On August 10, 2011, the FAA published in theFederal Registera notice of proposed rulemaking (NPRM) to amend Class D and Class E airspace at Northeast Philadelphia Airport, North Philadelphia, PA. (76 FR 49383). Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received. Subsequent to publication, the FAA found a typographic error in the regulatory text for the radius of the controlled airspace listed for Class E surface airspace, and makes the correction from a 5-mile radius to a 5.6-mile radius of the airport, and also removes reference to the ceiling level that was cited in error. Also, the geographic coordinates of the airport are adjusted.

Class D and E airspace designations are published in paragraphs 5000 and 6002, respectively, of FAA Order 7400.9V dated August 9, 2011, and effective September 15, 2011, which is incorporated by reference in 14 CFR 71.1. The Class D and Class E airspace designations listed in this document will be published subsequently in the Order.

This action amends Title 14, Code of Federal Regulations (14 CFR) part 71 to amend Class D airspace and Class E surface airspace at Northeast Philadelphia Airport, North Philadelphia, PA. The Class D and Class E surface airspace is reconfigured due to the closing of the Willow Grove Naval Air Station and Warminster NAWC. The boundary radius of the controlled airspace listed in the regulatory text for Class E airspace is corrected from a 5-mile radius to a 5.6-mile radius of the airport and reference to the ceiling level listed for Class E airspace is removed. Also, the geographic coordinates of the airport are adjusted to be in concert with the FAAs aeronautical database. This action enhances the safety and management of IFR operations at the airport.

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

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

This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class D and E airspace at Northeast Philadelphia Airport, North Philadelphia, PA.

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

On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).3 Title VII of the Dodd-Frank Act4 amended the Commodity Exchange Act (“CEA”)5 to establish a comprehensive new regulatory framework for swaps and security-based swaps. The legislation was enacted to reduce risk, increase transparency, and promote market integrity within the financial system by, among other things: (1) Providing for the registration and comprehensive regulation of swap dealers and majorswap participants; (2) imposing clearing and trade execution requirements on standardized derivative products; (3) creating robust recordkeeping and real-time reporting regimes; and (4) enhancing the Commission's rulemaking and enforcement authorities with respect to, among others, all registered entities and intermediaries subject to the Commission's oversight.

In addition, section 742(a) of the Dodd-Frank Act amends section 2(c)(2) of the CEA to add a new subparagraph, section 2(c)(2)(D) of the CEA,6 entitled “Retail Commodity Transactions.” New CEA section 2(c)(2)(D) provides the Commission with a new source of jurisdiction over certain retail commodity transactions.7 Congress enacted this provision following court decisions, includingCFTCv.Zelener, 8 that narrowly interpreted the term “contract of sale of a commodity for future delivery”—the statutory term for a futures contract—based on language in customer agreements.Zelenerinvolved retail foreign currency transactions that were characterized as spot sales in contract documents, but in which, in practice, customer positions were held open indefinitely and customers never took delivery of foreign currency.9

Zelenerheld that the transactions were not subject to CFTC jurisdiction because they did not involve futures contracts but were “in form, spot sales for delivery within 48 hours.”10 In so ruling, the court focused solely on the language of the customer agreements.

FollowingZelener,Congress provided the Commission with additional authority over retail foreign currency transactions in the CFTC Reauthorization Act of 2008.11 Similarly, in section 742(a) of the Dodd-Frank Act, Congress provided the Commission with additional authority over non-foreign currency retail commodity transactions by making specified forms of these transactions subject to certain provisions of the CEA regardless of whether they involve a “contract of sale of a commodity for future delivery.” Senator Lincoln explained the rationale for this legislation during floor debate on the Dodd-Frank Act:

Accordingly, new CEA section 2(c)(2)(D) broadly applies to any agreement, contract, or transaction in any commodity that is entered into with, or offered to (even if not entered into with), a non-eligible contract participant or non-eligible commercial entity on a leveraged or margined basis, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis.13 New CEA section 2(c)(2)(D) further provides that such an agreement, contract, or transaction shall be subject to CEA sections 4(a),14 4(b),15 and 4b16 “as if the agreement, contract, or transaction was a contract of sale of a commodity for future delivery.”17

New CEA section 2(c)(2)(D) excepts certain transactions from its application. In particular, new CEA section 2(c)(2)(D)(ii)(III)(aa)18 excepts a contract of sale that “results in actual delivery within 28 days or such other longer period as the Commission may determine by rule or regulation based upon the typical commercial practice in cash or spot markets for the commodity involved.”19

The Commission is issuing this interpretation to inform the public of the Commission's views as to the meaning of the term “actual delivery” as used in new CEA section 2(c)(2)(D)(ii)(III)(aa) and to provide the public with guidance on how the Commission intends to assess whether any given transaction results in actual delivery within the meaning of the statute.20 The Commission requests comment on whether its interpretation of “actual delivery” accurately construes the statutory language.

This interpretation does not address the meaning or scope of new CEA section 2(c)(2)(D)(ii)(III)(bb)21 or any exception to new CEA section 2(c)(2)(D) other than new CEA section 2(c)(2)(D)(ii)(III)(aa). Similarly, thisinterpretation does not address the meaning or scope of contracts of sale of a commodity for future delivery, the forward contract exclusion from the term “future delivery” set forth in CEA section 1a(27),22 or the forward contract exclusion from the term “swap” set forth in CEA section 1a(47)(B)(ii).23 Nor does this interpretation alter any statutory interpretation or statement of Commission policy relating to the forward contract exclusion.24

In the view of the Commission, the determination of whether “actual delivery” has occurred within the meaning of new CEA section 2(c)(2)(D)(ii)(III)(aa) requires consideration of evidence regarding delivery beyond the four corners of contract documents. This interpretation of the statutory language is based on Congress's use of the word “actual” to modify “delivery” and on the legislative history of new CEA section 2(c)(2)(D)(ii)(III)(aa) described above. Consistent with this interpretation of the statutory language, in determining whether actual delivery has occurred within 28 days, the Commission will employ a functional approach and examine how the agreement, contract, or transaction is marketed, managed, and performed, instead of relying solely on language used by the parties in the agreement, contract, or transaction. This approach best accomplishes Congress's intent when it enacted section 742(a) of the Dodd-Frank Act and gives full meaning to Congress's term “actual delivery.”

Relevant factors in this determination include the following: ownership, possession, title, and physical location of the commodity purchased or sold, both before and after execution of the agreement, contract, or transaction; the nature of the relationship between the buyer, seller, and possessor of the commodity purchased or sold; and the manner in which the purchase or sale is recorded and completed. The Commission provides the following examples to illustrate how it will determine whether actual delivery has occurred within the meaning of new CEA section 2(c)(2)(D)(ii)(III)(aa).

These final regulations amend the Regulations on Employment Taxes and Collection of Income Tax at Source (26 CFR part 31) under section 6011 relating to the employment tax return filing requirements and section 6302 relating to the employment tax deposit requirements. These final regulations are part of the IRS' continued effort to reduce taxpayer burden by permitting certain employers to file one employment tax return annually instead of four quarterly employment tax returns.

The Treasury Department and the IRS are considering changes to the annual filing program in light of the program's performance as measured against the program's original goals, administrative and operational considerations, and overall program effectiveness. Any changes to the program will be set forth in future guidance.

On January 3, 2006, temporary regulations (TD 9239) relating to Form 944 (the 2006 temporary regulations) were published in theFederal Register(71 FR 11). A notice of proposed rulemaking (REG-148568-04) cross-referencing the 2006 temporary regulations was published in theFederal Registeron the same day (71 FR 46) (the 2006 proposed regulations). A correction to the 2006 temporary regulations was published in theFederal Registeron March 17, 2006 (71 FR 13766). On December 29, 2008, temporary regulations (TD 9440), which revised the 2006 temporary regulations, relating to Form 944 (the 2008 temporary regulations) were published in theFederal Register(73 FR 79354). A notice of proposed rulemaking (REG-148568-04) cross-referencing the 2008 temporary regulations was published in theFederal Registeron the same day (73 FR 79423) (the 2008 proposed regulations). No requests for a public hearing were received; therefore, no public hearing was held. As noted in the 2008 temporary regulations, comments were received responding to the 2006 notice of proposed rulemaking. Those comments requested that use of Form 944 be changed from mandatory to voluntary and that the amount of the employment tax liability used to determine whether employers are eligible to file Form 944 (the “eligibility threshold”) be increased. The Treasury Department and the IRS agreed to make Form 944 voluntary and to continue to consider whether to increase the eligibility threshold. No comments responding to the 2008 notice of proposed rulemaking were received. This Treasury decision adopts the rules of the 2008 proposed regulations with minor clarifying changes and removes the temporary regulations. That is, participation in the Form 944 Program will remain voluntary and the eligibility threshold for participation will remain at $1,000.

Although this Treasury decision adopts the rules of the proposed regulations with no substantive change, some of the language included in the proposed regulations and the existing final regulations is clarified and updated to reflect current law and practice. The revisions are discussed in this preamble.

Employers that request to participate in the Form 944 Program must receive written notice to file Form 944 before they are permitted to file the form. Once employers receive this notice, they must file Form 944 for each year and cannot file Forms 941 until they are notified that their filing requirement has changed to Forms 941 because (1) They contacted the IRS to request that their filing requirement be changed to Forms 941, or (2) they no longer qualify for the Form 944 Program. The IRS issued guidance published in the Internal Revenue Bulletin (Rev. Proc. 2009-13 (2009-1 CB 323) and Rev. Proc. 2009-51 (2009-45 IRB 625)) that provides procedures for employers to follow to request to file Form 944 instead of Forms 941 (“opt in”). Additionally, Rev. Proc. 2009-13 and Rev. Proc. 2009-51 provide procedures for employers to follow to request to file Forms 941 instead of Form 944 when the IRS previously notified them they should file Form 944 (“opt out”). Under Rev. Proc. 2009-13, for tax year 2009, employers who were notified they should file Form 944 could only opt out if they anticipated that their employment tax liability would exceed the $1,000 threshold or if they wanted to e-file Forms 941 quarterly instead. Beginning in 2010, employers were able to opt out of filing Form 944 for any reason if they followed the procedures set forth in Rev. Proc. 2009-51 or its successor. These final regulations clarify that employers should follow the procedures contained in Rev. Proc 2009-51 or its successor to opt in or to opt out of the Form 944 Program.

The revisions contained in these final regulations also impact employers that file Spanish-language returns or returns for U.S. possessions. For tax year 2012 and later, Form 944-SS, Employer's ANNUAL Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands) and Form 944-PR, Planilla para la Declaración Federal ANUAL del Patrono, will be eliminated due to the low volume of employers filing these forms. Employers who would otherwise file a Form 944-SS or Form 944-PR will file a Form 944. The Treasury Department and the IRS plan to retain Form 944(SP), Declaración Federal ANUAL de Impuestos del Patrono o Empleador, which is the Spanish equivalent of Form 944. Employers in the United States in the Form 944 Program may file Form 944(SP) as an alternative to filing Form 944. Additionally, employers in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, and Puerto Rico may file a Form 944(SP) as an alternative to filing Form 944, for tax year 2012 and later. These final regulations remove references to the eliminated forms and update the language included in the proposed regulations and the existing final regulations to provide guidance to former Form 944-SS and Form 944-PR filers who are required to file Form 944 instead.

Employers in American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands who are required to file Form 944 for tax year 2012 and later can request to file Forms 941-SS instead of Form 944. Employers in Puerto Rico who are required to file Form 944 for tax year 2012 and later can request to file Forms 941-PR instead of Form 944. Employers required to file Form 944 should follow the procedures contained in Rev. Proc. 2009-51 or its successor to request to file Form 941-SS or Form 941-PR. See § 601.601(d)(2)(ii)(b).

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entitiespursuant to the Regulatory Flexibility Act (5 U.S.C. Chapter 6). The regulations under sections 6011 and 6302 affect only a small number of taxpayers that file employment tax returns, and participation in the Form 944 Program is voluntary. Therefore, the Treasury Department and the IRS have determined that the regulations will not affect a substantial number of small entities. Pursuant to section 7805(f) of the Internal Revenue Code, the proposed regulations preceding these regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small entities. No comments from the Small Business Administration were received.

The principal authors of these regulations are Blaise Dusenberry and Jennifer Records of the Office of the Associate Chief Counsel (Procedure and Administration).

Accordingly, 26 CFR part 31 is amended as follows:

(e) * * *

(2) The termemployment taxesdoes not include taxes with respect to wages for domestic service in a private home of the employer, unless the employer is otherwise required to file a Form 941 or Form 944 under § 31.6011(a)-4 or § 31.6011(a)-5. In the case of employers paying advance earned income credit amounts for periods ending before January 1, 2011, the amount of taxes required to be deposited shall be reduced by advance amounts paid to employees. Also, see § 31.6302-3 concerning a taxpayer's option with respect to payments made before January 1, 1994, to treat backup withholding amounts under section 3406 separately.

(f) * * *

(4)De minimis rule—(i)De minimis deposit rules for quarterly and annual return periods beginning on or after January 1, 2001.If the total amount of accumulated employment taxes for the return period isde minimisand the amount is fully deposited or remitted with a timely filed return for the return period, the amount deposited or remitted will be deemed to have been timely deposited. The total amount of accumulated employment taxes isde minimisif it is less than $2,500 for the return period or if it isde minimispursuant to paragraph (f)(4)(ii) of this section.

(ii)De minimis deposit rule for quarterly return periods beginning on or after January 1, 2010.For purposes of paragraph (f)(4)(i) of this section, if the total amount of accumulated employment taxes for the immediately preceding quarter was less than $2,500, unless § 31.6302-1(c)(3) applies to require a deposit at the close of the next day, then the employer will be deemed to have timely deposited the employer's employment taxes for the current quarter if the employer complies with the time and method payment requirements contained in paragraph (f)(4)(i) of this section.

(iii)De minimis deposit rule for employers who file Form 944.An employer who files Form 944 whose employment tax liability for the year equals or exceeds $2,500 but whose employment tax liability for a quarter of the year isde minimispursuant to paragraph (f)(4)(i) of this section will bedeemed to have timely deposited the employment taxes due for that quarter if the employer fully deposits the employment taxes accumulated during the quarter by the last day of the month following the close of that quarter. Employment taxes accumulated during the fourth quarter can be either deposited by January 31 or remitted with a timely filed return for the return period.

(5) * * *

(g)Agricultural employers—special rules—(1)In general.An agricultural employer reports wages paid to farm workers annually on Form 943 (Employer's Annual Tax Return for Agricultural Employees) and reports wages paid to nonfarm workers quarterly on Form 941 or annually on Form 944. Accordingly, an agricultural employer must treat employment taxes reportable on Form 943 (“Form 943 taxes”) separately from employment taxes reportable on Form 941 or Form 944 (“Form 941 or Form 944 taxes”). Form 943 taxes and Form 941 or Form 944 taxes are not combined for purposes of determining whether a deposit of either is due, whether the One-Day rule of paragraph (c)(3) of this section applies, or whether any safe harbor is applicable. In addition, Form 943 taxes and Form 941 or Form 944 taxes must be deposited separately. (See paragraph (b) of this section for rules for determining an agricultural employer's deposit status for Form 941 taxes). Whether an agricultural employer is a monthly or semi-weekly depositor of Form 943 taxes is determined according to the rules of this paragraph (g).

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

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas and lists the approved American viticultural areas.

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

Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions for the establishment or modification of viticultural areas. Such petitions must include the following:

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

• An explanation of the basis for defining the boundary of the proposed viticultural area;

• A narrative description of the features of the proposed viticultural area that affect viticulture, such as climate, geology, soils, physical features, and elevation, that make it distinctive and distinguish it from adjacent areas outside the proposed viticultural area boundary;

• A copy of the appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed viticultural area, with the boundary of the proposed viticultural area clearly drawn thereon; and

• A detailed narrative description of the proposed viticultural area boundary based on USGS map markings.

TTB received a petition from Thomas Farella of Farella-Park Vineyards and Bradford Kitson, on behalf of the vintners and grape growers in the Coombsville region of Napa Valley, California, proposing the establishment of the Coombsville viticultural area. The proposed viticultural area contains 11,075 acres, 1,360 acres of which are in 26 commercial vineyards, according to the petition. The proposed viticultural area lies within the Napa Valley viticultural area (27 CFR 9.23) and the larger, multicounty North Coast viticultural area (27 CFR 9.30). The distinguishing features of the proposed Coombsville viticultural area include geology, geography, climate, and soils.

TTB notes that the proposed Coombsville viticultural area adjoins or is located near four established viticultural areas: the Oak Knoll District of Napa Valley viticultural area (27 CFR 9.161), the Los Carneros viticultural area (27 CFR 9.32), the Wild Horse Valley viticultural area (27 CFR 9.124), and the Solano County Green Valley viticultural area (27 CFR 9.44). The Oak Knoll District of Napa Valley viticultural area to the northwest and the Los Carneros viticultural area to the southwest share portions of their boundary lines with those of the proposed viticultural area. The Wild Horse Valley viticultural area to the east and the Solano County Green Valley viticultural area to the southeast are close to, but do not touch, the eastern boundary line of the proposed Coombsville viticultural area.

The petition states that four bonded wineries use the “Coombsville” name on one or more of their wine labels: Bighorn Cellars, Laird Family Estate, Farella-Park Vineyards, and Monticello Cellars. All four wineries have advised TTB in writing that if the Coombsville viticultural area is established, they will be able to comply with the rule that at least 85 percent of the wine must be produced from grapes grown within the boundary of the Coombsville viticultural area in order to use the “Coombsville” name on the label as an appellation of origin.

Previously, a group of Napa Valley grape growers proposed the establishment of the 11,200-acre “Tulocay” American viticultural area in approximately the same area as the proposed Coombsville viticultural area. Consequently, TTB published Notice No. 68 in theFederal Register(71 FR 65432) on November 8, 2006, to propose the establishment of the Tulocay viticultural area. However, comments received in response to Notice No. 68 raised a substantial question as to whether there was a sufficient basis to conclude that the geographical area described in the petition was locally or nationally known as “Tulocay.” Additionally, the evidence provided by the commenters and other information available suggested the likelihood of confusion if the term “Tulocay” would suddenly be attributed only to grapes grown from a geographical area, as the term “Tulocay” has been identified with a particular winery for more than 30 years. Based on the comments received in response to Notice No. 68, TTB published Notice No. 84 in theFederal Register(73 FR 34902) on June 19, 2008, withdrawing Notice No. 68.

However, TTB did not preclude consideration of the current petition in Notice No. 84. In fact, TTB stated: “* * * currently there is no petition requesting the establishment of a viticultural area in the subject area using a variation of Tulocay, such as Tulocay District, or any other name, such as Coombsville or Coombsville District. It is noted that these findings do not preclude future consideration of a petition, supported by sufficient name evidence, proposing the establishment of a viticultural area in the subject area using a name other than `Tulocay.' ” Notice No. 84 further noted that some comments in response to Notice No. 68 expressed a preference for the name “Coombsville” for the proposed viticultural area rather than the petitioned-for “Tulocay” name.

TTB further notes that the eastern portion of the boundary line for the proposed Coombsville viticultural area differs from that of the proposed Tulocay viticultural area boundary line in order to keep the proposed Coombsville viticultural area within Napa County and the Napa Valley viticultural area. This boundary change results in a 125-acre reduction of the total area, from 11,200 acres for the previously proposed Tulocay viticultural area to 11,075 acres for the currently proposed Coombsville viticultural area.

The petition states that “Coombsville” is the commonly used name for an area that lies east of the City of Napa, California. In addition, the area east of the City of Napa is designated as “Coombsville” on the Napa County Land Use Plan 2008-2030 map. The petition also states that the Coombsville region has always had a separate identity from the City of Napa. Early on, the City of Napa grew in increments, eventually “swallowing up the easterly suburb of Coombsville” (“Napa Valley Heyday,” Richard H. Dillon, The Book Club of California, 2004, page 119).

The petition states that, as early as 1914, an unincorporated area of Napa County became commonly known as the “Coombsville” region, named for Nathan Coombs, a prominent community leader and founder of the City of Napa. Mr. Coombs owned 2,525 acres of land on 3 parcels to the east of the Napa River, in the area now called “Coombsville” (“Official Map of the County of Napa,” California, 1876). According to the petition, the original Coombsville Road, little more than an unnamed path, existed more than 120 years ago (“Map of Coombsville,” survey map, W. A. Pierce, “County Road from Napa to Green Valley,” 1883). Currently, Napa city and county road signs identify Coombsville Road where the road intersects with Third Street and the Silverado Trail. Coombsville Road is entirely within the boundary line of the proposed Coombsville viticultural area (“Napa Valley,” map, California State Automobile Association, May 2004).

The petition cited several Napa County newspaper reports to demonstrate that the Coombsville name is commonly used to refer to the region within the proposed viticultural area. For example, a newspaper report stated: “A week ago, Patrick Sexton's backyard in Coombsville was a riotous place, with a gobble-gobble here, a gobble-gobble there, a gobble-gobble everywhere” (“Napa High senior raises great gobblers,” The Napa Valley Register, Nov. 27, 2008). Another report describes a downed power line that cut off electricity to 2,200 Coombsville residential customers overnight (“Lights out again in Coombsville area,”op. cit.,Sept. 3, 2008). A third report describes a political district including Coombsville, American Canyon, and part of [the City of] Napa (“Local ballot for June takes shape,”op. cit.,March 12, 2008).

The petition also states that the Napa County real estate industry recognizes the Coombsville region in its sale listings. One realtor listing on July 7, 2009, described a property as “situated in the prestigious and desirable Coombsville area.” Another realtor listing from 2008 described a property as “Coombsville Area at Its Best!” The petition includes the following description of a proposed new housing development in the region: “The project is off of Wyatt Road, on the frontier where the residences of east Napa meet the open space and rural feel of Coombsville” (“No middle ground in Napa County,”op. cit.,Oct. 23, 2005). Fifty-five acres in the region purchased for real estate development is described in the petition as, “* * * in the Coombsville area of Napa County, scrub-covered slopes at the south end of the valley * * *” (“The Far Side of Eden—New Money, Old Land and the Battle for Napa Valley,” James Conaway, Houghton Mifflin Company, 2002, page 50).

