This rule is issued under Marketing Order No. 927, as amended (7 CFR part 927), regulating the handling of pears grown in Oregon and Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, Oregon-Washington pear handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as proposed herein would be applicable to all assessable fresh pears beginning July 1, 2012, and continue until amended, suspended, or terminated.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule would increase the assessment rate established for the Fresh Pear Committee (Committee) for the 2012-2013 and subsequent fiscal periods from $0.366 to $0.449 per standard box or equivalent of summer/fall pears handled, and would decrease the assessment rate from $0.471 to $0.449 per standard box or equivalent of fresh winter pears handled. The standard box or equivalent assessment rate for “other” fresh pears would remain unchanged at $0.00.

The Oregon-Washington pear marketing order provides authority for the Committee, with USDA approval, to formulate an annual budget of expenses and to collect assessments from handlers to administer the fresh pear program. The members of the Committee are producers and handlers of Oregon-Washington fresh pears. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed at a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2011-2012 and subsequent fiscal periods, the Committee recommended, and USDA approved, the following three base rates of assessment: (a) $0.366 per standard box or equivalent for any or all varieties or subvarieties of fresh pears classified as “summer/fall”; (b) $0.471 per standard box or equivalent for any or all varieties or subvarieties of fresh pears classified as “winter”; and (c) $0.000 per standard box or equivalent for any or all varieties or subvarieties of fresh pears classified as “other”. These base rates ofassessment would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on May 31, 2012, and unanimously recommended 2012-2013 expenditures of $9,166,744. To fund the 2012-2013 expenditures, the Committee also recommended an assessment rate of $0.449 per standard box or equivalent for both fresh summer/fall and winter pears.

In comparison, last year's budgeted expenditures were $9,301,960. The fresh summer/fall pear assessment rate of $0.449 is $0.083 higher than the rate currently in effect. The fresh winter pear assessment rate of $0.449 is $0.022 lower than the rate currently in effect. The Committee recommended increasing the promotion and paid advertising expenditures to market the larger 2012-2013 fresh summer/fall pear crop, estimated at four percent higher than 2011-2012 and the five-year average. Accordingly, the Committee recommended the higher fresh summer/fall pear assessment rate to fund the increased 2012-2013 promotion and paid advertising expenditures. The Committee estimates that the 2012-2013 fresh winter pear crop will be nine percent lower than 2011-2012. Consequently, the Committee recommended lower promotion and paid advertising expenditures for marketing the reduced fresh winter pear crop, resulting in a lower assessment rate for 2012-2013.

The major expenditures recommended by the Committee for the 2012-2013 fiscal period include $450,274 for contracted administration by Pear Bureau Northwest, $635,500 for production research and market development, $6,160,000 for promotion and paid advertising for winter pears, and $1,732,500 for promotion and paid advertising for summer/fall pears. In comparison, major expenses for the 2011-2012 fiscal period included $437,160 for contracted administration by Pear Bureau Northwest, $644,800 for production research and market development, $6,765,000 for promotion and paid advertising for winter pears, and $1,290,000 for promotion and paid advertising for summer/fall pears.

The Committee based its recommended assessment rate for fresh pears on the 2012-2013 summer/fall and winter pear crop estimates, the 2012-2013 program expenditure needs, and the current and projected size of its monetary reserve. Applying the $0.449 per standard box or equivalent assessment rate to the Committee's 4,500,000 standard box or equivalent fresh summer/fall pear crop estimate should provide $2,020,500 in assessment income. The quantity of assessable fresh winter pears for the 2012-2013 fiscal period is estimated at 16,000,000 standard boxes or equivalent and should provide $7,184,000 in assessment income. Thus, income derived from winter and summer/fall fresh pear handler assessments ($9,204,500) and interest and miscellaneous income ($20,000) would be adequate to cover the recommended $9,166,774 budget for 2012-2013. The Committee estimates that it will have a monetary reserve of $1,031,259 on June 30, 2012. During 2012-2013, the Committee estimates that $57,726 would be added to the reserve for an estimated reserve of $1,088,985 on June 30, 2013, which would be within the maximum permitted by the order of approximately one fiscal period's operational expenses (§ 927.42).

The proposed assessment rate would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee would continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's 2012-2013 budget and those for subsequent fiscal periods would be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 1,580 producers of fresh pears in the regulated production area and approximately 38 handlers of fresh pears subject to regulation under the order. Small agricultural producers are defined by the Small Business Administration (SBA)(13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,000,000.

According to the Noncitrus Fruits and Nuts 2011 Preliminary Summary issued in March 2012 by the National Agricultural Statistics Service, the total 2011 farm-gate value of all pears grown in Oregon and Washington is estimated at approximately $275,531,000. Based on the number of pear producers in the Oregon and Washington, the average gross revenue for each producer can be estimated at approximately $174,387. Furthermore, based on Committee records, the Committee has estimated that 56 percent of Oregon-Washington pear handlers currently ship less than $7,000,000 worth of fresh pears on an annual basis. From this information, it is concluded that the majority of producers and handlers of Oregon and Washington fresh pears may be classified as small entities.

This rule would increase the assessment rate established for the Committee and collected from handlers for the 2012-2013 and subsequent fiscal periods from $0.366 to $0.449 per standard box or equivalent of fresh summer/fall pears handled, and would decrease the assessment rate from $0.471 to $0.449 per standard box or equivalent of fresh winter pears handled. The Committee unanimously recommended 2012-2013 expenditures of $9,166,774, and an assessment rate of $0.449 per standard box or equivalent of fresh summer/fall and winter pears handled. The proposed assessment rate of $0.449 is $0.083 higher than the 2011-2012 assessment rate for summer/fall pears, and $0.022 lower than the 2011-2012 assessment rate for winter pears. The Committee recommended increasing the promotion and paid advertising expenditures to market the larger 2012-2013 fresh summer/fall pear crop, estimated at four percent higher than 2011-2012 and the five-year average. Accordingly, the Committee recommended the higher fresh summer/fall pear assessment rate to fund theincreased 2012-2013 promotion and paid advertising expenditures. The Committee estimates that the 2012-2013 fresh winter pear crop will be nine percent lower than 2011-2012. Consequently, the Committee recommended lower promotion and paid advertising expenditures for marketing the reduced fresh winter pear crop, resulting in a lower assessment rate for 2012-2013.

The quantity of assessable fresh summer/fall pears for the 2012-2013 fiscal period is estimated at 4,500,000 standard boxes or equivalent. Thus, the $0.449 rate should provide $2,020,500 in assessment income. Applying the $0.449 per standard box or equivalent assessment rate to the Committee's 16,000,000 standard box or equivalent fresh winter pear crop estimate should provide $7,184,000 in assessment income. Income derived from winter and summer/fall fresh pear handler assessments ($9,204,500) and interest and miscellaneous income ($20,000) would be adequate to cover the budgeted expenses.

The major expenditures recommended by the Committee for the 2012-2013 fiscal period include $450,274 for contracted administration by Pear Bureau Northwest, $635,500 for production research and market development, $6,160,000 for promotion and paid advertising for winter pears, and $1,732,500 for promotion and paid advertising for summer/fall pears. Budgeted expenses for these items in 2011-2012 were $437,160, $644,800, $6,765,000, and $1,290,000, respectively.

The Committee discussed alternatives to this rule. Leaving the assessment rate at the current level for summer/fall and winter pears was initially considered, but not recommended. Although considered, the Committee believes that the current assessment level for fresh summer/fall pears would not generate the funds necessary for the promotion and marketing of the larger fresh summer/fall pear crop. As a consequence, increasing it to the level recommended herein was determined as the best alternative. Similarly, the Committee discussed alternatives for the winter pear assessment rate, but concluded that the recommended lower assessment rate should generate enough funds for promotion and marketing of the smaller fresh winter pear crop.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the Oregon-Washington producer price for the 2012-2013 fiscal period could average $9 per standard box or equivalent of pears. Therefore, the estimated assessment revenue for the 2012-2013 fiscal period as a percentage of total producer revenue is 4.99 percent.

This action would modify the assessment obligation imposed on handlers. While the increase in the summer/fall pear assessment rate may impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. These costs would be offset by the benefits derived by the operation of the marketing order. On the other hand, decreasing the winter pear assessment rate would reduce the burden on handlers, and may reduce the burden on producers.

In addition, the Committee's meeting was widely publicized throughout the Oregon-Washington pear industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 31, 2012, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189, Generic Fruit Crops. No changes in those requirements as a result of this action are anticipated. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would impose no additional reporting or recordkeeping requirements on either small or large Oregon-Washington fresh pear handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

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

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:www.ams.usda.gov/MarketingOrdersSmallBusinessGuide.Any questions about the compliance guide should be sent to Laurel May at the previously mentioned address in theFOR FURTHER INFORMATION CONTACTsection.

A 10-day comment period is provided to allow interested persons to respond to this proposed rule. Ten days is deemed appropriate because: (1) The 2012-2013 fiscal period begins on July 1, 2012, and the marketing order requires that the rate of assessment for each fiscal period apply to all assessable pears handled during such fiscal period; (2) the Committee needs to have sufficient funds to pay its expenses which are incurred on a continuous basis; (3) the proposed rule would decrease the assessment rate for assessable fresh winter pears; and (4) handlers are aware of this action which was unanimously recommended by the Committee at a public meeting and is similar to other assessment rate actions issued in past years.

For the reasons set forth in the preamble, 7 CFR part 927 is proposed to be amended as follows:

Table of Contents I. General Information II. Background of State Submittals III. EPA Analysis of the Maintenance Plan for the 1997 8-Hour Ozone Standard for Salt Lake County and Davis County IV. EPA Analysis of the Associated Rule Revisions V. Proposed Action VI. Statutory and Executive Order Reviews Definitions

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

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

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

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

(iv) The wordsStateorUtahmean the State of Utah, unless the context indicates otherwise.

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

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

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

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

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

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

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

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

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

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

Under the Clean Air Act (CAA) enacted in 1970, EPA established national ambient air quality standards (NAAQS) for certain pervasive air pollutants, such as photochemical oxidant, carbon monoxide, and particulate matter. The NAAQS represent concentration levels below which public health and welfare are protected. The 1970 Act also required states to adopt and submit State Implementation Plans (SIPs) to implement, maintain, and enforce the NAAQS.

From time-to-time, the CAA requires SIP revisions to account for new or amended NAAQS or to meet other changed circumstances. The CAA was significantly amended in 1977, and under the 1977 Amendments, EPA promulgated attainment status designations for all areas of the country with respect to the NAAQS.

The CAA requires EPA to periodically review and revise the NAAQS, and in 1979, EPA established a new NAAQS of 0.12 ppm for ozone, averaged over 1 hour. This new NAAQS replaced the oxidant standard of 0.08 ppm. See 44 FR 8202 (February 8, 1979). Areas designated nonattainment for oxidant were considered to be nonattainment for ozone as well. Part D of CAA Title I requires special measures for areas designated nonattainment. In 1984, EPA approved Utah's SIP for the 1-hour ozone standard for the Salt Lake County and Davis County nonattainment area (49 FR 32575).

Congress significantly amended the CAA again in 1990. Under the 1990 Amendments, each area of the country that was designated nonattainment for the 1-hour ozone NAAQS, including Salt Lake County and Davis County, was classified by operation of law as marginal, moderate, serious, severe, or extreme nonattainment depending on the severity of the area's air quality problem. The ozone nonattainment designation for Salt Lake County and Davis County continued by operation of law according to section 107(d)(1)(C)(i) of the CAA, as amended in 1990. Furthermore, the area was classified by operation of law as moderate for ozone under CAA section 181(a)(1).

Under CAA section 175A, states may request redesignation of a nonattainment area to attainment if monitoring data showed that the area has met the NAAQS and if the area meets certain other requirements. On July 18, 1995, both Salt Lake and Davis Counties were found to be attaining the 1-hour ozone standard (60 FR 36723). On July 17, 1997, EPA approved the State's request to redesignate Salt Lake and Davis Counties to attainment for the 1-hour ozone standard. As part of that action, EPA approved the State's 1-hour ozone maintenance plan (62 FR 38213).

On July 18, 1997, EPA promulgated an 8-hour ozone NAAQS of 0.08 ppm (62 FR 38894). This standard was intended to replace the 1-hour ozone standard. On April 30, 2004, EPA designated areas of the country for the 1997 8-hour ozone standard (69 FR 23857). EPA designated all areas in Utah, including Salt Lake County and Davis County, as unclassifiable/attainment for the 1997 8-hour ozone NAAQS (69 FR 23940).

