On May 7, 1999, OPM published interim regulations at 64 FR 24504 that authorize special interagency selection priority for certain employees who are displaced from positions under the Panama Canal Employment System. The interim regulations were effective upon publication in the Federal Register. Interested parties had 60 days to submit written comments.

For reference, the Panama Canal Treaty of 1977, as implemented through Public Law 96-70 (93 Stat. 452, The Panama Canal Act of 1979, approved September 27, 1979, and generally effective October 1, 1979), provides for the final transfer of Panama Canal operations and full control of the former Canal Zone geographic area from the Government of the United States to the Republic of Panama on December 31, 1999. This action resulted in the involuntary separation, or geographic relocation, of most United States citizens working as Federal employees in the Canal Area.

Section 1212(a) of the Panama Canal Act, as codified in 22 U.S.C. 3652, authorized the President to establish the Panama Canal Employment System in accordance with applicable Treaty requirements and other provisions of law. Most Federal employees in the Canal Area held excepted service positions under the Panama Canal Employment System. However, § 1212(a) requires full interchange between these excepted service Panama Canal Employment System positions and positions in the competitive service.

Section 1232 of the Panama Canal Act, as codified in 22 U.S.C. 3672, provides certain employees of the former Canal Zone with priority consideration for continuing vacant Federal positions.

Specifically, § 1232(a) of the Act authorizes special selection priority for any citizen of the United States who was an employee of the Panama Canal Company or the Canal Zone Government on March 31, 1979, and was subsequently involuntarily separated by reduction in force. This priority is not available to otherwise eligible employees who are placed in another appropriate Federal position that is located in the Republic of Panama.

Similarly, § 1232(b) of the Act authorizes special selection priority for any citizen of the United States who, on March 31, 1979, was employed in the Canal Zone under the Panama Canal Employment System as an employee of an executive branch agency (including the Smithsonian Institution), and whose position was eliminated as the result of the Panama Canal Treaty of 1977 and related agreements. This priority is not available to otherwise eligible employees who are appointed to another appropriate Federal position that is located in the Republic of Panama.

Section 1232(c) of the Act mandates that OPM establish and administer a Government-wide special selection priority program for all eligible displaced employees of the former Canal Zone.

OPM received one comment, from a Federal agency, on the interim regulations.

The agency suggested that the final regulations limit interagency selection priority only to positions with no greater promotion potential than the displaced employee's former position under the Panama Canal Employment System. OPM did not adopt this suggestion because of the difficulty that a hiring agency could encounter in determining the promotion potential of the employee's former Panama Canal Employment System position, particularly after the cessation of activities on December 31, 1999.

The agency also suggested that the final regulations clarify that, in order to be eligible for this interagency selection program, a displaced employee must have a last performance rating of “Fully Successful” or equivalent (i.e., Summary Level 3, as defined in 5 CFR 430.208(d)). OPM adopted this suggestion, which was implied in the interim regulations. The final regulations clarify OPM's intention that the placement program for displaced former Panama Canal Zone employees follows the general eligibility requirements set forth in 5 CFR 330.704(a)(2) for other displaced employees, who are eligible for selection priority under the Interagency Career Transition Assistance Plan, which is authorized by 5 CFR 330, subpart G.

On another item, the agency suggested that OPM clarify that these regulations follow the same general order of selection that is provided under 5 CFR 330.705(a) for actions under the Interagency Career Transition Assistance Plan. OPM has also adopted this suggestion, again because the final regulations clarify OPM's intention that the placement program for displaced former Panama Canal Zone employees follows the general provisions applicable to displaced employees who are eligible for selection priority under the Interagency Career Transition Assistance Plan.

In addition, the agency suggested that OPM provide a definition of “Continental United States.” Upon review, we believe that this issue is presently covered by paragraph 5 CFR 210.102(b)(9), which provides that “Overseas means outside the continental United States, but does not include Alaska, Guam, Hawaii, the Isthmus of Panama, Puerto Rico, or the Virgin Islands.”

Finally, the agency suggested that OPM provide information on the payment of relocation expenses for displaced employees. This issue is beyond the scope of OPM's statutory and regulatory responsibility, and is therefore not covered in these final regulations.

Eligible displaced employees of the former Panama Canal Zone are eligible for interagency special selection priority in this new program on a similar basis as that provided to many displaced Federal employees under the Interagency Career Transition Assistance Plan. However, eligible displaced employees of the former Canal Zone receive special selection priority when applying for vacant positions throughout the continental United States, while the Interagency Career Transition Assistance Plan provides priority consideration to other displaced Federal employees only in the local commuting area where the displaced employee was separated.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because it affects only certain Federal employees.

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

On January 18, 2000, we published (at 65 FR 2521) interim regulations to implement the provisions of section 3154 of Public Law 105-261, enacted October 17, 1998, which governs the retirement eligibility, annuity benefits and deductions from basic pay of nuclear materials couriers employed by the United States Department of Energy under CSRS and FERS.

OPM received comments from one Federal agency. The commenter proposed that, for the purpose of entitlement to early retirement and enhanced annuity authorized by Public Law 105-261, the regulations be amended to extend coverage under that law for service performed as a nuclear materials courier prior to October 1, 1977, by employees of the predecessor agencies of the Department of Energy. We are unable to implement that proposal. Section 3154 of Public Law 105-261, for purposes of benefits under CSRS and FERS, specifically defines nuclear materials courier as “an employee of the Department of Energy * * *” We are aware that the nuclear materials courier function was performed by employees of the Department of Energy's predecessor agencies (Atomic Energy Commission and the Energy Research and Development Administration). However, the statutory definition reflects the specific intent and understanding between OPM and the Department of Energy that only service performed by couriers since the establishment of the Department of Energy on October 1, 1977, would be used in determining entitlement to early retirement and enhanced benefits under sections 8336(c) (CSRS) and 8412(d) (FERS) of title 5 U.S. Code as amended by Public Law 105-261. This intent is further manifested in 5 U.S.C. 8334, as amended by the law, which lists the applicable employee deductions for nuclear materials couriers under CSRS beginning on October 1, 1977. Additionally, the higher agency contributions and additional annual payments by the Department of Energy to reimburse the Civil Service Retirement and Disability Fund for the estimated increase in the unfunded liability to the Fund are based on estimated additional costs of using courier service only since October 1, 1977, to provide the enhanced benefits and early retirement.

Accordingly, we are now adopting the interim regulations as final without change.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because the regulation will only affect retirement benefits of retired nuclear materials couriers and their survivors.

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

In an interim rule effective October 7, 1999, and published in the Federal Register on October 15, 1999 (64 FR 55811-55812, Docket No. 99-044-2), we amended the Oriental fruit fly regulations, contained in § 301.93 through 301.93-10, by removing a portion of Hillsborough County, FL, from the list of quarantined areas in § 301.93-3(c). That action relieved unnecessary restrictions on the interstate movement of regulated articles from this area.

Comments on the interim rule were required to be received on or before December 14, 1999. We did not receive any comments. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule.

This action also affirms the information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act.

Further, for this action, the Office of Management and Budget has waived the review process required by Executive Order 12866.

In an interim rule effective August 15, 1998, and published in the Federal Register on August 20, 1998 (63 FR 44537-44538, Docket No. 98-084-1), we amended the Mexican fruit fly regulations (contained in 7 CFR 301.64 through 301.64-10) by removing a portion of Los Angeles County, CA, from the list of quarantined areas in § 301.64-3(c). That action relieved unnecessary restrictions on the interstate movement of regulated articles from this area.

Comments on the interim rule were required to be received on or before October 19, 1998. We did not receive any comments. Therefore, for the reasons given in the interim rule, we are adopting the interim rule as a final rule.

This action also confirms the information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act.

Further, for this action, the Office of Management and Budget has waived the review process required by Executive Order 12866.

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 all British Aerospace Model BAe 146 and certain Model Avro 146-RJ series airplanes was published in the Federal Register on June 28, 2000 (65 FR 39831). That action proposed to require inspections and torque checks of the stringer crown fittings and bolts at Ribs 0 and 2 of the wings for discrepancies, corrective action, if necessary; and eventual modification of the stringer crown fittings, which would terminate the inspections and checks.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to 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 20 airplanes of U.S. registry will be affected by this AD.

It will take approximately 8 work hours per airplane to accomplish the required inspection, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the required inspection on U.S. operators is estimated to be $9,600, or $480 per airplane, per inspection cycle.

It will take approximately 450 work hours per airplane (including access and close) to accomplish the required modification, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the required modification on U.S. operators is estimated to be $540,000, or $27,000 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 98-22-01, amendment 39-10847 (63 FR 58625, November 2, 1998), which is applicable to certain Fokker Model F.28 Mark 0100 series airplanes, was published in the Federal Register on March 15, 2000 (65 FR 13923). The action proposed to require new inspections (one-time detailed visual inspection and repetitive eddy current or dye penetrant inspections) to detect cracking of the nose landing gear (NLG) main fitting subassembly, and corrective actions, if necessary. The action also proposed to revise the applicability of the existing AD.

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

One commenter states that it has completed the inspections and has a repetitive inspection program already in place to comply with the requirements of this AD.

One commenter requests that the Explanation of Relevant Service Information section of the AD be revised to refer to the current type certificate holder (Fokker Services B.V.), rather than the now defunct airplane manufacturer, as the issuer of the relevant service information. The FAA acknowledges the accuracy of this information; however, since this section is not repeated in the final rule, no change is made to the AD.

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 as proposed.

There are approximately 87 airplanes of U.S. registry that will be affected by this AD.

The one-time detailed visual inspection required by this AD action will take approximately 1 work hour per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the one-time inspection required by this AD on U.S. operators is estimated to be $5,220, or $60 per airplane.

The repetitive eddy current or dye penetrant inspections required by this AD action will take approximately 1 work hour per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the repetitive inspection required by this AD on U.S. operators is estimated to be $5,220, or $60 per airplane, per inspection cycle.

The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the requirements of this AD, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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.

Section 37.37(b)(2) of the Code of Federal Regulations (14 CFR Part 47) requires an applicant for United States registration of an aircraft to provide evidence satisfactory to the Administrator that foreign registration of the aircraft has terminated. Satisfactory evidence included “a final judgment or decree of a court of competent jurisdiction that determines, under the law of the country concerned, that the registration has in fact become invalid.” (14 CFR 47.37(b)(2)) FAA interprets the phrase “court of competent jurisdiction” to mean a court of the country where the aircraft was last registered.

The FAA published this direct final rule with a request for comments in the Federal Register on June 22, 2000 (65 FR 38722). The FAA uses the direct final rulemaking procedure for a non-controversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment, were received within the comment period, the regulation would become effective on October 5, 2000. No adverse comments were received, and thus this notice confirms that this direct final rule will become effective on that date.

History

On June 22, 2000, the FAA published in the Federal Register a direct final rule; request for comments which revises the Class E airspace at Pratt, KS, (FR document 00-15534, 65 FR 38721, Airspace Docket No. 00-ACE-14). An error was subsequently discovered in the airport name of the Pratt Municipal Airport. This action corrects that error. After careful review of all available information related to the subject presented above, the FAA has determined that air safety and the public interest require adoption of the rule. The FAA has determined that this correction will not change the meaning of the action or add any additional burden on the public beyond that already published. This action corrects the error in the name of the Pratt Municipal airport and confirms the effective date to the direct final rule.

The FAA uses the direct final rulemaking procedure for a non-controversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment, were received within the comment period, the regulation would become effective on October 5, 2000. No adverse comments were received, and thus this notice confirms that this direct final rule will be effective on that date.

FDA has discovered that errors have inadvertently become incorporated into the agency's regulations for biologics. In the Federal Register of October 20, 1999 (64 FR 56441), a final rule incorrectly revised § 56.102 (21 CFR 56.102) in paragraph (b)(11) instead of correctly revising paragraph (b)(10). Section 56.102 (b)(10) and (b)(11) were affected by this inadvertent error. This document corrects those errors.

Therefore, under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and authority delegated to the Commissioner of Food and Drugs, 21 CFR part 56 is amended as follows:

In the Federal Register of September 23, 1993 (58 FR 49890), FDA published a final monograph for OTC topical antifungal drug products in part 333 (21 CFR part 333), subpart C. That monograph includes labeling in § 333.250. Section 333.250(b)(1) contains the following introductory language for the indications statement: (Select one of the following: “Treats,” “For the treatment of,” “For effective treatment of,” “Cures,” “For the cure of,” “Clears up,” or “Proven clinically effective in the treatment of”). Section 333.250(b)(2) contains similar language for products labeled for the prevention of athlete's foot.

In the Federal Register of July 22, 1999 (64 FR 39452), FDA published a proposed amendment of the monograph for OTC topical antifungal drug products to revise the indications in § 333.250(b)(1)(i) and (b)(2)(i). The proposed revision added the word “most” after the introductory parenthetical “Select one of the following” choices and before the name of the condition(s) for which the product is to be used. The agency also proposed to add the word “most” in § 333.250(b)(2)(ii) after the word “up” and before “athlete's foot.” The agency explained that topical antifungal drug products will not cure or treat all conditions commonly thought by consumers to be athlete's foot or jock itch and that the revised labeling will more accurately inform consumers what they can expect from using these products. The agency stated that this approach is consistent with the current labeling approved for OTC vaginal antifungal drug products under new drug applications, which states “cures most vaginal yeast infections.”

Interested persons were invited to submit comments on the proposal and on the agency's economic impact determination by October 20, 1999. In response to the proposed monograph amendment, one trade association of OTC drug manufacturers submitted a comment, a copy of which is on public display in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.

The agency has considered the comment in proceeding with this final rule. A summary of the comment with FDA's response follows.

The comment requested FDA to decide against the proposed amendment for several reasons:

1. Scientific documentation is lacking to show that adding the qualifier “most” would meet an important consumer need or is important for safe and effective use of these products. The comment noted that in the tentative final monograph for OTC topical antifungal drug products (54 FR 51136 at 51154, December 12, 1989) the agency stated that the statement “kills most athlete's foot fungi” described the performance of the product and was not related in a significant way to the safe and effective use of antifungal drug products that are already labeled with the required information. The comment contended that FDA did not provide information showing that addition of the word “most” relates in a significant way to the safe and effective use of OTC topical antifungal drug products or would have any value in assisting consumers to better use these products.

2. The use of a qualified indication statement resulting from addition of the word “most” is unprecedented in the OTC drug review. The comment noted that no other OTC drug monograph requires a statement that qualifies the effect of a drug category and questioned why topical antifungal drug products are now an exception to this labeling policy that has consistently omitted effectiveness qualifiers.

3. A qualified indications statement is potentially misleading, in that it implies inherent lack of efficacy of the active ingredient or questionable effectiveness of the drug product. The comment contended that this approach is inconsistent with the regulatory definition of effectiveness for OTC drug monograph products in § 330.10(a)(4)(ii) (21 CFR 330.10(a)(4)(ii)), which states: “Effectiveness means a reasonable expectation that, in a significant proportion of the target population, the pharmacological effect of the drug, when used under adequate directions for use and warnings against unsafe use, will provide clinically significant relief of the type claimed.” The comment argued that the standard for effectiveness does not require that every user of an OTC topical antifungal drug product gets complete relief (or prevention) for the condition for which he or she chose the product. The comment added that the monograph already requires a warning statement to consult a doctor if the product is not effective within the recommended treatment period.

4. Differences in labeling would occur between OTC drug products marketed under the monograph versus marketed under an approved application, resulting in consumer confusion. The comment noted that the amendment applies only to the monograph products and that FDA should coordinate label changes for all OTC products within a therapeutic category. The comment added that if monograph product labels are inconsistent with new drug application product labels for the same category of products, consumers could mistakenly believe that the monograph products are less effective because they are labeled to treat only “most” covered conditions.

The agency disagrees with the comment's request to decide against the proposed amendment and is responding to the comment's reasons in the order in which they appear in section II of this document.

1. As stated in the proposed amendment (64 FR 39452), the agency believes that addition of the qualifier “most” to the indications for OTC antifungal drug products would more accurately inform consumers what they can expect from using these products. When it proposed this labeling revision, the agency was aware of previous labeling claims it had discussed in the tentative final monograph (54 FR 51136 at 51154), as noted by the comment. The agency stated, at that time, that the claim “kills most athlete's foot fungi” was one of a number of claims that did not relate in a significant way to the safe and effective use of antifungal drug products that are labeled with the required information.

The agency notes that the Advisory Review Panel on OTC Antimicrobial (II) Drug Products (the Panel) discussed this claim in its report (47 FR 12480 at 12511, March 23, 1982). The Panel stated that “Many claims would appear to be acceptable; however, certain modifying words can make these claims unclear or even imprecise. For this reason, modifiers such as ‘most’ or ‘fast’ are not allowed.” The Panel then listed the claim “kills most athlete's foot fungi” as unacceptable.

As noted in the proposed amendment (64 FR 39452), the word “most” is currently used in the labeling of OTC vaginal antifungal drug products, which are marketed under new drug applications. This labeling has been in effect since late 1990 when these products were initially approved for OTC marketing. In making its decision to include the word “most” in the labeling of these products, the agency disagreed with the Panel and its previous position stated in the tentative final monograph for OTC antifungal drug products. The agency now considers it imprecise not to state in the labeling of all OTC antifungal drug products that they treat or cure or prevent “most” athlete's foot [and the other treatment claims listed in the monograph]. As discussed in the proposal (64 FR 39452), topical antifungal drug products will not cure or treat all conditions commonly thought by consumers to be athlete's foot or jock itch. In addition, data reviewed by the Panel for the various monograph ingredients showed that varying percentages of subjects were clinically and mycologically “cured.” The agency, therefore, concludes that inclusion of the word “most” in the labeling of these products is related to their effective use and will assist consumers in knowing better what to expect from using these products.

2. The agency disagrees with the comment's assertion that it is the agency's policy to omit effectiveness qualifiers. In addition, the use of a qualified indication statement resulting from addition of the word “most” is not unprecedented in the OTC drug review. The final monograph for OTC topical acne drug products contains the following indication statement in § 333.350(b)(2)(ii): “Penetrates pores to” (select one of the following: “eliminate most,” “control,” “clear most,” or “reduce the number of”) (select one or more of the following: “acne blemishes,” “acne pimples,” “blackheads,” or “whiteheads”). The agency notes that both acne and antifungal drug products are included in the same part 333 of the Code of Federal Regulations, entitled “topical antimicrobial drug products for over-the-counter human use.” As discussed above, the agency concludes that the qualifier “most” will assist consumers in knowing better what to expect from using these products.

3. The agency disagrees that a qualified indications statement is potentially misleading or that it implies inherent lack of efficacy of the active ingredient or questionable effectiveness of the drug product. The regulatory definition of effectiveness in § 330.10(a)(4)(ii) (see section II.3 of this document) provides sufficient latitude for the word “most” in describing the pharmacological effect of the drug and relief of the type claimed. Many indications in OTC drug monographs contain qualifiers of one kind or another, e.g., “helps,” “reduces,” “occasional,” “temporarily,” “temporary relief.” Even with this qualifier in the indications statement, these OTC drug products also contain a warning statement to consult a doctor if relief is not obtained, just as the topical antifungal drug products do. The agency concludes that the presence of such a warning statement in the product's labeling is not a sufficient basis not to have a qualified indications statement.

4. The agency does not intend for labeling differences to occur between topical antifungal drug products marketed under the monograph or an approved application. While the amendment applies only to the monograph products, the agency intends to notify all holders of approved new drug applications for OTC topical antifungal drug products to revise their product labeling in accord with the monograph by the effective date of the amendment. Thus, the labeling changes will have a coordinated effective date, and consumer confusion should not occur.

In conclusion, the agency is finalizing its proposal to amend the monograph indications statements by inserting the word “most” between the introductory phrase and the name of the condition(s) for which the OTC topical antifungal drug product is to be used. Accordingly, the agency is revising the indications in § 333.250(b)(1)(i) and (b)(2)(i) to add the word “most” after the introductory parenthetical “Select one of the following” choices and in § 333.250(b)(2)(ii) to add the word “most” after the word “up.” This “treats most” or “cures most” language must also be used whenever the alternative labeling approach allowed by § 330.1(c)(2) (21 CFR 330.1(c)(2)) is used or whenever a general statement containing this information appears in the labeling of the product (e.g., on the principal display panel).

FDA has examined the impacts of this final rule under Executive Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501et seq.). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). Under the Regulatory Flexibility Act, if a rule has a significant economic impact on a substantial number of small entities, an agency must analyze regulatory options that would minimize any significant impact of the rule on small entities. Section 202(a) of the Unfunded Mandates Reform Act requires that agencies prepare a written statement and economic analysis before proposing any rule that may result in an expenditure in any one year by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million (adjusted annually for inflation).

The agency believes that this final rule is consistent with the regulatory philosophy and principles identified in the Executive Order. In addition, the final rule is not a significant regulatory action as defined by the Executive Order and so is not subject to review under the Executive Order.

The purpose of this final rule is to make a minor revision in the indications for OTC topical antifungal drug products. This revision should improve consumers' self use of these products by better informing them about what they can expect from using the products.

The agency stated in the proposal that manufacturers of these products will incur minor costs to relabel their products to revise the indications statement and, in some cases, other statements that appear in product labeling (64 FR 39452 at 39453). The agency indicated that relabeling costs of the type required by this rule generally average about $2,000 to $3,000 per stockkeeping unit (SKU) (individual products, packages, and sizes). In determining this cost, the agency did not believe that manufacturers would need to increase the package size to make this minor labeling revision. Almost all of these products are marketed in an outer carton which should have adequate space for the minor labeling revision. The agency noted that approximately 50 manufacturers produce about 200 SKU's of OTC topical antifungal drug products marketed under the monograph. There may be a few additional small manufacturers or products in the marketplace that are not identified in the sources FDA reviewed. Assuming that there are about 200 affected OTC SKU's in the marketplace, FDA estimated that the rule would impose total one-time compliance costs on industry for relabeling of about $400,000 to $600,000. The agency did not receive any comments on these estimates.

The agency believes the actual cost could be lower for several reasons. First, most of the label changes will be made by private label small manufacturers that tend to use simpler and less expensive labeling. However, the final rule will not require any new reporting and recordkeeping activities. Therefore, no additional professional skills are needed. Second, the agency has made the compliance dates for this final rule the same as the dates for these monographed products to be in compliance with the new standardized format and standardized content requirements for the labeling of OTC drug products (21 CFR 201.66), which are now May 16, 2002 (and May 16, 2003, for products with annual sales less than $25,000). Thus, all required labeling changes can be made at the same time, thereby reducing the labeling cost of this final rule.

The agency considered but rejected several labeling alternatives: (1) A shorter or longer implementation period, and (2) an exemption from coverage for small entities. While the agency believes that consumers would benefit from having this new labeling in place as soon as possible, the agency also acknowledges that coordination of this labeling change with implementation of the new OTC “Drug Facts” labeling may significantly reduce the cost of this final rule. Both a shorter and a longer time period for this rule may cost more if firms would have to undertake two successive labeling revisions. In addition, a longer time period would unnecessarily delay the benefit of the new labeling to consumers who self-medicate with these OTC antifungal drug products. The agency rejected an exemption for small entities because the new labeling information is also needed by consumers who purchase products marketed by those entities.

Under the Unfunded Mandates Reform Act, FDA is not required to prepare a statement of costs and benefits for this final rule because this final rule is not expected to result in any one-year expenditure that would exceed $100 million adjusted for inflation.

This analysis shows that the agency has considered the burden to small entities. Thus, this economic analysis, together with other relevant sections of this document, serves as the agency's final regulatory flexibility analysis, as required under the Regulatory Flexibility Act.

FDA concludes that the labeling requirements in this final rule are not subject to review by the Office of Management and Budget because they do not constitute a “collection of information” under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Rather, the indications statements are a “public disclosure of information originally supplied by the Federal Government to the recipient for the purpose of disclosure to the public” (5 CFR 1320.3(c)(2)).