The petition notes that the Coombsville name has long been associated with viticulture. The petition states that the history of grape-growing in the Coombsville region dates to 1870, when the Carbone family purchased a large land parcel on Coombsville Road (“Napa Valley Heyday,” Richard H. Dillon, The Book Club of California, 2004, page 100). Around 1880, Antonio Carbone opened a winery (ibid.). The historic winery still exists and is now used as a private residence, the petition explains. The petition further states that modern vineyard plantings include: Farella-Park Vineyards; Stag's Leap Wine Cellars' Arcadia Vineyards; Far Niente Winery's Barrow Lane, Carpenter, and John's Creek Vineyards; Berlenbach Vineyards; and Richard Perry Vineyards.

The petition explains that “Coombsville” has national name recognition because of its renown as a wine region in Napa Valley. The following reports were published by Wine Spectator: “Putting Coombsville on the map for Napa Cabernet” (July 31, 2001), regarding a vintner who believes he can make one of the top cabernets in the Napa Valley region; “Caldwell Vineyards” (Nov. 15, 2002), regarding the first time that John Caldwell produced wine from a 60-acre Coombsville vineyard; “Franciscan Buys Large Parcel of Napa Land” (March 15, 1999), describing a 160-acre property in the Coombsville region; and “James Laube Unfined—An Armchair Winery `Tour' with Philippe Melka” (Aug. 10, 2007), detailing the acquisition of Coombsville-grown cabernet grapes to produce wine.

The petition also states that the following reports on the Coombsville region appeared on AppellationAmerica.com: the Coombsville region is described as “the hottest spot for grapes these days in the Napa Valley” and it is circled on a map of the Napa Valley in “Why Cool Coombsville is HOT” (Oct. 8, 2008); and a 1995 acquisition of 20 acres of vineyards in the Coombsville region is detailed in “The Wonders of Mountain Terroir: Let Robert Craig Explain” (Feb. 7, 2007).

According to USGS maps submitted with the petition, the proposed Coombsville viticultural area is nestled in the southeastern region of the Napa Valley viticultural area, between the eastern shores of both the Napa River and Milliken Creek and the western ridgeline of the Vaca Range at the Solano County line. The west-facing, horseshoe-shaped southern tip of the Vaca Range encircles much of the proposed Coombsville viticultural area and defines parts of the northern, eastern, and southern portions of the boundary line, according to the petition, boundary description, and USGS maps.

According to the boundary description in the petition, the eastern portion of the boundary line of the proposed Coombsville viticultural area incorporates straight lines between western peaks of the Vaca Range. The eastern portion of the boundary line corresponds in part to, but does not overlap, the western portions of the boundary lines of the Wild Horse Valley and Solano County Green Valley viticultural areas and stays within Napa County.

As detailed in the boundary description in the petition, the southern portion of the boundary line of the proposed Coombsville viticultural area follows a straight southeast-to-northwest line from a map point in Kreuse Canyon to Imola Avenue, and then continues west on Imola Avenue to the Napa River.

According to the petition, and as visible on the USGS maps, an east-west transverse ridge that climatically protects the Coombsville region from the full impact of the marine influence of the San Pablo Bay lies beyond the proposed southern portion of the boundary line. Commonly known as “Suscol,” “Soscol,” or “Soscol Ridge,” the ridge separates the Coombsville region from large portions of the Napa Valley flood plain's differing soils and broad slough topography. The petition states that the complex terrain of the ridge was difficult to use as a precise and reasonable southern portion of the boundary line for the proposedCoombsville viticultural area petition. Hence, a straight line between two map points and a portion of Imola Avenue was used to define the southern limits of the proposed Coombsville viticultural area. TTB believes that the straight line and Imola Avenue are a reasonable alternative for the proposed southern portion of the boundary line.

According to the boundary description and the USGS Napa Quadrangle map, the western portion of the boundary line of the proposed Coombsville viticultural area relies on portions of the Napa River and Milliken Creek to connect Imola Avenue to the south with Monticello Road to the north. TTB notes that the southwest corner of the proposed viticultural area, at the intersection of Imola Avenue and the Napa River, touches but does not overlap the eastern portion of the boundary line of the Los Carneros viticultural area.

According to the boundary description, the northern portion of the boundary line of the proposed Coombsville viticultural area uses Monticello Road and a straight line from the road's intersection with the 400-foot contour line eastward to the peak of Mt. George. Much of the length of the proposed northern portion of the boundary line follows a ridge line from the Vaca Range along Milliken Creek, according to the USGS maps submitted with the petition. TTB notes that the northwest corner of the proposed viticultural area, at the intersection of Milliken Creek and Monticello Road, touches but does not overlap the southeast corner of the Oak Knoll District of Napa Valley viticultural area.

The petition describes the ancient volcanic and crustal uplift events in the geologic history of the Coombsville region (“The Geologic Origin of the Coombsville Area,” EarthVision, Inc., May 2009). According to the petition and the above report, the initial geological event was the eruption and collapse of a volcano that was part of the Napa Valley-Sonoma volcanic series. The collapse of the volcano created a bowl-shaped structure known as a caldera, which formed the basis for the “cup and saucer” topography within the Coombsville region.

The petition states that the next important geologic process began when crustal forces started to uplift and wrinkle the earth crust in the Vaca Range. The uplift progressed from east to west through the Vaca Range. When the uplift passed through the Coombsville region, the western front of the caldera collapsed and slid westward as a large landslide into the valley below (ibid.). The ancient Napa River removed most of the landslide debris from the Napa Valley (ibid.). The remaining debris formed a raised structure in the valley, and the remaining portion of the caldera formed a horseshoe-shaped ridge to the east. This area is referred to on USGS maps of the Coombsville area as the “cup and saucer,” since the raised area resembles a teacup sitting within the curved “saucer” formed by the remaining ridge of the caldera.

The petition states that the earth surface materials that cover the proposed Coombsville viticultural area originated in a variety of ways. A thin coat of residual debris on volcanic bedrock covers the hills. Within the remains of the caldera, alluvial gravels of the Huichica Formation occur in the northern part and diatomaceous lake deposits occur along the northeast edge. The remainder of the surface material is a variety of alluvial deposits laid down since the ancient volcanic collapse (ibid.).

The petition did not include data on the geology of the surrounding areas.

As shown in the aerial photograph submitted with the petition, the most notable geographical characteristic of the proposed Coombsville viticultural area is a horseshoe-shaped, elevated landform, part of the Vaca Range (“The Winemaker's Dance—Exploring Terroir in the Napa Valley”). The west-facing horseshoe comprises a ring of volcanic mountains, according to the petition. The elevated cup-and-saucer landform lies partially within the curvature of the horseshoe on the western side of the proposed viticultural area. A small flood plain lies along the proposed western portion of the boundary line near the Napa River and Milliken Creek, the petition explains. The petition states that gentle slopes and rolling terrain extend westward from the Vaca Range and the opening of the horseshoe to the Napa River and Milliken Creek, and that most viticultural activity occurs within this area. The petition states that the Milliken-Sarco-Tulocay watershed, named after the three main creeks in the region, lies within the proposed Coombsville viticultural area. The cup-and-saucer landform presents a drainage obstacle, making Sarco Creek detour to the north and Tulocay Creek flow to the south. Eventually, all drainage flows to the southwest and joins with the south-flowing Napa River, the petition explains.

According to USGS maps, elevations within the proposed Coombsville viticultural area vary from about 10 feet along Milliken Creek and the Napa River shoreline to 1,877 feet at the peak of Mt. George, at the northeast corner of the proposed Coombsville viticultural area along the western ridge of the Vaca Range. The landforms along the remaining caldera wall that forms the edge of the “saucer” vary from approximately 500 to 1,200 feet in elevation, some having steep terrain. The raised “cup” portion of the cup-and-saucer formation exceeds 400 feet in elevation in some areas. The surrounding gentle slopes and rolling terrain which form the bottom of the “saucer” vary from approximately 100 to 200 feet in elevation. The flood plain along the western boundary line varies in elevation from 10 to 20 feet along Milliken Creek and the Napa River.

According to the petition, the combination of unique landforms and large elevation differences gives the proposed Coombsville viticultural area a fog-protected partial basin with high surrounding ridges. The aerial photograph submitted with the petition shows Coombsville as an isolated niche within the larger, more open terrain of the Napa Valley viticultural area. Also, the USGS maps indicate that the Vaca Range to the east provides a natural geographical boundary for the proposed viticultural area.

According to the USGS maps and the petition, the regions surrounding the proposed Coombsville viticultural area have different geographies. To the northwest of the proposed viticultural area lies the Oak Knoll District of Napa Valley viticultural area, which can be distinguished from the proposed Coombsville viticultural area by its low valley floor elevations and the dry creek alluvial fan. To the west lies the City of Napa. To the southwest lies the Los Carneros viticultural area, which can be distinguished from the proposed viticultural area by its low rolling hills, flatlands, and mountainous terrain. To the southeast lies the Solano County Green Valley viticultural area, with a more rugged terrain than the proposed Coombsville viticulture area. To the east lies the Wild Horse Valley viticultural area, which can be distinguished from the proposed viticultural area by its isolated valley and the surrounding steep, rugged terrain and high elevations. To the northeast are the Vaca Mountains, which can be distinguished from the proposed viticultural area by their rugged terrain.

The petition states that the proposed viticultural area has climatically unique features, including precipitation and heat summation. The petition provides statistical information on the microclimates of the adjacent Los Carneros and Oak Knoll District of Napa Valley viticultural areas, which are both within the larger Napa Valley viticultural area (“The Micro-Climate of the Coombsville Viticultural Area,” Erik Moldstad, Sept. 28, 2009). According to the petitioner, the isolated Wild Horse Valley and Solano County Green Valley viticultural areas, to the immediate east of the proposed Coombsville viticultural area, lack available weather station data. In considering this petition, TTB obtained historic weather station data for surrounding north, east, south, and west regions within 15 miles or less of the proposed Coombsville viticultural area (Lake Berryessa, Fairfield, Napa State Hospital, and the City of Napa, respectively) from the Western Region Climate Center (WRCC) Web site, created in partnership with the National Climatic Data Center, Regional Climate Centers, and State Climate Offices.

The table below presents average annual precipitation amounts and heat summation range totals for the Coombsville region, the Los Carneros and Oak Knoll District of Napa Valley viticultural areas, and the surrounding north, east, south, and west weather station areas. The table data is based primarily on petition documentation and also TTB's WRCC Web site data research.

The table shows that precipitation in the proposed Coombsville viticultural area averages 19.14 inches annually, and varies from the surrounding viticultural microclimates. The Coombsville region is warmer and wetter than the Los Carneros viticultural area to the southwest and cooler and drier than the Oak Knoll District of Napa Valley viticultural area to the northwest, according to Michael Wolf, owner of Michael Wolf Vineyard Services. To the northwest, the Oak Knoll District of Napa Valley viticultural area averages 2.5 inches more annual rainfall. To the southwest, the Los Carneros viticultural area has about 2 inches less rainfall annually. The data in the table indicates that the proposed Coombsville viticultural area averages 3.63 to 5.47 inches less precipitation annually than the four surrounding areas for which weather station data was obtained by TTB.

The growing season in the proposed Coombsville viticultural area is measured in the Winkler climate classification system (“General Viticulture,” Albert J. Winkler, University of California Press, 1974, pages 61-64). In the Winkler system, heat accumulation per year defines climatic regions. As a measurement of heat accumulation during the growing season, 1 degree day accumulates for each degree Fahrenheit that a day's mean temperature is above 50 degrees, which is the minimum temperature required for grapevine growth. Climatic region I has less than 2,500 growing degree days (GDD) per year; region II, 2,501 to 3,000; region III, 3,001 to 3,500; region IV, 3,501 to 4,000; and region V, 4,001 or more.

According to the table, the Coombsville region is a low Winkler region II (2,550 GDD units), which is cooler by 61 to 683 degree units than the four surrounding areas from which weather station data was obtained by TTB. The coolest of the four areas is Lake Berryessa to the north at 2,611 GDD units (region II), and the warmest is the City of Napa to the west at 3,233 GDD units (region III). Also, the adjacent Oak Knoll District of Napa Valley viticultural area is significantly warmer at 2,888 GDD units, a high Winkler region II. The adjacent Los Carneros viticultural area is cooler than the proposed Coombsville region (region l) at 2,435 GDD units.

The petition states that significant viticultural factors for the Coombsville region growing season include the amount of solar radiation and daytime heating. The solar radiation and heating are affected by the dissipation rate of morning fog, followed by the number of hours of sunshine, and then the onset of afternoon cooling bay breezes from San Pablo Bay.

The petition states that the effects of the presence and disappearance of fog from the Napa Valley region in the day alters the temperature rise in the grape-growing season. Temperature and sunlight have subtle effects on grape development that, over the growing season, affect grape ripening times and flavors. The pace of sugar accumulation and the pace of the lessening of acidity during grape ripening are two examples of how the fog affects grape development. The petition notes that grape growers in the cooler Los Carneros viticultural area, to the south and closer to the foggy bay, harvest grapes with similar sugar and acidity levels for the same varietal as in the Coombsville region, but do so later in the growing season. To the north of the Coombsville region, in the warmer and less foggy Oak Knoll District of Napa Valley viticultural area, the same varietals with similar sugar and acid levels are harvested earlier than in the Coombsville and Los Carneros areas.

The petition explains that the Coombsville region has more sunlight and daytime heat during the growing season than the Los Carneros viticultural area to the southwest and less than the Oak Knoll District of Napa Valley viticultural area to the northwest. The morning fog generally dissipates about 1 to 2 hours earlier in the Coombsville region than in the LosCarneros viticultural area to the southwest, and an hour later than in the Oak Knoll District of Napa Valley viticultural area to the northwest. Also, in the afternoon, the bay breezes first cool the Los Carneros viticultural area, then spread slowly northward through the Coombsville region into the Oak Knoll District of Napa Valley viticultural area, and eventually continue northward up the Napa Valley.

According to the petition, as the San Pablo Bay afternoon breezes reach northward to each micro-climate in the Napa Valley region, the air temperature incrementally stops rising, or slightly decreases. These cool breezes contribute to the differences in maximum daytime temperatures during the growing season for the south-to-north locations in the Los Carneros viticultural area, the Coombsville region, Oak Knoll District of Napa Valley viticultural area, and other Napa Valley viticultural areas.

The petition explains that the soils of the proposed Coombsville viticultural area are generally well drained and of volcanic origin. Upland soils are weathered from their primary volcanic source, while lowland soils are alluvial in nature (“A Custom Soil Resource Report for Napa County, California—Coombsville Soils,” Natural Resources Conservation Service, United States Department of Agriculture,http://websoilsurvey.nrcs.usda.gov/,May 27, 2009). The petitioner provided the following table, which shows the percentages of the predominant soils in the proposed Coombsville viticultural area as compared to surrounding regions, based on information contained in this report.

The Hambright-Rock outcrop complex makes up 28.5 percent of the Coombsville area, as shown on the above table, and is found in lesser concentrations to the north, east, and south. The complex is found in the Vaca Range and makes up most of the cup-and-saucer landform soils (ibid.).

Coombs gravelly and stony loams represent 24.1 percent of the soils in the Coombsville area, and are found in lesser concentrations to the north, east, and west, as shown on the above table. In addition, those soils are the main types appropriate for grape growing in the Coombsville region. They are alluvial, well drained soils at elevations of 50 to 500 feet. The Coombs soils are “relatively unique to the area,” and they were likely first identified in the Coombsville area, according to the petition. Coombs soils make up only 1.7 percent of the soils in Napa County, but they account for almost a quarter of the Coombsville region soils (ibid.).

As shown on the table, Sobrante soils make up 15.5 percent of the Coombsville region, 16 percent to the east in Wild Horse Valley, and a much lesser concentration to the northwest. These soils are well drained and are at elevations of 120 feet and higher.

As shown on the table, soils found in lesser concentrations in the proposed Coombsville viticultural area include Haire and Cole, which have higher concentrations in three of the surrounding areas.

The North Coast viticultural area was established by T.D. ATF-145, which was published in theFederal Registeron September 21, 1983 (48 FR 42973). It includes all or portions of Napa, Sonoma, Mendocino, Solano, Lake, and Marin Counties, California. TTB notes that the North Coast viticultural area contains all or portions of approximately 40 established viticultural areas, in addition to the area covered by the proposed Coombsville viticultural area. In the conclusion of the “Geographical Features” section of the preamble, T.D. ATF-145 states that “[d]ue to the enormous size of the North Coast, variations exist in climatic features such as temperature, rainfall, and fog intrusion.”

The proposed Coombsville viticultural area shares the basic viticultural feature of the North Coast viticultural area: the marine influence that moderates growing season temperatures in the area. However, the proposed viticultural area is much more uniform in its geography, geology, climate, and soils than the diverse multicounty North Coast viticultural area. In this regard, TTB notes that T.D. ATF-145 specifically states that “approval of this viticultural area does not preclude approval of additional areas, either wholly contained with the North Coast, or partially overlapping the North Coast,” and that “smaller viticultural areas tend to be more uniform in their geographical and climatic characteristics, while very large areas such as the North Coast tend to exhibit generally similar characteristics, in this case the influence of maritime air off of the Pacific Ocean and San Pablo Bay.” Thus, the proposal to establish the Coombsville viticultural area is not inconsistent with what was envisaged when the North Coast viticultural area was established.

The Napa Valley viticultural area was established by T.D. ATF-79, which was published in theFederal Registeron January 28, 1981 (46 FR 9061), includes most of Napa County, California. As noted in T.D. ATF-79, the Napa Valley viticultural area encompasses “all the areas traditionally known as `Napa Valley' which possess generally similar viticulture characteristics different from those of the surrounding areas.” TTB notes that the Napa Valley viticultural area encompasses 14 existing smaller viticultural areas, in addition to the area covered by the proposed Coombsville viticultural area.

The Coombsville petition states that a Mediterranean climate of warm, dry summers and cool, moist winters dominates the Napa Valley region. Air temperatures in the valley increase from south to north based on the dissipation of the marine fog and cooling windsfrom the San Pablo Bay to the south. Precipitation amounts are greater at the north end of the valley, at higher elevations, and in the Mayacmas Mountains on the west side of the valley. Sun exposure is greater on the east side of Napa Valley along the southwest face of the Vaca Range, including the Coombsville region, as compared to the western valley foothills of the Mayacmas Mountains.

According to T.D. ATF-79, the Napa Valley viticultural area contains varieties of both Coombs and Sobrante soils, which are prominent in the Coombsville region. The Napa Valley viticultural area also includes other soil types, including Bale, Cole, Yolo, Reyes, and Clear Lake. The latter soil types are not prominent or are not present in the proposed Coombsville viticultural area, according to the petition. Thus, while the characteristics of the proposed Coombsville viticultural area are generally similar to those of the Napa Valley viticultural area, there are some distinguishing characteristics that warrant its separate designation as a viticultural area.

TTB published Notice No. 119 regarding the proposed Coombsville viticultural area in theFederal Registeron May 24, 2011 (76 FR 30052). In that notice, TTB requested comments from all interested persons by July 25, 2011. TTB solicited comments on the accuracy of the name, boundary, climactic, and other required information submitted in support of the petition. TTB expressed particular interest in whether the distinguishing features of the proposed viticultural area are sufficiently different from the established Napa Valley and North Coast viticultural areas, within which the proposed area lies. Additionally, TTB asked if the geographic features of the proposed viticultural area are so distinguishable from the surrounding Napa Valley and North Coast viticultural areas that the proposed Coombsville viticultural area should no longer be part of those viticultural areas.

TTB received 50 comments in response to Notice No. 119. The commenters included 26 self-identified wine industry members and one self-identified representative of a trade association, the Napa Valley Vintners. Forty-nine of the comments express support for the proposed Coombsville viticultural area, and many note the unique climate and distinctive geography of the proposed viticultural area as described in Notice No. 119. The remaining comment, comment 17, notes a typographical error in the boundary description in paragraph (c)(12) of the proposed regulatory text, which is described in more detail below. There were no comments submitted in opposition to Notice No. 119.

After careful review of the petition and the comments received during the comment period, TTB finds that the evidence provided by the petitioner supports the establishment of the proposed Coombsville viticultural area within the Napa Valley and North Coast viticultural areas, as proposed in Notice No. 119, with the alteration to the boundary description as discussed below. Accordingly, under the authority of the Federal Alcohol Administration Act and part 4 of the TTB regulations, TTB establishes the “Coombsville” viticultural area in Napa County, California, effective 30 days from the publication date of this document.

See the narrative boundary description of the viticultural area in the regulatory text published at the end of this document. In this final rule, TTB altered some of the language in the written boundary description published as part of Notice No. 119, to conform the written boundary description to the boundary of the proposed viticultural area as marked on the USGS maps and the written description submitted with the petition. As noted in comment 17, in paragraph (c)(12) of the proposed regulatory text, the word “northwest” should have read “northeast.” Paragraph (c)(12) of the final regulatory text contains the correct term “northeast.”

The petitioner provided the required maps, and TTB lists them below in the regulatory text.

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this viticultural area, its name, “Coombsville,” is recognized as a name of viticultural significance under 27 CFR 4.39(i)(3). The text of the new regulation clarifies this point. Once this final rule becomes effective, wine bottlers using “Coombsville” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the viticultural area's name as an appellation of origin. The establishment of the Coombsville viticultural area will not affect any existing viticultural area, and any bottlers using Napa Valley or North Coast as an appellation of origin or in a brand name for wines made from grapes grown within the Coombsville viticultural area will not be affected by the establishment of this new viticultural area. The establishment of the Coombsville viticultural area will allow vintners to use “Coombsville,” “Napa Valley,” and “North Coast” as appellations of origin for wines made from grapes grown within the Coombsville viticultural area.

For a wine to be labeled with a viticultural area name or with a brand name that includes a viticultural area name or other term identified as being viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with the viticultural area name or other viticulturally significant term and that name or term appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name or other term of viticultural significance appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label.

Different rules apply if a wine has a brand name containing a viticultural area name or other viticulturally significant term that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

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

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

Karen A. Thornton of the Regulations and Rulings Division drafted this notice.

For the reasons discussed in the preamble, TTB amends title 27, chapter I, part 9, Code of Federal Regulations, as follows:

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

Part 4 of the TTB regulations (27 CFR part 4) provides for the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation, submission, and approval of petitions for the establishment or modification of American viticultural areas and lists the approved American viticultural areas.

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

Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing the establishment of an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions for the establishment or modification of American viticultural areas. Such petitions must include the following:

• Evidence that the area within the viticultural area boundary is nationally or locally known by the viticultural area name specified in the petition;

• An explanation of the basis for defining the boundary of the viticultural area;

• A narrative description of the features of the viticultural area that affect viticulture, such as climate, geology, soils, physical features, and elevation, that make it distinctive and distinguish it from adjacent areas outside the viticultural area boundary;

• A copy of the appropriate United States Geological Survey (USGS) map(s) showing the location of the viticultural area, with the boundary of the viticultural area clearly drawn thereon; and

• A detailed narrative description of the viticultural area boundary based on USGS map markings.

Patrick Shabram, on behalf of himself and David Hirsch of Hirsch Vineyards, submitted a petition in 2003 to establish the 27,500-acre Fort Ross-Seaview American viticultural area in the western part of Sonoma County, California (the Shabram-Hirsch petition). The Shabram-Hirsch petition states that the proposed Fort Ross-Seaview viticultural area, which contains 18 commercial vineyards on 506 acres, lies close to the Pacific Ocean and about 65 miles north-northwest of San Francisco. It lies entirely within the Sonoma Coast viticultural area (27 CFR 9.116), which lies entirely within the multicounty North Coast viticultural area (27 CFR 9.30). The proposed viticultural area would not overlap, or otherwise affect, any other viticultural areas.

In 1812, Fort Ross was established by Russian fur trappers on a bluff, lying just west of the boundary of the proposed Fort Ross-Seaview viticultural area and overlooking the Pacific Ocean, according to the Shabram-Hirsch petition. The fort served as Russia's southernmost outpost in the Pacific Northwest until it was abandoned in 1841. Since 1906, the site of the fort has been called the Fort Ross State Historic Park; a reconstructed fort now is open to the public. Seaview is a small, unincorporated community and real estate development located along the Pacific Coast Highway (State Route 1) and located nearby and to the north of the park. Much of the Seaview community is located within the proposed viticultural area.

Fort Ross Road winds through the southern portion of the proposed Fort Ross-Seaview viticultural area, as shown on the 1978 USGS Fort Ross quadrangle map; also shown on the map are Seaview Cemetery and, extending northward in the proposed viticultural area, Seaview Road. The intersection of Fort Ross and Seaview Roads lies to the northeast of the Fort Ross State Historic Park (California State Automobile Association, “Mendocino and Sonoma Coast” map, October 2000), according to the Shabram-Hirsch petition.

The Shabram-Hirsch petition states that the location of the proposed viticultural area is commonly called “Fort Ross-Seaview” by local grape growers. In a letter to Mr. Shabram explaining the origins and usage of the proposed “Fort Ross-Seaview” name, Daniel Schoenfeld, a grape grower and longtime resident, claimed that the Fort Ross-Seaview name identifies the proposed viticultural area and distinguishes the area from other geographic place names. Although all three names, “Fort Ross,” “Seaview,” and “Fort Ross-Seaview,” have been used to identify the area, Mr. Schoenfeld noted an increased incidence in use of the Fort Ross-Seaview name in recent years. For example, the land within and near the proposed viticultural area in the western part of Sonoma County has been called the “Fort Ross-Seaview district” (“A Miraculous Intersection: A Short History of Viticulture and Winegrowing in Western Sonoma County” by Charles L. Sullivan, 2001), according to the Shabram-Hirsch petition.

According to the Shabram-Hirsch petition, viticulture within the proposed Fort Ross-Seaview viticultural area dates to 1817, when Captain Leontii Andreianovich Hagemeister planted Peruvian grape cuttings at Fort Ross. In 1973, Michael Bohan planted two acres of grapes three miles east of Fort Ross, between Seaview Road and Creighton Ridge. In 1974, he planted another 15 acres, and, in 1976, he started selling his grape harvests to wineries in Sonoma and Santa Cruz Counties, California. In 1980, co-petitioner David Hirsch planted a vineyard between the 1,300- and 1,600-foot elevations in the Fort Ross-Seaview area, according to his April 15, 2003 letter to Mr. Shabram that was submitted as a supplemental exhibit to the petition. The petition notes that, in spring 2003, the proposed viticultural area contained 18 commercial vineyards on 506 acres.

According to the Shabram-Hirsch petition, the boundary of the proposed viticultural area generally incorporates most of the contiguous 920-foot elevation line. It also incorporates the ridges, hills, and mountains at higher elevations located along the Pacific coast near Fort Ross and Seaview in western Sonoma County. The 920-foot elevation line and the higher elevations separate the sunnier proposed viticultural area from the surrounding foggy areas, which are at lower elevations.

The western portion of the boundary line of the proposed Fort Ross-Seaview viticultural area is located between 0.5 and 2.5 miles from the Pacific coastline and mostly at or above the 920-foot elevation line, as shown on the USGS maps submitted with the Shabram-Hirsch petition. Coincidentally, the San Andreas Rift Zone runs generally parallel to and west of the western portion of the proposed boundary line and east of the Pacific coast, as shown on the USGS maps.

In his 2003 letter, Mr. Hirsch also explained that, because coastal fog does not rise above the 920-foot elevation line, the proposed viticultural area receives more hours of solar radiation than the surrounding lower elevations,which cannot support successful viticulture. “During the summer, fog usually covers the Sonoma Coast during the morning and burns off about noon,” he wrote. “This marine fog layer seldom rises above 900 feet, which explains why there are no vineyards below this elevation in the proposed area.” In addition, according to the Shabram-Hirsch petition, the moderating temperatures of the Pacific Ocean reduce the risk of nighttime freeze and frost within the proposed viticultural area.

The distinguishing features of the 27,500-acre proposed Fort Ross-Seaview viticultural area are topography, soils, and climate, according to the Shabram-Hirsch petition.

The Shabram-Hirsch petition explains that vineyards within the proposed viticultural area are generally located on rounded ridges with summits extending above 1,200 feet. The USGS maps submitted with the petition show that the proposed viticultural area consists of steep, mountainous terrain made up of canyons, narrow valleys, ridges, and 800- to 1,800-foot peaks. The area, mainly at elevations of between 920 and 1,800 feet, has meandering, light-duty or unimproved roads and jeep trails and scattered creeks and ponds.

The Shabram-Hirsch petition did not include a description of the topography in the surrounding areas.

The Shabram-Hirsch petition states that the soils consist of Yorkville, Boomer, Sobrante, Laughlin, and many other soils within the proposed Fort Ross-Seaview viticultural area (Soil Survey of Sonoma County, California, issued by the Natural Resources Conservation Service, 1990, pp. 44 and 45). Hugo soils are common in the proposed Fort Ross-Seaview viticultural area and in the mountain ranges of Sonoma County and Mendocino County to the north of the proposed viticultural area. Hugo soils are well drained, very gravelly loams derived from sandstone and shale (see publication cited above).

The Shabram-Hirsch petition states that some soils in the proposed viticultural area derived from metamorphic rocks and, to a lesser extent, igneous rocks, but most soils derived from sedimentary rocks (untitled maps, by M.E. Huffman and C.F. Armstrong, California Department of Conservation Division of Mines and Geology, reprinted 2000). The petition also states that the sedimentary rocks in the proposed viticultural area contrast with the relatively younger sedimentary rocks that are the parent material of the soils in the area to the west and that coincide with the San Andreas Rift Zone.

The Shabram-Hirsch petition did not include any soils data for the surrounding areas, except for the area to the west mentioned above.

The Shabram-Hirsch petition states that generally the proposed viticultural area is not directly affected by marine fog. In areas generally above 900 feet in elevation, the climate is influenced by longer periods of sunlight and is warmer than that in the surrounding land below 900 feet. The prevalence of marine fog below the 900-foot elevation line causes the surrounding, lower areas to be cooler and to have a shorter growing season than that in the proposed viticultural area.

According to the Shabram-Hirsch petition, the coastal fog and its effects on agriculture were studied for more than 3 decades by Robert Sisson, former County Director and Farm Advisor for Sonoma County (“Guidelines for Assessing the Viticultural Potential of Sonoma County: An Analysis of the Physical Environment,” M.A. thesis by Carol Ann Lawson, University of California, Davis, 1976). Mr. Sisson mapped the diverse climate of the lowermost, foggy coastal areas that surround some of the higher, sunnier elevations, according to the petition.

TTB notes that the Sisson system of climatic classification takes into account the amount of time that a vine is actually exposed to a certain temperature. The system uses such terms as “Coastal Cool” and “Coastal Warm,” which incorporate a method of heat summation that takes into account not only the highs and lows but the number of hours at which temperatures remain in the highly effective photosynthesis range of 70 to 90 °F. “Coastal Cool” is designated as having a cumulative duration of less than 1,000 hours between 70 °F and 90 °F in April through October.

The Shabram-Hirsch petition states that the proposed viticultural area is “Coastal Cool” (“Climate Types of Sonoma County,” map, Vassen, 1986). The area can support viticulture, in contrast to the surrounding, lower-elevation, cooler, less sunny, marine climatic areas that cannot sustain viticulture, according to the petition.

The Shabram-Hirsch petition also states that the proposed Fort Ross-Seaview viticultural area is in the heaviest fog intrusion area, spanning the entire coast of Sonoma County (“Lines of Heaviest and Average Maximum Fog Intrusion for Sonoma County,” map, by Carol Ann Lawson, 1976). However, TTB notes that this map does not detail the heavy fog line from the contrasting warmer and sunnier microclimates at higher elevations, such as that which exists in the proposed viticultural area.

The Shabram-Hirsch petition states that the water temperature of the ocean off the Pacific coast to the west of the proposed viticultural area rarely rises above 60 degrees Fahrenheit. From mid-spring to fall, a fogbank is created offshore that moves inland through low-elevation mountain gaps and valleys. The fog, rarely rising above the 900-foot elevation line, cools temperatures on shore and reduces sunshine in the early mornings and late afternoons at elevations of 900 feet or less. Consequently, the proposed viticultural area, which lies mainly between the 920- and 1,800-foot elevation lines, receives less fog and more sun during the growing season than the surrounding, lower areas.

The Shabram-Hirsch petition compares the proposed Fort Ross-Seaview viticultural area to the southwestern portion of the Sonoma Coast and nearby Russian River Valley viticultural areas. Those areas, to the southwest and to the northeast, respectively, have cool and comparatively less sunny climates because they generally receive marine fog and do not lie above the fog line.

The Shabram-Hirsch petition states that temperatures are roughly comparable during the coolest part of the year at Fort Ross State Historic Park at the 112-foot elevation level, just west of the proposed boundary, and at Campmeeting Ridge in Seaview at the 1,220-foot elevation level, located within the proposed viticultural area (“Unique Climatic and Environmental Characteristics of the Proposed Fort Ross-Seaview Viticultural Area,” 2001, by Patrick L. Shabram). However, daily high temperatures during the growing season May through October and daily low temperatures in June and from August through October are warmer on the ridge than at the park, according to the petition. Significant growing season temperature variations occur at points between these lower and higher elevations (see publication cited above).

TTB published Notice No. 34 regarding the proposed Fort Ross-Seaview viticultural area in theFederal Registeron March 8, 2005 (70 FR 11174). In Notice No. 34, TTB invitedcomments from all interested members of the public on or before May 9, 2005. In response to a request from an industry member, TTB subsequently extended the comment period of Notice No. 34 from May 12, 2005 until June 8, 2005 (see Notice No. 42, published in theFederal Registerat 70 FR 25000 (May 12, 2005)).

In Notice No. 34, TTB specifically invited comments regarding whether “Ft. Ross-Seaview,” “Fort Ross,” “Ft. Ross,” and “Seaview” should be designated as terms of viticultural significance in addition to the full “Fort Ross-Seaview” name. TTB also solicited comments on the sufficiency and accuracy of the name, boundary, climatic, and other required information submitted in support of the petition.

TTB received seven comments in response to Notice No. 34. Two comments support the petition without qualification, and a third commenter supports the proposed viticultural area but expressed concern about a potential conflict with his brand name if “Fort Ross” or Ft. Ross” alone are designated as terms of viticultural significance. Four additional comments oppose the petition on the ground that the proposed boundary line excludes a region to the north that the commenters contend has similar geographical features as the petitioned-for viticultural area.

The commenters in support of Notice No. 34 include co-petitioner David Hirsch, of Hirsch Vineyards, who has been growing wine grapes at a vineyard at an elevation of 1,500 feet in the proposed Fort Ross-Seaview viticultural area since 1980. In comment 2, Mr. Hirsch explains the importance of the area's marine-influenced climate, soils, and topography in producing premium grapes in the region. In comment 4, two local grape-growers that have been operating their vineyard on a 1,500-foot elevation ridgetop in the proposed viticultural area since 1982 explain that grape growing is part of the heritage of the Fort Ross-Seaview region. Both comments 2 and 4 emphasize that the establishment of the proposed viticultural area would help consumers identify wines made from grapes grown in the proposed Fort Ross-Seaview viticultural area.

In addition, in comment 3, a local vineyard and winery owner generally supports the establishment of the proposed viticultural area, but the owner opposes the designation of “Fort Ross” and “Ft. Ross” as viticulturally significant terms because it would create a conflict with the owner's trademarked “Fort Ross Winery” and “Fort Ross Vineyard” names, which the owner states would cause irreparable economic hardship and potentially cause consumer confusion.

Four additional comments, Nos. 1, 5, 6, and 7, oppose Notice No. 34 based on the proposed boundary line and propose an alternate boundary line that would include an additional area to the north. According to the four opposing commenters, all of whom own vineyards and/or wineries in the area to the north of the proposed viticultural area (the Northern Commenters), the vineyards in that area have the same distinguishing features and characteristics as the vineyards located within the proposed Fort Ross-Seaview viticultural area to the south. The Northern Commenters contend that the northern portion of the proposed boundary line should extend northward to Buckeye Creek, which would include a region generally referred to as the “Annapolis area.” In addition, two of the Northern Commenters also express concern about the use of the “Fort Ross-Seaview” name, explaining that the “Fort Ross” name is used by the Fort Ross Winery and that the “Seaview” name is used by an Australian sparkling wine bottler.

In comment 5, one of the Northern Commenters suggested that TTB delay establishing the Fort Ross-Seaview viticultural area to allow the growers in the northern area the opportunity to gather and submit documentation supporting a northern expansion of the 27,500-acre proposed Fort Ross-Seaview viticultural area (the Northern Addition). TTB agreed to a delay, and on November 11, 2005, the Northern Commenters submitted a petition, USGS maps, and a written boundary description for a proposed expansion of the 27,500-acre proposed Fort Ross-Seaview viticultural area to include the Northern Addition (the Northern Addition petition).

In the Northern Addition petition, the Northern Commenters petitioned for a 15,726-acre expansion of the proposed Fort Ross-Seaview viticultural area, which included 28 commercial vineyards on about 900 acres as of November 11, 2005. The documentation included a narrative explaining the basis for the proposal as well as supporting evidence relating to the historic name usage and distinguishing features of the Northern Addition. According to the Northern Addition petition, the Northern Addition is well-suited for commercial viticulture because the area vineyards, which are located at inland elevations between 700 and 900 feet, are protected from marine fog intrusion by parallel coastal ridges at elevations of 920 feet or higher. The coastal ridges effectively buffer the cooling fog of the Pacific Ocean from inland vineyards, according to the Northern Addition petition.

Name Evidence:The Northern Addition petition states that, since the Russian occupation of northern California, the “Fort Ross” name has continuously been used to identify the Sonoma County coastline north of the Russian River (including the proposed Fort Ross-Seaview viticultural area and the proposed Northern Addition).

Citing historical evidence relating to the Russian occupation's effect on native populations in the early and mid-1800s and the development of the area surrounding Fort Ross by George Washington Call in the mid-1870s, the Northern Addition petition contends that the historically-recognized “Fort Ross Region” extends northward from the Russian River to approximately the Gualala River and six to nine miles inland from the Pacific coastline, and that region includes the proposed Fort Ross-Seaview viticultural area as well as the proposed Northern Addition (“The Archeology and Ethnohistory of Fort Ross, California,” by Kent G. Lightfoot, Thomas A. Wake, and Ann M. Schiff, Archaeological Research Facility, University of California at Berkeley, 1991). The Northern Addition petition further notes that the natural environment of the “Fort Ross Region” extends, south to north, from the small coastal town of Jenner, located at the mouth of the Russian River, to the town of Gualala, located at the mouth of the Gualala River.

The Northern Addition petition adds that the “Seaview” geographical place name identifies the tiny coastal community of Seaview and Seaview Road, which the Northern Addition petition notes is “some distance” from the vineyards in the Northern Addition. The Northern Addition petition points out, however, that some vineyards in the 27,500-acre proposed Fort Ross-Seaview viticultural area are also located at similar distances from the Seaview community.

Given the distance of the Northern Addition from the Seaview community, the Northern Commenters proposed that the “Fort Ross” portion of the proposed viticultural area name be modified by an alternative geographical place name in lieu of “Seaview” that would better describe the proposed viticultural area with the 15,726-acre Northern Addition, such as “Stewarts Point” or “Annapolis.” TTB notes that “StewartsPoint” and “Annapolis” are geographical place names that refer to areas located in or near the Northern Addition and are outside the boundary line of the 27,500-acre proposed Fort Ross-Seaview viticultural area. Alternatively, the Northern Commenters suggested adding “Region” to the “Fort Ross” name or combining “Fort Ross” with “Sonoma Coast” or “Northern Sonoma Coast.”

Boundary Evidence:According to the Northern Addition petition, the proposed boundary line expansion is based on the geographical features of the 15,726-acre Northern Addition, which are similar to the distinguishing geographical features of the proposed 27,500-acre Fort Ross-Seaview viticultural area.

The Northern Addition petition explains that the western portion of the boundary line for the proposed Fort Ross-Seaview viticultural area would combine with the western portion of the proposed boundary line for the Northern Addition. The combined boundary line follows a high-elevation ridgeline that limits the inland intrusion of cooling marine fog off the Pacific Ocean. The northernmost portion of the proposed boundary line for the Northern Addition parallels the 600- to 400-foot elevations in the area of Buckeye Creek, a tributary of the South Fork of the Gualala River, as shown on USGS maps. The Northern Addition petition states that Buckeye Creek forms a natural boundary line between higher elevation areas to the south and north. The eastern portion of the proposed boundary line for the Northern Addition follows a 600-foot elevation line and roads on ridgelines between the generally mountainous coastal terrain and the very rugged interior mountains to the east. To the southeast, the proposed boundary line for the Northern Addition joins with the northeastern portion of the boundary line of the 27,500-acre proposed Fort Ross-Seaview viticultural area, according to the Northern Addition petition.

Distinguishing Features:The Northern Addition petition contends that the proposed Northern Addition shares the same distinguishing features of topography, climate, and soils as the proposed Fort Ross-Seaview viticultural area.

Topography:The Northern Addition petition states that the topography is similar in both the 27,500-acre proposed Fort Ross-Seaview viticultural area and the Northern Addition. According to the Northern Addition petition, the topography of the proposed Northern Addition consists of steep mountains with 5 to 70 percent slopes, 1,500-foot ridgetops, and valleys. In addition, the first ridgeline inland from the Pacific Ocean, which buffers coastal fog, forms the western portion of the boundary line of both the 27,500-acre proposed Fort Ross-Seaview viticultural area and the proposed Northern Addition, according to the boundary descriptions.

Climate:The Northern Addition petition asserts that the 27,500-acre proposed Fort Ross-Seaview viticultural area and the proposed Northern Addition share a similar climate, which is the primary defining feature of the area according to the Northern Commenters.

The Northern Addition petition compares the data on average annual heat accumulation, measured in growing degree days1 (GDD), for three vineyards in the proposed Fort Ross-Seaview viticultural area to similar data for a vineyard located in the proposed Northern Addition. The data for the three vineyards in the proposed Fort Ross-Seaview viticultural area originated from the Shabram-Hirsch petition. According to the data, which is summarized in the below table, all of the vineyards are located in Winkler climatic region II, which has 2,501-3,000 GDDs per year.

In addition, according to the Northern Addition petition and the above data, all four vineyards have a Coastal Cool climate using the Sisson system of climactic classification cited in the Shabram-Hirsch petition, in which areas with degree day accumulations in the higher Region I or lower Region II range are considered to be Coastal Cool.

According to the Northern Addition petition, a map submitted with the Shabram-Hirsch petition that is based on Sisson's research also shows that all of the vineyards in the proposed Northern Addition are located within the Coastal Cool classification, including the lower 560- to 890-foot elevations of the vineyards in the Northern Addition (Vassen, “Climate Types of Sonoma County Map,” 1986). The Northern Addition petition contends that the Marine Cold and Coastal Cool climate classifications are not rigidly divided at the 900-foot elevation line, and that the vineyards at the lower, 560- to 890-foot elevations in the proposed Northern Addition receive adequate solar radiation for grape ripening because they are surrounded by a higher elevation ridge to the west that decreases the frequency of fog intrusion and its concomitant cooling effects.

The Northern Addition petition also provides a comparison of growing season temperatures for Fort Ross State Historic Park (located at the 112-foot elevation to the west of the proposed viticultural area) and La Crema Vineyard (located in the proposed Northern Addition) to establish that both the Northern Addition and the proposed Fort Ross-Seaview viticultural area have warmer temperatures during the growing season as compared to the coastal, lower elevation Fort Ross State Historic Park. As with the proposed Fort Ross-Seaview viticultural area, the data show that the Northern Addition has average temperatures that are roughly comparable to those at Fort Ross State Historic Park when little fog occurs during the coolest part of the year and in the evenings during the growing season. By contrast, and similar to the proposed Fort Ross-Seaview viticultural area, the Northern Addition has daytime high temperatures during the growing season that are significantly higher than the growing season daytime hightemperatures at Fort Ross State Historic Park. The Northern Addition petitioners attribute these significantly higher temperatures to the warming effect of solar radiation during the daytime that is similar to the growing season warming that occurs in the proposed Fort Ross-Seaview viticultural area.

