file of this document is available on the date of publication in theFederal Registerathttp://www.gpoaccess.gov/fr/index.html.

Medicare prescription drug coverage is a voluntary program that covers various prescription drugs. The regulations and requirements for the program are codified in 42 CFR Part 423. The Centers for Medicare & Medicaid Services (CMS) promulgates rules and regulations concerning the Medicare program. Anyone who meets the requirements in 42 CFR 423.30(a) can enroll in Medicare prescription drug coverage. Medicare prescription drug coverage beneficiaries are responsible for deductibles, cost-sharing, and monthly premiums towards the cost of covered prescriptions. Costs vary by plan.

Beneficiaries with Medicare prescription drug coverage who have limited income and resources may qualify for Extra Help with their monthly premiums, deductibles, and cost-sharing for Medicare prescription drug coverage. To qualify for Extra Help a Medicare beneficiary must reside in one of the 50 states or the District of Columbia and must have resources and income within specific limits.

Congress passed MIPPA in July of 2008.1 Section 116 of MIPPA exempts certain items from income and resources determinations of Extra Help eligibility for applications filed on or after January 1, 2010. We also apply these exemptions to redeterminations that become effective on or after January 1, 2010. The items exempted under section 116 are the cash surrender value of life insurance and in-kind support and maintenance. To implement these requirements of MIPPA, we issued guidance in August 2009 and discontinued counting these exempted items for applications and redeterminations in accordance with the requirements of the statute. Accordingly, we no longer count as income the help a beneficiary receives when someone else provides food and shelter, or pays for food, mortgage, rent, heating fuel or gas, electricity, water, or property taxes. To reflect these statutory exemptions, we have revised sections 418.3335(b) and 418.3350 and deleted section 418.3345 of our regulations.

In March 2010, Congress passed the Affordable Care Act, which extends the effective date of a determination or redetermination of an Extra Help subsidy due to the death of a spouse.2 Currently, any adjustment in the amount of Extra Help the beneficiary receives is effective the month after the month in which we are notified of the death of a spouse. In some cases, the death of a spouse could result in a decrease in the amount or loss of Extra Help eligibility for the beneficiary.

Effective January 1, 2011, if the death of the spouse would decrease or eliminate the subsidy provided by the Extra Help program, we will extend the effective period for a determination or redetermination until 1 year after the date on which it would otherwise cease to be effective—that is, the month after the month we are notified of the death of the spouse. In order to reflect the changes made by the Affordable Care Act, we have revised sections 418.3120 and 418.3123 of our regulations.

Our current Extra Help rules at 418.3350(b) state that we do not count as income the unearned income described in sections 416.1124(b), (c)(1) through (c)(12), and (c)(14) through (c)(21). Our current rule omits a reference to paragraph 416.1124(c)(22), which we added after we published section 418.3350 in December 2005. We are updating the reference in section 418.3350 to correct this omission. This is a technical change only and does not affect the substance of our rules.

Executive Order 12866 requires each agency to write all rules in plain language. In addition to your substantive comments on this interim final rule, we invite your comments on how to make rules easier to understand.

For example:

• Would more, but shorter, sections be better?

• Are the requirements in the rule clearly stated?

• Have we organized the material to suit your needs?

• Could we improve clarity by adding tables, lists, or diagrams?

• What else could we do to make the rule easier to understand?

• Does the rule contain technical language or jargon that is not clear?

• Would a different format make the rule easier to understand,e.g.grouping and order of sections, use of headings, paragraphing?

We will start to use this rule on the effective date shown under DATES earlier in this preamble.

We are also inviting public comment on the changes made by this rule. We will consider any relevant comments we receive. We will publish a final rule to respond to those comments and to make any appropriate changes.

We follow the Administrative Procedure Act (APA) rulemaking procedures specified in 5 U.S.C. 553 when we develop regulations. Generally, the APA requires that an agency provide prior notice and opportunity for public comment before issuing a final rule. The APA provides exceptions to its notice and public comment procedures when an agency finds good cause for dispensing with such procedures because they are impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the finding and its reasons in the rule issued.3

We find good cause exists for proceeding without prior public notice and comment with respect to the new rules that exempt in-kind support and maintenance and the cash surrender value of life insurance policies from being counted as income or resources for determining Extra Help eligibility because the policies implemented with these rules are nondiscretionary under MIPPA. We implemented the policies on their effective date of January 1, 2010. Accordingly, we find that prior public comment with respect to these changes is unnecessary.

Beginning January 1, 2011, section 3304 of the Affordable Care Act requires us to implement the provision that extends the effective date of a decrease or elimination of an Extra Help subsidy due to the death of a spouse. In light of the March 23, 2010, enactment date of the Affordable Care Act and our need to have authority in place to implement section 3304 beginning January 1, 2011, we do not have sufficient time to provide a notice and comment period before promulgating final rules in order to begin administering the provision in a timely manner. Therefore, we find that the use of the APA's notice and comment rulemaking procedures would be impracticable in this situation. However, we are inviting public comment on the rule and will consider any relevant comments we receive within 60 days of the publication of the rule.

In addition, for the reasons cited above, we also find good cause for dispensing with the 30-day delay in the effective date of this rule.4 For the reasons stated above, we find it is impracticable and unnecessary to delay the effective date of the changes we are making in this interim final rule. Accordingly, we are making this interim final rule effective January 1, 2011.

We have consulted with the Office of Management and Budget (OMB) and determined that this interim final rule meets the criteria for a significant regulatory action under Executive Order 12866. It was subject to OMB formal review.

We certify that this interim final rule will not have a significant economic impact on a substantial number of small entities because it affects individuals only. Therefore, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act, as amended.

These rules do not create any new or affect any existing collections and, therefore, do not require Office of Management and Budget approval under the Paperwork Reduction Act.

Background on Viticultural Areas TTB Authority

Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act requires that these regulations, among other things, prohibit consumer deception and the use of misleading statements on labels, and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the regulations promulgated under the FAA Act.

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) contains the list of approved viticultural areas.

Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region distinguishable by geographical features, the boundaries of which have been recognized and defined in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographical origin. The establishment of viticultural areas allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of a viticultural area is neither an approval nor an endorsement by TTB of the wine produced in that area.

Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.3(b) of the TTB regulations requires the petition to include—

• Evidence that the proposed viticultural area is locally and/or nationally known by the name specified in the petition;

• Historical or current evidence that supports setting the boundary of the proposed viticultural area as the petition specifies;

• Evidence relating to the geographical features, such as climate, soils, elevation, and physical features that distinguish the proposed viticultural area from surrounding areas;

• A description of the specific boundary of the proposed viticultural area, based on features found on United States Geological Survey (USGS) maps; and

• A copy of the appropriate USGS map(s) with the proposed viticultural area's boundary prominently marked.

On August 5, 1981, the Bureau of Alcohol, Tobacco, and Firearms (ATF), our predecessor agency, published T.D. ATF-89 in theFederal Registerat 46 FR 39811 (August 5, 1981), establishing the Santa Maria Valley viticultural area (27 CFR 9.28) on 97,483 acres in southern San Luis Obispo and northern Santa Barbara counties, largely within the Central Coast viticultural area (27 CFR 9.75). A small portion of the existing Santa Maria Valley viticultural area lies outside of the Central Coast area's boundary within the Los Padres National Forest where no grape-growing takes place. In the Geographical Evidence section, T.D. ATF-89 stated that prevailing ocean winds blow west to east, into and through the Santa Maria Valley. The winds create a climate where air temperatures are cooler in summer and winter, but warmer in fall, than the surrounding areas.

In March 2006, Sara Schorske of Compliance Service of America, Inc., on behalf of a group of local winery and vineyard owners, submitted a petition proposing an expansion of the southern and western boundaries of the current Santa Maria Valley viticultural area. The petition presented evidence and documentation in recognition of the geographical name of the proposed southern expansion area and in support of the similarities of its climate, soils, terrain, and watershed with those of the original viticultural area. The petition also documented significant commercial viticulture to the south of the original southern boundary line. TTB returned the March 2006 petition to expand the Santa Maria Valley viticultural area with a letter urging the petitioner to delete the western expansion portion, about which sufficient evidence was not presented.

Ms. Schorske then submitted the current petition, which requests only a southern expansion (consisting of 18,790 acres) of the original Santa Maria Valley viticultural area. The expansion area lies in northern Santa Barbara County, according to the boundary description and USGS maps, and is entirely within the Central Coast viticultural area. The expansion area includes 9 vineyards, 255 acres of commercial viticulture, and 60 to 200 acres under viticultural development, according to the petition.

The current petition explains that the original petition supporting the establishment of the Santa Maria Valley viticultural area in 1981 documented the “Santa Maria Valley” name for the geographical area. Hence, T.D. ATF-89, in establishing the Santa Maria Valley viticultural area, determined that the most appropriate name for the geographical area was Santa Maria Valley.

The current petition states that the southern expansion of the Santa Maria Valley viticultural area follows the watershed boundary line between the Santa Maria Valley to the north and the Los Alamos Valley to the south. The current petition relies on the Santa Maria River watershed for name recognition of the expansion area.

The original southern boundary line of the Santa Maria Valley viticultural area follows Foxen Canyon Road and Clark Avenue, at Sisquoc, for 4.2 miles inside the southern perimeter of the Santa Maria River watershed, according to the current boundary description and USGS maps. On the south side of the Santa Maria Valley watershed, the creeks drain northward to lower elevations, through the valley, and into the Santa Maria River, as shown on USGS maps. Computer-generated watershed maps show that the expansion of the southern boundary line conforms to the Santa Maria River watershed, according to the petition.

The boundary line of the southern expansion of the Santa Maria Valley viticultural area, going clockwise, starts at the southeast corner of the current viticultural area boundary and travels in a straight line west-northwest, over the Solomon Hills to its intersection with U.S. Route 101, according to the boundary description and USGS maps. Following U.S. 101, the boundary line continues north to Clark Avenue in Orcutt, rejoining the original boundary line of the Santa Maria Valley viticultural area.

TTB notes that in establishing the Santa Maria Valley viticultural area, T.D. ATF-89 cited terrain, soils, and climate as distinguishing features.

Terrain:According to T.D. ATF-89, the boundary line of the Santa Maria Valley viticultural area surrounds the Santa Maria Valley floor, adjacent canyons, and sloping terraces. Elevations vary from a low of 200 feet at the Santa Maria River to a high of 3,200 feet at Tepusquet Peak. As shown on the USGS Foxen Canyon map, a westward projection of the San Rafael Mountains, peaking at 1,801 feet in elevation, extends about 4 miles into the southeast portion of the original Santa Maria Valley viticultural area. According to USGS maps, the original southern boundary line varies from 600 to 1,000 feet in elevation. Vineyards within the original viticultural area were planted between elevations of 300 feet on the valley floor and 800 feet on the slopes of the rolling hillsides.

Soils and Climate:According to T.D. ATF-89, the soils of the Santa Maria Valley viticultural area are well drained and fertile, and range in texture from sandy loam to clay loam. The prevailing, cooling, marine-influenced ocean winds are also important to the viticultural area.

Terrain:The petition states that the geography of the southern expansion of the Santa Maria Valley viticultural area is similar to that inside the original southern boundary line. The valley lies along an east-southeast axis, and is about 16 miles long within the existing viticultural area and the expansion area (“Locations of Weather Stations and Selected Vineyards and Wineries,” map, undated). In the southern expansion area, gently rolling hills give way to a more rugged terrain of canyons and steep slopes, as shown on USGS maps. Elevations in the southern expansion area vary between around 440 feet near Sisquoc to 1,360 feet at the southeast corner of the original Santa Maria Valley viticultural area, and are similar to those in areas on or surrounding the Santa Maria Valley floor.

The petition includes the table below, which shows the elevations of commercial vineyards in the southern portion of the original Santa Maria Valley viticultural area and in the southern expansion area. Elevations of vineyards within the southern portion of the original Santa Maria Valleyviticultural area range from 600 to 950 feet; likewise, those of vineyards in the southern expansion area range from 600 to 930 feet.

Climate:The petition explains that the Santa Maria Valley has a “maritime fringe” climate (“The Climate of Southern California,” Harry P. Bailey, University of California Press, 1966). The maritime fringe climate derives from the Pacific Ocean, causing foggy and windy conditions in the Santa Maria Valley. In contrast, some other inland, high-elevation areas nearby have either less or no marine influence, according to the petition.

The petition states that during the summer growing season, the marine air moves onshore, passing through low-elevation passes in the Coast Range, inland to the Santa Maria Valley. (T.D. ATF-89 describes the Santa Maria Valley as a “natural funnel-shaped” valley.) Temperatures are consistent throughout the gentle west-to-east rise in elevations in the Santa Maria Valley. The petition states that the cooling wind and fog encounter little resistance in any direction until they meet the Sierra Madre Mountains on the north side of the valley and the Solomon Hills on the south side, where the valley terminates. The boundary of the southern expansion extends to the Solomon Hills, where the cooling wind and fog encounter resistance, according to the petition.

The petition includes a map that shows the broad, westerly opening between these mountains and hills and how they funnel cooling wind and fog in an east-southeast direction, into the valley. T.D. ATF-89 states that “* * * the prevailing winds from the ocean [cause] the valley to have a generally cooler summer, warmer fall, and cooler winter than surrounding areas.”

The current petition provides data from two weather stations, one within the original Santa Maria Valley viticultural area and one within the expansion area. Both stations are nestled along foothills, slightly above the valley floor. A graph in the petition presents heat accumulation data recorded in 2004 at the two stations. The graph shows that growing season totals for 2004 in the original viticultural area and in the expansion area were both just below 3,000 growing degree days.

As a measurement of heat accumulation during the growing season, 1 growing degree day accumulates for each degree Fahrenheit that a day's mean temperature is above 50 degrees, the minimum temperature required for grapevine growth (“General Viticulture,” Albert J. Winkler, University of California Press, 1975, pages 61-64).

Soils:According to the petition, the original Santa Maria Valley viticultural area consists of a wide variety of soils, without a single dominant type. The petition provides a table listing the soil map units in the original Santa Maria Valley viticultural area and in the expansion area. The table is divided into four general areas. Three areas are within the original Santa Maria Valley viticultural area: (1) Valley floor, (2) hills (the Solomon Hills), and (3) mountains (the foothills of the Sierra Madre Mountains, northeast of the Santa Maria River). The fourth is the southern expansion area.

As shown in the table, the soils are mainly sand, sandy loam, and loam on the valley floor, but are mixed sandy loam, clay loam, shaly loam, and silt loam on mountains. However, the soils in the expansion area are also found in the original Santa Maria Valley viticultural area. In both the expansion area and on hills in the original viticultural area, the soils are sand, sandy loam, clay loam, and shaly clay loam, but are mostly loam and shaly loam.

TTB published Notice No. 103 regarding the proposed expansion of the Santa Maria Valley viticultural area in theFederal Registerat 75 FR 9827 (March 4, 2010). In that notice, TTB invited comments by May 3, 2010, from all interested persons. We solicited comments from interested members of the public on whether we should expand the Santa Maria Valley viticultural area as described above. We expressed particular interest in receiving comments concerning the similarity of the proposed expansion area to the current Santa Maria Valley viticultural area, the geographical features that distinguish the viticultural features of the proposed expansion area from the area beyond it to the south, and the use of the Santa Maria River watershed to justify the proposed expansion of the southern boundary line.

We received two comments in response to the notice, both supporting the expansion of the Santa Maria Valley viticultural area. An agricultural property appraiser supports the expansion and states the boundaries are reasonably defined by geographic features. A Farm Advisor employed with the Cooperative Extension-San Luis Obispo County, University of California, Agriculture and Natural Resources, supports the expansion based on similarities in temperature conditions within the existing Santa Maria Valley viticultural area and the expansion area. The Advisor included temperature data, an aerial picture of the area, and a 2008 and 2009 overview of the average growing degree days forthe Santa Maria Valley viticultural area that includes the expansion area.

After careful review of the petition and the comments received, TTB finds that the evidence submitted supports the expansion of the Santa Maria Valley viticultural area. Accordingly, under the authority of the Federal Alcohol Administration Act and part 4 of our regulations, we expand the Santa Maria Valley American viticultural area in Santa Barbara and San Luis Obispo Counties, California, effective 30 days from the publication date of this document.

See the narrative boundary description of the viticultural area in the regulatory text published at the end of this document.

The maps for determining the boundary of the viticultural area are listed below in the regulatory text.

The expansion of the Santa Maria Valley viticultural area will not affect currently approved wine labels. The approval of this expansion may allow additional vintners to use “Santa Maria Valley” as an appellation of origin on their wine labels. Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a wine to be labeled with a viticultural area name or with a brand name that includes a viticultural area name or other term identified as viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). Different rules apply if a wine has a brand name containing a viticultural area name or other viticulturally significant term that was used as a brand name on a label approved before July 7, 1986.See27 CFR 4.39(i)(2) for details.

We certify that this regulation will not have a significant economic impact on a substantial number of small entities. This regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name is the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

This rule is not a significant regulatory action as defined by Executive Order 12866. Therefore, it requires no regulatory assessment.

N.A. Sutton of the Regulations and Rulings Division drafted this notice.

The Department of Justice by this publication is finalizing an interim rule regarding the scope of application of the Sex Offender Registration and Notification Act (SORNA), title I of Public Law 109-248 (codified at 42 U.S.C. 16901et seq.). The interim rule,Applicability of the Sex Offender Registration and Notification Act,was published on February 28, 2007, at 72 FR 8894. The interim rule solicited public comments and the comment period ended on April 30, 2007.

The preamble to the interim rule explained that SORNA establishes national standards for sex offender registration and notification. The preamble further explained that SORNA's requirements are of two sorts. First, SORNA directly imposes registration obligations on sex offenders as a matter of federal law and provides for federal enforcement of these obligations under circumstances supporting federal jurisdiction. These federal registration obligations on sex offenders have been in force since the enactment of SORNA. Second, SORNA establishes minimum national standards for non-federal jurisdictions to incorporate in their sex offender registration and notification programs. The relevant “jurisdictions” as defined by SORNA are the 50 States, the District of Columbia, the principal territories, and Indian tribes to the extent provided in 42 U.S.C. 16927.See42 U.S.C. 16911(10). Jurisdictions that do not substantially implement SORNA's requirements in their programs within the time specified by SORNA are subject to a 10% reduction of certain justice assistance funding. SORNA affords jurisdictions a three-year period for substantial implementation of the SORNA standards, subject to extension for up to an additional two years in the Attorney General's discretion.See42 U.S.C. 16924-25.

The preamble to the interim rule took the position that SORNA applies of its own force to all sex offenders regardless of when they were convicted of their sex offenses. It also stated that rulemaking was immediately necessary to “foreclos[e] any dispute as to whether SORNA is applicable where the conviction for the predicate sex offense occurred prior to the enactment of SORNA.” 72 FR at 8896. The rule noted that this issue was “of fundamental importance to the initial operation of SORNA, and to its practical scope for many years, since it determines the applicability of SORNA's requirements to virtually the entire existing sex offender population.”Id.In light of these considerations, the Attorney General exercised his rulemaking authority under SORNA,see42 U.S.C. 16912(b), 16913(d); 28 CFR 72.1, to specify that “[t]he requirements of the Sex Offender Registration and Notification Act apply to all sex offenders, including sex offenders convicted of the offense for which registration is required prior to the enactment of that Act.” 28 CFR 72.3;see72 FR at 8896.

In issuing the interim rule, the Attorney General determined that there was good cause for receiving public comment after, rather than before, the rule's initial publication and for dispensing with the normal 30-day delay in effectiveness because of the urgency of eliminating any possible uncertainty regarding SORNA's applicability to sex offenders whose convictions predate SORNA's enactment.See72 FR at 8896-97. Accordingly, the Attorney General issued the rule as an interim rule with immediate effectiveness.See id.

Following the publication of the interim rule, the Attorney General published proposed guidelines to provide guidance and assistance to the states and other jurisdictions in incorporating the SORNA requirements into their sex offender registration and notification programs.See72 FR 30209 (May 30, 2007). The proposed guidelines solicited public comment and the comment period ended on August 1, 2007. Following consideration of the comments received, the Attorney General issued the finalNational Guidelines for Sex Offender Registration and Notification(hereafter, the “SORNA Guidelines” or “Guidelines”) on July 2, 2008, appearing at 73 FR 38030. The Guidelines, like the interim rule, state that SORNA applies to all sex offenders regardless of when they were convicted, and they provide guidance to jurisdictions regarding the registration of sex offenders whose convictions predate the enactment of SORNA.See73 FR at 38031, 38035-36, 38046-47, 38063-64.

InUnited Statesv.Utesch,596 F.3d 302, 310-11 (6th Cir. 2010), the United States Court of Appeals for the Sixth Circuit held that the SORNA Guidelines are, independently of the interim rule, a valid final rule providing that SORNA applies to all sex offenders, including those whose convictions predate SORNA. This rulemaking reflects no disagreement with that conclusion but rather aims to eliminate any possible uncertainty or dispute concerning the scope of SORNA's application by finalizing the interim rule. This publication does not reflect agreement with the conclusions of an earlier decision of the Sixth Circuit holding that the interim rule was invalid at the time of its publication and that SORNA does not apply retroactively of its own force.See United Statesv.Cain,583 F.3d 408, 413-24 (6th Cir. 2009).

The public comments on the interim rule were similar to comments received on the portions of the proposed SORNA Guidelines addressing SORNA's application to sex offenders with convictions predating SORNA's enactment. Accordingly, as discussed below, the preamble to the final SORNA Guidelines,see73 FR at 38031, 38035-36, 38043, and various features of the Guidelines themselves, address the concerns raised by the comments on the interim rule.

Many of the commenters on the interim rule assumed that the Attorney General made a discretionary decision to apply SORNA to sex offenders with pre-SORNA convictions and argued in effect that the Attorney General should reverse the decision based on their policy objections. The Department of Justice does not agree that the criticisms raised in these comments are well-founded. By authorizing the Attorney General “to specify the applicability of the requirements of [SORNA] to sex offenders convicted before the enactment of [SORNA],” 42 U.S.C. 16913(d), Congress at the very least placed it within the Attorney General's discretion to apply SORNA's requirements to sex offenders with pre-SORNA convictions if he determines (as he has) that the public benefits of doing so outweigh any adverse effects. The preamble to the interim rule, 72 FR at 8895-97, and the remainder of this summary, explain the considerations justifying the Attorney General's conclusion on this point. Accordingly, the Attorney General's issuance and finalization of the interim rule have asound legal basis, regardless of whether (i) SORNA's requirements apply of their own force to sex offenders with pre-SORNA convictions, and the interim rule merely confirmed that fact, or (ii) the applicability of SORNA's requirements to sex offenders with pre-SORNA convictions depends on rulemaking by the Attorney General.

Some of the comments on the interim rule reflected misunderstandings of SORNA's requirements. Many of these comments included assertions or assumptions that SORNA adopts a one-size-fits-all approach that treats all persons convicted of sexual offenses in the same way. However, SORNA's registration and notification requirements apply only to persons convicted of “sex offense[s]”—a defined term that does not include all crimes of a sexual nature.See42 U.S.C. 16911(5)-(8); 73 FR at 38037, 38051-52. Within the class of “sex offender[s]” required to register under SORNA because of their conviction for “sex offense[s],” SORNA distinguishes three tiers of offenders based on the nature and seriousness of the predicate sex offense and the offender's history of recidivism. Offenders in different tiers are treated differently under SORNA's standards in relation to length of registration, frequency of required in-person appearances to verify registration information, and public notification.See42 U.S.C. 16911(1)-(4), 16915-16, 16918(c)(1). Another common misconception in the comments was that SORNA restricts where sex offenders may live. However, SORNA is concerned with obtaining and disseminating information about sex offenders and does not prescribe limitations on sex offenders' places of residence, locations, or activities.See42 U.S.C. 16913-21; 73 FR at 38032.

Some of the public comments reflected misconceptions about SORNA's provisions relating to juvenile sex offenders, stating or assuming that there is little or no difference between SORNA's treatment of adult and juvenile offenders. However, SORNA requires registration much more narrowly on the basis of juvenile delinquency adjudications than on the basis of adult convictions. Juvenile delinquency adjudications count as “convictions” that trigger SORNA's requirements only if the juvenile is at least 14 years old at the time of the offense and the offense is comparable to or more severe than aggravated sexual abuse as described in 18 U.S.C. 2241 (or an attempt or conspiracy to commit such an offense).See42 U.S.C. 16911(8); 73 FR at 38030, 38032, 38040-41, 38050.

Hence, SORNA's registration requirements based on juvenile delinquency adjudications are limited to cases involving the commission of particularly serious sex offenses by juveniles who were at least 14 years old at the time of the offense. In addition, even for juveniles in this category, SORNA permits the reduction of their registration periods from life to 25 years if certain conditions are satisfied, a reduction that is not available to sex offenders with adult convictions for such crimes.See42 U.S.C. 16915(b)(2)(B), (3)(B).

Some of the comments received criticized SORNA as lacking valid policy support or as being counterproductive. Some commenters raised such criticisms in relation to SORNA's effects on covered sex offenders generally, while other commenters focused their criticisms on SORNA's application to juvenile sex offenders. The commenters often expressed particular concerns about the adverse effects of registration and notification on sex offenders and their families in such areas as housing, employment, personal security, education, and social relations.

