        DEPARTMENT OF COMMERCE
        National Oceanic and Atmospheric Administration
        50 CFR Part 226
        [Docket No. 030716175-3187-02; I.D.070303A]
        RIN 0648-AQ77
        Endangered and Threatened Species:  Advance Notice of Proposed Rulemaking to Designate Critical Habitat for 20 Listed Evolutionarily Significant Units of Pacific Salmon and Steelhead

          AGENCY:
          National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

          ACTION:
          Advance Notice of Proposed Rulemaking; request for information.

          SUMMARY:
          The National Marine Fisheries Service (NMFS) will be preparing critical habitat designation proposals for five species of Pacific salmon and steelhead (Oncorhynchus spp.) listed under the Endangered Species Act (ESA).  The designations will address 20 evolutionarily significant units (ESUs) of these species in the states of WA, OR, ID, and CA.  This advance notice of proposed rulemaking (ANPR) identifies issues for consideration and evaluation, and solicits comments regarding these issues as well as information regarding the areas and species under consideration.

          DATES:

          Comments and information regarding the suggested designation process and areas being considered for designation may be sent to the appropriate address or fax number (See
            ADDRESSES), no later than 5 p.m. on November 13, 2003.

          ADDRESSES:

          Comments may be sent to Chief, Protected Resources Division, NMFS, 525 NE Oregon Street - Suite 500, Portland, OR 97232.  Comments may also be sent via facsimile (fax) to 503 230-5435 or submitted on the Internet at http://www.nmfs.noaa.gov/ibrm.

          FOR FURTHER INFORMATION CONTACT:
          Steve Stone, NMFS Northwest Region (WA, OR, and ID), 503/231-2317; Craig Wingert, NMFS Southwest Region (CA), 562/980-4021; or Lamont Jackson, NMFS Office of Protected Resources, Silver Spring, MD, 301/713-1401.

        SUPPLEMENTARY INFORMATION:
        Rulemaking Background

        NMFS is responsible for determining whether species, subspecies, or distinct population segments of Pacific salmon and steelhead are threatened or endangered and which areas constitute critical habitat for them under the ESA (16 U.S.C. 1531 et seq.).  To be considered for listing under the ESA, a group of organisms must constitute a “species,” which is defined in section 3 to include “any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature.”  The agency has determined that a group of Pacific salmon or steelhead populations qualifies as a distinct population segment if it is substantially reproductively isolated and represents an important component in the evolutionary legacy of the biological species.  A group of populations meeting these criteria is considered an “evolutionarily significant unit” (ESU) (56 FR 58612, November 20, 1991).  In its ESA listing determinations for Pacific salmon and steelhead, NMFS has treated an ESU as a “distinct population segment.”  To date NMFS has identified 26 ESUs as threatened or endangered under the ESA (see 50 CFR 223.203 and 224.101).
        Section 4(b)(2) of the ESA requires NMFS to designate critical habitat for threatened and endangered species “on the basis of the best scientific data available and after taking into consideration the economic impact, and any other relevant impact, of specifying any particular area as critical habitat.”  This section grants the Secretary [of Commerce] discretion to exclude any area from critical habitat if he determines “the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat.”  The Secretary's discretion is limited, as he may not exclude areas if it “will result in the extinction of the species.”
        The ESA defines critical habitat under section 3(5)(A) as:

          “(i)  the specific areas within the geographical area occupied by the species, at the time it is listed . . ., on which are found those physical or biological features (I) essential to the conservation of the species and (II) which may require special management considerations or protection; and
          (ii)  specific areas outside the geographical area occupied by the species at the time it is listed . . . upon a determination by the Secretary that such areas are essential for the conservation of the species.”

        Once critical habitat is designated, section 7 of the ESA requires federal agencies to ensure they do not fund, authorize or carry out any actions that will destroy or adversely modify that habitat.  This requirement is in addition to the section 7 requirement that federal agencies ensure their actions do not jeopardize the continued existence of listed species.
        On February 16, 2000, NMFS published a final rule designating critical habitat for 19 ESUs of west coast salmon and steelhead (65 FR 7764).  The designations included more than one hundred and fifty river subbasins in WA, OR, ID, and CA.  Within each occupied subbasin, NMFS designated as critical habitat those lakes and river reaches accessible to listed fish along with the associated riparian zone, except for reaches on Indian land.  Areas considered inaccessible included areas above long-standing natural impassable barriers and areas above impassable dams, but not areas above ephemeral barriers such as failed culverts.
        In considering the economic impact, NMFS determined that the critical habitat designations would impose very little or no additional requirements on federal agencies beyond those already imposed by the listing of the species themselves.  The ESA's prohibition against adversely modifying critical habitat applies only to federal agencies, which are also prohibited from jeopardizing the continued existence of listed species.  NMFS reasoned that since it was designating only occupied habitat, there would be few or no actions that adversely modified critical habitat that also did not jeopardize the continued existence of the species.  Therefore, there would be no economic impact as a result of the designations (65 FR 7764, 7765, February 16, 2000).

        The National Association of Homebuilders (NAHB) challenged the designations in District Court in Washington, D.C. as having inadequately considered the economic impacts of the critical habitat designations (National Ass'n of Homebuilders v. Evans, 2002 WL 1205743 No. 00-CV-2799 (D.D.C.).  NAHB also challenged NMFS' designation of Essential Fish Habitat (EFH) (Pacific Coast Salmon Fishery Management Plan, 2000).  While the NAHB litigation was pending, the Court of Appeals for the 10th Circuit issued its decision in New Mexico Cattlegrowers' Association v. U.S. Fish and Wildlife Service, 248 F.3d 1277 (10th Cir. 2001) (NMCA).  In that case, the Court rejected the U.S. Fish and Wildlife Service's (FWS) approach to economic analysis, which was similar to the approach taken by NMFS in the final rule designating critical habitat for 19 ESUs of west coast salmon and steelhead.  The Court ruled that “Congress intended that the FWS conduct a full analysis of all of the economic impacts of a critical habitat designation, regardless of whether those impacts are attributable co-extensively to other causes.”  Subsequent to the 10th Circuit decision, NMFS entered into and sought judicial approval of a consent decree resolving the NAHB litigation.  That decree provided for the withdrawal of critical habitat designations for the 19 salmon and steelhead ESUs and dismissed NAHB's challenge to the EFH designations.  The District Court approved the consent decree and vacated the critical habitat designations by Court order on April 30, 2002 (National Ass'n of Homebuilders v. Evans, 2002 WL 1205743 (D.D.C. 2002).
        Related Rulemaking and Litigation

        At the same time NAHB was challenging the critical habitat designations, other plaintiffs were challenging NMFS' listing decision for Oregon Coast coho salmon.  In Alsea Valley Alliance v. Evans (143 F. Supp. 2d 1154 (D. Ore. 2001)) (Alsea), the U.S. District Court in Eugene, OR, set aside NMFS' 1998 ESA listing of the Oregon Coast coho salmon ESU, and ruled that NMFS' treatment of hatchery populations within this ESU was arbitrary and capricious.  Specifically, the Court found that NMFS' 1998 listing of Oregon Coast coho salmon made improper distinctions below the level of an ESU by excluding hatchery populations from listing protection even though they were determined to be part of the same ESU as the listed naturally spawned populations.  NMFS subsequently acceded to the District Court's decision and did not appeal the ruling.  However, on December 14, 2001, the U.S. Court of Appeals for the Ninth Circuit (Appeal No. 01-36071) granted intervenors-appellants an emergency motion to stay the district court judgment in the Alsea decision.  Accordingly, the Oregon Coast coho salmon ESU remains listed as a threatened species pending final disposition of the appeal.
        In light of the Alsea decision, NMFS announced it would reconsider its listing determinations for all salmon and steelhead ESUs affected by the ESA interpretive issues raised by the Court's decision (67 FR 6215, February 11, 2002; 67 FR 79898, December 31, 2002).  The agency also accepted several petitions to reconsider its listing of other ESUs based on the Alsea decision (67 FR 6215, February 11, 2002; 67 FR 48601, July 25, 2001).  NMFS' schedule for reconsidering these listing decisions anticipates proposing any revised listing determinations for all 26 listed ESUs (and one candidate ESU) by March 2004.  Since NMFS also intends to list those hatchery populations that are part of an ESU, many of the currently listed ESUs may be altered as a result of the ongoing status reviews, which could also affect the designation of critical habitat for such ESUs.
        Issues for Consideration and Evaluation

        Section 4(a)(3) of the ESA requires NMFS to designate critical habitat for threatened and endangered species.  NMFS is currently in the information-gathering phase, compiling information to prepare critical habitat proposals for the 19 ESUs vacated by the Court in April 2002 as well as the Northern California steelhead ESU listed as threatened on June 7, 2000 (65 FR 36074).  If new information warrants, the agency also may later revise, subject to appropriate regulatory procedures, existing critical habitat designations for six ESUs (Sacramento River winter-run chinook, Central California coast coho, Southern Oregon/Northern California coasts coho, Snake River sockeye, spring/summer chinook, and fall chinook salmon) that were not subject to the Court's decision in National Ass'n of Homebuilders v. Evans.
        Sections 3, 4(a) and 4(b) of the ESA suggest a number of questions the agency should consider when designating critical habitat for Pacific salmon and steelhead:
        What areas were occupied by the species at the time of listing?
        What physical and biological features are essential to the species' conservation?
        Are those essential features ones that may require special management considerations or protection?
        Are areas outside those currently occupied “essential for conservation”?
        What are the benefits to the species of critical habitat designation?
        What economic and other relevant impacts would result from a critical habitat designation, even if coextensive with other causes such as listing?
        What is the appropriate geographic scale for weighing the benefits of exclusion and benefits of designation?
        What is the best way to determine if the failure to designate an area as critical habitat will result in the extinction of the species concerned?

        Answering these questions involves a variety of biological and economic considerations.  Because these considerations are complex and there is considerable controversy surrounding critical habitat designations in general, NMFS is issuing this Advance Notice of Proposed Rulemaking to solicit information before issuing a proposed rule.  During the information-gathering phase, NMFS is seeking public input and information (see “Information Solicited” below) and will gather and analyze the best available scientific data to support critical habitat designations.  NMFS will continue to meet with comanagers and other stakeholders to review this information and the overall designation process.  NMFS will then initiate rulemaking with the publication of a proposed designation of critical habitat, opening a period for public comment and the opportunity for public hearings.  Information derived from NMFS' ongoing reconsideration of the listing determinations will also be important for defining the status of the relevant ESUs and informing the future critical habitat designations.  NMFS is also undertaking recovery planning for the currently listed ESUs.  Information developed in the recovery planning process will also inform any proposed critical habitat designations for the 20 ESUs.
        Pacific Salmon and Steelhead Biology and Habitat Use
        Pacific salmon and steelhead are anadromous fish, meaning adults migrate from the ocean to spawn in freshwater lakes and streams where their offspring hatch and rear prior to migrating back to the ocean to forage until maturity.  The migration and spawning times vary considerably between and within species and populations (Groot and Margolis, 1991).  At spawning, adults pair to lay and fertilize thousands of eggs in freshwater gravel nests or “redds” excavated by females.  Depending on lake/stream temperatures, eggs incubate for several weeks to months before hatching as “alevins” (a larval life stage dependent on food stored in a yolk sac).  Following yolk sac absorption, alevins emerge from the gravel as young juveniles called “fry” and begin actively feeding.  Depending on the species and location, juveniles may spend from a few hours to several years in freshwater areas before migrating to the ocean.  The physiological and behavioral changes required for the transition to salt water result in a distinct “smolt” stage in most species.  On their journey juveniles must migrate downstream through every riverine and estuarine corridor between their natal lake or stream and the ocean.  For example, smolts from Idaho will travel as far as 900 miles from their inland spawning grounds.  En route to the ocean the juveniles may spend from a few days to several weeks in the estuary, depending on the species.  The highly productive estuarine environment is an important feeding and acclimation area for juveniles preparing to enter marine waters.

        Juveniles and subadults typically spend from one to five years foraging over thousands of miles in the North Pacific Ocean before returning to spawn.  Some species, such as coho and chinook salmon, have precocious life history types (primarily male fish) that mature and spawn after only several months in the ocean.  Spawning migrations known as “runs” occur throughout the year, varying by species and location.  Most adult fish return or “home” with great fidelity to spawn in their natal stream, although some do stray to non-natal streams.  Salmon species die after spawning, while steelhead may return to the ocean and make repeat spawning migrations.

        This complex life cycle gives rise to complex habitat needs, particularly during the freshwater phase (see review by Spence et al., 1996).  Spawning gravels must be of a certain size and free of sediment to allow successful incubation of the eggs.  Eggs also require cool, clean, and well-oxygenated waters for proper development.  Juveniles need abundant food sources, including insects, crustaceans, and other small fish.  They need places to hide from predators (mostly birds and bigger fish), such as under logs, root wads and boulders in the stream, and beneath overhanging vegetation.  They also need places to seek refuge from periodic high flows (side channels and off channel areas) and from warm summer water temperatures (coldwater springs and deep pools).  Returning adults generally do not feed in fresh water but instead rely on limited energy stores to migrate, mature, and spawn.  Like juveniles, they also require cool water and places to rest and hide from predators.  During all life stages salmon and steelhead require cool water that is free of contaminants.  They also require migratory corridors with adequate passage conditions (timing, water quality, and water quantity) to allow access to the various habitats required to complete their life cycle.

        The homing fidelity of salmon and steelhead has created a meta-population structure with discrete populations distributed among watersheds (McElhany et al., 2000).  Low levels of straying result in regular genetic exchange among populations, creating genetic similarities among populations in adjacent watersheds.  Maintenance of the meta-population structure requires a distribution of populations among watersheds where environmental risks (e.g., from landslides or floods) are likely to vary.  It also requires migratory connections among the watersheds to allow for periodic genetic exchange and alternate spawning sites in the case that natal streams are inaccessible due to natural events such as a drought or landslide.
        Areas Occupied by the Species at the Time of Listing
        As described in ESA section 3(5)(A)(i), the agency will assemble the best available information to identify those “specific areas within the geographical area occupied by the species at the time it is listed . . . on which are found those physical or biological features . . . (I) essential to the conservation of the species and (II) which may require special management considerations or protection.”
        The ESA specifies that critical habitat is that habitat occupied by the species “at the time it is listed” (ESA section 3(5)(A)(i)).  Due to their anadromous, highly migratory life cycle and the presence of multiple year classes or “cohorts,” fish from a particular ESU are widely distributed at the time of listing.  For example, at the time an ESU is listed the eggs from one cohort may be incubating in stream gravel while older cohorts are rearing in an estuary and still others are foraging in the North Pacific Ocean.  Thus, the geographic area occupied is a vast and diverse array of habitats occupied simultaneously by various cohorts and life stages. NMFS' ESA regulations relevant to describing a “geographical area” and “specific areas” state that “each critical habitat will be defined by specific limits using reference points and lines as found on standard topographic maps of the area” (50 CFR 424.12).  These regulations require that NMFS also identify the state(s), county(ies), or other local governmental units within which all or part of the critical habitat is located.  However, the regulations note that such political units typically would not constitute the boundaries of critical habitat.  In addition, the regulations state that ephemeral reference points (e.g., trees, sand bars) shall not be used in defining critical habitat.  Distribution information for Pacific salmon and steelhead is available in three general formats:  (1) maps and databases identifying specific river segments (i.e., data mapped as line segments); (2) maps and databases identifying entire watersheds (i.e., data mapped as polygons); and (3) textual descriptions.  During the information-gathering phase, NMFS is seeking information in all available formats.

        NMFS will seek the best scientific information available to make the designations as precise as practicable.  Most of the data sources that NMFS has reviewed to date indicate that fish distribution can be mapped for most watersheds at a scale of 1 to 100,000 or greater (see StreamNet, 2003).  At this coarse scale, numerous streams and stream reaches that may contain physical and biological features essential to conservation do not appear (Roni et al., 1997; StreamNet, 2003).  Also, fish distribution maps are often based on a mix of empirical data (i.e., fish observations) and best professional judgement, and may not reflect the species' actual distribution in many stream reaches that have never been or have only occasionally been surveyed.  During the information-gathering phase, NMFS is seeking information that will allow it to map specific river reaches, using reference points and lines as found on standard topographic maps, that (1) are currently occupied by the species and (2) contain essential physical and biological features.  NMFS will seek input as to the accuracy and suitability of this approach, and the applicability of other approaches.
        NMFS has not designated marine areas in previous critical habitat designations for salmon, except in the case of Puget Sound chinook salmon and Hood Canal summer-run chum salmon.  This exclusion was due to the lack of identifiable special management considerations affecting marine habitat features (65 FR 7764, 7771, February 16, 2000).  However, in the February 2000 rulemaking the agency noted that it would be re-evaluating this issue, especially in light of the recent marine area designations of EFH for Pacific salmon (Pacific Coast Salmon Fishery Management Plan, 2000).  This notice seeks information on habitat in marine as well as freshwater areas.
        Physical and Biological Features Essential for Conservation

        Joint NMFS/FWS regulations for listing endangered and threatened species and designating critical habitat at section 50 CFR 424.12(b) state that the agency “shall consider those physical and biological features that are essential to the conservation of a given species and that may require special management considerations or protection (hereafter also referred to as “Essential Features”).  Pursuant to the regulations, such requirements include, but are not limited to the following:  (1) Space for individual and population growth, and for normal behavior; (2) Food, water, air, light, minerals, or other nutritional or physiological requirements; (3) Cover or shelter; (4) Sites for breeding, reproduction, rearing of offspring, germination, or seed dispersal; and generally; (5) Habitats that are protected from disturbance or are representative of the historic geographical and ecological distributions of a species.  These regulations go on to emphasize that the agency shall focus on essential features within the specific areas considered for designation.  These features “may include, but are not limited to, the following:   spawning sites, feeding sites, seasonal wetland or dryland, water quality or quantity,  geological formation, vegetation type, tide, and specific soil types.”

        The 20 ESUs under consideration comprise five species, each of which has unique life history characteristics and habitat requirements.  However, these characteristics/requirements depend on a common set of physical and biological features that are essential to the conservation of each species.  Information supporting the identification of essential features is contained in a robust body of scientific literature addressing salmonid life history and habitat characteristics (e.g., see Everest et al., 1985; Bell, 1986; Groot and Margolis, 1991; FEMAT, 1993; Spence et al., 1996).  Also, NMFS is applying knowledge gained from over a decade's experience with thousands of ESA section 7 consultations on listed salmonids to identify these features.  NMFS has developed a decision matrix (NMFS, 1996) that describes general parameters and characteristics of most of the essential features now under consideration in critical habitat designations.  During the information-gathering phase, NMFS seeks input on the following characterization of essential features.
        Essential features for the listed ESUs of salmon and steelhead include sites essential to support one or more life stages of a population necessary to the conservation of the ESU.  These sites in turn contain generic features that contribute to their conservation value for the ESU.  Specific types of sites and their generic features include:
        (1) Freshwater spawning sites with sufficient water quantity and quality and adequate substrate to support spawning, incubation and larval development;
        (2) Freshwater rearing sites with sufficient water quantity and floodplain connectivity to form and maintain physical habitat conditions and allow salmonid development and mobility; sufficient water quality to support growth and development; food and nutrient resources such as terrestrial and aquatic invertebrates, and forage fish; and natural cover such as shade, submerged and overhanging large wood, log jams, beaver dams, aquatic vegetation, large rocks and boulders, side channels and undercut banks;
        (3) Freshwater migration corridors free of obstruction and excessive predation, with adequate water quantity to allow for juvenile and adult mobility; cover, shelter and holding areas for juveniles and adults; and adequate water quality to allow for survival;
        (4) Estuarine areas that provide uncontaminated water and substrates; food and nutrient sources to support growth and development; and connected shallow water areas and wetlands to cover and shelter juveniles; and
        (5) Marine areas with sufficient water quality to support salmonid growth, development, and mobility; food and nutrient resources such as marine invertebrates and forage fish; and nearshore marine habitats with adequate depth, cover, and marine vegetation to provide cover and shelter.
        The conservation value of a site depends on (1) the importance of the populations associated with a site to the ESU conservation, and (2) the contribution of that site to the conservation of the population either through demonstrated or potential productivity of the area.
        Special Management Considerations or Protection

        Coupled with the identification of essential features, during the information-gathering phase NMFS seeks input on whether the above essential features may require special management considerations or protection.  For example, numerous special management considerations relate to fish passage conditions, including methods and procedures aimed at maintaining sufficient water flows and preventing or minimizing impacts from manmade barriers such as dams and culverts.  Similarly, essential natural cover elements such as shade and large wood involve a variety of land management considerations.  NMFS will document the special management considerations and protection associated with the essential features and expects to relate these to the factors affecting the species and/or critical habitat during formal rulemaking (see “Schedule and Contents of Rulemaking).
        Areas outside the Geographical Area Occupied by the Species
        Section 3(5)(A)(ii) of the ESA defines critical habitat to include specific areas outside the geographical area occupied by the species only if the Secretary determines them to be essential for the conservation of the species.  Section 3(3) of the ESA defines conservation as “the use of all methods and procedures which are necessary to bring any endangered species or threatened species to the point at which the measures provided pursuant to this Act are no longer necessary.”  NMFS' ESA regulations at 424.12(e) state that the agency “shall designate as critical habitat areas outside the geographical area presently occupied by a species only when a designation limited to its present range would be inadequate to ensure the conservation of the species.”  NMFS would thus include areas outside the occupied geographical area only if areas within the occupied geographical area were not adequate to support conservation.  In the previous designations of critical habitat (65 FR 7764, February 16, 2000), NMFS did not consider designations for areas outside the geographical areas occupied by the species.  The agency is also seeking information on the adequacy of the currently occupied habitat to support conservation of the listed ESUs, and whether areas that are unoccupied might be “essential for conservation.”
        Determining Conservation Value
        Section 4(b)(2) of the ESA requires that the Secretary, before designating any particular area as critical habitat, weigh the benefit of excluding the area from designation against the benefit of including it in the designation.  Accordingly, during the information-gathering phase, NMFS is seeking input on the benefit of designating areas as critical habitat.  In particular, NMFS seeks information on the conservation value of potential critical habitat based on the quality and quantity of the essential feature(s) and on the difficulty of restoring the quality and quantity where those features have been limited or degraded.  Federal agencies, states, tribes and others have already compiled a great deal of information on the historic and present importance of different areas to salmonid conservation.  Some general types of information include stream habitat inventories, juvenile and spawning fish surveys, redd and dam counts, angler harvest records, and tagged fish recoveries.  In some cases it may not be known whether an area was historically productive.  Areas might also be considered to have a high potential if they possess characteristics of other highly productive areas.

        NMFS will also gather analyses provided by the NMFS Technical Recovery Teams.  These Teams have been formed for several recovery planning areas covering most of the presently listed ESUs.  The Teams first identify the population structure of the ESU and provide guidance on what constitutes recovery for each population.  The Teams next provide guidance on the numbers and distribution of recovered populations that would constitute a healthy ESU, as well as guidance on the status of populations that will not be recovered but still have a role to play in overall ESU health.
        NMFS also seeks input on the best methods for evaluating the conservation value of potential critical habitat areas.  NMFS is interested in information relevant to monetizing the conservation value of an area, or to ranking the conservation benefits in an ordinal manner.  Finally, NMFS is seeking input on what approaches would allow it to determine if excluding an area from designation will result in the extinction of the species.
        Determining Economic and other Relevant Impacts
        Section 4(b)(2) of the ESA requires the Secretary to consider the “economic impact, and any other relevant impact,” of designating a particular area as critical habitat.  During the information-gathering phase, NMFS seeks information regarding the economic benefits of excluding an area from the critical habitat designation and the economic benefits of including an area as part of the critical habitat designation.  In keeping with the guidance provided by the Office of Management and Budget (2000, 2003), NMFS seeks information that would allow it to monetize these effects to the extent possible, as well as information on qualitative impacts to economic values.  NMFS is also seeking information on any other impacts of designating critical habitat.
        The Appropriate Geographic Scale for Weighing the Benefits of Exclusion and Benefits of Inclusion
        There are thousands of miles of rivers and streams presently occupied by listed salmon and steelhead in OR, WA, ID, and CA.  Before designating any “particular area” as critical habitat NMFS must balance the benefit of excluding that area against the benefit of including it in the designation (ESA section 4(b)(2)).  To manage this task, streams and rivers must be grouped in a manner that allows for meaningful analysis.  As discussed in more detail above, salmon populations tend to divide along watershed boundaries.  Through the mapping efforts of the U. S Geological Survey (USGS), watersheds can be mapped across most of the salmon and steelhead range at a fairly fine scale, relative to the broad distribution of the species.  NMFS  seeks input on the relevance of using watersheds as a unit of analysis for the balancing test.  In some cases it may be useful to consider habitat units at a finer scale than the watershed, for example where an economic impact or a conservation benefit can be isolated to a stream or river segment.  NMFS therefore also seeks input on approaches to isolating impacts of designation at a finer scale than the watershed.
        Process and Schedule

        In response to a complaint filed by the Pacific Coast Federation of Fishermen's Associations, Institute for Fisheries Resources, the Center for Biological Diversity, the Oregon Natural Resources Council, the Pacific Rivers Council, and the Environmental Protection Information Center alleging NMFS's failure to timely designate critical habitat,  NMFS  recently filed with the D.C. District Court an agreement resolving that litigation and establishing a schedule for designation of critical habitat.  The schedule provides for submission by June 30, 2004 to the Federal Register for publication the proposed rule(s) designating critical habitat for those of the 20 ESUs that are included on the list of threatened and endangered species as of June 30, 2004.  Additionally, the schedule provides for submission by January 18, 2005 to the Federal Register for publication the final rule(s) designating critical habitat for the 20 ESUs that are included on the lists of threatened and endangered species as of January 18, 2005.  The District Court approved the agreement on September 12, 2003.
        As described in current agency regulations (50 CFR 424.16), NMFS anticipates that the proposed rulemaking will contain text detailing the proposal, a summary of the data used and its relationship to the proposal, a summary of factors affecting the species and/or critical habitat, citations of pertinent information sources, a map of the critical habitat, an economic report, and an explanation of a 4(b)(2) process and any areas proposed for exclusion.  To the maximum extent practicable, the proposal will also include a brief description and evaluation of those activities (whether public or private) that, in the opinion of the Secretary, if undertaken, may adversely modify the critical habitat, or may be affected by the designation.  Products to be made available to the public at this step also include access to maps depicting the areas proposed for designation and relevant agency biological and economic analyses supporting the rulemaking.  NMFS also will provide the requisite comment period and opportunity for public hearings on the proposed rule.
        In addition to publication in the Federal Register, NMFS will provide the critical habitat proposal to, and invite comments from, affected states and counties (and equivalent jurisdictions) and scientific organizations as well as any federal agencies, tribal governments, local authorities, or private individuals or organizations known to be affected by the proposed rule.  The agency will also publish a summary of the proposed rule in a newspaper of general circulation in affected areas.  In accordance with a joint NMFS/FWS policy published on July 1, 1994 (59 FR 34270), NMFS will also seek the expert opinions of at least three appropriate and independent specialists.  The purpose of such review is to ensure that the critical habitat designations are based on scientifically sound data, assumptions, and analyses.  NMFS will send these peer reviewers copies of the proposed rule (and other documentation as needed) immediately following publication in the Federal Register.  The agency will invite each peer reviewer to comment independently, during the public comment period, on the proposed designations and will specifically identify and address all peer review comments in the final rule.
        In accordance with the Secretarial Order on American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered Species Act, NMFS will coordinate with Federally recognized American Indian Tribes on a Government-to-Government basis to determine how to make critical habitat assessments in areas that may impact Tribal trust resources.
        NMFS will review all information received during the comment period as well as any new information identified after publishing the proposed designations.  If changes are warranted, the agency will document the bases for the revisions and include this rationale as part of the administrative record for critical habitat designations.

        Per current agency regulations at 50 CFR 424.18 and 424.19, NMFS anticipates that the final designations will be published in a Federal Register notice containing the complete text of the rule, a summary of the comments and recommendations received in response to the proposal (including input from public hearings and peer reviewers), summaries of the data on which the rule is based and the relationship of such data to the final rule, and a description of any conservation measures available under the rule.  The final rule will:  summarize factors affecting the species; identify physical and biological features essential to the conservation of the species that may require special management considerations or protection; describe any significant activities that would either affect an area considered for designation as critical habitat or be likely to be affected by the designation; identify the probable economic and other relevant impacts of the designation upon proposed or ongoing activities; identify the areas where the benefits of exclusion outweigh the benefits of including such areas as critical habitat; and describe the boundaries and include a map of critical habitat.  To the maximum extent practicable, the final rule will also include a brief description and evaluation of those activities (whether public or private) that might occur in the designated areas and which, in the opinion of the Secretary, may adversely modify critical habitat or be affected by such designation.
        New information and public and peer reviewer comments may result in final designations that differ from the proposals.
        Information Solicited

        Past critical habitat designations have generated considerable public interest.  Therefore, NMFS believes it is important to engage the public early and often in the rulemaking process.  This advance notice is a key first step, and NMFS encourages all interested parties to submit comments regarding the issues raised in this notice.  NMFS is also soliciting biological and economic information relevant to making critical habitat designations for the following 20 ESUs:  (1) Puget Sound chinook salmon; (2) Lower Columbia River chinook salmon; (3) Upper Willamette River chinook salmon; (4) Upper Columbia River spring-run chinook salmon; (5) Central Valley Spring-run chinook salmon; (6) California coastal chinook salmon; (7) Oregon Coast coho salmon; (8) Hood Canal summer-run chum salmon; (9) Columbia River chum salmon; (10) Ozette Lake sockeye salmon; (11) Southern California steelhead; (12) South-Central California coast steelhead; (13) Central California Coast steelhead; (14) Central Valley California steelhead; (15) Upper Columbia River steelhead; (16) Snake River Basin steelhead; (17) Lower Columbia River steelhead; (18) Upper Willamette River steelhead; (19) Middle Columbia River steelhead; and (20) Northern California steelhead (see Figure 1).
        In accordance with agency regulations at 50 CFR 424.13, the agency will consult as appropriate with affected states, interested persons and organizations, other affected Federal agencies, and, in cooperation with the Secretary of State, with the country or countries in which the species concerned are normally found or whose citizens harvest such species from the high seas.  Data reviewed may include, but are not limited to, scientific or commercial publications, administrative reports, maps or other graphic materials, information received from experts, and comments from interested parties.  Specific data needs include:
        (1) Information (including fish surveys, dam counts, historical accounts, etc., as geographically specific as possible) on the past and current numbers and distribution of listed salmon and steelhead;
        (2) Information describing the quality and extent of marine, estuarine, and freshwater habitats for all life stages of listed salmon and steelhead, separately describing habitat occupied at the time of listing; currently occupied habitat; and habitat that is currently accessible but not occupied by listed salmon and steelhead;
        (3) Within areas occupied by salmon and steelhead in listed ESUs, NMFS seeks information regarding the physical and biological features that are essential to the conservation of the ESUs.  Such essential features may include, but are not limited to:  a) freshwater spawning sites with sufficient water quantity and quality and adequate substrate to support spawning, incubation and larval development; b) freshwater rearing sites with sufficient water quantity and floodplain connectivity to form and maintain physical habitat conditions and allow salmonid development and mobility; sufficient water quality to support growth and development; food and nutrient resources such as terrestrial and aquatic invertebrates, and forage fish; and natural cover such as shade, submerged and overhanging large wood, log jams, beaver dams, aquatic vegetation, large rocks and boulders, side channels and undercut banks; c) freshwater migration corridors free of obstruction and excessive predation, with adequate water quantity to allow for juvenile and adult mobility; cover, shelter and holding areas for juveniles and adults; and adequate water quality to allow for survival; d) estuarine areas that provide uncontaminated water and substrates; food and nutrient sources to support growth and development; and connected shallow water areas and wetlands to cover and shelter juveniles; e) marine areas with sufficient water quality to support salmonid growth, development, and mobility; food and nutrient resources such as marine invertebrates and forage fish; and nearshore marine habitats with adequate depth, cover, and marine vegetation to provide cover and shelter;
        (4) Any special management considerations or protection currently associated with essential physical and biological features within areas occupied by the listed ESUs, such as a recorded easement or deed restriction, a state statute or comprehensive land use program; a federal regulatory limitation or a legally-binding federal land use plan; or a county ordinance or other binding local enactment;
        (5) Whether there are any specific areas within the range of listed ESUs that should not be considered for critical habitat designation because they lack essential physical or biological features or may not require special management consideration or protections;
        (6) Whether specific Indian lands should be considered essential for the conservation of the listed ESUs or whether conservation needs can be achieved by limiting the designations to other lands;
        (7) Whether there are any specific areas outside the area occupied by listed ESUs that are essential for their conservation, and why;
        (8) Whether there are any specific areas that should be excluded from critical habitat designation because the benefits of such exclusion outweigh the benefits of specifying such area as part of the critical habitat;
        (9) Any current or planned activities in the range of listed ESUs and their possible impacts on areas that may qualify as critical habitat;
        (10) Any economic or other relevant impacts that may result from designating critical habitat, regardless of whether those impacts are attributable co-extensively to other causes, in particular those impacts affecting small entities;
        (11) Other benefits of excluding or designating a specific area as critical habitat;
        (12) Whether the approach to critical habitat designation for hatchery fish should be the same as for naturally spawned fish and if not, what approach should be used; and
        (13) Potential peer reviewers for proposed critical habitat designations, including persons with biological and economic expertise relevant to the designations.
        NMFS seeks the above information as soon as possible but by no later than November 13, 2003.

        As described in a joint NMFS/FWS policy on ESA information standards published on July 1, 1994 (59 FR 34271), NMFS will rely on the best and most comprehensive technical information available; gather and impartially evaluate information that disputes official positions; document evaluation of information; use, retain, and reference primary and original sources of information; and conduct management-level review of documents to verify and assure the quality of the science used to make the critical habitat designations.  NMFS will review all comments and information resulting from this advanced notice of proposed rulemaking prior to making any proposed designations and will include such documents in the agency's public record. The public may review information submitted by contacting NMFS (see
          ADDRESSES and FOR FURTHER INFORMATION CONTACT) or via the internet at http://www.nwr.noaa.gov.  The agency will continue to meet with comanagers and other stakeholders to review this information as well as the overall designation process prior to a proposed critical habitat designation.
        References

        The complete citations for the references used in this document can be obtained by contacting NMFS or via the Internet (see
          ADDRESSES and FOR FURTHER INFORMATION CONTACT).

          Dated:  September 24, 2003.
          Rebecca Lent,
          Deputy Assistant Administrator for Fisheries for Regulatory Programs, National Marine Fisheries Service.

      [FR Doc. 03-24568 Filed 9-26-03; 8:45 am]
      BILLING CODE 3510-22-S


        DEPARTMENT OF COMMERCE
        Bureau of Economic Analysis
        15 CFR Part 801
        [Docket No. 190726-0005]
        RIN 0691-AA89
        Direct Investment Surveys: BE-10, Benchmark Survey of U.S. Direct Investment Abroad

          AGENCY:
          Bureau of Economic Analysis, Commerce.

          ACTION:
          Notice of proposed rulemaking.

          SUMMARY:
          This proposed rule would amend regulations of the Department of Commerce's Bureau of Economic Analysis (BEA) to set forth the reporting requirements for the 2019 BE-10, Benchmark Survey of U.S. Direct Investment Abroad (“BE-10 survey”). The BE-10 survey is conducted every five years; the prior survey covered 2014. The BE-10 survey covers the universe of U.S. direct investment abroad and is BEA's most comprehensive survey of such investment. For the 2019 BE-10 survey, BEA proposes changes in data items collected, the design of the survey forms, and the reporting requirements for the survey to satisfy changing data needs and improve data quality and the effectiveness and efficiency of data collection.

          DATES:
          Comments on this proposed rule will receive consideration if submitted in writing on or before 5:00 p.m. October 7, 2019.

          ADDRESSES:
          You may submit comments, identified by RIN 0691-AA89 and referencing the agency name (Bureau of Economic Analysis), by any of the following methods:
          • Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. For Keyword or ID, enter “EAB-2019-0002.”
          • Email: ricardo.limes@bea.gov.

          • Mail: Multinational Operations Branch, U.S. Department of Commerce, Bureau of Economic Analysis, BE-69, Washington, DC 20233.
          • Hand Delivery/Courier: Multinational Operations Branch, U.S. Department of Commerce, Bureau of Economic Analysis, BE-69, 4600 Silver Hill Road, Suitland, MD 20746.

          Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in the proposed rule should be sent to both BEA through any of the methods above and to the Office of Management and Budget (OMB), OIRA, Paperwork Reduction Project 0608-0049, Attention PRA Desk Officer for BEA, via email at OIRA_Submission@omb.eop.gov, or by FAX at 202-395-7245.

            Public Inspection: All comments received are a part of the public record and will generally be posted to http://www.regulations.gov without change. Personal identifying information voluntarily submitted by the commenter may be publicly accessible. Do not submit confidential business information or otherwise sensitive or protected information. BEA will accept anonymous comments (enter N/A in required fields if you wish to remain anonymous).

          FOR FURTHER INFORMATION CONTACT:

          Ricardo Limes, Chief, Multinational Operations Branch (BE-69), Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20233; telephone number: (301) 278-9659; email: ricardo.limes@bea.gov.

        SUPPLEMENTARY INFORMATION:
        The BE-10, Benchmark Survey of U.S. Direct Investment Abroad, is a mandatory survey and is conducted once every five years by BEA under the authority of the International Investment and Trade in Services Survey Act (22 U.S.C. 3101-3108).
        The BE-10 survey covers the U.S. direct investment abroad universe and is BEA's most comprehensive survey of such investment. U.S. direct investment abroad is defined as the ownership or control, directly or indirectly, by one U.S. person of 10 percent or more of the voting securities of an incorporated foreign business enterprise or an equivalent interest in an unincorporated foreign business enterprise, including a branch.
        The purpose of the BE-10 survey is to obtain universe data on the financial and operating characteristics of, and on positions and transactions between, U.S. parent companies and their foreign affiliates. The data are needed to measure the size and economic significance of U.S. direct investment abroad, measure changes in such investment, and assess its impact on the U.S. and foreign economies. Such data are generally found in enterprise-level accounting records of respondent companies. The benchmark data provide a baseline for subsequent sample-based estimates in non-benchmark years. In particular, they serve as benchmarks for the quarterly direct investment estimates included in the U.S. international transactions, international investment position, and national income and product accounts, and for annual estimates of the U.S. direct investment abroad position and of the activities of U.S. multinational enterprises.
        This proposed rule would amend 15 CFR part 801 to set forth the reporting requirements for the BE-10, Benchmark Survey of U.S. Direct Investment Abroad. Under this proposed rule, persons subject to the reporting requirements of the BE-10, Benchmark Survey of U.S. Direct Investment Abroad, would be required to respond, whether or not they are contacted by BEA.
        The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520 (PRA).
        Description of Changes
        The proposed changes would amend the regulations and the survey forms for the BE-10 survey. These amendments include changes in data items collected, the design of the survey forms, and the reporting requirements for the survey.

        BEA proposes to change the reporting requirements for certain private funds that file the BE-10 survey. BEA, in cooperation with the U.S. Department of the Treasury, proposes to instruct reporters of investments in private funds that meet the definition of direct investment (that is, ownership by one person of 10 percent or more of the voting interest of a business enterprise) but display characteristics of portfolio investment (specifically, investors who do not intend to control or influence the management of an operating company) to report through the Treasury International Capital (TIC) reporting system. Reporting through TIC is more efficient because other related portfolio investments are already being reported there. Such private funds should not report on the BE-10 survey and BEA's other direct investment surveys. Direct investment in operating companies, including investment by and through private funds, will continue to be reported to BEA. This change has already been implemented on BEA's other surveys of U.S. direct investment abroad: The BE-577, Quarterly Survey of U.S. Direct Investment Abroad; and the BE-11, Annual Survey of U.S. Direct Investment Abroad. Additional information on the change in reporting requirements for investments in private funds can be found in the Direct Investment Surveys: BE-577, Quarterly Survey of U.S. Direct Investment Abroad-Transactions of U.S. Reporter With Foreign Affiliate, and Changes to Private Fund Reporting on Direct Investment Surveys
          Federal Register notice issued in 2016 (81 FR 33658).
        BEA proposes to add, delete, and modify some items on the BE-10 survey forms. Most of the additions are proposed in response to suggestions from data users and to provide more information about U.S. direct investment abroad. The following items would be added to, or modified on, the BE-10 survey:
        (1) The form of organization question for the U.S. reporter (item 2 on the BE-10A form, the form that collects information on the domestic operations of U.S. parent companies) will be modified to include more options: Corporations (except for S corporations); partnerships; S corporations; limited liability companies (LLCs); individual, estate, or trust; and other (specify). This information will help BEA to produce economic statistics by sector.
        (2) A question will be added to collect the 20‐digit Legal Entity Identifier of each U.S. parent and foreign affiliate on the BE-10A, BE-10B, and BE-10C forms (the BE-10B and BE-10C forms collect information on foreign affiliate operations). This information will assist in matching entities across databases, enabling better verification of data and linking to other surveys and publicly available data.
        (3) For each publicly traded company, the stock exchange on which it is listed and the ticker symbol will be collected on the BE-10A form. This information will assist in matching entities across databases, enabling better verification of data and linking to other surveys and publicly available data.
        (4) The income statement item on income from equity investments (item 44) on the BE-10A form will be modified to separately collect income from unconsolidated U.S. investments and from foreign investments. This will aid in resolving discrepancies between the BE-10 and the BE-577 surveys.
        (5) Item 73 on the BE-10A and item 127 on the BE-10B forms collect the amount of restatement in a company's property, plant, and equipment. This question will be modified to separately collect restatement due to “change in entity” and due to “change in accounting methods or principles.” A checkbox question will be added to the BE-10A and BE-10B forms asking if the change due to accounting methods or principles is due in whole or in part to implementation of FASB ASU No. 2016-02, Leases (Topic 842). This information will allow BEA to assess the impact on BEA's statistics of the change in accounting standards on leases.
        (6) Questions will be added to collect sales, employment, and costs and expenses (excluding compensation) on the BE-10A form, and sales on the BE-10B form, related to the provision of selected services generally recognized as prevalent in the digital economy. These selected services are (1) cloud computing, (2) digital intermediation services on both the BE-10A and BE-10B forms, and (3) advertising on the BE-10B form. In addition, checkboxes will be added to the BE-10A and BE-10B forms to collect the percentage of the respondent's sales of services delivered remotely, sales of services that were digitally ordered, and sales of goods that were digitally ordered, along with checkboxes to identify if this information was sourced from accounting records or from recall/general knowledge. These questions will contribute to BEA's efforts to measure the digital economy.
        (7) A checkbox question will be added to the BE-10B and BE-10C forms to capture whether the affiliate serves as a regional headquarters. This information will support research into the role and impact of regional headquarters in the operations of multinational enterprises.
        (8) A checkbox question will be added to the BE-10B forms to collect information on the value of R&D performed by the U.S. parent for the foreign affiliate under a collaborative R&D agreement, such as a cost-sharing agreement. This question will help BEA follow the production and use of intellectual property in global value chains and their impacts on economic statistics.
        (9) A section will be added to the BE-10 Claim for Not Filing to report affiliates that do not meet the survey reporting requirements. This section will make it easier for reporters to indicate to BEA which affiliates should be removed from the survey.
        a. The section would include a private funds exemption option. This is a change to prior reporting requirements described above.
        b. There would also be an option to select if the U.S. reporter no longer owns the foreign affiliate and if this was due to the affiliate being sold or liquidated, or because the U.S. reporter's ownership interest in the affiliate fell below 10 percent.
        BEA also proposes to eliminate or consolidate the following items from the BE-10 survey:

        (1) Item 8 on the BE-10A, which asks if the U.S. reporter is a bank, will be removed. This question was used in the past when reporting requirements for direct investment surveys were different for banks than other industries but is no longer needed.
        (2) Questions on contract manufacturing services will be deleted (items 33-35 on the BE-10A form). The data collected have been burdensome for companies to provide and have not been widely used by data users. Alternative methods are being developed to measure and study contract manufacturing.
        (3) The petroleum and mining exploration and development expenditures item will be removed from the BE-10A form (item 80) and BE-10B form (item 135). This item was used to calculate the current cost adjustment to the direct investment statistics in the international transactions accounts (ITAs) but is not used in the current methodology.
        (4) The trade in goods by world region questions (items 99-104 and 109-114) on the BE-10A form will be removed. The data collected have been burdensome for companies to provide and have not been widely used by data users. BEA is exploring alternative methods to produce geographical detail on trade by U.S. multinational companies.

        (5) Option 2 of item 11 on the BE-10B form and item 8 on the BE-10C form, which collect information on why the affiliate will no longer report on the survey, will be removed. This information will now be captured on the BE-10 Claim for Not Filing (as discussed in item 9 of the additions and modifications section above). U.S. reporters will no longer be required to complete the rest of the BE-10B or BE-10C form with partial year information for foreign affiliates that were sold, merged, reorganized, liquidated, seized, or otherwise ceased to exist at some point during, but before the end of, their fiscal year that ended in the calendar year covered by the BE-10 survey.
        (6) Items 18 and 19 on the BE-10B form, and 14 and 15 on the BE-10C form, which collect the direct ownership interest held by “foreign persons in this affiliate's country of location” and by “all other foreign persons,” will be combined into one item on each of the forms.
        (7) Questions collecting information on sales by world region (items 105-110) and on sales to the top five countries outside of the country of location of the affiliate (items 111-116) on the BE-10B form will be removed. The data collected have been burdensome for companies to provide and have not been widely used by data users. BEA will continue to collect items 101-104, which allow sales to be disaggregated into goods and services and by whether the sales are to the United States, to the host country, or to other foreign countries. These items are more widely used.
        (8) Several items of Part V of the BE-10B form and Part III of the BE-10C form will be removed, except for the items noted below. These data were used to validate the information collected on the quarterly survey, but data reported elsewhere in the BE-10 forms are sufficient for this purpose. The following items will be retained:
        a. A question on reverse investment (item 167 on the BE-10B form).
        b. Intercompany debt balances (items 63-65 on the BE-10C form) for foreign affiliates with less than $60 million in assets, sales, or net income.
        Executive Order 12866
        This proposed rule has been determined to be not significant for purposes of E.O. 12866.
        Executive Order 13132
        This proposed rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under E.O. 13132.
        Paperwork Reduction Act
        This proposed rule contains a collection-of-information requirement subject to review and approval by OMB under the PRA. The requirement will be submitted to OMB for approval as a reinstatement, with change, of a previously approved collection under OMB control number 0608-0049.
        Notwithstanding any other provisions of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA unless that collection displays a currently valid OMB control number.
        The BE-10 survey, as proposed, is expected to result in the filing of reports from approximately 18,000 respondents. A complete response includes a BE-10A form for the U.S. parent's domestic operation and one or more BE-10B, BE-10C, or BE-10D forms for its foreign affiliates. BEA estimates that U.S. parents will submit 18,000 BE-10A forms, 19,100 BE-10B forms, 14,500 BE-10C forms, 18,000 BE-10D forms, and 2,000 BE-10 Claims for Not Filing. Total annual burden is calculated by multiplying the estimated number of submissions of each form by the average hourly burden per form, which is 10 hours for the BE-10A form, 19 hours for the BE-10B form, 6 hours for the BE-10C form, 3 hours for the BE-10D form, and 0.5 hours for the BE-10 Claim for Not Filing. The estimated total respondent burden for this survey is estimated at 684,900 hours. The respondent burden for this collection of information is expected to vary considerably among respondents because of differences in company structure, size, and complexity. The burden includes time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The average respondent burden is 38 hours per response (684,900 hours/18,000 respondents), compared to an average burden of 144 hours and total burden of 561,100 hours for the previous (2014) BE-10 survey. The increase in the estimated total respondent burden reflects an increase in the respondent universe of U.S. and foreign entities that are required to file the BE-10 survey. The average burden decreased because the newer respondents on average file fewer and more abbreviated forms and because BEA is proposing a net decrease in the amount of information collected on the survey.
        Comments are requested concerning: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the burden estimate; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.

        Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in the proposed rule should be sent to both BEA and OMB following the instructions given in the ADDRESSES section above.
        Regulatory Flexibility Act
        The Chief Counsel for Regulation, Department of Commerce, has certified to the Chief Counsel for Advocacy, Small Business Administration, under the provisions of the Regulatory Flexibility Act (RFA), 5 U.S.C. 605(b), that this proposed rulemaking, if adopted, will not have a significant economic impact on a substantial number of small entities. The changes proposed in this rule are discussed in the preamble and are not repeated here.

        A BE-10 report is required of any U.S. company that had a foreign affiliate—that is, that had direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, including a branch—at the end of the U.S. company's 2019 fiscal year. U.S. companies that have direct investments abroad tend to be large. To qualify as a small business, the multinational enterprise as a whole must be evaluated when determining if the business meets the size standards set by the Small Business Administration (SBA), i.e. the size determination takes into account the sizes of both the U.S. parents and their foreign operations. BEA estimates that approximately 20 percent of the U.S. multinational enterprises that will be required to respond to the BE-10 survey are small businesses according to the standards established by the SBA. The number of items required to be reported for a U.S. parent and its foreign affiliates is determined by the size of each in terms of assets, sales, and net income. In the BE-10 survey, for the smallest foreign affiliates—those with assets, sales or gross operating revenues, and net income (loss) less than or equal to $25 million (positive or negative)—only a few selected items would be reported on a schedule-type form, Form BE-10D. To further ease the reporting burden on smaller U.S. companies, U.S. reporters with total assets, sales or gross operating revenues, and net income (loss) less than or equal to $300 million (positive or negative) are required to report a subset of items on the BE-10A form for U.S. reporters, in addition to forms they may be required to file for their foreign affiliates. BEA expects that virtually all small businesses filing the BE-10 will complete an abbreviated BE-10A and BE-10D. The proposed changes represent a net decrease in the amount of information collected on the survey, further reducing the economic impact on small businesses required to file the survey.
        Because relatively few small businesses are impacted by this rule, and because those small businesses that are impacted are subject to only minimal recordkeeping burdens, the Chief Counsel for Regulation certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities.

          List of Subjects in 15 CFR Part 801
          Economic statistics, International transactions, Multinational companies, Penalties, Reporting and recordkeeping requirements, U.S. direct investment abroad.

          Paul W. Farello,
          Associate Director of International Economics, Bureau of Economic Analysis.

        For reasons set forth in the preamble, BEA proposes to amend 15 CFR part 801 as follows:

          PART 801—SURVEY OF INTERNATIONAL TRADE IN SERVICES BETWEEN U.S. AND FOREIGN PERSONS AND SURVEYS OF DIRECT INVESTMENT

        1. The authority citation for 15 CFR part 801 continues to read as follows:

          Authority:
          5 U.S.C. 301; 15 U.S.C. 4908; 22 U.S.C. 3101-3108; E.O. 11961 (3 CFR, 1977 Comp., p. 86), as amended by E.O. 12318 (3 CFR, 1981 Comp. p. 173); and E.O. 12518 (3 CFR, 1985 Comp. p. 348).

        2. Revise § 801.8 to read as follows:

          § 801.8
          Rules and regulations for the BE-10, Benchmark Survey of U.S. Direct Investment Abroad.
          A BE-10, Benchmark Survey of U.S. Direct Investment Abroad will be conducted every five years and covers years ending in 4 and 9. All legal authorities, provisions, definitions, and requirements contained in §§ 801.1 through 801.2 and §§ 801.4 through 801.6 are applicable to this survey. Specific additional rules and regulations for the BE-10 survey are given in paragraphs (a) through (d) of this section. More detailed instructions are given on the report forms and instructions.
          (a) Response required. A response is required from persons subject to the reporting requirements of the BE-10, Benchmark Survey of U.S. Direct Investment Abroad, contained in this section, whether or not they are contacted by BEA. Also, a person, or their agent, contacted in writing by BEA about reporting in this survey must respond by filing a properly completed BE-10 report (BE-10A and BE-10B, BE-10C, BE-10D, and/or BE-10 Claim for Not Filing);
          (b) Who must report. A BE-10 report is required of any U.S. person that had a foreign affiliate—that is, that had direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise, including a branch—at the end of the U.S. person's fiscal year that ended in the calendar year covered by the survey. Foreign affiliates that are private funds and meet certain criteria are exempt from the BE-10 survey. Specifically, if a foreign affiliate meets ALL of the following 3 criteria, the U.S. reporter is not required to file a BE-10 form for that affiliate except to indicate exemption from the survey if contacted by BEA: (1) The foreign affiliate is a private fund; AND (2) the private fund foreign affiliate does not own, directly or indirectly through another business enterprise, an “operating company”—i.e., a business enterprise that is not a private fund or a holding company—in which the consolidated U.S. reporter owns at least 10 percent of the voting interest; AND (3) if the U.S. reporter owns the private fund indirectly (through one or more other business enterprises), there are no “operating companies” between the consolidated U.S. reporter and the indirectly-owned foreign private fund.
          (c) Forms to be filed. (1) Form BE-10A must be completed by a U.S. reporter. Form BE-10A is required to cover the fully consolidated U.S. domestic business enterprise. It must also file Form(s) BE-10B, BE-10C, and/or BE-10D for its foreign affiliates, whether held directly or indirectly.
          (2) Form BE-10B must be filed for each majority-owned foreign affiliate (for purposes of this survey, a “majority-owned” foreign affiliate is one in which the combined direct and indirect ownership interest of all U.S. parents of the foreign affiliate exceeds 50 percent) for which any of the following three items (not just the U.S. reporter's share) was greater than $80 million (positive or negative) at the end of, or for, its fiscal year that ended in the calendar year covered by the survey:
          (i) Total assets (without netting liabilities);
          (ii) Sales or gross operating revenues, excluding sales taxes; or
          (iii) Net income after provision for foreign income taxes.
          (3) Form BE-10C must be filed:
          (i) For each majority-owned foreign affiliate for which any one of the three items listed in paragraph (c)(2) of this section was greater than $25 million but for which none of these items was greater than $80 million (positive or negative) at the end of, or for, its fiscal year that ended in the calendar year covered by the survey, and
          (ii) For each minority-owned foreign affiliate (for purposes of this survey, a “minority-owned” foreign affiliate is one in which the combined direct and indirect ownership interest of all U.S. parents of the foreign affiliate is 50 percent or less) for which any one of the three items listed in paragraph (c)(2) of this section was greater than $25 million (positive or negative) at the end of, or for, its fiscal year that ended in the calendar year covered by the survey.
          (4) Form BE-10D must be filed for majority- or minority-owned foreign affiliates for which none of the three items listed in paragraph (c)(2) of this section was greater than $25 million (positive or negative) at the end of, or for, its fiscal year that ended in the calendar year covered by the survey. Form BE-10D is a schedule; a U.S. reporter would submit one or more pages of the form depending on the number of affiliates that are required to be filed on this form.
          (5) BE-10 Claim for Not Filing will be provided for response by:
          (i) Persons that are not subject to the reporting requirements of the BE-10 survey but have been contacted by BEA concerning their reporting status; or
          (ii) U.S. reporters that have been contacted by BEA concerning their reporting status for foreign affiliates that are no longer subject to the reporting requirements of the BE-10 survey.
          (d) Due date. A fully completed and certified BE-10 report comprising Form BE-10A and Form(s) BE-10B, BE-10C, BE-10D, and/or BE-10 Claim for Not Filing (as required) is due to be filed with BEA not later than May 31 of the year after the year covered by the survey, for those U.S. reporters filing fewer than 50, and June 30, for those U.S. reporters filing 50 or more, foreign affiliate Forms BE-10B, BE-10C, and/or BE-10D.

      [FR Doc. 2019-16628 Filed 8-6-19; 8:45 am]
      BILLING CODE 3510-06-P