Also, on April 30, 2004, EPA revoked the pre-existing 1-hour NAAQS (69 FR 23951, 23996; 40 CFR 50.9(b)). As part of this rulemaking, EPA established certain requirements to prevent backsliding in those areas that were designated as nonattainment for the 1-hour ozone standard at the time of designation for the 8-hour ozone standard, or that were redesignated to “attainment” but subject to a maintenance plan, as is the case for Salt Lake County and Davis County. These requirements are codified at 40 CFR 51.905.

In the case of Utah, one of these requirements was to submit a maintenance plan for the 1997 8-hour ozone standard. On March 22, 2007, the Governor of Utah submitted a maintenance plan for the 1997 8-hour ozone standard for Salt Lake County and Davis County, and associated rule revisions. In this notice, EPA is proposing to act on this March 22, 2007 maintenance plan and rule revisions.

In 2008,EPA promulgated a lower 8-hour ozone standard—0.075 ppm. 73 FR 16436. The 2008 ozone standard retains the same general form and averaging time as the 0.08 ppm standard set in 1997. Effective July 20, 2012, Salt Lake County and Davis County were designated Unclassifiable/Attainment for this lower standard. 77 FR 30088, 30151.

The 1997 ozone NAAQS is attained when the three-year average of the annual fourth-highest daily maximum 8-hour average ambient ozone concentration (also referred to as the “design value”) is less than or equal to 0.08 ppm at all monitoring sites within an air quality planning area. Forty CFR part 50, Appendix I, section 2.3, directs that the third decimal place of the computed three-year average be rounded; values equal to or greater than 0.005 are rounded up. Thus, under our regulations, a computed three-year ozone concentration of 0.085 ppm is the smallest value that is considered to be greater than 0.08 ppm and, thus, a violation of the standard.

A review of the data gathered at the ozone monitoring sites in Salt Lake County and Davis County from 2000-20111shows the area has been attaining the 8-hour ozone NAAQS except for the 2005-2007 period, which had a design value of 0.085 ppm. As noted above, EPA designated Salt Lake County and Davis County unclassifiable/attainment for the lower 2008 ozone standard (0.075 ppm) based on monitored values for 2008-2010. The following table shows design values for each year from 2000 through 2011:

Table of Contents I. What action is EPA proposing? II. What is the background for EPA's proposed action? III. What is EPA's analysis of Georgia's SIP revision? IV. Proposed Action V. Statutory and Executive Order Reviews I. What action is EPA proposing?

On July 26, 2012, EPD submitted a SIP revision to EPA for approval into the Georgia SIP to IBR1 federal NSR PSD permitting requirements at Georgia's Air Quality Control Rule 391-3-1-.02(7)—Prevention of Significant Deterioration of Air Quality.These rule changes were provided to comply with federal NSR permitting regulations and include provisions related to the implementation of the PM2.5NAAQS for the PSD program as promulgated in the rule entitled “Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5)—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC), Final Rule,” 75 FR 64864 (October 20, 2010) (hereafter referred to as “PM2.5PSD Increment-SILs-SMC Rule”) and the deferral until July 21, 2014, of the application of PSD permitting requirement to biogenic CO2emissions from bioenergy and other biogenic stationary sources as promulgated in the rule entitled, “Deferral for CO2Emissions From Bioenergy and Other Biogenic Sources Under the Prevention of Significant Deterioration (PSD) and Title V Programs,” Final Rule, 76 FR 43490 (July 20, 2011) (hereafter referred to as CO2Biomass Deferral Rule). Additionally, the July 26, 2012, SIP revision (1) IBR into Georgia SIP EPA's interim rulemaking entitled “Prevention of Significant Deterioration (PSD) and Nonattainment New Source Review (NNSR): Reconsideration of Inclusion of Fugitive Emissions; Interim Rule; Stay and Revisions,” 76 FR 17548 (March 30, 2011) (hereafter referred to as the “Fugitive Emissions Interim Rule”); (2) requests that EPA remove from the SIP the exclusion language at Rule 391-3-1-.02(7) regarding the coarse particle pollution (PM10) surrogate and grandfathering provision promulgated in the “Implementation of the New Source Review Program for Particulate Matter Less Than 2.5 Micrometers,” 73 FR 28321, May 16, 2008 (hereafter referred to as “NSR PM2.5Rule”); (3) amends the definitions Rule 391-3-1-.01(nnn)—Definitionsregarding testing and monitoring of air pollutants; and (4) revises Rule 391-3-1-.03(6)—Exemptionsby adding a new exemption for cumulative small modifications at an existing quarry where the quarry is not a major source and the associated emissions increase is less than 10 tons per year of particulate matter and PM10.

The two elements of EPD's July 26, 2012, SIP submittal that EPA is not proposing to approve in this action are: (1) incorporation of the SIL thresholds and provisions promulgated in EPA's PM2.5PSD Increment-SILs-SMC Rule (for reasons explained later in this notice); and (2) revisions to Rules 391-3-1-.02(2)(c)—Incinerators,391-3-1-.02(www)—Sewage Sludge Incineration,391-3-1-.02(8)(b)—New Source Performance Standardsand 391-3-1-.02(9)(b)—Emissions Standards for Hazardous Air Pollutants,as these regulations are not part of Georgia's federally approved SIP.

Today's proposed action to revise the Georgia SIP relates to PSD provisions promulgated in EPA's PM2.5PSD Increment-SILs-SMC Rule and CO2Biomass Deferral Rule. Additionally, the July 26, 2012, SIP revision addresses EPA's repeal of the grandfathering provision as promulgated in the Rule entitled “Implementation of the New Source Review Program for Particulate Matter Less Than 2.5 Micrometers (PM2.5); Final Rule to Repeal Grandfather Provision” (76 FR 28646, May 18, 2011) and the extension of the stay in the Fugitive Emissions Interim Rule. More details regarding these rules are found in the respective final rulemakings and are summarized below. For more information on the NSR Program and the PM2.5NAAQS please refer to the PM2.5PSD Increment-SILs-SMC Rule and the NSR PM2.5Rule.

On October 20, 2010, EPA finalized the PM2.5PSD Increment-SILs-SMC Rule to provide additional regulatory requirements under the PSD program regarding the implementation of the PM2.5NAAQS for NSR. Specifically, the rule establishes: (1) PM2.5increments pursuant to section 166(a) of the CAA to prevent significant deterioration of air quality in areas meeting the NAAQS; (2) SILs used as a screening tool (by a major source subject to PSD) to evaluate the impact a proposed major source or modification may have on the NAAQS or PSD increment; and (3) a SMC (also a screening tool) used by a major source subject to PSD to determine if a source must submit to the permitting authority one year of pre-construction air quality monitoring data prior to constructing or modifying a facility. As part of the response to comments on the October 20, 2010, final rulemaking, EPA explained that the Agency agrees that the SILs and SMCs used asde minimis 2 thresholds for the various pollutants are useful tools that enable permitting authorities and PSD applicants to screen out “insignificant” activities; however, these values are not required by the Act as part of an approvable SIP program. EPA believes that most states are likely to adopt the SILs and SMCs because of the useful purpose they serve regardless of EPA's position that the values are not mandatory. Alternatively, states may develop more stringent values if they desire to do so. In any case, states are not under any statutory deadline for revising their PSD programs to add these screening tools.See75 FR 64864, 64900.

Georgia's July 26, 2012, SIP revision IBR the NSR changes promulgated in the PM2.5PSD Increment-SILs-SMC Rule to be consistent with the federal NSR regulations and to appropriately implement the State's NSR program for the PM2.5NAAQS. More detail on the PM2.5PSD Increment-SILs-SMC Rule can be found in EPA's October 20, 2010, final rule and is summarized below.See75 FR 64864. For the reasons explained below, EPA is not proposing to take action to approve the SILs (promulgated in the PM2.5PSD Increment-SILs-SMC Rule) into the Georgia SIP in this rulemaking. EPA's authority to implement the SILs and SMC for PSD purposes has been challenged by the Sierra Club.Sierra Clubv.EPA,Case No 10-1413 (D.C. Circuit Court).3 More details regarding Georgia's changes to its PSD regulations are also summarized below in Section III.

As established in part C of title I of the CAA, EPA's PSD program protects public health from adverse effects of air pollution by ensuring that construction of new or modified sources in attainment or unclassifiable areas does not lead to significant deterioration ofair quality while simultaneously ensuring that economic growth will occur in a manner consistent with preservation of clean air resources. Under section 165(a)(3) of the CAA, a PSD permit applicant must demonstrate that emissions from the proposed construction and operation of a facility “will not cause, or contribute to, air pollution in excess of any maximum allowable increase or allowable concentration for any pollutant.” In other words, when a source applies for a permit to emit a regulated pollutant in an area that meets the NAAQS, the state and EPA must determine if emissions of the regulated pollutant from the source will cause significant deterioration in air quality. Significant deterioration occurs when the amount of the new pollution exceeds the applicable PSD increment, which is the “maximum allowable increase” of an air pollutant allowed to occur above the applicable baseline concentration4 for that pollutant. PSD increments prevent air quality in clean areas from deteriorating to the level set by the NAAQS. Therefore, an increment is the mechanism used to estimate “significant deterioration” of air quality for a pollutant in an area.

For PSD baseline purposes, a baseline area for a particular pollutant emitted from a source includes the attainment or unclassifiable area in which the source is located as well as any other attainment or unclassifiable area in which the source's emissions of that pollutant are projected (by air quality modeling) to result in an ambient pollutant increase of at least 1 microgram per meter cubed (μg/m3) (annual average).See40 CFR 52.21(b)(15)(i). Under EPA's existing regulations, the establishment of a baseline area for any PSD increment results from the submission of the first complete PSD permit application and is based on the location of the proposed source and its emissions impact on the area. Once the baseline area is established, subsequent PSD sources locating in that area need to consider that a portion of the available increment may have already been consumed by previous emissions increases. In general, the submittal date of the first complete PSD permit application in a particular area is the operative “baseline date” after which new sources must evaluate increment consumption.5 On or before the date of the first complete PSD application, emissions generally are considered to be part of the baseline concentration, except for certain emissions from major stationary sources. Most emissions increases that occur after the baseline date will be counted toward the amount of increment consumed. Similarly, emissions decreases after the baseline date restore or expand the amount of increment that is available.See75 FR 64864. As described in the PM2.5PSD Increment-SILs-SMC Rule, and pursuant to the authority under section 166(a) of the CAA, EPA promulgated numerical increments for PM2.5as a new pollutant6 for which NAAQS were established after August 7, 1977,7 and derived 24-hour and annual PM2.5increments for the three area classifications (Class I, II and III) using the “contingent safe harbor” approach.See75 FR 64864 at 64869 and ambient air increment table at 40 CFR 51.166(c)(1) and 52.21(c).

In addition to PSD increments for the PM2.5NAAQS, the PM2.5PSD Increment-SILs-SMC Rule amended the definition at 40 CFR 51.166 and 52.21 for “major source baseline date”and “minor source baseline date”(including trigger dates) to establish the PM2.5NAAQS specific dates associated with the implementation of PM2.5PSD increments.See75 FR 64864. In accordance with section 166(b) of the CAA, EPA required the states to submit revised implementation plans to EPA for approval (to adopt the PM2.5PSD increments) within 21 months from promulgation of the final rule (by July 20, 2012). Regardless of when a state submits its revised SIP, the emissions from major sources subject to PSD for PM2.5for which construction commenced after October 20, 2010 (major source baseline date), consume PM2.5increment and should be included in the increment analyses occurring after the minor source baseline date is established for an area under the state's revised PSD program.See75 FR 64864. As discussed in detail in Section III, Georgia's July 26, 2012, SIP revision IBR the PM2.5PSD increment permitting requirements promulgated in the PM2.5PSD Increment-SILs-SMC Rule.

Under the CAA and EPA regulations, an applicant for a PSD permit is required to gather preconstruction monitoring data in certain circumstances. CAA Section 165(a)(7) calls for “such monitoring as may be necessary to determine the effect which emissions from any such facility may have, or is having, on air quality in any areas which may be affected by emissions from such source.” In addition, CAA section 165(e) requires an analysis of the air quality in areas affected by a proposed major facility or major modification and calls for gathering one year of monitoring data unless the reviewing authority determines that a complete and adequate analysis may be accomplished in a shorter period. These requirements are codified in EPA's PSD regulations at 40 CFR 51.166(m) and 40 CFR 52.21(m). In accordance with EPA's Guideline for Air Quality Modeling (40 CFR part 51, appendix W), the preconstruction monitoring data are primarily used to determine background concentrations in modeling conducted to demonstrate that the proposed source or modification will not cause or contribute to a violation of the NAAQS.See40 CFR part 51, appendix W, section 9.2. SMCs are numerical values that represent thresholds of insignificant (i.e.,de minimis), monitored (ambient) impacts on pollutant concentrations. In EPA's PM2.5PSD Increment-SILs-SMC Rule, EPA established a SMC of 4 µg/m3for PM2.5.

Using the SMC as a screening tool, sources may be able to demonstrate that the modeled air quality impact of emissions from the new source or modification, or the existing air quality level in the area where the source would construct, is less than the SMC (i.e.,de minimis), and as such, may be allowed to forego the preconstruction monitoring requirement for a particular pollutant at the discretion of the reviewing authority.See40 CFR 51.166(i)(5) and 52.21(i)(5). SMCs are not minimum required elements of an approvable SIP under the CAA. Thisde minimisvalue is widely considered to be a useful component for implementing the PSD program, but is not absolutely necessary for the states to implement PSD programs. States can satisfy the statutory requirements for a PSD program by requiring each PSDapplicant to submit air quality monitoring data for PM2.5without usingde minimisthresholds to exempt certain sources from such requirements.See75 FR 64864. The PM2.5SMC became effective under the federal PSD program on December 20, 2010. States with EPA-approved PSD programs that adopt the SMC for PM2.5,however, may use the SMC, once it is part of an approved SIP, to determine when it may be appropriate to exempt a particular major stationary source or major modification from the monitoring requirements under its state PSD program. Georgia's July 26, 2012, revision IBR the SMC provision into the Georgia SIP.

Recently, the Sierra Club filed suit challenging EPA's authority to implement the PM2.5SILs8 as well as the SMC for PSD purposes as promulgated in the October 20, 2010, rule.Sierra Clubv.EPA,Case No 10-1413, D.C. Circuit Court. Specifically regarding the SMC, Sierra Club claims that the use of SMC to exempt a source from submitting a year's worth of monitoring data is inconsistent with the CAA. EPA responded to Sierra Club's claims in a brief dated April 6, 2012, which describes the Agency's authority to develop and promulgate SMCs.9 A copy of EPA's April 6, 2012, brief can be found in the docket for today's rulemaking atwww.regulations.govusing docket ID: EPA-R04-OAR-2012-0622.

On June 3, 2010 (effective August 2, 2010), EPA promulgated a final rulemaking, entitled “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Final Rule” (hereafter referred to as the GHG Tailoring Rule), for the purpose of relieving overwhelming permitting burdens from the regulation of greenhouse gases (GHG) that would, in the absence of the rule, fall on permitting authorities and sources.See75 FR 31514. EPA accomplished this by tailoring the applicability criteria that determine which GHG emission sources become subject to the PSD program of the CAA. In particular, EPA established in the GHG Tailoring Rule a phase-in approach for PSD applicability and estblished the first two steps of the phase-in for the largest GHG emitters.10 On January 13, 2011, EPD submitted a SIP revision to EPA to IBR into the Georgia SIP (at 391-3-1-.02(7)), the version of 40 CFR 52.21 as of June 3, 2010, which included the GHG Tailoring Rule thresholds.11 EPA took final action to approve Georgia's SIP revision on September 8, 2011.See76 FR 55572. Please refer to the GHG Tailoring Rule for specific details on the PSD thresholds.

In the July 20, 2011, final rulemaking, EPA deferred until July 21, 2014, the consideration of CO2emissions from bioenergy and other biogenic sources (hereafter referred to as “biogenic CO2emissions”) when determining whether a stationary source meets the PSD and title V applicability thresholds, including those for the application of best available control technology (BACT).12 See76 FR 43490. Thus, under the federal PSD rules, stationary sources that combust biomass (or otherwise emit biogenic CO2emissions) and construct or modify during the deferral period will not be subject to the application of PSD to the biogenic CO2emissions resulting from those actions. The deferral applies only to biogenic CO2emissions and does not affect non-GHG pollutants or other GHGs (e.g., methane and nitrous oxide) emitted from the combustion of biomass fuel. Also, the deferral only pertains to regulation of biogenic CO2emissions under the PSD and title V programs and does not pertain to any other EPA programs such as the GHG Reporting Program.

Biogenic CO2emissions are defined as emissions of CO2from a stationary source directly resulting from the combustion or decomposition of biologically-based materials other than fossil fuels and mineral sources of carbon. Examples of “biogenic CO2emissions” include, but are not limited to:

• CO2generated from the biological decomposition of waste in landfills, wastewater treatment, or manure management processes;

• CO2from the combustion of biogas collected from biological decomposition of waste in landfills, wastewater treatment, or manure management processes;

• CO2from fermentation during ethanol production or other industrial fermentation processes;

• CO2from combustion of the biological fraction of municipal solid waste or biosolids;

• CO2from combustion of the biological fraction of tire-derived fuel; and

• CO2derived from combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material.

The deferral is intended to be a temporary measure, in effect for no more than three years, to allow the Agency time to conduct detailed examination of the science and technical issues related to accounting for biogenic CO2emissions, and determine what, if any, treatment of biogenic CO2emissions should be in the PSD and title V programs. The biomass deferral rule is not EPA's final determination on the treatment of biogenic CO2emissions in those programs. The Agency plans to complete its science and technical review and any follow-up rulemakings within the three-year deferral period and further believes that three years is ample time to complete these tasks. It is possible that the subsequent rulemaking, depending on the nature of EPA's determinations, would supersede the biomass deferral rulemaking and become effective in fewer than three years. In that event, Georgia may revise its SIP accordingly.

EPA's final biomass deferral rule is an interim deferral for biogenic CO2emissions only and does not relieve sources of the obligation to meet the PSD and title V permitting requirements for other pollutant emissions that are otherwise applicable to the source during the deferral period or that may be applicable to the source at a future date pending the results of EPA's study and subsequent rulemaking action. This means, for example, that if the deferral is applicable to biogenic CO2emissions from a particular source during the three-year effective period and the study and future rulemaking do not provide for a permanent exemption from PSD and title V permitting requirements for the biogenic CO2emissions from a source with particular characteristics, then the deferral would end for that type of source and its biogenic CO2emissions would have to beappropriately considered in any applicability determinations that the source may need to conduct for future stationary source permitting purposes, consistent with that subsequent rulemaking and the final GHG Tailoring Rule (e.g.,a major source determination for title V purposes or a major modification determination for PSD purposes). EPA also wishes to clarify that the agency does not require that a PSD permit issued during the deferral period be amended or that any PSD requirements in a PSD permit existing at the time the deferral took effect, such as BACT limitations, be revised or removed from an effective PSD permit for any reason related to the deferral or when the deferral period expires.

Under 40 CFR 52.21(w), any PSD permit shall remain in effect, unless and until it expires or it is rescinded, under the limited conditions specified in that provision. Thus, a PSD permit that is issued to a source while the deferral was effective need not be reopened or amended if the source is no longer eligible to exclude its biogenic CO2emissions from PSD applicability after the deferral expires. However, if such a source undertakes a modification that could potentially require a PSD permit and the source is not eligible to continue excluding its biogenic CO2emissions after the deferral expires, the source will need to consider its biogenic CO2emissions in assessing whether it needs a PSD permit to authorize the modification.

Any future actions to modify, shorten, or make permanent the deferral for biogenic sources are beyond the scope of the biomass deferral action and this proposed approval of the deferral into the Georgia SIP, and will be addressed through subsequent rulemaking. The results of EPA's review of the science related to net atmospheric impacts of biogenic CO2and the framework to properly account for such emissions in title V and PSD permitting programs based on the study are prospective and unknown. Thus, EPA is unable to predict which biogenic CO2sources, if any, currently subject to the deferral as incorporated into the Georgia SIP would be subject to any permanent exemptions or which currently deferred sources would be potentially required to account for their emissions in the future rulemaking EPA has committed to undertake for such purposes in three or fewer years. Only in that rulemaking can EPA address the question of extending the deferral or putting in place requirements that would have the equivalent effect on sources covered by the biomass deferral. Once that rulemaking has occurred, Georgia may address related revisions to its SIP.

Georgia currently has a SIP-approved NSR program for new and modified stationary sources. EPD's PSD preconstruction rules are found at Georgia Air Quality Control Rule 391-3-1-.02(7)—Prevention of Significant Deterioration of Air Qualityand apply to major stationary sources or modifications constructed in areas designated attainment areas or unclassifiable/attainment areas as required under part C of title I of the CAA with respect to the NAAQS. Georgia's Rule 391-3-1-.02(7) IBR the federal NSR PSD regulations at 40 CFR 52.21 into the Georgia SIP. In effect, EPD's July 26, 2012, SIP revision revises Rule 391-3-1-.02(7) by updating the State's IBR date to July 20, 2011, which includes the federal PSD permitting updates promulgated in the PM2.5PSD Increment-SILs-SMC Rule, the CO2Biomass Deferral Rule and the extension of the stay in the Fugitive Emissions Interim Rule. Additionally, the July 26, 2012, SIP submission revises Rule 391-3-1-.02(7) by removing language to address EPA's repeal of the PM10surrogate and grandfathering provisions and clarifies at subparagraph (a)(1) of 391-3-1-.01 that all dates associated with IBR of the federal PSD rules (at 40 CFR 52.21) refer to the date of publication of those rules in theFederal Register. In addition to changes to Rule 391-3-1-.02(7), the July 26, 2012, SIP revision also (1) amends Georgia's definitions at 391-3-1-.01 by revising subparagraph (nnnn) to reference the February 1, 2012, update to Georgia's “Procedures for Testing and Monitoring Sources of Air Pollutants,” and; (2) modifies Rule 391-3-1-.03(6) by adding a new exemption from SIP permitting requirements (at subparagraph (i)(4)) for small modifications to an existing quarry that is not a major source, where the combined emissions increases, including any contemporaneous emission decreases from all nonexempt modified activities, are less than 10 tons per year of particulate matter and PM10. The new quarry exemption may not be used to avoid any emission limitations or standards of the Rules for Air Quality Control Chapter 391-3-1-.02 (e.g., PSD requirements), lower the potential to emit below “major source” thresholds, or avoid any “applicable requirement” as defined in 40 CFR Part 70.2.SeeGeorgia Rule 391-3-1-.03(6).

These changes to Georgia's rules became state effective on August 9, 2012. EPA is proposing to approve changes to Georgia's Rule 391-3-1-.02(7), to update the State's existing SIP-approved PSD program to be consistent with federal NSR regulations (at 40 CFR 52.21) and the CAA. In addition, EPA is proposing to approve Georgia's requested changes to Rules 391-3-1-.01 and .0. 3. More details on EPA's analysis and proposed approval of the portions of Georgia's July 26, 2012, SIP submittal addressing PSD provisions promulgated in the PM2.5PSD Increment-SILs-SMC Rule, the CO2Deferral Rule, the Fugitive Emissions Interim Rule and the NSR PM2.5Rule (grandfathering provision) are discussed below.

EPD's July 26, 2012, SIP revision IBR the following provisions into the Georgia SIP at regulation 391-3-1-.02(7) as promulgated in the October 20, 2010, PM2.5PSD Increment-SILs-SMC Rule: (1) PSD increments for PM2.5annual and 24-hour NAAQS pursuant to section 166(a) of the CAA; (2) SILs used as a screening tool (used by a major source subject to PSD) to evaluate the impact a proposed major source or modification may have on the NAAQS or PSD increment; and (3) SMC to determine the level of data gathering required of a major source in support of its PSD permit application for PM2.5emissions.

Specifically, Georgia's July 26, 2012, SIP revision IBR into the Georgia SIP (at 391-3-1-.02(7)) the PM2.5PSD increments as amended in the tables at 40 CFR 52.21(c) and (p)(5) (for Class I Variances) the amendments to the terms “major source baseline date” (as amended at 40 CFR 52.21(b)(14)(i)(c)); “minor source baseline date” (including establishment of the “trigger date”) (40 CFR 52.21(b)(14)(ii)(c)); and the definition of “baseline area” (as amended at 40 CFR 52.21(b)(15)(i) and (ii)). These changes provide for the implementation of the PM2.5PSD increments for the PM2.5NAAQS in the State's PSD program. In today's action, EPA is proposing to approve Georgia's July 26, 2012, SIP revision to address PM2.5PSD increments.

Regarding the SILs and SMC established in the October 20, 2010, PM2.5PSD Increment-SILs-SMC Rule, the Sierra Club has challenged EPA's authority to implement SILs and SMC. In a brief filed in the DC Circuit on April 6, 2012, EPA described the Agency's authority under the CAA to promulgate and implement the SMCs and SILsde minimisthresholds. With respect to the SMC, Georgia's July 26, 2012, SIP revision IBR the SMC of 4 µg/m3forPM2.5NAAQS at 391-3-1-.02(7). Georgia's July 26, 2012, SIP revision is consistent with EPA's current promulgated provisions in the October 20, 2010, PM2.5PSD Increment-SILs-SMC Rule. EPA is proposing to approve this promulgated threshold into the Georgia SIP as EPA believes the SMC is a valid exercise of the Agency'sde minimisauthority. However, EPA notes that future court action may require subsequent rule revisions and SIP revisions from the State of Georgia.

The July 26, 2012, SIP revision submitted by Georgia to IBR the new PSD requirements for PM2.5pursuant to the PM2.5PSD Increment-SILs-SMC Rule also includes the new regulatory text at 40 CFR 52.21(k)(2), concerning the implementation of SILs for PM2.5. EPA stated in the preamble to the October 20, 2010, final rule that we do not consider the SILs to be a mandatory SIP element, but regard them as discretionary on the part of a regulating authority for use in the PSD permitting process. Nevertheless, the PM2.5SILs are currently the subject of litigation before the U.S. Court of Appeals.Sierra Clubv.EPA,Case No 10-1413 (DC Circuit). In response to that litigation, EPA has requested that the court remand and vacate the regulatory text in EPA's PSD regulations at paragraph (k)(2) so that EPA can make necessary rulemaking revisions to that text. In light of EPA's request for remand and vacatur and the acknowledgement of the need to revise the regulatory text presently contained at paragraph (k)(2) of sections 51.166 and 52.21, EPA does not believe that it is appropriate at this time to approve that portion of Georgia's SIP revision that contains the affected regulatory text in the State's PSD regulations, at 391-3-1-0.2(7). Instead, EPA is taking no action at this time with regard to that specific provision contained in the SIP revision. EPA will take action on the SILs portion of Georgia's July 26, 2012, SIP revision in a separate rulemaking once the issue regarding the court case has been resolved.

In the July 20, 2011, CO2Biomass Deferral Rule, similar to the approach with the GHG Tailoring Rule, EPA incorporated the biomass deferral into the Federal PSD program by amending the definition of “subject to regulation” under 40 CFR 51.166 and 52.21, respectively. Georgia's July 26, 2012, SIP revision IBR into the Georgia SIP 40 CFR 52.21 as of July 20, 2011, which includes the CO2Biomass Deferral revision to the definition of “subject to regulation” deferring, until July 21, 2014, PSD applicability to biogenic carbon dioxide (CO2) emissions from bioenergy and other biogenic stationary sources. EPA is proposing to approve Georgia's IBR of the CO2Biomass Deferral Rule.

Georgia's July 26, 2012, SIP revision also IBR the extension of the stay of the Fugitive Emissions Rule into the Georgia PSD program at 391-3-1-.02(7). On December 19, 2008, EPA issued a final rule revising the requirements of the NSR permitting program regarding the treatment of fugitive emissions.See73 FR 77882. The final rule required fugitive emissions to be included in determining whether a physical or operational change results in a major modification only for sources in industries that have been designated through rulemaking under section 302(j)13 of the CAA. As a result of EPA granting the Natural Resource Defense Council's petition for reconsideration on the original Fugitive Emissions Rule14 on March 31, 2010, EPA stayed the Fugitive Emissions Rule (73 FR 77882) for 18 months to October 3, 2011. The stay allowed the Agency time to propose, take comment and issue a final action regarding the inclusion of fugitive emissions in NSR applicability determinations. On March 30, 2011 (76 FR 17548), EPA proposed an interim rule which superseded the March 31, 2010, stay and clarified and extended the stay of the Fugitive Emission Rule until EPA completes its reconsideration. The interim rule simply reverts the CFR text back to the language that existed prior to the Fugitive Emissions Rule changes in the December 19, 2008, rulemaking. EPA plans to issue a final rule affirming the interim rule as final. The final rule will remain in effect until EPA completes its reconsideration. EPA is proposing to approve Georgia's IBR of the interim rulemaking extending the stay of the Fugitives Emissions Rule into its SIP at Rule 391-3-1-.02(7).

In the NSR PM2.5Rule, EPA finalized regulations to establish the framework for implementing preconstruction permit review for the PM2.5NAAQS in both attainment and nonattainment areas including the grandfather provision which allowed PSD applicants that submitted their complete permit application prior to the July 15, 2008 effective date of the NSR PM2.5Rule to continue to rely on the 1997 p.m.10Surrogate Policy rather than amend their application to demonstrate compliance directly with the new PM2.5requirements.See73 FR 28321. On January 13, 2011, Georgia submitted a SIP revision to IBR into the Georgia SIP the version of 40 CFR 52.21 as of June 3, 2010 which included language that excluded the grandfathering exemption (at 40 CFR 52.21(i)(1)(xi)) from the state's PSD regulations (at Rule 391-3-1-.02(7)(b)(6)(i)) ensuring that sources were not subject to the grandfathering provision. EPA approved Georgia's January 13, 2011, SIP revision on September 8, 2011(76 FR 55572).

On May 18, 2011, EPA took final action to repeal the PM2.5grandfathering provision at 40 CFR 52.21(i)(1)(xi).See76 FR 28646. Georgia's July 26, 2012, SIP submittal incorporates into the Georgia SIP the version of 40 CFR 52.21 as of July 20, 2011, which includes the May 18, 2011, repeal of the grandfather provision. Thus, the language previously approved into Georgia's SIP at Rule 391-3-1-.02(7)(b)(6)(i) that excludes the grandfathering provision is no longer necessary. Georgia's July 26, 2012, SIP submittal removes the unnecessary language pertaining to the grandfather provision from Rule 391-3-1-.02(7)(b)(6)(i).15 EPA is proposing to approve this portion of Georgia's July 26, 2012, SIP submittal.

EPA is proposing to approve portions of Georgia's July 26, 2012, SIP revision adopting federal regulations amended in the October 20, 2010, PM2.5PSD Increment-SILs-SMC rule, the June 3, 2010, CO2Biomass Deferral Rule; the March 30, 2011, Fugitive Emissions Interim Rule, the additional amendments regarding PM2.5Grandfathering Provision, and the definition and exemption revisions into the Georgia SIP. EPA is not however proposing to approve in this rulemaking Georgia's SIP revisions regarding the SIL thresholds and provisions and Rule 391-3-1-.02(c)—Incinerators,391-3-1-.02(www)—Sewage Sludge Incineration,391-3-1-.02(8)(b)—New Source Performance Standardsand 391-3-1-.02(9)(b)—Emissions Standards for Hazardous Air Pollutants.EPA has made the preliminary determination that this SIP revision, with regard to the aforementioned proposed actions, is approvable because it is consistent with section 110 of the CAA and EPA regulations regarding NSR permitting.

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

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

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

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

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

• Does not have Federalism implications as specified in Executive Order 13132 (64 F43255, August 10, 1999);

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

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

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

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

In addition, this proposed rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Connecting the South Coast Air Basin to the Coachella Valley, the Banning Pass (also known as the San Gorgonio Pass) is one of the three major routes by which air pollutants are transported out of the Los Angeles metropolitan area (which lies within the South Coast Air Basin). Banning Pass runs in an east-west direction for about 15 miles and is about 5 miles wide. The pass starts west of Beaumont, California at an elevation of about 2,200 feet and reaches a maximum elevation of around 2,600 feet in the city of Beaumont, then drops to an elevation of near 1,400 feet between Cabazon and White Water. The San Bernardino Mountains are on the north side of the pass and the San Jacinto Mountains are on the south side. The San Bernardino Mountains reach a maximum elevation of approximately 11,500 feet at the top of San Gorgonio Mountain and the San Jacinto Mountains reach a maximum elevation of approximately 10,800 feet at Mt. San Jacinto.

The Morongo Band of Mission Indians, California (“Morongo Tribe” or “Tribe”) is a federally-recognized Indian tribe whose Indian country1 (“Morongo Reservation” or “Reservation”) lies within the Banning Pass. The Morongo Reservation covers approximately 35,000 acres and is home to approximately 1,500 full-time residents.2 The Morongo Reservation is rural, and most of the current land use is residential or agricultural. The Morongo Reservation also hosts a hotel and casino, among other enterprises.

The eastern edge of the Morongo Reservation abuts the current boundary between the South Coast Air Basin and Southeast Desert/Coachella Valley air planning areas. Most of the Morongo Reservation is located north of Interstate 10, just east of the City of Banning, but some of the Reservation is located south of Interstate 10 as well.

The Clean Air Act (CAA or “Act”) requires EPA to establish a National Ambient Air Quality Standard (NAAQS or “standard”) for pollutants that “may reasonably be anticipated to endanger public health and welfare” and to develop a primary and secondary standard for each NAAQS. The primary standard is designed to protect human health with an adequate margin of safety and the secondary standard is designed to protect public welfare and the environment. EPA has set NAAQS for six common air pollutants, referred to as criteria pollutants: Ozone, carbon monoxide, nitrogen dioxide, sulfur dioxide, particulate matter, and lead.

In 1979, EPA promulgated the first ozone3 standard of 0.12 parts per million (ppm), averaged over a one-hour period (“one-hour ozone standard”), to replace an earlier photochemical oxidant standard. In 1997, EPA revised the ozone standard to 0.08 ppm, eight-hour average (“1997 eight-hour ozone standard”), and then, in 2008, lowered the eight-hour ozone standard to 0.075 ppm (“2008 ozone standard”). Today's proposed action relates only to the designations and classifications for the one-hour ozone and 1997 eight-hour ozone standards, discussed below, but relies on EPA's analysis and rationale for the Agency's recent designations for the 2008 ozone standard.

Areas of the country were originally designated as attainment, nonattainment, or unclassifiable following enactment of the 1977 Amendments to the CAA.See43 FR 8962 (March 3, 1978). These designations were generally based on monitored air quality values compared to the applicable standard. Under the 1990 Amendments to the CAA, ozone nonattainment areas were further classified as “Marginal,” “Moderate,” “Serious,” “Severe” or “Extreme” depending upon the severity of the ozone problem. Area designations and classifications are codified in 40 CFR part 81; area designations and classifications for California are codified at 40 CFR 81.305.

EPA has historically designated areas in Southern California by referencing air basins, including the South Coast Air Basin4 and the Southeast Desert Air Basin. More recently, the EPA has recognized California's division of the former Southeast Desert Air Basin into the Mojave Desert Air Basin and the Salton Sea Air Basin. The relevant portion of the Southeast Desert Air Basin (and Salton Sea Air Basin) for the purposes of this proposed action is Coachella Valley, which covers roughly the middle third of Riverside County, i.e., east of the South Coast Air Basin and west of the Little San Bernardino Mountains.

Historically, the Morongo Reservation was included in the Coachella Valley portion of the Southeast Desert Air Basin and was designated accordingly for the various standards. In 2002, the State of California requested that EPA revise the boundaries of the South Coast Air Basin and the Southeast Desert Air Basin to remove the Banning Pass area from the Coachella Valley portion of the Southeast Desert Air Basin and include it in the South Coast Air Basin.See68 FR 57820 (October 7, 2003).5 Specifically, California sought to establish a new boundary approximately 18 miles east of the then-established boundary between the South Coast Air Basin and the Coachella Valley portion of the Southeast Desert Air Basin. The boundary between the two basins was to be moved from the range line common to Range 2 West and Range 1 West to the range line common to Range 2 East and Range 3 East (San Bernardino Base andMeridian).6 On October 7, 2003, EPA approved California's boundary change request (68 FR 57820).

With respect to the one-hour ozone standard, EPA's 2003 action had the effect of moving the Morongo Reservation from the Coachella Valley portion of the “Southeast Desert Modified AQMA Area” (“Southeast Desert”) to the South Coast Air Basin and changing the designations and classifications accordingly. Specifically, EPA's 2003 action had the effect of changing the ozone nonattainment area classification for the Banning Pass area, including the Morongo Reservation, from “Severe-17” to “Extreme”.7

In 2004, EPA promulgated area designations and classifications for the 1997 eight-hour ozone standard. Among the California areas, EPA designated the “Los Angeles-South Coast Air Basin, CA,” the boundary of which coincided with the boundary for the one-hour ozone standard, as amended in 2003 to include the entire Banning Pass, including the Morongo Reservation, as a “Severe-17” nonattainment area.See69 FR 23858 (April 30, 2004). In EPA's 2004 final rule, the Agency designated “Riverside Co. (Coachella Valley), CA” (“Coachella Valley”) as a “Serious” nonattainment area. In 2007, the State of California requested that EPA reclassify the South Coast nonattainment area from “Severe-17” to “Extreme” and the Coachella Valley nonattainment area from “Serious” to “Severe-15” for the 1997 eight-hour ozone standard.

In response to EPA's 2003 boundary change action and California's 2007 reclassification request, the Morongo Tribe requested that EPA create a separate nonattainment area for the Morongo Reservation or, alternatively, move the western boundary of the Coachella Valley area westward to include the Morongo Reservation.Seeletter from Robert Martin, Chairman, Morongo Band of Mission Indians, to Deborah Jordan, Director, Air Division, EPA Region IX, dated May 29, 2009.

In 2009, in response to California's 2007 reclassification request, EPA proposed that all Indian country in the South Coast be reclassified in keeping with the classification of non-Indian country State lands to “Extreme” for the 1997 eight-hour ozone standard.See43 FR 43654 (August 27, 2009). In 2010, EPA took final action granting the request by California to reclassify the South Coast Air Basin from “Severe-17” to “Extreme” for the 1997 eight-hour ozone standard, and to reclassify all Indian country, except that pertaining to the Morongo Tribe and the Pechanga Tribe, in keeping with the reclassification of non-Indian country State lands to “Extreme.” With respect to the Morongo Tribe and the Pechanga Tribe, EPA deferred reclassification pending EPA's final decisions on their previously-submitted boundary change requests.See75 FR 24409 (May 5, 2010). In EPA's 2010 final rule, the Agency also granted the request to reclassify the Coachella Valley nonattainment area to “Severe-15.”

Today's proposed action would correct EPA's 2003 action to the extent that the action relates to the designations and classifications of the Morongo Reservation for the one-hour ozone standard and would establish a separate one-hour ozone nonattainment area for the Reservation. Today's proposed action would also grant the Tribe's request to revise the boundary designation and to designate the Morongo Reservation as a separate nonattainment area for the 1997 eight-hour ozone standard.8

Today's proposed action would not affect the current designations and classifications of the Morongo Reservation for any of the other standards. Today's proposed action would also not affect the designations and classifications for any pollutant with respect to State lands.

The relevant statutory provisions for this proposed action are CAA section 110(k)(6), which is EPA's error correction authority, and CAA sections 107(d)(3), 301(a) and 301(d), which are EPA's authority to redesignate Indian country areas under these circumstances.

Section 110(k)(6) of the CAA provides: “Whenever the Administrator determines that the Administrator's action approving, disapproving, or promulgating any plan or plan revision (or part thereof), area designation, redesignation, classification, or reclassification was in error, the Administrator may in the same manner as the approval, disapproval, or promulgation revise such action as appropriate without requiring any further submission from the State. Such determination and the basis thereof shall be provided to the State and public.” We interpret this provision to authorize the Agency to make corrections to a promulgated regulation when it is shown to our satisfaction that (1) we clearly erred in failing to consider or inappropriately considering information made available to EPA at the time of the promulgation, or the information made available at the time of promulgation is subsequently demonstrated to have been clearly inadequate, and (2) other information persuasively supports a change in the regulation.See57 FR 56762, at 56763 (November 30, 1992).

Sections 107(d)(3)(A)-(C) provide that EPA may initiate the redesignation process “on the basis of air quality data, planning and control considerations, or any other air quality-related considerations the Administrator deems appropriate,” and “promulgate the redesignation, if any, of the area or portion thereof.” CAA section 107(d)(3) does not refer to Indian country, but consistent with EPA's discretionary authority in CAA sections 301(a) and 301(d)(4) to directly administer CAA programs, and protect air quality in Indian country through federal implementation, EPA is authorized to directly administer sections 107(d)(3)(A)-(C) and redesignate Indian country areas.9

Background

In January 2011, NMFS implemented the trawl rationalization program for the Pacific coast groundfish fishery's trawl fleet (see75 FR 78344; Dec. 15, 2010). The program was adopted in 2010 through Amendments 20 and 21 to the FMP and consists of an IFQ program for the shorebased trawl fleet (including whiting and non-whiting fisheries); and cooperative (coop) programs for the at-sea mothership and catcher/processor trawl fleets (whiting only). The initial allocations of whiting were challenged inPacific Dawnv.Bryson,No. C10-4829 TEH (N.D. Cal.) (Pacific Dawn). Following a decision on summary judgment that NMFS had not considered all of the required information and failed to provide an adequate basis in setting the initial whiting allocations, the court, on February 21, 2012, issued an order remanding the regulations establishing the initial allocations of whiting for the shorebased IFQ fishery and the at-sea mothership fishery “for further consideration” consistent with the court's December 22, 2011, summary judgment ruling. The order requires NMFS to implement revised regulations before the 2013 Pacific whiting fishing season begins on April 1, 2013.

On February 29, 2012, NMFS informed the Council of the order issued inPacific Dawn.NMFS requested that the Council initiate the reconsideration of the initial allocations for QS of whiting in the shorebased IFQ fishery and for whiting catch history assignments in the at-sea mothership fishery. NMFS also determined that a rulemaking was needed to delay or revise portions of the existing regulations while the Council and NMFS reconsidered the initial allocation of whiting, and informed the Council of its intent to publish an Advance Notice of Proposed Rulemaking (ANPR) to notify the public of the reconsideration and the process the agency and Council would follow.

NMFS published the ANPR on April 4, 2012 (77 FR 20337), which, among other things, announced the court's order, the Council meetings that would be addressing the whiting reconsideration, and NMFS' plan to publish two rulemakings in response to the court order. These two rulemakings are referred to as Reconsideration of Allocation of Whiting, Rules 1 and 2 (RAW 1 and RAW 2, respectively).

NMFS used emergency action authority under the MSA section 305(c)(1), 16 U.S.C. 1855(c), for RAW 1, which was proposed on May 21, 2012 (77 FR 29955), with the final rule published on August 1, 2012 (77 FR 45508). RAW 1 delayed the ability to transfer QS and IBQ between QS accounts in the shorebased IFQ fishery, and to the ability to sever mothership/catcher vessel endorsement and its associated catch history assignment (CHA) from limited entry trawl permits in the mothership fishery, pending the outcome of the reconsideration. The August 1 emergency rule also delayed issuance of quota associated with whiting directed trips at the beginning of the 2013 fishing year, as recommended by the Council. The RAW 1 rule is effective through January 28, 2013, and may be extended for an additional 186 days, consistent with the MSA.

At its March 2-7, 2012, meeting, the Council received briefings from NMFS regarding the remedy order issued inPacific Dawnand selected a three-meeting Council rulemaking process. On March 15, 2012, NMFS submitted a letter to the Council that provided a potential range of alternatives for reconsideration that NMFS believed was appropriate.

At its April 1-6, 2012, meeting, the Council received briefings from NMFS on the range of alternatives included in the March 15, 2012, letter, as well as guidance on allocation issues addressed in the MSA, agency guidance documents, and FMP goals and objectives. The Council received approximately two hours of public comment from nine individuals or groups of individuals and also received recommendations from its Groundfish Advisory Subpanel. After consideration of the public comment and advisory group recommendations, the Council added an additional alternative for analysis that would consider an allocation period of 2000-2010.

At the June 21-26, 2012, Council meeting, NMFS and Council staff gave an overview on the Draft Environmental Assessment (EA) and briefed the Council on the analysis of the range of alternatives. The Council, after listening to recommendations from its Groundfish Advisory Subpanel and public testimony, refined one alternative and asked staff to update the analyses over the summer based on this refinement. The Council did not select a preliminary preferred alternative, stating that it needed additional time to understand the analyses and information presented. The Council reconfirmed its intention to select a final preferred alternative at its September 2012 meeting.

At the September 13-18, 2012, Council meeting, the Council considered the Draft EA, which had been revised to incorporate more detailed information and analyzed a range of whiting allocation periods spanning the years between 1994 and 2010 for shoreside and mothership catcher vessels, and the years between 1998 and 2010 for shoreside processors. The Council listened to testimony from 24 individuals or groups of individuals, totaling nearly seven hours of public testimony and also received advisory body reports from both the Groundfish Advisory Subpanel and the Scientific and Statistical Committee. Following Council discussion, the Council voted to select the no-action alternative (initial whiting allocation qualifying years of 1994 through 2003 for the shoreside and mothership catcher vessels and 1998 through 2004 for shoreside whiting processors) as the final preferred alternative.

On October 30, 2012, the Council transmitted to NMFS its recommendation that the no-action alternative be adopted; the letter and its accompanying rationale are available at the Council's Web site athttp://www.pcouncil.org/wp-content/uploads/Xmit_WhtgRealloc_Ltr.pdf.

The MSA requires NMFS to review all regulations that the Council submits to determine whether the regulations are consistent with the MSA, the FMP, and other applicable law (16 U.S.C. 1854(b)). NMFS reviewed the Council record and the proposed regulatory language and has preliminarily determined that the Council's recommendation to maintain the existing initial whiting allocations is consistent the MSA, the FMP, the court's order inPacific Dawn,and other applicable law. NMFS requests comments on this conclusion; after review of the comments and the record as a whole, NMFS will make a finaldecision that will be announced in theFederal Register. The reasons for NMFS' preliminary determination are discussed below.

The MSA establishes the general requirement that allocations be fair and equitable (see e.g.,16 U.S.C. 1851(a)(4)). For allocations made in association with limited access privilege programs, the MSA further requires that the Council or NMFS must “establish procedures to ensure fair and equitable initial allocations, including consideration of: (i) Current and historical harvests; (ii) employment in the harvesting and processing sectors; (iii) investments in, and dependence upon, the fishery; and (iv) the current and historical participation of fishing communities” (16 U.S.C. 1853a(c)(5)(A)). Although the Council's recommendation must be consistent with the MSA as a whole when viewed in light of the FMP, the factors listed above were essential to the Council's and NMFS' decisions.

Ultimately, NMFS believes that irrespective of the qualifying years chosen as a result of the reconsideration, there is not one alternative that would be perceived as equally fair and equitable by all participants. Further, as long as the Council recommendation provides for a fair and equitable allocation by consideration of the required factors, and the Council and NMFS provide a reasonable explanation for that decision, then the requirements of 16 U.S.C. 1853a(c)(5)(A) are satisfied. Simply put, the MSA does not require a particular outcome for the allocation decision at issue here. This section addresses each factor from 16 U.S.C. 1853a(c)(5)(A) in a general fashion, followed by the overarching considerations that lead NMFS to preliminarily conclude that the initial whiting allocations are fair and equitable.

The alternatives that the Council examined allocated quota using catch history based on a range of years—1994 through 2010—that is as wide as possible given the best available scientific information on the groundfish trawl fleet prior to implementation of Amendment 20. Under the existing qualifying period for harvesters of 1994 through 2003, previously qualifying permits with catch history post-2003 or new entrants after 2003 do not have that catch history count towards their initial allocation of whiting. However, in light of the overarching considerations, the whiting allocation to harvesters based on a qualifying period of 1994 through 2003 is fair and equitable, and furthers the purposes of Amendment 20.

Consideration of current and historical harvests appears less relevant to the issue of the qualifying period for processors because processors do not “harvest” fish. To the extent that current and historical harvests relate to the decision on an appropriate qualifying period for processors, this factor is considered by examining the current and historical harvests delivered to shorebased processors. Current and historical harvests and their relationship to processors are also considered indirectly through the other three factors. NMFS specifically requests comment on the relevance of “current and historical harvests” to the determination of the qualifying period for processors.

The Draft EA concludes that rationalization brings changes in the nature and patterns of employment in both the processing and harvesting sectors. While there may be some initial local shifts or variations in employment depending on the whiting allocation alternative chosen, the analysis did not anticipate notable variation in the stability or level of employment overall among the identified alternatives. However, the Groundfish Advisory Subpanel and the Draft EA also noted that moving the end year of the qualifying periods to include more recent years could result in additional QS being allocated to processors in the north, which is where much of the whiting harvest and processing has more recently been taking place. Although the Draft EA indicates that the actual location of whiting harvest and delivery to processors appears to be predominately affected by factors other than the amount of whiting QS held in a given geographic area, the QS is still an asset for processors that can be used to offset the effects of some of the geographic shifts that may occur irrespective of QS distribution. Additionally, some processors testified as to the importance of their QS in attracting additional whiting deliveries to their facilities. Maintaining the 1998-2004 time period for processors and its broader geographic distribution may contribute to employment in coastal communities when paired with the 1994-2003 qualifying period for harvesters. Further, in light of the overarching considerations, the existing qualifying periods result in a fair and equitable allocation. NMFS specifically requests comments on the degree to which the existing qualifying periods, or the alternative qualifying periods considered, could affect employment in the harvesting and processing sectors.

The MSA does not provide a definition of “dependence.” In general terms, dependence upon the fishery relates to the degree to which participants rely on the whiting fishery as a source of wealth, income, or employment to financially support their business. Current harvests, historical harvests, levels of investment over time, and levels of participation over time are all aspects of dependence, as they can all be connected to the processes that fishers and processors use to generate income. The level of dependence could be viewed as a function of any number of metrics including: The number of the years an entity has participated in the fishery; the total whiting harvested or the amount processed by an entity; the sum total of all fish harvested or processed by an entity; the total income earning activities by an entity (for example, some processors process fish for other processors, or help in the trucking of fish); or an entity's relationship to other entities (for example, one company may own several processing plants or limited entry permits another company may be closely affiliated with another company either through ownership relationships or through sales agreements). However, these are all just individual measurements of factors that are related to dependence, not measures of dependence in and of themselves. Furthermore, it is difficult to calculate “dependence” per se even using all of these measures.

The extent to which participation in the harvesting or processing of whiting past the 2003-2004 end of the qualifying periods reflects dependence upon the fishery is largely reliant upon the metric used to evaluate dependence and the time periods during which that metric is applied. Although some of the alternatives considered would allocate more quota to the most recent participants in the fishery, even assuming recent participation in the fishery is the appropriate metric for evaluating the level of dependence, the overarching considerations lead NMFS to preliminarily conclude that the existing qualifying periods for harvesters and processors result in a fair and equitable allocation, consistent with the MSA. As discussed more fully below, the choice of ending the qualifying period for processors in 2004 rather than the 2003 control date was done to explicitly recognize investmentsin processing while still furthering the purposes of Amendment 20.

Moreover, the fact that the existing qualifying period for harvesters results in some limited QS allocation to permits without activity in the whiting fishery post 2003 does not alter NMFS' conclusion. Under the status quo qualifying period, there were twenty-one limited entry trawl permits and 14 mothership/catcher vessel endorsed limited entry trawl permits that received whiting quota share or catch history assignments even though they did not fish after 2003. The analysis then researched whether these permits were fished in the other whiting sector, other Pacific groundfish fisheries, other west coast fisheries, or in other Alaska fisheries. After accounting for participation in other fisheries, there were a total of nine permits (shoreside or mothership) that apparently had no fishing activity off the West Coast or Alaska after 2003. These nine permits translate into 1.3 percent of the total shoreside whiting QS and 1.0 percent of the total mothership catch history assignments used for the 2011 and 2012 fisheries. However, the data set used for analysis may not have been complete as the permit may be owned by an entity that participates in fisheries other than west coast and Alaska fisheries. Furthermore, while some quota goes to harvester permits with no recent history under a 2003 end year for harvesters, the analysis in the record reflects that the extent of truly latent permits (not associated with an entity with recent whiting landings) is very small (roughly one percent for both shoreside and mothership harvesters). Awarding QS to these “latent” permits is consistent with the goal of reducing overcapitalization in the fishery and ending the “race for fish” because to do otherwise (i.e. award QS for activities beyond the control date) would create incentives for participants to expand their activities and investments after control dates are announced in the hope that they would be rewarded quota share.

The Council analysis characterizes the limited entry permit as an asset or investment, a highly fishery dependent investment. The EA states that “after 2003, it is reported that permit prices varied substantially based on the history associated with the permit, in anticipation of the trawl program.” Excluding changes due to company restructuring and changes due to death or divorce, eighteen permits changed hands after 2003 and before the end of 2010. Based on data recently collected by the NWFSC and public comment, during 2009-2010, three permits were sold at values that averaged about $315,000. The Council analysis also discussed the portfolio concept of permits. Fishermen frequently own several different types of permits as a business strategy to respond to the ups and downs of various fisheries. (A portfolio could include one or more limited entry trawl permits along with permits to crab, shrimp, or to fish in the Alaska Pollock fishery.) To participate in the trawl fishery, a person first needs to obtain one of a limited number of permits (at the time of implementation of the trawl rationalization program, there were 175 trawl endorsed permits). However, after investing in a permit, a permit owner has several options on how to use that investment. The permit owner can fish the permit with his vessel or lease the permit to another person. The owner can also sell the permit or choose not to fish the permit or have anyone else fish the permit. As evidence of the importance of this investment, the permit owner needs to renew and pay a permit fee annually. The Region has preliminarily concluded that these types of investments are an important factor in determining dependence on the fishery. NMFS is requesting comment on the extent that such investments reflect dependence on the fishery.

Some believe that most recent fishing history is the best reflection of dependence on the fishery. There is no NMFS guidance on the measurement of dependence. Equating dependence solely to recent fishing history could be in a sense “double counting” as the MSA already indicates that “current” harvests are to be considered as a separate factor. From review of other NMFS and Council analyses, indicators of dependence are typically based on measures that relate the IFQ fishery revenues (whiting) to total revenues earned by the entity (whiting, crab, shrimp, pollock, etc.). It is not NMFS policy to use recent fishing as the only reflection of dependence on the fishery, nor is it NMFS policy to use recent fishing as the sole basis for determining the allocation period; such a determination must always be based on the specific facts each time allocations are considered. NMFS specifically requests comments on the degree to which the existing qualifying periods, or the alternative qualifying periods considered, result in a fair and equitable allocation when considering investments in and dependence upon the fishery, including what metrics should be considered in measuring investment in and dependence on the fishery and why, based on those metrics, any of the alternatives result in a fair and equitable allocation.

The Council considered the current and historical participation of fishing communities in several ways. Similar to the analysis for current and historical harvests, by examining alternatives with a wide range of years, the Council and NMFS were able to review the current and historical participation of communities as they changed over time. Further, the original decision on Amendment 20 contained measures that examined the role of fishing communities over time. For example, the 20 percent allocation to processors was intended to provide increased stability to communities by creating an added incentive for catcher vessels to land whiting in those communities and increase bargaining parity between harvesters and processors. The Draft EA also notes that:

NMFS preliminarily concludes that the existing qualifying periods reflect fair and equitable allocations that were intended to spread the impacts of the trawl rationalization program along the coast. NMFS specifically requests comments with respect to current and historical participation of fishing communities and how consideration of this factor supports the existing whiting allocations, or the other alternative qualifying periods considered.

NMFS believes a crucial consideration that must be taken into account when reviewing the initial whiting allocation decision is the control date. Historically, the Council and other fishery management councils have announced and adopted control dates to prevent speculative participation in a fishery pending development of a limited accessprogram, with the intent that the developed program may use the control date as the end date of fishing history that would count toward establishing initial allocations, if appropriate. Since adopting the initial control date in 2003 (announced in aFederal Registernotice in early 2004), the Council and NMFS have actively worked on developing and refining the groundfish trawl catch share program. As discussed in detail in the draft EA, beginning in 2003, the Council held numerous public committee meetings (averaging ten a year), conducted public discussions on the trawl program during numerous Council meetings, and worked consistently on the program over a seven year period (2003-2010).

In deciding to develop a catch share program for the groundfish trawl fishery, the Council was concerned with the problems of overcapitalization and ending the race for fish. By notifying existing and potential participants that the Council was seriously pursuing development of a catch share program, the Council intended to deter additional unwanted effort and capital in the fishery. NMFS recognizes that the plain language of theFederal Registernotice announcing the control date does not “guarantee” that activity occurring in any specific period will count toward initial allocations. In addition, control dates have been abandoned in the past for various reasons by this Council and in other regions. However, NMFS also believes it was reasonable for participants to interpret the control date as signaling a potential end date for the qualifying period, and there was extensive public testimony reflecting the fact that many participants did in fact make business decisions based on the control date. Testimony from some participants indicated that had they thought the control date would not be used as the end of the qualifying period, they would have changed plans to increase their whiting harvests while leasing their quota in other fisheries. In addition, if fishermen believed that activity beyond the control date would result in more quota, they could have chosen to invest additional capital into their boats, thus increasing overcapitalization and exacerbating the race for fish. Accordingly, participants who made business decisions based on the assumption that the control date would be used as the end of the qualifying period acted in a manner consistent with the conservation goals of the Council. In addition, based on the fact that the control date modified at least some participants' fishing behavior, extending the qualifying period further into the future could result in participants in other fisheries disregarding any signal sent by announcing a new control date in a different program.

Although the length of time between the original control date and the agency approval in 2010, implementation of the program in 2011, and this proposed decision in 2012, is longer than the comparable time span in most programs that announce control dates, this is explained by the complexity of the program, which resulted in significant time needed to involve the public and fishery participants, develop alternatives, develop appropriate analytical documents, reach a final decision, and implement that decision. The trawl rationalization program includes multi-species trading in a diverse fleet composed of small trawlers, large motherships, and catcher-processors in communities along most of the West Coast of the United States. From the time the control date was announced, there was continuous and systematic effort by the Council and the agency to develop and implement, with full public participation, one of the most complex rationalization programs ever devised.

For the harvesters, the 1994-2003 period is the widest date range possible to base allocations on landings history while ending the qualifying period on the control date. Using this qualifying period recognizes the conservation benefits accruing from those whose fishing behavior did not change in an effort to gain more quota. While some public testimony indicated that their increased effort post-2003 was not a result of speculation, there is no mechanism available to separate out speculative behavior from non-speculative nor is there any way to quantify the extent to which the control date prevented additional speculative effort or capital. By maintaining the control date as the cut-off, however, those who did engage in such speculation are not rewarded and those who honored the control date are not penalized. Although the Council and NMFS were aware that new entrants had come into the whiting fishery since 2003, these entrants did so aware of the control date and that their activity after 2003 may not count toward any initial allocation decision. While maintaining the existing cutoffs for initial allocations excludes more current harvest and landings from the allocation formulas, the impacts to the dependence and investments of most participants are relatively modest. For example, the shift of whiting quota shares that would result from status quo to Alternative 4 (which most favors recent history) represents only 17 percent for shorebased catcher vessels, and 3.1 percent for shorebased processors. Therefore it is still fair and equitable to have some recent catch history not count toward initial allocations. Maintaining the control date as the end of the qualifying period for harvesters is fully consistent with the original purposes of Amendment 20, including reducing overcapitalization and ending the race for fish. However, for processors, the Council chose the end year of 2004, contrary to the 2003 control date, fairly late in the original decision-making process.

NMFS preliminarily concludes that the Council's recommendation to use 2004 as the end year for processors is supported by several rationales. First, the Council received testimony that there was a significant investment in whiting processing capability made in 2002 and 2003 before the control date was announced, and as discussed further below, before the applicability of the control date to processors was clarified. That investment did not begin to earn processing history until 2003 and 2004. The Council considered this information in making its original initial allocation, and in more detail during the reconsideration. The Council concluded that it would be unfair to not recognize this investment decision that was made prior to the control date. By extending the qualifying period for processors to 2004, some of the additional processing capabilities could be recognized as part of the qualifying history. Furthermore, testimony received during the Council's reconsideration revealed no significant change from their knowledge of processor investments in the whiting fishery, i.e., no testimony indicated other processors made a significant investment before the 2003 control that became operational in 2004 or later.

In addition, the originally publishedFederal Registernotice of the 2003 control date did not clearly indicate that the date applied to processors. Subsequent clarifications were published in the middle of the 2004 season and just prior to the start of the 2005 fishing season. Accordingly, in addition to at least partially crediting investment decisions made prior to the control date, extending the end year of the qualifying period to 2004 reasonably accounts for the fact that processors may not have had adequate notice of the applicability of the 2003 control date until after the start of the 2004 whiting season.

Since the investment decision was made before the control date, changing the end year of the qualifying period forprocessors to 2004 did not benefit those who decided to increase processing capacity after they were aware that 2003 control date could potentially apply to processors. While adopting 2004 for processors does move beyond the original control date, it only departs by a single year and does so for what NMFS preliminary concludes are valid justifications. NMFS specifically requests comment on the importance of using the control date as the end of the qualifying period for harvesters and the rationale for varying the end of the qualifying period for processor by one year to 2004.

Overall, there is a sufficient basis for NMFS to preliminarily conclude that the Council's initial whiting allocation recommendation, including using qualification years of 1994-2003 for whiting harvesters and 1998-2004 for whiting processors, is consistent with the requirements of the MSA, the FMP, and other applicable law, and provides for a fair and equitable initial allocation to the shoreside and mothership sectors of the whiting fishery. As the NOAA Technical Memorandum entitled “The Design and Use of Limited Access Privilege Programs, (Anderson and Holliday, November 2007) suggests, the record to date confirms that it does not appear to be possible to devise whiting allocations that will be perceived as equally fair by all eligible entities. Consistent with that guidance, however, the Council and agency have followed a public and transparent process that involved all concerned stakeholders and allowed repeated opportunities to provide input. NMFS believes this process has been appropriate and essential to advancing a fair and equitable allocation. The record also establishes that in weighing the various factors identified under the MSA for initial allocations, there are inevitably tradeoffs that result under the various alternatives. In striking an overall balance, NMFS preliminarily finds that the reasons supporting maintaining the existing allocations for the shoreside and mothership whiting fisheries (e.g.,honoring the control date and the policy goals of Amendment 20, wide geographic distribution of the program benefits and costs along the coast and the corresponding fishing communities) outweigh those favoring more recent history (e.g.,reflection of the more current market and fishery conditions, providing greater amounts of quota to the most recent fishery participants, and reducing or eliminating quota shares to some pemit holders that do not have recent history). NMFS also notes that the draft EA indicates that the action alternatives result in a larger number of permits losing quota share to the benefit of a smaller number of permits that would gain quota share. NMFS requests comment on the overall balancing of the factors and impacts of this initial allocation decision.

NMFS requests comment on the following additional considerations relating to its preliminary determination that the proposed initial whiting allocations are fair and equitable and consistent with the MSA, FMP, and other applicable law.

NMFS finds that the relevant factors and best available information have been considered in compliance with requirements of the MSA in reaching its preliminary determination. NMFS requests comment over the degree to which there has been adequate consideration of the factors identified for initial allocations under the MSA including: current and historical harvests; employment in the harvesting and processing sectors; investments in, and dependence upon, the fishery; and, the current and historical participation of fishing communities. As reflected in the Council record and draft EA, additional factors have also been considered, and NMFS also requests comment on whether all other relevant factors and related information for each factor have been adequately considered.

NMFS notes that at the time of the original initial allocation decision and during the reconsideration before the Council, it appeared that the most, but not all, of participants supported the use of the existing qualifying periods rather than any of the alternatives considered. NMFS finds that the industry support for the original allocations referred to in the earlier record and the court summary judgment order inPacific Dawnas a “compromise” was in fact appropriate input from the affected industry that was developed as part of the overall transparent and public process that established the catch shares program. NMFS requests comment from the public on this issue, including on the degree to which industry supports the existing allocations, the extent to which NMFS should take into account the degree of industry support, and how the amount of support should inform consideration of the factors listed in the MSA for allocation decisions in light of the analysis provided in the draft EA.

NMFS proposes to revise the portions of the regulations that were temporarily delayed or revised by RAW 1. Additionally, to be consistent with Council action at its November 2012 meeting on a QS transfer provision affecting widow rockfish, NMFS proposes to extend the moratorium on transfer of widow rockfish QS in the IFQ fishery indefinitely pending the Council's reconsideration of the allocation of QS for widow rockfish. Specifically, NMFS proposes to:

(1) Allow transfer of QS or IBQ (except for widow rockfish QS) between QS permit holders in the shorebased IFQ fishery beginning January 1, 2014;

(2) Require QS permit holders in the shorebased IFQ fishery holding QS or IBQ in excess of the accumulation limits to divest themselves of excess QS (except for widow QS) or IBQ by November 30, 2015;

(3) Allow limited entry trawl permit holders in the mothership fishery to request a change (or transfer) of mothership/catcher vessel (MS/CV) endorsement and its associated catch history assignment (CHA) beginning September 1, 2014;

(4) Require MS/CV endorsed limited entry trawl permit owners to divest themselves of ownership in permits in excess of the accumulation limits by August 31, 2016; and

(5) Extend the divestiture period delay and moratorium on transfer of widow rockfish QS in the shorebased IFQ fishery indefinitely.

Each of these elements is described in further detail below.

The trawl rationalization program, as implemented in January 2011, delayed QS holders' ability to transfer QS and IBQ between QS accounts in the shorebased IFQ fishery through December 31, 2012 (i.e., transfer could begin in 2013). RAW 1 further delayed QS holders' ability to transfer QS and IBQ between QS accounts. This suspension of QS transfers was necessary to avoid complications which would occur if QS permit owners in the shorebased IFQ fishery were allowed to transfer QS percentages prior to the whiting allocation reconsideration. Since NMFS proposes to concur with the Council's no action recommendation, no changes to the initial whiting allocations are proposed. However, NMFS still requires adequate time to develop the regulations and software necessary to allow for transferof QS, and the Council has not taken final action regarding reallocation of widow rockfish quota. Therefore, the Council recommended and NMFS proposes to revise § 660.140(d)(3)(ii)(B)(2) to allow transfer of QS or IBQ (except for widow rockfish QS) between QS permit holders in the shorebased IFQ fishery, subject to accumulation limits and approval by NMFS, beginning January 1, 2014. Additionally, the rule would reinstate language that QS and IBQ cannot be transferred between December 1 and December 31 of each year, nor may QS and IBQ be transferred to a vessel account.

The delayed implementation of regulations that allow for the transfer of QS necessitates a corresponding delay to the divestiture periods for those QS permit owners with QS over the accumulation limits (also called QS control limits) in the shorebased IFQ fishery. The current regulations, as revised by RAW 1, state that QS permit owners that have an initial allocation of QS or IBQ in excess of the accumulation limits will be allowed to receive that allocation, but must divest themselves of the excess QS or IBQ during the first two years once QS transfers are allowed. Maintaining the full two years for divestiture would provide QS permit owners with sufficient time to plan and arrange sales of excess QS, as originally recommended by the Council for this provision of the trawl rationalization program. While two years from January 1, 2014, is December 31, 2015, the regulations prior to RAW 1 and being proposed to be reinstated with this rule at § 660.140(d)(3)(ii)(B)(2) state that the transfer of QS between QS accounts and from a QS account to a vessel account is prohibited between December 1 through December 31. Therefore, this rule proposes to revise § 660.140(d)(4)(v) to require QS permit holders in the shoreside IFQ fishery holding QS or IBQ in excess of the accumulation limits to divest themselves of excess QS (except for widow rockfish QS) or IBQ by November 30, 2015. Widow rockfish QS in excess of the accumulation limit would not be subject to the November 30, 2015, deadline for divestiture because widow rockfish QS may be reallocated as described later in the preamble under the extended moratorium on widow QS transfers.

RAW 1 instituted a delay in the ability of limited entry trawl permit owners in the mothership sector to transfer MS/CV endorsements and CHAs between limited entry trawl permits. The rationale for this action was similar to that for delaying QS transfers in the shorebased IFQ fishery; if permit owners were allowed to transfer ownership of CHAs before the reconsideration took place, then it would be difficult for NMFS to track changes to the initial allocations of whiting and other incidentally caught species. As recommended by the Council, consistent with the recommendation to make no changes to the initial allocations of whiting, NMFS proposes to revise § 660.150(g)(2)(iv)(B) and (C) to allow limited entry trawl permit holders in the mothership sector to request a change (or transfer) of MS/CV endorsement and its associated CHA beginning September 1, 2014.

Delayed implementation of regulations that allow for severability of the MS/CV endorsement and its associated CHA from the limited entry trawl permit in the mothership sector necessitates a corresponding delay to the divestiture periods for those limited entry trawl permit owners with CHA in excess of the accumulation limits for that sector. As recommended by the Council, NMFS proposes to revise § 660.150(g)(3)(i)(D) to require MS/CV-endorsed limited entry trawl permit owners to divest themselves of ownership in permits that have CHA in excess of the accumulation limits by August 31, 2016. Additionally, NMFS proposes that after August 31, 2016, any MS/CV-endorsed permits owned by a person (including any person who has ownership interest in the owner named on the permit) in excess of the accumulation limits will not be issued (renewed) until the permit owner complies with the accumulation limits.

This rule proposes to extend the moratorium on transfer of widow rockfish QS in the IFQ fishery indefinitely pending reconsideration of the allocation of QS for widow rockfish. The Council intends to reconsider widow rockfish QS allocations in the future because widow rockfish is no longer an overfished species and will be managed as a healthy, rebuilt stock beginning in 2013. NMFS proposes this change at § 660.140(d)(3)(ii)(B)(2).

Pursuant to section 304(b)(1)(A) of the MSA, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the Pacific Coast Groundfish FMP, other provisions of the MSA, and other applicable law, subject to further consideration after public comment. To the extent that the regulations in this rule differ from what was deemed by the Council, NMFS invokes its independent authority under 16 U.S.C. 1855(d).

The Council and NMFS prepared a draft environmental assessment (EA) for the reconsideration of initial whiting allocation that discusses the impact on the human environment of the proposed rule. While the draft EA considers more recent information, the Council recommended and NMFS is proposing the “No Action” alternative which retains the original initial allocations of whiting in the IFQ and mothership fisheries from Amendment 20. A copy of the EA is available on NMFS' Web site athttp://www.nwr.noaa.gov/Groundfish-Halibut/Groundfish-Fishery-Management/Trawl-Program/index.cfm. Aspects related to this action were previously discussed in the final environmental impact statement (EIS) for Amendments 20 to the Pacific Coast Groundfish FMP which discussed the structure and features of the original trawl rationalization program. A notice of availability for the final EIS published on June 25, 2010 (75 FR 36386). The Amendment 20 EIS is available on the Council's Web site athttp://www.pcouncil.org/or on NMFS' Web site.

OMB has determined that this action is not significant for purposes of Executive Order 12866.

A Regulatory Impact Review (RIR) was prepared on the action in its entirety and is included as part of the initial regulatory flexibility analysis (IRFA) on the proposed regulatory changes. The IRFA and RIR describe the impact this proposed rule, if adopted, would have on small entities. A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of this section in the preamble and in theSUMMARYsection of the preamble. A copy of the IRFA is available from NMFS (see ADDRESSES).

The Council considered four alternatives for allocating whiting. The following analysis compares the “status quo” alternative to Alternative 4 as they show greatest differences between the pre-control date fishery and post-control date fishery. The “status quo” alternative allocates whiting using the years 1994 to 2003 for harvesters (shoreside and mothership) and 1998-2004 for processors. Alternative 4 allocates whiting using the years 2000-2010 for both harvesters (shoreside and mothership) and processors. Over the years 1994-2010, there were 65 fishing permit holders that participated in the shoreside fishery and 37 permit holders that participated in the mothership fishery. Over the years 1998 to 2010, there were 16 processors that participated in the fishery and that meet the recent participation criteria of the various alternatives.

Comparing the status quo alternative to Alternative 4 in terms of 2011 ex-vessel revenues, information on the gainers and losers in each of these affected groups can be developed from information in the Draft EA. The allocation of 98,000 mt to the 2011 shorebased whiting fishery was worth approximately $21 million (exvessel value). Based on the status quo allocations, eighty percent of these quota pounds were allocated to fishing permits ($17 million) and 20 percent to the shorebased processors ($4 million). The allocation of 57,000 mt whiting to the whiting mothership catcher vessels was worth $12 million in exvessel value. It is important to note that 2011 was a peak year for the shorebased fishery and a near-peak year for the mothership fishery (seeFigure 3-5 of the Draft EA). (Note: although exprocessor or “first wholesale” revenues are higher than exvessel values and would be a better indicator of processing activity levels, data on exprocessor sales were not readily available for use by the Council. A better indicator of the gains and losses by groups would be changes in profits (revenues less operating costs)).

The NWFSC has developed an estimate of economic net revenue that is an indicator of profits. Economic net revenue seeks to measure economic profit, which includes the opportunity costs of operating a commercial fishing vessel. The NWFSC collected and assessed 2008 cost-earning data on vessels participating in the shoreside groundfish fisheries including whiting. Vessels that participate in the shoreside whiting fishery are typically classified as either “whiting” vessels or “Alaska” vessels depending on whether or not they operated in Alaska. Whiting vessels are defined as those with at least $100,000 revenue, of which at least 33% comes from whiting. Alaska vessels are defined at those vessels that earned at least $100,000 in revenue of which at least 50% comes from Alaska fisheries. The average economic net revenue of a whiting vessel in 2008 was $167,457, which represents 19.2% of revenue from all fisheries. Limited entry trawl vessels classified as Alaska vessels had an average economic net revenue of $493,915, 28.3% of the $1,744,793 revenue earned from all sources by these vessels. These estimates on based on revenue and cost information directly related to the operation of a commercial fishing vessel such as those associated with office space. Revenues are from West coast landings, Alaska landings, at-sea deliveries, sale and leasing of permits, chartering for research purposes and other activities related to the operation of the vessel. Compared to other years, these estimates may be high as whiting revenues and overall groundfish revenues were at their highest annual level during the 2001-2010 period during 2008. However, crab revenues during 2008 on the West Coast were at their lowest level since 2003.