In raising these concerns, some commenters may have been under an exaggerated impression of what SORNA's application to sex offenders with pre-SORNA convictions entails. The consequences are not boundless or indiscriminate. SORNA reserves its requirement of lifetime registration for the most serious category of sex offenders (“tier III”), and even in this category the registration period may be reduced to 25 years in certain circumstances if the registration requirement is based on a juvenile delinquency adjudication. The registration period for tier II offenders is 25 years, and the registration period for tier I offenders is 15 years, which may be reduced to 10 years in certain circumstances.See42 U.S.C. 16915. The registration period begins to run when a sex offender is released from imprisonment for the predicate sex offense, or at the time of sentencing in connection with a nonincarcerative sentence.See73 FR at 38068. Hence, for example, if a person was released from imprisonment in 1980 for a sex offense that places him in tier II, his SORNA registration period based on that offense ended in 2005—whether or not he was ever actually registered for the offense—and he is subject to no present registration requirement based on SORNA, absent conviction for other sex offenses. This limits the potential impact of SORNA's applicability to sex offenders with pre-SORNA convictions.See73 FR at 38036, 38046-47, 38068-69 (discussing limits on duration of registration and other practical limitations on SORNA's effect on sex offenders with pre-SORNA convictions).

Turning to the underlying substantive issues, Congress's enactment of SORNA reflects a general legislative judgment that the public safety benefits of SORNA's requirements outweigh any adverse effects. The effects of SORNA's requirements on sex offenders, and the public safety concerns sex offenders present, are similar, whether a sex offender's conviction occurred before or after SORNA's enactment. Accordingly, the interests opposing and supporting registration—any adverse effect or burden of SORNA's requirements on sex offenders weighed against the public safety interests furthered by those requirements—are much the same whether the class of sex offenders with pre-SORNA convictions or the class of sex offenders with post-SORNA convictions is considered.See72 FR at 8896-97 (noting frustration of SORNA's public safety objectives if sex offenders with pre-SORNA convictions were exempt from SORNA's requirements); 73 FR at 38035-36 (noting similarity of effects on sex offenders and public safety interests regardless of when the predicate sex offense convictions occurred). Hence, the Attorney General was and is justified in concluding that the balance comes out the same for the two classes and, accordingly, in exercising his authority to “specify the applicability of the requirements of [SORNA] to sex offenders convicted before the enactment” of SORNA, 42 U.S.C. 16913(d), to provide that SORNA applies to sex offenders with pre-SORNA convictions. 28 CFR 72.3.

Some commenters argued that the application of SORNA to sex offenders with pre-SORNA convictions would violate the Constitution's prohibition of ex post facto laws or other provisions of the Constitution. However, the SORNA requirements are non-punitive regulatory measures adopted for public safety purposes, and accordingly do not implicate the Constitution's prohibition of ex post facto laws.See42 U.S.C. 16901; 72 FR at 8896; 73 FR at 38036, 38044-46. The comments received identified no persuasive distinction for ex post facto purposes between the SORNA requirements and the sex offender registration and notification measures upheld by the Supreme Court against ex post facto challenge inSmithv.Doe,538 U.S. 84 (2003), and also didnot identify any persuasive reason to believe that either SORNA's requirements or their application to sex offenders with pre-SORNA convictions violates any other provision of the Constitution. This was so regardless of whether the general class of sex offenders or the limited class of juvenile delinquents qualifying as covered sex offenders under SORNA is considered.

Some commenters argued that applying SORNA's requirements to sex offenders with pre-SORNA convictions (or with pre-SORNA juvenile adjudications counting as “convictions” for SORNA purposes) would be unfair because the applicability of those requirements could not have been anticipated at the time of the offender's conviction for the predicate sex offense. However, fairness does not require that, when an offender's case is adjudicated, it must be possible to anticipate future regulatory measures that may be adopted in relation to persons like him to protect public safety. See73 FR at 38036. The government may not yet have developed effective regulatory measures to address the public safety concerns presented by certain types of offenders at the time of their offenses or convictions. That does not constitute a commitment to those offenders by the government that it will not develop such measures and apply them to the offenders at a later time,cf., e.g., Smithv.Doe,538 U.S. at 89-91 (registration requirements applied to sex offenders with convictions predating enactment of the registration law), and does not constitute a commitment to those offenders by the government that it will refrain from later strengthening or improving existing regulatory measures in light of lessons learned from experience. Moreover, on the other side of the balance, fairness is also due to persons who may be victimized by sex offenses that could be prevented by applying SORNA's requirements to sex offenders with pre-SORNA convictions. See73 FR at 38044-45 (discussing role of registration and notification measures in solving and preventing sex offenses). If such crimes occur, the harm to the victims is no less because the offender's previous sex offense conviction or convictions occurred before SORNA's enactment rather than after.

The conclusion does not differ when the treatment of juvenile delinquent sex offenders under SORNA is considered specifically. Both for sex offenders with adult convictions and for those adjudicated delinquent, the effects of registration requirements on the offenders and the public safety concerns the offenders present are similar regardless of whether their case dispositions occurred before or after the enactment of SORNA. Hence, as with adult sex offenders, the Attorney General was and is justified in concluding that the balance of interests does not differ materially depending on the timing of the adjudication in relation to SORNA's enactment and that SORNA's requirements should apply to juvenile delinquent sex offenders with pre-SORNA adjudications as well as to those with post-SORNA adjudications.

In relation to juvenile delinquent sex offenders, the operation of registration systems may entail a relaxation of confidentiality requirements that might otherwise apply in juvenile proceedings, but that is the case whether the delinquency adjudications occur before or after SORNA's enactment. The confidentiality of juvenile proceedings is generally a matter of legislative discretion. With respect to juveniles at least 14 years old adjudicated delinquent for particularly serious sex offenses, Congress has made a policy judgment that the public safety interests warrant a departure from strict juvenile confidentiality policies.See42 U.S.C. 16911(8); H.R. Rep. No. 218, 109th Cong., 1st Sess. Pt. 1, at 25 (2005) (“While the Committee recognizes that States typically protect the identity of a juvenile who commits criminal acts, in the case of sexual offenses, the balance needs to change; no longer should the rights of the juvenile offender outweigh the rights of the community and victims to be free from additional sexual crimes.”).

Thus, as reflected in the interim rule and this finalizing rulemaking, it is the Attorney General's view that applying SORNA's requirements to sex offenders with pre-SORNA convictions, including sex offenders required to register on the basis of juvenile delinquency adjudications, appropriately effectuates Congress's purposes in enacting SORNA.See72 FR at 8895-97; 73 FR at 38031-32, 38035-36, 38038, 38040.

The scope of SORNA's application to sex offenders has implications for jurisdictions because the states and other covered jurisdictions are generally expected to incorporate offenders to whom SORNA applies into their sex offender registration programs.See42 U.S.C. 16911(9), 16912(a), 16924-25; 72 FR at 8895; 73 FR at 38048. In light of this consequence, some of the public comments on the interim rule objected that jurisdictions would have difficulty in identifying, locating, notifying, and registering sex offenders required to register under SORNA who were convicted many years ago and who have since merged into the general population. These concerns about potential burdens on jurisdictions, however, were considered in the development of the SORNA Guidelines and are addressed through various features of the Guidelines.

The Guidelines recognize that it may not be feasible for a jurisdiction to identify and register all sex offenders with pre-SORNA convictions who are required to register under the SORNA standards. The Guidelines accordingly provide that jurisdictions will be considered to have substantially implemented the SORNA requirements if they register such offenders who remain in the justice system as prisoners, supervisees, or registrants, and such offenders who have passed out of the system but later re-enter it because of a subsequent criminal conviction.See73 FR at 38046, 38063-64.

As the Guidelines note, sex offenders in these classes are within the cognizance of the jurisdiction in any event and the jurisdiction will often have independent reasons to review their criminal histories for penal, correctional, or registration/notification purposes.See73 FR at 38046. In addition, the Guidelines provide that, in attempting to identify individuals who may be required to register under SORNA, jurisdictions may rely on their normal methods and standards in searching criminal histories, and need not undertake extraordinary efforts to identify individuals with old sex offense convictions that may be difficult to find. The Guidelines also provide guidance to jurisdictions about notifying such sex offenders concerning their registration obligations under SORNA and incorporating such offenders into their registration systems.See73 FR at 38043, 38063-64.

In sum, the comments received provide no persuasive reason to change the rule.

However, this final rule makes one clarifying change in the interim rule in light of the Supreme Court's decision inCarrv.United States,560 U.S. ___, 2010 WL 2160783 (2010).Carrheld that sex offenders cannot be criminally liable under 18 U.S.C. 2250 for failing to register as required by SORNA where federal jurisdiction is premised on interstate travel by the offender occurring before the enactment of SORNA. Example 2 in 28 CFR 72.3, which is part of the regulations added by the interim rule, describes a situation involving potential liability under 18 U.S.C. 2250 for a sex offender with a pre-SORNA sex offense conviction based on interstate travel. While theexample is not specific about the timing of the interstate travel in relation to the enactment of SORNA, it could be understood as referring to a situation in which the travel occurred before the enactment of SORNA. Accordingly, this final rule makes minor changes in the language of Example 2 so as to avoid any arguable inconsistency with the Supreme Court's holding inCarrregarding the scope of criminal liability under 18 U.S.C. 2250.

The Attorney General, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and by approving it certifies that this regulation will not have a significant economic impact on a substantial number of small entities for the purposes of that Act because the regulation concerns the application of the requirements of the Sex Offender Registration and Notification Act to certain offenders.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation. The Department of Justice has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f), and accordingly this rule has been reviewed by the Office of Management and Budget.

This regulation will not have substantial direct effects on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. There has been substantial consultation with State officials regarding the interpretation and implementation of the Sex Offender Registration and Notification Act. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism assessment.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. By way of explanation, this rule finalizes an interim rule concerning the applicability of SORNA's registration requirements to sex offenders, including those whose sex offense convictions occurred before SORNA's enactment. The rule facilitates federal prosecution of sex offenders in the affected classes who fail to register as required, see 18 U.S.C. 2250, but it does not directly require expenditures by state, local, or tribal governments. The interim rule was issued prior to the publication by the Attorney General of the SORNA Guidelines, appearing at 73 FR 38029 et seq., which determine what state, local, and tribal jurisdictions must do to achieve substantial implementation of the SORNA standards in their registration programs. The SORNA Guidelines include instructions to jurisdictions concerning the classes of sex offenders with pre-existing convictions whom the jurisdictions must register, and the costs of doing so will not be affected or increased by the finalization of the interim rule. Based on the known costs in jurisdictions that have implemented SORNA to date, it is not anticipated that the cost of implementing this aspect of the SORNA standards will exceed $100 million annually.

This rule comports with Executive Order 13175. The Department of Justice has carried out previous tribal consultations regarding actions under SORNA affecting Indian tribes. The Department engaged in a voluntary consultation on this rule with tribal officials in Spokane, Washington, on October 4, 2010.

This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996. 5 U.S.C. 804. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, or innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

The Bureau corrects its Inmate Discipline and Special Housing Units (SHU) regulations (28 CFR part 541, subpart A and subpart B), as published in theFederal Registerof December 8, 2010 (75 FR 76263), FR Doc. 2010-30525, as follows:

1. On page 76266, in the second column, second full paragraph beginning “Code 331”, the reference to “§ 541.03” is corrected to read “§ 541.3”.

Regulatory Information

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule, as it would be impracticable to do so because the event would occur before the rulemaking process would be completed. Because of the dangers posed by the pyrotechnics used in these fireworks displays, the safety zones are necessary to provide for the safety of event participants, spectators, spectator craft, and other vessels transiting the event area. For the safety concerns noted, it is in the public interest to have these regulations in effect during the event.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in theFederal Register. Any delay in the effective date of this rule would expose mariners to the dangers posed by the pyrotechnics used in the fireworks display.

The City of San Francisco will sponsor the New Year's Eve Celebration for the City of San Francisco Fireworks Display from 11:45 p.m. on December 31, 2010 until 12:30 a.m. on January 1, 2011, on the navigable waters of San Francisco Bay located 1,000 feet from the San Francisco Ferry Building in San Francisco, CA. The fireworks display is for entertainment purposes. From 11 a.m. until 11 p.m. on December 31, 2010, pyrotechnics will be loaded onto a barge at Pier 50 near position 37°46′29.5″ N, 122°22′57.4″ W. From 11 p.m. until 11:20 p.m. the loaded barge will be transiting from Pier 50 to the launch site located at position 37°47′42.60″ N, 122°23′19.10″ W. The Coast Guard has granted the event sponsor a marine event permit for the fireworks displays. We believe that a safety zone is necessary to protect spectators, vessels, and other property from the hazards associated with pyrotechnics on the fireworks barges.

The Coast Guard is establishing a safety zone to keep spectators and vessels a safe distance away from the fireworks barges to ensure the safety of participants, spectators, and transiting vessels during the fireworks display.The temporary safety zone will extend 100 feet from the nearest point of the barge during the loading, transit, and arrival of the pyrotechnics from Pier 50 to position 37°47′42.60″ N, 122°23′19.10″ W. The fireworks display will occur from 11:45 p.m. on December 31, 2010 until 12:30 a.m. on January 1, 2011, during which the safety zone will extend 1,000 feet from the nearest point of the barge at position 37°47′42.60″ N, 122°23′19.10″ W. At 12:30 a.m. on January 1, 2011 the safety zone will terminate.

The effect of the temporary safety zones will be to restrict navigation in the vicinity of the fireworks sites while the fireworks are set up, and until the conclusion of the scheduled displays. Except for persons or vessels authorized by the Coast Guard Patrol Commander, no person or vessel may enter or remain in the restricted area.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

Although this rule restricts access to the waters encompassed by the safety zones, the effect of this rule will not be significant. The entities most likely to be affected are pleasure craft engaged in recreational activities. In addition, the rule will only restrict access for a limited time. Finally, the Public Broadcast Notice to Mariners will notify the users of local waterway to ensure that the safety zone will result in minimum impact.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

Although this rule may affect owners and operators of pleasure craft engaged in recreational activities and sightseeing, it will not have a significant economic impact on a substantial number of small entities for several reasons: (i) This rule will encompass only a small portion of the waterway for a limited period of time; (ii) vessel traffic can pass safely around the area; (iii) vessels engaged in recreational activities and sightseeing have ample space outside of the affected areas of San Francisco, CA to engage in these activities; and (iv) the maritime public will be advised in advance of this safety zone via Broadcast Notice to Mariners.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have Tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does notrequire a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g.,specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 0023.1 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction. This rule involves establishing, disestablishing, or changing Regulated Navigation Areas and security or safety zones. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated underADDRESSES.

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it would be impracticable and contrary to public interest to delay the rule. Immediate action is necessary to protect the Deepwater Horizon blowout preventer and adjacent piers and infrastructure from destruction, loss or injury from sabotage or other subversive acts, accidents or other causes of a similar nature after a current temporary final rule (75 FR 65236, October 22, 2010) providing a security zone for this area expires.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in theFederal Register. This security zone is needed to protect the Deepwater Horizon blowout preventer and adjacent piers and infrastructure from destruction, loss or injury from sabotage or other subversive acts, accidents or other causes of a similar nature. Delaying the effective date of this temporary final rule is impracticable and contrary to public interest.

An investigation associated with the Deepwater Horizon incident is currently taking place in the vicinity of Michoud Slip. As noted above, a security zone is currently established (75 FR 65236, October 22, 2010). It encompasses the entire slip from position 30°0′34.2″ N, 89°55′40.7″ W to position 30°0′29.5″ N, 89°55′52.6″ W across the mouth of the slip. Vessels will not be allowed to enter this security zone without the permission of the Captain of the Port, New Orleans. This security zone is necessary to protect the Deepwater Horizon blowout preventer and adjacent piers and infrastructure from destruction, loss or injury from sabotage or other subversive acts, accidents or other causes of a similar nature.

A security zone is an area of land, water, or land and water established for a designated period of time to prevent damage or injury to a specified vessel, waterfront facility or to safeguard ports, harbors, territories, or waters of the United States. This security zone encompasses the Michoud Slip and adjacent piers where the Deepwater Horizon blowout preventer is located and is intended to protect and safeguard the blowout preventer from destruction, loss, or injury from sabotage or other subversive acts, accidents, or other causes of a similar nature. This security zone is necessary until all investigations related to the Deepwater Horizon are complete and the blowout preventer is no longer needed for matters relating to the Deepwater Horizon.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order.

Because of its location, the impacts of this security zone on routine navigation are expected to be minimal.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels, intending to transit the Michoud Slip, encompassing the entire slip from position 30°0′34.2″ N, 89°55′40.7″ W to position 30°0′29.5″ N, 89°55′52.6″ W across the mouth of the slip. This security zone will not have significant impact on a substantial number of small entities because of its location. If you are a small business entity and are significantly affected by this regulation please contact Lieutenant Commander (LCDR) Eva VanCamp, Sector New Orleans, at 504-365-2392, or e-mailEva.VanCamp@uscg.mil.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have Tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g.,specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction.

An environmental analysis checklist and a categorical exclusion determination will be uploaded to the docket as indicated underADDRESSES.

EPA has recently undertaken a series of actions pertaining to the regulation of GHGs that, although for the most part distinct from one another, establish the overall framework for today's final action on the Mississippi SIP.1 Four of these actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which EPA issued in a single final action,2 the “Johnson Memo Reconsideration,”3 the “Light-Duty Vehicle Rule,”4 and the “Tailoring Rule.”5 Taken together, these actions established regulatory requirements for GHGs emitted from new motor vehicles and new motor vehicle engines; determined that such regulations, when they take effect on January 2, 2011, will subject GHGs emitted from stationary sources to PSD requirements; and limited the applicability of PSD requirements to GHG sources on a phased-in basis.

On September 14, 2010, in response to the Tailoring Rule and earlier GHG-related EPA rules, MDEQ submitted a draft revision to EPA for approval into the Mississippi SIP to establish appropriate emission thresholds for determining which new or modified stationary sources become subject to Mississippi's PSD permitting requirements for GHG emissions. Subsequently, on November 5, 2010, EPA published a proposed rulemaking to approve a portion of Mississippi's September 14, 2010, SIP revision under parallel processing. 75 FR 68259. Specifically, Mississippi's September 14, 2010, draft SIP revision incorporates by reference the Tailoring Rule provisions at 40 CFR 52.21 (as amended June 3, 2010, and effective August 2, 2010), into the Mississippi SIP (APC-S-5—Regulations for the Prevention of Significant Deterioration) to address the thresholds for GHG permitting applicability. Detailed background information and EPA's rationale for the proposed approval are provided in EPA's November 5, 2010,Federal Registernotice.

EPA's November 5, 2010, proposed approval was contingent upon Mississippi providing a final SIP revision that was substantively the same as the revision proposed for approval by EPA in the November 5, 2010, proposed rulemaking. 75 FR 68259. Mississippi provided its final SIP revision on December 9, 2010. There was a minor change to correct an error for a citation noted in Mississippi's September 14, 2010, draft SIP revision. Specifically, in providing the citation for the NSR PM2.5Implementation Rule, Mississippi provided 73 FR 38349 in its September 14, 2010, draft SIP revision under APC-S-5, Section 2-7. In Mississippi's December 9, 2010, SIP revision, the State corrects this citation to read 73 FR 28321 instead of 73 FR 38349. Besides the correction of the citation, there were no differences between Mississippi's September 14, 2010, draft SIP revision, and the final SIP revision which was provided on December 9, 2010.

Mississippi's December 9, 2010, SIP revision also incorporates two administrative changes to their PSD regulations (Air Pollution Control, Section 5 (APC-S-5)—Regulations for the Prevention of Significant Deterioration). These changes relate to Mississippi's pre-existing exclusion of certain provisions of the federal PSD regulations from its SIP, specifically, provisions pertaining to the “reasonable possibility” standard,6 “clean units,” and“pollution control projects” (PCPs).7 In today's action, EPA is finalizing approval of these administrative changes into the Mississippi SIP. EPA's November 5, 2010, proposal addressed these revisions.

In addition to changes to address the Tailoring Rule and the aforementioned administrative changes mentioned above, Mississippi's December 9, 2010, SIP revision also includes: (1) Provisions to exclude facilities that produce ethanol through a natural fermentation process (hereafter referred to as the “Ethanol Rule”) from the definition of “chemical process plants” in the major NSR source permitting program; and (2) revision to incorporate by reference changes pursuant to EPA's Fugitive Emissions Rule (73 FR 77882, December 19, 2008).8 In today's final rulemaking, EPA is not taking final action on Mississippi's changes to its PSD regulations to exclude facilities from the definition of “chemical process plants” in the major NSR permitting program, nor is EPA taking final action on Mississippi's changes to incorporate the provisions of the Fugitive Emission Rule.

EPA received two sets of comments on the November 5, 2010, proposed rulemaking to approve revisions to Mississippi's SIP. One set of comments, provided by the Sierra Club, was in favor of EPA's November 5, 2010, proposed action. The other set of comments, provided by the Air Permitting Forum, raised concerns with final action on EPA's November 5, 2010, proposed action. A full set of the comments provided by both the Sierra Club and Air Permitting Forum (hereinafter referred to as “the Commenter”) is provided in the docket for today's final action. A summary of the adverse comments and EPA's responses are provided below.

Generally, the adverse comments fall into four categories. First, the Commenter asserts that PSD requirements cannot be triggered by GHGs. Second, the Commenter expresses concerns regarding a footnote in the November 5, 2010, proposal describing EPA's previously announced intention to narrow its prior approval of some SIPs to ensure that sources with GHG emissions that are less than the Tailoring Rule's thresholds will not be obligated under federal law to obtain PSD permits prior to a SIP revision incorporating those thresholds. The Commenter explains that the planned SIP approval narrowing action “is illegal.” Third, the Commenter states that EPA has failed to meet applicable statutory and executive order review requirements. Lastly, the Commenter states: “EPA should explicitly state in any final rule that the continued enforceability of these provisions in the Mississippi SIP is limited to the extent to which the Federal requirements remain enforceable.” EPA's response to these four categories of comments is provided below.

Comment 1:The Commenter asserts that PSD requirements cannot be triggered by GHGs. In its letter, the Commenter reiterates EPA's statement that without the Tailoring Rule thresholds, PSD will apply as of January 2, 2011, to all stationary sources that emit or have the potential to emit, depending on the source category, either 100 or 250 tons of GHG per year. The Commenter also reiterates EPA's statement that beginning January 2, 2011, a source owner proposing to construct any new major source that emits at or higher than the GHG applicability levels, or modify any existing major source in a way that would increase GHG emissions, would need to obtain a PSD permit that addresses these emissions before construction could begin. In raising concerns with the two aforementioned statements, the Commenter states: “No area in the State of Mississippi has been designated attainment or unclassifiable for greenhouse gases (GHGs), as there is no national ambient air quality standard (NAAQS) for GHGs. Therefore, GHGs cannot trigger PSD permitting.” The Commenter notes that it made this argument in detail in comments submitted to EPA on the Tailoring Rule and other related GHG rulemakings. The Commenter attached those previously submitted comments to its comments on the proposed rulemaking related to this action. Finally, the Commenter states that “EPA should immediately provide notice that it is now interpreting the Act not to require that GHGs trigger PSD and allow Mississippi to rescind that portion of its rules that would allow GHGs to trigger PSD.”

Response 1:EPA established the requirement that PSD applies to all pollutants newly subject to regulation, including non-NAAQS pollutants, in earlier national rulemakings concerning the PSD program, and EPA has not re-opened that issue in this rulemaking. In an August 7, 1980, rulemaking at 45 FR 52676, 45 FR 52710-52712, and 45 FR 52735, EPA stated that a “major stationary source” was one which emitted “any air pollutant subject to regulation under the Act” at or above the specified numerical thresholds; and defined a “major modification,” in general, as a physical or operational change that increased emissions of “any pollutant subject to regulation under the Act” by more than an amount that EPA variously termed as de minimis or significant. In addition, in EPA's NSR Reform rule at 67 FR 80186 and 67 FR 80240 (December 31, 2002), EPA added to the PSD regulations the new definition of “regulated NSR pollutant” (currently codified at 40 CFR 52.21(b)(50) and 40 CFR 51.166(a)(49)); noted that EPA added this term based on a request from a commenter to “clarify which pollutants are covered under the PSD program;” and explained that in addition to criteria pollutants for which a NAAQS has been established, “[t]he PSD program applies automatically to newly regulated NSR pollutants, which would include final promulgation of an NSPS [new source performance standard] applicable to a previously unregulated pollutant.”Id.at 67 FR 80240 and 67 FR 80264. Among other things, the definition of “regulated NSR pollutant” includes “[a]ny pollutant that otherwise is subject to regulation under the Act.”See40 CFR 52.21(b)(50)(d)(iv);see also id.40 CFR 51.166(a)(49)(iv).

In any event, EPA disagrees with the Commenter's underlying premise that PSD requirements are not triggered for GHGs when GHGs become subject to regulation as of January 2, 2011. As just noted, this has been well established and discussed in connection with prior EPA actions, including, most recently, the Johnson Reconsideration and the Tailoring Rule. In addition, EPA's November 5, 2010, proposed rulemaking notice provides the general basis for the Agency's rationale that GHGs (while not a NAAQS pollutant) can trigger PSD permitting requirements. The November 5, 2010, notice also refers the reader tothe preamble to the Tailoring Rule for further information on this rationale. In that rulemaking, EPA addressed at length the comment that PSD can be triggered only by pollutants subject to the NAAQS, and concluded such an interpretation of the Act would contravene Congress' unambiguous intent. See 75 FR 31560-31562. Further discussion of EPA's rationale for concluding that PSD requirements are triggered by non-NAAQS pollutants such as GHGs appears in the Tailoring Rule Response-to-Comments document (“Prevention of Significant Deterioration and Title V GHG Tailoring Rule: EPA's Response to Public Comments”), pp. 34-41; and in EPA's response to motions for a stay filed in the litigation concerning those rules (“EPA's Response to Motions for Stay,”Coalition for Responsible Regulationv.EPA,DC Cir. No. 09-1322 (and consolidated cases)), at pp. 47-59, and are incorporated by reference here. These documents have been placed in the docket for today's action.