The agency has determined under 21 CFR 25.31(a) 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.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 333 is amended as follows:

The current regulation relating to temporary workers, at 22 CFR 41.53(a)(2), requires receipt by a consular officer of a petition approved by the INS (or notification of an INS-approved extension of stay in H status) as a basis for the issuance of a temporary worker visa to an otherwise eligible alien. This interim rule amends that regulation to accord with new INS and Department of Labor (DOL) regulations. They reflect a recent INS delegation to the Department of Labor of the sole authority to approve (or disapprove) petitions filed to accord the status of temporary agricultural worker on certain aliens. This interim rule will permit consular officers to accept petitions in this category approved by the Department of Labor. The amendments in this rule consist of an insert relating to the DOL approval of such petitions in both 22 CFR 41.53(a)(2) and 41.53(b).

The Department is publishing this rule as an interim rule, with a 60-day provision for public comments, based on the “good cause” exceptions set forth at 5 U.S.C. 553(b)(3)(B) and 553(d)(3). The change in INS and DOL regulations will become effective on November 13, 2000, as will this rule. That change simplifies and expedites procedures which benefit all employers of temporary agricultural workers, and therefore is in the interest of the United States. This rule gives consular effect to that change. The substance of this rule results solely from actions taken by the INS and DOL, over which the Department has no control.

Pursuant to section 605 of the Regulatory Flexibility Act, the Department has assessed the potential impact of this rule, and the Assistant Secretary for Consular Affairs hereby certifies that it is not expected to have a significant economic impact on a substantial number of small entities and will benefit those that engage temporary agricultural workers.

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

The Department of State does not consider this rule to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review, and the Office of Management and Budget has waived its review process under section (6)(a)(3)(A).

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement.

This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

The current regulation governing the waiver of visa fees for diplomats, on a reciprocal basis or as provided in the Headquarters Agreement with the United Nations, identifies the beneficiaries of the waiver by the classification of the visas they seek. In some instances, members of missions invited by the United Nations in observer status do not qualify for any of the applicable classifications and, instead, obtain B-1 visas for the purpose of attendance at the United Nations in observer capacity. This amendment will bring such individuals under the same umbrella with regard to visa fees as others at the United Nations.

Yes. Article 11 of the Headquarters Agreement identifies the persons who are to be granted certain privileges. The fifth category, although not using the term “observer mission”, clearly encompasses members of such units. Article 13 requires, among other things, that visas for persons covered by Article 11 be issued gratis.

In the past, most persons entering for the purpose of attendance at the United Nations obtained visas in one of the identified classifications. The few who didn't faced fees of negligible amounts and did not object to them. Over time, however, some reciprocal visa issuance fees, in particular, have become substantial, and the unintended but obvious inequity became a problem. This change in the regulation rectifies that problem.

The implementation of this rule as an interim rule, with a 60-day provision for post-promulgation public comments, is based on the “good cause” exceptions set forth at 5. U.S.C. 553(b)(3)(B) and 553(d)(3). The benefit conferred fulfills the international responsibility of the United States as host country. Delay of the benefit for public notice and comment is unnecessary.

Pursuant to Section 605 of the Regulatory Flexibility Act, the Department has assessed the potential impact of this rule, and the Assistant Secretary for Consular Affairs hereby certifies that it is not expected to have a significant economic impact on a substantial number of small entities.

The rule does not directly affect states or local governments or Federal relationships, does not create unfunded mandates, and does not have sufficient federalism implications to warrant preparation of a federalism assessment.

As required by 5 U.S.C., chapter 8, the Department has screened this rule and determined that it is not a major rule, as defined in 5 U.S.C. 80412.

This rule will not affect paperwork requirements.

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 allowed between the submission of the request by the U.S. Army 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. This rule should be made effective in less than 30 days due to the short time frame allowed between the submission of the request by the U.S. Army and the date of the event.

On May 30, 2000, the Department of Army Rock Island Arsenal requested a temporary change to the operation of the Rock Island Railroad & Highway Drawbridge across the Upper Mississippi River, Mile 482.9 at Rock Island, Illinois. The Rock Island Railroad Drawbridge navigation span has a vertical clearance of 23.8 feet above normal pool in the closed-to-navigation position. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. Presently, the draw opens on signal for passage of river traffic. The Rock Island Arsenal requested the drawbridge be permitted to remain closed-to-navigation from 7:30 a.m. until 11:30 a.m. on September 24, 2000. During this time a foot race will cross the bridge. This temporary drawbridge operation regulation has been coordinated with the commercial waterway operators. No objections to the proposed temporary rule were raised.

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 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 river traffic is not likely to be delayed more than 4 hours.

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.

This rule will be in effect for only 4 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 rule 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 Mr. Roger K. Wiebusch, Bridge Administrator, Eighth Coast Guard District, Bridge Branch, at (314) 539-3900, extension 378.

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), of Commandant Instruction M16475.1C, this rule is categorically excluded from further environmental documentation. Promulgation of changes to drawbridge regulations has been found not to have significant effect on the human environment. A “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under ADDRESSES.

The NetPost Mailing Online experiment is the third of an expected four-step process that will culminate in the establishment of a permanent NetPost Mailing Online service. The Postal Service first conducted an operations test from March through September 1998, with a few customers. That was followed by a one-year market test with limited customer participation conducted from October 1998 through October 1999, pursuant to the Postal Rate Commission's Docket No. MC98-1 Opinion and Recommended Decision issued on October 7, 1998, and approved by the Postal Service Governors on October 16, 1998. In that docket, the Postal Service also requested authorization to conduct an experiment, which request was later withdrawn by Board of Governors Resolution No. 99-5 (May 3, 1999).

On November 16, 1999, the Postal Service filed a new Request for a Recommended Decision on an Experimental Classification and Fee Schedule for Mailing Online based on an upgraded information technology platform. The PRC designated this request as Docket No. MC2000-2 and published a notice with a description of the Postal Service's proposals in the Federal Register on November 26, 1999 (64 FR 66514). The PRC issued a favorable Opinion and Recommended Decision (Docket No. MC2000-2) dated June 21, 2000.

Accepting a Stipulation and Agreement developed by the Postal Service with several other parties, the Commission also recommended an adjustment to the limited waiver of minimum volume requirements in order to extend to providers of functionally equivalent services the same postage rates payable under NetPost Mailing Online.

The Postal Service Governors approved the Opinion and Recommended Decision on August 7, 2000, and the Board of Governors set September 1, 2000, as the implementation date (Resolution No. 00/10).

The Postal Service views NetPost Mailing Online as fulfillment of its mandate to bind the nation together through the provision of secure and universal correspondence services to the public. The new “hybrid” service combines recent advances in electronic communications through the Internet, state-of-the-art printing technology, and conventional postal functions, thus creating an integrated service for the production, processing, and delivery of mail. Postal customers with access to a personal computer and the Internet will be able to create and transmit electronic documents to the Postal Service Web site. Their documents and address lists will be transmitted to one or more contract printers, who will then prepare them as hardcopy for mailing. The Postal Service maintains its commitment to the sanctity of mail by precluding others' access to or use of NetPost Mailing Online customers' electronic documents.

The NetPost Mailing Online service will appear from a user's perspective to be similar to the Mailing Online service that was offered during the market test. However, users will access the service by means of the Postal Service's main corporate Web site, usps.com, instead of PostOffice Online. In addition, the service will be available nationwide, rather than limited to five metropolitan areas and a few thousand customers.

During the market test, the Postal Service contracted with one printer to produce mailings for a relatively small number of customers. Currently, two printers are under contract with the Postal Service, one in Chicago and another in Philadelphia. The Postal Service plan for the experiment is to route mailpieces to the printer closest to their delivery address and to use as many printers as necessary for nationwide coverage. Printers will prepare the electronically transmitted mailpieces and address lists as automation basic rate mailings. NetPost Mailing Online thus helps to lower system costs by taking advantage of mail presorting, automation, and destination entry of mailings.

NetPost Mailing Online provides an affordable, convenient option that makes using the mails easier for Postal Service customers, especially those running small offices or home offices who do not currently use more traditional mailing services. It employs advanced technology that benefits customers who otherwise might not have access to sophisticated digital printing technology or to list management and presort software necessary to qualify for lower automation rates. The Postal Service will batch all submitted jobs and send them via dedicated lines to one or more commercial digital printing contractors who then print the documents, finish them according to customer specifications, place them in envelopes bearing a delivery point barcode, and enter them as mail at a postal facility. Mailings will be accepted and verified using manifesting documentation and procedures specified in DMM P710.

Small-volume customers will be able to create First-Class Mail and Standard Mail (A) mailings and have them entered at the automation basic rates. There is no minimum or maximum volume requirement. The service is ideally suited for newsletters, flyers, statements, invoices, and small direct mailings. Customers can mail both letters and flats using a number of different document format, binding, and envelope options.

The Postal Service plans to offer service for mailings of letters and flats at Standard Mail (A) nonprofit automation rates some time in the future. While mailings at Priority Mail rates, First-Class Mail card rates, and Express Mail rates are not offered at this time, they should become available later during the experiment. The same is true for some special services. In the near future, service for international Letters and Letter Packages will be available.

In a single Web site visit to usps.com, a NetPost Mailing Online customer will be able to upload a word processing document and a list of addresses to a postal data center. The NetPost Mailing Online system will presort and distribute the mailing electronically to contract printers for printing and entry into the mail at a local postal facility. Additional features of the service include online document proofing, a “file cabinet” that retains customer jobs for 30 days and offers document and mailing list management capabilities, real-time status reports of jobs submitted, and a quick calculator that provides immediate price quotations.

A typical customer will compose a document using conventional desktop publishing or word processing software; access the Postal Service Web site and select various printing, finishing, and payment options; submit a mailing list for standardization based on the Postal Service's current address database; and complete submission of the job by sending the electronic version of the document and a mailing list to the Web site. All uploaded documents and mailing lists will be available for online proofing, and customers will have the option to receive copies of their documents either through the mail or by fax at no additional charge.

The software applications that are supported are Microsoft Word 6.0 or later, WordPerfect 6.0 or later, PageMaker 6.5 or later, VENTURA 7.0 or later, and QuarkXPress 3.2 or later. Mailing lists can be created in Microsoft Word 6.0 or later, WordPerfect 6.0 or later, Microsoft Access 95 or later, Excel 5.0 or later, or an ASCII text file. The service is accessible by means of widely used Internet browsers: Netscape 4.03 or later, or Microsoft Internet Explorer 4.01 or later. Any browser used must support JavaScript 1.2 or later.

Each uploaded mailing list will be checked against the Postal Service's National Address Management System to standardize the addresses, including abbreviations, directionals, and ZIP Codes. (Move update requirements for address quality are being waived temporarily while work is completed to integrate the FASTforward system with NetPost Mailing Online.) Unverifiable addresses will be extracted and returned for review and correction by the customer. Any addresses not in compliance with postal addressing standards will be purged from the address list prior to quotation of a final price. However, at the customer's option, pieces having nonstandard addresses may be mailed at the First-Class Mail single-piece rate.

While the service has been designed for ease of use, the Postal Service recognizes that customers may need assistance from time to time. This assistance is likely to range from basic “how to” questions to complex questions about software compatibility. The Postal Service has made provision for users to obtain online support seven days a week during the hours of 7:00 a.m. through 11:00 p.m. (EST). Customers can either telephone 1-800-344-7779 toll free or send an e-mail message to icustomercare@usps.com.

Customers will pay online with a major credit card for the applicable postage, plus a fee for commercial printing charges and other costs, such as those related to information technology. Prices will take into account any differences in printing and production costs around the country. Fees for NetPost Mailing Online service will be 1.52 times the sum of printer contractual costs for the particular mailing and $0.005 per impression (printing on one side of a page) for other Postal Service costs. Price quotes will be provided online for each mailing that individual customers create and will vary depending on such factors as paper size, number of impressions, use of spot color, finishing option (folding, stapling, saddle stitching, tape binding, self-mailer tabbing), envelope type, and print site.

NetPost Mailing Online totals the postage and production costs and displays a price quote on-screen as an order is created. If a customer changes any selection while creating the order, the displayed postage and fees also will change to reflect the new selection. The price quotes thus enable a customer to see immediately the effect of a selection upon the total cost. Once all information pertaining to a customer's job, including document options, delivery addresses, credit card authorization, and final price, are known and confirmed, a customer approves the transaction. The transaction then becomes final, and the total cost is billed to the customer's credit card account by NetPost Mailing Online, in accordance with the terms and conditions of use for the program.

Like other postal customers, NetPost Mailing Online customers may decide whether their mailings will be sent as First-Class Mail or Standard Mail (A), subject to the eligibility requirements for each mail class contained in the Domestic Mail Manual.

To help customers choose the proper postage rate, a screen is provided in the NetPost Mailing Online software. This screen notifies customers that a mailing sent as Standard Mail (A) could be subject to the payment of additional postage if it is later found to be ineligible for Standard Mail (A) rates. Eligibility requirements for items mailed as Standard Mail (A) are found in DMM E611 and E612, and information about items required to be sent as First-Class Mail is found in DMM E110. Customers also are advised that they may either consult their local post office or review pertinent sections of the DMM online at http://pe.usps.gov.

On occasion, Standard Mail (A) rates may be claimed in error. In such cases, the Postal Service has determined that all of the traditional procedures applicable to a customer's direct entry of a hardcopy mailing cannot apply to the NetPost Mailing Online service, because it is likely that a rate eligibility problem for a NetPost Mailing Online mailpiece would first be discovered only at the time it is presented commingled with the mailpieces of other customers. The Postal Service believes that it would be inappropriate to delay entry of the entire multicustomer mailing while a problem that may involve only one customer's mail is resolved. With a traditional mailing, when a rate eligibility problem is discovered by a Postal Service employee at the time a mailer presents a mailing to a post office acceptance unit, the mailer has an immediate choice of either paying the difference between the applicable First-Class Mail and the claimed Standard Mail (A) postage before the mailing is accepted, or withdrawing the mailing without paying the additional amount. A mailer might also elect to immediately challenge and seek appeal of the classification decision being made at that time in order to resolve the problem so that the mailing can proceed without further delay. (See DMM G020.)

The NetPost Mailing Online customer who submits the ineligible and underpaid electronic version of the mailpieces as Standard Mail (A) could be thousands of miles away from the entry post office. Moreover, by the time a printer presents the mail to an acceptance unit, the Postal Service will have incurred transaction costs, such as those associated with the electronic transmission of documents, address verification, production costs for printing and finishing, and transportation to the entry post office. Therefore, while NetPost Mailing Online and the contract printers will be responsible for meeting mail presorting and preparation requirements, content eligibility and revenue issues will be resolved after mail has entered the postal system, in accordance with the terms and conditions of use for the program.

Entry post offices will continue to use random sampling procedures to verify mail classification and rate eligibility as part of the acceptance process. If a customer has improperly claimed Standard Mail (A) rates, the Postal Service will accept the NetPost Mailing Online mailing without delaying it and without requiring a postage adjustment at the time of mailing. Subsequently, the entry post office will notify the NetPost Mailing Online coordinator of the deficiency. NetPost Mailing Online will in turn advise the manager of business mail entry, Northern Illinois District, who is the designated national coordinator responsible for debiting the NetPost Mailing Online centralized trust account for any revenue deficiencies that originate at print sites.

NetPost Mailing Online will review the circumstances of the mailing. If the classification decision that matter was ineligible for Standard Mail (A) rates is based upon a customer's failure to abide by content restrictions, the Postal Service may take steps to recover the deficiency amount from the customer by advising the customer that its credit card account will be billed for the difference between the applicable First-Class Mail rate and the rate paid, in accordance with the terms and conditions of use for the program. NetPost Mailing Online will make this notification to the customer. At this time, the customer also will be advised that the classification decision and related revenue deficiency may be appealed by submitting a letter to the Program Manager, NetPost Mailing Online, U.S. Postal Service, 475 L'Enfant Plaza SW, Washington, DC 20260-4413. If the customer appeals, NetPost Mailing Online will refer the appeal to the rates and classification service center in Chicago, Illinois, for a final agency decision.

Under existing eligibility requirements for automation rates, First-Class Mail letters, flats, and cards must be prepared in minimum quantities of 500 pieces. Standard Mail (A) letters and flats must be prepared in minimum quantities of 200 pieces or 50 pounds of addressed mail. NetPost Mailing Online mailings that otherwise meet all addressing and machinability requirements for automation rates will be permitted entry at automation rates without meeting these minimum volumes. This same privilege also is available to other services that are functionally equivalent to NetPost Mailing Online after certification by the Postal Service.

The justification for such exceptions to otherwise applicable minimum volumes is based on expectations that NetPost Mailing Online volumes will usually exceed them (by a wide margin if the service is successful), deeper potential discounts will be foregone, processing costs will be inherently low, and the selection of a more appropriate set of current or new rate categories can await a permanent form of NetPost Mailing Online.

Certification of functional equivalence requires payment of a $100.00 fee and demonstration that the service is comparable to NetPost Mailing Online service and capable of all of the following as specified by the Postal Service:

a. Accepting documents and mailing lists from remote users in electronic form, such as via the Internet, or converting documents and mailing lists to electronic form.

b. Using the electronic documents, mailing lists, and other software, including USPS-certified sortation software that sorts to the finest level of sortation possible, to create barcoded mailpieces meeting the requirements for automation category mail, with 100 percent standardized addresses on all pieces claiming discounted rates.

c. Commingling mailpieces from all sources without diversion to any other system and batching them according to geographic destination prior to printing and mailing.

d. Generating volumes that exceed, on average, otherwise applicable minimum volumes.

The Postal Service is unaware of any existing functionally equivalent services, but is willing to work with interested parties as services are developed to improve the likelihood of certification.

Pursuant to 39 U.S.C. 3624, the PRC, on June 21, 2000, issued to the Governors of the Postal Service its Opinion and Recommended Decision on the Postal Service's request.

Pursuant to 39 U.S.C. 3625, the Governors acted on August 7, 2000 (Decision of the Governors of the United States Postal Service on the Recommended Decision of the Postal Rate Commission on an Experimental Classification and Fee Schedule for Mailing Online, Docket No. MC2000-2), to approve the PRC's recommendation, and per resolution the Board of Governors set an implementation date of September 1, 2000, for fee and classification changes to take effect.

This final rule contains the DMM standards adopted by the Postal Service to implement the Governors' decision. Because of the experimental nature of NetPost Mailing Online service and previous experience with the Mailing Online market test, the Postal Service finds no need to solicit comments on the standards for NetPost Mailing Online. However, comments are invited in the expectation that these rules are likely to be modified during the course of the experiment.

Throughout this document, “we,” “us” and “our” refer to EPA.

Table 1 lists the rule we are approving with the date that it was adopted by the local air agency and submitted by the California Air Resources Board (CARB).

On March 7, 2000, this rule submittal was found to meet the completeness criteria in 40 CFR part 51, appendix V, which must be met before formal EPA review.

We finalized a limited approval and limited disapproval of Rule 4661 on January 15, 1999 (64 FR 2573). The limited approval portion of that rulemaking incorporated Rule 4661 into the federally enforceable SIP and the limited disapproval portion of triggered sanctions and FIP clocks under sections 179(a) and 110(c) of the CAA. The SJVUAPCD adopted a revision to the SIP-approved version and CARB submitted it to us on the dates indicated in Table 1. This revision was submitted to correct the deficiency noted in EPA's January 15, 1999 rulemaking.

The rule revision identifies prohibitory rules referenced in the Exemptions section of the rule, thereby correcting the only rule deficiency noted in our January 15, 1999 rulemaking. The revision also adds definitions of terms used in the rule and specifies recordkeeping, testing and compliance requirements. The TSD has more information about this rule.

Generally, SIP rules must be enforceable (see section 110(a) of the Act) and must not relax existing requirements (see sections 110(l) and 193).

Guidance and policy documents that we used to define specific requirements include the following:

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations; Clarification to Appendix D of November 24, 1987 Federal Register document,” (Blue Book), notice of availability published in the May 25, 1988 Federal Register.

We believe this rule is consistent with the relevant policy and guidance regarding enforceability and SIP relaxations. The TSD has more information on our evaluation.

As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rule because we believe it fulfills all relevant requirements. We do not think anyone will object to this, so we are finalizing the approval without proposing it in advance. However, in the Proposed Rules section of this Federal Register, we are also proposing approval of the same submitted rule. If we receive adverse comments by September 28, 2000, we will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on October 30, 2000. This will incorporate the rule into the federally enforceable SIP and permanently terminate any sanctions or FIP clocks associated with our January 15, 1999 action.

VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires states to submit regulations that control VOC emissions. Table 2 lists some of the national milestones leading to the submittal of this local agency VOC rule.

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 (Public Law 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 takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This rule does not 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. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action 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 October 30, 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 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

This rulemaking approves revisions to limits in the Indiana State Implementation Plan (SIP) for two companies in Lake County, Indiana. The first company is Lever Brothers, for which the Indiana Department of Environmental Management (IDEM) requested emission limit revisions for particulate matter on February 3, 1999. The second company is Northern Indiana Public Service Company (NIPSCo), for which IDEM requested emission limit revisions for both particulate matter and sulfur dioxide limits on December 28, 1999.

This document is organized according to the following table of contents:

The principal revision IDEM requested for Lever Brothers concerned a limit on pounds of particulate matter emissions per hour for one emission point, specifically the milling and pelletizer soap dust collection system. This emission point is also subject to a limit on particulate matter emissions per standard cubic foot of air, but IDEM did not request that this latter limit be revised. Indiana included emission limits for this facility in the Lake County SIP for small particles (“PM10”) that EPA approved on June 15, 1995, at 60 FR 31413. According to the State, while the emissions per volume limit was correctly set, an erroneous multiplication of emissions per volume times capacity air volume flow rate yielded a mistakenly low value for the emissions per hour value. IDEM requested that the emissions per hour limit be raised to the corrected value.

2. What Is EPA's Evaluation of This Request?

The requested revision must be evaluated as a relaxation of the Lake County PM10 plan. As such, the principal criterion EPA must use is given in section 110(l) of the Clean Air Act, requiring that revisions must not “interfere with any applicable requirement concerning attainment and reasonable further progress * * * or any other applicable requirement.”

To address this criterion, IDEM performed a dispersion modeling analysis of PM 10 concentrations attributable to Lever Brothers and other Lake County sources. IDEM used virtually the same inputs and procedures as the attainment plan that EPA approved in 1995, except that IDEM used ISC3, a more current dispersion model, as well as the revised emission rate for Lever Brothers. This analysis demonstrated that, despite the slightly increased allowable emissions for Lever Brothers, the plan was still adequate to attain and maintain the air quality standards in the vicinity.

EPA believes the modeling analysis satisfies applicable guidance. EPA approved most aspects of the analysis in 1995, and finds the use of an updated dispersion model and revised emission rate to be necessary and sufficient. EPA concurs with IDEM's conclusion from this analysis that the revision for Lever Brothers does not interfere with attainment or any other relevant requirements of the Clean Air Act. Therefore, EPA finds IDEM's request for a revision of Lever Brother's limit to be approvable.

For Northern Indiana Public Service Company's (NIPSCo's) Dean Mitchell Station, IDEM requested revisions to SIP limits for both particulate matter and sulfur dioxide (SO 2). These revisions are intended to accommodate mixes of boiler use that are not allowed under restrictions in the current SIP. The current SIP prohibits NIPSCo from simultaneously operating both units 4 and 5 at the Dean Mitchell Station unless one of these boilers is burning natural gas. The revised rules that IDEM requested EPA to approve would allow operation of these units under any of three scenarios. The first scenario is essentially identical to the current SIP scenario. The second scenario would allow simultaneous operation of units 4, 5, 6, and 11, but would restrict total emissions to a slightly lower level than the current SIP by imposing a tighter limit on pounds per million British Thermal Units (mmBTU). The third scenario would allow operation of half the units, either units 4 and 5 or units 6 and 11, coupled with emission limits that are comparable to current SIP limits.

The following table summarizes the limits in the current and submitted rules. The first part of this table shows the limits for particulate matter, including columns for the pound per mmBTU and pound per hour limits for boilers 4 and 5 and for boilers 6 and 11, as well as a column showing the total allowable emissions from the plant in pounds per hour. The table includes rows for the limits currently in the SIP and the limits for each of the three scenarios in the submitted rule. These scenarios are labeled AA, BB, and CC, after the respective subparagraph numbers in 326 IAC 6-1-10.1(d)(33) of the submitted rule.

The second part of the table shows limits for SO2, and uses the same columns and similar rows as the particulate matter part. Nevertheless, two differences warrant comment. First, for particulate matter the SIP rule is the rule in existence immediately prior to Indiana's adoption of the submitted rule. For SO2, however, the SIP rule is an older rule with a higher limit than the submitted rule or the immediately preceding State rule. Thus, the table includes an extra row showing the reduced SO2 limits of an intermediate State rule, adopted after EPA approved the SIP rule but before the State adopted the rule being evaluated here. (The intermediate State rule has never been approved into the SIP, and is not being approved in today's rulemaking.) Second, neither the SIP rule nor the intermediate State rule for SO2 have limits on pounds of SO2 emissions per hour. The entries in these portions of the table, shown in parentheses, instead reflect a de facto limit found by multiplying the limit in pounds per mmBTU times the boiler capacities in mmBTU per hour.

The principal criterion for reviewing these rule revisions is their impact on air quality. To address this criterion, IDEM presented results of two types of atmospheric dispersion modeling. The first type of modeling evaluated the concentrations attributable to all sources in the area. The second type of modeling focused on the incremental impact of the revisions of the NIPSCo-Dean Mitchell limits.

The modeling for particulate matter impacts of the universe of Lake County sources was the same modeling the State submitted for Lever Brothers. In brief, this modeling was very similar to modeling performed for the Lake County PM10 SIP approved in 1995, except for updated model selection and incorporation of the revised limits. As with Lever Brothers, this updated modeling is acceptable, and EPA agrees with Indiana's conclusion from this modeling that no violations of the air quality standards are expected to result from the revision of NIPSCo's particulate matter limits. EPA did not review the single source modeling, insofar as the more comprehensive modeling provided a firmer basis on which to evaluate Indiana's request.

The situation for SO2 is more complicated. Indiana conducted modeling of the emissions allowed by the submitted limits. This modeling estimated SO2 concentrations well over both the 24-hour and the annual average air quality standards in the vicinity of NIPSCo's Dean Mitchell Station. Indiana states that the violation is predominantly due to a Marblehead Lime Company facility, and that other sources, including NIPSCo, contribute only 10.7 micrograms per cubic meter (μg/m3) to the violation. Indiana also examined the impact of the revision from intermediate limits to the submitted limits. Indiana found the resulting incremental increase in concentrations to be insignificant, based on a significance threshold given in EPA's emission trading policy statement published in 1986 for Level II modeling analyses.

Indiana's submittal focuses on the difference between the new limits and the intermediate limits that existed in the State's rules prior to adoption of these new limits. These two sets of limits are approximately equivalent. EPA, on the other hand, is focusing on the difference between the new limits and the limits in the SIP. As seen in the above table, the new limits are clearly tighter than the limits in the SIP.

EPA is not accepting Indiana's arguments for approving NIPSCo's new limits. While an attainment strategy for the relevant area must clearly focus on emissions from Marblehead Lime, NIPSCo has a sufficient impact that it must also be considered a candidate for further controls if needed to attain the standards. In addition, under EPA's emission trading policy statement, in footnote 39, EPA states that emission trades may not generally be approved if the trade would create or exacerbate a violation of the air quality standard.

On the other hand, from EPA's perspective, Indiana is not simply requesting approval of limits that are equivalent to existing SIP limits, but in fact is requesting a tightening of the SIP limits for this source. The revised limits will not achieve attainment, and therefore the submission does not fully meet the Clean Air Act applicable requirements for demonstrating attainment of the air quality standards. However, the submission will allow EPA to enforce emission levels under which the area would be closer to attainment than with the current SIP limits. EPA has authority to approve revisions that tighten limits, even if the revised limits are insufficient to assure attainment. EPA finds the revised limits approvable on that basis and for that limited SIP-strengthening purpose, but not for purposes of demonstrating attainment of the air quality standards.

EPA is also working with Indiana on the larger question of achieving attainment of the SO2 air quality standards. EPA approved Indiana's plan for meeting the SO2 standards in Lake County on January 19, 1989 (54 FR 2112) based on our belief at the time that the plan assured attainment. However, EPA has now become aware that modeling shows that portions of the county may still be violating these standards. Indiana has conducted analyses to indicate which sources contribute most significantly to these potential violations. EPA will be assisting Indiana in evaluating and adopting strategies for further emission reductions as needed to assure adequate protection of public health in Lake County. EPA intends to provide the State a reasonable period of time to devise and submit a plan that fully meets the Clean Air Act requirements for attainment, before taking further action to address the problem.

EPA is approving the limit revisions for Lever Brothers that Indiana requested on February 3, 1999. EPA is also approving the limit revisions for NIPSCo-Dean Mitchell Station that Indiana requested on December 28, 1999, for the limited purpose of strengthening the approved SIP. EPA is publishing this action without prior proposal because EPA views these as noncontroversial revisions and anticipates no adverse comments. However, in a separate document in this Federal Register publication, the EPA is proposing the action taken in this final rule. This final rule will be effective on October 30, 2000 unless, by September 28, 2000, adverse written comments are received.

If the EPA receives such comments, EPA will withdraw this final action before the effective date by publishing a subsequent document in the Federal Register. All public comments received will be addressed in a subsequent final rule based on the associated proposed rule. The EPA does not intend to provide a second comment period on this action. Any parties interested in commenting on this action should do so at this time. If no such comments are received, the public is advised that this action will be effective on October 30, 2000.

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and Review.”

Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

This rule is not subject to Executive Order 13045 because it does not involve decisions intended to mitigate environmental health or safety risks.

Under Executive Order 13084, EPA may not issue a regulation that is not required by statute, that significantly affects or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments, or EPA consults with those governments. If EPA complies by consulting, Executive Order 13084 requires EPA to provide to the Office of Management and Budget, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation. In addition, Executive Order 13084 requires EPA to develop an effective process permitting elected officials and other representatives of Indian tribal governments “to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.”

Today's rule does not significantly or uniquely affect the communities of Indian tribal governments. This action does not involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this rule.

Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

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, 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. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions.

This rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities. Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

Under sections 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule.

EPA has determined that the approval action promulgated does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action approves pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

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. Section 804, however, exempts from section 801 the following types of rules: rules of particular applicability; rules relating to agency management or personnel; and rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding this action under section 801 because this is a rule of particular applicability.

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical.

The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.

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 October 30, 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 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Comments. Comments and data may be submitted by electronic mail (e-mail) to: a-and-r-docket@epa.gov. Electronic comments must be submitted as an ASCII file to avoid the use of special characters and encryption problems and will also be accepted on disks in WordPerfect® version 5.1, 6.1 or Corel 8 file format. All comments and data submitted in electronic form must note the docket number A-92-45. No confidential business information (CBI) should be submitted by e-mail. Electronic comments may be filed online at many Federal Depository Libraries.

Commenters wishing to submit proprietary information for consideration must clearly distinguish such information from other comments and clearly label it as CBI. Send submissions containing such proprietary information directly to the following address, and not to the public docket, to ensure that proprietary information is not inadvertently placed in the docket: Attention: Mr. Robert Rosensteel, U.S. EPA, c/o OAQPS Document Control Officer, 411 W. Chapel Hill Street, Room 944, Durham, NC 27711. The EPA will disclose information identified as CBI only to the extent allowed by the procedures set forth in 40 CFR part 2. If no claim of confidentiality accompanies a submission when it is received by the EPA, the information may be made available to the public without further notice to the commenter.

Docket. The docket is an organized and complete file of all the information considered by the EPA in the development of this rulemaking. The docket is a dynamic file because material is added throughout the rulemaking process. The docketing system is intended to allow members of the public and industries involved to readily identify and locate documents so that they can effectively participate in the rulemaking process. Along with the proposed and promulgated standards and their preambles, the contents of the docket will serve as the record in the case of judicial review. (See section 307(d)(7)(A) of the Clean Air Act (CAA).) An index for each docket, as well as individual items contained within the dockets, may be obtained by calling (202) 260-7548 or (202) 260-7549. A reasonable fee may be charged for copying docket materials. Docket indexes are also available by facsimile, as described on the Office of Air and Radiation, Docket and Information Center Website at http://www.epa.gov/airprogm/oar/docket/faxlist.html. World Wide Web. In addition to being available in the docket, an electronic copy of this action is also available through the World Wide Web (WWW). Following signature, a copy of this action will be posted on the EPA's Technology Transfer Network (TTN) policy and guidance page for newly proposed or promulgated rules at http://www.epa.gov/ttn/oarpg. The TTN at EPA's web site provides information and technology exchange in various areas of air pollution control. If more information regarding the TTN is needed, call the TTN HELP line at (919) 541-5384.

Regulated Entities. Entities potentially regulated by this direct final rule include:

This table is not intended to be exhaustive, but rather provides a guide regarding entities likely to be affected by this action. To determine whether your facility is regulated by this rule, you should carefully examine the applicability criteria in 40 CFR part 63, subpart JJJ and in the proposed amendments to subpart JJJ (64 FR 11560). If you have any questions regarding the applicability of this rule to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section. Judicial Review. Under section 307(b)(1) of the CAA, judicial review of this direct final rule is available by filing a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit within December 27, 2000. Under section 307(b)(2) of the CAA, the requirements that are the subject of this direct final rule may not be challenged later in civil or criminal proceedings brought by the EPA to enforce these requirements.

The following outline is provided to aid you in reading the preamble to this direct final rule.

On September 12, 1996, we promulgated NESHAP for Group IV Polymers and Resins as subpart JJJ in 40 CFR part 63. The NESHAP establishes a new subcategory for PET manufacture specified as the continuous TPA high viscosity multiple end finisher subcategory. The NESHAP also establishes standards for PCCTs, contained in 40 CFR 63.1329, for existing affected sources in the new subcategory. The NESHAP requires existing affected sources in the continuous TPA high viscosity multiple end finisher subcategory to comply with 40 CFR 63.1329 beginning September 12, 1999. Subsequent to issuing the NESHAP, we extended the compliance date for the PCCT provisions contained in 40 CFR 63.1329 to February 27, 2001 (63 FR 15312).

A petition has been submitted to us requesting reconsideration of the technical basis for establishment of the continuous TPA high viscosity multiple end finisher subcategory (Docket: A-92-45). The petition presents new information related to the production processes for the manufacture of PET that the petitioner claims calls into question the need and justification for a separate subcategory for the continuous TPA high viscosity multiple end finisher process. The information presented in the petition has led us to accept the petitioner's request to reconsider the need for the continuous TPA high viscosity multiple end finisher subcategory.

There is a regulatory difference between the continuous TPA high viscosity multiple end finisher subcategory and other PET subcategories regarding the requirements to limit the concentration of ethylene glycol in PCCT for existing affected sources under the provisions contained in 40 CFR 63.1329. As a result of the petition for reconsideration, existing affected sources in this subcategory cannot be certain of subsequent amendments to the NESHAP.

In the past, representatives of one existing affected source in the continuous TPA high viscosity multiple end finisher subcategory informed us in writing (Docket: A-92-45) that they were on the verge of committing to capital expenditures to purchase equipment necessary to comply with the current PCCT standard. They did not want to commit to capital expenditures when the petition was still under consideration and requested relief from the PCCT standard. Because of the uncertainty regarding possible amendments to the final standard for PCCT, we provided a temporary extension of the compliance date to February 27, 2001 in a previous direct final rule (61 FR 15312).

As the February 27, 2001 compliance date approaches and we are still in the process of evaluating the petition to reconsider, the same need for relief from the compliance date exists. In addition, we have confirmed that the affected source in question cannot meet the current MACT standard for PCCT without making significant modifications to their existing recovery system which would require additional capital investment. Again, considering the level of uncertainty regarding possible amendment to the final standard for PCCT, the capital investment described above could be wasted if the control equipment installed to meet the current standards was not sufficient to meet subsequent amended standards. Therefore, we are now providing, under CAA section 301(a), an indefinite stay of the compliance date for the PCCT standard applicable to the continuous TPA high viscosity multiple end finisher subcategory.

This indefinite stay applies only to the PCCT emission limitation at existing affected sources producing PET using the continuous TPA high viscosity multiple end finisher process. It does not affect any other provisions of the NESHAP applying to this subcategory or any other subcategories. We intend to complete our reconsideration of the NESHAP and, following the notice and comment procedures of CAA section 307(d), take appropriate action as expeditiously as practical. We do not believe this stay will, as a practical matter, affect the overall effectiveness of the NESHAP. Following our reconsideration of the NESHAP, we will establish a new compliance date for the provisions contained in 40 CFR 63.1329.

We are publishing this direct final rule without prior proposal because we view this stay to be noncontroversial, and we anticipate no adverse comments. In addition, we believe that the “indefinite stay” of the compliance date associated with the PCCT standard should become effective as soon as possible. However, in the “Proposed Rules” section of today's Federal Register, we are publishing a separate document that will serve as a proposal to stay the compliance date associated with the PCCT standard if adverse comments are filed. This rule will be effective on October 30, 2000 without further notice unless we receive adverse comment on this direct final rule by September 28, 2000. If we receive an adverse comment on this action, we will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

We are issuing a stay of the existing source compliance date associated with the PCCT standard for the Group IV (subpart JJJ) Polymers and Resins NESHAP for existing affected sources producing PET using the continuous TPA high viscosity multiple end finisher process. Specifically, we are staying the provisions in 40 CFR 63.1311(c) by adding a note at the end of this paragraph explaining that the compliance date for the provisions of 40 CFR 63.1329 for existing affected sources producing PET using the continuous TPA high viscosity multiple end finisher process is stayed indefinitely.

This stay will affect you if you are the owner or operator of an existing affected source subject to the Group IV Polymers and Resins NESHAP that produces PET using the continuous TPA high viscosity multiple end finisher process and operate a PCCT. You will not be required to comply with the requirements for PCCT found in 40 CFR 63.1329 by February 27, 2001. Also, you will not be required to comply with the associated monitoring, recordkeeping, and reporting provisions at that time. When the final amendments to the NESHAP are promulgated, we will issue a new compliance date(s), providing you with a reasonable amount of time in which to comply with the amended NESHAP.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the EPA must determine whether the regulatory action is “significant” and therefore subject to Office of Management and Budget (OMB) review and the requirements of the Executive Order. The Executive Order defines “significant regulatory action” as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or adversely affect, in a material way, the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

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

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

(4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The EPA has determined that this rule does not meet any of the criteria enumerated above and therefore, does not constitute a “significant regulatory action” under the terms of Executive Order 12866 and was not required to be reviewed by OMB.

Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any rule that: (1) is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that the EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the EPA must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the EPA.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and it is based on technology performance and not on health or safety risks.

For the Group IV Polymers and Resins NESHAP, the information collection requirements (ICR) were submitted to OMB under the Paperwork Reduction Act. At promulgation, OMB had already approved the ICR (#1737.01) and assigned OMB control number 2060-0351.

An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15. The EPA has amended 40 CFR 9.1 to include the OMB control number assigned to the Group IV Polymers and Resins NESHAP.

This action has no impact on the information collection burden estimates made previously. Therefore, the ICR has not been revised. Also, since this action will stay the compliance date indefinitely, an ICR is not needed.

The EPA has determined that it is not necessary to prepare a regulatory flexibility analysis in connection with this direct final rule. The EPA has determined that this rule will not have a significant economic impact on a substantial number of small entities. Only one entity is subject to the PCCT standard, and it is not a small entity. In addition, this rule will relieve regulatory burden for all entities subject to the PCCT standard.

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. The 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. A major rule cannot take effect until 60 days after it is published in the Federal Register. This rule is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective October 30, 2000.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires the EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least-burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows the EPA to adopt an alternative other than the least-costly, most cost-effective, or least-burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before the EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

The EPA has determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in aggregate, or the private sector in any 1 year. Instead, this rule provides additional time to comply with certain requirements of the Group IV Polymer and Resins NESHAP. Thus, today's rule is not subject to the requirements of sections 202 and 205 of the UMRA.

We also have determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. This rule does not impose any enforceable duties on small governments, i.e., they own or operate no sources subject to this rule and therefore are not required to purchase control systems to meet the requirements of this rule.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires the EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.”

Under section 6 of Executive Order 13132, the EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or the EPA consults with State and local officials early in the process of developing the proposed regulation. The EPA also may not issue a regulation that has federalism implications and that preempts State law, unless the EPA consults with State and local officials early in the process of developing the regulation.

This rule does not have federalism implications. It 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. This rule merely provides additional time for one facility, which is not owned or operated by a State or local government, to comply with certain requirements of the Group IV Polymers and Resins NESHAP. Thus, the requirements of section 6 of Executive Order 13132 do not apply to this direct final rule.

Under Executive Order 13084, the EPA may not issue a regulation that is not required by statute, that significantly or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments, or the EPA consults with those governments. If the EPA complies by consulting, Executive Order 13084 requires the EPA to provide to OMB, in a separately identified section of the preamble to the rule, a description of the extent of the EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation. In addition, Executive Order 13084 requires the EPA to develop an effective process permitting elected and other representatives of Indian tribal governments “to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.”

This direct final rule does not significantly or uniquely affect the communities of Indian tribal governments. This action imposes no enforceable duties on these entities. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this rule.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, (15 U.S.C. 272 note), directs all Federal agencies to use voluntary consensus standards instead of government-unique standards in their regulatory activities unless to do so would be inconsistent with applicable law or would be otherwise impractical. Voluntary consensus standards are technical standards (e.g., material specifications, test method, sampling and analytical procedures, business practices, etc.) that are developed or adopted by one or more voluntary consensus standards bodies. Examples of organizations generally regarded as voluntary consensus standards bodies include the American Society for Testing and Materials (ASTM), the National Fire Protection Association (NFPA), and the Society of Automotive Engineers (SAE). The NTTAA requires Federal agencies like the EPA to provide Congress, through OMB, with explanations when the EPA decides not to use available and applicable voluntary consensus standards.

This action does not involve technical standards. Therefore, the EPA did not consider the use of any voluntary consensus standards.

This is a summary of an Order on Reconsideration of the Third Report and Order, Fifth Report and Order (Order on Reconsideration, Fifth Report and Order) in the Commission's Part 1—Competitive Bidding proceeding adopted July 27, 2000 and released August 14, 2000. The complete text of this Order on Reconsideration, Fifth Report and Order 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 an Order on Reconsideration, Fifth Report and Order in its Part 1—Competitive Bidding proceeding, clarifying and amending general competitive bidding rules for all auctionable services. These modifications are intended to increase the efficiency of the competitive bidding process and provide more specific guidance to auction participants. In the past, the Commission adopted separate competitive bidding rules for each auctionable service. This rule making is part of the Commission's ongoing effort to establish a uniform and streamlined set of general competitive bidding rules for all auctionable services and to reduce the burden on both the Commission and the public of conducting service-specific auction rule makings.

2. In 1994, in implementing the Omnibus Budget Reconciliation Act of 1993, the Commission prescribed certain general competitive bidding rules and procedures, indicating that it would use these general rules and procedures as a basis for adopting specific competitive bidding rules for each auctionable service. See Implementation of Section 309(j) of the Communications Act—Competitive Bidding, PP Docket No. 93-253, Second Report and Order, 59 FR 22980 (May 4, 1994) (“Competitive Bidding Second Report and Order”). See Implementation of Section 309(j) of the Communications Act—Competitive Bidding, PP Docket No. 93-253, Second Memorandum Opinion and Order, 59 FR 44272 (August 26, 1994). In 1997, after completing 15 spectrum auctions and adopting service-specific bidding rules for each such auction, the Commission initiated a proceeding to expand the general competitive bidding rules, contained in part 1, subpart Q of its rules, and replaced any inconsistent or repetitive service-specific auction rules. See Amendment of Part 1 of the Commission's Rules—Competitive Bidding Proceeding, WT Docket No. 97-82, Order, Memorandum Opinion and Order and Notice of Proposed Rule Making, (“Part 1 NPRM”) 62 FR 13570 (March 21, 1997). The most recent comprehensive order in this proceeding was the Third Report and Order, 63 FR 2315 (January 15, 1998), and Second Further Notice of Proposed Rule Making, 63 FR 770 (January 7, 1998), (“Part 1 Third Report and Order” and “Second FNPRM”). In the Order on Reconsideration, the Commission addresses petitions for reconsideration and comments filed in response to the Part 1 Third Report and Order. The Fifth Report and Order addresses comments filed in response to the Second FNPRM, and the Fourth FNPRM, published elsewhere in this issue of the Federal Register, and adopted herein seeks comment on additional proposals relating to the general competitive bidding rules.

3. In this Order on Reconsideration the Commission:

• Amends § 1.2105(c)(1) of its rules to clarify that the prohibition on collusion begins on the filing deadline for short-form applications and ends on the down payment deadline.

• Clarifies and corrects the ownership disclosure requirements contained in § 1.2112 of its rules. In particular, with respect to entities not seeking designated entity status, the Commission eliminates the requirement to include debt and instruments such as warrants, convertible debentures, options and other debt interests in reporting their ownership interests.

• Amends § 1.2104(g)(1) of its rules to clarify that in the case of multiple bid withdrawals on a single license, within the same or subsequent auction(s), the payment for each bid withdrawal will be calculated based on the sequence of bid withdrawals and the amounts withdrawn. The Commission further clarifies that no withdrawal payment will be assessed for a withdrawn bid if either the subsequent winning bid or any of the intervening subsequent withdrawn bids, in either the same or subsequent auction(s), equals or exceeds that withdrawn bid. In addition, the Commission amends § 1.2104(g)(1) of its rules to provide that in instances in which bids have been withdrawn on a license that is not won in the same auction, the Commission will assess an interim withdrawal payment equal to 3 percent of the amount of the bid withdrawals.

• Retains, for the most part, the installment payment grace period and late payment fee provisions adopted in the Part 1 Third Report and Order, but adopts a slight modification to the payment due dates for late installment payments and associated late fees.

• Clarifies that licensees continue to have the opportunity to seek restructuring of installment payments. There is, however, no longer a procedure for requesting a grace period to stay installment payment deadlines pending such restructuring. Rather, licensees will be subject to the automatic late payment provisions of § 1.2110(g) as adopted herein.

• Clarifies that the assignee or transferee of a license paid for through installment payments is not responsible for the license debt until the assignment of license or transfer of control has been consummated.

• Clarifies that the unjust enrichment rules for bidding credits (§ 1.2111(d) of the Commission's rules) do not apply to assignments or transfers of C and F block licenses to non-entrepreneurs. The Commission further clarifies that pursuant to §§ 1.2111(c) and (d) of its rules, Commission approval of assignments of licenses and transfers of control that result in unjust enrichment with respect to bidding credits and installment payments is conditioned upon full payment of the required unjust enrichment payments on or before the consummation date.

• Clarifies that licensees defaulting on installment payments are subject to the default provisions of § 1.2110(f)(4) of its rules (redesignated herein as § 1.2110(g)(4)), and not to § 1.2104(g).

• Incorporates into the part 1 general competitive bidding rules the “former defaulter” policies adopted with respect to C block auction applicants. Specifically, the Commission: (i) allows “former defaulters,” i.e., applicants that have defaulted or been delinquent in the past, but have since paid all of their outstanding non-tax debts and all associated charges or penalties, to certify on FCC Form 175 that they are not in default and are, therefore, eligible for auction participation; and (ii) requires “former defaulters” to pay an upfront payment amount of 1.5 times the normal amount set by the Bureau for any given license in a Commission auction.

