I. Background

The Organic Foods Production Act of 1990 (OFPA) (7 U.S.C. 6501-6522), authorizes the establishment of the National List. The National List identifies synthetic substances that are exempted (allowed) in organic production and nonsynthetic substances that are prohibited in organic crop and livestock production. The National List also identifies nonagricultural nonsynthetic, nonagricultural synthetic and nonorganic agricultural substances that may be used in organic handling. The exemptions and prohibitions granted under the OFPA are required to be reviewed every 5 years by the National Organic Standards Board (NOSB). The Secretary has authority under the OFPA to renew such exemptions and prohibitions. If the substances are not reviewed by the NOSB within 5 years of their inclusion on the National List and addressed by the Secretary, then their authorized use or prohibition expires under OFPA's sunset provision.

On March 26, 2010, the National Organic Program (NOP) published an Advance Notice of Proposed Rulemaking (ANPR) to announce the pending sunset of substances on the National List and opened the public comment process on whether existing exemptions for specified synthetic and nonsynthetic substances in organic handling should be continued (75 FR 14500).1 The ANPR indicated that the exemption for the use of nutrient vitamins and minerals as ingredients in or on processed products labeled as “organic” or “made with organic (specified ingredients or food group(s))” would expire after October 21, 2012, if the listing was not renewed. The public comment period lasted 60 days. Comments were received from organic handlers, ingredient suppliers and trade associations. Comments received supported the continued listing of nutrient vitamins and minerals in organic handling. The written comments can be retrieved athttp://www.regulations.govby searching for the document ID number: AMS-NOP-09-0074. The NOP provided the NOSB with these public comments to consider in their deliberations on the status of nutrient vitamins and minerals inorganic products after the 2012 sunset date.

At their April 2011 public meeting, the NOSB approved a recommendation to renew the listing for nutrient vitamins and minerals after its October 21, 2012 sunset date. Their recommendation stated that the listing should be renewed as codified at 7 CFR 205.605(b): “Nutrient vitamins and minerals, in accordance with 21 CFR 104.20, Nutritional Quality Guidelines for Foods”.2 In addition to the ANPR for Sunset 2012 published on March 26, 2010, the NOSB received additional public comment concerning the pending sunset of this listing in response to threeFederal Registernotices announcing meetings of the NOSB and its planned deliberations on recommendations involving Sunset 2012 substances. The notices were published in theFederal Registeras follows: March 17, 2010 (75 FR 12723), September 20, 2010 (75 FR 57194), and March 4, 2011 (76 FR 12013). The NOSB received further written and oral testimony concerning nutrient vitamins and minerals at all three of these public business meetings which occurred in Woodland, CA on April 26-29, 2010, in Madison, WI on October 25-28, 2010, and in Seattle, WA on April 26-29, 2011. The written comments can be retrieved viahttp://www.regulations.govby searching for the document ID numbers: AMS-NOP-10-0021 (May 2010 meeting); AMS-NOP-10-0068 (October 2010 meeting); and AMS-NOP-11-05 (April 2011 meeting). The oral comments were recorded in the meeting transcripts available on the NOP Web site,http://www.ams.usda.gov/nop.

During their April 2011 deliberations on the renewal of nutrients vitamins and minerals, the NOSB explained that the Food and Drug Administration (FDA) had recently provided a response to the NOP regarding the reference to 21 CFR 104.20 in the current annotation for nutrient vitamins and minerals on the National List.3 The reference to 21 CFR 104.20 refers to the fortification policy for food under the FDA's jurisdiction. The NOP had requested the information from FDA to consider whether changes to the annotation were necessary to correct an inaccurate cross reference to FDA policy and to clarify what synthetic substances are allowed as vitamins and minerals in products labeled as “organic” or “made with organic (specified ingredients or food group(s)).” The fortification policy at 21 CFR 104.20 provides for the rational addition of essential nutrients to food for human consumption. FDA considers only “essential nutrients” to be within the scope of its fortification policy at 21 CFR 104.20. The nutrients which FDA has determined to be essential are enumerated in 21 CFR 101.9(c)(8)(iv) with corresponding Reference Daily Intakes (RDIs), and 21 CFR 101.9(c)(9), which includes potassium and its corresponding Daily Reference Value (DRV). FDA stated that substances such as omega-3 and omega-6 fatty acids, inositol, choline, carnitine, and taurine are not essential nutrients listed under 101.9(c)(8)(iv) and are, therefore, not within the scope of FDA's fortification policy at 21 CFR 104.20. The FDA also clarified that infant formula is not within the scope of the fortification policy; the requirements in 21 CFR part 107 pertain to required and essential nutrients for infant formula and include minimum and maximum amounts for those nutrients.

Based on this information, the NOSB signaled its intent to issue another recommendation for an annotation change to the listing for nutrients vitamins and minerals at their November 2011 public meeting. However, since NOP intended to take action to amend the listing through a proposed rule, the NOSB opted to remove proposing a recommendation for an annotation change on nutrient vitamins and minerals from their November 2011 meeting agenda.

On January 12, 2012, AMS published a proposed rule on the 2012 Sunset Review for nutrient vitamins and minerals (77 FR 1980). The rule proposed to address the April 2011 NOSB recommendation and to revise the cross reference to FDA regulations to specify that only vitamins and minerals which are declared essential for food in 21 CFR 101.9 and vitamins and minerals that are required for infant formula in 21 CFR 107.10 and 107.100, may be used in organic products. As a result, under the proposal, any ingredient not specified by these cross references to FDA regulations would be excluded from use in organic products and would need to be petitioned to the NOSB for separate exemptions on the National List. Examples of affected ingredients which would need separate exemptions on the National List include docosahexanoic acid (DHA) algal oil, arachidonic acid (ARA) single-cell oil, taurine, inositol, choline, ascorbyl palmitate, synthetic beta-carotene, L-carnitine, lycopene, nucleotides, lutein, and L-methionine. Further, AMS would need to conduct separate rulemaking to codify the exemptions based on NOSB recommendations for any petitioned substances. A detailed discussion of the proposal, including further discussion of the examples of ingredients that would be affected and an initial assessment of the impacts of correcting the cross references to FDA regulations, is available in the proposed rule (77 FR 1980).

The proposed rule provided a 60 day comment period, which closed on March 12, 2012. Comments were specifically requested on: (i) The actual economic impacts of the proposed action; (ii) the adequacy of the estimated impact of the proposed action on small entities; and (iii) the length of the proposed compliance date. AMS received 26 written comments in response to the proposed rule. The written comments can be retrieved viawww.regulations.govby searching for the document ID number: AMS-NOP-10-0083. Persons wanting to visit the USDA South Building to view comments in response to the proposed rule are requested to make an appointment in advance by calling (202) 720-3252.

AMS continues to assess the public comments on the proposed rule and evaluate the impact of clarifying the cross reference to FDA regulations. Given that the current allowance for nutrient vitamins and minerals is due to sunset (“expire”) from the National List on October 21, 2012, AMS is issuing this interim rule with request for comments to provide continuity to the organic industry and avoid widespread disruption that would result if the allowance for vitamins and minerals were to sunset. For example, if the current allowance for vitamins and minerals was to sunset, Vitamins A and D, used to fortify fluid milk, and B-vitamins, used in bread and cereal to replace vitamins lost during processing, could no longer be added to organic products.

AMS believes that renewing the current listing for nutrient vitamins and minerals on the National List is the most appropriate action at this time. When AMS published the proposed rule in January 2012, the agency requested comments on the adequacy of the economic analysis that was presented and the two year compliance date that was proposed. AMS received limited public comment on the impacts of correcting the cross reference to FDA regulations. The NOSB has made final recommendations to AMS on fourpetitioned substances, petitions for eight substances remain outstanding. A summary of the status of these petitions is provided in Table 1.

Once the NOSB completes its review and has issued recommendations on all petitioned nutrients, the public will be able to more fully comment on the implications of correcting the FDA cross reference as proposed. For this reason, we are requesting comments through this interim rule. After consideration of comments submitted to both the proposed rule and this interim rule, AMS intends to issue a final rule that will address the proposed correction to the listing for nutrient vitamins and minerals on the National List. As previously noted, AMS would need to conduct separate rulemaking to codify the exemptions based on recommendations by the NOSB for any petitioned substance.

Therefore, consistent with the April 2011 NOSB recommendation, this interim rule continues the allowance for nutrient vitamins and minerals at section 205.605(b) as follows: “Nutrient vitamins and minerals, in accordance with 21 CFR 104.20, Nutritional Quality Guidelines for Foods.” This action enables the industry to continue with the status quo until additional public comments are received and a final rule is published. This action avoids the widespread disruption to the organic market that would occur if the allowance for any synthetic vitamins and minerals were to sunset (“expire”) from the National List on October 21, 2012.

The OFPA authorizes the Secretary to make amendments to the National List based on proposed amendments developed by the NOSB. Sections 6518(k)(2) and 6518(n) of OFPA authorize the NOSB to develop proposed amendments to the National List for submission to the Secretary and establish a petition process by which persons may petition the NOSB for the purpose of having substances evaluated for inclusion on or deletion from the National List. The National List petition process is implemented under section 205.607 of the NOP regulations. The current petition process (72 FR 2167, January 18, 2007) can be accessed through the NOP Web site athttp://www.ams.usda.gov.

This action has been determined not significant for purposes of Executive Order 12866, and therefore, has not been reviewed by the Office of Management and Budget.

Executive Order 12988 instructs each executive agency to adhere to certain requirements in the development of new and revised regulations in order to avoid unduly burdening the court system.This interim rule is not intended to have a retroactive effect.

States and local jurisdictions are preempted under the OFPA from creating programs of accreditation for private persons or State officials who want to become certifying agents of organic farms or handling operations. A governing State official would have to apply to USDA to be accredited as a certifying agent, as described in the OFPA (7 U.S.C. 6514(b)). States are also preempted by the OFPA (7 U.S.C. 6503 through 6507) from creating certification programs to certify organic farms or handling operations unless the State programs have been submitted to, and approved by, the Secretary as meeting the requirements of the OFPA.

Pursuant to the OFPA (7 U.S.C. 6507(b)(2)), a State organic certification program may contain additional requirements for the production and handling of organically produced agricultural products that are produced in the State and for the certification of organic farm and handling operations located within the State under certain circumstances. Such additional requirements must: (a) Further the purposes of the OFPA, (b) not be inconsistent with the OFPA, (c) not be discriminatory toward agricultural commodities organically produced in other States, and (d) not be effective until approved by the Secretary.

Pursuant to the OFPA (7 U.S.C. 6519(f)), this interim rule would not alter the authority of the Secretary under the Federal Meat Inspection Act (21 U.S.C. 601-624), the Poultry Products Inspection Act (21 U.S.C. 451-471), or the Egg Products Inspection Act (21 U.S.C. 1031-1056), concerning meat, poultry, and egg products, nor any of the authorities of the Secretary of Health and Human Services under the Federal Food, Drug and Cosmetic Act (21 U.S.C. 301-399), nor the authority of the Administrator of EPA under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) (7 U.S.C. 136-136(y)).

The OFPA (7 U.S.C. 6520) provides for the Secretary to establish an expedited administrative appeals procedure under which persons may appeal an action of the Secretary, the applicable governing State official, or a certifying agent under this title that adversely affects such person or is inconsistent with the organic certification program established under this title. The OFPA also provides that the U.S. District Court for the district in which a person is located has jurisdiction to review the Secretary's final decision.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) requires agencies to consider the economic impact of each rule on small entities and evaluate alternatives that would accomplish the objectives of the rule without unduly burdening small entities or erecting barriers that would restrict their ability to compete in the market. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small business will not be unduly or disproportionately burdened. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

Pursuant to the requirements set forth in the RFA, AMS performed an economic impact analysis on small entities in the final rule published in theFederal Registeron December 21, 2000 (65 FR 80548). AMS has also considered the economic impact of this interim rule on small entities. The effect of this rule would be to allow the continued use of nutrients vitamins and minerals in organic handling. AMS concludes that the economic impact of continuing this allowance for nutrient vitamins and minerals in organic handling would avoid market disruption and would be beneficial to small agricultural service firms. Therefore, AMS certifies that this rule would not have a significant economic impact on a substantial number of small entities.

Small agricultural service firms, which include producers, handlers, and accredited certifying agents, have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $7,000,000 and small agricultural producers are defined as those having annual receipts of less than $750,000.

Based on USDA data from the Economic Research Service (ERS), the total acreage of certified organic land grew from 1.8 million acres in 2000 to 4.8 million acres in 2008, of which approximately 2.2 million acres was pasture and rangeland.4 The number of certified organic producers in the U.S. has more than doubled in that time period rising from approximately 7,000 in 2000 to nearly 17,700 by the end of 2011.5 ERS, based upon the list of certified operations maintained by the NOP, estimated the number of certified handling operations was 3,225 in 2007. AMS believes that most of these entities would be considered small entities under the criteria established by the SBA.

The increasing production capacity for organic agricultural products parallels growth trends in sales of organic products. Since implementation of the NOP, the organic industry has experienced consecutive years of growth demonstrated by increasing sales to consumers. In 2011, U.S. retail sales of organic food and beverages totaled over $29.2 billion.6 The pace of double-digit sales growth that persisted from 2002-2008 has dipped, but the 7.7 percent growth recorded from 2009-2010, and the 9.4 percent growth recorded from 2010-2011, marked increases from previous years. The top grossing organic food categories in terms of sales for 2011 are fruits and vegetables (40.5%), dairy (14.6%) and packaged/prepared foods, which includes baby formula and baby food (13.6%). Sales of dry breakfast goods, which includes cereals, grew 6.2% in the year 2011, exceeding $1 billion. Organic frozen prepared foods account for the highest sales within the packaged/prepared foods category. Nutrient vitamins and minerals are used to fortify products in the dairy, packaged/prepared foods, and breakfast goods product categories.

In addition, USDA has 91 accredited certifying agents who provide certification services to producers and handlers. A complete list of names and addresses of accredited certifying agents may be found on the AMS NOP Web site, athttp://www.ams.usda.gov/nop.AMS believes that most of these accredited certifying agents would be considered small entities under the criteria established by the SBA.

No additional collection or recordkeeping requirements are imposed on the public by this interim rule. Accordingly, OMB clearance is not required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3501, Chapter 35.

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

This interim rule reflects a recommendation submitted to the Secretary by the NOSB for the purpose of fulfilling the requirements of 7 U.S.C. 6517(e) of the OFPA. Section 7 U.S.C. 6517(e) requires the NOSB to review each substance on the National List within 5 years of its publication. Pursuant to 5 U.S.C. 553, it is found and determined upon good cause that it is impracticable and contrary to the public interest to give preliminary notice prior to putting this rule into effect in order to ensure the continued use of nutrients vitamins and minerals in organic products after October 21, 2012, and avoid widespread disruption to the organic market. Accordingly, this rule shall be effective on October 21, 2012.

The authority citation for 7 CFR part 205 continues to read as follows:

The Federal Meat Inspection Act (FMIA), 21 U.S.C. 601et seq.,and the Poultry Products Inspection Act (PPIA), 21 U.S.C. 451et seq.,provide for mandatory Federal inspection of livestock and poultry slaughtered at official establishments and of meat and poultry products processed at official establishments. FSIS bears the cost of mandatory inspection provided during non-overtime and non-holiday hours of operation. Official establishments pay for inspection services performed on holidays or on overtime.

On March 19, 2012, FSIS proposed to amend its regulations pertaining to the schedule of operations (77 FR 15976). FSIS proposed to amend these regulations to define the 8-hour workday as including time that inspection program personnel need to prepare the inspection station at meat slaughter establishments, if necessary, or to retrieve and return lot tally sheets at poultry slaughter establishments; the time necessary for FSIS inspection program personnel to sharpen knives, if necessary, at meat slaughter establishments; and the time necessary to conduct duties scheduled by FSIS, including administrative activities at meat and poultry slaughter establishments. The activities are integral and indispensable to the principal work of inspection program personnel as defined in 29 CFR 790.8, “Principal” activities. Therefore, these activities need to be part of the Agency's regulatory definition for the 8-hour workday.

FSIS received one comment within the scope of the rulemaking regarding the proposed rule change from an association representing the meat industry. The comment raised the following issues:

The commenter stated that FSIS has ignored the Office of Personnel Management (OPM) regulation 5 CFR 551.412(a) that governs the exclusion ofde minimisactions from compensable activities. The commenter stated that the OPM rule excludes preparatory activities that last less than 10 minutes and also stated that the proposed rule identified two of three activities specified in the proposal—administrative activities and preparation for inspection—as each taking less than 10 minutes per day. Therefore, the commenter asserted that the OPM regulation precludes the need for the proposed rule.

As stated in the proposed rule, FSIS considers these activities as integral and indispensable to the principal work of inspection program personnel as defined in 29 CFR 790.8, “Principal” activities. As integral and indispensable work activities under the Fair Labor Standards Act, FSIS finds that these activities should be included as part of the continuous workday when reading both 5 CFR 551.412(a) and the OPM definition of “workday” at 5 CFR 551.411(a), together. 5 CFR 551.412(a) cannot be properly read alone to exclude time spent on indispensable work activities during the continuous workday from compensable hours of work. Any duties scheduled by FSIS, including administrative duties, are integral and indispensable to the essential work of inspection program personnel because they enable inspection program personnel to carry out their work effectively. The preparation of the workstation is an integral and indispensable activity ensuring that inspectors have the necessary stamps used to identify condemned parts while conducting their inspection duties. Therefore, administrative duties and the preparation of the work station in cattle slaughter establishments are integral and indispensable to the principal work of inspection program personnel as defined in 29 CFR 790.8, “Principal” activities, and thus, these activities need to be part of the Agency's regulatory definition for the 8-hour workday.

The commenter did not dispute that knife sharpening is a compensable activity but did oppose the standardized approach in the proposed rule that would give inspectors one 15-minute period for knife sharpening if they perform on-line duties in a cattle slaughter establishment 3 days or less per week or if they perform on-line duties in a swine slaughter establishment, and two 15-minute periods for knife sharpening if they perform on-line duties in a cattle slaughter establishment 4 or more days per week. The commenter stated that plants should be permitted to conduct individualized assessments of the time it takes inspectors to sharpen their knives.

The time estimates FSIS developed in the proposed rule for knife sharpening were based on an Agency CD-ROM training video, “Knife-Safety and Sharpening Skills,” and the numbers of times per week for knife sharpening were based on a variety of factors, including the species being inspected (i.e., cattle or swine) and the number of carcasses inspected. The time allocations that FSIS is finalizing are necessary to ensure the safe and proper use of knives during inspection. The Agency cannot ensure the safety of its inspectors and that proper knife sharpening occurs if each establishment determines for itself how long it should take inspectors to sharpen a knife because each establishment will have a financial incentive to reduce this amount of time. Therefore, when FSIS implements this rule, it will ensure inspection program personnel have an appropriate amount of time to sharpen their knives.

The commenter stated that because inspectors bill in 15-minute increments, all slaughter facilities already pay inspectors for time during which inspection work is not being done. The commenter stated that a facility should be permitted to review inspectors' time records and offer corrections supported by reports and stamped surveillance footage, if necessary, before inspectors submit their time records. The commenter also stated that during interruptions for line stoppages or equipment failures, inspectors should make use of the time that they are not on the line for activities such as knife sharpening. The commenter also stated that if inspectors choose not to use such time, establishments should not have to pay overtime for the activity.

FSIS supervisors assign work to inspection program personnel. FSIS will ensure that its supervisory personnel instruct inspection program personnel to complete the activities addressed in this final rule during any time remaining in a 15-minute increment of overtime or during work times when they are not on the line. However, FSIS does not agree that establishments should implement a formal monitoring program, such as video surveillance of FSIS employees or checking inspector time sheets. FSIS supervisors ensure that employees accurately record the time that they work. Establishment management should discuss any concerns about the time worked by FSIS inspectors with FSIS supervisors.

Lastly, the commenter stated that any additional time inspectors need to be compensated for under the proposed rule should not count against the 10-hour-per-day limit of actual inspector time permitted by FSIS.

FSIS ensures that the maximum time an employee may work on the slaughter line is ten (10) hours per work day. While knife sharpening, station preparation, and administrative duties are integral to the work and conducted during the continuous workday, they are activities not done on the slaughter line itself. Therefore, these activities are not subject to the 10 hour per day limit of slaughter line activity.

After consideration of the comments received and for the reasons discussed above, FSIS is adopting the proposed rule as a final without revision and is amending the meat regulations to provide that the 8 hours of inspection service provided to establishments free of charge will include activities necessary to fully carry out an inspection program, including time for inspection program personnel to prepare the work station; the time necessary for FSIS inspection program personnel to sharpen knives, if necessary; and the time necessary to conduct duties scheduled by FSIS, including administrative duties. When the rule goes into effect, FSIS will direct its supervisory personnel at livestock slaughter establishments to conduct a new time measurement that measures the amount of time it takes to don required gear, walk to a work station, prepare the work station, and doff required gear. If establishments do not provide a knife sharpening service, the establishment will also need to incorporate the times and frequencies discussed above in response to comments on knife sharpening into the 8 hours of inspection or request that knife sharpening be done in an overtime period.

FSIS is amending the poultry products regulations to provide that the 8 hours of inspection service provided to establishments free of charge will include activities necessary to fully carry out an inspection program, including time for inspection program personnel to retrieve and return lot tally sheets and the time necessary to conduct duties scheduled by FSIS, including administrative duties. Inspection program personnel in poultry products establishments do not use knives when conducting inspection activities and do not need to prepare the work station. When this rule goes into effect, FSIS will direct its supervisory personnel in poultry slaughter establishments to conduct a new time measurement that measures the amount of time it takes inspection program personnel to don required gear, pick up a lot tally sheet, and doff required gear.

In addition, when this rule goes into effect, slaughter establishments will need to provide inspection program personnel 1 minute every day to complete time and attendance activities.

As with the provisions for donning, doffing, and the associated walk time, establishments will need to either incorporate the time for inspection program personnel performing on-line inspection duties to conduct knife sharpening, to complete the time and attendance reporting, and to prepare for inspection into their hours of operation or request overtime charges. The regulations provide that FSIS will bill overtime in 15-minute increments (9 CFR 307.6 and 381.39). Therefore, in situations where establishments have requested overtime, FSIS, when possible, will instruct inspection program personnel performing on-line inspection duties to do the activities addressed in this rule during any time that remains within 15-minutes of requested overtime.

This rule has been designated non-significant under section 3(f) of Executive Order 12866. Accordingly, the rule has not been reviewed by the Office of Management and Budget.

Under this final rule, the most direct cost to the industry will be the overtime fee that the Agency will need to charge slaughter establishments for the time inspection program personnel spend in three groups of activities: (1) Sharpening knives, (2) completing administrative activities, and (3) preparing for inspection. As we explained in the cost analysis of the Final Rule on Changes to the Schedule of Operations Regulations (76 FR page 33979), if meat and poultry slaughter establishments want to maintain their normal shift length of operating for 8 hours, they would incur some overtime fees.1 Although the choice is voluntary, the Agency expects that most meat and poultry slaughter establishments will choose to maintain their current shift-time, as shortening the shift-time will decrease production and revenue while idling existing capacity. However, FSIS does not expect the overtime fee from these three groups of activities to be significant because (1) the establishments have options, as we will discuss later, besides paying overtime for some of these activities, and (2) the time for carrying out administrative activities and preparing for inspection (including preparing an inspection station and picking up and dropping off lot tally sheets) is small—one minute or two per day—and will probably not push the overtime over the 15-minute threshold to incur more over-time charge than are currently assessed for donning and doffing activities.

Similar to donning and doffing, the actual time FSIS inspection program personnel will take to perform these activities will vary in each meat and poultry slaughter establishment depending on plant-specific variables. FSIS developed estimates on the amount of time it takes for inspection program personnel to perform these activities and requested public comments. FSIS did not receive any comments on the estimates, so FSIS's estimates remain the same in this final rule.

Knife-sharpening:

a. Two 15-minute periods per week for inspection program personnel who perform on-line inspection duties in beef slaughter operations for 4 or more days per week.

b. One 15-minute period per week for inspection program personnel on the beef slaughter line for 3 days or less per week or in a swine slaughter establishment.

• One minute per day to complete administrative activities.

• Two minutes or less for preparing for inspection.

Agency personnel data2 show that there are 3,053 inspection program personnel performing on-line inspection duties in poultry and meat slaughter establishments—2,037 in poultry, 1,000 in meat, and 16 in establishments that slaughter both meat and poultry. Data from an Agency survey3 indicates that among the meat slaughtering inspectors, 56 percent work in beef establishments that operate 4 or 5 days per week, 4 percent work in beef establishments that operate less than 4 days per week, 36 percent work in swine establishments, and 4 percent work in lamb, sheep, and goat establishments. Because lamb, sheep, and goat establishments are small or very small establishments, inspection program personnel would be able to complete the activities addressed in this final rule within the 8-hour day, and, therefore, there are no related cost calculations for these establishments in this final rule. Applying the percentages to the total of 1,016 meat slaughter inspectors,4 we have 573 inspection program personnel working in beef establishments that operate 4 or 5 days per week, and 409 working in either beef establishments that operate less than 4 days per week or swine establishments. The overtime fee that the Agency charges for each 15-minute interval is $17.08 for FY 2012. Multiplying this number by the Agency-estimated knife-sharpening time, we estimated the annual cost for knife sharpening time to be about $1,776.3 ($17.08 per quarter-hour × 2 knife-sharpening periods per week × 52 weeks per year) per inspection program personnel in beef slaughter establishments that operate 4 days or more a week, and $888.2 ($17.08 per quarter-hour × 52 weeks per year) per inspection program personnel in beef slaughter establishments that operate 3 days or less or in swine establishments. If the industry had to pay all the meat slaughter inspectors to sharpen their knives, the total cost to the industry would be about $1.38 million ($1776.3 × 573) + ($888.2 × 409). However, the actual impact would be much less because the industry can offer knife-sharpening services to Agency inspection program personnel instead of paying overtime for it.

If an establishment provides a knife-sharpening service, FSIS will instruct inspection program personnel to use that service. An Agency query5 found that the majority of the meat-slaughter establishments are offering knife sharpening to their employees, and about 91% of those also offer the service to Agency inspection program personnel. We expect that many other establishments will start offering the service to avoid paying overtime charges when this rule becomes effective.

As for the other two groups of activities, the time they take is minimal. According to the Agency's estimates mentioned above, these activities combined will be at most 3 minutes per day. In addition, FSIS will permit the establishment to take on the responsibility of preparing the inspection station for inspection program personnel in livestock slaughter establishments. Given that the Agency charges overtime in 15-minute increments, and that it believes the donning, doffing, and walking time to be usually less than 15-minutes, time for these additional activities can be absorbed in the overtime period for donning, doffing, and walking time in most cases, thus not causing any additional overtime. In the unlikely, worst-case scenario where these activities push the daily overtime beyond the first 15-minute interval, the establishments would pay each inspection program personnel another $4,441 ($17.08 per inspector × 5 days per week × 52 weeks per year) annually. However, the Agency believes this scenario would apply to only a very small percentage of the inspection program personnel.

Comparing the cost to the annual revenue of the meat slaughtering industry alone, which is about $67.2 billion,6 the costs of this rule to the industry will not be significant.

The industry is likely to pass the increased costs on to consumers because of the inelastic nature of the consumer demand for meat and poultry products. However, given that the total volume of meat and poultry slaughtered under Federal inspection in 2010 was about 92billion pounds,7 the increased cost per pound due to the overtime fee will be less than $0.0001 on average.

This final rule will include integral and indispensible work activities (as defined by the Fair Labor Standards Act) into the defined inspector “workday.” Therefore, this rule will help ensure compliance with the law and the improved use of Agency resources.

The FSIS Administrator has made a determination that this final rule will not have a significant impact on a substantial number of small entities, as defined by the Regulatory Flexibility Act (5 U.S.C. 601). There are 263 small and 566 very small meat and poultry slaughter establishments (by Small Business Administration standard). In small and very small establishments, inspection program personnel typically have adequate time during their tour of duty to sharpen their knives as well as conduct the other activities under this final rule, because they do not have to be on-line for 8 hours. Therefore, the impact will not be significant.

This final rule has been reviewed under the Paperwork Reduction Act and imposes no new paperwork or recordkeeping requirements.

The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, and marital or family status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, or audiotape) should contact USDA's Target Center at (202) 720-2600 (voice and TTY).

To file a written complaint of discrimination, write USDA, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW., Washington, DC 20250-9410 or call (202) 720-5964 (voice and TTY). USDA is an equal opportunity provider and employer.

FSIS will announce this final rule online through the FSIS Web page located at:http://www.fsis.usda.gov/regulations_&_policies/Federal_Register_Notices/index.asp.

FSIS will also make copies of thisFederal Registerpublication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations,Federal Registernotices, FSIS public meetings, and other types of information that could affect or would be of interest to constituents and stakeholders. The Update is communicated via Listserv, a free electronic mail subscription service for industry, trade groups, consumer interest groups, health professionals, and other individuals who have asked to be included. The Update is also available on the FSIS Web page. Through the Listserv and Web page, FSIS is able to provide information to a much broader and more diverse audience. In addition, FSIS offers an electronic mail subscription service which provides automatic and customized access to selected food safety news and information. This service is available at:http://www.fsis.usda.gov/News_&_Events/Email_Subscription/.Options range from recalls to export information to regulations, directives and notices. Customers can add or delete subscriptions themselves, and have the option to password protect their accounts.

For the reasons discussed in the preamble, FSIS is amending 9 CFR Chapter III as follows:

This discussion contains the following sections:

The purpose of these final rules is to update and improve the Commission's Part 21 investigation process by accounting for and incorporating modern discovery methods, facilitating the enforcement of Commission compulsory process, and generally increasing efficiency and cooperation. The adopted revisions to Rule 4.12 are designed to provide additional guidance regarding appropriate standards of conduct, and procedures for addressing alleged violations of those standards. The revisions to Part 2 will take effect on November 9, 2012 unless the Commission or a Commission official identified in Rule 2.7(l) determines that application of an amended rule in an investigation pending as of November 9, 2012 would not be feasible or would create an injustice. Revised Rule 4.1(e) will govern attorney conduct alleged to have occurred on or after November 9, 2012.

In its January 23, 2012 Notice of Proposed Rulemaking (“NPRM”),3 the Commission invited public comment on proposed amendments to its Rules of Practice governing its nonadjudicative procedures in investigative proceedings (“Part 2 investigations”). The public comment period closed on March 23, 2012.4 The Commission stated in the NPRM that it has periodically examined and revised its Rules of Practice for the sake of clarity and to make the Commission's procedures more efficient and less burdensome for all parties. The Commission observed that its review of the Part 2 investigation process was especially appropriate in light of growing reliance upon and use of electronic media in Part 2 investigations.

The proposed amendments announced in the NPRM were the culmination of a broad and systematic internal review to improve the Commission's investigative procedures and reflect the development of Part 2 investigative practice in recent years. The Commission undertook this effort in order to improve the Part 2 investigation process through a comprehensive review, rather than piecemeal modifications of a limited number of rules, to ensure that the rules are internally consistent and that they are workable in practice.

With the NPRM, the Commission endeavored to modernize some of the Part 2 rules by proposing regulations that included: (1) A rule that sets out specifications for privilege logs; (2) a rule that conditions any extensions of time to comply with Commission process on a party's continued progress in achieving compliance; (3) a rule that conditions the filing of any petition to quash or limit Commission process on a party having engaged in meaningful “meet and confer” sessions with Commission staff; (4) a rule that eliminates the two-step process for resolving petitions to quash; and (5) rules that establish tighter deadlines for the Commission to rule on petitions. Other proposed changes updated the rules by including express references to electronically stored information (“ESI”) and consolidated related provisions that were dispersed throughout Part 2.

Apart from modernizing the Part 2 rules, the NPRM also sought to turn well-accepted agency best practices into formal components of the Part 2 investigation process. Such rules included: (1) A rule affirming that staff may disclose the existence of an investigation to certain third parties; (2) a rule codifying staff's practice of responding internally to petitions to limit or quash compulsory process; and (3) the Commission's announcement of its general policy that all parties engage in meaningful discussions with staff to prevent confusion or misunderstandings about information sought during an investigation.

The Commission received comments on the proposed Part 2 revisions from five individuals or entities: the Section of Antitrust Law of the American Bar Association (“Section”); Crowell & Moring, LLP (“Crowell & Moring”); Kelley, Drye & Warren, LLP (“Kelley Drye”); James Butler of Metropolitan Bank Group; and Joe Boggs, an individual consumer.5 Most commenters endorsed the objectives of the Commission's proposed amendments. Mr. Butler opined that “the proposed revisions will streamline the rules and add structure to the agency's investigatory process by consolidating related provisions that are currently scattered and/or may be outdated.” The Section commented that it was generally supportive of the Commission's efforts “to review its investigatory procedures with an eye toward fairness, efficiency, and openness.”6 The Crowell & Moring and Kelley Drye comments likewise endorsed the Commission's proposed changes, “particularly as they relate to electronic media in document discovery.”7 The Crowell & Moringcomment also observed that the rules should “help the Commission execute its enforcement mandate while minimizing unnecessary cost and burden on parties and bringing investigations to a speedier conclusion.”8

But these commenters also offered several substantive criticisms of the proposed rules. As a threshold matter, the Commission addresses the Section's general observation that “although it is apparent that the Commission has serious concerns about how the investigative process is working, it is not entirely clear from the proposed amendments what those problems are, why the Commission's existing authority is inadequate to remedy particular issues * * * or how the proposals would remedy any such problems or omissions.”9 In conjunction with this comment, the Section also proposed that the Commission convene a joint task force comprised of members of the private bar “to review whether there are indeed problems with the investigative or disciplinary processes, and, if so, the types of targeted remedies that might be appropriate.”10 The Commission notes in response that each of the rule revisions is a product of the Commission's own considerable expertise and investigative experience. As noted above, some of the problems that the Commission has identified stem from a lack of a clear, well-recognized policy setting out what is expected of respondents in certain circumstances. One example the Section identifies pertains to proposed Rule 2.11(c), discussed below. Compulsory process respondents occasionally produce documents with material redacted for reasons apart from its protected status. However, redaction of, for example, allegedly confidential, but non-privileged, business material, is improper.11 The proposed rule clarifies the obligations of recipients of compulsory process.12

These commenters also offered more specific criticisms addressed in detail below in the section-by-section analysis. The announced privilege log specifications were among the new modernizing rules that garnered significant comments. Many commenters urged the Commission to relax these specifications to align them with the Commission's procedures for privilege logs submitted during discovery for administrative adjudications (“Part 3”) and Hart-Scott-Rodino second requests (“second requests”). Commenters also criticized the Commission's adaptation of the Federal Rules of Civil Procedure (“FRCP”) to account for ESI and provide for the sampling and testing of documents.

The commenters also offered analysis of the rule revisions intended to codify existing practices. This subset of comments included the Section's and Kelley Drye's view that staff replies to petitions to limit or quash should be served on the petitioner. Those same commenters also argued against the provision in Rule 2.6 stating that Commission staff may disclose the existence of an investigation to potential witnesses.

Upon consideration of the various comments and its own review of the existing and proposed rules, the Commission agrees that some of the proposed rules can be modified to better reduce the burdens of the Part 2 process without sacrificing the quality of an investigation. After all, the proposed rules were intended to improve, rather than diminish, the FTC's ability to conduct fair and efficient investigations. The Part 2 investigative process works most effectively and efficiently when staff and outside counsel and their clients engage in meaningful communication and work in a cooperative and professional manner.

Accordingly, the Commission is adopting the proposed rules and issuing some further modifications, including: (1) A revision of the privilege log specifications to decrease the burden on respondents, while still accounting for staff's need to effectively evaluate privilege claims; (2) extending the deadline for the first meet and confer to decrease the burden on recipients of process and their counsel; and (3) implementing a “safety valve” provision allowing parties showing good cause to file a petition to limit or quash before any meet and confer has taken place.

The comments and the Commission's revisions to Part 2 are addressed in more detail in the section-by-section analysis of the final rule revisions.13

The Commission also sought comment on proposed changes to its rule governing attorney discipline, Rule 4.1(e). As the Commission explained in the NPRM,14 the proposed rule was designed to provide additional clarity regarding appropriate standards of conduct for attorneys practicing before the Commission and procedures for the evaluation of allegations of attorney misconduct. The proposed rule clarified that attorneys may be subject to discipline for violating such standards, including engaging in conduct designed merely to delay or obstruct Commission proceedings or providing false or misleading information to the Commission or its staff. The proposed rule also provided that a supervising attorney may be responsible for another attorney's violation of these standards of conduct if he or she orders or ratifies the attorney's misconduct.