Comment 2:The Commenter expresses concerns regarding a footnote in which EPA describes its previously announced intention to narrow its prior approval of some SIPs to ensure that sources with GHG emissions that are less than the Tailoring Rule's thresholds will not be obligated under federal law to obtain PSD permits during any gap between when GHG permitting requirements go into effect and when the SIP is revised to incorporate the Tailoring Rule thresholds. The Commenter explains that narrowing “is illegal.” Further, the Commenter states that “EPA hasnotproposed to narrow Mississippi's SIP approval here and any such proposal must be explicit and address the action specifically made with respect to Mississippi. EPA cannot sidestep these important procedural requirements.”

Response 2:While EPA does not agree with the Commenter's assertion that the narrowing approach discussed in EPA's Tailoring Rule is illegal, the narrowing approach was not the subject of EPA's November 5, 2010, proposed rulemaking to approve Mississippi's September 14, 2010, SIP revision. Rather the narrowing approach was the subject of a separate rulemaking, and any action to use this approach for Mississippi's SIP will be considered and finalized in an action separate from today's rulemaking. In today's final action, EPA is acting to approve a SIP revision submitted by Mississippi, and is not otherwise narrowing its approval of prior submitted and approved provisions in the Mississippi SIP. Accordingly, the legality of the narrowing approach is not at issue in this rulemaking.

Comment 3:The Commenter states that EPA has failed to meet applicable statutory and executive order review requirements. Specifically, the Commenter refers to the statutory and executive orders for the Paperwork Reduction Act, the Regulatory Flexibility Act (RFA), Unfunded Mandates Reform Act, and Executive Order 13132 (Federalism). Additionally, the Commenter mentions that EPA has never analyzed the costs and benefits associated with triggering PSD for stationary sources in Mississippi, much less nationwide.

Response 3:EPA disagrees with the Commenter's statement that EPA has failed to meet applicable statutory and executive order review requirements. As stated in EPA's proposed approval of Mississippi's December 9, 2010, SIP revision, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. Accordingly, EPA approval, in and of itself, does not impose any new information collection burden, as defined in 5 CFR 1320.3(b) and (c), that would require additional review under the Paperwork Reduction Act. In addition, this SIP approval will not have a significant economic impact on a substantial number of small entities, beyond that which would be required by the state law requirements, so a regulatory flexibility analysis is not required under the RFA. Accordingly, this rule is appropriately certified under section 605(b) of the RFA. Moreover, as this action approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandates or significantly or uniquely affect small governments, such that it would be subject to the Unfunded Mandates Reform Act. Finally, this action does not have federalism implications that would make Executive Order 13132 applicable because it merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA.

In sum, today's rule is a routine approval of a SIP revision, approving state law, and does not impose any requirements beyond those imposed by state law. To the extent these comments are directed more generally to the application of the statutory and executive order reviews to the required regulation of GHGs under PSD programs, these comments are irrelevant to the approval of state law in today's action. However, EPA provided an extensive response to similar comments in promulgating the Tailoring Rule. EPA refers the Commenter to the sections in the Tailoring Rule entitled “VII. Comments on Statutory and Executive Order Reviews,” 75 FR 31601-31603, and “VI. What are the economic impacts of the final rule?,” 75 FR 31595-31601. EPA also notes that today's action does not in-and-of itself trigger the regulation of GHGs. To the contrary, by putting in place higher PSD applicability thresholds for GHGs than would otherwise be in effect under the Act, this rulemaking, as well as EPA's Tailoring Rule, provides relief to smaller GHG-emitting sources that would otherwise be subject to PSD permitting requirements for their GHG emissions.

Comment 4:The Commenter states that “[i]f EPA proceeds with this action, it must condition approval on the continued validity of its determination that PSD can be triggered by or is applicable to GHGs.” Further, the Commenter remarks on the ongoing litigation in the U.S. Court of Appeals for the DC Circuit. Specifically, regarding EPA's determination that PSD can be triggered by GHGs or is applicable to GHGs, the Commenter mentions that “EPA should explicitly state in any final rule that continued enforceability of these provisions in the Mississippi SIP is limited to the extent to which the federal requirements remain enforceable.” The Commenter notes that if a stay is issued, these requirements should also be stayed.

Response 4:EPA believes that it is most appropriate to take actions that are consistent with the federal regulations that are in place at the time the action is being taken. To the extent that any changes to federal regulations related to today's action result from pending legal challenges or other actions, EPA will process appropriate SIP revisions in accordance with the procedures provided in the Act and EPA's regulations. EPA notes that in an order dated December 9, 2010, the United States Court of Appeals for the DC Circuit denied motions to stay EPA's regulatory actions related to GHGs.Coalition for Responsible Regulation, Inc.v.EPA,Nos. 09-1322, 10-1073, 10-1092 (and consolidated cases), Slip Op. at 3 (DC Cir. December 10, 2010) (order denying stay motions).

Final approval of Mississippi's December 9, 2010, SIP revision will put in place the GHG emission thresholds for PSD applicability set forth in EPA's Tailoring Rule (75 FR 31514, June 3, 2010), ensuring that smaller GHGsources emitting less than these thresholds will not be subject to permitting requirements when these requirements begin applying to GHGs on January 2, 2011. Pursuant to section 110 of the CAA, EPA is approving a portion of the changes made in Mississippi's December 9, 2010, SIP revision into Mississippi's SIP.

Mississippi's December 9, 2010, revision updates its existing incorporation by reference of the federal NSR program to include the relevant federal Tailoring Rule provisions set forth at 40 CFR 52.21 into the Mississippi SIP at APC-S-5—Regulations for the Prevention of Significant Deterioration. 9 EPA has determined that Mississippi's December 9, 2010, SIP revision is consistent with the Tailoring Rule. Furthermore, EPA has determined that the December 9, 2010, revision to Mississippi's SIP is consistent with section 110 of the CAA.See, e.g.,Tailoring Rule, at 75 FR 31561.

In accordance with 5 U.S.C. 553(d), EPA finds there is good cause for this action to become effective on January 2, 2011. This is because a delayed effective date is unnecessary due to the nature of Mississippi's changes to its PSD regulations to establish appropriate emissions thresholds for determining PSD applicability with respect to new or modified GHG-emitting sources in accordance with EPA's Tailoring Rule, thereby relieving the State from certain CAA requirements that would otherwise apply to it. The January 2, 2011, effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30-day waiting period prescribed in section 553(d) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's rule relieves the sources within Mississippi from considering the lower emissions thresholds for GHG permitting purposes. For these reasons, EPA finds good cause under 5 U.S.C. 553(d)(3) for this action to become effective January 2, 2011.

EPA is taking final action to approve Mississippi's December 9, 2010, SIP revision which includes updates to Mississippi's air quality regulations, APC-S-5—Regulations for the Prevention of Significant Deterioration.Specifically, Mississippi's December 9, 2010, SIP revision establishes appropriate emissions thresholds for determining PSD applicability with respect to new or modified GHG-emitting sources in accordance with EPA's Tailoring Rule. EPA has made the determination that the December 9, 2010, SIP revision is approvable because it is in accordance with the CAA and EPA regulations, including regulations pertaining to PSD permitting for GHGs.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

The Congressional Review Act, 5 U.S.C. 801et seq.,as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in theFederal Register.A major rule cannot take effect until 60 days after it is published in theFederal Register.This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 28, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (Seesection 307(b)(2).)

Table of Contents I. What is the background for today's final action? II. What is EPA's response to comments received on this action? III. What is the effect of today's final action? IV. When is today's action effective? V. Final Action VI. Statutory and Executive Order Reviews I. What is the background for today's final action?

EPA has recently undertaken a series of actions pertaining to the regulation of GHGs that, although for the most part distinct from one another, establish the overall framework for today's final action on the Alabama SIP.1 Four of these actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which EPA issued in a single final action,2 the “Johnson Memo Reconsideration,”3 the “Light-Duty Vehicle Rule,”4 and the “Tailoring Rule.”5 Taken together, these actions established regulatory requirements for GHGs emitted from new motor vehicles and new motor vehicle engines; determined that such regulations, when they take effect on January 2, 2011, will subject GHGs emitted from stationary sources to PSD requirements; and limited the applicability of PSD requirements to GHG sources on a phased-in basis.

On August 17, 2010, in response to the Tailoring Rule and earlier GHG-related EPA rules, ADEM submitted a draft revision to EPA for approval into the Alabama SIP to establish appropriate emission thresholds for determining which new or modified stationary sources become subject to Alabama's PSD permitting requirements for GHG emissions. Subsequently, on November 5, 2010, EPA published a proposed rulemaking to approve Alabama's August 17, 2010, SIP revision under parallel processing. 75 FR 68285. Specifically, Alabama's August 17, 2010, draft SIP revision includes changes to ADEM's Air Quality Regulations, 335-3-14-.04,Air Permits Authorizing Construction in Clean Air Areas—Prevention of Significant Deterioration Permitting (PSD).The changes to ADEM's Rule 335-3-14-.04Air Permits Authorizing Construction in Clean Air Areas—Prevention of Significant Deterioration Permitting (PSD)address the thresholds for GHG permitting applicability. Detailed background information and EPA's rationale for the proposed approval are provided in EPA's November 5, 2010,Federal Registernotice.

EPA's November 5, 2010, proposed approval was contingent upon Alabama providing a final SIP revision that was substantively the same as the revision proposed for approval by EPA in the November 5, 2010, proposed rulemaking. 75 FR 68285. Alabama provided its final SIP revision on December 14, 2010. There were no changes between Alabama's August 17, 2010, draft SIP revision and the final SIP revision which was provided on December 14, 2010.

EPA received two sets of comments on the November 5, 2010, proposed rulemaking to approve revisions to Alabama's SIP. One set of comments, provided by the Sierra Club, was in favor of EPA's November 5, 2010, proposed action. The other set of comments, provided by the Air Permitting Forum, raised concerns with final action on EPA's November 5, 2010, proposed action. A full set of the comments provided by both the Sierra Club and Air Permitting Forum (hereinafter referred to as “the Commenter”) is provided in the docket for today's final action. A summary of the adverse comments and EPA's responses are provided below.

Generally, the adverse comments fall into four categories. First, the Commenter asserts that PSD requirements cannot be triggered by GHGs. Second, the Commenter expresses concerns regarding a footnote in the November 5, 2010, proposal describing EPA's previously announced intention to narrow its prior approval of some SIPs to ensure that sources with GHG emissions that are less than the Tailoring Rule's thresholds will not be obligated under federal law to obtain PSD permits prior to a SIP revision incorporating those thresholds. The Commenter explains that the planned SIP approval narrowing action “is illegal.” Third, the Commenter states that EPA has failed to meet applicable statutory and executive order review requirements. Lastly, the Commenter states: “EPA should explicitly state in any final rule that the continued enforceability of these provisions in the Alabama SIP is limited to the extent to which the federal requirements remain enforceable.” EPA's response to these four categories of comments is provided below.

Comment 1:The Commenter asserts that PSD requirements cannot be triggered by GHGs. In its letter, the Commenter reiterates EPA's statement that without the Tailoring Rule thresholds, PSD will apply as of January 2, 2011, to all stationary sources that emit or have the potential to emit, depending on the source category, either 100 or 250 tons of GHG per year. The Commenter also reiterates EPA's statement that beginning January 2, 2011, a source owner proposing to construct any new major source that emits at or higher than the GHG applicability levels, or modify any existing major source in a way that would increase GHG emissions, would need to obtain a PSD permit that addresses these emissions before construction could begin. In raising concerns with the two aforementioned statements, the Commenter states: “No area in the State of Alabama has been designated attainment or unclassifiable for greenhouse gases (GHGs), as there is no national ambient air quality standard (NAAQS) for GHGs. Therefore, GHGs cannot trigger PSD permitting.” The Commenter notes that it made this argument in detail in comments submitted to EPA on the Tailoring Rule and other related GHG rulemakings. The Commenter attached those previously submitted comments to its comments on the proposed rulemaking related to this action. Finally, the Commenter states that “EPA should immediately provide notice that it is now interpreting the Act not to require that GHGs trigger PSD and allow Alabama to rescind that portion of its rules that would allow GHGs to trigger PSD.”

Response 1:EPA established the requirement that PSD applies to all pollutants newly subject to regulation, including non-NAAQS pollutants, inearlier national rulemakings concerning the PSD program, and EPA has not re-opened that issue in this rulemaking. In an August 7, 1980, rulemaking at 45 FR 52676, 45 FR 52710-52712, and 45 FR 52735, EPA stated that a “major stationary source” was one which emitted “any air pollutant subject to regulation under the Act” at or above the specified numerical thresholds; and defined a “major modification,” in general, as a physical or operational change that increased emissions of “any pollutant subject to regulation under the Act” by more than an amount that EPA variously termed as de minimis or significant. In addition, in EPA's NSR Reform rule at 67 FR 80186 and 67 FR 80240 (December 31, 2002), EPA added to the PSD regulations the new definition of “regulated NSR pollutant” (currently codified at 40 CFR 52.21(b)(50) and 40 CFR 51.166(a)(49)); noted that EPA added this term based on a request from a commenter to “clarify which pollutants are covered under the PSD program;” and explained that in addition to criteria pollutants for which a NAAQS has been established, “[t]he PSD program applies automatically to newly regulated NSR pollutants, which would include final promulgation of an NSPS [new source performance standard] applicable to a previously unregulated pollutant.”Id.at 67 FR 80240 and 67 FR 80264. Among other things, the definition of “regulated NSR pollutant” includes “[a]ny pollutant that otherwise is subject to regulation under the Act.”See40 CFR 52.21(b)(50)(d)(iv);see also id.40 CFR 51.166(a)(49)(iv).

In any event, EPA disagrees with the Commenter's underlying premise that PSD requirements are not triggered for GHGs when GHGs become subject to regulation as of January 2, 2011. As just noted, this has been well established and discussed in connection with prior EPA actions, including, most recently, the Johnson Reconsideration and the Tailoring Rule. In addition, EPA's November 5, 2010, proposed rulemaking notice provides the general basis for the Agency's rationale that GHG (while not a NAAQS pollutant) can trigger PSD permitting requirements. The November 5, 2010, notice also refers the reader to the preamble to the Tailoring Rule for further information on this rationale. In that rulemaking, EPA addressed at length the comment that PSD can be triggered only by pollutants subject to the NAAQS, and concluded such an interpretation of the Act would contravene Congress' unambiguous intent.See75 FR 31560-31562. Further discussion of EPA's rationale for concluding that PSD requirements are triggered by non-NAAQS pollutants such as GHGs appears in the Tailoring Rule Response-to-Comments document (“Prevention of Significant Deterioration and Title V GHG Tailoring Rule: EPA's Response to Public Comments”), pp. 34-41; and in EPA's response to motions for a stay filed in the litigation concerning those rules (“EPA's Response to Motions for Stay,”Coalition for Responsible Regulationv.EPA,DC Cir. No. 09-1322 (and consolidated cases)), at pp. 47-59, and are incorporated by reference here. These documents have been placed in the docket for today's action.

Comment 2:The Commenter expresses concerns regarding a footnote in which EPA describes its previously announced intention to narrow its prior approval of some SIPs to ensure that sources with GHG emissions that are less than the Tailoring Rule's thresholds will not be obligated under federal law to obtain PSD permits during any gap between when GHG permitting requirements go into effect and when the SIP is revised to incorporate the Tailoring Rule thresholds. The Commenter explains that narrowing “is illegal.” Further, the Commenter states that “EPA hasnotproposed to narrow Alabama's SIP approval here and any such proposal must be explicit and address the action specifically made with respect to Alabama. EPA cannot sidestep these important procedural requirements.”

Response 2:While EPA does not agree with the Commenter's assertion that the narrowing approach discussed in EPA's Tailoring Rule is illegal, the narrowing approach was not the subject of EPA's November 5, 2010, proposed rulemaking to approve Alabama's August 17, 2010, draft SIP revision. Rather the narrowing approach was the subject of a separate rulemaking, and any action to use this approach for Alabama's SIP will be considered and finalized in an action separate from today's rulemaking. In today's final action, EPA is taking action to approve a SIP revision submitted by Alabama, and is not otherwise narrowing its approval of prior submitted and approved provisions in the Alabama SIP. Accordingly, the legality of the narrowing approach is not at issue in this rulemaking.

Comment 3:The Commenter states that EPA has failed to meet applicable statutory and executive order review requirements. Specifically, the Commenter refers to the statutory and executive orders for the Paperwork Reduction Act, the Regulatory Flexibility Act (RFA), Unfunded Mandates Reform Act, and Executive Order 13132 (Federalism). Additionally, the Commenter mentions that EPA has never analyzed the costs and benefits associated with triggering PSD for stationary sources in Alabama, much less nationwide.

Response 3:EPA disagrees with the Commenter's statement that EPA has failed to meet applicable statutory and executive order review requirements. As stated in EPA's proposed approval of Alabama's August 17, 2010, SIP revision, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. Accordingly, EPA approval, in-and-of-itself, does not impose any new information collection burden, as defined in 5 CFR 1320.3(b) and (c), that would require additional review under the Paperwork Reduction Act. In addition, this SIP approval will not have a significant economic impact on a substantial number of small entities, beyond that which would be required by the state law requirements, so a regulatory flexibility analysis is not required under the RFA. Accordingly, this rule is appropriately certified under section 605(b) of the RFA. Moreover, as this action approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandates or significantly or uniquely affect small governments, such that it would be subject to the Unfunded Mandates Reform Act. Finally, this action does not have federalism implications that would make Executive Order 13132 applicable because it merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA.

In sum, today's rule is a routine approval of a SIP revision, approving state law, and does not impose any requirements beyond those imposed by state law. To the extent these comments are directed more generally to the application of the statutory and executive order reviews to the required regulation of GHGs under PSD programs, these comments are irrelevant to the approval of state law in today's action. However, EPA provided an extensive response to similar comments in promulgating the Tailoring Rule. EPA refers the Commenter to the sections in the Tailoring Rule entitled “VII. Comments on Statutory and Executive Order Reviews,” 75 FR 31601-31603, and “VI. What are the economic impacts of the final rule?,” 75 FR 31595-31601. EPA also notes that today's action does not in-and-of itself trigger the regulationof GHGs. To the contrary, by putting in place higher PSD applicability thresholds for GHGs than would otherwise be in effect under the Act, this rulemaking, as well as EPA's Tailoring Rule, provides relief to smaller GHG-emitting sources that would otherwise be subject to PSD permitting requirements for their GHG emissions.

Comment 4:The Commenter states that “[i]f EPA proceeds with this action, it must condition approval on the continued validity of its determination that PSD can be triggered by or is applicable to GHGs.” Further, the Commenter remarks on the ongoing litigation in the U.S. Court of Appeals for the D.C. Circuit. Specifically, regarding EPA's determination that PSD can be triggered by GHGs or is applicable to GHGs, the Commenter mentions that “EPA should explicitly state in any final rule that continued enforceability of these provisions in the Alabama SIP is limited to the extent to which the federal requirements remain enforceable.” The Commenter notes that if a stay is issued, these requirements should also be stayed. Additionally, the Commenter notes the following statement in Alabama's proposed rulemaking: “It is the opinion of ADEM that the PSD program is not the appropriate vehicle for regulating GHG emissions. ADEM is taking this action to insure continuance of primacy of permitting authority for the State of Alabama and to alleviate some of the “absurd results” of EPA's previous GHG regulatory actions. If future Congressional or judicial action results in GHGs not being regulated under the PSD program, ADEM intends to undertake a rulemaking action to delete the PSD permitting thresholds for GHGs from its regulations.”

Response 4:EPA believes that it is most appropriate to take actions that are consistent with the Federal regulations that are in place at the time the action is being taken. To the extent that any changes to Federal regulations related to today's action result from pending legal challenges or other actions, EPA will process appropriate SIP revisions in accordance with the procedures provided in the Act and EPA's regulations. It appears that ADEM acknowledges, by their statement that they “intend to undertake a rulemaking action to delete the PSD permitting thresholds for GHGs from its regulations,” that a future SIP revision may be necessary. EPA notes that in an order dated December 10, 2010, the United States Court of Appeals for the D.C. Circuit denied motions to stay EPA's regulatory actions related to GHGs.Coalition for Responsible Regulation, Inc.v.EPA,Nos. 09-1322, 10-1073, 10-1092 (and consolidated cases), Slip Op. at 3 (DC Cir. December 10, 2010) (order denying stay motions).

Final approval of Alabama's December 14, 2010, SIP revision will put in place the GHG emission thresholds for PSD applicability set forth in EPA's Tailoring Rule (75 FR 31514, June 3, 2010), ensuring that smaller GHG sources emitting less than these thresholds will not be subject to permitting requirements when these requirements begin applying to GHGs on January 2, 2011. Pursuant to section 110 of the CAA, EPA is approving the changes made in Alabama's December 14, 2010, final SIP revision into Alabama's SIP.

The changes to Alabama's SIP-approved PSD program that EPA is approving today are to Alabama's rules which have been formatted to conform to Alabama's SIP-approved PSD regulations 335-3-14-.04,Air Permits Authorizing Construction in Clean Air Areas—Prevention of Significant Deterioration Permitting (PSD),but in substantive content the rules that address the Tailoring Rule provisions are the same as the federal rules. EPA performed a line-by-line review of the proposed change to Alabama's SIP-approved PSD regulations 335-3-14-.04,Air Permits Authorizing Construction in Clean Air Areas—Prevention of Significant Deterioration Permitting (PSD)and has determined that the proposed change is consistent with (and substantively the same as) the change to the federal provisions made by EPA's Tailoring Rule. Furthermore, EPA has determined that the December 14, 2010, revision to Alabama's SIP is consistent with section 110 of the CAA.See, e.g.,Tailoring Rule, at 75 FR 31561.

EPA is making the effective date of today's final action the same day as Alabama's effective date for its rulemaking. In accordance with 5 U.S.C. 553(d), EPA finds there is good cause for this action to become effective on January 18, 2011. This is because a delayed effective date is unnecessary due to the nature of Alabama's changes to its PSD regulations to establish appropriate emissions thresholds for determining PSD applicability with respect to new or modified GHG-emitting sources in accordance with EPA's Tailoring Rule, thereby relieving the State from certain CAA requirements that would otherwise apply to it. The January 18, 2011, effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30-day waiting period prescribed in section 553(d) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's rule relieves the sources within Alabama from considering the lower emissions thresholds for GHG permitting purposes. For these reasons, EPA finds good cause under 5 U.S.C. 553(d)(3) for this action to become effective January 18, 2011.

EPA is taking final action to approve Alabama's December 14, 2010, SIP revision which includes to Alabama's air quality regulation 335-3-14-.04,Air Permits Authorizing Construction in Clean Air Areas—Prevention of Significant Deterioration Permitting (PSD).Specifically, Alabama's December 14, 2010, SIP revision establishes appropriate emissions thresholds for determining PSD applicability with respect to new or modified GHG-emitting sources in accordance with EPA's Tailoring Rule. EPA has made the determination that the December 14, 2010, SIP revision is approvable because it is in accordance with the CAA and EPA regulations including regulations pertaining to PSD permitting for GHGs.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Officeof Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

The Congressional Review Act, 5 U.S.C. 801et seq.,as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in theFederal Register. A major rule cannot take effect until 60 days after it is published in theFederal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 28, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (Seesection 307(b)(2).)

Table of Contents I. What is the background for today's final action? II. What is EPA's response to comments received on this action? III. What is the effect of today's final action? IV. When is today's action effective? V. Final Action VI. Statutory and Executive Order Reviews I. What is the background for today's final action?

EPA has recently undertaken a series of actions pertaining to the regulation of GHGs that, although for the most part distinct from one another, establish the overall framework for today's final action for the Kentucky SIP. The first four of these actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which EPA issued in a single final action,1 the “Johnson Memo Reconsideration,”2 the “Light-Duty Vehicle Rule,”3 and the “Tailoring Rule.”4 Taken together, these actions established regulatory requirements for GHGs emitted from new motor vehicles and new motor vehicle engines; determined that such regulations, when they take effect on January 2, 2011, will subject GHGs emitted from stationary sources to PSD requirements; and limited the applicability of PSD requirements to GHG sources on a phased-in basis. In a separate action, EPA called on the Commonwealth of Kentucky and 12 other States with SIPs that do not provide authority to issue PSD permits governing GHGs to revise their SIPs to provide such authority (the “GHG PSD SIP Call”).5 EPA established a deadline of March 31, 2011, for Kentucky (including the entire State, except for the Louisville Metro Air Pollution Control District) to submit its GHG PSD SIP. Finally, in the most recent action, EPA proposed to implement a FIP authorizing PSD permitting for GHGs for those States that are unable to revise their SIPs to provide that authority by the applicable deadline (the “GHG PSD FIP”).6 By a notice signed December 23, 2010, EPA finalized the FIP for seven States:Arizona, Arkansas, Florida, Idaho, Kansas, Oregon, and Wyoming.

On August 5, 2010,7 in response to the Tailoring Rule and earlier GHG-related EPA rules, and in anticipation of the GHG PSD SIP Call rulemaking, KDAQ submitted a draft revision to EPA for approval into the Kentucky SIP to: (1) Provide the Commonwealth with the authority to regulate GHGs under its PSD program; and (2) establish appropriate emission thresholds for determining which new or modified stationary sources become subject to Kentucky's PSD permitting requirements for GHG emissions.8 Subsequently, on November 5, 2010, EPA published a proposed rulemaking to approve a portion of Kentucky's August 5, 2010, SIP revision under parallel processing. 75 FR 68272. Specifically, Kentucky's August 5, 2010, draft SIP revision includes changes to Kentucky's Air Quality Regulations,401 KAR 51:001—Definitions for 401 KAR Chapter 51. 9 The changes include incorporating by reference the Federal definition for “subject to regulation” (as amended in the Tailoring Rule at 51.166(b)(48)) and revising the definition for “regulated NSR pollutant” to provide authority for the Commonwealth to regulate GHG and apply the Tailoring Rule's thresholds for GHG permitting applicability. Detailed background information and EPA's rationale for the proposed approval are provided in EPA's November 5, 2010,Federal Registernotice.

EPA's November 5, 2010, proposed approval was contingent upon the Commonwealth of Kentucky providing a final SIP revision that was substantively the same as the revision proposed for approval by EPA in the November 5, 2010, proposed rulemaking. 75 FR 68272. Kentucky provided its final SIP revision on December 13, 2010. While there are minor differences between the draft and final regulations, EPA has determined that these differences do not warrant re-proposal of this action. Kentucky's draft regulations proposed some changes to certain definitions; however, Kentucky decided not to proceed with those changes and instead chose to retain the definitions set forth in Kentucky's regulations. The definitions retained from the prior version of Kentucky's regulations had previously been approved by EPA and incorporated into Kentucky's SIP. Kentucky's decision does not alter the portions of the SIP revision authorizing Kentucky to issue PSD permits governing GHGs and to implement the Tailoring Rule thresholds. Thus, EPA concludes that Kentucky's decision to retain certain definitions provided in its regulations does not warrant a new public comment period prior to EPA's final approval of the SIP revision.10

EPA received two sets of comments on the November 5, 2010, proposed rulemaking to approve revisions to Kentucky's SIP. One set of comments, provided by the Sierra Club, was in favor of EPA's November 5, 2010, proposed action. The other set of comments, provided by the Air Permitting Forum, raised concerns with final action on EPA's November 5, 2010, proposed action. A full set of the comments provided by both the Sierra Club and Air Permitting Forum (hereinafter referred to as “the Commenter”) is provided in the docket for today's final action. A summary of the adverse comments and EPA's responses are provided below.

Generally, the adverse comments fall into six categories. First, the Commenter asserts that PSD requirements cannot be triggered by GHGs. Second, the Commenter objects to EPA's interpretation of the Act that Kentucky will face a construction ban absent this SIP revision. Third, the Commenter asserts that EPA's notice does not provide sufficient information on which particular regulatory provisions are proposed for approval in EPA's November 5, 2010, proposed action. Fourth, the Commenter expresses concerns regarding a footnote in the November 5, 2010, proposal describing EPA's previously announced intention to narrow its prior approval of some SIPs to ensure that sources with GHG emissions that are less than the Tailoring Rule's thresholds will not be obligated under Federal law to obtain PSD permits prior to a SIP revision incorporating those thresholds. The Commenter explains that the planned SIP approval narrowing action is “inapplicable to this action and, if applicable, is illegal.” Fifth, the Commenter states that EPA has failed to meet applicable statutory and executive order review requirements. Lastly, the Commenter states: “EPA should explicitly state in any final rule that the continued enforceability of these provisions in the Kentucky SIP is limited to the extent to which the Federal requirements remain enforceable.” EPA's response to these six categories of comments is provided below.

Comment 1:The Commenter asserts that PSD requirements cannot be triggered by GHGs. In its letter, the Commenter reiterates EPA's statement that without the Tailoring Rule thresholds, PSD will apply as of January 2, 2011, to all stationary sources that emit or have the potential to emit, depending on the source category, either 100 or 250 tons of GHG per year. The Commenter also reiterates EPA's statement that beginning January 2, 2011, a source owner proposing to construct any new major source that emits at or higher than the GHG applicability levels, or modify any existing major source in a way that would increase GHG emissions, would need to obtain a PSD permit that addresses these emissions before construction could begin. In raising concerns with the two aforementioned statements, the Commenter states: “[n]o area in the Commonwealth of Kentucky has been designated attainment or unclassifiable for greenhouse gases (GHGs), as there is no national ambient air quality standard (NAAQS) for GHGs. Therefore, GHGs cannot trigger PSD permitting.” The Commenter notes that it made this argument in detail in comments submitted to EPA on the Tailoring Rule and other related GHG rulemakings. The Commenter attached those previously submitted comments to its comments on the proposedrulemaking related to this action. Finally, the Commenter states that “EPA should immediately provide notice that it is now interpreting the Act not to require that GHGs trigger PSD and allow Kentucky to rescind that portion of its rules that would allow GHGs to trigger PSD.”

Response 1:EPA established the requirement that PSD applies to all pollutants newly subject to regulation, including non-NAAQS pollutants, in earlier national rulemakings concerning the PSD program, and EPA has not re-opened that issue in this rulemaking. In an August 7, 1980, rulemaking at 45 FR 52676, 45 FR 52710-52712, and 45 FR 52735, EPA stated that a “major stationary source” was one which emitted “any air pollutant subject to regulation under the Act” at or above the specified numerical thresholds; and defined a “major modification,” in general, as a physical or operational change that increased emissions of “any pollutant subject to regulation under the Act” by more than an amount that EPA variously termed as de minimis or significant. In addition, in EPA's NSR Reform rule at 67 FR 80186 and 67 FR 80240 (December 31, 2002), EPA added to the PSD regulations the new definition of “regulated NSR pollutant” (currently codified at 40 CFR 52.21(b)(50) and 40 CFR 51.166(a)(49)); noted that EPA added this term based on a request from a commenter to “clarify which pollutants are covered under the PSD program;” and explained that in addition to criteria pollutants for which a NAAQS has been established, “[t]he PSD program applies automatically to newly regulated NSR pollutants, which would include final promulgation of an NSPS [new source performance standard] applicable to a previously unregulated pollutant.”Id.at 67 FR 80240 and 67 FR 80264. Among other things, the definition of “regulated NSR pollutant” includes “[a]ny pollutant that otherwise is subject to regulation under the Act.”See40 CFR 52.21(b)(50)(d)(iv);see also id.40 CFR 51.166(a)(49)(iv).

In any event, EPA disagrees with the Commenter's underlying premise that PSD requirements are not triggered for GHGs when GHGs become subject to regulation as of January 2, 2011. As just noted, this has been well established and discussed in connection with prior EPA actions, including, most recently, the Johnson Reconsideration and the Tailoring Rule. In addition, EPA's November 5, 2010, proposed rulemaking notice provides the general basis for the Agency's rationale that GHGs (while not a NAAQS pollutant) can trigger PSD permitting requirements. The November 5, 2010, notice also refers the reader to the preamble to the Tailoring Rule for further information on this rationale. In that rulemaking, EPA addressed at length the comment that PSD can be triggered only by pollutants subject to the NAAQS, and concluded such an interpretation of the Act would contravene Congress' unambiguous intent.See75 FR 31560-31562. Further discussion of EPA's rationale for concluding that PSD requirements are triggered by non-NAAQS pollutants such as GHGs appears in the Tailoring Rule Response-to-Comments document (“Prevention of Significant Deterioration and Title V GHG Tailoring Rule: EPA's Response to Public Comments”), pp. 34-41; and in EPA's response to motions for a stay filed in the litigation concerning those rules (“EPA's Response to Motions for Stay,”Coalition for Responsible Regulationv.EPA,D. C. Cir. No. 09-1322 (and consolidated cases)), at pp. 47-59, and are incorporated by reference here. These documents have been placed in the docket for today's action.

Comment 2:The Commenter raised concerns regarding EPA's interpretation of the Act that Kentucky will face a construction ban absent this SIP revision. In its letter, the Commenter mentions that it provided comments on EPA's GHG PSD SIP Call and GHG PSD FIP rulemakings expressing that “EPA's interpretation of the Act to impose a construction ban based on Section 165(a) is incorrect.” Further, the Commenter states: “No statutory language addressing implementation plan requirements can be construed to produce self-executing changes to SIPs or FIPs approved or promulgated under section 110 of the Act unless Congress enacts statutory provisions explicitly amending those SIPs or FIPs to incorporate new requirements, thereby obviating the need for rulemaking under section 110(a) or (c) of the Act to effect revisions to those implementation plans.” The Commenter also contends that there is no support for EPA's “permit moratorium” interpretation because (in the Commenter's opinion) CAA section 165(a) is not self-executing and approved SIPs and promulgated FIPs can only be changed through section 110 rulemakings to revise those plans. In support of its position, Commenter cites toUnited Statesv.Cinergy Corp.,No. 09-3344 (7th Cir. October 12, 2010). The Commenter further states that Kentucky would be able to issue PSD permits after January 2, 2011, even without GHG limits, because its current SIP is approved and it would be acting consistent with that approved SIP. Further, the Commenter states that “EPA's rule contemplated that states have 3 years to revise their SIPs when an NSR-related change occurs and, assuming without conceding that EPA could impose PSD on GHGs, EPA should have followed that procedure in this case.”

Response 2:EPA notes that the Agency provided an extensive response in the final GHG SIP Call rulemaking to comments nearly identical to comments received on this rulemaking, 75 FR 77698, and EPA incorporates by reference those responses, as contained in the preamble and the Tailoring Rule Response to Comment document, into this rulemaking. The following gives examples of references in the GHG SIP Call rulemaking preamble and record in which EPA responded to these, or substantially similar, comments:

With respect to the comments that (i) “EPA's interpretation of the Act to impose a construction ban based on Section 165(a) is incorrect;” (ii) “No statutory language addressing implementation plan requirements can be construed to produce self-executing changes to SIPs or FIPs approved or promulgated under section 110 of the Act unless Congress enacts statutory provisions explicitly amending those SIPs or FIPs to incorporate new requirements, thereby obviating the need for rulemaking under section 110(a) or (c) of the Act to effect revisions to those implementation plans;” and (iii) there is no support for EPA's “permit moratorium” interpretation because (in the Commenter's opinion) CAA section 165(a) is not self-executing and approved SIPs and promulgated FIPs can only be changed through section 110 rulemakings to revise those plans,see,for example, 75 FR 77705 in footnote 16, and 75 FR 77710-77711. EPA notes further that the requirement of CAA section 165(a)(1) that stationary sources that emit the requisite quantity of pollutants subject to regulation obtain a pre-construction permit is mandated by the CAA and is automatically updated to apply to any pollutant newly subject to regulation; thus, contrary to the commenter's statement, EPA is not construing the CAA to “produce self-executing changes to SIPs * * *.” In addition, today's action does not create what the Commenter calls a “permit moratorium”; in fact today's rule puts in place a permitting authority for GHG-emitting sources for Kentucky only one day after GHG PSD permitting requirements go into effect. Further, no “self-executing changes” to Kentucky's SIP are made in today's action; EPA is simply approving Kentucky's submittedDecember 13, 2010, SIP revision according to the proper process.

With respect to the comment that a decision by Judge Posner (i.e., United Statesv.Cinergy Corp.,No. 09-3344 (7th Cir. October 12, 2010)) directly addresses this issue,see75 FR 77705 in footnote 16.

With respect to the comment that Kentucky would be able to issue PSD permits after January 2, 2011, even without GHG limits, because its current SIP is approved and it would be acting consistent with that approved SIP, EPA notes that it is true that Kentucky could issue such a permit to cover the non-GHG pollutants emitted by a source. If the source emits GHGs in at least the specified amount, however, then the source would need a PSD permit for its GHG emissions. Kentucky, absent an approved SIP revision applying the State's PSD program to GHGs, would not have the authority to issue such a permit.

With respect to the comment that “EPA's rule contemplated that States have 3 years to revise their SIPs when an NSR-related change occurs and, assuming without conceding that EPA could impose PSD on GHGs, EPA should have followed that procedure in this case,”see75 FR 77707-77708. In any event, the proper length of time EPA must provide States to act is also irrelevant to this rule because this action deals with a SIP revision actually submitted by Kentucky to EPA for approval.

Comment 3:The Commenter indicates that EPA's proposed action on Kentucky's draft rules is inconsistent with CAA section 110 because it does not provide for Federal notice and comment on the final State action.

Response 3:EPA disagrees with the Commenter's assertion that EPA's proposed action is inconsistent with section 110 of the CAA because EPA's proposed approval was based on a draft form of the Commonwealth's regulations. As explained in our proposal at 75 FR 68273, EPA utilized a “parallel processing” procedure for this SIP revision. Under this procedure, EPA proposes rulemaking action concurrently with the State's procedures for approving a SIP submittal and amending its regulations (40 CFR part 51, appendix V, 2.3). EPA reviews that SIP submittal, even though the regulation is not yet adopted in final form by the State, as if it were a final, adopted regulation. In doing so, EPA evaluates the draft regulation against the same approvability criteria as any other SIP submittal. Thus, we have not used the “parallel processing” procedure to avoid any statutory requirements. In this case, as explained earlier in this notice, EPA has determined that the minor differences between the draft and final regulations are not significant and do not warrant re-proposal of this action. Accordingly, the proposal gave the public the appropriate opportunity to comment on the substance of the August 5, 2010, SIP revision for which EPA is today issuing a final approval.

Comment 4:The Commenter states that EPA's proposed rulemaking does not provide sufficient information on which particular revisions are included in the November 5, 2010, proposed action. Specifically, the Commenter mentions that EPA does not provide citations or other explicit reference to what EPA is actually approving. The Commenter states that “this failure makes it impossible for the public to meaningfully assess and comment regarding the provisions on which EPA proposes to act.” Further, the Commenter explains that the docket contained over 100 pages of underline/strikeout regulatory text, much of which is already in the Kentucky SIP.

Response 4:EPA disagrees that the November 5, 2010, proposed rulemaking does not provide sufficient information on which particular regulatory provisions EPA was proposing for approval. To the contrary, in the section entitled“V. What is EPA's Analysis of Kentucky's Proposed SIP Revision?”of the November 5, 2010, proposal, EPA explains that the proposed rulemaking would approve changes to Kentucky's regulations, at 401 KAR 51:001—Definitions for 401 KAR Chapter 51,including an update to the definition of “subject to regulation” that provides the Commonwealth with authority to issue PSD permits governing GHGs and establishes appropriate GHG emission thresholds for PSD applicability. 75 FR 68278. Additionally, EPA's November 5, 2010, notice identifies those portions of Kentucky's submittal that are not being acted upon in this proceeding.See75 FR 68273 and 68278 n.10. Finally, as the Commenter notes, the docket for this action includes a marked up version of 401 KAR 51:001—Definitions for 401 KAR Chapter 51showing the revisions under consideration. Thus, EPA sufficiently identified the particular SIP revisions at issue in this action.

Comment 5:The Commenter expresses concerns regarding a footnote in which EPA describes its previously announced intention to narrow its prior approval of some SIPs to ensure that sources with GHG emissions that are less than the Tailoring Rule's thresholds will not be obligated under Federal law to obtain PSD permits during any gap between when GHG permitting requirements go into effect and when the SIP is revised to incorporate the Tailoring Rule thresholds. The Commenter explains that narrowing is “inapplicable to this action and, if applicable, is illegal.”

Response 5:While EPA does not agree with the Commenter's assertion that the narrowing approach discussed in EPA's Tailoring Rule is illegal, EPA does acknowledge that the narrowing approach is inapplicable to the action that EPA is today taking for Kentucky's December 13, 2010, SIP revision. In today's final action, EPA is acting to approve a SIP revision submitted by Kentucky, and is not otherwise narrowing its approval of prior submitted and approved provisions in the Kentucky SIP. Accordingly, the legality of the narrowing approach is not at issue in this rulemaking.

Comment 6:The Commenter states that EPA has failed to meet applicable statutory and executive order review requirements. Specifically, the Commenter refers to the statutory and executive orders for the Paperwork Reduction Act, the Regulatory Flexibility Act (RFA), Unfunded Mandates Reform Act, and Executive Order 13132 (Federalism). Additionally, the Commenter mentions that EPA has never analyzed the costs and benefits associated with triggering PSD for stationary sources in Kentucky, much less nationwide.

Response 6:EPA disagrees with the Commenter's statement that EPA has failed to meet applicable statutory and executive order review requirements. As stated in EPA's proposed approval of Kentucky's December 13, 2010, SIP revision, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. Accordingly, EPA approval, in and of itself, does not impose any new information collection burden, as defined in 5 CFR 1320.3(b) and (c), that would require additional review under the Paperwork Reduction Act. In addition, this SIP approval will not have a significant economic impact on a substantial number of small entities, beyond that which would be required by the State law requirements, so a regulatory flexibility analysis is not required under the RFA. Accordingly, this rule is appropriately certified under section 605(b) of the RFA. Moreover, as this action approves pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandates or significantly or uniquely affect small governments, such that itwould be subject to the Unfunded Mandates Reform Act. Finally, this action does not have federalism implications that would make Executive Order 13132 applicable because it merely approves a State rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA.

In sum, today's rule is a routine approval of a SIP revision, approving State law, and does not impose any requirements beyond those imposed by State law. To the extent these comments are directed more generally to the application of the statutory and executive order reviews to the required regulation of GHGs under PSD programs, these comments are irrelevant to the approval of State law in today's action. However, EPA provided an extensive response to similar comments in promulgating the Tailoring Rule. EPA refers the Commenter to the sections in the Tailoring Rule entitled“VII. Comments on Statutory and Executive Order Reviews,”75 FR 31601-31603, and“VI. What are the economic impacts of the final rule?,”75 FR 31595-31601. EPA also notes that today's action does not in-and-of itself trigger the regulation of GHGs. To the contrary, by putting in place higher PSD applicability thresholds for GHGs than would otherwise be in effect under the Act, this rulemaking, as well as EPA's Tailoring Rule, provides relief to smaller GHG-emitting sources that would otherwise be subject to PSD permitting requirements for their GHG emissions.

Comment 7:The Commenter states that “[i]f EPA proceeds with this action, it must condition approval on the continued validity of its determination that PSD can be triggered by or is applicable to GHGs.” Further, the Commenter remarks on the ongoing litigation in the U.S. Court of Appeals for the DC Circuit. Specifically, regarding EPA's determination that PSD can be triggered by GHGs or is applicable to GHGs, the Commenter mentions that “EPA should explicitly state in any final rule that continued enforceability of these provisions in the Kentucky SIP is limited to the extent to which the Federal requirements remain enforceable.” The Commenter notes that if a stay is issued, these requirements should also be stayed.

Response 7:EPA believes that it is most appropriate to take actions that are consistent with the Federal regulations that are in place at the time the action is being taken. To the extent that any changes to Federal regulations related to today's action result from pending legal challenges or other actions, EPA will process appropriate SIP revisions in accordance with the procedures provided in the Act and EPA's regulations. EPA notes that in an order dated December 10, 2010, the United States Court of Appeals for the DC Circuit denied motions to stay EPA's regulatory actions related to GHGs.Coalition for Responsible Regulation, Inc.v.EPA,Nos. 09-1322, 10-1073, 10-1092 (and consolidated cases), Slip Op. at 3 (DC Cir. December 10, 2010) (order denying stay motions).

Final approval of Kentucky's December 13, 2010, SIP revision will make Kentucky's SIP adequate with respect to PSD requirements for GHG-emitting sources, thereby negating the need for a GHG PSD FIP. Furthermore, final approval of Kentucky's SIP revision will put in place the GHG emission thresholds for PSD applicability set forth in EPA's Tailoring Rule (75 FR 31514, June 3, 2010), ensuring that smaller GHG sources emitting less than these thresholds will not be subject to permitting requirements when these requirements begin applying to GHGs on January 2, 2011. Pursuant to section 110 of the CAA, EPA is approving a portion of the changes made in Kentucky's December 13, 2010, proposed SIP revision into the Commonwealth's SIP.

The changes to Kentucky's SIP-approved PSD program that EPA is approving today are to Kentucky's rules which have been formatted to conform to Kentucky's rule drafting standards for 401 KAR 51:001—Definitions for 401 KAR Chapter 51,but in substantive content the rules that address the Tailoring Rule provisions are the same as the Federal rules. As part of its review of the Kentucky submittal, EPA performed a line-by-line review of Kentucky's proposed SIP changes and has determined that the provisions that EPA is approving today are consistent with the Tailoring Rule. Furthermore, EPA has determined that the December 13, 2010, revision to Kentucky's SIP is consistent with section 110 of the CAA.See, e.g.,Tailoring Rule, at 75 FR 31561.

EPA is making the effective date of today's final action the same day as the Commonwealth's effective date for its rulemaking. In accordance with 5 U.S.C. 553(d), EPA finds there is good cause for this action to become effective on January 3, 2011. This is because a delayed effective date is unnecessary due to the nature of the Commonwealth's changes to its PSD regulations, which provide the Commonwealth with the needed authority to regulate GHG-emitting sources for permitting purposes. Additionally, Kentucky's changes to its PSD regulations to establish appropriate emissions thresholds for determining PSD applicability with respect to new or modified GHG-emitting sources in accordance with EPA's Tailoring Rule, thereby relieving the Commonwealth from certain CAA requirements that would otherwise apply to it. The January 3, 2011, effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30-day waiting period prescribed in section 553(d) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's rule provides sources emitting GHGs at or above the higher emissions thresholds with a permitting authority from which it can seek the permits which, prior to this rule, Federal and State law already required them to seek, and relieves the sources within the Commonwealth from considering the lower emissions thresholds for GHG permitting purposes. For these reasons, EPA finds good cause under 5 U.S.C. 553(d)(3) for this action to become effective January 3, 2011.

EPA is taking final action to approve the Commonwealth of Kentucky's December 13, 2010, SIP revision, which includes updates to Kentucky's air quality regulations, 401 KAR 51:001—Definitions for 401 KAR Chapter 51,relating to PSD requirements for GHG-emitting sources. Significantly, Kentucky's December 13, 2010, SIP revision: (1) Provides the Commonwealth with the authority to regulate GHGs under its PSD program, and (2) establishes appropriate emissions thresholds for determining PSD applicability with respect to new or modified GHG-emitting sources in accordance with EPA's Tailoring Rule. EPA has made the determination that the December 13, 2010, SIP revision isapprovable because it is in accordance with the CAA and EPA regulations, including regulations pertaining to PSD permitting for GHGs.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

The Congressional Review Act, 5 U.S.C. 801et seq.,as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in theFederal Register. A major rule cannot take effect until 60 days after it is published in theFederal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 28, 2011. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (Seesection 307(b)(2).)

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to those engaged in the following activities:

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

This listing is not intended to be exhaustive, but rather to provide a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed underFOR FURTHER INFORMATION CONTACT.

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site athttp://www.gpoaccess.gov/ecfr.To access the harmonized test guidelines referenced in this document electronically, please gohttp://www.epa.gov/ocsppand select “Test Methods and Guidelines.”

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2009-0205 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 28, 2011. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit a copy of your non-CBI objection or hearing request, identified by docket ID number EPA-HQ-OPP-2009-0205, by one of the following methods:

•Federal eRulemaking Portal: http://www.regulations.gov.Follow the online instructions for submitting comments.

•Mail:Office of Pesticide Programs (OPP) Regulatory Public Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

•Delivery:OPP Regulatory Public Docket (7502P), Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only accepted during the Docket Facility's normal hours of operation (8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays). Special arrangements should be made for deliveries of boxed information. The Docket Facility telephone number is (703) 305-5805.

In theFederal Registerof May 6, 2009 (74 FR 20947) (FRL-8412-7), EPA issued a notice pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 9F7535) by Valent USA Corporation, 1600 Riviera Ave., Suite 200, Walnut Creek, CA 94596. The petition requested that 40 CFR part 180 be amended by adding a section for the herbicide imazosulfuron and establishing tolerances therein for residues of imazosulfuron, 2-chloro-N-[[(4,6-dimethoxy-2-pyrimidinyl)amino]carbonyl] imidazo-[1,2-a]pyridine-3-sulfonamide, in or on pepper, bell, fruit; pepper, non-bell, fruit; rice, grain; and tomato, fruit; each at 0.02 parts per million (ppm). That notice referenced a summary of the petition prepared by Valent USA Corporation, the registrant, which is available in the docket,http://www.regulations.gov.There were no comments received in response to the notice of filing.

EPA has modified the proposed commodity terms for pepper and tomato commodities and revised the requested tolerance expression in accordance with current policy. The reasons for these changes are explained in Unit IV.C.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. * * *”

Consistent with section 408(b)(2)(D) of FFDCA, and the factors specified in section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA hassufficient data to assess the hazards of and to make a determination on aggregate exposure for imazosulfuron including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with imazosulfuron follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

The toxicology data for imazosulfuron suggest that this herbicide possesses relatively low toxicity. Many of the effects of single or repeated dosing were observed near or beyond the respective limit doses.

Imazosulfuron is of low acute toxicity by the oral, dermal, and inhalation routes of exposure; it is not a skin or eye irritant or a dermal sensitizer. The primary target organ of imazosulfuron in repeated-dose studies was the liver in all species tested. Mild to moderate thyroid effects were apparent only in the chronic toxicity study in dogs. Dramatic eye effects (retinal degeneration, lens vascularization, cataracts and corneal scarring) were observed in rats fed > 1,000 mg/kg/day beginning at 3 months in the chronic toxicity/carcinogenicity study. Ocular effects (increased incidence of eye opacity, corneal edema, inflammation and neovascularization) were also observed in the high-dose males (4,577 mg/kg/day) in the 90-day feeding toxicity study in rats. Decreased body weight and body weight gain compared to control were frequent findings throughout the toxicology database for imazosulfuron.

Clinical signs (decreased motor activity, abnormal gait, upward curvature of the spine and piloerection) were observed in males at the limit dose of the acute neurotoxicity study; however, these effects can be attributed to generalized toxicity and were resolved by Day 2 of the study. No neurotoxic effects were observed during the subchronic screening battery or noted as clinical signs in any other repeated-dose study.

No developmental effects were observed at the highest dose tested (HDT) (125 mg/kg/day) in the rabbit developmental toxicity study. No developmental or reproductive toxicity was observed in the 1-generation rat study. Decreased pup viability was observed in the rat 2-generation reproduction study at a dose approaching the limit dose (LOAEL = 892 mg/kg/day) in both the F1 and F2 offspring generations. Mortality was also observed in the parental generation at this dose. No increased qualitative or quantitative offspring susceptibility was apparent in any of the submitted studies for imazosulfuron.

There was no evidence of carcinogenicity in rats and mice up to the limit dose at 24 and 18 months, respectively. Imazosulfuron was determined to be non-mutagenic in bacteria and negative in anin vivomammalian cytogenetics assay. Overall, there was no evidence that imazosulfuron was either mutagenic or clastogenic in eitherin vivoorin vitroassays. The cancer classification is “not likely to be carcinogenic to humans,” based on the absence of significant tumor increases in the carcinogenicity studies.

Specific information on the studies received and the nature of the adverse effects caused by imazosulfuron as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found athttp://www.regulations.govin the document “Imazosulfuron: Human Health Risk Assessment for Proposed Uses on Rice, Peppers and Tomatoes,” p. 45 in docket ID number EPA-HQ-OPP-2009-0205.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process,see http://www.epa.gov/pesticides/factsheets/riskassess.htm.A summary of the toxicological endpoints for imazosulfuron used for human risk assessment is shown in the Table of this unit.

1.Dietary exposure from food and feed uses.In evaluating dietary exposure to imazosulfuron, EPA considered exposure under the petitioned-for tolerances. There are no tolerances currently established for imazosulfuron. EPA assessed dietary exposures from imazosulfuron in food as follows:

i.Acute exposure.Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. Such effects were identified for imazosulfuron. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 1994-1996 and 1998 Nationwide Continuing Surveys of Food Intakes by Individuals (CSFII). As to residue levels in food, EPA assumed that residues are present in all commodities at the tolerance level and that 100% of commodities are treated with imazosulfuron. DEEMTM7.81 default concentration factors were used to estimate residues of imazosulfuron in processed commodities.

ii.Chronic exposure.In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 1994-1996 and 1998 CSFII. As to residue levels in food, EPA assumed that residues are present in all commodities at the tolerance level and that 100% of commodities are treated with imazosulfuron. DEEMTM7.81 default concentration factors were used to estimate residues of imazosulfuron in processed commodities.

iii.Cancer.Based on the results of carcinogenicity studies in rats and mice, EPA classified imazosulfuron as “Not likely to be Carcinogenic to Humans”; therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv.Anticipated residue and percent crop treated (PCT) information.EPA did not use anticipated residue or PCT information in the dietary assessment for imazosulfuron. Tolerance level residues and 100 PCT were assumed for all food commodities.

2.Dietary exposure from drinking water.The residues of concern in drinking water include imazosulfuron and its degradates HMS, IPSN, UDPM, ADPM, and SDPM. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for imazosulfuron and its degradates in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of imazosulfuron and its degradates. Further information regarding EPAdrinking water models used in pesticide exposure assessment can be found athttp://www.epa.gov/oppefed1/models/water/index.htm.

Based on the First Index Reservoir Screening Tool (FIRST), Tier 1 Rice Model, and Screening Concentration in Ground Water (SCI-GROW) models, the estimated drinking water concentrations (EDWCs) of imazosulfuron and its degradates for both acute exposures and chronic exposures for non-cancer assessments are estimated to be 278.9 parts per billion (ppb) for surface water (based on the Tier 1 Rice Model results) and 4.8 ppb for ground water (based on the SCI-GROW model results).

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute and chronic dietary risk assessment, the water concentration value of 278.9 ppb was used to assess the contribution to drinking water.

3.From non-dietary exposure.The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g.,for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Imazosulfuron is currently registered for the following uses that could result in residential exposures: Residential turfgrass and recreational areas. EPA assessed residential exposure using the following assumptions: There is a potential for exposure of homeowners applying products containing imazosulfuron on home lawns. There is also a potential for post-application exposure of adults and children entering turf areas that have been treated with imazosulfuron and for bystander exposure of adults and children in areas adjacent to pesticide applications.

Residential handlers may receive short-term dermal and inhalation exposure to imazosulfuron when mixing, loading and applying the pesticide on home lawns. Since a dermal endpoint of concern was not identified for imazosulfuron, only short-term inhalation exposure of residential handlers was assessed.

Adults and children may receive short-term inhalation and dermal exposures from entering turf areas treated with imazosulfuron. Volatilization of imazosulfuron may also be a source of short-term post-application inhalation exposure of bystanders nearby application sites. Finally, children may receive short-term incidental oral exposure (i.e.,hand-to-mouth, object-to-mouth and soil ingestion exposure) during post-application activities on treated turf. EPA did not identify any dermal endpoints of concern for imazosulfuron; and a quantitative post-application inhalation exposure assessment was not performed for imazosulfuron due to its low acute inhalation toxicity, low vapor pressure (< 3.5 × 10−6Pa), low proposed use rate (0.3 lb ai/A), and the soil-directed application method (i.e.,it is not applied using equipment, such as air blast sprayers, that would result in higher post-application inhalation exposures). Therefore, EPA assessed only short-term post-application incidental oral exposure of children (toddlers).

Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found athttp://www.epa.gov/pesticides/trac/science/trac6a05.pdf.

4.Cumulative effects from substances with a common mechanism of toxicity.Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA has not found imazosulfuron to share a common mechanism of toxicity with any other substances, and imazosulfuron does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that imazosulfuron does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals,seeEPA's Web site athttp://www.epa.gov/pesticides/cumulative.

1.In general.Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2.Prenatal and postnatal sensitivity.The pre- and postnatal toxicity database for imazosulfuron includes guideline rat and rabbit developmental toxicity studies and a 2-generation reproduction toxicity study in rats. No developmental effects were observed at the HDT in the rabbit developmental toxicity study, and no developmental or reproductive toxicity was observed in the developmental (1-generation) rat study. In the 2-generation rat reproduction study, both decreased pup viability and parental mortality were observed, but only at a dose approaching the limit dose.

3.Conclusion.EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X. That decision is based on the following findings:

i. The toxicity database for imazosulfuron is largely complete, lacking only an immunotoxicity study. EPA has evaluated the available toxicity data for imazosulfuron and determined that an additional database uncertainty factor is not needed to account for potential immunotoxicity. The most sensitive endpoint in the database is moderate thyroid hypertrophy. Liver toxicity accompanied by body weight and food consumption effects is seen throughout the toxicology database. No treatment-related changes indicative of potential immunotoxicity were seen in hematology parameters, organ weights (thymus, spleen), gross necropsy (enlarged lymph nodes) or histopathology (spleen, thymus, lymph nodes) when tested up to the limit dose in mice and rats. Therefore, EPA does not believe that conducting a special series 870.7800 immunotoxicity study will result in a NOAEL less than 75 mg/kg/day, which is presently used as the point of departure for chronic risk assessment.

ii. No neurotoxic effects were observed during the subchronic screening battery or noted as clinical signs in any other repeated-dose study. Although untoward clinical signs were observed in the acute neurotoxicity study, these effects can be attributed to generalized toxicity and were resolved by Day 2 of the study. Based on these considerations, there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.

iii. There is no evidence that imazosulfuron results in increased susceptibility inin uterorats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

iv. There are no significant residual uncertainties in the exposure databases. Data have been requested to confirm the stability of imazosulfuron during frozen storage and the metabolic profile of pyrimidine-labeled imazosulfuron in rice grain in the confined rotational crop trial. A field rotational crop study is also required for grain (wheat); however, as explained in Unit III.D.3.iv.c., EPA does not expect these studies to have a measurable impact on exposure estimates for imazosulfuron.

a.Storage stability.The final reports of the storage stability studies must be submitted, reflecting frozen storage intervals of up to 11.8 months for peppers, up to 34.5 months for rice grain, and up to 17.3 months for tomatoes. Interim data suggest that imazosulfuron is stable in frozen storage, and similar sulfonylurea chemicals are known to be stable. Therefore, EPA expects imazosulfuron to be stable in frozen storage but is requiring the final study reports as confirmation.

b.Metabolic profile.The HPLC profile for the pyrimidinyl (Py)-label grain storage stability analysis must be submitted to confirm that the metabolite profile was stable in Py-label grain. Grain samples from the confined rotational crop study were stored for a relatively long interval (9 months) prior to completion of the analyses. Analysis of an imidozolyl (Im)-label sample after the 9-month period yielded a metabolic profile similar to that of a sample analyzed at the start of the period. A similar comparison must be made for the Py-label sample of grain. This is of no practical consequence for risk assessment because total residue levels on grain were small (<0.01 ppm at a 365-day plantback interval), imazosulfuron was not present, and no metabolites/degradates were considered toxicologically significant.

c.Field accumulation in rotational crops (grain).The grain (wheat) rotational crop study is needed to identify maximum levels of residues in grain and livestock feed items (forage, straw) as a function of the plantback interval. On an interim basis, a plantback interval of 12 months is being required for grains and soybeans. The results of the rotational crop study may allow a shorter plantback interval. The confined rotational crop study showed that imazosulfuron and metabolites will be negligible (<0.01 ppm) on forage, hay, straw, stover, and grain at a 365-day plantback interval and will, therefore, make no contribution to dietary exposure.

The dietary food exposure assessments were performed assuming tolerance-level residues and 100 PCT for all commodities. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to imazosulfuron in drinking water. EPA used similarly conservative assumptions to assess postapplication exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by imazosulfuron.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1.Acute risk.An acute aggregate risk assessment takes into account acute exposure estimates from dietary consumption of food and drinking water. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to imazosulfuron will occupy 1.4% of the aPAD for infants less than 1 year old, the population group receiving the greatest exposure.

2.Chronic risk.Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to imazosulfuron from food and water will utilize 2.7% of the cPAD for infants less than 1 year old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of imazosulfuron is not expected.

3.Short-term risk.Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Imazosulfuron is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to imazosulfuron.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 40,000 for adults and 7,000 for children. For adults, the aggregate MOE includes short-term residential handler inhalation exposure plus chronic dietary exposure to imazosulfuron from food and water. For children, the aggregate MOE includes short-term incidental oral residential exposure plus chronic dietary exposure to imazosulfuron from food and water. Because EPA's level of concern for imazosulfuron is a MOE of 100 or below, these MOEs are not of concern.

4.Intermediate-term risk.Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). An intermediate-term adverse effect was identified; however, imazosulfuron is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for imazosulfuron.

5.Aggregate cancer risk for U.S. population.Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, imazosulfuron is not expected to pose a cancer risk to humans.

6.Determination of safety.Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children, from aggregate exposure to imazosulfuron residues.

Adequate enforcement methodology (liquid chromatography/mass spectrometry/mass spectrometry (LC/MS/MS) Method RM-42C-3) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address:residuemethods@epa.gov.

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint U.N. Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

The Codex has not established a MRL for imazosulfuron.

EPA is revising the proposed commodity terms for “pepper, bell, fruit”; “pepper, non-bell, fruit”; and “tomato, fruit”; to read “pepper, bell”; “pepper, non-bell”; and “tomato”. The commodity terms have been changed in accordance with the guidance in the Agency's Food and Feed Commodity Vocabulary.

EPA is also revising the requested tolerance expression to clarify the chemical moieties that are covered by the tolerances and specify how compliance with the tolerances is to be measured. The revised tolerance expression makes clear that the tolerances cover residues of the herbicide imazosulfuron, including its metabolites and degradates, but that compliance with the tolerance levels is to be determined by measuring only imazosulfuron, 2-chloro-N-[[(4,6-dimethoxy-2-pyrimidinyl)amino]carbonyl]imidazo-[1,2-α]pyridine-3-sulfonamide, in or on the commodities.

Therefore, tolerances are established for residues of imazosulfuron, including its metabolites and degradates, in or on pepper, bell at 0.02 ppm; pepper, non-bell at 0.02 ppm; rice, grain at 0.02 ppm; and tomato at 0.02 ppm. Compliance with the tolerance levels is to be determined by measuring only imazosulfuron, 2-chloro-N-[[(4,6-dimethoxy-2-pyrimidinyl)amino]carbonyl]imidazo-[1,2-α]pyridine-3-sulfonamide, in or on the commodities.

This final rule establishes tolerances under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitledRegulatory Planning and Review(58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, entitledActions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use(66 FR 28355, May 22, 2001) or Executive Order 13045, entitledProtection of Children from Environmental Health Risks and Safety Risks(62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501et seq.,nor does it require any special considerations under Executive Order 12898, entitledFederal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations(59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601et seq.) do not apply.

This final rule directly regulates growers, food processors, food handlers, and food retailers, not States or Tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of FFDCA. As such, the Agency has determined that this action will not have a substantial direct effect on States or Tribal governments, on the relationship between the national government and the States or Tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian Tribes. Thus, the Agency has determined that Executive Order 13132, entitledFederalism(64 FR 43255, August 10, 1999) and Executive Order 13175, entitledConsultation and Coordination with Indian Tribal Governments(65 FR 67249, November 9, 2000) do not apply to this final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

The Congressional Review Act, 5 U.S.C. 801et seq.,generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of this final rule in theFederal Register. This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

I. Background

In FR Doc. 2010-17207 (75 FR 44314) the final rule entitled “Medicare and Medicaid Programs; Electronic Health Record Incentive Program” (hereinafter referred to as the Medicare and Medicaid EHR Incentive Program), there were several technical and typographical errors that are identified in the Summary of Errors section and corrected in the Correction of Errors section and in the regulations text of this correcting amendment.

In the preamble to this final rule, we made the following technical and typographical errors.

On page 44314, in theFOR FURTHER INFORMATION CONTACT, we are correcting the contact information for Medicaid incentive payment issues for better accuracy.

On page 44337, in our response to a comment on the objective generate and transmit permissible prescriptions electronically, we inadvertently referenced only the restrictions established by the Department of Justice (DOJ) on electronic prescribing for controlled substances in Schedule II, when in fact we meant to include Schedule II-V. We intended to encompass all prescriptions where e-prescribing is not permitted, so we are including Schedules III-V. At the time of the publication of the our January 13, 2010 proposed rule, the Drug Enforcement Agency (DEA) had not published its March 31, 2010 final rule (75 FR 16236) on the electronic prescribing of controlled substances. We are aligning our regulation with the DEA regulations regarding electronic prescribing of controlled substances by adding schedules II-V so that we are in line with DEA regulation.

On page 44351, in our discussion of the proposed rule EP/Eligible Hospital Measure, we erroneously referred to “five rules” related to clinical decision support although we reduced that requirement to one rule.

On page 44359, in our response to a comment regarding charging fees, we inadvertently omitted a word. Also, in our discussion of the numerator and denominator for the clinical summary objective, we inadvertently referred to unique patients, rather than to office visits. As the measure for this objective relies on office visits (see§ 495.6(d)(13)), we are correcting the preamble to also refer to office visits. We have also eliminated a reference in the preamble to eligible hospitals and CAHs in the threshold for this objective, as the objective applies only to EPs.

On pages 44440 and 44442, we are revising our discussions of hospital-based EPs, so that they correctly refer to EPs that furnish “90 percent or more,” (rather than “more than 90 percent”) of their covered professional services in an inpatient or emergency department setting. This is in keeping with the definition in § 495.4.

On page 44487, we are correcting the preamble to more precisely state that the 90-day period for deriving hospitals' patient volume is based on the preceding fiscal year. This is in keeping with § 495.306, which specifically references the fiscal year.

Also, on page 44487 and page 44488 we inadvertently referred to hospitals when discussing the patient panel methodology for estimating Medicaid patient volume. As the patient panel methodology will be used only by EPs (and as our regulation cites only to EPs when discussing the patient panel methodology—see§ 495.306(d)), we are eliminating the references to hospitals.

On page 44488, we incorrectly included “unduplicated Medicaid encounters” in the last sentence, instead of “unduplicated encounters.” This correction allows for us to keep the numerator and denominator consistent when determining the Medicaid patient volume.

On pages 44499, 44518, 44549, and 44562, we made typographical errors which include errors in mathematical symbols, column headings, and the numbering and referencing of tables.

On page 44568, in § 495.6(d)(14)(i), we erroneously omitted medication allergies in the list of examples. Therefore, we are including this reference to be consistent with the preamble of the July 28, 2010 final rule.

On page 44568, in § 495.6(e)(1), we inadvertently omitted a reference to the exclusion for any EP who writes fewer than 100 prescriptions during the EHR reporting period (as discussed in the preamble of the final rule (see page 44336)). Therefore, we are correcting § 495.6(e)(1) by referencing this exclusion in accordance with § 495.6(a)(2) “Implement drug-formulary checks.”

On page 44587, in § 495.366(b)(3), we made inadvertent errors by citing to inpatient and outpatient settings, rather than the inpatient or emergency room settings in a discussion of “hospital-based.”

On page 44588, in § 495.368(c) regarding overpayments, we are correcting the period of consideration for overpayments. We note that section 1903(d)(2) of the Act was amended by section 6506 of the Patient Protection and Affordable Care Act (known as the Affordable Care Act (ACA)). This amendment changed the mandatory time period for collection of overpayments from 60 days to 1 year. Therefore, we are correcting § 495.368(c) to implement this statutory change.

In FR Doc. 2010-17207 of July 28, 2010, we make the following corrections:

1. On page 44314, in the first column,FOR FURTHER INFORMATION CONTACTsection, lines 3 and 4 the phrase, “Edward Gendron, (410) 786-1064, Medicaid incentive payment issues,” is corrected to read “Jessica Kahn, (410) 786-9361, and Michelle Mills, (410) 786-3854, Medicaid incentive program issues.

2. On page 44337,

a. Second column, last paragraph, last line, the phrase “Schedule II” is corrected to read “Schedule II-V.”

b. Third column, first partial paragraph,

(1) Line 1, the phrase “Schedule II” is corrected to read “Schedule II-V.”

(2) Line 20 the phrase “Schedule II” is corrected to read “Schedule II-V.”

3. On page 44351, in the first column, fifth paragraph, lines 5 through 11, the sentence “Therefore, we revise this measure to require that at least one of the five rules be related to a clinical quality measure, assuming the EP, eligible hospital or CAH has at least one clinical quality measure relevant to their scope of practice.” is corrected to read “In light of the decision to limit the objective to one clinical decision support rule, we do not believe it is appropriate to further link that rule to a specific clinical quality measure.”

4. On page 44359,

a. First column, first partial paragraph, line 6, “generated certified EHR technology.” is corrected to read “generated by certified EHR technology.”

b. Second column, second full paragraph, lines 4 through 16, the bulleted text beginning with term “Denominator” and ending with phrase “meet this measure” is corrected to read as follows:

•Denominator:Number of office visits by the EP during the EHR reporting period.

•Numerator:Number of office visits in the denominator for which the patient is provided a clinical summary within 3 business days.”

•Threshold:The resulting percentage must be more than 50 percent in order for an EP to meet this measure.”

5. On page 44367, third column, seventh full paragraph, last line, the term “ferquency” is corrected to read “frequency.”

6. On page 44440, second column, last paragraph, lines 11 and 12, the phrase “if more than 90 percent” is corrected to read “if 90 percent or more.”

7. On page 44442, in the first column, first full paragraph, lines 9 and 10, the phrase “if more than 90 percent” is corrected to read “if 90 percent or more.”

8. On page 44487,

a. Top half of the page, second column, third full paragraph, line 13, the phrase “in the preceding calendar year” is corrected to read “in the preceding calendar year (fiscal year for hospitals).”

b. Bottom half of the page, third column, last paragraph, lines 4 and 5, the phrase “individual hospital's or EP's” is corrected to read “individual EP's.”

9. On page 44488, in the first column, first partial paragraph, line 20, the phrase “or hospital” is deleted. Line 25, the phrase, “unduplicated Medicaid encounters” is corrected to read “unduplicated encounters.”

10. On page 44499, in the middle of the page, in Table 19: Hospital Incentives, second column, the column heading, “CY” is corrected to read “FY.”

11. On page 44518, in first column, first full paragraph, line 23 the figure “−4,675,161” is corrected to read “4,675,161.”

12. On page 44549, in the third column, first partial paragraph, line 10, the reference “Table 51,” is corrected to read “Table 38.”

13. On page 44562, second fourth of the page, in the table heading, the table number “TABLE 51” is corrected to read “TABLE 38:”.

We ordinarily publish a notice of proposed rulemaking in theFederal Registerto provide a period for public comment before the provisions of a rule take effect in accordance with section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). However, we can waive this notice and comment procedure if the Secretary finds, for good cause, that the notice and comment process is impracticable, unnecessary, or contrary to the public interest, and incorporates a statement of the finding and the reasons therefore in the notice.

Section 553(d) of the APA also ordinarily requires a 30-day delay in effective date of final rules after the date of their publication in theFederal Register. This 30-day delay in effective date can be waived, however, if an agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued.

With the exception of the correction to § 495.368(c), the changes made by this notice do not constitute agency rulemaking, and therefore the 60 day comment period and delayed effective date do not apply. This correction notice merely corrects typographical and technical errors in the EHR incentive program final rule and does not make substantive changes to the July 28, 2010 final rule that would require additional time on which to comment or a delay in effective date. Instead, this correction notice is intended to ensure the accuracy of the final rule.

In addition, even if the notice and comment and delayed effective date procedures applied, we find good cause to waive such procedures. Undertaking further notice and comment procedures to incorporate the corrections in this notice into the final rule or delaying the effective date would delay these corrections beyond the date necessary for EPs, eligible hospitals and CAHs to begin receiving incentive payments, and would be contrary to the public interest. Furthermore, such procedures would be unnecessary, as we are not altering the policies that were already subject to comment and finalized in our final rule. The one change we are making, to § 495.368(c), is necessary to comply with a provision of the Affordable Care Act that is already in effect; thus, we find it would be both unnecessary and impracticable to subject such change to a comment period as well as any delay in effective date.

The Federal Emergency Management Agency (FEMA) makes the final determinations listed below of the modified BFEs for each community listed. These modified BFEs have been published in newspapers of local circulation and ninety (90) days have elapsed since that publication. The Deputy Federal Insurance and Mitigation Administrator has resolved any appeals resulting from this notification.

The modified BFEs are not listed for each community in this notice. However, this final rule includes the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection.

The modified BFEs are made pursuant to section 206 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001et seq.,and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities.

These modified BFEs are used to meet the floodplain management requirements of the NFIP and also are used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in those buildings. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act.This final rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act.As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification.This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism.This final rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform.This final rule meets the applicable standards of Executive Order 12988.

The modified BFEs are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection is provided.

Any request for reconsideration must be based on knowledge of changed conditions or new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001et seq.,and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act.This interim rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act.As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification.This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism.This interim rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform.This interim rule meets the applicable standards of Executive Order 12988.

The Federal Emergency Management Agency (FEMA) makes the final determinations listed below of the modified BFEs for each community listed. These modified BFEs have been published in newspapers of local circulation and ninety (90) days have elapsed since that publication. The Deputy Federal Insurance and Mitigation Administrator has resolved any appeals resulting from this notification.

The modified BFEs are not listed for each community in this notice. However, this final rule includes the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection.

The modified BFEs are made pursuant to section 206 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001et seq.,and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities.

These modified BFEs are used to meet the floodplain management requirements of the NFIP and also are used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in those buildings. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act.This final rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act.As flood elevation determinations are not within the scope of the Regulatory FlexibilityAct, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification.This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism.This final rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform.This final rule meets the applicable standards of Executive Order 12988.

The Federal Emergency Management Agency (FEMA) makes the final determinations listed below of the modified BFEs for each community listed. These modified BFEs have been published in newspapers of local circulation and ninety (90) days have elapsed since that publication. The Deputy Federal Insurance and Mitigation Administrator has resolved any appeals resulting from this notification.

The modified BFEs are not listed for each community in this notice. However, this final rule includes the address of the Chief Executive Officer of the community where the modified BFE determinations are available for inspection.

The modified BFEs are made pursuant to section 206 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001et seq.,and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified BFEs are the basis for the floodplain management measures that the community is required either to adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program (NFIP).

These modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own or pursuant to policies established by other Federal, State, or regional entities.

These modified BFEs are used to meet the floodplain management requirements of the NFIP and also are used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in those buildings. The changes in BFEs are in accordance with 44 CFR 65.4.

National Environmental Policy Act.This final rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act.As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification.This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism.This final rule involves no policies that have federalism implications under Executive Order 13132, Federalism.

Executive Order 12988, Civil Justice Reform.This final rule meets the applicable standards of Executive Order 12988.

I. Statutory Authority

This final rule is published under the authority granted to the Secretary of the United States Department of Health and Human Services (Secretary) by sections 1102, 453, 453A, 454, 454A, and 463 of the Act. Section 1102 of the Act, 42 U.S.C. 1302, authorizes the Secretary to publish regulations that may be necessary for the efficient administration of the Child Support Enforcement program authorized under title IV-D of the Act (IV-D program).

The provisions of this final rule pertaining to the Federal Parent Locator Service (Federal PLS) implement section 453 of the Act, 42 U.S.C. 653. Section 453 requires the Secretary to establish and conduct a Federal PLS to obtain and transmit specified information only to authorized persons for purposes of establishing parentage, or establishing, modifying, or enforcing child support obligations. Section 453 of the Act, 42 U.S.C. 653, also authorizes the Secretary to disclose information in the Federal PLS to the State Child Support Enforcement program (authorized under title IV-D of the Act), Temporary Assistance for Needy Families program (TANF or IV-A program authorized under title IV-A of the Act), Child Welfare Services program (IV-B program authorized under title IV-B of the Act), and Foster Care and Adoption Assistance program (IV-E program authorized under title IV-E of the Act) to assist States in carrying out their responsibilities under those programs. Section 463 of the Act, 42 U.S.C. 663, also permits States to use information in the Federal PLS for the purpose of enforcing any Federal or State law with respect to a parental kidnapping or making or enforcing a child custody or visitation determination. In addition, the provisions of this final rule pertaining to the State Parent Locator Service (State PLS) implement section 454(8), 42 U.S.C. 654(8), which requires each State IV-D program to establish a State PLS to locate parents by exchanging data with the Federal PLS and utilizing other information sources and records in the State.