• Clarifies that licensees defaulting on installment payments will be permitted to participate in future Commission spectrum auctions if they have either (i) paid all of their outstanding non-tax debt, along with all associated charges and penalties; or (ii) been relieved of such obligations pursuant to otherwise applicable law. In all instances, installment payment defaulters eligible to participate in future auctions will be required to pay an upfront payment amount of 1.5 times the normal amount set by the Bureau for any given license in a Commission auction to assure their future financial soundness.

4. In this Fifth Report and Order the Commission:

• Declines, at this time, to adopt special provisions for minority-and women-owned businesses pending completion of a series of market studies to determine whether, and under what circumstances, targeted preferences for minorities and women are appropriate. The Commission notes, however, that minority-and women-owned businesses that qualify as small businesses may take advantage of the provisions the Commission has adopted for small businesses.

• Declines, at this time, to adopt special provisions for rural telephone companies, such as bidding preferences or an unserved area fill-in policy. The Commission notes, however, that it will continue to provide rural telephone companies with bidding credits should such entities qualify as small businesses.

• Adheres to the Commission's previous decision to suspend the installment payment program. The Commission will, however, continue to provide small businesses with bidding credits as it has done in auctions for a number of services, e.g., the Local Multipoint Distribution Service (“LMDS”), Location and Monitoring Service (“LMS”), 220 MHz and VHF Public Coast services.

• Adopts as its general attribution rule a controlling interest standard for determining which applicants qualify as small businesses. Under this standard, the Commission will attribute to the applicant the gross revenues of its controlling interests and their affiliates in assessing whether the applicant qualifies for its small business provisions, such as bidding credits. The Commission does not adopt a minimum equity threshold. Rather, applicants will be required to identify controlling interests based on the principles of either de jure or de facto control. Current C and F block licensees will continue to be eligible to hold their licenses regardless of whether or not they would qualify under the newly established attribution rules adopted herein. As to future C and F block auctions, however, all applicants, including existing C and F block licensees, will be subject to the attribution rules in effect at the time of filing their short-form applications.

• Maintains its rule of calculating default payment amounts on a license-by-license basis and implements the Balanced Budget Act provisions regarding administrative filing periods as set forth here.

• Delegates to the Wireless Telecommunications Bureau the authority to make any revisions to the Code of Federal Regulations that are necessary to conform the service-specific auction rules to the part 1 general competitive bidding rules.

5. In response to the Part 1 Third Report and Order, the Commission received seven petitions for reconsideration and two comments in support of the petitions for reconsideration. A list of the parties that filed pleadings in response to the Part 1 Third Report and Order, and the abbreviations used to refer to such parties, is included in Appendix B of the complete document. The petitioners raise various issues regarding installment payments for auction-won licenses. For the reasons discussed here, the Commission clarifies certain rules at petitioners' request and dismiss or deny these petitions in all other respects. Further, the Commission addresses comments filed in response to the ULS NPRM that relates to aspects of its auction rules. See Biennial Regulatory Review—Amendment of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission's Rules to Facilitate the Development and Use of the Universal Licensing System in the Wireless Telecommunications Services, WT Docket No. 98-20, Notice of Proposed Rulemaking, 63 FR 16938 (April 7, 1998) (“ULS NPRM”). In addition, the Commission takes this opportunity to clarify, on its own motion, certain aspects of the Part 1 Third Report and Order.

6. Background. Section 1.2105(c)(1) of the Commission's rules generally prohibits collusion between competing bidders from “after the filing of short-form applications * * * until after the high bidder makes the required down payment * * *” See 47 CFR 1.2105(c)(1). The Commission's bidder information packages generally state that “[t]his prohibition begins with the filing of short-form applications, and ends on the down payment due date.” The Commission's Public Notices specifically provide that the collusion prohibition becomes effective on the “filing deadline of short-form applications” and ends on the “post-auction down payment due date.” To avoid any confusion regarding when the prohibition on collusion begins and ends, the Commission believes it is necessary to amend § 1.2105(c)(1) of its rules.

7. Discussion. On its own motion, the Commission amends § 1.2105(c)(1) of its rules to provide that applicants are prohibited from communicating with each other about bids, bidding strategies, or settlements from “after the short-form application filing deadline * * * until after the down payment deadline * * *.” This rule change makes clear that competing bidders may not engage in communications prohibited by the rule from the date that short-form applications are due to the Commission until after the down payment deadline has passed. The amendment affirms that there is a uniform date for all bidders on which restrictions on communications begin and end.

8. Background. In the Part 1 Third Report and Order, the Commission concluded that detailed ownership information is necessary to ensure that applicants claiming designated entity status qualify for such status and that all applicants comply with spectrum caps and other ownership limits. The Commission also stated that disclosure of ownership information helps bidders identify entities that are subject to its anti-collusion rules. To these ends, the Commission promulgated § 1.2112, based on its broadband PCS rules, to serve as a uniform ownership disclosure rule for all auctionable services.

9. Discussion. Because a number of applicants in the Phase II 220 MHz auction found § 1.2112 confusing, the Commission has decided, on reconsideration, to reorganize the rule in a more logical, straightforward manner. The Commission first revised § 1.2112(b)(1) to use the term “controlling interest” to describe the parties whose connection or relationship with another FCC-regulated business must be reported under (b)(1). A “controlling interest” includes individuals or entities, or groups of individuals or entities, that have control of the applicant under the principles of either de jure or de facto control as discussed herein. Then, because identification of controlling interests is significant only for applicants claiming designated entity status, the Commission includes those reporting requirements related to such status in paragraph (b), which applies only to applicants claiming eligibility for small business provisions. The Commission also corrects the rule to indicate that gross revenues must be reported not only on the long-form application, but also on the short-form application.

10. In addition, the Commission corrects § 1.2112(a)(3) in which it used language that was overly broad. Section 1.2112(a)(3) states erroneously that an applicant must provide: “[a] list of any party holding a 10 percent or greater interest in any entity holding or applying for any FCC-regulated business in which a 10 percent or more interest is held by another party which holds a 10 percent or more interest in the applicant.” This language has the unintended effect of requiring the reporting of parties with a distant relationship to the applicant. Section 1.2112(a)(3), however, also provides the following example: “If Company A owns 10 percent of Company B (the applicant) and 10 percent of Company C then Companies A and C must be listed on Company B's application.” The rule's example accurately reflects which parties the Commission intended the applicant to report. That is, when a company (Company A) that must be reported under the rule because of its ownership interest in the applicant (Company B) also owns at least 10 percent of another company that is an FCC-licensed entity or applicant for an FCC license (Company C), Company C must be reported. The Commission's intent was to require that FCC-regulated entities be reported when there is a connection between such an entity and the applicant at issue through a common owner. The Commission therefore amends § 1.2112 to better reflect its intent and comport with the example provided in the rule. In addition, the Commission amends § 1.2112 to require applicants to disclose, in the case of a limited liability company, only those members that hold a 10 percent or greater interest in the applicant. Section 1.2112(a)(8), as adopted in the Part 1 Third Report and Order, required applicants to disclose all members of a limited liability company, regardless of their ownership interest in the applicant. The Commission now revises the disclosure requirement pertaining to limited liability companies to be consistent with those regarding limited partnerships. Finally, the Commission changes other aspects of the sequencing so that the revised rule begins by seeking general information in § 1.2112(a)(1) through (a)(4) and becomes progressively more detailed in (a)(5) and (a)(6). This “building block” approach is intended to provide applicants with a clearer understanding regarding the information that must be disclosed.

11. The Commission also takes this opportunity to address relevant comments that were filed separately in response to the ULS NPRM. In comments on the ULS NPRM, commenters object to the breadth of information collected in § 1.2112. In particular, they argue that the requirement to identify direct and indirect owners with an interest of 10 percent or greater is burdensome and overly broad. The Commission disagrees, and believes that the 10 percent reporting requirement helps competing, bidders accurately assess the legitimacy of their auction opponents and their respective bids. As discussed in the Part 1 Third Report and Order, the collection of detailed ownership information is necessary for ensuring compliance with ownership limits, such as spectrum caps. 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 agrees with commenters, however, that § 1.2112 could be less burdensome in certain regards. Therefore, except for entities claiming special eligibility or designated entity status, the Commission will not require applicants to include information regarding warrants, convertible debentures, stock options, debt securities or other debt interests as part of the 10 percent reporting requirement unless and until conversion of such interests is effected. Generally, the Commission has not included such interests in calculating ownership interests under rules establishing various ownership limits. See 47 CFR 20.6(d) (CMAS spectrum cap), 22.942(d) (cellular cross-interest), 73.3555 Note 2 (broadcast multiple ownership), and 76.501 Note 2 (cable cross-ownership). The Commission agrees with commenters that the current reporting burden imposed on applicants may exceed the benefit of requiring disclosure of these interests. The Commission continues to believe, however, that in calculating ownership interests for the purpose of determining designated entity status and eligibility for bidding credits, warrants, convertible debentures, options and other debt interests must be treated as having been exercised and must be reported as part of the applicant's disclosure. In the case of applicants seeking special eligibility or designated entity status, the Commission has traditionally treated these interests as being fully diluted because it is reaching determinations regarding the bona fide nature of the applicant. See 47 CFR. § 24.813 (1997). This section was subsequently removed from the Code of Federal Regulations. See Biennial Regulatory Review—Amendment of Parts 0, 1, 13, 22, 24, 26, 27, 80, 87, 90, 95, 97, and 101 of the Commission's Rules to Facilitate the Development and Use of the Universal Licensing System in the Wireless Telecommunications Services, WT Docket No. 98-20, ULS Report and Order, 63 FR 68904 (December 14, 1998). Thus, the Commission agrees that it is reasonable for it to require more ownership information from these entities where such information is designed to show that the special eligibility and/or bidding credit is both legitimate and warranted.

12. Background. Section 1.2104(g)(1) of the Commission's rules sets forth the payment obligations of a bidder that withdraws a high bid on a license during the course of an auction. Specifically, it provides that a bidder that withdraws a standing high bid is subject to a payment equal to the difference between the amount of the withdrawn bid and the amount of the subsequent winning bid the next time the license is offered by the Commission. As the auctions program has evolved, however, the Commission has encountered situations involving multiple bid withdrawals on a single license, which are not specifically addressed by § 1.2104(g)(1) of the Commission's rules. The Commission, therefore, believes it is necessary to broaden its rule to clarify its application to this particular contingency. In addition, the Commission wishes to modify § 1.2104(g)(1) to more specifically articulate its policy of assessing interim bid withdrawal payments.

13. Discussion. On its own motion, the Commission clarifies a policy that the Bureau has relied on in the past. If a bidder withdraws its bid and there is no higher bid in the same or subsequent auction(s), the bidder that withdrew its bid is responsible for the difference between its withdrawn bid and the net high bid in the same or subsequent auction(s). In the case of multiple bid withdrawals on a single license, within the same or subsequent auction(s), the payment for each bid withdrawal will be calculated based on the sequence of bid withdrawals and the amounts withdrawn. No withdrawal payment will be assessed for a withdrawn bid if either the subsequent winning bid or any of the intervening subsequent withdrawn bids, in either the same or subsequent auction(s), equals or exceeds that withdrawn bid. Thus, a bidder that withdraws a bid will not be responsible for any withdrawal payments if there is a subsequent higher bid in the same or subsequent auction(s). This policy allows bidders to most efficiently allocate their resources as well as to evaluate their bidding strategies and business plans during an auction while, at the same time, maintaining the integrity of the auction process. The Bureau retains the discretion to scrutinize multiple bid withdrawals on a single license for evidence of anti-competitive strategic behavior and take appropriate action when deemed necessary.

14. The Commission also wishes to modify § 1.2104(g)(1) of its rules to state more specifically its policy of assessing interim bid withdrawal payments. The Commission amends § 1.2104(g)(1) to provide that in instances in which bids have been withdrawn on a license that is not won in the same auction, the Commission will assess an interim withdrawal payment equal to 3 percent of the amount of the bid withdrawals. The 3 percent interim payment will be applied toward any final bid withdrawal payment that will be assessed at the close of the subsequent auction of the license. Assessing an interim bid withdrawal payment ensures that the Commission receives a minimal withdrawal payment pending assessment of any final withdrawal payment.

15. Background. The installment payment rules, adopted in the Competitive Bidding Second Report and Order, permitted a licensee to make an installment payment up to 90 days after the due date without a late payment charge and without being considered in default. A licensee whose installment payment was more than 90 days past due, however, was in default, unless a “grace period” request was filed prior to the payment due date. See 47 CFR § 1.2110(b)(4)(x)(E)(4)(i) and (ii) (1994). Specifically, in anticipation of default on one or more installment payments, a licensee could request that the Commission grant a three to six month grace period during which no installment payments need be made. The licensee would not be declared in default during the pendency of such request. Grant of the request would result in the licensee not being considered in default during the grace period, and the interest that accrued while no payments were made would be amortized over the remaining term of the license. Following the expiration of any grace period without successful resumption of payment, or upon denial of a grace period request, or default with no such request submitted, the license would cancel automatically.

16. In the Part 1 Third Report and Order, the Commission modified the grace period provisions as applied to all licensees participating in an installment payment plan at that time. These provisions took effect on March 16, 1998. Thus, beginning with installment payments due on or after March 16, 1998, a licensee that did not make an installment payment when due automatically had an additional 90 days in which to submit its required payment without being considered delinquent, but was assessed a late payment fee equal to 5 percent of the amount of the past due installment payment. If the licensee failed to make the required payment within the first 90-day period, the licensee was automatically provided a subsequent 90 days to submit its required payment without being considered delinquent, this time subject to a second, additional late payment fee equal to 10 percent of the amount of the past due installment payment. The licensee was not required to submit a request to take advantage of these provisions. A licensee that failed to make payment within 180 days after an installment payment due date sufficient to pay all past due late payment fees, interest, and principal, was deemed to have failed to make full payment of its obligation and the license was automatically cancelled without further Commission action. The late payment fee and automatic cancellation provisions described did not apply to licensees with grace period requests that were properly filed prior to the effective date of the Part 1 Third Report and Order until such time as the Commission (or the Bureau upon delegated authority) addressed these grace period requests.

17. Discussion. All petitioners oppose some aspect of the modified provisions relating to the submission of late installment payments. In challenging the modified late payment provisions, petitioners generally argue that: (i) they are unfair, punitive, and commercially unreasonable; (ii) they constitute impermissible retroactive rulemaking as applied to licensees currently participating in the installment payment plan; and (iii) they violate basic contract principles. The Commission addresses each of these arguments in turn.

18. While installment payments must be timely, the Commission's grace period provisions provide limited relief for entities that find themselves in financial distress. Petitioners claim that the revised late payment provisions are unfair because, in determining auction and construction strategies, petitioners had relied on the availability of a 90-day non-delinquency period and deferral of payment obligations while grace period requests remained pending. The Commission's late payment provisions, however, were not intended to serve as a tool that licensees might use in their normal course of planning auction strategy and build-out. These provisions are provided for extraordinary circumstances—instances of financial distress—for which temporary relief is appropriate. Petitioners' assertions of reliance on such provisions for any other purpose are misplaced. Petitioners also claim that it is punitive and commercially unreasonable to impose the same late payment fee amount whether the payment arrives one day late or ninety days late. The Commission disagrees. The Commission's fundamental goal in adopting the late payment provisions is to encourage payment by the due date. Achievement of this goal is best attainable by adhering to the 5 percent and 10 percent late payment fee schedule the Commission has adopted. A prorated approach towards late fees could serve as a disincentive to licensees to pay on time and, thereby, undermine achievement of the Commission's basic goal. As the Commission stated in the Part 1 Third Report and Order, the Commission's “approach is consistent with the standard commercial practice of establishing late payment fees and developing financial incentives for licensees to resolve capital issues before payment due dates.” Further, the approach the Commission has taken is a commercially reasonable debt management practice used with respect to a variety of debt instruments from credit cards to mortgages. Therefore, the Commission disagrees with petitioners' claims that the revised late payment provisions are unfair, punitive, and commercially unreasonable.

19. Petitioners also contend that the regulatory changes to the installment payment program adopted in the Part 1 Third Report and Order are unlawfully retroactive, insofar as they could have an adverse effect on the previously established installment payment obligations. For example, a commenter claims that the revised late payment rules unsettle the expectations of licensees that opted to pay for licenses in installments. Another commenter argues that a “rule” under the Administrative Procedure Act (“APA”) is supposed to embody “the whole or a part of any agency statement of general or particular applicability and future effect. * * *” These arguments do not withstand analysis.

20. The Commission's new Part 1 rules do not violate the prohibitions on “primary retroactivity” under the APA as set forth in Supreme Court cases such as Bowen v. Georgetown Univ. Hospital, 488 U.S. 204 (1988). The Commission has not, for example, gone back to past transactions and imposed new penalties for conduct, which was previously allowed by its rules. Rather, the Commission here merely prescribed rules for the future, i.e., prospective procedures by which licensees remit installment payments after March 16, 1998, the effective date of the new rules, that deal with past transactions, i.e., the previously established installment payment obligations. Such a rule change does not constitute unlawful retroactive rulemaking under the APA.

21. Further, the fact that the new rules may unsettle expectations about the economic benefits of participating in the installment payment plan does not make the new rules unlawfully retroactive. In that regard, the U.S. Court of Appeals for the D.C. Circuit has explained: “[A] new rule or law is not retroactive ‘merely because it * * * upsets expectations based on prior law.' ” DirecTV, Inc. v. FCC 110 F.3d 816, 826 (D.C. Cir. 1997) (quoting Landgraf v. USI Film Products, 511 U.S. 244, 269, 114 S. Ct. 1483, 1499 (1994)). This type of “secondary” retroactivity is an entirely lawful consequence of much agency rulemaking and does not by itself render a rule invalid. Commission licensees, in particular, have no vested right to an unchanged regulatory scheme throughout their license term. Therefore, petitioners' claim that the revised late payment provisions are unlawfully retroactive fails.

22. Finally, petitioners contend that contract law precludes application of the new late payment procedures to licensees paying for their licenses in installments prior to the effective date of the Part 1 Third Report and Order. For example, a commenter challenges the Commission's elimination of the 90-day non-delinquency period, which was incorporated as a term of the existing promissory notes executed by 900 MHz Specialized Mobile Radio service (900 MHz SMR) licensees. Other commenters argue that adoption of the new late payment procedures constitutes unilateral modification (i.e., breach) of a contract between the Commission and the licensees for payment of licenses under specified payment terms even without a signed promissory note.

23. Installment payment programs currently exist in the following services: the 218-219 MHz Service, broadband Personal Communications Services (PCS) frequency block C, broadband PCS frequency block F, broadband PCS frequency block A (pioneers' preference licensees only), regional narrowband PCS, 900 MHz SMR, and the Multipoint Distribution Service (MDS). For some services in which the Commission has offered installment payments, far from being punitive and unreasonable, the Commission has afforded extraordinary relief regarding installment payment obligations. Specifically, the Commission suspended the effect of the new late payment provisions as applied to any license in the 218-219 MHz Service for which a properly filed grace period request was pending or for which adequate installment payments were made as of March 16, 1998, pending Commission resolution of issues raised in the 218-219 MHz Service Order, 63 FR 54073 (October 8, 1998), and NPRM, 63 FR 52215 (September 30, 1998). Most recently, the Commission offered restructuring to certain 218-219 MHz Service licensees. Regarding these licensees, therefore, there is no conflict between the application of the new late payment procedures and contract law.

24. Among the remaining licensees that have benefitted from Commission installment payment plans, licensees in broadband PCS frequency block A and regional narrowband PCS did not sign separate loan documents. The payment terms and conditions with respect to these licenses, therefore, have always been a matter of Commission regulation through the part 1 rules. In this regard, the following language appears on the licenses themselves: “This authorization is subject to the condition that the remaining balance of the winning bid amount will be paid in accordance with part 1 of the Commission's rules.” These licensees were aware, or should have been aware, that the terms and conditions of part 1 or other aspects of the license can be modified by the Commission by rulemaking, and that such changes have been uniformly upheld by the courts as lawful. The part 1 rules at issue in this proceeding were modified subject to APA-consistent administrative rulemaking procedures and are intended to provide greater flexibility to licensees in determining their use of grace periods and late payment provisions. The application of the Commission's modified late payment provisions does not constitute a breach of contract as argued by these petitioners.

25. Some SMR and MDS licensees argue that the Promissory Note and Security Agreements executed by these licensees bound the Commission to the rules in place at the time of the license grant. This is demonstrably incorrect. The Commission did not promise these licensees, or any other licensees, that the part 1 rules would remain unchanged during the license term. Rather, the Note and Security Agreement provide that the licensee must comply with “all Commission orders and regulations applicable to the licensee,” without regard to the time in which those applicable rules were promulgated or amended. The SMR and MDS notes emphasized that the Commission's rules, as amended, would take precedence over the terms of the notes in case of any conflict. Moreover, when addressing future events, such as the making of installment payments, applications for grace periods and incidents of default, the Note and Security Agreement refer to the “then-applicable” rules of the Commission, a clear reference to the rules that would be applicable at the time of such events. Specifically with respect to “grace periods” which were modified by the revision of part 1, the SMR and MDS Notes are worded conditionally—“if any such grace period or extension of payments is provided for in the then-applicable orders and regulations of the Commission.” This conditional language confirms that the “then-applicable” grace period rules referred to in the Note are those rules that may exist at the time in the future when a grace period is sought, and not necessarily the rules that were in place at the time of the license grant; otherwise, the sentence would not have been phrased as a contingency, but would have cited whatever grace period rules were in effect at the time of the Note. Given these provisions, the last paragraph in the Note—which states that the Note may not be changed except by an agreement in writing executed by the party against whom enforcement of such change is sought—means that individual modifications to any particular agreement must be made in writing by mutual consent. Significantly, however, this clause does not preclude service-wide changes of the governing rules by the agency's public notice and comment rulemaking process. Specifically, the Payee, by signing such Note, has already agreed to be bound by the Commission's rules as they may be amended from time to time in the provisions of the Note and Security Agreement referencing the “then-applicable” rules of Commission. The Commission, therefore, retains the modified grace period and late payment fee provisions adopted in the Part 1 Third Report and Order.

26. As discussed, the Commission concludes that the revised late payment rules are not commercially unreasonable, do not constitute impermissible retroactive rulemaking, and do not violate basic contract principles. The Commission believes, however, that a slight modification to the payment due dates for late installment payments and associated late fees would benefit licensees. Under the Part 1 Third Report and Order, licensees that miss an installment payment are given up to two 90-day periods in which to submit the installment payment and associated late fee without being considered delinquent. Regularly scheduled installment payments, on the other hand, are due quarterly (i.e., every 3 months), which may provide a licensee with up to 92 calendar days to make timely payment depending upon the month in which the payment is due. This discrepancy in payment due dates may cause confusion for licensees. For example, a late installment payment and associated late fee may be due a day or two before the next regularly scheduled quarterly installment payment. Because these due dates are so proximate, licensees may mistakenly assume that they can pay their late installment payment and late fee on the due date of the next regularly scheduled quarterly installment payment without incurring an additional late payment fee or being considered delinquent.

27. In order to avoid any confusion as to when late installment payments and accompanying late fees are due, the Commission will amend the due dates for late installment payments to comport with quarterly due dates. Specifically, rather than providing licensees that fail to make timely installment payments with two 90-day periods in which to satisfy their payment obligations, the Commission will provide such licensees with two quarters (two 3-month periods) in which to submit their late installment payments and required late fees without being considered delinquent. Thus, due dates for late installment payments and associated late fees will coincide with quarterly due dates for regularly scheduled installment payments. Although the Commission modifies the due dates for submitting late installment payments, it does not change the associated late fee provisions. The Commission, therefore, amends § 1.2110(f)(4) (redesignated herein as § 1.2110(g)(4)) of its rules to provide that a licensee that fails to make an installment payment when due will be permitted to make its required payment by the end of the next quarter (a 3-month period) without being considered delinquent, but will be assessed a late payment fee equal to 5 percent of the amount of the past due installment payment. If the licensee fails to make the required payment within the first quarter after the regularly scheduled due date, the licensee will be allowed to make its required payment by the end of the subsequent quarter without being considered delinquent, this time subject to a second, additional late payment fee equal to 10 percent of the amount of the past due installment payment. The licensee is not required to submit a request to take advantage of these provisions. A licensee that fails to make payment within two quarters (or 6 months) after an installment payment due date sufficient to pay all past due late payment fees, interest, and principal, will be deemed to have failed to make full payment of its obligation and, as has been the case since the inception of the Commission's competitive bidding and auction specific installment payment rules, the license will automatically cancel without further Commission action.

28. Background. In the Competitive Bidding Second Report and Order, the Commission stated that once it granted a grace period request, “a defaulting licensee could maintain its construction efforts and/or operations while seeking funds to continue payments or seek from the Commission a restructured payment plan.” Reference to a restructured payment plan also appeared in the former grace period rule, § 1.2110(e)(4)(ii), which permitted licensees to temporarily suspend their installment payments pending the restructuring of such payment obligations. In amending § 1.2110 to be consistent with the Commission's decision in the Part 1 Third Report and Order to revise the late payment provisions and eliminate the grace payment procedure, the Commission removed language that referred to a restructured payment schedule.

29. Discussion. Commenter objects to the elimination of language in § 1.2110 referring to a restructuring of installment payments. Commenter contends that the Commission eliminated the option to restructure without providing notice and comment or any rationale for the elimination in violation of the APA. By removing language in § 1.2110(e)(4)(ii) that referenced a restructured payment schedule, the Commission did not intend to eliminate a licensee's option to request restructuring of its installment payment obligations. The Commission simply sought to amend the rule to provide for automatic grace periods rather than requiring a showing of financial need to support a grace period request. Licensees in the installment payment program may still submit requests for payment restructuring or workouts. There is, however, no longer a procedure for requesting a grace period to stay installment payment deadlines pending such restructuring. Rather, licensees will be subject to the automatic late payment provisions of § 1.2110(g) as adopted herein. Because licensees continue to have the opportunity to seek restructuring of installment payments, the Commission was not required under the APA to seek comment on the elimination of that option. Moreover, the reference to a “restructured payment schedule” in § 1.2110(e)(4)(ii) was part and parcel of the Commission's rule section that provided for individual grace period requests and financial distress showings. The Commission proposed to amend that rule section in its entirety and adopt automatic grace periods in the Part 1 Notice of Proposed Rule Making. Interested parties could reasonably have anticipated that the Commission's proposal to amend the grace period request rule could result in the amendment of language in that rule referencing restructuring. Thus, omitting a reference to a restructured payment schedule is within the specific scope of the Part 1 Notice of Proposed Rule Making to adopt automatic grace periods and eliminate the requirement to file financial distress showings and, therefore, is not violative of the APA.

30. Background. The Communications Act of 1934 (“Communications Act”), as amended, requires the Commission to approve assignments of licenses and transfers of control. Prior to the adoption of the ULS Report and Order, upon approval of an assignment or transfer, the Bureau amended its licensing database for certain private and microwave services. If an assignment or transfer was not consummated, the Commission required the filing of a second transfer application that reflected the “return” of the license from the putative transferee to the original licensee. The ULS rules, however, now require parties to assignments of licenses or transfers of control in all wireless services only to file a notice that they have consummated the underlying transaction, at which point the Bureau amends its licensing database.

31. Discussion. A commenter seeks clarification regarding an assignee's or transferee's responsibility for installment payment debt in the event of default by an assignor or transferor in cases where the Bureau amended its database simply upon approval of the assignment or transfer. Specifically, the commenter believes that the assignee or transferee should not be responsible for licensee debt until the transaction is consummated. As an initial matter, the Commission emphasizes that the consummation date of an assignment of license or transfer of control governs debt obligations irrespective of the post-consummation notification requirement. Therefore, regarding an assignment of license, the Commission clarifies that the assignee of a license paid for through installment payments is not responsible for the license debt until the transaction is consummated. As a practical matter, for services where licensees have signed promissory notes (i.e., C block, F block, MDS and 900 MHz SMR) assignees must execute loan documents and consummation does not occur until the execution of such documents. In these instances, the assignee will, of course, be aware that consummation has occurred. However, for services where licensees did not sign promissory notes (i.e., 218-219 MHz, regional narrowband PCS and broadband PCS frequency block A (pioneers' preference licenses)), if a default occurs prior to consummation, and the Commission mistakenly initiates debt collection procedures against the assignee that is not the actual licensee, that party should notify the Commission in writing that the underlying transaction was not consummated and the Commission will initiate debt collection procedures against the assignor that is the licensee.

32. In contrast to an assignment of license, with transfers of control the licensee does not change and, therefore, remains liable for the debt irrespective of consummation. In such cases, the Commission generally looks to the licensee for repayment of the debt. The Commission recognizes, however, that there may be unusual circumstances in which the Commission might look beyond the licensee for repayment of the debt, e.g., pierce the corporate veil, and a new party to the licensing entity could become subject to debt collection at consummation. The Commission reiterates that the consummation date governs the debt obligations irrespective of the post-notification requirements. Therefore, if the Commission inadvertently initiates debt collection procedures against a party that is not part of the licensing entity because the transfer of control was not consummated, the party should notify the Commission in writing that the underlying transaction was not consummated and the Commission will stop its debt collection proceedings against the party that is not part of the licensing entity.

33. Background. In the Part 1 Third Report and Order, the Commission revised the part 1 unjust enrichment rules as applied to assignments and transfers of control of licenses acquired using bidding credits and/or installment payments. Specifically, if a licensee seeks to assign or transfer control of its license to an entity not meeting the same eligibility standards for installment payments at any time during the initial license term, the licensee must make full payment of the remaining unpaid principal and any unpaid interest accrued through the date of assignment or transfer as a condition of Commission approval. Similarly, if a licensee seeks to assign or transfer control of its license to an entity not meeting the same eligibility standards for bidding credits, the licensee must reimburse the government for the amount of the bidding credit, plus interest based on the rate for United States Treasury obligations applicable on the date the license is granted, as a condition of Commission approval. Unlike the unjust enrichment payment for installment payments, however, the unjust enrichment payment for bidding credits decreases based on the amount of time the initial license has been held, with no unjust enrichment payment due after the fifth year of initial licensing. In making these changes to the unjust enrichment rules in the Part 1 Third Report and Order, the Commission specifically superseded the existing service-specific unjust enrichment provisions, replacing each of those rules with a cross-reference to the new part 1 unjust enrichment rule, 47 CFR § 1.2111.

34. Discussion. A commenter seeks clarification regarding the application of the revised unjust enrichment rules for bidding credits (§ 1.2111(d) of the Commission's rules) and the broadband PCS entrepreneurs' block prohibition on assignments and transfers to non-entrepreneurs during the first five years of initial licensing (§ 24.839 of the Commission's rules). As a practical matter, under the part 1 rules as modified in the Part 1 Third Report and Order, bidding credit unjust enrichment payments are not required for assignments or transfers of control of C and F block licenses to non-entrepreneurs because § 24.839 bars such assignments or transfers until five years after the date of the initial license grant, at which point the bidding credit unjust enrichment penalties of § 1.2111 lapse. The proscription of § 24.839, however, does not apply if an entrepreneur proposes to assign or transfer its C or F block license to another qualifying entrepreneur. In such a case, § 1.2111 provides for unjust enrichment payments with respect to assignments and transfers between entities qualifying for different tiers of bidding credits.

35. The commenter further argues that the Commission has not adequately explained why PCS entrepreneur block licensees are subject to a five-year transfer restriction when licensees in other services are allowed to assign or transfer licenses during the first five years of the license term, subject to the repayment of bidding credits. In order to fulfill its statutory duty to give opportunities to small businesses, the Commission set aside the PCS C and F blocks for participation only by smaller entities, in this case, entrepreneurs. See Implementation of Section 309(j) of the Communications Act—Competitive Bidding, PP Docket No. 93-253, Fifth Report and Order, 59 FR 37566 (July 22, 1994). To ensure that licenses in these blocks are used exclusively by smaller entities, the Commission adopted a rule to preclude the trafficking of entrepreneur block licenses to non-entrepreneurs for the first five years of licensing. See 47 CFR 24.839. In adopting this transfer restriction, the Commission explained that allowing parties to take advantage of bidding in the entrepreneurs' blocks and immediately assign or transfer control of the authorizations to non-entrepreneurs would undermine its goal of giving entrepreneurs the opportunity to provide PCS. Since these entrepreneur blocks are the only spectrum set aside specifically for smaller entities, these are the only licenses subject to the five-year anti-trafficking provision. In contrast, with respect to services in which all entities, large and small, are permitted to acquire licenses, the Commission's objective is to ensure that, irrespective of entity size, the license is awarded to the entity that values it most. In such cases, the Commission may offer bidding credits or other incentives to afford small entities an opportunity to acquire licenses. In these instances, the Commission is not concerned with ensuring that a block of spectrum is used exclusively by smaller entities and, therefore, permits the transfer of licenses early in the license term subject to repayment under its unjust enrichment rules for bidding credits and installment payments.

36. The Commission further clarifies that pursuant to § 1.2111(c) and (d) of its rules, Commission approval of assignments of licenses and transfers of control that result in unjust enrichment with respect to bidding credits and installment payments is conditioned upon full payment of the required unjust enrichment payments on or before the consummation date. In other words, consummation of an assignment of license or transfer of control will not be valid unless the Commission first receives the required unjust enrichment payment in full. The Commission believes that this clarification will ensure efficiency in the processing and consummation of assignments of licenses and transfers of control.

37. Background. In the Part 1 Third Report and Order, the Commission addressed matters relating to defaults on payment obligations by winning bidders in spectrum auctions. Under § 1.2104(g), winning bidders that default on a down payment or full payment after the close of an auction are subject to a payment equal to the difference between the amount of the defaulted bid and the amount of the winning bid the next time the license is auctioned, plus 3 percent of the lesser of these amounts. The Commission considered whether a licensee failing to make a timely installment payment should be subjected to these same provisions. In paragraphs 115 and 116 of the Part 1 Third Report and Order, the Commission decided against imposing the default provisions of § 1.2104(g) with respect to defaults on installment payments. The Commission found that without such additional payments, its other rules and installment payment terms are adequate to discourage defaults. Despite the clear statement on this point in paragraphs 115 and 116, the Commission believes that paragraph 122 of the Part 1 Third Report and Order may still have left some ambiguity in this matter. Specifically, the latter paragraph may be construed as stating that the additional payment requirements of § 1.2104(g)(2) relating to down payment and full payment defaulters are also applicable to installment payment defaulters.

38. Discussion. The Commission clarifies that licensees defaulting on installment payments (“installment payment defaulters”) are not subject to § 1.2104(g)(2). The automatic default provisions of § 1.2110(f)(4) (redesignated herein as § 1.2110(g)(4)) are adequate to discourage untimely installment payments. The Commission notes that while § 1.2109(c) identifies types of defaulters that are subject to § 1.2104(g)(2), the rule does not reference installment payment defaulters. Instead, installment payment defaults are covered by § 1.2110(g)(4), as designated herein, which does not incorporate § 1.2104(g)(2). As the Commission noted in the Part 1 Third Report and Order, the risk of losing a license should provide most licensees with a strong incentive to avoid default. Accordingly, the Commission concludes that § 1.2104(g)(2) does not apply to installment payment defaulters. Rather, pursuant to § 1.2110(g)(4)(iv), as designated herein, licensees that default on installment payment obligations will automatically lose their licenses and be subject to debt collection procedures.

39. Background. The Commission's FCC Form 175 short-form application for all auctions requires applicants to certify that they are not in default on any Commission licenses and that they are not delinquent on any non-tax debt owed to any Federal agency. The purpose of this rule is to preserve the integrity of the auction process and to ensure that bidders are capable of meeting their financial commitments to the Commission. In the C Block Fourth Report and Order, the Commission determined that “former defaulters,” i.e., applicants that have defaulted or been delinquent in the past, but have since paid all of their outstanding non-Internal Revenue Service Federal debts and all associated charges or penalties, are eligible to participate in future auctions of C block spectrum, provided that they are otherwise qualified. See Amendment of the Commission's Rules Regarding Installment Payment Financing for Personal Communications Services (PCS) Licensees, WT Docket No. 97-82, C Block Fourth Report and Order, 63 FR 50791 (September 23, 1998). In addition, the Commission adopted a special upfront payment policy for “former defaulters” seeking to participate in C block auctions. It required that “former defaulters” make an upfront payment of 50 percent more than the normal amount set by the Bureau for any given license in a C block auction. The Commission applied these policies in the broadband PCS auction that concluded on April 15, 1999 (Auction No. 22).

40. Discussion. On its own motion, the Commission hereby incorporates into the part 1 general competitive bidding rules the “former defaulter” policies adopted with respect to C block auction applicants. While the Commission has determined that it is necessary to limit participation in Commission auctions to entities that can certify that they are not in default on certain debts, the Commission also believes that past business misfortunes do not inevitably preclude an entity from being able to meet its present and future responsibilities as a Commission licensee. Therefore, the Commission will allow “former defaulters,” i.e., applicants that have defaulted or been delinquent in the past, but have since paid all of their outstanding non-tax debts and all associated charges or penalties, to certify on Form 175 that they are not in default and are, therefore, eligible for auction participation. Thus, a bidder that has defaulted on its down or final payment obligation, but has paid, by the short-form application deadline, any default payments assessed by the Commission (e.g., the initial default payment of 3 percent of the defaulted bid amount pursuant to 47 CFR 1.2104(g)(2)) is qualified to certify on Form 175 that it is not in default and is eligible to participate in Commission auctions. Such bidder, however, remains subject to any as yet unassessed payment obligations pursuant to § 1.2104(g) of the Commission's rules, unless otherwise relieved from such obligations under applicable law.

41. In determining the upfront payment amounts required by “former defaulters” seeking to participate in future C block auctions, the Commission reasoned that “the integrity of the auctions program and the licensing process dictates requiring a more stringent financial showing from applicants with a poor Federal financial track record.” The Commission believes that this reasoning applies with equal force to “former defaulters” seeking to participate in any Commission auction. Consequently, the Commission will amend § 1.2106(a) of its general competitive bidding rules to require that “former defaulters” pay an upfront payment amount of 1.5 times the normal amount set by the Bureau for any given license in a Commission auction. So that the Bureau may implement this rule, the Commission will require applicants to make an additional certification revealing whether they have ever been in default on any Commission license or have ever been delinquent on any non-tax debt owed to any Federal agency. If any one of an applicant's controlling interests or their affiliates as defined by § 1.2110 of the Commission's rules (as adopted herein) has ever been in default on Commission licenses or has ever been delinquent on any non-tax debt owed to any Federal agency, but has made the requisite payment, the applicant will be eligible to participate in Commission auctions but will be considered a “former defaulter” for purposes of the upfront payment requirements. The Commission may use credit information concerning the applicant, its controlling interests and their affiliates to verify any certified statements regarding the history of payments made to the Federal government by such entities.

42. Under § 1.2110(g)(4), as designated herein, when a licensee defaults on an installment payment, its license automatically cancels without any action by the Commission, and the entire outstanding debt obligation becomes subject to debt collection procedures. A licensee that has previously defaulted on an installment payment will be permitted to participate in future Commission spectrum auctions under certain conditions. In order to be eligible for participation in a future auction, an installment payment defaulter must have either (i) paid all of its outstanding non-tax debt, along with all associated charges and penalties; or (ii) been relieved of such obligations pursuant to otherwise applicable law. See, e.g., Debt Collection Improvement Act of 1996 (DCIA); 31 U.S.C. 3711 et seq.; see also 4 CFR 103.1 et seq; NextWave Personal Comms., Inc. 200 F.3d 43, 59 at n. 15 (2d Cir. December 22, 1999). In all instances, installment payment defaulters eligible to participate in future auctions will be required to pay an upfront payment amount of 1.5 times the normal amount set by the Bureau for any given license in a Commission auction to assure their future financial soundness.

43. In the Part 1 Third Report and Order, the Commission established a uniform set of bidding rules for all auctionable services to increase the efficiency of its licensing process. In the Second FNPRM, the Commission sought comment on a variety of additional proposals relating to the general competitive bidding rules. In particular, the Commission sought comment on whether a sufficient evidentiary basis exists for creating bidding preferences for minority- and women-owned businesses, and whether there are mechanisms the Commission should employ to further the opportunities for rural telephone companies to participate in the provision of spectrum-based services. In addition, the Commission asked whether the Commission should continue its installment payment program for small businesses and, if not, whether appropriate alternatives exist that would further the goals of section 309(j) of the Communications Act. Next, the Commission requested comment on what uniform attribution standard it should adopt for determining whether entities seeking bidding credits qualify as small businesses. Finally, the Commission sought comment on a number of payment and administrative issues, including the appropriate formula for calculating default payments. In response to the Second FNPRM, the Commission received six comments and one reply comment.

44. Background. In Adarand Constructors, Inc. v. Pena, the Supreme Court held that “all racial classifications * * * must be analyzed by a reviewing court under strict scrutiny.” Under the Adarand decision, any federal program that uses race as a basis for decisionmaking must serve a compelling governmental interest and must be narrowly tailored to serve that interest in order to pass constitutional muster. In United States v. Virginia, et al., the Supreme Court determined that gender-based programs are subject to intermediate scrutiny. Under this standard of review, there must be an “exceedingly persuasive justification” for a program in which gender is a determining factor in decisionmaking. Further, a gender-based government action is constitutional only if it serves an important governmental objective and is substantially related to the achievement of that objective.

45. In the Second FNPRM, the Commission sought comment on whether there is a compelling governmental interest that would justify the use of preferences for minority-owned businesses or an exceedingly persuasive justification to support gender-based preferences for women-owned businesses. In addition, the Commission asked commenters to provide evidence in support of their positions and to indicate what measures, if any, could be narrowly tailored to withstand judicial review. What specifically tailored tools, the Commission asked, such as bidding credits, might be appropriate or should preferences be given to minority-owned or women-owned businesses that also qualify as small businesses.

46. Finally, the Commission noted that the Office of Management and Budget (“OMB”) modified its standards for the classification of federal data on race and ethnicity. Specifically, OMB: (i) separated the category for Asian and Pacific Islander into two categories—“Asian” and “Native Hawaiian or Other Pacific Islander” and (ii) changed the term “Hispanic” to “Hispanic or Latino.” The Commission sought comment on whether it should amend the designated entity provisions of the part 1 rules to reflect this change.

47. Discussion. The Commission did not receive any comments on these issues. Because the record is sparse, the Commission concludes that it is not appropriate to adopt special provisions for minority-owned and women-owned businesses at this time. The Commission has said that minority- and women-owned businesses that qualify as small businesses may take advantage of the special provisions it has adopted for small businesses.

48. The Commission notes, too, that the Office of Communications Business Opportunities (OCBO) 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, the Commission 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 will consider race- and gender-based provisions for future auctions.

49. Finally, having received no comments on the issue, the Commission will amend its definition of the term “minority” in § 1.2110 of the general competitive bidding rules to reflect the changes identified. This will conform the Commission's definition of the term “minority” to that currently used by OMB.

50. Background. In the Second FNPRM, the Commission noted that auctions have generally provided rural telephone companies with favorable opportunities. The Commission has also observed that the percentage of rural telephone companies that have won rural geographic area licenses in the United States is significant. The Commission sought comment on whether there were additional mechanisms that might increase opportunities for rural telephone companies to provide spectrum-based services to the public.

51. Discussion. Based on the limited record before it, the Commission will not, at this time, adopt mechanisms, such as bidding preferences or an unserved area fill-in policy, specifically for rural telephone companies. The Commission will, however, continue to provide rural telephone companies with bidding credits should such entities qualify as small businesses. The Commission will address issues affecting rural communities and underserved areas in other upcoming proceedings and believe a more extensive record can be developed at that time.

52. The Commission does, however, want to highlight one issue raised by commenters. It was proposed that the Commission establish geographic area licenses no larger than BTAs in all future auctions. Section 309(j) of the Communications Act requires the Commission to disseminate licenses to a wide variety of applicants, including small businesses and rural telephone companies, and to promote the development and rapid deployment of new technologies to the public, including those residing in rural areas. The Commission can best satisfy this mandate by establishing license areas that promote these goals on a service-specific basis. Although the Commission has used small license areas in several services (e.g., broadband PCS D, E and F blocks and LMDS) and may do so in specific services in the future, the Commission is unwilling to limit its flexibility by adopting an ironclad rule against large service areas. The Commission anticipates, for example, that certain satellite-based services may not be particularly suited to small geographic area licensing, while other services may indeed be more suitable for this type of license category (i.e., the broadband PCS C block auction). The Commission always invites comment on these issues so as to tailor its rules for specific services in ways that afford opportunities to a wide variety of entities.

53. Background. In the Part 1 Third Report and Order, the Commission suspended the installment payment program. Because, however, small businesses have been successful in the auctions in which installment payment plans were offered, the Commission sought comment on ways the Commission could provide an effective installment payment program while at the same time minimizing the concerns (e.g., licensee default or difficulty meeting financial obligations to the Commission) that led to the suspension of installment payment plans for small businesses. The Commission also sought comment on how it could create an installment payment plan that would encourage only serious, financially qualified small business applicants to apply for licenses while ensuring the rapid provision of service to the public and guaranteeing that the American public is reasonably compensated for use of the spectrum. In addition, the Commission sought comment on how it might fashion an installment payment program that would meet the statutory requirement that all payments of principal and interest for covered auctions be deposited in the United States Treasury by the statutory deadline (September 30, 2002) for collection. The Commission further requested comment on means other than bidding credits and installment payments by which it might facilitate the participation of small businesses and other designated entities in its spectrum auction program. Finally, the Commission asked whether it should establish the interest rate for installment payments (if the program is reinstituted) based upon the rate of United States Treasury obligations on the date of the close of the auction.

54. Discussion. Having received no comments regarding reinstitution of its installment payment program or alternatives thereto, the Commission will adhere to its previous decision to suspend the installment payment program. In suspending the installment payment program, the Commission concluded that small businesses need not receive installment payments to successfully participate in its spectrum auctions. The Commission noted, for example, that in the cellular auction for unserved areas, which had no installment payment plans, 36 percent of the licenses went to small or very small businesses. In addition, the Commission stated that requiring payment in full within a short time after the close of the auction ensures greater financial accountability from applicants. Finally, experience has shown that licensees filing for bankruptcy may impede the Commission's processes, resulting in delayed deployment of service.

55. The Commission believes that section 309(j) of the Communications Act requires it to explore ways of responding to the investment capital needs of small, minority-owned and women-owned businesses. Accordingly, while the Commission believes its decision to offer bidding credits has been extremely helpful in allowing these designated entities a foothold in many of its auctionable wireless services, it remains open to proposals that would result in even greater participation by these entities.

56. The Commission will, as it has done in the LMDS, LMS, 220 MHz Service, and VHF Public Coast Service auctions, continue to provide small businesses with bidding credits. In light of this decision, the Commission need not address the method of establishing interest rates for such installment payments. If the Commission reinstates an installment payment plan in the future, it will revisit this issue.

57. Background. In the Second FNPRM, the Commission discussed its earlier proposal to adopt a general attribution rule for determining small business eligibility for all future auctions. Specifically, the Commission sought further comment on whether to adopt a “controlling interest” standard for attributing to an applicant the gross revenues of its investors and affiliates in determining whether the applicant qualifies as a small business. The Commission explained that, in the past, the Commission adopted service-specific attribution rules with varying standards of attribution. In addition, the Commission asked whether a “controlling interest” standard is sufficient to calculate size so that only those entities truly meriting small business status qualify for bidding credits. The Commission also sought comment on whether alternate standards for attributing the gross revenues of investors and affiliates in an applicant would better meet its goals. The Commission further requested comment on whether or not the controlling interest standard would be strengthened by imposing a minimum equity requirement (e.g., 15 percent) that any person or entity identified as controlling must hold.

58. Discussion. The Commission will adopt as its general attribution rule a “controlling interest” standard for determining which applicants qualify as small businesses. Under this standard, the Commission will attribute to the applicant the gross revenues of its controlling interests and their affiliates in assessing whether the applicant is qualified to take advantage of its small business provisions, such as bidding credits. The Commission notes that operation of its definition of “affiliate” will cause all affiliates of controlling interests to be affiliates of the applicant. The Commission believes that this approach is simpler and more flexible than the previously used control group approach, and thus will be more straightforward to implement. Moreover, application of the “controlling interest” standard will ensure that only those entities truly meriting small business status qualify for the Commission's small business provisions. The Commission used this same approach in the attribution rules for the LMDS, 800 MHz SMR, 220 MHz, VHF Public Coast and LMS auction proceedings.

59. A “controlling interest” includes individuals or entities, or groups of individuals or entities, that have control of the applicant under the principles of either de jure or de facto control. Thus, there may be more than one “controlling interest” whose revenues must be counted. The premise of this rule is that all parties that control an applicant or have the power to control an applicant, and their affiliates, will have their gross revenues counted and attributed to the applicant in determining the applicant's eligibility for small business status or for any other size-based status using a gross revenue threshold.

60. De jure control is typically evidenced by the holding of 50.1 percent or more 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 Ellis Thompson. See Ellis Thompson Corporation, 60 FR 1776 (January 5, 1995). For instance, the gross revenues of managers may be attributed to the applicant if de facto control standards are met. The Commission does not believe it is necessary to presume that equity interests of less than 50.1 percent are attributable to the applicant because it relies on the concept of de facto control. An applicant may have interest holders that do not possess de jure control but have “actual” (i.e., de facto) control. Therefore, in determining the gross revenues to be attributed to the applicant, the Commission will include individuals or entities that have either de jure or de facto control. Accordingly, the Commission will amend § 1.2110 to incorporate these principles of control.

61. Controlling interests must be identified by the applicant seeking status as a small business. The “controlling interest” definition provides specific guidance on the 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 attributed. 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 must be attributed to the applicant. 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, the Commission believes, looks to substance over form in assessing eligibility for small business status.

62. Some commenters have expressed concern over whether the revenues of so called “passive investors” would be attributed to the applicant. The controlling interest standard adopted herein will be applied to all investors in an applicant. In other words, if any investor has either de jure or de facto control of the applicant, that investor's gross revenues will be attributed to the applicant for purposes of determining whether the applicant qualifies as a small business. Application of the principles of either de jure or de facto control will accurately identify those investors that are controlling interests and that are not, by definition, therefore, “passive investors.” The Commission notes too that, under the controlling interest standard, the officers and directors of any applicant will be considered to have a controlling interest in the applicant.

63. The Commission believes that the de jure and de facto concepts of control, together with the application of its affiliation rules, will effectively prevent larger firms from illegitimately seeking status as small businesses. For this reason, the Commission disagrees with the commenter that urges it not to amend its attribution rules to include those that have management agreements and joint marketing agreements with the applicant or licensee. The Commission will adopt provisions that make attributable the gross revenues of those that have management or marketing agreements with the applicant or licensee where such agreements grant authority over key aspects of the applicant's or licensee's business.

64. The Commission declines to adopt a minimum equity requirement for controlling interests because it is contrary to its goal of providing legitimate small businesses maximum flexibility in attracting passive financing. A minimum equity requirement would require any person or entity identified as a controlling interest to retain some level of equity in the applicant, thereby reducing the amount of equity the applicant could offer to non-controlling interests in exchange for financing. This policy would thus limit a small business' ability to raise capital and undermine the Commission's intention of promoting small business participation in the highly competitive telecommunications marketplace.

65. Further, the Commission does not believe that the adoption of a minimum equity requirement is necessary to ensure appropriate identification of an applicant's controlling interests if the principles of de jure and de facto control are applied. These principles are, in effect, broader than the minimum equity requirement because they look to actual control irrespective of the amount of equity held in an applicant. While the Commission agrees with commenters that lack of equity may indicate lack of de facto control, it is not persuaded that this factor alone is dispositive. Rather than focusing solely on equity holdings, applicants are required to identify those controlling interests that actually have control through application of the principles of either de jure or de facto control. This approach, which has proven successful in the broadcast context, will operate equally well with respect to the calculation of gross revenues for purposes of determining eligibility for bidding preferences. By alerting the Commission to all attributable interests, application of the principles of de jure and de facto control will preclude unqualified applicants from taking advantage of its small business provisions. Moreover, as discussed in the Part 1 Third Report and Order, requiring detailed ownership information under § 1.2112 will ensure that applicants claiming small business status qualify for such status and that all applicants comply with spectrum caps and other ownership limits.

66. The Commission further concludes that these new rules should not make current C and F block licensees ineligible to hold their licenses. The eligibility of current C and F block licensees to continue to hold their licenses will not be reassessed based on the new attribution rules. These licensees will remain eligible to hold their licenses regardless of whether or not they would qualify under the newly established attribution rules. As to future C and F block auctions, however, all applicants, including existing C and F block licensees, will be subject to the attribution rules in effect at the time of filing their short-form applications. For auctions that begin within two years after the start of Auction No. 22, the C, E, and F block auction that began on March 23, 1999, the Commission's new attribution rules will have no effect on the eligibility as an entrepreneur of any entity that was eligible for, and participated in, Auction No. 5 or Auction No. 10. Eligibility for small business preferences, however, will be determined based on the attribution rules in effect at the time of an applicant's short-form filing. Similarly, with respect to transfers of control and assignments of license, existing C and F block licensees may be assignees or transferees within the first five years of license grant consistent with the anti-trafficking provision contained in § 24.839(d) of the Commission's rules. Non-licensees, however, are precluded from being assignees or transferees within the first five years of license grant unless they qualify as entrepreneurs based on the attribution rules in effect at the time of assignment or transfer.

67. Background. In the Second FNPRM, the Commission sought comment on whether it should modify § 1.2104(g) of its rules to provide that, where a winning bidder defaults on multiple licenses, the default payment will be determined based upon the aggregate winning bid and the aggregate winning bid the next time the licenses are offered by the Commission. The Commission sought comment on whether this system could encourage insincere bidding and defaults since it could greatly reduce the effective penalty for a default. The Commission questioned whether, since the potential defaulter would not be facing the full harm caused by the default on the additional license, the incentive for insincere bidding and default would be too great. Indeed, the Commission continued, this modification could encourage speculation by encouraging a high bidder on a relatively high valued license that anticipates default to purposely bid and default on a relatively low valued license in order to lessen the default payment assessed under its rules. Finally, the Commission sought comment on whether such a modification could function without nullifying the provision in § 1.2104(g) that assesses an additional default payment equal to three percent of the subsequent winning bid or the amount bid, whichever is lower. No comments were received on this issue.

68. Discussion. Section 1.2104(g)(2) of the Commission's rules is central to the integrity of the Commission's auction process. The principal function of this rule is to establish that the close of the auction creates a binding contractual obligation by the high bidder to pay the auction price for the license. Whether the obligation is thereafter breached by a default of payment or by a failure to qualify to receive the license for which the bid was placed, the winning bidder's liability remains a function of the high bid and is based on the obligation that was incurred at auction, plus an additional 3 percent payment as set forth in the rule.

69. Without more comment, the Commission will not amend its rule to adopt an aggregate approach to calculating default payments. Rather, the Commission will continue to evaluate each licensee's default payment obligations on a license-by-license basis. In other words, the Commission will calculate the default payment owed on each license separately, even in cases where a single bidder defaults on multiple licenses. Therefore, licensees may not use a subsequent auction gain from one defaulted license to reduce default payments on other licenses that are subsequently auctioned for less than that originally bid by the defaulting licensee.

70. When a winning bidder defaults on a license, the bidder becomes subject to a default payment equal to the difference between the amount bid and the subsequent winning bid, plus an additional payment equal to 3 percent of the lower of the initial winning bid or the subsequent winning bid. In the case of multiple defaults, the Commission has determined that the amount of the default payment is calculated on a license-by-license basis and then added together to determine the total default payment.

71. The Commission's auction rules were designed to encourage bidders wishing to withdraw their bids to do so prior to the close of the auction, rather than default after the auction. In the case of withdrawal, the additional 3 percent payment is not required. Thus no withdrawal payment is assessed if the subsequent winning bid exceeds the withdrawn bid. Encouraging withdrawals over defaults increases auction efficiency. If a bidder withdraws its bid during the auction, there is an opportunity for another bidder to win the license. However, if the bidder defaults after the auction, a new spectrum license must be auctioned. A bidder that would have bid to win the license after a withdrawal may not be as willing or able to pay if it has to wait for another auction before it can obtain the license. In addition to the time and expense required to auction the new spectrum license and collect the default payment, a subsequent auction results in a delay in provision of service to the public.

72. The Commission believes if it were to allow a bidder that defaults on multiple licenses to offset subsequent auction losses with subsequent auction gains, it might encourage insincere bidding and defaults by greatly reducing the effective penalty for a default. If aggregation of subsequent auction gains and subsequent auction losses would result in a net gain, the defaulting bidder would be required to pay only the 3 percent penalty, an amount that could be lower than the withdrawal payments determined on a license-by-license basis.

73. Background. In the Part 1 Third Report and Order, the Commission amended § 1.2108 of its rules to conform to the provisions in the Balanced Budget Act of 1997 regarding the filing period for petitions to deny the long-form applications of winning bidders. The Balanced Budget Act of 1997 gives the Commission authority to shorten the period in which license applications are granted, notwithstanding section 309(b) of the Communications Act which generally prohibits the Commission from granting applications for licenses prior to 30 days following public notice of their filing. Section 1.2108, as amended, provides that the Commission shall not grant a license less than seven days after public notice that long-form applications have been accepted for filing and that, in all cases, the period for filing petitions to deny such applications shall be no shorter than five days.

74. Although noting its belief that a shortened petition to deny period is appropriate for future auctions, the Commission sought comment on the appropriate length of a petition to deny period in light of this legislation. For example, the Commission sought comment on whether there are instances in which the Commission should provide for a longer period than the minimums set forth in the statute for the filing of petitions to deny or for the grant of initial licenses in auctionable services (five days and seven days, respectively). In particular, the Commission asked commenters to address whether auctions for specific services (e.g., broadcast licenses) require longer periods for the filing of petitions to deny and why this may be so. No comments on these matters were received.

75. Discussion. The Commission will adopt its proposal to shorten administrative filing periods, when possible, as directed by the Balanced Budget Act of 1997. This conclusion is consistent with the Commission's mandate in section 309(j)(3)(A) of the Communications Act, which obligates it to promote “the development and rapid deployment of new technologies, products, and services for the benefit of the public, including those residing in rural areas, without administrative or judicial delays.”

76. In order to have a consistent and general rule for filing petitions to deny, the Commission will establish a maximum ten-day period for the filing of such petitions. However, because the provision in the Balanced Budget Act anticipates—and the Commission believes—that the appropriate period for filing petitions to deny may vary from service to service, it will delegate to the appropriate licensing bureau the discretion, to be exercised in exigent circumstances, to reduce this period. This reduced filing period may not be shorter than that prescribed by the Balanced Budget Act. The Commission will increase the time period from 5 days (as originally adopted in the rule) to 10 days in order to afford parties (including small businesses) additional flexibility in challenging license awards. This approach, the Commission believes, is consistent with the intent of Congress in the Balanced Budget Act to more expeditiously resolve these disputes while, at the same time, ensuring that all parties (particularly small businesses) have a reasonable opportunity to exercise their rights under the Communications Act.

77. In the Part 1 Third Report and Order, the Commission stated that “[t]hese changes to our general competitive bidding rules are intended to streamline our regulations and eliminate unnecessary rules wherever possible * * *.” With the issuance of this Order on Reconsideration, Fifth Report and Order, the Commission has made a majority of the part 1, rule changes contemplated in its efforts to streamline the competitive bidding regulations. The next step in this process is to eliminate unnecessary rules to the best of the Commission's ability at this time. Some service-specific rules repeat portions of the Commission's new part 1 rules almost verbatim; others contain obvious discrepancies. In its attempt to provide the most specific guidance possible to future auction participants, the Commission believes it is in the public interest to conform the service-specific auction rules to the general competitive bidding rules in cases of obvious repetition and where the Commission specifically superseded inconsistent rules in the course of the part 1 proceeding. The Commission hereby instructs the Wireless Telecommunications Bureau to make conforming edits to the Code of Federal Regulations consistent with this decision.

78. Pursuant to the Regulatory Flexibility Act, 5 U.S.C. 604, a Supplemental Final Regulatory Flexibility Analysis for the Order on Reconsideration and a Final Regulatory Flexibility Analysis for the Fifth Report and Order is incorporated herein.

79. This Order on Reconsideration, Fifth Report and Order 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 collections contained in this Order on Reconsideration, Fifth Report and Order as required by the Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency comments are due on or before October 30, 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.

80. In addition to filing comments on the information collections contained in this Order on Reconsideration, Fifth Report and Order with the Secretary, a copy of any comments on the information collections 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, N.W., Washington, DC 20503 or via the Internet to edward.springer@omb.eop.gov.

81. For further information concerning this Order on Reconsideration, Fifth Report and Order, contact Leora Hochstein at (202) 418-1022 (Auctions and Industry Analysis Division, Wireless Telecommunications Bureau). For additional information concerning the information collections contained in this Order on Reconsideration, Fifth Report and Order, contact Judy Boley at (202) 418-0214 or via the Internet at jboley@fcc.gov.

82. Authority for issuance of this Order on Reconsideration, Fifth Report and Order is contained in sections 4(i), 303(r) and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r) and 309(j).

83. Accordingly, it is ordered that, pursuant to the authority granted in sections 4(i), 5(b), 5(c)(1), 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 155(b), 155(c)(1), 303(r), and 309(j), part 1 of the Commission's rules is amended as specified, effective October 30, 2000, following OMB approval, unless a document is published in the Federal Register stating otherwise.

84. It is further ordered that the Commission's Consumer Information Bureau, Reference Operations Division, shall send a copy of this Order on Reconsideration, Fifth Report and Order, including the Supplemental Final Regulatory Flexibility Analysis, the Final Regulatory Flexibility Analysis to the Chief Counsel for Advocacy of the Small Business Administration.

85. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the FNPRM (published elsewhere in this issue of the Federal Register) in WT Docket No. 97-82. The Commission sought written public comment on the proposals in the FNPRM, including comment on the IRFA. A Final Regulatory Flexibility Analysis (FRFA) was incorporated in the report and order section of the Part 1 Third Report and Order and Second FNPRM. The Commission received seven petitions for reconsideration in response to the Part 1 Third Report and Order and two comments in support of the petitions for reconsideration. This supplemental FRFA analyzes the modifications adopted in response to those petitions and comments, and conforms to the RFA.

86. The Order on Reconsideration of the Third Report and Order (“Order on Reconsideration”) amends and clarifies the Commission's general competitive bidding rules for all auctionable services. Specifically, the Commission clarifies that the prohibition on collusion begins on the filing deadline for short-form applications and ends on the down payment deadline. In addition, the Commission clarifies and corrects the ownership disclosure requirements. With respect to entities not seeking designated entity status, the Commission eliminates the requirement to include debt and instruments such as warrants, convertible debentures, options and other debt interests in reporting their ownership interests. The Commission also amends its rules to clarify that in the case of multiple bid withdrawals on a single license, within the same or subsequent auction(s), the payment for each bid withdrawal will be calculated based on the sequence of bid withdrawals and the amounts withdrawn. The Commission further amends its rules to provide that in instances in which bids have been withdrawn on a license that is not won in the same auction, the Commission will assess an interim withdrawal payment equal to 3 percent of the amount of the bid withdrawals. In addition, the Commission retains, for the most part, the installment payment grace period and late payment fee provisions adopted in the Part 1 Third Report and Order, but adopts a slight modification to the payment due dates for late installment payments and associated late fees. The Commission also concludes that licensees defaulting on installment payments are subject to the default provisions of § 1.2110(f)(4) of its rules (redesignated herein as § 1.2110(g)(4)) and not to § 1.2104(g). The Commission incorporates into the part 1 general competitive bidding rules the “former defaulter” policies adopted with respect to C block auction applicants. The Commission clarifies the circumstances under which installment payment defaulters will be eligible to participate in future auctions. Finally, the Order on Reconsideration makes a number of clarifications with respect to the restructuring of installment payments, the assignment and transfer of licenses paid for through installment payments, and the unjust enrichment rules for bidding credits.

87. These amendments and clarifications are intended to simplify the Commission's general competitive bidding rules, increase the efficiency of the competitive bidding process, and provide more specific guidance to auction participants.

88. No petitions for reconsideration directly addressed the FRFA contained in the Part 1 Third Report and Order. The Commission, however, did receive petitions for reconsideration of the Part 1 Third Report and Order that addressed issues affecting small businesses. In particular, the Commission received petitions opposing various aspects of the installment payment grace period and late payment fee provisions adopted in the Part 1 Third Report and Order. The Order on Reconsideration addresses petitioners' arguments and concludes that the revised late payment rules relating to the submission of installment payments are not commercially unreasonable, do not constitute impermissible retroactive rulemaking, and do not violate basic contract principles. The Commission further determines that the modified grace period and late payment fee provisions apply to 900 MHz SMR and MDS licensees that have signed Promissory Notes and Security Agreements. In addition, the Commission adopts a slight modification to the payment due dates for late installment payments and associated late fees in order to avoid any confusion as to when such payments are due. The Commission clarifies that, despite amendments to the installment payment rules, licensees in the installment payment program continue to have the opportunity to seek restructuring of installment payments. The Commission notes, however, that there is no longer a procedure for requesting a grace period to stay installment payment deadlines pending such restructuring. Rather, licensees will be subject to the automatic late payment provisions of § 1.2110(g) of the Commission's rules as adopted in this Order on Reconsideration. The Commission further clarifies in response to comments that the assignee or transferee of a license paid for through installment payments is not responsible for the license debt until the assignment of license or transfer of control has been consummated. Also in response to requests for clarification, the Commission clarifies that the unjust enrichment rules for bidding credits do not apply to assignments and transfers of C and F block licenses to non-entrepreneurs.

89. The Commission is required to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern,” under section 3 of the Small Business Act, unless the Commission has developed one or more definitions that are appropriate for its activities. Under the Small Business Act, a “small business concern” is one which: (i) is independently owned and operated; (ii) is not dominant in its field of operation; and (iii) meets any additional criteria established by the Small Business Administration (SBA). A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities and towns; of these, 37,566, or 96 percent, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, the Commission estimates that 81,600 (96 percent) are small entities. Nationwide, there are 4.44 million small business firms, according to SBA reporting data.

90. The rules adopted in the Order on Reconsideration apply to all entities, including small entities, seeking to obtain licenses in auctionable services through competitive bidding. These rules generally apply to future auctions. In estimating the number of small entities that may participate in future auctions of radio services, the Commission anticipates that current radio services licensees are representative of future auction participants. The following is the Commission's estimate of the number of small entities that are current radio licensees:

Cellular Licensees. Neither the Commission nor the SBA has developed a definition of small entities applicable to cellular licensees. Therefore, the applicable definition of small entity is the definition under the SBA rules applicable to radiotelephone (wireless) companies. This definition provides that a small entity is a radiotelephone company employing no more than 1,500 persons. According to the Bureau of the Census, only 12 radiotelephone firms out of a total of 1,178 such firms that operated during 1992 had 1,000 or more employees. Therefore, even if all 12 of these firms were cellular telephone companies, nearly all, cellular carriers were small businesses under the SBA's definition. In addition, the Commission notes that there are 1,758 cellular licenses; however, it does not know the number of cellular licensees, since a cellular licensee may own several licenses. The most reliable source of information regarding the number of cellular service providers nationwide appears to be data the Commission publishes annually in its Telecommunications Industry Revenue report, regarding the Telecommunications Relay Service (TRS). The report places cellular licensees and Personal Communications Service (PCS) licensees in one group. According to the most recent Telecommunications Industry Revenue data, 808 carriers reported that they were engaged in the provision of either cellular service or Personal Communications Service (PCS) services. The Commission does not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of cellular service carriers that would qualify as small business concerns under the SBA's definition. Consequently, the Commission estimates that there are no more than 808 small cellular service carriers.

220 MHz Radio Service—Phase I Licensees. The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a definition of small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, the Commission applies the definition under the SBA rules applicable to radiotelephone communications companies. This definition provides that a small entity is a radiotelephone company employing no more than 1,500 persons. According to a 1995 estimate by the Bureau of the Census, only 12 radiotelephone firms out of a total of 1,178 such firms that operated during 1992 had 1,000 or more employees. Therefore, assuming this general ratio has not changed significantly in recent years in the context of Phase I 220 MHz licensees, the Commission estimates that nearly all such licensees are small businesses under the SBA's definition.

220 MHz Radio Service—Phase II Licensees. The Phase II 220 MHz service is a new service, and is subject to spectrum auctions. In the 220 MHz Third Report and Order, 62 FR 16004 (April 3, 1997) the Commission adopted criteria for defining small businesses and very small businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. The Commission has defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. Additionally, a very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA has approved these definitions. An auction of Phase II licenses commenced on September 15, 1998, and closed on October 22, 1998. Nine hundred and eight (908) licenses were auctioned in 3 different-sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (“REAG”) licenses, and 875 Economic Area (EA) licenses. Of the 908 licenses auctioned, 693 were sold. Companies claiming small business status won: 1 of the Nationwide licenses, 67% of the Regional licenses, 47% of the REAG licenses and 54% of the EA licenses. As of January 22, 1999, the Commission announced that it was prepared to grant 654 of the Phase II licenses won at auction. A second 220 MHz Radio Service auction began on June 8, 1999 and closed on June 30, 1999. This auction offered 225 licenses in 87 EAs and four REAGs. (A total of 9 REAG licenses and 216 EA licenses. No nationwide licenses were available in this auction.) Of the 215 EA licenses won, 153 EA licenses (71%) were won by bidders claiming small business status. Of the 7 REAG licenses won, 5 REAG licenses (71%) were won by bidders claiming small business status.

Private and Common Carrier Paging. The Commission has adopted a two-tier definition of small businesses in the context of auctioning licenses in the Common Carrier Paging and exclusive Private Carrier Paging services. A small business will be defined as either (1) an entity that, together with its affiliates and controlling principals, has average gross revenues for the three preceding years of not more than $3 million, or (2) an entity that, together with affiliates and controlling principals, has average gross revenues for the three preceding calendar years of not more than $15 million. Because the SBA has not yet approved this definition for paging services, the Commission will utilize the SBA's definition applicable to radiotelephone companies, i.e., an entity employing no more than 1,500 persons. At present, there are approximately 24,000 Private Paging licenses and 74,000 Common Carrier Paging licenses. According to the most recent Telecommunications Industry Revenue data, 172 carriers reported that they were engaged in the provision of either paging or “other mobile” services, which are placed together in the data. The Commission does not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of paging carriers that would qualify as small business concerns under the SBA's definition. Consequently, the Commission estimates that there are no more than 172 small paging carriers. The Commission estimates that the majority of private and common carrier paging providers would qualify as small entities under the SBA definition.

Mobile Service Carriers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to mobile service carriers, such as paging companies. As noted in the section concerning paging service carriers, the closest applicable definition under the SBA rules is that for radiotelephone (wireless) companies, and the most recent Telecommunications Industry Revenue data shows that 172 carriers reported that they were engaged in the provision of either paging or “other mobile” services. Consequently, the Commission estimates that there are no more than 172 small mobile service carriers.

Broadband Personal Communications Service (PCS). The broadband PCS spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission defined “small entity” for blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. For block F, an additional classification for “very small business” was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These regulations defining “small entity” in the context of broadband PCS auctions have been approved by the SBA. No small businesses within the SBA-approved definition bid successfully for licenses in blocks A and B. There were 90 winning bidders that qualified as small entities in the C block auctions. A total of 93 small and very small business bidders won approximately 40% of the 1,479 licenses for blocks D, E, and F. On March 23, 1999, the Commission held another auction (Auction No. 22) of C, D, E, and F block licenses for PCS spectrum returned to the Commission by previous license holders. In that auction, 48 bidders claiming small business, very small business or entrepreneurial status won 272 of the 341 licenses (80%) offered. Based on this information, the Commission concludes that the number of small broadband PCS licensees includes the 90 winning C block bidders, the 93 qualifying bidders in the D, E, and F blocks, and the 48 winning bidders from Auction No. 22, for a total of 231 small entity PCS providers as defined by the SBA and the Commission's auction rules.

Narrowband PCS. The Commission has auctioned nationwide and regional licenses for narrowband PCS. There are 11 nationwide and 30 regional licensees for narrowband PCS. The Commission does not have sufficient information to determine whether any of these licensees are small businesses within the SBA-approved definition for radiotelephone companies. At present, there have been no auctions held for the major trading area (MTA) and basic trading area (BTA) narrowband PCS licenses. The Commission anticipates a total of 561 MTA licenses and 2,958 BTA licenses will be awarded by auction. Such auctions, however, have not yet been scheduled. Given that nearly all radiotelephone companies have no more than 1,500 employees and that no reliable estimate of the number of prospective MTA and BTA narrowband licensees can be made, the Commission assumes, for its purposes here, that all of the licenses will be awarded to small entities, as that term is defined by the SBA.

Rural Radiotelephone Service. The Commission has not adopted a definition of small entity specific to the Rural Radiotelephone Service. A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio Systems (BETRS). The Commission will use the SBA's definition applicable to radiotelephone companies, i.e., an entity employing no more than 1,500 persons. There are approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that almost all of them qualify as small entities under the SBA's definition.

Air-Ground Radiotelephone Service. The Commission has not adopted a definition of small entity specific to the Air-Ground Radiotelephone Service. Accordingly, the Commission will use the SBA's definition applicable to radiotelephone companies, i.e., an entity employing no more than 1,500 persons. There are approximately 100 licensees in the Air-Ground Radiotelephone Service, and the Commission estimates that almost all of them qualify as small under the SBA definition.

Specialized Mobile Radio (SMR). The Commission awards bidding credits in auctions for geographic area 800 MHz and 900 MHz SMR licenses to two tiers of firms: (1) “small entities,” those with revenues of no more than $15 million in each of the three previous calendar years; and (2) “very small entities,” those with revenues of no more than $3 million in each of the three previous calendar years. The regulations defining “small entity” and “very small entity” in the context of 800 MHz SMR (upper 10 MHz and lower 230 channels) and 900 MHz SMR have been approved by the SBA. The Commission does not know how many firms provide 800 MHz or 900 MHz geographic area SMR service pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. The Commission assumes, for its purposes here, that all of the remaining existing extended implementation authorizations are held by small entities, as that term is defined by the SBA. The Commission has held auctions for geographic area licenses in the 800 MHz (upper 10 MHz) and 900 MHz SMR bands. There were 60 winning bidders that qualified as small and very small entities in the 900 MHz auction. Of the 1,020 licenses won in the 900 MHz auction, 263 licenses were won by bidders qualifying as small and very small entities. In the 800 MHz SMR auction, 38 of the 524 licenses won were won by small and very small entities.

Private Land Mobile Radio (PLMR). PLMR systems serve an essential role in a range of industrial, business, land transportation, and public safety activities. These radios are used by companies of all sizes operating in all U.S. business categories. The Commission has not developed a definition of small entity specifically applicable to PLMR licensees due to the vast array of PLMR users. For the purpose of determining whether a licensee is a small business as defined by the SBA, each licensee would need to be evaluated within its own business area. The Commission is unable at this time to estimate the number of small businesses that could be affected by the rules. However, the Commission's 1994 Annual Report on PLMRs indicates that at the end of fiscal year 1994 there were 1,087,267 licensees operating 12,481,989 transmitters in the PLMR bands below 512 MHz. Any entity engaged in a commercial activity is eligible to hold a PLMR license. Therefore, these rules could potentially affect every small business in the United States if PLMR licenses are subject to auction.

Amateur Radio Service. The Commission estimates that 8,000 applicants will apply for vanity call signs in FY 2000. All are presumed to be individuals.

Aviation and Marine Radio Service. Small businesses in the aviation and marine radio services use a marine very high frequency (VHF) radio, any type of emergency position indicating radio beacon (EPIRB) and/or radar, a VHF aircraft radio, and/or any type of emergency locator transmitter (ELT). The Commission has not developed a definition of small entities specifically applicable to these small businesses. Therefore, the applicable definition of small entity is the definition under the SBA rules for radiotelephone communications. Most applicants for recreational licenses are individuals. Approximately 581,000 ship station licensees and 131,000 aircraft station licensees operate domestically and are not subject to the radio carriage requirements of any statute or treaty. Therefore, for purposes of its evaluations and conclusions here, the Commission estimates that there may be at least 712,000 potential licensees that are individuals or small entities, as that term is defined by the SBA.

Marine Coast Service. Between December 3, 1998 and December 14, 1998, the Commission held an auction of 42 VHF Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and 161.775-162.0125 MHz (coast transmit) bands. For purposes of this auction, and for future public coast auctions, the Commission defines a “small” business as an entity that, together with controlling interests and affiliates, has average gross revenues for the preceding three years not to exceed $15 million dollars. A “very small” business is one that, together with controlling interests and affiliates, has average gross revenues for the preceding three years not to exceed $3 million dollars. There are approximately 10,672 licensees in the Marine Coast Service, and the Commission estimates that almost all of them qualify as “small” businesses under the Commission's definition, which has been approved by the SBA.

Location and Monitoring Service (LMS). The SBA has not developed a definition of small entities specifically applicable to LMS licensees. Therefore, the applicable definition under SBA rules of a small entity is the definition under the rules applicable to radiotelephone (wireless) companies. This provides that a small entity is a radiotelephone company employing no more than 1,500 persons. According to the Bureau of the Census, only twelve radiotelephone firms out of a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. Therefore, using such data, even if all twelve of these firms were LMS companies, nearly all such carriers were small businesses under the SBA's definition. As a practical matter, there are only a handful of existing LMS licensees—those being those licensed under the former Automatic Vehicle Monitoring service.

Fixed Microwave Services. Microwave services include common carrier, private-operational fixed, and broadcast auxiliary radio services. At present, there are approximately 22,015 common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services. The Commission has not yet defined a small business with respect to microwave services. For its purposes here, the Commission will utilize the SBA's definition applicable to radiotelephone companies—i.e., an entity with no more than 1,500 persons. Under this definition, the Commission estimates that all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as small entities.

Local Multipoint Distribution Service. The Commission held two auctions for licenses in the Local Multipoint Distribution Services (LMDS) (Auction No. 17 and Auction No. 23). For both of these auctions, the Commission defined a small business as an entity, together with its affiliates and controlling principals, having average gross revenues for the three preceding years of no more than $15 million but not more than $40 million. A very small business was defined as an entity, together with affiliates and controlling principals, having average gross revenues for the three preceding years of not more than $15 million. Of the 144 winning bidders in Auction Nos. 17 and 23, 125 bidders (87%) were small or very small businesses.

24 GHz—Incumbent 24 GHz Licensees. The rules the Commission are adopting today may affect incumbent licensees who were relocated to the 24 GHz band from the 18 GHz band, and applicants who wish to provide services in the 24 GHz band. The Commission has not developed a definition of small entities applicable to licensees in the 24 GHz band. Therefore, the applicable definition of small entity is the definition under the SBA rules for the radiotelephone industry that provides that a small entity is a radiotelephone company employing fewer than 1,500 persons. The 1992 Census of Transportation, Communications, and Utilities, conducted by the Bureau of the Census, which is the most recent information available, 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. This information notwithstanding, the Commission believes that there are only two licensees in the 24 GHz band that were relocated from the 18 GHz band. Both licensees appear to have more than 1,500 employees. Therefore, it appears that no incumbent licensee in the 24 GHz band is a small business entity.

Future 24 GHz Licensees. The proposals also affect potential new licensees on the 24 GHz band. Pursuant to 47 CFR 24.720(b), the Commission has defined “small business” for Blocks C and F broadband PCS licensees as firms that had average gross revenues of less than $40 million in the three previous calendar years. This regulation defining “small business” in the context of broadband PCS auctions has been approved by the SBA. With respect to new applicants in the 24 GHz band, the Commission shall use this definition of “small business” and apply it to the 24 GHz band under the name “entrepreneur.” With regard to “small business,” the Commission shall adopt the definition of “very small business” used for 39 GHz licenses and PCS C and F block licenses: businesses with average annual gross revenues for the three preceding years not in excess of $15 million. Finally, “very small business” in the 24 GHz band shall be defined as an entity with average gross revenues not to exceed $3 million for the preceding three years. The Commission will not know how many licensees will be small or very small businesses until the auction, if required, is held. Even after that, the Commission will not know how many licensees will partition their license areas or disaggregate their spectrum blocks, if partitioning and disaggregation are allowed.

39 GHz. The Commission held an auction (Auction No. 30) for fixed point-to-point microwave licenses in the 38.6 to 40.0 GHz band (39 GHz Band). For this auction, the Commission defined a small business as an entity, together with affiliates and controlling interests, having average gross revenues for the three preceding years of not more than $40 million. A very small business was defined as an entity, together with affiliates and controlling principals, having average gross revenues for the three preceding years of not more than $15 million. The SBA has approved these definitions. Of the 29 winning bidders in Auction No. 30, 18 bidders (62%) were small business participants.

Multipoint Distribution Service (MDS). This service involves a variety of transmitters, which are used to relay data and programming to the home or office, similar to that provided by cable television systems. In connection with the 1996 MDS auction, the Commission defined small businesses as entities that had annual average gross revenues for the three preceding years not in excess of $40 million. This definition of a small entity in the context of MDS auctions has been approved by the SBA. These stations were licensed prior to implementation of section 309(j) of the Communications Act of 1934, as amended. Licenses for new MDS facilities are now awarded to auction winners in Basic Trading Areas (BTAs) and BTA-like areas. The MDS auctions resulted in 67 successful bidders obtaining licensing opportunities for 493 BTAs. Of the 67 auction winners, 61 meet the definition of a small business.

MDS is also heavily encumbered with licensees of stations authorized prior to the MDS auction. SBA has developed a definition of small entities for pay television services, which includes all such companies generating $11 million or less in annual receipts. This definition includes MDS systems, and thus applies to incumbent MDS licensees and wireless cable operators which may not have participated or been successful in the MDS auction. Information available to us indicates that there are 832 of these licensees and operators that do not generate revenue in excess of $11 million annually. Therefore, for purposes of this analysis, the Commission finds there are approximately 892 small MDS providers as defined by the SBA and the Commission's auction rules.

Public Safety Radio Services. Public Safety radio services include police, fire, local government, forestry conservation, highway maintenance, and emergency medical services. There are a total of approximately 127,540 licensees within these services. Governmental entities as well as private businesses comprise the licensees for these services. As noted, governmental entities with populations of less than 50,000 fall within the SBA definition of a small entity. There are 85,006 governmental entities in the nation, as of the last census. This number includes such entities as states, counties, cities, utility districts, and school districts. There are no figures available on what portion of this number has populations of fewer than 50,000; however, this number includes 38,978 counties, cities, and towns and of those, 37,566 or 96 percent, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, the Commission estimates that 96 percent or 81,600 are small entities that may be affected by its rules.

Offshore Radiotelephone Service. This service operates on several UHF TV broadcast channels that are not used for TV broadcasting in the coastal area of the states bordering the Gulf of Mexico. At present, there are approximately 55 licensees in this service. The Commission is unable at this time to estimate the number of licensees that would qualify as small under the SBA's definition for radiotelephone communications.

Wireless Communications Services. This service can be used for fixed, mobile, radio-location and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The Commission auctioned geographic area licenses in the WCS service. In the auction, there were seven winning bidders that qualified as very small business entities and one winning bidder that qualified as a small business entity. The Commission concludes that the number of geographic area WCS licensees affected includes these eight entities.

General Wireless Communication Service. This service was created by the Commission on July 31, 1995 by transferring 25 MHz of spectrum in the 4660-4685 MHz band from the federal government to private sector use. The Commission sought and obtained SBA approval of a refined definition of “small business” for GWCS in this band. According to this definition, a small business is any entity, together with its affiliates and entities holding controlling interests in the entity that has average annual gross revenues over the three preceding years that are not more than $40 million. By letter dated March 30, 1999, NTIA reclaimed the spectrum allocated to GWCS and identified alternative spectrum at 4940-4990 MHz. On February 23, 2000, the Commission released its Notice of Proposed Rule Making, 65 FR 14230 (March 16, 2000) in WT Docket No. 00-32 proposing to allocate and establish licensing and service rules for the 4.9 GHz band.

Television Broadcasting Stations. The SBA defines a television broadcasting station that has no more than $10.5 million in annual receipts as a small business. Television broadcasting stations consist of establishments primarily engaged in broadcasting visual programs by television to the public, except cable and other pay television services. Included in this industry are commercial, religious, educational, and other television stations. Also included are establishments primarily engaged in television broadcasting and which produce taped television program materials. Separate establishments primarily engaged in producing taped television program materials are classified under another SIC number.

There were 1,509 television stations operating in the nation in 1992. That number has remained fairly steady as indicated by the approximately 1,590 operating television broadcasting stations in the nation as of January 1999. For 1992, the number of television stations that produced less than $10.0 million in revenue was 1,155 establishments. Thus, of the 1,590 television stations approximately 77%, or 1,224, of those stations are considered small businesses. As of January 1999, 2136 low power television stations and 4921 television translator stations were also licensed, and the Commission believes the vast majority of these stations are small businesses. These estimates may overstate the number of small entities since the revenue figures on which they are based do not include or aggregate revenues from non-television affiliated companies.

Radio Broadcasting Stations. The SBA defines a radio broadcasting station that has no more than $5 million in annual receipts as a small business. A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public. Included in this industry are commercial, religious, educational and other radio stations. Radio broadcasting stations that primarily are engaged in radio broadcasting and that produce radio program materials are similarly included. However, radio stations that are separate establishments and are primarily engaged in producing radio program material are classified under another SIC number. The 1992 census indicates that 96% (5,861 of 6,127) of radio station establishments produced less than $5 million in revenue in 1992. Official Commission records indicate that 11,334 individual radio stations were operating in 1992. As of January 1999, official Commission records indicate that 12,496 radio stations were operating. The Commission concludes that a similarly high percentage (96%) of current radio broadcasting licensees are small entities. As of January 1999, there were also 3171 FM translator/booster stations licensed, and the Commission believes the vast majority of these stations are small businesses. These estimates may overstate the number of small entities since the revenue figures on which they are based do not include or aggregate revenues from non-radio affiliated companies.

Instructional Television Fixed Service (ITFS). In addition, there are presently 2032 ITFS licensees. All but 100 of these licenses are held by educational institutions. Educational institutions may be included in the definition of a small entity. ITFS is a non-pay, non-commercial educational microwave service that, depending on SBA categorization, has, as small entities, entities generating either $10.5 million or less, or $11.0 million or less, in annual receipts. However, the Commission does not collect, nor is it aware of other collections of, annual revenue data for ITFS licensees. Thus, the Commission concludes that up to 1932 of these licensees are small entities.

Pending and Future Broadcast Applicants. The Commission has given the SBA broadcast size standards, supra. The competitive bidding procedures set forth in the Order on Reconsideration will affect: (i) any entity with a pending application for a construction permit for a new full service commercial radio or analog television broadcast station, if mutually exclusive applications have been filed; (ii) any entity that files an application in the future for a new full service commercial radio or analog television station, if mutually exclusive applications are filed; (iii) any entity with a pending application on file, or filing an application in the future, for a new low power television station, or a television or FM translator station, if mutually exclusive applications have been or are filed; (iv) any entity that has a pending or future application to make a make a major change in an existing facility in any commercial broadcast or secondary broadcast service, if mutually exclusive applications have been or are filed; and (v) any entity that has filed or files in the future an application for a license for an ITFS station, if mutually exclusive applications have been filed or are filed. The Commission estimates that there are currently pending before the Commission the following mutually exclusive applications:

• approximately 620 mutually exclusive applications for full power commercial radio stations, and approximately 165 competing applications for full power commercial analog television stations;

• approximately 275 mutually exclusive applications for low power television stations and television translator stations, and approximately 20 competing applications for FM translator stations; and

• approximately 200 or more mutually exclusive applications for ITFS stations.

Although applicants for broadcast construction permits have been required to demonstrate sufficient financing to construct and initially operate the proposed broadcast station, the Commission does not require the filing of financial information specifically concerning the entity seeking a construction permit, such as the entity's annual revenues. Thus, the Commission has no data on file as to whether entities with pending permit applications, which are subject to the new competitive bidding selection procedures adopted for the broadcast services, meet the SBA's definition of a small business concern. However, the Commission concludes that, given the smaller size of the markets at issue in the pending applications, most of the entities with pending applications for a permit to construct a new primary or secondary broadcast station are small entities, as defined by the SBA rules.

In addition to the pending applicants that may be affected by the auction procedures adopted for the broadcast services, any entity that applies for a construction permit for a new broadcast station in the future will be subject to these competitive bidding rules if mutually exclusive applications are filed. It is not possible, at this time, to estimate the number of markets for which mutually exclusive applications will be received, nor the number of entities that in the future may seek a construction permit for a new broadcast station. Given the fact that fewer new stations (particularly fewer analog television stations) will be licensed in the future and that these stations generally will be located in smaller, more rural areas, the Commission concludes that most of the entities applying for these stations will be small entities, as defined by the SBA rules.

Digital Audio Radio Service (DARS). The Commission has not developed its own definition of “small entity” for purposes of licensing satellite delivered services. Accordingly, the Commission relies on the definition of “small entity” provided under the Small Business Administration (SBA) rules applicable to Communications Services, Not Elsewhere Classified. A “small entity” under these SBA rules is defined as an entity with $11.0 million or less in annual receipts. The two current U.S. satellite DARS licensees, XM Satellite Radio and Sirius Satellite Radio, are in the midst of deploying their systems, and appear to have no revenues. Thus, XM and Sirius are “small entities” under the SBA definition.

Direct-to-Home (DTH) Satellite Service—Direct Broadcast Satellite (DBS) and Home Satellite Services (HSD). Video service is available from high power DBS satellites that transmit signals to small DBS dish antennas installed at subscribers' premises, and from medium and low power satellites requiring larger satellite dish antennas. In the last year, DirecTV merged with United States Satellite Broadcasting Co., Inc. (USSB) and acquired PrimeStar. DirecTV and EchoStar are among the ten largest providers of multichannel video programming service. DBS represented a 12.5% share of the national MVPD market in June 1999 and HSD represented another 2.2% of that market. Thus, it appears that no DBS or HSD operators meet the SBA's definition of “small entity.”

91. One rule amendment adopted in this Order on Reconsideration will decrease the reporting requirements for entities not seeking designated entity status. Other rule amendments, however, may increase the reporting and recordkeeping requirements for all license applicants, including small entities.

92. Specifically, the Commission amends § 1.2112 of its rules to reduce the amount of ownership information that applicants must report on their short- and long-form applications. Section 1.2112 requires applicants to identify direct and indirect owners with an interest of 10 percent or greater. Previously under § 1.2112, in calculating the 10 percent interest, the Commission required applicants to include debt and interests such as warrants and convertible debentures, stock options, debt securities or other debt interests. In this Order on Reconsideration, the Commission amends § 1.2112 to provide that such interests need not be reported unless the entity is seeking status as a designated entity. For the purpose of determining designated entity status and eligibility for bidding credits, the Commission believes that warrants, convertible debentures, options and other debt interests should be treated as having been exercised. For the broader purpose of determining all applicants' ownership interests, the Commission will not require information regarding interests in an applicant that have not yet vested.

93. The Commission amends its general competitive bidding rules to permit “former defaulters,” i.e., applicants that have defaulted or been delinquent in the past, but have since paid all of their outstanding non-Internal Revenue Service Federal debts and all associated charges or penalties, to certify on FCC Form 175 that they are not in default and are, therefore, eligible for auction participation. “Former defaulters” will be required to pay an upfront payment amount of 1.5 times the normal amount set by the Bureau for any given license in a Commission auction. So that the Bureau may implement this rule, it will require applicants to make an additional certification revealing whether they or any of their controlling interests or affiliates have ever been in default on any Commission license or have ever been delinquent on any non-tax debt owed to any Federal agency.

94. The Order on Reconsideration also clarifies that the assignee or transferee of a license paid for through installment payments is not responsible for the license debt until the assignment or transfer has been consummated. There may be cases in which the Commission believes that an assignment or transfer has been consummated when it has not. In such instances, the Commission may mistakenly initiate debt collection procedures against the wrong party. If such action occurs, the affected party should notify the Commission in writing that the underlying transaction was not consummated and the Commission will stop its debt collection proceedings against that party.

95. Incorporation into the part 1 general competitive bidding rules of the “former defaulter” policies adopted with respect to C block auction applicants will provide more opportunities for all entities, including small entities, to participate in spectrum auctions. The “former defaulter” policies adopted herein permit all “former defaulters” including small entities, to participate in future spectrum auctions under certain conditions.

96. All petitioners in this proceeding oppose some aspect of the Commission's installment payment grace period and late payment fee provisions adopted in the Part 1 Third Report and Order. The Commission has reviewed petitioners' arguments and concludes that it will retain these provisions, but will adopt a slight modification to the payment due dates for late installment payments and associated late fees. Specifically, the Commission amends the due dates for installment payments to comport with quarterly due dates. An alternative would be to maintain the current rules, but this modification may avoid confusion as to when such payments are due. Revisions to the Commission's installment payment rules were first proposed in the notice section of the Order, Memorandum Opinion and Order and Notice of Proposed Rule Making, 62 FR 13540 (March 21, 1997). Comments on installment payment issues were received and addressed in the Part 1 Third Report and Order. In response to the Part 1 Third Report and Order, the Commission received petitions for reconsideration of its installment payment grace period and late payment fee provisions. In concluding to retain these provisions in this Order on Reconsideration, the Commission has thoroughly reviewed and carefully evaluated all of the opposing arguments presented. The Commission rejected the alternative of reinstating the requirement for licensees using installment payments to submit grace period requests demonstrating financial needs due, in part, to the burdens that procedure imposes on small business licensees.

97. The Commission determines that the revised late payment rules relating to the submission of installment payments are not commercially unreasonable, do not constitute impermissible retroactive rulemaking, and do not violate basic contract principles. The late installment payment provisions were not intended to serve as a tool that licensees might use in their normal course of planning auction strategy and build-out. These provisions are provided for extraordinary circumstances—instances of financial distress—for which temporary relief is appropriate. The Commission considered a number of alternatives presented by petitioners, but found that those proposals were not consistent with the Commissions fundamental goal in adopting the late payment provisions, which is to encourage payment on the due date. The Commission has determined that this goal is best attainable by adhering to the 5 percent and 10 percent late payment fee schedule adopted in the Part 1 Third Report and Order. The Commission further determines that the modified grace period and late payment fee provisions apply to 900 MHz SMR and MDS licensees that have signed Promissory Notes and Security Agreements. The SMR and MDS notes emphasized that the Commission's rules, as amended, would take precedence over the terms of the notes in case of any conflict. The Commission clarifies that, despite amendments to the installment payment rules, licensees in the installment payment program continue to have the opportunity to seek restructuring of installment payments. The Commission notes, however, that there is no longer a procedure for requesting a grace period to stay installment payment deadlines pending such restructuring. Rather, licensees will be subject to the automatic late payment provisions of § 1.2110(g) of the Commission's rules as adopted in this Order on Reconsideration.

98. The Commission shall send a copy of this Final Regulatory Flexibility Analysis, along with this Order on Reconsideration, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). See 5 U.S.C. § 604(b). A copy of the Order and this FRFA will also be sent to the Chief Counsel for Advocacy of the Small Business Administration.

99. This Final Regulatory Flexibility Analysis (FRFA) in the Fifth Report and Order conforms to the RFA, as amended by the Contract With America Advancement Act of 1996 (CWAAA), Public Law 104-121, 110 Stat. 847 (1996).

100. The Fifth Report and Order makes substantive amendments to the Commission's general competitive bidding rules for auctionable services. Specifically, the Fifth Report and Order adopts a “controlling interest” standard for the attribution of gross revenues in determining whether a license applicant qualifies as a small business. The “controlling interest” standard is intended to prevent larger firms from illegitimately seeking status as small businesses and ensure that only those entities truly meriting small business status are eligible for the small business provisions. In addition, the Fifth Report and Order establishes a maximum 10-day filing period for the submission of petitions to deny the long-form applications of winning bidders. The Commission increases the filing period from 5 days (as adopted in the Part 1 Third Report and Order) to 10 days in order to afford parties (including small businesses) additional flexibility in challenging license awards. The Commission also delegates to the Wireless Telecommunications Bureau the authority to make any revisions to the Code of Federal Regulations that are necessary to conform the service-specific auction rules to the part 1 general competitive bidding rules. Finally, the Commission addresses other issues raised by the Second FNPRM and affirms its existing rules relative to those issues.

101. No comments were received directly in response to the IRFA. The Commission, however, did receive comments on issues affecting small businesses in response to the Second FNPRM. Specifically, a commenter proposed that the Commission establish geographic area licenses no larger than BTAs in all future auctions. Commenter argued that the use of small areas facilitates the delivery of service to rural areas by increasing the opportunity for rural small businesses and rural telephone companies to acquire licenses. Commenter also contends that authorizing smaller geographic areas increases the number of licenses available and the diversity of licenses, and facilitates the buildout of networks. The Commission rejects the commenter's proposal. Section 309(j) of the Communications Act requires the Commission to disseminate licenses to a wide variety of applicants, including small businesses and rural telephone companies, and to promote the development and rapid deployment of new technologies to the public, including those residing in rural areas. The Commission believes that it can best satisfy this mandate by establishing license areas that promote these goals on a service-specific basis. Although the Commission has used small license areas in several services (e.g., broadband PCS D, E and F blocks and LMDS) and may do so in specific services in the future, it is unwilling to limit its flexibility by adopting an ironclad rule against large service areas. The Commission anticipates, for example, that certain satellite-based services may not be particularly suited to small geographic area licensing, while other services may indeed be more suitable for this type of license category (i.e., the broadband PCS C block auction).

102. Comments were also filed in response to the Commission's proposal to adopt a “controlling interest” standard as its general attribution rule for determining which applicants qualify as small businesses. In this Fifth Report and Order, the Commission adopts a “controlling interest” standard and addresses the related comments. Under the “controlling interest” standard, the gross revenues of the applicant, its controlling interests and their affiliates will be aggregated and attributed to the applicant in determining whether the applicant qualifies as a small business. A “controlling interest” includes individuals or entities that have control of the applicant as determined by the principles of de jure or de facto control.

103. Commenters raised various issues regarding the attribution standard. Some commenters expressed concern over whether the revenues of so called “passive investors” would be attributed to the applicant. The Commission states that the controlling interest standard adopted herein will be applied to all investors of the applicant. In other words, if any investor has either de jure or de facto control of the applicant, that investor's gross revenues will be attributed to the applicant for purposes of determining whether the applicant qualifies as a small business. Some commenters suggested that the Commission adopt a minimum equity requirement for controlling interests. The Commission concludes that rather than focusing solely on equity-holdings, applicants will be required to identify those controlling interests that actually have control through application of the principles of de jure or de facto control. A Commenter urges the Commission not to amend its attribution rules to include entities that have management and joint marketing agreements with the applicant or licensee. The Commission adopts provisions that make attributable the gross revenues of those that have management or marketing agreements where such agreements grant authority over key aspects of the applicant's or licensee's business. Another commenter urges the Commission not to apply any new attribution or affiliation rules adopted in this proceeding to current C block licensees that won their licenses under the control group broadband PCS rules. The Commission will not reassess the eligibility of current C and F block licensees to continue to hold their licenses under the new attribution rules adopted herein. These licensees will remain eligible to hold their licenses regardless of whether or not they would qualify under the newly established attribution rules. As to future C and F block auctions, however, all applicants, including existing C and F block licensees, will be subject to the attribution rules in effect at the time of filing their short-form applications. For auctions that begin within two years after the start of Auction No. 22 (March 23, 1999), the Commission's new attribution rules will have no effect on the eligibility as an entrepreneur of any entity that was eligible for, and participated in, Auction No.5 or Auction No.10. Eligibility for small business preferences, however, will be determined based on the attribution rules in effect at the time of an applicant's short-form filing.

104. The Commission is required to provide a description of, and, where feasible, an estimate of, the number of small entities that may be affected by the proposed rules, if adopted. The rules adopted in this Fifth Report and Order apply to all entities, including small entities, seeking to obtain licenses in auctionable services through competitive bidding. These rules generally apply to future auctions. In estimating the number of small entities that may participate in future auctions of wireless services, the Commission anticipates that current wireless services licensees are representative of future auction participants. The Commission hereby incorporates into this FRFA section the detailed Supplemental FRFA analysis and descriptions of potentially affected small entities, supra, including the cellular, broadband and narrowband PCS, 220 MHz, paging, mobile service, air-ground, SMR, PLMR, aviation and marine, offshore radiotelephone services, GWCS, fixed microwave, rural, wireless, public safety, governmental entities and Marine Coast Services.

105. All license applicants are subject to the reporting and record-keeping requirements of the competitive bidding rules. Specifically, applicants are required to apply for spectrum auctions by filing a short-form application prior to auction. Applicants are also required to file a long-form application at the conclusion of an auction. Entities seeking treatment as “small businesses” must disclose on their short-and long-form applications, separately and in the aggregate, the gross revenues of the applicant, its controlling interests (as that term is defined in the Fifth Report and Order), and their affiliates.

106. The Commission has considered the economic impact on small entities of the following rules and modifications adopted in the Fifth Report and Order and has taken steps to minimize the burdens on small entities.

Attribution of Gross Revenues of Investors and Affiliates. The Commission adopts a “controlling interest” standard for attributing to an applicant the gross revenues of its investors and affiliates in determining whether the applicant qualifies as a small business. Application of the controlling interest standard protects the interests of small businesses by preventing larger firms from illegitimately seeking small business status and ensuring that only those entities truly meriting such status are eligible for the small business provisions. The Commission further concludes that the eligibility of current C and F block licensees to continue to hold their licenses will not be reassessed based on the new attribution rules. Therefore, these licensees will continue to be eligible to hold their licenses regardless of whether or not they would qualify under the newly established attribution rules. By applying the current, rather than the new, rules to existing C and F block licensees, the Commission eliminates the burden on such licensees of having to restructure to meet new standards in order to remain licensees.

Administrative Filing Periods for Applications and Petitions to Deny. The Commission establishes a maximum 10-day filing period for submitting petitions to deny against long-form applications. The Commission increases the filing period from 5 days (as adopted in the Part 1 Third Report and Order) to 10 days in order to afford parties (including small businesses) additional flexibility in challenging license applications.

107. In addition to the modifications adopted in this Fifth Report and Order, the Commission affirms its existing rules with respect to certain other issues affecting small businesses. Specifically, the Commission declines, at this time, to adopt special provisions for minority-and women-owned businesses pending completion of a series of market studies to determine whether, and under what circumstances, targeted preferences for minorities and women are appropriate. The Commission notes, however that minority-and women-owned businesses that qualify as small businesses may take advantage of the provisions adopted for small businesses. In addition, the Commission declines, at this time, to adopt special provisions for rural telephone companies, such as bidding preferences or an unserved area fill-in policy. The Commission notes, however, that it will continue to provide rural telephone companies with bidding credits should such entities qualify as small businesses. The Commission further determines that, for the time being, it will not offer installment payments for auctionable services. The Commission notes that commenters did not offer suggestions as to how to retain the program or alternatives to replace the program. The Commission states that it will, as it has done in the LMDS, LMS, 220 MHz Service, and VHF Public Coast Service auctions, continue to provide small businesses with bidding credits.

108. The Commission shall send a copy of this Final Regulatory Flexibility Analysis, along with the Fifth Report and Order, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801(a)(1)(A). See 5 U.S.C. § 604(b). A copy of the Order and this FRFA will also be sent to the Chief Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.

(2) Default or disqualification after close of auction. A bidder assumes a binding obligation to pay its full bid amount upon acceptance of the high bid at the close of an auction. If a high bidder defaults or is disqualified after the close of such an auction, the defaulting bidder will be subject to the payment in paragraph (g)(1) of this section plus an additional payment equal to 3 percent of the subsequent winning bid. If the subsequent winning bid exceeds the defaulting bidder's bid amount, the 3 percent payment will be calculated based on the defaulting bidder's bid amount. If either bid amount is subject to a bidding credit, the 3 percent credit will be calculated using the same bid amounts and basis (net or gross bids) as in the calculation of the payment in paragraph (g)(1) of this section. Thus, for example, if gross bids are used to calculate the payment in paragraph (g)(1) of this section, the 3 percent will be applied to the gross amount of the subsequent winning bid, or the gross amount of the defaulting bid, whichever is less.

This is a summary of the Commission's Report and Order, MM Docket No. 99-356, adopted July 26, 2000, and released August 4, 2000. The full text of this Commission decision is available for inspection and copying during normal business hours in the Commission's Reference Center, 445 12th Street, SW, Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractors, International Transcription Services, Inc., 1231 20th Street, NW., Washington, DC 20036, (202) 857-3800, facsimile (202) 857-3805.

All sea turtles that occur in U.S. waters are listed as either endangered or threatened under the Endangered Species Act of 1973 (ESA). The Kemp's ridley (Lepidochelys kempii), leatherback (Dermochelys coriacea), and hawksbill (Eretmochelys imbricata) are listed as endangered. Loggerhead (Caretta caretta) and green (Chelonia mydas) turtles are listed as threatened, except for populations of green turtles in Florida and on the Pacific coast of Mexico, which are listed as endangered.

The incidental take of these species as a result of shrimp trawling activities has been documented in the Gulf of Mexico and along the Atlantic. Under the ESA and its implementing regulations, taking sea turtles is prohibited, with exceptions identified in 50 CFR 223.206. Existing sea turtle conservation regulations (50 CFR part 223, subpart B) require most shrimp trawlers operating in the Gulf and Atlantic areas to have a NMFS-approved TED installed in each net rigged for fishing, year-round.

The regulations provide for the use of limited tow times as an alternative to the use of TEDs for vessels with certain specified characteristics or under certain special circumstances. The provisions of 50 CFR 223.206 (d)(3)(ii) specify that the Assistant Administrator for Fisheries, NOAA (AA), may authorize compliance with tow time restrictions as an alternative to the TED requirement, if [she] determines that the presence of algae, seaweed, debris, or other special environmental conditions in a particular area makes trawling with TED-equipped nets impracticable. The provisions of 50 CFR 223.206(d)(3)(i) specify the maximum tow times that may be used when tow-time limits are authorized as an alternative to the use of TEDs. The tow times may be no more than 55 minutes from April 1 through October 31 and no more than 75 minutes from November 1 through March 31. These tow time limits are designed to minimize the level of mortality of sea turtles that are captured by trawl nets not equipped with TEDs.

The Texas Parks and Wildlife Department (TPWD), informed the NMFS Southeast Regional Administrator on August 18, 2000, that the shrimp fishery in Galveston Bay has been experiencing serious problems since early August caused by an unusually high abundance of the bryozoan, Zoobotryon verticillatum. TPWD has observed heavy catches of the bryozoans in working shrimp vessels in Galveston Bay, and has supplied NMFS with photographic documentation of the problem. TPWD divers have also encountered the bryozoans in mats over 2 feet (61 cm) thick along the bottom of the bay.

Drought conditions have produced salinities exceeding 30 parts per thousand in Galveston Bay. Elevated salinities and water temperatures are believed to be responsible for the extraordinarily high concentrations of bryozoans, Zoobotryon verticillatum. The dense, filamentous bryozoan fills shrimp nets and becomes lodged in the TEDs after relatively short periods of towing, rendering the TEDs ineffective in expelling sea turtles from the shrimp nets as well as negatively impacting fishermen's catches.

The TPWD requested that NMFS use its authority to allow the use of limited tow times for a 30-day period as an alternative to the use of TEDs in Galveston Bay, north of the Galveston jetties, east of the Galveston Island Interstate-45 Causeway, west of the “Shellfish Line” in East Bay (the line running from the entrance to Robinson Bayou to the tide gauge at Marsh Point), and, in Upper Galveston Bay, south of the overhead power lines crossing from near Evergreen Point to near Barbours Cut, and, in Trinity Bay, south of the line running from the entrance of Double Bayou to Umbrella Point. Essentially, most of Galveston Bay, excluding the upper half of Trinity Bay and the eastern quarter of East Bay, is included in the exemption area requested by TPWD. According to local shrimpers, they were able to relocate to bryozoan-free areas initially, but, as the bryozoan concentration has spread, they are unable to find clear areas to trawl throughout virtually all of the bay. TPWD's investigation has confirmed the widespread nature of the problem. Under the current conditions, tows longer than 20-30 minutes cannot be made because of the large catches of bryozoans. Shrimpers report that shrimp can be found interspersed within the bryozoan mats. TEDs become quickly blocked with the organisms, making them non-functional for turtle escape and sometimes requiring shrimpers to empty the net from the mouth rather than the tail bag. This process is much slower and a sea turtle that might be incidentally caught with the bryozoan mats would be submerged for a longer period of time than if the net can be emptied from the tail bag.

The AA finds that the impacts of the current drought conditions in eastern Texas on Galveston Bay have created special environmental conditions that may make trawling with TED-equipped nets impracticable. Therefore, the AA issues this notification to authorize the use of restricted tow times as an alternative to the use of TEDs in inshore waters of Galveston Bay. TPWD is continuing to monitor the situation and will cooperate with NMFS in determining the ongoing extent of the bryozoan occurrence in Galveston Bay. Moreover, TPWD has stated that TPWD game wardens would enforce the restricted tow times and commit additional effort to the task. Ensuring compliance with tow time restrictions is critical to effective sea turtle protection, and the commitment from the TPWD Director of Coastal Fisheries to provide additional enforcement of the tow time restrictions is an important factor enabling NMFS to issue this authorization. NMFS and TPWD will monitor the situation to ensure there is adequate protection for sea turtles in this area and to determine whether bryozoan concentrations continue to make TED use impracticable.

NMFS encourages shrimp trawlers in Galveston Bay, Texas, to continue to use TEDs if possible, even though they are authorized under this action to use restricted tow times. NMFS studies have shown that the problem of clogging by seagrass, algae or debris is not unique to TED-equipped nets. When fishermen trawl in problem areas, they may experience clogging with or without TEDs. A particular concern of fishermen, however, is that clogging in a TED-equipped net may hold open the turtle escape opening and increase the risk of shrimp loss. If shrimpers intend primarily to harvest shrimp that are intermixed with the bryozoans, then they will most likely want to remove their TEDs, but they will have to contend with extremely heavy catches of the bryozoan that will force them to use very short tows. On the other hand, TEDs do help exclude certain types of debris and allow shrimpers to conduct longer tows.

Shrimpers should consider legally modifying their TEDs to exclude the bryozoan mats to allow them to catch shrimp in clear areas of bottom. NMFS' gear experts recommend several modifications to maximize the debris exclusion ability of TEDs that may allow some fishermen to continue using TEDs without resorting to restricted tow times. To exclude debris, NMFS recommends the use of hard TEDs made of either solid rod or of hollow pipe that incorporate a bent angle at the escape opening, in a bottom-opening configuration. In addition, the installation angle of a hard TED in the trawl extension is an important performance element in excluding debris from the trawl. High installation angles can result in debris clogging the bars of the TED; NMFS recommends an installation angle of 45°, relative to the normal horizontal flow of water through the trawl, to optimize the TED's ability to exclude turtles and debris. Even lower angles may be necessary to exclude the bulky bryozoan. Furthermore, the use of accelerator funnels, which are allowable modifications to hard TEDs, is not recommended in areas with heavy amounts of debris or vegetation. Lastly, the webbing flap that is usually installed to cover the turtle escape opening may be modified to help exclude debris quickly: the webbing flap can either be cut horizontally to shorten it so that it does not overlap the frame of the TED or be slit in a fore-and-aft direction to facilitate the exclusion of debris.

All of these recommendations represent legal configurations of TEDs for shrimpers fishing in inshore waters of Galveston Bay who are not subject to special requirements effective in the Gulf Shrimp Fishery-Sea Turtle Conservation Area. This action does not authorize any other departure from the TED requirements, including any illegal modifications to TEDs. In particular, if TEDs are installed in trawl nets, they may not be sewn shut.

The authorization provided by this temporary rule applies to all shrimp trawlers that would otherwise be required to use TEDs in accordance with the requirements of 50 CFR 223.206(d)(2) who are operating in inshore waters of Galveston Bay, Texas, north of the Galveston jetties, east of the Galveston Island Interstate-45 Causeway, west of the “Shellfish Line” in East Bay (the line running from the entrance to Robinson Bayou to the tide gauge at Marsh Point), and, in Upper Galveston Bay, south of the overhead power lines crossing from near Evergreen Point to near Barbours Cut, and, in Trinity Bay, south of a line running from the entrance of Double Bayou to Umbrella Point. “ Inshore waters,” as defined at 50 CFR 222.102, means the marine and tidal waters landward of the 72 COLREGS demarcation line (International Regulations for Preventing Collisions at Sea, 1972), as depicted or noted on nautical charts published by NOAA (Coast Charts, 1:80,000 scale) and as described in 33 CFR part 80. Instead of the required use of TEDs, shrimp trawlers may opt to comply with the sea turtle conservation regulations by using restricted tow times. A shrimp trawler utilizing this authorization must limit tow times to no more than 55 minutes, measured from the time trawl doors enter the water until they are retrieved from the water. This authorization is in effect until 11:59 p.m. local time on September 22, 2000.

The AA, at any time, may modify the alternative conservation measures through publication in the Federal Register, if necessary to ensure adequate protection of endangered and threatened sea turtles. Under this procedure, the AA may modify the affected area or impose any necessary additional or more stringent measures, including more restrictive tow times or synchronized tow times, if the AA determines that the alternative authorized by this temporary rule is not sufficiently protecting turtles, as evidenced by observed lethal takes of turtles aboard shrimp trawlers, elevated sea turtle strandings, or insufficient compliance with the authorized alternative. The AA may also terminate this authorization for these same reasons, or if compliance cannot be monitored effectively, or if conditions do not make trawling with TEDs impracticable. The AA may modify or terminate this authorization, as appropriate, at any time. A document will be published in the Federal Register announcing any additional sea turtle conservation measures or the termination of the tow time option in Galveston Bay. This authorization will expire automatically at 11:59 p.m. on September 22, 2000, unless it is explicitly extended through another notification published in the Federal Register.

This action has been determined to be not significant for purposes of Executive Order 12866.

The AA has determined that this action is necessary to respond to an emergency situation to allow more efficient fishing for shrimp, while providing adequate protection for endangered and threatened sea turtles pursuant to the ESA and other applicable law.

Pursuant to 5 U.S.C. 553(b)(B), the AA finds that there is good cause to waive prior notice and opportunity to comment on this temporary rule. It is impracticable and contrary to the public interest to provide prior notice and opportunity for comment. The AA finds that unusually high densities of bryozoans (Zoobotryon verticillatum) are creating special environmental conditions that may make trawling with TED-equipped nets impracticable. The AA has determined that the use of limited tow times for the described area and time would not result in a significant impact to sea turtles. Notice and comment are contrary to the public interest in this instance because providing notice and comment would prevent the agency from providing relief within the necessary time frame. The public was provided with notice and an opportunity to comment on 50 CFR 223.206(d)(3)(ii).

Pursuant to 5 U.S.C. 553(d)(1), because this temporary rule relieves a restriction, it is not subject to a 30-day delay in effective date. NMFS is making the rule effective August 23, 2000 through 11:59 p.m. local time on September 22, 2000.

Since prior notice and an opportunity for public comment are not required to be provided for this action by 5 U.S.C. 553, or by any other law, the analytical requirements of 5 U.S.C. 601 et seq. are inapplicable.

The AA prepared an Environmental Assessment (EA) for the final rule (57 FR 57348, December 4, 1992) requiring TED use in shrimp trawls and creating the regulatory framework for the issuance of notices such as this. Copies of the EA are available (see ADDRESSES).

The fishery for coastal migratory pelagic fish (king mackerel, Spanish mackerel, cero, cobia, little tunny, dolphin, and, in the Gulf of Mexico only, bluefish) is managed under the Fishery Management Plan for the Coastal Migratory Pelagic Resources of the Gulf of Mexico and South Atlantic (FMP). The FMP was prepared by the Gulf of Mexico and South Atlantic Fishery Management Councils (Councils) and is implemented under the authority of the Magnuson-Stevens Fishery Conservation and Management Act by regulations at 50 CFR part 622.

Based on the Councils' recommended annual total allowable catch and the allocation ratios in the FMP, NMFS implemented an annual commercial quota for the Gulf of Mexico migratory group of king mackerel in the western zone of 1.05 million lb (0.48 million kg) (63 FR 8353, February 19, 1998).

Under 50 CFR 622.43(a), NMFS is required to close any segment of the king mackerel commercial fishery when its quota has been reached, or is projected to be reached, by filing a notification at the Office of Federal Register. NMFS has determined that the commercial quota of 1.05 million lb (0.48 million kg) for Gulf group king mackerel in the western zone will be reached on August 25, 2000. Accordingly, the commercial fishery for Gulf group king mackerel in the western zone is closed at 12:01 a.m., local time, August 26, 2000, through June 30, 2001, the end of the fishing year. The boundary between the eastern and western zones is 87°31'06″ W. long., which is a line directly south from the Alabama/Florida boundary.

Until July 1, 2001, no person aboard a vessel for which a commercial permit for king mackerel has been issued, other than a vessel operating as a charter vessel or headboat, may fish for or retain king mackerel in or from the western zone in the EEZ. A vessel for which a charter vessel/headboat permit and a commercial king mackerel permit have been issued is operating as a charter vessel or headboat when it carries a paying passenger or when more than three persons are aboard, including captain and crew. A person, other than captain or crew, aboard a vessel operating as a charter vessel or headboat may fish for or retain king mackerel in or from the western zone under the bag and possession limits of 50 CFR 622.39(c)(1)(ii).

During the closure, king mackerel taken from the western zone in the EEZ, including those harvested under the bag and possession limits, may not be purchased or sold. This prohibition does not apply to trade in king mackerel from the western zone that were harvested, landed ashore, and sold prior to the closure and were held in cold storage by a dealer or processor.

This action responds to the best available information recently obtained from the fishery. The closure must be implemented immediately to prevent an overrun of the commercial quota (50 CFR 622.42(c)(1)) of Gulf group king mackerel, given the capacity of the fishing fleet to harvest the quota quickly. Overruns could potentially lead to further overfishing and unnecessary delays in rebuilding this overfished resource. Any delay in implementing this action would be impractical and contrary to the Magnuson-Stevens Act, the FMP, and the public interest. NMFS finds for good cause that the implementation of this action cannot be delayed for 30 days. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is waived.

This action is taken under 50 CFR 622.43(a) and is exempt from review under Executive Order 12866.