Prior documents in this proceeding: Notice of Hearing issued on November 24, 2008, and published in the December 1, 2008, issue of theFederal Register(73 FR 72747).

This administrative action is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Order 12866.

The proposed amendments were formulated based on the record of the public hearing held in Washington, DC, on December 5, 2008. The hearing was held to consider and receive evidence from Upland cotton producers, importers, and other interested parties on the proposed amendments to the Cotton Order (7 CFR part 1205). The hearing was held pursuant to the provisions of the Cotton Act (7 U.S.C. 2101-2118), and the applicable rules of practice and procedure governing research and promotion programs (7 CFR part 1200). The proposed amendments in this decision would: (1) Amend the Cotton Order to incorporate the States of Kansas, Virginia, and Florida into the definition of “cotton-producing state” as separate states, (2) amend the definition of “cotton-producing region” to list Kansas, Virginia, and Florida as separate states, and (3) make any such changes as may be necessary to the Cotton Order if any of the proposed amendments as adopted, so that all of the Cotton Order's provisions conform to the effectuated amendments. AMS believes that conditions exist that warrant the omission of a recommended decision in this rulemaking proceeding under 7 CFR 1200.13(d) of the Rules of Practice and Procedure with respect to the proposed amendments.

The amendments are proposed by AMS to amend the Cotton Order and to implement section 14202 of the 2008 Farm Bill that amended the Cotton Act. In addition, AMS proposed to amend the definition of cotton-producing region for consistency with the changes to the definition of cotton-producing state. AMS also proposed to make such changes as may be necessary to the Cotton Order to conform to any amendment that may result from the hearing. No conforming changes were determined to be necessary by AMS.

Three witnesses testified at the hearing, and all were in favor of the amendments. One witness represented AMS, one witness represented the Virginia Cotton Growers Association and the National Council, and lastly, one witness represented the Cotton Board.

At the conclusion of the hearing, the Administrative Law Judge set January 14, 2009, as the date for interested persons to file proposed findings and conclusions or written arguments and briefs based on the evidence received at the hearing on the proposed amendments. The Hearing Clerk received six briefs during the briefing period. Briefs were received from the offices of Congressman Allen Boyd, Jr., Florida; Congressman Bob Goodlatte, Virginia; and, Senator Pat Roberts, Kansas. Comments also were received from the Kansas Cotton Association, the Florida Farm Bureau; and, Southern Cotton Growers, Inc. Each of these briefs expressed full support of the prompt implementation of the amendments proposed by AMS. All discussions in briefs pertaining to the amendments proposed in this decision were considered. Two briefs, one from the office of Senator Bill Nelson, Florida; and one from the United States Association of Importers of Textiles and Apparel, were received after the January 14, date and therefore were untimely. Accordingly, they were not considered in this decision.

AMS proposed these amendments to the Cotton Order for the purpose of implementing changes to the Cotton Act as mandated by section 14202 of the 2008 Farm Bill. Section 14202 modified the Cotton Act by adding States of Kansas, Virginia, and Florida to the definition of “cotton-producing state” as separate states effective beginning with the 2008 crop of cotton. A crop year is synonymous with marketing year and 7 CFR 1205.320 of the Cotton Order defines “marketing year” as a consecutive 12-month period ending July 31.

AMS proposed to amend section 1205.314 of the Cotton Order to incorporate the States of Kansas, Virginia, and Florida into the definition of cotton-producing state and amend section 1205.319 to reflect the incorporation of the above three states in the definition of cotton-producing region.

The material issues in this decision presented on the record of the hearing are as follows:

1. Whether to amend section 1205.314 to read as follows: Cotton-producing State means each of the following States and combination of States: Alabama; Arizona; Arkansas; California-Nevada; Florida; Georgia; Kansas; Louisiana; Mississippi; Missouri-Illinois; New Mexico; North Carolina; Oklahoma; South Carolina; Tennessee-Kentucky; Texas; and Virginia.

2. Whether to amend section 1205.319 to read as follows: “Cotton-producing region” means each of the following groups of cotton-producing States: (a) Southeast Region: Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia; (b) Midsouth Region: Arkansas, Louisiana, Mississippi, Missouri-Illinois, and Tennessee-Kentucky; (c) Southwest Region: Kansas, Oklahoma and Texas; (d) Western Region: Arizona, California-Nevada, and New Mexico.

3. Whether to expedite the decision on all of the proposals by omitting the recommended decision and proceeding directly to the Secretary's decision and referendum order.

The following findings and conclusions on the material issues are based on the record of the hearing.

Section 1205.314 should be amended to provide that the States of Kansas, Virginia, and Florida be separate states in the definition of “Cotton-Producing State.” Section 1205.314 should read as follows: “Cotton-producing State” means each of the following States and combination of States: Alabama; Arizona; Arkansas; California-Nevada; Florida; Georgia; Kansas; Louisiana; Mississippi; Missouri-Illinois; New Mexico; North Carolina; Oklahoma; South Carolina; Tennessee-Kentucky; Texas; and Virginia.

Section 1205.314 of the Cotton Order currently defines Cotton-Producing State as, “Cotton-producing State means each of the following States and combination of States: Alabama-Florida; Arizona; Arkansas; California-Nevada; Georgia; Louisiana; Mississippi; Missouri-Illinois; New Mexico; North Carolina-Virginia; Oklahoma; South Carolina; Tennessee-Kentucky; Texas.” Currently, Kansas is not included in this definition, Virginia is combined as a region with North Carolina, and Florida is combined as a region with Alabama. AMS is proposing to amend the definition so that Kansas is added and Florida and Virginia are separated from their current partner states.

The witness representing AMS testified that the major effect of these changes is that any cotton producer organization, in any cotton-producing state, including the respective States of Kansas, Virginia, and Florida, may request certification from the Secretary pursuant to section 1205.341 of the Order to participate in nominating members and alternate members to represent such State on the Cotton Board pursuant to section 1205.324. The witness also testified that the change would also allow the States of Kansas, Virginia, and Florida, pursuant to section 1205.322(b)(1), to have at least one member, and one additional member for each 1 million bales or major fraction (more than half) thereof of cotton produced in the state and marketed above 1 million bales during the period specified in the regulations for determining board membership. Further, the AMS witness stated that in determining whether any cotton-producing state is entitled to be represented by more than one member of the Cotton Board, as provided in section 1205.322, average annual production of Upland cotton in terms of 480-pound net weight bales for the five most recent marketing years will be used as the criteria for determination of such additional members.

The AMS witness cited the U.S. Department of Agriculture's National Agricultural Statistics Service's report entitledCotton Ginnings 2007 Summary(Exhibit 6), which published the total bales produced and ginned (or marketed) by State. In the 2007 marketing year, according to this publication, Florida produced 105,900 Upland cotton 480-pound bales and would be entitled to one member and one alternate. Kansas produced 53,500 Upland cotton 480-pound bales and would be entitled to one member and one alternate. Virginia produced 98,050 480-pound bales and would be entitled to one member and one alternate.

We also note that theCotton Ginnings 2007 Summaryshows the bales ginned for: Alabama—409,900 bales and North Carolina—61,600 bales. This demonstrates that those states have significant production of cotton, and having their own Cotton Board seats would not be inappropriate.

The AMS witness stated that if the proposed changes are adopted, a total of three additional members and three alternates would be added to the Cotton Board. The witness said the 2008 Cotton Board was composed of 37 members and 37 alternate members, which are 22 producer and 15 importer members and their respective alternates, and one consumer advisor. Excluding the proposed amendment to the Cotton Order, the 2009 Cotton Board, already calculated, would be 38 members and 38 alternates, which would be 23 producers and 15 importer members and respective alternates. The AMS witness indicated that if current cotton production and cotton imports remain consistent with their 5-year averages, and there are no changes, then just three additional producer members will be added based on the cotton gin for those three states. The total Board membership would be 26 producers and 15 importer members and respective alternates, and one consumer advisor.

The witness appearing on behalf of the Virginia Cotton Growers Association and the National Cotton Council (VCGA/NCC witness) strongly supported the proposed amendments. The witness testified that the amendments to the Cotton Order, which would ultimately provide Kansas, Virginia and Florida individual representation on the Cotton Board, will enhance the Board's ability to carry out its mission. Further, the witness indicated that these states have, and will continue to contribute funds to the Cotton Research and Promotion Program. By providing the three states with individual representation on the Board, the witness stated that it will strengthen their support, enhance communication from these production areas, and better enable the Cotton Board to represent the interests of all cotton-producing areas in the United States. Moreover, the witness said that there is no other national research and promotion program for Upland cotton like the one carried out under the Cotton Act. The new representation on the Board will not overlap or contradict any ongoing promotional activities in any region of the Cotton Belt.

The VCGA/NCC witness stated that the addition of individual representation for Kansas, Virginia and Florida reflects the shift in Upland cotton production over the years. For example the witness said successful completion of the Boll Weevil Eradication Program has led to the resurgence and expansion of cotton in the Southeast, including Virginia andFlorida. In addition, improved transportation, storage and handling, some as a direct result of research conducted under the Cotton Act, has led to Upland cotton production in Kansas. According to the witness, in Virginia and Florida, the total economic activity generated by cotton production and processing exceeds $100 million annually in each state. In Kansas, acreage expanded rapidly, until recently, when prices from competing crops reversed the trend. The witness stated that the three states continue to plant more than 300,000 acres of cotton, employ over 3,000 people, and produce annual cotton crops valued at $100 million annually in each state at the farm gate.

The witness commented that the Cotton Research and Promotion Program funded through producer and importer contributions has been highly successful. Broader representation will facilitate even stronger support and enhance participation by producers. In addition, the witness urged the Secretary to take the necessary action to amend the Cotton Order, as this action will assure that nearly a thousand producers, who account for nearly 5 percent of annual production, will, for the first time, have direct representation and input into the program which they are helping finance. The witness concluded by saying that allowing these states direct representation, the Cotton Board will be better able to carry out its mission and the purpose of the statute, to increase the demand for cotton and cotton products, will be fulfilled.

The witness representing the Cotton Board testified in support of the proposed amendments. The witness indicated that the Cotton Board is ready to comply with the 2008 Farm Bill and any changes to the Cotton Act and Cotton Order that governs the Cotton Research and Promotion Program. In addition, the witness indicated that the Board is prepared to include the states and their representatives into the Cotton Board's system of governance. The witness emphasized that the Cotton Board is organized to administratively support and finance USDA's efforts to amend the Cotton Order and implement the proposed amendments. The witness testified that the Cotton Board believes that providing Kansas, Virginia, and Florida individual representation on the Board would enhance the Board's ability to carry out its mission and fiduciary responsibility, namely, to provide financing for and oversight of the Program. The witness added that producers in these States have and will continue to contribute funds to the Program. By providing them individual representation on the Cotton Board, the witness believes it will strengthen their support, enhance communication from these production areas, and better enable the Cotton Board to represent the interests of all cotton-producing areas in the United States. The Cotton Board witness reiterated the statements made by the VCGA/NCC that the Research and Promotion Program has been highly successful, and that broader representation will facilitate even stronger support and enhanced participation by producers. Moreover, the Cotton Board witness affirmed the VCGA/NCC witness' statement that nearly 1,000 producers, who account for nearly 5 percent of annual production, will, for the first time have direct representation and input into the program which they are helping to finance if the amendments were implemented.

Record evidence supports amending section 1205.314 of the Order to incorporate the States of Kansas, Virginia, and Florida into the definition of “cotton-producing State” as separate States as provided in the 2008 Farm Bill.

Section 1205.319 should be amended to read as follows:

“Cotton-production region” means each of the following groups of cotton-producing States: (a) Southeast Region: Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia; (b) Midsouth Region: Arkansas, Louisiana, Mississippi, Missouri-Illinois, and Tennessee-Kentucky; (c) Southwest Region: Kansas, Oklahoma and Texas; (d) Western Region: Arizona, California-Nevada, and New Mexico.

The AMS witness testified that AMS is proposing to amend the definition of cotton-producing region in section 1205.319 of the Cotton Order to make it consistent with the change to the definition of cotton-producing state.

“Cotton-producing region” is currently defined as each of the following groups of cotton-producing states: (a) Southeast Region: Alabama-Florida, Georgia, North Carolina-Virginia, and South Carolina; (b) Midsouth Region: Arkansas, Louisiana, Mississippi, Missouri-Illinois, and Tennessee-Kentucky; (c) Southwest Region: Oklahoma and Texas; (d) Western Region: Arizona, California-Nevada, and New Mexico.”

Accordingly, record evidence supports amending section 1205.319 of the Order to amend the definition of “cotton-producing region” to list Kansas, Virginia, and Florida as separate states. This change should make the section consistent with changes made to the definition of “cotton-producing state” in section 1205.314 of the Order.

The AMS witness testified that conditions exist that warrant the omission of a recommended decision in this rulemaking proceeding under 7 CFR 1200.13(d) of the Rules of Practice and Procedure with respect to the proposed amendments. The 2008 Farm Bill provides that this change be made during the 2008 crop of cotton. Omission of the recommended decision would allow the rulemaking to conform to this timeline as closely as possible. Accordingly, in accordance with section 1200.13(d) of the rules of practice and procedure, it is hereby found and determined on the basis of the record that due and timely execution of the Secretary's functions imperatively and unavoidably requires omission of the recommended decision.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) [5 U.S.C. 601-612], AMS has considered the economic effect of this action on small entities and has determined that its implementation will not have a significant economic impact on a substantial number of small entities. There are currently approximately 18,000 producers, and approximately 16,000 importers that are subject to the Cotton Order. In 13 CFR part 121, the Small Business Administration (SBA) defines small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (importers) as those having annual receipts of no more than $7.0 million. The majority of these producers and importers are small businesses under the criteria established by the SBA.

The Cotton Research and Promotion Act of 1966 provides authority to establish the Cotton Board to administer the Cotton Research and Promotion Program. In 2009, the Board is composed of 38 members and 38 alternate members (23 producer and 15 importer members and alternate members) and one consumer advisor. The Board is responsible for carrying out an effective and continuous program of research and promotion in order to strengthen the competitive position of Upland cotton by expanding domestic and foreign markets for cotton, improving fiber quality, and lowering the costs of production. The Program, including U.S. Department of Agriculture administrative costs, isfinanced through producer and importer assessments levied on each bale or bale equivalent of cotton at a rate of $1 per bale with a supplemental (currently 5/10ths of one percent) assessment not to exceed 1 percent of the value of lint of each bale. There are approximately 18,000 producers, and approximately 16,000 importers that are subject to the Order. In 2008, the Board collected $64.2 million in assessments ($36.2 million from producers and $28 million from importers).

Interested persons were invited to present evidence at the hearing on the possible regulatory and informational impacts of the proposals on small businesses. The amendments proposed herein would not result in any additional regulatory requirements being imposed on cotton producers and importers. The proposed amendments to the Cotton Order merely reflect the statutory changes needed to implement the 2008 Farm Bill provisions that provided that Kansas, Virginia, and Florida be separate states in the definition of “cotton-producing state.”

There are no new information collection reports as a result of the proposed amendments. Information collection requirements and recordkeeping provisions contained in 7 CFR part 1205 have been previously approved by the Office of Management and Budget (OMB) and assigned OMB Control Number 0581-0093 under the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35).

The amendments herein have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. If adopted, the proposed amendments would not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Cotton Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 12 of the Cotton Act, any person subject to an order may file with the Secretary of Agriculture a petition stating that the order, any provision of the plan, or any obligation imposed in connection with the order is not in accordance with law and requesting a modification of the order or to be exempted therefrom. Such person is afforded the opportunity for a hearing on the petition. After the hearing, the Secretary would rule on the petition. The Cotton Act provides that the District Court of the United States in any district in which the person is an inhabitant, or has his principal place of business, has jurisdiction to review the Secretary's ruling, provided a complaint is filed within 20 days from the date of the entry of ruling.

Briefs, and the evidence in the record were considered in making the findings and conclusions set forth in this decision. To the extent that the suggested findings and conclusions filed by interested persons are inconsistent with the findings and conclusions of this decision, the requests to make such findings or to reach such conclusions are denied.

Annexed hereto and made a part hereof is the document entitled “Order Amending the Cotton Research and Promotion Order.” This document has been decided upon the detailed and appropriate means of effectuating the foregoing findings and conclusions.

It is hereby ordered,that this entire decision be published in theFederal Register.

Pursuant to the applicable provisions of the Cotton Research and Promotion Act (7 U.S.C. 2101-2118) it is hereby directed that a referendum be conducted among the cotton producers and importers who have been engaged in the production of Upland cotton in the United States or who were engaged in the importation of Upland cotton or cotton-containing products to determine whether such producers or importers favor the amendments of the said annexed Cotton Research and Promotion Order.

The procedure applicable to the referendum shall be the procedure for the conduct of referenda in connection with the Cotton Research and Promotion order (7 CFR part 1205.200) as published in this issue of theFederal Register. The referendum period shall be from October 13, 2009, through November 10, 2009, provided that ballots cast prior to October 13, 2009, shall not be invalidated for that reason. For the purpose of determining producer voter eligibility, the representative period is the period January 1, 2008 through December 31, 2008. Producers engaged in the production of the 2008 crop during that period are eligible to vote in the referendum. For the purpose of determining importer voter eligibility, the 12-month period during which qualifying imports of cotton must have been made is January 1, 2008, through December 31, 2008, and imported such products having a value of cotton in excess of the de minimis value per line item entry would also be eligible to vote.

The agent of the Secretary to conduct such referendum is hereby designated to be Shethir M. Riva, Chief, Research and Promotion Staff, Cotton and Tobacco Programs, AMS, USDA, Stop 0224, 1400 Independence Ave., SW., Room 2637-S, Washington, DC 20250-0224, telephone (202) 720-6603, facsimile (202) 690-1718, or e-mail atShethir.Riva@ams.usda.gov.

Single copies of the complete text of the proposed amendments to the Cotton Research and Promotion Order may be obtained from any Farm Service Agency county office in cotton-producing counties or from the Agricultural Marketing Service, Cotton and Tobacco Programs, Washington, DC 20250.

It is hereby ordered, That all of this decision, referendum order, and annexed and Cotton Research and Promotion Order be published in theFederal Register.

The findings and determinations hereinafter set forth are supplementary and in addition to the findings and determinations previously made in connection with the issuance of the Order; and all of said previous findings and determinations are hereby ratified and affirmed.

Pursuant to the provisions of the Cotton Research and Promotion Act (Cotton Act) (7 U.S.C. 2101-2118), and the applicable rules of practice and procedure effective thereunder (7 CFR part 1200), a public hearing was held in Washington, DC on December 5, 2008, on the proposed amendments to the Cotton Research and Promotion Order (7 CFR part 1205). Upon the basis of the evidence introduced at such hearing and the record thereof, it is found that:

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

(2) All cotton produced and handled in the United States is in the current of interstate or foreign commerce ordirectly burdens, obstructs, or affects interstate or foreign commerce in cotton and cotton products.

The provisions of the amended Order are set forth in full herein.

For the reasons set forth in the preamble, 7 CFR Part 1205 is proposed to be amended as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA-2009-0824 and Airspace Docket No. 09-AAL-11) and be submitted in triplicate to the Docket Management Facility (see ADDRESSESsection for address and phone number). You may also submit comments through the Internet athttp://www.regulations.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2009-0824 and Airspace Docket No. 09-AAL-11.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this action may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet athttp://www.regulations.gov.Recently published rulemaking documents can also be accessed through the FAA's Web page athttp://www.faa.gov/air_traffic/publications/airspace_amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see ADDRESSESsection for address and phone number) between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. An informal docket may also be examined during normal business hours at the office of the Regional Air Traffic Division, Federal Aviation Administration, 222 West 7th Avenue, Box 14, Anchorage, AK 99513-7587.

Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, for a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is proposing an amendment to the Title 14, Code of Federal Regulations (14 CFR part 71), that would revise two Colored Federal Airways, G-16 and B-26 by removing the segment to the BTI NDB from each airway description. In a separate action, one Area Navigation (RNAV) route T-228 was revised, and T-73 was established to continue IFR service to Village of Kaktovik, Alaska. The BTI NDB decommissioning proposal was publicly circulated in notice number 06-AAL-49NR. After reviewing public comment, the FAA decided that keeping the NDB was not feasible and that it should be decommissioned.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this proposed regulation: (1)Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would revise Colored Federal Airways in Alaska.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1E, “Environmental Impacts: Policies and Procedures,” prior to any FAA final regulatory action.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

In FR Doc. E9-22850, appearing on page 48423, in theFederal Registerof Wednesday, September 23, 2009, the following corrections are made:

1. On page 48423, in the third column, in the Docket No. heading, “[Docket No. FDA-2008-D-0409]” is corrected to read “[Docket No. FDA-2009-N-0435]”.

2. On page 48423, in the third column, in theADDRESSESsection, beginning in the second line, “[Docket No. FDA-2008-D-0409] (formerly Docket No. 2004D-0431)” is corrected to read “[Docket No. FDA-2009-N-0435]”.

Grand Teton National Park is located in northwest Wyoming, and encompasses approximately 310,000 acres. Located just to the south of Yellowstone National Park, Grand Teton is at the heart of the Greater Yellowstone Ecosystem, and includes the iconic mountains of the Teton Range, the broad valley of Jackson Hole, numerous lakes, and a 40-mile segment of the Snake River. The park was originally established in 1929, but at that time included only the mountains and several of the lakes at their base. In 1943, Jackson Hole National Monument was established by presidential proclamation, including much of the valley to the east of the mountains. In 1950, Congress combined the 1929 park and the national monument into the present-day national park, ending the long and controversial period that led up to the park's establishment.

The park supports diverse and abundant populations of wildlife, and is world renowned for its opportunities to view elk, moose, bison, pronghorn, grizzly and black bears, grey wolves, and coyotes. Other species, such as trumpeter swans, bald eagles, and many species of waterfowl and small mammals are also abundant.

Visitors to Grand Teton National Park typically participate in several types of activities, including scenic touring, viewing wildlife, hiking, mountain climbing, fly fishing, float trips, bicycling, and other forms of recreation consistent with enjoyment of the park's resources. The park includes several major developed areas, five campgrounds, almost 200 miles of hiking trails, 140 miles of paved roads, and 70 miles of unpaved roads. Visitation to the park has remained relatively constant over the last decade at approximately 2.5 million recreational visitors, mostly occurring between the months of May and September.

In April 2000, Grand Teton National Park undertook a transportation study to provide basic information regarding transportation issues in the park. The study served as a foundation for the next step in the process, which included the development of a transportation plan that was initiated in September 2001. TheTransportation Plan/Final Environmental Impact Statement(FEIS) was released in September 2006. ARecord of Decision(ROD) selecting Alternative 3a was signed on March 12, 2007, and a notice of the decision was published in theFederal Registeron April 24, 2007 (72 FR 20365). A full description of the alternatives that were considered, the environmental impacts associated with the project, and public involvement can be found online athttp://www.nps.gov/grte/parkmgmt/tranplan.htm.

Although the planning effort and ROD addressed a variety of transportation-related issues, a major focus was on the development of a system of multi-use pathways to improve opportunities for non-motorized activities within the park. Bicycling has become increasingly popular in the park, and many visitors and others who commented during the planning process expressed concerns over the risks that are present when bicycles and motor vehicles share the road. Commentors often noted that this was particularly true for families with young children or visitors who are not experienced bicyclists.

Among the issues that were raised during the planning process were the potential effects of the pathway system on the park's wildlife. Although wildlife is abundant and often visible from park roads, it is well documented that animals respond differently to pedestrians and bicyclists than they do to the mere presence of motor vehicles. The potential for reducing the effectiveness of habitat and displacing wildlife from areas located near the pathways was a significant concern for many individuals and organizations that commented during the planning process. Furthermore, in light of the park's abundant wildlife, concerns were raised regarding the potential for surprise encounters between bicyclists and large animals, including grizzly bears.

The ROD sets forth the park's decision for the development of an extended system of multi-use pathways within the park. The system will include 39 miles of pathways between the south park boundary and Colter Bay via the Teton Park Road, as well as a 3-mile segment along the Moose-Wilson Road between the Granite Canyon Entrance and the Laurance S. Rockefeller Preserve. In general, pathways will be constructed within 50 feet of the road, except that the 16-mile segments between North Jenny Lake Junction and Colter Bay and along the Moose-Wilson Road will be constructed in very close proximity to the roads, generally within the existing engineered and previously disturbed road corridors.

The preferred alternative in the final plan/EIS, and subsequently adopted in the ROD, addressed the concerns regarding wildlife through a combination of research and monitoring, construction phasing, and the requirement that certain portions of the pathway system would be constructed within the existing road corridors. Specifically, the ROD includes a significant emphasis on wildlife research and monitoring to provide detailed understanding of the effects of pathway development. Monitoring and research activities were begun in 2007 to provide a pre-construction baseline, and will continue through at least 2009. The phased approach to construction of the pathway system will allow information obtained from the research and monitoring program to be integrated into the design and operation of each subsequent pathway segment. Finally, for those portions of the pathway system between North Jenny Lake Junction and Colter Bay, and along the Moose-Wilson Road, the pathways will be located within the engineered corridor in which the existing roadways are located. Since the road corridors are less frequently used by wildlife than the adjacent habitat, and have generally clear lines of sight, the chances for surprise encounters between bicyclists and wildlife would be reduced to essentially the same level that exists on the road shoulder.

The first phase of pathways was constructed during the summer and fall of 2008. These segments extend from the Dornan's inholding near park headquarters in Moose along the Teton Park Road to the South Jenny Lake area, a distance of approximately 8 miles. Additional segments may be constructed as funds become available.

This proposed rule complies with 36 CFR 4.30, which requires the NPS to designate bicycle routes outside of developed areas through promulgation of a special regulation. That regulation further specifies that such routes may bedesignated only upon “* * * a written determination that such use is consistent with the protection of a park area's natural, scenic and aesthetic values, safety considerations and management objectives and will not disturb wildlife or park resources.” The Superintendent has made such a determination and found that the designation of the pathway segment between Moose and South Jenny Lake as a route for bicycle use is consistent with the requirements of 36 CFR 4.30.

The proposed rule would also make several changes to the special regulations for Grand Teton National Park to reflect current operating practices or changes to the park's land status. The proposed rule would close Phelps Lake to the operation of motor boats, consistent with all other backcountry lakes in the park. This change is prompted by the change in land status for the area surrounding the southern half of the lake. Prior to November 2007, these lands were a private inholding within the park known as the JY Ranch, owned by Laurance S. Rockefeller and, subsequent to his death, by his estate. The property functioned as a family guest ranch and retreat for the Rockefeller family since the 1930s, where guests typically engaged in activities such as hiking, horseback riding, and boating on Phelps Lake. The ranch included a boathouse on the lakeshore where motorboats were kept during the summer. The park's special regulations authorized the use of motorboats on Phelps Lake, thereby allowing the JY Ranch to continue a use that had existed prior to the park's establishment. No other motorboat use occurred on the lake since it was inaccessible to park visitors except on foot or horseback.

Before his death, Mr. Rockefeller made a decision to donate the property to the United States for inclusion within Grand Teton National Park. In accordance with Mr. Rockefeller's wishes, all buildings, roads, and other development were removed by his estate, and a system of trails to allow visitors to enjoy the area was constructed. The property was acquired by the United States in November 2007. The proposed rule would remove the now unnecessary provision to allow motorboat use on Phelps Lake.

The proposed rule would remove the provision in § 7.22(b) that allows authorized marine bait dealers, all of which are park concessioners, to keep certain species of fish taken from Jackson Lake and sell them as bait. The NPS determined that provision to be unnecessary and inconsistent with NPS Management Policies 2006 and the practice was discontinued several years ago.

The proposed rule would eliminate the provision in paragraph (3) that authorizes marine bait dealers at Jackson Lake to take certain species of fish taken from Jackson Lake or waters that flow into Jackson Lake and sell those fish as bait.

The proposed rule would eliminate the reference to Phelps Lake in paragraph (1), thus prohibiting the use of motorboats on that body of water. Motorboats would continue to be allowed on Jackson and Jenny lakes.

The proposed rule adds a new paragraph to the special regulations for Grand Teton National Park, designating two segments of existing multi-use pathways as routes for bicycle use. The general regulations for bicycle use in the National Park System require that such designation be accomplished by the promulgation of a special regulation. The proposed rule would designate the segments that were completed in 2008.

This document is not a significant rule and is not subject to review by the Office of Management and Budget under Executive Order 12866.

(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. This is based on information contained in the report titled “Cost-Benefit and Regulatory Flexibility Analyses: Proposed Regulations Designating Pathways for Multi-Use in Grand Teton National Park,” which is available for public review athttp://www.regulations.gov.

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. Implementing actions under this rule will not interfere with plans by other agencies or local government plans, policies, or controls since this is an agency specific change.

(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. It only affects the use of bicycles and motorboats within Grand Teton National Park. No grants or other forms of monetary supplement are involved.

(4) This rule does not raise novel legal or policy issues. This rule simply implements the Servicewide bicycle regulation regarding bicycle routes in Grand Teton National Park.

The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601et seq.). This certification is based on information contained in the report titled, “Cost-Benefit and Regulatory Flexibility Analyses: Proposed Regulations Designating Pathways for Multi-Use in Grand Teton National Park,” which is available for public review athttp://www.regulations.gov.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

a. Does not have an annual effect on the economy of $100 million or more.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

This determination is based on information from “Cost-Benefit and Regulatory Flexibility Analyses: Proposed Regulations Designating Pathways for Multi-Use in Grand Teton National Park” which can be found athttp://www.regulations.gov.This action does not involve additional construction, fees, or other measures that would increase costs to visitors, businesses, communities, or the Park. Therefore, this action will not impose any costs.

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. It addresses public use of national parklands, and imposes no requirements on other agencies or governments.

Under the criteria in Executive Order 12630, this rule does not have significant takings implications. A takings implication assessment is not required.

In accordance with Executive Order 13132, the rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. This proposed rule only affects use of NPS administered lands and waters. It has no outside effects on other areas.

This rule complies with the requirements of Executive Order 12988. Specifically, this rule:

(a) Does not unduly burden the justice system;

(b) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(c) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

This rule does not contain information collection requirements, and a submission under the Paperwork Reduction Act (PRA) is not required.

In accordance with the National Environmental Policy Act, the National Park Service prepared an Environmental Impact Statement and Record of Decision for the uses contemplated in the proposed rule. A copy of the documents can be obtained by contacting the Superintendent, Grand Teton National Park, P.O. Drawer 170, Moose, Wyoming 83012. The documents are also available online athttp://www.nps.gov/grte/parkmgmt/tranplan.htm.

In accordance with the President's memorandum of April 29, 1994, “Government to Government Relations with Native American Tribal Governments” (59 FR 22951) and 512 DM 2:

We have evaluated the potential effects on federally recognized Indian tribes and have determined that there are no potential effects. Representatives of the eleven tribes affiliated with Grand Teton National Park were consulted during the preparation of the Environmental Impact Statement for the project.

We are required by Executive Orders 12866 and 12988 and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:

(a) Be logically organized;

(b) Use the active voice to address readers directly;

(c) Use clear language rather than jargon;

(d) Be divided into short sections and sentences; and

(e) Use lists and tables wherever possible.

If you feel that we have not met these requirements, send us comments by one of the methods listed in theADDRESSESsection. To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the numbers of the sections or paragraphs that you find unclear, which sections or sentences are too long, the sections where you feel lists or tables would be useful, etc.

Drafting Information:The primary authors of this regulation were Gary Pollock, Management Assistant, Grand Teton National Park, Michael Tiernan, Office of the Solicitor, U.S. Department of the Interior and Philip A. Selleck, Chief, Regulations and Special Park Uses, National Park Service.

Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

In consideration of the foregoing, the National Park Service proposes to amend 36 CFR Part 7 as set forth below:

Veterans and servicemembers with severe disabilities may be eligible under 38 U.S.C. chapter 21 for specially adapted housing (SAH) grants. In administering the SAH program, VA helps these eligible individuals to purchase, construct, or adapt a home that suits the individual's living needs. This document proposes to amend VA's regulations in 38 CFR Part 36, Subpart C, Assistance to Certain Disabled Veterans in Acquiring Specially Adapted Housing, §§ 36.4400 through 36.4410, which implement the SAH grant program. Because eligibility for SAH grants includes certain disabled servicemembers, the proposed rule would revise the heading of Subpart C to refer to “Eligible Individuals” rather than “Certain Disabled Veterans.”

The proposed amendments are necessary for three reasons. First, VA believes the regulations should be written in a reader-focused style. Second, detailed guidance about program policies and an easy-to-follow organizational structure will help applicants and eligible individuals (and those acting on their behalf) to navigate the program. Third, substantive changes are necessary to incorporate legislation, policy decisions, and a legal decision of VA's Office of the General Counsel. Pursuant to 38 U.S.C. 2101(d), the Secretary may prescribe regulations applicable to the SAH program. In revising these regulations, VA intends that applicants, eligible individuals, other program participants, and other interested parties will be better informed about the legal requirements and Department policies that guide the administration of SAH grants.

The following is a section-by-section analysis of VA's proposed rule. We outline briefly for each section the current rule and the proposed rule, as well as the reasons for the changes, noting the objectives and intended effects of the proposed rule. VA welcomes comments on every aspect of its proposal, but is particularly interested in drawing attention to three sections: (1) § 36.4404, in which VA proposes to ease the requirements for satisfying the SAH eligibility criteria; (2) § 36.4405, VA's proposed two-staged approval process intended to reduce eligible individuals' out-of-pocket expenses, thereby increasing the number of eligible individuals who may use the SAH program; and (3) § 36.4406, a more structured process for reimbursing eligible individuals who have expended personal funds toward authorized grant expenses.

Current § 36.4400, “Applicability,” states that any references to chapters 21 and 37 of title 38 U.S.C. are deemed where applicable to refer also to the prior corresponding provisions of the law. At the time the current rule was promulgated, Congress had recently consolidated into title 38 all of the laws administered by the then Veterans Administration. Almost 50 years have passed since Congress moved the statutes governing SAH to 38 U.S.C. chapter 21, and VA believes the reference to the former provisions may confuse readers. Therefore, the proposed rule would delete the reference to the former codification of the SAH authorizing statutes. The section's heading would be changed to “Authority” to reflect changes in its content. The proposed rule would no longer contain the current rule's applicability provisions. No substantive change is intended by the changes to this section.

Currently, definitions of eight terms are found in § 36.4401: “Secretary,” “chapter 21,” “movable facilities,” “necessary land,” “special fixtures and necessary adaptations,” “housing unit,” “remodeling,” and “veteran's family.” The proposed rule would add 16 terms and delete six terms. These changes would: (1) Replace certain terms with more reader-friendly ones; (2) add new terms, providing SAH-specific meanings where everyday usage might require additional clarification; (3) define terminology unique to the SAH program; (4) provide new definitions as a result of both established and proposed VA policies; and (5) delete terms that would be rendered unnecessary by the new rule. The terms would also be reordered to appear in alphabetical order.

First, the definition of “Housing unit” would be expanded to make it easier for the general public to understand the rule. The term “Housing unit,” which would be defined to include “any residential unit, including all necessary land, improvements, and appurtenances, together with such movable equipment or special features as are authorized by 38 U.S.C. 1717 and 2101,” would incorporate the current definitions of “movable facilities,” “necessary land,” and “special fixtures and necessary adaptations.”

Second, the proposed rule would expand the list of definitions and provide SAH-specific meanings for some commonly-used words. For example, the term “reside,” which would mean “to occupy (including seasonal occupancy) as one's residence,” would reflect VA's current policy of allowing seasonal occupancyunder the SAH program. Other new terms include: “Adapt,” “braces,” “disability,” “eligible individual,” and “eligible individual's family.”

Third, a few of the proposed definitions reflect terminology that has developed over time with the SAH program: “Paraplegic housing grant or PH grant,” “adapted housing grant or AH grant,” and “temporary residence adaptations grant or TRA grant,” would mean grants authorized under 38 U.S.C. 2101(a), 2101(b), and 2102A, respectively. “Specially adapted housing grant” would be defined to clarify that the term refers collectively to PH, AH, or TRA grants. “Aggregate amount of assistance available” would mean the grant amount available to an eligible individual based on the annual adjustments required by 38 U.S.C. 2102(e).

Fourth, the proposed rule would add several definitions that are the result of substantive policy decisions. The term “ownership interest” would: (1) Ensure that an eligible individual will not be denied SAH benefits because he or she chooses a less traditional method of property ownership, (2) account for the fact that trends in property ownership vary based on geographic region, and (3) incorporate statutory language expressly permitting the Secretary to provide SAH grants outside the United States. A definition of “beneficial property interest” has also been added to facilitate provision of SAH grants outside the United States by accounting for different laws and customs related to property ownership in various countries. The preamble explanation of § 36.4405 describes more fully the effects of this change.

Three other new defined terms would be “construction-related cost,” “preconstruction cost,” and “reimburse.” VA believes that these terms are necessary in explaining VA's policy of reimbursing eligible individuals (or, where applicable, their estates) for costs related to the preparation for adaptations and for the actual adaptations. An in-depth explanation of this policy is provided below, in the discussion of § 36.4406.

Finally, the proposed rule would render certain terms unnecessary. Such terms are “chapter 21,” “movable facilities,” “necessary land,” and “special fixtures and necessary adaptations,” “remodeling,” which would be considered part of the definition of “adapt,” and “veteran's family,” which would be replaced with “eligible individual's family.” Therefore, VA proposes to delete these terms.

Chapter 21 of title 38, U.S.C., authorizes the Secretary to provide three types of SAH grants. The PH grant is available to the most severely disabled veterans and servicemembers who meet the criteria set forth in section 2101(a). The monetary cap on PH grants, currently $60,000, is higher than that for the other grants. The AH grant is for severely disabled veterans and servicemembers who satisfy the requirements of section 2101(b). Its statutory cap is currently $12,000. The TRA grant, authorized by Public Laws 109-233 and 110-289, is a grant that allows eligible individuals who temporarily reside in a housing unit owned by a member of the eligible individual's family to receive assistance to adapt that home.

Currently, the regulations do not describe in detail the various SAH grant types. Instead, they cite only the basic information codified at 38 U.S.C. 2101. Moreover, the regulations give few particulars about the various grant types available to eligible individuals, but specifically reference the maximum grant amounts, which are subject to annual adjustments and, thus, easily outdated.

Therefore, under the proposed rule, § 36.4402, “Grant types,” would explain the PH grant, AH grant, and TRA grant. More specifically, the section would describe the respective plan options under which an eligible individual may obtain assistance. The statute provides formulas for calculating the amount of grant assistance, based on the type of grant and the nature of the property to be adapted. By outlining these detailed formulas in the regulation, VA would make it easier for the public to understand how VA determines the amount of assistance it is to provide. VA also clarifies its interpretation of 38 U.S.C. 2102(a)(3), which governs the amounts of assistance available for the remodeling of a dwelling acquired prior to the application for SAH assistance. This provision requires the Secretary to pay the greater of (A) the cost to the veteran of such remodeling or (B) 50 percent of the cost to the veteran of such remodeling, plus other costs as prescribed by statute. These other costs may be either 50 percent of the costs of the dwelling and land or the full amount of any unpaid principal loan balance, whichever is less. Since Congress expressly limited 38 U.S.C. 2102(a)(2) and (a)(4) to the smaller of the available sums, but did not impose a similar limitation on option (a)(3). VA has always interpreted Congress's omission as being intentional, meaning the Secretary should pay the greater of the available sums to eligible individuals who choose option (a)(3). This is consistent with the policy of the Specially Adapted Housing program which “is intended to be of the highest beneficial character and, within reasonable legal bounds, should be liberally construed.” VAOPGCPREC 13-95. The section would also tie the grant amount to the “aggregate amount of assistance available” rather than explicitly mentioning a dollar figure. In addition, the section would clarify the restrictions on duplication of benefits that currently exist in § 36.4402(b)(1) and (b)(2). These restrictions are intended to reflect the limitations imposed by 38 U.S.C. 2104(b) without imposing any additional limitation. Finally, the section would correct the citation of section 1712 by referring instead to 38 U.S.C. 1717.

The proposed changes in § 36.4402 are necessary for three reasons. First, by discussing the specifics of the PH grant, AH grant, and TRA grant plans, the proposed rule would better inform eligible individuals about their SAH options. Second, since the TRA grant was authorized by Public Laws 109-233 (“Veterans' Housing Opportunity and Benefits Improvement Act of 2006”) and 110-289 (“Housing and Economic Recovery Act of 2008”), which were enacted after VA issued the current SAH regulations, the proposed rule would update the SAH regulations to include relevant information about this benefit. Finally, eliminating specific dollar amounts from the regulatory text would allow the Secretary to adjust grant amounts, in accordance with applicable statutory provisions (38 U.S.C. 2102(e)), without amending the regulations. The intended effect of this action is clear, detailed, accurate regulations that will further assist eligible individuals in obtaining their SAH benefits.

Currently, the SAH regulations do not provide any information about subsequent use of SAH grants. Prior to the enactment of Public Law 109-233 in 2006, an individual could receive only one grant of assistance under the SAH program. Therefore, even if an individual had used only half of the aggregate amount of assistance available, the individual was unable to preserve the balance of assistance in order to reuse the benefit at a later date.

With the enactment of Public Law 109-233, the program was expanded to allow for up to three grant usages per eligible individual, subject to the aggregate amount of assistance available. Accordingly, we are proposing that § 36.4403, “Subsequent use,” would describe the restrictions on obtaining more than one SAH grant. The section would discuss the number of times each grant may be used and the aggregate amount of assistance available. Additionally, the section would note that funds from subsequent grant usages may not be used retroactively; in other words, even if the eligible individual has not used the aggregate amount of assistance available, subsequent use funds may not reimburse for costs incurred prior to the enactment of the enabling legislation (June 15, 2006) or prior to the eligible individual's subsequent use grant approval. The intended effect of this action is regulations that are up to date and that will educate applicants and other interested persons about opportunities available through the SAH program.

38 U.S.C. 2101 sets forth the eligibility requirements for obtaining SAH assistance by dividing such requirements into two categories: (i) Disability requirements and (ii) feasibility and suitability requirements. The former prescribes the medical criteria necessary for eligibility; the latter establishes minimum standards for determining whether the proposed adaptations are consistent with the purpose of the SAH program and the applicant's unique circumstances. Applicants must satisfy the requirements of both statutory categories before being considered eligible to receive a grant of assistance.

Currently, the regulations implementing the eligibility requirements are found at 38 CFR 36.4402. In that section, there is no discussion of the medical disability requirements for SAH eligibility, merely a reference to 38 U.S.C. 2101. Current § 36.4402 details the feasibility and suitability requirements located at 38 U.S.C. 2101(a)(3) and (b)(3), but it also lists the legal property interests, non-discrimination certifications, and flood insurance certifications that are acceptable to VA for the purpose of the SAH program. Although these last three requirements are important aspects of the SAH program, their placement in § 36.4402 may be confusing, as one might infer that such considerations factor into an applicant's eligibility.

Therefore, proposed § 36.4404, “Eligibility for assistance,” would revise current § 36.4402 by limiting its scope only to those criteria necessary for SAH eligibility: Disability requirements and feasibility and suitability requirements. In terms of disability requirements, the section would outline the statutory requirements. In terms of feasibility and suitability requirements, this section would outline the requirements set forth for PH grants in 38 U.S.C. 2101(a)(3), for AH grants in section 2101(b)(3), and for TRA grants in section 2102A.

The statutory meaning of PH grant feasibility is that an applicant's medical condition does not prevent him or her from living in the proposed housing unit, in the proposed locality, and that the applicant's present or anticipated income and expenses bear a proper relation to the proposed housing unit. Evidence of such feasibility might include, among other things, doctors' orders and credit reports.

PH grant suitability means that the nature and condition of the proposed housing unit are suitable to the applicant's living needs. In most cases, the proposed rule would simplify the evidence one must submit at this stage by allowing him or her to provide materials as basic as non-scaled drawings and a specific list of the proposed adaptations. Depending on the applicant's condition and the proposed adaptations, however, a determination may require more detailed documentation, such as scaled plans and specifications. Additional aspects of this policy are discussed in the analysis of §§ 36.4405 and 36.4406.

Like the PH grant, the AH grant's feasibility and suitability requirements in this proposed rule mirror the statute. Such requirements are based on residency and can be satisfied by the applicant certifying that he or she resides, and reasonably intends to reside, in the proposed housing unit. If the applicant's residence is not yet constructed, then the applicant must certify that he or she will be residing in, and reasonably intends to be residing in, the housing unit. An applicant may also be eligible for an AH grant if the existing housing unit, or the housing unit to be constructed, is owned by a member of the applicant's family.

Proposed § 36.4404 would also address another important aspect of eligibility. Because ownership interests, non-discrimination certifications, and flood certifications are not part of the eligibility determination, all references to such issues would be moved to other sections, as explained below. This action is necessary for two reasons. First, it is important that the SAH regulations state as clearly as possible which disability conditions make an individual eligible for which grant. Second, it is necessary to state expressly to the public that eligibility cannot be established (and, consequently, neither preconstruction costs nor construction costs may be incurred) until both the disability requirements and the feasibility and suitability requirements have been confirmed and documented. VA has authority to take this action pursuant to 38 U.S.C. 2101 and 2102A. The intended effect of this action is regulations that are up to date and that accurately describe all of the requirements that may make an individual eligible for SAH assistance.

Currently, the regulations provide little information regarding the SAH grant approval process. While regulations are not always the proper medium through which to explain detailed administrative procedures, it is important for applicants, eligible individuals, and other affected members of the public to understand the chronology of the program and what it means to them as far as incurring costs and moving forward with planning and construction. Thus, VA is proposing that the regulations contain details about the meanings, requirements, and implications of the SAH grant approval process.

Under the current grant approval process, SAH agents at field facilities counsel applicants, in accordance with the program's operating manual (VBA Manual M26-12,“Specially Adapted Housing Grant Processing Procedures, Loan Guaranty Operations Regional Office Manual,” available athttp://www.warms.vba.va.gov/M26_12.html), at each point in the application process. Changes to the SAH program (specifically, the subsequent use and TRA grant provisions of Public Laws 109-233 and 110-289) have rendered the program complex enough that specific regulatory guidance in the area of grant approval will simplify the process for all participants.

Under proposed § 36.4405, “Grant approval,” VA would formalize a two-staged grant approval process. The first stage of the approval process would lead to what proposed § 36.4405(a) calls “conditional approval,” at which point the Secretary may authorize certain preconstruction costs. The second stage, as set forth in proposed § 36.4405(b), would culminate in “final approval,” and the Secretary's disbursement of the full grant proceeds.

Conditional approval would be the Secretary's authorization for anapplicant to move forward with more detailed planning of adaptations. An application would be approved conditionally on the date the Secretary determines that the individual has met all eligibility requirements, as set forth in proposed § 36.4404, and that the applicant has not exceeded the grant usage and dollar limitations set forth in proposed §§ 36.4402 and 36.4403.

Once an applicant has obtained conditional approval, the Secretary may authorize him or her, in writing, to incur certain preconstruction costs pursuant to § 36.4406. Such preconstruction costs could include architectural services, land surveys, attorneys' fees, and other costs or fees necessary to plan for grant use and would be limited to no more than 20 percent of the eligible individual's grant amount. Conditional approval must be granted before an applicant would be authorized to incur any preconstruction costs. Should an applicant incur preconstruction costs prior to conditional approval, he or she would not be reimbursed for those costs. This is because, pursuant to the authorizing statute, an applicant must be deemed eligible for grant assistance before the Secretary may approve the disbursement of any grant funds.

An applicant who has obtained conditional approval would need to satisfy all requirements of § 36.4405(b) before the Secretary would authorize final approval. One such requirement would be to provide the Secretary scaled plans and specifications for the planned adaptations. The Secretary must determine that the plans and specifications meet the minimum property and design requirements of the SAH program. VA's review of plans at this stage would differ from the feasibility and suitability determination under § 36.4404. Under proposed § 36.4404, plans may be preliminary and need not be scaled, which would allow VA to determine eligibility without requiring a veteran or servicemember to expend personal funds in advance of the grant. The plans and specifications required at this stage, however, would need to be more detailed than those required to determine eligibility, as they would be relied upon during the inspection process and for the release of funds. In other words, at the beginning of this second and final stage, the Secretary already would have determined that the planned adaptations were suitable and feasible for the purposes of eligibility; nevertheless, the Secretary still would need to determine that the adaptations also met minimum property and design requirements before granting final approval and disbursing the remaining grant proceeds.

Another important requirement in this stage is that an applicant who has obtained conditional approval must provide the Secretary evidence of sufficient ownership interest in the proposed housing unit. Though this requirement is not new, it would change substantially from current practice. As stated above, existing title requirements for PH grants, which are found at 38 CFR 36.4402, do not necessarily reflect the vast choices available to an applicant when planning an estate. For instance, a life-estate is a commonly used tool in estate-planning, yet VA's current regulations do not include the life-estate as an acceptable form of title.

Under the proposed rule, an applicant would have more freedom in the type of estate that he or she chooses to obtain. Moreover, since the applicant would already be conditionally approved for a grant at this stage, meaning that the applicant's eligibility status would have been determined, he or she would be authorized to use a portion of the grant proceeds for attorneys' and other legal fees. VA believes that this change will open the door to SAH assistance for a number of veterans and servicemembers who might not otherwise be able to afford the upfront costs associated with the SAH program.

In addition to the proposed new portions of the regulation described above, the final grant approval section would contain the joint ownership provisions, non-discrimination certifications, flood insurance requirements, and geographical limitations in current §§ 36.4402(a)(5), 36.4402(a)(6), 36.4403, and 36.4411, respectively. The current rule on joint ownership would be revised in accordance with the statute in 38 U.S.C. 2102(c), making it clear that an eligible individual's available grant assistance would not be reduced simply because of a shared interest in a property. The non-discrimination and flood insurance provisions would not contain new provisions, but they would be more intuitively located. The provisions relating to geographical limitations would be revised to eliminate specific references to Guam and American Samoa, because they are included within the meaning of the term “Territories.” This provision would also incorporate the provisions of Public Law 110-289 expressly permitting the Secretary, in his or her discretion, to provide SAH grants to otherwise eligible individuals residing outside the United States.

The proposed amendments to the SAH grant approval process are necessary to reduce the possible confusion surrounding the process created by current regulations. Since numerous determinations must be made at various points on the SAH timeline, and since certain financial considerations (for example, reimbursements for preconstruction costs) are dependent upon the stage of an applicant's grant approval, it is important that the regulations are clear about exactly how such stages are structured. VA has authority to take this action pursuant to 38 U.S.C. 2101 and 2102A. The intended effect of this action is more detailed regulations that make clear to the public the aspects of and practical differences between conditional approval and final approval of SAH grants.

With the exception of current §§ 36.4406 and 36.4410, current regulations provide little information about what costs an eligible individual may incur with SAH grant funds and when these costs may be incurred. Furthermore, since VA is proposing to include in the regulations the two-stage approval process, VA believes that the regulations also should explain more fully what costs may be incurred, when costs will be reimbursed, and when and how grant funds will be disbursed, depending on the status of conditional approval and final approval.

Section 36.4406, “Reimbursement of costs and disbursement of grant funds,” would revise and expand upon current § 36.4406 to explain how grant funds will be disbursed, and would set forth specific requirements for incurring and reimbursing certain preconstruction costs. The section would re-emphasize that conditional approval must be obtained in order for an applicant to incur allowable preconstruction costs and that there would be a 20 percent cap on such costs to preserve the remaining grant funds for construction, in the event that final approval is granted.

The section also would substitute the broader framework of “construction-related costs” for current § 36.4404's limitations on costs allowable for grant computation. Construction-related costs, as defined under proposed § 36.4401 would mean “[a]n expense incurred for the purpose of or directly related to building, modifying, or adapting a housing unit by using specially adapted housing grant proceeds.” Since each eligible individual would require different adaptations, VA believes that the broader framework would allow an eligible individual to achieve maximumuse of his or her grant proceeds and adapted property.

In terms of grant disbursement after final approval, proposed § 36.4406 would be similar to current regulations in stating that the Secretary determines the method on a case-by-case basis. Currently, the Secretary generally requires that funds either be deposited into an escrow account so that an escrow agent can disburse funds directly to a contractor or that the funds be disbursed to a mortgage holder to reduce the outstanding principal indebtedness. This practice would remain in effect under the proposed rule.

Finally, proposed § 36.4406 would note that, in the event that an eligible individual dies at some point during the SAH grant timeline, the estate may be reimbursed for authorized preconstruction and construction related costs, but must submit requests for reimbursement that are timely under the proposed rule. Unfortunately, some eligible individuals will die before the adaptations to their housing units are finished. VA's new two-staged process will make it easier for eligible individuals' estates to recover costs where the individual had been determined eligible and had already expended personal funds. At the same time, a limitation on the timeframe in which an eligible individual's estate may seek such reimbursement is necessary. VA believes that one year from the date on which the Loan Guaranty Service becomes aware of the eligible individual's death would provide the estate sufficient time in which to submit the necessary documentation. Under the proposed rule, VA would require that requests for reimbursement be submitted within one year, except when the Secretary determines that equity and good conscience require otherwise.

These actions are necessary in order to clarify what specific preliminary costs may be incurred, to detail the administrative requirements that must be followed in order to be properly reimbursed, and to explain the options regarding grant disbursement. This section takes into account the fact that, to obtain a grant, an eligible individual may have to incur certain reasonable expenses; and that, although SAH grants are made for the benefit of the eligible individual not his or her family, VA has a longstanding administrative practice of making an eligible individual's estate whole. In developing this section, we were also guided by a 1995 legal decision of the VA Office of the General Counsel (VAOPGCPREC 13-95), which held:

VA has authority to take this action pursuant to 38 U.S.C. 2101(d). The intended effect of this action is more detailed regulations that make clear to the public the costs that may be incurred and the temporal requirements for their reimbursement.

Section 36.4407, “Guaranteed and direct loans,” would revise current § 36.4409 to clarify its requirements. No substantive change to § 36.4409 is intended.

Proposed § 36.4408, “Submission of proof to the Secretary,” would renumber current § 36.4405. The change would be structural only.

Proposed § 36.4409, “Delegations of authority,” would renumber current § 36.4408. In addition, VA proposes updates to the list of positions with delegated authority to reflect changes in position titles and to add the Deputy Director, Loan Guaranty Service. VA has authority to take this action pursuant to 38 U.S.C. 501, 512, and 2101.

Proposed § 36.4410, “Supplementary administrative action,” would renumber previous § 36.4407. It would also rephrase current § 36.4407 in a reader-focused style. No substantive change is intended to current § 36.4407.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.

Although this document contains provisions constituting collections of information, under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521), no new or proposed revised collections of information are associated with this proposed rule. The information collection provisions for § 36.4400et seq.are currently approved by the Office of Management and Budget (OMB) and have been assigned OMB control numbers 2900-0031, 2900-0047, 2900-0132, and 2900-0300.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Executive Order classifies a regulatory action as a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB) unless OMB waives such review, if it is a regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The economic, interagency, budgetary, legal, and policy implications of this proposed rule have been examined, and it has been determined to be a significant regulatory action under Executive Order 12866.

The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This proposed rule would directly affect only individuals. Therefore, pursuant to 5 U.S.C. 605(b), this proposed rule is exempt from the initial and finalregulatory flexibility analysis requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.106, Specially Adapted Housing for Disabled Veterans; and 64.118, Veterans Housing—Direct Loans for Certain Disabled Veterans.

For the reasons stated in the preamble, the Department of Veterans Affairs proposes to amend 38 CFR part 36 (subpart C) as set forth below.

The Councils published a proposed rule in theFederal Registerat 74 FR 45579, September 3, 2009. The comment period is being extended to provide additional time for interested parties to review the proposed FAR changes.