This rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, it has been reviewed by the Office of Management and Budget (OMB).

A Regulatory Impact Analysis has been completed and is available to interested persons from the Kansas City address listed above. In summary, the analysis finds that the benefits of Good Performance Refunds will outweigh the expenses of the program. Good Performance Refunds will return a portion of producer paid premium back to producers who purchase crop insurance for their risk management needs, pursue loss prevention and loss reduction methods, and demonstrate good farming practices, providing, in effect, a premium discount to individual producers demonstrating a series of good years with very few losses in their insurance history.

The Good Performance Refund program will specifically encourage sound management practices as well as encouraging insured producers to continue participation in the crop insurance program. Benefits to insured's who qualify for the program based on their individual number of insured years and losses, will be cash refunds of premium based on their out-of-pocket premium amount. Cash refunds are estimated on average to be slightly over $1,000 for the 2011 refund and will vary annually depending on the number of producers qualifying, and, once qualified, the individual insured's number of years of insurance history and amount of insurance purchased. The return of some previously paid premium dollars may be used to offset anticipated increases in the costs of production inputs or higher crop insurance premiums due to higher crop prices and, in some cases, higher volatility of prices. With these higher anticipated costs, these benefits allow producers to continue purchasing higher levels of crop insurance.

The GPR program will, additionally, encourage insureds not to claim small or insignificant losses so they may qualify for a refund later. Small losses present administrative costs to insurance providers, the government, and taxpayers that can add up program-wide. Any reduction of these types of losses can result, long-term, in decreases in administrative costs of the program as well as possible decreases for future premium rates and corresponding subsidy amounts, thus benefiting insureds, insurance providers, the government and taxpayers.

GPR costs to the government are estimated at $75 million annually.

Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), there are no paperwork implications involved with this rule.

FCIC is committed to complying with the E-Government Act of 2002, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications.

FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. GPR payments for the Federal crop insurance program are calculated using the same method for all producers regardless of the size of their farming operation. The amount of work required of the insurance companies will not increase because the information must already be collected under the present regulations, policies and procedures approved by the FCIC and by the Risk Management Agency of the United States Department of Agriculture (RMA), and the GPR payments will be issued by RMA on behalf of FCIC. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and, therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605).

This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.

This program is not subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.

This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC, the administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought.

This action is not expected to have a significant economic impact on the quality of the human environment, health, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

Section 508(d)(3) of the Federal Crop Insurance Act (Act) authorizes the Federal Crop Insurance Corporation (FCIC) to provide a performance-based premium discount to a producer of an agricultural commodity who has good insurance or production experience relative to other producers of that agricultural commodity in the same area and as determined by the FCIC.

The proposed rule will implement a GPR program to producers meeting the qualifications for years of participation in the Federal crop insurance program combined with a limited number of losses, demonstrating favorable program performance. In addition, any new or beginning producers may be recognized for initial participation in the program who also demonstrated favorable program performance.

GPR payments will not exceed $75 million unless FCIC makes an announcement of an alternative amount in a notice published in the Federal Register. Based on the net paid premium of qualifying producers and the total amount designated for GPR payments, a premium percentage will be determined to apply to all producers who meet the program qualification requirements.

Good cause is shown to provide a shortened comment period because the provisions of this rule are straight-forward, so a shortened comment period still allows enough time for the public to provide meaningful comments.

While the premium to purchase buy-up levels of coverage in the Federal crop insurance program already receive substantial subsidies, these subsidies are not tied to an individual producer's performance. The good performance refund will provide a tool to encourage producers to mitigate small losses.

Producers will soon be making decisions regarding the upcoming crop year so knowing and understanding the benefits of this rule will allow producers to take more timely actions to purchase the necessary buy-up levels of coverage required for qualification for a good performance refund, and to reduce or prevent small losses that could otherwise jeopardize their future qualifications for such refund. To the extent losses are mitigated or reduced in the Federal crop insurance program, premium rates also may be lower, in turn reducing program costs to producers, the government, and taxpayers.

A longer comment period, such as a 60 day period, would delay the implementation of this rule and the payment of any refunds hereunder, until well after the normal spring planting season for most 2011 crops. By delaying these refunds, producers will not be able to use them to help finance their 2011 spring operations. In addition, in the coming weeks, producers will be making decisions regarding the upcoming crop year so knowing and understanding the benefits of this rule will allow producers to take more timely actions to purchase the necessary buy-up levels of coverage required for qualification for a good performance refund, and to reduce or prevent small losses that could otherwise jeopardize their future qualifications for such refund. To the extent losses are mitigated or reduced in the crop insurance program, premium rates also may be lower, in turn reducing program costs to producers, the government, and taxpayers.

The agency believes that requirements governing the payment of a good performance refund are straight-forward. There are a limited number of ways that such refunds can be provided within the context of the Federal crop insurance program. Therefore, a lengthy delay of implementation of the program is unnecessary and contrary to providing the benefits to producers receiving these refunds in time for them to be used to help finance their spring 2011 operations. For the reasons stated above, good cause is shown to limit the comment period to 15 days for this rule as a lengthy comment period is not practicable and would be contrary to the public interest.

The GPR is applicable to the 2011 and succeeding calendar years as long as funds are available for GPR payments.

Accordingly, as set forth in the preamble, the Federal Crop Insurance Corporation proposes to add a newsubpart Y to 7 CFR part 400 to read as follows:

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to add a new airworthiness directive (AD), applicable to Gulfstream Aerospace Corporation Model G-1159 airplanes, was published in theFederal Registeras a Notice of Proposed Rulemaking (NPRM) on January 2, 1991 (56 FR 33). The proposed rule would have superseded an existing airworthiness directive (AD 90-13-02, Amendment 39-6660 (55 FR 29008, July 17, 1990)), applicable to certain Gulfstream Aerospace Corporation Model G-1159 airplanes. The existing AD currently requires an inspection to detect cracks or corrosion in the wing structure in the area of Fuselage Station (FS) 452 inboard clothespin attachment fitting, and repair if necessary. The NPRM proposed to require additional repetitive inspections to detect corrosion or cracks in the forward and aft wing attach fittings at FS 345 and 452, respectively, and adjacent wing beam and wing plank areas, and repair if necessary; and the application of corrosion protection treatment. The NPRM resulted from a review of the inspection reports submitted in response to the existing AD. The proposed actions were intended to prevent significantly reduced structural integrity of the wing/fuselage attachment joint, and the inability to carry flight or ground loads.

Since the issuance of that NPRM, Gulfstream has revised Chapter 5, inspection program (continued airworthiness), of the aircraft maintenance manual (AMM) to include additional inspections that address the unsafe condition detailed in the NPRM. We have also received data that shows full fleet compliance with the inspection and applicable repair required by AD 90-13-02.

Upon further consideration, the FAA has determined that the actions required by AD 90-13-02 adequately addressed the identified unsafe condition. Therefore, it is not necessary to mandate the repetitive inspections specified in the Gulfstream AMM. Accordingly, the proposed rule is hereby withdrawn.

Withdrawal of this NPRM constitutes only such action, and does not preclude the agency from issuing another action in the future, nor does it commit the agency to any course of action in the future.

Since this action only withdraws a notice of proposed rulemaking, it is neither a proposed nor a final rule and therefore is not covered under Executive Order 12866, the Regulatory Flexibility Act, or DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979).

Accordingly, the notice of proposed rulemaking, Docket 90-NM-267-AD, published in theFederal Registeron January 2, 1991 (56 FR 33), is withdrawn.

On July 21, 2010, President Obama signed the Dodd-Frank Act.2 Title VII of the Dodd-Frank Act3 amended the Commodity Exchange Act (“CEA”)4 to establish a comprehensive new regulatory framework for swaps and certain security-based swaps. The legislation was enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: (i) Providing for the registration and comprehensive regulation of swap dealers and major swap participants;5 (ii) imposing mandatory clearing and trade execution requirements on clearable swap contracts; (iii) creating robust recordkeeping and real-time reporting regimes; and (iv) enhancing the rulemaking and enforcement authorities of the Commission with respect to, among others, all registered entities and intermediaries subject to the oversight of the Commission.

In order to ensure the proper implementation of the comprehensive new regulatory framework, the Dodd-Frank Act requires the Commission to promulgate regulations regarding the mitigation of conflicts of interest in the operation of certain DCOs, DCMs, and SEFs. On October 1, 2010, the Commission identified possible conflicts. Section II below briefly summarizes these conflicts. To address these conflicts, the Commission proposed6 both (i) structural governance requirements7 and (ii) limits on ownership of voting equity and exercise of voting power8 (the “Conflicts of Interest NPRM”).

I. Background

The Tobacco Control Act, enacted on June 22, 2009, amends the Federal Food, Drug, and Cosmetic Act (the FD&C Act) and provides FDA with the authority to regulate tobacco products (Pub. L. 111-31, 123 Stat. 1776). Among other things, the Tobacco Control Act requires that, before a new tobacco product may be introduced or delivered for introduction into interstate commerce, one of the following must occur: (1) A premarket application under section 910(b) of the FD&C Act (21 U.S.C. 387j(b)) must be submitted to FDA, and FDA must issue an order finding that the new product may be introduced or delivered for introduction into interstate commerce under 910(c) of the FD&C Act; or (2) a report under section 905(j) of the FD&C Act (21 U.S.C. 387e(j)) demonstrating the new tobacco product's substantial equivalence to an appropriate predicate product (as defined in the FD&C Act) must be submitted and FDA must issue an order finding the new product to be substantially equivalent to the predicate product and in compliance with the requirements of the Tobacco Control Act (section 910(a)(2) of the FD&C Act). Section 905(j)(3) of the FD&C Act, as amended, states that FDA may exempt tobacco products that are modified by adding or deleting a tobacco additive, or increasing or decreasing the quantity of an existing tobacco additive, from the requirement of demonstrating substantial equivalence if the Agency determines that: (1) Such modification would be a minor modification of a tobacco product that can be sold under the FD&C Act, (2) a report demonstrating substantial equivalence is not necessary to ensure that permitting the product to be marketed would be appropriate for the protection of the public health, and (3) an exemption is otherwise appropriate. Section 905(j)(3)(B) of the FD&C Act requires FDA to issue regulations implementing this provision by July 1, 2011.

“Additive” is defined at section 900(1) of the FD&C Act, as “any substance the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component or otherwise affecting the characteristic of any tobacco product (including any substances intended for use as a flavoring or coloring or in producing, manufacturing, packing, processing, preparing, treating, packaging, transporting, or holding), except that such term does not include tobacco or a pesticide chemical residue in or on raw tobacco or a pesticide chemical” (21 U.S.C. 387(1)).

The proposed rule, if finalized, would establish a pathway for manufacturers, including importers, to request exemptions from the substantial equivalence requirements of the Tobacco Control Act. It would not establish categories of minor modifications, or identify specific modifications, that meet the statutory criteria for exemptions. As FDA acquires more information about the additives in tobacco products from which to establish such categorical exemptions, it may issue additional regulations or guidance. FDA requests comment on how best to establish categories for these exemptions.

A manufacturer who obtains an exemption under the procedures of this proposed rule is also required to report to FDA under 905(j)(1)(A)(ii) of the FD&C Act (this requirement is not addressed in this proposed rule). Section 905(j)(1)(A)(ii) of the FD&C Act requires the manufacturer to report at least 90 days prior to introducing or delivering for introduction into interstate commerce the tobacco product that is the subject of the exemption, the basis for the manufacturer's determination that “the tobacco product is modified within the meaning of [section 905(j)(3)], the modifications are to a product that is commercially marketed and in compliance with the requirements of this Act, and all of the modifications are covered by exemptions granted by FDA pursuant to [section 905(j)(3)]” (section 905(j)(1)(A)(ii) of the FD&C Act). In addition, this submission must describe “action taken by [the applicant] to comply with the requirements under section 907 that are applicable to the tobacco product” (section 905(j)(1)(B) of the FD&C Act).

The proposed rule includes a procedural mechanism for rescinding an exemption where necessary to protect the public health. Before rescinding an exemption, FDA proposes to provide the manufacturer notice of the proposed rescission and an opportunity for an informal hearing under part 16 (21 CFR part 16), unless the continuance of the exemption presents a serious risk to public health. If the continuance of the exemption presents a serious risk to public health, FDA would rescind the exemption prior to giving notice and an opportunity for a hearing, and provide notice and opportunity for an informal hearing under part 16 as quickly as possible following the rescission.

As required by section 905(j)(3)(B) of the FD&C Act, this rule would implement section 905(j)(3) of the FD&C Act. Specifically, the rule would provide that FDA may exempt tobacco products that are modified by adding or deleting a tobacco additive, or increasing or decreasing the quantity of an existing tobacco additive, if FDA determines that the modification would be a minor modification of a tobacco product that can be sold under the FD&C Act; a 905(j) report demonstratingsubstantial equivalence to a predicate tobacco product is not necessary to ensure that permitting the tobacco product to be marketed would be appropriate for protection of the public health; and an exemption is otherwise appropriate. These criteria are specified in the statute.

The proposed rule also explains that an exemption request may be made only by the manufacturer of a legally, commercially marketed tobacco product for a minor modification to that manufacturer's product. FDA is proposing this requirement because it believes that only the manufacturer of the product being modified will have, and be able to provide to FDA, sufficient and complete information about the product and the proposed modification. This includes information about a tobacco product that is trade secret or confidential commercial information and available only to the manufacturer of the product. Such information is necessary to allow FDA to determine whether the tobacco product and modification satisfy the criteria for exemption.

