Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Proposed Rules 737 

Section 2(h)(1)(B) of the Act), 

membership (as described in Section 

5(b)(c)(2)(C) of the Act), and the finding 

of products acceptable or not acceptable 

for clearing. In describing such 

decisions, the derivatives clearing 

organization shall specifically disclose 

whether: 

(1) Its Board of Directors has rejected 

a recommendation or superseded an 

action of the Risk Management 

Committee; or 

(2) The Risk Management Committee 

has rejected a recommendation or 

superseded an action of its 

subcommittee (as described in 

§ 39.13(g)(5) of this part). 

(C) Nothing in the foregoing shall be 

construed as requiring a designated 

contract market, a registered swap 

execution facility, or a derivatives 

clearing organization to disclose any 

‘‘non-public information’’ (as § 1.3(ggg) 

of this chapter defines such term), 

including, without limitation, minutes 

from meetings of its Board of Directors 

or committees and information that it 

may have received on a confidential 

basis from an applicant for membership. 

(2) The registered entity must ensure 

that the information specified in 

paragraphs (d)(1)(i) to (vii) of this 

section is current, accurate, clear, and 

readily accessible, for example, on its 

Web site. The registered entity shall set 

forth such information in a language 

commonly used in the commodity 

futures and swap markets and at least 

one of the domestic language(s) of the 

jurisdiction in which the registered 

entity is located. 

(e) Regulatory Program. (1) As part of 

its regulatory program, each registered 

derivatives clearing organization, 

designated contract market, or registered 

swap execution facility must establish, 

maintain, and enforce written 

procedures to: 

(i) Identify, on an ongoing basis, 

existing and potential conflicts of 

interest; and 

(ii) Make fair and non-biased 

decisions in the event of a conflict of 

interest. Such procedures shall include 

rules regarding the recusal, in 

applicable circumstances, of parties 

involved in the making of decisions. 

The Chief Compliance Officer of a 

registered derivatives clearing 

organization or registered swap 

execution facility shall, in consultation 

with the Board of Directors of the entity, 

an equivalent body, or a senior officer 

of the entity, resolve any such conflicts 

of interest. 

(f) Limitations on Use or Disclosure of 

Non-Public Information. (1) Each 

registered entity must establish and 

maintain written policies and 

procedures on safeguarding non-public 

information gained through either an 

ownership interest or through the 

performance of official duties (including 

duties associated with self-regulatory or 

regulatory purposes) by members of its 

Board of Directors, members of any 

committee, or officers and other 

employees. 

(2) Such policies and procedures shall 

comport, at a minimum, with the 

following principles: 

(i) No individual or entity described 

in paragraph (f)(1) of this section shall 

use or disclose any non-public 

information, absent prior written 

consent from the relevant registered 

entity. A registered entity shall establish 

guidelines that specify the information 

that must be included in the written 

consent. 

(ii) No individual or entity described 

in paragraph (f)(1) of this section shall, 

either during or after service with the 

relevant registered entity: 

(A) Use, directly or indirectly, 

information that the registered entity 

deems to be non-public information; or 

(B) Disclose non-public information to 

others, except: 

(1) To others within the relevant 

registered entity or to outside advisors 

thereof, provided that such advisors are 

subject to confidentiality obligations, 

and that such disclosure is necessary for 

the performance of official duties by the 

individual or entity; 

(2) If required by regulatory authority; 

or 

(3) If compelled to so by valid legal 

process, provided that the individual or 

entity notifies the relevant registered 

entity. 

Issued in Washington, DC, on December 9, 

2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

Appendices to Governance 

Requirements for Derivatives Clearing 

Organizations, Designated Contract 

Markets, and Swap Execution 

Facilities; Additional Requirements 

Regarding the Mitigation of Conflicts of 

Interest—Commission Voting Summary 

and Statements of Commissioners 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Gensler and 

Commissioners Dunn, Sommers, Chilton and 

O’Malia voted in the affirmative; no 

Commissioners voted in the negative. 

Appendix 2—Statement of Chairman 

Gary Gensler 

I support the proposed rule on further 

governance and conflicts of interest 

requirements for derivatives clearing 

organizations (DCOs), designated contract 

markets (DCMs) and swap execution facilities 

(SEFs). The proposed rule complements the 

conflicts of interest provisions that the 

Commission proposed on October 1st by 

keeping regulators up to date about the 

composition of boards, board committees and 

ownership, promoting transparency in 

decision-making and ensuring limitations on 

use or disclosure of non-public information. 

The proposed rule also provides guidance to 

industry and the public on appropriate 

minimum governance fitness standards for 

DCOs and DCMs, as well as the manner in 

which market participants must be heard or 

included in DCO or DCM governance 

arrangements. The proposed rule would 

enhance the integrity of clearing and trading 

and would increase public trust in the 

facilities on which such important activities 

occur. 

[FR Doc. 2010–31898 Filed 1–5–11; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Parts 16 and 1107 

[Docket No. FDA–2010–N–0646] 

RIN 0910–AG39 

Tobacco Products, Exemptions From 

Substantial Equivalence Requirements 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Proposed rule. 

SUMMARY: The Food and Drug 

Administration (FDA) is issuing this 

proposed rule to establish procedures 

for requesting an exemption from the 

substantial equivalence requirements of 

the Family Smoking Prevention and 

Tobacco Control Act (Tobacco Control 

Act). The proposed rule would describe 

the process and statutory criteria for 

requesting an exemption and explain 

how FDA would review requests for 

exemptions. Once finalized, this 

regulation will satisfy the requirement 

in the Tobacco Control Act that FDA 

issue regulations implementing the 

exemption provision. 

DATES: Submit either electronic or 

written comments on the proposed rule 

by March 22, 2011. Submit comments 

on information collection issues under 

the Paperwork Reduction Act of 1995 by 

February 7, 2011, (see the ‘‘Paperwork 

Reduction Act of 1995’’ section of this 

document). 


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ADDRESSES: You may submit comments, 

identified by [Docket No. FDA–2010–N– 

0646 and/or RIN number 0910–AG39], 

by any of the following methods, except 

that comments on information 

collection issues under the Paperwork 

Reduction Act of 1995 must be 

submitted to the Office of Regulatory 

Affairs, Office of Management and 

Budget (OMB) (see the ‘‘Paperwork 

Reduction Act of 1995’’ section of this 

document). 

