A proposed rule detailing the revisions was published in the Federal Register on March 8, 2000 (65 FR 12140). A 30-day comment period was provided for interested persons to respond to the proposed rule. No comments were received, and no changes have been made in the provisions of the final rule.

This final rule has been determined to be not significant for purposes of Executive Order 12866, and it has not been reviewed by the Office of Management and Budget (OMB).

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. This rule would not preempt any state or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of this rule.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) AMS has considered the economic impact of this action on small entities and has determined that its implementation will not have a significant economic impact on a substantial number of small businesses.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be disproportionately burdened. There are an estimated 35,000 cotton growers in the U.S. who voluntarily use the AMS cotton classing services annually, and the majority of these cotton growers are small businesses under the criteria established by the Small Business Administration (13 CFR 121.201). Continuing the user fee at the 1999 crop level will not significantly affect small businesses as defined under the RFA because:

(1) The fee represents a very small portion of the cost-per-unit currently borne by those entities utilizing the services (the 1999 user fee for classification services was $1.35 per bale; the fee for the 2000 crop will be maintained at $1.35 per bale; the 2000 crop is estimated at 17,945,000 bales);

(2) The fee for services will not affect competition in the marketplace; and

(3) The use of classification services is voluntary. For the 1999 crop, 16,409,650 bales were produced, and virtually all of them were submitted by growers for the classification service.

(4) Based on the average price paid to growers for cotton from the 1998 crop of 65.3 cents per pound, 500 pound bales of cotton are worth an average of $326.50 each. The user fee for classification services, $1.35 per bale, is less than one percent of the value of an average bale of cotton.

In compliance with OMB regulations (5 CFR part 1320) which implement the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq. ), the information collection requirements contained in the provisions to be amended by this proposed rule have been previously approved by OMB and were assigned OMB control number 0581-0009 under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ).

The changes will be made effective July 1, 2000, as provided by the Cotton Statistics and Estimates Act.

The user fee charged to cotton producers for High Volume Instrument (HVI) classification services under the Cotton Statistics and Estimates Act (7 U.S.C. 473a) was $1.35 per bale during the 1999 harvest season as determined by using the formula provided in the Uniform Cotton Classing Fees Act of 1987, as amended by Public Law 102-237. The fees cover salaries, costs of equipment and supplies, and other overhead costs, including costs for administration, and supervision.

This final rule establishes the user fee charged to producers for HVI classification at $1.35 per bale during the 2000 harvest season.

Public Law 102-237 amended the formula in the Uniform Cotton Classing Fees Act of 1987 for establishing the producer's classification fee so that the producer's fee is based on the prevailing method of classification requested by producers during the previous year. HVI classing was the prevailing method of cotton classification requested by producers in 1999. Therefore, the 2000 producer's user fee for classification service is based on the 1999 base fee for HVI classification.

The fee was calculated by applying the formula specified in the Uniform Cotton Classing Fees Act of 1987, as amended by Public Law 102-237. The 1999 base fee for HVI classification exclusive of adjustments, as provided by the Act, was $2.14 per bale. An increase of one and thirty-nine hundredths percent, or three cents per bale increase due to the implicit price deflator of the gross domestic product added to the $2.14, would result in a 2000 base fee of $2.17 per bale. The formula in the Act provides for the use of the percentage change in the implicit price deflator of the gross national product (as indexed for the most recent 12-month period for which statistics are available). However, this has been replaced by the gross domestic product by the Department of Commerce as a more appropriate measure for the short-term monitoring and analysis of the U.S. economy.

The number of bales to be classed by the United States Department of Agriculture from the 2000 crop is estimated at 17,945,000 bales. The 2000 base fee was decreased 15 percent based on the estimated number of bales to be classed (one percent for every 100,000 bales or portion thereof above the base of 12,500,000, limited to a maximum adjustment of 15 percent). This percentage factor amounts to a 33 cents per bale reduction and was subtracted from the 2000 base fee of $2.17 per bale, resulting in a fee of $1.84 per bale.

With a fee of $1.84 per bale, the projected operating reserve would be 49.77 percent. The Act specifies that the Secretary shall not establish a fee which, when combined with other sources of revenue, will result in a projected operating reserve of more than 25 percent. Accordingly, the fee of $1.84 must be reduced by 49 cents per bale, to $1.35 per bale, to provide an ending accumulated operating reserve for the fiscal year of 25 percent of the projected cost of operating the program. This will establish the 2000 season fee at $1.35 per bale.

Accordingly, § 28.909, paragraph (b) will reflect the continuation of the HVI classification fee at $1.35 per bale.

As provided for in the Uniform Cotton Classing Fees Act of 1987, as amended, a five cent per bale discount would continue to be applied to voluntary centralized billing and collecting agents as specified in § 28.909(c).

Growers or their designated agents requesting classification data provided on computer punched cards will continue to be charged the fee of 10 cents per card in § 28.910(a) to reflect the costs of providing this service. Requests for punch card classification data represented less than 1.0 percent of the total bales classed from the 1999 crop, down from 2.6 percent in 1997. Growers or their designated agents receiving classification data by methods other than computer punched cards would continue to incur no additional fees if only one method of receiving classification data was requested. The fee for each additional method of receiving classification data in § 28.910 would remain at five cents per bale, and it would be applicable even if the same method was requested. However, if computer punched cards were requested, a fee of ten cents per card would be charged. The fee in § 28.910(b) for an owner receiving classification data from the central database would remain at five cents per bale, and the minimum charge of $5.00 for services provided per monthly billing period would remain the same. The provisions of § 28.910(c) concerning the fee for new classification memoranda issued from the central database for the business convenience of an owner without reclassification of the cotton will remain the same.

The fee for review classification in § 28.911 will be maintained at $1.35 per bale.

The fee for returning samples after classification in § 28.911 will remain at 40 cents per sample.

Pursuant to 5 U.S.C. 553, it is determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) the cotton crop year begins July 1, 2000, (2) a uniform fee for the entire crop is mandated by the Cotton Statistics and Estimates Act, and (3) a 30 day comment period was provided for in the proposed rule and no comments were received.

The Regulatory Flexibility Act (5 U.S.C. 601-612) requires the Agency to examine the impact of a proposed rule on small entities. Small businesses in the fluid milk processing industry have been defined by the Small Business Administration as those processors employing not more than 500 employees. For purposes of determining a processor's size, if the plant is part of a larger company operating multiple plants that collectively exceed the 500-employee limit, the plant will be considered a large business even if the local plant has fewer than 500 employees. There are approximately 275 fluid milk processors subject to the provisions of the Fluid Milk Promotion Order. Most of these processors are considered small entities.

The Fluid Milk Promotion Order (7 CFR Part 1160) is authorized under the Fluid Milk Promotion Act of 1990 (Act) (7 U.S.C. 6401 et seq. ). The amendments, proposed by the National Fluid Milk Processor Promotion Board, modifies the membership provisions of the Order.

The amendments will allow up to three representatives of a fluid milk processor to serve on the 20-person Board. Currently, the Order states that a fluid milk processor shall be represented on the Board by no more than two members. This action takes into account changes in the industry which have resulted in the formation of larger regional and national companies. This amendment should help reduce Board vacancies and foster continuity in Board activities and membership.

The amendments also will allow a Board member whose fluid milk processor company affiliation changes to serve on the Board for a period of up to six months or until a successor is appointed, whichever is sooner, provided that the eligibility requirements of the Order are still met. Under current Order provisions, a Board member whose company affiliation changes may continue to serve on the Board for a period of up to 60 days or until a successor is appointed, whichever is sooner, provided that such member continues to meet the Order's eligibility standards. The amendment will more accurately reflect the time needed to fill a Board vacancy.

The amendments will allow the Board to operate in an effective and efficient manner. The amendments to the Order will not add any burden to regulated parties because they relate to provisions concerning Board membership. Additionally, the changes will not impose additional reporting or collecting requirements. No relevant Federal rules have been identified that duplicate, overlap, or conflict with this rule.

Accordingly, pursuant to 5 U.S.C. 605(b), the Agricultural Marketing Service has certified that this rule will not have a significant economic impact on a substantial number of small entities.

Prior document in this proceeding:

Proposed Rule: Issued March 14, 2000, published March 17, 2000 (65 FR 14484).

The Department is issuing this rule in conformance with Executive Order 12866.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have a retroactive effect. This rule will not preempt any State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule.

The Fluid Milk Promotion Act of 1990, as amended, authorizes the Fluid Milk Promotion Order. The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 1999K of the Act, any person subject to a Fluid Milk Promotion Order may file with the Secretary a petition stating that the Order, any provision of the Order, or any obligation imposed in connection with the Order is not in accordance with the law and request a modification of the Order or to be exempted from the Order. A person subject to an order is afforded the opportunity for a hearing on the petition. After a hearing, the Secretary would rule on the petition. The Act provides that the district court of the United States in any district in which the person is an inhabitant, or has his principal place of business, has jurisdiction to review the Secretary's ruling on the petition, provided a complaint is filed not later than 20 days after the date of the entry of the ruling.

In accordance with the Paperwork Reduction Act (44 U.S.C. Chapter 35), the forms and reporting and recordkeeping requirements that are included in the Fluid Milk Promotion Order have been approved by the Office of Management and Budget (OMB) and were assigned OMB No. 0581-0093, except for Board members' nominee information sheets that were assigned OMB No. 0505-0001.

This final rule amends certain provisions of the Fluid Milk Promotion Order. The amendments will modify the membership provisions of the Order. One proposal will allow up to three representatives of a fluid milk processor to serve on the 20-member Board. Currently, the Order states that a fluid milk processor shall be represented by no more than two representatives on the Board. This amendment takes into account changes in the industry which have resulted in the formation of larger regional and national companies. Additionally, the amendment would provide the Secretary greater flexibility in those situations that warrant additional representation for a fluid milk processor.

The amendments also will allow a Board member who changes fluid milk processor company affiliation to serve on the Board for a period of up to six months or until a successor is appointed, whichever is sooner, provided that the eligibility requirements of the Order are still met. Under current Order provisions, a Board member whose company affiliation changes may continue to serve on the Board for a period of up to 60 days or until a successor is appointed, whichever is sooner, provided that such member continues to meet the Order's eligibility standards. The amendment would more accurately reflect the time needed to fill a Board vacancy.

The Board states that the amendments would ensure Board continuity and full representation and allow it to operate effectively and efficiently.

A notice of proposed rulemaking was published in the Federal Register on March 17, 2000 (65 FR 14484), concerning the proposed suspension. Interested persons were afforded an opportunity to file written data, views and arguments thereon. One comment supporting and one opposing the proposed amendments were received.

The Board reiterated its support for the amendments. The opposing comment stated the proposed changes would provide larger processors more power and suggested reducing the number of Board members.

The Order should be amended to allow a fluid milk processor to be represented by up to 3 members on the 20-member Board. The Order provisions provide for a 20-member Board with 15 members representing geographic regions and five at-large members which include at least three fluid milk processors and at least one member from the general public. Further, to the extent practicable, members representing geographic regions should represent processing operations of differing sizes.

This amendment provides needed flexibility in the appointment process. The Secretary appoints Board members on the basis of the Order's provisions. Through the appointment process, the Secretary maintains control over the Board's composition, including the number of multi-member processors. As stated by the proponent of the proposals, the fluid milk processing industry has experienced and continues to undergo changes in processing operations which result in larger regional and national companies operating in various geographical regions. Accordingly, this amendment will ensure Board continuity and full representation while maintaining the Board at its current membership level.

The Order also should be amended to permit a Board member who changes fluid milk processor company affiliation to serve on the Board for a period of up to six months or until a successor is appointed, whichever is sooner, provided that the eligibility requirements of the Order are still met. The amendment will more accurately reflect the time needed to fill a Board vacancy.

The amendments will ensure Board continuity and full representation and allow the Board to operate in an effective and efficient manner and should be made effective as soon as possible. Therefore, good cause exists for making this rule effective less than 30 days from the date of publication in the Federal Register . The proposed amendments to the order are made final in this action.

The FOIA requires each Federal agency covered by the Act to specify a schedule of fees applicable to processing of requests for agency records. 5 U.S.C. 552(a)(4)(i). On March 15, 1991, the Board published for comment in the Federal Register its proposed FOIA Fee Schedule. 56 FR 11114. No comments were received in response to that notice and the Board issued a final Fee Schedule on May 6, 1991.

Pursuant to 10 CFR 1703.107(b)(6) of the Board's regulations, the Board's General Manager will update the FOIA Fee Schedule once every 12 months. Previous Fee Schedule updates were published in the Federal Register and went into effect, most recently, on June 1, 1999, 99 FR 14685.

Accordingly, the Board issues the following schedule of updated fees for services performed in response to FOIA requests.

SBA proposed a revision to the size standard for the Help Supply Services industry (SIC 7363) from $5.0 million to $10.0 million average annual receipts (64 FR 55873, dated October 15, 1999). The proposal was made following comments from the public expressing concern that the size standard has not kept pace with the rapid growth in the industry due in part to the trends of outsourcing and downsizing. The industry has changed in two ways—help supply firms are larger and they are providing a wider range of personnel to businesses. We also had a request to allow help supply firms to exclude funds collected for and remitted to unaffiliated third parties from gross receipts, as is currently done for travel agents and real estate agents, since 60 percent to 85 percent of revenues on many Federal contracts are “passed-through” to a firm's employees or associates.

The current size standard for this industry, $5.0 million, is based on gross billings including funds paid to employees (sometimes referred to as “associates”). Based on a review of industry data, SBA proposed increasing the size standard for the Help Supply Services industry to $10 million in average annual receipts. SBA did not propose a change to the way average annual receipts are calculated for firms in the Help Supply Services industry. Under SBA's size regulations (13 CFR 121.104), the size of a firm for a receipts-based size standard is based on information reported on a firm's Federal tax returns. Generally, receipts reported to the Internal Revenue Service (IRS) include a firm's gross receipts or sales from provision of goods or services. Only when firms in an industry generally display certain characteristics will we exclude certain pass-though revenues from the calculation of gross receipts. As explained in the proposed rule, SBA evaluated this issue and concluded that gross receipts is appropriate in calculating the size of a firm in this industry.

The final rule adopts the proposed size standard of $10 million based on our analysis of the industry as presented in the proposed rule. The comments received on the proposed rule did not provide us with sufficient reasons to alter our assessment of the industry data or the position that the size standard should be based on gross receipts. The comments to the proposed rule and our position are discussed below.

We received six timely comments on the proposed size standard—four from individual firms, one from an association and one from an SBA attorney. The association representing over 1,400 firms supported adopting the proposed rule. Of the four firms who commented, two were opposed, one was for and one was for a size standard increase, but higher than the one proposed. The comments raised four major issues. Each of these issues is discussed below along with our response.

Two comments raised the issue of small firms being at a disadvantage if they would have to compete with firms in the $5.0 million to $10.0 million range. They contend that companies with $5 million to $10 million in receipts have established themselves in the industry. If these businesses were defined as small, they would take away work from the presently defined small businesses. This issue is raised often when we proposes to increase the size standard, and it is a valid concern. However, we believe our analysis of the industry clearly supports that firms of up to $10 million in receipts are small businesses within this industry. The average firm in the industry generates almost $3 million in receipts and firms of $10 million or less in receipts account for only a little more than a third of total industry receipts. Given these and the characteristics discussed in the proposed rule, we believe we have identified the firms reasonably considered small in this industry.

Related to this issue, we are looking into ways to protect the smaller firms while having a size standard that includes firms of sufficient size to handle the typical Federal procurement. One pilot program currently being tested is the Very Small Business Set-Aside Program. This program reserves procurements of $50,000 or less for very small businesses—defined as a business with not more than 15 employees and not more than $1.0 million revenues. The pilot program is being conducted within the geographical area of ten SBA district offices. (For more information on this program, please call the SBA's Office of Government Contracting at (202) 205-6460, or visit our web site at http://www.sba.gov/GC/vsbqa.html.)

One comment disagreed with our use and analysis of the 1992 Census data to evaluate the size standard for this industry. The comment recommended a size standard to $20.0 million based on more recent data on the industry. In particular, the comment presented data (without citing its sources) showing average firm size and the four-firm concentration ratio to be much higher than our calculations shown in the proposed rule. We used the latest available Census Bureau data on this industry. We recognize that the industry has grown since the last data were collected, but until more complete data are available, we must continue to rely on the 1992 Census data as the most complete and representative data available on the Help Supply Services industry for establishing size standards. We expect to get newer data later this year based on the 1997 Economic Census. If these data show the $10 million to be an inappropriate size standard, we will consider publishing another proposal based on an analysis of that new data.

SBA received one comment stating that firms in this industry do indeed work on commissions, but it is called a “rate” and that revenues are artificially inflated if labor costs are not excluded from the calculation. The comment asserts that the labor rate is a pass-through and only the mark-up rate is the firm's revenues. They disagreed with the analysis done by SBA on the factors such as agent-like relationship in arriving at the position not to exclude labor costs for this industry. Further, the comment argued that staffing for this industry is like inventory in other industries.

We disagree. The proposed rule stated five characteristics that we consider in assessing whether or not to exclude certain types of “pass-through” revenues. The argument that we should view the personnel supplied by help supply services firms to their client firms as inventory did not convince us that an agent-like relationship exists. Help supply services firms are providing their own resources (or “inventory”) under their control to another firm. On the other hand, the role of an agent is to represent the agent's principal. Often an agent negotiates a transaction bringing parties together, but always acts on behalf of the principal as required by their fiduciary relationship. The comment did not identify which party would be the principal, but it would not be the employees/associates (also described by the comment as “inventory”) and it would not be the firm using the employees. Rather, help supply services firms act on their own behalf and in their own interest when negotiating to obtain personnel or to supply staffing to a firm. For an agency to exist, there must be a principal-agent relationship and that is not evident in this industry.

We also do not agree with the position that the labor costs of help supply services firms are the same as funds held in trust for another. While there is a close connection between the wages and benefits of personnel supplied by a help supply services firm and the firm using the personnel, it is the help supply services firm that is responsible for paying the employees' wages and benefits. The revenues paid to the help supply services firm by the firm using the employees legally belong to the help supply services firm even though the help supply services firm has a legal obligation to pay its employees. This is a much different arrangement than holding funds in trust for an unaffiliated third party. Such trust funds are legally owned by the unaffiliated third party, but collected and distributed by the holder on the owner's behalf. An association representing over 1,400 firms in the help supply services industry also rejected the notion that help supply services firms should be viewed as agents. It also stated that the wages and benefits of the help supply services employees are not earmarked for the purpose of paying employees.

Finally, we recognize that the help supply service firms often apply a rate to labor costs in arriving at a price for supplying personnel to a client. The comment estimated an average rate for the industry. However, there does not appear to be a standard rate provided by the industry, which is one necessary characteristic for allowing an exclusion of certain pass-through revenues. Rather, the comment itself acknowledged that rates vary by firm. An average rate charged by firms in the industry is not the same concept as a common or standard rate applied by firms throughout the industry. Also, we note that many industries operate on a cost plus mark-up basis, but are not agents and their costs are not recognized as “pass-through” funds.

One comment raised the issue of prior findings of affiliation between a franchisor and franchisee in the staffing industry where the franchisor controlled the “associates” of the franchisee. His question was how would the proposal to exempt “Professional Employee Organizations” (PEOs) from the presumption of affiliation with the firms to whom they supply personnel affect these earlier decisions. Changing the size standard will not affect prior or subsequent findings of affiliation. The clarification regarding PEOs is narrowly written so as not to impact findings of affiliation based on control or other grounds. It addresses the issue of affiliation between the firm using the employees and the PEO supplying the employees under a co-employment arrangement. It does not address the issue of where or how the PEO obtains the employees it subsequently provides to the firm. In many cases, they were formerly the sole employees of the firm using their services before the firm contracted out the professional administration of its employees. If the PEO obtains its employees from a franchisor, affiliation could still be found between the franchisor and the franchisee where a franchise agreement gives control of the franchisee's “associates” to the franchisor. In such cases, the receipts or employment of both the franchisor and the franchisee must be included in the calculation. This is a separate issue from what the clarification addresses, namely, how the firm (using the employees) calculates its size.

SBA is also clarifying the language in 13 CFR 121.103(b)(4). Section (b) discusses exclusions from affiliation rules while paragraph (4) specifically excludes business concerns that lease employees. We are inserting “Professional Employee Organizations (PEOs)” in this section along with leasing companies. Their relationship with the firms to whom they provide employees and staffing services are similar, yet questions arise from time-to-time because PEOs were not specifically mentioned in the exclusion. SBA will not find a firm affiliated with a leasing company or PEO merely because it uses the services of a leasing company or PEO. However, SBA might find affiliation based on other conditions. Nothing in the clarification of the exclusions to the affiliation rule is intended to change the way a firm must count its employees when determining size. All employees must be counted; whether permanent, part-time, temporary, leased or covered by a contract with a PEO. How a firm obtains its staffing is a business decision, and size standards are not intended to influence its decision in that regard.

SBA has determined that this rule will not be a significant rule within the meaning of Executive Order 12866 since it will not have an impact of $100 million or more. The total amount of Federal procurement and SBA guaranteed loans combined is less than $160 million to this industry annually, and a change to the size standard is unlikely to significantly affect these programs.

For purposes of the Regulatory Flexibility Act, this rule would not have a substantial impact on a significant number of small entities. Although potentially 576 additional firms could gain small business status as a result of this rule, only a very small percentage of firms in the industry compete for Federal procurements or obtain guaranteed loans through SBA's financial assistance programs.

For the purpose of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., SBA has determined that this rule would not impose new reporting or record-keeping requirements other than those already required of SBA.

For purposes of Executive Order 13132, SBA has determined that this rule does not have any federalism implications warranting the preparation of a Federalism Assessment.

For purposes of Executive Order 12988, SBA certifies that this rule is drafted, to the extent practicable, in accordance with the standards set forth in Section 3 of that order.

On May 3, 1996, Raytheon Aircraft Company, PO Box 85, Wichita, Kansas 67201-0085, submitted an application for a new type certificate for the Raytheon Model 4000. The significant aircraft design features include an 84 inch diameter graphite composite fuselage, new metal wing and a graphite composite skin on aluminum sub-structure empennage. The Model 4000 is 69 feet, 2 inches in length and 61 feet, 9 inches in width. It has a Primus Epic flightdeck, and two aft mounted PW308A engines. There are 12 forward-facing seats and a forward observer seat. The significant systems features include a new state of the art integrated avionics/electronics and electrical systems suite. The avionics/electronics and electrical systems installed in this airplane have the potential to be vulnerable to high-intensity radiated fields (HIRF) external to the airplane.

Under the provisions of 14 CFR § 21.17, Raytheon Aircraft Company must show that the Model 4000 meets the applicable provisions of part 25, as amended by Amendment 25-1 through Amendment 25-87 thereto.

If the Administrator finds that the applicable airworthiness regulations ( i.e., part 25, as amended) do not contain adequate or appropriate safety standards for the Raytheon Aircraft Company Model 4000 airplane because of novel or unusual design features, special conditions are prescribed under the provisions of § 21.16.

In addition to the applicable airworthiness regulations and special conditions, the Model 4000 must comply with the fuel vent and exhaust emission requirements of part 34 and the noise certification requirements of part 36, and the FAA must issue a finding of regulatory adequacy pursuant to § 611 of Public Law 92-574, the “Noise Control Act of 1972.”

Special conditions, as appropriate, are issued in accordance with § 11.49, after public notice, as required by §§ 11.28 and 11.29(b), and become part of the type certification basis in accordance with § 21.17(a)(2).

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, the special conditions would also apply to the other model under the provisions of § 21.101(a)(1).

The Raytheon Aircraft Company Model 4000 airplanes will utilize new avionics/electronics and electrical systems that will perform critical functions. These systems may be vulnerable to HIRF external to the airplane. The significant systems features include a new state of the art integrated avionics/electronics and electrical systems suite. The avionics/electronics and electrical systems installed in this aircraft have the potential to be vulnerable to high-intensity radiated fields (HIRF) external to the airplane.

There is no specific regulation that addresses protection requirements for electrical and electronic systems from HIRF. Increased power levels from ground-based radio transmitters and the growing use of sensitive avionics/electronics and electrical systems to command and control airplanes have made it necessary to provide adequate protection.

To ensure that a level of safety is achieved equivalent to that intended by the regulations incorporated by reference, special conditions are needed for the Raytheon Aircraft Company Model 4000. These special conditions require that new avionics/electronics and electrical systems that perform critical functions be designed and installed to preclude component damage and interruption of function due to both the direct and indirect effects of HIRF.

With the trend toward increased power levels from ground-based transmitters, plus the advent of space and satellite communications coupled with electronic command and control of the airplane, and the use of composite material in the airplane structure, the immunity of critical avionics/electronics and electrical systems to HIRF must be established.

It is not possible to precisely define the HIRF to which the airplane will be exposed in service. There is also uncertainty concerning the effectiveness of airframe shielding for HIRF. Furthermore, coupling of electromagnetic energy to cockpit-installed equipment through the cockpit window apertures is undefined. Based on surveys and analysis of existing HIRF emitters, an adequate level of protection exists when compliance with the HIRF protection special condition is shown with either paragraph 1, or 2 below:

1. A minimum threat of 100 volts rms per meter electric field strength from 10 KHz to 18 GHz.

a. The threat must be applied to the system elements and their associated wiring harnesses without the benefit of airframe shielding.

b. Demonstration of this level of protection is established through system tests and analysis.

2. A threat external to the airframe for both of the following field strengths for the frequency ranges indicated. Both peak and average field strength components from the Table are to be demonstrated.

The threat levels identified above are the result of an FAA review of existing studies on the subject of HIRF, in light of the ongoing work of the Electromagnetic Effects Harmonization Working Group of the Aviation Rulemaking Advisory Committee.

Notice of proposed special conditions No. 25-00-01-SC for the Raytheon Aircraft Model 4000 airplanes was published in the Federal Register on March 14, 2000 (65 FR 13703). No comments were received, and the special conditions are adopted as proposed.

As discussed above, these special conditions are applicable to the Model 4000 airplane. Should Raytheon Aircraft Company apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design features, these special conditions would apply to that model as well under the provisions of § 21.101(a)(1).

This action affects only certain design features on the Raytheon Aircraft Company Model 4000 airplanes. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Raytheon Aircraft Company Model 4000 airplanes.

1. Protection from Unwanted Effects of High-Intensity Radiated Fields (HIRF). Each electrical and electronic system that performs critical functions must be designed and installed to ensure that the operation and operational capability of these systems to perform critical functions are not adversely affected when the airplane is exposed to high intensity radiated fields.

2. For the purpose of this special condition, the following definition applies:

Critical Functions. Functions whose failure would contribute to or cause a failure condition that would prevent the continued safe flight and landing of the airplane.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 94-18-03, Amendment 39-9016 (59 FR 46536), applicable to R-R RB211-22B and -524 series turbofan engines, was published in the Federal Register on August 31, 1999 (64 FR 47447). That action proposed to require the removal from service of IP compressor stage 6-7 rotor shafts that exceed reduced cyclic life limits.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

There are approximately 1,300 engines of the affected design in the worldwide fleet. The manufacturer has advised the FAA that there are 228 engines installed on aircraft of U.S. registry that will be affected by this AD. It will take approximately 24 work hours or $1,440 per engine to accomplish the proposed rework actions, if rework of the rotor shafts is selected. Otherwise, to maintain the record of the cyclic life of IP compressor stage 6-7 rotor shafts has minimum economic impact on U.S operators. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be less than $330,000.

This final rule does not have federalism implications, as defined in Executive Order 13132, because it does not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the FAA has not consulted with state authorities prior to publication of this final rule.

For the reasons discussed above, I certify that this action: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES .

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Fokker Model F.28 Mark 1000, 2000, 3000, and 4000 series airplanes was published in the Federal Register on February 8, 2000 (65 FR 6046). That action proposed to require a one-time review of the maintenance records to determine if tripping of the fuel boost pump circuit breakers has been recorded, repetitive inspections to detect fuel leakage from the fuel boost pump wiring conduits, and corrective actions, if necessary. That action also proposed to require replacement of the three single wires inside the metal conduit sleeve of the fuel boost pumps with new wires protected by a polyamide sleeve, which would terminate the repetitive inspections.

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received.

One commenter requests that the Discussion and Explanation of Relevant Service Information sections be revised to refer to Fokker Services B.V. as the current type certificate holder, rather than the now defunct airplane manufacturer. The commenter advises that Fokker Services B.V. is conducting the Fuel System Safety Program mentioned in the Discussion section, and is also the issuer of the relevant service information. The FAA acknowledges the accuracy of this information; however, since these sections are not repeated in the final rule, no change is made to the AD.

The same commenter requests that the statement of unsafe condition be corrected in several areas of the proposed AD. The commenter notes that electrical arcing has only been observed between the metal conduit and the fuel boost pump wiring, and states that the description of the unsafe condition should be revised to remove the statement that such arcing “could result in a possible fuel tank ignition source.” The commenter states that since no arc-through of the metal conduit has been observed, and the conduit is submerged in fuel during all phases of flight, it is very unlikely that the arcing could serve as an ignition source for the fuel vapors inside the fuel tank. The commenter requests that the Summary, Discussion, and Compliance sections of the AD be revised to eliminate such a statement, and suggests that the actions required by the proposed AD are instead intended to prevent repetitive electrical arcing between damaged fuel boost pump wiring and the metal conduit, ignition of fuel vapors within the metal conduit, and/or chafing of the fuel boost pump wiring.

The FAA does not concur. Although the commenter states that it is very unlikely that the arcing could lead to an ignition source for the fuel vapors inside the fuel tank, insufficient data were provided to the FAA to demonstrate that such arcing could not create an ignition source in the fuel tank. Additionally, although other conditions will be prevented by accomplishment of the actions required by this AD, the possible ignition of fuel vapors is the unsafe condition being addressed by this AD. No change is made to the final rule.

The same commenter requests that the phrase “replacement of the three single wires inside the metal conduit sleeve” in the Summary section of the proposed AD be revised to delete the word “sleeve” to describe the replacement more accurately. The FAA concurs. The use of the word “sleeve” in this context was an inadvertent error in terminology, although the replacement is described accurately in the text of the AD. The Summary section of the final rule has been revised accordingly.

The same commenter requests that the Explanation of Relevant Service Information section be revised in several areas pertaining to the description of the procedures contained in Part 2, Paragraph D., of the Accomplishment Instructions of Fokker Service Bulletin SBF28/28-046, dated September 1, 1999. The commenter's suggestions include expanding the description of the corrective actions to list all such actions, and clarifying that certain actions are to be accomplished subsequent to and depending on the results of the resistance check. The FAA acknowledges that more detailed descriptions of all corrective actions could have been included, but has determined that the description provided in the proposed AD was sufficient to give adequate notice to operators concerning required actions. Since this information is not retained in the final rule, no change is made to the AD in this regard.

After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the change described previously. The FAA has determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

The FAA estimates that 22 airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required review of the maintenance records, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the review on U.S. operators is estimated to be $1,320, or $60 per airplane.

It will take approximately 3 work hours per airplane to accomplish the required repetitive inspection, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the inspection required by this AD on U.S. operators is estimated to be $3,960, or $180 per airplane, per inspection cycle.

It will take approximately 33 work hours per airplane to accomplish the required modification, at an average labor rate of $60 per work hour. Required parts will cost approximately $1,355 per airplane. Based on these figures, the cost impact of the modification required by this AD on U.S. operators is estimated to be $73,370, or $3,335 per airplane.

The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted.

The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.

For the reasons discussed above, I certify that this action: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 99-21-24, Amendment 39-11369 (64 FR 55621, October 14, 1999), which applies to Eurocopter France Model SA-365C, C1, C2, N, and N1; AS-365N2, and SA-366G1 helicopters, was published in the Federal Register on February 29, 2000 (65 FR 10727). That action proposed to require requires the same actions as the existing AD, but adds the Eurocopter France Model AS-365N3 helicopter to the applicability.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

The FAA estimates that 101 helicopters of U.S. registry will be affected by this AD, that it will take approximately 0.5 work hour per helicopter and approximately 3,000 inspections per helicopter over the life of the fleet to accomplish the required actions, and that the average labor rate is $60 per work hour. Required parts will cost approximately $3,000 per helicopter. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be $9,123,000, assuming 11 ship sets of bearings are replaced on the fleet.

The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 13132.

For the reasons discussed above, I certify that this action: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas.

On April 14, 1999, the FAA proposed to amend 14 CFR part 71 (part 71) to revoke one jet route, and to modify five jet routes, three VOR Federal airways, and one colored Federal airway in Alaska (64 FR 18392). This action was considered necessary due to overlapping jet routes, decommissioning of the Adak NDB, and the existence of obsolete fixes still shown on jet routes. Interested parties were invited to participate in this rulemaking by submitting written comments on the proposal to the FAA. No comments were received. Except for editorial changes, this amendment is the same as that proposed in the notice.

This action amends part 71 by revoking one jet route (J-814R), and modifying five jet routes (J-111, J-115, J-127, J-501, and J-511), three VOR Federal airways (V-319, V-453, and V-456), and one colored Federal airway (G-8), in Alaska. The FAA is taking this action for the following reasons.

Segments of J-111 from Anchorage to Middleton Island to the noncompulsory reporting point SNOUT overlap existing J-804R segments and are not used. This action revises the legal description of J-111 to reflect this change.

Jet Route J-115 and Colored Federal Airway G-8 use Adak NDB which will be decommissioned. The new NDB on Adak Island will be named Mount Moffett NDB. This action changes the legal descriptions of J-115 and G-8 to show the new NDB.

Jet Routes J-127, J-501, J-511, and J-814R terminate at AUGIN, MIXER, ENCOR, and PANTT fixes which were once part of the NOPAC ATS route structure and these fixes are no longer required for air traffic control (ATC) purposes. As a result, the FAA is revising J-127, J-501, and J-511 to reflect this change in route structure and revoking J-814R as this route is no longer needed for ATC purposes.

Alaskan Federal Airways V-319 and V-453 are being amended by adding and converting non-part 95 segments to VOR Federal airway segments. Non-part 95 segments are routes that are nonregulatory, uncharted, and are not subject to the requirements of part 95, instrument flight rules (IFR) altitudes. The conversion of these non-part 95 segments to VOR Federal airway segments will add to the IFR airway and route infrastructure in Alaska. The new VOR Federal airway segments, unlike the non-part 95 segments, will enable the FAA to provide charted flight procedural information to the pilots pertaining to navigational guidance, minimum en route altitudes and minimum obstruction clearance altitudes information, thereby enhancing safety.

Alaskan Federal Airway V-456 is amended to correct a discrepancy on how the airway is depicted on the IFR En route L-3/L-4 Low Altitude—Alaska Chart and the Kodiak Aeronautical Sectional Chart. The outbound radial from King Salmon is 032° on the sectional chart and 033° on the en route chart. The current legal description for V-456 includes an intersection (King Salmon 053° and Kenai 239°) which will be removed to correct the discrepancy. The course from King Salmon to Kenai (032.71°) will resolve to 033° once the intersection is removed. This action will make the route segment a straight line and will not affect the fixes STREW, BITOP, or COPPS on V-456.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this action: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Jet routes, green Federal airways, and Alaskan VOR Federal airways are published in paragraph 2004, paragraph 6009(a), and paragraph 6010(b), respectively, of FAA Order 7400.9G, Airspace Designations and Reporting Points, dated September 1, 1999, and effective September 16, 1999, which is incorporated by reference in 14 CFR 71.1. The jet routes, green Federal airway, and Alaskan VOR Federal airways listed in this document will be published subsequently in or removed from the order.

In a notice published in the Federal Register of May 12, 1998 (63 FR 26193), FDA announced that a food additive petition (animal use) (FAP 2238) had been filed by Alltech Biotechnology Center, 3031 Catnip Hill Pike, Nicholasville, KY 40356. The petition proposed to amend the food additive regulations in § 573.920 Selenium (21 CFR 573.920) to provide for the safe use of selenium yeast as a source of selenium in animal feeds intended for use in poultry. The notice of filing provided for a 60-day comment period on the petitioner's environmental assessment. No comments have been received.

FDA concludes that the data establish the safety and utility of selenium yeast, for use in feeds for chickens, and the food additive regulations should be amended as set forth below.

In accordance with § 571.1(h) (21 CFR 571.1(h)), the petition and the documents that FDA considered and relied upon in reaching its decision to approve the petition are available for inspection at the Center for Veterinary Medicine by appointment with the information contact person listed above. As provided in § 571.1(h), the agency will delete from the documents any materials that are not available for public disclosure before making the documents available for inspection.

The agency has determined under 21 CFR 25.32(r) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

Any person who will be adversely affected by this regulation may at any time file with the Dockets Management Branch (address above) written objections by July 6, 2000. Each objection shall be separately numbered, and each numbered objection shall specify with particularity the provisions of the regulation to which objection is made and the grounds for the objection. Each numbered objection on which a hearing is requested shall specifically so state. Failure to request a hearing for any particular objection shall constitute a waiver of the right to a hearing on that objection. Each numbered objection for which a hearing is requested shall include a detailed description and analysis of the specific factual information intended to be presented in support of the objection in the event that a hearing is held. Failure to include such a description and analysis for any particular objection shall constitute a waiver of the right to a hearing on the objection. Three copies of all documents are to be submitted and are to be identified with the docket number found in brackets in the heading of this document. Any objections received in response to the regulation may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday.

These correcting amendments affect all offshore operators and lessees. The following describes the two minor corrections we are making.

On May 29, 1998 (63 FR 29478), MMS published a final rule commonly known as the “redesignation” rule, which assigned new section numbers to each section in 30 CFR part 250 (Oil and Gas and Sulphur Operations in the Outer Continental Shelf). The purpose was to allow MMS to logically format the subparts in the future without further renumbering. In the process of redesignating the regulations, we missed correcting a citation in 30 CFR 250.613(a). That section references the citation “§ 250.91”, which should have been changed to “§ 250.601” and is now being corrected.

In § 250.198(e), our regulations incorporate various documents by reference and these documents are then referenced in other sections of the regulations. One of these documents is API RP 14H, Recommended Practice for Installation, Maintenance and Repair of Surface Safety Valves and Underwater Safety Valves Offshore. This document is referenced in § 250.804(a)(4) as “API RP 14H, Section 4, Table 2”. However, there are no tables in Section 4 of API RP 14H and the reference should have been to “Section 6” rather than “Section 4”. We are correcting § 250.804(a)(4) to simply reference document “API RP 14H” without designating a specific section of the document.

As published, the final regulations contain errors which may prove to be misleading, and are in need of clarification.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. This rule is being promulgated without an NPRM due to the short time frame available between the submission of the request by the Department of Public Works of the City of San Francisco and the date of the event. Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

On May 10, 2000, the Department of Public Works of the City of San Francisco requested a temporary change to the operation of the Third Street Bridge across Mission Creek, China Basin at Mile (0.0) in San Francisco, California. The Third Street Drawbridge navigation span provides vertical clearance of 8 feet above MLLW in the closed-to-navigation position. Navigation on the waterway consists of both commercial and recreational watercraft. Presently, the draw is required to open on signal if at least one hour advance notice is given. The City requested the drawbridge be permitted to remain closed to navigation from 8:30 a.m. to 10:30 a.m. on July 9, 2000. During this time the bridge will be crossed by participants in the scheduled Second Annual Chronicle Marathon. This temporary drawbridge operation amendment has been coordinated with the waterway users. No objections to the proposed rule were raised.

This temporary rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. It has not been reviewed by the Office of Management and Budget under that Order. It is not a “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040, February 26, 1979). The Coast Guard expects the economic impact of this temporary rule to be so minimal that a full Regulatory Evaluation under paragraph 10(e) of the regulatory policies and procedures of DOT is unnecessary. This is because waterway traffic is not likely to be delayed more than two hours.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), the Coast Guard must consider whether this temporary rule will have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields and government jurisdictions with populations of less than 50,000.

This rule will be in effect for only 2 hours early in the day and the Coast Guard expects the impact of this action to be minimal. Therefore, the Coast Guard certifies under 5 U.S.C. 605(b), that this action will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Any individual that qualifies or, believes he or she qualifies as a small entity and requires assistance with the provisions of this rule, may contact David H. Sulouff, Chief, Bridge Section, Eleventh Coast Guard District, Building 50-6, Coast Guard Island, Alameda, CA 94501-5100, telephone 510-437-3516.

This rule calls for no new collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3520).

We have analyzed this rule under the principles and criteria contained in Executive Order 13132, and have determined that this rule does not have implications of federalism under that Order.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) governs the issuance of Federal regulations that require unfunded mandates. An unfunded mandate is a regulation that requires a State, local, or tribal government or the private sector to incur direct costs without the Federal Government's having first provided the funds to pay those unfunded mandate costs. This rule will not impose an unfunded mandate.

This rule will not effect a taking of private property or otherwise have taking implications under E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not concern an environmental risk to health or risk to safety that may disproportionately affect children.

The Coast Guard considered the environmental impact of this temporary rule and concluded that under Chapter 2.B.2 and Figure 2-1, 32(e) of Commandant Instruction M16475.1C, this temporary rule is categorically excluded from further environmental documentation. A “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under ADDRESSES .

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Publishing an NPRM is impracticable because we received notice of this rehabilitation very recently, not leaving time for a NPRM.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . We received notice of this rehabilitation very recently, not leaving time for a delayed effective date.

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking [CGD07-00-053], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this temporary rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the address under ADDRESSES , explaining why one would be beneficial. If the Coast Guard determines that a public meeting would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

The West 79th Street Causeway Drawbridge, mile 1084.6, across the Atlantic Intracoastal Waterway, has a vertical clearance of 19.5 feet at mean high water and a horizontal clearance of 90 feet between fenders. The existing operating regulations in 33 CFR 117.5 require the bridge to open promptly and fully for the passage of vessels when a request to open is given.

The Florida Department of Transportation requested from the Coast Guard on May 9, 2000, that the West 79th Street Causeway Drawbridge operations be temporarily changed to allow for rehabilitation of the drawbridge. This temporary rule change to the drawbridge operating regulations will allow the drawbridge owner or operator to open every thirty minutes, Monday through Saturday, from 7 a.m. to 6 p.m., starting Thursday, May 25, 2000 through February 28, 2001.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040, February 26, 1979). The Coast Guard expects the economic impact of this proposal to be minimal because the bridge will still open at 30 minute intervals and on demand during evenings, Sundays, and holidays.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: owners or operators of vessels intending to transit the Intracoastal waterway at mile 1084.6. Although this temporary rule will be in effect for nine months, vessel traffic can still pass through the drawbridge every 30 minutes during weekdays and Saturday, and on demand at all other times.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. If the rule would affect your small business, organization, or government jurisdiction and you have questions concerning is provisions or options for compliance, please contact the person listed under FOR FURTHER INFORMATION CONTACT for assistance in understanding and participating in this rulemaking.

We also have a point of contact for commenting on actions by employees of the Coast Guard. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

We have analyzed this rule under Executive Order 13132 and have determined that this rule does not have implications for federalism under that Order.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) governs the issuance of Federal regulations that require unfunded mandates. An unfunded mandate is a regulation that requires a state, local, or tribal government or the private sector to incur direct costs without the Federal Government's having first provided the funds to pay those unfunded mandate costs. This rule will not impose an unfunded mandate.

This rule will not effect a taking of private property or otherwise have taking implications under E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not concern an environmental risk to health or risk to safety that may disproportionately affect children.

The Coast Guard considered the environmental impact of this rule and concluded that under figure 2-1, paragraph (32)(e), of Commandant Instruction M16475.lC, this rule is categorically excluded from further environmental documentation.

On May 17, 2000, we published a notice of proposed rulemaking (NPRM) entitled Safety Zone: OPSAIL 2000 Fireworks Displays and Search and Rescue Demonstrations, Port of New York/New Jersey in the Federal Register (65 FR 31293). We received no letters commenting on the proposed rule. No public hearing was requested, and none was held.

The Coast Guard is establishing four temporary safety zones for fireworks displays, and one temporary safety zone for Search and Rescue demonstrations being held in conjunction with OPSAIL 2000.

The Coast Guard is establishing four temporary safety zones for the Macy's/OPSAIL 2000 fireworks display in New York Harbor, the East River, and Hudson River, on July 4, 2000. The first safety zone includes all waters of the East River east of a line drawn from the Fireboat Station Pier, Battery Park City, in approximate position 40°42′15.5″N 074°01′07″ W (NAD 1983) to Governors Island Light (2) (LLNR 35010), in approximate position 40°41′34.5″N 074°01′11″ W (NAD 1983); north of a line drawn from Governors Island, in approximate position 40°41′25.3″N 074°00′42.5″W (NAD 1983) to the southwest corner of Pier 9A, Brooklyn; south of a line drawn through the southern point of Roosevelt Island from East 47th Street, Manhattan to 46 Road, Brooklyn, and all waters of Newtown Creek west of the Pulaski Bascule Bridge.

Vessels equal to or greater than 20 meters (65.6 feet) in length, carrying persons for the purpose of viewing the fireworks, may take position in an area inside the safety zone at least 200 yards off the bulkhead on the west bank and just off the pierhead faces on the east bank of the East River between the Williamsburg Bridge and a line drawn through the East River Main Channel Lighted Buoy 18 (LLNR 27335), to a point on the Brooklyn shore at North 9th Street. All vessels must be in this location by 6:30 p.m. (e.s.t.) on July 4, 2000.

Once in position within the zone, all vessels must remain in position until released by the Captain of the Port, New York. On-scene-patrol personnel will monitor the number of designated vessels taking position in the viewing area of the zone. If it becomes apparent that any additional spectator vessels in the viewing area will create a safety hazard, the patrol commander may prevent additional vessels from entering it. After the event has concluded and the fireworks barges have safely relocated outside of the main channel, vessels will be allowed to depart the viewing area as directed by the patrol commander.

We created the viewing area within this safety zone in order to reduce significant safety hazards in this area of the East River, due in great part, to the extremely strong currents. Based on experience from similar events in this area of the East River, we are concerned that smaller spectator craft located in between the two fireworks barge sites could drift into the fallout zone of either barge site. Additionally, experience from previous events has also shown that having large and small craft located in a confined area presents safety hazards for both sized vessels due to vessel wake, anchor swing radii, and restricted visibility of larger vessels in a confined area.

One safety zone is required for this large section of the East River because the Coast Guard has a limited amount of assets available to patrol this event of national significance. If we made this zone into two zones, we could not adequately enforce the boundaries of both zones, and the safety of the port and the mariners would be unacceptably compromised because of the two nearby fireworks barge locations in a confined waterway with significant currents.

The Staten Island Ferries may continue services to their ferry slip at Whitehall Street, The Battery, Manhattan, New York. Continuing ferry services in the southwestern portion of the safety zone will not create a hazard nor be threatened by the fireworks display because Vessel Traffic Services New York will monitor and control the transits of these ferries. Failure to allow these continued ferry services will have a negative impact on residents of Staten Island, New York, and those persons traveling to and from Manhattan at the end of the holiday weekend.

The second safety zone includes all waters of the Hudson River north of a line drawn from the southwest corner of Pier 94, Manhattan, to 40°46′31.3″N, 074°00′37.9″W (NAD 1983) onshore in Weehawken, NJ, and south of a line drawn from the northeast corner of Pier D, Weehawken, NJ, to the northwest corner of the northern pier of the West 30th Street Heliport in Manhattan.

The third safety zone includes all waters of Upper New York Bay, east of Liberty Island, bound by the following points: 40°41′33.2″N 074°02′24.4″W; 40°41′11.3″N 074°02′44.4″W; 40°41′02.1″N 074°02′25.1″W; 40°41′09.1″N 074°02′10.2″W; 40°41′25.6″N 074°02′09.6″W (NAD 1983); thence to the point of beginning.

The fourth safety zone includes all waters of Anchorage Channel, Upper New York Bay, bound by the following points: 40°38′12.4″N 074°03′05.6″W; 40°38′01.5″N 074°03′00.7″W; 40°37′21.0″N 074°02′50.0″W; 40°37′15.6″N 074°03′16.6″W; 40°38′08.3″N 074°03′37.4″W (NAD 1983); thence to the point of beginning.

The safety zones will be enforced from 6:30 p.m. (e.s.t.) until 11:30 p.m. (e.s.t.) on July 4, 2000. If the event is cancelled due to inclement weather, then this section will be enforced from 6:30 p.m. (e.s.t) until 11:30 p.m. (e.s.t.) on July 5, 2000. The safety zones prevent vessels from transiting these portions of Upper New York Bay, the East River and the Hudson River, and is needed to protect boaters from the hazards associated with fireworks launched from 13 separate barges in the area. No vessel may enter the safety zones without permission of the Captain of the Port, New York.

These safety zones cover the minimum area needed and impose the minimum restrictions necessary to ensure the protection of all vessels and the fireworks handlers aboard the barges.

Public notifications will be made prior to the event via Local Notice to Mariners, marine information broadcasts, facsimile, OPSAIL Inc.'s website, and Macy's waterways telephone “hotline” at 212-494-5247.

After the oil spill that resulted from the grounding of the Tank Barge NORTH CAPE off the coast of Rhode Island in 1996, a group comprised of operators of towing vessels and tank barges, environmental organizations, State agencies, and Coast Guard officials, formed the Regional Risk Assessment Team (RRAT). The purpose of the RRAT was to review operating procedures for tugs and barges in the Northeast. The RRAT issued a report that included recommended actions to minimize risks peculiar to the transportation of petroleum in the waters of the First Coast Guard District.

On October 13, 1998, the Coast Guard published in the Federal Register (63 FR 54639) a Notice of Proposed Rulemaking (NPRM) entitled “Regulated Navigation Area: Navigable Waters within the First Coast Guard District.” That NPRM addressed many of the issues that the RRAT also addressed.

On November 13, 1998, Congress enacted the Coast Guard Authorization Act of 1998 (Act). Section 311 of the Act required the Coast Guard, under authority delegated by the Secretary of Transportation, to promulgate regulations for the safety of towing vessels and tank barges in waters of the Northeast not later than December 31, 1998. Section 311(b)(1)(B) of the Act required the Coast Guard to fully consider each recommendation from the RRAT report. On December 30, 1998, the Coast Guard published in the Federal Register (63 FR 71764) a Final Rule establishing the RNA for the waters of the Northeast.

After publication of the Final Rule, several companies in the towing and tank barge industry affected by the RNA notified the Coast Guard that they were concerned about the economic impact of the RNA's positive barge control provisions. Acting on these concerns, the Coast Guard published an Interim Rule in the Federal Register (64 FR 12746) on March 15, 1999, that temporarily authorized COTPs to exempt vessels from the positive barge control provisions based upon equivalent levels of safety. The Interim Rule also sought out comments on the economic impact of the positive barge control provisions on small entities. We conducted a public meeting on April 16, 1999 in New Haven, CT. The meeting was attended by 13 individuals, and there were 8 speakers.

Prior to publication of the Interim Rule, 33 CFR 165.100(d)(1)(i) required that single-hull tank barges carrying petroleum and operating in the navigable waters of the First Coast Guard District either be towed by a tug equipped with twin-screws and two engines, or be escorted by a second tug. Double-hull tank barges and certain small barges in confined waters were exempt from this requirement. The positive control provision in the RNA addressed the hazards associated with operating single-hull tank barges with single-screw tugs in the First Coast Guard District waters. However, it provided little flexibility to address special circumstances. This Final Rule provides COTPs with the authority to address special circumstances. This exemption authority is consistent with RRAT report that had recommended that the Coast Guard establish a regulatory provision authorizing exemptions in limited circumstances.

Under the final regulations, the COTP may consider exempting operators from the positive barge control provision upon the operator's demonstration of equivalent measures of safety. The exemptions, if granted, would result in the continued use of a single-screw and/or single-engine tug to tow a single-hull tank barge without an escort tug on the navigable waters of the First Coast Guard District. In determining whether to grant an exemption of the positive control provisions, the COTP will consider a variety of factors including, but not limited to, the availability of timely on-call tug assistance, the time of transit, the route, the weather, environmental factors, the amount and grade of cargo, the existence and sufficiency of anchoring and retrieval equipment on a manned barge, transits in protected waters, and the construction of the tank barge, as well as the operators' overall safety record.

Requests for exemptions must be submitted in writing to each COTP in whose zone the barge intends to operate. Operators whose vessels transit multiple COTP zones must apply for the exemption from each COTP. COTPs will consult with each other in such cases. The Final Rule is responsive to the needs of small businesses, and gives the COTP the flexibility to weigh risk while continuing to safeguard the environment.

This rule makes permanent the exemption process of the Interim Rule, which is set to expire on June 30, 2000. Because of the need to keep that exemption process authority, under U.S.C. 553(d)(1), this rule is effective in less than 30 days. Additionally, to remain responsive to industry needs while continuing to protect the environment and for the other reasons stated in the preamble of this rule, the Coast Guard finds good cause under 553 U.S.C. (d)(3) for making this rule effective in less than 30 days.

The Coast Guard received 84 written comments on the Interim Rule, contained in 9 individual letters to the docket; we received another 22 comments at the public meeting.

Several comments generally questioned the effectiveness of the RNA on improving safety. Five comments stated that single-screw tugs have decided safety advantages over twin-screw tugs, especially in narrow channels, shallow drafts, and tight bends where the danger to safe navigation is increased. A related comment suggested that, rather than try to eliminate a whole class of vessels, the Coast Guard eliminate or minimize risk as much as possible.

The overall purpose of the RNA is to improve safety and reduce the risk of an oil spill in First Coast Guard District waters. We believe that these regulations are effective safety measures, because they require operational planning, increase underway safety communications, and improve emergency response preparation. While single-screw tugs may have advantages, they do not have a redundant control system to serve as backup in the event the primary system fails to avoid a collision or grounding. We have not eliminated single-screw tug operation.

The RNA does not preclude the use of single-screw tugs, but it does generally require that tank barges under tow by these tugs employ an escort. Single-screw, or single-engine tugs may continue to tow double-hull barges, or seek an exemption for towing a tank barge with a capacity of less than 25,000 barrels in an area of limited depth or width. The Final Rule adds another exemption authority to address unique situations in which an equivalent level of safety is provided by the operator. By applying the RNA's measures together with those safety measures included in the two national rulemakings for Fire Protection [64 FR 56257] and Emergency Control Measures [65 FR 31806], the Coast Guard will lower the risk of pollution due to spills from tank barges.

Two comments suggested that the Coast Guard create a matrix to assess risk and screen vessels for safety. Consideration for continued service should be based on safety factors that will prevent oil pollution. Some companies already employ numerous operational and equipment precautions to ensure safety; these are things that should be determining factors in assessing risk. A related comment suggested that the RNA include a “grandfather” clause permitting those small entities that have been hauling petroleum with single-screw tugs prior to January 29, 1999, to continue this method of transporting.

We agree that a matrix may be a useful tool for COTPs to gauge risk factors when considering requests for exemption in some cases. A COTP is not limited in the way he or she evaluates an application. However, we note that the use of a single matrix in each of the five different COTP zones would be difficult in light of risks that may be unique to a particular COTP zone. Companies that employ preventive measures would be advised to identify those measures in any application for exemption under this Final Rule. The COTP will evaluate those measures in the equivalency determination. The result may have the same effect as “grandfathering” in some cases.

Three comments focused on the importance of the tug operator, and suggested enhanced qualification and skill standards consistent with the 1995 amendments to the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW).

The Coast Guard encourages operators, on their own initiative, to increase training and improve their professional skills to further good marine practices. This rule does not preclude any owner of a tank barge from adherence to higher watchkeeping standards. However, Coast Guard District Commanders, including the First District Commander, do not generally have independent authority to establish STCW requirements.

Several comments urged that the Coast Guard establish procedures for transforming the temporary exemption into a permanent program, and that such a program would comply with the meaning and intent of the RRAT, which recommended waivers in certain instances.

We agree. This Final Rule makes a permanent exemption authority consistent with the recommendations of the RRAT report. The purpose of the Interim Rule was to solicit comments on the measures of positive control in the RNA, particularly those from small businesses. Following the period for public comment, and having held a public meeting, the Coast Guard re-evaluated the risks posed by the continued use of a single-screw tug while operating on the temporary exemption. Since we inserted the authority into the RNA, COTPs have evaluated 38 applications under the temporary exemption authority and granted 32 exemptions. Although no oil spills have been associated with vessels operating under the exemption, we acknowledge that the data is limited to a relatively brief one-year period of time.

One comment suggested that the Coast Guard establish a committee to study, in detail, how many small entities are involved and the type and extent of economic dislocation caused by the regulation. The Office of Advocacy of the Small Business Administration (SBA) has maintained that the use of general statistics is not an effective way to determine the impact of a regulation on any particular small business and that “Small Entity” does not adequately segment the small towing firms affected.

The Coast Guard relied upon the SBA definition of small entity when promulgating this Final Rule. The SBA regulations require the use of their small entity definition in the various industries unless the agency has promulgated specific definitions. The Coast Guard obtained sufficient information when we re-opened the docket with the Interim Rule and conducted additional analysis of the impact on small businesses. The Coast Guard notified over 180 owners of tugs and tank barges in the Northeast, to inform them of the rulemaking and solicit the request for comments from small entities to describe the impact of the positive barge control provisions.

Several comments addressed the cost and safety of towing gear for anchoring and emergencies. They stated that the practice of picking up loose barges with emergency towing gear would place personnel and equipment in peril. Another comment stated that an engine-room fire aboard any tug, single or twin-screw, would render that tug helpless as all engine compressors, steering, and electric wiring are in one engine room.

Anchoring systems and firefighting were not the purpose of this rule. These issues were, however, addressed by the national rulemakings, Emergency Control Measures for Tank Barges, and Fire Protection previously noted.

One comment recommended that § 165.100(d)(1)(i) be amended to apply to only single-hull tank barges with a capacity of more than 7,500 barrels of oil. The comment recommended a new exemption provision be established to allow COTPs to grant exemptions to single-hull tank barges of this capacity.

We agree that COTPs should have authority to issue exemptions, and have amended the regulations to reflect this change. As such, COTPs may allow a tank barge owner to continue using a single-screw, single-engine tug to tow the barge, provided they employ alternative measures for the positive control of the barge. Rather than limit the exemption criteria solely to barge capacity, however, this rule requires COTPs to consider a host of factors including the barge capacity.

Two comments stated that to achieve its stated goal of reducing the risk of oil spills, the rulemaking's escort tug requirements should apply to tank ships as well as tank barges, or to neither. The rule does not address the considerably greater risks posed by tank ships but poses increased requirements only on tank barges that carry far less oil.

It is true that the RNA does not address tank ships, and neither the RRAT nor the Act addressed that class of vessels. But we disagree that the escort tug should apply to neither tank ships nor tank barges as a result. Towing vessels provide the propulsion for tank barges but are largely unregulated. Tank ships are essentially a towing vessel and tank barge combined as an integral unit and are heavily regulated to reduce the risk of oil spills. In several respects, the RNA, combined with the two national rulemakings previously noted, attempts to raise the level of safety on tugs and tank barges to that of tank ship operations.

Four comments stated their appreciation for the expanded exemption provisions of § 165.100(d)(1)(iii) in the Interim Rule; however it claims that the exemption does not go far enough. Since the RNA is based on a single-hull versus double-hull distinction, it should follow the same timeline established by Congress in OPA 90 for the phase-out of single-hull tank vessels.

Neither the RNA in general, nor the positive barge control provisions specifically, have any impact on the statutory phase-out period for single-hull tank vessels. The RNA, simply, imposes operational requirements on single-hull tank vessels until they are phased-out in accordance with law. By amending the positive control measures, this rule increases the opportunities for single-screw tugs to continue towing single-hull tank barges.

Six comments state that this rulemaking imposes new regulations on the entire single-hull segment of the tank barge industry in the Northeast without properly documenting oil spills resulting from single-screw propulsion failures. The incident that prompted the legislation underlying this rulemaking had nothing to do with the number of screws on the tug.

As the comment notes, legislation underlies the rulemaking. The RNA establishes four operational measures for the safety of towing vessels and tank barges. These measures are preventive in nature and are designed to increase safety in an emergency. Clearly, it was the intent of the Congress, the RRAT, and the Coast Guard to establish measures to improve the safety during tank barge transits. While the NPRM does identify 12 examples where a redundant propulsion system prevented a grounding or collision, neither the Coast Guard, nor the RRAT sought to make a comparison between tugs with redundant systems and those without. Instead, the intent was to increase the safety of tank barge transits by requiring a redundancy, or ensuring that those tugs without redundant systems had tug escorts.

One comment stated that the Summary of Costs assigns arbitrary hourly cost figures for charter tugs, and does not address the fact that in some cases these vessels may not even be available. The comment states that the cost of $300 per hour is arbitrary when you consider different ports. Worse than the cost per hour is the issue of availability which is uncertain in some areas where no hourly figure can accurately estimate the rule's impact.

We note these comments and have revised our analysis in response to the comments received during the comment period. The data published in the Summary of Costs were gathered from sources such as the Army Corps of Engineers (ACOE) Navigation Data Center, the Coast Guard's Marine Safety Information System, and included telephone surveys with a number of towing vessel and tank barge owners. The Coast Guard analyzed these data, which it published for public consideration. We have revisited our data sources and revised upward the number of impacted transits. The cost of $300 per hour was used after calling industry sources; we consider that figure to be a reasonable approximation. We note that no comments suggested a more appropriate estimate.

One comment stated that the Summary of Costs provided no allowance for added down-time for tugs and barges while awaiting voyage plan approval, or while waiting for assist tugs to arrive. Additional costs are incurred as the result of the crew training for anchoring and pickup gear.

We note these comments. The Voyage Plan is only required to be complete before departure, and does not require approval. The cost of crew training for anchoring and retrieval gear is the subject of a separate rulemaking published by Coast Guard Headquarters. However, we have added the cost of training when the escort tug is not familiar with the barge operations.

Two comments stated that the Summary of Costs does not address the issue of lost opportunity costs to impacted companies and the communities they serve. When a barge cannot be used because both single-screw tugs are away with a tank barge, revenue is lost or delayed.

We note these comments. In the short run, while impacted companies are realigning their assets in order to be in compliance with the RNA, there may be some lost profit opportunities for barges. We have taken this into account in our revised Summary of Costs. We note that with the exemptions this may not be a factor at all. We also note that since the interim regulations have been in effect, the Coast Guard has not received a single complaint of a petroleum shortage that was created as a result of these regulations.

Four comments stated that the analysis does not properly address the substantial costs of purchasing additional tugs to comply with the positive control measures. Costs for additional tugs are prohibitively expensive for small businesses and could cause the business to close its doors.

We disagree that the Coast Guard is requiring small businesses to purchase additional tugs. Instead, small businesses have other options available in § 165.100(d)(1)(i) for continued service. The COTP may grant exemptions to those small businesses that employ alternative safety measures for their current vessels.

Four comments state that compelling the use of twin-screw tugs has forced an unfair economic hardship on small businesses, and has seriously depressed the value of single-screw tugs. The analysis does not quantify or address the rulemaking's effect on single-screw tugs, whose value has fallen by about a third since this rulemaking was proposed. Additionally, two comments stated that their small company made a large investment in a single-skin barge before they became aware of the rulemaking. The new regulation has drastically changed their financial equation that served as the basis to purchase this barge.

We agree that the rulemaking may have placed an economic burden on certain small businesses. After publication of the Final Rule on December 30, 1998, the Coast Guard heard from several small tug and tank barge companies claiming that they had been unaware of the rulemaking, and had failed to submit comments to the docket voicing their opinion. As a result, the Coast Guard reopened the docket to learn more about the affects of the positive control measures on their small businesses. In response to the comments received, the First District Commander has amended the regulations to permit companies that own single-screw tugs to continue in the tank barge service, provided alternative safety measures are approved by the COTP. The new exemption may reduce the unexpected costs for those companies that receive exemptions, and will thereby offer them relief for continued service.

Four comments stated that the analysis appears faulty and does not explain how the Regulatory Assessment led the Coast Guard to enact extra burdens on the operators of single-screw tugs. The analysis shows a tug escort rule effectiveness of $67,561.55 per barrel of oil not spilled which seems way too high. The $32,103 cost-effectiveness figure published in the Federal Register was high. It looks like the Coast Guard may require the transportation industry to spend over $12 million without preventing any oil from spilling.

We disagree that the RNA will not prevent oil spills from tank barges. However, we have revised the regulatory assessment; a copy is available in the docket.

One comment asked whether the Coast Guard wasn't already doing enough with regulations to prevent another NORTH CAPE scenario. Other rulemakings, such as Fire Suppression and the Emergency Control Measures for Tank Barges, will all reduce the likelihood of oil spilling from barges. Benefit figures for the RNA may be lower because another rule would have prevented many accidents from happening. Under that rule as proposed, a single-hull barge being towed will be fitted with an anchoring system required by a separate rulemaking. The analysis does not properly address how the rulemaking for Emergency Control Measures for Tank Barges and other OPA 90 rulemakings will prevent groundings.

We note these comments. The analysis did take into account the potential benefits of these other rulemakings. Please see the “Benefits” section of the Regulatory Assessment available in the docket.

One comment asked whether this rulemaking imposed operational conditions, which are, instead, actually equipment regulations that require a second engine and a second screw for the tugs.

The RNA does not contain an option for installing a second engine and second screw. Any such actions would be taken independent of the RNA, even though the result may be that the affected tug would be subject to fewer RNA requirements.

One comment stated that the rulemaking should be declared null and void because the rule makes no mention of hazardous areas or hazardous conditions.

We disagree that the RNA was not based on hazardous conditions. The premise of this rulemaking was the inherent risks associated with the waterborne transportation of petroleum products in the Northeast, which is subject to high-risk transit areas. As a heavily industrialized and oil-dependent region of the country, the Northeast is subject to a high volume of tank barge traffic, particularly during the winter months, due to the demand for home heating oil. These operating conditions include dangerous and often violent winter storms that are unique to the region, and therefore create substantial hazards for the vessel's crew and the environment. As described in the rulemaking's Background and Purpose of the NPRM, the First Coast Guard District has experienced 289 marine casualties involving tank barges from 1992 through 1996. Given this high number of tank barge-related casualties and the potential for another major pollution incident, the Coast Guard promulgated this RNA as required by law, citing these hazardous conditions.

One comment stated that the Coast Guard should explain why it wants to place tug escort rules in 33 CFR part 165 when there are regulations on tug escorts found in 33 CFR part 168. While the Coast Guard did not require tug escorts in the waters of the First District during the 1994 rulemaking, the commentor asks what has changed between 1994 and 1999? Accident histories do not justify the change of position.

We disagree, and note that these regulations are the result of the NORTH CAPE spill in January 1996. We also find that Part 165 is the appropriate subpart for these regional regulations. This subpart permits the District Commander to control vessel traffic operating conditions within his area of responsibility. As it establishes a RNA, this rulemaking is limited to those waters under the authority of the First District Commander. Accident histories have long been a source of legislated governance of the marine-transportation industry; the most noteworthy of which is the Oil Pollution Act of 1990 which was the result in large part from the grounding of the EXXON VALDEZ.

One comment stated that their company lost revenue because the rule went into effect at the end of the industry's season. There are customers that will not hire tug companies even if they hold exemptions. This rulemaking creates an unjust situation for small entities that are trying to comply with the law. Additionally, one comment stated that this rule will have a significant economic impact on their business. To purchase a new twin-screw, twin-engine tug will cost $25,000 per month in a mortgage payment. The requirements will not affect large businesses, but may put smaller businesses out of business.

We have amended the rulemaking to ease the economic burden on small entities. By allowing the COTP to grant exemptions for single-screw tugs to continue in towing tank barges, the First District Commander is responsive to the concerns of small entities. This amendment offers relief to those small entities that might experience economic hardship by offering them the option of applying for an exemption for continued service from the COTP.

One comment stated that all federal agencies are required to identify alternative regulatory approaches for small business, small governmental jurisdictions and non-profit organizations.

We agree that the Coast Guard is responsible for considering the economic impact on small entities. As such, the Coast Guard believes that this amended rulemaking satisfies the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) by offering alternatives to small businesses in § 165.100(d)(1)(iii) that will allow them to continue to tow tank barges in the Northeast and accordingly does not place a substantial impact on a significant number of small businesses.

This rule is not a significant regulatory action under 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. It has not been reviewed by the Office of Management and Budget (OMB) under that Order. It is not significant under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040; February 26, 1979).

A Regulatory Assessment under paragraph 10e of the regulatory policies and procedures of DOT is available in the docket for inspection or copying where indicated under ADDRESSES . A summary of the Assessment follows:

The principal benefits of this rule are protection against oil spillage, human casualties, and property damage that may result from navigation-related incidents of tank barges and towing vessels while underway in the navigable waters of the First Coast Guard District. Quantifiable benefits accrue from averted pollution measured in barrels of oil not spilled, averted injuries and deaths, and averted damage to vessels and property measured in dollars.

Using information from the Coast Guard Marine Safety Management System from January 1, 1992, to December 31, 1996, we reviewed 96 tank barge casualty cases. These casualties involved vessels that were underway within the boundaries of the First Coast Guard District and which would have been affected by this rule if it had been in effect. This period represents some post OPA-90 experience, is long enough to survey a significant number of casualties, and short enough to avoid old problems which are now solved. These 96 cases provided the pool from which the benefits are estimated. During this base period, there was no reported oil spilled from double-hull barges.

For all four measures, we reviewed each casualty case report to assess whether the casualty could have been prevented or diminished in severity by this rule. A team of Coast Guard analysts assigned an effectiveness degree to which each measure would have positively affected each casualty case. We tabulated data on deaths and injuries, oil spillage, and dollar totals reported for damage to the tank barges, towing vessels, piers, or other structures, and estimated benefits for each measure adjusted to the accurate degree of effectiveness.

Over the period of analysis, the present value of total damages and deaths avoided by the rule would be $2,192,473 (1998 dollars). Total pollution avoided by the rule would be 1,368.65 barrels. These figures are different from those obtained in earlier Regulatory Assessments due to updating and improvement of the data and methodology.

Businesses that use tank barge and towing vessels within the geographic boundaries of the First District, as well as the tank barge and towing vessel industries themselves, will bear the majority of the costs of this rule.

The cost of this rule is the sum of costs from the requirements for positive control for barges, enhanced communications, voyage planning, and restricted navigation areas. These anticipated costs recognize that many of the towing vessels and tank barges operating within the geographic boundaries of the First District are already in compliance with these requirements.

(1) Positive Control for Tank Barges: Data from the First District and U.S. Army Corps of Engineers indicated that there are 21,640 transits occurring within the District each year. Of these transits, we estimate 1.95%, or 421, involve a single-hull, petroleum-laden tank barge being towed by a tug without twin engines or twin screws, and thus, this rule would require an escort or assist tug. The cost of an escort or assist tug is $300 an hour. It is assumed this escort or assist tug would, on average, spend 20 hours in round trip service on each transit. The cost of the tug for a single transit would therefore be $6,000. Over the period of analysis, the present value total cost of the escort or assist tug escorts would be $21,608,076 (1998 dollars).

Another cost of the tug-escort requirement is the cost to familiarize the crew of the escort tug if they are not familiar with the anchor and breakaway gear of the barge they will escort. We estimate this training would be necessary for 60% of the transits and the training would take an average of one hour. Over the period of analysis, the present value total cost of training would be $215,911.

This requirement also may cause some businesses to incur other costs. First, the resale prices of the existing single-screw tugs in the First Coast Guard District may be slightly lower for at least some period due to this rulemaking. We estimate the present value total cost from lost resale value would be $150,000. Second, in the short run, while impacted companies are realigning their assets in order to be in compliance with the tug-escort requirement, there may be some lost profit opportunities for barges. We estimate the present value total cost in terms of lost profit would be $50,000. With permanent waivers, we expect the impact of lost profit or lost resale value may be reduced.

The present value total cost of the positive-control requirement would be $22,023,987 ($21,608,076 + $215,911 + $150,000 + $50,000 = $22,023,987).

(2) Enhanced Communications: This rule would require the person(s) on watch on a towing vessel to make approximately eight securite calls during the average transit in the First District. The cost of this requirement to the operator would be the time added to the crews' watch duties per transit and/or the diminished productivity per transit as a result of this requirement.

Each securite call would take about 0.00833 hours (or 0.5 minutes) per transit. This time represents the number of hours (or minutes) that a crewmember would give up doing other activities during a transit. We assume that the master makes half of the securite calls and the mate makes the other half. Based on a rate of $350 per 12-hour day, we estimate the average hourly wage for a master of a towing vessel would be $29.17. Based on a rate of $250 per 12-hour day, we estimate the average hourly rate for a mate would be $20.83. As each person makes 4 calls per transit, the total labor time and total labor cost per transit would be 0.0666 hours/transit and $1.67/transit, respectively (8 calls/transit × 0.00833 hours/call = 0.0666 hours/transit and [($29.17/hour × 0.033 hours/transit) + ($20.83/hour × 0.033 hours/transit) = $1.67/transit]).

With 11,902 transits of petroleum-laden tank barges (55% of 21,640 total transits) within the First Coast Guard District each year, the total annual time burden of this requirement would be 792.67 hours, and the potential opportunity cost would be $19,837 per year ($1.6667/transit × 11,902 transits/year = $19,837/year). Over the period of analysis, the present value total cost of this requirement would be $187,393 in 1998 dollars.

Given the existing practices that occur during typical watch duties, we expect the time necessary to make each call would not increase the time spent performing watch duties nor decrease productivity of either crewmember on watch. Without an increase in labor time devoted to watch duties or decrease in productivity, the financial cost of the enhanced-communications requirement would be $0.

(3) Voyage Planning: Currently we estimate 21,640 transits of tank barges in the First Coast Guard District each year. The Coast Guard estimates that 90% (or 19,476) of these transits already are in compliance with this proposed requirement. Thus, 10% or 2,164 transits currently lack a voyage plan. Further data from the First Coast Guard District indicates that 55% of the annual transits involve petroleum-laden tank barges. Therefore, we estimate that 55% or 1,190 of the 2,164 petroleum-laden tank barge transits currently lack a voyage plan.

For each transit, as a representative of the owner or operator, the master of the towing vessel spends approximately 0.5 hours (or 30 minutes) preparing a voyage plan. The average wage rate for a towing vessel master is estimated to be $29.17 per hour. The annual cost of voyage planning would be $17,357 ($29.17/hour × 0.5 hours/transit × 1,190 transits/year = $17,357/year). Over the period of analysis, the present value total cost of the voyage-planning requirement would be $163,965 (in 1998 dollars).

(4) Restricted Navigation Areas: This proposed requirement would establish two restricted navigation areas that would bar the traffic of towing vessels with petroleum-laden tank barges. These two areas are Fishers Island Sound and the eastern portion of Cape Cod Bay. Historically and currently there has been no traffic of towing vessels with petroleum-laden tank barges operating within either of these two areas. Thus, the cost of the restricted navigation requirement would be $0.

The present value total cost of this rule would be $22,187,952 ($22,023,987 for positive control of barges + $0 for enhanced communications + $163,965 for voyage planning + $0 for restricted navigation areas = $22,187,952). In terms of cost-effectiveness, this rule would prevent 1,368.65 barrels of pollution at a cost of $16,212 per barrel.

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Coast Guard must consider whether this rule will have a significant economic impact on a substantial number of small entities. “Small entities” include small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The rule would require the following:

(1) positive control measures for tank barges, which require an escort or assist tug during all transits involving towing vessels not equipped with twin-screw/twin-engine propulsion, and that are engaged in towing petroleum-laden single-hull tank barges in the First Coast Guard District;

(2) operators of vessels towing petroleum-laden tank barges initiate and broadcast securite calls on radio identifying their position at specified locations during a transit in the First District;

(3) a voyage plan be prepared prior to a petroleum-laden tank barge voyage within the First District; and

(4) two restricted navigation areas within the First District that would bar traffic of towing vessels with petroleum-laden tank barges.

The maximum estimated cost of this regulation would be $22,187,952 with the majority of the cost (or 99%) being the cost of the positive-control requirement. The voyage-planning requirement would have an estimated cost of $163,965, while the enhanced-communications and restricted-navigation-areas requirements would be expected to have zero financial cost.

We estimate there are currently 11,902 petroleum-laden tank barge transits within the First District per year. We estimate that approximately 95% of the towing vessels that tow petroleum-laden tank barges in the First District are twin-screw, which do not require positive control measures. Also exempted from the positive-control requirement would be all double-hull tank barges that currently make up 29% of the tank barge fleet. Consequently, we estimate that 421 transits would be impacted by the positive-control requirement.

The Small Business Administration, in 13 CFR 121, defines small businesses by either the number of employees or by the amount of a company's receipts in dollars. For examples, a business in the towing-&-tugboat-services industry that has annual revenue no greater than $5 million is a small entity. However, a business in the water-transportation-of-freight industry that has no more than 500 employees would be a small entity. The Coast Guard does not collect revenue nor number-of-employee information from the businesses it regulates; however, information can be obtained from sources such as Dun & Bradstreet or the U.S. Census. According to Dun & Bradstreet Marketplace 1999 , the percentage of companies nationally with annual revenue equal to or less than $5 million in the towing-&-tugboat-services industry (SIC Code 4492) is about 86%. Regionally, for companies that are located in one of the states within the boundaries of the First District which are in SIC Code 4492, approximately 90% would be considered a small entity. For water transportation of freight, n.e.c. (SIC Code 4449), the percentage of companies nationally with a maximum of 500 employees is approximately 95%, while for companies located in one of the states within the boundaries of the First Coast Guard District that percentage is approximately 95% as well.

The Coast Guard's Marine Safety Management System (MSMS) database identifies 34 different companies that own tank barges certificated under subchapter O or D within the boundaries of the First District. The MSMS database also identifies 124 different companies located in one of the states within the boundaries of the First District that own towing vessels. These towing vessels are not owned strictly by companies that are engaged in towing & tugboat services or water transportation of freight. Other owners of towing vessels include construction companies and governments.

It is the businesses who hire the towing vessels and tank barges for transporting their goods that directly incur the costs of this rulemaking by having to pay for the escorts or assist tugs. However, some towing vessels and barge owners, the majority of which are small entities, may be affected by the positive-control requirement if they can no longer provide tug service at a competitive price due to the requirement that they employ an escort or assist tug.

On March 15, 1999, an Interim Rule allowed the local COTP to authorize temporary exemptions to the positive-control requirement established in the December 30, 1998, Final Rule. Since inserting this authority into the rule, thirty-two temporary exemptions have been granted with no pollution incidents. These exemptions expire June 30, 2000. Comments from industry have requested that the Coast Guard establish procedures that would transform the temporary exemption into a permanent exemption. In an effort to reduce the impact of the positive-control requirement, this Final Rule allows the COTP to authorize exemptions to the positive-control requirement, and removes the temporary nature of the exemptions that were granted in the Interim Rule. Accordingly, the Coast Guard certifies under 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities.

In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard offered to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking. Commander (m), First Coast Guard District, provided explanatory information to a number of individuals by telephone.

The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about enforcement by Federal agencies. The Ombudsman will annually evaluate enforcement and rate each agency's responsiveness to small business. If you wish to comment on enforcement by the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

The Final Rule calls for no collection of information under the Paperwork Reduction Act of 1995 [44 U.S.C. 3501 et seq. ].

This rule would revise the rules at 33 CFR 165.100(d)(1)(iii) that address navigational safety, and voyage planning for towing vessels. We have analyzed this rule in accordance with the principles and criteria contained in Executive Order 13132. It is well settled that States are preempted from establishing any requirements for tank vessels and the vessels that tow them in the categories of design, construction, alteration, repair, maintenance, operation, equipping, personnel qualification, and manning. See the decision of the Supreme Court in the consolidated cases of United States v. Locke and Intertanko v. Locke ___ U.S. ___, 2000 U.S. LEXIS 1895 (March 6, 2000). Thus, this entire rule falls within preempted categories. Because States may not promulgate rules the categories set out, preemption is not an issue under that Order.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) [Pub. L. 104-4, 109 Stat. 48] requires Federal agencies to assess the effects of certain regulatory actions on State, local, and tribal governments, and the private sector. UMRA requires a written statement of economic and regulatory alternatives for rules that contain Federal mandates. A “Federal mandate” is a new or additional enforceable duty imposed on any State, local, or tribal government, or the private sector. If any Federal mandate causes those entities to spend, in the aggregate, $100 million or more in any one year, the UMRA analysis is required. This Final Rule would not impose Federal mandates on any State, local, or tribal governments, or the private sector.

The Coast Guard considered the environmental impact of this rule and concluded that under figure 2-1, paragraphs 34(g) and (i) of Commandant Instruction M16475.1C, this rule is categorically excluded from further environmental documentation. A “Determination of Categorical Exclusion” is available in the docket for inspection or copying where indicated under ADDRESSES .

Although this rule is being published as a temporary final rule without prior notice, an opportunity for public comment is nevertheless desirable to ensure the rule is both reasonable and workable. Accordingly, we encourage you to submit comments and related material. If you do so, please include your name and address, identify the docket number for the rulemaking (CGD05-00-018), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8.5 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. We were not notified of this event in sufficient time to publish an NPRM, allow for comments, and publish a final rule in sufficient time to allow notice to the public for the fireworks display. In previous years, this event and similar ones have been held without incident and without comment from the public regarding the Coast Guard's establishment of limited safety zones around the fireworks display.

The Coast Guard is establishing a temporary safety zone for the Shore Thing Independence Day Celebration fireworks display to be held at Ocean View Beach Park, Chesapeake Bay, Virginia. The safety zone will restrict vessel traffic within a 500-foot radius of the fireworks display, which will be fired from land, in approximate position 36° 57.30′ N, 076° 15.00′ W. The safety zone is necessary to protect mariners and spectators from the hazards associated with the fireworks display.

The safety zone is effective from 9 p.m. until 10 p.m. on the July 1, 2000. Additional public notifications will be made prior to the event via marine information broadcasts.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040; February 26, 1979). This temporary final rule only affects a limited area for one hour, alternative routes exist for maritime traffic, and advance notification via marine information broadcasts will enable mariners to plan their transit to avoid entering the restricted area. The Coast Guard expects the economic impact of this rule to be so minimal that a full regulatory evaluation under paragraph 10(e) of the regulatory policies and procedures of the DOT is unnecessary.

Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Coast Guard considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which might be small entities: the owners or operators of vessels intending to operate or anchor in portions of the Chesapeake Bay, Virginia within 500 feet of a shoreside fireworks display at Ocean View Beach Park located in approximate position 36° 57.30′ N, 076° 15.00′ W.

This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: This temporary final rule only affects a limited area for one hour, alternative routes exist for maritime traffic, and advance notification via marine information broadcasts will enable mariners to plan their transit to avoid entering the restricted area.

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

We have analyzed this rule under Executive Order 13132 and have determined that this rule does not have implications for federalism under that order.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) governs the issuance of federal regulations that require unfunded mandates. An unfunded mandate is a regulation that requires a state, local, or tribal government or the private sector to incur direct costs without the Federal Government's having first provided the funds to pay those unfunded mandate costs. This rule will not impose an unfunded mandate.

This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not concern an environmental risk to health or risk to safety that may disproportionately affect children.

The Coast Guard considered the environmental impact of this rule and concluded that under figure 2-1, paragraph (34)(g), of Commandant Instruction M16475.lC, this rule is categorically excluded from further environmental documentation. This regulation will have no impact on the environment.

NARA published a final rule document in the Federal Register of June 1, 2000, (65 FR 34977) revising 36 CFR part 1280, Public Use of NARA Facilities. Section 1280.14 provides the conditions under which NARA employees, other Government employees, and the public may use the NARA shuttle. NARA has had a long-standing policy that NARA employees may use the shuttle only for official purposes, but this limitation was omitted from the final rule. This correction provides that text.

In the document FR 00-13810 published on June 1, 2000, (65 FR 34977) make the following correction:

On December 19, 1997, the Pennsylvania Department of Environmental Protection (DEP) submitted a revision to its SIP. The revision consists of amendments to Title 25 of the Pennsylvania Code including Chapter 121—Definitions and Chapter 123—NO X Allowance Requirements. On December 27, 1999, DEP submitted a subsequent revision to its SIP amending Chapter 121—Definitions and Chapter 123—NO X Allowance Requirements. This regulation is part of a regional NO X reduction program based upon an MOU drawn between the member states of the OTC. The OTC adopted a MOU on September 27, 1994, committing the signatory states to the development and implemenation of a two phase region-wide reduction in NO X emissions by 1999 and 2003, respectively. As reasonably available control technology (RACT) to reduce NO X emissions was required to be implemented by May of 1995, the MOU refers to the reduction in NO X emissions to be achieved by 1999 as Phase II; and the reduction in NO X emissions to be achieved by 2003 as Phase III. The OTC member states include Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Maryland, Delaware, the northern counties of Virginia, and the District of Columbia. All of the OTC members, with the exception of the Commonwealth of Virginia, signed the September 27, 1994 MOU. The OTC MOU requires a reduction in ozone season NO X emissions from utility and large industrial combustion facilities within the OTR in order to further the effort to achieve the health-based National Ambient Air Quality Standard (NAAQS) for ozone. In the MOU, the OTC states agreed to propose regulations for the control of NO X emissions in accordance with the following guidelines:

1. The level of NO X required would be established from a 1990 baseline emissions level.

2. The reduction would vary by location, or zone, and would be implemented in two phases utilizing a region wide trading program.

3. The reduction would be determined based on the less stringent of each of the following:

a. By May 1, 1999, the affected facilities in the inner zone shall reduce their rate of NO X emissions by 65% from baseline, or emit NO X at a rate no greater than 0.20 pounds per million Btu. (This is a Phase II requirement.)

b. By May 1, 1999, the affected facilities in the outer zone shall reduce their rate of NO X emissions by 55% from baseline, or shall emit NO X at a rate no greater than 0.20 pounds per million Btu. (This is a Phase II requirement.)

c. By May 1, 2003, the affected facilities in the inner and outer zones shall reduce their rate of NO X emissions by 75% from baseline, or shall emit NO X at a rate no greater than 0.15 pounds per million Btu. (This is a Phase III requirement.)

d. By May 1, 2003, the affected facilities in the Northern zone shall reduce their rate of NO X emissions by 55% from baseline, or shall emit NO X at a rate no greater than 0.20 pounds per million Btu. (This is a Phase III requirement.)

A Task Force of representatives from the OTC states, organized through the Northeast States for Coordinated Air Use Management (NESCAUM) and the Mid-Atlantic Regional Air Management Association (MARAMA), was charged with the task of developing a Model Rule that would implement the program defined by the OTC MOU. During 1995 and 1996, the NESCAUM/ MARAMA NO X Budget Task Force worked with EPA and developed a model rule as a template for OTC states to adopt their own rules to implement the OTC MOU. The model was issued May 1, 1996. The model rule was developed by and for the OTC states to implement the Phase II reductions called for in the MOU to be achieved by May 1, 1999. The model rule does not include the implementation of Phase III.

Pennsylvania's Chapter 121—Definitions and Chapter 123—Nitrogen Oxides Allowance Requirements are based upon and are consistent with the “NESCAUM/MARAMA NO X Budget Rule” issued in May 1, 1996. The model rule was developed by the states in the OTR using the EPA's economic incentive rules (67 FR 16690) which were published on April 7, 1994, as the general regulatory framework.

On December 19, 1997, the Pennsylvania DEP submitted a revision to its SIP. The revision consists of amendments to Title 25 of the Pennsylvania Code including Chapter 121—Definitions and Chapter 123—NO X Allowance Requirements. Chapter 121—Definitions includes the terms used in Chapter 123—NO X Allowances Requirements. Chapter 123—NO X Allowances Requirements consists of twenty sections: (1) Purpose; (2) Source NO X allowance requirements and NO X allowance control period; (3) General NO X allowance provisions; (4) Source authorized account representative requirements; (5) Allowance Tracking System (NATS) provisions; (6) NO X allowance transfer protocol; (7) NO X allowance transfer procedures; (8) Source emissions monitoring requirements; (9) Source emissions reporting requirements; (10) Source compliance requirements; (11) Failure to meet source compliance requirements; (12) Source operating permit provision requirements; (13) source record keeping requirements; (14) General NO X allocation provisions; (15) Initial NO X allowance NO X allocations; (16) Source opt-in provisions; (17) New NO X affected source provisions; (18) Emission reduction credit provisions; (19) Bonus NO X allowance awards; (20) Audit. Appendix A to Chapter 123 is where the budgeted sources and their NO X allowance allocations are identified. On December 27, 1999, DEP submitted amendments to its December 19, 1997 SIP revision request. The amendments revise Chapter 121—Definitions and Chapter 123—NO X Allowance Requirements. In Chapter 121—Definitions, the term “NO X affected source” was modified to clarify that only individual emission units of 15 MWe or greater are included in the definition. In addition, the definition of “NO X affected source” was further clarified to exclude emergency electrical generating units used to power safety equipment at nuclear power plants. In Chapter 123—NO X Allowance Requirements, Section 123.115—Initial NO X Allowance NO X Allocations was modified to remove the Washington Power Company allocation. Appendix A to Chapter 123 was renamed to Appendix E, and was modified in four ways. First, the NO X affected sources identified through the process described in Section 123.117—New NO X Affected Source Provisions were added to Appendix E. Second, the accounting error that resulted in over-allocating the 1999 budget was corrected with a pro rata reduction in all NO X affected sources emissions. Third, several sources mistakenly included in the previous Appendix A were deleted. Finally, the last column of the previous Appendix A was deleted and the “Baseline NO X lb/MMBtu” column was renamed to add the term “Bonus Allowances”.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve Pennsylvania's NO X Allowance Requirements if adverse comments are filed. This rule will be effective on August 7, 2000 without further notice unless EPA receives adverse comment by July 6, 2000. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

EPA is approving revisions to the Pennsylvania SIP consisting of Chapter 121—Definitions and Chapter 123—NO X Allowance Requirements, submitted on December 19, 1997 and amended on December 27, 1999. These revisions implement Pennsylvania's portion of Phase II of the OTC's MOU to reduce nitrogen oxides.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. This action merely approves state law as meeting federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). For the same reason, this rule also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13084 (63 FR 27655, May 10, 1998). This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the taking implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Taking” issued under the executive order. This rule does noYt impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 7, 2000. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action to approve Pennsylvania's NO X Allowance Requirements may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

This is a summary of a Second Report and Order ( Second R&O ) in the Commission's narrowband PCS proceeding adopted May 5, 2000, and released May 18, 2000. The complete text of this Second R&O is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW, Washington, DC. It may also be purchased from the Commission's copy contractor, International Transcription Services, Inc. (ITS, Inc.), 1231 20th Street, NW, Washington, DC 20036, (202) 857-3800. It is also available on the Commission's web site at http://www.fcc.gov/wtb/auctions.

1. The Commission adopts a Second Report and Order ( Second R&O ) in its narrowband PCS proceeding, amending certain rules governing this service. The Commission provided for the operation of narrowband PCS in the 900 MHz band, adopting a spectrum allocation and channelization plan, licensing rules, and technical standards for the service, in 1993. See Amendment of the Commission's Rules to Establish New Narrowband Personal Communications Services, First Report and Order, 58 FR 42681 (August 11, 1993). See also Amendment of the Commission's Rules to Establish New Narrowband Personal Communications Services, Memorandum Opinion and Order, 59 FR 14115 (March 25 1994). In Implementation of Section 309(j) of the Communications Act—Competitive Bidding, Second Report and Order, 59 FR 22980 (May 4, 1994), the Commission determined that, pursuant to section 309(j) of the Communications Act of 1934, as amended, PCS is subject to competitive bidding in the case of mutually exclusive applications, and the Commission adopted general competitive bidding rules for auctionable services. In Implementation of Section 309(j) of the Communications Act—Competitive Bidding, Third Report and Order, 59 FR 26741 (May 24, 1994), the Commission established competitive bidding rules specifically for narrowband PCS. Currently, of the three megahertz of 900 MHz spectrum allocated for narrowband PCS, two one-megahertz blocks have been divided into specific channels for licensing. The remaining one megahertz of narrowband PCS spectrum has been reserved to accommodate future development of narrowband PCS. Thus far, nationwide and regional licenses have been awarded through two auctions, which were held in 1994.

2. This Second R&O resolves issues raised in Amendment of the Commission's Rules to Establish New Personal Communications Services, Narrowband PCS, Report and Order and Further Notice of Proposed Rulemaking ( Narrowband PCS R&O/Further Notice ), 62 FR 27507 (May 20, 1997). In response to the Narrowband PCS R&O/Further Notice , the Commission received 15 comments and 16 reply comments.

3. Service Area Reallocation. In this Second R&O , the Commission amends its current allocation of narrowband PCS spectrum to eliminate Basic Trading Areas (BTAs) and license the remaining spectrum, including the response channels, based on Major Trading Areas (MTAs). The Commission finds that MTAs are the most appropriate geographic area for licensing the remaining narrowband PCS spectrum because they will serve the needs of a wide range of entities, including both large and small service providers. The Commission does not believe that using MTAs will compromise the goal of ensuring entry for small businesses or undermine the confidence of either incumbent and potential licensees or the investment community.

4. Finally, the Commission notes that the use of MTAs will avoid any potential problems that might arise from inconsistencies between the boundaries of Major Economic Areas (MEAs) and existing regional licenses based on MTAs. Moreover, Rand McNally & Company, which owns the copyright to MTAs, has granted a blanket license to parties with an interest in this proceeding to use MTAs, and there is therefore no impediment to their use for narrowband PCS.

5. Spectrum Aggregation Limit. In this Second R&O, the Commission eliminates the narrowband PCS spectrum aggregation limit. Adopted in 1993, this rule provided that a single licensee was permitted to hold licenses for no more than three channels, either paired or unpaired, in any geographic area. The limit was adopted to ensure that narrowband PCS services would be offered on a competitive basis.

6. The Commission recently has concluded that the paging/messaging industry is highly competitive. Moreover, narrowband PCS licensees increasingly compete with other sectors of the wireless industry, including broadband PCS and Specialized Mobile Radio (SMR) that offer the same or similar services. Thus, the Commission finds that the aggregation limit is not needed to prevent an undue concentration of licenses, either through the auctioning of additional narrowband PCS spectrum or post-auction mergers. Moreover, in order to compete with other providers of paging and messaging services, narrowband PCS licensees may need to consolidate and should not be prevented from doing so by the narrowband PCS spectrum aggregation limit.

7. Further, the Commission does not believe that large companies will attempt to acquire licenses merely to foreclose entry by smaller entities, because it is clear that such a strategy would not be successful in limiting competition. Acquiring spectrum for purposes of withholding its use would be very expensive. In addition, such efforts would be difficult, given the large number of licensees already competing in this market and the fact that narrowband PCS licensees face competition from other wireless sectors. Although the Commission has found that a Commercial Mobile Radio Services (CMRS) spectrum cap is necessary to ensure that the mobile voice market is competitive, the risk of excessive concentration through mergers is far lower in the paging/messaging context. Paging carriers face growing competition from short messaging services and other digital service features offered by an increasing number of mobile voice carriers. In addition, the recent auction of spectrum in the 929 and 931 MHz bands should facilitate further entry or capacity expansion. The Commission notes that it retains the ability to evaluate individual transfer and assignment applications on a case-by-case basis through its review of such applications.

8. Eligibility for Response Channels. In order to provide an opportunity for incumbent paging licensees to upgrade their operations, the Commission set aside 100 kilohertz (eight unpaired frequencies) of the three megahertz allocated for narrowband PCS as paging response channels, i.e. , channels to be used in paired communications with existing one-way paging frequencies to provide mobile-to-base station communications. The Commission's intent in establishing these channels was to provide a means for one-way (single frequency) paging licensees to obtain a second frequency for the purpose of delivering signals back from their customers' mobile devices.

9. In this Second R&O, the Commission lifts all eligibility restrictions on applying for paging response channels, finding that such restrictions unnecessarily exclude potential users of the response channels that are not paging licensees, e.g., narrowband PCS licensees. Thus, eligibility for acquiring narrowband PCS response channels will no longer be limited to existing paging licensees, i.e., those licensed to operate conventional one-way paging base stations under part 22 or part 90 of the Commission's rules as of the application filing deadline for the paging response channels. The Commission finds that lifting the eligibility restrictions will encourage entry of new narrowband PCS providers by providing greater flexibility to new licensees to use these channels in conjunction with other spectrum to provide new services. In keeping with its decision to abolish the limit on aggregation of narrowband PCS spectrum, as well as its decision to eliminate eligibility restrictions for paging response channels, the Commission also concludes that there should be no limit on the number of response channels a licensee may hold.

10. The Commission will retain the current rule restricting use of the response channels to mobile-to-base transmissions. Several commenters argue that allowing these channels to be used for other purposes would cause harmful interference with current narrowband PCS licensees. The Commission agrees with these commenters and will retain the current rule restricting use of the response channels to mobile-to-base transmissions.

11. Construction and Coverage Requirements for Narrowband PCS Licensees. The Commission will maintain its current coverage requirements for narrowband PCS and adopts a substantial service requirement as an alternative. The Commission finds that coverage requirements, including a substantial service standard, encourage the provision of service to areas that would not necessarily receive service expeditiously solely through the operation of market forces. The Commission recognizes that narrowband PCS is a developing service and that there has been a delay in equipment availability. It therefore believes that it would not be appropriate at this time to establish three- and five-year benchmarks for this service, as it has done for the paging services, in lieu of the current benchmarks. The Commission also believes, however, that its five- and ten-year construction benchmarks provide sufficient time for narrowband PCS licensees to construct their systems and that there is no need to alter the current benchmarks. Any problems that individual licensees may have because of difficulties with financing or equipment availability may be addressed by evaluating requests for waiver on a case-by-case basis.

12. The Commission further finds that a substantial service option may be very useful in allowing licensees to use spectrum flexibly to provide new and innovative services uninhibited by a requirement that they meet a specific coverage benchmark or lose their license. In addition, rural areas may be more difficult to serve than urban areas. Permitting licensees to make a substantial service showing may encourage them to build out in rural areas because it would give them the option of satisfying the Commission's construction requirements by serving rural areas without necessarily having to meet either population or composite area benchmarks. The Commission finds that these advantages outweigh any concerns commenters have regarding potential speculation or anticompetitive conduct.

13. In the past the Commission has offered guidance to licensees in other services with regard to factors that it would consider in evaluating whether the substantial service requirement has been met. The Commission will apply these same factors to evaluations of substantial service showings made by narrowband PCS licensees. Thus, the Commission may consider such factors as whether the licensee is offering a specialized or technologically sophisticated service that does not require a high level of coverage to be of benefit to customers, and whether the licensee's operations serve niche markets. A licensee may also demonstrate that it is providing service to unserved or underserved areas without covering a specific composite area or percentage of the population. Because the substantial service requirement can be met in a variety of ways, the Wireless Telecommunications Bureau (Bureau) will review licensees' showings on a case-by-case basis.

14. Just as it believes that the addition of a substantial service alternative to its rules will be helpful to entities seeking to provide innovative services, the Commission also recognizes that there may be instances in which a flexible approach to its narrowband PCS operational or technical rules would be helpful to such entities and would promote the development of new services. Although the Commission has crafted these rules to generally provide for a wide range of technologies and business plans, there may be instances where particular circumstances render the rules unreasonable or overly burdensome, to the extent the public interest would be harmed by their strict application. The Commission therefore will give expedited treatment to requests for waivers of these operational and technical rules, and, to the extent it finds that such waivers will not harm other licensees and will be in the public interest, it will consider them favorably.

15. Construction and Coverage Requirements for Nationwide Paging Licensees. In Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems, Memorandum Opinion and Order on Reconsideration and Third Report and Order ( Paging MO&O/Third Report and Order ), 64 FR 33762 (June 24, 1999), the Commission considered the issue of coverage requirements for nationwide geographic area paging licensees and deferred any decision on the issue until it resolved similar matters in the instant narrowband PCS rulemaking proceeding. In this Second R&O, the Commission declines to adopt coverage requirements for nationwide paging licensees that would be in addition to the build-out requirements they have already met.

16. Nationwide paging licensees have already met pre-existing build-out rules, which were imposed in connection with nationwide exclusivity rules prior to the advent of geographic area licensing. Having carefully examined its databases reflecting the extent of construction by nationwide paging licensees, the Commission finds that all of these licensees are already providing sufficient coverage to meet the five-year benchmark applicable to nationwide narrowband PCS licensees, and some of them have met the ten-year benchmark. Thus, while the Commission expects nationwide paging licensees to build out their systems to the same extent as nationwide narrowband PCS licensees, it concludes that the build-out requirements set forth in its previous rules were adequate to promote coverage by nationwide paging licensees that is equivalent to that of nationwide narrowband PCS licensees, which have recently reached their five-year benchmark. In addition, while the Commission anticipates that nationwide paging licensees' build-out in rural areas should increase in the future given that licensees appear to have already constructed in most urban areas, it has no evidence that nationwide paging licensees' build-out in rural areas is deficient. The Commission therefore concludes that it is unnecessary to impose a new layer of regulations on nationwide paging licensees by adopting additional coverage requirements for them. However, if the Commission is presented with evidence that there is a need to impose a requirement equivalent to the ten-year nationwide narrowband PCS benchmark, it will consider revisiting this issue in the future.

17. Applicability of the Part 1 General Competitive Bidding Rules. Following the release of the Narrowband PCS R&O/Further Notice in April 1997, the Commission adopted an order establishing uniform competitive bidding provisions for all auctionable services. See Amendment of Part 1 of the Commission's Rules—Competitive Bidding Procedures, Third Report and Order and Second Further Notice of Proposed Rule Making ( Part 1 Third Report and Order ), 63 FR 770 (January 7, 1998). Thus, the general competitive bidding rules found in subpart Q of part 1 of the Commission's rules, including provisions adopted in the Part 1 Third Report and Order, will serve as the general competitive bidding rules for all future auctions, regardless of whether service-specific rules have previously been adopted. Subpart Q of part 1 of the Commission's rules will apply to narrowband PCS, unless the Commission determines that, with regard to particular matters, the adoption of service-specific rules is warranted. The Balanced Budget Act of 1997 provides that, before the issuance of bidding rules, the Commission must provide adequate time for parties to comment on proposed auction procedures. In response to this statutory requirement, the Commission has directed the Bureau, under its existing delegated authority, to seek comment prior to the commencement of each auction on a variety of auction-specific operational issues. See Part 1 Third Report and Order (citing Balanced Budget Act of 1997, section 3002(a)(1)(B)(iv)). Under part 1 and consistent with this approach, matters such as auction design, license grouping, activity rules, minimum opening bids, and reserve prices will be determined by the Bureau pursuant to its delegated authority.

18. The Commission declines to adopt the suggestion that it require applicants to identify each frequency in each market on which they wish to bid and submit upfront payments for each individual license. The Commission believes that its current rules, which require an upfront payment to cover only those licenses on which an applicant intends to bid in any one round, are appropriate because they allow bidders the flexibility to pursue backup strategies during the course of an auction in the event they are unable to obtain their first choice of licenses. Such flexibility is crucial to an efficient auction and optimal license assignment. The Commission also declines to modify its anti-collusion rule to provide a safe harbor for carriers engaged in negotiations regarding mergers or intercarrier agreements. It has declined to create such a safe harbor in the past, and it has not been presented with an adequate justification for departing from that decision with respect to narrowband PCS. Finally, certain commenters urge the Commission to provide auction participants with the identity of all competing bidders. It has generally been the Commission's practice to disclose the identity of all bidders in Commission auctions. If, however, in the case of particular auctions a limit on such information appears warranted, the Bureau will, consistent with the Balanced Budget Act of 1997 and current practice, seek comment on the issue in a public notice prior to the auction.

19. Treatment of Designated Entities. The term “designated entity” refers to small businesses, rural telephone companies, and businesses own by minorities and/or women. In this Second R&O, the Commission declines to offer race- and gender-based designated entity provisions for narrowband PCS at this time. Commenters in this proceeding have submitted no evidence or data on the issue of race- or gender-based auction provisions, and the Commission concludes that it does not have a sufficient record to support such special provisions at this time under current standards of judicial review. See Adarand Constructors, Inc. v. Pen a, 515 U.S. 200 (1995) (requiring a strict scrutiny standard of review for Congressionally mandated race-conscious measures) and United States v. Virginia, 518 U.S. 515 (1996) (applying an intermediate scrutiny standard of review to a state program containing gender classification).

20. The Commission remains committed to meeting the statutory objectives of promoting economic opportunity and competition, avoiding excessive concentration of licenses, and ensuring access to new and innovative technologies by disseminating licenses among a wide variety of applicants, including small businesses, rural telephone companies, and businesses owned by members of minority groups and women. It believes the bidding credits it adopts for small businesses will assist in meeting these objectives because many minority- and women-owned entities are small businesses and will therefore qualify for these special provisions. The Commission also believes that its standardization of the rules regarding definitions of eligible entities, unjust enrichment, and bidding credits in the Part 1 Third Report and Order will assist small and minority- and women-owned businesses because the resulting predictability will facilitate effective business planning and capital accumulation. The Commission's Office of Communications Business Opportunities has initiated several studies to gather information regarding barriers to entry faced by minority- and women-owned firms that wish to participate, or have participated, in Commission auctions. Further, the Commission has recently commenced several new studies to explore additional entry barriers and to seek further evidence of racial and gender discrimination against potential licensees. In addition, it will continue to track the rate of participation in its auctions by minority- and women-owned firms and evaluate this information with other data gathered to determine whether provisions to promote participation by minorities and women can satisfy judicial scrutiny. If a sufficient record can be adduced, the Commission may consider race- and gender-based auction provisions in the future.

21. The Commission declines to adopt financial preferences designed specifically for rural telephone companies. The Commission is not persuaded by the argument that it should provide special bidding credits for rural telephone companies in order to meet its obligation to ensure that rural telephone companies have the opportunity to participate in spectrum-based services. The Commission has no evidence that large rural telephone companies encounter barriers to capital formation comparable to those faced by other designated entities. Moreover, the vast majority of rural telephone companies that have participated in the Commission's auctions to date have identified themselves as small businesses and have qualified for bidding credits on that basis. Thus, the Commission finds that small business bidding credits are sufficient to ensure that rural telephone companies have opportunities to participate in spectrum-based services.

22. For purposes of narrowband PCS, the Commission will define a small business as an entity with average annual gross revenues not to exceed $40 million for the preceding three years and a very small business as an entity with average annual gross revenues not to exceed $15 million for the preceding three years. The Commission declines to adopt different definitions and thresholds for different channel blocks.

23. In the Part 1 Third Report and Order, the Commission established a standard schedule of bidding credits for small businesses. While these bidding credits are higher than some previously adopted for specific services, the Commission concluded in the Part 1 Third Report and Order that, based on its auction experience and the fact that it had decided to suspend the use of installment payments, the schedule adopted would provide adequate opportunities for small businesses to participate in spectrum auctions. The Commission believes that the levels of bidding credits in this schedule, which are higher than those proposed in the Narrowband PCS R&O/Further Notice, are sufficient to promote the participation of small businesses in the provision of narrowband PCS. The Commission therefore sees no reason to deviate from them here, and declines to adopt higher levels as recommended by certain commenters. Thus, as provided in § 1.2110(e)(2) of the Commission's rules, small and very small businesses will be eligible for bidding credits as follows: Small businesses, i.e., those entities with average annual gross revenues for the preceding three years not exceeding $40 million, will receive a 15 percent bidding credit. Very small businesses, i.e., those entities with average annual gross revenues for the preceding three years not exceeding $15 million, will receive a 25 percent bidding credit. These bidding credits will be available on all channels for which licenses are auctioned. Thus, bidding credits will not be restricted to certain channels.

24. The Commission will attribute the gross revenues of the applicant, the applicant's controlling interests, and its affiliates in making determinations regarding small business status. This approach is consistent with the standard proposed in Amendment of Part 1 of the Commission's Rules—Competitive Bidding Procedures, Memorandum Opinion and Order and Notice of Proposed Rule Making, 62 FR 13540 (March 21, 1997), wherein the Commission proposed a “controlling interest” standard as the general attribution rule for all future auctions. Under this standard, eligibility for small business provisions will be determined by attributing the gross revenues of the applicant, its controlling interests, which are defined to include those that exercise either de jure or de facto control, and its affiliates. Typically, de jure control is evidenced by holdings of greater than 50 percent of the voting stock of a corporation or, in the case of a partnership, general partnership interests. De facto control is determined on a case-by-case basis, and includes the criteria set forth in a Notice of Hearing Designation Order ( Ellis Thompson Corp. ), 60 FR 1776 (January 5, 1995).

25. The “controlling interest” definition also provides specific guidance on calculation of various types of ownership interests. For purposes of calculating equity held in an applicant, the definition provides for full dilution of certain stock interests, warrants, and convertible debentures. In addition, the definition provides for attribution of partnership and other ownership interests, including stock interests held in trust, non-voting stock, and indirect ownership through intervening corporations. When an applicant cannot identify controlling interests under the definition, the revenues of all interest holders in the applicant and their affiliates will be counted. For example, if a company is owned by four entities, each of which has 25 percent voting equity and no shareholders' agreement or voting trust gives any one of them control of the company, the revenues of all four entities and their affiliates must be counted. Treating such a corporation in this way is similar to the Commission's treatment of a general partnership—all general partners are considered to have a controlling interest. This rule looks to substance over form in assessing eligibility for small business status.

26. The Commission's intent is to provide flexibility that will enable legitimate small businesses to attract passive financing in a highly competitive and evolving telecommunications marketplace. At the same time, the Commission believes that this controlling interest threshold will function effectively to ensure that only those entities truly meriting small business status are eligible for small business provisions. In particular, the Commission believes that the de jure and de facto concepts of control used to determine controlling interests in an applicant and the application of its affiliation rules will effectively prevent larger firms from illegitimately seeking status as a small business. The Commission also finds that the controlling interest standard it adopts, along with the definition of “affiliate” set forth in part 1 of its rules ( see 47 CFR 1.2110(b)(4)), adequately addresses commenters' concerns regarding new business structures and widely held companies.

27. The Commission continues to believe that the obstacles faced by small businesses, including women- and minority-owned small businesses, in raising capital are not necessarily confined to small business principals and affiliates with limited personal net worth. Moreover, personal net worth limits are difficult to apply and enforce. The Commission therefore eliminates the $40 million individual net worth limitation in its narrowband PCS rules.

28. With respect to payment matters, the Commission declines to adopt installment payment plans for small businesses participating in narrowband PCS auctions in the future. The Commission's experience has demonstrated that installment payments may not be necessary to ensure a meaningful opportunity for small businesses to participate successfully in its auction program. The Commission continues to believe that bidding credits, coupled with its partitioning and disaggregation policies, are sufficient to overcome barriers faced by small businesses seeking to participate in the narrowband PCS marketplace. As a result of the Commission's decision to suspend installment payments, and its adoption of rules governing late payments and defaults in part 1, subpart Q, issues related to installment payments regarding interest, late payment fees, and payment schedules raised in the Narrowband PCS R&O/Further Notice are now moot. Current licensees paying for their licenses in installments are subject to the late payment and default provisions in part 1.

29. The Commission believes that when a small business entity applies to transfer or partition its license or disaggregate spectrum, unjust enrichment rules are necessary in order to ensure that non-small business entities cannot take indirect advantage of the Commission's small business incentives. However, the Commission does not need to establish a separate unjust enrichment requirement for narrowband PCS because it has adopted a uniform requirement in part 1, subpart Q, of its rules for all services. Accordingly, the unjust enrichment provisions set forth at 47 CFR 1.2111 will apply to narrowband PCS. These provisions address assignments and transfers between entities qualifying for different tiers of bidding credits. Because the Commission will now offer bidding credits only to small businesses, its unjust enrichment rules will apply to any case where a licensee that qualified for a bidding credit seeks to transfer or partition to an entity that is not a small business. In addition, the Commission's revised attribution rules will apply in determining small business status. Finally, the Commission declines to adopt a holding period or transfer restrictions for narrowband PCS licenses that would be in addition to its unjust enrichment rules.

30. Partitioning and Disaggregation. The Commission will permit all narrowband PCS licensees, including incumbents, to partition their geographic license area at any time to any entity eligible for a narrowband PCS license. Small businesses and others may face certain barriers to entry into the provision of spectrum-based services, which may be addressed by allowing qualifying entities to acquire a partitioned license. The Commission also believes that the partitioning policy it adopts will allow licensees to use spectrum more efficiently, speed service to underserved areas, and stimulate competition.

31. Partitioning will be permitted based on any geographic area defined by the parties to a partitioning arrangement. Partitionees will hold their licenses for the remainder of the partitioner's ten-year license term. This term is appropriate because a licensee, through partitioning, should not be able to confer greater rights than it was awarded under the terms of its license grant.

32. Parties to a partitioning arrangement will have two options for meeting the applicable narrowband PCS construction requirements. Under the first option, the partitionee may certify that it will satisfy the same construction requirements as the original licensee, with the partitionee meeting the requirements in its partitioned area and the partitioner responsible for satisfying the requirements in the area it has retained. Under the second option, the original licensee may certify that it has already met or will meet its five-year construction requirement and that it will meet the 10-year requirement for the entire market involved. All parties should understand that, under the first option, both the partitioner and partitionee are individually responsible for meeting the coverage requirements for their respective areas. Failure by either party to meet its coverage requirements will result in the automatic cancellation of its license without further Commission action. Under the second option, only the partitioner's license will be cancelled if it fails to meet the coverage requirements for the entire geographic area. The partitionee will not be subject to coverage requirements except for those necessary to obtain license renewal.

33. Partitioning applicants will be required to submit, as separate attachments to the partial assignment application, a description of the partitioned service area and a calculation of the population of the partitioned service area. The partitioned service area must be defined using counties, FCC-defined service areas ( e.g., Economic Areas), or the boundaries of the area described in terms of latitude and longitude. When partitioning counties or FCC-defined service areas, the applicant need only supply the county and state, or market number. When describing the boundary of an area, however, the applicant must supply sets of coordinates (latitude and longitude referenced to the North American Datum of 1983—NAD83) along the boundary sufficient to describe the area. An applicant may use as few as three sets of coordinates, up to a maximum of 120 sets of coordinates in order to describe an area. Applicants are free to aggregate several areas described by coordinates in order to accurately describe the boundary of the partitioned area.

34. The Commission will also permit all narrowband PCS licensees, including nationwide licensees to disaggregate portions of their spectrum in the same general manner as it has for licensees in other CMRS services where it has adopted disaggregation. The Commission concludes that marketplace forces should determine whether it is technically feasible to disaggregate narrowband spectrum. Allowing narrowband PCS spectrum disaggregation could potentially expedite the introduction of service to underserved areas and provide increased flexibility to licensees. The Commission also believes that disaggregation combined with bidding credits and geographic partitioning will facilitate the acquisition of narrowband PCS spectrum by small businesses.

35. The Commission finds that it is unnecessary to require a party that wishes to disaggregate to retain a minimum amount of spectrum. Thus, the Commission will allow disaggregating parties to negotiate channelization plans among themselves as a part of their disaggregation agreements. Parties will be permitted to disaggregate spectrum in any increments as long as such disaggregation is otherwise consistent with the Commission's rules. Disaggregatees will be authorized to hold licenses for the remainder of the disaggregator's original ten-year term. As the Commission concluded with respect to partitioners, the disaggregator should not be entitled to confer greater rights than it was awarded under the initial license grant.

36. With respect to meeting construction requirements, disaggregating parties will be permitted to choose between two options: Under the first option, the parties may agree that either the disaggregator or the disaggregatee will be responsible for meeting the coverage requirements for the geographic service area. Under the second option, the disaggregator and disaggregatee may certify that they will share the responsibility for meeting the coverage requirements for the entire geographic area. Under the first option, if the certifying party fails to meet the coverage requirements for the entire geographic area, that party's license will be subject to cancellation, but the non-certifying party's license will not be affected. However, if the parties to a disaggregation agreement select the second option and jointly fail to satisfy the coverage requirements for the entire geographic area, both parties' licenses will be subject to cancellation. Parties seeking Commission approval of a disaggregation agreement will be required to include a certification as to which party or parties will be responsible for meeting the construction requirements.

37. Combined partitioning and disaggregation will be permitted. This will allow narrowband PCS licensees the flexibility to design the types of agreements they desire, and will advance the goals of providing competitive service offerings and encouraging new market entrants. In the event that there is a conflict in the application of the partitioning and disaggregation rules, the partitioning rules will prevail. When a combination of partitioning and disaggregation is proposed, the Commission will use both the population of the partitioned area and the amount of spectrum disaggregated to calculate unjust enrichment payments.

38. The Commission has adopted a general rule that determines the amount of unjust enrichment payments assessed for all current and future licensees that engage in partitioning and disaggregation. Specifically, the rules adopted in the Part 1 Third Report and Order indicate that if a licensee seeks to partition any portion of its geographic area, the amount of the unjust enrichment payment will be calculated based on the ratio of the population in the partitioned area to the overall population of the license area. In the event of disaggregation, the amount of the unjust enrichment payment will be based upon the ratio of the amount of spectrum disaggregated to the amount of spectrum held by the disaggregating licensee. See 47 CFR 1.2111(e). The unjust enrichment provisions adopted in the Part 1 Third Report and Order will apply to any narrowband PCS licensee that receives a bidding credit and later elects to partition or disaggregate its license. When combined partitioning and disaggregation is proposed, the Commission will use a combination of both population of the partitioned area and amount of spectrum disaggregated to make these pro rata calculations.

39. Installment payments have been suspended as a means of financing small businesses and other designated entities seeking to secure spectrum licenses. Nonetheless, there are a small number of current narrowband licensees that qualified as small businesses for installment payment plans. If such a licensee sought to partition or disaggregate its license to another small business, the partitionee or disaggregatee would be permitted to pay its portion of the remaining obligation on the license in installments. If, however, such a licensee sought to partition or disaggregate its license to a non-small business, the Commission's part 1 unjust enrichment rules would apply.

40. Because the Commission has suspended its installment payment program, the issue of default obligations for parties entering into partitioning and disaggregation agreements is moot with respect to future licensees. With respect to current small business licensees that may partition or disaggregate to other small businesses, the Commission concludes that a default on one party's payment obligation should not affect the other party's license.

41. Ownership Disclosure Requirements. The Commission believes that requiring detailed ownership information is necessary to ensure that all applicants claiming small business status qualify for such status. Disclosure of ownership information also aids bidders by providing them with information about their auction competitors and alerting them to entities subject to the Commission's anti-collusion rules. The Commission has adopted uniform ownership disclosure requirements in part 1, subpart Q, of its rules for all services. See 47 CFR 1.2112. These rules require all auction applicants to disclose the real party or parties in interest by including as an exhibit to their short-form applications detailed ownership information. Moreover, they require that applicants list controlling interests as well as all parties holding a 10 percent or greater interest in the applicant and any affiliates of these interest holders. These rules, combined with the controlling interest standard the Commission adopts in this Second R&O and its definition of “affiliate,” will help to ensure that only qualifying applicants obtain the benefits of the Commission's small business provisions, without being unduly burdensome.

42. Construction Prior to Grant of Licenses for Narrowband and Broadband PCS. The Commission will apply its part 1 rules, which permit applicants for all licenses awarded by competitive bidding to begin construction of facilities prior to the grant of their applications. Sees 47 CFR 1.2113. The Commission believes that allowing pre-grant construction furthers the statutory objective of rapidly deploying new technologies, products, and services for the benefit of the public. Pre-grant construction will be subject to any narrowband PCS service restrictions, including but not limited to antenna restrictions, environmental requirements, and international coordination. Any applicant engaging in pre-grant construction does so entirely at its own risk, and the Commission will not take such activity into account in ruling on any petition to deny.

43. A Final Regulatory Flexibility Analysis, pursuant to the Regulatory Flexibility Act, 5 U.S.C. 604, is incorporated in this document.

44. This Second R&O contains a modified information collection. As part of its continuing effort to reduce paperwork burdens, the Commission invites the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collection contained in this Second R&O, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due on or before July 6, 2000. Written comments must be submitted by OMB on the modified information collection on or before August 7, 2000. Comments should address: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (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.

OMB Control Number: 3060-0625.

Title: Amendment of the Commission's Rules to Establish New Personal Communications Services, Narrowband PCS.

Form Number: N/A.

Type of Review: Revision of existing collection.

Respondents: Business or other for-profit; Individuals or households; Not-for-profit institutions; Federal Government; and State, Local or Tribal Government.

Number of Respondents: 1,500.

Estimate Time Per Response: 3.5 hrs. (avg.).

Frequency of Response: On occasion.

Total Annual Burden: 5,250 hours.

Total Annual Costs: $1,050,000.

Needs and Uses: The amendments to the Commission's narrowband Personal Communications Services rules adopted in this proceeding will improve the efficiency of spectrum use, reduce the regulatory burden on spectrum users, encourage competition, and promote service to the largest feasible number of users.

45. In addition to filing comments with the Secretary, a copy of any comments on the information collection(s) contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 1-C804, 445 12th Street, SW., Washington, DC 20554, or via the Internet to jboley@fcc.gov and to Edward Springer, OMB Desk Officer, 10236 NEOB, 725 17th Street, NW., Washington, DC 20503 or via the Internet to edward.springer@omb.eop.gov.

46. Authority for issuance of this Second R&O is contained in sections 4(i), 257, 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 257, 303(r), and 309(j).

47. Accordingly, it is ordered that part 24 of the Commission's rules is amended as specified, effective August 7, 2000, except § 24.104, which shall be effective upon OMB approval.

48. It is further ordered that the Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this Second R&O, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

49. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Narrowband PCS R&O/Further Notice in this proceeding. The Commission sought written public comment on the proposals in the Narrowband PCS R&O/Further Notice, including comment on the IRFA. No commenter raised an issue concerning the IRFA. The Commission's Final Regulatory Flexibility Analysis (FRFA) in this Second R&O conforms to the RFA.

50. This Second R&O amends the Commission's rules for narrowband PCS. The amendments adopted promote efficient licensing of narrowband PCS and enhance the service's competitive potential in the Commercial Mobile Radio Service marketplace. The Second R&O also makes the competitive bidding rules for narrowband PCS, which previously provided preferences for minority- and women-owned businesses, race- and gender-neutral. The Commission deems the latter changes necessary in light of the Supreme Court's decisions in Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995) (requiring a strict scrutiny standard of review for Congressionally mandated race-conscious measures) and United States v. Virginia, 518 U.S. 515 (1996) (applying an intermediate scrutiny standard of review to a state program containing gender classification). By applying the Commission's standardized part 1 competitive bidding rules to narrowband PCS and eliminating most of the service-specific competitive bidding rules previously applied, the Second R&O also simplifies and reduces the regulatory burden on applicants and licensees.

51. No party filed comments responding to the IRFA. The Commission has, however, taken small business concerns into account in the Second R&O , as discussed in Sections v and vi of this FRFA.

52. The rules adopted in the Second R&O will affect small businesses that hold or seek to acquire narrowband PCS licenses. These entities include small businesses that obtain nationwide, regional or MTA geographic area licenses through auction, assignment, or transfer and small businesses that acquire partitioned and/or disaggregated MTA, regional, or nationwide geographic area licenses.

53. To date, two auctions of narrowband PCS licenses have been conducted. Through these auctions, the Commission has awarded a total of 41 licenses, out of which 11 were obtained by small businesses. For purposes of the two auctions that have already been held, small businesses were defined as entities with average gross revenues for the prior three calendar years of $40 million or less. To ensure meaningful participation of small business entities in the auctions, the Commission adopts a two-tiered definition of small businesses in the Second R&O . A small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A very small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. In December 1998, the Small Business Administration approved this two-tiered definition, which had been proposed in the Narrowband PCS R&O/Further Notice . Letter of December 2, 1998, to Amy J. Zoslov, Chief, Auctions and Industry Analysis Division, Wireless Telecommunications Bureau, from Aida Alvarez, Administrator Small Business Administration.

54. Without this definition, the Commission would utilize the SBA definition applicable to radiotelephone companies, i.e. , an entity employing fewer than 1,500 persons. See 13 CFR 121.201, Standard Industrial Classification Code 4812. Nearly all radiotelephone companies have fewer than 1,000 employees. The 1992 Census of Transportation, Communications, and Utilities, conducted by the Bureau of the Census, shows that only 12 radiotelephone firms out of a total of 1,178 such firms that operated during 1992 had 1,000 or more employees. U.S. Bureau of the Census, U.S. Department of Commerce, 1992 Census of Transportation, Communications, and Utilities, UC92-S-1, Subject Series, Establishment and Firm Size, Table 5, Employment Size of Firms: 1992, SIC Code 4812 (issued May 1995).

55. In the future, the Commission will auction 459 licenses to serve MTAs and 408 response channel licenses. There is also one megahertz of narrowband PCS spectrum that has been held in reserve and that the Commission has not yet decided to release for licensing. The Commission cannot predict accurately the number of licenses that will be awarded to small entities in future auctions. However, 4 of the 16 winning bidders in the two previous narrowband PCS auctions were small businesses, as that term was defined under the Commission's rules. The Commission assumes, for purposes of the evaluations and conclusions in this FRFA, that a large portion of the remaining narrowband PCS licenses will be awarded to small entities. The Commission also assumes that at least some small businesses will acquire narrowband PCS licenses by means of the Commission's partitioning and disaggregation rules.

56. The rules adopted in the Second R&O impose reporting and recordkeeping requirements on small businesses, as well as others, seeking to obtain or transfer licenses through partitioning and disaggregation. The information requirements will be used to determine whether the proposed partitionee or disaggregatee is an entity qualified to obtain a partitioned license or disaggregated spectrum. The information will be a one-time filing by an applicant requesting such a license. The information can be submitted on FCC Form 603 for part 24 narrowband PCS services. The Commission estimates that the average burden on the applicant is three hours for the information necessary to complete these forms. The Commission estimates that 75 percent of the respondents, which may include small businesses, will contract out the burden of responding. The Commission estimates that it will take approximately 30 minutes to coordinate information with those contractors. The remaining 25 percent of respondents, which may include small businesses, are estimated to employ in-house staff to provide the information. Applicants filing electronically, including small businesses will not incur any per minute on-line charge. The Commission estimates that applicants contracting out the information would use an attorney or engineer (average of $200 per hour) to prepare the information.

57. Narrowband PCS applicants and licensees, including small businesses, will be subject to the reporting and recordkeeping requirements already contained in the Commission's part 1 competitive bidding rules, which apply to all auctionable services. These part 1 rules include the unjust enrichment rule set forth at 47 CFR 1.2111, which includes a reporting requirement for applicants seeking approval of a transfer of control or assignment of license within three years of receiving a new license through competitive bidding. The part 1 rules also include the uniform ownership disclosure requirements of 47 CFR 1.2112, which require all auction applicants to disclose the real party or parties in interest by including as an exhibit to their short-form applications detailed ownership information. The Commission finds that these rules, combined with its controlling interest standard and definition of “affiliate,” will help to ensure that only qualifying applicants obtain the benefits of its small business provisions, without being unduly burdensome. In addition, narrowband PCS licensees that qualify as designated entities will be required to maintain at their facilities or by a designated agent, for the term of the license, information relevant to their eligibility for designated entity status. This requirement will further help to ensure that only qualifying applicants obtain the benefits of the Commission's small business provisions.

58. The rules adopted in the Second R&O are designed to implement Congress' goal of giving small businesses, as well as other entities, the opportunity to participate in the provision of spectrum-based services. The rules are also consistent with the Communications Act's mandate to identify and eliminate market entry barriers for entrepreneurs and small businesses in the provision and ownership of telecommunications services. See generally 47 U.S.C. 257, 309(j).

59. Service Areas. The Commission finds that MTAs, rather than nationwide and regional geographic areas, are the most appropriate geographic area for licensing the remaining narrowband PCS spectrum because they will serve the needs of a wide range of entities, including both large and small service providers. Certain commenters argued that any additional nationwide or regional licenses would be too costly for small businesses to acquire and build out. MTAs, however, are not too large to preclude the entry of small businesses, and those interested in service areas larger than MTAs will be able to create such areas by aggregating licenses.

60. Bidding Credits. To ensure meaningful participation of small business entities in the auctions, the Commission adopts a two-tiered definition of small businesses in the Second R&O. A small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A very small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. Small businesses are eligible for a 15 percent bidding credit. Very small businesses are eligible for a 25 percent bidding credit. In contrast to the Commission's previous rules, bidding credits will now be applicable to narrowband PCS licenses on all channels.

61. Partitioning and Disaggregation. The Second R&O adopts rules permitting narrowband PCS licensees to partition portions of their geographic areas, or disaggregate portions of the spectrum for which they hold a license, to other entities qualified to be licensees. Such partitioning and disaggregation will facilitate market entry by parties that may lack the financial resources to participate in auctions, including small businesses. Partitioning and disaggregation are expected to enable small businesses to obtain licenses for areas smaller than nationwide, regional or MTA areas, or smaller amounts of spectrum, at costs they will be able to afford. The Commission's decision to allow parties to partitioning or disaggregation agreements to choose between two options to meet their coverage requirements will provide small businesses with more flexibility in managing their resources.

62. Substantial Service Option. The Second R&O allows narrowband PCS licensees to demonstrate “substantial service” as an alternative to meeting the coverage requirements set forth in the existing rules. The Commission finds that a substantial service option may be very useful in allowing licensees, including small businesses, to use spectrum flexibly to provide new and innovative services uninhibited by a requirement that they meet a specific coverage benchmark or lose their license.

63. Application of Part 1 Standardized Rules. The Commission believes that its application of the part 1 standardized rules regarding eligible entities, unjust enrichment, and bidding credits will assist small businesses because the resulting predictability will facilitate the business planning and capital fundraising process.

64. The Commission considered and rejected the following alternative proposals concerning service areas, spectrum aggregation, response channels, coverage requirements, nationwide paging licensees, competitive bidding rules, installment payments, and disaggregation.

65. Service Areas. The Commission declined to adopt Metrocall's, Celpage's and Benbow's recommendation that it use a combination of regional and MTA service areas for future licensing of narrowband PCS. Similarly, the Commission declined to adopt Arch's proposal that it allocate one of the two remaining 50 kHz paired channels as a nationwide license. Taking into consideration other commenters' argument that it would be too costly for small businesses to acquire and build out nationwide and regional licenses, the Commission decided to use MTAs for future licensing. The Commission also declined to adopt several commenters' recommendation that it use BTA-based licenses to license narrowband PCS spectrum. The Commission concluded that using MTAs rather than BTAs would not compromise the goal of ensuring entry for small businesses.

66. Spectrum Aggregation. In the Second R&O , the Commission considered the argument that it should maintain the narrowband PCS spectrum aggregation limit, which was originally adopted to ensure that narrowband PCS services would be offered on a competitive basis. The Commission decided to eliminate the narrowband PCS aggregation limit, finding that the aggregation limit is not needed to prevent an undue concentration of licenses and that it may be harmful if it disadvantages narrowband PCS licensees in competing against other services.

67. Response Channels. In the Second R&O , the Commission considered and rejected its tentative conclusion that the response channels should not be restricted to mobile-to-base transmissions, provided that licensees comply with the relevant rules regarding maximum transmitter power and interference. The Commission agreed with commenters Arch, Benbow, and PCIA that allowing these channels to be used for other purposes would cause harmful interference with current narrowband PCS licensees and determined that it would retain the current rule restricting use of the response channels to mobile-to-base transmissions.

68. Construction and Coverage Requirements. The Commission declined to adopt recommendations by certain commenters that it modify its current construction benchmarks. It declined, for example, to adopt Arch's and Benbow's suggestion that it eliminate the five-year construction requirement and allow both existing and new narrowband PCS licensees to meet a 37.5 percent population benchmark by the tenth year of their license terms. The Commission found that its five- and ten-year construction benchmarks provide sufficient time for narrowband PCS licensees to construct their systems. The nationwide narrowband PCS licensees that have reached their five-year buildout benchmarks have all represented that they met the requirement, and none requested a waiver. The Commission found that there is no need to alter the current benchmarks, and that it is best to address any problems that individual licensees may have because of difficulties with financing or equipment availability by evaluating requests for waiver on a case-by-case basis.

69. Several commenters opposed the adoption of a “substantial service” requirement on the grounds that replacing the existing coverage requirements with a substantial service test would encourage speculation, fraud, and anticompetitive behavior. In considering and rejecting this argument, the Commission concluded that coverage requirements, including a substantial service standard, encourage the provision of service to areas that would not necessarily receive service expeditiously solely through the operation of market forces. The Commission found that the substantial service option may be very useful in allowing licensees to use spectrum flexibly to provide new and innovative services uninhibited by a requirement that they meet a specific coverage benchmark or lose their license. The Commission also concluded that permitting licensees to make a substantial service showing may encourage them to build out in rural areas. The Commission also declined to adopt Ameritech's recommendation that substantial service be defined as “service that is sound, favorable, and reasonably capable of meeting an appropriate portion of the public demand for one or more of the communications services of which the system is capable under the Commission's rules.” In the past the Commission has offered guidance to licensees in other services with regard to factors that it would consider in evaluating whether the substantial service requirement has been met, and it will maintain this practice with respect to narrowband PCS.

70. Nationwide Paging Licenses. In the Paging MO&O/Third Report and Order , the Commission considered the issue of coverage requirements for nationwide geographic area paging licensees and deferred any decision on the issue until it resolved similar matters in the instant narrowband PCS rulemaking proceeding. In the Second R&O, the Commission found that all nationwide paging licensees are already providing sufficient coverage to meet the five-year benchmark applicable to nationwide narrowband PCS licenseees, and some of them have met the ten-year benchmark. Thus, the Commission concluded that the build-out requirements imposed on nationwide paging licensees under its previous rules were adequate to promote coverage equivalent to that of nationwide narrowband PCS licensees, and therefore it is not necessary to adopt coverage requirements for nationwide paging licensees that would be in addition to the build-out requirements they have already met.

71. Competitive Bidding Rules. The Commission declined to adopt certain commenters' recommendation that it require applicants to identify each frequency in each market on which they wish to bid and submit upfront payments for each individual license. The Commission found that its current rules, which require an upfront payment to cover only those licenses on which an applicant intends to bid in any one round, are appropriate because they allow bidders the flexibility to pursue backup strategies during the course of an auction in the event they are unable to obtain their first choice of licenses. The Commission also declined to modify its anti-collusion rule to provide a safe harbor for carriers engaged in negotiations regarding mergers or intercarrier agreements, as requested by PCIA. The Commission has declined to create such a safe harbor in the past, and it has not been presented with an adequate justification for departing from that decision here. Finally, several commenters requested that the Commission provide auction participants with the identity of all competing bidders. It has generally been the Commission's practice to disclose the identity of all bidders in Commission auctions. If, in the case of particular auctions, a limit on such information appears warranted, the Wireless Telecommunications Bureau will, consistent with the Balanced Budget Act of 1997 and current practice, seek comment on the issue in a public notice prior to the auction.

72. Installment Payments. The Commission declined to adopt installment payment plans for small businesses participating in narrowband PCS auctions. This action is consistent with the Commission's policy set forth in the Part 1 Third Report and Order , where the Commission noted that its experience has demonstrated that installment payments may not be necessary to ensure a meaningful opportunity for small businesses to participate successfully in its auction program.

73. Bidding Credits. The Commission decided to adopt a 15 percent bidding credit for small businesses and a 25 percent bidding credit for very small businesses. A small business is an entity with average annual gross revenues not to exceed $40 million for the preceding three years, and a very small business is an entity with average annual gross revenues not to exceed $15 million for the preceding three years. The Commission declined to adopt higher bidding credits, as Merlin and RTG recommend. The bidding credits adopted are those provided for in the Commission's part 1 standardized competitive bidding rules. The Commission believes that these levels of bidding credits, which are higher than those proposed in the Narrowband PCS R&O/Further Notice , are sufficient to promote the participation of small businesses in the provision of narrowband PCS, and that there is no reason to deviate from the standard schedule of bidding credits here.

74. Bidding Credits for Rural Telephone Companies. The Commission declined to adopt RTG's and NTCA's recommendation that it provide special bidding credits for rural telephone companies in order to meet its obligation to ensure that rural telephone companies have the opportunity to participate in spectrum-based services. The Commission has no evidence that large rural telephone companies encounter barriers to capital formation comparable to those faced by other designated entities. In addition, the vast majority of rural telephone companies that have participated in the Commission's auctions to date have identified themselves as small businesses and have qualified for bidding credits on that basis. Thus, the Commission believes that small business bidding credits are sufficient to ensure that rural telephone companies have the ability to participate in spectrum-based services, and it does not believe that rural telephone companies will be unable to compete in narrowband PCS auctions or the messaging marketplace without special financial preferences.

75. Attribution. The Commission declined to adopt Merlin's recommendations regarding amending its rules to adapt to various business structures. Merlin suggests, for example, that, for purposes of defining whether a company is widely held, whatever its form of business organization, the Commission should formulate its rules to state that a widely held company is one in which no single equity holder has 15 percent or more of the equity of the applicant. The Commission found that the controlling interest standard adopted in the Second R&O , along with the definition of “affiliate” set forth in part 1 of the Commission's rules, adequately addresses Merlin's concerns.

76. Disaggregation. Some commenters stated that disaggregation is not technically feasible and therefore it is unnecessary for the Commission to address the issue at this time. In considering and rejecting such arguments, the Commission concluded that marketplace forces should determine whether it is technically feasible to disaggregate narrowband spectrum. The Commission also concluded that allowing narrowband PCS spectrum disaggregation could potentially expedite the introduction of service to underserved areas and provide increased flexibility to licensees. Finally, the Commission found that disaggregation combined with bidding credits and geographic partitioning will facilitate the acquisition of narrowband PCS spectrum by small businesses.

77. Report to Congress. The Commission will send a copy of the Second R&O , including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. See 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Second R&O , including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

The Atlantic shark fishery is managed under the Fishery Management Plan for Atlantic Tunas, Swordfish, and Sharks (HMS FMP), and its implementing regulations found at 50 CFR part 635 issued under authority of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1801 et seq .).

On June 30, 1999, NMFS received a Court Order from Judge Steven D. Merryday relative to the May 1997 lawsuit challenging commercial harvest quotas for Atlantic sharks. Specifically, the order states: “. . . the Court hereby preliminarily, and until further order of the Court, expressly ENJOINS the defendant and his designees from enforcing the 1999 regulations, 64 FR 29090 (May, 28, 1999) with respect to Atlantic shark commercial catch quotas and fish-counting methods (including the counting of dead discards and state commercial landings after federal closures) that are different from the quotas and fish counting methods prescribed by the 1997 Atlantic shark regulations, 62 FR 16648 (April 7, 1997).”

As such, the annual 2000 LCS quota continues at the 1997 level of 1,285 mt dw for all species of LCS, (Table 1 of appendix A to part 635), with no minimum size on ridgeback LCS. The SCS and pelagic shark quotas also revert to their annual 1997 levels, of 1,760 and 580 mt dw, respectively. The 1997 prohibited species list includes only five prohibited species: white, basking, whale, sand tiger and bigeye sand tiger. The limited access provisions for commercial harvests still apply, including trip limits for directed and incidental shark permit holders.

A motion to clarify the terms of the court injunction is pending before the court. If granted, the 1999 prohibited species list would be in effect for the Atlantic commercial shark fishery. NMFS will announce the court's decision with specific details in the Federal Register once the court rules on the motion.

Under the terms of the Court injunction, the Assistant Administrator for Fisheries, NOAA (AA), is authorized to adjust the semiannual quota to reflect actual catches during the preceding semiannual period. Harvest data submitted to NMFS indicate that the landings of LCS from January through March 31, 2000, totaled 742.7 mt dw, which is 100.7 mt dw more than the available semiannual quota of 642.5 mt dw. Therefore, the adjusted quota for LCS for the second 2000 semiannual period is decreased from 642.5 mt dw to 542 mt dw. The adjusted quota of 542 mt dw is available for the period July 1 through December 31, 2000.

The second semiannual fishing season of the 2000 fishing year for the commercial fishery for LCS in the Western North Atlantic Ocean, including the Gulf of Mexico and the Caribbean Sea, will open July 1, 2000. Catch rate data from the second semiannual fishing seasons from 1997, 1998, and 1999 for LCS species indicate that the available LCS quota of 542.5 mt dw will be attained within 38 days. Accordingly, the AA has determined, based on these projected catch rates and the adjusted quota, that the quota for the 2000 second semiannual season for LCS in or from the Western North Atlantic Ocean, including the Gulf of Mexico and Caribbean Sea, will be attained as of August 7, 2000. The LCS fishery will close August 7, 2000, at 11:30 p.m. local time.

During a closure, retention of, fishing for, possessing or selling LCS are prohibited for persons fishing aboard vessels issued a limited access permit under § 635.4. The sale, purchase, trade, or barter of carcasses and/or fins of LCS harvested by a person aboard a vessel that has been issued a permit under § 635.4 are prohibited, except for those that were harvested, offloaded, and sold, traded, or bartered prior to the closure and were held in storage by a dealer or processor.

The second semiannual quota for SCS is 880 mt dw. The second semiannual quota for pelagic sharks is 290 mt dw. When quotas are projected to be reached for these fisheries, the AA will file notification of closure at the Office of the Federal Register at least 14 days before the effective date.

Those vessels that have not been issued a limited access permit under § 635.4 may not sell sharks and are subject to the recreational retention limits and size limits specified at §§ 635.20(e) and 635.22(c). The recreational fishery is not affected by any closure in the commercial fishery.

This action is taken under 50 CFR part 635 and is exempt from review under Executive Order 12866.