In addition, the proposed rule instituted appropriate procedural safeguards to govern the Commission's consideration of allegations of attorney misconduct, which is discussed further in the section-by-section analysis. To that end, the proposed rule established a framework for evaluating and adjudicating allegations of misconduct by attorneys practicing before the Commission.

The Commission received three comments addressing the proposed revisions to Rule 4.1(e) from the Section, the American Financial Services Association (“AFSA”), and a law student.15 These commenters offered several substantive criticisms of the proposed rule, which are addressed below. The Commission, upon consideration of these comments and its own review of the existing and proposed rules, issues several modifications to the proposed rules, including: (1) A revision to clarify the scope of potential imputed responsibility under the rule for supervisory or managerial attorneys; and (2) revisions to provide for the Commission to issue an order to show cause before issuance of an attorney reprimand in all cases and to provide an opportunity for a hearing prior to imposition of any sanction where there are disputed issues of material fact to be resolved.

In a notice published in theFederal Registeron December 12, 2003 (68 FR 69312), the Secretary exercised the authority under the HEROES Act (Pub. L. 108-76, 20 U.S.C. 1098bb(b)) and announced waivers and modifications of statutory and regulatory provisions designed to assist “affected individuals.” Under 20 U.S.C. 1098ee(2), the term “affected individual” means an individual who:

• Is serving on active duty during a war or other military operation or national emergency;

• Is performing qualifying National Guard duty during a war or other military operation or national emergency;

• Resides or is employed in an area that is declared a disaster area by any Federal, State, or local official in connection with a national emergency; or

• Suffered direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Secretary.

Under the HEROES Act, the Secretary's authority to provide the waivers and modifications would have expired on September 30, 2005. On September 30, 2005, Public Law 109-78 extended the expiration date of the Secretary's authority to September 30, 2007. Accordingly, in a notice in theFederal Registerpublished on October 20, 2005 (70 FR 61037), the Secretary extended the expiration of the waivers and modifications published on December 12, 2003, to September 30, 2007.

On September 30, 2007, the President signed into law Public Law 110-93, which eliminated the September 30, 2007, expiration date of the HEROES Act, thereby making permanent the Secretary's authority to issue waivers and modifications of statutory and regulatory provisions.

On December 26, 2007, the Secretary published a notice in theFederal Register(72 FR 72947) extending the waivers and modifications published on December 12, 2003, to September 30, 2012. In that notice, the Secretary also indicated an intent to review the waivers and modifications published on December 12, 2003, in light of statutory and regulatory changes and to consider whether to change some or all of the published waivers and modifications.

We are now updating the waivers and modifications to reflect the results of that review. With limited exceptions, the waivers and modifications in this notice reflect the same waivers and modifications originally published in the December 12, 2003,Federal Registernotice. However, they have been updated to reflect statutory and regulatory changes that have occurred since the original publication. In addition, a waiver has been added to assist affected individuals in regard to the annual reevaluation requirements for borrowers who are repaying loans made under the Federal Family Education Loan (FFEL) Program or Federal Direct Loan (Direct Loan) Program under the Income-Based Repayment (IBR) or Income-Contingent Repayment (ICR) plans.

The waiver and modifications related to military deferments were eliminated because the time-limited military service deferment under section 455(f)(4) of the HEA to which they applied (commonly referred to as the Armed Forces deferment) has been replaced by the military service deferment authorized in sections 428(b)(1)(M)(iii), 455(f)(2)(C), and 464(c)(2)(A)(iii) of the HEA, which is available to all borrowers, regardless of when they received their loans, for any period during which a borrower is serving on active duty during a war or other military operation or national emergency, or is performing qualifying National Guard duty during a war or other military operation or national emergency.

In addition, the Secretary has decided not to retain the modification to the amount of unearned funds an institution must return under the Return of Title IV Funds requirements in section 484(b)(1) of the HEA and 34 CFR 668.22(g) because the Secretary has determined that it is not in the best interest of affected individuals. The removal of institutional charges that the institution is required to cover, and has covered, with non-title IV sources of aid generally results in the institution returning less unearned title IV, HEA program funds and the student returning more, often leaving the student with a larger title IV, HEA program loan debt.

The Secretary is issuing these waivers and modifications under the authority of the HEROES Act, 20 U.S.C. 1098bb(a). In accordance with the HEROES Act, the Secretary is providing the waivers and modifications of statutory and regulatory provisions applicable to the student financial assistance programs under title IV of the HEA that the Secretary believes are appropriate to ensure that:

• Affected individuals who are recipients of student financial assistance under title IV are not placed in a worse position financially in relation to that financial assistance because they are affected individuals;

• Affected individuals who are recipients of student financial assistance are not unduly subject to administrative burden or inadvertent, technical violations or defaults;

• Affected individuals are not penalized when a determination of need for student financial assistance is calculated;

• Affected individuals are not required to return or repay an overpayment of grant funds based on the HEA's Return of title IV Funds provision; and

• Entities that participate in the student financial assistance programs under title IV of the HEA and that are located in areas that are declared disaster areas by any Federal, State, or local official in connection with a national emergency, or whose operations are significantly affected by such a disaster, receive temporary relief from administrative requirements.

In 20 U.S.C. 1098bb(b)(1), the HEROES Act further provides that section 437 of the General Education Provisions Act (20 U.S.C. 1232) and section 553 of the Administrative Procedure Act (5 U.S.C. 553) do not apply to the contents of this notice.

In 20 U.S.C. 1098ee, the HEROES Act defines the following terms used in this notice:

Active dutyhas the meaning given that term in 10 U.S.C. 101(d)(1), but does not include active duty for training or attendance at a service school (e.g., the U.S. Military Academy or U.S. Naval Academy).

Military operationmeans a contingency operation as that term is defined in 10 U.S.C. 101(a)(13).

National emergencymeans a national emergency declared by the President of the United States.

Serving on active duty during a war or other military operation or national emergencyincludes service by an individual who is—

(A) a Reserve member of an Armed Force ordered to active duty under 10 U.S.C. 12301(a), 12301(g), 12302, 12304, or 12306, or any retired member of an Armed Force ordered to active duty under 10 U.S.C. 688, for service in connection with a war or other military operation or national emergency, regardless of the location at which that active duty service is performed; and

(B) any other member of an Armed Force on active duty in connection with any war, operation, or emergency or subsequent actions or conditions who has been assigned to a duty station at a location other than the location at which the member is normally assigned.

Qualifying National Guard duty during a war or other military operation or national emergencymeans service as a member of the National Guard on full-time National Guard duty (as defined in 10 U.S.C. 101(d)(5)) under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days under 32 U.S.C. 502(f), in connection with a war, another military operation, or a national emergency declared by the President and supported by Federal funds.

The following waivers and modifications are grouped into four categories, according to the affected individuals to whom they apply.

Category 1: The Secretary is waiving or modifying the following provisions of title IV of the HEA and the Department's regulations for ALL affected individuals as specified in the SUPPLEMENTARY INFORMATION section of this notice:

Section 480 of the HEA provides that, in the calculation of an applicant's expected family contribution (EFC), the term “total income,” which is used in the determination of “annual adjusted family income” and “available income,” is equal to adjusted gross income plus untaxed income and benefits for the preceding tax year minus excludable income. The HEROES Act allows an institution to substitute adjusted gross income plus untaxed income and benefits received in the first calendar year of the award year for which such determination is made for any affected individual, and for his or her spouse and dependents, if applicable, in order to reflect more accurately the financial condition of an affected individual and his or her family. The Secretary has determined that an institution has the option of using the applicant's original EFC or the EFC based on the data from the first calendar year of the award year.

If an institution chooses to use the alternate EFC, it should use the administrative professional judgment procedures established by the Secretary as discussed in the following section on “Professional Judgment.”

Section 479A of the HEA specifically gives the financial aid administrator (FAA) the authority to use professional judgment to make case-by-case adjustments to the cost of attendance or to the values of the items used in calculating the EFC to reflect a student's special circumstances. The Secretary is modifying this provision by removing the requirement that adjustments be made case by case for affected individuals. The use of professional judgment in Federal need analysis is discussed in the Federal Student Aid Handbook available atwww.ifap.ed.gov.

The Secretary encourages FAAs to use professional judgment in order to reflect more accurately the financial need of affected individuals. To that end, the Secretary encourages institutions to determine an affected individual's need using the method listed below that is the most beneficial to the affected individual:

• By using the adjusted gross income (AGI) plus untaxed income and benefits received in the first calendar year of the award year;

• By using professional judgment; or

• By making no modifications. (For example, in some cases, an individual's income will increase as a result of serving on active duty or performing qualifying National Guard duty.)

The FAA must clearly document the reasons for any adjustment and the facts supporting the decision. In almost all cases, the FAA should have documentation from a third party with knowledge of the student's unusual circumstances. As usual, any professional judgment decisions made by an FAA that affect a student's eligibility for a subsidized student financial assistance program must be reported to the Central Processing System.

Section 484B(b)(2) of the HEA and 34 CFR 668.22(h)(3)(ii) require a student to return or repay, as appropriate, unearned grant funds for which the student is responsible under the Return of Title IV Funds calculation. For a student who withdraws from an institution because of his or her status as an affected individual, the Secretary is waiving these statutory and regulatory requirements so that a student is not required to return or repay any overpayment of grant funds based on the Return of Title IV Funds provisions.

For these students, the Secretary also waives 34 CFR 668.22(h)(4), which:

• Requires an institution to notify a student of a grant overpayment and the actions the student must take to resolve the overpayment;

• Denies eligibility to a student who owes a grant overpayment and does not take an action to resolve the overpayment; and

• Requires an institution to refer a grant overpayment to the Secretary under certain conditions.

Therefore, an institution is not required to contact the student, notify the National Student Loan Data System, or refer the overpayment to the Secretary. However, the institution must document in the student's file the amount of any overpayment as part of the documentation of the application of this waiver.

The student is not required to return or repay an overpayment of grant funds based on the Return of Title IV Funds provision. Therefore, an institution must not apply any title IV credit balance to the grant overpayment prior to: using a credit balance to pay authorized charges; paying any amount of the title IV credit balance to the student or parent, in the case of a parent PLUS loan; or using the credit balance to reduce the student's title IV loan debt (with the student's authorization) as provided in Dear Colleague Letter GEN-04-03 (February 2004; revised November 2004).

Pursuant to 34 CFR 668.57(a)(3)(ii), for an individual who is required to file a U.S. income tax return and has been granted a filing extension by the Internal Revenue Service (IRS), an institution must accept, in lieu of an income tax return for verification of AGI or income tax paid:

• A copy of IRS Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” that the individual filed with the IRS for the specified year, or a copy of the IRS's approval of an extension beyond the automatic six-month extension if the individual requested an additional extension of the filing time; and

• A copy of each IRS Form W-2 that the individual received for the specified year or, for a self-employed individual, a statement signed by the individual certifying the amount of AGI for the specified year.

The Secretary is modifying this provision so that the submission of acopy of IRS Form 4868 or a copy of the IRS extension approval is not required if an affected individual has not filed an income tax return by the filing deadline.

For these individuals, an institution must accept, in lieu of an income tax return for verification of AGI and taxes paid:

• A signed statement from the individual certifying that he or she has not filed an income tax return or a request for a filing extension because he or she was called up for active duty or for qualifying National Guard duty during a war or other military operation or national emergency; and

• A copy of each W-2 received for the specified year or, for a self-employed individual, a statement signed by the individual certifying the amount of AGI for the specified year.

An institution may request that an individual granted a filing extension submit tax information using the IRS Data Retrieval Tool, or by obtaining a tax return transcript from the IRS that lists tax account information for the specified year after the income tax return is filed. If an institution receives the tax information, it must verify the income information of the tax filer(s).

Category 2: The Secretary is waiving or modifying the following provisions of title IV of the HEA and the Department's regulations for affected individuals who are serving on active duty, performing qualifying National Guard duty during a war or other military operation or national emergency, or who reside or are employed in a disaster area as described in the SUPPLEMENTARY INFORMATION section of this notice.

Under 34 CFR 668.22(a)(6)(iii)(A)(5) and (a)(6)(iii)(D), a student (or parent for a parent PLUS loan) must be provided a post-withdrawal disbursement of a title IV loan if the student (or parent) responds to an institution's notification of the post-withdrawal disbursement within 14 days of the date that the institution sent the notice, or a later deadline set by the institution. If a student or parent submits a late response, an institution may, but is not required to, make the post-withdrawal disbursement.

The Secretary is modifying this requirement so that, for a student who withdraws because of his or her status as an affected individual in this category and who is eligible for a post-withdrawal disbursement, the 14-day time period in which the student (or parent) must normally respond to the offer of the post-withdrawal disbursement is extended to 45 days, or to a later deadline set by the institution. If the student or parent submits a response after the designated period, the institution may, but is not required to, make the post-withdrawal disbursement. As required under the current regulations, if the student or parent submits the timely response instructing the institution to make all or a portion of the post-withdrawal disbursement, or the institution chooses to make a post-withdrawal disbursement based on receipt of a late response, the institution must disburse the funds within 180 days of the date of the institution's determination that the student withdrew.

Under 34 CFR 668.22(d)(3)(iii)(B), a student is required to provide a written, signed, and dated request, which includes the reason for that request, for an approved leave of absence prior to the leave of absence. However, if unforeseen circumstances prevent a student from providing a prior written request, the institution may grant the student's request for a leave of absence if the institution documents its decision and collects the written request at a later date. It may be appropriate in certain limited cases for an institution to provide an approved leave of absence to a student who must interrupt his or her enrollment because he or she is an affected individual in this category. Therefore, the Secretary is waiving the requirement that the student provide a written request for affected individuals who have difficulty providing a written request as a result of being an affected individual in this category. The institution's documentation of its decision to grant the leave of absence must include, in addition to the reason for the leave of absence, the reason for waiving the requirement that the leave of absence be requested in writing.

Under 34 CFR 668.164(e), an institution must pay any title IV credit balance to the student, or parent in the case of a parent PLUS loan, within 14 days after the balance occurred. However, under 34 CFR 668.165(b)(i), if a student (or parent) has provided authorization, an institution may use a title IV credit balance to reduce the borrower's total title IV loan debt, not just the title IV loan debt for the period for which the Return of Title IV Funds calculation is performed.

Therefore, for students who withdraw because they are affected individuals in this category, the Secretary is modifying 34 CFR 668.164(e) to consider that the institution has met the 14-day requirement if, within that timeframe, the institution attempts to contact the student (or parent) to suggest that the institution be authorized to return the credit balance to the loan program(s).

Based upon the instructions of the student (or parent), the institution must promptly return the funds to the title IV loan programs or pay the credit balance to the student (or parent).

In addition, if an institution chooses to attempt to contact the student (or parent) for authorization to apply the credit balance to reduce the student's title IV loan debt, it must allow the student (or parent) 45 days to respond. If there is no response within 45 days, the institution must promptly pay the credit balance to the student (or parent) or return the funds to the title IV programs if the student or parent cannot be located.

Consistent with the guidance provided in Dear Colleague Letter GEN-04-03 (February 2004; revised November 2004), the institution may also choose to pay the credit balance to the student (or parent) without first requesting permission to apply the credit balance to reduce the student's title IV loan debt.

Under 34 CFR 668.165(a)(4)(ii), an institution must return loan proceeds or cancel the loan, or both, if the institution receives a loan cancellation request from a borrower within 14 days after the date of the institution's notice to the borrower of his or her right to cancel all or a portion of a loan, or by the first day of the payment period if the institution sends the notice more than 14 days before the first day of the payment period. Under 34 CFR 668.165(a)(4)(iii), if an institution receives a late loan cancellation request from a borrower, the institution may, but is not required to, comply with the request. For a borrower who is an affected individual in this category, the Secretary is modifying this provision to require an institution to allow at least 60 days, rather than at least 14 days, for the borrower to request the cancellation of all or a portion of a loan for which proceeds have been credited to the account at the institution. If an institution receives a loan cancellation request from a borrower after the 60-day period, the institution may, but is not required to, comply with the request.

Under 34 CFR 668.164(c)(3)(i), an institution must obtain affirmative consent from a student or parent, as applicable, to disburse title IV funds to a bank account designated by the student or parent. In addition, 34 CFR 668.165(b)(1) provides that an institution must obtain a written authorization from a student or parent, as applicable, to:

• Use title IV funds to pay for educationally related charges incurred by the student at the institution other than charges for tuition and fees and, as applicable, room and board; and

• Hold on behalf of the student or parent any title IV funds that would otherwise be paid directly to the student or parent.

The Secretary is modifying these provisions to permit an institution to accept affirmative consent and any authorization provided by a student (or parent for a parent PLUS loan) orally, rather than in writing, if the student or parent is prevented from providing a written affirmative consent or authorization because of his or her status as an affected individual in this category. The institution must document the oral consent or authorization.

Institutions may, in cases where a student failed to meet the institution's satisfactory academic progress standards as a direct result of being an affected individual in this category, apply the exception provision of “other special circumstances” contained in 34 CFR 668.34(a)(9)(ii).

Sections 428(b)(7)(D) and 464(c)(7) of the HEA and 34 CFR 674.31(b)(2)(i)(C), 682.209(a)(5), and 685.207(b)(2)(ii) and (c)(2)(ii) exclude from a Federal Perkins Loan, FFEL, or Direct Loan borrower's (title IV borrower's) initial grace period any period during which a borrower who is a member of an Armed Forces reserve component is called or ordered to active duty for a period of more than 30 days. The statutory and regulatory provisions further require that any single excluded period may not exceed three years and must include the time necessary for the borrower to resume enrollment at the next available regular enrollment period. Lastly, any borrower who is in a grace period when called or ordered to active duty is entitled to another six- or nine-month grace period, as applicable, upon completion of the excluded period of service.

The Secretary is modifying these statutory and regulatory provisions to exclude from a title IV borrower's initial grace period, any period, not to exceed three years, during which a borrower is an affected individual in this category. Any excluded period must include the time necessary for an affected individual in this category to resume enrollment at the next available enrollment period.

A title IV borrower is considered to be in an “in-school” status and is not required to make payments on a title IV loan that has not entered repayment as long as the borrower is enrolled at an eligible institution on at least a half-time basis. Under sections 428(b)(7) and 464(c)(1)(A) of the HEA and 34 CFR 674.31(b)(2), 682.209(a), and 685.207(b), (c), and (e)(2) and (3), when a title IV borrower ceases to be enrolled at an eligible institution on at least a half-time basis, the borrower is obligated to begin repayment of the loan after a six- or nine-month grace period, depending on the title IV loan program and the terms of the borrower's promissory note. The Secretary is modifying the statutory and regulatory provisions that obligate an “in-school” borrower who has dropped below half-time status to begin repayment if the borrower is an affected individual in this category, by requiring the holder of the loan to maintain the loan in an “in-school” status for a period not to exceed three years, including the time necessary for the borrower to resume enrollment in the next regular enrollment period, if the borrower is planning to go back to school. The Secretary will pay interest that accrues on a subsidized Stafford Loan as a result of the extension of a borrower's in-school status under this modification.

Under sections 427(a)(2)(C)(i), 428(b)(1)(M)(i), 428B(a)(2) and (d)(1), 428C(b)(4)(C), 455(f)(2)(A), and 464(c)(2)(A)(i) of the HEA and 34 CFR 674.34(b)(1), 682.210(b)(1)(i) and (ii), 682.210(s)(2)and(3), and 685.204(b)(1)(i)(A) and (B), a title IV borrower is eligible for a deferment on the loan during periods after the commencement or resumption of the repayment period on the loan when the borrower is enrolled and in attendance as a regular student on at least a half-time basis (or full-time, if required by the terms of the borrower's promissory note) at an eligible institution; enrolled and in attendance as a regular student in a course of study that is part of a graduate fellowship program; or engaged in graduate or post-graduate fellowship-supported study outside the United States. The borrower's deferment period ends when the borrower no longer meets one of the above conditions.

The Secretary is waiving the statutory and regulatory eligibility requirements for this deferment for title IV borrowers who were required to interrupt a graduate fellowship deferment, or who were in an in-school deferment but who left school, because of their status as an affected individual in this category. The holder of the loan is required to maintain the loan in the graduate fellowship deferment or in-school deferment status for a period not to exceed three years during which the borrower is an affected individual in this category. This period includes the time necessary for the borrower to resume his or her graduate fellowship program or resume enrollment in the next regular enrollment period if the borrower returns to school. The Secretary will pay interest that accrues on a subsidized Stafford Loan as a result of extending a borrower's eligibility for deferment under this waiver.

Under section 464(e) of the HEA and 34 CFR 674.33(d)(2), there is a three-year cumulative limit on the length of forbearances that a Federal Perkins Loan borrower can receive. To assist Federal Perkins Loan borrowers who are affected individuals in this category, the Secretary is waiving these statutory and regulatory requirements so that any forbearance based on a borrower's status as an affected individual in this category is excluded from the three-year cumulative limit.

Under section 464(e) of the HEA and 34 CFR 674.33(d)(2) and (3), a school must receive a request and supporting documentation from a Federal Perkins Loan borrower before granting the borrower a forbearance, the terms of which must be in the form of a written agreement. The Secretary is waiving these statutory and regulatory provisions to require an institution to grant forbearance based on the borrower's status as an affected individual in this category for a one-year period, including a three-month “transition period” immediately following, without supporting documentation or a written agreement, based on the written or oral request of the borrower, a member of the borrower's family, or another reliable source. The purpose of the three-month transition period is to assist borrowers so that they will not be required toreenter repayment immediately after they are no longer affected individuals in this category. In order to grant the borrower forbearance beyond the initial twelve- to fifteen-month period, supporting documentation from the borrower, a member of the borrower's family, or another reliable source is required.

Under 34 CFR 682.211(i)(1), a FFEL borrower who requests forbearance because of a military mobilization must provide the loan holder with documentation showing that he or she is subject to a military mobilization. The Secretary is waiving this requirement to allow a borrower who is not otherwise eligible for the military service deferment under 34 CFR 682.210(t)(9), 685.204(e)(7), and 674.34(h)(7) to receive forbearance at the request of the borrower, a member of the borrower's family, or another reliable source for a one-year period, including a three-month transition period that immediately follows immediately following, without providing the loan holder with documentation. In order to grant the borrower forbearance beyond this period, documentation supporting the borrower's military mobilization must be submitted to the holder of the loan.

The Secretary will apply the forbearance waivers and modifications in this section to loans held by the Department of Education.

In accordance with 34 CFR part 674, subpart C—Due Diligence, and 682.410(b)(6), schools and guaranty agencies must attempt to recover amounts owed from defaulted Federal Perkins and FFEL borrowers, respectively. The Secretary is waiving the regulatory provisions that require schools and guaranty agencies to attempt collection on defaulted loans for the time period during which the borrower is an affected individual in this category and for a three-month transition period. The school or guaranty agency may stop collection activities upon notification by the borrower, a member of the borrower's family, or another reliable source that the borrower is an affected individual in this category. Collection activities must resume after the borrower has notified the school or guaranty agency that he or she is no longer an affected individual and the three-month transition period has expired. The loan holder must document in the loan file why it has suspended collection activities on the loan, and the loan holder is not required to obtain evidence of the borrower's status while collection activities have been suspended. The Secretary will apply the waivers described in this paragraph to loans held by the Department of Education.

Depending on the loan program, borrowers may qualify for loan cancellation if they are employed fulltime in specified occupations, such as teaching, as a civil legal assistance attorney, or in law enforcement, pursuant to Sections 428J, 428L, 460(b)(1), and 465(a)(2)(A)-(M) and (a)(3) of the HEA, and 34 CFR 674.53, 674.55, 674.55(b), 674.56, 674.57, 674.58, 674.60, 682.216, and 685.217. Generally, to qualify for loan cancellation, borrowers must perform uninterrupted, otherwise qualifying service for a specified length of time (for example, one year) or for consecutive periods of time, such as five consecutive years.