The Northern Addition petition explains that the terrain of the region contributes to its distinctive climate because the high elevation ridge along the Pacific coastline blocks or slows the intrusion of marine fog currents flowing inland. According to the Northern Addition petition, the growing season climate of the proposed Fort Ross-Seaview viticultural area and the Northern Addition are similar because they both are affected by the fog-buffering caused by the coastal ridges and hills along the northernmost portions of the Sonoma Coast viticultural area. The Northern Addition petition further notes that the mountainous terrain in the region causes nighttime cool air to drain from the surrounding ridges and hillsides to the lower elevations, thereby extending the growing season on the higher ridges and hillsides and reducing the risk of springtime frost in both the proposed Fort Ross-Seaview viticultural area and the proposed Northern Addition.

Soils:The Northern Addition petition states that the soils in both the proposed Fort Ross-Seaview viticultural area and the proposed Northern Addition are varied, well drained, and nonalluvial (Soil Survey of Sonoma County, California, 1972, issued by the U.S. Department of Agriculture, Natural Resources Conservation Service). Goldridge, Yorkville, Josephine, and Laughlin soils are common in both areas, and Hugo soils make up 54 percent of the proposed Fort Ross-Seaview viticultural area and 45 percent of the proposed Northern Addition (see publication cited above), according to the Northern Addition petition.

Following the submission of the Northern Addition petition, Patrick Shabram, co-author of the Shabram-Hirsch petition, submitted additional documentation to support the establishment of the 27,500-acre Fort Ross-Seaview viticultural area as originally proposed (the Shabram response).

As a general matter, the Shabram response emphasizes that the Northern Addition area, which is known as the Annapolis region, is a grape growing area distinct and separate from the petitioned-for Fort Ross-Seaview viticultural area, notwithstanding some similar characteristics. The Shabram response further contends that the arguments presented in favor of the Northern Addition, especially the argument premised on the similar Coastal Cool climate classification in both regions, are equally applicable to other nearby California coastal regions. Accordingly, the Shabram response argues that an expansion of the proposed Fort Ross-Seaview viticultural area based on the grounds stated in the Northern Addition petition would warrant a larger expansion into other neighboring regions, including the established Mendocino Ridge viticultural area (27 CFR 9.158) to the north, established by T.D. ATF-392 (published in theFederal Registerat 62 FR 55512 (October 27, 1997)), and the proposed Freestone-Occidental viticultural area (a petition under TTB review) to the south, both of which generally share a similar Coastal Cool climate as a result of coastal fog and have some similar soil types. Such an expansion would create a larger, regional viticultural area more akin to the established Sonoma Coast viticultural area as compared to the smaller, local viticultural area that was sought by the Fort Ross-Seaview petitioners.

Name Evidence:The Shabram response states that the “Fort Ross-Seaview” name is not associated with the Northern Addition area, and it argues that use of the name to identify the viticulture of the Northern Addition would be confusing to consumers. According to the Shabram response, the Northern Addition area is instead recognized as a separate geographical region known as “Annapolis,” which is the reason why the area was not considered for inclusion when the Fort Ross-Seaview growers first considered petitioning for a viticultural area. The Shabram response notes that the Northern Addition petitioners' proposed amendment of the “Fort Ross-Seaview” name to either “Fort Ross-Annapolis” or “Sonoma Coast Mountains” for the proposed expanded viticultural area (including the Northern Addition) shows that the name lacks significance in the Annapolis area.

As explained in the Shabram response, the Fort Ross-Seaview vineyard owners considered various other potential names when discussing the best geographical name for their proposed viticultural area, including but not limited to Fort Ross, Fort Ross Ridges, Seaview, and Seaview Ridges (“California's New Frontier,” by Steve Heimoff, “Wine Enthusiast,” July 2001). According to the Shabram response, the area vineyard owners ultimately agreed that the area is called both the “Fort Ross area” and the “Seaview area,” and that both names are significant to local viticulture (see publication cited above), resulting in the proposed “Fort Ross-Seaview” name.

In further support of the proposed Fort Ross-Seaview name, the Shabram response quotes two Fort Ross vineyard owners regarding the significance of the name. One area grower, Lester Schwartz, stated in a supplemental exhibit to the petition that “[t]he petitioners chose `Fort Ross-Seaview' because that is what locals call the area which produces fine grapes and wine” (Schwartz letter to TTB, dated May 4, 2005). Another local grower, Daniel Schoenfeld, stated in his 2004 letter to Mr. Shabram about the “Fort Ross-Seaview” name that “[t]he region that constitutes the proposed AVA is known as the `Fort Ross' area, as the `Seaview' area, and as the `Fort Ross-Seaview' area. All three names have been used interchangeably to describe the area. `Fort Ross-Seaview' has been used for a number of years in verbal communication to eliminate confusion associated with the different names” (in conversation with TTB personnel, May 18, 2004).

The Shabram response further states that writers consistently do not include the Northern Addition (or Annapolis) region when referring to the Fort Ross-Seaview area, or vice versa. As noted in the discussion of the Shabram-Hirsch petition above, Charles Sullivan used the “Fort Ross-Seaview” name to refer to the area, which was before the local growers reached a consensus on the name of the proposed viticultural area, and the Shabram Response notes that Mr. Sullivan does not mention Annapolis or the Northern Addition when discussing Fort Ross-Seaview viticulture. In addition, the Shabram response points out that the Friends of the Gualala River Web site (available athttp://gualalariver.org/) has a map that shows the location of local Annapolis vineyards, but it does not include the vineyards in the proposed Fort Ross-Seaview viticultural area to the south.

The Shabram response also notes that the location of the vineyards of two of the Northern Addition petitioners, Brice Jones and Don Hartford, has been referred to as “Annapolis” rather than “Fort Ross-Seaview”: Mr. Jones was described as an “Annapolis vintner” in a news article (“Brice Jones, Artesa Open Routes Across Land for Animals: Annapolis Winegrowers to Establish Wildlife Corridors,” by Carol Benfell, [Santa Rosa] Press Democrat, September 11, 2001); and the Hartford FamilyWinery notes that the Lands Edge Vineyards 2007 Pinot Noir “is sourced predominantly from our estate's Annapolis vineyard” (http://www.hartfordwines.com/wines/pinotnoir/landsedge.html).

Boundary Evidence:The Shabram response contends that there are three geographically distinctive viticultural areas in coastal Sonoma County: Annapolis (north), Fort Ross-Seaview (middle), and Freestone-Occidental (south).

As stated in “A Wine Journey along the Russian River,” a source cited in the Shabram response, Sonoma County coastal viticulture “is clustered in three areas close to the shore: Annapolis up north, near the Mendocino County line; Fort Ross in the center; and (merging these two areas into one) Occidental Ridges and Freestone, to the south (which some people refer to as the Bodega plantings)” (Steve Heimoff, University of California Press, 2005, pages 234-5). The Shabram response also refers to a map that depicts the separate vineyard clusters in the Annapolis, Fort Ross-Seaview, and Freestone-Occidental areas (“Sonoma Coast,” map no. 11, in “North American Pinot Noir,” by John Winthrop Haeger, University of California Press, 2004) and notes that none of the Fort Ross-Seaview wine growers that Mr. Heimoff specifically names in his book are located in the Annapolis area of the map.

The Shabram response explains that the Fort Ross-Seaview vineyards are clustered together along several higher ridges in close proximity to the Pacific Ocean, unlike the vineyards generally clustered at the lower elevations further inland around the town of Annapolis to the north. The Wheatfield Fork of the Gualala River is located between the two clusters of vineyards on the ridges, and the area adjacent to the Fork is characterized by fog intrusion and a steep valley that drops to an elevation of 160 feet. Commercial viticulture is difficult, if not impossible, in the area adjacent to the Wheatfield Fork because of the fog and the steep terrain, according to the Shabram response.

The Shabram response also states that the Annapolis area consists of the ridges surrounding the Wheatfield Fork and Buckeye and Grasshopper Creeks (located in the proposed Northern Addition). By contrast, the proposed Fort Ross-Seaview viticultural area is located to the south of the Annapolis area and consists of a series of ridges that are separated from the surrounding areas by the Wheatfield Fork and the South Fork of the Gualala River and tributary creeks (“North American Pinot Noir,” page 92). The Shabram response states that further south, the Freestone-Occidental area contains ridges that are separated from one another by tributaries of Salmon Creek (see publication cited above). The Shabram response also notes that, in the Northern Addition, the vineyard closest to the northernmost vineyard in the proposed Fort Ross-Seaview viticultural area is approximately 3.5 miles away (measured in a straight line), whereas all of the vineyards within the proposed Fort Ross-Seaview viticultural area are located within an approximately 10 mile stretch, with no vineyard more than 1.5 miles away from another vineyard.

Distinguishing Features:The Shabram response states that subtle climatic and geographic differences exist between the Annapolis and Fort Ross-Seaview regions. Although both areas broadly share a Coastal Cool climate classification, the Shabram response explains that there are differences in the nature of the coastal cooling in each area, which are largely based on the higher elevations of vineyards in the Fort Ross-Seaview area as compared to those in the Annapolis area. As a result, each area receives different amounts of total solar radiation, which in turn affects the ripening times for grapes in those areas, according to the Shabram response.

The Shabram response states that vineyards in the proposed Fort Ross-Seaview viticultural area are located at high elevations above the fog line, so they receive a full day of solar radiation. David Hirsch, Joan and Walt Flowers, and Daniel Schoenfeld, all local growers in the proposed Fort Ross-Seaview viticultural area, attested to Mr. Shabram and to Wine News magazine (Jeff Cox, “Cool Climate Pioneers—Sonoma's Ridgetop Winegrowers Scale New Heights,” Wine News, August/September 2002) that foggy conditions transition to clear skies beginning at the 900-foot elevations of the Fort Ross-Seaview area. Although the 900-foot elevation line does not mark an absolute break in the fog, it is the best available evidence of a fog ceiling, according to the Shabram response.

Further, the Shabram response states that, although the convection and conduction of fog from the Pacific Ocean cool both the Annapolis and Fort Ross-Seaview areas, the vineyards in the Annapolis area are cooler because they are situated at lower elevations, where partial fog reduces total solar radiation, despite the presence of a ridgeline to the west that buffers the fog. For example, the Shabram response quotes a description of Peay Vineyards (located in the Northern Addition), in which it is described as sitting “on a hilltop that is not way up in the air, but just at the top of the fog level, low enough to be very cool, but high enough not to be too cool and wet for grapes” (http://www.peayvineyards.com/). [TTB notes that Peay Vineyards is located at an elevation of approximately 755 feet, as shown on a topographical map provided by the Northern Commenters.] By comparison, the vineyards in the Fort Ross-Seaview area typically are located at higher elevations that are above the fog inversion layer, so they are therefore less cooled by fog and receive greater solar radiation warming while still receiving some cooling via conduction due to the close proximity of the fog layer, according to the Shabram response.

The Shabram response also provides a statement from Vanessa Wong, a grape grower and winemaker at Peay Vineyards who has worked with vineyards located in both the proposed Fort Ross-Seaview viticultural area and the Northern Addition for the past nine vintages and has also made wines from grapes grown in both areas. Ms. Wong explains that the inversion layer of cool ocean fog persists throughout the day in her vineyards in the Northern Addition. According to Ms. Wong, coastal breezes blow cool air along unobstructed land between sea level and 1,000 feet in altitude, which is the mean top of the inversion layer. By contrast, vineyards located above the much cooler inversion layer—including vineyards located along the Fort Ross-Seaview ridges and areas further inland—have warmer temperatures.

Ms. Wong further states that grape maturity dates differ significantly between vineyards in the proposed Fort Ross-Seaview viticultural area and those in the Northern Addition. According to Ms. Wong, for the same vintage and grape variety, the harvest dates in the Northern Addition are consistently later than those in proposed Fort Ross-Seaview viticultural area, adding that ripening generally occurs 10 to 14 days earlier in the Fort Ross-Seaview area than at the lower-elevation Peay Vineyards. Ms. Wong attributes the later ripening in the Annapolis area to the cooler temperatures in that region: “I believe that the pick dates for the Annapolis area are later than those of the Fort Ross-Seaview area because the Annapolis area is cooler than the Fort Ross-Seaview area.”

The following table, which was provided by Ms. Wong, illustrates the difference in pick dates between the Fort Ross-Seaview and Annapolis areas and shows that, for the years that Ms.Wong provided data, the pick dates of the vineyards in the proposed Fort Ross-Seaview viticultural area are significantly earlier than those of the vineyards in the Northern Addition area:

Given the conflicting evidence provided by the original petitioner and by the Northern Commenters with respect to the distinguishing features and boundary line of the proposed viticultural area, as well as the length of time that had elapsed since TTB published Notice No. 34 and solicited public comments on the proposed establishment of the Fort Ross-Seaview viticultural area, TTB determined that it was appropriate to reopen the comment period for Notice No. 34 before taking any final action regarding the proposed Fort Ross-Seaview viticultural area.

Accordingly, TTB reopened the comment period for Notice No. 34 for an additional 45 days on April 21, 2011, with comments due on or before June 6, 2011 (see Notice No. 117, published in theFederal Registerat 76 FR 22338). Notice No. 117 did not contain the details of the northern expansion documentation (referred to here as the “Northern Addition petition”) or of the Shabram response due to the length of those documents, but TTB informed the public in Notice No. 117 that those documents, as well as the original Shabram-Hirsch petition, Notice No. 34, and the original comments received in response to Notice No. 34, were posted for public viewing on Regulations.gov, the Federal e-rulemaking portal.

In Notice No. 117, TTB specifically invited comments on the following issues: (1) Whether TTB should establish the proposed “Fort Ross-Seaview” viticultural area; (2) the sufficiency and accuracy of the proposed viticultural area's name, “Fort Ross-Seaview,” including comments on the name's applicability to the proposed Northern Addition and any alternative names for the proposed viticultural area and the Northern Addition area; and (3) the appropriateness of the proposed viticultural area's boundary line and whether the proposed viticultural area is limited to the area within the boundary line described in Notice No. 34 or if it also extends further to the north as stated by the Northern Commenters.

TTB received three comments in response to Notice No. 117, all strongly supporting the establishment of the Fort Ross-Seaview viticultural area as proposed in Notice No. 34. Two of the comments, Nos. 8 and 9, were submitted by local growers who had previously submitted supporting comments in response to Notice No. 34, Lester Schwartz of Fort Ross Vineyard & Winery LLC and David Hirsch, respectively; the third comment, No. 10, was submitted by Patrick Shabram. There were no comments submitted by the Northern Commenters in response to Notice No. 117.

The supporting comments state their opposition to the proposed Northern Addition based on the distinctiveness of the proposed Fort Ross-Seaview viticultural area and their contention that the Northern Addition (or the Annapolis area) is a separate, viticulturally distinct area. Comment 9 specifically notes the proposed viticultural area's distinctiveness based on its location, soils, and climate, stating that the area's climate is influenced by its close proximity to the ocean as well as its altitude. In comment 10, Patrick Shabram reiterates his prior contention that the main distinction between the proposed viticultural area and the Northern Addition is that the vineyards located within the proposed Fort Ross-Seaview viticultural area are located above or in close proximity to the intruding coastal fog, as compared to the Northern Addition vineyards, which are typically below the fog line. Mr. Shabram adds that various local grape growers have attested to the fact that vineyards within the proposed Fort Ross-Seaview viticultural area are located above the fog, an assertion that Mr. Shabram notes has not been disputed by any growers inside or outside of the proposed viticultural area.

In support of the argument that the Northern Addition is a unique area that is separate and viticulturally distinct from the proposed Fort Ross-Seaview viticultural area, comments 8 and 10 refer to recent articles that recognize that the Fort Ross-Seaview and Annapolis areas are separate grape-growing areas with different climates within the larger Sonoma Coast region. For example, both comments quote an August 2, 2010 article by Eric Asimov, the chief wine critic for the New York Times, that discusses the diversity within the large Sonoma Coast viticultural area, stating that “[e]ven along the narrow swath of land close to the coast, numerous microclimates emerge, making vineyards around Annapolis to the north very different from vineyards on the ridges above Fort Ross in the appellation's western midsection, not to mention those to the south near Freestone and Occidental” (Eric Asimov, “The Evolution of Sonoma Coast Chardonnay,” The New York Times, August 2, 2010).

Comment 10 also quotes an April 27, 2011 article from the Santa Rosa Press Democrat that similarly identifies the same “three particular coastal areas” of the Sonoma Coast and distinguishes the Annapolis area from the area to its immediate south (the location of the proposed Fort Ross-Seaview viticultural area) based on the Annapolis area's lower elevation ridges and its location five to six miles inland from the Pacific Ocean (Virginia Boone, “Wine Way Out West,” Santa Rosa Press Democrat, April 27, 2011).

In addition, comments 8 and 10 quote a 2009 article by the wine editor of the San Francisco Chronicle that names Peay Vineyards as its Winery of the Year and describes the cooler climate in the Annapolis area as compared to the warmer vineyards to the south (within the proposed Fort Ross-Seaview viticultural area), which are located closer to the coast but above the inversion layer: “Even by Sonoma Coast standards, Peay occupies a chilly slice of the world. While vineyards just to the south like Hirsch * * * or Flowers * * * may sit closer to the coast, they're above the inversion layer. The site in Annapolis is lower, between 600 and 800 feet, with colder temperatures” (Jon Bonne, “Winery of the Year: PeayVineyards,” San Francisco Chronicle, December 27, 2009).

In another article about Peay that is quoted in comments 8 and 10, Randy Caparoso of Sommelier Journal recounted Nick Peay's description of the distinctiveness of the Annapolis area as contrasted to the Fort Ross-Seaview area to the south:

According to comment 10, Greg LaFollette, a winemaker who has worked with grape growers in various coastal Sonoma locations (including Fort Ross-Seaview), is quoted in that same article as stating that he “always experienced much higher degree-day accumulation [in Fort Ross-Seaview]”.

Comments 8 and 10 also cite the lack of evidence demonstrating that the “Fort Ross-Seaview” name applies to the Northern Addition area as an additional reason for establishing the petitioned-for viticultural area as proposed in Notice No. 34. In comment 10, Patrick Shabram refers to his earlier argument from the Shabram response that the names “Fort Ross,” “Seaview,” or “Fort Ross-Seaview” lack viticultural significance in relation to the Northern Addition area, which is instead known as the “Annapolis area.” Noting that he was unable to find any reference to the Annapolis area as “Fort Ross,” Mr. Shabram states that a number of recent news articles refer to the Northern Addition area as “Annapolis” in conjunction with other sub-regions of the west Sonoma Coast region, including Fort-Ross Seaview and Freestone-Occidental, further underscoring his contention that the “Fort Ross” name is not used in conjunction with the proposed Northern Addition.

TTB has carefully considered the comments received in response to Notice Nos. 34 and 117 and has reviewed all petition evidence and subsequent documentation received in support of, or in opposition to, the proposed Fort Ross-Seaview viticultural area, including all comments and documentation relating to the proposed Northern Addition.

The evidence submitted both by the Northern Commenters and by Mr. Shabram raised significant questions regarding whether the “Fort Ross-Seaview” name is applicable to the proposed Northern Addition.

Based on TTB's review of the evidence provided by the Northern Commenters to support their assertion that the “Fort Ross” and “Fort Ross Region” names are used in connection with the Northern Addition area, it appears that this use of these names reflects very limited historic name usage during the Russian occupation only (1812-41); the evidence provided does not include more recent references to the area by those names. Regarding the archaeology and ethnohistory study of the Russian occupation of the Fort Ross area that the Northern Addition petition cites for a historical perspective of the occupation's effect on native populations, TTB notes that the study details the historic boundaries of the occupation, but not the current boundary lines of the Fort Ross geographical area.

By contrast, the evidence that was submitted in the Shabram response and in comments 8 and 10 supports the original petitioners' contention in response to the Northern Addition petition that local growers as well as the wine press recognize the Fort Ross-Seaview area as a separate and distinct area from the Annapolis area, and that the “Fort Ross-Seaview” geographical place name is commonly used by local growers to identify only the grape-growing region in the immediate area around Fort Ross and Seaview, but not the neighboring region to the north.

Accordingly, TTB has determined that the name evidence provided in the Northern Addition petition does not substantiate the Northern Commenters' assertion that the “Fort Ross-Seaview,” “Fort Ross,” or “Seaview” names currently apply to the Northern Addition, including the Annapolis area.

As described in Notice No. 34, the Shabram-Hirsch petitioned-for boundary line largely incorporates the hills and mountains located along the Pacific coast near Fort Ross and Seaview in western Sonoma County that are mostly above 900 feet, which generally marks the separation between the higher, sunnier elevations of the proposed area and the surrounding lower, foggier elevations.

TTB notes that the USGS maps show a clear distinction between the Fort Ross-Seaview area and the Annapolis area to the north, with the Wheatfield Fork of the Gualala River creating a natural separation of the lower elevations of the Northern Addition from the steep, higher elevation terrain of the proposed Fort Ross-Seaview viticultural area. TTB also notes that the northernmost vineyard in the proposed Fort Ross-Seaview viticultural area is more than 3 miles from the closest vineyard in the Northern Addition, as shown on an exhibit submitted by the Northern Commenters. In contrast, as pointed out in the Shabram response, all of the vineyards within the proposed Fort Ross-Seaview viticultural area are located within an approximately 10 mile stretch, with no vineyard more than 1.5 miles away from another vineyard.

In addition, the evidence and comments submitted in this case demonstrate that there are two distinct geographical differences between the two areas that affect the proposed boundary line and suggest that they should be considered separate regions: (1) Distance from the Pacific coastline; and (2) elevation. Most locations within the proposed Fort Ross-Seaview viticultural area are located only 0.5 to 2.5 miles from the Pacific coastline, whereas most locations within the Northern Addition are located 4 to 6 miles from the coastline, as shown on USGS maps. The elevation of the vineyards in the two areas is also significantly different; vineyards in the Fort Ross-Seaview area are generally located at elevations between 920 to 1,800 feet, which are above the coastal fog according to local growers and the Shabram-Hirsch petition, as compared to the lower 560- to 890-foot elevations of vineyards in the Northern Addition, which are more influenced by the marine fog.

Finally, TTB notes that the separate identities of the Fort Ross-Seaview and the Northern Addition (or Annapolis) areas have been recognized in recent newspaper articles and wine magazines. As noted above, the Shabram response and comments 8 and 10 cite to multiple articles that refer to the two regions as separate areas and describe their different grape-growing conditions, which further highlights the distinction between the proposed Fort Ross-Seaview viticultural area and the Annapolis area to the north.

TTB thus finds that the boundary line for the proposed Fort Ross-Seaview viticultural area should not include the Annapolis area to the north.

In Notice No. 34, the climate, topography, and soils of the proposed Fort Ross-Seaview viticultural area were identified as the area's distinguishing features. In the Northern Addition petition, the Northern Commenters contend that these same distinctive features are shared by the Northern Addition area, thus warranting a modification of the proposed boundary line to include the Northern Addition. More specifically, the Northern Addition petition asserts that both the proposed Fort Ross-Seaview viticultural area and the Northern Addition have a Coastal Cool climate and similar soil types, which is not challenged in the Shabram response.

Based on the Shabram-Hirsch petition, the Northern Addition petition, the Shabram response, and the public comments, TTB finds that there are some similarities in the soil, topography, and growing season climate of the proposed Fort Ross-Seaview viticultural area and the Northern Addition. As discussed below, however, given that both areas are wholly contained within two larger existing viticultural areas—the North Coast and Sonoma Coast viticultural areas—some general similarities in distinguishing features can be expected, especially in regard to the regional climate because both the proposed Fort Ross-Seaview viticultural area and the Northern Addition have a Coastal Cool climate, which is a distinguishing feature of the surrounding Sonoma Coast viticultural area according to T.D. ATF-253. In addition, as noted in the Shabram response, an expansion of the proposed Fort Ross-Seaview viticultural area based on the general grounds stated in the Northern Addition petition could warrant the inclusion of other nearby coastal areas with broadly similar features. Accordingly, the general regional similarities described in the Northern Addition petition would not necessarily preclude a finding that the microclimate and specific topography of a particular area (such as the proposed Fort Ross-Seaview viticultural area) are sufficiently distinct from those of the adjacent areas as to warrant its recognition as a distinct viticultural area.

While conceding that there are some broad similarities in the climate and topography between the proposed Fort Ross-Seaview viticultural area and the Northern Addition, the Shabram-Hirsch petition, the Shabram response, and the supporting comments also assert that the proposed Fort Ross-Seaview viticultural area has warmer growing conditions with increased solar radiation due to the lack of fog at the high elevation vineyards in the area. The petitioners submitted both statistical and anecdotal evidence in support of their position.

First, the degree day data provided by the petitioners in the Shabram-Hirsch petition for three vineyards in the proposed viticultural area shows that the vineyards are in Winkler region II, and that those vineyards on average had degree days that were greater than or equal to the average degree days for the single vineyard for which data was provided by the Northern Commenters.2 The average degree days for two of the vineyards within the proposed Fort Ross-Seaview viticultural area were significantly greater than the average degree days for the vineyard within the Northern Addition, and the third vineyard had an equal number of degree days on average, suggesting that the growing season temperatures in the proposed viticultural area are somewhat warmer than those in the Northern Addition.

The pick date data provided by Ms. Wong in the Shabram response further supports the assertion that the proposed Fort Ross-Seaview viticultural area has warmer growing conditions than the Northern Addition. According to the data provided by Ms. Wong, for the same growing seasons for the same grapes, the vineyards located within the proposed viticultural area had a pick date that was significantly earlier than the pick date for the vineyard located in the Northern Addition. Ms. Wong specifically attributed the later pick dates in the Northern Addition to the cooler temperatures in the lower elevation vineyards in that area.

In addition, observations by local grape growers as well as articles in the wine press, as described above, further indicate that the higher elevation vineyards located in the proposed Fort Ross-Seaview viticultural area are warmer and receive more solar radiation than the lower elevation vineyards in the Northern Addition because the Fort Ross-Seaview vineyards are located above both the cooler temperature inversion layer as well as the fog line. As noted above, local growers in the proposed Fort Ross-Seaview viticultural area claim that their vineyards benefit from day-long solar radiation because they are located above the fog line and the cool inversion layer. This distinction has also been recognized by two winemakers in the Northern Addition—Ms. Wong and Nick Peay—with the latter contrasting his vineyards in the cooler Annapolis area to the Fort Ross-Seaview area based on the location of his vineyards in (not above) the inversion layer and the influence of unobstructed fog in the area (Jon Bonne, “Winery of the Year: Peay Vineyards,” San Francisco Chronicle, December 27, 2009; Randy Caparoso, “Sonoma Extreme,” Sommelier Journal, January 31, 2011, pp. 70-80).

Finally, TTB notes that the Northern Commenters did not dispute the distinction made in the Shabram response relating to the location of the Fort Ross-Seaview vineyards above the fog line. Although the Northern Addition petition states that the lower elevation vineyards in the Northern Addition are protected from the cooling effects of marine fog intrusion by the surrounding higher elevation ridgelines, the evidence submitted with the Northern Addition petition and with other comments indicates that there is still some fog intrusion in the area. By contrast, the evidence submitted in support of the proposed Fort Ross-Seaview viticultural area demonstrates that vineyards in that area are located above the fog line, thereby resulting in warmer growing season conditions, increased solar radiation, and earlier harvest dates for those vineyards. TTB also notes that no other comments in support of the Northern Addition or in opposition to the proposed Fort Ross-Seaview viticultural area were submitted in response to Notice No. 117.

Accordingly, TTB concludes that the evidence submitted in the Shabram-Hirsch petition, in the Shabram response, and in the supporting comments is sufficient to demonstrate that the climate, topography, and other distinguishing features of the proposed Fort Ross-Seaview viticultural area are sufficiently distinct from those of the Northern Addition to warrant the establishment of the new viticultural area originally proposed in Notice No. 34.

As noted earlier in this preamble, the proposed Fort Ross-Seaview viticultural area is located entirely within the Sonoma Coast and North Coast viticultural areas. The similarities and differences between the proposed viticultural area and the surrounding Sonoma Coast and North Coast viticultural areas are addressed in the following paragraphs.

The large North Coast viticultural area was established by T.D. ATF-145 (published in theFederal Registerat 48 FR 42973 on September 21, 1983) and includes all or portions of Napa, Sonoma, Mendocino, Solano, Lake, and Marin Counties, California. TTB notes that the North Coast viticultural area encompasses approximately 40 established viticultural areas in northern California, in addition to the proposed Fort Ross-Seaview viticultural area. T.D. ATF-145 explicitly recognizes that “[d]ue to the enormous size of the North Coast, variations exist in climatic features such as temperatures, rainfall, and fog intrusion.” (See 48 FR 42975-42976.)

The proposed Fort Ross-Seaview viticultural area shares the overall distinguishing feature of the North Coast viticultural area: The marine influence from the Pacific Ocean that results in cooler temperatures throughout the region during the growing season. The proposed Fort Ross-Seaview viticultural area, however, is much more uniform in its geographical features than the North Coast viticultural area as a result of its much smaller size. In this regard, T.D. ATF-145 specifically states that “approval of this viticultural area does not preclude approval of additional areas, either wholly contained with the North Coast, or partially overlapping the North Coast” and that “smaller viticultural areas tend to be more uniform in their geographical and climatic characteristics” (see 48 FR 42976). Thus, the proposal to establish the proposed Fort Ross-Seaview viticultural area is consistent with the clear intent expressed in T.D. ATF-145.

The Sonoma Coast viticultural area was established by T.D. ATF-253 (published in theFederal Registerat 52 FR 22302 on June 11, 1987) within the established North Coast viticultural area. T.D. ATF-253 states that the Sonoma Coast viticultural area includes only the portion of Sonoma county “which is under very strong marine climate influence.” According to T.D. ATF-253, the Sonoma Coast viticultural area has a “Coastal Cool” climate, which is shared by the proposed Fort Ross-Seaview viticultural area that would be located within the Sonoma Coast viticultural area.

Notwithstanding this broad climactic similarity, the information before TTB indicates that there are some differences in the microclimate of the proposed Fort Ross-Seaview viticultural area that distinguish it from the surrounding Sonoma Coast viticultural area. According to the Shabram-Hirsch petition, although the petitioned-for viticultural area lies a short distance from the Pacific Ocean, the elevations of the vineyards located within the proposed viticultural area are generally located above the fog line. The petition also states that the proposed Fort Ross-Seaview viticultural area is warmer during the growing season than the surrounding areas in the Sonoma Coast viticultural area because it is located above the cool temperature inversion layer that results from the draining of cooler air from the high elevation ridges in the proposed viticultural area into the surrounding lower elevations.

The Shabram-Hirsch petition also notes that the topography of the Sonoma Coast viticultural area includes large, flat valley areas, gently rolling hilly regions, several mountainous areas, and a portion of the Russian River and its watershed, as shown on the Sonoma County USGS map. By contrast, the topography of the proposed Fort Ross-Seaview viticultural area generally is more uniform with mountains, steep slopes, and elevations mostly between 920 to 1,800 feet, as shown on USGS maps.

After careful review of the Shabram-Hirsch petition, the Northern Addition petition, the Shabram response, and the comments received in response to Notice Nos. 34 and 117, TTB finds that the evidence submitted supports the establishment of the 27,500-acre Fort Ross-Seaview viticultural area within the Sonoma Coast and North Coast viticultural areas as originally proposed. The evidence submitted by the Northern Commenters to support modification of the proposed boundary line to include the Northern Addition, including the Annapolis region, within the Fort Ross-Seaview viticultural area failed to establish the requisite commonality of name and distinguishing features. TTB would be willing to consider a separate petition for the establishment of a viticultural area encompassing the Annapolis region.

In addition, TTB has determined that both “Fort Ross-Seaview” and “Ft. Ross-Seaview” are viticulturally significant. After consideration of the concerns of some commenters, TTB believes that it would not be appropriate to find that “Fort Ross” or “Ft. Ross,” standing alone, is viticulturally significant. TTB also has determined that the name “Seaview,” standing alone, does not have viticultural significance because of its wide geographical usage, both domestically and internationally. Therefore, the establishment of the Fort Ross-Seaview viticultural area will not affect use of the names “Fort Ross,” “Ft. Ross,” and “Seaview” on wine labels of domestic and foreign producers.

Accordingly, under the authority of the Federal Alcohol Administration Act and part 4 of the TTB regulations, TTB establishes the 27,500-acre “Fort Ross-Seaview” viticultural area in Sonoma County, California, effective 30 days from the publication date of this document.

See the narrative boundary description of the viticultural area in the regulatory text published at the end of this document. In this final rule, TTB altered some of the language in the written boundary description provided in the petition and published as part of Notice No. 34. TTB made these alterations in the written boundary description language for clarity and to conform the written boundary description to the boundary of the proposed viticultural area as marked on the USGS maps submitted with the petition.

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

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this viticultural area and its inclusion in part 9 of the TTB regulations, “Fort Ross-Seaview” and “Ft. Ross-Seaview” are recognized under 27 CFR 4.39(i)(3) as terms of viticultural significance. The text of the new regulation clarifies this point.

Once this final rule becomes effective, wine bottlers using “Fort Ross-Seaview” or “Ft. Ross-Seaview” in a brand name, including a trademark or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use “Fort Ross-Seaview” or “Ft. Ross-Seaview” as an appellation of origin. The establishment of the Fort Ross-Seaview viticultural area will not affect any existing viticultural area, and any bottlers using Sonoma Coast or North Coast as an appellation of origin or in a brand name for wines made from grapes grown within the Fort Ross-Seaview viticultural area will not be affected by the establishment of this new viticultural area.

For a wine to be labeled with a viticultural area name or with a brandname that includes a viticultural area name or other term identified as being viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with the viticultural area name or other viticulturally significant term and that name or term appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name or other viticulturally significant term appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label.

Different rules apply if a wine has a brand name containing a viticultural area name or other term of viticultural significance that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

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

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

Elisabeth C. Kann of the Regulations and Rulings Division drafted this notice.

For the reasons discussed in the preamble, 27 CFR, chapter I, part 9, is amended as follows:

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

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas and lists the approved American viticultural areas.

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

Section 4.25(e)(2) of the TTB regulations outlines the procedure for proposing an American viticultural area and provides that any interested party may petition TTB to establish a grape-growing region as a viticultural area. Section 9.12 (27 CFR 9.12) of the TTB regulations prescribes standards for petitions for the establishment or modification of American viticultural areas. Such petitions must include the following:

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

• An explanation of the basis for defining the boundary of the proposed viticultural area;

• A narrative description of the features of the proposed viticultural area that affect viticulture, such as climate, geology, soils, physical features, and elevation, that make it distinctive and distinguish it from adjacent areas outside the proposed viticultural area boundary;

• A copy of the appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed viticultural area, with the boundary of the proposed viticultural area clearly drawn thereon; and

• A detailed narrative description of the proposed viticultural area boundary based on USGS map markings.

TTB received a petition from R. Paul Beveridge, owner of Wilridge Winery and Vineyard, to establish the “Naches Heights” American viticultural area in the State of Washington. The proposed Naches Heights viticultural area is located entirely within the larger Columbia Valley viticultural area (27 CFR 9.74) of Washington and Oregon. The city of Yakima lies to the southeast of the proposed viticultural area in a valley at lower elevations.

According to the petition, the proposed Naches Heights viticultural area encompasses 13,254 acres and contains 105 acres of commercial vineyards either producing or expecting to produce wine grapes in the foreseeable future.

The “Naches Heights” name applies to an elevated plateau area in Yakima County, Washington, according to the petition and USGS maps. The USGS topographical maps of Naches, Selah, Yakima West, and Wiley City are used in the written boundary description in the petition to define the boundary of the proposed viticultural area. The area between the Naches River and Cowiche Creek is identified as “Naches Heights” on the USGS maps as well as on a public lands map (Yakima Public Lands Quadrangle map, 2001, Washington State Department of Natural Resources), according to the petition.

TTB notes that a search of the USGS Geographical Names Information System (GNIS) describes Naches Heights as a summit in Yakima County, Washington. Also, a general Internet search for “Naches Heights” produced many hits relating to the geographical region in which the proposed viticultural area falls.

The petition provided evidence of local usage of the name “Naches Heights,” including listings for the “Naches Heights Community Center” and the “Little Store on Naches Heights” in The DexOnline.com, Qwest, 2008 Yakima Valley telephonedirectory. The petition also included multiple articles from the Yakima Herald-Republic referring to “Naches Heights,” including an October 22, 2008, obituary of Albert Robert Couchman, who had worked in orchards in Naches Heights; an October 24, 2008, article about a cross-country competition entitled “Local Report: GNAC's best heading to Naches Heights”; and an October 26, 2008, article entitled “Naches Heights: Senior Marcie Mullen turned in Central Washington University's top performance in Saturday's GNAC cross country championship * * *.” In addition, the petition included a 1990 Cowiche Canyon brochure issued by the Bureau of Land Management's Spokane District that contained a drawing showing the Naches Heights geographical area, with Cowiche Canyon to the immediate west at lower elevations.

According to USGS maps submitted with the petition, the Naches Heights plateau landform is surrounded by lower elevation valleys and the lower Tieton River to the west, the Naches River to the north and east, and Cowiche Creek to the south and west. The man-made Congdon (Schuler) Canal is located along a portion of the proposed eastern boundary line, closely following the 1,300-foot elevation line. TTB notes that these landforms are distinguishable on both the aerial photographs and the USGS maps submitted with the petition.

The proposed Naches Heights viticultural area lies entirely within, and is 0.001 percent the size of, the Columbia Valley viticultural area. The 11.6 million acre Columbia Valley viticultural area was established by T.D. ATF-190, published in theFederal Register(49 FR 44895) on November 13, 1984. It was described as a large, treeless basin surrounding the Yakima, Snake, and Columbia Rivers in portions of Washington and Oregon. The topography of the Columbia Valley viticultural area was described as a rolling terrain, cut by rivers and broken by long, sloping, basaltic, east-west uplifts. In addition, T.D. ATF-190 stated that the Columbia Valley viticultural area is dominated by major rivers and has a long, dry growing season. The Naches Heights petition notes that the ancient Missoula Floods carved much of the basin geography within the Columbia Valley AVA.

The proposed viticultural area is a single, elevated Tieton andesite plateau landform that ends in andesite cliffs that descend into the valleys surrounding the plateau. Although this landform generally shares a similar climate, it is geographically and geologically distinguishable from the surrounding portions of the Columbia Valley viticultural area, according to the petition. The relatively flat terrain of the plateau gently increases in elevation over the 11 miles from southeast to northwest, as shown on the USGS maps, and the entire plateau is elevated over the surrounding valleys. Unlike the rest of the Columbia Valley, no major rivers cross the plateau landscape, although the proposed viticultural area contains several intermittent streams and small ponds.

The petition states that geology, geography, and soils distinguish the proposed viticultural area from the surrounding areas.

The petition states that approximately one million years ago, the termination of andesite flow from the Cascade Mountains down the valley of the Tieton River formed the Naches Heights plateau. The proposed Naches Heights viticultural area is located on, and encompasses, a geological formation of Tieton andesite, a volcanic rock.

According to the petition, in contrast to the Naches Heights plateau, there are alluvial deposits, including those that are terraced and older, to the north, east, and south of the proposed viticultural area. To the west of the area are alluvial deposits and Grande Ronde Basalt, Ringold Formation gravels, the Ellensburg Formation, and the Cascade Mountains.

The petition states that the proposed Naches Heights viticultural area is a plateau that terminates in cliffs of andesite to the north, east, and south. The andesite cliffs distinguish the proposed viticultural area from the Naches River Valley, the Cowiche Creek Valley, and the nearby Yakima River Valley. The USGS maps show that the Naches Heights plateau is elevated in comparison to the surrounding river and creek valleys. Aerial photos submitted with the petition also show the Naches Heights plateau landform and the cliffs that surround it in contrast with the surrounding lower elevation valleys.

On the far west side of the proposed viticultural area, the andesite cliffs are subsumed by the foothills of the Cascade Mountains, according to the petition and the USGS maps. Although not distinguished by steep cliffs, the proposed western boundary line marks the end of andesite rocks and the beginning of the Cascade Mountains foothills, as shown in an aerial photo submitted with the petition. Elevations gradually rise heading west and northwest of the Naches Heights into the Cascade Mountains and the 3,578-foot Bethel Ridge. The high mountainous elevations to the west create a rain shadow effect that protects the Naches Heights plateau from Pacific winter storms.

Elevations on the Naches Heights and along the Tieton andesite cliffs also distinguish the plateau from the surrounding regions, according the petition. The lowest elevations of the proposed viticultural area are approximately 1,200 feet, which is at the tip of the andesite flow at the far eastern edge of the proposed viticultural area. From this point, the cliffs rise to 1,400 feet, according to the USGS maps. The highest elevation of the plateau, located near the far western end of the proposed viticultural area, is approximately 2,100 feet, at which point the cliffs drop immediately to 1,600 feet. The Yakima City Hall lies to the southeast of the proposed viticultural area at 1,061 feet, a significantly lower elevation than that of the Naches Heights. As explained in the petition, cold air drains off the plateau and into the surrounding valleys, thereby reducing potential frost damage and winterkill to vineyards on the Naches Heights.

After the volcanic flow of andesite cooled and hardened to form the Naches Heights plateau, pockets of loess, or wind-blown soil, were deposited on the plateau, according to the petition. After a period of about 1 million years marked by winds and volcanic eruptions in the Cascades, deep beds of unique soils formed in the loess pockets on the plateau. The predominant soils on the plateau are Tieton loam and Ritzville silt loam (U.S. Department of Agriculture, National Resource Conservation Service, Web Soil Survey athttp://websoilsurvey.nrcs.usda.gov/). According to the petition, the only major difference between Tieton loam and Ritzville silt loam is that the latter formed in deeper pockets of loess, thus creating a very consistent soil type throughout the proposed viticultural area.

The Naches Heights plateau landform, according to the NRCS web soil survey, has generally deep loess soils withadequate drainage and deep rooting depths conducive to successful viticulture. Further, the grape vine roots are not prone to freezing, or winterkill, in the deep plateau soils.

Unlike the plateau, much of the greater Columbia Valley region that surrounds the Naches Heights was covered by alluvial material deposited by the ancient Missoula Floods, according to the petition. Hence, the proposed viticultural area is surrounded mainly by gravelly alluvial soils readily distinguishable from the Tieton loam and Ritzville silt loam of Naches Heights. Harwood loam, a transitional soil formed in both loess and alluvium, is located in small areas of the southern portion of the Naches Heights that is outside the boundary line of the proposed viticultural area.

Rocks, cobbles, and shallow rooting depths are characteristics of the lower elevation valley region that surrounds the Naches Heights plateau, according to the NRCS data. In the valley region, the cold air from the surrounding mountain elevations drains onto the valley floor and ponds to create stagnant, cold air environments that make vine growth difficult during some seasons, the petition explains. Unlike the Naches Heights soils, the valley and floodplain soils, including the Weirman, Wenas, and Kittitas series, are subject to seasonal flooding and a water table close to the surface of the soil, according to NRCS data. In addition, the valley vines have shallow rooting depths that can reach the water table and be frozen during extreme cold weather. Further, seasonal flooding can affect some portions of the surrounding valley area.

TTB published Notice No. 118 regarding the proposed Naches Heights viticultural area in theFederal Register(76 FR 30060) on May 24, 2011. In that notice, TTB requested comments from all interested persons by July 25, 2011. TTB solicited comments on the accuracy of the name, boundary, and other required information submitted in support of the petition. TTB expressed particular interest in whether the geographical features of the proposed viticultural area are so distinguishable from the surrounding Columbia Valley viticultural area that the proposed Naches Heights viticultural area should no longer be a part of the Columbia Valley viticultural area. TTB also sought information on the impact of the establishment of the proposed Naches Heights viticultural area on wine labels that include the words “Naches Heights,” and whether there would be a conflict between the proposed viticulturally significant terms and currently used brand names.

TTB received no comments in response to Notice No. 118.

After careful review of the petition, and after receiving no contrary evidence during the comment period, TTB finds that the evidence provided by the petitioner supports the establishment of the proposed Naches Heights viticultural area within the Columbia Valley viticultural area as proposed in Notice No. 118. Accordingly, under the authority of the Federal Alcohol Administration Act and part 4 of TTB's regulations, TTB establishes the “Naches Heights” viticultural area in Yakima County, Washington, effective 30 days from the publication date of this document.

See the narrative boundary description of the viticultural area in the regulatory text published at the end of this notice. In this final rule, TTB altered some of the language in the written boundary description provided in the petition and published as part of Notice No. 118. TTB made these alterations in the written boundary description language for clarity and to conform the written boundary description to the boundary of the proposed viticultural area as marked on the USGS maps submitted with the petition.

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

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. With the establishment of this viticultural area, its name, “Naches Heights,” is recognized as a name of viticultural significance under 27 CFR 4.39(i)(3). The text of the regulation clarifies this point. Once this final rule becomes effective, wine bottlers using “Naches Heights” in a brand name, including a trademark, or in another label reference as to the origin of the wine, will have to ensure that the product is eligible to use the viticultural area's name as an appellation of origin.

On the other hand, TTB finds that no single part of the proposed viticultural area name standing alone, such as “Naches,” has viticultural significance. Accordingly, the regulatory text set forth in this document specifies only the full “Naches Heights” name as a term of viticultural significance for purposes of part 4 of the TTB regulations. The establishment of the Naches Heights viticultural area will not affect any existing viticultural area, and any bottlers using Columbia Valley as an appellation of origin or in a brand name for wines made from grapes grown within the Naches Heights viticultural area will not be affected by the establishment of this new viticultural area. The establishment of the Naches Heights viticultural area will allow vintners to use both “Naches Heights” and “Columbia Valley” as appellations of origin for wines made from grapes grown within the Naches Heights viticultural area.

For a wine to be labeled with a viticultural area name or with a brand name that includes a viticultural area name or other term identified as being viticulturally significant in part 9 of the TTB regulations, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name or other term, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with the viticultural area name or other viticulturally significant term and that name or term appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the viticultural area name or other term of viticultural significance appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label.

Different rules apply if a wine has a brand name containing a viticultural area name or other term of viticultural significance that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

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

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

Karen A. Thornton of the Regulations and Rulings Division drafted this final rule.

For the reasons discussed in the preamble, TTB amends title 27, chapter I, part 9, Code of Federal Regulations, as follows:

The National Labor Relations Board is revising its rules governing the consideration of certain pleadings that ordinarily require action by a quorum of at least three Board Members. The revisions are being adopted to facilitate, insofar as it is possible, the normal functioning of the Agency during periods when the number of Board members falls below three, the number required to establish a quorum of the Board. See 29 U.S.C. 153(b);New Process Steelv.NLRB,—U.S.—, 130 S.Ct. 2635 (2010). No Notice of Proposed Rulemaking (NPRM) is required with respect to this rules revision, as it falls under the Administrative Procedure Act's exception to the NPRM requirement for regulatory actions involving agencyorganization, procedure, or practice.See 5 U.S.C. 553.

At present, the rules of the National Labor Relations Board (NLRB) provide only for the adjudication of cases and the issuance of decisions by the Board when it is composed of three or more members, which constitutes the Congressionally-designated quorum of the Board. InNew Process Steelv.NLRB, supra,130 S. Ct. 2635, the Supreme Court held that Congress empowered the Board to delegate its powers to no fewer than three members, and that, to maintain a valid quorum, a membership of three must be maintained.Id.at 2640. It can be anticipated that, from time to time, the number of individuals appointed by the President and confirmed by Congress to serve as members of the National Labor Relations Board may fall below three. Thus, the Board has determined that the purposes of the National Labor Relations Act will best be served, and the Board's Congressional mandate will best be carried out, if its rules were revised to refer, under those circumstances only, certain motions and appeals to other offices of the Board, while preserving for the parties the right to ultimate review by the Board when a quorum is restored. In this regard, the Board has identified certain classes of disputes that are amendable to processing through other Board offices;i.e.,Motions for Summary Judgment, Motions for Default Judgment, Motions for Dismissal of Complaints, and requests for permission to file special appeals will be referred to the Chief Administrative Law Judge for ruling, and administrative and procedural motions will be referred to the Executive Secretary for ruling. In all cases of such referrals, parties will retain the right to full Board review by filing a request for review or exceptions to the ruling at the appropriate time. Normal time limits for filing will apply, and the case will be considered on its merits by the Board upon restoration of a quorum.

It is anticipated that these changes in the rules will serve the interest of the public and the parties in the speedy resolution of disputes, where that resolution is possible, as well as in the litigation of cases before administrative law judges with as few disruptions as possible. In addition, the Board anticipates that, as in some cases the parties will determine that no exception is warranted, these revisions may serve to reduce the backlog of cases that the Board will face when a quorum is restored.

The regulatory review provisions of Executive Order 12866 do not apply to independent regulatory agencies. However, even if they did, the proposed changes in the Board's rules would not be classified as “significant rules” under Section 6 of Executive Order 12866, because they will not result in (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or foreign markets. Accordingly, no regulatory impact assessment is required.

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Because no notice of proposed rulemaking is required for procedural rules, the requirements of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) pertaining to regulatory flexibility analysis do not apply to these rules. However, even if the Regulatory Flexibility Act were to apply, the NLRB certifies that these rules will not have a significant economic impact on a substantial number of small business entities as they merely provide parties with avenues for expeditiously pursuing and defending claims before the Board under certain narrow circumstances.

These rules are not subject to Section 3504(h) of the Paperwork Reduction Act (44 U.S.C. 3501) since they do not contain any new information collection requirements.

Because these rules relate to Agency procedure and practice and merely modify the Agency's internal processing of certain motions in narrow circumstances, the Board has determined that the Congressional review provisions of the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801) do not apply.

To provide for the normal operation of the Board during periods when the number of Board members is insufficient to constitute a quorum, the Board amends 29 CFR part 102 as follows:

Throughout this document “we,” “us,” or “our” refer to EPA.

EPA is approving revisions to the Missouri SIP and Operating Permits Program submitted to EPA on August 31, 2010. On December 17, 2008, EPA finalized the Air Emissions ReportingRequirements Rule (AERR). This rule outlines EPA's emission inventory reporting requirements. In the December 17, 2008 action, EPA consolidated, reduced and simplified the current requirements; added limited new requirements; provided additional flexibility to the states in the ways they collect and report emissions data; and accelerated the reporting of emissions data to EPA by state and local agencies. Revisions to the SIP amend 10 CSR 10-6.110 Submission of Emission Data, Emission Fees and Process Information to align the State's Air Pollution Control Program reporting requirements with EPA's reporting requirements. Specifically, the State moved the Emissions Inventory Questionnaire (EIQ) due date from June 1 to April 1; codified several long-standing practices for items such as initial EIQ reporting periods for partial year operation and reporting thresholds for required pollutants; added definitions; and clarified record keeping and reporting requirements. The State retained the emission fee at $40.00 and the fee payment due date of June 1, but recodified this section to section (3)(A), Emissions Fees from Section (3)(D). No changes are being made to the Emissions Fees, which is an integral part of the Title V operating permit program, but not approved as part of the SIP. Missouri's amendments ensure that their reporting requirements align with EPA's AERR. EPA has conducted an analysis of the State's amendments and concluded that these do not adversely affect the stringency of the SIP.

EPA is approving the request to amend the Missouri SIP and operating permits program by approving the State's request to amend 10 CSR 10-6.110Submission of Emission Data, Emission Fees and Process Informationto align the State's rule with EPA's reporting requirements. Approval of these revisions will ensure consistency between state and Federally-approved rules. EPA has determined that these changes will not relax the SIP or adversely impact air emissions.

We are processing this action as a direct final action because the revisions make routine changes to the existing rules which are noncontroversial. Therefore, we do not anticipate any adverse comments. Please note that if EPA receives adverse comment on part of this rule and if that part can be severed from the remainder of the rule, EPA may adopt as final those parts of the rule that are not the subject of an adverse comment.

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 13, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today'sFederal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Chapter I, title 40 of the Code of Federal Regulations is amended as follows:

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site athttp://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2010-0916 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 13, 2012. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit a copy of your non-CBI objection or hearing request, identified by docket ID number EPA-HQ-OPP-2010-0916, by one of the following methods:

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

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

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

In theFederal Registersof December 15, 2010 (75 FR 78240) (FRL-8853-1) and February 4, 2011 (76 FR 6465) (FRL-8858-7), EPA issued notices pursuant to section 408(d)(3) of FFDCA, 21 U.S.C. 346a(d)(3), announcing the filing of pesticide petitions (PP 0F7773) by Gowan Company, 370 South Main St., Yuma, AZ 85364; and (PP 0E7787) by the Interregional Research Project Number 4 (IR-4), 500 College Road East, Suite 201 W, Princeton, NJ 08540. The petitions requested that 40 CFR 180.448 be amended by establishing tolerances for residues of the insecticide hexythiazox,(trans-5-(4-chlorophenyl)-N-cyclohexyl-4-methyl-2-oxothiazolidine-3-carboxamide), including its metabolites containing the (4-chlorophenyl)-4-methyl-2-oxo-3-thiazolidine moiety, in or on aspirated grain fractions (PP 0F7773) at 0.5 parts per million (ppm) and greenhouse tomatoes (PP 0E7787) at 0.5 ppm; by increasing the existing tolerance for corn, field, stover from 2.5 ppm to 6 ppm, and by removing the designation of “Tolerances with regional registrations” from the tolerances for corn, field, forage; corn, field, grain; and corn, field, stover (PP 0F7773). That notice referenced a summary of the petition prepared by Gowan Company, the registrant, which is available in the docket,http://www.regulations.gov. There were no comments received in response to the notice of filing.

Based on EPA's review, Gowan Company revised their petition (PP 0F7773) as follows:

i. By increasing the proposed tolerance for corn, field, stover to 7.0 ppm;

ii. By adding a request for an increase in the established tolerances for cattle, meat byproducts; goat, meat byproducts; hog, meat byproducts; horse, meat byproducts; and sheep, meat byproducts to 0.05 ppm; and

iii. By adding a request for a decrease in the established tolerance for corn, field, forage to 3.0 ppm.

The reasons for these changes are explained in Unit IV.C.

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

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

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

Hexythiazox has low acute toxicity by the oral, dermal and inhalation routes of exposure. It produces mild eye irritation, is not a dermal irritant, and is negative for dermal sensitization. Thetarget organs of hexythiazox are the liver and adrenal glands. Developmental toxicity was not observed in rabbits at the limit dose. Developmental effects observed in the rat occurred only at a dose level where maternal toxicity was observed. Hexythiazox is not a reproductive toxicant. The toxicology database for hexythiazox provides no indication of increased susceptibility in rats or rabbits from in utero and postnatal exposure to hexythiazox. The database does not show any evidence of treatment-related effects on the nervous system or the immune system. Hexythiazox is classified as “likely to be carcinogenic to humans”. EPA has determined that a non-quantitative risk assessment approach (i.e.,nonlinear, reference dose (RfD) approach) was appropriate and protective of all chronic effects including potential carcinogenicity of hexythiazox.

Specific information on the studies received and the nature of the adverse effects caused by hexythiazox as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found athttp://www.regulations.govin document “Hexythiazox. Human Health Risk Assessment to Support Amended Use on Field Corn and New Use on Greenhouse Tomatoes” in docket ID number EPA-HQ-OPP-2010-0916.

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

A summary of the toxicological endpoints for hexythiazox used for human risk assessment is shown in Table 1 of this unit.

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site athttp://ecfr.gpoaccess.gov/cgi/t/text/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2011-0732 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 13, 2012. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing that does not contain any CBI for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit a copy of your non-CBI objection or hearing request, identified by docket ID number EPA-HQ-OPP-2011-0732, by one of the following methods.

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

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

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

In theFederal Registerof October 5, 2011 (76 FR 61647) (FRL-8890-5), EPA issued a notice pursuant to section 408 of FFDCA, 21 U.S.C. 346a, announcing the receipt of a pesticide petition (PP 1E7909) filed by Momentive Performance Materials, 3500 South State Route 2; Friendly, WV 26146. The petition requested that 40 CFR 180.960 be amended by establishing an exemption from the requirement of atolerance for residues of 2-Propenoic acid, 2-methyl-, polymer with butyl 2-propenoate and ethenylbenzene; CAS Reg. No. 25036-16-2. That notice included a summary of the petition prepared by the petitioner and solicited comments on the petitioner's request. The Agency received one comment from a private citizen who opposed the authorization to sell any pesticide that leaves a residue on food. The Agency understands the commenter's concerns and recognizes that some individuals believe that no residue of pesticides should be allowed. However, under the existing legal framework provided by section 408 of FFDCA EPA is authorized to establish pesticide tolerances or exemptions where persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by the statute.

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

EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be shown that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. In the case of certain chemical substances that are defined as polymers, the Agency has established a set of criteria to identify categories of polymers expected to present minimal or no risk. The definition of a polymer is given in 40 CFR 723.250(b) and the exclusion criteria for identifying these low-risk polymers are described in 40 CFR 723.250(d). Butyl acrylate-methacrylic acid-styrene polymer conforms to the definition of a polymer given in 40 CFR 723.250(b) and meets the following criteria that are used to identify low-risk polymers.

1. The polymer is not a cationic polymer nor is it reasonably anticipated to become a cationic polymer in a natural aquatic environment.

2. The polymer does contain as an integral part of its composition the atomic elements carbon, hydrogen, and oxygen.

3. The polymer does not contain as an integral part of its composition, except as impurities, any element other than those listed in 40 CFR 723.250(d)(2)(ii).

4. The polymer is neither designed nor can it be reasonably anticipated to substantially degrade, decompose, or depolymerize.

5. The polymer is manufactured or imported from monomers and/or reactants that are already included on the TSCA Chemical Substance Inventory or manufactured under an applicable TSCA section 5 exemption.

6. The polymer is not a water absorbing polymer with a number average molecular weight (MW) greater than or equal to 10,000 daltons.

Additionally, the polymer also meets as required the following exemption criteria specified in 40 CFR 723.250(e).

7. The polymer's number average MW of 17,000 is greater than or equal to 10,000 daltons. The polymer contains less than 2% oligomeric material below MW 500 and less than 5% oligomeric material below MW 1,000.

Thus, butyl acrylate-methacrylic acid-styrene polymer meets the criteria for a polymer to be considered low risk under 40 CFR 723.250. Based on its conformance to the criteria in this unit, no mammalian toxicity is anticipated from dietary, inhalation, or dermal exposure to butyl acrylate-methacrylic acid-styrene polymer.

For the purposes of assessing potential exposure under this exemption, EPA considered that butyl acrylate-methacrylic acid-styrene polymer could be present in all raw and processed agricultural commodities and drinking water, and that non-occupational non-dietary exposure was possible. The number average MW of butyl acrylate-methacrylic acid-styrene polymer is 17,000 daltons. Generally, a polymer of this size would be poorly absorbed through the intact gastrointestinal tract or through intact human skin. Since butyl acrylate-methacrylic acid-styrene polymer conform to the criteria that identify a low-risk polymer, there are no concerns for risks associated with any potential exposure scenarios that are reasonably foreseeable. The Agency has determined that a tolerance is not necessary to protect the public health.

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

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

Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA concludes that a different margin of safety will be safe for infants and children. Due to the expected low toxicity of butyl acrylate-methacrylic acid-styrene polymer, EPA has not used a safety factor analysis to assess the risk. For the same reasons the additional tenfold safety factor is unnecessary.

Based on the conformance to the criteria used to identify a low-risk polymer, EPA concludes that there is a reasonable certainty of no harm to the U.S. population, including infants and children, from aggregate exposure to residues of butyl acrylate-methacrylic acid-styrene polymer.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

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

The Codex has not established a MRL for butyl acrylate-methacrylic acid-styrene polymer.

Accordingly, EPA finds that exempting residues of butyl acrylate-methacrylic acid-styrene polymer from the requirement of a tolerance will be safe.

This final rule establishes a tolerance under section 408(d) of FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these rules from review under Executive Order 12866, entitledRegulatory Planning and Review(58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule is not subject to Executive Order 13211, entitledActions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use(66 FR 28355, May 22, 2001) or Executive Order 13045, entitledProtection of Children from Environmental Health Risks and Safety Risks(62 FR 19885, April 23, 1997). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501et seq.,nor does it involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

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

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

Although this action does not require any special considerations under Executive Order 12898, entitledFederal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations(59 FR 7629, February 16, 1994), EPA seeks to achieve environmental justice, the fair treatment and meaningful involvement of any group, including minority and/or low-income populations, in the development, implementation, and enforcement of environmental laws, regulations, and policies. As such, to the extent that information is publicly available or was submitted in comments to EPA, the Agency considered whether groups or segments of the population, as a result of their location, cultural practices, or other factors, may have atypical or disproportionately high and adverse human health impacts or environmental effects from exposure to the pesticide discussed in this document, compared to the general population.

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

Therefore, 40 CFR chapter I is amended as follows:

We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted, without change, tohttp://www.regulations.govand will include any personal information you have provided.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-0363), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online, or by fax, mail or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an email address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go tohttp://www.regulations.govand insert “USCG-2011-0363” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go tohttp://www.regulations.gov,click on the “read comments” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2011-0363” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. If you do not have access to the Internet, you may also view the docket online by visiting the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of theFederal Register(73 FR 3316).

We do not now plan to hold a public meeting, but you may submit a request for one to the docket using one of the methods specified underADDRESSES. In your request, explain why you believe a public meeting would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in theFederal Register.

We are publishing this direct final rule under 33 CFR 1.05-55 because we do not expect an adverse comment. If no adverse comment or notice of intent to submit an adverse comment is received by February 13, 2012, this rule will become effective as stated in theDATESsection. In that case, approximately 30 days before the effective date, we will publish a document in theFederal Registerstating that no adverse comment was received and confirming that this rule will become effective as scheduled. However, if we receive an adverse comment or notice of intent to submit an adverse comment, we will publish a document in theFederal Registerannouncing the withdrawal of all or part of this direct final rule. If an adverse comment applies only to part of this rule (e.g.,to an amendment, a paragraph, or a section) and it is possible to remove that part without defeating the purpose of this rule, we may adopt, as final, those parts of this rule on which no adverse comment was received. We will withdraw the part of this rule that was the subject of an adverse comment. If we decide to proceed with a rulemaking following receipt of an adverse comment, we will publish a separate notice of proposed rulemaking (NPRM) and provide a new opportunity for comment.

A comment is considered adverse if the comment explains why this rule or a part of this rule would be inappropriate, including a challenge to its underlying premise or approach, or would be ineffective or unacceptable without a change.

The Coast Guard has the delegated authority to carry out the responsibilities related to vessel inspection enumerated in 46 U.S.C. 3301-3318.See also46 U.S.C. 2104; DHS Delegation 0170.1(92b). Pursuant to this authority, the Coast Guard has issued regulations regarding inspection and certification of seagoing barges in 46 CFR parts 90 and 91.

In 1983, sec. 2101(32), Public Law 98-89, 97 Stat. 500 (46 U.S.C. 2101) redefined “seagoing barge” as a non self-propelled vessel of at least 100 gross tons making voyages beyond the Boundary Line. Coast Guard regulations at 46 CFR 91.01-10(c) do not reflect the language change and instead refer to seagoing barges as vessels “on the high seas or ocean.” The purpose of this rule is to change the language in 46 CFR 91.01-10 from “on the high seas or ocean” to “beyond the Boundary Line” to reflect the language of Public Law 98-89.

In 1993, Congress exempted from inspection seagoing barges that are unmanned and not carrying hazardous material as cargo, or carrying a flammable or combustible liquid, including oil, in bulk.SeeCoast Guard Authorization Act of 1993, Public Law 103-206, 107 Stat. 2419 (46 U.S.C. 3302(m)). In 1993, the Coast Guard stopped requiring the specified seagoing barges to be inspected to conform with Public Law 103-206. However, the Coast Guard did not amend its regulations to reflect the exemption. The purpose of this rule is to change the language concerning seagoing barges in 46 CFR 90.05-25, 46 CFR 91.01-10, and the vessel inspection tables in 46 CFR parts 2, 24, 30, 70, 90, and 188 to reflect the exemption created by Public Law 103-206.

Coast Guard regulations contained in 46 CFR 91.01-10(c) provide for modification of the period of validity of the certificate of inspection for seagoing barges that: (1) Proceed on the high seas or ocean for the sole purpose of changing place of employment; or (2) make rare or infrequent voyages on the high seas or ocean and returning to the port of departure. This language does not reflect the language of Public Law 98-89 that redefined “seagoing barge” as a non self-propelled vessel of at least 100 gross tons making voyages beyond the Boundary Line. In this rule, the Coast Guard changes the language of &46 CFR 91.01-10(c)(1)(i) and (ii) to clarify that modification of the period of validity of the certificate of inspection is permissible for seagoing barges that make voyages beyond the “Boundary Line” vice the current language of “high seas or ocean.”

Coast Guard regulations contained in 46 CFR 90.05-25 dictates inspection and certification requirements for seagoing barges, but currently do not reflect the exemptions enacted by Public Law 103-206. In this rule, the Coast Guard modifies the language of 46 CFR 90.05-25 exempting seagoing barges from inspection and certification that are unmanned, and not carrying hazardous material as cargo, or a flammable or combustible liquid, including oil, in bulk as enacted by Public Law 103-206.

To promote consistency and readability we are revising 46 CFR 91.01-10(c)(1)(i), 46 CFR 91.01-10(c)(1)(ii), and 46 CFR 91.01-10(c)(2) to replace the language “non self-propelled vessels of 100 gross tons and over” with the term “seagoing barge” as enacted by Public Law 98-89 and contained in 46 CFR 90.10-36.

The remaining revisions are intended to make the language of the vessel inspection table published in the CFR consistent with the language of the revised regulations. The vessel inspection table is a visual representation of when vessels must be inspected, and is organized by type of vessel, method of propulsion, cargo, mission, etc. This is a single table that is published in the multiple sections of the CFR that deal with inspection of vessels, namely 46 CFR parts 2, 24, 30, 70, 90, and 188. We are revising the vessel inspection table by removing from row 4, column 4 the text “All seagoing barges except those covered by columns 2 and 3.” and adding, in its place, the text “All manned seagoing barges.”

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 14 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, 58 FR 51735 (Regulatory Planning and Review), as supplemented by Executive Order 13563, 76 FR 3821 (Improving Regulation and Regulatory Review), and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866. The Office of Management andBudget has not reviewed it under these Executive Orders.

Sec. 2102 (32) of Public Law 98-89 redefined “seagoing barge” to mean “a non-self-propelled vessel of at least 100 gross tons making voyages beyond the Boundary Line.”

Sec. 311 of Public Law 103-206 amended 46 U.S.C. 3302 to exempt certain seagoing barges from inspection and certification when the barges are unmanned and not carrying hazardous material as cargo, or a flammable or combustible liquid, including oil, in bulk. This rule will align 46 CFR 90.05-24, 46 CFR 91.01-10, and the vessel inspection table in 46 CFR 2, 24, 30, 70, 90, and 188 with Public Law 98-89 and Public Law 103-206.

Based on Public Law 98-89 and Public Law 103-206, seagoing barges that do not need inspection are those that meet all of the following characteristics:

1. Coastwise or oceans route as per sec. 2102(32), Public Law 98-89;

2. 100 gross tons or greater as per sec. 2102 (32), Public Law 98-89;

3. Unmanned as per sec. 311, Public Law 103-206; and

4. Not carrying hazardous material as cargo, or a flammable or combustible liquid, including oil, in bulk as per sec. 311, Public Law 103-206.

Because the Coast Guard is aligning the text of the regulations with the current inspections laws enacted in 1993, only barges that are manned, or carrying hazardous material as cargo or a flammable or combustible liquid, including oil, in bulk are inspected. If owners or operators choose to voluntarily inspect barges that are exempt from inspection, these owners or operators do so voluntarily and would voluntarily incur the cost. We estimate that there are no additional costs to implement this rule.

The benefit of this rule is in making the CFR consistent with the current law. As this statutory change has been in effect for more than 18 years, we expect this rule will not provide additional cost savings to industry.

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

As previously discussed, the purpose of this rule is to align the language concerning seagoing barges in 46 CFR 90.05-25, 46 CFR 91.01-10, and the vessel inspection tables in 46 CFR parts 2, 24, 30, 70, 90, and 188 with the language of Public Law 98-89 and Public Law 103-206. Public Law 98-89 redefined “seagoing barge” as a non-self-propelled vessel of at least 100 gross tons making voyages beyond the Boundary Line. Public Law 103-206 exempted certain seagoing barges from inspection and certification that are unmanned, and not carrying hazardous material as cargo, or carrying a flammable or combustible liquid, including oil, in bulk.

This rule does not result in additional costs for small entities because the Coast Guard is aligning the text of the regulations with the current law. Since exempted barges have not been inspected for more than 10 years, this rule will impose no additional impacts (costs or cost savings) to small entities.

Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. Comments submitted in response to this finding will be evaluated under the criteria in the “Regulatory Information” section of this preamble.

Under sec. 213(a) of the Contract with America Act of 1996, Public Law104-121, 110 Stat. 847, we want to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking process. If the rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult LT Douglas Tindall at (202) 372-1411 or by email atDouglas.Tindall@uscg.mil.The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-(888) 734-3247).

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

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

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

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded under section 2.B.2, figure 2-1, paragraph (34)(a) of the Instruction. This rule involves amendments to regulations which are editorial or procedural and merely align the text of the regulations with current law and Coast Guard practice. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated underADDRESSES.

For the reasons discussed in the preamble, the Coast Guard amends 46 CFR parts 2, 24, 30, 70, 90, 91, and 188 as follows:

By notice of proposed rulemaking (NPRM) published on September 7, 2011 (76 FR 55335), FRA proposed an alternate passenger rail service pilot program in response to a statutory mandate—specifically, § 214 of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), Public Law No. 110-432, Division B (Oct. 16, 2008). The comment period for the NPRM closed on November 7, 2011. FRA received written comments submitted by Ratp Development America, the Transportation Trades Department of the AFL-CIO, the American Short Line and Regional Railroad Association, the Association of Independent Passenger Rail Operators, Herzog Transit Services, Inc., First Transit, Veolia Transportation N.A., and two individuals.

General comments are addressed in this section, and more specific comments are addressed in the relevant sections of the preamble below. Some comments were generally supportive of the NPRM, and other comments were generally unsupportive of the NPRM.

A comment sought clarification regarding whether an eligible rail carrier under the pilot program could create a separate company to manage and operate the passenger operation, or whether it could enter into a private access rights agreement with an alternative rail passenger operator. This final rule develops a pilot program that permits a rail carrier or rail carriers that own infrastructure over which Amtrak operates certain passenger rail service routes to petition FRA to be considered as a passenger rail service provider over such a route in lieu of Amtrak. This final rule does not prohibit an eligible rail carrier from creating a separate company to manage and/or operate the passenger rail service, or from entering into an agreement with a third party to manage and/or operate the passenger rail service. However, a pilot program petition must be submitted by a rail carrier or rail carriers that own the infrastructure as described in § 269.7 of this final rule. In addition, such information regarding the management and/or operation of the service would be relevant to FRA's evaluation of the bid, and should be described in detail pursuant to § 269.9 of this final rule.

Several comments stated that the pilot program should allow a State to submit a petition (with the concurrence of the infrastructure owner), and/or that there should be a statutory role for States in the pilot program. Comments also stated that State involvement is particularly important to bidding on State-supported routes (which are eligible under the pilot program) as such routes are largely funded by States. A comment further stated that States should be able to participate in the pilot program process both out of a matter of fairness and to ensure that existing contracts between States and Amtrak would not be unconstitutionally impaired. As an initial matter, § 214 of PRIIA only provides that a rail carrier or rail carriers that own infrastructure over which Amtrak operates certain passenger rail service routes may submit a petition.See49 U.S.C. 24711(a)(1). Section 214 does not establish a statutory role for States in the pilot program petition process. In compliance with this statutory mandate, this final rule provides that only an eligible rail carrier may submit a petition. However, a State may participate in the pilot program process. Specifically, apetitioning rail carrier may include, in its bid package, documentation of a State's approval of the bid for the particular State-supported route. Indeed, § 269.9(b)(4) of this final rule requires, in part, that a bidder describe the sources of non-Federal funding, including any State operating subsidy and any other State payments.See also49 U.S.C. 24711(a)(3).

Comments stated that the pilot program should include the right-of-way owner as a full partner in the proposed service, and that the pilot program should recognize the importance of protecting the capacity required for freight operations. As an initial matter, FRA agrees that freight railroads (and commuter railroads, for that matter) are critical partners to the success of intercity passenger rail that makes use of their facilities. Furthermore, the pilot program recognizes that a bid submitted by an eligible rail carrier must describe how that rail carrier would operate over right-of-way on the route that it does not own. Specifically, § 269.9 of this final rule requires a bidder to describe the operating agreement(s) necessary for the operation of passenger service over right-of-way on the route that is not owned by the bidder.

A comment stated that FRA should solicit the opinion of States on how the pilot program, as applied to State-supported routes, could best be made to successfully work. As noted, FRA published the proposed rule in theFederal Register,but did not receive any comments from a State.

Another comment contested the constitutionality of § 201 of PRIIA, which defines the national railroad passenger transportation system, but did not relate the comment to the proposed rule.

Lastly, one comment generally disagreed with the NPRM and stated that a better way to meet the requirements of PRIIA would be to convert Amtrak into a § 501(c)(3) nonprofit corporation. FRA disagrees. As discussed above, the NPRM (and this final rule) was in response to a specific statutory mandate that FRA complete a rulemaking proceeding to develop an alternate passenger rail service pilot program.

This final rule is in response to a statutory mandate that FRA complete a rulemaking proceeding to develop a pilot program that permits a rail carrier or rail carriers that own infrastructure over which Amtrak operates certain passenger rail service routes to petition FRA to be considered as a passenger rail service provider over such a route in lieu of Amtrak for a period not to exceed five years after October 16, 2008 (the date of enactment of PRIIA). Section 214 further provides that those routes described in 49 U.S.C. 24102(5)(B), (C), and (D) and in 49 U.S.C. 24702 are eligible for the pilot program, and that the program not be made available to more than two routes.

Section 214 also provides for, among other things, the following: The establishment of a petition, notification, and bid process through which FRA would evaluate bids to provide passenger rail service over particular routes by interested rail carriers and Amtrak; FRA's selection of a winning bidder by, among other things, evaluating the bids against the financial and performance metrics developed under section 207 of PRIIA; FRA's execution of a contract with the winning bidder awarding the right and obligation to provide passenger rail service over the route, along with an operating subsidy, as well as requiring compliance with the minimum standards established under section 207 of PRIIA, among other things; that Amtrak must provide access to its reservation system, stations, and facilities to a winning bidder; that employees used in the operation of a route under the pilot program would be considered an employee of that rail carrier and would be subject to the applicable Federal laws and regulations governing similar crafts or classes of employees of Amtrak; that the winning bidder must provide hiring preference to displaced qualified Amtrak employees; that the winning bidder would be subject to the grant conditions under 49 U.S.C. 24405; and that, if a winning bidder ceases to operate the service or to otherwise fulfill their obligations, the FRA Administrator, in collaboration with the Surface Transportation Board, would take any necessary action to enforce the contract and to ensure the continued provision of service.

Section 214 provides that, before FRA may take any action allowed under 49 U.S.C. 24711, the Secretary of Transportation (Secretary) must certify that the FRA Administrator has sufficient resources that are adequate to undertake the pilot program. FRA understands this requirement to mean that FRA may not proceed with any action under a pilot program developed by this final rule until the Secretary has issued such a certification.

It should also be noted that section 214 requires FRA to award to a winning bidder, among other things, an operating subsidy. 49 U.S.C. 24711(a)(5)(B). PRIIA did not authorize funds for FRA to use to pay for any such operating subsidy, or any other costs arising from the proposed pilot program; nor did Congress appropriate funds for the pilot program.

Comments stated that the pilot program should allow for the transfer of current and existing service subsidies made by FRA to Amtrak to operators selected under the pilot program. However, FRA does not have the authority to transfer any such existing subsidies. Other comments stated that there should be a mechanism for FRA to award an operating subsidy to pay for costs associated with the pilot program. As described above, no funds have been appropriated to the FRA to provide such financial assistance.

A comment also stated that a mechanism needs to be created to clearly identify the route by route subsidy and the method of transfer, and that such information would be critical to a fair bidding process. The comment goes on to suggest that FRA analyze and rank all Amtrak routes (national and State-supported). In addition, the comment notes that the cost allocation methodology of § 209 of PRIIA should be the basis for determining the appropriate subsidy amount for these routes. FRA notes that useful route-by-route Amtrak cost information is published in the Quarterly Report on the Performance and Service Quality on Intercity Passenger Train Operations (available athttp://www.fra.dot.gov/rpd/passenger/2165.shtml). FRA also notes that avoidable cost outputs are not yet available, and that eight quarters of comparable fully allocated cost data has not yet been accumulated. However, waiting for this data, and for the States and Amtrak to arrive at a final consensus on the § 209 methodology, could potentially delay publication of this final rule well beyond the expiration of the pilot program itself (October 16, 2013). Furthermore, in order to be competitive, prospective bidders will likely need to provide the service at cost levels below those of Amtrak's. It is the bidder's verifiable cost projections for their proposed service, rather than the historical Amtrak costs, that will be particularly important in the bidding process.

This final rule incorporates the adequate resources certification requirement by providing, in § 269.3(a), that part 269 is not applicable to any railroad, unless and until, the Secretary certifies that FRA has sufficient resources that are adequate to undertake the pilot program. Only upon such certification does the pilot program become available. As described below,the time period within which petitions may be filed with FRA is triggered by FRA providing notice of the Secretary's certification.

A comment stated that the Secretary must quickly certify that FRA has adequate resources to undertake the program; the comment further provided that substantial FRA resources would not be required for the pilot program. The Secretary will issue this certification when appropriate. In addition, it must be noted that FRA will expend valuable resources in administering the pilot program, especially in the thorough evaluation of each of the petitions and bid packages that may be received.

The final rule establishes deadlines for filing petitions, filing bids, and FRA's execution of contract(s) with any winning bidders. As to the filing of petitions, § 269.7(b) of the final rule requires a petition to be filed with FRA no later than 45 days after FRA provides notice of the Secretary's certification that the FRA Administrator has sufficient resources that are adequate to undertake the pilot program. This deadline is necessary in order to comply with the statutory mandate. Specifically, 49 U.S.C. 24711(a)(4) requires FRA to, as relevant here, “give preference in awarding contracts to bidders seeking to operate routes that have been identified as one of the five worst performing Amtrak routes under section 24710” of title 49 of the United States Code. In order to comply with this statutory directive to “give preference” to “the five worst performing Amtrak routes,” FRA must be able to evaluate all bids at the same time. Section 269.7(b)'s petition deadline enables FRA to evaluate all bids at the same time and to “give preference” where appropriate as directed by the statute.

In addition, §§ 269.3(c) and 269.7(d) of the final rule also take into consideration the possibility that the period during which a railroad may provide passenger rail service under this pilot program, which is currently set by statute to expire on October 16, 2013, is extended by statute. In that event, the final rule requires petitions to be filed with FRA no later than 60 days after the enactment of such statutory authority and requires such petitions to otherwise comply with the requirements of this part.

A comment stated that the “worst performing routes” criteria must be modified to assure that other routes, including State-supported routes, be eligible for the pilot program. Another comment sought clarification regarding whether petitions for routes which were not one of the worst performing routes would be permitted to compete against one of the worst performing routes. Section 214 of PRIIA mandates which routes are eligible for the pilot program, as follows: Those routes described in 49 U.S.C. 24102(5)(B), (C), or (D) and 49 U.S.C. 24702.See49 U.S.C. 24711(a)(1). As such, Amtrak State-supported routes under 49 U.S.C. 24702 are eligible for the pilot program. In addition, the worst performing routes preference is required by statute, and simply provides that FRA shall give preference in awarding contracts to bidders who are seeking to operate such routes.See49 U.S.C. 24711(a)(4). FRA is not required to select such routes; instead, the worst performing routes preference is one factor in FRA's evaluation of the bids submitted.

As to the filing of bids, § 269.9 requires the Petitioner and Amtrak to both file bids with FRA no later than 60 days after the petition deadline established by § 269.7(b). Section 269.9(b) articulates the bid requirements. The 60-day time period gives a bidder sufficient time to prepare a bid that satisfies the bid requirements, while also limiting the duration of the bid process.

One comment stated that a petitioner's failure to submit a bid within the timeline established by this final rule should result in an automatic disqualification of that party from bidding on the route at issue. The comment stated that late bids would defeat what is already a short-duration program, and would allow a party to game the process. The final rule is clear that under § 269.9 both the petitioner and Amtrak must file bids with FRA no later than 60 days after the petition deadline established by § 269.7(b). No allowance is made for exceptions to this deadline. Furthermore, § 269.13 requires FRA to execute a contract with the winning bidder(s) no later than 90 days after the bid deadline established by § 269.9.

Lastly, as to the award and execution of contracts with winning bidders, § 269.13 requires FRA to execute a contract with the winning bidder(s) no later than 90 days after the bid deadline established by § 269.9. Section 214 of PRIIA requires FRA to “execute a contract within a specified, limited time.” 49 U.S.C. 24711(a)(5). The 90-day time period is a limited period for FRA and the winning bidder(s) to execute an agreement(s) that satisfies the requirements of § 269.13, including FRA's obligation of an operating subsidy in compliance with the statutory requirements.

This section provides that the final rule carries out the statutory mandate set forth in 49 U.S.C. 24711 that requires FRA to develop a pilot program that permits a rail carrier or rail carriers that own infrastructure over which Amtrak operates a passenger rail service route to petition FRA to be considered as a passenger rail service provider over that route in lieu of Amtrak.

A comment sought clarification regarding the meaning of the term “own” as it is used in this section (and as it is used in § 269.7(a) of this final rule). The comment further stated that the party responsible for maintenance of such infrastructure under 49 CFR part 213 should be considered an owner for purposes of this section. However, § 214 of PRIIA is clear in that only a rail carrier or rail carriers that own such infrastructure may submit a petition under the pilot program.See49 U.S.C. 24711(a)(1). The statute does not authorize FRA to expand this statutory directive by allowing a party responsible for maintenance of such infrastructure to submit a petition. Furthermore, and as noted above, this final rule does not prohibit an eligible rail carrier from entering into an agreement with a third party (such as an entity that maintains the infrastructure) to manage and/or operate the passenger rail service.

Paragraph (a) of this section provides that the final rule does not apply to any railroad, unless and until, the Secretary certifies that FRA has sufficient resources that are adequate to undertake the pilot program. This section also states that, upon receipt, FRA will provide notice of the certification on the FRA public Web site. This paragraph is based on the statutory directive in 49 U.S.C. 24711(e). In addition, as discussed in § 269.7(a), FRA's notice of the Secretary's certification will trigger the 45-day deadline by which an eligible railroad may petition FRA under the pilot program.

Paragraph (b) of this section provides that the pilot program will not be made available to more than two Amtrak intercity passenger rail routes. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(b).

Paragraph (c) of this section provides that any rail carrier or rail carriers awarded a contract to provide passengerrail service under the pilot program may only be able to provide such service for a period not to exceed five years after October 16, 2008 (the date of PRIIA's enactment), or a later date authorized by statute. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(1). In addition, this paragraph also takes into consideration the possibility that the 5-year limitation period established in PRIIA is extended by statute.

Several comments stated that the pilot program should be extended to allow for a longer program period (e.g.,extending the program to five years from the time an award is made), which the comments stated would allow pilot program operators to function more efficiently, and would be a more appropriate period of time considering the work necessary to operate a route. However, as discussed, § 214 of PRIIA requires that the pilot program not exceed five years after the date of PRIIA's enactment (October 16, 2008). In addition, the final rule does take into consideration the possibility that the period established in PRIIA may be extended by statute.

This section contains the definitions for the final rule. This section defines the following terms: Act; Administrator; Amtrak; File and filed; Financial plan; FRA; Operating plan; Passenger rail service route; Petitioner; Railroad, and Secretary. Among other definitions, this section defines “passenger rail service route” to mean those routes described in 49 U.S.C. 24102(5)(B), (C), and (D) and in 49 U.S.C. 24702. This definition is based on the statutory directive contained in 49 U.S.C. 24711(a)(1). In addition, this section defines “railroad” to mean a rail carrier or rail carriers, as defined in 49 U.S.C. 10102(5). This definition is based on the statutory directive contained in 49 U.S.C. 24711(a)(1) and (c)(3).

This section also defines “financial plan” to mean a plan that contains, for each Federal fiscal year fully or partially covered by the bid: An annual projection of the revenues, expenses, capital expenditure requirements, and cash flows (from operating activities, investing activities, and financing activities, showing sources and uses of funds) attributable to the route; and a statement of the assumptions underlying the financial plan's contents. In addition, this section defines “operating plan” to mean a plan that contains, for each Federal fiscal year fully or partially covered by the bid: A complete description of the service planned to be offered, including the train schedules, frequencies, equipment consists, fare structures, and such amenities as sleeping cars and food service provisions; station locations; hours of operation; provisions for accommodating the traveling public, including proposed arrangements for stations shared with other routes; expected ridership; passenger-miles; revenues by class of service between each city-pair proposed to be served; and a statement of the assumptions underlying the operating plan's contents. The final rule requires bidders to include a financial plan and an operating plan—as those terms are defined here—in their bids. These definitions will ensure that bids contain sufficient information to be evaluated.

Paragraph (a) of this section provides that a railroad that owns infrastructure over which Amtrak operates a passenger rail service route may petition FRA to be considered as a passenger rail service provider over that route in lieu of Amtrak for a period of time consistent with the time limitations described in section 269.3(c). This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(1). This paragraph does not require that a railroad own all of the infrastructure over which Amtrak operates a passenger rail service route in order to file a petition.

Comments sought clarification regarding the routes that are eligible under the pilot program (one comment sought confirmation that all current non-Northeast Corridor Amtrak-operated routes are eligible for the pilot program, whether part of Amtrak's national system or State-supported, and regardless of the length of the route). A related comment sought clarification regarding the eligibility of routes which connected with or utilized Northeast Corridor or other Amtrak-owned infrastructure. As discussed above, PRIIA and this final rule provide that all of the routes described in 49 U.S.C. 24102(5)(B), (C), and (D) and in 49 U.S.C. 24702 are eligible.See49 U.S.C. 24711(a)(1). Amtrak's Northeast Corridor is not eligible for the pilot program.See49 U.S.C. 24711(a)(1) (statute does not include 49 U.S.C. 24102(5)(A) in the description of eligible Amtrak routes). As noted, FRA will examine any agreement(s) necessary for the operation of the proposed passenger service over right-of-way on the route that is not owned by the petitioning railroad, as described in § 269.9(b)(2) of this final rule. This analysis would include any Amtrak-owned infrastructure on the route at issue (whether voluntary or pursuant to a Surface Transportation Board order under § 217 of PRIIA).

Another comment asked whether the proposed rule “exercise[s] any jurisdiction” over the process in which a State enters into a contract with a party other than Amtrak to operate a State-supported intercity passenger route (or whether such a situation more appropriately falls under § 217 of PRIIA). Section 214 of PRIIA does not address this issue, nor does this final rule.

In seeking clarification regarding the meaning of the term “passenger rail service route” as used in Paragraph (a) of this section, a comment questioned whether the Chicago-Milwaukee route 21 Hiawatha is included as part of the route 25 Empire Builder because it uses the same trackage, and whether route 25, which has two destinations, Seattle and Portland, is one route or two. Determination of these site-specific details can only be made in response to specific petitions. For this final rule to address every such situation—of which the national rail network could present more than one—would add needless complexity and would delay the rulemaking process.

A comment questioned FRA's authority to permit a rail carrier that does not own all of the infrastructure on a particular eligible route to access that portion of the infrastructure owned by another party. This comment misconstrues the proposed rule. Under the NPRM and this final rule, a railroad that owns infrastructure over which Amtrak operates certain passenger rail service routes may petition FRA. As noted, a railroad does not have to own all of the infrastructure over which Amtrak operates in order to file a petition. However, in that event, FRA would expect the railroad to describe in its bid the agreement(s) necessary to operate over right-of-way that is not owned by the bidding railroad, in compliance with § 269.9(b) of this final rule.

A comment also stated that a railroad should be able to offer service over a shorter route (as compared to the Amtrak route) if the omitted section of the route would continue to be provided with service by another passenger train. However, § 214 of PRIIA and this final rule require that a railroad selected to provide rail passenger service over a route under the pilot program must continue to provide passenger rail service on the route that is no less frequent, nor over a shorter distance, than Amtrak provided on that route before the award.See49 U.S.C. 24711(c)(1)(A).

Paragraph (b) of this section provides that a petition submitted to FRA under this rule must: Be filed with FRA no later than 45 days after FRA provides notice of the Secretary's certification pursuant to proposed § 269.3(a); describe the petition as a “Petition to Provide Passenger Rail Service under 49 CFR part 269”; and describe the route or routes over which the petitioner wants to provide passenger rail service and the Amtrak service that the petitioner wants to replace. This paragraph is intended to ensure that a petition provides clear notice to FRA.

Paragraph (c) of this section provides that, in the event that a later statute extends the time period under which a railroad may provide passenger rail service pursuant to the pilot program, petitions would have to be filed with FRA no later than 60 days after the later of the enactment of such statutory authority or the Secretary's issuance of the certification under § 269.3(a), and that the petition must otherwise comply with the requirements of the pilot program. This paragraph takes into consideration the possibility that the 5-year limitations period established in PRIIA is extended by statute.

Paragraph (a) of this section provides that FRA will notify Amtrak of any eligible petition filed with FRA no later than 30 days after FRA's receipt of such petition. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(2).

A comment stated that Amtrak should be required to provide any bidder under the pilot program with route performance information for the previous five years (including ridership, passenger-miles, and revenues by class of service between each city-pair). However, such a requirement is beyond the authority created by § 214 of PRIIA.

A comment also stated that FRA and Amtrak should work with bidders under the pilot program to develop a proposal that is mutually beneficial to all parties (e.g.,a proposal in which Amtrak continues to provide some of its services for the route at issue). The statutory mandate sets forth a competitive process in which a railroad and Amtrak bid for a route. The statute does not authorize a requirement that Amtrak work on a collaborative bid with a railroad that is seeking to replace Amtrak.

A comment sought clarification regarding whether Amtrak is restricted to bidding its current fully-allocated financial performance under the route profitability system, or whether Amtrak could be allowed to propose anything materially different from its current performance. That comment went on to state that Amtrak should not be able to make a bid materially different from its current fully-allocated financial and performance metrics and that Amtrak should not be able to make a bid based on incremental costs because its overhead is devoted to servicing these passenger routes. However, § 214 of PRIIA and this final rule are intended to foster improved and more competitive passenger rail service. The comment's proposed restrictions would stifle innovation and work against that very purpose. Moreover, all bidders have an inherent interest in minimizing the cash losses of the service in question: Amtrak, because it operates under a limited Federal operating grant; and the competing bidder(s), which would need to minimize both the subsidy requirement and the cash drain on their corporate finances (so as to both win the bid and safeguard their profitability). FRA believes that these inherent factors will prohibit bids that do not cover their full costs, and in any event, FRA will be carefully evaluating all bids for their viability.

Paragraph (b) of this section describes the bid requirements, including a requirement that such bids must be filed with FRA no later than 60 days after the petition deadline established by § 269.7. Paragraph (b) further provides that such bids must: (1) Provide FRA with sufficient information to evaluate the level of service described in the proposal, and to evaluate the proposal's compliance with the requirements described in § 269.13(b); (2) describe how the bidder would operate the route (including an operating plan, a financial plan and, if applicable, any agreement(s) necessary for the operation of passenger service over right-of-way on the route that is not owned by the railroad), and, if the bidder intends to generate any revenues from ancillary activities (i.e.,activities other than passenger transportation, accommodations, and food service) as part of its proposed operation of the route, then the bidder must fully describe such ancillary activities and identify their incremental impact in all relevant sections of the operating plan and the financial plan, and on the route's performance under the financial and performance metrics developed pursuant to § 207 of the Act, together with the assumptions underlying the estimates of such incremental impacts; (3) describe what Amtrak passenger equipment would be needed, if any; (4) describe in detail, including amounts, timing, and intended purpose, what sources of Federal and non-Federal funding the bidder would use, including but not limited to any Federal or State operating subsidy and any other Federal or State payments; (5) contain a staffing plan describing the number of employees needed to operate the service, the job assignments and requirements, and the terms of work for prospective and current employees of the bidder for the service outlined in the bid; and (6) describe how the passenger rail service would comply with the financial and performance metrics developed pursuant to § 207 of PRIIA (at a minimum, this description must include, for each Federal fiscal year fully or partially covered by the bid: A projection of the route's expected on-time performance and train delays according to the metrics developed pursuant to § 207 of PRIIA; and the net cash used in operating activities per passenger-mile attributable to the route, both before and after the application of any expected public subsidies). This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(3) and (a)(6).

FRA is making one technical change to the rule text in Paragraph (b)(6) in order to permit FRA to better compare and evaluate bids. Paragraph (b)(6) provides that a bid must describe how the passenger rail service would comply with the financial and performance metrics developed pursuant to § 207 of PRIIA, and then proceeds to list what that description must include. The last item in that list is the net cash used in operating activities per passenger-mile. FRA is making one technical change here by further stating that the net cash must be both before and after the application of any expected public subsidies. This clarification is consistent with the statutory mandate and the metrics developed pursuant to § 207 of PRIIA, and allows for FRA to be able to compare the net cash numbers provided by Amtrak and a rail carrier.See49 U.S.C. 24711(a)(4).

Paragraph (c) of this section provides that FRA may request supplemental information from a petitioner and/or Amtrak where FRA determines such information is needed to evaluate a bid. In such a request, FRA will establish a deadline by which the supplemental information must be submitted to FRA. This paragraph allows FRA to request additional information where the information provided in a bid prevents FRA from adequately evaluating the proposal.

This section provides that FRA will select a winning bidder by evaluating the bids against the financial andperformance metrics developed under section 207 of PRIIA and the requirements of this part, and will give preference in awarding contracts to bidders seeking to operate routes that have been identified as one of the five worst performing Amtrak routes under 49 U.S.C. 24710. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(4).

Paragraph (a) of this section provides that FRA will execute a contract with the winning bidder(s) consistent with the requirements of § 269.13 and as FRA may otherwise require, no later than 90 days after the bid deadline established by § 269.9(b). This paragraph also provides that FRA will provide timely notice of these selections to all petitioners and to Amtrak. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(5).

Paragraph (b) of this section provides that, among other things, such a contract will: (1) Award to the winning bidder the right and obligation to provide passenger rail service over that route subject to such performance standards as FRA may require, consistent with the standards developed under section 207 of PRIIA; (2) award to the winning bidder an operating subsidy for the first year at a level not in excess of the level in effect during the fiscal year preceding the fiscal year in which the petition was received, adjusted for inflation, and for any subsequent years at such level, adjusted for inflation; (3) condition the operating and subsidy rights upon the winning bidder continuing to provide passenger rail service on the route that is no less frequent, nor over a shorter distance, than Amtrak provided on that route before the award; (4) condition the operating and subsidy rights upon the winning bidder's compliance with the minimum standards established under section 207 of PRIIA and such additional performance standards as FRA may establish; and (5) subject the winning bidder to the grant conditions established by 49 U.S.C. 24405. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(5), (c)(1), and (c)(4).

A comment stated that FRA should mandate contractual provisions for liability and insurance that are consistent for all parties. However, the statutory mandate does not authorize such a requirement. It should be noted that § 214 and this final rule do require that a winning bidder under the pilot program shall be subject to the grant conditions under 49 U.S.C. 24405.See49 U.S.C. 24711(c)(4). One requirement under 49 U.S.C. 24405(c)(1)(D) is compliance with the liability requirements consistent with 49 U.S.C. 28103, which among other things limits rail passenger transportation liability.

Paragraph (c) of this section provides that the winning bidder will make their staffing plan, submitted as required by § 269.9(b)(4), available to the public after the bid award. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(a)(6).

Paragraph (a) of this section provides that, if an award under § 269.13 is made to a rail carrier other than Amtrak, Amtrak must provide access to its reservation system, stations, and facilities directly related to operations to the winning bidder awarded a contract, in accordance with § 217 of PRIIA, necessary to carry out the purposes of the final rule. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(c)(2).

A comment stated that the rolling stock, stations, and reservation systems that Amtrak uses need to be available to pilot program operators at no cost. As discussed, § 214 of PRIIA requires that Amtrak provide access to its reservation system, stations, and facilities.See49 U.S.C. 24711(c)(2). However, § 214 does not authorize FRA to require Amtrak to provide such access at no cost.

A comment sought clarification regarding how FRA would establish an equitable cost basis for third party access to Amtrak's reservation system, stations, and facilities in a timely manner. As required by statute and this final rule, Amtrak is required to provide such access in accordance with § 217 of PRIIA, which provides a process by which a cost is agreed upon by the parties.See49 U.S.C. 24711(c)(2).

A comment also sought clarification as to whether such access includes access to services provided by Amtrak employees, including reservation agents, redcaps, gate agents, Qualified Maintenance Persons or Qualified Persons. The statute and this final rule only provide that Amtrak shall be required to provide access to its reservation system, stations, and facilities; the statute does not authorize access to services performed by Amtrak employees.

A comment stated that Amtrak should not be able to prevent operation of a route by a private rail carrier by withholding services directly related to Amtrak's control of its facilities, stations, or reservation systems. FRA agrees that Amtrak must comply with the requirements of the statute and this final rule. In providing access to its reservation system, stations, and facilities, Amtrak would need to allow the third-party to successfully use the reservation system, stations and facilities.

A comment sought clarification regarding whether the term “facilities” as used in paragraph (a) of this section encompasses Amtrak's contracted right to use facilities it does not own and provided the hypothetical example of whether a bidder for the Vermonter route would have access to the portion of the Northeast Corridor between New Haven and New York City owned by Metro North. That comment went on to state that the definition should be broad and should encompass all facilities to which Amtrak has access through ownership, lease or contract. Section 214 of PRIIA does not authorize such a broad definition. Putting aside circumstances in which Amtrak owns the infrastructure and § 217 of PRIIA may apply, neither the statute nor this final rule require that owners of right-of-way not owned by a bidding railroad must provide access to their infrastructure. As described above, pursuant to the statutory mandate, the pilot program developed by this final rule only permits a rail carrier or rail carriers that own infrastructure to petition FRA. In the event that a bidder does not own all of the infrastructure on the route, the bid must describe the operating agreements necessary for operation on the right-of-way not owned by the railroad.

Paragraph (b) of this section provides that the employees of any person used by a rail carrier in the operation of a route under the final rule will be considered an employee of that carrier and subject to the applicable Federal laws and regulations governing similar crafts or classes of employees of Amtrak, including provisions under § 121 of the Amtrak Reform and Accountability Act of 1997 relating to employees that provide food and beverage service. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(c)(3).

Paragraph (c) of this section provides that a winning bidder will provide hiring preference to qualified Amtrak employees displaced by the award of the bid, consistent with the staffing plan submitted by the winning bidder. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(c)(4).

This section provides that, if a rail carrier awarded a route under this rule ceases to operate the service or fails tofulfill its obligations under the contract required under § 269.13, the Administrator, in collaboration with the Surface Transportation Board, will take any necessary action consistent with title 49 of the United States Code to enforce the contract and ensure the continued provision of service, including the installment of an interim service provider and re-bidding the contract to operate the service. This section further provides that the entity providing service would either be Amtrak or a rail carrier eligible for the pilot program under § 269.7. This paragraph is based on the statutory directive contained in 49 U.S.C. 24711(d).

This final rule has been evaluated in accordance with existing policies and procedures and determined to be non-significant under Executive Orders 12866 and 13563, and U.S. Department of Transportation (DOT) policies and procedures.See44 FR 11034; February 26, 1979. FRA has prepared and placed in the docket a regulatory impact analysis (RIA) addressing the economic impact of this final rule. Document inspection and copying facilities are available at the DOT Central Docket Management Facility located in Room W12-140 on the ground level of the West Building, 1200 New Jersey Avenue SE., Washington, DC 20590. Docket material is also available for inspection electronically through the Federal eRulemaking Portal athttp://www.regulations.gov.Photocopies may also be obtained by submitting a written request to the FRA Docket Clerk at the Office of Chief Counsel, RCC-10, Mail Stop 10, Federal Railroad Administration, 1200 New Jersey Avenue SE., Washington, DC 20590; please refer to Docket No. FRA-2009-0108.

As part of a RIA, FRA generally assesses quantitative measurements of the cost and benefit streams expected to result from the adoption of a rule. However, in this case, due to the limited number of routes that can be awarded under the pilot program (only two routes can be awarded), and the short timeframe in which this pilot program will operate (until 2013), it is not feasible to perform an analysis for an extended period. There are no alternate service provider railroad regulatory costs because the program is voluntary with respect to such rail carriers. Regulatory costs will be triggered for Amtrak if one or more alternative service providers bid on a route(s). For informational purposes, FRA included in the RIA appendices detailing the estimated average costs for both a railroad and Amtrak to participate in the pilot program. FRA estimates the average cost for each individual railroad to participate in the program and to submit the required bid proposal (the majority of the cost) at about $300,000 per route, and the average cost for Amtrak at about $150,000 per route (regardless of how many individual railroads bid on the individual Amtrak route). Non-Amtrak railroads that participate voluntarily will do so because they consider the benefits to exceed the costs. Thus, any participation will be net-beneficial with respect to the voluntary participant. Any costs to Amtrak are regulatory costs incurred solely due to the requirements of this final rule, and will primarily be associated with costs associated with developing bids.

Given that this pilot program is voluntary for alternate service providers and is not currently funded by Congress, FRA estimates that this regulation will not result in any benefits or costs.

To ensure potential impacts of rules on small entities are properly considered, FRA developed this final rule in accordance with Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act (5 U.S.C. 601et seq.). The Regulatory Flexibility Act requires an agency to review regulations to assess their impact on small entities. An agency must conduct a regulatory flexibility analysis unless it determines and certifies that a rule is not expected to have a significant impact on a substantial number of small entities.

As noted earlier in this final rule, the purpose of this rulemaking is to respond to a statutory mandate to develop a pilot program that permits a rail carrier or rail carriers that own infrastructure over which Amtrak operates certain passenger rail service routes to petition FRA to be considered as a passenger rail service provider over such a route in lieu of Amtrak for a period not to exceed 5 years after the date of enactment of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA). The final rule develops this pilot program in conformance with the statutory directive.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601et seq.) requires a review of proposed and final rules to assess their impact on small entities, unless the Secretary of Transportation certifies that the rule will not have a significant economic impact on a substantial number of small entities. Pursuant to Section 312 of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), FRA has issued a final policy that formally establishes “small entities” as including railroads that meet the line-haulage revenue requirements of a Class III railroad. Title 49 Code of Federal Regulations CFR Part 209, Appendix C. For other entities, the same dollar limit in revenues governs whether a railroad, contractor, or other respondent is a small entity.Id.Additionally, Section 601(5) defines as “small entities” governments of cities, counties, towns, townships, villages, school districts, or special districts with populations less than 50,000. Such governments will not be directly impacted by this final rule.

FRA is initiating this final rule in response to a statutory mandate set forth in Section 214 of the PRIIA. Section 214 requires FRA to complete a rulemaking proceeding to develop a pilot program that permits a rail carrier or rail carriers that own infrastructure over which Amtrak operates certain passenger rail service routes to petition FRA to be considered as a passenger rail service provider over such a route in lieu of Amtrak for a period not to exceed 5 years after the date of enactment of the PRIIA. This final rule develops this pilot program in conformance with the statutory directive.

This final rule is applicable to railroads that own infrastructure upon which Amtrak operates those routes described in 49 U.S.C. 24102(5)(B), (C), and (D) and in 49 U.S.C. 24702, which may include small railroads. “Small entity” is defined in 5 U.S.C. 601 as including a small business concern that is independently owned and operated, and is not dominant in its field of operation. The U.S. Small Business Administration (SBA) has authority to regulate issues related to small businesses, and stipulates in its size standards that a “small entity” in the railroad industry is a for profit “line-haul railroad” that has fewer than 1,500 employees, a “short line railroad” with fewer than 500 employees, or a “commuter rail system” with annualreceipts of less than $7 million.See“Size Eligibility Provisions and Standards,” 13 CFR Part 121, Subpart A. Federal agencies may adopt their own size standards for small entities in consultation with SBA and in conjunction with public comment. Pursuant to that authority, FRA has published a final statement of agency policy that formally establishes “small entities” or “small businesses” as being railroads, contractors, and hazardous materials shippers that meet the revenue requirements of a Class III railroad as set forth in 49 CFR 1201.1-1, which is $20 million or less in inflation-adjusted annual revenues, and commuter railroads or small governmental jurisdictions that serve populations of 50,000 or less.See68 FR 24891 (May 9, 2003) (codified at Appendix C to 49 CFR Part 209). The $20 million limit is based on the Surface Transportation Board's revenue threshold for a Class III railroad carrier. Railroad revenue is adjusted for inflation by applying a revenue deflator formula in accordance with 49 CFR 1201.1-1. FRA is using this definition for the final rule.

Small railroads face the same requirements for entry in the pilot program as other railroads. The railroad must own infrastructure upon which Amtrak operates those routes described in 49 U.S.C. 24102(5)(B), (C), and (D), and in 49 U.S.C. 24702.

The purpose of this economic analysis is to provide pertinent information on the effects of the regulation, 49 CFR Part 269, Alternate Passenger Rail Service Pilot Program. FRA believes that the regulation will not have any effect on small railroads since participation in the pilot program is voluntary, only two routes are available for award, the program expires in 2013, and it is unlikely that Federal funding not currently available will be available for the program. FRA does not anticipate that any small railroads will be interested in taking over such an existing, eligible Amtrak route.

This regulation is voluntary for all rail carriers, except Amtrak, which will be impacted only if another carrier petitions to participate in the pilot program. Therefore, there are no mandates placed on large or small railroads. Consequently, this regulation will not affect a substantial number of small entities, and most likely will not impact any small entities.

The factual basis for the certification that this final rule will not have a significant economic impact on a substantial number of small entities is that the pilot program is voluntary for all rail carriers except Amtrak; and no small entities are anticipated to apply. Therefore, this regulation is not expected to have a significant economic impact on a substantial number of small entities.

FRA notes that this regulation does not disproportionately place any small railroads that are small entities at a significant competitive disadvantage. Small railroads are not excluded from participation, so long as they are eligible. This regulation and the underlying statute are aimed at railroads taking over an entire route. If Amtrak uses 30 miles of a small railroad's infrastructure in a route that is 750 miles long, the small railroad could not apply to take over just its own segment, but will have to apply to take over the whole route. Thus, the ability to bid on a route is not constrained by a railroad's size.

FRA invited comments from all interested parties on this certification. FRA also requested comments on the regulatory impact analysis and its underlying assumptions. FRA particularly encouraged small entities that could potentially be impacted by the proposed regulation to participate in the public comment process by submitting comments on this assessment or this rulemaking to the official DOT docket. Although FRA received comments on the proposed rule, none were related to either economic analysis.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The final rule does not require, or otherwise impose, any requirements upon any small entities. Instead, this final rule develops a pilot program under which an eligible small entity may voluntarily elect to participate. Furthermore, the final rule establishes a very limited pilot program that applies to no more than two Amtrak routes.

According to the Paperwork Reduction Act of 1995 and OMB's Implementing Guidance at 5 CFR 1320.3(c), “collection of information means, except as provided in section 1320.4, the obtaining, causing to be obtained, soliciting, or requiring the disclosure to an agency, third parties or the public of information by or for an agency by means of identical questions posed to, or identical reporting, recordkeeping, or disclosure requirements imposed on, ten or more persons, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit.” FRA expects that the requirements of this final rule will affect less than 10 railroads or “persons” as defined in 5 CFR 1320.(c)(4). Consequently, no information collection submission is necessary, and no approval is being sought from the Office of Management and Budget (OMB) at this time.

FRA has evaluated this final rule in accordance with its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321et seq.), other environmental statutes, Executive Orders, and related regulatory requirements. FRA has determined that this document is not a major FRA action (requiring the preparation of an environmental impact statement or environmental assessment) because the rulemaking would not result in a change in current passenger service; instead, the program would only potentially result in a change in the operator of such service. In accordance with section 4(c) and (e) of FRA's Procedures, the agency has further concluded that no extraordinary circumstances exist with respect to this final rule that might trigger the need for a more detailed environmental review. As a result, FRA finds that this final rule is not a major Federal action significantly affecting the quality of the human environment.

Executive Order 13132, “Federalism” (64 FR 43255, Aug. 4, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, the agency may not issuea regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation.

FRA has analyzed this final rule in accordance with the principles and criteria contained in Executive Order 13132. This final rule will not have a substantial direct effect 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. In addition, this final rule will not impose substantial direct compliance costs on State and local governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply. As explained, FRA has determined that this final rule has no federalism implications. Accordingly, FRA has determined that preparation of a federalism summary impact statement for this final rule is not required.

Pursuant to Section 201 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that “before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in 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, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement” detailing the effect on State, local, and tribal governments and the private sector. This monetary amount of $100,000,000 has been adjusted to $140,800,000 to account for inflation. This final rule will not result in the expenditure of more than $140,800,000 by the public sector in any one year, and thus preparation of such a statement is not required.

Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355 (May 22, 2001). Under the Executive Order, a “significant energy action” is defined as any action by an agency (normally published in theFederal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking that: (1)(i) Is a significant regulatory action under Executive Order 12866 or any successor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) is designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. FRA has evaluated this final rule in accordance with Executive Order 13211. FRA has determined that this final rule is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Consequently, FRA has determined that this final rule is not a “significant energy action” within the meaning of Executive Order 13211.

Interested parties should be aware that anyone is able to search the electronic form of all written communications and comments received into any agency docket by the name of the individual submitting the document (or signing the document, if submitted on behalf of an association, business, labor union,etc.). You may review DOT's complete Privacy Act Statement in theFederal Registerpublished on April 11, 2000 (65 FR 19477), or you may visithttp://www.dot.gov/privacy.html.

For the reasons discussed in the preamble, FRA amends chapter II, subtitle B of title 49, Code of Federal Regulations, by adding part 269 to read as follows: