The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions are impracticable because these procedures would significantly delay issuance of the design approval and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On October 7, 2011, Atlantic Aero, Inc., applied for a supplemental type certificate (STC) for the installation and operation of a HUD and an EFVS in the Bombardier Model CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 variants). The original type certificate for the CL-600-2B16 is A21EA, dated April 30, 1987, and is now at revision 31, dated May 25, 2011.

The Model CL-600-2B16 is a 22-passenger, transport category airplane that operates with a crew of two. It is powered by two General Electric engines and has a maximum takeoff weight of 43,100 pounds for the CL-601-3A and 3R variants and 47,600 pounds for the CL-604 variant.

The electronic infrared image displayed between the pilot and the forward windshield represents a novel or unusual design feature in the context of Title 14, Code of Federal Regulations (14 CFR) 25.773. Section 25.773 was not written in anticipation of such technology. The electronic image has the potential to enhance the pilot's awareness of the terrain, hazards, and airport features. At the same time, the image may partially obscure the pilot's direct outside compartment view. Therefore, the FAA needs adequate safety standards to evaluate the EFVS to determine that the imagery provides the intended visual enhancements without undue interference with the pilot's outside compartment view. The FAA's intent is that the pilot will be able to use a combination of the information seen in the image and the natural view of the outside scene, as seen through the image, as safely and effectively as a pilot compartment view without an enhancedvision system (EVS) image, and that it is compliant with § 25.773.

Although the FAA has determined that the existing regulations are not adequate for certification of EFVSs, it believes that EFVSs could be certified through application of appropriate safety criteria. Therefore, the FAA has determined that special conditions should be issued for certification of EFVSs to provide a level of safety equivalent to that provided by the standard in § 25.773.

On January 9, 2004, the FAA published revisions to operational rules in 14 CFR parts 1, 91, 121, 125, and 135 to allow aircraft to operate below certain altitudes during a straight-in instrument approach while using an EFVS to meet visibility requirements.

Prior to this rule change, the FAA issued Special Conditions No. 25-180-SC, which applied to an EVS installed on Gulfstream Model G-V airplanes. Those special conditions addressed the requirements for the pilot compartment view and limited the scope of the intended functions permissible under the operational rules at the time. The intended function of the EVS imagery was to aid the pilot during the approach and allow the pilot to detect and identify the visual references for the intended runway down to 100 feet above the touchdown zone. However, the EVS imagery alone was not to be used as a means to satisfy visibility requirements below 100 feet.

The recent operational rule change expands the permissible application of certain EVSs that are certified to meet the new EFVS standards. The new rule allows the use of an EFVS for operation below the minimum descent altitude or decision height to meet new visibility requirements of § 91.175(l). The purpose of these special conditions is not only to address the issue of the “pilot compartment view,” as was done by Special Conditions No. 25-180-SC, but also to define the scope of intended function consistent with § 91.175(l) and (m).

Under the provisions of § 21.101, Atlantic Aero, Inc., must show that the Bombardier Model CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 variants), as changed, continues to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A21EA or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference are listed in Type Certificate Data Sheet No. A21EA, Revision 31, dated May 25, 2011, which covers all variants of the Bombardier CL-600-2B16 airplanes. In addition, the certification basis includes certain special conditions and exemptions that are not relevant to these special conditions.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Bombardier Model CL-600-2B16 because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, the special conditions would also apply to the other model.

In addition to the applicable airworthiness regulations and special conditions, the Model CL-600-2B16 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.101.

The Bombardier Model CL-600-2B16 will incorporate the following novel or unusual design feature: An EFVS that projects a video image derived from a FLIR camera through the HUD. The EFVS image is projected in the center of the “pilot compartment view,” which is governed by § 25.773. The image is displayed with HUD symbology and overlays the forward outside view. Therefore, § 25.773 does not contain appropriate safety standards for the EFVS display.

Operationally, during an instrument approach, the EFVS image is intended to enhance the pilot's ability to detect and identify “visual references for the intended runway” [see § 91.175(l)(3)] to continue the approach below decision height or minimum descent altitude. Depending on atmospheric conditions and the strength of infrared energy emitted and/or reflected from the scene, the pilot can see these visual references in the image better than they can be seen through the window without EFVS.

Scene contrast detected by infrared sensors can be much different from that detected by natural pilot vision. On a dark night, thermal differences of objects which are not detectable by the unaided eye are easily detected by many imaging infrared systems. On the other hand, contrasting colors in visual wavelengths may be distinguished by the unaided eye but not by an imaging infrared system. Where thermal contrast in the scene is sufficiently detectable, the pilot can recognize shapes and patterns of certain visual references in the infrared image. However, depending on conditions, those shapes and patterns in the infrared image can appear significantly different than they would with normal vision. Considering these factors, the EFVS image needs to be evaluated to determine that it can be accurately interpreted by the pilot.

The EFVS image may improve the pilot's ability to detect and identify items of interest. However, the EFVS needs to be evaluated to determine that the imagery allows the pilot to perform the normal flightcrew duties and adequately see outside the window through the image, consistent with the safety intent of § 25.773(a)(2).

Compared to a HUD displaying the EFVS image and symbology, a HUD that only displays stroke-written symbols is easier to see through. Stroke symbology illuminates a small fraction of the total display area of the HUD, leaving much of that area free of reflected light that could interfere with the pilot's view out the window through the display. However, unlike stroke symbology, the video image illuminates most of the total display area of the HUD (approximately 30 degrees horizontally and 25 degrees vertically), which is a significant fraction of the pilot compartment view. The pilot cannot see around the larger illuminated portions of the video image, but must see the outside scene through it.

Unlike the pilot's external view, the EFVS image is a monochrome, two-dimensional display. Many, but not all, of the depth cues found in the natural view are also found in the image. The quality of the EFVS image and the level of EFVS infrared-sensor performance could depend significantly on conditions of the atmospheric and external light sources. The pilot needs adequate control of sensor gain and image brightness, which can significantly affect image quality and transparency (i.e., the ability to see the outside view through the image). Certain system characteristics could create distracting and confusing display artifacts. Finally, because this is a sensor-based system intended to provide a conformal perspective corresponding with the outside scene, the system must be able to ensure accurate alignment. Therefore, safety standards are needed for each of the following factors:

• An acceptable degree of image transparency;

• Image alignment;

• Lack of significant distortion; and

• The potential for pilot confusion or misleading information.

Section 25.773, “Pilot compartment view,” specifies that “Each pilot compartment must be free of glare and reflection that could interfere with the normal duties of the minimum flight crew * * *.” In issuing § 25.773, the FAA did not anticipate the development of the EFVS and does not consider that § 25.773 adequately addresses the specific issues related to such a system. Therefore, the FAA has determined that special conditions are needed to address the specific issues particular to the installation and use of an EFVS.

The EFVS is intended to present an enhanced view during the landing approach. This enhanced view would help the pilot see and recognize external visual references, as required by § 91.175(l), and to visually monitor the integrity of the approach, as described in FAA Order 6750.24D, “Instrument Landing System and Ancillary Electronic Component Configuration and Performance Requirements,” dated March 1, 2000.

Based on this approved functionality, users would seek to obtain operational approval to conduct approaches, including approaches to Type I runways, in visibility conditions much lower than those for conventional Category I.

The purpose of these special conditions is to ensure that the EFVS to be installed can perform the following functions:

• Present an enhanced view that aids the pilot during the approach.

• Provide enhanced flight visibility to the pilot that is no less than the visibility prescribed in the standard instrument approach procedure.

• Display an image that the pilot can use to detect and identify the “visual references for the intended runway” required by § 91.175(l)(3) to continue the approach with vertical guidance to 100 feet height above the touchdown-zone elevation.

Depending on the atmospheric conditions and the particular visual references that happen to be distinctly visible and detectable in the EFVS image, these functions would support its use by the pilot to visually monitor the integrity of the approach path.

Compliance with these special conditions does not affect the applicability of any of the requirements of the operating regulations (i.e., 14 CFR parts 91, 121, and 135). Furthermore, use of the EFVS does not change the approach minima prescribed in the standard instrument approach procedure being used; published minima still apply.

The FAA certification of this EFVS is limited as follows:

1. The infrared-based EFVS image will not be certified as a means to satisfy the requirements for descent below 100 feet height above touchdown.

2. The EFVS may be used as a supplemental device to enhance the pilot's situational awareness during any phase of flight or operation in which its safe use has been established.

An EFVS image may provide an enhanced image of the scene that may compensate for any reduction in the clear outside view of the visual field framed by the HUD combiner. The pilot must be able to use this combination of information seen in the image and the natural view of the outside scene, as seen through the image, as safely and effectively as the pilot would use a pilot compartment view without an EVS image that is compliant with § 25.773. This is the fundamental objective of the special conditions.

The FAA will also apply additional certification criteria, not as special conditions, for compliance with related regulatory requirements, such as §§ 25.1301 and 25.1309. These additional criteria address certain image characteristics, installation, demonstration, and system safety. Image-characteristics criteria include the following:

Installation criteria address visibility and access to EFVS controls and integration of EFVS in the cockpit.

The EFVS demonstration criteria address the flight and environmental conditions that need to be covered.

The FAA also intends to apply certification criteria relevant to high-intensity radiated fields (HIRF) and lightning protection.

As discussed above, these special conditions are applicable to the Bombardier Model CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 variants). Should Atlantic Aero, Inc., apply at a later date for a supplemental type certificate to modify any other model included on Type Certificate No. A21EA to incorporate the same novel or unusual design feature, the special conditions would apply to that model as well.

This action affects only certain novel or unusual design features on one model series of airplanes. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Bombardier Model CL-600-2B16 (CL-601-3A, CL-601-3R, and CL-604 variants) airplanes modified by Atlantic Aero, Inc.

1. Enhanced flight vision system (EFVS) imagery on the head-up display (HUD) must not degrade the safety of flight or interfere with the effective use of outside visual references for required pilot tasks during any phase of flight in which it is to be used.

2. To avoid unacceptable interference with the safe and effective use of the pilot compartment view, the EFVS device must meet the following requirements:

a. The EFVS design must minimize unacceptable display characteristics or artifacts (e.g., noise, “burlap” overlay, running water droplets) that obscure the desired image of the scene, impair the pilot's ability to detect and identify visual references, mask flight hazards, distract the pilot, or otherwise degrade task performance or safety.

b. Automatic control of EFVS display brightness must be sufficiently effective, in dynamically changing background (ambient) lighting conditions, to prevent full or partial blooming of the display that would distract the pilot, impair the pilot's ability to detect and identify visual references, mask flight hazards, or otherwise degrade task performance or safety. If automatic control for image brightness is not provided, it must be shown that a single manual setting is satisfactory for the range of lighting conditions encountered during a time-critical, high-workload phase of flight (e.g., low visibility instrument approach).

c. A readily accessible control must be provided that permits the pilot to immediately deactivate and reactivate display of the EFVS image on demand without removing the pilot's hands from the primary flight controls (yoke or equivalent) or thrust control.

d. The EFVS image on the HUD must not impair the pilot's use of guidance information, or degrade the presentation and pilot awareness of essential flight information displayed on the HUD, such as alerts, airspeed, attitude, altitude and direction, approach guidance, windshear guidance, traffic alert and collision avoidance system (TCAS) resolution advisories, or unusual attitude recovery cues.

e. The EFVS image and the HUD symbols, which are spatially referenced to the pitch scale, outside view and image, must be scaled and aligned (i.e., conformal) to the external scene. In addition, the EFVS image and the HUD symbols, when considered singly or in combination, must not be misleading, cause pilot confusion, or increase workload. Airplane attitudes or crosswind conditions may cause certain symbols (e.g., the zero-pitch line or flight path vector) to reach field-of-view limits such that they cannot be positioned conformably with the image and external scene. In such cases, these symbols may be displayed but with an altered appearance, which makes the pilot aware that they are no longer displayed conformably (for example, “ghosting”).

f. A HUD system used to display EFVS images must, if previously certified, continue to meet all of the requirements of the original approval.

3. The safety and performance of the pilot tasks associated with the use of the pilot compartment view must not be degraded by the display of the EFVS image. Pilot tasks that must not be degraded by the EFVS image include:

a. Detection, accurate identification, and maneuvering, as necessary, to avoid traffic, terrain, obstacles, and other hazards of flight.

b. Accurate identification and utilization of visual references required for every task relevant to the phase of flight.

Use of EFVS for instrument approach operations must be in accordance with the provisions of § 91.175(l) and (m) and § 121.651 where applicable. Appropriate limitations must be stated in the operating limitations section of the airplane flight manual to prohibit the use of the EFVS for functions that have not been found to be acceptable.

Comments Invited

This AD is a final rule that involves requirements affecting flight safety, and we did not provide you with notice and an opportunity to provide your comments prior to it becoming effective. However, we invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that resulted from adopting this AD. The most helpful comments reference a specific portion of the AD, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit them only one time. We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this rulemaking during the comment period. We will consider all the comments we receive and may conduct additional rulemaking based on those comments.

This AD is prompted by several reports of fatigue cracks on M/R blades installed on Bell Model 212 helicopters. The cracks were found in the lower skin, doublers, and box beam at the M/R blade attachment bolt hole, and through the lower grip plate at blade station (BS) 36. Because the fatigue cracks were discovered on M/R blades installed on the Bell Model 212 helicopters, we issued AD No. 2010-03-03, Amendment 39-16186 (75 FR 5681, February 4, 2010) (AD 2010-03-03) for certain Bell Model 205B and 212 helicopters. That AD required visually inspecting the M/R blades for an edge void, corrosion, or a crack. After issuing that AD, we received another report of a fatigue crack on a M/R blade installed on a Model 212 helicopter. Further analysis by the manufacturer revealed that the inspections required by AD 2010-03-03 needed to be expanded and performed at an increased frequency, and on additional part-numbered M/R blades which can also be installed on other Bell model helicopters. We then issued AD No. 2011-23-02 (76 FR 68301, November 4, 2011) (AD 2011-23-02), which superseded AD 2010-03-03. AD 2011-23-02 retained the requirements of the superseded AD, increased the frequency and scope of the inspections required by that AD, and expanded the applicability to include the Model 205A-1 and 210 helicopters, additional M/R blade part numbers, and all helicopter serial numbers for the affected models.

Since the issuance of AD 2011-23-02, we have determined that the same part-numbered M/R blades can also be installed on certain FAA-approved modified restricted category helicopters. Therefore, we are mandating the inspection requirements for the applicable restricted category helicopters. The actions specified in this AD are intended to detect an edge void, corrosion, or a crack on an M/R blade, which could lead to loss of the M/R blade and subsequent loss of control of the helicopter.

We are issuing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other helicopters of these same type designs.

Bell has issued Alert Service Bulletin (ASB) No. 205B-08-51 dated January 11, 2011 (ASB 205B-08-51) for Model 205B helicopters, ASB No. 210-08-03 dated January 10, 2011 (ASB 210-08-03) for the Model 210 helicopters, and ASB No. 212-08-130 dated January 11, 2011 (ASB 212-08-130) for Model 212 helicopters, all revision B. The ASBs describe procedures to detect an edge void, corrosion, or a crack in the upper and lower grip plates, doublers, and blade skins of the M/R blade between blade stations 24.5 and 85.

This AD requires, within 25 hours time-in-service (TIS), and thereafter at intervals not to exceed 25 hours TIS, the following actions:

• Washing the upper and lower M/R blade surfaces using a solution of cleaning compound and water;

• Visually inspecting the upper and lower grip plates, doublers, and remaining surfaces of the M/R blade in an area from blade stations 24.5 to 40, including the entire width of the M/R blade chord width for an edge void, any corrosion, or a crack;

• Wiping each of the bond lines at the edges of both grip plates and each of the layered doublers with an alcohol-soaked cloth for their entire length and chord width and, using a 3x power or higher magnifying glass and a bright light, visually inspecting each of the bond lines on the upper and lower surfaces of the M/R blade for an edge void, any corrosion, or any edge delamination, as indicated by a crack in the paint finish.

• If there is an edge delamination or a crack in the paint finish, removing paint from areas in which an edge delamination along any bond line of a grip plate or doubler or a crack in the M/R blade paint finish is discovered to determine if an edge void or a crack exists in the M/R blade and, if there is not an edge void or a crack, refinishing the sanded area;

• Applying a light coat of preservative oil to all surfaces of the M/R blade;

• Replacing any M/R blade that has an edge void or any corrosion with an airworthy M/R blade or repairing the M/R blade if the damage is within the maximum repair damage limits;

• Replacing any M/R blade that has a crack in any grip plate or doubler with an airworthy M/R blade; and

• Replacing any M/R blade that has a crack in the M/R blade skin with an airworthy M/R blade, or repairing the M/R blade if the damage is within the maximum repair damage limits.

This AD applies to various restricted category Model HH-1K, TH-1F, TH-1L, UH-1A, UH-1B, UH-1E, UH-1F, UH-1H, UH-1L, and UH-1P helicopters; ASB 205B-08-51, ASB 210-08-03, and ASB 212-08-130 apply to Model 205B, 210, and 212 helicopters, respectively.

This AD also differs from the ASBs as follows:

• We do not include the requirement to inspect for a dark line along any ofthe bond lines after wiping with an alcohol-soaked cloth to detect an edge void or edge delamination as stated in the ASBs. The alcohol is only being used as a cleaning agent for the purposes of this AD.

• This AD requires inspecting for an edge void, a crack, or any corrosion in an area from blade stations 24.5 to 40, including the entire width of the M/R blade chord, while the ASBs require inspecting from blade stations 24.5 to 85. This AD includes the inspections of the bondlines for their entire length and chord width for an edge delamination or for a crack in the paint finish, while the ASB inspections do not.

• The ASBs use the phrase “bond lines between doublers, grip plates, and skin” to describe the bond lines, and we use “bond lines at the edges of both grip plates and each of the layer doublers.”

• The ASBs use the phrase “cracks in the bond lines between doublers or grip plates” to describe a separation of the doubler or grip plate along an edge, and we use the term “edge delamination.”

We estimate that this AD will affect 25 helicopters of U.S. Registry.

We estimate that operators may incur the following costs in order to comply with this AD. Washing and visually inspecting each M/R blade requires one work hour at an average labor rate of $85 per hour, for a cost per helicopter of $85 and a total cost to the U.S. operator fleet of $2,125 per inspection cycle. If an edge void, corrosion, or a crack is found, replacing an M/R blade with an airworthy M/R blade requires approximately 24 work hours at an average labor rate of $85 per hour, and required parts cost $121,875, for a total cost for each M/R blade replacement of $123,915.

The short compliance time is required because the previously described critical unsafe condition can adversely affect the structural integrity and controllability of the helicopter. In addition, the various restricted category helicopters are high usage aircraft, and they could reach 100 hours TIS within 60 days. Therefore, the actions described previously are required within 25 hours TIS, a short compliance time, and are to be repeated thereafter at intervals not to exceed 25 hours TIS, and this AD must be issued immediately.

Since an unsafe condition exists that requires the immediate adoption of this AD, we determined that notice and opportunity for public comment before issuing this AD are impracticable and that good cause exists for making this amendment effective in less than 30 days.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. 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.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect 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.

For the reasons discussed, I certify that this AD:

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);

3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

The collection of information contained in these regulations relating to the furnishing of information under § 1.1273-2 to determine the issue price of a debt instrument was previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under control number 1545-1353. The collection of information in these final regulations is in § 1.1273-2(f)(9) and is an increase in the total annual burden in the current regulations under § 1.1273-2. Under § 1.1273-2(f)(9), the issuer of a debt instrument is required to make the fair market value of property (which can be stated as the issue price of the debt instrument) available to holders in a commercially reasonable fashion within 90 days of the date that the debt instruments are issued, including by electronic publication. The issuer's determinations are binding on all holders of the debt instrument unless the holder explicitly discloses that its determinations are different from the issuer's determinations on a timely filed Federal income tax return for the taxable year that includes the acquisition date of the debt instrument. The disclosure must include how the holder determined the value or issue price that it is using. This information is required by the IRS to ensure consistent treatment between the issuer and the holders or to alert the IRS when inconsistent positions are being taken by the issuer and one or more holders. This information will be used for audit and examination purposes. The likely respondents are businesses or other for-profit institutions.

Estimated total annual reporting burden is 10,000 hours.

Estimated average annual burden per respondent is .5 hours.

Estimated average burden per response is 5 minutes.

Estimated number of respondents is 20,000.

Estimated total frequency of responses is 20,000.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and return information are confidential, as required by 26 U.S.C. 6103.

The issue price of a debt instrument is determined under section 1273(b) of the Internal Revenue Code (Code) or, in the case of certain debt instruments issued for property, under section 1274. Section 1273(b)(3) generally provides that in the case of a debt instrument issued for property and part of an issue some or all of which is traded on an established securities market (often referred to as “publicly traded”), the issue price of the debt instrument is the fair market value of the debt instrument. Similarly, if a debt instrument is issued for stock or securities (or other property) that are publicly traded, the issue price of the debt instrument is the fair market value of the stock, securities, or other property. If a debt instrument issued for property is not publicly traded or is not issued for property that is publicly traded, the issue price of the debt instrument is usually determined under section 1274, which generally results in an issue price equal to the statedprincipal amount of the debt instrument if the debt instrument provides for adequate stated interest.

Section 1.1273-2 of the Income Tax Regulations (the “current regulations”) contains the rules that generally apply to determine the issue price of a debt instrument that is publicly traded or is issued for publicly traded property and when property (including a debt instrument issued for property) is publicly traded. In general, under § 1.1273-2(f) of the current regulations, property is traded on an established market (that is, publicly traded for purposes of section 1273(b)(3) and § 1.1273-2) if the property is exchange listed property, market traded property, property appearing on a quotation medium, or readily quotable property in the 60-day period ending 30 days after the issue date of the debt instrument.

The issue price of a debt instrument has important income tax consequences. As an initial matter, the difference between the issue price of a debt instrument and its stated redemption price at maturity measures whether there is any original issue discount (OID) associated with the instrument. A debt-for-debt exchange (including a significant modification of existing debt) in the context of a workout may result in a reduced issue price for the new debt, which generally would produce cancellation of indebtedness income for the issuer, a loss to the holder whose basis is greater than the issue price of the new debt, and OID that generally must be accounted for by both the issuer and the holder of the new debt. These consequences, exacerbated by the effects of the credit crisis on the debt markets in recent years, have focused attention on the definition of when property is traded on an established market for purposes of § 1.1273-2(f).

A notice of proposed rulemaking (REG-131947-10, 76 FR 1101) (proposed regulations) was published in theFederal Registeron January 7, 2011. No public hearing was requested or held. However, written comments responding to the notice of proposed rulemaking were received from the public. These comments were considered and are available for public inspection athttp://www.regulations.govor upon request. After consideration of the comments, the proposed regulations are adopted as amended by this Treasury decision. The comments and the revisions are discussed in this preamble.

The increased liquidity and transparency of the debt markets in recent years has largely eliminated concerns about reliable information on sales and pricing being unavailable. The proposed regulations acknowledge this fact by updating and streamlining the “publicly traded” standard under the current regulations to reflect current market practice. To the extent that objective pricing information exists, the proposed regulations use that information to determine issue price for purposes of section 1273.

Although the final regulations substantially follow the framework established in the proposed regulations, comments received on the proposed regulations prompted several changes. The final regulations dispense with the category of exchange listed property because the small amount of debt that is listed rarely actually trades over the exchange. Moreover, although stock, commodities, and similar property are commonly listed on and traded over a board or exchange, such property typically will be the subject of frequent sales or quotes and would be covered in a separate category of publicly traded property. A debt instrument that is issued for stock, commodities, or similar exchange traded property is therefore tested under the rule for property where there is a sales price or quote within the 31-day period ending 15 days after the issue date of the debt instrument. Eliminating the category of property listed on an exchange also eliminates the need for the de minimis trading exception in the proposed regulations, which was intended to exclude property that is listed on an exchange but trades in a negligible quantity.

In response to commenters, the final regulations also expand and clarify the $50 million exception for small debt issues in the proposed regulations. Participants in the debt trading markets indicated that liquidity begins to noticeably diminish when an issue falls below $100 million. The final regulations therefore expand the small debt issue exception from $50 million to $100 million, which creates an automatic exclusion for debt that is the least likely to be publicly traded. The final regulations also clarify that the exception applies based on the outstanding stated principal amount of the debt instruments in an issue when the determination is made.

The other significant change made in the final regulations is to require that issue price be reported consistently by issuers and holders. In response to comments, the final regulations provide that an issuer's determination as to whether property is traded on an established market and, if it is, the fair market value of the property generally is binding on the holders of the debt instrument. Information on pricing and recent sales generally is easily accessible by the issuer of a debt instrument, making the issuer the logical person to determine issue price. The final regulations also require the issuer to make the fair market value of the property (which can be stated as the issue price of the debt instrument) available to holders in a commercially reasonable fashion, which can be a posting to a Web site or similar electronic publication, within 90 days of the date that the debt instruments are issued. If a holder makes a contrary determination that the property is or is not traded on an established market, or uses a fair market value that is different from the value determined by the issuer, the holder must file a statement with its income tax return that explicitly states that it is using a different determination, the reasons for the different determination and, if applicable, describes how fair market value was determined.

There also was a comment urging that the final regulations be accompanied by additional regulations, possibly under section 446(b), that would require a matching of the cancellation of debt income that often accompanies a debt-for-debt exchange (with the issue price of the new debt instrument determined under these rules) with the OID deductions that accrue subsequently on the new debt instrument. As an alternative, commenters suggested that the Treasury Department and IRS provide a special rule that treats the issue price of the new debt instrument in a debt-for-debt exchange as being equal to the lesser of the issue price determined under the principles of section 1274 and the adjusted issue price of the old debt instrument, whether or not the old debt instrument or the new debt instrument is publicly traded. The same commenters recommended that the suspension of the application of the applicable high yield discount obligation rules in section 163(e)(5) be extended, as they were in Notice 2010-11, [2010-4 IRB 326, January 25, 2010], or that similar relief be provided for all debt instruments issued in an exchange that meets certain conditions. These suggestions were not adopted because they are outside the scope of these regulations.

The remaining comments relate to specific aspects of the proposed regulations. For example, one commenter recommended that the final regulations specify that property falls within the de minimis trading exception if no actual sales of the property occur during the 31-day period ending 15 daysafter the issue date. As previously noted, because the de minimis trading exception was not adopted in the final regulations and the existence of price quotations can be used to accurately determine the fair market value of a debt instrument, this comment was not adopted in the final regulations.

Several comments pertain to the rules for sales and price quotations. One commenter recommended that the final regulations provide that a sales price or quote for property must provide a reasonable basis to determine fair market value for the property to be treated as publicly traded. Another commenter recommended that if an available actual sales price or quote is from a date different than the issue date and the taxpayer has a reasonable basis to conclude that the fair market value as of the issue date is different from such sales price or quote, the taxpayer may use reasonable methods to modify such price or quote to arrive at the fair market value as of the issue date. Commenters also recommended that the final regulations clarify that a price quote must be a bona fide price quote to a third party to buy and sell, must be available to the issuer or the holder who is determining the issue price of the debt instrument in question, and must exist independently of any inquiry the issuer or the holder makes in connection with the issue price determination. The final regulations rely on sales information and price quotations from brokers, dealers, and pricing services, which are widely available to market participants that trade debt instruments. Recent financial information, whether in the form of sales or price quotes, is the most reliable objective information available on fair market value, and such information is readily available to participants in the debt trading markets. The final regulations are therefore responsive to the concerns expressed by commenters. Moreover, as discussed earlier in the preamble, the final regulations require the issuer to disclose the fair market value of property to the holders, which will ensure that the issue price is available to holders in most situations.

In addressing the provision in the proposed regulations that permits taxpayers to use any reasonable method, consistently applied, to determine the fair market value when there is more than one sales price or price quotation, commenters requested that the final regulations describe various factors that taxpayers may consider in establishing fair market value. In response to this comment, the final regulations provide a non-exclusive list of factors a taxpayer may consider to establish fair market value. However, a method that may be reasonable in one situation may not be so in another situation. In addition, in response to another comment on this provision in the proposed regulations, the final regulations provide that a method will be regarded as consistently applied as long as it is consistently applied to the same or substantially similar facts to determine the fair market value.

One commenter recommended that the final regulations clarify that a sales price exists within the meaning of proposed § 1.1273-2(f)(3)(i) only if the purchase and sale of the property occurs, and the sales price is reasonably available, during the testing period. The final regulations accept part of this suggestion by explicitly incorporating the 31-day time period in the description of when a sales price exists, but the suggestion that the sales price must be available in that same time period would be needlessly restrictive and is not adopted. The final regulations specifically provide that taxpayers are only required to search for executed sales for a reasonable period of time after the issue date (including a significant modification), but that time need not be within the 31 days surrounding the issue date. Here, too, the addition of the issuer-holder consistency rule described earlier in the preamble will considerably alleviate the burden of determining when a sale has occurred because the issuer is usually in the best position to know when its debt has been sold or modified.

In response to a comment, the final regulations add a second anti-abuse rule providing that if there is any sale or price quote a principal purpose of which is to cause the property to be traded on an established market or to materially misrepresent the value of property for federal income tax purposes, then the sale or price quote is disregarded.

Finally, a commenter recommended that the effective date of the final regulations be modified to provide that the new rules do not apply to any debt instrument issued or exchanged pursuant to a written binding agreement entered into by the taxpayer before the date that the final regulations are published in theFederal Register. The final regulations do not adopt this comment. However, to minimize their effect on pending transactions, the final regulations under § 1.1273-2(f) apply only to debt instruments issued on or after 60 days after the publication date of the final regulations.

The proposed regulations expanded the definition of a qualified reopening under § 1.1275-2(k) to debt instruments that are issued for cash to unrelated persons, provided that the other requirements of the regulations are satisfied. Commenters requested that the qualified reopening rules in § 1.1275-2(k) be further liberalized. In response to these comments, the final regulations expand the definition of a qualified reopening to include an issuance that satisfies a 100 percent yield test for a reopening after six months. This change is consistent with the intent of the reopening rules, which prevent taxpayers from converting OID into market discount. In response to comments, the final regulations also make slight revisions to the rules used to determine the testing date for a qualified reopening.

Comments also were received on the proposed amendment to the regulations under section 1274 that address potentially abusive situations. One commenter suggested that the change to § 1.1274-3 be deferred and considered as part of a larger project addressing distorted gains from modifications, or, alternatively, that the proposed change be limited so that the recent sale rule continues to apply to a debt modification if all sales that are part of the recent sales transaction involve, in the aggregate, a large portion of the modified debt (for example, more than 50 percent by principal amount). Another commenter requested that the final regulations not apply if either a recent sale occurs or a binding contract providing for the recent sale is entered into prior to publication because investors may commit to buy pools of discount debt in reliance on existing law. Potential distortions created by distressed debt situations are the subject of a separate guidance project. In the meantime, the Treasury Department and the IRS believe that the proposed regulations reach the correct result in determining issue price under section 1274, and the final regulations do not adopt these suggestions. However, to minimize their effect on pending transactions, the final regulations under § 1.1274-3(b)(4) apply only to a debt instrument issued on or after 60 days after the publication date of the final regulations.

The regulations generally apply to a debt instrument issued on or after November 13, 2012.

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 has also 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 the collection of information in these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the collection of information imposed on a taxpayer generally only applies if the outstanding stated principal amount of the debt is more than $100 million, which is anticipated to affect only a small number of small entities. Moreover, any economic impact is expected to be minimal because it should take a taxpayer no more than one-half hour to satisfy the information-sharing requirement in these regulations. Therefore, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the proposed regulations preceding these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business, and no comments were received.

These regulations were drafted by personnel in the Office of Associate Chief Counsel (Financial Institutions and Products) and the Treasury Department.

Accordingly, 26 CFR parts 1 and 602 are 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, 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 FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01 (Revised), dated January 21, 2003, to the TTB Administrator to perform the functions and duties in the administration and enforcement of this law.

Part 4 of the TTB regulations (27 CFR part 4) sets forth the standards promulgated under the FAA Act for the labeling and advertising of wine. Section 4.27 of the TTB regulations (27 CFR 4.27) sets forth rules regarding the use of a vintage date on wine labels. Section 4.27(a) provides that vintage wine is wine labeled with the year of harvest of the grapes and that the wine “must be labeled with an appellation of origin other than a country (which does not qualify for vintage labeling).” Rules regarding appellation of origin labeling are contained in § 4.25 of the TTB regulations (27 CFR 4.25).

In addition, § 4.27(a)(1) provides that for American or imported wines labeled with a viticultural area appellation of origin (or its foreign equivalent), at least 95 percent of the wine must have been derived from grapes harvested in the labeled calendar year. For American or imported wines labeled with an appellation of origin other than a country or viticultural area (or its foreign equivalent), § 4.27(a)(2) provides that at least 85 percent of the wine must have been derived from grapes harvested in the labeled calendar year.

The requirement that vintage wine must be labeled with an appellation of origin other than a country derives from T.D. ATF-53, published in theFederal Register(43 FR 37672) by TTB's predecessor agency, the Bureau of Alcohol, Tobacco and Firearms (ATF), on August 23, 1978. Prior to that time the applicable regulations required that grapes used to make vintage wine must have been grown in the same “viticultural area,” a term then undefined by the regulations.

In amended Notice No. 304, a notice of proposed rulemaking preceding T.D. ATF-53 and published in theFederal Register(42 FR 30517) on June 15, 1977, ATF noted that the wine industry advocated that the then current requirement that 95 percent of the grapes used to make vintage wine be grown in the labeled appellation area be reduced to 75 percent. This mirrored the requirement that to bear an appellation of origin, at least 75 percent of the grapes used to make a wine must be grown in the appellation area indicated on the label. The industry position, according to ATF, was that “vintage means only that the grapes were grown in the specified year, and that the place in which the grapes were grown is unimportant.” ATF stated in that notice that it did not agree, commenting as follows:

However, in T.D. ATF-53, the agency modified its position somewhat stating that it concurred with the industry position that a vintage date should refer only to the year of harvest. Accordingly, a new regulatory provision regarding appellations of origin, also adopted in T.D. ATF-53, required that the percentage of grapes required to come from the labeled appellation area depended upon whether the appellation was a viticultural area (85 percent), a State, county or foreign equivalent (75 percent), or a multicounty or multistate appellation (100 percent), but in each case without reference to vintage date usage. The rulemaking record for T.D. ATF-53 does not explain why ATF decided that vintage wine must be labeled with an appellation other than a country, but it does indicate that the agency believed that a vintage date should provide consumers information about harvest conditions.

In its most recent rulemaking action regarding vintage dating, TTB liberalized the requirements by reducing the percentage of wine derived from grapes required to be harvested in the labeled calendar year from 95 percent to 85 percent for wine labeled with an appellation of origin other than a country or a viticultural area (or its foreign equivalent). See T.D. TTB-45, published in theFederal Register(71 FR 25748) on May 2, 2006. The percentage remained at 95 for wines bearing a viticultural area (or its foreign equivalent) as an appellation of origin. Blending wine from different vintages could result in a more consistent product and provide a better value for consumers, according to the proponents of the earlier liberalization of vintage date labeling.

The European Commission submitted a petition requesting TTB to amend § 4.27(a) to allow the use of a country appellation for vintage labeling. Thepetitioner stated that the current regulation prohibiting a country appellation presents a significant difficulty for its member countries.

The petitioner noted that some of its member countries are much smaller in size than certain U.S. States, counties, and even certain American viticultural areas (AVAs). To illustrate this, it compared the areas of Malta (246 sq. km), Luxembourg (2,586 sq. km), and Austria (83,871 sq. km) with the Lodi AVA (2,230 sq. km) and the Ohio River Valley AVA (67,000 sq. km). The petitioner argued that there is no convincing rationale for a rule that allows vintage dating for a wine with an appellation of “California” (423,970 sq. km), but not for a wine labeled with the appellation “Portugal” (92,391 sq. km).

The petitioner also contrasted the vintage date rule in question with the general varietal (grape type) labeling rule contained in 27 CFR 4.23(a), under which the names of one or more grape varieties may be used as the type designation of a grape wine only if the wine is also labeled with an appellation of origin as defined in § 4.25. Because § 4.25 includes countries within the definition of an appellation of origin, a wine labeled with a varietal designation may be labeled with a country appellation. The petitioner contended that these regulatory rules are inconsistent and that it would seem more logical to apply a coherent approach and allow vintage labeling for wines labeled with a country appellation.

Finally, the petitioner asserted that the language in Article 7(1) of the 2006 “Agreement between the United States of America and the European Community on Trade in Wine” supports the proposed change. (Seehttp://www.ttb.gov/agreements/us_ec_wine_agreement.shtml.) TTB notes that Article 7 concerns names of origin, which include the country names of the Member States of the European Union. However, because the use of vintage dates is not specifically addressed in that provision, TTB does not consider this assertion to be particularly supportive of the proposed change.

On November 4, 2011, TTB published Notice No. 122 in theFederal Register(76 FR 68373) proposing to amend § 4.27 to allow vintage labeling for wines labeled with a country as an appellation of origin. In addition, the proposed amendments to § 4.27 required a conforming amendment in § 4.34(b)(5) to remove the reference to the requirement that an appellation of origin for vintage wine shall be other than a country.

TTB received 26 comments in response to Notice No. 122, of which 22 comments favor the proposal, while 3 oppose it. One comment expresses no opinion on the proposal, but requests a revision that would permit wines to be labeled with multiple vintages, a suggestion which is beyond the scope of this rulemaking.

Comments in support of the proposal were submitted by foreign wineries and trade associations, the government of Australia, the European Commission (the petitioner), WineAmerica, one U.S. winery, and two individuals. Nearly all of the supporting comments state that the proposed revisions will provide valuable information to consumers about the age of wines labeled with a country as an appellation of origin.

Several comments contained very similar reasons for supporting the proposed rule. These comments assert that the 85% vintage labeling requirement for wines labeled with country appellations is consistent with EC and Australian rules. The comments also state that the proposal will provide consistency with TTB regulations at 27 CFR 4.23(a) and 27 CFR 4.25, which permit a wine labeled with a country appellation to bear a grape varietal name. In addition, these comments argue that the proposed revisions will eliminate “the discrepancies that arise from the nature of appellations.” Some comments also contend that for the purpose of vintage dating, large States such as Texas or Alaska and a country such as Italy should be treated equally. The comments also assert that the existing rules “could be deemed a breach to the spirit” of the WTO Agreement on Technical Barriers to Trade.

According to the supporting comment submitted by the U.S. winery, the winery's research found that more than 70 percent of wine drinkers consider the vintage date an indication of the wine's age and that a third of wine drinkers consider a wine without a vintage date to be of lower quality. The winery comments that it sometimes has to blend wine from different regions in order to maintain a consistent, high quality product, but that these wines are at a disadvantage in the marketplace because of these consumer attitudes towards vintage dating.

In its comment, WineAmerica, a national association of American wineries, also states that the current rules put wines with American appellations at a competitive disadvantage because they may not use vintage dates. WineAmerica reports that this disadvantage is so great that, in years when its members have to use out-of-state fruit, they often choose to obtain Certificates of Label Exemption for intra-state commerce only in order to sell American appellation wines with vintage dates. WineAmerica argues that the proposal will place these wines on equal footing with wines labeled with multi-state, state, and county appellations and is “sensible regulatory reform” needed by its members, which it describes as family-owned businesses located throughout the United States. WineAmerica asserts that, “(I)f adopted, Notice No. 122 would benefit thousands of American businesses, allowing wineries in every state to truthfully disclose information about their products that consumers find useful.”

In its comment, the National Association of Beverage Importers (NABI), a U.S.-based trade group, states that the proposed revision may impact the market for bulk wine shipped to U.S. wineries from supplier nations. Allowing vintage dating on country appellation wines will elevate the value of these wines to their importers and to consumers. In addition, NABI states it disagrees with TTB's statement in Notice No. 122 that language in Article 7(1) of the 2006 agreement on trade in wine between the United States and the European Community (EC) is not particularly supportive of the proposal. According to NABI, the lack of a specific reference to vintage dates should not bar the powerful sense of fairness and equal treatment contained in the agreement. NABI states that it believes the agreement is significant for establishing the framework for accurately defining consumer information on wine imported from the EC and that “[v]intage dating of country origin product is consistent with that framework.”

Opposition to the proposal came from the California Association of Winegrape Growers (CAWG), the Lodi District Grape Growers Association, and one U.S. winery. Both associations state that vintage dates should not be allowed on wines labeled with a country for an appellation absent “stricter standards of origin for wine labeled with the American appellation of origin.” They note that wines labeled with an EU country name must consist entirely of wine from that country, while TTB regulations permit wine labeled with the American appellation of origin tocontain up to 25 percent wine from other countries. This, they state, misleads the consumer and places U.S. growers at a disadvantage. Both organizations note that California law requires a wine claiming a California appellation of origin to consist wholly of California wine, and CAWG notes that Oregon law requires that all grapes used in the production of a wine with an Oregon appellation be grown in Oregon. Both organizations urge TTB to act on a current petition submitted by CAWG and other grape growers associations which proposes that wines bearing American appellations of origin must contain only U.S. wine.

The comment from the winery that does not support the proposed rule states that the proposal will dilute the vintage date standard and confuse consumers, stating, “It makes a huge difference if the wine is from an AVA specifically, or if it would just say American. * * * Most people who are not avid wine drinkers, identify with AVAs. Most wine drinkers also identify with a year date. Let's not make more confusion to the general public than what is necessary. Let's keep the standards high.”

After careful review of the comments discussed above, TTB has determined that it is appropriate to adopt without change the proposed regulatory amendments contained in Notice No. 122. The majority of commenters expressed support for the proposed rule. While TTB understands the winery's argument that applying a vintage date to a large area could undermine the value of a vintage date statement, TTB believes that vintage dates can provide useful, truthful information to consumers. TTB considers the concerns expressed by CAWG and the Lodi District Grape Growers Association about the percentage of foreign wine permitted in wine labeled with the American appellation of origin to be a separate issue outside the scope of this rulemaking.

TTB certifies under the provisions of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) that this final rule will not have a significant economic impact on a substantial number of small entities. These amendments merely provide optional, additional flexibility in wine labeling decisions. Accordingly, a regulatory flexibility analysis is not required.

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

Jennifer Berry of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document.

For the reasons discussed in the preamble, TTB amends 27 CFR, chapter I, part 4 as set forth below:

Background on Viticultural Areas TTB Authority

Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act 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 FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01 (Revised), dated January 21, 2003, to the TTB Administrator to perform the functions and duties in the administration and enforcement of this law.

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 wineadvertisements. 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 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 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 consulting geographer Patrick Shabram, on behalf of himself and Anselmo Vineyards of Inwood Valley, California, proposing the establishment of the “Inwood Valley” American viticultural area. The original petition proposed a viticultural area containing approximately 32,647 acres, with 60 acres on 4 commercially-producing vineyards and 14 acres planned for further viticultural development. After reviewing the original petition, TTB suggested to the petitioner that the boundary of the proposed viticultural area be modified in order to conform to the requirements of § 9.12 of the TTB regulations (27 CFR 9.12), which requires a petitioned-for viticultural area to be an area in which viticulture exists and to contain features distinguishable from the surrounding area. Acting on this request, Patrick Shabram, the consulting geographer who submitted the original petition on behalf of Anselmo Vineyards, submitted an addendum to the petition, proposing a modified boundary that used lines drawn between identifiable features on the USGS maps to approximate the limits of the distinguishing soil types of the proposed viticultural area and to exclude portions of the proposed viticultural area that do not contain viticulture. The proposed modifications reduced the size of the proposed viticultural area to 28,298 acres and were not intended to affect any grape growers located within the originally petitioned-for viticultural area.

The proposed Inwood Valley viticultural area, located in rural, southern Shasta County in north-central California, does not overlap, or otherwise involve, any existing or proposed viticultural areas.

TTB published Notice No. 125 in theFederal Registeron December 5, 2011 (76 FR 75830), proposing to establish the Inwood Valley viticultural area, based on the modified boundary as discussed above. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed viticultural area. The distinguishing features of the proposed viticultural area include geology, topography, climate, native vegetation, and soil. The notice also included a comparison of the distinguishing features to the surrounding area. For a description of the evidence relating to the name, boundary, and distinguishing features of the proposed viticultural area, see Notice No. 125.

In Notice No. 125, TTB solicited comments on the accuracy of the name, boundary, climactic, and other required information submitted in support of the petition. The comment period closed on February 3, 2012.

During the comment period, TTB received four comments in response to Notice No. 125. The commenters included two self-identified wine industry members and two commenters who did not list any affiliation. Three of the comments support the establishment of the proposed Inwood Valley viticultural area. TTB also received one comment outside of the comment period, as discussed later in this section.

One of the three supporting comments, comment 2, also states that the main purpose of the American viticultural area program is not to provide more information to consumers, but instead to boost the local economy and provide vintners with a more competitive advantage in the marketplace. TTB notes that its regulations regarding the approval of American viticultural areas and their use on labels are intended to ensure that such statements provide adequate information about the identity and origin of the product and are not misleading. Whether or not, and to what extent, there is any economic benefit from the approval of a viticultural area is not a factor that TTB considers in determining whether or not to approve a petition for a viticultural area.

The fourth comment objects to the proposed “Inwood Valley” name, stating that people do not correlate the name “Inwood” with Northern California, and that the word “valley” is “nongeographical.” Rather, the comment contends that the word “valley” is often used as a marketing tool to promote the idea of nature and fresh produce, and that making the name “Inwood Valley” viticulturally significant would prohibit wine bottlers outside the proposed viticultural area that currently use the name “Inwood” on their labels from later adding “valley” to their labels or brand name if they believed it would be in their best marketing interest to do so. The comment cites Inwood Estates Vineyard and Winery in Dallas, Texas, as an example of a winery that would be prohibited from adding “valley” to its name if “Inwood Valley” becomes a term of viticultural significance. The commenter did not claim any association with Inwood Estates Vineyard and Winery and did not comment on any other aspect of the petition.

Section 9.12(a)(1) of the TTB regulations requires that the area within the proposed viticultural area “must be nationally or locally known by the name specified in the petition.” As stated in Notice No. 125, TTB has determined the name evidence submitted by the petitioner shows that the region within the proposed viticultural area is known locally as “Inwood Valley.” The evidence provided with the petition indicates that local residents and businesses within the proposed viticultural area use the name “Inwood Valley,” and that the name “Inwood Valley” accurately describes the region in which the proposed viticultural area is located. TTB further adds that “Inwood,” by itself, is not recognized as having viticultural significance, and that the word “valley” is commonly used in American viticultural area names; there are 40 American viticultural area names containing the word “valley” in California alone.

TTB is not aware of any current label holder that will be adversely affected by the establishment of the Inwood Valley viticultural area and the designation of the full name “Inwood Valley” as a term of viticultural significance. Such establishment also will not affect any current or future label holders using the word “Inwood,” standing alone, on wine labels. For example, the ability of Inwood Estates Vineyard and Winery to use “Inwood Estates” or “Inwood Winery” on a wine label would not be affected by the publication of this final rule. With regard to the restriction on the use of the term “Inwood Valley” on future labels, TTB specifically noted in Notice No. 125 that any current or future label holder wishing to use the term on a wine label must ensure that the wine meets the eligibility requirements for the appellation.

After the close of the comment period, TTB received a comment from a vineyard owner requesting that the southern boundary of the proposed viticultural area be modified in order to include his vineyard. The commenter stated that his vineyard was within the boundary of the viticultural area as originally proposed in the petition, and that he became aware of the boundary line modification and the resultant exclusion of his vineyard only after the comment period had closed. According to the vineyard owner, his property is located immediately adjacent to the viticultural area boundary proposed in Notice No. 125 and currently has 2.5 acres of planted vineyards, with 4 more acres of vineyards planned in the near future. After being informed of the commenter's request, Mr. Shabram sent a letter to TTB acknowledging that the exclusion of the vineyard was inadvertent and stating that the geographical features of the vineyard are similar to those of the viticultural area proposed in Notice No. 125.

TTB notes that, as stated in Notice No. 125, the proposed boundary was based on marked features on USGS maps that approximately follow the distinguishing features of elevation and soil types. TTB believes a slight modification to the boundary to include the vineyard at issue is consistent with the distinguishing features evidence submitted with the petition and discussed in Notice No. 125. Also, although the comment period had already closed when the comment was received, TTB specifically noted in the proposed rule its interest in comments relating to the appropriateness of the proposed boundary.

Accordingly, given the circumstances of the exclusion of the commenter's vineyard from the proposed viticultural area and the potential impact of the rulemaking on the commenter, TTB concludes that the boundary should be modified so that the additional vineyard is included within the Inwood Valley viticultural area. Mr. Shabram provided TTB with the modifications to the boundary description based on markings appearing on the applicable USGS maps, and the letters from the vineyard owner and Mr. Shabram are included in the rulemaking docket. The boundary modification adds 143 acres to the Inwood Valley viticultural area, for a total of 28,441 acres, with approximately 62.5 acres dedicated to 5 commercially-producing vineyards.

After careful review of the petition and the comments received, TTB finds that the evidence provided by the petitioner supports the establishment of the 28,441-acre Inwood Valley viticultural area as proposed in Notice No. 125 and modified by the alteration to the boundary description discussed below. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and part 4 of the TTB regulations, TTB establishes the “Inwood Valley” viticultural area in Shasta 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 final rule. Paragraphs (c)(17) and (18) of the final boundary description of the viticultural area differ from the description in the proposed rule, consistent with the modification of the southern portion of the boundary line discussed above. In addition, TTB clarified the wording of other boundary descriptions within paragraph (c) but the location of the boundary as described in those sections did not change from that proposed in Notice No. 125.

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, “Inwood Valley,” 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 “Inwood Valley” 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 name as an appellation of origin.

For a wine to be labeled with a viticultural area name or with a brand name that includes a viticultural area name or other term identified as 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. The regulation imposes no newreporting, 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 FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01 (Revised), dated January 21, 2003, to the TTB Administrator to perform the functions and duties in the administration and enforcement of this law.

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 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.

In August 2008, TTB received a petition from Rachel E. Martin, executive vice president of Boxwood Winery in Middleburg, Virginia, proposing the establishment of the “Middleburg Virginia” American viticultural area in portions of Loudoun and Fauquier Counties in northern Virginia. The petition states that the proposed viticultural area derives its name from the Town of Middleburg, Virginia, and it is bounded by the Potomac River to the north and by mountains to the east, south, and west. The petition notes that the proposed viticultural area covers approximately 190-square miles (121,600 acres) and contains 229 acres of commercial vineyards and 12 wineries.

In July 2009, Ms. Martin submitted to TTB a modification to the proposed Middleburg Virginia viticultural area boundary line in order to include several additional vineyards within the proposed viticultural area. The modification increased the size of the proposed viticultural area by 1,920 acres in the Burnt Mill Run area, east of Zulla, on the USGS Rectortown map. According to the petitioner, the additional acreage has the same distinguishing features as the originally proposed viticultural area. With the petitioner's modified boundary line, the proposed Middleburg Virginia viticultural area contains 251 acres of commercial grape growing in 10 vineyards and 14 wineries. With the petitioner's agreement, TTB also made several small modifications to the originally-proposed boundary line in order to better match the provided maps with the petition's narrative boundary description. These changes were made in the vicinity of the town of Marshall and Little Cobbler Mountain and near the hamlet of Airmont along Route 734 and added approximately 5 square miles (3,200 acres) to the proposed viticultural area. TTB notes that the proposed viticultural area does not overlap or otherwise affect any established or proposed American viticultural area.

TTB published Notice No. 123 in theFederal Registeron November 8, 2011 (76 FR 69198), proposing to establish the Middleburg Virginia viticultural area. In the notice, TTB summarized the evidence from the petition regarding the name, boundary, and distinguishing features for the proposed viticultural area. The distinguishing features of the proposed viticultural area include climate, topography, geology, and soil. The notice also compared the distinguishing features of the proposed viticultural area to the surrounding area. TTB estimates that the proposed Middleburg Virginia viticultural area, as described in Notice No. 123, contains approximately 198-square miles (or 126,720 acres). For a description of the evidence relating to the name, boundary, and distinguishing features of the proposed viticultural area see Notice No. 123.

In Notice No. 123, TTB solicited comments on the accuracy of the name, boundary, climatic, and other required information submitted in support of the petition. The comment period was scheduled to close on January 9, 2012. During the comment period, the Loudoun Wine Growers Association submitted a request to extend the comment period (comment 12), claiming that their members had beenunaware of the proposal. In response to the request, Ms. Rachel E. Martin, who filed the original petition to establish the Middleburg Virginia viticultural area, submitted a comment (comment 23) that expressed opposition to the extension of the comment period. In the interest of providing the public with a full opportunity to comment on the proposed rulemaking, TTB issued Notice No. 123A, which extended the comment period until February 27, 2012 (77 FR 2027, January 13, 2012).

Excluding the two comments received regarding the extension of the comment period, TTB received 26 comments in response to Notice No. 123 during both the original and extended comment period. The commenters included 17 self-identified wine industry members, including growers and vintners; 3 commenters who did not list any affiliation; 2 food and wine writers; Ms. Martin, the petitioner, who submitted two additional comments; Virginia's Secretary of Agriculture and Forestry, on behalf of the Commonwealth; and a soil scientist.

Fifteen of the commenters unequivocally support the proposed Middleburg Virginia viticultural area (comments 1, 4, 6, 7, 9, 11, 16, 17, 18, 19, 20, 21, 22, 24, and 25). These commenters included 10 self-identified wine industry members, including growers, vintners, and a wine exporter; two food and wine writers; the Secretary of Agriculture and Forestry for the Commonwealth of Virginia; and two commenters who stated no affiliation. Several of the comments specifically supported the evidence that was presented in the petition and described in Notice No. 123. For instance, comment 7, from a winery operator within the petitioned-for viticultural area, states that the petition was “well researched” and accurately describes the “unique geographical and agricultural” nature of the region. Comment 9, from a local winemaker and grape grower, applauds the petition as “the most comprehensive I have ever seen related to a Virginia AVA” and believes it effectively describes the microclimate of the area. Comment 17, from a grower to the west and outside of the petitioned-for viticultural area, notes that “[the] features of the lands identified in this AVA are clearly distinctive from the valley in which we grow grapes.” Comment 22, from a local grower, supports the boundaries of the petitioned-for viticultural area, stating that “[the] area defined accurately depicts the consistent grape-growing area, which varies measurably from the surrounding area.” In comment 24, a wine writer states that the petitioned-for viticultural area “comprises a contiguous and distinct microclimate that is distinct from the surrounding area.” Finally, comment 25, from a viticultural consultant who has worked with growers in the region, believes the petitioned-for viticultural area should be established and become “one of what should eventually be many AVAs based on specific geographic parameters,” and describes the varied elevations within the boundaries as resembling the elevation variations found within the established Napa Valley and Monticello viticultural areas.

An additional comment (comment 26) supports the establishment of the proposed viticultural area and also requests a boundary modification to include the commenter's vineyard in the proposed viticultural area. The modification request is discussed later in this document.

Comment 27 expressly opposes the establishment of the proposed Middleburg Virginia viticultural area because “[t]here are sufficient viticultural areas,” and many of the existing viticultural areas are “underutilized.” The comment states that “[a]dding yet another designation reduces the intrinsic value of said designation” and urges rejecting “this and future applications.”

TTB notes that under its regulations the number of established viticultural areas and utilization rate of the designations are not factors that determine whether or not a viticultural area should be established. TTB does not believe these factors are determinative as to whether the use of a viticultural area name on a label as an appellation of origin would provide adequate information about the identity and origin of the product or would be misleading.

Alex Blackburn, the soil scientist whose analysis was relied upon and cited in the petition, also submitted a comment (comment 5) to clarify two statements attributed to him in the petition and Notice No. 123. Mr. Blackburn first explained that although the topography section of Notice No. 123 states that fairly level terrain, like that found in the southern region of the proposed viticultural area, is an important characteristic for a vineyard site, steeper parcels can be prepared and managed for use as vineyards and may have “significant advantages concerning the production of quality grapes.” Secondly, Mr. Blackburn noted that the soils section of Notice No. 123 describes the Purcellville, Tankerville, Philomont, and Middleburg soils of the proposed viticultural area as being “among the best in the Blue Ridge Physiographic Province for fruit production, and grapevines grown in these soils have better quality with few vigor problems” because they are “lower in natural fertility and in available water capacity” than the soils of the region outside the proposed viticultural area. Mr. Blackburn clarified that while the statement may apply to the Tankerville and Philomont soils, Purcellville soils “are often vigorous due to high natural fertility and plant available water,” and the Middleburg soils are very deep and fertile but are located in drainage swales that are generally not recommended for the production of quality grapes.

Section 9.12(a)(3) requires a petition to include a description of the common features of a proposed viticultural area and how those features are distinctive from the features associated with adjacent areas outside the proposed viticultural area boundary. TTB agrees that Mr. Blackburn's comments clarify the statements attributed to him in the petition and Notice No. 123, but these clarifications do not affect the evidence supporting the conclusion that the soil and terrain within the proposed viticultural area are distinguishable from the surrounding area.

Four comments from local vineyard owners (comments 3, 8, 10, and 14) object to the name of the proposed viticultural area, claiming that the name “Middleburg Virginia” does not represent the entire region within the proposed viticultural area, particularly the portion within northern Loudoun County. TTB notes that none of these comments expressly opposes the establishment of the proposed viticultural area.

Comment 3 proposes the alternative names of “Northern Virginia” and “Greater Loudoun” and suggests that the name “Middleburg Virginia” might be appropriate if the size of the proposed viticultural area was reduced to encompass a much smaller area around the town of Middleburg. Comment 8 states that the region of northern Loudoun County has “no historical or geographical association with the town of Middleburg,” and offered the name “Northern Piedmont” as an alternative. Comment 10 states that the proposed viticultural area is toolarge for the name “Middleburg Virginia” to apply to the entire area, and suggests the proposed viticultural area be called “Northern Virginia Piedmont.” Comment 14 also questions whether the proposed name applies to the entire region within the proposed viticultural area, but supports the establishment of a viticultural area in the region and agrees with the proposed boundary. In response to these concerns, Ms. Martin, the petitioner, submitted a comment (comment 13) reiterating her belief that the proposed name is applicable to the entire region that would be included in proposed viticultural area.

In response to these comments, TTB notes that § 9.12(a)(1) requires a petition to provide evidence that currently and directly associates a name with the proposed viticultural area, and that the area be known locally or nationally by that name. As stated in Notice No. 123, the evidence provided with the petition indicates that local residents and businesses within the proposed viticultural area use the name “Middleburg Virginia,” and that the name “Middleburg Virginia” accurately describes the general region in which the proposed viticultural area is located rather than only the town of Middleburg. Although the three commenters claim that the proposed “Middleburg Virginia” name does not apply to the entire proposed viticultural area, they offered no evidence to refute the name evidence provided in the petition and Notice No. 123. Additionally, the commenters did not submit any evidence in support of the alternative proposed names that they assert more accurately describe the entire proposed viticultural area than the “Middleburg Virginia” name.

Four comments (comments 2, 10, 15 and 26) suggest modifications to the proposed boundary line. Comment 2 suggests adjusting the proposed western portion of the boundary line to coincide with the eastern boundary of the established Shenandoah Valley viticultural area farther to the west, in order to eliminate a 3-mile wide “gap” between the proposed viticultural area and the Shenandoah Valley viticultural area. Comment 2 further states that the boundary modification would be justified because the soil characteristics and growing conditions of the “gap” are similar to those within proposed viticultural area.

Comment 10 claims the proposed viticultural area is too heterogeneous, and the hillier, mountainous areas within the proposed boundary should be removed because they have a different topography from the rest of the proposed viticultural area. Comment 15 also suggests modifying the proposed boundary line to remove the slopes, peaks, and ridges of the mountains within the proposed viticultural area because these higher, steeper elevations are “separately distinct features from the rolling plains of Middleburg and its surrounding countryside.”

One comment (comment 26) supports the establishment of the proposed Middleburg Virginia viticultural area and also requests that the boundary be adjusted to include the commenter's vineyard, which is adjacent to the eastern portion of the proposed boundary that follows State Route 662. Ms. Martin, the petitioner, in comment 28 confirmed that the climate, topography, geology, and soil of the property in question are consistent with the proposed viticultural area, and she stated that she supports a modification of the boundary to include the commenter's property.

Section 9.12(a)(2) of the TTB regulations requires petitions to explain the basis for defining the boundary of the proposed viticultural area and to describe the commonalities within the boundary and explain how the region outside the proposed boundary differs. As noted in Notice No. 123, the boundary evidence included in the petition provided an adequate basis for the proposed boundary. Comments 2, 10, and 15 recommend significant boundary modifications; however, the commenters did not provide data and evidence to support their assertions and rebut the evidence submitted with the petition. With regard to comment 2, TTB notes that the terrain in the gap between the proposed viticultural area and the established Shenandoah viticultural area appears to be more mountainous and rugged than that of the majority of the proposed viticultural area, with higher elevations and steeper slopes that run in a north-south direction, compared to the gentle, rolling hills within the proposed viticultural area.

With regard to the request in comment 26 to modify the eastern portion of the proposed boundary that follows State Route 662 so that the commenter's vineyard would be included within the viticultural area, there are several factors that support this proposed boundary change. First, the commenter's property is directly adjacent to the boundary of the proposed viticultural area. TTB notes that the proposed boundary was based in part on marked features on USGS maps that approximately track the distinguishing feature of soil types; the location and extent of a particular soil type can only be approximated on the USGS maps used for boundary directions. Second, the petitioner confirmed that the property shares the same distinguishing features as the region within the proposed viticultural area. Finally, the boundary modification adds only 330 acres (0.5 square miles). Accordingly, TTB concludes that the boundary should be modified to include the commenter's vineyard.

After careful review of the petition and the comments received in response to Notice No. 123, TTB finds that the evidence provided by the petitioner supports the establishment of the approximately 198-square mile Middleburg Virginia viticultural area. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and part 4 of the TTB regulations, TTB establishes the “Middleburg Virginia” viticultural area in Loudoun and Fauquier Counties, Virginia, 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.

As discussed earlier in this document, the final boundary description of the viticultural area differs from the description in the proposed rule in order to incorporate the additional 330 acres. Paragraphs (c)(8) through (12) have been changed to expand the southern boundary slightly to include a vineyard that was adjacent to and outside of the viticultural area boundary proposed in Notice No. 123; subparagraphs (c)(9) through (c)(42) in the proposed rule were redesignated as paragraphs (c)(13) through (c)(46) in this final rule to accommodate the boundary modification.

The petitioner provided the required maps, and TTB lists them below in the regulatory text. The Leesburg Quadrangle map was added to accommodate the boundary modification described above.

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, “Middleburg Virginia,” isrecognized 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 “Middleburg Virginia” 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.

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 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. 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 final rule.

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

Table of Acronyms DHSDepartment of Homeland Security FRFederal Register NPRMNotice of Proposed Rulemaking A. Regulatory History and Information

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the Coast Guard did not receive necessary information regarding the event with sufficient time to publish an NPRM and to receive public comments prior to the event. Any delay in the effective date of this rule would be contrary to the public interest because immediate action is needed to minimize potential danger to air show participants, participant aircraft, spectators, and the general public.

For the same reason discussed above, under 5 U.S.C. 553(d)(3) the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in theFederal Register.

The legal basis for the rule is the Coast Guard's authority to establish regulated navigation areas and other limited access areas: 33 U.S.C. 1231; 46 U.S.C. Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Public Law 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.

On May 14, 2012, Kaneohe Bay Air Show 2012 coordinators informed the U.S. Coast Guard of a State of Hawaii approved Air Show plan that include an aerial performance “show box” extending beyond the Kane`ohe Bay Naval Defensive Sea Area as established by Executive Order No. 8681 of February 14, 1941. Within this “show box”, the U.S. Navy Blue Angels Squadron will conduct aerobatic performances, exhibiting their aircraft's maximum performance capabilities, over Kaneohe Bay, Oahu, Hawaii during a 3-day period. Taking into account the hazards associated within this “show box” during the Squadron's high powered multiple jet aircraft performances, and that Kaneohe Bay normally experiences heavy waterway traffic during the weekends, a safety zone for the portions of the “show box” that extend beyond the Kane`ohe Bay Naval Defensive Sea was determined to be appropriate by the Captain of the Port so as to ensure the safety of all watercraft and the general public during the Blue Angels' performances.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, 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 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders. The economic impact of this rule is not significant for the following reasons: (1) The safety zone will be enforced for only eight hours each day for a three day period; (2) although persons and vessels will not be able to enter, transit through, anchor in, or remain within the event area without authorization from the Captain of the Port Honolulu or a designated representative, they may operate in the surrounding area during the enforcement period; (3) persons and vessels may still enter, transit through, anchor in, or remain within the event area during the enforcement period if authorized by the Captain of the Port Miami or a designated representative.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered the impact of this rule on small entities. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule may affect the following entities, some of which may be small entities: the owners or operators of vessels intending to enter, transit through, anchor in, or remain within that portion of Kaneohe Bay encompassed within the safety zone from 8 a.m. until 5 p.m. on September 28, 29, and 30, 2012. For the reasons discussed in the Regulatory Planning and Review section above, this rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the personlisted in theFOR FURTHER INFORMATION CONTACT, above. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in theFOR FURTHER INFORMATION CONTACTsection to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

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 would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule would 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 would not create an environmental risk to health or risk to safety that might disproportionately affect children.

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

This rule is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

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 made a preliminary determination 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 involves the establishment of a temporary safety zone to protect the public on navigable waters of the United States. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. A preliminary environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated underADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

On June 27, 2012, the Postal Service filed a notice with the Postal Regulatory Commission (Docket No. R2012-9) to temporarily reduce the prices for certain types of First-Class Mail and Standard Mail letters and flats containing a transactional two-dimensional barcode (“mobile barcode”) readable by consumer mobile devices. The terms “mobile barcode or mobile barcodes” include equivalent mobile technologies such as watermarks or tags. On August 7, 2012, the PRC approved the Holiday Mobile Shopping Promotion (“Promotion”), which will take place between November 7, 2012 and November 21, 2012 (“promotion period”). The Promotion is designed to spur mobile purchasing by putting mailers' mobile-optimized offers, coupons, and catalogs into the hands of customers for the Black Friday/Cyber Monday holiday shopping timeframe.

In this final rule, the Postal Service provides a description of the eligibility conditions for the Holiday Mobile Shopping Promotion, and the revised mailing standards to implement the promotion. The new standards will replace those for the Mobile Commerce and Personalization Promotion that have been in effect for the months of July and August 2012.

To be eligible, each mailpiece listed on a qualifying postage statement must have a mobile barcode on the outside of the piece or on the contents within the piece. When scanned, the mobile barcode must lead the recipient of the mailpiece to a mobile optimized shopping Web site that allows the recipient to purchase an advertised product on the mobile device (the sale of services will not qualify). Directional text must be printed near the mobile barcode to instruct the recipient to scan the image. Mobile barcodes that direct consumers to web pages that allow them to pay for prior or future purchases or encourage enrollment in online bill payment or paperless statement services are not eligible for the Promotion. Mailpieces with mobile barcodes that convey postage information, destination, sender, or a machinable serial number for security purposes also are not eligible for the discount.

The Holiday Mobile Shopping Promotion provides an upfront price reduction of 2 percent on the eligible postage for qualifying mailpieces. Qualifying mailings are Presorted and automation mailings of First-Class Mail cards, letters, and flats, and Standard Mail (including Nonprofit) letters and flats. Commingled, co-mailed, and combined mailings are allowed, but a separate postage statement is required for the mailpieces with mobile barcodes.

The price reduction will be taken off the eligible postage amount due at the time of mailing. The Promotion discount does not apply to single-piece First-Class Mail pieces including residual single-piece First-Class Mail pieces claimed on a postage statement for Presorted and automation mailings. The price reduction also does not apply to any Standard Mail residual pieces paying single-piece First-Class Mail prices.

Eligible mailings must be accompanied by electronic documentation, submitted via mail.dat, mail.xml, or Postal Wizard. The electronic documentation must identify the mail owner and mail preparer in the “by/for” fields for all mailings, either by the Customer Registration ID (CRID) or Mailer ID (MID) assigned by USPS®. Mailings of automation cards and letters, including Standard Mail letters (other than those with simplified addresses) claiming a carrier route automation letter price on a postage statement, or automation flats must have Intelligent Mail® barcodes. Mailpieces with POSTNETTMbarcodes will not be eligible for the price reduction.

Mailers also may qualify for an additional 1 percent rebate on the pre-discount postage of their qualifying mailings if a portion of their orders is fulfilled via Priority Mail® between November 9, 2012, and December 31, 2012 (“fulfillment period”). Priority Mail packages must bear a unique trackable barcode (i.e., Delivery Confirmation barcode or Intelligent Mail package barcode). To claim the rebate, mailers will need to demonstrate that during the fulfillment period, the number of Priority Mail packages delivered to customers exceeded 0.5 percent (“package threshold”) of the total number of qualifying mailpieces sent during the “promotion period” (November 7, 2012, through November 21, 2012.).

An example of the package threshold calculation is in the table below:

In the example above, if the mailer had sent 500 packages or less via Priority Mail with Delivery Confirmation during the fulfillment period, there would be no rebate. Rebate applications will be due to the program office no later than February 15, 2013. Any earned rebate will be deposited to the participant's mailing postage payment account.

Postage payment methods will be restricted to permit imprint, metered postage, or precancelled stamps. Pieces with metered postage must bear an exactamount of postage as stipulated by the class and shape of mail. For First-Class Mail letters, the affixed values below are for the first 2 ounces only, and for First-Class Mail flats, for the first ounce only. Affixed postage values for metered mailings will be as follows:

Mailings with postage paid by metered or precancelled stamp postage will have the percentage discount deducted from the additional postage due, except for Value Added Refund mailings, which may include the amount of the discount with the amount to be refunded. The holiday mobile shopping promotion discount cannot be combined with other incentives, with the exception of the full-service Intelligent Mail barcode discount.

To participate in the promotion, customers must be registered for the Promotion on the Incentive Programs Service through the Business Customer Gateway athttps://gateway.usps.com/bcg/login.htmand specify which permits and CRIDs will participate in the promotion. Registration opens September 15, 2012 and must be completed at least 2 hours prior to the first mailing. The Postal Service will implement the Promotion and temporary price reduction for mailings made on November 7, 2012, through November 21, 2012. Plant-verified drop shipment (PVDS) mailings accepted no later than November 21, 2012, may be entered at destinations through December 6, 2012. Program requirements, including updated FAQs, are available on the RIBBS® Web site athttps://ribbs.usps.gov/index.cfm?page=mobilebarcodeor by email tomobilebarcode@usps.gov.

The Postal Service adopts the following changes toMailing Standards of the United States Postal Service,Domestic Mail Manual (DMM), which is incorporated by reference in theCode of Federal Regulations.See 39 CFR 111.1.

Accordingly, 39 CFR part 111 is amended as follows:

We will publish an appropriate amendment to 39 CFR Part 111 to reflect these changes.

When the Postal Service was mandated to comply with Sarbanes-Oxley regulations, the Postal Service required a Statement on Auditing Standards (SAS) 70 Type II Report from each of our providers. As the American Institute of Certified Public Accountants (AICPA) guidance has changed, the Postal Service is now requiring a Statements on Standards for Attestation Engagements (SSAEs) No. 16 Type II Report from each of our providers. We have also clarified that the expense incurred from obtaining this report will be paid by the resetting companies (RCs).

Accordingly, for the reasons stated, 39 CFR part 501 is amended as follows:

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

The SIP revision which is the subject of this action was submitted by Missouri by letter dated October 11, 2011. The revision consists primarily of a consolidation of existing rules relating to PM emission from indirect heating sources. EPA most recently revised the NAAQS for PM on October 17, 2006. (71 FR 61144). The PM standard regulates two types of particulates: fine particulates, or PM2.5, which generally refers to particles less than or equal to 2.5 micrometers (µm) in diameter; and coarse particulates, or PM10, referring generally to particles less than or equal to 10 µm in diameter. Because the preexisting state rules were designed to address a prior NAAQS for total suspended particulates, the consolidated Missouri rule regulates total PM emissions, without reference to particle size.

Today's action does not change existing emissions limitations, but rather consolidates four previously existing Missouri area-specific rules into one state-wide standard for clarity. The consolidated rule provides an exemption for units that burn specific types of “clean burning” fuels and an alternative method of demonstrating compliance by averaging emissions for facilities with multiple units subject to this rule, as described in more detail below. These four rules were previously approved into the Missouri SIP.See40 CFR 52.1320(c).

The four rules which are being consolidated into the new Missouri rule include:

Missouri's new rule restricts the emission of PM from fuel burning equipment used for indirect heating. As discussed above, the rule applies state-wide, with additional conditions applicable to the Springfield, Kansas City and St. Louis Metropolitan Areas. The rule applies to facilities that burn fuel for the primary purpose of producing steam, hot water, or hot air or other indirect heating of liquids, gases or solids and, in the course of doing so, the products of combustion do not come into contact with process materials. The types of facilities affected by this rule include but are not limited to utility and industrial boilers, process heaters and smelters of all sizes. The types of fuel may include but are not limited to coal, tire-derived fuel, coke, lignite, coke breeze, gas, fuel oil, biomass and wood, but do not include refuse.

An installation is excluded from this rule if all of the installation's applicable units are fueled only by landfill gas, propane, natural gas, fuel oils #2 through #6 (provided that the fuels are low in sulfur), or other gases with low hydrogen sulfide and/or mercury content, as discussed in greater detail below.

EPA's analysis of the State's SIP submittal is presented below. As a result of EPA's analysis, we are approving this request and are amending Missouri's SIP to remove the four pre-existing rules and replace them with the new rule, 10 CSR 10-6.405. This revision creates the new consolidated rule and rescinds the former area-specific rules.

This rulemaking does not change the substantive PM emissions requirements. It merely clarifies the Missouri regulation, adds exemptions for individual emission units using clean-burning fuels and for entire facilities using only these specific clean fuels, and is expected to improve compliance.

The Missouri rule establishes emission rate limits for installations in which fuel is burned for the primary purpose of producing steam, hot water, or hot air or other indirect heating of liquids, gases, or solids and in the course of doing so, the products of combustion do not come into direct contact with process materials. As discussed above, fuels may include but are not limited to coal, tire-derived fuel, coke, lignite, coke breeze, gas, fuel oil, biomass and wood, but do not include refuse.

An installation is excluded from this rule if all of the installation's applicable units are fueled only by landfill gas, propane, natural gas, fuel oils #2 through #6 (with less than 1.2 percent sulfur), or other gases (with hydrogen sulfide levels less than or equal to four parts-per-million by volume as measured by American Standard for Testing of Materials (ASTM) ASTM D4084, or equivalent method, and mercury concentrations less than 40 micrograms per cubic meter as measured using ASTM D5954, or ASTM D6350, or equivalent), or any combination of these fuels.

In a correspondence dated January 31, 2012, the Missouri Department of Natural Resources (MDNR) provided supplemental information to EPA supporting the rule. In its analysis of the emissions impact of the clean fuels exclusion, MDNR relied on a technical analysis of emissions from units burning such fuels, performed for EPA in conjunction with the boiler MACT rulemaking (76 FR 80532). MDNR compared projected emissions from such units to the emission limitations under the state rule, and concluded that emissions would be lower with the use of clean fuels than emissions allowed under the state's indirect heating rule. MDNR concluded, based on this analysis, that emissions would not increase as a result of the exclusion. EPA has reviewed MDNR's analysis and agrees with this conclusion.

The Missouri rule sets emission limits for Existing Indirect Heating Sources based on the area of the State (Kansas City and St. Louis Metropolitan areas, or Springfield—Greene County and Outstate Missouri areas) and the aggregate heat content of all fuels whose combustion products pass through a stack(s). These limits are the same as those already approved in the State SIP through the adoption of the pre-existing rules.

Similarly, the Missouri rule sets emission limits for New Indirect Heating Sources. Again, these limits are the same as those already approved in the State SIP through the adoption of the pre-existing regulations.

The Missouri rule also presents the option of demonstrating compliance if the weighted average emission rate (WAER) of two or more indirect heating sources is less than or equal to the maximum allowable particulate emission rate limits for PM emissions required by the regulation. EPA has reviewed this approach and determinedthat it is a valid method for demonstrating compliance with the standard because it achieves the same overall level of emissions for the installation.

The January 31, 2012, correspondence, referenced above, also included a technical analysis demonstrating that the averaging approach versus unit-specific PM limits for determining compliance with the rule had no effect on the emission limits. EPA agrees with this analysis.

In summary, EPA has reviewed this consolidated regulation and determined that it achieves the same level of PM control as the pre-existing four regulations, and therefore is equally protective of human health and the environment.

The Missouri rule is state enforceable and has already been made effective by the state as of October 30, 2011. The Missouri rule specifies reporting and record keeping requirements for installations subject to the rule. The owner or operator of an installation subject to the rule shall maintain records annual emissions and testing records demonstrating compliance with the rule for a period of five years. These records must be available to MDNR upon request.

EPA is approving Missouri's request to include the new State rule regulation into the Missouri SIP. This approval is based on EPA's finding that the rule is as stringent as the four rules it replaces and fulfills the requirements of the CAA. EPA notes that although this SIP revision does not reduce state-wide PM from current levels, it consolidates and clarifies four existing rules to result in greater compliance toward attaining the 2006 p.m. NAAQS.

Under the CAA, the Administrator is required to approve a SIP submission that the Administrator determines to be in compliance 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 does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

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

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

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

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

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

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

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

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

In addition, this action 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 in 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 March 16, 2009. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (Seesection 307(b)(2).)

40 CFR part 52 is amended as follows:

The information in this section is organized as follows:

After evaluating the petition for IBM, EPA proposed, on July 16, 2012 (77 FR 41720), to exclude the waste from the lists of hazardous waste under § 261.31. EPA is finalizing the decision to grant IBM's delisting petition to have its F006 wastewater treatment sludge excluded, or delisted, from the definition of a hazardous waste, once it is disposed in a Subtitle D landfill.

IBM's petition requests a delisting from the F006 waste listing under 40 CFR 260.20 and 260.22. IBM does not believe that the petitioned waste meets the criteria for which EPA listed it. IBM also believes no additional constituents or factors could cause the waste to be hazardous. EPA's review of this petition included consideration of the original listing criteria, and the additional factors required by the Hazardous and Solid Waste Amendments of 1984 (HSWA). See Section 3001(f) of RCRA, 42 U.S.C. 6921(f), and 40 CFR 260.22 (d)(1)-(4) (hereinafter all sectional references are to 40 CFR unless otherwise indicated). In making the final delisting determination, EPA evaluated the petitioned waste against the listing criteria and factors cited in § 261.11(a)(2) and (a)(3). Based on this review, EPA agrees with the petitioner that the waste is nonhazardous with respect to the original listing criteria. (If EPA had found, based on this review, that the waste remained hazardous based on the factors for which the waste was originally listed, EPA would have proposed to deny the petition). EPA evaluated the waste with respect to other factors or criteria to assess whether there is a reasonable basis to believe that such additional factors could cause the wastes to be hazardous. EPA considered whether the waste is acutely toxic, the concentrations of the constituents in the waste, their tendency to migrate and to bioaccumulate, their persistence in the environment once released from the waste, plausible and specific types of management of the petitioned waste, the quantities of waste generated, and waste variability. EPA believes that the petitioned waste does not meet the listing criteria and thus should not be a listed waste. EPA's final decision to delist the waste from IBM's facility is based on the information submitted in support of this rule, including a description of the waste and analytical data from the Essex Junction, Vermont facility.

This exclusion applies to the waste described in IBM's petition only if the requirements described in 40 CFR part 261, Appendix IX, Table 1 and the conditions contained herein are satisfied.

The delisted F006 wastewater treatment sludge will be disposed of in a Subtitle D landfill which is permitted, licensed or otherwise authorized by a state to manage industrial waste.

This rule is effective September 13, 2012. The Hazardous and Solid Waste Amendments of 1984 amended Section 3010 of RCRA, 42 U.S.C. 6930(b)(1), allow rules to become effective in less than six months after the rule is published when the regulated community does not need the six-month period to come into compliance. That is the case here because this rule reduces, rather than increases, the existing requirements for persons generating hazardous waste. This reduction in existing requirements also provides a basis for making this rule effective immediately, upon publication, under the Administrative Procedure Act, pursuant to 5 U.S.C. 553(d).

EPA is issuing this exclusion under the federal RCRA delisting program. Thus, upon the exclusion being finalized, the wastes covered will be removed from Subtitle C control under the federal RCRA program. This will mean, first, that the wastes will be delisted in any State or territory where the EPA is directly administering the RCRA program (e.g., Iowa, Indian Country). However, whether the wastes will be delisted in States which have been authorized to administer the RCRA program will vary depending upon the authorization status of the States and the particular requirements regarding delisted wastes in the various States.

While Vermont has been authorized to generally administer the federal RCRA program, it has not sought or obtained authorization to delist federal listed wastes. See 58 FR 26243 (May 3, 1993). Instead, the Vermont Hazardous Waste Regulation section 7-217(c) specifies that “the Administrator of EPA shall retain the authority to exclude such wastes.” By letter dated April 12, 2012, the Vermont Department of Environmental Conservation has confirmed that Vermont interprets this regulation to mean that upon the EPA making a delisting determination (regarding a federally regulated waste), the delisting determination takes effect within that State. Thus, this delisting determination will apply within Vermont with no further action required by the State.

Like Vermont, some other generally authorized States have not received authorization for delisting. Thus, the EPA makes delisting determinations for such States. However, RCRA allows states to impose their own regulatory requirements that are more stringent than EPA's, under § 3009 of RCRA. These more stringent requirements may include a provision that prohibits a federally issued exclusion from taking effect in the state, or that requires a State concurrence before the federal exclusion takes effect, or that allows the State to add conditions to any federal exclusion. We urge the petitioner to contact the state regulatory authority in each State to or through which it may wish to ship its wastes to establish the status of its wastes under the state's laws.

EPA has also authorized some states to administer a delisting program in place of the federal program, that is, to make state delisting decisions. In such states, the state delisting requirements operate in lieu of the federal delisting requirements. Therefore, this exclusion does not apply in those authorized states unless the state makes the rule part of its authorized program. If IBM transports the federally excluded waste to or manages the waste in any state with delisting authorization, IBM must obtain a delisting authorization from that state before it can manage the waste as non-hazardous in that state.

A delisting petition is a request from a generator to EPA or to an authorized state to exclude or delist, from the RCRA list of hazardous wastes, waste the generator believes should not be considered hazardous under RCRA.

Under §§ 260.20 and 260.22, facilities may petition EPA to remove their wastes from hazardous waste regulation by excluding them from the lists of hazardous wastes contained in §§ 261.31 and 261.32. Specifically, § 260.20 allows any person to petition the Administrator to modify or revokeany provision of 40 CFR parts 260 through 265 and 268. Section 260.22 provides generators the opportunity to petition the Administrator to exclude a waste from a particular generating facility from the hazardous waste lists.

Petitioners must provide sufficient information to EPA to allow EPA to determine that the waste to be excluded does not meet any of the criteria under which the waste was listed as a hazardous waste. In addition, the Administrator must determine, where he/she has a reasonable basis to believe that factors (including additional constituents) other than those for which the waste was listed could cause the waste to be a hazardous waste and that such factors do not warrant retaining the waste as a hazardous waste.

IBM petitioned EPA on July 11, 2008, to exclude from the lists of hazardous waste contained in §§ 261.31 and 261.32, F006 wastewater treatment sludge, generated from its facility in Essex Junction, Vermont.

IBM requested that EPA grant an exclusion for 3,150 cubic yards per year of F006 wastewater treatment sludge.

To support its petition, IBM submitted: (1) Facility information on production processes and waste generation processes; (2) Historical sampling data of the IWTP sludge; (3) Analytical results from four samples for total concentrations for volatiles (SW-846 Method 8260B), semi volatiles (SW-846 Method 8270C) and metals (SW-846 Method 6010B except for mercury—SW-846 Method 7471A and selenium—SW-846 Method 7010), for compounds of concern (COCs); and (4) Analytical results from four samples for Toxicity Characteristic Leaching Procedure (TCLP) extract values for volatiles (SW-846 Method 8260B), semi volatiles (SW-846 Method 8270C) and metals (SW-846 Method 6010B except for mercury—SW-846 Method 7470 and selenium—SM 3113B) for COCs.

EPA received one email comment from a consultant regarding the petition.

Comment:Based on the condition that the resultant sludge is a combination of three (3) independent waste streams (i.e. it appears each waste stream is being diluted by two(2) other waste streams) it would be prudent to require IBM to submit to EPA, or the landfill, monthly waste rates from each of the three (3) independent waste streams to ensure the contribution ratios are not dramatically changing.

The removal of one waste process could potentially increase the hazardous components by 50% from the other 2 waste streams. If volume of sludge waste is a component in EPA's calculations related to overall impact, then the increase, or reduction of a waste stream could impact the results.

Response:EPA believes that the requirements found in Conditions 4, 5 and 6 of the final exclusion adequately address any changes in operations or processes at the facility that could have an impact on the composition of the delisted sludge.

Under Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735,October 4, 1993), this rule is not of general applicability and therefore is not a regulatory action subject to review by the Office of Management and Budget (OMB). This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501et seq.) because it applies to a particular facility only. Because this rule is of particular applicability relating to a particular facility, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601et seq.), or to Sections 202, 204, and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). Because this rule will affect only a particular facility, it will not significantly or uniquely affect small governments, as specified in Section 203 of UMRA. Because this rule will affect only a particular facility, this final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, “Federalism,” (64 FR 43255,August 10, 1999). Thus, Executive Order 13132 does not apply to this rule. Similarly, because this rule will affect only a particular facility, this final rule does not have tribal implications, as specified in Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249,November 9, 2000). Thus, Executive Order 13175 does not apply to this rule. This rule also is not subject to Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885,April 23, 1997), because it is not economically significant as defined in Executive Order 12866, and because the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. The basis for this belief is that the Agency used the DRAS program, which considers health and safety risks to children, to calculate the maximum allowable concentrations for this rule. This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355,May 22, 2001), because it is not a significant regulatory action under Executive Order 12866. This rule does not involve technical standards; thus, the requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by Section 3 of Executive Order 12988, “Civil Justice Reform,” (61 FR 4729,February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct.

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. Section 804 exempts from Section 801 the following types of rules (1) Rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agencyparties (5 U.S.C. 804(3)). EPA is not required to submit a rule report regarding today's action under Section 801 because this is a rule of particular applicability. Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. The Agency's risk assessment did not identify risks from management of this material in a Subtitle D landfill. Therefore, EPA believes that any populations in proximity of the landfills used by this facility should not be adversely affected by common waste management practices for this delisted waste.

For the reasons set out in the preamble, 40 CFR part 261 is amended as follows:

The snapper-grouper fishery of the South Atlantic includes yellowtail snapper and is managed under the Fishery Management Plan (FMP) for the Snapper-Grouper Fishery of the South Atlantic Region. The FMP was prepared by the South Atlantic Fishery Management Council (Council) and is implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

The 2007 reauthorization of the Magnuson-Stevens Act implemented new requirements that established ACLs and AMs to end overfishing and prevent overfishing from occurring. AMs are management controls to prevent ACLs from being exceeded, and to correct or mitigate overages of the ACL if they occur.

The Comprehensive ACL Amendment to the Snapper-Grouper FMP, the Golden Crab Fishery of the South Atlantic Region FMP, the Dolphin and Wahoo Fishery off the Atlantic States FMP, and the Pelagic Sargassum Habitat of the South Atlantic Region FMP published March 16, 2010 (77 FR 15916). In part, the final rule for the Comprehensive ACL Amendment specified ACLs and AMs for species in the Snapper-Grouper FMP that are not undergoing overfishing, including yellowtail snapper. Implementation of ACLs and AMs for yellowtail snapper is intended to prevent overfishing from occurring in the future, while maintaining catch levels consistent with achieving optimum yield for the resource.

The AM at § 622.49(b)(14)(i) requires NMFS to close the commercial sector for yellowtail snapper for the remainder of the fishing year when the ACL is reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS projected the commercial ACL for yellowtail snapper of 1,142,589 lb (518,270 kg), round weight, would be reached on or before September 11, 2012, and closed the commercial sector for yellowtail snapper on that date (77 FR 53776, September 4, 2012). However, based on updated landings estimates, NMFS has determined that only 75 percent of the available commercial ACL will be landed by September 11, 2012. Therefore, NMFS will reopen the commercial sector to allow the remainder of the ACL to be harvested.

Under the reopening procedures located at § 622.43(c), when a sector has been closed based on a projection of when the ACL specified in § 622.49 has been reached and subsequent data indicate that the ACL was not reached, the Assistant Administrator may file a notification to that effect with the Office of the Federal Register. Such notification may reopen the sector to provide an opportunity for the ACL to be harvested. Accordingly, NMFS is reopening the commercial sector for yellowtail snapper in the South Atlantic EEZ from 12:02 a.m., local time, September 11, 2012, through December 31, 2012, the end of the fishing year, unless the ACL is reached before that date. If the ACL is reached before that date, the Assistant Administrator may file a notification to that effect with the Office of the Federal Register.

The Regional Administrator, Southeast Region, NMFS, has determined this temporary rule is necessary for the conservation and management of South Atlantic yellowtail snapper and is consistent with the Magnuson-Stevens Act and other applicable laws.

This action is taken under § 622.43(c) and is exempt from review under Executive Order 12866.

These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive the requirements to provide prior notice and the opportunity for public comment on this temporary rule. Such procedures are unnecessary and contrary to the public interest because the commercial ACL for yellowtail snapper established in the Comprehensive ACL Amendment and located at § 622.49(b)(14)(i)(A) and the reopening procedures located at § 622.43(c) have already been subject to notice and comment and all that remains is to notify the public that additional harvest is available under the established ACL and, therefore, the commercial sector for yellowtail snapper will reopen.

Additionally, there is a need to immediately notify the public of the reopening of the commercial sector for yellowtail snapper because the closure is set for September 11, 2012, and this reopening will allow fishers to continue their fishing practices with minimal disruption to business practices. Therefore, this temporary rule is intended to minimize economic harm to fishermen while still protecting the yellowtail snapper resource.

For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The C season allowance of the 2012 total allowable catch (TAC) of pollock in Statistical Area 610 of the GOA is 9,338 metric tons (mt) as established by the final 2012 and 2013 harvest specifications for groundfish of the GOA (77 FR 15194, March 14, 2012). In accordance with § 679.20(a)(5)(iv)(B), the Administrator, Alaska Region, NMFS (Regional Administrator), hereby increases the C season pollock allowance by 512 mt to reflect the underharvest of the B seasonal apportionment in Statistical Area 610. Therefore, the revised C season allowance of the pollock TAC in Statistical Area 610 is 9,850 mt (9,338 mt plus 512 mt).

In accordance with § 679.20(d)(1)(i), the Regional Administrator has determined that the C season allowance of the 2012 TAC of pollock in Statistical Area 610 of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 9,800 mt and is setting aside the remaining 50 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for pollock in Statistical Area 610 of the GOA.

After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Acting Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) and § 679.25(c)(1)(ii) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for pollock in Statistical Area 610 of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 7, 2012.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.