The proposed rule would also require that the exemption request (and supporting information) be submitted in an electronic format that FDA can process, review, and archive. FDA intends to provide and update information on its website on how manufactures may provide the electronic submission to FDA (e.g.,information on electronic media and methods of transmission). The proposed rule would also require that the exemption request be legible (FDA must be able to read the document) and in English. These requirements would ensure that FDA could review the exemption request expeditiously and appropriately. Electronic submission of information is consistent with the Government Paperwork Elimination Act (Pub. L. 105-277) requirement that Federal agencies allow individuals or entities to submit information or transact business with the agency electronically. Because of the broad availability of the Internet, FDA does not anticipate any need to submit an exemption request and supporting information in a non-electronic format. However, a company that is not able to submit an exemption request in an electronic format may submit a written request to the Center for Tobacco Products explaining in detail why the company cannot submit the request in an electronic format and requesting an alternative format.

The proposed rule would require that an exemption request be submitted with supporting documentation and contain the manufacturer's address and contact information; a detailed explanation of the purpose for the modification; a detailed description of the modification, including whether the modification involves adding or deleting a tobacco additive, or increasing or decreasing the quantity of an existing tobacco additive; a detailed explanation of why the modification is considered a minor modification of a tobacco product that can be sold under the FD&C Act; a detailed explanation of why a report intended to demonstrate substantial equivalence is not necessary to ensure that permitting the tobacco product to be marketed would be appropriate for the protection of public health; a certification by a responsible official of the company, such as the chief executive officer, summarizing the supporting evidence and providing the rationale for the official's determination that the modification will not increase the product's toxicity, addictiveness, or appeal to or use by minors; and other information justifying an exemption.

The rule would require the submission of this information, along with supporting documentation, to enable FDA to determine whether an exemption from having to demonstrate substantial equivalence to an appropriate predicate product would be appropriate for the protection of the public health, as required by the statute (section 905(j)(3) of the FD&C Act). FDA requests comment on what supporting information would be necessary for us to make these determinations. The proposed rule would also require a certification in the form of a signed statement by a responsible official of the company, summarizing the supporting evidence and providing the rationale for the official's determination that the modification will not increase the product's toxicity, addictiveness, or appeal to or use by minors. Because of the importance of this information to an exemption determination, FDA is proposing to require that a responsible official of the company, such as the chief executive officer, certify that the modification will not have these effects.

The proposed regulation explains that FDA would review the information submitted in support of the request and determine whether to grant or deny the request for an exemption based on whether the criteria in the statute are satisfied. The proposed rule also provides that, if FDA determines that the information submitted by the manufacturer is insufficient to enable it to determine whether an exemption is appropriate, FDA may request additional information from the manufacturer. The rule would also provide that if the manufacturer fails to respond within the timeframe requested, FDA will consider the exemption request withdrawn. An exemption determination will be publicly available consistent with the requirements of part 20 (21 CFR part 20); trade secret and confidential commercial information are exempted from disclosure requirements consistent with § 20.61.

As discussed earlier in this document, the proposed rule includes a provision expressly permitting FDA to rescind an exemption if the Agency determines that rescission is necessary to protect the public health. FDA believes it is important that it be able to rescind exemptions in circumstances where the exemption is not appropriate for the public health, such as when FDA's decision to grant an exemption was based on false or incomplete information. FDA is proposing to provide notice and an opportunity for an informal hearing under part 16 to the manufacturer who requested the exemption prior to rescinding an exemption. If, however, the continuance of the exemption presents a serious risk to public health, the proposed rule provides that FDA could rescind the exemption before providing notice and an opportunity for a hearing. In that case, FDA would provide the manufacturer notice and an opportunity for a hearing as soon as possible after the rescission.

Consistent with the requirements of the FD&C Act, FDA intends to provide technical and other nonfinancial assistance to small tobacco product manufacturers in complying with the premarket requirements of sections 905 and 910 of the FD&C Act, along with other requirements (section 901(f) of the FD&C Act). FDA requests comment on what technical assistance or guidance would be helpful to small manufacturers in complying with these requirements. Small tobacco product manufacturers may contact FDA atsmallbiz.tobacco@fda.hhs.govfor assistance.

FDA proposes that any final rule that issues based on this proposal become effective 30 days after the final rule publishes in theFederal Register.

Section 905(j)(3)(B) of the FD&C Act requires that FDA issue regulations to implement the provision on exemptions from the substantial equivalence requirements of the Tobacco Control Act. Section 905(j)(3)(A) of the FD&C Act provides that FDA may exempt fromthe requirements relating to the demonstration of substantial equivalence tobacco products that are modified by adding or deleting a tobacco additive, or increasing or decreasing the quantity of an existing tobacco additive, if FDA determines the modification would be a minor modification of a tobacco product that can be sold under the FD&C Act; a report is not necessary to ensure that permitting the tobacco product to be marketed would be appropriate for protection of the public health; and an exemption is otherwise appropriate. FDA is issuing this proposed rule as required by section 905(j)(3)(B) of the FD&C Act. Additionally, section 701(a) of the FD&C Act (21 U.S.C. 371) gives FDA general rulemaking authority to issue regulations for the efficient enforcement of the FD&C Act.

The Agency has determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

FDA has examined the impacts of the proposed rule under Executive order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Order 12866 directs Agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes that this proposed rule is not a significant regulatory action as defined by the Executive order.

The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. The Tobacco Control Act requires that tobacco product manufacturers obtain either a marketing authorization order under section 910(c) or an order under section 910(a)(2) finding the new tobacco product to be substantially equivalent to an appropriate predicate tobacco product before introducing a new product into interstate commerce. Although this requirement is costly, the option of requesting an exemption as set forth in this proposed rule provides a mechanism for potentially reducing costs. If manufacturers of new tobacco products do not expect this option to reduce costs associated with their new product submissions, they will choose not to use it. The Agency therefore proposes to certify that the rule will not have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that Agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $135 million, using the most current (2009) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this proposed rule to result in any 1-year expenditure that would meet or exceed this amount.

FDA compares the effects of this rule to a baseline we will refer to as the post-statute baseline. Under the Tobacco Control Act, in the absence of this or other rulemaking under section 905(j)(3), tobacco product manufacturers must submit to FDA either a premarket application or a report under section 905(j) demonstrating substantial equivalence to an appropriate predicate product, and FDA must issue the appropriate corresponding order before a new tobacco product may be introduced or delivered for introduction into interstate commerce. Although substantial equivalence requirements are not yet in effect, the statutory grace period ends on March 22, 2011. The statutory deadline for issuing regulations under section 905(j)(3) is July 1, 2011, after the end of the grace period. Therefore, under the post-statute baseline we assume that requirements to report under 905(j) will be in effect. Compared with the cost associated with the post-statute baseline, this rule may result in cost savings if some tobacco manufacturers request, and are granted, substantial equivalence exemptions. If for any reason this proposed rule is finalized before the substantial equivalence requirements go into effect, it would simply have no effect until such time that they do.

This proposed rule may potentially apply to any tobacco product manufacturer or importer whose products are regulated under the Tobacco Control Act. Statistics of U.S. Businesses data indicate that there are 20 cigarette manufacturers and 46 other tobacco product manufacturers (U.S. Census, 2009). Because other tobacco product manufacturers would include cigar and pipe tobacco manufacturers, not all 46 firms represent manufacturers that are currently regulated under the Tobacco Control Act.1 An unknown number of importers would be affected.2 Not all new tobacco products are expected to meet the statutory requirements for an exemption. Furthermore, FDA is not establishing categories of minor modifications, or identifying specific modifications, that meet the statutory criteria for exemptions. It is therefore likely that only a subset of the potentially affected manufacturers and importers would choose to request an exemption.

The number of new products introduced in a given year is the theoretical maximum number that could be introduced under a substantial equivalence exemption. However, some new products may not be substantially equivalent to an appropriate predicate tobacco product and will require premarket authorization under section 910(c), in which case they would not be eligible for a substantial equivalence exemption. The remaining products would require 905(j) reports, including demonstration of substantial equivalence. Under this proposed rule, an unknown number of those new 905(j) products would be eligible for possible introduction into interstate commerce under a substantial equivalence exemption.

FDA uses scanner data covering late 2007 to late 2009 from AC Nielsen to estimate the number of new tobacco products introduced in a year. A Universal Product Code (UPC) is deemed to be introduced in 2008 if total dollar sales over the final weeks of 2007 were zero, but total dollar sales over 2008 were greater than zero. Because unique UPCs are assigned to different types of packaging for otherwise identical products, most new UPCs do not represent new products, but rather different ways of packaging existing products. To address this issue, FDAsorts the data by brand description, and by product description within each brand description. The product description varies by UPC and contains information about both product characteristics and packaging. Therefore, the product description of every new UPC can be compared with the product descriptions preceding and following it to determine whether the new UPC represents a new package for an existing product or a new product altogether.

Using the scanner data, FDA finds that of 628 new UPCs for cigarettes in 2008, 151 represent new products not present in the 2007 data. Of 215 new UPCs for chewing tobacco, 43 represent new products. Of 36 new UPCs for smoking tobacco (excluding pipe tobacco), 20 represent new products.3 Of 36 new UPCs for cigarette paper, 19 represent new products. This leads to an estimated 233 new products in 2008. We assume the same average number of new products will continue to be introduced every year going forward. However, it is also possible that requirements imposed by the Tobacco Control Act will lead manufacturers to introduce new products at a lower rate in the future.

As outlined previously, some of the estimated 233 new products introduced annually may require premarket authorization under section 910(c), and exemptions would be requested for an unknown number of the remaining products. Although in theory the maximum number of requests equals the number of new products, based on the requirements for an exemption and experience with other regulated products, FDA estimates that in the first years after the procedure is in place, only 50 exemption requests will be submitted per year. This may increase over time as learning takes place. FDA anticipates requesting additional information to support 40 of those requests.

The main effect of this proposed rule would be a potential reduction in the costs of introducing new tobacco products compared with the post-statute baseline. Under the baseline scenario, all new products that do not undergo premarket review under section 910(c) must submit a report under section 905(j) that includes the basis for manufacturer's determination that the new tobacco product is substantially equivalent to an appropriate predicate tobacco product. If an exemption request is submitted and granted, a manufacturer would be able to submit a different and potentially shorter 905(j) report in which, under 905(j)(1)(A)(ii), a discussion of the exemption is used in place of the demonstration of substantial equivalence. On a per-product basis, any potential cost savings for the 905(j) report, net of the cost of requesting the exemption, would be the savings attributable to this rule.

FDA estimates that it would take 360 hours to prepare an exemption request. Based on the requirements set forth in the codified language, FDA anticipates that preparation of most sections would require technical scientific and engineering expertise. Legal input and review would also play a role. Therefore, in valuing the time cost, FDA uses the weighted average of tobacco manufacturing industry-specific hourly wages for life, physical, and social science occupations ($30.91), architecture and engineering occupations ($40.93), and legal occupations ($71.83) (Ref. U.S. BLS, 2010). FDA assigns these occupational categories weights of 40 percent, 40 percent, and 20 percent. The resulting composite wage is $43.10. FDA then doubles this amount to $86.20 to account for benefits and overhead. Multiplying by 360 hours yields a cost per exemption request of $31,033. FDA anticipates that when it asks a manufacturer to provide additional information in support of an exemption request, it will take an average of 50 hours to prepare the additional information. Using the same hourly cost of labor, providing additional information is estimated to result in an additional cost of $4,310. These are elective costs. Firms will not choose to submit a request unless any potential cost savings in a 905(j) report justifies the cost.

Using FDA's estimate that we expect to receive 50 requests per year, the total cost of all exemption requests submitted would be $1,551,700. There would be an additional cost of $172,400 if, as anticipated, we ask for additional information supporting 40 of the 50 requests. FDA requests comment on these cost estimates.

Because substantial equivalence report requirements are not yet being enforced, and there is no guidance beyond the contents of the Tobacco Control Act, FDA does not attempt to estimate the cost of preparing a 905(j) report that includes the demonstration of substantial equivalence or the cost of preparing a 905(j) report citing an exemption. Some manufacturers may find that, for a particular product, preparing a 905(j) report that includes the basis for the manufacturer's determination that its new tobacco product is substantially equivalent to an appropriate predicate tobacco product would be costlier than submitting an exemption request and citing the exemption in a 905(j) report. Such a manufacturer may consider submitting an exemption request. If a manufacturer finds that the exemption process would not reduce costs for legally introducing a new tobacco product, it would maintain the post-statute status quo and submit a 905(j) that includes the basis for the manufacturer's determination that its new tobacco product is substantially equivalent to an appropriate predicate tobacco product. FDA requests comment on these conclusions.

In order to grant an exemption, FDA must find, among other things, that a report demonstrating substantial equivalence would not be necessary to ensure that permitting the tobacco product to be marketed would be appropriate for protection of the public health. Furthermore, an exemption could be rescinded if found to be inappropriate, and the process for rescission would depend on whether there is a serious risk to public health. Therefore, FDA does not anticipate that setting up a mechanism for obtaining substantial equivalence exemptions would result in costs to public health. FDA requests comment on this approach.

Under this proposed rule, there may be uncertainty on the part of manufacturers as to what kinds of product modifications may be granted an exemption and how much supporting evidence will be required as the basis for an exemption. If some manufacturers are more conservative in requesting exemptions than FDA would be in granting them, they may not fully avail themselves of any potential cost savings. Alternatively, if some manufacturers are too optimistic about what types of modifications will be exempt, they will incur higher costs because they will have to demonstrate substantial equivalence in their 905(j) reports in addition to having submitted unsuccessful exemption requests.

FDA acknowledges the theoretical possibility that overall submission costs could increase as the result of this uncertainty. This would happen if so many unsuccessful exemption requests were submitted that the excess costsassociated with them exceeded any cost savings from exemptions that were granted. This situation is unlikely to occur, especially as time goes on and manufacturers gain information on submission costs and the requirements that must be met for exemptions. Manufacturers might continue to submit unsuccessful exemption requests, but it would increasingly be a well-informed choice based on an accurate estimation of the probability of being granted an exemption and the excess cost of preparing an unsuccessful request compared with the cost savings attributable to an exemption. Moreover, it is possible that some of the information compiled for an exemption request would be reused as part of a demonstration of substantial equivalence, thus reducing the effort expended in preparing both types of submissions.

In summary, the substantial equivalence exemption requirements laid out in this proposed rule offer an additional channel for legally introducing new tobacco products that result from minor modifications of tobacco products that can be sold under the Tobacco Control Act. Introducing a new product through this channel may potentially reduce costs. If manufacturers find that obtaining an exemption would not reduce costs, or if they do not want to risk having to demonstrate substantial equivalence in their 905(j) reports in addition to having submitted unsuccessful exemption requests, they may choose to maintain the post-statute status quo and not pursue substantial equivalence exemptions.

This proposed rule contains information collection provisions that are subject to review by OMB under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520). A description of these provisions is given below with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering the data needed, and completing and reviewing each collection of information. FDA requests comment on the burden and practical utility of the information being requested. Comment is also requested on whether the information being requested is duplicative of other collections.

Title:Exemptions From Substantial Equivalence Requirements for Tobacco Products.

Description:In this proposed rule, a pathway would be established by FDA for manufacturers to request exemptions from the substantial equivalence requirements of the Tobacco Control Act. As it acquires more information about the additives in tobacco products from which to establish categories of exemptions, FDA may issue additional regulations or guidance on this subject.

This rule would implement section 905(j)(3) of the FD&C Act, allowing FDA to exempt tobacco products that are modified by adding or deleting a tobacco additive, or increasing or decreasing the quantity of an existing tobacco additive, if FDA determines that the modification would be a minor modification of a tobacco product that can be sold under the FD&C Act. The rule also explains that an exemption request may be made only by the manufacturer of a legally marketed tobacco product for a minor modification to that manufacturer's product and the request (and supporting information) must be submitted in an electronic format that FDA can process, review, and archive. In addition, the request and all supporting information must be legible and in (or translated into) the English language.

Under the proposal, an exemption request must be submitted with supporting documentation and contain the manufacturer's address and contact information, information about the modification; and an explanation of why a report intended to demonstrate substantial equivalence is not necessary. The request must also contain a certification by a responsible official summarizing the supporting evidence and providing the rationale for the official's determination that the modification will not increase the product's toxicity, addictiveness, or appeal to/use by minors; and include other information justifying an exemption. This information would enable FDA to determine whether the exemption request would be appropriate for the protection of the public health.

This proposed rule also includes a procedural mechanism for rescinding an exemption where necessary to protect the public health. In general, FDA would rescind an exemption only after providing the manufacturer notice of the proposed rescission and an opportunity for an informal hearing under part 16. However, FDA may rescind an exemption prior to notice and opportunity for a hearing under part 16 if the continuance of the exemption presents a serious risk to public health. In that case, FDA would provide the manufacturer an opportunity for a hearing as soon as possible after the rescission.

FDA would review the information submitted in support of the request and determine whether to grant or deny the request based on whether the criteria specified in the statute are satisfied. If FDA determines that the information submitted is insufficient to enable it to determine whether an exemption is appropriate, FDA may request additional information from the manufacturer. If the manufacturer fails to respond within the timeframe requested, FDA would consider the exemption request withdrawn.

Description of Respondent:Manufacturers of tobacco products who are requesting an exemption from the substantial equivalence requirements of the FD&C Act, as amended by the Tobacco Control Act.

Table 1 describes the annual reporting burden as a result of the provisions set forth in this proposed rule. Based on information related to premarket provisions for other FDA-regulated products and anticipated interest from industry in this provision, FDA estimates that it would receive 50 exemption requests annually and that itwould take a manufacturer 360 hours to prepare an exemption request. FDA estimates that it would need to request additional data for 40 of these requests, and that it will take 50 hours to prepare this data. FDA anticipates using the rescission authority to respond to one issue of concern related to an exemption determination each year (the burden hours for 21 CFR 1107.1(d) are included under part 16 hearing regulations, and are not included in the burden estimates in table 1 of this document).

The information collection provisions of this proposed rule have been submitted to OMB for review. Interested persons are requested to fax comments regarding information collection (see ADDRESSES) to the Office of Information and Regulatory Affairs, OMB. To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB,Attn:FDA Desk Officer,Fax:202-395-7285, or e-mailed tooira_submission@omb.eop.gov.

FDA has analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the proposed rule, if finalized, would not contain policies that would 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. Accordingly, the Agency tentatively concludes that the proposed rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

Interested persons may submit to the Division of Dockets Management (see ADDRESSES) either electronic or written comments regarding this document. It is only necessary to send one set of comments. It is no longer necessary to send two copies of mailed comments. Identify comments with the docket number found in brackets in the heading of this document. Received comments may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

The following references have been placed on display in the Division of Dockets Management (see ADDRESSES), and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. (FDA has verified the Web site addresses, but we are not responsible for any subsequent changes to the Web sites after this document publishes in theFederal Register.)

1. U.S. Census Bureau, 2007 Economic Census, “Sector 31: EC0731I1: Manufacturing: Industry Series: Detailed Statistics by Industry for the United States: 2007.” Release Date: October 30, 2009, Access Date: August 30, 2010, (http://factfinder.census.gov/servlet/IBQTable?_bm=y&-ds_name=EC0731I1&-NAICS2007=312210/312221/312229&-ib_type=NAICS2007&-geo_id=&-_industry=312221&-_lang=en&-fds_name=EC0700A1)

2. U.S. Bureau of Labor Statistics, “Occupational Employment Statistics: May 2009 National Industry-Specific Occupational Employment and Wage Estimates NAICS 312200—Tobacco Manufacturing,” May 14, 2010,http://data.bls.gov/cgi-bin/print.pl/oes/current/naics4_312200.htm.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR parts 16 and 1107 be amended to read as follows:

Congress authorized the Community Forest and Open Space Conservation Program (hereafter “CFP”) to address the needs of communities to protect and maintain their forest resources. In the CFP authorization, Congress found that people derive health benefits from having access to forests for recreation and exercise. Congress also found that forests protect public water supplies and may provide financial benefits from forest products. The CFP is a competitive grant program whereby local governments, Tribal Governments, and qualified non-profit organizations are eligible to apply for grants to establish community forests through fee-simple land acquisitions. “Fee-simple” means full ownership and acquisition of real property, versus a partial interest such as conservation easement. By creating community forests through land acquisition, communities and Tribes can sustainably manage forests for these and many other benefits, including wildlife habitat, stewardship demonstration sites for forest landowners, and environmental education.

While the CFP title includes the term “open space,” the authorizing language does not discuss the term. The only land cover Congress references is “forests.” As a result, in this proposed rule, the term “open space” is also not used, and is assumed that the only type of “open space” on which Congress wanted CFP to focus is “forests.”

The Forest Service believes that these proposed regulations for CFP will facilitate administration of the program and provide uniform criteria for program participation. The program willfocus its funding to forests that provide community benefits as defined in this proposed rule that are identified as a national, regional, or local priority for protection. See Ranking Criteria and Proposal selection in § 230.5 of this proposed rule. The Agency welcomes comments on national, regional, and local conservation priorities for selection of proposals.

Tribal consultation was initiated on October 20, 2010, and is currently ongoing. No tribal input has been received during the initial 60-day period. Consultation will continue during the 60-day public comment period.

The Cooperative Forestry Assistance Act of 1978 (CFAA) enables the Forest Service to work with States, private landowners, and communities to address the full range of forest resources from urban street trees to large rural timber lands. The design and delivery of most Cooperative Forestry programs is influenced by the priorities of State resource agencies regarding urban, suburban or rural forests.

The CFP recognizes that successful protection of community forests depends on engaged citizens. Their participation is equal in importance to the type of forests being protected. The CFP complements and builds upon other CFAA programs that focus on stewardship and education by providing the opportunity for some communities to go a step further and directly acquire and manage forests. Because the CFP provides grant assistance directly to Tribal Governments, local governments or qualified nonprofit organizations, it is able to assist those entities that have demonstrated a sustained commitment to community forestry. Through public engagement, these communities are able to articulate specific community needs that this program can meet, and demonstrate that they have the capacity to manage a public asset such as a community forest.

Benefits provided by forests acquired under the CFP will need to be quantified, and may address a variety of outcomes such as protecting a municipal water supply, providing public access for outdoor recreation, or providing economic benefits from sustainable forest management, including harvesting forest products and using woody biomass for renewable energy production. Beyond local measures of success, the contribution of community forests to larger protected areas of forest and open space helps support resource-based economies, and adds needed resiliency to natural systems as they respond to climate change. Therefore, in addition to public engagement to articulate local needs and capacity, successful community forests in the CFP will be part of a larger landscape level context that will protect many kinds of open spaces and working lands that provide a variety of ecosystem services. In this way, the program delivers local benefits that can also have a larger impact, since these community forests will likely be part of a larger conservation initiative.

Grant recipients will be required to provide the Forest Service with a Geographic Information System (GIS) shapefile of CFP project tracts and cost share tracts. The geospatial information will reside at the National Information Center for State and Private Forestry. The areas protected through this program will be able to be seen in map and other formats on the Forest Service website. These GIS shapefiles will allow the Forest Service to spatially track CFP program accomplishments and allow the agency to calculate program outcomes and public benefits provided by the lands protected through CFP. The Agency welcomes comments on outcome measures for benefits provided by forests acquired under the CFP.

Under CFP, applications will be submitted to the State Forester or equivalent Tribal Government official who will, in turn, conduct a general review of all applications for eligibility and compatibility with landscape conservation efforts. The proposed rule does not allow submission of an application for a project to both CFP and the Forest Legacy Program simultaneously. The State Forester or equivalent Tribal Government official may provide technical assistance to applicants in the preparation of applications and implementation of grants.

The Forest Service proposes to conduct a nationally competitive review and ranking process to select projects for funding. The application process is outlined in § 230.3 of this proposed rule. Individual applications will be ranked according to criteria outlined in § 230.5 of this proposed rule. The Forest Service anticipates providing additional specificity on the review process, review criteria, and timelines in an annual request for proposals (RFP). The Forest Service requests public comment regarding the application process outlined in § 230.3 and the ranking criteria outlined in § 230.5 of this proposed rule

The Forest Service wants to minimize the amount of time between issuing the RFP and funding the selected projects. To achieve this goal, the Forest Service anticipates issuing an RFP each year, and selecting projects during the first quarter of the following fiscal year (October-December) subject to the availability of funds. The proposed rule requires the State Forester or equivalent Tribal Government official to forward all applications with recommendations to the Forest Service. While the Forest Service anticipates this intermediate step will add approximately 30 days to the review process, the Agency believes that input from State Foresters and Tribal Governments will be valuable in helping the Forest Service make final funding decisions.

Project grants are subject to National Environmental Policy Act (NEPA) and must comply with agency NEPA implementing procedures as described in 40 CFR 1500-1508 as well as the Council on Environmental Quality's NEPA procedures at 40 CFR 1500-1508. CFP grants are to be used for transferring title and ownership of private lands to third parties and will not fund any ground-disturbing activities. The Forest Service has concluded that CFP grants fall under the categorical exclusion provided in the Forest Service's NEPA procedures for “acquisition of land or interest in land” 36 CFR 220.6(d)(6); 73 FR 43084 (July 24, 2008). As a result, CFP project grants are excluded from documentation in an environmental assessment or impact statement. The applicability of the categorical exclusion will be confirmed through scoping and a review for extraordinary circumstances.

The statute establishing CFP states that only local governments, Tribal Governments, and qualified nonprofit organizations are eligible to receive a grant through CFP. The statute also provided definitions for those three eligible organizations. Local governments are defined as municipal, county, and other local governments with jurisdiction over local land use decisions. Tribal Governments are defined as those that are federally recognized Tribes as prescribed by section 4 of the Indian Self-Determination and Education Assistance Act (U.S.C. 450b). Finally, qualified nonprofit organizations are defined as charities under the Internal Revenue Code (26 U.S.C. 501(c)(3)) and which also have a conservation purpose(26 U.S.C. 170(h)(4)(A)). A conservation purpose is defined as the preservation of land for outdoor recreation or education, protection of natural habitat or ecosystems, preservation of open space, and preservation of historic lands or structures. Consistent with regulations of the Internal Revenue Service (26 CFR 1.170A-14(c)(1)) qualified non-profit organizations must also have a commitment to protect in perpetuity, the purposes for which the tract was acquired under the CFP and demonstrate that they have the resources to enforce the protection of the property as a community forest. In general, a land conservancy or land trust is the type of organization that would be considered a qualified nonprofit organization under the authorizing statute of the CFP.

In order to minimize the chances that the property is ever sold, or converted to non-forest uses, the following four actions will be required of the grant recipient:

(1) Grant recipients will be required to record a Notice of Grant Requirements with the deed in the lands records of the local county or municipality.

(2) Grant recipients will define objectives for the use and management of the community forest in the required Community Forest Plan. Because the size, condition, and possible uses of community forests under this program could be quite varied, the Community Forest Plan will identify forest uses for the property. In order to guide compliance with the requirements of the CFP, “non-forest uses” is defined in § 230.2 of this proposed rule.

(3) Every ten years, grant recipients will submit to the Forest Service a self-certifying statement that the property has not been sold or converted to non-forest uses.

(4) Grant recipients will be subject to a spot check conducted by the Forest Service to verify that property acquired under the CFP has not been sold or converted to non-forest uses (§ 230.2).

In the statute establishing the CFP, Congress required that the grant recipient cannot sell the land or convert it to non-forest uses (Sec. 8003.e). In the event that these conditions are violated, the law requires that the grant recipient pay the Federal Government an amount equal to the greater of the current sale price or current appraised value of the land. An additional penalty is that the grant recipient that sells or converts a parcel acquired under the CFP will not be allowed to receive additional grants under the program. Ramifications for conversion to non-forest use or sale is discussed in § 230.9 “Ownership Use and Requirements” of this proposed rule.

The Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (“Uniform Act”) (42 U.S.C. 4601,et. seq.) provides guidance and procedures for the acquisition of real property by the Federal government, including relocation benefits to displaced persons. Department of Transportation regulations implementing the Uniform Act (49 CFR 24) have been adopted by the Department of Agriculture (7 CFR 21). However, CFP is deemed exempt from the Uniform Act because it meets the exemption criteria stated at 49 CFR 24.101(b)(1).

Section 7A(c)(4) of the Cooperative Forestry Assistance Act (16 U.S.C. 2103d(c)(4)), requires that land acquired under CFP be appraised in accordance with theUniform Appraisal Standards for Federal Land Acquisitions(Federal Appraisal Standards) in order to determine the non-Federal share of the cost of a parcel of privately-owned forest land. The Federal Appraisal Standards are contained in a readily available public document, which is well known to professional appraisers (see: http://www.usdoj.gov/enrd/Legal_Documents.html). A grant recipient will be responsible for assuring that the appraisal of the CFP tract is done in conformance with the Federal Appraisal Standards. The Federal Appraisal Standards will be used to determine reimbursement for the non-Federal cost share. However, separate tracts donated for the purpose of providing the non-Federal cost share may be appraised using the Uniform Standards of Professional Appraisal Practice (USPAP) or the IRS regulations for a donation in land. The Forest Service will be available to assist applicants with the appraisal and associated appraisal review, and will conduct spot checks to assure compliance with Federal Appraisal Standards.

This proposed rule has been reviewed under USDA procedures and Executive Order 12866. The Office of Management and Budget (OMB) has determined that this proposed rule is significant for purposes of Executive Order 12866. A Cost Benefit Analysis has been completed and has determined that the benefits for each established forests will vary, depending on characteristics of the forest land, the community, and the management objectives developed with public input in the establishment of the required community forest plan. Where these forests are located will also be dependent on the communities that support them, therefore, they could occur in communities from the very rural to decidedly urban. Since there will be diversity among forests and their benefits, this analysis uses qualitative as well as quantitative methods to describe the potential benefits and costs of CFP.

The primary cost of CFP is the acquisition of the land itself. The transfer of lands from private property may reduce the tax base, or result in forgone economic benefits fostered by development. This analysis assumes that development and associated activity is established elsewhere without resulting in forestland conservation and the opportunity cost of lower economic activity is off-set by the benefits provided by the community forest, such that the main costs become the cost of the acquisition and the tax revenue foregone by the local government unit. These costs are compared with the benefits of protecting forest land, which are largely intangibles, such as environmental goods and services from the land and non-market valued amenities, such as open spaces and scenic views, but also includes the economic value of retaining and active working forest in the local economy. Qualitative and quantitative evidence supports the assertion that community forests provide many benefits to communities, especially in areas threatened by conversion of private forest land.

This proposed rule will not have an annual effect of $100 million or more on the economy nor adversely affect productivity, competition, jobs, the environment, public health or safety, nor adversely affect State or local governments. This proposed rule will not interfere with an action taken or planned by another agency nor raise new legal or policy issues. Finally, this proposed rule will not alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients of such programs.

This proposed rule does not regulate the private use of land or the conduct of business. It is a grant program to local governments, Tribal Government and qualified nonprofit organizations for purposes of acquiring land for resourceconservation and open space preservation. By providing funding to eligible entities for land acquisition, the Federal Government will promote the non-monetary benefits of sustainable forest management. These benefits include: improved water quality, wildlife and fish habitat, forest based educational programs including vocational education programs in forestry, replicable models of effective forest stewardship for private landowners, open space preservation, carbon sequestration, and enhanced recreational opportunities including hunting and fishing.

The acquisition of land by eligible entities may affect the local real property tax base, depending on applicable state law and the tax status of the acquiring entity. The possible impact on the real property tax base is not possible to ascertain, but is assumed that any land going from taxable to non-taxable status would cause a commensurate shifting of the tax burden to other taxable properties or, alternatively, a reduction in local tax revenues.

As a new program, CFP would not materially alter the budgetary impact of entitlements, user fees, loan programs, or the rights and obligations of program participants. The program is voluntary for each participating eligible entity.

This proposed rule has been considered in light of Executive order 13272 regarding property considerations of small entities and the Small Business Regulatory Enforcement Fairness Act of 1996. The proposed rule for voluntary participation in the CFP does not impose significant direct costs on small entities. This proposed rule imposes no additional requirements on the affected public. Entities most likely affected by this proposed rule are the local governments, qualified nonprofit organizations, and Tribal governments eligible to receive a grant through CFP. The minimum requirements on small entities imposed by this proposed rule are necessary to protect the public interest, not administratively burdensome or costly to meet, and are within the capabilities of small entities to perform. The proposed rule would not materially alter the budgetary impact of entitlements, user fees, loan programs, or the rights and obligations of program participants. It does not compel the expenditure of $100 million or more by any State, local or Indian Tribal government, or anyone in the private sector. Under these circumstances, the Forest Service has determined that this action would not have a significant economic impact on a substantial number of small entities.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), which the President signed into law on March 22, 1995, the Agency has assessed the effects of this proposed rule on State, local, and tribal governments and the private sector. This proposed rule does not compel the expenditure of $100 million or more by any State, local or Indian Tribal governments, or anyone in the private sector. Therefore, a statement under section 202 of that Act is not required.

The Forest Service has considered this rule under the requirements of Executive Order 13132, Federalism, and Executive Order 12875, Government Partnerships. The Forest Service has determined that the rule conforms with the federalism principles set out in these Executive Orders. The rule would not impose any compliance costs on the States other than those imposed by statute, and would not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Based on comments received on this proposed rule, the Agency will consider if any additional consultations will be needed with the State and local governments prior to adopting a final rule.

In accordance with the Paperwork Reduction Act of 1995 [44 U.S.C. Chapter 35], the Forest Service is requesting an approval of a new information collection.

Title:Proposed substitution of 36 CFR part 230, Subpart A with Community Forest and Open Space Conservation Program.

OMB Number:0596-New.

Expiration Date of Approval:3 years from approval date.

Type of Request:New information collection.

Abstract:The purpose of CFP is to achieve community benefits through grants to local governments, Tribal Governments, and qualified nonprofit organizations to establish community forests by acquiring and protecting private forestlands. This proposed rule includes information requirements necessary to implement CFP and comply with grants regulations and OMB Circulars. The information requirements will be used to help the Forest Service in the following areas:

(1) To determine that the applicant is eligible to receive funds under the program,

(2) To determine if the proposal meets the qualifications in the law and regulations,

(3) To evaluate and rank the proposals based on a standard, consistent information, and

(4) To determine if the projects costs are allowable, and sufficient cost share is provided.

Local governmental entities, Tribal Governments, and qualified nonprofit organizations are the only entities eligible for the program, and therefore are the only organizations from which information will be collected.

The information collection required for a request for proposals and grant application, is approved and assigned Office of Management and Budget Control (OMB) No. 0596-New. The information collection required for a proposed bonded notice in this proposed rule has been submitted to OMB as a new collection.

Estimated Number of Respondents:180.

Estimated Number of Responses per Respondent:1.

Estimated Number of Total Annual Responses:180.

Estimated Total Annual Burden on Respondents:5,800 hours.

Comments:Comments are invited on:

(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

(2) The accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and

(4) Ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

This proposed rule has tribal implications as defined in Executive Order 13175. Section 7A(a)(1) of the Cooperative Forestry Assistance Act establishes that Federally recognized Indian tribes are eligible entities to participate in the CFP. In accordance with the President's memorandum ofApril 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951); the Executive Order of November 6, 2000, “Consultation and Coordination With Indian Tribal Governments” (EO 13175); and with the directives of the Department of Agriculture (DR1350-001); we have determined that specific effects on Indian tribes are likely to occur through implementation of the CFP and, therefore, the opportunity for government-to-government consultation will be provided. Tribal consultation will be accomplished through local and regional consultation processes in coordination with the Washington Office of the Forest Service.

Tribal consultation was initiated on October 20, 2010, and is currently ongoing. No Tribal input has been received during the initial 60-day period. Consultation will continue during the 60-day public comment period.

This proposed rule has been analyzed in accordance with the principles and criteria contained in Executive Order 12630, and it has been determined that the proposed rule does not pose the risk of a taking of constitutionally protected private property. This proposed rule implements a program to assist eligible entities to acquire land from willing landowners. Any land use restrictions are voluntarily undertaken by program participants.

The Forest Service has determined that this proposed rule falls under the categorical exclusion provided in Forest Service regulations on National Environmental Policy Act procedures. Such procedures exclude from documentation in an environmental assessment or impact statement “rules, regulations, or policies to establish service wide administrative procedures, program processes, or instructions.” 36 CFR 220.6(d)(2); 73 FR 43084 (July 24, 2008). This proposed rule outlines the programmatic implementation of CFP, and as such, has no direct effect on Forest Service decisions for land management activities.

This proposed rule has been reviewed under Executive Order 13211 of May 18, 2001, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. It has been determined that this proposed rule does not constitute a significant energy action as defined in the Executive Order.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Forest Service has not identified any State or local laws or regulations that are in conflict with this proposed rule or that would impede full implementation of this proposed rule. Nevertheless, in the event that such a conflict was to be identified, the proposed rule would preempt the State or local laws or regulations found to be in conflict. However, in that case, no retroactive effect would be given to this rule, and the Forest Service would not require the use of administrative proceedings before parties could file suit in court challenging its provisions.

Therefore, for the reasons set forth in the preamble, the Forest Service proposes to amend part 230 of Title 36 of the Code of Federal Regulations by revising subpart A to read as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. The following outline is provided to aid in locating information in this preamble.

On December 9, 2010, the Connecticut Department of Environmental Protection (DEP) submitted a draft revision to EPA for approval into Connecticut's SIP to: (1) Provide the State with the authorityto regulate GHGs under its PSD program; and (2) establish appropriate emission thresholds for determining which new or modified stationary sources become subject to Connecticut's PSD permitting requirements for GHG emissions. Final approval of Connecticut's December 9, 2010 SIP revision will make Connecticut's SIP adequate with respect to PSD requirements for GHG-emitting sources, thereby negating the need for a GHG FIP. Furthermore, final approval of Connecticut's December 9, 2010, SIP revision will put in place the GHG emission thresholds for PSD applicability set forth in EPA's Tailoring Rule, ensuring that smaller GHG sources emitting less than these thresholds will not be subject to the permitting requirements that will begin applying to GHGs on January 2, 2011. Pursuant to section 110 of the CAA, EPA is proposing to approve this revision into the Connecticut SIP.

Because this draft SIP revision is not yet state-effective, Connecticut requested that EPA “parallel process” the SIP revision in a letter dated December 9, 2010. Under this procedure, the EPA Regional Office works closely with the state while developing new or revised regulations, and may propose approval of the SIP revision before it has become fully effective as state law.

Connecticut conducted a public comment period on its proposed regulations from September 1, 2010 to October 18, 2010.1 On October 14, 2010, EPA submitted comments to Connecticut on the state's proposed regulations. On December 9, 2010, Connecticut submitted a letter to EPA explaining that Connecticut had considered all the submitted comments and made revisions to the proposed regulation, and that a revised “final draft” regulation was now available that responded to all of EPA's comments. Connecticut requested that EPA propose to approve this final draft regulation, rather than the original proposed regulation, as the SIP revision.

As Connecticut explained, however, pursuant to Connecticut's regulatory adoption laws, this final draft regulation must be reviewed by Connecticut's Office of Attorney General and then the Legislative Regulations Review Committee before it can be finalized and made effective under state law. Therefore, as of today, Connecticut has not yet issued final regulations. However, pursuant to the “parallel processing” mechanism, EPA is proposing approval of the SIP revision, based on the proposed state action.

After Connecticut submits the formal state-effective SIP revision request (including a response to all public comments raised during the State's public participation process), EPA will prepare a final rulemaking notice for the SIP revision, provided Connecticut's final promulgated regulation adequately addresses EPA's comments. If changes are made to the SIP revision after EPA's notice of proposed rulemaking, such changes must be acknowledged in EPA's final rulemaking action. If the changes are significant, then EPA may be obliged to re-propose action. In addition, if the changes render the SIP revision not approvable, EPA's re-proposal of the action would be a disapproval of the revision.

Today's proposed action on the Connecticut SIP relates to three federal rulemaking actions. The first rulemaking is EPA's “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule,” Final Rule (the Tailoring Rule). 75 FR 31514 (June 3, 2010). The second rulemaking is EPA's “Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Finding of Substantial Inadequacy and SIP Call,” Proposed Rule, (GHG SIP Call). 75 FR 53892 (September 2, 2010). The third rulemaking is EPA's “Action to Ensure Authority to Issue Permits Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: Federal Implementation Plan,” Proposed Rule, 75 FR 53883 (September 2, 2010) (GHG FIP), which serves as a companion rulemaking to EPA's proposed GHG SIP Call. A summary of each of these rulemakings is described below.

In the first rulemaking, the Tailoring Rule, EPA establishes appropriate GHG emission thresholds for determining the applicability of PSD requirements to GHG-emitting sources. In the second rulemaking, the GHG SIP Call, EPA is proposing to find that the EPA-approved PSD programs in 13 States (including Connecticut) are substantially inadequate to meet CAA requirements because they do not appear to apply PSD requirements to GHG-emitting sources. For each of these States, EPA proposes to require the State (through a “SIP Call”) to revise its SIP as necessary to correct such inadequacies. EPA is proposing an expedited schedule for these States to submit their SIP revision, in light of the fact that as of January 2, 2011, certain GHG-emitting sources will become subject to the PSD requirements and may not be able to obtain a PSD permit in order to construct or modify. In the third rulemaking, the GHG FIP (which is not yet final), EPA is proposing a FIP to apply in any state that is unable to submit, by its deadline, a SIP revision to ensure that the state has authority to issue PSD permits for GHG-emitting sources. Connecticut is now seeking to revise its SIP to make it adequate with respect to PSD requirements for GHG-emitting sources, thereby negating the need for a GHG FIP. Furthermore, Connecticut is seeking to revise its SIP to put in place the GHG emission thresholds for PSD applicability set forth in EPA's Tailoring Rule, thereby ensuring that smaller GHG sources emitting less than these thresholds will not be subject to permitting requirements.

Below is a brief overview of GHGs and GHG-emitting sources, the CAA PSD program, minimum SIP elements for a PSD program, and EPA's recent actions regarding GHG permitting. Following this section, EPA discusses, in sections III and IV, the relationship between the proposed Connecticut SIP revision and EPA's other national rulemakings as well as EPA's analysis of Connecticut's SIP revision.

A detailed explanation of GHGs, climate change and the impact on health, society, and the environment is included in EPA's technical support document for EPA's GHG endangerment finding final rule (Document ID No. EPA-HQ-OAR-2009-0472-11292 athttp://www.regulations.gov). The endangerment finding rulemaking is discussed later in this rulemaking. A summary of the nature and sources of GHGs is provided below.

GHGs trap the Earth's heat that would otherwise escape from the atmosphere into space and form the greenhouse effect that helps keep the Earth warm enough for life. GHGs are naturally present in the atmosphere and are also emitted by human activities. Human activities are intensifying the naturally occurring greenhouse effect by increasing the amount of GHGs in the atmosphere, which is changing the climate in a way that endangers human health, society, and the natural environment.

Some GHGs, such as carbon dioxide (CO2), are emitted to the atmosphere through natural processes as well as human activities. Other gases, such as fluorinated gases, are created and emitted solely through human activities. The well-mixed GHGs of concern directly emitted by human activities include CO2, methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6), hereafter referred to collectively as “the six well-mixed GHGs,” or, simply, GHGs. Together these six well-mixed GHGs constitute the “air pollutant” upon which the GHG thresholds in EPA's Tailoring Rule are based. These six gases remain in the atmosphere for decades to centuries where they become well-mixed globally in the atmosphere. When they are emitted more quickly than natural processes can remove them from the atmosphere, their concentrations increase, thus increasing the greenhouse effect.

In the U.S., the combustion of fossil fuels (e.g.,coal, oil, gas) is the largest source of CO2emissions and accounts for 80 percent of the total GHG emissions by mass. Anthropogenic CO2emissions released from a variety of sources, including through the use of fossil fuel combustion and cement production from geologically stored carbon (e.g.,coal, oil, and natural gas) that is hundreds of millions of years old, as well as anthropogenic CO2emissions from land-use changes such as deforestation, perturb the atmospheric concentration of CO2, and the distribution of carbon within different reservoirs readjusts. More than half of the energy-related emissions come from large stationary sources such as power plants, while about a third come from transportation. Of the six well-mixed GHGs, four (CO2, CH4, N2O, and HFCs) are emitted by motor vehicles. In the U.S., industrial processes (such as the production of cement, steel, and aluminum), agriculture, forestry, other land use, and waste management are also important sources of GHGs.

Different GHGs have different heat-trapping capacities. The concept of Global Warming Potential (GWP) was developed to compare the heat-trapping capacity and atmospheric lifetime of one GHG to another. The definition of a GWP for a particular GHG is the ratio of heat trapped by one unit mass of the GHG to that of one unit mass of CO2over a specified time period. When quantities of the different GHGs are multiplied by their GWPs, the different GHGs can be summed and compared on a carbon dioxide equivalent (CO2e) basis. For example, CH4has a GWP of 21, meaning each ton of CH4emissions would have 21 times as much impact on global warming over a 100-year time horizon as 1 ton of CO2emissions. Thus, on the basis of heat-trapping capability, 1 ton of CH4would equal 21 tons of CO2e. The GWPs of the non-CO2GHGs range from 21 (for CH4) up to 23,900 (for SF6). Aggregating all GHGs on a CO2e basis at the source level allows a facility to evaluate its total GHG emissions contribution based on a single metric.

The PSD program is a preconstruction review and permitting program applicable to new major stationary sources and major modifications at existing stationary sources. The PSD program applies in areas that are designated “attainment” or “unclassifiable” for a national ambient air quality standard (NAAQS). The PSD program is contained in part C of title I of the CAA. The “nonattainment NSR” program applies in areas not in attainment of a NAAQS or in the Ozone Transport Region, and it is implemented under the requirements of part D of title I of the CAA. Collectively, EPA commonly refers to these two programs as the major NSR program. The governing EPA rules are contained in 40 CFR 51.165, 51.166, 52.21, 52.24, and part 51, Appendices S and W. There is no NAAQS for CO2or any of the other well-mixed GHGs, nor has EPA proposed any such NAAQS; therefore, unless and until EPA takes further such action, the nonattainment NSR program does not apply to GHGs.

The applicability of PSD to a particular source must be determined in advance of construction or modification and is pollutant-specific. The primary criterion in determining PSD applicability for a proposed new or modified source is whether the source is a “major emitting facility,” based on its predicted potential emissions of regulated pollutants, within the meaning of CAA section 169(1) that either constructs or undertakes a modification. EPA has implemented these requirements in its regulations, which use somewhat different terminology than the CAA does, for determining PSD applicability.

Under PSD, a “major stationary source” is any source belonging to a specified list of 28 source categories that emits or has the potential to emit 100 tpy or more of any air pollutant subject to regulation under the CAA, or any other source type that emits or has the potential to emit such pollutants in amounts equal to or greater than 250 tpy. We refer to these levels as the 100/250-tpy thresholds. A new source with a potential to emit (PTE) at or above the applicable “major stationary source threshold” is subject to major NSR. These limits originate from section 169 of the CAA, which applies PSD to any “major emitting facility” and defines the term to include any source that emits or has a PTE of 100 or 250 tpy, depending on the source category. Note that the major source definition incorporates the phrase “subject to regulation,” which, as described later, will begin to include GHGs on January 2, 2011, under our interpretation of that phrase as discussed in the recent memorandum entitled, “EPA's Interpretation of Regulations that Determine Pollutants Covered by Federal Prevention of Significant Deterioration (PSD) Permit Program.” 75 FR 17004 (April 2, 2010).

PSD also applies to existing sources that undertake a “major modification,” which occurs when: (1) There is a physical change in, or change in the method of operation of, a “major stationary source;” (2) the change results in a “significant” emissions increase of a pollutant subject to regulation (equal to or above the significance level that EPA has set for the pollutant in 40 CFR 52.21(b)(23)); and (3) there is a “significant net emissions increase” of a pollutant subject to regulation that is equal to or above the significance level (defined in 40 CFR 52.21(b)(23)). Significance levels, which EPA has promulgated for criteria pollutants and certain other pollutants, represent ade minimiscontribution to air quality problems. When EPA has not set a significance level for a regulated NSR pollutant, PSD applies to an increase of the pollutant in any amount (that is, in effect, the significance level is treated as zero).

This section provides a very brief summary of the main requirements of the PSD program. One principal requirement is that a new major source or major modification must apply best available control technology (BACT), which is determined on a case-by-case basis taking into account, among other factors, the cost effectiveness of the control and energy and environmental impacts. EPA has developed a “top-down” approach for BACT review, which involves a decision process that includes identification of all available control technologies, elimination oftechnically infeasible options, ranking of remaining options by control and cost effectiveness, and then selection of BACT. Under PSD, once a source is determined to be major for any regulated NSR pollutant, a BACT review is performed for each attainment pollutant that exceeds its PSD significance level as part of new construction or for modification projects at the source, where there is a significant increase and a significant net emissions increase of such pollutant.2

In addition to performing BACT, the source must analyze impacts on ambient air quality to assure that sources do not cause or contribute to violation of any NAAQS or PSD increments and must analyze impacts on soil, vegetation, and visibility. In addition, sources or modifications that would impact Class I areas (e.g.,national parks) may be subject to additional requirements to protect air quality related values (AQRVs) that have been identified for such areas. Under PSD, if a source's proposed project may impact a Class I area, the Federal Land Manager is notified and is responsible for evaluating a source's projected impact on the AQRVs and recommending either approval or disapproval of the source's permit application based on anticipated impacts. There are currently no NAAQS or PSD increments established for GHGs, and therefore these PSD requirements would not apply for GHGs, even when PSD is triggered for GHGs. However, if PSD is triggered for a GHG-emitting source, all regulated NSR pollutants that the new source emits in significant amounts would be subject to PSD requirements. Therefore, if a facility triggers NSR for non-GHG pollutants for which there are established NAAQS or increments, the air quality, additional impacts, and Class I requirements would apply to those pollutants.

Pursuant to existing PSD requirements, the permitting authority must provide notice of its preliminary decision on a source's application for a PSD permit and must provide an opportunity for comment by the public, industry, and other interested persons. After considering and responding to comments, the permitting authority must issue a final determination on the construction permit. Usually NSR permits are issued by a state or local air pollution control agency that has its own authority to issue PSD permits under a permit program that has been approved by EPA for inclusion in its SIP. In some areas, EPA has delegated its authority to issue PSD permits under federal regulations to the state or local agency. In other areas, EPA issues the permits under its own authority.

The CAA contemplates that the PSD program be implemented in the first instance by the states and requires that states include PSD requirements in their SIPs. CAA section 110(a)(2)(C) requires that—

These provisions, read in conjunction with the PSD applicability provisions—which, as noted above, applies, by its terms, to “any air pollutant,” and which EPA has, through regulation, interpreted more narrowly as any “NSR regulated pollutant”—and read in conjunction with other provisions, such as the BACT provision under CAA section 165(a)(4), mandate that SIPs include PSD programs that are applicable to, among other things, any air pollutant that is subject to regulation, including, as discussed below, GHGs on and after January 2, 2011.3

A number of states do not have PSD programs approved into their SIPs. In those states, EPA's regulations at 40 CFR 52.21 govern, and either EPA or the state as EPA's delegatee acts as the permitting authority. On the other hand, most states have PSD programs that have been approved into their SIPs, and these states implement their PSD programs and act as the permitting authority. Connecticut has a SIP-approved PSD program.

By notice dated December 15, 2009, pursuant to CAA section 202(a), EPA issued, in a single final action, two findings regarding GHGs that are commonly referred to as the “Endangerment Finding” and the “Cause or Contribute Finding.” “Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act,” 74 FR 66496. In the Endangerment Finding, the Administrator found that six long-lived and directly emitted GHGs—CO2, CH4, N2O, HFCs, PFCs, and SF6—may reasonably be anticipated to endanger public health and welfare. In the Cause or Contribute Finding, the Administrator “define[d] the air pollutant as the aggregate group of the same six * * * greenhouse gases,” 74 FR 66536, and found that the combined emissions of this air pollutant from new motor vehicles and new motor vehicle engines contribute to the GHG air pollution that endangers public health and welfare.

By notice dated May 7, 2010, EPA published what is commonly referred to as the “Light-Duty Vehicle Rule” (LDVR), which for the first time established federal controls on GHGs emitted from light-duty vehicles. “Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule.” 75 FR 25324. In its applicability provisions, the LDVR specifies that it “contains standards and other regulations applicable to the emissions of six greenhouse gases,” including CO2, CH4, N2O, HFCs, PFCs, and SF6. 75 FR 25686 (40 CFR 86.1818-12(a)). Shortly before finalizing the LDVR, by notice dated April 2, 2010, EPA published a notice commonly referred to as the Johnson Memo Reconsideration. On December 18, 2008, EPA issued a memorandum, “EPA's Interpretation of Regulations that Determine Pollutants Covered byFederal Prevention of Significant Deterioration (PSD) Permit Program” (known as the “Johnson Memo” or the “PSD Interpretive Memo,” and referred to in this preamble as the “Interpretive Memo”), that set forth EPA's interpretation regarding which EPA and state actions, with respect to a previously unregulated pollutant, cause that pollutant to become “subject to regulation” under the Act. Whether a pollutant is “subject to regulation” is important for the purposes of determining whether it is covered under the federal PSD permitting program. The Interpretive Memo established that a pollutant is “subject to regulation” only if it is subject to either a provision in the CAA or regulation adopted by EPA under the CAA that requires actual control of emissions of that pollutant (referred to as the “actual control interpretation”). On February 17, 2009, EPA granted a petition for reconsideration on the Interpretive Memo and announced its intent to conduct a rulemaking to allow for public comment on the issues raised in the memorandum and on related issues. EPA also clarified that the Interpretive Memo would remain in effect pending reconsideration.

On March 29, 2010, EPA signed a notice conveying its decision to continue applying (with one limited refinement) the Interpretive Memo's interpretation of “subject to regulation” (“Interpretation of Regulations that Determine Pollutants Covered by Clean Air Act Permitting Programs”). 75 FR 17004. EPA concluded that the “actual control interpretation” is the most appropriate interpretation to apply given the policy implications. However, EPA refined the Agency's interpretation in one respect: EPA established that PSD permitting requirements apply to a newly regulated pollutant at the time a regulatory requirement to control emissions of that pollutant “takes effect” (rather than upon promulgation or the legal effective date of the regulation containing such a requirement). In addition, based on the anticipated promulgation of the LDVR, EPA stated that the GHG requirements of the vehicle rule would take effect on January 2, 2011, because that is the earliest date that a 2012 model year vehicle may be introduced into commerce. In other words, the compliance obligation under the LDVR does not occur until a manufacturer may introduce into commerce vehicles that are required to comply with GHG standards, which will begin with model year 2012 and will not occur before January 2, 2011.

On June 3, 2010 (effective August 2, 2010), EPA promulgated a final rulemaking for the purpose of relieving overwhelming permitting burdens that would, in the absence of the rule, fall on permitting authorities and sources, the Tailoring Rule, 75 FR 31514. EPA accomplished this by tailoring the applicability criteria that determine which GHG emission sources become subject to the PSD program4 of the CAA. In particular, EPA established in the Tailoring Rule a phase-in approach for PSD applicability and established the first two steps of the phase-in for the largest GHG-emitters. Additionally, EPA committed to certain follow-up actions regarding future steps beyond the first two, discussed in more detail later.

For the first step of the Tailoring Rule, which will begin on January 2, 2011, PSD requirements will apply to major stationary source GHG emissions only if the sources are subject to PSD anyway due to their emissions of non-GHG pollutants. Therefore, in the first step, EPA will not require sources or modifications to evaluate whether they are subject to PSD requirements solely on account of their GHG emissions. Specifically, for PSD, Step 1 requires that as of January 2, 2011, the applicable requirements of PSD, most notably, the BACT requirement, will apply to projects that increase net GHG emissions by at least 75,000 tpy CO2e, but only if the project also significantly increases emissions of at least one non-GHG pollutant.

The second step of the Tailoring Rule, beginning on July 1, 2011, will phase in additional large sources of GHG emissions. New sources that emit, or have the potential to emit, at least 100,000 tpy CO2e will become subject to the PSD requirements. In addition, sources that emit or have the potential to emit at least 100,000 tpy CO2e and that undertake a modification that increases net GHG emissions by at least 75,000 tpy CO2e will also be subject to PSD requirements. For both steps, EPA notes that if sources or modifications exceed these CO2e-adjusted GHG triggers, they are not covered by permitting requirements unless their GHG emissions also exceed the corresponding mass-based triggers in tpy.

EPA believes that the costs to the sources and the administrative burdens to the permitting authorities of PSD permitting will be manageable at the levels in these initial two steps and that it would be administratively infeasible to subject additional sources to PSD requirements at those times. However, EPA also intends to issue a supplemental notice of proposed rulemaking in 2011, in which the Agency will propose or solicit comment on a third step of the phase-in that would include more sources, beginning on July 1, 2013. In the Tailoring Rule, EPA established an enforceable commitment that the Agency will complete this rulemaking by July 1, 2012, which will allow for 1 year's notice before Step 3 would take effect.

In addition, EPA committed to explore streamlining techniques that may well make the permitting programs much more efficient to administer for GHG, and that therefore may allow their expansion to smaller sources. EPA expects that the initial streamlining techniques will take several years to develop and implement.

In the Tailoring Rule, EPA also included a provision, that no source with emissions below 50,000 tpy CO2e, and no modification resulting in net GHG increases of less than 50,000 tpy CO2e, will be subject to PSD permitting before at least 6 years (i.e., April 30, 2016). This is because EPA has concluded that at the present time the administrative burdens that would accompany permitting sources below this level would be so great that even with the streamlining actions that EPA may be able to develop and implement in the next several years, and even with the increases in permitting resources that EPA can reasonably expect the permitting authorities to acquire, it would be impossible to administer the permit programs for these sources until at least 2016.

As EPA explained in the Tailoring Rule, the threshold limitations are necessary because without it, PSD would apply to all stationary sources that emit or have the potential to emit more than 100 or 250 tons of GHG per year beginning on January 2, 2011. This is the date when EPA's recently promulgated LDVR takes effect, imposing control requirements for the first time on CO2and other GHGs. If this January 2, 2011, date were to pass without the Tailoring Rule being in effect, PSD requirements would apply to GHG emissions at the 100/250 tpy applicability levels provided under a literal reading of the CAA as of that date. From that point forward, a source owner proposing to construct any new major source that emits at or higher than the applicability levels (and which therefore may be referred to as a “major” source) or modify any existing majorsource in a way that would increase GHG emissions would need to obtain a permit under the PSD program that addresses these emissions before construction or modification could begin.

Under these circumstances, many small sources would be burdened by the costs of the individualized PSD control technology requirements and permit applications that the PSD provisions, absent streamlining, require. Additionally, state and local permitting authorities would be burdened by the extraordinary number of these permit applications, which are orders of magnitude greater than the current inventory of permits and would vastly exceed the current administrative resources of the permitting authorities. Permit gridlock would result since the permitting authorities would likely be able to issue only a tiny fraction of the permits requested.

In the Tailoring Rule, EPA adopted regulatory language codifying the phase-in approach. As explained in that rulemaking, many state, local and tribal area programs will likely be able to immediately implement the approach without rule or statutory changes by, for example, interpreting the term “subject to regulation” that is part of the applicability provisions for PSD permitting. EPA has requested permitting authorities to confirm that they will follow this implementation approach for their programs, and if they cannot, then EPA has requested that they notify the Agency so that we can take appropriate follow-up action to narrow federal approval of their programs before GHGs become subject to PSD permitting on January 2, 2011.5 On July 20, 2010, Connecticut provided a letter to EPA with the requested notification. See the docket for this proposed rulemaking for a copy of Connecticut's letter.

The thresholds that EPA established are based on CO2e for the aggregate sum of six GHGs that constitute the pollutant that will be subject to regulation, which we refer to as GHG.6 These gases are: CO2, CH4, N2O, HFCs, PFCs, and SF6. Thus, in EPA's Tailoring Rule, EPA provided that PSD applicability is based on the quantity that results when the mass emissions of each of these gases is multiplied by the GWP of that gas, and then summed for all six gases. However, EPA further provided that in order for a source's GHG emissions to trigger PSD requirements, the quantity of the GHG emissions must equal or exceed both the applicability thresholds established in the Tailoring Rule on a CO2e basis and the statutory thresholds of 100 or 250 tpy on a mass basis.7 Similarly, in order for a source to be subject to the PSD modification requirements, the source's net GHG emissions increase must exceed the applicable significance level on a CO2e basis and must also result in a net mass increase of the constituent gases combined.

EPA adopted the Tailoring Rule after careful consideration of numerous public comments. On October 27, 2009 (74 FR 55292), EPA proposed the Tailoring Rule. EPA held two public hearings on the proposed rule, and received over 400,000 written public comments. The public comment period ended on December 28, 2009. The comments provided detailed information that helped EPA understand better the issues and potential impacts of the Tailoring Rule. The preamble of EPA's Tailoring Rule describes in detail the comments received and how some of these comments were incorporated in EPA's final rule.See75 FR 31514 for more detail.

By notice dated September 2, 2010, EPA proposed the GHG SIP Call. In that action, along with the companion GHG FIP rulemaking published at the same time, EPA took steps to ensure that in the 13 States that do not appear to have authority to issue PSD permits to GHG-emitting sources at present, either the State or EPA will have the authority to issue such permits by January 2, 2011. EPA explained that although for most States, either the State or EPA is already authorized to issue PSD permits for GHG-emitting sources as of that date, our preliminary information shows that these 13 States have EPA-approved PSD programs that do not appear to include GHG-emitting sources and therefore do not appear to authorize these States to issue PSD permits to such sources. Therefore, EPA proposed to find that these 13 States' SIPs are substantially inadequate to comply with CAA requirements and, accordingly, proposed to issue a SIP Call to require a SIP revision that applies their SIP PSD programs to GHG-emitting sources. In the companion GHG FIP rulemaking, EPA proposed a FIP that would give EPA authority to apply EPA's PSD program to GHG-emitting sources in any State that is unable to submit a corrective SIP revision by its deadline. Connecticut was one of the States for which EPA proposed a SIP Call.

As noted above, by notice dated September 2, 2010, EPA proposed the GHG SIP Call. At the same time, EPA proposed a FIP to apply in any state that is unable to submit, by its deadline, a SIP revision to ensure that the state has authority to issue PSD permits to GHG-emitting sources.8 As discussed in section IV of this rulemaking, Connecticut does not interpret its current PSD regulations as providing it with the authority to regulate GHG, and as such, Connecticut is included on the list of areas for the proposed SIP call. Connecticut's December 9, 2010, proposed SIP revision (the subject of this rulemaking) addresses this authority.

On December 9, 2010, DEP provided a revision to Connecticut's SIP to EPA for parallel processing and eventual approval. This revision to Connecticut's SIP is necessary because without it, (1) the State would not have authority to issue PSD permits to GHG-emitting sources, and as a result, absent further action, those sources may not be able to construct or undertake modifications beginning January 2, 2011; and (2) assuming that the State attains authority to issue PSD permits to GHG-emitting sources, PSD requirements would apply, as of January 2, 2011, at the 100- or 250-tpy levels provided under the CAA. This would greatly increase the numberof required permits, imposing undue costs on small sources; which would overwhelm Connecticut's permitting resources and severely impair the function of the program.

The State's December 9, 2010, proposed SIP revision: (1) Provides the State with the authority to regulate GHG under the PSD program of the CAA, and (2) establishes thresholds for determining which stationary sources and modification projects become subject to permitting requirements for GHG emissions under the PSD program. Specifically, Connecticut's December 9, 2010, proposed SIP revision includes proposed changes to Regulations of Connecticut State Agencies, section 22a-174-1, by adding definitions for “carbon dioxide equivalent emissions” and “greenhouse gases.” The proposed SIP revision also addresses the thresholds for GHG permitting applicability and implementation through changes proposed to Connecticut's PSD regulations at section 22a-174-3a.

The State of Connecticut is currently a SIP-approved state for the PSD program. However, Connecticut does not interpret its current rules, which are generally consistent with the federal rules, to be automatically updating to include newly designated regulated air pollutants such as GHG. In a letter provided to EPA on July 20, 2010, Connecticut notified EPA that the State does not currently have the authority to regulate GHG and thus is in the process of revising its regulation (the subject of this proposed action) to provide this authority. To provide this authority, Connecticut is adding definitions of “carbon dioxide equivalent emissions” and “greenhouse gases” to section 22a-174-1, and revising PSD applicability and BACT requirements in section 22a-174-3a, to explicitly regulate GHG under the CAA. EPA has preliminarily determined that this change to Connecticut's regulation is consistent with the CAA and its implementing regulations regarding GHG.

The changes included in Connecticut's PSD program are substantively the same as EPA's Tailoring Rule. The Connecticut rules have been developed to conform to the structure of Connecticut's rule in section 22a-174-3a, 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 Connecticut submittal, EPA performed a line-by-line review of Connecticut's proposed changes to its regulations and concluded the state's proposed regulations are consistent with the Tailoring Rule.

Pursuant to section 110 of the CAA, EPA is proposing to approve the State of Connecticut's December 9, 2010, proposed SIP revision, relating to PSD requirements for GHG-emitting sources. Specifically, Connecticut's December 9, 2010, proposed SIP revision: (1) Provides the State with the authority to regulate GHGs under its PSD program, and (2) establishes appropriate emissions thresholds for determining PSD applicability to new and modified GHG-emitting sources in accordance with EPA's Tailoring Rule. EPA has made the preliminary determination that this SIP revision is approvable because it is in accordance with the CAA and EPA regulations regarding 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 proposed action merely approves the State's law as meeting federal requirements and does not impose additional requirements beyond those imposed by the State's law. For that reason, this proposed 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).

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.

For the purpose of this document, we are giving meaning to certain words or initials as follows:

(i) The words or initialsActorCAAmean or refer to the Clean Air Act, unless the context indicates otherwise.

(ii) The wordsEPA, we, usorourmean or refer to the United States Environmental Protection Agency.

(iii) Minor NSR means NSR established under section 110 of the Act and 40 CFR 51.160.

(iv) NSR means new source review, a phrase intended to encompass the stationary source regulatory programs that regulate the construction and modification of stationary sources as provided under CAA section 110(a)(2)(C), CAA Title I, parts C and D, and 40 CFR 51.160 through 51.166.

(v) The initialsSIPmean or refer to State Implementation Plan.

(vi) The wordsStateorMontanamean the State of Montana, unless the context indicates otherwise.

(vii) NAAQS means National Ambient Air Quality Standards.

1.Submitting CBI.Do not submit this information to EPA throughhttp://www.regulations.govor e-mail. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2.Tips for Preparing Your Comments.When submitting comments, remember to:

a. Identify the rulemaking by docket number and other identifying information (subject heading,Federal Registerdate and page number).

b. Follow directions—The agency may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

c. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

d. Describe any assumptions and provide any technical information and/or data that you used.

e. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

f. Provide specific examples to illustrate your concerns, and suggest alternatives.

g. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

h. Make sure to submit your comments by the comment period deadline identified.

On October 16, 2006, the State of Montana submitted revisions to revise the Montana State Implementation Plan (SIP) and rules. This submission contained revisions to Administrative Rules of Montana (ARM) 17.8.743(1), and new rules I-VI, codified as ARM 17.8.1601, 17.8.1602, 17.8.1603, 17.8.1604, 17.8.1605, and 17.8.1606, pertaining to the regulation of oil and gas well facilities, and 17.8.759, pertaining to Montana air quality permit applicability. The revisions to ARM 17.8.743(1), 17.8.1601, 17.8.1602, 17.8.1603, 17.8.1604, 17.8.1605, and 17.8.1606 provide, generally, that an owner or operator of an oil and gas well facility for which a Montana air quality permit is required may wait until 60 days after the well completion date before submitting an application for a permit. EPA is proposing to act on the revisions to these seven regulations in this notice. The Montana Board of Environmental Review (Board) adopted these revisions to existing SIP revisions and new rules on December 2, 2005. ARM 17.8.759 is being addressed in a separate action (see75 FR 9834-9843). The submission also contains revisions to ARM 17.8.1402 pertaining to incorporation by reference. This revision was addressed by EPA in a previous action (see75 FR 3993-3996). In addition to these revisions, on October 16, 2006, Montana is also withdrawing ARM 17.8.743(1)(c) regarding the applicability of incinerators in the Montana air pollution program rules. ARM 17.8.743(1)(c) was inadvertently included in the submission dated May 28, 2003. The Board adopted ARM 17.8.743(1)(c) on December 6, 2002.

On November 1, 2006, the State of Montana submitted revisions to revise the Montana SIP and rules. This submission contained revisions to ARM 17.8.504, 17.8.505, 17.8.744, 17.8.1204 and new rules I-IX, codified as ARM 17.8.1701, 17.8.1702, 17.8.1703, 17.8.1704, 17.8.1705,17.8.1710, 17.8.1711, 17.8.1712 and 17.8.1713 pertaining to the regulation of oil and gas well facilities. The revision to ARM 17.8.504 pertains to air quality permit application fees; ARM 17.8.505 pertains to air quality operation fees; ARM 17.8.744(l) provides that a Montana air quality permit is not required for facilities that register with the department in accordance with ARM 17.8.17; and ARM 17.8.1204 addresses air quality operating permit program applicability. The Board adopted these new rules and rule amendments on March 23, 2006. EPA is proposing to act on all these rule submissions in this action.

EPA notes that ARM 17.8.1204 (regarding Air Quality Operating Permit Program Applicability) and ARM 17.8.505 (regarding Air Quality Operation Fees) are part of the Title V and Part 70 regulations which we do not approve into the SIP. Instead, we approve operating permit regulations under our operating permit regulations at 40 CFR part 70. Thus, we intend to consider approval of Montana's proposed Part C revisions pursuant to our part 70 regulations at such time as Montana submits an appropriate request under 40 CFR 70.4(i). The revisions are meaningless absent their regulatory context, and that regulatory context is not part of the EPA-approved SIP and is not incorporated by reference into 40 CFR part 52. Instead, the approval status of Montana's part 70 Program is reflected in 40 CFR part 70, Appendix A. Thus, because we are obligated to act on SIP submissions, we plan to disapprove these revisions as a revision to Montana's SIP. If the State requests to withdraw part C from the SIP revision prior to the time we take final action, we would not be obligated to take final action because part C would no longer be pending before the Agency as a SIP revision. Additionally, if requested by the State, we will separately consider these revisions as a revision to the approved operating permit program for the State.

The November 1, 2006 submission also contains revisions to the following rules: ARM 17.8.101, ARM 17.8.102, ARM 17.8.103, ARM 17.8.302, ARM 17.8.767, ARM 17.8.801, ARM 17.8.802, ARM 17.8.818, ARM 17.8.902 and ARM 17.8.1002 pertaining to incorporation by reference of current federal regulations and other materials into air quality rules. EPA is not acting on these rule submissions. These revisions were addressed by EPA in a previous action (see75 FR 3993-3996).

These proposed amendments to existing new rules and adoption of new rules listed above that are the subject of this notice, hereafter referred to as “the Program,” would establish a registration system for certain facilities that presently require a minor NSR air quality permit under the SIP regulations. The Program would establish a general registration system for oil and gas well facilities. The Program would allow the owner or operator of an oil or gas well facility to register with the Montana Department of Environmental Quality (MDEQ) in lieu of submitting a permit application and obtaining a permit to construct or modify the source. Currently, with specific exemptions, the administrative rules adopted under the CAA of Montana and approved by EPA into the SIP, require the owner or operator of sources of air pollution to obtain a permit prior to construction or modification.

EPA is proposing to disapprove the revisions and new rules as submitted by Montana on October 16, 2006 and November 1, 2006, as identified above.

Section 110(a)(2)(C) of the Act requires that each implementation plan include a program to regulate the construction and modification of stationary sources, including a permit program as required by parts C and D of title I of the Act, as necessary to assure that the NAAQS are achieved. Parts C and D, which pertain to prevention of significant deterioration (PSD) and nonattainment, respectively, address major NSR programs for stationary sources, and the permitting program for “nonmajor” (or “minor”) stationary sources is addressed by section 110(a)(2)(C) of the Act. We generally refer to the latter program as the “minor NSR” program. A minor stationary source is a source whose “potential to emit” is lower than the major source applicability threshold for a particular pollutant defined in the applicable major NSR program.

Therefore, we evaluated the submitted revisions and new rules using the federal regulations under CAA section 110(a)(2)(C), which require each State to include a minor NSR program in its SIP. EPA regulations require that a minor NSR program include:

• A plan that includes “legally enforceable procedures that enable” the permitting agency to determine whether a minor source will cause or contribute to violations of applicable portions of the control strategy, 40 CFR 51.160(a)(1).

• A plan that sets forth legally enforceable procedures that enable the State to determine whether the minor source will result in “interference with a national ambient air quality standard,” 40 CFR 51.160(a)(2) and, to prevent the source from doing so, 40 CFR 51.160(b).

• A plan that includes a discussion of “the basis for determining which facilities will be subject to review,” 40 CFR 51.160(e).

• A plan that includes a discussion of “the air quality data and the dispersion or other air quality modeling used” tomeet the requirements of EPA regulations 40 CFR 51.160(f).

In addition, we reviewed the State's regulations for compliance with the Act. Generally, SIPs must be enforceable (seesection 110(a) of the Act) and must not relax existing SIP requirements (seesection 110(l) and 193 of the Act).

EPA has issued several guidance memoranda that explain the Agency's requirements for practicable enforceability for purposes of effectively limiting a source's potential to emit. See, e.g., June 13, 1989 Memorandum entitled, “Guidance on Limiting Potential to Emit in New Source Permitting, from Terrell F. Hunt, Associate Enforcement Counsel, OECA, and John Seitz, Director, OAQPS, to EPA Regional Offices. Further guidance was provided on January 25, 1995 in a memorandum entitled, “Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act (Act),” from John Seitz, Director, OAQPS and Robert I. Van Heuvelen, Director, ORE to Regional Air Directors. Although the latter memo applies to stationary sources subject to CAA Section 112 and Title V, we are citing this notice for the general practicable enforceability principles.

For example, as presented in the guidance, practicable enforceability for a source-specific permit means that the permit's provisions must, at a minimum:

(1) Include technically accurate emission limitations;

(2) Specify the time period for the limitation (hourly, daily, monthly, annually);

(3) Specify the method for determining compliance including appropriate monitoring, recordkeeping and reporting (MRR);

(4) Identify the category of sources that are covered by the rule;

(5) Where coverage is optional, provide for notice to the permitting authority of the source's election to be covered by the rule; and

(6) Recognize the enforcement consequences relevant to the rule.

EPA reviewed the proposed new rules against the six criteria mentioned above. This review, which is also discussed in a memo from Richard R. Long, Director, Region 8 Air and Radiation Program, to the Board on January 30, 2006 (Long memo), includes:

a. Specific applicability. The Rules must clearly identify the category of sources that qualify for the rule's coverage.

b. Reporting or notice to permitting authority. The rule should provide that a source notify the permitting authority of its coverage by the rule.

c. Specific technically accurate emission limits. The rule must clearly specify the emission limits that apply, and include the specific associated compliance monitoring. A rule that allows sources to submit the specific parameters and associated emission limits to be monitored may not be enforceable because the rule itself does not set specific emission limits.

d. Specific compliance monitoring. The rule must specify the methods to determine compliance. Specifically, the rule must state the monitoring requirements, recordkeeping requirements, reporting requirements and test methods as appropriate.

e. Practically enforceable averaging times. The averaging time period must readily allow for determination of compliance.

f. Clearly recognized enforcement. Violations of the emission thresholds imposed by the rule constitute violations of permitting and SIP requirements.

Section 110(a)(2)(A) of the Act and 40 CFR 51.160(a)(1) requires that SIP revision submittals be enforceable. The September 23, 1987, Memorandum from J. Craig Potter, Assistant Administrator for Air and Radiation, and Thomas L. Adams Jr., Assistant Administrator for Enforcement and Compliance Monitoring, entitled “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency” provides EPA's guidance for interpreting this provision in the Act. EPA proposes to find that the proposed new and modified rules do not meet the requirements of section 110(a)(2), which require that SIP revision submittals be enforceable. First, there are no specific up-front methodologies in the submitted Program for the State to use to be able to determine whether a source covered by these rules is in compliance with 40 CFR 51.160. The Program fails to meet the enforceability requirements to assure compliance. This is because there are no specific limits to limit production, hours of operation, fuel consumption, etc. to ensure the facility's potential to emit remains below major source thresholds for any particular pollutant. Second, while ARM 17.8.1705, codified as New Rule V, requires that the owner or operator of a registered facility shall monitor and record annual production information for all emission points and maintain onsite records showing daily hours of operation and daily production rates, 17.8.1705 does not have any specific limits that limit the potential to emit. Thus, EPA finds that the testing, recordkeeping, reporting, and monitoring provisions necessary to establish how compliance will be determined and to ensure that the NAAQS are protected are insufficient.

The rule must clearly specify the emission limits that apply, and include the necessary more specialized monitoring, recordkeeping, and reporting (MRR) requirements required for an oil and gas registration program to ensure accountability and provide a means to determine compliance. The submitted Program is generic concerning MRR. For example, ARM 17.8.1705 requires that the owner or operator of a registered facility shall monitor and record annual production information for all emission points, as required by the MDEQ in the annual emission inventory request. ARM 17.8.1605 (Recordkeeping requirements) only requires that the owner or operator of an oil and gas well facility shall record, and maintain onsite or at a central field office, a record of each monthly inspection. There are no specific limits to limit potential to emit and there are no specific up front methodologies specified in this rule to determine compliance.

The submitted Program is generic concerning the types of monitoring that are required, rather than identifying the application of specific monitoring approaches, providing the technical specifications for each of the specific allowable monitoring systems, and requiring replicable procedures for the approval of any alternative monitoring system (January 25, 1995 memo from Kathie A. Stein, Director Air Enforcement Division entitled “Guidance on Practicable Enforceability”). The Program also lacks the replicable procedures that are necessary to ensure that (1) adequate monitoring is required that would accurately determine emissions under the Program; (2) the Program is based upon sound science and meets generally acceptable scientific procedures for data quality and manipulation; and (3) the information generated by such system meets minimum legal requirements for admissibility in a judicial proceeding to enforce the Program (September 23, 1987, Memorandum from J. Craig Potter, Assistant Administrator for Air and Radiation, and Thomas L. Adams Jr., Assistant Administrator for Enforcement and Compliance Monitoring, entitled “Review of State Implementation Plans and Revisions for Enforceability and Legal Sufficiency”). For example: ARM 17.8.1604 and 17.8.1712 require the source to inspect monthly all VOC piping components for leaks and repair such leaks within a specific period oftime. The rule should specify methods more sophisticated than sight, sound and smell to detect leaks; for example, field gas chromatography; photo ionization air monitoring; or portable gas detection instrumentation. Additionally, ARM 17.8.1713(4) requires the owner or operator of a registration oil or gas well facility with a “detectible level of hydrogen sulfide from the well” to submit an “air quality analysis demonstrating compliance” with the ambient standards for SO2and hydrogen sulfide. The regulation is ambiguous and provides no information regarding what should go in such a demonstration. The Program should also ensure consistency and accuracy in the calculations that oil and gas well facilities conduct, for example by including the calculations in the rule or referencing specific AP-42 air pollutant emission factors or American Society for Testing Materials (ASTM) methods to determine emissions from the various emission units at the oil and gas well facility.

Because of the reasons stated above, EPA finds the MRR requirements in the Program fail to ensure attainment and maintenance of the NAAQS are protected. The Program lacks language requiring the owner or operator to maintain the proper MRR, which would allow the State to be able to determine if there was an adverse impact on air quality.

Even if the rules were federally enforceable as required by CAA section 110(a)(2)(C), the rule must also be enforceable as a practical matter. EPA's review of these proposed revisions also focused on whether these revisions are enforceable as a practical matter. If limitations imposed by SIP rules are incomplete, vague, or nonexistent, enforcement by the States, citizens and EPA would not be effective. Emission limitations must be of sufficient quality and quantity to ensure accountability. EPA has issued several guidance documents explaining the requirements of practicable enforceability (e.g.,June 13, 1989 Memorandum entitled, “Guidance on Limiting Potential to Emit in New Source Permitting, from Terrell F. Hunt, Associate Enforcement Counsel, OECA, and John Seitz, Director, OAQPS, to EPA Regional Offices. Further guidance was provided on January 25, 1995 in a memorandum entitled, “Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act (Act),” from John Seitz, Director, OAQPS and Robert I. Van Heuvelen, Director, ORE to Regional Air Directors).

The standard of review in this instance is a determination whether the submitted Program has sufficient practically enforceable procedures that enable the permitting agency to determine whether a minor source will cause or contribute to violations of applicable portions of the NAAQS and the control strategy as required in 40 CFR 51.160. In the Long memo, EPA expressed concerns that, among other things, the submitted Program lacks the appropriate practically enforceable averaging times in order to determine compliance. EPA policy expresses a preference for short term limits, generally daily, but not to exceed one month (January 25, 1995 memo from Kathie A. Stein, Director Air Enforcement Division entitled “Guidance on Practicable Enforceability”). ARM17.8.1705 only requires the owner or operator of a registered facility to monitor and record annual production information, as required by MDEQ in the annual emission inventory request. The State only requires that production information be gathered on a calendar year basis and submitted to MDEQ by the date required in the emission inventory request. This requirement does not enable the permitting agency to determine whether a minor source will cause or contribute to violations of applicable portions of the NAAQS short term limits or PSD increments. If MDEQ envisions that some oil and gas well facilities that emit less than 100 tons per year of criteria air pollutants may be registration eligible, the rule must also include provisions for short term limits to ensure that the short term NAAQS limits and increments are met.

One of the requirements for practical enforceability is for a minor source to provide notice to the State before construction begins (Stein, Guidance on Enforceability Requirements for Limits Potential to Emit through SIP and § 112 Rules and General Permits). The proposed Program allows sources to operate and emit criteria pollutants up to 60 days before submitting a registration or permit application; therefore, there is no requirement that the State be notified before construction begins. Therefore, neither the public, the State, nor EPA can determine if compliance is met before construction; thus, these limitations are not practically enforceable.

As discussed above, any Minor NSR SIP revision submittal must meet section 110(l) of the CAA. Section 110(l) of the Act indicates that EPA cannot approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in Section 171), or any other applicable requirement of the Act. The Long memo stated that MDEQ should provide an appropriate analysis showing that the proposed new rule will not impact the NAAQS or PSD increments. EPA expressed concerns to MDEQ related to the cumulative effect of numerous registration sources. For example, the Program could allow hundreds of unrelated emission sources to be subject to individual emission limitations, yet the submitted Program lacks the appropriate practically enforceable averaging times in order to determine compliance with short term NAAQS limits and PSD increments. EPA recommended that MDEQ should perform a screening cumulative impact analysis showing, under the worst case scenarios, what effect oil and gas well facilities would have on the ozone, NO2, SO2and PM NAAQS and increments. Montana has not performed such an analysis. Therefore, EPA lacks sufficient available information to determine that the proposed SIP relaxation would not interfere with any applicable requirement concerning attainment and maintenance of the NAAQS, PSD increment, or any other requirement of the Act.

Montana's submittal did not include modeling assumptions that will ensure compliance with NAAQS. Examples of assumptions which should be discussed include the estimated number of facilities expected to be covered under the Program, as well as, their assumed locations (i.e., identify potentially high density locations). Montana did not demonstrate what the cumulative impacts from numerous oil and gas facilities operating under the Program in certain regions and statewide would have on the NAAQS.

EPA notes that in addition to the registration program allowing for new sources to escape the SIP permit requirements, ARM 17.8.1703 allows an owner or operator of a registration eligible facility for which a valid Montana Air Quality Permit (MAQP) has been issued to register with the department and request a revocation of the previously issued MAQP. This is a relaxation under section 110(l), because it provides an exemption from SIP requirements not previously available to sources. This SIP relaxation creates a risk of interference with attainment and maintenance of the NAAQS and control strategy. EPA lacks sufficient information to determine that this SIP relaxation would not interfere with attainment and maintenance of the NAAQS, PSD increment, or any other requirement of the Act.

EPA is proposing to disapprove revisions and new rules as identified in this action and as submitted by the State of Montana on October 16, 2006 and November 1, 2006. EPA is proposing disapproval based upon a number of factors, including: (1) The lack of any objective, replicable methodology in order to determine compliance, (2) the lack of sufficient MRR requirements, and (3) the lack of enforceability. Additionally, EPA lacks sufficient information to determine that the requested revision to add the new oil and gas registration program to the Montana Minor NSR SIP will not interfere with any applicable requirement concerning attainment and reasonable further progress (RFP) as required by CAA Section 110(l), or any other requirement of the Act. Finally, EPA also lacks sufficient information to make a finding that the submitted Program will ensure protection of the NAAQS, PSD increments, and noninterference with the Montana SIP control strategies.

Under the Clean Air Act, 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 Clean Air Act. Accordingly, this proposed 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 Clean Air Act; 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.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This section provides additional information by addressing the following questions:

EPA previously issued findings that certain States had failed to submit SIPs to satisfy the requirements of section 110(a)(2)(D)(i) of the CAA for the 1997 ozone and fine particle (PM2.5) standards (70 FR 21147, April 25, 2005). These findings started a 2-year clock for the promulgation of a FIP by EPA unless, prior to that time, each State made a submission to meet the requirements of 110(a)(2)(D)(i) and EPA approved the submission. This 2-year period expired in May 2007. EPA promulgated the Clean Air Interstate Rule (CAIR) on May 12, 2005, (see70 FR 25162). CAIR required States to reduce emissions of sulfur dioxide and nitrogen oxides that significantly contribute to, and interfere with maintenance of the NAAQS for PM2.5and/or ozone in any downwind State. CAIR was intended to provide States covered by the rule with a mechanism to satisfy their CAA section 110(a)(2)(D)(i)(I) obligations to address significant contribution to downwind nonattainment and interference with maintenance in another State with respect to the 1997 ozone and PM2.5NAAQS. Many States adopted the CAIR provisions and submitted SIPs to EPA to demonstrate compliance with the CAIR requirements in satisfaction of their 110(a)(2)(d)(i)(I) obligations.

For States that were in the CAIR region, EPA determined that the 110(a)(2)(D)(i)(I) SIP requirements were addressed by CAIR and the CAIR FIPs. However, the CAIR region did not include the State of Kansas. Therefore, Kansas was required to submit a SIP revision independent of CAIR to address interstate transport under 110(a)(2)(D)(i)(I).

On August 15, 2006, EPA issued guidance for SIP submissions addressing the requirements of section 110(a)(2)(D)(i) for the 1997 PM2.5and ozone NAAQS.1 To satisfy the section 110(a)(2)(D)(i)(I) requirement, on January 9, 2007, the State of Kansas submitted to EPA a declaration that the State does not contribute significantly to projected downwind ozone nonattainment, or interfere with maintenance in the year 2010, and provided a technical demonstration to support their negative declaration. On March 9, 2007, EPA approved the Kansas Department of Health and Environment's (KDHE) submittal to address CAA Section 110(a)(2)(D)(i).2

EPA was sued by a number of parties on various aspects of CAIR, and on July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit issued its decision to vacate and remand both CAIR and the associated CAIR FIPs in their entirety.North Carolinav.EPA,531 F.3d 836 (DC Cir. Jul. 11, 2008). However, in response to EPA's petition for rehearing, the Court issued an order remanding CAIR to EPA without vacating either CAIR or the CAIR FIPs.North Carolinav.EPA,550 F.3d 1176 (DC Cir. Dec. 23, 2008). The Court thereby left CAIR in place in order to “temporarily preserve the environmental values covered by CAIR” until EPA replaces it with a rule consistent with the Court's opinion.Id.at 1178. The Court directed EPA to “remedy CAIR's flaws” consistent with its July 11, 2008, opinion, but declined to impose a schedule on EPA for completing that action.Id.

EPA approved KDHE's SIP prior to the remand of the CAIR by the DC Circuit. The remand of CAIR had no impact on EPA's approval of the KDHE's SIP submission to satisfy the requirements of CAA Section 110(a)(2)(D)(i)(I).

On July 6, 2010, the Administrator signed a proposed Federal Implementation Plan to Reduce Interstate Transport of Fine Particulate Matter and Ozone (Transport Rule) to replace CAIR in response to the court's ruling.3 The updated modeling in support of the proposed Transport Rule responding to the remand of CAIR demonstrates that emissions from Kansas do interfere with maintenance of the 1997 8-hour ozone NAAQS in downwind areas.4 The previously approved Kansas SIP did not adequately address emissions. Therefore, based on the modeling used to support the proposed Transport Rule, which was not available at the time Kansas prepared and EPA approved the SIP submission, EPA proposes to find that the SIP revision approved on March 7, 2007, is substantially inadequate pursuant to 110(a)(2)(D)(i)(I).

To correct the deficiency, KDHE must submit a revised SIP that contains adequate provisions to prohibit air pollutant emissions from within the State that significantly contribute to nonattainment or interfere with maintenance of the 1997 8-hour ozone NAAQS in other downwind States. The SIP revision must contain measures that ensure that sources in Kansas reduce their NOXemissions sufficiently toeliminate the NOXemissions that contribute significantly to nonattainment, or that interfere with maintenance of the 1997 ozone standard, downwind. By eliminating those NOXemissions, the control measures will assure that the remaining NOXemissions will meet the level identified in the proposed Transport Rule as the State's ozone season NOXemission budget.

Section 110(k)(5) of the CAA provides that after EPA makes a finding that a plan is substantially inadequate, it may establish a reasonable deadline for correcting the deficiencies, but the date cannot be later than 18 months after the State is notified of the finding.

EPA intends to finalize the SIP Call in early summer of 2011. We propose to allow the State 12 months from the date of the notice, which will be the date on which we sign the final action, to submit the SIP revision, unless, during the comment period, the State expressly advises that it would not object to a shorter period—as short as 3 weeks from the date of signature of the final in which case we would establish the shorter period as the deadline. If the Administrator signs the notice on or about May 1, 2011, the earliest possible deadline would be three weeks from the date of signature. The purpose of establishing the shorter period as the deadline—assuming that the State advises us that it does not object to that shorter period—is to allow Kansas to use the FIP under the proposed Transport Rule to satisfy this SIP deficiency in an expedited manner. This would allow Kansas sources the ability to use the same remedy available to sources affected by the Transport Rule, within the same time period which EPA recommends. If the State does not advise us that it does not object to a shorter deadline, then the 12-month deadline would apply.

EPA proposes that this 3-week-to-12-month time period, although expedited, meets the CAA 110(k)(5) requirement as a “reasonable deadline” and we welcome comment on this interpretation. The term “reasonable deadline,” as it appears in that provision, is not defined. We interpret it to mean a time period that is sensible or logical, based on all the facts and circumstances. Those facts and circumstances include (i) the State SIP development and submission process, (ii) the ability for sources in Kansas to address emission reductions using the same remedy and timing as other sources in the proposed Transport Rule; and (iii) the preferences of the State. The following elaborates on those three facts and circumstances.

First, although the 12-month period is consistent with the time period required for SIP revisions in at least one previous SIP call that EPA issued, the NOXSIP Call,5 we recognize that a period shorter than 12 months is expedited in light of the time involved in most State SIP development and submission processes. In particular, we recognize that Kansas would need to undertake rulemaking actions, which would be time-consuming. Although this is a matter of State process, we are prepared to continue to work with Kansas to develop expedited methods for developing, processing, and submitting a SIP revision.

Second, providing the opportunity for sources in Kansas to address emission reductions using the same remedy and timing as other sources in the proposed Transport Rule is a significant consideration. Prescribing a shorter period for Kansas to address the SIP deficiency would mean that sources in Kansas could take advantage of the same remedy provided to other sources affected by the Transport Rule.

Finally, the preference of Kansas is important because the deadline for submittal of the corrective SIP revision in response to a SIP Call acts as a burden on the State. If Kansas does not object to an earlier deadline under which it must operate—which, in a sense, is contrary to the State's self-interest because an earlier deadline typically increases burdens—then that is an indication of the reasonableness of the deadline.

In the case where the State fails to make a timely and responsive SIP submittal, a finding that the State failed to submit the required SIP revision would trigger the requirement under section 110(c) that EPA promulgate a FIP no later than 2 years from the date of the finding, if the deficiency has not been corrected, and EPA has not approved a plan revision. The proposed Transport Rule, when finalized, is the FIP that EPA intends to implement for Kansas to fulfill the section 110(a)(2)(D)(i)(I) FIP obligation in the event the State fails to submit an adequate SIP revision. EPA intends for the Transport Rule FIP to be implemented sooner than 2 years from any such final finding.

In addition, if EPA finalizes this SIP Call by determining that the existing SIP is substantially inadequate, and if the State subsequently fails to provide a timely response to the SIP Call, the CAA provides for EPA to issue a finding of State failure under section 179(a). Such a finding normally starts an 18-month mandatory sanctions clock. However, as is made clear in the order of sanctions rule, (40 CFR 52.31), the section 179 mandatory sanctions apply only in nonattainment areas. See, 59 FR 39832 (August 4, 1994). Kansas has no areas designated as nonattainment for the 1997 ozone NAAQS. Therefore, EPA believes that the section 179 mandatory sanctions would not apply in Kansas as a result of any planning failure associated with the SIP Call proposed in this action.

It should also be noted that EPA does not intend to finalize this SIP Call if the Final Transport Rule modeling does not show that emissions from Kansas are contributing significantly to nonattainment or interfering with maintenance of the 1997 8-hour ozone NAAQS in downwind areas.

EPA proposes the following actions relating to the Kansas interstate transport SIP: (1) Find the SIP is substantially inadequate to address the interstate transport of NOXand the ozone that it forms in the atmosphere that contribute significantly to nonattainment or interfere with maintenance of the 1997 ozone NAAQS in downwind States; (2) require that Kansas revise the SIP to address the requirements of section 110(a)(2)(D)(i)(I); (3) require the State to submit revisions to the SIP within 12 months of the final finding or an alternative deadline; (4) determine that the section 179 mandatory sanctions would not be implicated by this action.

Under the Clean Air Act, a finding of substantial inadequacy and subsequent obligation for a State to revise its SIP arise out of section 110(a) and 110(k)(5). The finding and State obligation do not directly impose any new regulatory requirements. In addition, the State obligation is not legally enforceable by a court of law. EPA would review its intended action on any SIP submittal in response to the finding in light of applicable statutory and Executive Order requirements, in subsequent rulemaking acting on such SIP submittal. For those reasons, this proposed 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 Clean Air Act; 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 finding of SIP inadequacy would not 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 statutory authority for this action is provided by sections 110 and 301 of the CAA, as amended (42 U.S.C. 7410 and 7601).

The Board proposes to establish regulations governing the issuance of emergency routing orders upon application of the National Railroad Passenger Corporation (Amtrak). The rules will be codified at 49 CFR parts 1011, 1034, 1102, 1104, and 1115.

Amtrak is a government-owned corporation that operates intercity passenger trains on an approximately 21,000-mile rail network, serving 46 States and 3 Canadian provinces. During its 2010 fiscal year, Amtrak carried more than 28 million passengers. With the exception of certain rail lines located primarily in the northeastern United States, Amtrak does not own the lines over which its trains operate. Most of the lines Amtrak uses are owned and operated by freight railroads, which are subject to the Board's jurisdiction.

Periodically, an established Amtrak route becomes blocked or closed as the result of a derailment, unscheduled maintenance, severe weather, or other emergency. In these circumstances, if an alternate rail routing exists, Amtrak may seek to detour its trains around the blockage using the alternate route. If no alternate route is available, Amtrak may be forced to suspend train operations.

In most emergency rerouting situations, Amtrak reaches a voluntary agreement governing the terms of its use with the rail carrier that owns the alternate route. Occasionally, however, Amtrak is unable to reach an agreement. In this event, Amtrak may seek relief from the Board as provided by the statute: