Federal Register Vol. 81, No.56,

This proposal is issued under Marketing Order No. 985 (7 CFR part 985), as amended, regulating the handling of spearmint oil produced in the Far West (Washington, Idaho, Oregon, and designated parts of Nevada and Utah), 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 proposed rule in conformance with Executive Orders 12866, 13563, and 13175.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule is not intended to have retroactive effect. Under the order now in effect, salable quantities and allotment percentages may be established for classes of spearmint oil produced in the Far West. This proposed rule would establish the quantity of spearmint oil produced in the Far West, by class, which handlers may purchase from, or handle on behalf of, producers during the 2016-2017 marketing year, which begins on June 1, 2016.

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. A 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.

The Committee meets annually in the fall to adopt a marketing policy for the ensuing marketing year or years. In determining such marketing policy, the Committee considers a number of factors, including, but not limited to, the current and projected supply, estimated future demand, production costs, and producer prices for all classes of spearmint oil. Input from spearmint oil handlers and producers regarding prospective marketing conditions for the upcoming year is considered as well.

If the Committee's marketing policy considerations indicate a need for limiting the quantity of any or all classes of spearmint oil marketed, the Committee subsequently recommends to USDA the establishment of a salable quantity and allotment percentage for such class or classes of oil in the forthcoming marketing year. Recommendations for volume control are intended to ensure that market requirements for Far West spearmint oil are satisfied and orderly marketing conditions are maintained.

The salable quantity represents the total amount of each class of spearmint oil that handlers may purchase from, or handle on behalf of, producers during the marketing year. The allotment percentage is the percentage used to calculate each producer's prorated share of the salable quantity. It is derived by dividing the salable quantity for each class of spearmint oil by the total of all producers' allotment bases for the same class of oil. Each producer's annual allotment of salable spearmint oil is calculated by multiplying their respective total allotment base by the allotment percentage for each class of spearmint oil. A producer's allotment base is their quantified share of the spearmint oil market based on a statistical representation of past spearmint oil production, with accommodation for reasonable, normal adjustments to such base as prescribed by the Committee and approved by USDA.

Salable quantities and allotment percentages are established at levels intended to fulfill market requirements and to maintain orderly marketing conditions. Committee recommendations for volume control are made well in advance of the period in which the regulations are to be effective, thereby allowing producers the chance to adjust their production decisions accordingly.

Pursuant to authority in §§ 985.50, 985.51, and 985.52 of the order, the full eight-member Committee met on October 21, 2015, and recommended salable quantities and allotment percentages for both classes of oil for the 2016-2017 marketing year. By a vote of 6-1, the Committee recommended the establishment of a salable quantity and allotment percentage for Scotch spearmint oil of 958,711 pounds and 45 percent, respectively. With a unanimous vote, the Committee recommended the establishment of a salable quantity and allotment percentage for Native spearmint oil of 1,209,546 pounds and 50 percent, respectively. One Committee member did not vote in either motion.

This action would set the amount of Scotch and Native spearmint oil that handlers may purchase from, or handle on behalf of, producers during the 2016-2017 marketing year, which begins on June 1, 2016. Salable quantities and allotment percentages have been placed into effect each season since the order's inception in 1980.

As noted above, the Committee recommended a salable quantity of Scotch spearmint oil of 958,711 pounds and an allotment percentage of 45 percent for the upcoming 2016-2017 marketing year. Motions for allotments of 41, 43, 46, 47, and 48 percent were made by members during the meeting but were ultimately not carried due to insufficient votes or a lack of seconding by other Committee members. To arrive at these recommendations, the Committee utilized 2016-2017 sales estimates for Scotch spearmint oil, as provided by several of the industry's handlers, historical and current Scotch spearmint oil production, inventory statistics, and international market data obtained from consultants for the spearmint oil industry.

Trade demand for Far West Scotch spearmint oil is expected to decrease from the 1,000,000 pounds anticipated in the 2015-2016 marketing year to 900,000 pounds in 2016-2017. Industry reports indicate that the decreased trade demand estimate is the result of decreased consumer demand for spearmint flavored products, especially chewing gum in China and India, as fruit flavors are becoming preferential to consumers. Strong, recovering production of spearmint oil in competing markets, most notably Canada, has also factored into the Committee's assessment of the market.

Production of Far West Scotch spearmint oil increased from 1,093,740 pounds in 2014 to an estimated 1,229,258 pounds for 2015. This increase in production, along with a simultaneous decrease in the demand estimate for the forthcoming 2016-2017 marketing year, is consistent with the Committee's desire to bolster the Scotch spearmint oil salable inventory to ensure that the market is fully supplied. With the reserve pool of Scotch spearmint oil nearly exhausted, salable carry-in would be the only cushion to any unanticipated supply shocks that may affect the industry.

The Committee estimates that there will be 233,752 pounds of salable carry-in of Scotch spearmint oil on June 1, 2016. This figure, which is the primary measure of excess supply, would be up dramatically from the 4,494 pounds carried-in the previous year on June 1, 2015. The Committee further estimates that salable carry-in will grow to 292,463 pounds at the beginning of the 2017-2018 marketing year, if current market conditions and projections are maintained. This anticipated level of carry-in would be above the quantity that the Committee considers favorable (generally 150,000 pounds). However, without any Scotch spearmint oil in the reserve pool, the Committee believes that this higher salable carry-in is manageable.

The 2016-2017 Scotch spearmint oil salable quantity of 958,711 pounds recommended by the Committee represents a decrease of 306,914 pounds from the salable quantity established the previous marketing year (1,265,625 pounds). Of the total salable quantity established for the 2015-2016 marketing year, the Committee believes that 36,367 pounds of annual allotment will go unfilled as a result of producers who did not produce their entire annual allotment and who do not have any Scotch spearmint oil in the reserve pool to fill the deficiency. Therefore, the Committee estimates the total available supply for the 2015-2016 marketing year to be just 1,233,752 pounds (4,494 pounds of carry-in plus 1,265,625 pounds of salable quantity less the 36,367 pounds of unused annual allotment).

The Committee estimates the 2015-2016 marketing year trade demand for Scotch spearmint oil at 1,000,000 pounds. When considered in conjunction with the 2015-2016 marketing year total available supply, the Committee expects that there will be 233,752 pounds of available carry-in of Scotch spearmint oil on June 1, 2016. That carry-in, when combined with the recommended 2016-2017 marketing year salable quantity of 958,711 pounds, would result in a total supply of 1,192,463 pounds of Scotch spearmint oil for the 2016-2017 marketing year. This quantity is expected to fully satisfy estimated market demand of 900,000 pounds.

The Committee's stated intent in the use of marketing order volume control regulations for Scotch spearmint oil is to keep adequate supplies available to meet market needs and maintain orderly marketing conditions. The recommended salable quantity of Scotch spearmint oil for the upcoming marketing year is less than the 1,265,853 pound salable quantity established for the previous year. Even so, the Committee expects that the market will be fully supplied for the 2016-2017 marketing year. In addition, the Committee expects that Scotch spearmint oil inventories will be replenished after being completely exhausted in the course of the 2013-2014 marketing year.

The Committee believes that the recommended salable quantity would adequately meet demand, as well as result in a larger carry-in for the following year. The Committee developed its recommendation for the proposed Scotch spearmint oil salable quantity and allotment percentage for the 2016-2017 marketing year based on the information discussed above, as well as the computational data outlined below.

(A) Estimated carry-in of Scotch spearmint oil on June 1, 2016: 233,752 pounds. This figure is the difference between the revised 2015-2016 marketing year total available supply of 1,233,752 pounds and the estimated 2015-2016 marketing year trade demand of 1,000,000 pounds.

(B) Estimated trade demand of Scotch spearmint oil for the 2016-2017 marketing year: 900,000 pounds. This estimate was established by the Committee and is based on input from producers at Scotch spearmint oil production area meetings held in mid-October 2015, as well as estimates provided by handlers and other meeting participants at the October 21, 2015 meeting. The average estimated trade demand derived from the six production area producer meetings was 1,027,666 pounds, which is 6,084 pounds less than the average of trade demand estimates submitted by handlers. Far West Scotch spearmint oil sales have averaged 1,023,729 pounds per year over the last three years, and 954,578 pounds over the last five years. Given the anticipated market conditions for the coming year, the Committee decided it was prudent to anticipate the lower trade demand at 900,000 pounds. Should the initially established volume control levels prove insufficient to adequately supply the market, the Committee has the authority to recommend intra-seasonal increases, as were undertaken in the 2014-2015 marketing year, and several other previous marketing years.

(C) Salable quantity of Scotch spearmint oil required from the 2016-2017 marketing year production: 666,248 pounds. This figure is the difference between the estimated 2016-2017 marketing year trade demand (900,000 pounds) and the estimated carry-in on June 1, 2016 (233,752 pounds). This salable quantity represents the minimum amount of Scotch spearmint oil that may be needed to satisfy estimated demand for the coming year.

(D) Total estimated allotment base of Scotch spearmint oil for the 2016-2017 marketing year: 2,130,469 pounds. This figure represents a one-percent increase over the revised 2015-2016 total allotment base of 2,109,375 pounds as prescribed by the order under § 985.53(d)(1). The one-percent increase equals 21,094 pounds of Scotch spearmint oil. This total estimated allotment base is generally revised each year on June 1 due to producer base being lost because of the bona fide effort production provisions of § 985.53(e). The adjustment is usually minimal.

(E) Computed Scotch spearmint oil allotment percentage for the 2016-2017 marketing year: 31.3 percent. This percentage is computed by dividing the minimum required salable quantity (666,248 pounds) by the total estimated allotment base (2,130,469 pounds).

(F) Recommended Scotch spearmint oil allotment percentage for the 2016-2017 marketing year: 45 percent. This is the Committee's recommendation and is based on the computed allotment percentage (31.3 percent), and input from producers and handlers at the October 21, 2015 meeting. The recommended 45 percent allotment percentage reflects the Committee's belief that the computed percentage (31.3 percent) may not adequately supply the potential 2016-2017 Scotch spearmint oil market demand.

(G) Recommended Scotch spearmint oil salable quantity for the 2016-2017 marketing year: 958,711 pounds. This figure is the product of the recommended salable allotment percentage (45 percent) and the total estimated allotment base (2,130,469 pounds) for the 2016-2017 marketing year.

(H) Estimated total available supply of Scotch spearmint oil for the 2016-2017 marketing year: 1,192,463 pounds. This figure is the sum of the 2016-2017 recommended salable quantity (958,711 pounds) and the estimated carry-in on June 1, 2016 (233,752 pounds).

The Committee also recommended a 2016-2017 Native spearmint oil salable quantity of 1,209,546 pounds and an allotment percentage of 50 percent at the October 21, 2015, meeting. These figures represent a decrease of 131,723 pounds and 5 percent, respectively, from the previous marketing year. To formulate this recommendation, the Committee utilized Native spearmint oil sales estimates for the 2016-2017 marketing year, as provided by several of the industry's handlers, as well as historical and current Native spearmint oil market statistics.

The Committee estimates that there will be 609,603 pounds of Native spearmint oil in the reserve pool on June 1, 2016. This figure, which is the excess Native spearmint oil production held in reserve by producers, is up from the previous industry peak of 606,942 pounds on June 1, 2011. That estimate is 163,765 pounds higher than the previous year reserve pool level. Reserve pool levels of Native spearmint oil had been slowly moving toward the level that the Committee believes is optimal for the industry prior to the spike that is expected for the 2015-2016 marketing year. The increase in Native spearmint oil held in reserve is the direct result of greatly increased production and only moderately increased industry trade demand.

Far West Native spearmint oil production was 1,274,926 pounds in 2014, but jumped to 1,510,936 pounds in 2015, an 18.5 percent increase in just one year. In contrast, sales of Native spearmint oil have only been growing at around a 3 percent rate over the past five years. The Committee hopes that Native spearmint oil reserve pool inventory will reverse its current trend over the course of the 2016-2017 marketing year and begin to decrease to levels that are deemed optimal for the industry as producers curtail excess production and utilize their reserve pool stock to fill some of their annual allotments.

As mentioned previously, Committee statistics indicate that demand for Far West Native spearmint oil has been slightly increasing in recent years, peaking at 1,390,984 pounds for the full 2014-2015 marketing year, the most recent full marketing year recorded. In addition, recorded sales for June through October of 2015 are running ahead of the same period last year. This trend is expected to continue even as imports of spearmint oil are also rising. Canada has more than doubled shipments of spearmint oil into the U.S. market from 2014 to 2015, and Chinese shipments are up 14 percent over the same period.

The one exception in imports, India, has reduced shipments during the last year. Recent reports used by the Committee indicate that spearmint oil produced in India is improving in quality, yet decreasing in acreage. Indian spearmint oil is increasingly regarded as an alternative to high quality, Far West Native spearmint oil, but production problems have limited importation into the U.S. market. As a result, imports from India, while still in demand, decreased in the past year. However, spearmint oil from India may return as a major threat to the Far West Native spearmint oil industry's domestic market share in the future.

During a recent tour of U.S. end-user companies, the chairperson and Committee staff received input that indicated sales of mint products both domestically and abroad have slowed down. This is largely the result of slowing economies in Europe and Asia. End-users also felt the inventories of Native spearmint oil that they currently have on hand are adequate for the time being. The end-users did indicate that they intend to continue to rely on Far West production as their main source of high quality Native spearmint oil, but such demand may be at lower quantities moving forward in response to current market factors.

As such, spearmint oil handlers, who regularly help predict trade demand for Far West Native spearmint oil, estimate demand to range between 1,000,000 and 1,400,000 pounds (with a weighted average of 1,350,000 pounds) for the upcoming 2016-2017 marketing year. The Committee used the handlers input when it established the estimated 2016-2017 marketing year Native spearmint oil trade demand of 1,275,000 pounds. The estimated carry-in of 142,657 pounds of Native spearmint oil on June 1, 2016, in conjunction with the Committee recommended salable quantity of 1,209,546 pounds, would result in an estimated total available supply of 1,352,203 pounds of Native spearmint oil during the 2016-2017 marketing year. The Committee expects that 77,203 pounds of salable Native spearmint oil will be carried into the 2017-2018 marketing year, a reduction of 65,454 pounds.

Carry-in spearmint oil is distinct from reserve pool spearmint oil and represents the amount of salable spearmint oil produced, but not marketed, in a previous year or years, but is available for sale in the current year under a previous year's annual allotment. It is the primary measure of excess spearmint oil supply under the order as it represents overproduction in prior years that is currently available to the market without restriction. Reserve pool oil, on the other hand, represents the amount of excess spearmint oil production held off the market under marketing order provisions and can only be marketed under certain conditions.

The Committee's stated intent in the use of marketing order volume control regulations for Native spearmint oil is to keep adequate supplies available to meet market needs while maintaining orderly marketing conditions. With that in mind, the Committee developed its recommendation for the proposed Native spearmint oil salable quantity and allotment percentage for the 2016-2017 marketing year based on the information discussed above, as well as the data outlined below.

(A) Estimated carry-in of Native spearmint oil on June 1, 2016: 142,657 pounds. This figure is the difference between the revised 2015-2016 marketing year total available supply of 1,465,990 pounds and the estimated 2015-2016 marketing year trade demand of 1,323,333 pounds.

(B) Estimated trade demand of Native spearmint oil for the 2016-2017 marketing year: 1,275,000 pounds. This estimate was established by the Committee and is based on input from producers at six Native spearmint oil production area meetings held in mid-October 2015, as well as estimates provided by handlers and other meeting participants at the October 21, 2015, meeting. This figure represents a decrease of 31,500 pounds from the previous year's estimate. The average estimated trade demand for Native spearmint oil from the six production area meetings was 1,323,333 pounds, whereas the handlers' estimates ranged from 1,000,000 to 1,400,000 pounds. The average of Far West Native spearmint oil sales over the last three years is 1,340,045 pounds. The Committee chose to be conservative in the establishment of its trade demand estimate to avoid oversupplying the market in the face of increasing production.

(C) Salable quantity of Native spearmint oil needed from the 2016-2017 marketing year production: 1,132,343 pounds. This figure is the difference between the estimated 2016-2017 marketing year estimated trade demand (1,275,000 pounds) and the estimated carry-in on June 1, 2016 (142,657 pounds). This is the minimum amount of Native spearmint oil that the Committee believes would be required to meet the anticipated 2016-2017 marketing year trade demand.

(D) Total estimated allotment base of Native spearmint oil for the 2016-2017 marketing year: 2,419,091 pounds. This figure represents a one-percent increase over the revised 2015-2016 total allotment base of 2,395,140 pounds as prescribed by the order in § 985.53(d)(1). The one-percent increase equals 23,951 pounds of Native spearmint oil. This estimate is generally revised each year on June 1 due to producer base being lost because of the bona fide effort production provisions of § 985.53(e). The revision is usually minimal.

(E) Computed Native spearmint oil allotment percentage for the 2016-2017 marketing year: 46.8 percent. This percentage is calculated by dividing the required salable quantity (1,132,343 pounds) by the total estimated allotment base (2,419,091 pounds) for the 2016-2017 marketing year.

(F) Recommended Native spearmint oil allotment percentage for the 2016-2017 marketing year: 50 percent. This is the Committee's recommendation based on the computed allotment percentage (46.8 percent), the average of the computed allotment percentage figures from the six production area meetings (47.3 percent), and input from producers and handlers at the October 21, 2015, meeting. The recommended 50 percent allotment percentage is also based on the Committee's belief that the computed percentage (46.8 percent) may not adequately supply the potential market for Native spearmint oil in the 2016-2017 marketing year.

(G) Recommended Native spearmint oil 2016-2017 marketing year salable quantity: 1,209,546 pounds. This figure is the product of the recommended allotment percentage (50 percent) and the total estimated allotment base (2,419,091 pounds).

(H) Estimated available supply of Native spearmint oil for the 2016-2017 marketing year: 1,352,203 pounds. This figure is the sum of the 2016-2017 recommended salable quantity (1,209,546 pounds) and the estimated carry-in on June 1, 2016 (142,657 pounds).

The salable quantity is the total quantity of each class of spearmint oil that handlers may purchase from, or handle on behalf of, producers during a marketing year. Each producer is allotted a share of the salable quantity by applying the allotment percentage to the producer's allotment base for the applicable class of spearmint oil.

The Committee's recommended Scotch and Native spearmint oil salable quantities and allotment percentages of 958,711 pounds and 45 percent, and 1,209,546 pounds and 50 percent, respectively, are based on the goal of maintaining market stability. The Committee anticipates that this goal would be achieved by matching the available supply of each class of spearmint oil to the estimated demand of each, thus avoiding extreme fluctuations in inventories and prices.

The salable quantities proposed in this rule are not expected to cause a shortage of spearmint oil supplies. Any unanticipated or additional market demand for spearmint oil which may develop during the marketing year could be satisfied by an intra-seasonal increase in the salable quantity. The order contains a provision in § 985.51 for intra-seasonal increases to allow the Committee the flexibility to respond quickly to changing market conditions.

Under volume regulation, producers who produce more than their annual allotments during the marketing year may transfer such excess spearmint oil to producers who have produced less than their annual allotment. In addition, on December 1 of each year, producers that have not transferred their excess spearmint oil to other producers must place their excess spearmint oil production into the reserve pool to be released in the future in accordance with market needs and under the Committee's direction.

This proposed regulation, if adopted, would be similar to regulations issued in prior seasons. The average initial allotment percentage for the five most recent marketing years for Scotch spearmint oil is 50.4 percent, while the average initial allotment percentage in the same five-year period for Native spearmint oil is 51.4 percent.

Costs to producers and handlers resulting from this rule are expected to be offset by the benefits derived from a more stable market and increased returns. In conjunction with the issuance of this proposed rule, USDA has reviewed the Committee's marketing policy statement for the 2016-2017 marketing year. The Committee's marketing policy statement, a requirement whenever the Committee recommends volume regulation, fully meets the intent of §§ 985.50 985.51 of the order.

During its discussion of potential 2016-2017 salable quantities and allotment percentages, the Committee considered: (1) The estimated quantity of salable oil of each class held by producers and handlers; (2) the estimated demand for each class of oil; (3) the prospective production of each class of oil; (4) the total of allotment bases of each class of oil for the current marketing year and the estimated total of allotment bases of each class for the ensuing marketing year; (5) the quantity of reserve oil, by class, in storage; (6) producer prices of oil, including prices for each class of oil; and (7) general market conditions for each class of oil, including whether the estimated season average price to producers is likely to exceed parity. Conformity with USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” (http://www.ams.usda.gov/publications/content/1982-guidelines-fruit-vegetable-marketing-orders) has also been reviewed and confirmed.

The establishment of the proposed salable quantities and allotment percentages would allow for anticipated market needs. In determining anticipated market needs, the Committee considered historical sales, as well as changes and trends in production and demand. This rule also provides producers with information on the amount of spearmint oil that should be produced for the 2016-2017 season in order to meet anticipated market demand.

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 action 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 businesses 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 eight spearmint oil handlers subject to regulation under the order, approximately 38 producers of Scotch spearmint oil, and approximately 92 producers of Native spearmint oil in the regulated production area. Small agricultural service firms are defined by the Small Business Administration (SBA) as those having annual receipts of less than $7,500,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

Based on the SBA's definition of small entities, the Committee estimates that two of the eight handlers regulated by the order could be considered small entities. Most of the handlers are large corporations involved in the international trading of essential oils and the products of essential oils. In addition, the Committee estimates that 12 of the 38 Scotch spearmint oil producers, and 28 of the 92 Native spearmint oil producers could be classified as small entities under the SBA definition. Thus, a majority of handlers and producers of Far West spearmint oil may not be classified as small entities.

The Far West spearmint oil industry is characterized by producers whose farming operations generally involve more than one commodity, and whose income from farming operations is not exclusively dependent on the production of spearmint oil. A typical spearmint oil producing operation has enough acreage for rotation such that the total acreage required to produce the crop is about one-third spearmint and two-thirds rotational crops. Thus, the typical spearmint oil producer has to have considerably more acreage than is planted to spearmint during any given season. Crop rotation is an essential cultural practice in the production of spearmint oil for purposes of weed, insect, and disease control. To remain economically viable with the added costs associated with spearmint oil production, a majority of spearmint oil producing farms fall into the SBA category of large businesses.

Small spearmint oil producers generally are not as extensively diversified as larger ones and, as such, are more at risk from market fluctuations. Such small producers generally need to market their entire annual production of spearmint oil and are not financially able to hold spearmint oil for sale in future years. In addition, small producers generally do not have a large assortment of other crops to cushion seasons with poor spearmint oil returns.

Conversely, large diversified producers have the potential to endure one or more seasons of poor spearmint oil markets because income from alternate crops could support their operation for a period of time. Reasonable assurance of a stable price and market provides all producing entities with the ability to maintain proper cash flow and to meet annual expenses. The benefits for this rule are expected to be equally available to all producers and handlers regardless of their size.

This proposed rule would establish the quantity of spearmint oil produced in the Far West, by class, which handlers may purchase from, or handle on behalf of, producers during the 2016-2017 marketing year. The Committee recommended this rulemaking to help maintain stability in the spearmint oil market by matching supply to estimated demand, thereby avoiding extreme fluctuations in supplies and prices. Establishing quantities that may be purchased or handled during the marketing year through volume regulations allows producers to coordinate their spearmint oil production with the expected market demand. Authority for this action is provided in §§ 985.50, 985.51, and 985.52 of the order.

Instability in the spearmint oil sub-sector of the mint industry is much more likely to originate on the supply side than the demand side. Fluctuations in yield and acreage planted from season-to-season tend to be larger than fluctuations in the amount purchased by handlers. Historically, demand for spearmint oil tends to change slowly from year to year.

Demand for spearmint oil at the farm level is derived from retail demand for spearmint-flavored products such as chewing gum, toothpaste, and mouthwash. The manufacturers of these products are by far the largest users of spearmint oil. However, spearmint flavoring is generally a very minor component of the products in which it is used, so changes in the raw product price have little impact on the retail prices for those goods.

In 2013, 2014, and 2015, the Committee set salable percentages at levels that resulted in most, if not all, of the spearmint oil production being made available to the market. This was in response to the increased demand for spearmint oil from the Far West due to increased utilization by end-users and the reduced supply of spearmint oil coming from other production areas, both domestic and foreign.

Although there is still strong demand for spearmint oil, competing areas (mainly Canada) have experienced better than expected production in 2015 and will create some marketing pressure for spearmint oil from the Far West. In addition, the slowing of international markets for spearmint flavored products has negatively impacted the demand for domestically produced spearmint oil. Thus, the lower salable quantities and allotment percentages recommended by the Committee for the 2016-2017 marketing year are intended to be responsive to the changing environment of the spearmint oil market.

In the late 1990's, the Committee recommended higher than normal salable percentages in hopes of gaining market share. This approach did not work, and in the following years the salable percentage was reduced in order to work through the excess spearmint oil production and resulting build-up of inventory. In order to avoid a similar scenario moving forward, the Committee, relying heavily on the information provided to them by spearmint oil handlers during the October 21, 2015, meeting, ultimately recommended reducing the 2016-2017 marketing year salable percentages from the previous year to better align the available supply with market demand. The Committee reported that recent producer prices for spearmint oil are $18.00 to $20.00 per pound.

Spearmint oil production tends to be cyclical. Prior to the inception of the marketing order in 1980, extreme variability in producer prices was common. For example, the season average producer price for Washington Native spearmint oil in 1971 was $3.00 per pound. By 1975, the producer price had risen to $11.00 per pound, an increase of over 260% in just four years. Such fluctuations were not unusual in the spearmint oil industry in the years leading up to the promulgation of the order. For most producers, this was an untenable situation. Years of relatively high spearmint oil production, with demand remaining relatively stable, led to periods in which large producer stocks of unsold spearmint oil depressed producer prices. Shortages and high prices followed in subsequent years, as producers responded to price signals by cutting back production.

After establishment of the order, the supply and price variability in the spearmint oil market moderated. During the 20-year period from 1987 to 2006, the season average producer price for Native spearmint oil ranged from a high of $11.10 to a low $9.10 per pound, or a difference of 22 percent. No change in producer price from one year to the next during this period was more than $1.00 per pound. This is a remarkable record of price stability. From 2006 to 2008, prices jumped by $3.80 per pound as contracts tied to input costs were prevalent in the industry. During this time period, prices for fuel, fertilizer, and labor increased dramatically, resulting in higher contracted producer prices, and a resulting concurrent increase in the overall season average producer price for the industry.

The significant variability of the spearmint oil market is illustrated by the fact that the coefficient of variation (a standard measure of variability; “CV”) of Far West spearmint oil producer prices for the period 1980-2014 (when the marketing order was in effect) is 0.23, compared to 0.36 for the decade prior to the promulgation of the order (1970-79) and 0.49 for the prior 20-year period (1960-79). The coefficient of variation, as presented herein, was calculated by USDA from information provided by the Committee and the National Agricultural Statistics Service. This analysis provides an indication of the price stabilizing impact of the marketing order as higher CV values correspond to greater variability.

According to information compiled by the Committee, production in the shortest marketing year since the establishment of the order was about 47 percent of the 34-year average (1.92 million pounds from 1980 through 2014) and the largest crop was approximately 160 percent of the 34-year average. A key consequence is that, in years of oversupply and low prices, the season average producer price of spearmint oil is below the average cost of production (as measured by the Washington State University Cooperative Extension Service).

The wide fluctuations in supply and prices that result from the cyclical nature of the spearmint oil industry, which were even more pronounced before the creation of the order, can create liquidity problems for some producers. The order was designed to reduce the price impacts of the cyclical swings in production. However, producers have been less able to weather these cycles in recent years because of increases to production costs. While prices for spearmint oil have been relatively steady, the cost of production has increased to the extent that plans to plant spearmint may be postponed or vacated indefinitely. Producers may also be enticed by the prices of alternative crops and their lower cost of production.

In an effort to stabilize prices, the spearmint oil industry uses the volume control mechanisms authorized under the order. This authority allows the Committee to recommend a salable quantity and allotment percentage for each class of oil for the upcoming marketing year. The salable quantity for each class of oil is the total volume of oil that producers may sell during the marketing year. The allotment percentage for each class of spearmint oil is derived by dividing the salable quantity by the total allotment base.

Each producer is then issued an annual allotment certificate, in pounds, for the applicable class of oil. This is calculated by multiplying the producer's allotment base by the applicable allotment percentage. This is the amount of oil of each applicable class that the producer can market.

By December 1 of each year, the Committee identifies any oil that individual producers have produced above the volume specified on their annual allotment certificates. Prior to December 1, such excess oil can be transferred to another producer to fill a deficiency in that producer's annual allotment as provided for in § 985.156(a).

The order allows limited quantities of excess oil to be sold by one producer to another producer to fill production deficiencies during a marketing year. A deficiency occurs when on-farm production is less than a producer's annual allotment. When a producer has a deficiency, the producer's own reserve oil can be utilized to fill that deficiency, or excess production (production of spearmint oil in excess of the producer's annual allotment) from another producer may also be secured to fill the deficiency. As mentioned previously, all of these provisions need to be exercised prior to December 1 of each year.

Excess spearmint oil not transferred to another producer to fill a deficiency is held in storage and, on December 1, is added to the reserve pool administered by the Committee pursuant to § 985.157. The Committee maintains the reserve pool for each class of spearmint oil. Once spearmint oil is placed in the reserve pool, such spearmint oil cannot enter the market during that marketing year unless USDA approves a Committee recommendation to increase the salable quantity and allotment percentage for a certain class of oil, subsequently making a portion of the reserve pool of that class of spearmint oil available to the market. Without an increase in the salable quantity and allotment percentage, spearmint oil placed in the reserve pool cannot be removed from the reserve pool and marketed in the marketing year in which it is initially placed in the reserve pool. However, producers may dispose of reserve spearmint oil from their own production, and held in their own account, under certain provisions in subsequent marketing years under the supervision of the Committee.

While the Committee administers the reserve pool of spearmint oil, ownership and physical possession of spearmint oil held in reserve does not transfer to the Committee. The Committee accounts for, and controls the release of, reserve spearmint oil, but does not take title to, or dispose of, any such oil of its own accord. Producers, at their sole discretion, make the decisions regarding the disposition of oil held in the reserve pool under any one of three possible mechanisms. First, producers may utilize reserve oil from their own production to fill intra-seasonal increases in the allotment percentage and salable quantity. Second, producers may fill an ensuing year's annual allotment from spearmint oil held in the reserve pool. Lastly, producers may exchange salable oil of the same class and quantity of reserve oil from their own production to rotate stock, so long as the Committee is properly notified and the oil is properly identified.

In any given year, the total available supply of spearmint oil is composed of current production plus salable carryover stocks from the previous crop. The Committee seeks to maintain market stability by balancing supply and demand, and to close the marketing year with an appropriate level of salable spearmint oil to carry over into the subsequent marketing year. If the industry has production in excess of the salable quantity, the reserve pool absorbs the surplus quantity of spearmint oil, thereby withholding it from the market, unless such oil is needed to fill unanticipated intra-seasonal increases in demand. In this way, excess spearmint oil is not allowed to oversupply the market and create price instability. Likewise, if production is insufficient in any given year to fully supply the market with spearmint oil, the reserve pool oil can be released to satisfy the market demand until production can be increased.

Therefore, under its provisions, the order may attempt to stabilize prices by (1) limiting supply and establishing reserves in high production years, thus minimizing the price-depressing effect that excess producer stocks have on unsold spearmint oil, and (2) ensuring that stocks are available in short supply years when prices would otherwise increase dramatically. Reserve pool stocks, which increase in high production years, are drawn down in years where the crop is short.

An econometric model generated by USDA was used to assess the impact that volume control has on the prices producers receive for their commodity. Without volume control, spearmint oil markets would likely be over-supplied. This could result in low producer prices and a large volume of oil stored and carried over to the next crop year. The model estimates how much lower producer prices would likely be in the absence of volume controls.

The Committee estimated trade demand for the 2016-2017 marketing year for both classes of oil at 2,175,000 pounds, and that the expected combined salable carry-in will be 376,409 pounds. This results in a combined required salable quantity of 1,798,591 pounds (2,175,000 pounds of trade demand less 376,409 pounds of carry-in). Under volume control, total sales of spearmint oil by producers for the 2016-2017 marketing year would be limited to 2,544,666 pounds (the recommended salable quantity for both classes of spearmint oil of 2,168,257 pounds plus 376,409 of carry-in). This total available supply of 2,544,666 pounds should be more than adequate to supply the 2,175,000 pounds of anticipated trade demand for spearmint oil.

The recommended allotment percentages, upon which 2016-2017 producer allotments are based, are 45 percent for Scotch spearmint oil and 50 percent for Native spearmint oil. Without volume controls, producers would not be limited to these allotment levels, and could produce and sell an unrestricted quantity of spearmint oil. The USDA econometric model estimated that the season average producer price per pound (from both classes of spearmint oil) would decline about $1.45 per pound as a result of the higher quantities of spearmint oil that would be produced and marketed without volume control. The surplus situation for the spearmint oil market that would exist without volume controls in 2016-2017 also would likely dampen prospects for improved producer prices in future years because of the buildup in stocks.

The use of volume control allows the industry to fully supply spearmint oil markets while avoiding the negative consequences of over-supplying these markets. The use of volume control is believed to have little or no effect on consumer prices of products containing spearmint oil and would not result in fewer retail sales of such products.

The Committee discussed alternatives to the recommendations contained in this rule for both classes of spearmint oil. The Committee discussed and rejected the idea of not regulating any volume for both classes of spearmint oil because of the severe price-depressing effects that would likely occur without volume control. The alternative to establish salable quantities and allotment percentages at the 2015-2016 marketing year's levels was discussed, but not put to any motion, for both classes of oil. The Committee also considered salable quantities and allotment percentages that were above and below the levels that were ultimately recommended for Scotch spearmint oil. Ultimately, the action taken by the Committee was to decrease the salable quantities and allotment percentages for both Class 1 and Class 3 spearmint oil from the current 2015-2016 marketing year levels.

As noted earlier, the Committee's recommendation to establish salable quantities and allotment percentages for both classes of spearmint oil was made after careful consideration of all available information including: (1) The estimated quantity of salable oil of each class held by producers and handlers; (2) the estimated demand for each class of oil; (3) the prospective production of each class of oil; (4) the total of allotment bases of each class of oil for the current marketing year and the estimated total of allotment bases of each class for the ensuing marketing year; (5) the quantity of reserve oil, by class, in storage; (6) producer prices of oil, including prices for each class of oil; and (7) general market conditions for each class of oil, including whether the estimated season average price to producers is likely to exceed parity.

Based on its review, the Committee believes that the salable quantities and allotment percentages recommended would achieve the objectives sought. The Committee also believes that, should there be no volume regulation in effect for the upcoming marketing year, the Far West spearmint oil industry would return to the pronounced cyclical price patterns that occurred prior to the promulgation of the order. As previously stated, annual salable quantities and allotment percentages have been issued for both classes of spearmint oil since the order's inception. The salable quantities and allotment percentages proposed herein are expected to facilitate the goal of maintaining orderly marketing conditions for Far West spearmint oil for the 2016-2017 and future marketing years.

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. 0581-0178, Specialty Crops Program. No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would establish the salable quantities and allotment percentages for Class 1 (Scotch) spearmint oil and Class 3 (Native) spearmint oil produced in the Far West during the 2016-2017 marketing year. Accordingly, this action would not impose any additional reporting or recordkeeping requirements on either small or large spearmint oil producers or 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 proposed rule.

The Committee's meeting was widely publicized throughout the spearmint oil industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the October 21, 2015, 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.

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

A 15-day comment period is provided to allow interested persons to respond to this proposal. Fifteen days is deemed appropriate because: (1) The 2016-2017 fiscal period begins on June 1, 2016, and a final determination on the salable quantities and allotment percentages should be made prior to handlers purchasing from, or handling on behalf of, producers of any oil for the ensuing marketing year; and (2) handlers are aware of this action, which was recommended by the Committee at a public meeting and is similar to other salable quantities and allotment percentages issued in past years. All written comments timely received will be considered before a final determination is made on this matter.

For the reasons set forth in the preamble, 7 CFR part 985 is proposed to be amended as follows:

I. Obtaining Information and Submitting Comments II. Background; Statutory Authority III. Discussion IV. Regulatory Flexibility Certification V. Regulatory Analysis VI. Backfitting and Issue Finality VII. Plain Writing VIII. National Environmental Policy Act IX. Paperwork Reduction Act

Public Protection Notification

Please refer to Docket ID NRC-2015-0223 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:

• Federal Rulemaking Web site: Go to http://www.regulations.gov and search for Docket ID NRC-2015-0223.

• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection at http://www.nrc.gov/reading-rm/adams.html. To begin the search, select “ADAMS Public Documents” and then select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, 301-415-4737, or by email to [email protected]. The ADAMS accession number for each document referenced in this document (if that document is available in ADAMS) is provided the first time that a document is referenced. For the convenience of the reader, the ADAMS accession numbers are provided in a table in the “Availability of Documents” section of this document.

• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.

Please include Docket ID NRC-2015-0223 in the subject line of your comment submission in order to ensure that the NRC is able to make your comment submission publicly available in this docket.

The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at http://www.regulations.gov as well as entering the comment submissions into ADAMS. The NRC does not routinely edit comment submissions to remove identifying or contact information.

If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.

The NRC's fee regulations are primarily governed by two laws: (1) The Independent Offices Appropriations Act of 1952 (IOAA) (31 U.S.C. 9701), and (2) OBRA-90. The OBRA-90 statute requires the NRC to recover approximately 90 percent of its budget authority through fees; this fee-recovery requirement excludes amounts appropriated for Waste Incidental to Reprocessing, generic homeland security activities, and Inspector General (IG) services for the Defense Nuclear Facilities Safety Board, as well as any amounts appropriated from the Nuclear Waste Fund. The OBRA-90 statute first requires the NRC to use its IOAA authority to collect user fees for NRC work that provides specific benefits to identifiable applicants and licensees (such as licensing work, inspections, special projects). The regulations at part 170 of title 10 of the Code of Federal Regulations (10 CFR) authorize these fees. But, because the NRC's fee recovery under the IOAA (10 CFR part 170) does not equal 90 percent of the NRC's budget authority, the NRC also assesses generic “annual fees” under 10 CFR part 171 to recover the remaining fees necessary to achieve OBRA-90's 90 percent fee recovery. These annual fees recover generic regulatory costs that are not otherwise collected through 10 CFR part 170.

The NRC is issuing the FY 2016 proposed fee rule based on the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), amount of $1,002.1 million, a decrease of $13.2 million from FY 2015. As explained previously, certain portions of the NRC's total budget are excluded from the NRC's fee-recovery amount—specifically, these exclusions include: $1.3 million for waste-incident-to-reprocessing activities, $1.0 million for IG services for the Defense Nuclear Facilities Safety Board, and $18.8 million for generic homeland security activities. Additionally, 10 percent of the NRC's budget is recovered through this congressional appropriation. After accounting for the OBRA-90 exclusions, this 10-percent appropriation and net billing adjustments—i.e., the sum of unpaid current year invoices (estimated) minus payments for prior year invoices and the prior year billing credit issued to the U.S. Department of Energy (DOE) for the transportation fee class—approximately $883.9 million in FY 2016 must be billed as fees to licensees. Of this amount, the NRC estimates that $325.8 million will be recovered through 10 CFR part 170 user fees; that leaves approximately $558.1 million to be recovered through 10 CFR part 171 annual fees. Table I summarizes the fee-recovery amounts for the FY 2016 proposed fee rule using the enacted budget, and taking into account excluded activities, the 10-percent appropriation, and net billing adjustments (individual values may not sum to totals due to rounding).

The NRC uses an hourly rate to assess fees for specific services provided by the NRC under 10 CFR part 170. The hourly rate also helps determine flat fees (which are used for the review of certain types of license applications). The NRC's hourly rate is derived by dividing the sum of recoverable budgeted resources for: (1) Mission-direct program salaries and benefits; (2) mission-indirect program support; and (3) agency support—which includes corporate support, office support (FY 2015 only), and the IG. In FY 2016, the agency eliminated the office support category for budgetary resources. Created in FY 2011, office support included indirect resources that sustained an individual office—such as supervisory, administrative assistant, and other support staff full-time equivalent (FTE) hours. In FY 2015, the agency contracted with consultants EY to provide a study of NRC support costs and budget structure in comparison to other Federal peer agencies. Based on recommendations in this study, starting in FY 2016, resources formerly budgeted in office support have been reclassified into either mission-indirect program support or corporate support, depending upon whether the resources were budgeted in support of a program office or a corporate support office.

The mission-direct FTE hours are the product of the mission-direct FTE multiplied by the estimated annual hours per direct FTE. The only budgeted resources excluded from the hourly rate are those for contract activities related to mission-direct and fee-relief activities. Billable contract activities are included as a separate line item on the 10 CFR part 170 invoice.

For FY 2016, the NRC is proposing to decrease the hourly rate from $268 to $266. The hourly rate decrease is due to a reduced budget and an increase in the estimated direct hours worked per mission-direct FTE during the year. The FY 2016 estimated annual direct hours per staff is 1,440 hours, up from 1,420 hours in FY 2015. Assuming a constant budget, as the FTE hours per staff increases, the hourly rate decreases. Table II shows the hourly rate calculation methodology. The FY 2015 amounts are provided for comparison purposes.

The NRC proposes to amend the flat application fees that it charges to applicants for import and export licenses, applicants for materials licenses and other regulatory services, and holders of materials, import, and export licenses in its schedule of fees in §§ 170.21 and 170.31 to reflect the revised hourly rate of $266. The NRC calculates these flat fees by multiplying the average professional staff hours needed to process the licensing actions by the proposed professional hourly rate for FY 2016. The NRC analyzes the actual hours spent performing licensing actions and then estimates the average professional staff hours that are needed to process licensing actions as part of its biennial review of fees, which is required by Section 902 of the Chief Financial Officers Act of 1990 (31 U.S.C. 902(8)). The NRC performed this review in FY 2015 and will perform this review again in FY 2017. The lower hourly rate of $266 is the primary reason for the decrease in application fees.

The NRC rounds these flat fees in such a way that ensures both convenience for its stakeholders and that any rounding effects are minimal. Accordingly, fees under $1,000 are rounded to the nearest $10, fees between $1,000 and $100,000 are rounded to the nearest $100, and fees greater than $100,000 are rounded to the nearest $1,000.

The proposed licensing flat fees are applicable for import and export licensing actions (see fee categories K.1. through K.5. of § 170.21), as well as certain materials licensing actions (see fee categories 1.C. through 1.D., 2.B. through 2.F., 3.A. through 3.S., 4.B. through 5.A., 6.A. through 9.D., 10.B., 15.A. through 15.L., 15.R., and 16 of § 170.31). Applications filed on or after the effective date of the FY 2016 final fee rule will be subject to the revised fees in the final rule.

As previously noted, Congress provides 10 percent of the NRC's recoverable budget authority through an appropriation. The NRC applies this 10-percent Congressional appropriation to offset certain budgeted activities—please see Table III for a full listing. These activities are referred to as “fee-relief” activities. Any difference between the 10-percent appropriation and the budgeted amount of these fee-relief activities results in a fee adjustment (either an increase or decrease) to all licensees' annual fees, based on their percentage share of the NRC's budget.

In FY 2016, the NRC's budgeted fee-relief activities fall below the 10-percent appropriation threshold—therefore, the NRC proposes to assess a fee-relief adjustment (i.e., credit) to decrease all licensees' annual fees based on their percentage share of the budget. Table III summarizes the fee-relief activities for FY 2016. The FY 2015 amounts are provided for comparison purposes.

Table IV shows how the NRC allocates the -$1.5 million fee-relief adjustment (credit) to each license fee class.

In addition to the fee-relief adjustment, the NRC also assesses a generic LLW surcharge of $3.3 million. The LLW disposal occurs at commercially-operated LLW disposal facilities licensed by either the NRC or the Agreement States. There are three existing low-level waste disposal facilities in the United States that accept various types of low-level waste. All are in Agreement States and, therefore, regulated by the State authority. The NRC allocates this surcharge to its licensees based on data available in DOE's Manifest Information Management System. This database contains information on total LLW volumes and NRC usage information from four generator classes: academic, industry, medical, and utility. The ratio of utility waste volumes to total LLW volumes over a period of time is used to estimate the portion of this surcharge that should be allocated to the power reactors, fuel facilities, and materials fee classes. The materials portion is adjusted to account for the fact that a large percentage of materials licensees are licensed by the Agreement States rather than the NRC.

Table IV shows the surcharge, and its allocation across the various fee classes.

In accordance with SECY-05-0164, “Annual Fee Calculation Method,” dated September 15, 2005 (ADAMS Accession No. ML052580332), the NRC rebaselines its annual fees every year. Rebaselining entails analyzing the budget in detail and then allocating the budgeted costs to various classes or subclasses of licensees. It also includes updating the number of NRC licensees in its fee calculation methodology.

The NRC proposes to revise its annual fees in §§ 171.15 and 171.16 to recover approximately 90 percent of the NRC's FY 2016 budget authority (less non-fee amounts and the estimated amount to be recovered through 10 CFR part 170 fees). The total estimated 10 CFR part 170 collections for this proposed rule total are $325.8 million, an increase of $4.1 million from the FY 2015 fee rule. The NRC, therefore, must recover $558.1 million through annual fees from its licensees, which is a decrease of $8.9 million from the FY 2015 final rule.

Table V shows the rebaselined fees for FY 2016 for a representative list of categories of licensees. The FY 2015 amounts are provided for comparison purposes.

The work papers (ADAMS Accession No. ML16056A437) that support this proposed rule show in detail how the NRC allocated the budgeted resources for each class of licenses and how the fees are calculated. The work papers are available as indicated in Section XIII, “Availability of Documents.”

Paragraphs a. through h. of this section describe budgetary resources allocated to each class of licensees and the calculations of the rebaselined fees. For more information about detailed fee calculations for each class, please consult the accompanying work papers.

The NRC proposes to collect $31.8 million in annual fees from the fuel facility class.

1. The Commission proposes to revise the pro forma Small Generator Interconnection Agreement (SGIA) originally set forth in Order No. 2006 1 and revised in Order No. 792.2 In this Notice of Proposed Rulemaking (NOPR), the Commission proposes to modify the pro forma SGIA pursuant to its authority under section 206 of the Federal Power Act (FPA) to ensure that rates, terms and conditions of jurisdictional service remain just and reasonable and not unduly discriminatory or preferential.3 The proposed modifications would require small generating facilities interconnecting through the SGIA to ride through abnormal frequency and voltage events and not disconnect during such events.4 The Commission intends that the proposed revisions address the Commission's concerns that it would be unduly discriminatory to impose these requirements on large generating facilities and not small generating facilities. The Commission believes that small generating facilities should now have ride through requirements comparable to large generating facilities.5

2. The pro forma SGIA establishes the terms and conditions under which public utilities must provide interconnection service to small generating facilities of no larger than 20 megawatts (MW). Currently, the pro forma SGIA does not mandate that small generating facilities must ride through voltage or frequency disturbances.

3. The Commission has previously evaluated whether small generating facilities should be subject to these requirements. In Order No. 2006, the Commission explored whether voltage ride through requirements proposed for large wind generating facilities should apply to small generating facilities.6 While a commenter asked the Commission to implement standards for small generating facilities that are similar to those proposed for large generating facilities, other commenters responded that special capabilities, such as low voltage ride through, were not needed for any small generating facility. The Commission concluded that generating facilities interconnecting under Order No. 2006 would be small and would have minimal impact on the transmission provider's electric system and, therefore, need not be subject to ride through requirements.7

4. The Commission again addressed these requirements with regard to small generating facilities in Order No. 792. In that proceeding, the Commission proposed to revise section 1.5.4 of the pro forma SGIA to address the reliability concern related to automatic disconnection of small generating facilities during over- and under-frequency events that could become a matter of concern at high penetrations of distributed energy resources.8 The proposed revisions to section 1.5.4 would have required the interconnection customer to design, install, maintain, and operate its small generating facility, in accordance with the latest version of the applicable standards to prevent automatic disconnection during over- and under-frequency events.9

5. The Commission declined to adopt this proposed revision in Order No. 792.10 Instead, the Commission recognized that Institute of Electrical and Electronics Engineers (IEEE) was, at the time, in the process of amending IEEE Standard 1547, which is an interconnection standard that is referenced in the Small Generator Interconnection Procedures.11 The Commission also noted that IEEE was about to begin a full IEEE Standard 1547 revision process in 2014, where frequency and voltage ride through requirements in the standard were to be evaluated. The Commission concluded that it would continue to monitor the IEEE Standard 1547 revision process and could revise the pro forma SGIA as it relates to IEEE Standard 1547 in the future, if necessary.12

6. Since the Commission issued Order No. 792, IEEE has completed a partial revision of IEEE Standard 1547, which is IEEE Standard 1547a. IEEE is also in the process of fully revising IEEE Standard 1547. IEEE Standard 1547a permits generating facilities to have wider trip setting compared with IEEE Standard 1547. However, IEEE Standard 1547a includes permissive—and not mandatory—ride through requirements.13

7. Following the Commission's evaluations of the need for ride through requirements for small generating facilities, the impact of small generating facilities on the grid has changed, and the amount has increased. For example, NERC has noted in multiple reports, the mix of generation resources is changing and the high penetration of distributed energy resources will impact the reliability of the electric grid if sufficient care is not taken to mitigate potential adverse impacts.14 NERC also has found that a lack of coordination between small generating facilities and NERC Reliability Standards can lead to events where system load imbalance may increase during frequency excursions or voltage deviations due to the disconnection of distributed energy resources, which may exacerbate a disturbance on the Bulk-Power System.15 In addition, the Commission has observed the growth in grid-connected solar photovoltaic generation since the issuance of Order No. 2006 and the growth in small generator interconnection requests driven by state renewable portfolio standards.16 Moreover, technology now available to newly interconnecting small generating facilities, such as smart inverters, permits the capability to ride through frequency and voltage disturbances.17

8. Conditions have changed since the Commission last evaluated whether to impose ride through requirements on small generating facilities.18 IEEE has revised its standards, and IEEE Standard 1547a now provides wider trip settings that give small generating facilities greater ability to ride through disturbances.19 In addition, distributed energy resources have had an increasing presence and impact on the electric system. The absence of ride through requirements for small generating facilities increases the risk that an initial voltage or frequency disturbance may cause a significant number of small generating facilities to trip across a particular area or Interconnection. Moreover, the Commission is concerned that small generating facilities, in the aggregate or in significant combination, could exacerbate an initial disturbance by tripping off-line instead of riding through a disturbance. Large generating facilities are already subject to ride through requirements to avoid these types of occurrences. Given the changes in conditions described above, we now conclude there is reason to subject small generating facilities to ride through requirements. For these reasons, the Commission preliminarily concludes that the lack of ride through requirements is unduly discriminatory or preferential for small generating facilities.

9. The Commission acknowledges that some areas have a greater penetration of distributed resources than others at this time. Nevertheless, the Commission believes that the proposed reforms to the pro forma SGIA are appropriate on an industry-wide basis now. The issue regarding small generating facilities the Commission seeks to address in this NOPR is expected to increase over time, and it is appropriate for the Commission to act on an industry-wide basis now to ensure effective protections and to avoid possible increased costs that may result from applying the rule on a different basis.20

10. The Commission affirms that this NOPR is not intended to interfere with state interconnection procedures or agreements in any way. The pro forma SGIA applies only to interconnections made subject to a jurisdictional open access transmission tariff (OATT) for the purposes of jurisdictional wholesale sales. Similar to the approach in Order Nos. 2006 and 792, the Commission hopes that any changes to the pro forma SGIA resulting from this NOPR will be helpful to states when updating their own interconnection rules, but the states are under no obligation to adopt the provisions of the Commission's proposal.21

Any final order will be published in the Federal Register and may not be effective prior to April 22, 2016.

The Drug Enforcement Administration (DEA) implements and enforces titles II and III of the Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended. 21 U.S.C. 801-971. Titles II and III are referred to as the “Controlled Substances Act” and the “Controlled Substances Import and Export Act,” respectively, and are collectively referred to as the “Controlled Substances Act” or the “CSA” for the purpose of this action. The DEA publishes the implementing regulations for these statutes in title 21 of the Code of Federal Regulations (CFR), chapter II. The CSA and its implementing regulations are designed to prevent, detect, and eliminate the diversion of controlled substances and listed chemicals into the illicit market while providing for the legitimate medical, scientific, research, and industrial needs of the United States. Controlled substances have the potential for abuse and dependence and are controlled to protect the public health and safety.

Under the CSA, each controlled substance is classified into one of five schedules based upon its potential for abuse, its currently accepted medical use in treatment in the United States, and the degree of dependence the drug or other substance may cause. 21 U.S.C. 812. The initial schedules of controlled substances established by Congress are found at 21 U.S.C. 812(c), and the current list of all scheduled substances is published at 21 CFR part 1308.

Section 201 of the CSA, 21 U.S.C. 811, provides the Attorney General with the authority to temporarily place a substance into schedule I of the CSA for two years without regard to the requirements of 21 U.S.C. 811(b) if she finds that such action is necessary to avoid imminent hazard to the public safety. 21 U.S.C. 811(h)(1). In addition, if proceedings to control a substance are initiated under 21 U.S.C. 811(a)(1), the Attorney General may extend the temporary scheduling for up to one year. 21 U.S.C. 811(h)(2).

Where the necessary findings are made, a substance may be temporarily scheduled if it is not listed in any other schedule under section 202 of the CSA, 21 U.S.C. 812, or if there is no exemption or approval in effect for the substance under section 505 of the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 355. 21 U.S.C. 811(h)(1). The Attorney General has delegated scheduling authority under 21 U.S.C. 811 to the Administrator of the DEA. 28 CFR 0.100.

Section 201(h)(4) of the CSA, 21 U.S.C. 811(h)(4), requires the Administrator to notify the Secretary of the Department of Health and Human Services (HHS) of his intention to temporarily place a substance into schedule I of the CSA.1 The Administrator transmitted notice of his intent to place butyryl fentanyl and beta-hydroxythiofentanyl in schedule I on a temporary basis to the Assistant Secretary by letter dated December 21, 2015 (received by the HHS on December 23, 2015). The Assistant Secretary responded to this notice by letter dated January 13, 2016, and advised that based on review by the Food and Drug Administration (FDA), there are currently no investigational new drug applications or approved new drug applications for butryl fentanyl or beta-hydroxythiofentanyl. The Assistant Secretary also stated that the HHS has no objection to the temporary placement of butryl fentanyl or beta-hydroxythiofentanyl into schedule I of the CSA. Neither butryl fentanyl nor beta-hydroxythiofentanyl are currently listed in any schedule under the CSA, and no exemptions or approvals are in effect for butryl fentanyl or beta-hydroxythiofentanyl under section 505 of the FDCA, 21 U.S.C. 355. The DEA has found that the control of butryl fentanyl and beta-hydroxythiofentanyl in schedule I on a temporary basis are necessary to avoid an imminent hazard to public safety.

To find that placing a substance temporarily into schedule I of the CSA is necessary to avoid an imminent hazard to the public safety, the Administrator is required to consider three of the eight factors set forth in section 201(c) of the CSA, 21 U.S.C. 811(c): The substance's history and current pattern of abuse; the scope, duration and significance of abuse; and what, if any, risk there is to the public health. 21 U.S.C. 811(h)(3). Consideration of these factors includes actual abuse, diversion from legitimate channels, and clandestine importation, manufacture, or distribution. 21 U.S.C. 811(h)(3).

A substance meeting the statutory requirements for temporary scheduling may only be placed in schedule I. 21 U.S.C. 811(h)(1). Substances in schedule I are those that have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. 21 U.S.C. 812(b)(1).

Available data and information for butyryl fentanyl and beta-hydroxythiofentanyl, summarized below, indicate that these synthetic opioid substances have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. The DEA's three-factor analysis is available in its entirety under of the public docket of this action as a supporting document at www.regulations.gov under Docket Number DEA-434.

Clandestinely produced substances structurally related to the schedule II opioid analgesic fentanyl were trafficked and abused on the West Coast in the late 1970s and 1980s. These clandestinely produced fentanyl-like substances were commonly known as designer drugs, and recently there has been a reemergence in the trafficking and abuse of designer drug substances, including fentanyl-like substances. Alpha-methylfentanyl, the first fentanyl analogue identified in California, was placed into schedule I of the CSA in September 1981. 46 FR 46799. Following the control of alpha-methylfentanyl, the DEA identified several other fentanyl analogues (3-methylthiofentanyl, acetyl-alpha-methylfentanyl, beta-hydroxy-3-methylfentanyl, alpha-methylthiofentanyl, thiofentanyl, beta-hydroxyfentanyl, para-fluorofentanyl, and 3-methylfentanyl) in submissions to forensic laboratories. These substances were temporarily controlled under schedule I of the CSA after finding that they posed an imminent hazard to public safety and were subsequently permanently placed in schedule I of the CSA. On July 17, 2015, acetyl fentanyl was temporarily controlled under schedule I of the CSA after a finding by the Administrator that it posed an imminent hazard to public safety. 80 FR 42381.

Prior to October 1, 2014, the System to Retrieve Information from Drug Evidence (STRIDE) collected the results of drug evidence analyzed at DEA laboratories and reflected evidence submitted by the DEA, other federal law enforcement agencies, and some local law enforcement agencies. STRIDE data were queried through September 30, 2014, by date submitted to federal forensic laboratories. Since October 1, 2014, STARLiMS (a web-based, commercial laboratory information management system) has replaced STRIDE as the DEA laboratory drug evidence data system of record. DEA laboratory data submitted after September 30, 2014, are reposited in STARLiMS. Data from STRIDE and STARLiMS were queried on December 21, 2015. The National Forensic Laboratory Information System (NFLIS) is a program of the DEA that collects drug identification results from drug cases analyzed by other federal, state, and local forensic laboratories. NFLIS reports from other federal, state, and local forensic laboratories were queried on December 22, 2015.2

The first laboratory submission of butyryl fentanyl was recorded in Kansas in March 2014 according to NFLIS. STRIDE, STARLiMS and NFLIS registered seven reports containing butyryl fentanyl in 2014 in Illinois, Kansas, Minnesota, and Pennsylvania; 81 reports of butyryl fentanyl were recorded in 2015 in California, Connecticut, Florida, Indiana, North Dakota, New York, Ohio, Oregon, Tennessee, Virginia, and Wisconsin. A total of three reports of beta-hydroxythiofentanyl were recorded by STARLiMS, all of which were reported in 2015 from Florida. To date, beta-hydroxythiofentanyl has not been reported in NFLIS; however, this substance was identified in June 2015 by a forensic laboratory in Oregon.

Evidence also suggests that the pattern of abuse of fentanyl analogues, including butyryl fentanyl and beta-hydroxythiofentanyl, parallels that of heroin and prescription opioid analgesics. Seizures of butyryl fentanyl have been encountered in tablet and powder form. Butyryl fentanyl was identified on bottle caps and spoons and residue was detected within glassine bags, on digital scales, and on sifters which demonstrates the abuse of this substance as a replacement for heroin or other opioids, either knowingly or unknowingly. Butyryl fentanyl has been encountered as a single substance as well as in combination with other illicit substances, such as acetyl fentanyl, heroin, cocaine, or methamphetamine. Like butyryl fentanyl, beta-hydroxythiofentanyl has been encountered in both tablet and powder form. Both butyryl fentanyl and beta-hydroxythiofentanyl have caused fatal overdoses, in which intravenous routes of administration are documented.

The DEA is currently aware of at least 40 confirmed fatalities associated with butyryl fentanyl and 7 confirmed fatalities associated with beta-hydroxythiofentanyl. The information on these deaths occurring in 2015 was collected from toxicology and medical examiner reports and was reported from four states—Florida (7, beta-hydroxythiofentanyl), Maryland (1, butyryl fentanyl), New York (38, butyryl fentanyl), and Oregon (1, butyryl fentanyl). STRIDE, STARLiMS, and NFLIS have a total of 88 drug reports in which butyryl fentanyl was identified in drug exhibits submitted in 2014 and 2015 from California, Connecticut, Florida, Illinois, Indiana, Kansas, Minnesota, North Dakota, New York, Ohio, Oregon, Pennsylvania, Tennessee, Virginia, and Wisconsin. STARLiMS has a total of three drug reports in which beta-hydroxythiofentanyl was identified in drug exhibits submitted in 2015 from Florida. It is likely that the prevalence of butyryl fentanyl and beta-hydroxythiofentanyl in opioid analgesic-related emergency room admissions and deaths is underreported as standard immunoassays cannot differentiate these substances from fentanyl.

The population likely to abuse butyryl fentanyl and beta-hydroxythiofentanyl overlaps with the populations abusing prescription opioid analgesics and heroin. This is evidenced by the routes of administration and drug use history documented in butyryl fentanyl and beta-hydroxythiofentanyl fatal overdose cases. Because abusers of these fentanyl analogues are likely to obtain these substances through illicit sources, the identity, purity, and quantity is uncertain and inconsistent, thus posing significant adverse health risks to abusers of butyryl fentanyl and beta-hydroxythiofentanyl. Individuals who initiate (i.e. use an illicit drug for the first time) butyryl fentanyl or beta-hydroxythiofentanyl abuse are likely to be at risk of developing substance use disorder, overdose, and death similar to that of other opioid analgesics (e.g., fentanyl, morphine, etc.).

Butyryl fentanyl and beta-hydroxythiofentanyl exhibit pharmacological profiles similar to that of fentanyl and other mu-opioid receptor agonists. Due to limited scientific data, their potency and toxicity are not known; however, the toxic effects of both butyryl fentanyl and beta-hydroxythiofentanyl in humans are demonstrated by overdose fatalities involving these substances. Abusers of these fentanyl analogues may not know the origin, identity, or purity of these substances, thus posing significant adverse health risks when compared to abuse of pharmaceutical preparations of opioid analgesics, such as morphine and oxycodone.

Based on the documented case reports of overdose fatalities, the abuse of butyryl fentanyl and beta-hydroxythiofentanyl leads to the same qualitative public health risks as heroin, fentanyl and other opioid analgesic substances. The public health risks attendant to the abuse of heroin and opioid analgesics are well established and have resulted in large numbers of drug treatment admissions, emergency department visits, and fatal overdoses.

Butyryl fentanyl and beta-hydroxythiofentanyl have been associated with numerous fatalities. At least 40 confirmed overdose deaths involving butyryl fentanyl abuse have been reported in Maryland (1), New York (38), and Oregon (1) in 2015. At least seven confirmed overdose fatalities involving beta-hydroxythiofentanyl have been reported in Florida in 2015. This indicates that both butyryl fentanyl and beta-hydroxythiofentanyl pose an imminent hazard to the public safety.

In accordance with 21 U.S.C. 811(h)(3), based on the available data and information, summarized above, the continued uncontrolled manufacture, distribution, reverse distribution, importation, exportation, conduct of research and chemical analysis, possession, and abuse of butyryl fentanyl and beta-hydroxythiofentanyl pose an imminent hazard to the public safety. The DEA is not aware of any currently accepted medical uses for these substances in the United States. A substance meeting the statutory requirements for temporary scheduling, 21 U.S.C. 811(h)(1), may only be placed in schedule I. Substances in schedule I are those that have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. Available data and information for butyryl fentanyl and beta-hydroxythiofentanyl indicate that these substances have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. As required by section 201(h)(4) of the CSA, 21 U.S.C. 811(h)(4), the Administrator, through a letter dated December 21, 2015, notified the Assistant Secretary of the DEA's intention to temporarily place this substance in schedule I.

This notice of intent initiates an expedited temporary scheduling action and provides the 30-day notice pursuant to section 201(h) of the CSA, 21 U.S.C. 811(h). In accordance with the provisions of section 201(h) of the CSA, 21 U.S.C. 811(h), the Administrator considered available data and information, herein set forth the grounds for his determination that it is necessary to temporarily schedule butyryl fentanyl and beta-hydroxythiofentanyl in schedule I of the CSA, and finds that placement of these opioid substances into schedule I of the CSA is necessary in order to avoid an imminent hazard to the public safety.

Because the Administrator hereby finds that it is necessary to temporarily place these synthetic opioids into schedule I to avoid an imminent hazard to the public safety, any subsequent final order temporarily scheduling these substances will be effective on the date of publication in the Federal Register, and will be in effect for a period of two years, with a possible extension of one additional year, pending completion of the regular (permanent) scheduling process. 21 U.S.C. 811(h)(1) and (2). It is the intention of the Administrator to issue such a final order as soon as possible after the expiration of 30 days from the date of publication of this notice. Butyryl fentanyl and beta-hydroxythiofentanyl will then be subject to the regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, importation, exportation, research, conduct of instructional activities and chemical analysis, and possession of a schedule I controlled substance.

The CSA sets forth specific criteria for scheduling a drug or other substance. Regular scheduling actions in accordance with 21 U.S.C. 811(a) are subject to formal rulemaking procedures done “on the record after opportunity for a hearing” conducted pursuant to the provisions of 5 U.S.C. 556 and 557. 21 U.S.C. 811. The regular scheduling process of formal rulemaking affords interested parties with appropriate process and the government with any additional relevant information needed to make a determination. Final decisions that conclude the regular scheduling process of formal rulemaking are subject to judicial review. 21 U.S.C. 877. Temporary scheduling orders are not subject to judicial review. 21 U.S.C. 811(h)(6).

Section 201(h) of the CSA, 21 U.S.C. 811(h), provides for an expedited temporary scheduling action where such action is necessary to avoid an imminent hazard to the public safety. As provided in this subsection, the Attorney General may, by order, schedule a substance in schedule I on a temporary basis. Such an order may not be issued before the expiration of 30 days from (1) the publication of a notice in the Federal Register of the intention to issue such order and the grounds upon which such order is to be issued, and (2) the date that notice of the proposed temporary scheduling order is transmitted to the Assistant Secretary of HHS. 21 U.S.C. 811(h)(1).

Inasmuch as section 201(h) of the CSA directs that temporary scheduling actions be issued by order and sets forth the procedures by which such orders are to be issued, the DEA believes that the notice and comment requirements of section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553, do not apply to this notice of intent. In the alternative, even assuming that this notice of intent might be subject to section 553 of the APA, the Administrator finds that there is good cause to forgo the notice and comment requirements of section 553, as any further delays in the process for issuance of temporary scheduling orders would be impracticable and contrary to the public interest in view of the manifest urgency to avoid an imminent hazard to the public safety.

Although the DEA believes this notice of intent to issue a temporary scheduling order is not subject to the notice and comment requirements of section 553 of the APA, the DEA notes that in accordance with 21 U.S.C. 811(h)(4), the Administrator will take into consideration any comments submitted by the Assistant Secretary with regard to the proposed temporary scheduling order.

Further, the DEA believes that this temporary scheduling action is not a “rule” as defined by 5 U.S.C. 601(2), and, accordingly, is not subject to the requirements of the Regulatory Flexibility Act (RFA). The requirements for the preparation of an initial regulatory flexibility analysis in 5 U.S.C. 603(a) are not applicable where, as here, the DEA is not required by section 553 of the APA or any other law to publish a general notice of proposed rulemaking.

Additionally, this action is not a significant regulatory action as defined by Executive Order 12866 (Regulatory Planning and Review), section 3(f), and, accordingly, this action has not been reviewed by the Office of Management and Budget (OMB).

This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132 (Federalism) it is determined that this action does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

For the reasons set out above, the DEA proposes to amend 21 CFR part 1308 as follows:

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background, Purpose, and Legal Basis

On January 30, 2016, Super Boat International Productions, Inc. notified the Coast Guard that it will be conducting a series of high speed boat races in the Atlantic Ocean, offshore from Cocoa Beach, FL on May 15, 2016 from 10 a.m. to 5 p.m. The COTP Jacksonville has determined that the potential hazards associated with high speed boat races necessitate the establishment of a special local regulation.

The purpose of this rulemaking is to ensure the safety of life on the navigable waters of the United States by prohibiting all vessels and persons not participating in the event from entering the regulated area. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1233.

The COTP proposes to establish a special local regulation for the Space Coast Super Boat Grand Prix, a series of high-speed boat races. The regulated area includes the waters of the Atlantic Ocean offshore from Cocoa Beach, Florida and will be enforced daily from 10 a.m. to 5 p.m., on May 15, 2016. Approximately 30 high-speed boats are anticipated to participate in the races. The regulated area would encompass an offshore area that is approximately two and a half nautical miles long by a half nautical mile wide. No vessel or person would be permitted to enter the regulated area without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget.

The Coast Guard has determined that this NPRM is not a significant regulatory action for the following reasons: (1) The special local regulation would be enforced for a total of only seven hours; (2) although persons and vessels would not be able to enter, transit through, anchor in, or remain within the regulated area without authorization from the COTP Jacksonville or a designated representative, they would be able to operate in the surrounding area during the enforcement period; (3) persons and vessels would still be able to enter, transit through, anchor in, or remain within the regulated area if authorized by the COTP Jacksonville or a designated representative; and (4) the Coast Guard would provide advance notification of the special local regulation to the local maritime community via Broadcast Notice to Mariners or by on-scene designated representative.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit through the regulated area may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a special local regulation that would prohibit persons and vessels from transiting through an offshore area that is approximately two and a half nautical miles long by a half nautical mile wide during a one day racing event lasting seven hours. Normally such actions are categorically excluded from further review under paragraph 34(h) of Figure 2-1 of Commandant Instruction M16475.lD. A preliminary environmental analysis checklist and Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

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

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, you may review a Privacy Act notice regarding the Federal Docket Management System in the March 24, 2005, issue of the Federal Register (70 FR 15086).

Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that Web site's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 100 as follows:

Invitation to Comment: We invite you to submit comments regarding this notice. To ensure that your comments have maximum effect in developing the notice of final priority and requirements, we urge you to identify clearly the specific section of the proposed priority or requirement that each comment addresses.

We invite you to assist us in complying with the specific requirements of Executive Orders 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from this proposed priority and these proposed requirements. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program.

During and after the comment period, you may inspect all public comments about this notice in Room 5163, 550 12th Street SW., Potomac Center Plaza, Washington, DC, between the hours of 8:30 a.m. and 4:00 p.m., Washington, DC time, Monday through Friday of each week except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the Rulemaking Record: On request, we will provide an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for this notice. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT.

Purpose of Program: The purpose of the Technical Assistance on State Data Collection program is to improve the capacity of States to meet the Individuals with Disabilities Education Act (IDEA) data collection and reporting requirements. Funding for the program is authorized under section 611(c)(1) of IDEA, which gives the Secretary the authority to reserve funds appropriated under Part B of the IDEA to provide technical assistance activities authorized under section 616(i) of IDEA. Section 616(i) of IDEA requires the Secretary to review the data collection and analysis capacity of States to ensure that data and information determined necessary for implementation of IDEA section 616 are collected, analyzed, and accurately reported to the Secretary. It also requires the Secretary to provide technical assistance, where needed, to improve the capacity of States to meet the data collection requirements under IDEA Parts B and C, which include the data collection and reporting requirements in sections 616 and 618 of IDEA.

Program Authority: 20 U.S.C. 1411(c) and 1416(i).

Applicable Program Regulations: 34 CFR 300.702.

Proposed Priority:

This notice contains one proposed priority.

Background:

One essential part of successfully educating students is assessing their progress in learning to high standards. Done well and thoughtfully, assessments are tools for learning and promoting equity. They provide necessary information for educators, families, the public, and students themselves to measure progress and improve outcomes for all learners.

Section 612(a)(16) of the IDEA requires that all students with disabilities are included in all general State and districtwide assessments, including assessments described under section 1111 of the Elementary and Secondary Education Act of 1965 (ESEA), with appropriate accommodations and alternate assessments where necessary and as indicated in their respective individualized education programs. In accordance with Federal law, there are multiple ways for students with disabilities to participate in State and districtwide assessments: General assessments, general assessments with accommodations, alternate assessments that are based on alternate academic achievement standards for students with the most significant cognitive disabilities, and alternate assessments that are based on grade-level academic achievement standards. (For additional information, see section 1111 of the ESEA.)

Further, research shows that (1) instruction for students with disabilities is increasingly aligned with State academic content standards, (2) State and districtwide assessment data are more frequently used to make educational decisions for these students, and (3) participating in State and districtwide assessments and being included in accountability systems may have positive effects on educational results for students with disabilities (Aron & Loprest, 2012; Courtade, Spooner, & Browder, 2012; Kurz, Elliott, Lemons, Zigmond, Kloo, & Kettler, 2014). However, teachers cannot simply wait until the results of State and districtwide assessments are made available to make educational decisions. In addition to analyzing results from State (typically summative) assessments, formative assessments are increasingly being used before, during, and after instruction to help teachers understand their students' learning and improve their own instructional practices (Conderman & Hedin, 2012).

Despite the progress State educational agencies (SEAs) and local educational agencies (LEAs) have made in including students with disabilities in assessments and accountability systems, SEAs and LEAs continue to face challenges. These challenges include integrating data from dissimilar tests (e.g., general, accommodated, and alternate) into a single accountability system, developing consistent SEA and LEA policies on assessment accommodations that provide maximum accessibility while maintaining test reliability and validity, and analyzing and using formative and summative assessment data to improve instruction and accountability for students with disabilities.

In addition, one of the most complex challenges faced by SEAs and LEAs is developing and administering English language proficiency (ELP) assessments to students who are both ELs and students with disabilities (U.S. Department of Education, 2014). Properly identifying these students is also a significant challenge if their disabilities are masked by their limited English proficiency, or vice versa. Improper identification may lead to inappropriate instruction, assessment, and accommodation for these students. Linguistic and cultural biases may also affect the validity of assessment for ELs with disabilities (Lane & Leventhal, 2015).

Finally, the Department notes that in many schools, there may be unnecessary testing and insufficient clarity of purpose applied to the task of assessing students, including students with disabilities, consuming too much instructional time and creating undue stress for educators and students. (For more information, see the Department's February 2nd, 2016, letter to Chief State School Officers available at: http://www2.ed.gov/admins/lead/account/saa/16-0002signedcsso222016ltr.pdf.)

These and other complex challenges will continue to arise in this dynamic landscape as States adopt college- and career-ready academic content standards and develop new, valid, more instructionally useful and inclusive assessments aligned to these standards.

Developing these new assessments has been challenging and time-consuming, and States must continue to ensure that all students with disabilities can fully participate in State and districtwide assessments. States and LEAs will also need support in identifying and implementing evidence-based practices for effectively including children with disabilities in State and districtwide assessments. Moreover, evidence-based methods for analyzing and effectively using State and districtwide assessment data to improve instruction and accountability for students with disabilities will continue to need further development and refinement.

Accordingly, we propose a priority in this notice that will be utilized in a competition to fund a Center to support SEAs and LEAs in analyzing and effectively using assessment data to improve results for children with disabilities. Under the proposed priority in this notice, as part of the Technical Assistance on State Data Collection program, the Center will (1) assist States in analyzing and using assessment data to better achieve the State Identifiable Measurable Result(s) (SIMR), which were described in their IDEA Part B State Systemic Improvement Plans (SSIPs) that were developed in accordance with section 616(b) of IDEA and OSEP guidance on Indicator B-17 of the Federal Fiscal Year (FFY) 2013 through FFY 2018 IDEA Part B State Performance Plan/Annual Performance Report (SPP/APR); 2 and (2) assist State efforts to provide TA to LEAs in analyzing and using assessment data to support achievement of the SIMR, as appropriate.

In addition to the priority we are proposing in this notice, we plan to establish in the applicable notice inviting applications an additional priority under the Technical Assistance and Dissemination to Improve Services and Results for Children with Disabilities program that will support the Center. This additional priority is from allowable activities specified or otherwise authorized in sections 663 and 681(d) of the IDEA (20 U.S.C. 1463 and 1481(d)). Under section 681(d) of the IDEA, the Secretary may, without regard to rulemaking, fund activities under the Technical Assistance and Dissemination to Improve Services and Results for Children with Disabilities program. Therefore, we are not proposing that priority in this notice. However, because we plan to use the additional priority to support the Center, in connection with the priority under the Technical Assistance on State Data Collection program and requirements we propose in this notice, we believe comments on the priority and requirements proposed in this notice may be informed by including relevant portions of the text of this additional priority. An abbreviated version of that additional priority is included in Appendix 1 to this notice. The complete priority will be issued at a later date.

The priority we are proposing in this notice is:

Proposed Priority: Technical Assistance to States on the Analysis and Use of Assessment Data To Support Achievement of the State Identified Measurable Result(s).

The purpose of the priority we are proposing in this notice is to assist States in analyzing and using assessment data to support the achievement of the SIMR as described in their SSIP. [This proposed priority is authorized under sections 611(c) and 616(i) of the IDEA (20 U.S.C. 1411(c) and 1416(i)).]

As detailed earlier in the background section, research indicates that SEAs and LEAs continue to face challenges in analyzing and using assessment data to improve instruction and accountability for students with disabilities. SEAs also need assistance analyzing State assessment data to better achieve their SIMRs. Beginning in FFY 2013, States were required to provide, as part of Phase I of the SSIP, a statement of the result(s) the State intends to achieve through implementation of the SSIP, which is referred to as the SIMR for children with disabilities. The State must establish “measurable and rigorous” targets for each successive year of the SPP/APR (FFYs 2014 through 2018). The end target (for FFY 2018) must demonstrate improvement over the FFY 2013 baseline data. At least 42 States have focused their IDEA Part B SIMR on improving academic achievement as measured by assessment results for children with disabilities. These States will need assistance in analyzing and using State assessment data to promote academic achievement and to improve results for children with disabilities.

Proposed Priority:

The purpose of this priority is to (1) assist States in analyzing and using assessment data to better achieve the SIMR as described in their IDEA Part B SSIPs, and (2) assist State efforts to provide technical assistance (TA) to LEAs in analyzing and using State and districtwide assessment data to better achieve the SIMR, as appropriate. The Center must achieve, at a minimum, the following expected outcomes:

(a) Increased capacity of SEA personnel to analyze and use assessment data to better achieve the SIMR described in the IDEA Part B SSIP, including the uses of assessment data to evaluate and improve educational policy, inform instructional programs and improve instruction for students with disabilities; and

(b) Increased capacity of SEA personnel to provide TA to LEAs in the analysis and use of State and districtwide assessment data to improve instruction of students with disabilities and better achieve the SIMR.

Types of Priorities:

When inviting applications for a competition using one or more priorities, we designate the type of each priority as absolute, competitive preference, or invitational through a notice in the Federal Register. The effect of each type of priority follows:

Absolute priority: Under an absolute priority, we consider only applications that meet the priority (34 CFR 75.105(c)(3)).

Competitive preference priority: Under a competitive preference priority, we give competitive preference to an application by (1) awarding additional points, depending on the extent to which the application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) selecting an application that meets the priority over an application of comparable merit that does not meet the priority (34 CFR 75.105(c)(2)(ii)).

Invitational priority: Under an invitational priority, we are particularly interested in applications that meet the priority. However, we do not give an application that meets the priority a preference over other applications (34 CFR 75.105(c)(1)).

Background:

In addition to the programmatic requirements contained in the proposed priority in this notice and the additional priority included in Appendix 1, to be considered for funding applicants must meet the following requirements.

Proposed Requirements:

The Assistant Secretary proposes the following requirements for this program. We may apply these requirements in any year in which this program is in effect.

Applications that:

(a) Demonstrate, in the narrative section of the application under “Significance of the Project,” how the proposed project will—

(1) Address the needs of SEAs and LEAs to analyze and use State and districtwide assessment data in instructional decision-making to improve teaching and learning for students with disabilities. To meet this requirement the applicant must—

(i) Present applicable national, State, and local data demonstrating the needs of SEAs and LEAs to analyze and use State and districtwide assessment data in instructional decision-making to improve teaching and learning for students with disabilities;

(ii) Demonstrate knowledge of current educational issues and policy initiatives about analyzing and using assessment data in instructional decision-making to improve teaching and learning for students with disabilities; and

(iii) Describe the level at which SEAs and LEAs currently analyze and use State and districtwide assessment data in instructional decision-making to improve teaching and learning for students with disabilities.

(2) Improve the analysis and use of assessment data to improve teaching and learning for students with disabilities.

(b) Demonstrate, in the narrative section of the application under “Quality of the Project Services,” how the proposed project will—

(1) Ensure equal access and treatment for members of groups that have traditionally been underrepresented based on race, color, national origin, gender, age, or disability. To meet this requirement, the applicant must describe how it will—

(i) Identify the needs of the intended recipients for technical assistance (TA) and information; and

(ii) Ensure that products and services meet the needs of the intended recipients (e.g., by creating materials in formats and languages accessible to the stakeholders served by the intended recipients);

(2) Achieve its goals, objectives, and intended outcomes. To meet this requirement, the applicant must provide—

(i) Measurable intended project outcomes; and

(ii) The logic model (see paragraph (f)(1)) by which the proposed project will achieve its intended outcomes;

(3) Use a conceptual framework to develop project plans and activities, describing any underlying concepts, assumptions, expectations, beliefs, or theories, as well as the presumed relationships or linkages among these variables, and any empirical support for this framework;

(4) Be based on current research and make use of evidence-based practices. To meet this requirement, the applicant must describe—

(i) The current research on the effectiveness of analyzing and using assessment data in instructional decision-making to improve teaching and learning for students with disabilities; and

(ii) How the proposed project will incorporate current evidence-based practices in the development and delivery of its products and services;

(5) Develop products and provide services that are of high quality and sufficient intensity and duration to achieve the intended outcomes of the proposed project. To address this requirement, the applicant must describe—

(i) How it proposes to identify or develop the knowledge base on analyzing and using assessment data in instructional decision-making to improve teaching and learning for students with disabilities;

(ii) Its proposed approach to universal, general TA,3 which must identify the intended recipients of the products and services under this approach;

(iii) Its proposed approach to targeted, specialized TA,4 which must identify—

(A) The intended recipients of the products and services under this approach; and

(B) Its proposed approach to measure the readiness of potential TA recipients to work with the project, assessing, at a minimum, their current infrastructure, available resources, and ability to build capacity at the local level; and

(iv) Its proposed approach to intensive, sustained TA,5 which must identify—

(A) The intended recipients of the products and services under this approach;

(B) Its proposed approach to measure the readiness of SEA and LEA personnel to work with the project, including their commitment to the initiative, alignment of the initiative to their needs, current infrastructure, available resources, and ability to build capacity at the SEA and LEA levels;

(C) Its proposed plan for assisting SEAs (and LEAs, in conjunction with SEAs) to build training systems that include professional development based on adult learning principles and coaching; and

(D) Its proposed plan for working with appropriate levels of the education system (e.g., SEAs, regional TA providers, LEAs, schools, and families) to ensure that there is communication between each level and that there are systems in place to support the collection, analysis and use of assessment data in instructional decision-making to improve teaching and learning for students with disabilities;

(E) Its proposed plan for collaborating and coordinating with Department of Education funded TA investments and IES research and development investments, where appropriate, in order to align complementary work and jointly develop and implement products and services to meet the purposes of this priority;

(6) Develop products and implement services that maximize efficiency. To address this requirement, the applicant must describe—

(i) How the proposed project will use technology to achieve the intended project outcomes;

(ii) With whom the proposed project will collaborate and the intended outcomes of this collaboration; and

(iii) How the proposed project will use non-project resources to achieve the intended project outcomes.

(c) In the narrative section of the application, under “Quality of the Evaluation Plan,” include an evaluation plan for the project as described in the following paragraphs. The evaluation plan must describe measures of progress in implementation, including the extent to which the project's products and services have reached its target population, and measures of intended outcomes or results to assess the project's progress toward achieving intended outcomes.

In designing the evaluation plan, the project must—

(1) Designate, with the approval of the OSEP project officer, a project liaison staff person with sufficient dedicated time, experience in evaluation, and knowledge of the project to work in collaboration with the Center to Improve Project Performance (CIPP),6 the project director, and the OSEP project officer on the following tasks:

(i) Revise, as needed, the logic model (see paragraph (f)(1) this priority) submitted in the grant application to provide for a more comprehensive measurement of implementation and outcomes and to reflect any changes or clarifications to the model discussed at the kick-off meeting;

(ii) Refine the evaluation design and instrumentation proposed in the application consistent with the logic model (e.g., preparing evaluation questions about significant program processes and outcomes; developing quantitative or qualitative data collections that permit both the collection of progress data, including fidelity of implementation, as appropriate, and progress toward achieving intended outcomes; selecting respondent samples if appropriate; designing instruments or identifying data sources; and identifying analytic strategies); and

(iii) Revise, as needed, the evaluation plan submitted in the grant application such that it clearly—

(A) Specifies the measures and associated instruments or sources for data appropriate to the evaluation questions, suggests analytic strategies for those data, provides a timeline for conducting the evaluation, and includes staff assignments for completion of the plan;

(B) Delineates the data expected to be available by the end of the second project year for use during the project's intensive review for continued funding described under the heading Fourth and Fifth Years of the Project; and

(C) Can be used to assist the project director and the OSEP project officer, with the assistance of CIPP as needed, to specify the performance measures to be addressed in the project's Annual Performance Report;

(2) Cooperate with CIPP staff in order to accomplish the tasks described in paragraph (c)(1) of this section; and

(3) Dedicate sufficient funds in each budget year to cover the costs of carrying out the tasks described in paragraphs (c)(1) and (c)(2) of this section and implementing the evaluation plan.

(d) Demonstrate, in the narrative section of the application under “Adequacy of Project Resources,” how—

(1) The proposed project will encourage applications for employment from persons who are members of groups that have traditionally been underrepresented based on race, color, national origin, gender, age, or disability, as appropriate;

(2) The proposed key project personnel, consultants, and subcontractors have the qualifications and experience to carry out the proposed activities and achieve the project's intended outcomes;

(3) The applicant and any key partners have adequate resources to carry out the proposed activities; and

(4) The proposed costs are reasonable in relation to the anticipated results and benefits.

(e) Demonstrate, in the narrative section of the application under “Quality of the Management Plan,” how—

(1) The proposed management plan will ensure that the project's intended outcomes will be achieved on time and within budget. To address this requirement, the applicant must describe—

(i) Clearly defined responsibilities for key project personnel, consultants, and subcontractors, as applicable; and

(ii) Timelines and milestones for accomplishing the project tasks;

(2) Key project personnel and any consultants and subcontractors will be allocated to the project and how these allocations are appropriate and adequate to achieve the project's intended outcomes;

(3) The proposed management plan will ensure that the products and services provided are of high quality; and

(4) The proposed project will benefit from a diversity of perspectives, including those of families, educators, TA providers, researchers, and policy makers, among others, in its development and operation.

(f) Address the following application requirements. The applicant must—

(1) Include, in Appendix A, a logic model that depicts, at a minimum, the goals, activities, outputs, and intended outcomes of the proposed project. A logic model communicates how a project will achieve its intended outcomes and provides a framework for both the formative and summative evaluations of the project.

(2) Include, in Appendix A, a conceptual framework for the project;

(3) Include, in Appendix A, person-loading charts and timelines, as applicable, to illustrate the management plan described in the narrative;

(4) Include, in the budget, attendance at the following:

(i) A one and one-half day kick-off meeting in Washington, DC, after receipt of the award, and an annual planning meeting in Washington, DC, with the OSEP project officer and other relevant staff during each subsequent year of the project period;

(ii) A two and one-half day project directors' meeting in Washington, DC, during each year of the project period;

(iii) Three trips annually to attend Department briefings, Department-sponsored conferences, and other meetings, as requested by OSEP; and

(iv) A one-day intensive 3+2 review meeting in Washington, DC, during the last half of the second year of the project period;

(5) Include, in the budget, a line item for an annual set-aside of five percent of the grant amount to support emerging needs that are consistent with the proposed project's intended outcomes, as those needs are identified in consultation with OSEP.

(6) Maintain a Web site that meets government or industry-recognized standards for accessibility.

Fourth and Fifth Years of the Project:

In deciding whether to continue funding the project for the fourth and fifth years, the Secretary will consider the requirements of 34 CFR 75.253(a), as well as—

(a) The recommendation of a review team consisting of experts selected by the Secretary. This review will be conducted during a one-day intensive meeting that will be held during the last half of the second year of the project period;

(b) The timeliness and effectiveness with which all requirements of the negotiated cooperative agreement have been or are being met by the project; and

(c) The quality, relevance, and usefulness of the project's products and services and the extent to which the project's products and services are aligned with the project's objectives and likely to result in the project achieving its intended outcomes.

References:

We will announce the final priority and requirements in a notice in the Federal Register. We will determine the final priority and requirements after considering responses to this notice and other information available to the Department. This notice does not preclude us from proposing additional priorities or requirements subject to meeting applicable rulemaking requirements.

Executive Orders 12866 and 13563:

Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or Tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

This proposed regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

We have also reviewed this proposed regulatory action under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing this proposed priority and these proposed requirements only on a reasoned determination that their benefits justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that this regulatory action is consistent with the principles in Executive Order 13563.

We have also determined that this regulatory action does not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.

Intergovernmental Review: This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the contact person listed under FOR FURTHER INFORMATION CONTACT.

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

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

Along with this proposed rule, EPA is publishing a direct final rule in the “Rules and Regulations” section of today's Federal Register pursuant to which EPA is authorizing these changes. EPA did not issue a proposed rule before today because EPA believes this action is not controversial and does not expect comments that oppose it. EPA has explained the reasons for this authorization in the direct final rule. Unless EPA receives written comments that oppose this authorization during the comment period, the direct final rule in today's Federal Register will become effective on the date it establishes, and EPA will not take further action on this proposal. If EPA receives comments that oppose this action, EPA will withdraw the direct final rule and it will not take effect. EPA will then respond to public comments in a later final rule based on this proposed rule. You may not have another opportunity to comment on these state program changes. If you want to comment on this action, you must do so at this time. For additional information, please see the direct final rule published in the “Rules and Regulations” section of today's Federal Register.