Electronic Submissions 

Submit electronic comments in the 

following way: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Written Submissions 

Submit written submissions in the 

following ways: 

• FAX: 301–827–6870. 

• Mail/Hand delivery/Courier (for 

paper, disk, or CD–ROM submissions): 

Division of Dockets Management (HFA– 

305), Food and Drug Administration, 

5630 Fishers Lane, rm. 1061, Rockville, 

MD 20852. 

Instructions: All submissions received 

must include the Agency name and 

Docket No. and Regulatory Information 

Number (RIN) for this rulemaking. All 

comments received may be posted 

without change to http:// 

www.regulations.gov, including any 

personal information provided. For 

additional information on submitting 

comments, see the ‘‘Comments’’ heading 

of the SUPPLEMENTARY INFORMATION

section of this document. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov and insert the 

docket number, found in brackets in the 

heading of this document, into the 

‘‘Search’’ box and follow the prompts 

and/or go to the Division of Dockets 

Management, 5630 Fishers Lane, rm. 

1061, Rockville, MD 20852. 

FOR FURTHER INFORMATION CONTACT: 

Annette Marthaler, Center for Tobacco 

Products, Food and Drug 

Administration, 9200 Corporate Blvd., 

Rockville, MD 20850–3229, 877–287– 

1373, annette.marthaler@fda.hhs.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Tobacco Control Act, enacted on 

June 22, 2009, amends the Federal Food, 

Drug, and Cosmetic Act (the FD&C Act) 

and provides FDA with the authority to 

regulate tobacco products (Pub. L. 111– 

31, 123 Stat. 1776). Among other things, 

the Tobacco Control Act requires that, 

before a new tobacco product may be 

introduced or delivered for introduction 

into interstate commerce, one of the 

following must occur: (1) A premarket 

application under section 910(b) of the 

FD&C Act (21 U.S.C. 387j(b)) must be 

submitted to FDA, and FDA must issue 

an order finding that the new product 

may be introduced or delivered for 

introduction into interstate commerce 

under 910(c) of the FD&C Act; or (2) a 

report under section 905(j) of the FD&C 

Act (21 U.S.C. 387e(j)) demonstrating 

the new tobacco product’s substantial 

equivalence to an appropriate predicate 

product (as defined in the FD&C Act) 

must be submitted and FDA must issue 

an order finding the new product to be 

substantially equivalent to the predicate 

product and in compliance with the 

requirements of the Tobacco Control Act 

(section 910(a)(2) of the FD&C Act). 

Section 905(j)(3) of the FD&C Act, as 

amended, states that FDA may exempt 

tobacco products that are modified by 

adding or deleting a tobacco additive, or 

increasing or decreasing the quantity of 

an existing tobacco additive, from the 

requirement of demonstrating 

substantial equivalence if the Agency 

determines that: (1) Such modification 

would be a minor modification of a 

tobacco product that can be sold under 

the FD&C Act, (2) a report 

demonstrating substantial equivalence 

is not necessary to ensure that 

permitting the product to be marketed 

would be appropriate for the protection 

of the public health, and (3) an 

exemption is otherwise appropriate. 

Section 905(j)(3)(B) of the FD&C Act 

requires FDA to issue regulations 

implementing this provision by July 1, 

2011. 

‘‘Additive’’ is defined at section 900(1) 

of the FD&C Act, as ‘‘any substance the 

intended use of which results or may 

reasonably be expected to result, 

directly or indirectly, in its becoming a 

component or otherwise affecting the 

characteristic of any tobacco product 

(including any substances intended for 

use as a flavoring or coloring or in 

producing, manufacturing, packing, 

processing, preparing, treating, 

packaging, transporting, or holding), 

except that such term does not include 

tobacco or a pesticide chemical residue 

in or on raw tobacco or a pesticide 

chemical’’ (21 U.S.C. 387(1)). 

The proposed rule, if finalized, would 

establish a pathway for manufacturers, 

including importers, to request 

exemptions from the substantial 

equivalence requirements of the 

Tobacco Control Act. It would not 

establish categories of minor 

modifications, or identify specific 

modifications, that meet the statutory 

criteria for exemptions. As FDA 

acquires more information about the 

additives in tobacco products from 

which to establish such categorical 

exemptions, it may issue additional 

regulations or guidance. FDA requests 

comment on how best to establish 

categories for these exemptions. 

A manufacturer who obtains an 

exemption under the procedures of this 

proposed rule is also required to report 

to FDA under 905(j)(1)(A)(ii) of the 

FD&C Act (this requirement is not 

addressed in this proposed rule). 

Section 905(j)(1)(A)(ii) of the FD&C Act 

requires the manufacturer to report at 

least 90 days prior to introducing or 

delivering for introduction into 

interstate commerce the tobacco product 

that is the subject of the exemption, the 

basis for the manufacturer’s 

determination that ‘‘the tobacco product 

is modified within the meaning of 

[section 905(j)(3)], the modifications are 

to a product that is commercially 

marketed and in compliance with the 

requirements of this Act, and all of the 

modifications are covered by 

exemptions granted by FDA pursuant to 

[section 905(j)(3)]’’ (section 

905(j)(1)(A)(ii) of the FD&C Act). In 

addition, this submission must describe 

‘‘action taken by [the applicant] to 

comply with the requirements under 

section 907 that are applicable to the 

tobacco product’’ (section 905(j)(1)(B) of 

the FD&C Act). 

The proposed rule includes a 

procedural mechanism for rescinding an 

exemption where necessary to protect 

the public health. Before rescinding an 

exemption, FDA proposes to provide the 

manufacturer notice of the proposed 

rescission and an opportunity for an 

informal hearing under part 16 (21 CFR 

part 16), unless the continuance of the 

exemption presents a serious risk to 

public health. If the continuance of the 

exemption presents a serious risk to 

public health, FDA would rescind the 

exemption prior to giving notice and an 

opportunity for a hearing, and provide 

notice and opportunity for an informal 

hearing under part 16 as quickly as 

possible following the rescission. 

II. Overview of the Proposed Rule 

As required by section 905(j)(3)(B) of 

the FD&C Act, this rule would 

implement section 905(j)(3) of the FD&C 

Act. Specifically, the rule would 

provide that FDA may exempt tobacco 

products that are modified by adding or 

deleting a tobacco additive, or 

increasing or decreasing the quantity of 

an existing tobacco additive, if FDA 

determines that the modification would 

be a minor modification of a tobacco 

product that can be sold under the 

FD&C Act; a 905(j) report demonstrating 


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substantial equivalence to a predicate 

tobacco product is not necessary to 

ensure that permitting the tobacco 

product to be marketed would be 

appropriate for protection of the public 

health; and an exemption is otherwise 

appropriate. These criteria are specified 

in the statute. 

The proposed rule also explains that 

an exemption request may be made only 

by the manufacturer of a legally, 

commercially marketed tobacco product 

for a minor modification to that 

manufacturer’s product. FDA is 

proposing this requirement because it 

believes that only the manufacturer of 

the product being modified will have, 

and be able to provide to FDA, sufficient 

and complete information about the 

product and the proposed modification. 

This includes information about a 

tobacco product that is trade secret or 

confidential commercial information 

and available only to the manufacturer 

of the product. Such information is 

necessary to allow FDA to determine 

whether the tobacco product and 

modification satisfy the criteria for 

exemption. 

The proposed rule would also require 

that the exemption request (and 

supporting information) be submitted in 

an electronic format that FDA can 

process, review, and archive. FDA 

intends to provide and update 

information on its website on how 

manufactures may provide the 

electronic submission to FDA (e.g., 

information on electronic media and 

methods of transmission). The proposed 

rule would also require that the 

exemption request be legible (FDA must 

be able to read the document) and in 

English. These requirements would 

ensure that FDA could review the 

exemption request expeditiously and 

appropriately. Electronic submission of 

information is consistent with the 

Government Paperwork Elimination Act 

(Pub. L. 105–277) requirement that 

Federal agencies allow individuals or 

entities to submit information or 

transact business with the agency 

electronically. Because of the broad 

availability of the Internet, FDA does 

not anticipate any need to submit an 

exemption request and supporting 

information in a non-electronic format. 

However, a company that is not able to 

submit an exemption request in an 

electronic format may submit a written 

request to the Center for Tobacco 

Products explaining in detail why the 

company cannot submit the request in 

an electronic format and requesting an 

alternative format. 

The proposed rule would require that 

an exemption request be submitted with 

supporting documentation and contain 

the manufacturer’s address and contact 

information; a detailed explanation of 

the purpose for the modification; a 

detailed description of the modification, 

including whether the modification 

involves adding or deleting a tobacco 

additive, or increasing or decreasing the 

quantity of an existing tobacco additive; 

a detailed explanation of why the 

modification is considered a minor 

modification of a tobacco product that 

can be sold under the FD&C Act; a 

detailed explanation of why a report 

intended to demonstrate substantial 

equivalence is not necessary to ensure 

that permitting the tobacco product to 

be marketed would be appropriate for 

the protection of public health; a 

certification by a responsible official of 

the company, such as the chief 

executive officer, summarizing the 

supporting evidence and providing the 

rationale for the official’s determination 

that the modification will not increase 

the product’s toxicity, addictiveness, or 

appeal to or use by minors; and other 

information justifying an exemption. 

The rule would require the 

submission of this information, along 

with supporting documentation, to 

enable FDA to determine whether an 

exemption from having to demonstrate 

substantial equivalence to an 

appropriate predicate product would be 

appropriate for the protection of the 

public health, as required by the statute 

(section 905(j)(3) of the FD&C Act). FDA 

requests comment on what supporting 

information would be necessary for us 

to make these determinations. The 

proposed rule would also require a 

certification in the form of a signed 

statement by a responsible official of the 

company, summarizing the supporting 

evidence and providing the rationale for 

the official’s determination that the 

modification will not increase the 

product’s toxicity, addictiveness, or 

appeal to or use by minors. Because of 

the importance of this information to an 

exemption determination, FDA is 

proposing to require that a responsible 

official of the company, such as the 

chief executive officer, certify that the 

modification will not have these effects. 

The proposed regulation explains that 

FDA would review the information 

submitted in support of the request and 

determine whether to grant or deny the 

request for an exemption based on 

whether the criteria in the statute are 

satisfied. The proposed rule also 

provides that, if FDA determines that 

the information submitted by the 

manufacturer is insufficient to enable it 

to determine whether an exemption is 

appropriate, FDA may request 

additional information from the 

manufacturer. The rule would also 

provide that if the manufacturer fails to 

respond within the timeframe 

requested, FDA will consider the 

exemption request withdrawn. An 

exemption determination will be 

publicly available consistent with the 

requirements of part 20 (21 CFR part 

20); trade secret and confidential 

commercial information are exempted 

from disclosure requirements consistent 

with § 20.61. 

As discussed earlier in this document, 

the proposed rule includes a provision 

expressly permitting FDA to rescind an 

exemption if the Agency determines 

that rescission is necessary to protect 

the public health. FDA believes it is 

important that it be able to rescind 

exemptions in circumstances where the 

exemption is not appropriate for the 

public health, such as when FDA’s 

decision to grant an exemption was 

based on false or incomplete 

information. FDA is proposing to 

provide notice and an opportunity for 

an informal hearing under part 16 to the 

manufacturer who requested the 

exemption prior to rescinding an 

exemption. If, however, the continuance 

of the exemption presents a serious risk 

to public health, the proposed rule 

provides that FDA could rescind the 

exemption before providing notice and 

an opportunity for a hearing. In that 

case, FDA would provide the 

manufacturer notice and an opportunity 

for a hearing as soon as possible after 

the rescission. 

Consistent with the requirements of 

the FD&C Act, FDA intends to provide 

technical and other nonfinancial 

assistance to small tobacco product 

manufacturers in complying with the 

premarket requirements of sections 905 

and 910 of the FD&C Act, along with 

other requirements (section 901(f) of the 

FD&C Act). FDA requests comment on 

what technical assistance or guidance 

would be helpful to small 

manufacturers in complying with these 

requirements. Small tobacco product 

manufacturers may contact FDA at 

smallbiz.tobacco@fda.hhs.gov for 

assistance. 

III. Effective Date 

FDA proposes that any final rule that 

issues based on this proposal become 

effective 30 days after the final rule 

publishes in the Federal Register. 

IV. Legal Authority 

Section 905(j)(3)(B) of the FD&C Act 

requires that FDA issue regulations to 

implement the provision on exemptions 

from the substantial equivalence 

requirements of the Tobacco Control 

Act. Section 905(j)(3)(A) of the FD&C 

Act provides that FDA may exempt from 


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1A possible offsetting factor is that these data 

only include firms with payroll, and there could be 

some small tobacco product manufacturers without 

payroll. 

2Manufacturers, wholesalers, and retailers could 

all theoretically import tobacco products. Census 

data do not distinguish firms that import from firms 

that do not. 

the requirements relating to the 

demonstration of substantial 

equivalence tobacco products that are 

modified by adding or deleting a 

tobacco additive, or increasing or 

decreasing the quantity of an existing 

tobacco additive, if FDA determines the 

modification would be a minor 

modification of a tobacco product that 

can be sold under the FD&C Act; a 

report is not necessary to ensure that 

permitting the tobacco product to be 

marketed would be appropriate for 

protection of the public health; and an 

exemption is otherwise appropriate. 

FDA is issuing this proposed rule as 

required by section 905(j)(3)(B) of the 

FD&C Act. Additionally, section 701(a) 

of the FD&C Act (21 U.S.C. 371) gives 

FDA general rulemaking authority to 

issue regulations for the efficient 

enforcement of the FD&C Act. 

V. Environmental Impact 

The Agency has determined under 21 

CFR 25.30(h) that this action is of a type 

that does not individually or 

cumulatively have a significant effect on 

the human environment. Therefore, 

neither an environmental assessment 

nor an environmental impact statement 

is required. 

VI. Analysis of Impacts 

A. Introduction 

FDA has examined the impacts of the 

proposed rule under Executive order 

12866 and the Regulatory Flexibility Act 

(5 U.S.C. 601–612), and the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4). Executive Order 12866 directs 

Agencies to assess all costs and benefits 

of available regulatory alternatives and, 

when regulation is necessary, to select 

regulatory approaches that maximize 

net benefits (including potential 

economic, environmental, public health 

and safety, and other advantages; 

distributive impacts; and equity). The 

agency believes that this proposed rule 

is not a significant regulatory action as 

defined by the Executive order. 

The Regulatory Flexibility Act 

requires Agencies to analyze regulatory 

options that would minimize any 

significant impact of a rule on small 

entities. The Tobacco Control Act 

requires that tobacco product 

manufacturers obtain either a marketing 

authorization order under section 910(c) 

or an order under section 910(a)(2) 

finding the new tobacco product to be 

substantially equivalent to an 

appropriate predicate tobacco product 

before introducing a new product into 

interstate commerce. Although this 

requirement is costly, the option of 

requesting an exemption as set forth in 

this proposed rule provides a 

mechanism for potentially reducing 

costs. If manufacturers of new tobacco 

products do not expect this option to 

reduce costs associated with their new 

product submissions, they will choose 

not to use it. The Agency therefore 

proposes to certify that the rule will not 

have a significant economic impact on 

a substantial number of small entities. 

Section 202(a) of the Unfunded 

Mandates Reform Act of 1995 requires 

that Agencies prepare a written 

statement, which includes an 

assessment of anticipated costs and 

benefits, before proposing ‘‘any rule that 

includes any Federal mandate that may 

result in the expenditure by State, local, 

and tribal governments, in the aggregate, 

or by the private sector, of $100,000,000 

or more (adjusted annually for inflation) 

in any one year.’’ The current threshold 

after adjustment for inflation is $135 

million, using the most current (2009) 

Implicit Price Deflator for the Gross 

Domestic Product. FDA does not expect 

this proposed rule to result in any 1- 

year expenditure that would meet or 

exceed this amount. 

B. Baseline 

FDA compares the effects of this rule 

to a baseline we will refer to as the poststatute baseline. Under the Tobacco 

Control Act, in the absence of this or 

other rulemaking under section 

905(j)(3), tobacco product manufacturers 

must submit to FDA either a premarket 

application or a report under section 

905(j) demonstrating substantial 

equivalence to an appropriate predicate 

product, and FDA must issue the 

appropriate corresponding order before 

a new tobacco product may be 

introduced or delivered for introduction 

into interstate commerce. Although 

substantial equivalence requirements 

are not yet in effect, the statutory grace 

period ends on March 22, 2011. The 

statutory deadline for issuing 

regulations under section 905(j)(3) is 

July 1, 2011, after the end of the grace 

period. Therefore, under the post-statute 

baseline we assume that requirements to 

report under 905(j) will be in effect. 

Compared with the cost associated with 

the post-statute baseline, this rule may 

result in cost savings if some tobacco 

manufacturers request, and are granted, 

substantial equivalence exemptions. If 

for any reason this proposed rule is 

finalized before the substantial 

equivalence requirements go into effect, 

it would simply have no effect until 

such time that they do. 

C. Number of Affected Entities 

This proposed rule may potentially 

apply to any tobacco product 

manufacturer or importer whose 

products are regulated under the 

Tobacco Control Act. Statistics of U.S. 

Businesses data indicate that there are 

20 cigarette manufacturers and 46 other 

tobacco product manufacturers (U.S. 

Census, 2009). Because other tobacco 

product manufacturers would include 

cigar and pipe tobacco manufacturers, 

not all 46 firms represent manufacturers 

that are currently regulated under the 

Tobacco Control Act.1 An unknown 

number of importers would be affected.2

Not all new tobacco products are 

expected to meet the statutory 

requirements for an exemption. 

Furthermore, FDA is not establishing 

categories of minor modifications, or 

identifying specific modifications, that 

meet the statutory criteria for 

exemptions. It is therefore likely that 

only a subset of the potentially affected 

manufacturers and importers would 

choose to request an exemption. 

D. Number of Exemption Requests 

The number of new products 

introduced in a given year is the 

theoretical maximum number that could 

be introduced under a substantial 

equivalence exemption. However, some 

new products may not be substantially 

equivalent to an appropriate predicate 

tobacco product and will require 

premarket authorization under section 

910(c), in which case they would not be 

eligible for a substantial equivalence 

exemption. The remaining products 

would require 905(j) reports, including 

demonstration of substantial 

equivalence. Under this proposed rule, 

an unknown number of those new 905(j) 

products would be eligible for possible 

introduction into interstate commerce 

under a substantial equivalence 

exemption. 

FDA uses scanner data covering late 

2007 to late 2009 from AC Nielsen to 

estimate the number of new tobacco 

products introduced in a year. A 

Universal Product Code (UPC) is 

deemed to be introduced in 2008 if total 

dollar sales over the final weeks of 2007 

were zero, but total dollar sales over 

2008 were greater than zero. Because 

unique UPCs are assigned to different 

types of packaging for otherwise 

identical products, most new UPCs do 

not represent new products, but rather 

different ways of packaging existing 

products. To address this issue, FDA 


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3The smoking tobacco category refers to tobacco 

products, other than cigarettes, cigars and 

accessories, which are intended to be smoked. 

Smoking tobacco products are further identified in 

the data as cigarette tobacco (roll-your-own), 

smoking tobacco, or pipe tobacco. Since pipe 

tobacco is not currently subject to the Tobacco 

Control Act, products clearly identified as such are 

excluded from the analysis. 

sorts the data by brand description, and 

by product description within each 

brand description. The product 

description varies by UPC and contains 

information about both product 

characteristics and packaging. 

Therefore, the product description of 

every new UPC can be compared with 

the product descriptions preceding and 

following it to determine whether the 

new UPC represents a new package for 

an existing product or a new product 

altogether. 

Using the scanner data, FDA finds 

that of 628 new UPCs for cigarettes in 

2008, 151 represent new products not 

present in the 2007 data. Of 215 new 

UPCs for chewing tobacco, 43 represent 

new products. Of 36 new UPCs for 

smoking tobacco (excluding pipe 

tobacco), 20 represent new products.3

Of 36 new UPCs for cigarette paper, 19 

represent new products. This leads to an 

estimated 233 new products in 2008. 

We assume the same average number of 

new products will continue to be 

introduced every year going forward. 

However, it is also possible that 

requirements imposed by the Tobacco 

Control Act will lead manufacturers to 

introduce new products at a lower rate 

in the future. 

As outlined previously, some of the 

estimated 233 new products introduced 

annually may require premarket 

authorization under section 910(c), and 

exemptions would be requested for an 

unknown number of the remaining 

products. Although in theory the 

maximum number of requests equals the 

number of new products, based on the 

requirements for an exemption and 

experience with other regulated 

products, FDA estimates that in the first 

years after the procedure is in place, 

only 50 exemption requests will be 

submitted per year. This may increase 

over time as learning takes place. FDA 

anticipates requesting additional 

information to support 40 of those 

requests. 

E. Benefits and Costs 

The main effect of this proposed rule 

would be a potential reduction in the 

costs of introducing new tobacco 

products compared with the post-statute 

baseline. Under the baseline scenario, 

all new products that do not undergo 

premarket review under section 910(c) 

must submit a report under section 

905(j) that includes the basis for 

manufacturer’s determination that the 

new tobacco product is substantially 

equivalent to an appropriate predicate 

tobacco product. If an exemption 

request is submitted and granted, a 

manufacturer would be able to submit a 

different and potentially shorter 905(j) 

report in which, under 905(j)(1)(A)(ii), a 

discussion of the exemption is used in 

place of the demonstration of 

substantial equivalence. On a perproduct basis, any potential cost savings 

for the 905(j) report, net of the cost of 

requesting the exemption, would be the 

savings attributable to this rule. 

FDA estimates that it would take 360 

hours to prepare an exemption request. 

Based on the requirements set forth in 

the codified language, FDA anticipates 

that preparation of most sections would 

require technical scientific and 

engineering expertise. Legal input and 

review would also play a role. 

Therefore, in valuing the time cost, FDA 

uses the weighted average of tobacco 

manufacturing industry-specific hourly 

wages for life, physical, and social 

science occupations ($30.91), 

architecture and engineering 

occupations ($40.93), and legal 

occupations ($71.83) (Ref. U.S. BLS, 

2010). FDA assigns these occupational 

categories weights of 40 percent, 40 

percent, and 20 percent. The resulting 

composite wage is $43.10. FDA then 

doubles this amount to $86.20 to 

account for benefits and overhead. 

Multiplying by 360 hours yields a cost 

per exemption request of $31,033. FDA 

anticipates that when it asks a 

manufacturer to provide additional 

information in support of an exemption 

request, it will take an average of 50 

hours to prepare the additional 

information. Using the same hourly cost 

of labor, providing additional 

information is estimated to result in an 

additional cost of $4,310. These are 

elective costs. Firms will not choose to 

submit a request unless any potential 

cost savings in a 905(j) report justifies 

the cost. 

Using FDA’s estimate that we expect 

to receive 50 requests per year, the total 

cost of all exemption requests submitted 

would be $1,551,700. There would be 

an additional cost of $172,400 if, as 

anticipated, we ask for additional 

information supporting 40 of the 50 

requests. FDA requests comment on 

these cost estimates. 

Because substantial equivalence 

report requirements are not yet being 

enforced, and there is no guidance 

beyond the contents of the Tobacco 

Control Act, FDA does not attempt to 

estimate the cost of preparing a 905(j) 

report that includes the demonstration 

of substantial equivalence or the cost of 

preparing a 905(j) report citing an 

exemption. Some manufacturers may 

find that, for a particular product, 

preparing a 905(j) report that includes 

the basis for the manufacturer’s 

determination that its new tobacco 

product is substantially equivalent to an 

appropriate predicate tobacco product 

would be costlier than submitting an 

exemption request and citing the 

exemption in a 905(j) report. Such a 

manufacturer may consider submitting 

an exemption request. If a manufacturer 

finds that the exemption process would 

not reduce costs for legally introducing 

a new tobacco product, it would 

maintain the post-statute status quo and 

submit a 905(j) that includes the basis 

for the manufacturer’s determination 

that its new tobacco product is 

substantially equivalent to an 

appropriate predicate tobacco product. 

FDA requests comment on these 

conclusions. 

In order to grant an exemption, FDA 

must find, among other things, that a 

report demonstrating substantial 

equivalence would not be necessary to 

ensure that permitting the tobacco 

product to be marketed would be 

appropriate for protection of the public 

health. Furthermore, an exemption 

could be rescinded if found to be 

inappropriate, and the process for 

rescission would depend on whether 

there is a serious risk to public health. 

Therefore, FDA does not anticipate that 

setting up a mechanism for obtaining 

substantial equivalence exemptions 

would result in costs to public health. 

FDA requests comment on this 

approach. 

Under this proposed rule, there may 

be uncertainty on the part of 

manufacturers as to what kinds of 

product modifications may be granted 

an exemption and how much 

supporting evidence will be required as 

the basis for an exemption. If some 

manufacturers are more conservative in 

requesting exemptions than FDA would 

be in granting them, they may not fully 

avail themselves of any potential cost 

savings. Alternatively, if some 

manufacturers are too optimistic about 

what types of modifications will be 

exempt, they will incur higher costs 

because they will have to demonstrate 

substantial equivalence in their 905(j) 

reports in addition to having submitted 

unsuccessful exemption requests. 

FDA acknowledges the theoretical 

possibility that overall submission costs 

could increase as the result of this 

uncertainty. This would happen if so 

many unsuccessful exemption requests 

were submitted that the excess costs 


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742 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Proposed Rules 

associated with them exceeded any cost 

savings from exemptions that were 

granted. This situation is unlikely to 

occur, especially as time goes on and 

manufacturers gain information on 

submission costs and the requirements 

that must be met for exemptions. 

Manufacturers might continue to submit 

unsuccessful exemption requests, but it 

would increasingly be a well-informed 

choice based on an accurate estimation 

of the probability of being granted an 

exemption and the excess cost of 

preparing an unsuccessful request 

compared with the cost savings 

attributable to an exemption. Moreover, 

it is possible that some of the 

information compiled for an exemption 

request would be reused as part of a 

demonstration of substantial 

equivalence, thus reducing the effort 

expended in preparing both types of 

submissions. 

F. Conclusion 

In summary, the substantial 

equivalence exemption requirements 

laid out in this proposed rule offer an 

additional channel for legally 

introducing new tobacco products that 

result from minor modifications of 

tobacco products that can be sold under 

the Tobacco Control Act. Introducing a 

new product through this channel may 

potentially reduce costs. If 

manufacturers find that obtaining an 

exemption would not reduce costs, or if 

they do not want to risk having to 

demonstrate substantial equivalence in 

their 905(j) reports in addition to having 

submitted unsuccessful exemption 

requests, they may choose to maintain 

the post-statute status quo and not 

pursue substantial equivalence 

exemptions. 

VII. Paperwork Reduction Act of 1995 

This proposed rule contains 

information collection provisions that 

are subject to review by OMB under the 

Paperwork Reduction Act of 1995 (the 

PRA) (44 U.S.C. 3501–3520). A 

description of these provisions is given 

below with an estimate of the annual 

reporting burden. Included in the 

estimate is the time for reviewing 

instructions, searching existing data 

sources, gathering the data needed, and 

completing and reviewing each 

collection of information. FDA requests 

comment on the burden and practical 

utility of the information being 

requested. Comment is also requested 

on whether the information being 

requested is duplicative of other 

collections. 

Title: Exemptions From Substantial 

Equivalence Requirements for Tobacco 

Products. 

Description: In this proposed rule, a 

pathway would be established by FDA 

for manufacturers to request exemptions 

from the substantial equivalence 

requirements of the Tobacco Control 

Act. As it acquires more information 

about the additives in tobacco products 

from which to establish categories of 

exemptions, FDA may issue additional 

regulations or guidance on this subject. 

This rule would implement section 

905(j)(3) of the FD&C Act, allowing FDA 

to exempt tobacco products that are 

modified by adding or deleting a 

tobacco additive, or increasing or 

decreasing the quantity of an existing 

tobacco additive, if FDA determines that 

the modification would be a minor 

modification of a tobacco product that 

can be sold under the FD&C Act. The 

rule also explains that an exemption 

request may be made only by the 

manufacturer of a legally marketed 

tobacco product for a minor 

modification to that manufacturer’s 

product and the request (and supporting 

information) must be submitted in an 

electronic format that FDA can process, 

review, and archive. In addition, the 

request and all supporting information 

must be legible and in (or translated 

into) the English language. 

Under the proposal, an exemption 

request must be submitted with 

supporting documentation and contain 

the manufacturer’s address and contact 

information, information about the 

modification; and an explanation of 

why a report intended to demonstrate 

substantial equivalence is not necessary. 

The request must also contain a 

certification by a responsible official 

summarizing the supporting evidence 

and providing the rationale for the 

official’s determination that the 

modification will not increase the 

product’s toxicity, addictiveness, or 

appeal to/use by minors; and include 

other information justifying an 

exemption. This information would 

enable FDA to determine whether the 

exemption request would be appropriate 

for the protection of the public health. 

This proposed rule also includes a 

procedural mechanism for rescinding an 

exemption where necessary to protect 

the public health. In general, FDA 

would rescind an exemption only after 

providing the manufacturer notice of the 

proposed rescission and an opportunity 

for an informal hearing under part 16. 

However, FDA may rescind an 

exemption prior to notice and 

opportunity for a hearing under part 16 

if the continuance of the exemption 

presents a serious risk to public health. 

In that case, FDA would provide the 

manufacturer an opportunity for a 

hearing as soon as possible after the 

rescission. 

FDA would review the information 

submitted in support of the request and 

determine whether to grant or deny the 

request based on whether the criteria 

specified in the statute are satisfied. If 

FDA determines that the information 

submitted is insufficient to enable it to 

determine whether an exemption is 

appropriate, FDA may request 

additional information from the 

manufacturer. If the manufacturer fails 

to respond within the timeframe 

requested, FDA would consider the 

exemption request withdrawn. 

Description of Respondent: 

Manufacturers of tobacco products who 

are requesting an exemption from the 

substantial equivalence requirements of 

the FD&C Act, as amended by the 

Tobacco Control Act. 

TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN

21 CFR Section Number of 

respondents 

Annual 

frequency per 

response 

Total annual 

responses 

Hours per 

response Total hours 

1107.1(b) .............................................................................. 50 1 50 360 18,000 

1107.1(c) .............................................................................. 40 1 40 50 2,000 

Total .............................................................................. ........................ ........................ ........................ ........................ 20,000 

Table 1 describes the annual reporting 

burden as a result of the provisions set 

forth in this proposed rule. Based on 

information related to premarket 

provisions for other FDA-regulated 

products and anticipated interest from 

industry in this provision, FDA 

estimates that it would receive 50 

exemption requests annually and that it 


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Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Proposed Rules 743 

would take a manufacturer 360 hours to 

prepare an exemption request. FDA 

estimates that it would need to request 

additional data for 40 of these requests, 

and that it will take 50 hours to prepare 

this data. FDA anticipates using the 

rescission authority to respond to one 

issue of concern related to an exemption 

determination each year (the burden 

hours for 21 CFR 1107.1(d) are included 

under part 16 hearing regulations, and 

are not included in the burden estimates 

in table 1 of this document). 

The information collection provisions 

of this proposed rule have been 

submitted to OMB for review. Interested 

persons are requested to fax comments 

regarding information collection (see 

ADDRESSES) to the Office of Information 

and Regulatory Affairs, OMB. To ensure 

that comments on the information 

collection are received, OMB 

recommends that written comments be 

faxed to the Office of Information and 

Regulatory Affairs, OMB, Attn: FDA 

Desk Officer, Fax: 202–395–7285, or 

e-mailed to 

oira_submission@omb.eop.gov. 

VIII. Federalism 

FDA has analyzed this proposed rule 

in accordance with the principles set 

forth in Executive Order 13132. FDA 

has determined that the proposed rule, 

if finalized, would not contain policies 

that would 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. 

Accordingly, the Agency tentatively 

concludes that the proposed rule does 

not contain policies that have 

federalism implications as defined in 

the Executive order and, consequently, 

a federalism summary impact statement 

is not required. 

IX. Comments 

Interested persons may submit to the 

Division of Dockets Management (see 

ADDRESSES) either electronic or written 

comments regarding this document. It is 

only necessary to send one set of 

comments. It is no longer necessary to 

send two copies of mailed comments. 

Identify comments with the docket 

number found in brackets in the 

heading of this document. Received 

comments may be seen in the Division 

of Dockets Management between 9 a.m. 

and 4 p.m., Monday through Friday. 

X. References 

The following references have been 

placed on display in the Division of 

Dockets Management (see ADDRESSES), 

and may be seen by interested persons 

between 9 a.m. and 4 p.m., Monday 

through Friday. (FDA has verified the 

Web site addresses, but we are not 

responsible for any subsequent changes 

to the Web sites after this document 

publishes in the Federal Register.) 

1. U.S. Census Bureau, 2007 

Economic Census, ‘‘Sector 31: EC0731I1: 

Manufacturing: Industry Series: Detailed 

Statistics by Industry for the United 

States: 2007.’’ Release Date: October 30, 

2009, Access Date: August 30, 2010, 

(http://factfinder.census.gov/servlet/ 

IBQTable?_bm=y&- 

ds_name=EC0731I1&- 

NAICS2007=312210/312221/312229&- 

ib_type=NAICS2007&-geo_id=&- 

_industry=312221&-_lang=en&- 

fds_name=EC0700A1) 

2. U.S. Bureau of Labor Statistics, 

‘‘Occupational Employment Statistics: 

May 2009 National Industry-Specific 

Occupational Employment and Wage 

Estimates NAICS 312200—Tobacco 

Manufacturing,’’ May 14, 2010, http:// 

data.bls.gov/cgi-bin/print.pl/oes/

current/naics4_312200.htm. 

List of Subjects 

21 CFR Part 16 

Administrative practice and 

procedure. 

21 CFR Part 1107 

Tobacco products, Substantial 

equivalence, Exemptions. 

Therefore, under the Federal Food, 

Drug, and Cosmetic Act and under 

authority delegated to the Commissioner 

of Food and Drugs, it is proposed that 

21 CFR parts 16 and 1107 be amended 

to read as follows: 

PART 16—REGULATORY HEARING 

BEFORE THE FOOD AND DRUG 

ADMINISTRATION 

1. The authority citation for 21 CFR 

part 16 continues to read as follows: 

Authority: 15 U.S.C. 1451–1461; 21 U.S.C. 

141–149, 321–394, 467f, 679, 821, 1034; 28 

U.S.C. 2112; 42 U.S.C. 201–262, 263b, 364. 

§ 16.1 [Amended] 

2. In § 16.1 (b)(2) add in numerical 

sequence ‘‘§ 1107.1(d), relating to 

rescission of an exemption from the 

requirement of demonstrating 

substantial equivalence for a tobacco 

product.’’ 

3. Add part 1107 to subchapter K to 

read as follows: 

PART 1107—ESTABLISHMENT 

REGISTRATION, PRODUCT LISTING, 

AND SUBSTANTIAL EQUIVALENCE 

REPORTS 

Subpart A—Exemptions 

Sec. 

1107.1 Exemptions. 

Authority: 21 U.S.C. 387e(j) and 387j. 

Subpart A—Exemptions 

§ 1107.1 Exemptions. 

(a) General requirements. Under 

section 905(j)(3) of the Federal Food, 

Drug, and Cosmetic Act (21 U.S.C. 

387e(j)(3)), FDA may exempt from the 

requirements relating to the 

demonstration that a tobacco product is 

substantially equivalent within the 

meaning of section 910 of the Federal 

Food, Drug, and Cosmetic Act (21 U.S.C. 

387j), tobacco products that are 

modified by adding or deleting a 

tobacco additive, or increasing or 

decreasing the quantity of an existing 

tobacco additive, if FDA determines 

that: 

(1) Such modification would be a 

minor modification of a tobacco product 

that can be sold under the Federal Food, 

Drug, and Cosmetic Act (legally 

marketed tobacco product); 

(2) A report under section 905(j)(1) 

intended to demonstrate substantial 

equivalence is not necessary to ensure 

that permitting the tobacco product to 

be marketed would be appropriate for 

protection of the public health; and 

(3) An exemption is otherwise 

appropriate. 

(b) Request for an exemption under 

section 905(j)(3) of the Federal Food, 

Drug, and Cosmetic Act. A request for 

an exemption from the requirement of 

demonstrating substantial equivalence 

may be made only by the manufacturer 

of a legally marketed tobacco product 

for a minor modification to that tobacco 

product. To request an exemption, the 

manufacturer must submit the request 

and all information supporting the 

request in an electronic format that FDA 

can process, review, and archive. If the 

manufacturer is unable to submit an 

exemption request in an electronic 

format, the manufacturer may submit a 

written request to the Center for 

Tobacco Products explaining in detail 

why the company cannot submit the 

request in an electronic format and 

requesting an alternative format. Such 

request must include an explanation of 

why an alternative format is necessary. 

In addition, the request and all 

supporting information must be legible 

and in the English language. An 

exemption request must contain: 


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744 Federal Register / Vol. 76, No. 4 / Thursday, January 6, 2011 / Proposed Rules 

(1) The manufacturer’s address and 

contact information; 

(2) A detailed explanation of the 

purpose for the modification; 

(3) A detailed description of the 

modification, including a statement as 

to whether the modification involves 

adding or deleting a tobacco additive, or 

increasing or decreasing the quantity of 

an existing tobacco additive; 

(4) A detailed explanation of why the 

modification is a minor modification of 

a tobacco product that can be sold under 

the Federal Food, Drug, and Cosmetic 

Act; 

(5) A detailed explanation of why a 

report under section 905(j)(1) of the 

Federal Food, Drug, and Cosmetic Act 

intended to demonstrate substantial 

equivalence is not necessary to ensure 

that permitting the tobacco product to 

be marketed would be appropriate for 

protection of the public health; 

(6) A certification (i.e., a signed 

statement by a responsible official of the 

company) summarizing the supporting 

evidence and providing the rationale for 

the official’s determination that the 

modification does not increase the 

tobacco product’s appeal to/use by 

minors, toxicity, or addictiveness/abuse 

liability; and 

(7) Other information justifying an 

exemption. 

(c) Exemption determination. FDA 

will review the information submitted 

and determine whether to grant or deny 

an exemption request based on whether 

the criteria in section 905(j)(3) of the 

Federal Food, Drug, and Cosmetic Act 

are met. FDA may request additional 

information if necessary to make a 

determination. FDA will consider the 

exemption request withdrawn if the 

information is not provided within the 

requested timeframe. 

(d) Rescission of an exemption. FDA 

may rescind an exemption if it finds 

that the exemption is not appropriate for 

the protection of public health. In 

general, FDA will rescind an exemption 

only after notice and opportunity for a 

hearing under 21 CFR part 16 of this 

chapter is provided. However, FDA may 

rescind an exemption prior to notice 

and opportunity for a hearing under 21 

CFR part 16 of this chapter if the 

continuance of the exemption presents 

a serious risk to public health. In that 

case, FDA will provide the 

manufacturer an opportunity for a 

hearing as soon as possible after the 

rescission. 

Dated: January 3, 2011. 

Leslie Kux, 

Acting Assistant Commissioner for Policy. 

[FR Doc. 2011–34 Filed 1–5–11; 8:45 am] 

BILLING CODE 4160–01–P 

DEPARTMENT OF AGRICULTURE 

Forest Service 

36 CFR Part 230 

RIN 0596–AC84 

Community Forest and Open Space 

Conservation Program 

AGENCY: Forest Service, USDA. 

ACTION: Proposed rule, request for 

comments. 

SUMMARY: Public comments are solicited 

for this proposed rule which 

implements the Community Forest and 

Open Space Conservation Program 

(CFP) authorized by Section 8003 of the 

Food, Conservation, and Energy Act of 

2008. The CFP legislation is an 

amendment to the Cooperative Forestry 

Assistance Act of 1978. The CFP is a 

competitive grant program whereby 

local governments, Tribal Governments, 

and qualified non-profit organizations 

are eligible to apply for grants to 

establish community forests. The 

program’s two purposes are to assist 

communities in acquiring forestland 

that would provide public recreation, 

environmental and economic benefits, 

and forest-based educational programs, 

and to protect forestland that has been 

identified as a national, regional, or 

local priority for protection. Existing 

provisions in Forest Service regulations 

pertaining to the Stewardship Incentive 

Program will be removed as 

deauthorized by the Farm Security and 

Rural Investment Act of 2002, and this 

proposed rule will be substituted in lieu 

thereof. 

DATES: Comments must be received in 

writing by March 7, 2011 Pursuant to 

the Paperwork Reduction Act, 

comments on the information collection 

burden that would result from this 

proposal must be received by March 7, 

2011. 

ADDRESSES: Written comments 

concerning this notice should be 

addressed to Community Forest 

Program, U.S. Forest Service, State and 

Private Forestry, Cooperative Forestry, 

1400 Independence Avenue, SW., Code 

1123, Washington, DC 20250. 

Comments may also be sent via email to 

communityforest@fs.fed.us, or via 

facsimile to (202) 205–1271. All 

comments, including names and 

addresses when provided, are placed in 

the record and are available for public 

inspection and copying. The public may 

inspect comments received at U.S. 

Forest Service, 1400 Independence 

Avenue, SW., Code 1123, Washington, 

DC 20250. Those wishing to inspect 

comments are encouraged to call ahead 

to (202) 205–1389 to facilitate entry to 

the building. 

Comments concerning the 

information collection requirements 

contained in this action should 

reference OMB No. 0596–New, the 

docket number, date, and page number 

of this issue of the Federal Register. 

Comments should be sent to the address 

listed in the above paragraph. 

FOR FURTHER INFORMATION CONTACT: 

Maya Solomon, U.S. Forest Service, 

State and Private Forestry, Cooperative 

Forestry, (202) 205–1376. Individuals 

who use telecommunication devices for 

the deaf (TDD) may call the Federal 

Information Relay Service (FIRS) at 

1–800–877–8339 between 8 a.m. and 8 

p.m., Eastern Standard Time, Monday 

through Friday. 

SUPPLEMENTARY INFORMATION: 

Background and Need for Proposed 

Rule 

Congress authorized the Community 

Forest and Open Space Conservation 

Program (hereafter ‘‘CFP’’) to address the 

needs of communities to protect and 

maintain their forest resources. In the 

CFP authorization, Congress found that 

people derive health benefits from 

having access to forests for recreation 

and exercise. Congress also found that 

forests protect public water supplies 

and may provide financial benefits from 

forest products. The CFP is a 

competitive grant program whereby 

local governments, Tribal Governments, 

and qualified non-profit organizations 

are eligible to apply for grants to 

establish community forests through 

fee-simple land acquisitions. ‘‘Feesimple’’ means full ownership and 

acquisition of real property, versus a 

partial interest such as conservation 

easement. By creating community 

forests through land acquisition, 

communities and Tribes can sustainably 

manage forests for these and many other 

benefits, including wildlife habitat, 

stewardship demonstration sites for 

forest landowners, and environmental 

education. 

While the CFP title includes the term 

‘‘open space,’’ the authorizing language 

does not discuss the term. The only land 

cover Congress references is ‘‘forests.’’ 

As a result, in this proposed rule, the 

term ‘‘open space’’ is also not used, and 

is assumed that the only type of ‘‘open 

space’’ on which Congress wanted CFP 

to focus is ‘‘forests.’’ 

The Forest Service believes that these 

proposed regulations for CFP will 

facilitate administration of the program 

and provide uniform criteria for 

program participation. The program will 


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