Several sections of the Act require safeguarding measures for information contained in State and Federal databases, including the National Directory of New Hires (NDNH) and the Federal Case Registry (FCR). Section 454(8) requires States receiving funding under title IV-D to have a State plan providing that the State IV-D program will: (1) Establish a service to locate parents utilizing all sources of information and available records and the Federal PLS; and (2) disclose the information described in sections 453 and 463 only to the “authorized persons” specified in sections 453 and 463, subject to the privacy safeguards in section 454(26) of the Act. In addition, sections 453(m) and 463(c) restrict disclosure of confidential information maintained by the Federal PLS only to an “authorized person” for an authorized purpose and require the Secretary to establish and implement safeguards designed to restrict access to confidential information in the Federal PLS to authorized persons for authorized purposes. Section 453(l), 42 U.S.C. 653(l), also specifies that information in the Federal PLS shall not be used or disclosed except as expressly provided in section 453. Section454(26), 42 U.S.C. 654(26), requires the State IV-D agency to have in effect safeguards, applicable to all confidential information handled by the State agency, that are designed to protect the privacy rights of the parties and prohibit disclosure of information in cases involving domestic violence or child abuse. Section 453A of the Act, 42 U.S.C. 653a, requires States to establish and operate an automated directory containing information on newly hired employees and to use the information to assist in the administration of the State Child Support program and certain other specified programs listed in section 453A(h) of the Act. Additionally, sections 454(16) and 454A, 42 U.S.C. 654(16) and 654a, require States to maintain computerized child support enforcement systems and to use the system to extract information necessary to enable the State IV-D agency (and other programs designated by the Secretary) to carry out their responsibilities under title IV-D of the Act and under such programs, and to have in effect safeguards on the access to and use of data in the State's automated system.

This final rule prohibits disclosure of confidential and personally identifiable information to private collection agencies (PCAs) and expands disclosure of information to child welfare programs authorized under titles IV-B and IV-E and the Supplemental Nutrition Assistance Program (SNAP). On September 26, 2008, a final rule, following a notice and comment period, entitled “State Parent Locator Service; Safeguarding Child Support Information,” was published in theFederal Register[73 FR 56422] to address requirements for State Parent Locator Service responses to authorized location requests, State IV-D program safeguarding of confidential information, authorized disclosures of this information, and restrictions on the use of confidential data and information for child support purposes with exceptions for certain disclosures permitted by statute. The effective date given for the final rule was March 23, 2009. In accordance with the memorandum of January 20, 2009, from the Assistant to the President and Chief of Staff entitled “Regulatory Review” [74 FR 4435], on March 3, 2009, the Department published a notice in theFederal Register[74 FR 9171] seeking public comment on a contemplated delay of 60 days in the effective date of the rule entitled “State Parent Locator Service; Safeguarding Child Support Information.” In response to those comments, the Department issued a subsequent notice published in theFederal Register[74 FR 11879] on March 20, 2009, which delayed the effective date of the September 26, 2008 rule by 60 days until May 22, 2009, in order to permit Departmental officials the opportunity for further review of the issues of law and policy raised by this rule. However, subsequent to publication of the March 20, 2009 notice, the Department determined that additional time would be needed for officials to complete their review of the rule and to fully assess the substantive comments received in response to the March 3, 2009 notice. As a result, on April 15, 2009, a notice was published in theFederal Register[74 FR 17445] indicating that the Department was contemplating a further delay in the effective date of the “State Parent Locator Service; Safeguarding Child Support Information” final rule to December 30, 2010, and requesting comments on the delay of the effective date. In response to comments from the April 15, 2009 notice, the Department issued a subsequent notice, published in theFederal Register[74 FR 23798] on May 21, 2009 delaying the effective date of the September 26, 2008 rule to December 30, 2010.

Although the March 3, 2009 and the April 15, 2009 notices invited comments on whether a delay in the rule's effective date was needed “to allow Departmental officials the opportunity for further review and consideration,” both notices also generated focused substantive comments recommending changes to several particular provisions of the final rule that warranted further consideration. In addition to supporting a delay in the effective date of the rule, the comments raised specific policy concerns regarding two areas of the September 26, 2008 final rule: (1) The rules for disclosure of confidential and personally identifiable information about individuals maintained by State IV-D programs to a private, for-profit child support collection agency as an “agent of a child;” and (2) the child welfare data exchange provisions of the rules in light of legislation enacted in October 2008 after publication of the final rule.

With respect to disclosure of information to private collection agencies, concerns have been raised by commenters, Departmental officials, media coverage, litigation and program stakeholders that the government's disclosure of confidential information to private child support collection agencies may not serve the children's best interests. Specific concerns have been raised about the risks involved in disclosing confidential data to private collection agencies not acting as a State's agent under a contractual relationship nor required to comply with ethics and confidentiality rules such as those governing State agencies and private attorneys, and whose business practices are largely unregulated and not subject to program oversight.

Additionally, commenters on the March 3 and April 15, 2009 notices stated that a delay in the effective date would give the Administration an opportunity to conduct a review of the child welfare data exchange provisions to ensure that the provisions of the rule conform toThe Fostering Connections to Success and Increasing Adoptions Act(Pub. L. 110-351), (the Fostering Connections Act) signed into law on October 7, 2008, eleven days after the Safeguarding Final Rule was published.

On June 7, 2010, a Notice of Proposed Rulemaking (NPRM) was published in theFederal Register[75 FR 32145] which proposed limited changes to the final regulation published on September 26, 2008 to address concerns identified by Department officials as well as those raised by commenters. Only selected portions of the “State Parent Locator; Safeguarding Child Support Information” final rule were addressed in the NPRM. The final rule published on September 26, 2008, in [73 FR 56442] will go into effect on December 30, 2010.

The following is a summary of the regulatory provisions included in this final rule. The NPRM limited those sections of the final rule published on September 26, 2008 that were open for public comment. Affected sections include §§ 301.1, 302.35, 303.21, 303.69, 303.70, and 307.13. Additionally, we made a conforming change to § 303.20, which did not appear in the NPRM.

The Section-by-Section Discussion of the Regulations (Section IV) provides a detailed listing of the comments and responses. We considered each comment and where appropriate, amended the final rule. Specifically, changes include:

In § 301.1 we added a definition of “attorney of a child.” Commenters recommended a definition that requires the assurance of a genuine attorney-client relationship which creates an ethical obligation to represent the best interests of the child and/or the child's resident parent. The newly-added definition specifies that there is an attorney-client relationship with anethical and fiduciary duty upon the attorney to represent the client's best interests under applicable rules of professional responsibility.

We made a technical change to the language in § 302.35(a)(2)(i) to include “non-parent relatives” to the list of those individuals about whom the State PLS may disclose information under section 453(a)(2) and 453(j)(3) of the Act for locate purposes. This was based on a comment that the rule was inconsistent; we agree and made the change accordingly. Additionally, this change is consistent with the change made to § 302.35(d)(2) in accordance with the Fostering Connections Act. We changed the language at § 302.35(c) in response to a comment that, as written, the NPRM would mandate that Tribal IV-D programs would have to make attestation and provide evidence that they are an authorized program to which the State PLS may disclose locate information. It was not our intent to exclude authorization for Tribal IV-D programs which are a part of the Child Support Enforcement program and have an intergovernmental agreement with a State to access Federal PLS information as set forth in OCSE PIQT-10-01. Therefore, we added new language to § 302.35(c)(1) providing that a Tribal IV-D agency that provides child support services under an approved Tribal IV-D plan and has an intergovernmental agreement in place with a State, entered into pursuant to section 454(7) of the Act for the provision of Federal PLS services, is an authorized program and may request locate information from the State PLS.

Additionally, the commenters supported preventing disclosure of confidential information to private collection agencies. However, the commenters thought that attestation remained important for a parent, legal guardian, attorney, or agent of a child not receiving assistance under title IV-A of the Act. We agree and reinstated the attestation for those individuals listed above in § 302.35(c)(3)(iii).

A conforming change was made to § 303.20 that was not proposed in the NPRM. Previously, § 303.20(b)(7) referenced operation of the State PLS required under § 302.35. Because of the changes made to the regulatory language at § 302.35, it was necessary to make a conforming change for consistency by adding §§ 303.3 and 303.70 to the regulatory text at § 303.20(b)(7).

The final change to the regulatory language is in §§ 303.70(d)(1), (3), and (4). This technical amendment was made to correspond with the change intended to permit disclosure of location information regarding non-parent relatives. The former paragraph referred to information provided to parents and putative fathers. The technical correction is necessary to eliminate any conflicts or confusion in providing non-parent relative information to IV-B and IV-E agencies. The phrase “non-parent relative” was added to § 303.70(d)(1). The language at § 303.70(d)(2), which requires that a parent's or putative father's Social Security Number (SSN) be provided to the State PLS or Federal PLS for purposes of locating parents, putative fathers, or children for purposes related to title IV-D, IV-A, IV-B and IV-E was not changed. This also requires that the IV-D agency must make reasonable efforts to ascertain the individual's SSN before making the submittal to the Federal PLS. It was not appropriate to add “non-parent relative” to this section because the IV-D agency is not required to ascertain the SSN of a non-parent relative prior to making a submittal to the Federal PLS. A new § 303.70(d)(3) was added to require that the submittal request contain the non-parent relative's SSN, if known. Former § 303.70(d)(3) is thus renumbered to § 303.70(d)(4).

Some commenters suggested changes to the Appendices based on changes in the proposed regulatory language. We amended the Appendices in three areas: one change was made to Appendix A and two changes were made to Appendix C. A suggestion was made that we include language in the “Limitations” column in Appendix A as it relates to the State agency administering IV-B and IV-E programs in accordance with sections 453(c)(4), 453(j)(3) and 454(8) of the Act. We agree and added language that indicates that any use of the information from the Federal PLS and the State PLS outside the purposes of section 453(a)(2) and 453(j)(3) of the Act requires independent verification. The first change in Appendix C was to modify the term “food stamps” to “SNAP” for consistency with the regulatory language and the rest of the Appendix. This change was in the “Authorized person/program” under the portion of Appendix C that listed the authority for sections 453A(h)(2) and 1137 of the Act. The second change to the Appendix was to add a footnote. Commenters correctly noted that Appendix C did not reference the domestic violence language referenced in both Appendices A and B. This prohibition against the disclosure of information if there is a reasonable evidence of domestic violence or child abuse and the disclosure of such information would be harmful to the custodial parent (also referred to as resident parent) or child is required by sections 453(b)(2) and (3), 454(8) and (26) of the Act.

This section provides a detailed discussion of comments received on the proposed rule, and describes changes made to the proposed rule. We referred generally to actions of the “Department” pursuant to the rule. The rule itself refers to actions of the “Secretary,” however, the day-to-day activities of the Secretary's functions have been delegated and are exercised by other Department officials, primarily in the Administration for Children and Families. “Office” refers to the Federal Office of Child Support Enforcement (OCSE). We received comments from 26 commenters including 12 State agencies, nine advocacy groups, two organizations, and three private citizens. The majority of comments related to State Parent Locator Service, § 302.35.

Several comments not attributable to specific sections of the regulation are discussed below.

1.Comment:All commenters supported the prohibition of disclosing confidential and personally identifiable information to private child support collection agencies (PCAs).

Response:We agree that the prohibition of disclosing confidential and personally identifiable information to PCAs is an appropriate change to the regulation. The final rule reflects that position.

2.Comment:All commenters supported the expansion of released information to title IV agencies, including IV-B and IV-E.

Response:This final rule mandates the expansion provided in the proposed rules consistent with section 453(j)(3) of the Social Security Act, permitting disclosure of information to IV-B and IV-E agencies for a broader range of authorized purposes that was not fully addressed in the September 26, 2008 regulation. Program responsibilities include locating relatives of children removed from parental custody in order to identify potential placements for the child and assist the State agency in permanency planning. Communication involving data matches and shared data between IV-D, IV-B, and IV-E programs serves the best interests of children and their families.

3.Comment:One commenter stated that for child welfare purposes, noncustodial parents should be notified and considered as potential placements. This would occur when identifyingrelatives, providing notice to relatives, and placing siblings together. If the noncustodial parent is not an appropriate placement, the noncustodial parent may still be able to provide critical information to aid in making prompt and appropriate arrangements for children.

Response:We agree that it may be appropriate for children to be placed with their biological (both custodial and noncustodial) parents, consistent with child welfare program policies and the best interests of the children. This regulation provides for information concerning relatives, including the noncustodial parent under § 305.35(d)(1), to be released to the IV-B and IV-E agencies.

4.Comment:One commenter was supportive of restricting access to PCAs, but questioned the policy in PIQ 02-02 that, as written, would allow custodial parents to change their addresses to a PCA address.

Response:As discussed in the preamble to the NPRM, PIQ-02-02,Requests by Custodial Parents for a Change of Address for the Disbursement of the Custodial Parent's Share of Child Support Collectionsallowed a custodial parent to change his or her address to that of a PCA. The redirection of payments by a PCA and the policy to allow a custodial parent to change his or her address to that of a PCA, will be considered under a separate rulemaking authority.

On August 14, 2009, OCSE issued DCL-09-22,Private Collection Agencies and Redirection of Payments.This DCL indicated that OCSE had been alerted to the fact that some PCAs have instructed employers to redirect child support payments away from a State Disbursement Unit (SDU) to a PCA. In accordance with sections 454B, 466(a)(1)(A), 466(a)(8), and 466(b)(5) of the Act, payments in all IV-D cases and in non-IV-D cases in which the initial support order was issued on or after January 1, 1994 and in which the obligor's income is subject to wage withholding must be paid through the SDU.

5.Comment:One commenter expressed concern that the answer to question one in PIQ 03-05 conflicts with the NPRM, and should be changed.

Response:We agree. PIQ-03-05,Guidance on Private Collection Agencies—Agent of a Child and Third Party Address for Correspondenceaddressed inquiries requesting clarification on issues related to PCAs. The PIQ indicated that because “agent of a child” was not defined, a “for profit, private collection agency or private attorney could act as an `agent of a child' provided it has a valid contract that meets the State's statutory and regulatory requirements for acting as an agent, if any,” and was thus authorized, under section 453(b)(1) and (c), to access confidential information from the Federal and State PLS.

This final rule adds a definition of “agent of a child.” Under the definition of “agent of a child,” a PCA no longer qualifies as an authorized person to receive confidential and personally identifiable information. In the final rule “agent of a child” means a caretaker relative having custody of or responsibility for the child. We will revise the PIQ after publication of the final rule to ensure consistency with the regulation.

6.Comment:The proposed effective date for changes is not sufficient time to implement the changes. The commenter expressed concerns about the difficulty for States to implement the final rule as published on September 26, 2008 and then implement this final rule.

Response:The delay in implementation of the final rule published on September 26, 2008 was necessitated by the concerns raised by Departmental officials and commenters. We believe that the differences in the proposed and final regulation are not so great that the implementation cannot be accomplished. OCSE is prepared to provide assistance to States as needed.

1.Comment:Many commenters agreed with the inclusion of “caretaker relative” in the definition of “agent of a child.” Other commenters suggested removing “relative” from the definition, and a few commenters proposed narrowing the definition to include only a court-appointed conservator or guardianad litem.One commenter suggested adding “non-parent relative” to the definition.

Response:As noted in the preamble to the NPRM, “caretaker relative” is a longstanding term used in the TANF program and recognizes the practical reality that children are sometimes left in the care of a relative even though the relative may not have been appointed by a court. This language allows appropriate family members to advocate for the child's best interests. The definition also prohibits PCAs, which may have financial motives separate, or even adverse to the child's best interests, from acting as the child's agent. We did not see the need to provide a specific definition for legal guardian.

2.Comment:One commenter agreed with our definition, but questioned whether a Tribal IV-D agency's ability to access the Federal PLS is supported by the definition of “agent of a child.”

Response:We agree and have revised the final rule to clarify that a Tribal IV-D agency's authority to access information contained in the Federal PLS and State PLS is at newly added language at § 302.35(c)(1) which includes a Tribal IV-D agency as an authorized program.

1.Comment:In the NPRM, we specifically sought comments on whether to add a definition of “attorney of a child” to the final rule. Several commenters thought a definition was necessary for “attorney of a child” for various reasons. Some commenters thought that it was important to clarify that attorney, as referenced in section 453(c)(3) of the Act refers to attorney of a child, not an attorney for either parent. Other commenters thought it was important that OCSE adopt a definition that requires assurance of a genuine attorney-client relationship that creates an ethical obligation to represent the best interests of the child. Another commenter stated that the language in the NPRM regarding the phrase “attorney of a child,” was too broad and needed to be defined.

Response:We are persuaded that a definition is necessary, and we have revised § 301.1 to provide the following definition: “Attorney of a child means a licensed lawyer who has entered into an attorney-client relationship with either the child or the child's resident parent to provide legal representation to the child or resident parent related to the establishment of paternity, or the establishment, modification, or enforcement of child support. An attorney-client relationship imposes an ethical and fiduciary duty upon the attorney to represent the client's best interests under applicable rules of professional responsibility.” (Please note that “resident parent” is also referred to as “custodial parent”.)

1.Comment:One commenter correctly noted that although §§ 302.35(a) and (b) were not open for comment, a clarification was necessary to add “non-parent relative” to authorize disclosure of locate information for title IV-B and title IV-E purposes in § 302.35(a)(2) consistent with the change made to § 302.35(d)(2).

Response:We agree with this comment and made this technical correction to the final rule at § 302.35(a)(2)(i) to read, “The State PLSshall access and release information authorized to be disclosed under section 453(a)(2) and 453(j)(3) of the Act from the Federal PLS and, in accordance with State law, information from relevant in-State sources of information and records, as appropriate, for locating custodial parents, noncustodial parents, non-parent relatives, and children upon request of authorized individuals specified in paragraph (c) of this section, for authorized purposes specified in paragraph (d) of this section.” An additional change was made to § 302.35(a)(2)(i) that authorizes disclosure of information about relatives of children involved in IV-B and/or IV-E cases in accordance with the Fostering Connections Act.

2.Comment:One commenter said that the language at § 302.35(c) and Appendix A indicates that a request involving a child not receiving IV-A assistance is a non-IV-D requests. Many children who are not receiving IV-A assistance are participants in a IV-D case.

Response:We agree that many children who are not receiving IV-A assistance may be participants in a IV-D case. However, this authorized purpose of the request example is specific to non-IV-D child support cases. The language is based on section 453(c)(3) of the Act.

3.Comment:One commenter, although supportive of the goal of denying access to Federal PLS information to a PCA, proposed that we do not delete § 302.35(c)(3)(iii) since it did not solely apply to PCAs, and also required evidence of a relationship between the requestor and the child. Another commenter suggested that it is not burdensome to request an attestation that the requestors are who they purport to be, especially when it comes to releasing confidential information. This same commenter suggested that we add “resident” to the regulatory language.

Response:We agree with the commenters and have added § 302.35(c)(3)(iii) requiring an attestation from a resident parent, legal guardian, attorney, or agent of a child. The addition of “resident” is appropriate as it is consistent with the statutory language. Section 453(c)(3) of the Act includes the definition of “authorized person” as a resident parent. The final rule at § 302.35(c)(3)(iii) is amended to read: “Attests that the requestor is the resident parent, legal guardian, or attorney, or agent of a child not receiving assistance under title IV-A.”

4.Comment:Many commenters were pleased with broadened disclosure of information allowed by § 302.35(d) for the disclosure of an individual's location, income, employment benefits, assets, debts, child support history, Family Violence Indicator (FVI), and other confidential information not only for parents, but non-parent relatives as well. One commenter explained that the broadened purposes will assist in carrying out IV-B and IV-E's responsibility to administer their programs.

Other commenters wanted to limit disclosure to non-parent relatives and were primarily concerned with privacy for family violence victims. One commenter who wanted to limit disclosure expressed concern that the option for State IV-D agencies to share with other child welfare agencies a broader range of data elements than available in the Federal PLS raises safety, information reliability, and privacy concerns for domestic violence victims.

One commenter prefers limiting data access to “the extent necessary” to achieve an authorized purpose. The commenter elaborated that this language would protect the privacy rights of individuals as information regarding an individual's assets and debts would rarely be necessary to establish parental rights, and the availability of health insurance would not be relevant towards locating a non-parent relative for placement of a child.

Response:Section 105 of the Fostering Connections Act amended section 453(j)(3) of the Social Security Act to expand the authority for information comparisons and disclosures of information from the Federal PLS for title IV program purposes to include child welfare and foster care programs funded under IV-B and IV-E of the Social Security Act. The law authorizes disclosure of information in the Federal PLS and State PLS to conduct data matches and share data with child welfare agencies “to the extent and with the frequency that the Secretary determines to be effective in assisting States to carry out their responsibilities under this part [D], part B or E, and programs funded under part A.” This final rule reflects the extent to which that data matching and sharing is appropriate in assisting States to carry out their responsibilities.

The purpose of broadening disclosure of information about non-parent relatives is to promote communication and efficiency between title IV agencies. Many of the commenters realized this and were pleased with the policy. Some commenters were justifiably concerned about disclosing information in family violence cases. The Act addresses their concerns. Under sections 453(b)(2) and (3), 454(8), and 454(26) of the Act, no information may be disseminated regarding a family violence case. Section 453(b)(2) of the Act states that “* * * No information shall be disclosed if the State has notified the Secretary that the State has reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the custodial parent or the child of such parent * * *.” Please refer to the “Limitations” column in Appendices A, B, and C. This statutory limitation is reflected in Appendices A, B, and C. Additionally, the final rule at sections 302.35(e) and 303.21(e) published in theFederal Registeron September 26, 2008 [73 FR 56422] prohibits the release of information when the State has reasonable evidence of domestic violence or child abuse.

We take these requirements very seriously and are committed to ensuring that information is not shared that might jeopardize the safety of an individual thought to be a victim of family violence or child abuse. The intention of the FVI is to protect the victim whether the victim is the child, the custodial parent or the noncustodial parent. We are working closely with the Family and Youth Services Bureau, Family Violence Prevention and Services Program in the Administration for Children and Families on this critical issue. We also plan to reach out to domestic violence programs in developing guidance and training. In fact, we currently lead a Domestic Violence Collaboration Work Group which includes representatives from the National Resource Center on Domestic Violence and the Family Violence Prevention and Services Program.

5.Comment:Two commenters stated that these final regulations should clarify that States will provide assurances that their title IV-D and IV-E agencies will collaborate, through an interagency agreement, to ensure that child welfare agencies safely and appropriately handle cases with an FVI flag. These agreements should address the manner and information to be shared. In addition, required training should address confidentiality, the impact of family violence, post-traumatic stress disorder, and cultural competency. OCSE and the Children's Bureau should consider issuing a joint guidance to assist States in crafting interagency agreements.

Response:We agree that when there is data sharing between two agencies, an interagency agreement strengthens the integrity of safeguarding the information between the agencies involved. Interagency training between IV-D, IV-B and IV-E agencies is appropriate toensure proper implementation of this final regulation. As we work to operationalize these regulations, we will develop joint guidance with our Federal counterparts in the child welfare and domestic violence programs on interagency agreements and conduct extensive outreach to State child support and child welfare programs.

6.Comment:Two commenters opposed establishing separate standards for disclosure for the Federal PLS and State PLS. One commenter requested that the regulations or other Federal guidance make clear, when referring to State IV-B and IV-E agencies for the purpose of receiving information under the proposed regulations, that political subdivisions of the State should be considered.

Response:The Federal PLS is not part of the State PLS. Requests for information from the Federal PLS must flow through the State PLS, and each State's standards are different based on sources of information each State receives in accordance with the State's law. For example, some States may have additional enforcement remedies that do not exist in the Federal PLS, such as seizure of lottery or gambling winnings. In addition, States administer the placement of children involved in IV-B and IV-E cases, and must abide by minimum Federal guidelines. States have broad discretion to implement their IV-B and IV-E programs, as long as they comport with the minimum Federal guidelines.

7.Comment:The regulation should acknowledge that establishing parental rights is part of assisting States to carry out their responsibilities under IV-B and IV-E.

Response:We agree that establishing parental rights is part of assisting States to carry out their responsibilities under titles IV-B and IV-E of the Act. We will work with our IV-B and IV-E colleagues in defining States' program responsibilities.

8.Comment:Two commenters raised a number of questions about information that is gathered as part of the application process for child support services and kept on file at the child support agency. These commenters wanted to know: What type of case-specific information is currently entered and retained in OCSE databases; whether location information could be separated from other types of information in the databases; if notice is provided to IV-D clients about the types of information entered and retained in the databases, and with whom and for what purposes may it be shared. The commenters also wanted to know whether there are opportunities available for the person providing the information to view and correct inaccuracies before sharing occurs; if informed consent is provided prior to OCSE sharing information with other agencies; if the client has the ability to limit any aspect of data sharing, and whether IV-D workers could be subject to a subpoena in child welfare cases in which decisions were made based on data secured from the OCSE database.

Response:Applications for child support services, although developed by each State agency, must contain Federally required data elements which are uploaded onto the State's automated system. OCSE's databases, such as the National Directory of New Hires and the Federal Case Registry must have system of records notices that provide notice to the public with respect to the collection of information on individuals and procedures for contesting the accuracy of a record. The system of records notices are currently in the process of being updated and should be in effect prior to the effective date of this rule. Also,seethe Privacy Act and Paperwork Reduction Act notice on the Internal Revenue Service form W-4 form, available athttp://www.irs.gov/pub/irs-pdf/fw4.pdf.

Additionally, location information can be separated from other types of data. Many States have a generic disclosure statement regarding the information collected on individuals and with whom it may be shared. States also proactively urge clients to update demographic information. A growing trend among States is the establishment of customer service Web sites which permit and/or encourage clients to review and update other information in the State's database.

Informed consent is not provided prior to OCSE sharing information with other agencies. Title IV-B and IV-E agencies are authorized by law to access this information under section 453(j)(3) of the Act for the purpose of carrying out their programs. Redisclosure of information is not addressed in this rule. Presently, such information must be independently verified before redisclosure by the IV-B or IV-E agency is permitted.

9.Comment:One commenter stated that 42 U.S.C. 653(j) clearly seemed to contemplate that not only will the IV-D agency share matches—the pairing of a known identity with additional elements—but it also will disclose information, including the identity of a person who may not previously have been known, to the IV-B and IV-E agency.

Response:This final regulation authorizes the sharing of information with IV-B and IV-E agencies available through the State PLS to locate relatives for potential placement of a child removed from parental custody, to place siblings in groups, and to otherwise assist State agencies in permanency planning activities. Information which may be disclosed about a child or a relative of children involved in IV-B and IV-E cases is limited to name, SSN, most recent address, employer name, and address and employer identification number. To the extent that a relative is “identified” through use of the Federal PLS and the State PLS, that information may be shared with IV-B and IV-E agencies. This final regulation also authorizes the sharing of information with IV-B and IV-E agencies available from the statewide automated system pursuant to section 454A(f)(3) of the Act, to assist such programs to carry out program functions.

Child welfare agencies do not have direct access to statewide child support automated systems to permit IV-B and IV-E caseworkers to search for data. Only certain IV-D staff have direct access to the Federal PLS. Courts and other programs do not. State IV-A, IV-B, and IV-E agencies will work together to develop appropriate transactions for an automated information exchange between the agencies to ensure adherence to proper data safeguarding standards as set forth in this regulation.

10.Comment:One commenter said that New York State is a State-supervised, county administered State. The commenter would like to know explicitly how the process of access to information from the State PLS would function in that State. The commenter also asked whether the information would be available directly to the local departments of Social Services, and how requests for information would be transmitted and received.

Response:We acknowledge that States organize and operate their programs differently. OCSE is currently in discussions with our Federal counterparts in the child welfare and domestic violence programs to develop broad based implementing guidance that States can use in their specific operational environments.

11.Comment:One commenter asked if the final regulation imposes any limitations on redisclosure of information by local departments of social services in performing their child welfare functions.

Response:We direct the commenter to Appendix A. Whether redisclosure is permitted depends upon the purpose of the inquiry, and the agency requesting the data. Title IV-B and IV-E agencies are authorized by law to access thisinformation for the purpose of carrying out their programs. Redisclosure of information is not addressed in this rule. Presently, such information needs to be independently verified before redisclosure is permitted. OCSE and its counterparts in Federal child welfare and domestic violence programs will provide instructions in the future.

12.Comment:One commenter noted that currently there is a jointly-issued administrative directive which references how referrals for locating absent parents travel from child welfare to local IV-D units. The local IV-D units access Federal PLS and State PLS and return information back to local child welfare agencies. The commenter would like to see a new jointly-issued administrative directive as a result of the publication of this final rule.

Response:We agree that the jointly issued directive: ACYF-CB-IM-07-06/OCSE-IM-07-06,Appropriate Referrals, Requests for Location Services, Child Support Applications, and Electronic Interface between Child Welfare and Child Support Enforcement Agencies,issued on September 6, 2007, is an important document for the interoperability of the child support, domestic violence, and child welfare programs. We will collaborate with the Administration on Children, Youth and Families of HHS to update this joint document as appropriate.

13.Comment:One commenter suggested that the purpose of disclosure should guide the amount of information disclosed rather than the specific relative relationship between the requester and the child. The commenter supported the broader disclosure regulated at § 302.35(d)(1) and the more limited disclosure regulated at § 302.35(d)(2).

Response:We agree with the commenter. As provided in the regulation, the purpose of a request does control the nature of the data disclosed. The Appendices provide guidance as to the information that may be disclosed and the agencies to which the information may be disclosed depending on the purpose for which the information is being requested.

14.Comment:One commenter stated that title IV-B and IV-E agencies should be provided with at least the six pieces of information [name, Social Security Number, address, employer's name, employer's address, and employer identification number]. The commenter also encouraged the sharing of additional contact information, such as telephone numbers and e-mail addresses, if the Federal PLS or State PLS maintains these sources of information.

Response:The final regulation at § 302.35(d)(2) clearly establishes that for the purposes of assisting States to carry out their responsibilities to administer the IV-B and IV-E programs, the information that may be disclosed with respect to a child or relative of a child involved in a IV-B or IV-E case is limited to: Name, SSN, most recent address, employer name and address, and employer identification number. The Federal PLS does not maintain additional contact information such as telephone numbers and e-mail addresses. Additionally, if the case has an FVI marker, thennoinformation about the case may be shared for any reason. Section 453(b)(2) of the Act says: “no information shall be disclosed if the State has reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the custodial parent or the child.” Information from cases marked with the FVI may be released to a court or an agent of a court pursuant to the procedure set forth in section 453(b)(2)(A) and (B).

15.Comment:One commenter stated that child welfare agencies do not need extensive information if their intent is to locate noncustodial parents, or to identify and/or locate grandparents or other relatives to carry out the purpose of the IV-B or IV-E program. The commenter encourages sharing any other contact information such as telephone numbers and e-mail addresses, if they are maintained on the State PLS or Federal PLS.

Response:As stated above, the information that may be disclosed about a child or relative of a child involved in a IV-B or IV-E case is limited to name, SSN, most recent address, employer name and address, and employer identification number.

16.Comment:One commenter noted that section 453(j)(3) of the Act directs the Secretary to disclose Federal PLS information to State agencies and the regulation directs the State PLS to disclose confidential information only from in-State sources regarding non-parent relatives; the regulation also excludes IV-B and IV-E agencies from receiving Federal PLS information regarding non-parent relatives. The commenter questioned the statutory authority for § 302.35(d)(2). The commenter recommended deleting § 302.35(d)(2) because the lack of a clear statutory basis creates liability for State IV-D agencies.

Response:We disagree that there is not a clear statutory basis for the disclosure of information at § 302.35(d)(2). The Fostering Connections Act amended section 453(j)(3) of the Act to include IV-B and IV-E agencies. While certain IV-D staff have direct access to the Federal PLS; courts and other programs do not have access. Requests for information from the Federal PLS must flow through the State PLS. Federal PLS information is not excluded.

17.Comment:Two commenters said that if data was exchanged between child support and child welfare agencies through an interagency agreement, provisions for implementation and enforcement of privacy and family violence safety protections should be required. This final rule should mandate the provisions to be included in the interagency agreements to facilitate compliance with the safeguarding rules. Those agreements should also contain provisions for informed consent to disclosures.

Response:As stated earlier in this preamble, when there is data sharing between two agencies, an interagency agreement strengthens the integrity of the agencies involved to safeguard the information. Intergovernmental agreements support the integrity and security of an intergovernmental system when data is shared. Any interagency agreement should contain provisions that comport with this final rule. Disclosures under section 453 of the Act do not require consent of the individual. Such disclosures are considered to be a routine use of the information collected under the Privacy Act.

18.Comment:One commenter noted that the Children's Bureau recently issued guidance on The Fostering Connections Act, encouraging States to employ a consistent definition of “relative” for the purposes of any guardianship assistance program and any notification that is carried out pursuant to The Fostering Connections Act. States are permitted to include non-blood relatives or “fictive kin” when defining “relative.” The commenter suggests States be provided the latitude to use “fictive kin” when implementing this rule.

Response:OCSE defers to States' definitions of “relative.”

1.Comment:One commenter stated that under § 303.21(d)(1), the IV-D agency is not required to provide locate services to other State agencies performing duties under title IV, XIX, XXI, and SNAP if it is determined that doing so would interfere with the IV-D agency meeting its own obligations. The commenter said that the same provision should apply when providing locationinformation to authorized individuals in non-IV-D cases under section § 302.35.

Response:The statutory change made by The Fostering Connections Act contemplates that child support agencies will exchange data with IV-B and IV-E programs.

2.Comment:One commenter said that the response to comment 32, page 56437 of the final rule, published on September 26, 2008, implies that before IV-D agencies can disclose address or employment information received from the FCR or NDNH to the Medicaid agency, the IV-D agency is expected to verify the information through postal verifications or wages.

Response:The response to comment 32 in the final rule published on September 26, 2008, was meant as an example. We used postal verification in that instance for illustrative purposes only. Independent verification, as defined in § 303.21(a)(2), is still valid: “Independent verification is the process of acquiring and confirming confidential information through the use of a second source. The information from the second source, which verifies the information about NDNH or FCR data, may be released to those authorized to inspect and use the information as authorized under the regulations or the Act.” This final rule did not change § 303.21(a)(2).

1.Comment:One commenter noted that although not open for comment, § 303.70(d)(1) needs to be revised to correspond with the change intended to permit location information for non-parent relatives. The paragraph refers to information to be provided to parents and putative parents. Without corresponding changes, the commenter noted conflicts may arise in providing non-parent relative information to IV-D and IV-B agencies.

Response:We agree that a conforming change is appropriate and have made the corresponding change. The final regulation at § 303.70(d)(1) now reads: “The parent's, putative father's or non-parent relative's name; * * *.”

2.Comment:One commenter observed that State IV-D directors are required to annually attest that the State IV-D agency only will obtain information from the Federal PLS that meets Federal requirements. Any conflict in requirements for State PLS and Federal PLS increases the risks for States that must interpret and apply the law correctly.

Response:States should continue to be diligent in meeting requirements and assessing risks. States are responsible for applying these laws.

1.Comment:One commenter stated that the automated systems guide requires States to have data exchanges with title XXI for establishing and enforcing medical support. The elements include address, name, employer, and employer address. In Florida, all SSNs are verified by the Federal Case Registry (FCR). The FCR is the only verification source used for SSNs. Under the new requirements, States will be required to reprogram systems to identify each data element's verification source, isolate National Directory for New Hires (NDNH) and FCR sources and only exchange data that does not have a verification source of NDNH and FCR. The commenter further explained that the final rule in 2008 (73 FR 56437, response to comment 42) stated that independent verification is not required but “is merely a condition that must be met if the State wishes to use or disclose information for non-IV-D purposes to non-authorized persons. There is no such restriction in IV-D cases.” That rule says that IV-D agencies are required to exchange information with title XIX and SSI using the automated system and would not require independent verification because it was used for IV-D purposes. Is that still the case or does this new rule supersede that?

Response:This rule revised only certain sections of theState Parent Locator Services, Safeguarding Child Support Information; Final Rulethat was published on September 26, 2008. This final rule does not change the fact that child support agencies may exchange data from the automated child support system with title XIX and title IV programs under section 454A(f)(3) of the Act, and sections 303.21(d)(1) and 307.13(a)(3) and (4), without independent verification. The only limitation in the final rule is that IRS information must be independently verified before being exchanged with title IV or title XIX programs and MSFIDM data may not be shared, even if independently verified. Therefore, this final rule does not supersede the final rule published on September 26, 2008 [73 FR 56422] as it relates to data exchanges with title XIX agencies. Regarding the SSI program, SDNH information may be shared for benefits eligibility verification pursuant to section 453A(h)(2)

2.Comment:One commenter was pleased to see the inclusion of SNAP on the list of authorized recipients of child support information. Another commenter questioned the different requirements for disclosure in § 307.13(a)(3) and § 307.13(a)(4)(iii) and § 307.13(a)(4)(iv).

Response:The commenter was correct that there are different requirements for disclosure under § 307.13(a)(3) and § 307.13(a)(4)(iii) and § 307.13(a)(4)(iv). Under § 307.13(a)(3), information may be disclosed to Medicaid, SNAP, and CHIP to the extent necessary to carry out their program responsibilities to the extent that the information disclosure does not interfere with the IV-D program meeting its own obligations. Under § 307.13(a)(4), the disclosure of NDNH, FCR, FIDM, and IRS information may not be shared outside the program except with IV-B and IV-E agencies. Under section 454A(f)(3) of the Act, the Secretary has designated the title IV programs and thus authorized the release of that information to title IV programs. Title IV-B and IV-E programs are within the scope of the authority as set forth by those delegations.

1.Comment:One commenter said that in the final rule published on September 26, 2008, the response to comment 39 stated that not all information received from the FCR is part of the FCR database and not subject to independent verification. Appendix A does not specify which data elements available from the FCR are subject to independent verification and which are not subject to independent verification. The commenter further explained that States need specific information on which data elements in which automated files are subject to independent verification.

Response:The data that is subject to independent verification is dependent upon several factors. The charts in the Appendices to this final rule are intended to assist the States in determining what data can be shared with which agencies from the different systems of information available to the State.i.e.,the automated statewide child support enforcement system, the State PLS, or the State Directory of New Hires, and for which purposes. OCSE will continue to assist States in ensuring that their statewide child support enforcement systems are programmed to be compliant with these data safeguarding rules.

2.Comment:One commenter said that the language in the “Limitations” column in Appendix A that states, “noInternal Revenue Service information provided for non-IV-D cases unless independently verified” should be eliminated because IRS tax information cannot be disclosed for any reason, IV-D or non-IV-D, unless obtained by a third party. The preamble to the rule published on September 26, 2008 states: “There is no way to independently verify Federal Tax refund offset information. We continue to work with the Department of Treasury and the Congress to resolve this issue.”

Response:We are not persuaded that this language should be eliminated from the Appendix. Independent verification, as defined in § 303.21(a)(2), is still valid and reads: “Independent verification is the process of acquiring and confirming confidential information through the use of a second source. The information from the second source, which verifies the information about NDNH or FCR data, may be released to those authorized to inspect and use the information as authorized under the regulations or the Act.”

3.Comment:One commenter requested changes to the “Limitations” column in Appendix A. The commenter said that multi-State and in-State financial institution information is not available for non-IV-D cases. The wording in the Limitation “provide for non-IV-D cases” implies that State IV-D agencies are required to disclose Financial Institution Data Match (FIDM) information for non-IV-D cases. The suggestion was to revise the text to clarify that FIDM information cannot be disclosed outside of the IV-D program to any entity for any purpose. The same comment applies to resident parents, legal guardians, and attorneys.

Response:We disagree and have not amended the “Limitations” column. Please note that the column states “no multistate institution data match (MSFIDM) and no State Financial Institution Data Match (FIDM) provided for non-IV-D cases.”

4.Comment:One commenter stated that the last row of the Appendix A, which refers to IV-B and IV-E receiving information on relatives of children, include both Federal PLS and State PLS as sources, but the regulatory language at § 302.35(d)(2) does not include Federal PLS.

Response:The regulatory language at § 302.35(d)(2) references § 302.35(d)(1) which states that information through the Federal PLS may be provided. The Appendix is accurate as it relates to Federal and State PLS as sources of information.

5.Comment:One commenter suggests that Tribal IV-D agencies be listed as a separate “authorized person/program” in Appendix A because it appears as if Tribal agencies have different access and limitations than those who would fall under “non-IV-D requests.”

Response:Tribal IV-D agencies may acquire FIDM information through their State counterparts provided they have an interagency agreement in effect with the State. Many Tribal IV-D programs have these agreements in place and are receiving the information. We do not agree that Tribal IV-D agencies should be listed as a separate “authorized person/program” and have not made that change to the Appendix.

6.Comment:One commenter noted that PIQ-07-02/PIQT-07-02,FFP for State Automated Systems Costs related to Service Agreements with Tribal IV-D Programs; Submitting Tribal IV-D cases for Federal Tax Refund Offset; and Submitting Requests to the Federal Parent Locator Service (FPLS) in Tribal IV-Dstates that access to information from a source other than the IRS can be provided to Tribal IV-D programs. However, Appendix A indicates that no MSFIDM can be provided for non-IV-D cases. Can that information be disclosed to Tribal agencies?

Response:Tribal IV-D programs do not have direct access to the Federal PLS. However, Tribal IV-D programs may access information from the Federal PLS through an interagency agreement with the State in accordance with the change made to section 302.35(c)(1). Should a Tribal IV-D program enter into an interagency agreement with the State for access to this information, it is bound by these safeguarding regulations as noted in Footnote 2 to Appendix A. For additional information,seePIQT 10-01.

7.Comment:One commenter noted that the Appendix A limitations include “child not receiving IV-A benefits” and that attestation and evidence are required for Tribal IV-D programs. Is the intent that a Tribal IV-D program request associated with a child not receiving benefits not be honored? Is the intent that attestation, evidence, and a fee, be required for Tribal IV-D program access?

Response:The commenter correctly points out that Tribal IV-D programs should be included in the list of those considered as an authorized program. We agree and added new language to § 302.35(c)(1) which indicates that a Tribal IV-D agency that provides child support services under an approved Tribal IV-D plan and has an intergovernmental agreement in place with a State for the provision of Federal PLS services, is an authorized program and may request locate information from the State PLS. For additional information,seePIQT 10-01.

8.Comment:One commenter noted that Appendix C describes the disclosure of broader information to potentially multiple agencies. The Appendix does not include “Footnote 1” on limitations that is in both Appendices A and B. That footnote should be in Appendix C.

Response:We agree. In this final rule, the footnote was added to Appendix C and now reads: “No information shall be disclosed if the disclosure of such information would contravene the national policy or security interests of the United States or the confidentiality of census data. No information shall be disclosed if the State has reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the CP or child.Seesections 453(b)(2) and 454(26) of the Act for the process of releasing information to a court or agent of a court.”

Section 302.35(c) contains an information collection requirement. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Administration for Children and Families (ACF) has submitted a copy of this section to the Office of Management and Budget (OMB) for its review in tandem with the final rule published onSeptember 26, 2008. There are no changes to this section.

The Secretary certifies that, under 5 U.S.C. 605(b), as enacted by the Regulatory Flexibility Act (Pub. L. 96-354), this rule will not result in a significant impact on a substantial number of small entities. The primary impact is on State governments. State governments are not considered small entities under the Act.

Executive Order 12866 requires that regulations be reviewed to ensure that they are consistent with the priorities and principles set forth in the Executive Order. The Department has determined that this rule is consistent with these priorities and principles. The changes would not significantly alter States' child support enforcement operations. This regulation responds to State requests for guidance on data privacy issues and therefore should not raise negative impact concerns.

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that a covered agency prepare a budgetary impact statement before promulgating a rule that includes any Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year adjusted annually for inflation. The threshold for 2010, adjusted for inflation is $135 million. If a covered agency must prepare a budgetary impact statement, section 205 further requires that it select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with the statutory requirements. In addition, section 203 requires a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule. We have determined that this rule will not result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of more than $135 million in 2010. Accordingly, we have not prepared a budgetary impact statement, specifically addressed the regulatory alternatives considered, or prepared a plan for informing and advising any significantly or uniquely impacted small governments. There are no costs associated with this regulation. It clarifies the protection of confidential information contained in the records of State child support enforcement agencies.

This rule is not a major rule as defined in 5 U.S.C. chapter 8.

Section 654 of the Treasury and General Government Appropriations Act of 1999 requires Federal agencies to determine whether a proposed policy or regulation may affect family well-being. If the agency's determination is affirmative, then the agency must prepare an impact assessment addressing seven criteria specified in the law. This regulation protects the confidentiality of information contained in the records of State child support enforcement agencies. These regulations will not have an adverse impact on family well-being as defined in the legislation.

Executive Order 13132 prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on State and local governments and is not required by statute, or the rule preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This rule does not have federalism impact as defined in the Executive order.

I. Background

DoD is issuing a final rule to amend the DFARS to implement section 207 of the Weapon Systems Acquisition Reform Act of 2009 (WSARA) (Pub. L. 111-23). Section 207 requires DoD to revise the DFARS to provide uniform guidance and tighten existing requirements relating to organizational conflicts of interest (OCIs) of contractors in major defense acquisition programs (MDAPs). The law sets out situations that must be addressed and allows DoD to establish such limited exceptions as are necessary to ensure that DoD has continued access to advice on systems architecture and systems engineering matters from highly qualified contractors, while also ensuring that such advice comes from sources that are objective and unbiased.

In developing regulatory language, section 207 directed DoD to consider the recommendation presented by the Panel on Contracting Integrity and further directed DoD to consider any findings and recommendations of the Administrator of the Office of Federal Procurement Policy (OFPP) and the Director of the Office of Government Ethics (OGE) pursuant to section 841(b) of the Duncan Hunter National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2009 (Pub. L. 110-417). Section 841(b) of the NDAA for FY 2009 required review by OFPP, in consultation with OGE, of FAR coverage of OCIs. Neither OFPP nor OGE has issued recommendations to date pursuant to section 841(b), but both have worked with the FAR Acquisition Law Team, which includes representatives from DoD and the civilian agencies, to draft a proposed rule on OCIs under FAR Case 2007-018. As part of this process, OFPP, OGE, and the FAR Acquisition Law Team reviewed comments received in response to an Advance Notice of Proposed Rulemaking, published in theFederal Registerat 73 FR 15962 on March 26, 2008, and are also considering pertinent comments that were submitted in response to this DFARS Case 2009-D015 in formulation of the proposed FAR rule.

A public meeting was held on December 8, 2009 (see74 FR 57666) to provide opportunity for dialogue on the possible impact on DoD contracting of the section 207 requirements relating to OCIs.

DoD published a proposed rule in theFederal Registeron April 22, 2010 (75 FR 20954). The comment period was initially scheduled to close on June 21, 2010. On June 15, 2010, the commentperiod was extended to July 21, 2010 (75 FR 33752).

DoD received comments from 21 respondents in response to the proposed rule. Some respondents expressed general support for the rulemaking. Others expressed concern that the rule did not achieve the overall objectives of section 207, either because the proposed coverage was too stringent or not sufficiently strong. Based on public comments, changes were made to the proposed rule, including the following:

• Removing from the DFARS final rule the proposed changes that would have provided general regulatory coverage on OCIs to temporarily replace that in FAR subpart 9.5.

• Locating the core of the final rule in subpart 209.5 and 252.209.

• Making clear that this final rule takes precedence over FAR subpart 9.5, to the extent that there are inconsistencies.

• Adding to the policy an explanation of the basic goals to promote competition and preserve DoD access to the expertise of qualified contractors.

• Tightening the exception for “domain experience and expertise” to require a head of the contracting activity determination that DoD needs access to the domain experience and expertise of the apparently successful offeror; and that, based on the agreed-to resolution strategy, the apparently successful offeror will be able to provide objective and unbiased advice.

• Refining the definition of “major subcontractor” to include upper and lower limits on application of the percentage factor test for determining if the value of the subcontract in relation to the prime contract warrants classifying the subcontract as major; specifically—

○ A subcontract less than the cost or pricing data threshold would not be considered a major subcontract; and

○ A subcontract equal to or exceeding $50 million would automatically be considered a major subcontract.

• Addressing pre-MDAP as well as MDAP programs.

The following is a discussion of the comments and the changes included in this final rule as a result of those comments. Comments on aspects of the proposed rule that would have provided general coverage on OCIs outside the context of major defense acquisition programs are being considered in the formulation of the FAR rule.

Comment:A number of respondents took exception to coverage in the proposed rule that would have extended beyond MDAP to cover all DoD procurements, noting that the broader OCI changes should be considered for inclusion in the FAR rather than the DFARS for the following reasons:

• Congress did not mandate, or even suggest, that DoD adopt new regulations to completely rewrite the OCI rules applicable to all DoD procurements.

• The manner in which DoD is proceeding in relation to the FAR rule is an inversion of the way we normally proceed, is inefficient, and will be confusing and disruptive to DoD and industry.

One respondent said the rule goes beyond agency-specific acquisition regulations as contemplated and authorized by FAR 1.301et seq.,both in form and in substance.

Two respondents endorsed the proposed rule's approach of extending the OCI coverage beyond MDAPs, with one respondent noting that the same OCI policy concerns that Congress addressed in connection with MDAPs apply across the board. This respondent also pointed out that the General Accountability Office bid protest case law that the proposed rule cites applies to all procurements, not only MDAPs. Also, the respondent said, application of the new OCI coverage to this broad spectrum of contracts provides a greater level of consistency across procurements.

Response:DoD does not agree that the proposed rule violated FAR subpart 1.3 by addressing OCI issues that go beyond those that are specifically applicable in the context of MDAPs, but has decided to remove coverage from the rule that is not required to comply with section 207 of WSARA. DoD's intent was to provide coverage that would improve all aspects of OCI policy affecting the covered contract types, not just those aspects unique to MDAPs and systems engineering and technical assistance (SETA) contracting, since some OCI issues involved are no different from those raised on any other procurement. In doing so, DoD also sought to temporarily apply those provisions that are common to both those contracts covered by section 207 and other contracts, so that all would benefit from the improved coverage until the FAR is modified. However, coordinating and reconciling the many comments received on the proposed general coverage with the team developing FAR coverage would delay the finalization of this rulemaking and could create unnecessary confusion. Therefore, DoD has concluded that the final DRAFS rule will address only MDAP and SETA OCI coverage as required by section 207. As noted above, comments related to the general coverage have been provided to the team developing changes to FAR coverage on OCIs.

Comment:Another respondent suggested that DoD and the FAR Council could use the WSARA-mandated changes as a pilot program and evaluate the results of the changes when developing the DoD-wide and Government-wide regulations. This respondent further stated that a powerful reason to restrict application of this rule to MDAP procurements as a pilot program is that OCI policy could drive significant changes to the industrial base.

Response:This comment is now moot, since DoD decided to remove the comprehensive coverage from the DFARS rule.

Comment:Another respondent stated that, by extending the scope of this rule beyond MDAPs, it appeared that DoD might have been trying to address the difficult issue of what rules to follow for programs and technology development efforts that start as a non-MDAP and then transition to an MDAP. If so, the respondent stated, this rule could have addressed that issue by limiting its applicability to MDAPs and then requiring that all potential OCI in non-MDAP programs be exempted or be “required to be easily mitigated” once they cross into the MDAP threshold.

Response:The issue of addressing programs that may become MDAP programs has been resolved by revising the final rule to cover both pre-MDAP and MDAP programs. SETA contracts are often required in the early pre-MDAP phase of a program.

Comment:Various respondents recommended that the rule on OCIs should remain in DFARS part 209 for the following reasons:

• Four respondents stated their opinions that the OCI rules should not be moved to DFARS part 203 to avoid the perception that OCI is in the same category as improper business practices, which pertains to conduct that is criminal in nature. Two of these respondents stated that putting OCI coverage in part 209 is inconsistent with the notion that mitigation is the preferred method of addressing OCI. One respondent said it wasunreasonable even to imply that an OCI inherently constitutes misconduct, since OCIs are routine in typical businesss settings and a byproduct of defense industry consolidation.

• On the positive side, one respondent said that the OCI rules should remain in DFARS part 209 because of their relationship to a company's responsibility. Another respondent stated the opinion that a contracting officer's determination of whether to accept or reject a mitigation plan has the same weight as a determination of affirmative responsibility.

• One respondent pointed out that while the Government has the discretion under both FAR 9.503 and the proposed rule to waive OCIs, it cannot waive improper business practices, such as unlawful gratuities and kickbacks.

• One respondent thought that the regulations should remain within DFARS part 9 simply for continuity.

Response:DoD does not agree that placing the OCI rules in part 203 vs. part 209 lends credence to the perception that OCI is in the same category as conduct that is criminal in nature. We note that part 209 also covers criminal activity by way of its association with suspension and debarment. Furthermore, the scope of part 203 has been evolving over time, an example being the recent FAR rule proposing inclusion of a new FAR subpart 3.11 to include policy addressing personal conflicts of interest by contractor employees performing acquisition functions closely associated with inherently governmental functions—seeFAR Case 2008-025. And while acceptance or rejection of a mitigation plan might affect a contractor's responsibility, it is not, in and of itself, a determination relating to responsibility.

However, because the FAR proposed rule has not yet been published, and because the decision has been made to limit this rule to implementation of OCIs in MDAPs (seesection II.A.1.), this final rule has been located primarily in subpart 209.5, until such time as the FAR coverage on OCIs may be relocated.

Comment:Two respondents expressed concerns that the definition of “major subcontractor” was arbitrary. The proposed clause at 252.203-70WW (now 252.209-7009) defined a major subcontractor as a subcontractor awardee with a subcontract totaling 10 percent or more of the value of the contract. One of the respondents was concerned that a subcontractor with millions of dollars in subcontracts may not be covered, but others with less than $1 million would be covered.

Response:As the clause relates to subcontractors for major defense acquisition programs which, generally, are programs that exceed $1.8 billion (Fiscal Year 1990 constant dollars) in eventual total expenditure (10 U.S.C. 2430), a prime contract would not likely be issued with a value of only $10 million, which would be the prime contract threshold for a $1 million subcontract to meet the 10 percent subcontract threshold to be a major subcontract. However, DoD agrees with the need to enhance the definition. The final rule contains—

• A lower end exclusion of any subcontract that is less than the cost or pricing data threshold; and

• An upper bound, such that any subcontract that equals or exceeds $50 million will be considered a major subcontract, regardless of whether it meets the 10 percent criterion.

This is modeled after—

• 15.404-3(c)(1), which specifies thresholds for requiring cost or pricing data on subcontracts; and

• DODI 5000.02 Table 4, which addresses major contracts and subcontracts.

Comment:Two respondents observed that there is no definition of “Systems Engineering and Technical Assistance” in statute or regulation and noted that the FAR defines “systems engineering” and “technical direction,” which may not necessarily be exactly the same as “systems engineering and technical assistance.”

One of the respondents expressed concerns that the definition of “Systems Engineering and Technical Assistance” is vague and that the rule should add “to support requirements definition, source selection, or evaluation of contractor performance in a Major Defense Acquisition Program.”

Several respondents proposed that the “systems engineering and technical assistance” definition be restricted to activities and functions that relate to supporting source selection and testing activities that might trigger bias and impaired objectivity OCIs. According to these respondents, all other support should be classified as engineering or program support; and the related OCIs should be addressed through standard mitigation techniques. “Systems Engineering and Technical Assistance” needs to be better defined and only address those circumstances when the contractor has “authority” and is in a position to unduly influence a program, event, or outcome.

Response:DoD decided to provide a unified definition for “systems engineering and technical assistance” as a single term, as well as the individual definitions of “systems engineering” and “technical assistance”, because “systems engineering and technical assistance” is the statutory term and is the recognized term for a particular type of contract. DoD sought advice from systems engineering and technical assistance subject matter experts within DoD to arrive at a more comprehensive definition of the term. In response to public comments, DoD changed the requirement from “substantially all” to “any” and clarified that “directing other contractors' operations” does not apply to the operations of subcontractors. It is not necessary to include in the definition of SETA that it is only for MDAPs. SETA contracts could be for other types of programs as well. The limitation to MDAPs is accomplished through the policy statements and the clause prescriptions.

The definition should not restrict the meaning to select activities based on the presumption of the likelihood of the occurrence of an OCI. While potential OCIs can be significant concerns in source selection and testing activities, potential OCIs can exist in other activities, with harmful repercussions to DoD. The determination of the existence of potential for an OCI is situational and based on the facts and conditions. It is up to the contracting officer to determine the potential for an OCI. The definition should not be based on the presumption that an OCI will occur for SETA contracts and will not occur in the range of other activities.

Comment:One respondent made several comments about the definitions of a number of activities cited within the definition of “systems engineering” and “technical assistance” and suggested further definitional clarity of the activities. The respondent asked what “determining specifications” means and what “determining interface requirements” means. The respondent cited a number of specific actions a contractor may be asked to perform and asked if the work would fall under the DFARS definition of SETA.

Response:Further definition of the activity elements is not required. These terms are in common use. It is up to the contracting officer, exercising common sense, good judgment, sound discretion, and the advice of technical experts to determine if the activities in asolicitation would be covered by the definition of SETA.

Comment:One respondent recommended that the SETA definition should include a statement that the contractor performs the services, but will not be delivering the system. The respondent cites Section 203.1270-6 (now 209.571-7) as the basis for this change.

Response:The consequence of being a SETA contractor is outside of, and unnecessary for, inclusion within the definition of what a SETA contractor is. While 209.571-7 prohibits a SETA contractor from participating as a contractor or major subcontractor on the related program, there are certain instances listed in 209.571-7 where the paragraph does not apply. Changing the definition of SETA is unnecessary and could lead to erroneous application of the rule.

Comments:A number of respondents objected to the rule's designation of mitigation as the “preferred method” for resolving OCIs.

Two respondents suggested that a preference for mitigation would reduce, rather than increase, competition for Government contracts. Specifically, they suggested that the preference appears to favor industry interests in the sense that it chiefly will benefit large, integrated businesses which, but for the application of a preference for mitigation, might otherwise be precluded from competing for certain requirements.

Several respondents expressed concern that the preference for mitigation would impinge upon the contracting officer's duty and discretion to consider all appropriate factors, such as the potential costs associated with monitoring mitigation plans, when determining which method for resolving a particular OCI would best serve the Government's interest.

One respondent stated that establishing an outright preference for mitigation would create a potential ground for bid protests by unsuccessful offerors. The respondent opined that DoD agencies may find themselves defending against claims that contracting officers did not take adequate affirmative steps to comply with the preference by finding ways to mitigate potential OCIs.

Response:DoD carefully considered the comments on both sides of this issue. While finding that the policy rationale supporting the proposed preference for mitigation is sound, DoD agrees that establishing a formal preference may have the unintended effect of encouraging contracting officers to make OCI resolution decisions without considering all appropriate facts and information. Therefore, in order to make it clear that decisions about how best to resolve OCIs arising in particular procurements remain a matter within the “common sense, good judgment, and sound discretion” of DoD contracting officers, DoD has removed the rule's stated preference for mitigation.

However, DoD replaced the rule's explicit mitigation preference with a more general statement of DoD policy interests in this area. Specifically, the rule now provides that it is DoD policy to promote competition and, to the extent possible, preserve DoD access to the expertise and experience of highly-qualified contractors. To this end, the rule now emphasizes the importance of employing OCI resolution strategies that do not unnecessarily restrict the pool of potential offerors and do not impose per se restrictions on the use of particular resolution methods, except as may be required under part 209.571-7.

Comment:One respondent stated that the rule's stated policy preference for mitigation should be replaced with a preference for avoidance in order to comply with the “statutory intent” of WSARA. The respondent expressed concern that various aspects of the rule significantly impair the ability of contracting officers to employ avoidance strategies. Finally, the respondent commented that the rule should reflect that mitigation is the resolution method of last resort.

Response:As discussed in the response to the preceding comment, DoD replaced the rule's explicit preference for mitigation with language more generally emphasizing that contracting officers should seek to employ OCI resolution strategies that promote competition and do not unnecessarily restrict the pool of potential offerors. DoD does not agree that WSARA requires an across-the-board preference for avoidance. Such a preference would give rise to the same issues and concerns voiced by other respondents relating to contracting officer discretion, potential bid protests, and the like. To the extent that WSARA creates a requirement or preference for avoidance, that preference is limited to SETA contracts and is appropriately addressed at 209.571-7.

Comments:A number of respondents expressed support for the rule's stated preference for using mitigation to resolve OCIs. Generally, these respondents stated that the preference for mitigation would promote competition, preserve Government access to the broadest range of experienced contractors, and promote transparency.

Several respondents expressed concern that the rule does not do enough to encourage contracting officers to use mitigation and that some aspects of the rule may, in fact, discourage the use of mitigation.

One respondent suggested that, despite its stated preference for mitigation, the rule as a whole appears actually to favor avoidance and neutralization, principally because it provides “no meaningful guidance regarding when and how mitigation should be used.”

Another respondent stated that the preference for mitigation would be more compelling if the rule included more examples of acceptable mitigation methods.

A third respondent made several specific recommendations for bolstering the preference for mitigation. The respondent suggested that DoD: (1) Add a statement “summarizing the potential benefits of mitigation” and (2) add language requiring contracting officers to “consider the status of the industrial base and the number of potential sources” before determining that mitigation was inappropriate.

Response:As discussed in responses to preceding comments, DoD decided to replace the rule's express preference for mitigation with language indicating that it is DoD policy that contracting officers should seek to employ OCI resolution strategies that promote competition and do not unnecessarily restrict the pool of potential offerors. DoD appreciates the general concern voiced by these respondents that some agencies and contracting officers may already be either implicitly or explicitly favoring avoidance-based resolution strategies. DoD recognizes that an explicit preference for mitigation may serve a useful purpose in cases where agencies or contracting officers are unnecessarily foreclosing competitive opportunities by favoring avoidance over mitigation. Therefore, although DoD has removed the rule's express preference for mitigation, the rule's revised policy language will have the appropriate effect of encouraging contracting officers to consider all potential OCI resolutionstrategies, to pursue resolution outcomes that promote competition whenever feasible, and to implement strategies that are consistent with the Government's best interests, broadly speaking.

A more detailed analysis of the methods and benefits of mitigation is outside the scope of the present rule and may be addressed in the FAR rule on OCIs.

Comment:One respondent requested a clarification in 203.1270-5(a)(2) (now 209.571-6(a)(2)) of the proposed rule to provide that there should not be a second OCI evaluation after award when the contractor establishes a team arrangement and its accepted proposal explains the work the prime will do and what other team members will do. The respondent was concerned that the proposed rule implies that there will be a reevaluation, although WSARA does not require a second evaluation. The respondent recommended adding before the semicolon in subparagraph (a)(2) the following: “either as part of the initial award determination or, if the prime contractor makes this disclosure after award, then before beginning the relevant work”.

Response:There is nothing in the statement in the proposed rule that implies that the timing of the evaluation would be after award. In the proposed rule, the policy in 203.703 made clear that OCIs are to be resolved early in the acquisition process. Since this rule is limited strictly to MDAP, the requirement in current FAR 9.504(a) still applies,i.e.,the contracting officer is required to analyze planned acquisitions in order to identify and evaluate potential OCIs as early in the acquisition process as possible, and to avoid, neutralize, or mitigate significant potential conflicts before contract award. Further details about early resolution of OCIs will be addressed in the FAR OCI rule.

Comment:The same respondent also commented that the regulation should not be silent on how the contracting officer is to consider awards to affiliates.

Response:The policy section on identification of OCIs at 209.571-6(a)(2) states that the contracting officer “shall consider” the proposed award of a major subsystem by a prime contractor to business units or other affiliates of the same corporate entity. Since OCIs are very specific to individual situations, the regulation cannot provide a precise prescription for how the contracting officer should consider this, except to alert the contracting officer to potential conflicts in such situations.

Comment:Four respondents expressed concern that the rule's exception for all highly-qualified SETA contractors (where the OCI can be adequately resolved) is overly broad, beyond the limited exception contemplated by WSARA, and unnecessary in view of the numbers of conflict-free SETA contractors.

One respondent stated that there is clear congressional preference for a rule prohibiting any systems engineering firm from participating in the development or construction of a system in an MDAP. The respondent quoted various sources, including the references by the Senate Armed Services Committee during debate on SR 111-201.

One respondent recommended that the rule should include a requirement that the contracting officer also determine that there is no other source with the requisite domain experience and expertise before approving OCI mitigation.

However, another respondent expressed concern about whether the rule will adequately ensure DoD access to advice on systems architecture and engineering matters.

Response:WSARA permits the SETA exception contained in the proposed rule. A SETA exception is necessary to meet DoD needs and the proposed exception contained the requirement that the OCI must be adequately resolved. In the absence of an exception, many or all prospective SETA contractors may have OCIs and could be excluded. As a result, the best-qualified or best-priced contractors might be unavailable unless future restrictions are lifted. However, in response to concern that the exception was overly broad and would not meet the objective of WSARA to “tighten” application of OCI policy, DoD revised the exception to require a determination by the head of the contracting activity that “an exemption is necessary because DoD needs the domain experience and expertise of the highly qualified, apparently successful offeror.” The head of the contracting activity must further determine that, based on the agreed-to resolution strategy, the apparently successful offeror will be able to provide objective and unbiased advice.

Comment:Another respondent objected that the rule did not include an exception for performance of SETA functions by any affiliate of the contractor performing production or development work as a prime or major contractor, as was referenced in the statutory language and the accompanying conference report. Further, the respondent objected that the only acceptable mitigation approach for impaired objectivity OCIs for MDAPS seemed to be splitting work away from a contractor and affiliates, as the waiver option is not authorized.

Response:The SETA exception is not unduly restrictive with regard to affiliates. It is not true that affiliates of the contractor performing the production contract could not qualify for performance of SETA functions.

Further, although the waiver option was deliberately omitted from the exception because the statute requires that the contractor must be able to provide objective and unbiased advice, the rule does not address what mitigation approaches would be acceptable.

Comment:One respondent stated that it is necessary for the rule to address training and implementation. The respondent stated that contracting officers should not be allowed to make decisions on OCIs until training is completed.

Response:This is not an entirely new requirement. The FAR already requires that OCIs be addressed, and there are existing training courses that cover OCIs. The Government will make changes to standard contracting course curriculum to implement these changes.

Comment:The same respondent requested more guidance on the use of particular data sources to inform their decisions, and any required processes to implement the rule effectively. For example, the respondent suggests that contracting officers should separate SETA-type work from design- and development-type work, and not include both types in the same task order or other contract vehicle.

Response:FAR 9.506 procedures provide current guidance on sources of information to identify and evaluate potential organizational conflicts of interest. DoD has also added to DFARS Procedures, Guidance, and Information the guidance about separating SETA-type work from other types of design- and development-type work.

Comment:Three respondents commented on the potential impact of the regulation on small businesses. However, several of the comments related to aspects of the rule that have been eliminated from this more focused final rule.

One respondent recommended adding language into the regulation that would exempt from OCI restrictions smallbusinesses that are not involved in hardware or major software developments. In addition, the same respondent recommended imposing the OCI restrictions on prime contractors and large subcontractors, and allowing small subcontractors (those with less than 10 percent of total award) and small businesses to continue to provide both development and contract efforts with approved OCI plans.

Response:DoD notes that the rule, per the statute, requires that a SETA contract for a major defense acquisition program contain a provision prohibiting the contractor or any affiliate of the contractor from participating as a prime contractor or a major subcontractor in the development or construction of a weapon system under the program. Therefore, “small,”i.e.,other than major, subcontractors are exempted. The statute, however, does not provide for a specific exemption for small businesses. In addition, the rule does allow offerors, whether large or small, to continue to provide both development and contract efforts with approved OCI plans and an appropriate determination by the head of the contracting activity in accordance with 209.571-7(b).

Comments:Although no respondents specifically commented on the estimated burden hours published with the proposed rule, several respondents commented on the burden imposed by the disclosure requirement of 252.203-XX(e)(1)(ii).

Response:This requirement is no longer included in the rule. The only requirement now is for submission of a mitigation plan under a SETA contract if the offeror is requesting an exception to the limitation on future contracting.

This is a significant regulatory action and, therefore, is subject to Office of Management and Budget review under section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

DoD certifies that this final rule will not result in a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,et seq.,because the requirements of subpart 209.572 do not differ substantially from the burden currently imposed on offerors and contractors by FAR subpart 9.5.

With regard to major defense acquisition programs, the prohibition against a SETA contractor participating in the development or production contract applies only to the prime contract or a major subcontract. Therefore, small businesses are less likely to be affected. Further, the rule allows for avoidance, neutralization, or mitigation of organizational conflicts of interest. A final regulatory flexibility analysis has, therefore, not been performed.

The Paperwork Reduction Act (44 U.S.C. chapter 35) applies because the final rule contains information collection requirements.

Title:Defense Federal Acquisition Regulation Supplement (DFARS); Organizational Conflicts of Interest in Major Defense Acquisition Programs.

Number of Respondents:150.

Responses per Respondent:3.

Annual Responses:750.

Average Burden per Response:20.

Annual Burden Hours:15,000.

Needs and Uses:DoD needs the information required by 252.209-7008 to identify and resolve organizational conflicts of interest, as required by section 207 of the Weapon Systems Acquisition Reform Act of 2009.

The burden hours are substantially reduced in comparison to the proposed rule because the final rule only addresses organizational conflicts of interest in major defense acquisition programs.

The information collection requirements for this final rule have been approved under OMB Clearance Number 0704-0477, Organizational Conflicts of Interest in Major Defense Acquisition Programs ICR.

I. Background

DoD published a proposed rule on January 6, 2010 (75 FR 832) to implement—

• A waiver of the procurement prohibition of section 302(a) of the Trade Agreements Act of 1979 with regard to acquisitions by DoD or GSA, on behalf of DoD, in support of operations in Afghanistan from the following nine South Caucasus/Central and South Asian (SC/CASA) states: Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan; and

• A determination by the Deputy Secretary of Defense that it would be inconsistent with the public interest to apply the provisions of the Balance of Payments Program to offers of products (other than arms, ammunition, or war materials) and construction materials from these SC/CASA states acquired in direct support of operations in Afghanistan.

• Alternate I of 252.225-7035, to delete the phrase “Australian or” from paragraph (c)(2)(i); and

• Alternate I of 252.225-7045, to add in paragraph (b), line 4, that the Bahrain Free Trade Agreement does not apply.

DoD did not receive any comments on the proposed rule.

Therefore, DoD is finalizing the proposed rule with no substantive change. The final rule does incorporate the following editorial and technical corrections:

• Incorporates the current DFARS baseline.

• Amends various clause prefaces to reference the correct clause prescriptions.

• Amends 225.1101(6)(i) to reference the World Trade Organization (WTO) Government Procurement Agreement (GPA) rather than the Trade Agreements Act, in conformance with FAR 225.1101(c)(1).

• Amends paragraph (d), added by Alternate II to the clause at 252.225-7021, to limit applicability. Only contractors from an SC/CASA state are required to notify the government of the SC/CASA state with regard to the benefit of providing reciprocal procurement opportunities to U.S. products and services, in conformance with the requirement imposed by the United States Trade Representative.

• Corrects the provision and clause at 252.225-7035 and 252.225-7036, so that Peruvian end products are not erroneously treated as eligible products in acquisitions that do not exceed the WTO GPA threshold (see DFARS Case 2008-D046, published at 74 FR 37650 and 75 FR 3179 for initial implementation of the Peruvian Free Trade Agreement). The threshold for end products for the Peruvian Free Trade Agreement, like the Free Trade Agreements of Bahrain and Morocco, is equal to the threshold of the WTO GPA. Therefore, these trade agreements are only in effect for acquisitions that exceed the WTO GPA threshold (covered by DFARS provision and clause 252.225-7020 and 252.225-7021). This is a technical amendment to this DFARS provision and clause in order to conform to the trade threshold for the Peruvian Free Trade Agreement that is at FAR 25.402(b) and to be consistent with the corresponding FAR provision and clause at 52.225-3 and 52.225-4.

This is not a significant regulatory action and, therefore, was not subject to review by the Office of Management and Budget under Executive Order 12866, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

DoD certifies that this rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,et seq.,because this rule only impacts acquisitions that are in support of operations in Afghanistan, allowing acquisition of products and services from the SC/CASA states. The minimal information collection requirement applies only to contractors that are from an SC/CASA state, and does not apply to U.S. small business concerns. DoD did not receive any comments from small businesses or other interested parties.

The Paperwork Reduction Act applies because the rule modifies information collection requirements that have been approved by the Office of Management and Budget under 44 U.S.C. 3501,et seq.However, the impact on existing approved information collection requirements (OMB clearance 0704-0229) is expected to be negligible.

In addition, this final rule contains a new information collection requirement that has received approval of the Office of Management and Budget under 44 U.S.C. 3501,et seq.(OMB Clearance Number 0704-0475). DoD did not receive any comments on the proposed information collection requirement.

An interim final rule was published in theFederal Registeron December 13, 2010 (75 FR 77535), to implement Steller sea lion protection measures to ensure that the Bering Sea and Aleutian Islands management area (BSAI) groundfish fisheries off Alaska are not likely to jeopardize the continued existence of the western distinct population segment of Steller sea lions or adversely modify its designated critical habitat. NMFS is correcting errors identified in the preamble to the interim final rule and the regulatory text.

The Assistant Administrator for Fisheries, NOAA (AA), finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be impracticable and contrary to the public interest. These errors should be corrected immediately to eliminate potential confusion by the regulated public. If the effective date for these corrections is delayed to solicit prior public comment, these technical errors will not be corrected by the effective date of this final rule, thereby undermining the conservation and management objectives of the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area. Good cause to waive prior notice and the opportunity for public comment for the interim final rule corrected by this action can be found in 75 FR 77535 (December 13, 2010).

The AA further finds, pursuant to 5 U.S.C 553(d)(3), good cause to waive the thirty (30) day delayed effectiveness period for the reasons stated above.

NMFS is correcting errors and is not making substantive changes to the interim final rule published on December 13, 2010 (75 FR 77535). The corrections to Tables 5, 6, and 12 to 50 CFR part 679 are listed below. These corrections revise coordinates for Steller sea lion sites, revise footnotes, add degree symbols, add lines between rows, and remove a 3-nm groundfish fishing closure in Table 12 to 50 CFR part 679, which was erroneously added by the interim final rule.

On page 77547, in Table 5 to part 679, seventh row (Great Sitkin I.), third column, we are replacing value “52 06.00 N” to read “52 06.60 N”; in the fourth column we are replacing value “176 10.50 W” to read “176 07.00 W”, and in the fifth column we are replacing value “52 06.60 N” to read “52 07.00 N”.

On page 77550, in Table 5 to part 679, first row (Bird I.), fourth column, we are replacing value “163 17.2 W” to read “163 17.15 W”; in the third row (South Rocks), fourth column, we are replacing value “162 41.3 W” to read “162 41.25 W”; in the fourth row (Clubbing Rocks (S)), fourth column, we are replacing value “162 26.7 W” to read “162 26.74 W”; and in the fifth row (Clubbing Rocks (N)), fourth column, we are replacing value “162 26.7 W” to read “162 26.72 W”.

On page 77552, in Table 5 to part 679, fourth row (Ushagat I./SW), third column, we are replacing value “58 54.75” to read “58 54.75 N”.

On page 77553, in Table 5 to part 679, third row (Rugged Island), we are adding value in the fifth column to read “59 51.00 N” and adding value in the sixth column to read “149 24.70 W”.

On page 77557, in Table 6 to part 679, footnote 6(a), we are replacing “0 nn” to read “0 nm”.

On page 77557, in Table 6 to part 679, footnote 7, we are replacing the second subparagraph “(a)” to read “(b)”.

On page 77558, in Table 12 to part 679, we are removing the sixteenth row (Tanaga I./Bumpy Pt.).

On page 77559, in Table 12 to part 679, fourteenth row (Clubbing Rocks (S)), fourth column, we are replacing value “162 26.7 W” to read “162 26.74 W”; and, in the fifteenth row (Clubbing Rocks (N)), fourth column, we are replacing value “162 26.7 W” to read “162 26.72 W”.

On page 77560, in Table 12 to part 679, second row (Choweit I.), fifth column, we are replacing value “55 00.30 N” to read “56 00.30 N”.

In addition to these regulatory corrections, we are correcting a statement in the preamble to the interim final rule (74 FR 77535, December 13, 2010) that incorrectly referenced existing Pacific cod trawl seasons. On page 77539, in the second column, correct the last sentence to read:

“Waters that are 10 nm to 20 nm from Steller sea lion sites and that occur in this one degree longitude area are closed to directed fishing for Pacific cod with trawl gear in the C season (June 10, 1200 hours, A.l.t., to November 1, 1200 hours, A.l.t.), but are open during the A and B seasons.”