This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

62699

Vol. 62, No. 227

Tuesday, November 25, 1997

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection

Service

7 CFR Part 353

[Docket No. 95–071–1]

RIN 0579–AA75

Export Certification; Accreditation of

Non-Government Facilities

AGENCY: Animal and Plant Health

Inspection Service, USDA.

ACTION: Proposed rule.

SUMMARY: We are proposing to amend

the export certification regulations to

provide for the establishment of a

program under which non-government

facilities could become accredited to

perform specific laboratory testing or

phytosanitary inspection services that

could serve as the basis for the issuance

of a Federal phytosanitary certificate,

export certificate for processed plant

products, or phytosanitary certificate for

reexport. The accreditation criteria for

particular laboratory testing and

phytosanitary inspection services would

be developed by the Animal and Plant

Health Inspection Service in

cooperation with other interested

government, industry, academic, or

research entities. Currently, only tests

conducted by public laboratories or

inspections carried out by Federal,

State, or county inspectors or by agents

may be used as the basis for the

issuance of Federal certificates. The

proposed accreditation program would

provide a mechanism for qualified nongovernment facilities to become

accredited to perform testing or

inspection services that may be used as

supporting documentation for the

issuance of certificates for certain plants

or plant products.

DATES: Consideration will be given only

to comments received on or before

January 26, 1998.

ADDRESSES: Please send an original and

three copies of your comments to

Docket No. 95–071–1, Regulatory

Analysis and Development, PPD,

APHIS, Suite 3C03, 4700 River Road

Unit 118, Riverdale, MD 20737–1238.

Please state that your comments refer to

Docket No. 95–071–1. Comments

received may be inspected at USDA,

room 1141, South Building, 14th Street

and Independence Avenue SW.,

Washington, DC, between 8 a.m. and

4:30 p.m., Monday through Friday,

except holidays. Persons wishing to

inspect comments are requested to call

ahead on (202) 690–2817 to facilitate

entry into the comment reading room.

FOR FURTHER INFORMATION CONTACT: Mr.

Narcy G. Klag, Operations Officer, Port

Operations, PPQ, APHIS, 4700 River

Road Unit 139, Riverdale, MD 20737–

1236; (301) 734–8537.

SUPPLEMENTARY INFORMATION:

Background

The export certification regulations

contained in 7 CFR part 353 (referred to

below as the regulations) set forth the

procedures for obtaining certification for

plants and plant products offered for

export or re-export. Export certification

is not required by the regulations;

rather, it is provided by the Animal and

Plant Health Inspection Service (APHIS)

as a service to exporters who are

shipping plants or plant products to

countries that require phytosanitary

certification as a condition of entry.

After assessing the condition of the

plants or plant products intended for

export, relative to the receiving

country’s regulations, an inspector will

issue an internationally recognized

phytosanitary certificate (PPQ Form

577), a phytosanitary certificate for

reexport (PPQ Form 579), or an export

certificate for processed plant products

(PPQ Form 578), if warranted.

Since 1975, APHIS has participated

with State governments in the

Cooperative Phytosanitary Export

Certification Program, which allows

certain State officials, as well as APHIS

officials, to issue phytosanitary

certificates, phytosanitary certificates

for reexport, or export certificates for

processed plant products. Because the

number of Federal inspectors is limited,

the use of State and county inspectors

is a considerable service to exporters of

plants and plant products in terms of

both time and convenience.

In a final rule published in the

Federal Register on April 8, 1996 (61 FR

15365–15371, Docket No. 90–117–3), we

amended the export certification

regulations to, among other things: (1)

Revise the requirements for a person to

qualify as an inspector; (2) allow

county-level plant regulatory officials,

in addition to State and APHIS officials,

to qualify as inspectors; (3) allow

persons other than inspectors—those

persons being referred to as ‘‘agents’’—

to perform phytosanitary field

inspections; and (4) provide for an

industry-based certification, under

certain conditions, of certain low-risk

plant products such as kiln-dried

lumber offered for export. Those

amendments were intended, in part, to

provide additional qualified personnel

and export certification options in order

to relieve some of the demands placed

upon the existing pool of inspectors by

increasingly stringent foreign import

requirements and dwindling Federal

and State budgets.

In this document, we are proposing to

further broaden the options for

inspection and export certification by

establishing regulations under which

non-government facilities such as

commercial laboratories and private

inspection services could become

accredited by APHIS to perform specific

laboratory testing or phytosanitary

inspection services that could serve as

the basis for the issuance of a Federal

phytosanitary certificate, phytosanitary

certificate for reexport, or export

certificate for processed plant products.

This proposed approach is consistent

with current international trends toward

industry self-certification and is based

upon the recent efforts of a working

group within the North Atlantic Plant

Protection Organization (NAPPO) to

draft standards for the accreditation of

laboratories performing phytosanitary

and other export certification activities

to ensure compliance with import

requirements for products moving into

or within the regional territories of the

NAPPO member countries (Canada,

Mexico, and the United States).

The regulations proposed in this

document would establish a means by

which non-government facilities could

be accredited by APHIS to perform

certain functions related to

phytosanitary export certification. It is

important to note, however, that these

proposed regulations would only

establish a template upon which

accreditation programs for specific

functions could be developed—these

proposed regulations would not

establish specific accreditation
62700 Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules

standards for, by way of example, a

private laboratory seeking to be

accredited to perform virus testing on

plant material intended for export.

Rather, specific accreditation standards

would be developed as demand dictates.

If, for example, a private laboratory

wishes to perform virus testing on plant

material intended for export, APHIS

would work with that laboratory, and

any other similarly situated laboratory,

as well as with any other appropriate

and interested government, industry,

academic, or research entity, to identify

and develop the appropriate specific

standards against which the private

laboratory’s ability and competence to

perform that virus testing could be

judged. Once completed, those

standards would be reviewed by APHIS

and its cooperators and published in the

Federal Register for comment. Once

approved and published as a final rule,

they would become the standard for the

accreditation of non-government

facilities to perform virus testing of

plant material intended for export. Such

standards would be published in 7 CFR

part 353.

We believe that this proposed

approach is beneficial in two ways:

First, it would be difficult, if not

impossible, for APHIS to develop a

single, one-size-fits-all set of standards

for the numerous disciplines that play a

role in phytosanitary export

certification. Secondly, the proposed

approach would allow APHIS to

develop specific standards with the

participation of those best able to

recommend valid scientific criteria, i.e.,

the government, academic, and privatesector individuals who have the

experience and expertise in the

particular area for which specific

standards are being developed.

Proposed Regulations

To establish this proposed

accreditation program, we would first

amend § 353.1 to add a definition of

non-government facility, which we

would define as ‘‘laboratory, research

facility, inspection service, or other

entity that is maintained, at least in part,

for the purpose of providing laboratory

testing or phytosanitary inspection

services and that is not operated by the

Federal Government or by the

government of a State or a subdivision

of a State.’’ We believe that laboratories,

research facilities, or inspection services

are the types of entities most likely to

seek accreditation under the proposed

regulations. By excluding facilities

operated by Federal, State, county, or

local governments, the intent is that the

accreditation program is to apply only

to private entities. The involvement of

government-run facilities in

phytosanitary export certification is

already covered under the current

regulations in part 353; it is not our

intent to require facilities operated by

any level of Federal or State government

to become accredited.

The regulations in § 353.7 currently

state, with regard to the issuance of

certificates, that the Administrator of

APHIS may authorize inspectors to

issue phytosanitary certificates,

phytosanitary certificates for reexport,

or export certificates for processed plant

products on the basis of inspections

made by cooperating Federal, State, and

county agencies. Therefore, to

accommodate the proposed

accreditation program, we are proposing

to amend paragraphs (a), (b), and (c) of

§ 353.7 to further provide that the

Administrator may also authorize

inspectors to issue those certificates on

the basis of a laboratory test or an

inspection conducted by a nongovernment facility that has been

accredited in accordance with § 353.8,

which is a new section that we would

add to the regulations to spell out the

specific provisions of the proposed

accreditation program.

The proposed new § 353.8 would be

divided into three main paragraphs:

Paragraph (a) would serve to describe

the accreditation program, paragraph (b)

would set out the criteria for

accreditation, and paragraph (c) would

discuss the fees related to the

accreditation program. These three

paragraphs are discussed in greater

detail below.

Paragraph (a) of proposed § 353.8

would begin by stating that the

Administrator may accredit a nongovernment facility to perform specific

laboratory testing or phytosanitary

inspection services if the Administrator

determines that the facility meets the

criteria for accreditation found in

paragraph (b). (Note: The term

‘‘Administrator’’ is used in this

document, as it is used throughout

APHIS’ regulations, to mean the

Administrator of APHIS or any person

authorized to act for the Administrator.)

A list of accredited non-government

facilities could be obtained by writing to

APHIS.

To determine whether or not a facility

meets the criteria for accreditation,

APHIS would conduct an assessment of

the facility and its fitness to conduct the

testing or inspection services for which

it is seeking accreditation. A description

of the assessment process is found

below in the discussion of the criteria

for accreditation.

Paragraph (a)(2) of proposed § 353.8

describes the conditions under which

the Administrator could deny

accreditation to a non-government

facility or withdraw the accreditation

that had been previously granted to a

facility. Clearly, a facility would have to

be able to meet and comply with the

standards identified as being necessary

for the accurate and reliable execution

of the testing or inspection services for

which it has been, or is seeking to be,

accredited. Therefore, the proposed

regulations would provide that the

Administrator could deny accreditation

to a facility that APHIS determines,

through its pre-accreditation

assessment, does not meet the criteria

for accreditation and has failed to take

the remedial action recommended to

correct identified deficiencies.

Similarly, the Administrator could

withdraw the accreditation of an

accredited facility if APHIS determined

that the facility was not adhering to the

criteria for the maintenance of

accreditation and had failed to take the

remedial action recommended to correct

the identified deficiencies.

If APHIS denied a facility’s

application for accreditation, the

operator of the facility would be

informed of the reasons for the denial

and would be afforded the opportunity

to appeal the decision to the

Administrator. To ensure that there

would be an informed and timely

review of the appeal, the operator’s

appeal would have to be in writing and

submitted within 10 days after receiving

notification of the denial and would

have to include all of the facts and

reasons upon which the operator was

relying to show that the facility had

been wrongfully denied accreditation.

The Administrator would then grant or

deny the operator’s appeal in writing as

promptly as circumstances permitted,

with the response stating the reasons for

his or her decision. If there was a

conflict as to any material fact regarding

the denial or the reasons for the denial,

a hearing would be held to resolve the

conflict under rules of practice adopted

by the Administrator.

The withdrawal of a facility’s

accreditation would be handled in

much the same way. The operator of the

facility would be informed of the

reasons for the proposed withdrawal

before any action was taken and given

the opportunity to appeal the proposed

withdrawal. The appeal would have to

be in writing and submitted to the

Administrator within 10 days after the

operator was informed of the reasons for

the proposed withdrawal. The appeal

would have to include all of the facts

and reasons upon which the operator of

the facility was relying to show that the

reasons for the proposed withdrawal
Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules 62701

were incorrect or did not support the

withdrawal of the facility’s

accreditation. The Administrator would

grant or deny the appeal in writing as

promptly as circumstances permitted

and would state the reason for his or her

decision. If there was a conflict as to any

material fact regarding the proposed

withdrawal or the reasons for the

proposed withdrawal, a hearing would

be held to resolve the conflict under

rules of practice adopted by the

Administrator. However, the proposed

regulations would provide that the

withdrawal of a facility’s accreditation

could become effective before a final

determination was made regarding an

appeal if the Administrator determined

that an immediate withdrawal was

necessary to protect the public health,

interest, or safety. In such a case, the

withdrawal would be effective at the

time APHIS notifies the operator of the

facility either orally or in writing. In the

event of an oral notification, a written

confirmation would be given to the

operator as promptly as circumstances

allowed. The withdrawal would

continue in effect pending the

completion of the withdrawal and

appeal proceedings, and any subsequent

judicial review of those proceedings,

unless the Administrator ordered

otherwise.

The proposed regulations also would

provide that the Administrator would

withdraw a facility’s accreditation if the

operator of the facility informed APHIS

in writing that the facility wished to

terminate its accredited status.

We would allow a non-government

facility that has had its application for

accreditation denied or its accreditation

withdrawn to reapply for accreditation

using the same application procedures

provided for first-time applicants.

However, if the facility’s accreditation

had been denied or withdrawn because

it failed to meet or comply with the

standards for accreditation, we would

require the facility operator to include

written documentation with the

application that specified what actions

had been taken to correct the conditions

that led to the denial or withdrawal of

the facility’s accreditation. It is likely

that a pre-accreditation assessment of a

reapplying facility would place added

emphasis on those areas in which the

facility had been deficient, so the

documentation describing the actions

taken to correct those deficiencies

would be useful when determining the

scope and design of the assessment.

Because a facility may need to

disclose confidential business

information to APHIS during the course

of its pre-accreditation assessment or

during the term of its accreditation,

paragraph (a) of proposed § 353.8 would

conclude by stating that all information

gathered by APHIS during its

accreditation-related activities would be

treated with the appropriate level of

confidentiality. As set forth in the U.S.

Department of Agriculture’s (USDA’s)

administrative regulations in 7 CFR

1.11, the USDA is responsible for

making the final determination with

regard to the disclosure or

nondisclosure of information submitted

by a business, but the policy of the

USDA is to obtain and consider the

views of the submitter of any privileged

or confidential business information

and to provide the submitter the

opportunity to object to the disclosure

of such information.

Pre-Accreditation Assessment

Paragraph (b) of proposed § 353.8

would set out the criteria for the

achievement and retention of

accreditation. The paragraph would

begin by stating that specific standards

for accreditation in a particular area of

laboratory testing or phytosanitary

inspection could be obtained by writing

to APHIS. However, as discussed

previously in this document, specific

standards have not yet been developed

for any area of accreditation. Rather, it

is our intention that specific standards

would be developed in the future on an

‘‘as needed’’ basis when a nongovernment facility informs APHIS that

it would like to become accredited in a

particular area of laboratory testing or

phytosanitary inspection. Once

standards in a particular area have been

developed and adopted by APHIS, those

standards would be available to nongovernment facilities that may wish to

become similarly accredited.

Because accreditation standards

under the proposed regulations would,

at least initially, have to be drafted and

adopted before the assessment process

could begin, the proposed regulations

would provide for APHIS’ development

of standards. Therefore, paragraph (b)(1)

would state that if specific standards for

accreditation in a particular area of

laboratory testing or phytosanitary

inspection had not been identified by

APHIS, the Administrator would

develop the appropriate specific

standards applicable to accreditation in

that particular area. The regulations

would further provide that APHIS

would place a notice in the Federal

Register to inform the public of the

opportunity to participate in the

development of those standards by

submitting suggested criteria or

recommending particular considerations

that may need to be addressed in the

standards. This proposed approach

would ensure that APHIS’ resources are

focused on those areas in which

facilities are interested in obtaining

accreditation and allow for standards to

be prepared through a collaborative,

cooperative process that provides for the

participation of all interested parties,

including the operator of the nongovernment facility seeking

accreditation and any other interested

governmental, industry, academic, or

research entity.

Once accreditation standards are

promulgated, the operator of a nongovernment facility seeking

accreditation would begin the

accreditation process by submitting an

application to APHIS. The first items on

the application would be the legal name

and full address of the facility and the

name, address, telephone number, and

fax number of the operator of the facility

or his or her authorized representative.

These items would enable APHIS to

identify the facility for its records and

contact the facility’s operator or an

authorized representative as the preaccreditation assessment process begins

and during the term of the facility’s

accreditation.

The application would then have to

contain a description of the facility

itself. This information would enable

APHIS to understand the nature of the

facility, i.e., whether the facility is a

stand-alone building or is located

within a larger office or laboratory

building, what the facility’s primary

function is and the scope of operations

within the facility, and, if applicable,

the relationship the facility has to a

larger corporate entity. This type of

information would give APHIS a frame

of reference as it considers the

suitability of the facility for the type of

work it is seeking to perform under the

accreditation program and would

provide a starting point for the design of

a pre-accreditation assessment. The

application would conclude with a

description of the specific laboratory

testing or phytosanitary inspection

services for which the facility is seeking

accreditation. The completed

application would then have to be

signed by the operator of the facility or

his or her authorized representative.

After it had received the completed

application, APHIS would review the

application to identify the scope of the

assessment that would be necessary to

adequately review the facility’s fitness

to conduct the laboratory testing or

phytosanitary inspection services for

which it is seeking accreditation.

Through that review, APHIS would

determine the number of assessors

needed for an assessment team, the

fields of expertise that should be
62702 Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules

represented on the team, and the means

by which the facility’s competence to

conduct the applicable laboratory tests

or phytosanitary inspections could be

evaluated.

Once the scope of the assessment has

been defined, APHIS could identify the

individuals who would comprise the

assessment team, determine the

materials that would be needed for the

assessment, and project the length of the

assessment process, which would allow

APHIS to develop an estimate of the

expenses that would be incurred by the

government in the course of the preaccreditation assessment process. Those

expenses would have to be reimbursed

by the facility seeking accreditation, so

APHIS would provide the estimate to

the operator of the facility before

embarking upon any activities that

would result in costs being incurred.

Before the assessment of a facility

could begin, the operator of the facility

would have to agree, in writing, to allow

the assessment team access to its

facilities, supply the team with the

information it needs to evaluate the

facility, and to enter into a trust fund

agreement with APHIS to pay the

assessment fee regardless of the

assessment’s outcome (i.e., even if the

assessment team recommends that the

facility not be accredited), and, if

accreditation is granted, to pay the

charges related to the subsequent

maintenance of the facility’s

accreditation, such as laboratory fees for

the corroboration of check tests. (The

specific provisions of the trust fund

agreement are explained below under

‘‘Fees and Trust Fund Agreement.’’)

Once the operator of the facility had

agreed, in writing, to these terms,

APHIS would assemble the assessment

team and commence the assessment as

soon as circumstances permitted.

The assessment itself would focus on

four major areas: Physical plant,

equipment, methods of testing or

inspection, and personnel. The

assessment team would compare the

facility’s performance in those areas

against the specific accreditation

standards that had been identified for

the particular laboratory testing or

phytosanitary inspection services for

which the facility was seeking

accreditation. The four areas are

explained in greater detail below.

Physical Plant

The facility’s physical plant would

have to meet the criteria identified in

the accreditation standards as necessary

to properly conduct the laboratory

testing or phytosanitary inspection

services for which it seeks accreditation.

For example, a facility that wished to be

accredited to perform laboratory testing

would have to have adequate laboratory

space in which to perform the testing,

storage space for holding samples and

supplies, and office space for preparing

reports and other documentation.

Equipment

The assessment team would

determine whether the facility’s

personnel had unrestricted access to the

equipment identified in the

accreditation standards as necessary to

properly conduct the laboratory testing

or phytosanitary inspection services for

which it seeks accreditation. To

continue with the example in the

previous paragraph, a facility seeking

accreditation for laboratory testing

would have to have the microscopes,

computers, scales, analyzers, etc. that

would be necessary for the facility to

properly conduct that laboratory testing.

The assessment team would also verify,

where appropriate, that calibration and

monitoring of the required equipment is

documented and conforms to prescribed

standards.

Methods of Testing or Inspection

To ensure that the facility was

employing scientifically valid and upto-date methodology to conduct its

laboratory testing or phytosanitary

inspection activities, the assessment

team would review the facility’s quality

manual or other equivalent

documentation that described the

system in place at the facility for the

conduct of the laboratory testing or

phytosanitary inspection services for

which the facility seeks accreditation.

The assessors would verify that the

manual was available to, and in use by,

the facility personnel who perform the

services and that the methods and

procedures described in the manual

were equal to those identified in the

accreditation standards.

Personnel

The assessment team would also

review the qualifications of the facility’s

personnel, both management and staff,

who were responsible for the testing or

inspection services for which the

facility was seeking accreditation. Those

personnel, who would have to be

identified to the assessment team,

would have to possess the training,

education, or experience identified in

the accreditation standards as necessary

to properly conduct the testing or

inspection services for which the

facility was seeking accreditation, and

that training, education, or experience

would have to be documented. If the

particular accreditation standards under

which the facility was being reviewed

allowed for the use of subcontractors,

the assessment team would also review

the qualifications of any subcontractors

used by the facility in connection with

its laboratory testing or phytosanitary

inspection activities.

Retaining Accreditation

Once accredited, the non-government

facility would have to observe several

conditions to maintain its accreditation.

First, the facility would have to

continue to observe the specific

standards applicable to its area of

accreditation, i.e., the standards by

which it was judged in its initial, preaccreditation assessment. To give

APHIS the ability to monitor the

facility’s compliance with those

standards, the facility would have to

agree to be assessed and evaluated on a

periodic basis through proficiency tests

or check samples and be able to

demonstrate on request that it is able to

perform the tests or inspection services

for which it was accredited. If, in the

course of an assessment or evaluation,

APHIS identifies any deficiencies in the

facility or in its conduct of testing or

inspection activities, the operator of the

facility would have to ensure that those

deficiencies are resolved.

Because the facility’s accreditation

would have been based largely on

APHIS’ review and acceptance of

specific elements in place at the facility

at the time of the assessment, we would

require that the facility notify APHIS

when those elements changed.

Specifically, we would require that the

operator of the facility notify APHIS

when there are any changes in key

management personnel or facility staff

accountable for the testing or inspection

services for which the facility has been

accredited. We would also require the

operator of the facility to report any

changes involving the location,

ownership, physical plant, equipment,

or other conditions that existed at the

facility at the time accreditation was

granted.

Fees and Trust Fund Agreement

To cover the costs of APHIS’

involvement in the assessment process,

the operator of the facility seeking

accreditation would have to enter into a

trust fund agreement with APHIS.

Under the agreement, the operator of the

facility would pay in advance all

estimated costs that APHIS expected to

incur through its involvement in the

pre-accreditation assessment process

and the maintenance of the facility’s

accreditation. Those costs would

include administrative expenses

incurred in those activities, such as

laboratory fees for evaluating check test
Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules 62703

results, and all salaries (including

overtime and the Federal share of

employee benefits), travel expenses

(including per diem expenses), and

other incidental expenses incurred by

the APHIS in performing those

activities. The agreement would require

the operator of the facility to deposit a

certified or cashier’s check with APHIS

for the amount of the costs, as estimated

by APHIS. If the deposit was not

sufficient to meet all costs incurred by

APHIS, the agreement would further

require the operator of the facility to

deposit another certified or cashier’s

check with APHIS for the amount of the

remaining costs, as determined by

APHIS, before APHIS’ services would be

completed. After a final audit at the

conclusion of the pre-accreditation

assessment, any overpayment of funds

would be returned to the operator of the

facility or held on account until needed

for future activities related to the

maintenance of the facility’s

accreditation.

Executive Order 12866 and Regulatory

Flexibility Act

This proposed rule has been reviewed

under Executive Order 12866. The rule

has been determined to be significant

for the purposes of Executive Order

12866 and, therefore, has been reviewed

by the Office of Management and

Budget.

This proposed rule would amend the

export certification regulations to

provide for the establishment of a

program under which non-government

facilities could become accredited to

perform specific laboratory testing or

phytosanitary inspection services that

could serve as the basis for the issuance

of Federal phytosanitary certificates,

phytosanitary certificates for reexport,

or an export certificates for processed

plant products. The accreditation

criteria for particular laboratory testing

and phytosanitary inspection services

would be developed by APHIS with the

participation of other interested

governmental, industry, academic, or

research entities. Currently, only tests

conducted by public laboratories or

inspections carried out by Federal,

State, or county inspectors or by agents

may be used as the basis for the

issuance of a Federal certificate. The

proposed accreditation program would

provide a mechanism for qualified nongovernment facilities to become

accredited to perform the testing or

inspection services that may be used as

supporting documentation for the

issuance of Federal certificates for the

export or reexport of certain plants or

plant products.

The regulations proposed in this

document are intended only to provide

a framework upon which accreditation

programs for specific functions could be

established, so they would not, in and

of themselves, entail any costs to APHIS

or any non-government facility.

However, any specific accreditation

program that would be established

under these proposed regulations would

entail costs to both the entities being

accredited and the accrediting body, i.e.,

APHIS. Because the accreditation

program is expected to be selfsupporting, the costs to APHIS would be

recouped through accreditation fees.

The fees charged by APHIS in

connection with the initial accreditation

of a non-government facility and the

maintenance of that accreditation

would, therefore, have to be adequate to

recover the costs incurred by the

government in the course of APHIS’

accreditation activities. We expect that

the costs that would have to be

reimbursed would be largely

attributable to the cost of transportation

for the assessors to travel to the site of

the facility, lodging for the assessors,

their salary and per diem, any

laboratory fees charged for evaluating

check test results, and administrative

expenses. Costs for specific

accreditation programs would vary

depending on the range of activities for

which a facility was seeking

accreditation, the number of assessors

needed to adequately conduct a preaccreditation assessment, the type and

number of any proficiency tests that

would have to be conducted, and the

frequency with which post-accreditation

evaluation activities such as check tests

and site visits would have to be

conducted.

The proposed regulations would

stipulate that APHIS would provide an

estimate of its anticipated fees to the

operator of the facility prior to

undertaking any activities that would

result in fees being charged to a facility.

Participation in any accreditation

program developed under these

proposed regulations would be

voluntary. At this time, we estimate that

15 individual non-government facilities

would be likely to seek and maintain

accreditation annually on about 82

accredited procedures, as long as the

costs of participating in an accreditation

program are lower than the benefits they

receive from the program. As a result,

this program would have to meet the

test of the marketplace.

The domestic seed industry, through

the American Seed Trade Association,

has indicated its interest in establishing

an accreditation program for seed health

testing and field inspection of seed, so

we have used the domestic seed

industry to illustrate the potential

benefits that could result from the

establishment of specific accreditation

programs.

The seed industry would likely

benefit from the establishment of an

accreditation program because domestic

seed exporters routinely require the

services of inspectors and agents in

order to obtain the phytosanitary

certification required by most, if not all,

importing countries; the benefits would

be realized in terms of more timely

certifications, which in turn could lead

to reduced costs as well as increased

U.S. exports.

The value of seed exported from the

United States to other countries

continues to grow rapidly, from $665

million in 1994–95 (July to June), to

$705 million in 1995–96, to more than

$800 million projected for 1996–97.

There has been a concomitant rise in

demand for laboratory testing and

phytosanitary inspection services to

meet other countries’ import

requirements. The ability of Federal,

State, and county testing and inspection

services to meet this growing demand

will be increasingly strained. Already

there are instances in which the

accreditation of non-government

facilities would have prevented the loss

of export sales.

For example, some seed export

opportunities have been forfeited

because the results of pre-harvest field

inspections are usually not known until

after harvest. It is common for seed from

several fields to be blended before

shipment. If the sample from one field

is subsequently reported to contain an

actionable pest, then none of the

blended seed—which may have been

harvested from as many as eight or nine

fields—could be exported. In one case

in which this occurred, the affected seed

company lost foreign sales worth

$250,000. Such losses would be much

less likely to occur if there were more

timely reporting of pre-harvest

inspections; accredited non-government

inspection facilities could make timely

reporting a reality. In general, nongovernment testing and inspection

services could be expected to be

completed with minimal delay, leading

to greater marketing flexibility and

lower risk of lost sales.

Additional benefits, of even greater

potential significance, would be gained

through the standardization of testing

and inspection protocols that would

result from the establishment of

accreditation standards, particularly

when internationally recognized

standards are used. Major seed trading

partners of the United States, such as
62704 Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules

Canada, France, and The Netherlands,

have national seed health organizations

that address seed health issues in part

by employing laboratory accreditation

protocols. The standards that would

underlie accreditation of nongovernment facilities in the United

States could help lead to the removal of

discrepancies among foreign

phytosanitary regulations, thereby

expediting U.S. seed exports.

Accreditation of non-government

facilities, by promoting more

streamlined exports based on

internationally recognized standards,

could be expected to benefit other

export sales besides those of the seed

industry. As a self-supporting system,

private firms that expect benefits in

excess of costs of accreditation would

participate. In addition to the net

benefits received by these firms directly,

society as a whole would benefit from

enhanced trade.

Under these circumstances, the

Administrator of the Animal and Plant

Health Inspection Service has

determined that this action would not

have a significant economic impact on

a substantial number of small entities.

Executive Order 12372

This program/activity is listed in the

Catalog of Federal Domestic Assistance

under No. 10.025 and is subject to

Executive Order 12372, which requires

intergovernmental consultation with

State and local officials. (See 7 CFR part

3015, subpart V.)

Executive Order 12988

This proposed rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. If this proposed rule is

adopted: (1) All State and local laws and

regulations that are inconsistent with

this rule will be preempted; (2) no

retroactive effect will be given to this

rule; and (3) administrative proceedings

will not be required before parties may

file suit in court challenging this rule.

Paperwork Reduction Act

In accordance with section 3507(d) of

the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.), the information

collection or recordkeeping

requirements included in this proposed

rule have been submitted for approval to

the Office of Management and Budget

(OMB). Please send written comments

to the Office of Information and

Regulatory Affairs, OMB, Attention:

Desk Officer for APHIS, Washington, DC

20503. Please state that your comments

refer to Docket No. 95–071–1. Please

send a copy of your comments to: (1)

Docket No. 95–071–1, Regulatory

Analysis and Development, PPD,

APHIS, suite 3C03, 4700 River Road

Unit 118, Riverdale, MD 20737–1238,

and (2) Clearance Officer, OIRM, USDA,

room 404–W, 14th Street and

Independence Avenue SW.,

Washington, DC 20250. A comment to

OMB is best assured of having its full

effect if OMB receives it within 30 days

of publication of this proposed rule.

This proposed rule would provide for

the establishment of a program under

which non-government facilities could

become accredited to perform specific

laboratory testing or phytosanitary

inspection services that could serve as

the basis for the issuance of a Federal

phytosanitary certificate, export

certificate for processed plant products,

or phytosanitary certificate for reexport.

This proposed accreditation program

would provide a mechanism for

qualified non-government facilities to

become accredited to perform testing or

inspection services that may be used as

supporting documentation for the

issuance of certificates for certain plants

or plant products.

Launching this accreditation program

would necessitate that APHIS use a

number of information collection

activities to ensure that non-government

facilities participating or seeking to

participate in the program possess the

necessary qualifications. Therefore, we

are seeking OMB approval to employ

the following information collection

activities in connection with the APHIS

export certification program:

Application for accreditation: The

operator of a non-government facility

who wishes to be accredited in a

particular area of laboratory testing or

phytosanitary inspection must submit

an application to APHIS. The

application must contain the legal name

and full address of the facility; the

name, address, telephone, and fax

number of the facility’s operator; a

description of the facility; and a

description of the specific laboratory

testing or phytosanitary inspection

services for which the facility is seeking

accreditation.

Agreement to fulfill accreditation

procedure: Before APHIS will assess a

non-government facility to determine

whether it meets the standards for

accreditation, the operator of the facility

must sign an agreement with APHIS.

Specifically, the operator must agree to

supply any information needed for the

evaluation of the facility, pay the fees

charged for the assessment, and accept

the charges related to the subsequent

maintenance of the facility’s

accreditation.

Documentation of equipment: The

equipment used in the non-government

facility (microscopes, computers, etc.)

must be calibrated and monitored to

ensure that it conforms to the standards

for accreditation. This calibration and

monitoring must be documented by

facility personnel.

Quality manual or equivalent

documentation: The operator of a nongovernment facility is responsible for

maintaining a quality manual or similar

documentation at the facility that

describes the system in place for

conducting the laboratory testing or

phytosanitary inspection services for

which the faculty is accredited. The

manual must be available to and used

by facility personnel performing the

work.

Identity of personnel and

subcontractor’s qualifications: The

personnel employed at the nongovernment facility must be identified

and possess the training, education, or

experience necessary to perform the

laboratory testing or phytosanitary

inspection services for which the

facility is accredited. The operator of the

facility is responsible for acquiring and

maintaining documentation concerning

the training, education, and experience

of facility personnel. If the nongovernment facility uses a subcontractor

to perform some of its testing or

inspection services, the qualifications of

the subcontractor must be documented

and made available to APHIS. The

facility operator is responsible for

acquiring and maintaining this

documentation.

Notification of changes in personnel:

The facility operator must notify APHIS

whenever the facility undergoes any

change in personnel. This notification

may be written, communicated via

telephone, or by any other means of

communication convenient to the

facility’s operator.

Report changes in location or

ownership: The facility operator must

notify APHIS if the facility moves its

operations to a new location, undergoes

an ownership change, replaces

equipment, or experiences any other

changes in the conditions that existed at

the time the facility received its

accreditation. This notification may be

written, communicated via telephone,

or by any other means of

communication convenient to the

facility’s operator.

We are soliciting comments from the

public (as well as affected agencies)

concerning our proposed information

collection and recordkeeping

requirements. We need this outside

input to help us:

(1) Evaluate whether the proposed

information collection is necessary for

the proper performance of our agency’s
Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules 62705

1A list of accredited non-government facilities

may be obtained by writing to Port Operations,

PPQ, APHIS, 4700 River Road Unit 139, Riverdale,

MD 20737–1236.

functions, including whether the

information will have practical utility;

(2) Evaluate the accuracy of our

estimate of the burden of the proposed

information collection, including the

validity of the methodology and

assumptions used;

(3) Enhance the quality, utility, and

clarity of the information to be

collected; and

(4) Minimize the burden of the

information collection on those who are

to respond (such as through the use of

appropriate automated, electronic,

mechanical, or other technological

collection techniques or other forms of

information technology, e.g., permitting

electronic submission of responses).

Estimate of burden: Public reporting

burden for this collection of information

is estimated to average 3.609 hours per

response.

Respondents: Operators of nongovernment facilities who wish to be

accredited to perform laboratory testing

or phytosanitary inspection services in

connection with APHIS’ export

certification program and certain

employees of such non-government

facilities.

Estimated number of respondents: 15.

Estimated number of responses per

respondent: 5.466.

Estimated annual number of

responses: 82.

Estimated total annual burden on

respondents: 296 hours.

Copies of this information collection

can be obtained from Clearance Officer,

OIRM, USDA, room 404–W, 14th Street

and Independence Avenue SW.,

Washington, DC 20250.

All responses to this notice will be

summarized and included in the request

for OMB approval. All comments will

also become a matter of public record.

Regulatory Reform

This action is part of the President’s

Regulatory Reform Initiative, which,

among other things, directs agencies to

remove obsolete and unnecessary

regulations and to find less burdensome

ways to achieve regulatory goals.

List of Subjects in 7 CFR Part 353

Exports, Plant diseases and pests,

Reporting and recordkeeping

requirements.

Accordingly, 7 CFR part 353 would be

amended as follows:

PART 353—EXPORT CERTIFICATION

1. The authority citation for part 353

would continue to read as follows:

Authority: 7 U.S.C. 147a; 21 U.S.C. 136

and 136a; 44 U.S.C. 35; 7 CFR 2.22, 2.80, and

371.2(c).

2. In § 353.1, a definition of nongovernment facility would be added, in

alphabetical order, to read as follows:

§ 353.1 Definitions.

* * * * *

Non-government facility. A

laboratory, research facility, inspection

service, or other entity that is

maintained, at least in part, for the

purpose of providing laboratory testing

or phytosanitary inspection services and

that is not operated by the Federal

Government or by the government of a

State or a subdivision of a State.

* * * * *

3. In § 353.7, paragraphs (a)(4), (b)(4),

and (c)(4) would each be amended by

adding a new sentence at the end of

each paragraph to read as follows:

§ 353.7 Certificates.

(a) * * *

(4) * * * The Administrator may also

authorize inspectors to issue a

certificate on the basis of a laboratory

test or an inspection performed by a

non-government facility accredited in

accordance with § 353.8.

* * * * *

(b) * * *

(4) * * * The Administrator may also

authorize inspectors to issue a

certificate on the basis of a laboratory

test or an inspection performed by a

non-government facility accredited in

accordance with § 353.8.

* * * * *

(c) * * *

(4) * * * The Administrator may also

authorize inspectors to issue a

certificate on the basis of laboratory test

or an inspection performed by a nongovernment facility accredited in

accordance with § 353.8.

* * * * *

4. A new § 353.8 would be added to

read as follows:

§ 353.8 Accreditation of non-government

facilities.

(a) The Administrator may accredit a

non-government facility to perform

specific laboratory testing or

phytosanitary inspection services if the

Administrator determines that the nongovernment facility meets the criteria of

paragraph (b) of this section.1

(1) A non-government facility’s

compliance with the criteria of

paragraph (b) of this section shall be

determined through an assessment of

the facility and its fitness to conduct the

laboratory testing or phytosanitary

inspection services for which it seeks to

be accredited. If, after evaluating the

results of the assessment, the

Administrator determines that the

facility meets the accreditation criteria,

the facility’s application for

accreditation will be approved.

(2) The Administrator may deny

accreditation to, or withdraw the

accreditation of, any non-government

facility to conduct laboratory testing or

phytosanitary inspection services upon

a determination that the facility does

not meet the criteria for accreditation or

maintenance of accreditation under

paragraph (b) of this section and has

failed to take the remedial action

recommended to correct identified

deficiencies.

(i) In the case of a denial, the operator

of the facility will be informed of the

reasons for the denial and may appeal

the decision in writing to the

Administrator within 10 days after

receiving notification of the denial. The

appeal must include all of the facts and

reasons upon which the person relies to

show that the facility was wrongfully

denied accreditation. The Administrator

will grant or deny the appeal in writing

as promptly as circumstances permit,

stating the reason for his or her

decision. If there is a conflict as to any

material fact, a hearing will be held to

resolve the conflict. Rules of practice

concerning the hearing will be adopted

by the Administrator.

(ii) In the case of withdrawal, before

such action is taken, the operator of the

facility will be informed of the reasons

for the proposed withdrawal. The

operator of the facility may appeal the

proposed withdrawal in writing to the

Administrator within 10 days after

being informed of the reasons for the

proposed withdrawal. The appeal must

include all of the facts and reasons upon

which the person relies to show that the

reasons for the proposed withdrawal are

incorrect or do not support the

withdrawal of the accreditation of the

facility. The Administrator will grant or

deny the appeal in writing as promptly

as circumstances permit, stating the

reason for his or her decision. If there

is a conflict as to any material fact, a

hearing will be held to resolve the

conflict. Rules of practice concerning

the hearing will be adopted by the

Administrator. However, withdrawal

shall become effective pending final

determination in the proceeding when

the Administrator determines that such

action is necessary to protect the public

health, interest, or safety. Such

withdrawal will be effective upon oral

or written notification, whichever is

earlier, to the operator of the facility. In

the event of oral notification, written
62706 Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules

confirmation will be given as promptly

as circumstances allow. This

withdrawal will continue in effect

pending the completion of the

proceeding, and any judicial review

thereof, unless otherwise ordered by the

Administrator.

(3) The Administrator will withdraw

the accreditation of a non-government

facility if the operator of the facility

informs APHIS in writing that the

facility wishes to terminate its

accredited status.

(4) A non-government facility whose

accreditation has been denied or

withdrawn may reapply for

accreditation using the application

procedures in paragraph (b) of this

section. If the facility’s accreditation

was denied or withdrawn under the

provisions of paragraph (a)(2) of this

section, the facility operator must

include with the application written

documentation specifying what actions

have been taken to correct the

conditions that led to the denial or

withdrawal of accreditation.

(5) All information gathered during

the course of a non-government

facility’s assessment and during the

term of its accreditation will be treated

by APHIS with the appropriate level of

confidentiality, as set forth in the U.S.

Department of Agriculture’s

administrative regulations in § 1.11 of

this title.

(b) Criteria for accreditation of nongovernment facilities. (1) Specific

standards for accreditation in a

particular area of laboratory testing or

phytosanitary inspection are set forth in

this part and may be obtained by writing

to APHIS. If specific standards for

accreditation in a particular area of

laboratory testing or phytosanitary

inspection have not been promulgated

by APHIS, the Administrator will

develop appropriate standards

applicable to accreditation in the area

for which the non-government facility is

seeking accreditation and publish a

notice of proposed rulemaking in the

Federal Register to inform the public

and other interested persons of the

opportunity to comment on and

participate in the development of those

standards.

(2) The operator of a non-government

facility seeking accreditation to conduct

laboratory testing or phytosanitary

inspection shall submit an application

to the Administrator. The application

must be completed and signed by the

operator of the facility or his or her

authorized representative and must

contain the following:

(i) Legal name and full address of the

facility;

(ii) Name, address, and telephone and

fax number of the operator of the facility

or his or her authorized representative;

(iii) A description of the facility,

including its physical plant, primary

function, scope of operation, and, if

applicable, its relationship to a larger

corporate entity; and

(iv) A description of the specific

laboratory testing or phytosanitary

inspection services for which the

facility is seeking accreditation.

(3) Upon receipt of the application,

APHIS will review the application to

identify the scope of the assessment that

will be required to adequately review

the facility’s fitness to conduct the

laboratory testing or phytosanitary

inspection services for which it is

seeking accreditation. Before the

assessment of the facility begins, the

applicant’s representative must agree, in

writing, to fulfill the accreditation

procedure, especially to receive the

assessment team, to supply any

information needed for the evaluation of

the facility, and to enter into a trust

fund agreement as provided by

paragraph (c) of this section to pay the

fees charged to the applicant facility

regardless of the result of the assessment

and to pay the charges of subsequent

maintenance of the accreditation of the

facility. Once the agreement has been

signed, APHIS will assemble an

assessment team and commence the

assessment as soon as circumstances

permit. The assessment team will

measure the facility’s fitness to conduct

the laboratory testing or phytosanitary

inspection services for which it is

seeking accreditation against the

specific standards identified by the

Administrator for those services by

reviewing the facility in the following

areas:

(i) Physical plant. The facility’s

physical plant (e.g., laboratory space,

office space, greenhouses, vehicles, etc.)

must meet the criteria identified in the

accreditation standards as necessary to

properly conduct the laboratory testing

or phytosanitary inspection services for

which it seeks accreditation.

(ii) Equipment. The facility’s

personnel must possess or have

unrestricted access to the equipment

(e.g., microscopes, computers, scales,

triers, etc.) identified in the

accreditation standards as necessary to

properly conduct the laboratory testing

or phytosanitary inspection services for

which it seeks accreditation. The

calibration and monitoring of that

equipment must be documented and

conform to prescribed standards.

(iii) Methods of testing or inspection.

The facility must have a quality manual

or equivalent documentation that

describes the system in place at the

facility for the conduct of the laboratory

testing or phytosanitary inspection

services for which the facility seeks

accreditation. The manual must be

available to, and in use by, the facility

personnel who perform the services.

The methods and procedures used by

the facility to conduct the laboratory

testing or phytosanitary inspection

services for which it seeks accreditation

must be commensurate with those

identified in the accreditation standards

and must be consistent with or

equivalent to recognized international

standards for such testing or inspection.

(iv) Personnel. The management and

facility personnel accountable for the

laboratory testing or phytosanitary

inspection services for which the

facility is seeking accreditation must be

identified and must possess the training,

education, or experience identified in

the accreditation standards as necessary

to properly conduct the testing or

inspection services for which the

facility seeks accreditation, and that

training, education, or experience must

be documented. Any subcontractor

utilized by the facility in connection

with the testing or inspection services

for which accreditation is sought must

be identified to APHIS; the

subcontractor’s qualifications will be

reviewed by APHIS as part of the

facility’s assessment.

(4) To retain accreditation, the facility

must agree to:

(i) Observe the specific standards

applicable to its area of accreditation;

(ii) Be assessed and evaluated on a

periodic basis by means of proficiency

testing or check samples;

(iii) Demonstrate on request that it is

able to perform the tests or inspection

services representative of those for

which it is accredited;

(iv) Resolve all identified deficiencies;

(v) Notify APHIS as soon as

circumstances permit of any changes in

key management personnel or facility

staff accountable for the laboratory

testing or phytosanitary inspection

services for which the facility is

accredited; and

(vi) Report to APHIS as soon as

circumstances permit any changes

involving the location, ownership,

physical plant, equipment, or other

conditions that existed at the facility at

the time accreditation was granted.

(c) Fees and trust fund agreement.

The fees charged by APHIS in

connection with the initial accreditation

of a non-government facility and the

maintenance of that accreditation shall

be adequate to recover the costs

incurred by the government in the

course of APHIS’ accreditation
Federal Register / Vol. 62, No. 227 / Tuesday, November 25, 1997 / Proposed Rules 62707

activities. To cover those costs, the

operator of the facility seeking

accreditation must enter into a trust

fund agreement with APHIS under

which the operator of the facility will

pay in advance all estimated costs that

APHIS expects to incur through its

involvement in the pre-accreditation

assessment process and the

maintenance of the facility’s

accreditation. Those costs shall include

administrative expenses incurred in

those activities, such as laboratory fees

for evaluating check test results, and all

salaries (including overtime and the

Federal share of employee benefits),

travel expenses (including per diem

expenses), and other incidental

expenses incurred by the APHIS in

performing those activities. The

operator of the facility must deposit a

certified or cashier’s check with APHIS

for the amount of the costs, as estimated

by APHIS. If the deposit is not sufficient

to meet all costs incurred by APHIS, the

operator of the facility must deposit

another certified or cashier’s check with

APHIS for the amount of the remaining

costs, as determined by APHIS, before

APHIS’ services will be completed.

After a final audit at the conclusion of

the pre-accreditation assessment, any

overpayment of funds will be returned

to the operator of the facility or held on

account until needed for future

activities related to the maintenance of

the facility’s accreditation.

Done in Washington, DC, this 19th day of

November 1997.

Terry L. Medley,

Administrator, Animal and Plant Health

Inspection Service.

[FR Doc. 97–30944 Filed 11–24–97; 8:45 am]

BILLING CODE 3410–34–P

SMALL BUSINESS ADMINISTRATION

13 CFR Part 123

Disaster Loan Program

AGENCY: Small Business Administration

(SBA).

ACTION: Proposed rule.

SUMMARY: Under this proposed rule, an

SBA disaster loan borrower could

request an increase in a disaster loan

within two years after the loan was

approved. The increase must be used to

cover eligible damages resulting from

events that occurred after the loan was

approved and were beyond the

borrower’s control. Under the proposed

rule, the SBA Associate Administrator

for Disaster Assistance could waive the

two year limit because of extraordinary

circumstances.

DATES: Comments must be submitted on

or before December 26, 1997.

ADDRESSES: Comments should be

mailed to Bernard Kulik, Associate

Administrator for Disaster Assistance,

Small Business Administration, 409

Third Street, S.W., Washington, D.C.

20416.

FOR FURTHER INFORMATION CONTACT:

Bernard Kulik, 202/205–6734.

SUPPLEMENTARY INFORMATION: SBA

makes thousands of physical and

economic injury disaster loans to repair

or replace damaged property or to help

a business recover from economic

injury. Borrowers must use such loans

only to help them recover from the

effects of a specific disaster. Borrowers

may request increases in their loans

after the initial disaster loans were made

and, where appropriate, SBA will

approve the request. Under this

proposed rule, SBA is defining the

circumstances under which a borrower

can request an increase and limiting the

time period for the request to two years.

The SBA Associate Administrator for

Disaster Assistance (AA/DA) would

have the authority to waive the two year

limit for extraordinary and

unforeseeable circumstances.

Under the proposed rule, a borrower

of a disaster loan (whether physical or

economic injury) could request an

increase in the loan amount if the

eligible cost of repair or replacement of

damages increases because of events

occurring after the loan approval that

were beyond the borrower’s control. For

example, a borrower can request an

increase of a physical disaster loan

before the repair, renovation or

reconstruction is completed if hidden

damage is discovered or if official

building codes changed since SBA

approved the physical disaster loan.

With respect to economic injury disaster

loans, borrowers could request an

increase in working capital if they could

not resume business activity as quickly

as planned because of events beyond

their control. These examples, while not

all inclusive, would support a

borrower’s request for an increase in the

amount of a disaster loan. These kinds

of events usually will be apparent

within two years after SBA approves a

disaster loan. However, in extraordinary

circumstances, the proposed rule would

permit the AA/DA to waive the two year

limitation.

Compliance With Executive Orders

12612, 12778, and 12866, the

Regulatory Flexibility Act (5 U.S.C. 601,

et seq.), and the Paperwork Reduction

Act (44 U.S.C. Ch. 35)

SBA certifies that this proposed rule

does not constitute a significant rule

within the meaning of Executive Order

12866 and will not have a significant

economic impact on a substantial

number of small entities within the

meaning of the Regulatory Flexibility

Act, 5 U.S.C. 601 et seq. It is not likely

to have an annual economic effect of

$100 million or more on the economy,

result in a major increase in costs or

prices, or have a significant adverse

effect on competition or the United

States economy.

For purposes of the Paperwork

Reduction Act, 44 U.S.C. Ch. 35, SBA

certifies that this proposed rule contains

no new reporting or recordkeeping

requirements.

For purposes of Executive Order

12612, SBA certifies that this proposed

rule has no federalism implications

warranting the preparation of a

Federalism Assessment.

For purposes of Executive Order

12778, SBA certifies that this rule is

drafted, to the extent practicable, in

accordance with the standards set forth

in section 2 of that Order.

(Catalog of Federal Domestic Assistance

Programs, No. 59.012 and 59.008)

List of Subjects in 13 CFR Part 123

Disaster assistance, Loan programsbusiness, Small Businesses.

Accordingly, pursuant to the

authority contained in section 5(b)(6) of

the Small Business Act (15 U.S.C.

634(b)(6)), SBA proposes to amend part

123, chapter I, title 13, Code of Federal

Regulations, as follows:

PART 123—DISASTER LOAN

ASSISTANCE

1. The authority citation for Part 123

would continue to read as follows:

Authority: 15 U.S.C. 634(b)(6), 636(b),

636(c) and 636(f); Pub. L. 102–395, 106 Stat.

1828, 1864; and Pub. L. 103–75, 107 Stat.

739.

2. Sections 123.18, 123.19 and 123.20

would be added to read as follows:

§ 123.18 Can I request an increase in the

amount of a physical disaster loan?

SBA will consider your request for an

increase in your loan if you can show

that the eligible cost of repair or

replacement of damages increased

because of events occurring after the

loan approval that were beyond your

control. An eligible cost is one which is