For borrowers who are affected individuals in this category, the Secretary is waiving the requirements that apply to the various loan cancellations that such periods of service be uninterrupted or consecutive, if the reason for the interruption is related to the borrower's status as an affected individual in this category. Therefore, the service period required for the borrower to receive or retain a loan cancellation for which he or she is otherwise eligible will not be considered interrupted by any period during which the borrower is an affected individual in this category, including the three-month transition period. The Secretary will apply the waivers described in this paragraph to loans held by the Department of Education.

A borrower of a Direct Loan or FFEL Loan must make nine on-time, monthly payments over ten consecutive months to rehabilitate a defaulted loan in accordance with section 428F(a) of the HEA and 34 CFR 682.405 and 685.211(f). Federal Perkins Loan borrowers must make nine consecutive, on-time monthly payments to rehabilitate a defaulted Federal Perkins Loan in accordance with section 464(h)(1)(A) of the HEA. To assist title IV borrowers who are affected individuals in this category, the Secretary is waiving the statutory and regulatory requirements that payments made to rehabilitate a loan must be consecutive or made over no more than ten consecutive months. Loan holders should not treat any payment missed during the time that a borrower is an affected individual in this category, or the three-month transition period, as an interruption in the number of monthly, on-time payments required to be made consecutively, or the number of consecutive months in which payment is required to be made, for loan rehabilitation. If there is an arrangement or agreement in place between the borrower and loan holder and the borrower makes a payment during this period, the loan holder must treat the payment as an eligible payment in the required series of payments. When the borrower is no longer considered to be an affected individual in this category, and the three-month transition period has expired, the required sequence of qualifying payments may resume at the point they were discontinued as a result of the borrower's status. The Secretary will apply the waivers described in this paragraph to loans held by the Department of Education.

Under sections 428F(b) and 464(h)(2) of the HEA and under the definition of “satisfactory repayment arrangement” in 34 CFR 668.35(a)(2), 674.2(b), 682.200(b), and 685.102(b), a defaulted title IV borrower may make six consecutive, monthly, on-time payments to reestablish eligibility for title IV student financial assistance. To assist title IV borrowers who are affected individuals in this category, the Secretary is waiving statutory and regulatory provisions that require the borrower to make consecutive payments in order to reestablish eligibility for title IV student financial assistance. Loan holders should not treat any payment missed during the time that a borrower is an affected individual in this category as an interruption in the six consecutive, monthly, on-time payments required for reestablishing title IV eligibility. If there is an arrangement or agreement in place between the borrower and loan holder and the borrower makes a payment during this period, the loan holder must treat the payment as an eligible payment in the required series of payments. When the borrower is no longer considered to be an affected individual or in the three-month transition period for purposes of this notice, the required sequence of qualifying payments may resume at the point they were discontinued as a result of the borrower's status. The Secretary will apply the waivers described in this paragraph to loans held by the Department of Education.

Under the definition of “satisfactory repayment arrangement” in 34 CFR685.102(b), a defaulted FFEL or Direct Loan borrower may establish eligibility to consolidate a defaulted loan in the Direct Consolidation Loan Program by making three consecutive, monthly, on-time payments on the loan. The Secretary is waiving the regulatory requirement that such payments be consecutive. FFEL loan holders should not treat any payment missed during the time that a borrower is an affected individual in this category as an interruption in the three consecutive, monthly, on-time payments required for establishing eligibility to consolidate a defaulted loan in the Direct Consolidation Loan Program. If there is an arrangement or agreement in place between the borrower and loan holder and the borrower makes a payment during this period, the loan holder must treat the payment as an eligible payment in the required series of payments. When the borrower is no longer considered to be an affected individual in this category or in the three-month transition period, the required sequence of qualifying payments may resume at the point they were discontinued as a result of the borrower's status as an affected individual. The Secretary will apply the waivers described in this paragraph to Direct and FFEL loans held by the Department of Education and to commercially held FFEL loans.

Section 493C(c) of the HEA requires the Secretary to establish procedures for annually determining a borrower's eligibility for income-based repayment, including verification of a borrower's annual income and the annual amount due on the total amount of the borrower's loans. Section 493C(b)(6) of the HEA provides that if a borrower no longer has a partial financial hardship, the maximum monthly payment amount the borrower will be required to pay is an amount that does not exceed the monthly amount paid under the standard repayment plan based on a ten-year repayment period. Under 34 CFR 682.215(e), 682.221(e), and 685.209, borrowers repaying under the IBR or ICR plan must be evaluated annually to determine if the borrower continues to have a partial financial hardship, if applicable, and whether the borrower's monthly payment amount under the IBR or ICR plan should be recalculated based on changes in the borrower's income or family size. Borrowers are required to provide information about their annual income and family size to the loan holder each year by the deadline specified by the holder. A borrower who fails to provide the required information would have his or her monthly payment amount adjusted to the amount the borrower would pay under the ten-year standard payment plan.

The Secretary is waiving these statutory and regulatory provisions to require loan holders to maintain an affected borrower's payment at the most recently calculated IBR or ICR monthly payment amount for up to a three-year period, including a three-month transition period immediately following, if the borrower's status as an affected individual in this category has prevented the borrower from providing documentation of updated income and family size by the specified deadline for the holder's receipt of that information.

Category 3: The Secretary is waiving or modifying the following provisions of title IV of the HEA and the Department's regulations for affected individuals who are serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency as described in the SUPPLEMENTARY INFORMATION section of this notice.

The HEROES Act encourages institutions to provide a full refund of tuition, fees, and other institutional charges for the portion of a period of instruction that a student was unable to complete, or for which the student did not receive academic credit, because he or she was called up for active duty or for qualifying National Guard duty during a war or other military operation or national emergency. Alternatively, the Secretary encourages institutions to provide a credit in a comparable amount against future charges.

The HEROES Act also recommends that institutions consider providing easy and flexible reenrollment options to students who are affected individuals in this category. At a minimum, an institution must comply with the requirements of 34 CFR 668.18, which addresses the readmission requirements for service members under certain conditions.

Of course, an institution may provide such treatment to affected individuals other than those who are called up to active duty or for qualifying National Guard duty during a war or other military operation or national emergency.

Before an institution makes a refund of institutional charges, it must perform the required Return of Title IV Funds calculations based upon the originally assessed institutional charges. After determining the amount that the institution must return to the title IV Federal student aid programs, any reduction of institutional charges may take into account the funds that the institution is required to return. In other words, we do not expect that an institution would both return funds to the Federal programs and also provide a refund of those same funds to the student.

Category 4: The Secretary is waiving or modifying the following provisions of the HEA and the Department's regulations for dependents and spouses of affected individuals who are serving on active duty or performing qualifying National Guard duty during a war or other military operation or national emergency as described in the SUPPLEMENTARY INFORMATION section of this notice.

Regulations in 34 CFR 668.57(b) and (c) require signatures to verify the number of family members in the household and the number of family members enrolled in postsecondary institutions. The Secretary is waiving the requirement that a dependent student submit a statement signed by one of the applicant's parents when no responsible parent can provide the required signature because of the parent's status as an affected individual in this category.

Generally, when a dependent applicant for title IV aid submits the FAFSA or submits corrections to a previously submitted FAFSA, at least one parental signature is required on the FAFSA, SAR, or ISIR. The Secretary is waiving this requirement so that an applicant need not provide a parent's signature when there is no responsible parent who can provide the required signature because of the parent's status as an affected individual in this category. In these situations, a student's high school counselor or the FAA may sign on behalf of the parent as long as the applicant provides adequate documentation concerning the parent's inability to provide a signature due to the parent's status as an affected individual in this category.

Electronic Access to This Document:The official version of this document is the document published in theFederal Register. Free Internet access to the official edition of theFederal Register and the Code of Federal Regulations is available via the Federal Digital System at:www.gpo.gov/fdsys.At this site you can view this document, as well as all other documents of this Department published in theFederal Register, in text or Adobe Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in theFederal Registerby using the article search feature at:www.federalregister.gov.Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

This rule amends part 51 of title 38, Code of Federal Regulations, to remove the requirement that a veteran receiving nursing home care in a State home must have resided in the State home for at least 30 consecutive days before VA will pay per diem when that veteran does not stay in the State home overnight. VA pays per diem to State homes for veterans who stay elsewhere overnight to create a “bed hold,” so that the State home reserves the veteran's bed until the veteran returns from a temporary absence. Typically, these temporary absences arise from a veteran's acute need for a higher level of care, such as a period of hospitalization. Temporary absences also arise for reasons other than hospital care, such as when a veteran travels to visit family members.

This rule also clarifies in 38 CFR 51.43(c) that VA calculates occupancy rate “by dividing the total number of patients in the nursing home or domiciliary by the total recognized nursing home or domiciliary beds in that facility.” This is consistent with current practice, and will help ensure that State homes understand our methodology.

The 30-day residency requirement for bed hold per diem payments was established in 2009 in 38 CFR 51.43(c), which stated: “Per diem will be paid under §§ 51.40 and 51.41 for each day that the veteran is receiving care and has an overnight stay. Per diem also will be paid when there is no overnight stay if the veteran has resided in the facility for 30 consecutive days (including overnight stays) and the facility has an occupancy rate of 90 percent or greater. However, these payments will be made only for the first 10 consecutive days during which the veteran is admitted as a patient for any stay in a VA or other hospital (a hospital stay could occur more than once in a calendar year) and only for the first 12 days in a calendar year during which the veteran is absent for purposes other than receiving hospital care.”See74 FR 19433.

In the proposed rule that preceded the addition of § 51.43, we stated that the basis for the 30-day residency requirement was that “State homes should receive per diem payments to hold beds only for permanent residents and only if the State home would likely fill the bed without such payments. Allowing payments for bed holds only after a veteran has been in a nursing home for at least 30 consecutive days (including overnight stays) appears to be sufficient to establish permanent residency.” 73 FR 72402. In addition, the 2009 final rule confirmed VA's intent to make the 30-day rule a factor that directly affected eligibility for bed hold payments, stating: “We believe that 30 days is a minimal amount of time for demonstrating that a veteran intends to be a resident at the State home and that the veteran was not temporarily placed in the State home.” 74 FR 19429.

VA adopted the 30-day residency requirement as the measure for determining whether a veteran would likely return to a State home after not having stayed there overnight, and in turn whether the State home should receive continued per diem payments in the veteran's absence to hold the veteran's bed. Through application of this requirement, however, VA has come to recognize that duration of residency in a State home is not an accurate predictor of whether a veteran is likely to return to a State home after a temporary absence. For instance, with absences resulting from the veteran's need for hospital care, the veteran's health status while hospitalized is actually what determines whether andwhen he or she will return to a nursing home level of care at the State home. With absences resulting from non-hospital care reasons, the veteran in almost all instances communicates an intent to return to the State home within a specific period of time, or communicates that he or she will not be returning. With both types of absences, we no longer find that a veteran's period of residency at a State home is determinative as to whether the veteran will likely return to the State home. Therefore, we believe the 30-day residency requirement is unnecessary in ensuring standards of bed hold per diem payments, and are removing this requirement from 38 CFR 51.43(c).

Based on our experience in applying § 51.43(c) since 2009, we believe our determination of whether to pay bed hold per diem for veterans who are absent overnight from State homes should be based on whether the veteran's bed would otherwise be taken by another resident. The best predictor of whether a veteran's bed is likely to be taken by another resident during the veteran's absence is the State home's occupancy rate, not the length of time the veteran has resided in the State home. If a State home has sufficient beds to offer new residents so that it need not fill the veteran's bed during the veteran's absence, then per diem payments to hold the veteran's bed are not needed. If the State home does not have a sufficient number of available beds, then per diem payments should be paid for a veteran during any absence, subject to the limitations set forth in the rest of § 51.43(c) to ensure the bed is reserved for the veteran until he or she returns to the State home.

Thus, the current 90 percent occupancy requirement for State homes in § 51.43(c) will serve as the sole criterion to determine whether bed hold per diem is paid to State homes, and those payments will remain subject to the limitations currently in § 51.43(c) (“Per diem also will be paid when there is no overnight stay if * * * the facility has an occupancy rate of 90 percent or greater. However, these payments will be made only for the first 10 consecutive days during which the veteran is admitted as a patient for any stay in a VA or other hospital (a hospital stay could occur more than once in a calendar year) and only for the first 12 days in a calendar year during which the veteran is absent for purposes other than receiving hospital care.”). Maintaining the occupancy measure and payment limitations for bed hold per diem payments, while removing the residency requirement, will help ensure that VA is able to provide stable nursing home care via State homes as we intend.

Additionally, removing the 30-day residency requirement brings VA more in line with generally accepted standards of practice for nursing home care. VA's other community nursing home care programs (such as the contract nursing home care program) do not have a similar residency requirement, and VA seeks to have a consistent bed hold policy for nursing home care provided to veterans in non-VA facilities. Moreover, it is administratively burdensome to track periods of residency in State homes across the country, as the total estimated average daily census for State homes is over 18,000 veterans in the nursing home level of care. This continuous tracking diverts significant VA resources, as this information must be monitored for 139 State nursing homes 5 days a week at 97 VA Medical Centers (VAMC) of jurisdiction, for 52 weeks a year for approximately an hour a day. Assuming a GS-06, step 5 grade level employee at each VAMC tracks residency for those state nursing homes in its jurisdiction, the estimated cost to VA in continuing this practice is $418,000 annually. In comparison, VA estimates that 1,095 more per diem payments would be made per year if there were no residency requirement, for an estimated increased annual cost of $265,000. Based on these calculations, tracking residency, due to the current 30-day residency requirement, costs VA nearly 60 percent more than the amount of the projected increase in per diem payments that VA would make if the 30-day residency requirement were removed. In addition, tracking residency does not ensure veteran beds are held as we intend and does not contribute to our efforts in providing dependable nursing home care to veterans through State homes. Under the current rule, State homes also shoulder the administrative burden of tracking and reporting the residency dates of veterans, and will likely receive a similar benefit from the removal of the 30-day requirement.

Though in the past we believed a 30-day residency requirement helped ensure per diem was paid judiciously, VA now understands that the costs of this requirement outweigh possible savings. There have been numerous ongoing requests from the State home community and the National Association of State Veterans Homes (NASVH) for VA to remove the 30-day residency requirement for bed hold per diem payments. Because this rule benefits veterans and liberalizes a prerequisite for per diem payments, we do not believe that any members of the public are adversely affected by this rule.

VA believes this direct final rule is non-controversial, anticipates that this rule will not result in any significant adverse comment, and therefore is issuing it as a direct final rule. Previous actions of this nature, which remove restrictions on VA medical benefits to improve health outcomes, have not been controversial and have not resulted in any significant adverse comment or objection. However, in the “Proposed Rules” section of thisFederal Registerpublication, we are publishing a separate, substantially identical proposed rule document that will serve as a proposal for the provisions in this direct final rule if any significant adverse comment is filed. (See RIN 2900-AO37).

For purposes of the direct final rulemaking, a significant adverse comment is one that explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or why it would be ineffective or unacceptable without a change. In determining whether an adverse comment is significant and warrants withdrawing a direct final rule, we will consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process in accordance with section 553 of the Administrative Procedure Act (5 U.S.C. 553). Comments that are frivolous, insubstantial, or outside the scope of the rule will not be considered adverse under this procedure. For example, a comment recommending an additional change to the rule will not be considered a significant comment unless the comment states why the rule would be ineffective without the additional change.

Under direct final rule procedures, if no significant adverse comment is received within the comment period, the rule will become effective on the date specified above. After the close of the comment period, VA will publish a document in theFederal Registerindicating that no significant adverse comment was received and confirming the date on which the final rule will become effective. VA will also publish a notice in theFederal Registerwithdrawing the proposed rule.

However, if any significant adverse comment is received, VA will publish in theFederal Registera notice acknowledging receipt of a significant adverse comment and withdrawing the direct final rule. In the event the directfinal rule is withdrawn because of receipt of any significant adverse comment, VA can proceed with the rulemaking by addressing the comments received and publishing a final rule. Any comments received in response to the direct final rule will be treated as comments regarding the proposed rule. Likewise, any significant adverse comment received in response to the proposed rule will be considered as a comment regarding the direct final rule. VA will consider such comments in developing a subsequent final rule.

Title 38 of the Code of Federal Regulations, as revised by this rulemaking, represents VA's implementation of its legal authority on this subject. Other than future amendments to this regulation or governing statutes, no contrary guidance or procedures are authorized. All existing or subsequent VA guidance is read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.

This document contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this regulatory amendment will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. The State homes that are subject to this rulemaking are State government entities under the control of State governments. All State homes are owned, operated and managed by State governments except for a small number that are operated by entities under contract with State governments. These contractors are not small entities. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” which requires review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined and it has been determined not to be a significant regulatory action under Executive Order 12866.

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

The Catalog of Federal Domestic Assistance numbers and titles are 64.005, Grants to States for Construction of State Home Facilities; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.015, Veterans State Nursing Home Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved this document on September 10, 2012, for publication.

For the reasons stated in the preamble, the Department of Veterans Affairs amends 38 CFR part 51 as follows:

Throughout this document, the terms “we,” “us,” and “our” refer to EPA.

On June 28, 2012 (77 FR 38557), under section 110(k) of the Clean Air Act (CAA or “Act”), EPA proposed a limited approval and limited disapproval of revisions to the Nevada State Implementation Plan (SIP). The revisions, which were submitted by the Nevada Division of Environmental Protection (NDEP) on January 24, 2011, include certain new or amended State rules [i.e., certain sections of Nevada Administrative Code (NAC)] that govern applications for, and issuance of, permits for stationary sources [a process referred to herein as “New Source Review” (NSR) and rules referred to herein as “NSR rules”].1 NDEP's January 24, 2011 submittal also includes a rescission of one definition from the existing SIP (the definition of “special mobile equipment”).

As described in our June 28, 2012 proposed rule (77 FR at 38557), on November 9, 2011, NDEP amended the January 24, 2011 submittal by replacing an NSR rule (NAC 445B.3457) that had been submitted on January 24, 2011 as a temporary regulation with the version of the rule that had been adopted by the State Environmental Commission (SEC) as a permanent regulation. On May 21, 2012, NDEP further amended the January 24, 2011 submittal by submitting a small set of additional NSR-related rules (and one statutory definition), certain clarifications concerning the previously-submitted NSR rules, and documentation supporting the selection of emissions-based thresholds for triggering the public notice requirements for draft permits for certain source modifications.

Table 1 below lists the rules (and one statutory definition) that were submitted by NDEP on January 24, 2011, November 9, 2011, and May 21, 2012 and on which EPA is taking final limited approval and limited disapproval action in this document.

In our proposed rule (77 FR 38557, at 38559), we discussed the regulatory history of the Nevada SIP and identified the existing Nevada SIP rules governing NSR for stationary sources under NDEP jurisdiction (see table 2).

Table of Contents I. Background II. EPA's Analysis of North Carolina's SIP Revision III. Final Action IV. Statutory and Executive Order Reviews I. Background

The Rocky Mount, North Carolina 1997 8-hour ozone attainment and maintenance area is comprised of two counties—Edgecombe and Nash (hereafter referred to as the “Rocky Mount Area” or “Area”). In accordance with the CAA, the Rocky Mount Area was designated nonattainment for the 1997 8-hour ozone national ambient air quality standards (NAAQS) on April 30, 2004, with an effective date of June 15, 2004.See69 FR 23858.

On June 19, 2006, the State of North Carolina, through NCDENR, submitted a final request for EPA to: (1) Redesignate the Rocky Mount Area to attainment; and (2) approve a North Carolina SIP revision containing a maintenance plan for Rocky Mount, North Carolina. On November 6, 2006, EPA approved the redesignation request for the Rocky Mount Area. Additionally, EPA approved the 1997 8-hour ozone maintenance plan (including MVEBs for Edgecombe and Nash Counties) for theRocky Mount Area. 71 FR 64891. These approvals were based on EPA's determination that the State of North Carolina had demonstrated that the Rocky Mount Area met the criteria for redesignation to attainment specified in the CAA, including the determination that the entire Rocky Mount Area had attained the 1997 8-hour ozone NAAQS.

In the November 6, 2006, final rulemaking, EPA also found adequate and approved MVEBs for Edgecombe and Nash Counties in the Rocky Mount Area. Specifically, EPA found adequate and approved the 2008 and 2017 MVEBs for nitrogen oxides (NOX) (for both Edgecombe and Nash Counties) that were contained in the 1997 8-hour ozone maintenance plan for the Rocky Mount Area.1 Further, in the November 6, 2006, action, EPA found adequate and approved the insignificance determination for volatile organic compound (VOC) contribution from motor vehicle emissions to the 1997 8-hour ozone pollution in the Rocky Mount Area.

On February 7, 2011, North Carolina provided a SIP revision (the subject of this action) to increase the amount of safety margins allocated to the NOXMVEBs to account for changes in the projection models. Section II provides EPA's analysis of North Carolina's February 7, 2011, SIP revision.

As discussed above, on February 7, 2011, the State of North Carolina, through NCDENR, submitted a SIP revision to revise the MVEBs for Edgecombe and Nash Counties in the Rocky Mount Area to account for the new emissions model, VMT projection models, and other emission model input data. The MVEBs (expressed in tons per day (tpd) and kilograms per day (kg/d)) that are being updated through today's action were originally approved by EPA on November 6, 2006, and are outlined in the table below.

DAQ is currently allocating portions of the available safety margin2 to the MVEBs to account for new emissions models, VMT projections models, as well as changes to future vehicle mix assumptions, that influence the emission estimations. DAQ decided to allocate a majority of the safety margin available to the MVEBs. For 2017, DAQ estimated the amount needed to account for the current emission model and VMT projections model, and then added an additional 21 percent to account for any future changes to the emission model, projection model and other input data.

At this time, North Carolina is seeking to adjust the safety margins. The following tables provide the adjusted NOXemissions data, in kg/d for the 2008 base attainment year inventories, as well as the projected NOXemissions inventory 2017.

A total of 3,329 kg (3.67 tons) and 3,482 kg (3.84 tons) of 2008 and 2017 NOxsafety margin, respectively, were added to the MVEBs for the Rocky Mount Area. Taking into consideration the portion of the safety margin applied to the MVEBs, the resulting difference between the attainment level of emissions from all sources and the projected level of emissions from all sources in the maintenance area, i.e., the new safety margins, for each projected year is listed.

As shown in Tables 2 and 3 above, the Rocky Mount Area is projected to steadily decrease its total VOC and NOXemissions from the base year of 2008 to the maintenance year of 2017. This VOC and NOXemission decrease demonstrates continued attainment/maintenance of the 1997 8-hour ozone NAAQS for ten years from 2008 (the year the Area was effectively designated attainment for the 1997 8-hour ozone NAAQS) as required by the CAA. These projected reductions of ozone precursors indicates continued maintenance of the 1997 8-hour ozone NAAQS.

The revised MVEBs that North Carolina submitted for the Rocky Mount Area were developed with projected mobile source emissions derived using the MOBILE6 motor vehicle emissions model. This model was the most current model available at the time North Carolina was performing its analysis. However, EPA has now issued an updated motor vehicle emissions model known as Motor Vehicle Emission Simulator or MOVES. In its announcement of this model, EPA established a two-year grace period for continued use of MOBILE6.2 in regional emissions analyses for transportation plan and transportation improvement programs (TIPs) conformity determinations (extending to March 2, 2012),3 after which states (other than California) must use MOVES in conformity determinations for TIPs. As stated above, MOBILE6.2 was the applicable mobile source emissions model that was available when the original SIP was submitted. EPA's “Policy Guidance on the Use of MOVES2010 and Subsequent Minor Revisions for State Implementation Plan Development, Transportation Conformity, and Other Purposes” (http://www.epa.gov/otaq/models/moves/documents/420b12010.pdf) explains that the CAA does not require states that have already submitted SIPs to revise these SIPs simply because a new motor vehicle emissions model is now available. The guidance further states that the use of MOBILE6.2 in an already submitted SIP should not be an obstacle to approval of that SIP assuming that it is otherwise approvable because it would be unreasonable to require revision to a SIP which in this case was submitted prior to the release of MOVES.

EPA is taking direct final action to approve North Carolina's February 7, 2011, SIP revision to allocate a portion of the available safety margin to the MVEBs for the 1997 8-hour ozone NAAQS for the Rocky Mount, North Carolina Area. The revised MVEBs, for Edgecomb and Nash Counties in North Carolina ensure continued attainment of the 1997 8-hour ozone NAAQS through the maintenance year 2017. EPA has evaluated North Carolina's February 7, 2011, SIP revision, and has determined that it meets the applicable requirements of the CAA and EPA regulations, and is consistent with EPA policy. On March 12, 2008, EPA issued revised ozone NAAQS. The current action, however, is being taken to address requirements under the 1997 8-hour ozone NAAQS.

EPA is publishing this rule without prior proposal because the Agency views this as a non-controversial amendment and anticipates no adverse comments. However, in the proposed rules section of thisFederal Registerpublication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should an adverse comment be filed. This rule will be effective on November 26, 2012 without further notice unless the Agency receives adverse comment by October 29, 2012. If EPA receives such comments, then EPA will publish a document withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. If no such comments are received, the public is advised this rule will be effective on November 26, 2012 and no further action will be taken on the proposed rule.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by November 26, 2012. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today'sFederal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements.Seesection 307(b)(2).

40 CFR part 52 is amended as follows:

List of Subjects in 40 CFR Part 300

Environmental protection, Air pollution control, Chemicals, Hazardous Waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water Supply.

1. Background

A proposed rule was published on May 5, 2011 (76 FR 25657) to consolidate NASA's three existing cross-waiver of liability clauses into two clauses and to align the two clauses with Agency mission requirements, consistent with the cross-waiver of liability regulatory authority at 14 CFR part 1266. The regulatory authority at 14 CFR part 1266 was promulgated on February 26, 2008 (73 FR 10143-50). The February 2008 rule established NASA's cross-waiver of liability authority in two categories of NASA agreements: (1) Agreements for ISS activities pursuant to the “Agreement Among the Government of Canada, Governments of Member States of the European Space Agency, the Government of Japan, the Government of the Russian Federation, and the Government of the United States ofAmerica concerning Cooperation on the Civil International Space Station” (commonly referred to as the ISS Intergovernmental Agreement, or IGA); and (2) launch agreements involving science or space exploration activities unrelated to the ISS.

Following promulgation of the two-category regulatory authority, the three-category contract clause arrangement no longer aligned. The procurement rule of May 7, 2011 proposed to delete one clause and realign the remaining two to cover the two categories of contracts on which cross-waivers of liability are authorized and required: Contracts supporting ISS and contracts supporting launches into space that are not related to the ISS. Clause 1852.228-72, Cross-Waiver of Liability for Space Shuttle Services will be deleted. Clause 1852.228-76 is amended and retitledCross-Waiver of Liability for International Space Station Activities,and 1852.228-78 is amended and retitledCross-Waiver of Liability for Science or Space Exploration Activities Unrelated to the International Space Station.While the proposed rule included continuing applicability of cross waivers of liability to Space Shuttle support contracts, this final rule removes the Space Shuttle support contract references because NASA will not issue any new contracts for Space Shuttle support. Further, wherever the cross-waiver of liability clauses are referenced in the NASA FAR Supplement, conforming changes are being made to clause numbers and titles.

Two respondents submitted comments in response to the proposed rule. NASA reviewed and considered all comments in the development of the final rule. No changes are being made to the rule as a result of the comments. A discussion of the comments follows:

A. One respondent mistakenly cited this docket number, but the comments submitted were unrelated to this rule.

B. One respondent submitted 19 specific recommendations for change. They are individually addressed below. In general, the comments appear to confuse the relationship NASA has with its contractors vice that which NASA has with Cooperating Parties under cooperative Space Act agreements. This procurement rule addresses only the requirements for NASAcontractors.This rule does not address the relationship that NASA has with other entities under cooperative Space Act agreements.

C. Comments:

1. 1852.228-76(a): The stated objective is “to extend this cross-waiver of liability to NASAcontracts”[emphasis added.] There is a distinction between NFS contracts and Space Act agreements that is recognized throughout the proposed rule, but not reflected in paragraph (a). Recommend adding “Space Act agreements”.

NASA Response:The distinction between NASA contracts and Space Act agreements is recognized throughout the rule, but this rule applies only to contracts, and therefore, Space Act agreements are not cited in the clause. The purpose of this rule is to extend cross-waivers of liability to contracts. Space Act Agreements have their own set of terms, and they are governed by 14 CFR part 1266. To the extent that cross-waivers of liability apply to Space Act agreements, the terms will be included in the Space Act agreement. Space Act agreements are outside the scope of this Rule.

2. 1852.228-76(b)(1): NASA contracts should be added to the definition of “Agreement” to ensure that the cross-waiver clauses include FAR-based contracts. NASA Response: “Agreement”, as defined in the clause, is correct. Agreement, as used here, refers to Space Act agreements between NASA and Cooperating Parties, and does not include contracts. Contracts between NASA and contractors, including subcontracts and supplier contracts thereunder, are not Agreements as defined in the clause.

3. 1852.228-76(b)(5): The definition of “Party” should be amended to add NASA contractors.

NASA Response:“Party”, as defined in the clause, refers to Parties to the cooperative Space Act agreement, i.e. the Space Act agreement between NASA and a Cooperating Party. The definition does not include contractors, and the definition clearly states that contractors and subcontractors are not “Parties”.

4. 1852.228-76(b)(6): Recommend amending the definition of payload to read “all property to be flown or used on or in a Launch orTransfer Vehicleor the ISS”

NASA Response:It is not necessary to add “transfer vehicle” to the definition of “payload” because, at the time of launch, a transfer vehicle is “property flown on a launch vehicle”, and is therefore included in the definition of payload. While it is true that, at some point, a transfer vehicle ceases to be “payload” and becomes, instead, a “space vehicle”, it is not necessary, for purposes of this rule, to define that point in time. A transfer vehicle is subject to cross-waivers of liability whether it is functioning as payload or as a space vehicle. For a detailed discussion on NASA's development of a definition of “transfer vehicle,” please see 73 FR 10146.

5. 1852.228-76 (b)(7): The “Protected Space Operations” definition includes certain activities “in implementation of the IGA * * * and contracts to perform work in support of NASA's obligations under the IGA and these related agreements.” It appears that the capitalized “Agreements” in this sentence refers to the IGA; however, “Agreement” is defined in the clause to mean otherwise. Recommend clarifying the distinction.

NASA response:Agreements as used in 1852.228-76(b)(7) is consistent with the definition of Agreement in the clause. It does not refer specifically to the IGA.

6. 1852.228-76(c)(1): Recommend changing “the contractor” to “each party”.

NASA response:The “contractor” is the correct term. The purpose of the clause is to require the contractor to agree to a waiver of liability. The clause does not apply to “each party” to other agreements.

7. 1852.228-76(c)(2): Recommend changing “the contractor” to “each party” and “subcontractors” to “related entities”.

NASA response:The clause is correct as written. The clause requires the contractor to extend the cross-waiver liability to its subcontractors at any tier. Use of the terms “Party” or “related entities” would, for reasons stated above, be incorrect. 1852.228-76(c)(2)(ii): Recommend changing “subcontractors” to “related entities.”

NASA Response:See response to 7.

8. 1852.228-76(c)(4)(i): Recommend changing “the Government” to “a Party”, and “own contractors or between its own contractors and their subcontractors and subcontractors” to ” related entities”.

NASA Response:The clause is correct as written. Cross-waivers do not apply between the Government and its contractors or between a contractor and its subcontractors. Contract terms and conditions apply to these relationships.

9. 1852.228-76(c)(4)(v): Recommend changing “contractor” to “party” and “subcontractor” to “related entity”.

NASA Response:See response to 9.

10. 1852.228-76(c)(4)(vi): Recommend changing “Government” to “a Party” and “contractor's” to “other Party's” inserting the word “contractual” before “obligations ” and changing “contract” to “agreement”.

NASA Response:The clause is correct as written. Specifically, 1852.228-76(c)(4)(vi) refers to the relationshipbetween NASA and its contractor and does not include any other parties or any agreements.

11. 1852.228-78(b)(1): NASA contracts should be amended to add the definition of “Agreement” to ensure that the cross-waiver clauses include FAR-based contracts. We recommend amending the definition as follows: “Agreement” refers to any NASA Space Act agreementsor contracts that containthe cross-waiver of liability provisions authorized by 14 CFR Part 1266-104.”

NASA Response:This rule amends the NASA FAR Supplement which applies only to contracts and not Space Act Agreements. Also see response to 2.

12. 1852.228-78(b)(4): Recommend the definition of “Party” be amended to add NASA contracts.

NASA Response:See response to 3.

13. 1852.228-78(b)(5): Recommend adding “Transfer Vehicle” to the definition of “Payload”.

NASA Response:See response to 4.

14. 1852.228-78(c)(1): Recommend changing “contractor” to “each Party”.

NASA Response:The clause is correct as written. The contract clause obligates the contractor. See response to 6 above.

15. 1852.228-78(c)(2): Recommend changing “contractor” to “party” and “own subcontractors at all tiers” to “related entities”.

NASA Response:The clause is correct as written. See response to 7.

16. 1852.228-78(c)(4)(i): Recommend changing “Government” to “a Party” and “own contractors or between its own contractors and their subcontractors” to ” Related Entities”.

NASA Response:The clause is correct as written. See response to 9.

17. 1852.228-78(c)(4)(v): Recommend changing “contractor” to “a Party” and “subcontractors” to “related entities” .

NASA Response:The clause is correct as written. See response to 9.

18. 1852.228-78(c)(4)(6): Recommend changing “Government” to “a party” and “contractor's” to “other party's” and inserting the word “contractual” before “obligations ” and “contract” to “agreement”.

NASA Response:See response to 11.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

NASA certifies that this final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, at 5 U.S.C. 601,et. seq.,because it the rule does not impose any additional requirements on small business. The rule updates and realigns already-existing requirements.

The Paperwork Reduction Act (Pub. L. 104-13) is not applicable because the NFS changes do not impose information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501,et seq.

(End of Clause)

The snapper-grouper fishery of the South Atlantic includes vermilion snapper and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management 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 commercial ACL (commercial quota) for vermilion snapper in the South Atlantic is 302,523 lb (137,222 kg), gutted weight, for the current fishing period, July 1 through December 31, 2012, as specified in 50 CFR 622.42(e)(4)(ii).

In accordance with regulations at 50 CFR 622.49(b)(6)(i), NMFS is required to close the commercial sector for vermilion snapper when the commercial ACL (commercial quota) for the applicable portion of the fishing year has been reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that the commercial ACL (commercial quota) for South Atlantic vermilion snapper will have been reached by September 28, 2012. Accordingly, the commercial sector for South Atlantic vermilion snapper is closed effective 12:01 a.m., local time, September 28, 2012, until 12:01 a.m., local time, January 1, 2013.

The operator of a vessel with a valid commercial vessel permit for South Atlantic snapper-grouper having vermilion snapper onboard must have landed and bartered, traded, or sold such vermilion snapper prior to 12:01 a.m., local time, September 28, 2012. During the closure, the bag limit specified in 50 CFR 622.39(d)(1)(v), applies to all harvest or possession of vermilion snapper in or from the South Atlantic EEZ, including the bag limit that may be retained by the captain or crew of a vessel operating as a charter vessel or headboat. The bag limit for such captain and crew is zero. During the closure, the possession limits specified in 50 CFR 622.39(d)(2) apply to all harvest or possession of vermilion snapper in or from the South Atlantic EEZ. During the closure, the sale or purchase of vermilion snapper taken from the EEZ is prohibited. The prohibition on sale or purchase does not apply to the sale or purchase of vermilion snapper that were harvested, landed ashore, and sold prior to 12:01 a.m., local time, September 28, 2012, and were held in cold storage by a dealer or processor. For a person on board a vessel for which a Federal commercial or charter vessel/headboat permit for the South Atlantic snapper-grouper fishery has been issued, the sale and purchase provisions of the commercial closure for vermilion snapper would apply regardless of whether the fish are harvested in state or Federal waters, as specified in 50 CFR 622.43(a)(5)(ii).

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA), finds that the need to immediately implement this action to close the commercial sector for vermilion snapper constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures would be unnecessary and contrary to the public interest. Such procedures would be unnecessary because the rule establishing the closure has been subject to notice and comment, and all that remains is to notify the public of the closure. Allowing prior notice and opportunity for public comment is contrary to the public interest. This action needs to be immediately implemented to protect vermilion snapper because the capacity of the fishing fleet allows for rapid harvest of the quota. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial ACL (commercial quota).

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).

This action is taken under 50 CFR 622.43(a) and is exempt from review under Executive Order 12866.