Compared with the status quo alternative, under Alternative 4 approximately 17% ($3.7 million) of the allocation to shorebased catcher vessels would be transferred away from the status quo holders; twenty eight permit holders would gain quota share including six permits that did not qualify under the status quo alternative (Table 4-4 of the Draft EA). The largest gain by a single permit holder is 3.3% ($700,000). Alternative 4 would lead to 37 permits losing quota share including 12 permits that would not receive any quota share. The largest loss by a single permit holder would be 2.0% of quota share ($340,000). A total of 41 out of 65 permits will see a change of less than $100,000 (increase or decrease) in revenues in comparing Alternative 4 to the status quo alternative.

In comparing Alternative 4 to the Status Quo alternative for shorebased processors, approximately 3.1% ($660,000) of the allocation to shorebased processors would be transferred away from the status quo holders; nine processors would gain including seven processors that did not qualify under the status quo alternative (Table 4-29 of the Draft EA). The largest gain by a single processor would be 1.3% of quota share ($275,000). Alternative 4 would lead to seven processors losing quota share, including three processors that would not receive any quota share. The largest loss by a single processor would be 0.8% of quota share ($170,000). Nine out of 16 processors would see a change of less than $100,000.

In comparing Alternative 4 to the Status Quo alternative for whiting mothership catcher vessels, approximately 18% ($2 million) of the total catch history assignment would be transferred away from the status quo holders; 16 mothership catcher vessel endorsed permits would gain (Table 4-16 of the Draft EA). No new permits would qualify. The largest gain by a single permit holder would be 4.5% of catch history assignment ($545,000). Alternative 4 would lead to 21 permits with reduced catch history assignments, including 10 permits that would not receive any catch history assignment. The largest loss by a single catch history assignment holder would be 2.7% ($333,000). Eighteen out of 36 permits would see a change of less than $100,000.

However, in terms of net economic benefit to the nation, the effects of the alternatives are similar. According to the PSMFC's Scientific and Statistical Committee: “The way the fisheries are actually prosecuted (geographic location of fishing and landings, timing of fishing, and participants) will in the long-term tend not to be affected by who receives the initial allocation of catch shares.” Over time, the use of the catch shares will likely migrate through leases or sales to the participants who can put them to their most profitable use. This means that the eventual biological, ecological, and economic performance of the fisheries will be relatively independent of the initial allocation of catch shares. It has been the experience of many catch share programs that such transitions occur rather quickly, often within the first few years. As a consequence, the initial allocation of quota shares is not an effective tool to direct fishing or processing effort to particular geographic locations.”

The initial allocation of whiting is a one-time distribution of wealth in the form of quota shares and catch history assignments to members of the fishing industry. The initial allocation is essentially the granting of a capital asset that will affect harvester and processor competitiveness and assist existing participants in the transition to the new management system. To the degree that initial allocation match up with the harvesters that will use the quota, transition costs and disruption will be lessened as the fishery moves to its long-term, more efficient state.Similarly, those processors who receive an initial allocation may experience a boost in their competitive advantage due to the infusion of new wealth (the value of the QS received).

The initial allocation does not affect the long-term efficiency and operation of the fishery. However, liquidity constraints, and perhaps other unknown constraints, may mean that there are some short-term inefficiencies. For example, this one time distribution of wealth may affect expenditures in the communities depending on location and spending patterns of recipients of these quota shares and catch history assignments. The Draft EA provides the following regarding impacts on communities: “The effects of the initial allocations on the distribution of fishing among communities are difficult to predict. Quota is tradable and highly divisible, giving it a fluidity such that it will likely move toward those ports in which profit margins tend to be the highest, regardless of the initial allocations. Where profit margins are similar, allocations given to entities that are already invested in whiting fishery-dependent capital assets are likely to stay with those entities at least in the near term. Similarly, where profit margins are similar, there will likely be some tendency in the near term for quota that is traded to move toward locations where whiting fishery-dependent capital assets already exist. Regardless of how the quota is distributed, vessels may move operations between ports during the year based on the geographic distribution of fishing opportunities. Processors are likely to use their shares in the port in which their facilities are located, however, some processors have facilities in more than one port and so may shift harvest between ports in response to the location of fishing opportunities. At the same time, the recent shift of harvest toward more northern ports appears to be a response to investments in those ports, indicating that the location of fish is not the only factor driving the location of landings. Over the long term, it is expected that operations will move, or quota will be traded, to the ports in which the highest profits can be earned, taking into account all forms of costs such as average distance to fishing grounds and catch and bycatch rates.”

While the discussion above concerns the long run efficiency and operation of the fishery, short run effects matter. The initial allocation of quota shares affects each participant's business operation, investments, and community. With the choice of the status quo alternative over alternatives that reflect more recent history, NMFS and the Council are providing to those who have historically participated in the fishery (the majority of which are also recent participants) are anticipated to have a better chance to benefit from the market processes described above.

This action also would revise several regulations that were delayed on an emergency basis in response to the Court order. RAW 1 delayed the ability to transfer QS and IBQ between QS accounts in the shorebased IFQ fishery, and to the ability to sever mothership/catcher vessel endorsement and its associated catch history assignment (CHA) from limited entry trawl permits in the mothership fishery, pending the outcome of the reconsideration.

NMFS postponed the ability to trade quota shares as well as the ability of mothership catcher vessels to trade their endorsements and catch history assignments separately from their limited entry permits. NMFS also postponed a delay in all trading of QS species/species groups because for many affected parties, their QS allocations (especially for bycatch species) are a composite of whiting-trip calculations and non-whiting trip calculations. Postponing these activities, while NMFS and the Council reconsidered the whiting allocation, minimize confusion and disruption in the fishery from trading quota shares that have not yet been firmly established by regulation. For example, if QS trading was not delayed, QS permit owners would be transferring QS amounts that potentially could change (increase or decrease) after the reconsideration. For similar reasons, NMFS also delayed the ability to transfer a mothership catcher vessel (MS/CV) endorsement and associated catch history assignment from one limited entry trawl permit to another in the mothership sector. The ability to sell or trade a limited entry permit with the endorsement and catch history remains. The use of the catch history assignment to be assigned to a co-op to be fished continues. NMFS intends to announce any changes to the amount of catch history assignments associated with MS/CV-endorsed limited entry trawl permits by April 1, 2013 which is before the May 15 start date for the whiting mothership fishery. These delays were expected to be temporary in nature and to benefit both small and large entities as they help smooth the transition to any changes in how Pacific whiting is allocated, and reduce the uncertainty to existing and potential new holders of these allocations.

With these proposed regulations, those who find themselves with excess QS (except for widow QS) and IBQ, have until November 30, 2015, to divest. MS/CV-endorsed limited entry trawl permit owners will have to divest themselves of ownership in permits in excess of the accumulation limits by August 31, 2016. This rule allows limited entry trawl permit holders in the mothership sector to request a change (or transfer) of MS/CV endorsement and its associated CHA beginning September 1, 2014. Finally, this rule allows transfer of QS or IBQ, except widow rockfish QS, between QS permit holders beginning January 1, 2014.

The Small Business Administration has established size criteria for all major industry sectors in the US, including fish harvesting and fish processing businesses. A business involved in fish harvesting is a small business if it is independently owned and operated and not dominant in its field of operation (including its affiliates) and if it has combined annual receipts not in excess of $4.0 million for all its affiliated operations worldwide. A seafood processor is a small business if it is independently owned and operated, not dominant in its field of operation, and employs 500 or fewer persons on a full-time, part-time, temporary, or other basis, at all its affiliated operations worldwide. A business involved in both the harvesting and processing of seafood products is a small business if it meets the $4.0 million criterion for fish harvesting operations. A wholesale business servicing the fishing industry is a small business if it employs 100 or fewer persons on a full-time, part-time, temporary, or other basis, at all its affiliated operations worldwide. For marinas and charter/party boats, a small business is one with annual receipts not in excess of $7.0 million.

Over the years 1994-2010, there were 65 limited entry trawl fishing permit holders that participated in the shoreside whiting fishery and 37 limited entry trawl fishing permit holders that participated in the mothership fishery. Over the years 1998 to 2010, 16 processors have participated in the fishery. NMFS NWR now collects small business information as part of its permit renewal processes. Based on that information and on other information, there are three large companies associated with the 16 processors and 13 small companies. Sixteen of the limited entry trawl permits that participated in the whiting fishery are associated with large companies and 49 of these permits are associated with small companies. In the mothership fishery 14 catcher vessel permits areassociated with large companies and 23 with small companies.

No Federal rules have been identified that duplicate, overlap, or conflict with the alternatives. Public comment is hereby solicited, identifying such rules. A copy of this analysis is available from NMFS (seeADDRESSES).

NMFS issued Biological Opinions under the Endangered Species Act (ESA) on August 10, 1990, November 26, 1991, August 28, 1992, September 27, 1993, May 14, 1996, and December 15, 1999, pertaining to the effects of the Pacific Coast groundfish PCGFMP fisheries on Chinook salmon (Puget Sound, Snake River spring/summer, Snake River fall, upper Columbia River spring, lower Columbia River, upper Willamette River, Sacramento River winter, Central Valley spring, California coastal), coho salmon (Central California coastal, southern Oregon/northern California coastal), chum salmon (Hood Canal summer, Columbia River), sockeye salmon (Snake River, Ozette Lake), and steelhead (upper, middle and lower Columbia River, Snake River Basin, upper Willamette River, central California coast, California Central Valley, south/central California, northern California, southern California). These biological opinions have concluded that implementation of the PCGFMP for the Pacific Coast groundfish fishery is not expected to jeopardize the continued existence of any endangered or threatened species under the jurisdiction of NMFS, or result in the destruction or adverse modification of critical habitat.

NMFS issued a Supplemental Biological Opinion on March 11, 2006, concluding that neither the higher observed bycatch of Chinook in the 2005 whiting fishery nor new data regarding salmon bycatch in the groundfish bottom trawl fishery required a reconsideration of its prior “no jeopardy” conclusion. NMFS also reaffirmed its prior determination that implementation of the Groundfish PCGFMP is not likely to jeopardize the continued existence of any of the affected ESUs. Lower Columbia River coho (70 FR 37160, June 28, 2005) and Oregon Coastal coho (73 FR 7816, February 11, 2008) were recently relisted as threatened under the ESA. The 1999 biological opinion concluded that the bycatch of salmonids in the Pacific whiting fishery were almost entirely Chinook salmon, with little or no bycatch of coho, chum, sockeye, and steelhead.

On December 7, 2012, NMFS completed a biological opinion concluding that the groundfish fishery is not likely to jeopardize non-salmonid marine species including listed eulachon, green sturgeon, humpback whales, Steller sea lions, and leatherback sea turtles. The opinion also concludes that the fishery is not likely to adversely modify critical habitat for green sturgeon and leatherback sea turtles. An analysis included in the same document as the opinion concludes that the fishery is not likely to adversely affect green sea turtles, olive ridley sea turtles, loggerhead sea turtles, sei whales, North Pacific right whales, blue whales, fin whales, sperm whales, Southern Resident killer whales, Guadalupe fur seals, or the critical habitat for Steller sea lions.

As Steller sea lions and humpback whales are also protected under the Marine Mammal Protection Act, incidental take of these species from the groundfish fishery must be addressed under MMPA section 101(a)(5)(E). On February 27, 2012, NMFS published notice that the incidental taking of Steller sea lions in the West Coast groundfish fisheries was addressed in NMFS' December 29, 2010, Negligible Impact Determination (NID) and this fishery has been added to the list of fisheries authorized to take Steller sea lions (77 FR 11493, Feb. 27, 2012). NMFS is currently developing MMPA authorization for the incidental take of humpback whales in the fishery.

On November 21, 2012, the U.S. Fish and Wildlife Service (FWS) issued a biological opinion concluding that the groundfish fishery will not jeopardize the continued existence of the short-tailed albatross. The (FWS) also concurred that the fishery is not likely to adversely affect the marbled murrelet, California least tern, southern sea otter, bull trout, nor bull trout critical habitat.

This proposed rule was developed after meaningful consultation and collaboration, through the Council process, with the tribal representative on the Council. The proposed regulations have no direct effect on the tribes.

For the reasons stated in the preamble, 50 CFR part 660 is proposed to be amended as follows: