Section 203 of the Immigration and Nationality Act (the Act) provides for the allocation of preference visas for both family and employment-based immigrants. The second preference employment-based category (EB-2) allows for the immigration of aliens who are members of the professions holding advanced degrees or aliens of exceptional ability. See section 203(b)(2) of the Act. The Act at section 203(b)(2)(B) also allows the Attorney General to waive the job offer requirement placed on EB-2 immigrants when the Attorney General determines that services the alien intends to provide will be in the national interest. Such waivers are commonly called national interest waivers. These waivers relieve the petitioner from fulfilling the labor certification requirement, as administered by the Department of Labor.

On November 12, 1999, the President approved enactment of the Nursing Relief for Disadvantaged Areas Act of 1999, Public Law 106-95 (Nursing Relief Act). Section 5 of the Nursing Relief Act amends section 203(b)(2) of the Act by adding a new subparagraph (B)(ii). The amendment establishes special rules for requests for a national interest waiver that are filed by or on behalf of physicians who are willing to work in an area or areas of the United States designated by the Secretary of Health and Human Services (HHS) as having a shortage of health care professionals or at facilities operated by the Department of Veterans Affairs (VA). The amendment is applicable only to practicing licensed physicians (namely doctors of medicine and doctors of osteopathy), not other health care professionals such as nurses, physical therapists, or doctor's assistants.

Note that the Consolidated Appropriations Act, 2000, Public Law 106-113, 113 Stat. 1501, enacted on November 29, 1999, also included an essentially identical amendment to section 203(b)(2)(B) of the Act. (See Section 1000(a)(1) of Division B of Pub. L. 106-113, 113 Stat. at 1535, which enacts the Department of Justice Appropriations Act, 2000.) To make the benefit of new section 203(b)(2)(B)(ii) as widely available as possible, and to avoid confusion for any physician on whose behalf a petition was filed between November 12 and November 29, 1999, the interim rule fixes November 12, 1999, as the proper effective date.

Under the Act as amended, the Attorney General is directed to grant a national interest waiver of the job offer requirement to any alien physician who agrees to work full-time in a clinical practice for the period fixed by statute. For most cases, the required period of service is 5 years; 3 years' service is sufficient in those cases involving immigrant visa petitions filed before November 1, 1998. The alien physician must provide the service either in an area or areas designated by the HHS as having a shortage of health care professionals (namely in HHS designated Medically Underserved Areas, Primary Medical Health Professional Shortage Areas, or Mental Health Professional Shortage Areas), or at a VA facility or facilities. In either case, the alien physician must also obtain a determination from HHS, VA, another federal agency that has knowledge of the physician's qualifications, or a State department of public health that the physician's work in such an area, areas, or facility is in the public interest.

This interim rule is necessary to codify the provisions of Public Law 106-95 and to put into place procedures for both the public and Service officers to follow.

Section 203(b)(2)(B)(ii) of the Act states that any physician may petition for a national interest waiver. While the statutory language says “any physician,” the Service notes that HHS currently limits physicians in designated shortage areas to the practice of family or general medicine, pediatrics, general internal medicine, obstetrics/gynecology, and psychiatry. Unless HHS establishes shortage areas for other fields of medicine, only these fields of medicine are covered by this rule.

The Service anticipates that the majority of physicians petitioning under the new provisions will be those that are already admitted to the United States in a valid nonimmigrant status. The Service expects that many J-1 nonimmigrant medical doctors in training, as well as physicians practicing medicine in H-1B nonimmigrant status, will apply for this waiver since many J-1 and H-1B physicians practice or are in training to practice family or general medicine. It is unlikely that many physicians living abroad will have completed the necessary licensing and certification procedures in order to qualify for this particular EB-2 immigrant visa. Any physician living abroad who has met the requirements necessary to practice in the United States, however, may seek a national interest waiver of the job offer requirement, if the physician can meet the requirements of section 203(b)(2)(B)(ii).

The interim rule establishes that physicians petitioning for EB-2 immigrant status with a request for a national interest waiver must fulfill the aggregate 5 years of full-time service within a 6-year period following approval of the petition and waiver (within 4 years of approval of the petition and waiver for cases filed before November 1, 1998). The Service is of the opinion that granting physicians one additional year to accumulate the needed aggregate time is more than reasonable.

The Service realizes that situations will arise that cause some physicians to have interruptions in the respective medical practice, such as job loss through no fault of their own and the ensuing search for new employment in an underserved area, pregnancy, or providing care to ill parents, children, or other family members. Nevertheless, the Service does not consider it appropriate to allow physicians to remain in the United States indefinitely without satisfying the service requirement. The Service will, therefore, deny the application for adjustment of status and revoke approval of the visa petition and national interest waiver in any case in which the alien physician fails to submit, within the time fixed by the interim rule, the required documentary evidence establishing the physician's compliance with the service requirement.

No. The Act plainly states that any time spent by the alien physician in J-1 nonimmigrant status does not count toward either the 5 or 3-year medical service requirement.

This interim rule establishes what documentary evidence is necessary for physicians desiring to take advantage of the statutory amendment. However, most of this documentation is similar to what a physician would be required to submit if he or she were not applying for the national interest waiver. In a national interest waiver case, however, the evidence must establish that the physician will work in an HHS designated shortage area or a VA facility and that the petition is supported by the needed attestations from either HHS, VA, another Federal agency that has knowledge of the physician's qualifications, or a State public health department.

This interim rule provides that, in order to provide an attestation, the Federal agency must possess knowledge of the alien physician's skills and have experience in making similar type attestations. In addition to HHS and the VA, this might include, for example, attestations from the medical director of a United States military hospital, The Peace Corps, or the Department of State.

Yes, the interim rule establishes that the needed attestation must come from a State department of public health (or the equivalent), including United States territories and the District of Columbia. While the Act, as amended, states that “a department of public health in any State” may provide the needed attestation, the Service has concerns over how a completely decentralized system of providing attestations can effectively address the problem of physician shortages. In particular, the Service sees problems with an attestation procedure operating without a central authority in each State having oversight of the process and oversight of where the physicians are actually practicing. Therefore, the interim rule places the authority with each State department of public health to make the necessary attestations. Nothing in this interim rule prevents local departments of public health from urging the central State health department to issue attestations concerning the merits of a particular alien physician and that physician's desire to practice medicine in an HHS-designated underserved area. This policy of placing the authority to render a needed attestation with the State public health department is consistent with Service regulations that address waivers of the 2-year return home requirement for J-1 nonimmigrant physicians. See 8 CFR 212.7(c)(9)(i)(D).

The Service is also restricting such attestations to physicians intending to practice clinical medicine within the agency's territorial jurisdiction. For example, the Service will not accept an attestation from the State of Maryland Public Health Department regarding a physician proposing to practice medicine exclusively in Pennsylvania.

As noted, most alien physicians must work in the area designated by the Secretary of HHS as having a shortage of health care professionals (or at the VA facility) for at least 5 years before the alien physician may obtain permanent residence status. A special rule applies if the alien physician is the beneficiary of an immigrant visa petition filed before November 1, 1998. In that case, all the other requirements apply but the alien physician may obtain permanent residence after only 3 years of qualifying service. The Service has established an administrative method to implement the noted effective dates by providing guidance at 8 CFR 204.12(d) for each group of possible petitioners and beneficiaries.

If a Service decision that denied an immigrant visa petition became administratively final before November 12, 1999, the alien physician may obtain the benefit contained in the interim rule only through the filing of a new immigrant visa petition with the required evidence. The Service will not entertain motions to reopen or reconsider denied cases because the provisions of section 203(b)(2)(B)(ii) of the Act were not in effect when those particular cases were denied. Under established precedent, in order for an alien to receive a priority date, his or her petition must be fully approvable under the law that is in effect at the time of filing. See Matter of Atembe. 19 I&N Dec. 427 (BIA 1986). The denial of a motion to reopen or reconsider, however, will be without prejudice to the filing of a new immigrant visa petition.

This restriction applies only if the denial became final before November 12, 1999. That is, if the petitioner had filed a timely appeal of the Administrative Appeals Office (AAO) which was still pending as of that date, or, if the AAO affirmed the denial but the petitioner had already sought judicial review by November 12, 1999, it will not be necessary to file a new petition. In making provision for cases filed before November 1, 1998, however, section 203(b)(2)(B)(ii)(IV) of the Act makes it clear that Congress intended to apply this new provision to all petitions that were actually pending on November 12, 1999. If a case was pending before the AAO or a Federal court on November 12, 1999, the Service will support remand of the case to the proper Service Center for a new decision in light of the new amendment. If the case is still pending before a Service Center, the visa petitioner may supplement the record with evidence that satisfies the requirements of section 203(b)(2)(B)(ii) of the Act.

Section 203(b)(2)(B)(ii)(III) of the Act allows any physician in receipt of an approved immigrant petition with an accompanying national interest waiver request based on full-time service in a shortage area to immediately apply for adjustment of status to that of lawful permanent resident. With a non-frivolous adjustment of status application pending, the alien physician is eligible to apply for an Employment Authorization Document (EAD) pursuant to 8 CFR 274a.12(c)(9). (Physicians with approved immigrant petitions and national interest waivers based on service in a shortage area should file the application for adjustment of status and the application for an EAD simultaneously.) This relieves the physician of having to maintain any type of valid nonimmigrant status prior to the final adjudication of the adjustment of status application. That is to say, the alien physician, under section 245(c)(7) of the Act, must have been in a lawful nonimmigrant status when the alien physician files the adjustment application, but need not remain in lawful nonimmigrant status during the entire period of medical service.

In general, the alien's 5-year or 3-year period of medical service begins when the alien starts working for the petitioner in a medically underserved area. If the physician, other than those with J-1 nonimmigrant visas, already has authorization to accept employment at the facility, the 6-year or 4-year period during which the physician must provide the service begins on the date that the Service approves the Form I-140 petition and national interest waiver. If the physician must obtain employment authorization before the physician can begin working, the 6-year or 4-year period begins on the date the Service issues an EAD. Since section 203(b)(2)(B)(ii)(II) of the Act specifically prohibits any time served in J-1 nonimmigrant status as counting towards the 5-year service requirement, J-1 physicians with approved Form I-140 petitions will have their medical service under this rule begin on the date the physician starts his or her employment with the petitioner, and after the Service issues an EAD.

The interim rule does include a special provision for former J-1 nonimmigrant physicians who have obtained foreign residence requirement waivers. Section 214(l) of the Act, as previously amended by section 220 of Public Law 103-416, provides a special waiver of the foreign residence requirement for alien physicians who are willing to work at VA facilities or in HHS-designated underserved areas. Under section 214(l), 3 years' service as an H-1B nonimmigrant is sufficient. The interim rule makes clear that for aliens who already have a waiver under section 214(l) of the Act, the Service will calculate the 5-year or 3-year period of services of the national interest waiver under section 203(b)(2)(B)(ii) of the Act beginning on the date the alien changed from J-1 to H-1B status. That is, an alien who is subject to the foreign residence requirement will not be required to first serve for 3 years to obtain that waiver and then to serve an additional 5 years to obtain adjustment of status based on the national interest waiver.

Section 203(b)(2)(B)(ii)(II) of the Act prohibits the Attorney General from making a final determination on any adjustment of status application submitted by a physician practicing medicine full-time in a medically underserved area until the physician has had the opportunity to prove that he or she has worked full-time as a physician for an aggregate of 5 or 3 years, depending on filing date. Physicians should note that this period of service does not count any time the physician has spent in a J-1 nonimmigrant status.

The interim rule establishes two points where the alien physician must submit evidence noting his or her practice of medicine in an underserved area. First, physicians with the 5-year service requirement must make an initial submission of evidence no later than 120 days after the second anniversary of the approval of the immigrant petition, From I-140. The physician must document at least 12 months of qualifying employment during the first 2-year period. If a physician has not worked at least one year of this 2-year period, it will be mathematically impossible for the physician to reach his or her five-year mark within six years. At the end of the physician's four-year balance, evidence must be submitted that documents the employment of the final years of the 5-year aggregate service requirement. Alien physicians with the 3-year service requirement will only be required to submit evidence once, at the conclusion of the 3-years aggregate service.

As evidence, the Service will request individual tax return documents, and documentation from the employer attesting that the physician has in fact performed the required full-time clinical medical service. If a physician obtained the waiver based on his or her plan to establish his or her own practice, the physician must submit documentation proving he or she did so, including proof of the incorporation of the medical practice (if incorporated), business licenses, and business tax returns.

Yes. Since the Attorney General is prohibited from making the final adjudication on a physician's adjustment of status application, until the physician has submitted evidence documenting the medical service in a shortage area or areas, the interim rule establishes two modifications to the adjustment filing procedure. First, physicians will not be scheduled for fingerprinting at an Application Support Center until the physician submits evidence documenting the completion of the required years of service. Second, physicians will not submit the required medical examination report at the time of filing for adjustment. The medical report will instead be submitted with the documentary evidence noting the physician's fulfillment of the 5 or 3-year medical service requirement.

Yes, physicians will not be prohibited from relocating to other underserved areas. However, the interim rule establishes that any physician desiring to relocate must submit a new petition that documents the reasons for the proposed relocation. The interim rule, at 8 CFR 204.12(f), establishes the necessary procedures for the alien physician and the new petitioner to follow.

The Service will take into account the amount of time the physician is engaged in full-time practices in calculating the aggregate medical service time in the underserved areas. For example, if the physician completed 3 years of service before approval of a second petition, then only 2 more years of service would be needed to qualify for adjustment of status. However, petitioners and beneficiaries should note that the authorization to begin a medical practice in a new area does not constitute the beginning of a new 6-year period. Regardless of the number of moves, physicians are granted just one 6-year period to complete the required service time.

The interim rule does not require that a physician relocate to another underserved area should the area the physician is practicing full-time clinical medicine lose its designation as an underserved area. The purpose of such a designation is to foster a greater physician presence in underserved areas. The Service believed one of the desired results of the statutory amendment is for physicians to take up residency in these areas and become integral parts of the community. Once an area is no longer designated as an underserved area, however, the Service can no longer grant national interest waivers for physicians to practice in that area (other than for physicians who will work in a VA facility).

The interim rule establishes, at section 245.18(i), that the Service will deny the application for adjustment of status and revoke approval of the Form I-140 if a physician fails to file proof of the physician's completion of the service requirement in a timely fashion.

The Service is seeking public comments regarding this interim rule. In particular, the Service is interested in hearing from States on the Service's intended method of vesting State departments of public health with the authority to issue attestations for alien physicians. The Service welcomes suggestions on this and all other topics concerning the information contained within this interim rule.

The Service's implementation of this rule as an interim rule, with provisions for post-promulgation public comments, is based on the “good cause” exceptions found at 5 U.S.C. 553 (b)(B) and (d)(3). The reason and necessity for immediate implementation of this interim rule without prior notice and comment is that the new legislation became effective upon enactment and requires the Service to alter the processing of immigrant petitions where the petitioner is requesting a national interest waiver based on service as a physician at a VA facility or in an area designated by the Secretary of HHS as having a shortage of health care professionals. Issuing an interim rule allows the regulatory provisions to become effective in a relatively short period of time, and allows alien physicians to begin taking advantage of the new provisions without further delays.

The Service is also aware of the effect that delays in issuing these interim regulations may have on public health in underserved areas of the United States. For this reason, the Service has already consulted with and incorporated suggestions from other Federal agencies involved with physician shortage issues, including HHS, the VA, the Departments of State and Agriculture, and the Appalachian Regional Commission.

For these reasons, the Commissioner has determined that delaying the implementation of this rule would be unnecessary and contrary to the public interest, and that there is good cause for dispensing with the requirements of prior notice. However, the Service welcomes public comment on this interim rule and will address those comments prior to the implementation of the final rule.

The Commissioner of the Immigration and Naturalization Service, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that the rule will not have a significant economic impact on a substantial number of small entities. While some physicians will self-petition and establish self-operated medical practices or clinics, the Service anticipates that the majority of physicians taking advantage of the provisions outlined within this regulation will be employed by hospitals, clinics, or other medical facilities. In these instances, the effect on hospitals, clinics, or other medical facilities considered small entities will be positive by expanding the labor pool of qualified physicians eligible to be employed in designated underserved areas.

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 or more in any 1-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.

This rule is considered by the Department of Justice, Immigration and Naturalization Service, to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. Under Executive Order 12866, section 6(a)(3)(B)-(D), this proposed rule has been submitted to the Office of Management and Budget for review. This rule is mandated by the Nursing Relief for Disadvantaged Areas Act of 1999 in order to create an incentive for qualified alien physicians to practice medicine in medically underserved areas of the United States.

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. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient Federalism implications to warrant the preparation of a federalism summary impact statement.

This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of E.O. 12988.

The evidence requirements contained in § 204.12 and § 245.18 that must be submitted with the Forms I-140 and I-485 are considered information collections. Since a delay in issuing this interim rule could have an impact in providing public health services in underserved areas of the United States, the Service is using emergency review procedures for review and clearance by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act (PRA) of 1995.

The OMB approval has been requested by September 21, 2000. If granted, the emergency approval is only valid for 180 days. Comments concerning the information collection should be directed to: Office of Information and Regulatory Affairs, OMB Desk Officer for the Immigration and naturalization Service, Office of Management and Budget, Room 10235, Washington, DC 20503.

During the first 60 days of this same period a regular review of this information will also be undertaken. Written comments are encouraged and will be accepted until November 6, 2000. Your comments should address one or more of the following points:

The Service, in calculating the overall burden this requirement will place upon the public, estimates that approximately 8,000 physicians may apply for the national interest waivers annually. The Service also estimates that it will take the physicians approximately 1 hour to comply with the new requirements as noted in this interim rule. This amounts to 8,000 total burden hours.

Organizations and individuals interested in submitting comments regarding this burden estimate or any aspect of these information collection requirements, including suggestions for reducing the burden, should direct them to: Immigration and Naturalization Service, Director, Policy Directives and Instructions Branch, 425 I Street NW., Room 5307, Washington, DC 20536.

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 Aerospatiale Model ATR42 series airplanes was published in the Federal Register on August 3, 1999 (64 FR 42052). That action proposed to require a revision to the Airworthiness Limitations Section of the Instructions for Continued Airworthiness to incorporate inspections to detect fatigue cracking in certain structure, inspection intervals, and life limits for certain items.

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

One commenter, an operator, questions the need to issue the proposed AD. The commenter notes that a listing of airworthiness limitations is required for type certification, as specified by section 25.1529 of the Federal Aviation Regulations (14 CFR 25.1529) and Appendix H, paragraph H25.4. The commenter states that this listing is included in its Operations Specifications, and that such specifications would never be approved with any airworthiness limitations that were beyond the limits specified by the manufacturer. In light of this, the commenter considers the actions required by the proposed rule to be redundant.

The FAA infers that the commenter requests that the proposed AD be withdrawn. The FAA does not concur. As stated in the proposed AD, all products certificated to comply with the airworthiness standards requiring “damage tolerance assessments” must have Instructions for Continued Airworthiness (or, for some products, maintenance manuals), that include an Airworthiness Limitations Section (ALS).

Based on in-service data or post-certification testing and evaluation, the manufacturer may revise the ALS to include new or more restrictive life limits and structural inspections, or it may become necessary for the FAA to impose new or more restrictive life limits and structural inspections, in order to ensure continued structural integrity and continued compliance with damage tolerance requirements. However, to require compliance with these new inspection requirements and life limits for previously certificated airplanes, the FAA must engage in rulemaking; namely, the issuance of an AD. Because loss of structural integrity would constitute an unsafe condition, it is appropriate to impose such requirements through the AD process. Although prudent operators already may have incorporated the latest revisions of the ALS, issuance of this AD ensures that all operators take appropriate action to correct the identified unsafe condition.

The practice of requiring a revision to the ALS, rather than requiring individual inspections, has been used for several years and is not a novel or unique procedure. The FAA finds that requiring ALS revisions is advantageous for operators because it allows them to record AD compliance status only once—at the time they make the revision—rather than after every inspection. It also has the advantage of keeping all airworthiness limitations, whether imposed by original certification or by the requirements of an AD, in one place within the operator's maintenance program, thereby reducing the risk of non-compliance because of oversight or confusion. In addition, for a large fleet of airplanes with several small operators, it is possible that operators may not receive revisions to the ALS documents. The AD process ensures that these operators are aware of the revisions to the ALS. No change is made to the final rule.

One commenter, the manufacturer, states that the “Time Limits” section of the Maintenance Planning Document (MPD) also includes Certification Maintenance Requirements (CMR) tasks that are applicable to the equipment and systems and are necessary to maintain the certificated standard level of airworthiness. The commenter suggests that a paragraph be added to the proposed AD to require accomplishment of the CMR tasks.

The FAA does not concur. Although the FAA agrees that accomplishment of CMR tasks is necessary to maintain these airplanes in an airworthy condition, the necessity for those actions is based on statistical safety analyses of various airplane systems prior to issuance of an airplane Type Certificate (TC). Thus, CMR tasks are undertaken for a different purpose than are the actions required by this AD, and are intended to address a different unsafe condition than is addressed in this AD. However, if CMR tasks are added, or made more restrictive, following issuance of the TC, the FAA will consider separate rulemaking action to require accomplishment of those additional actions. No change to the final rule is necessary.

Two commenters advise the FAA that the ATR42 MPD has been reissued as two separate documents, one applicable to Model ATR42-200, -300, and -320 series airplanes, and the other applicable to Model ATR42-500 series airplanes. One commenter suggests that, since the “Time Limits” section of the MPD for ATR42-500 airplanes may be changed independently of the other document, the actions in the proposed AD should be separated to reflect the separate documents and revision levels. In addition, these commenters state that Revision 3 of each of these “Time Limits” sections was issued in February 1999. The manufacturer also advises that Revision 4 of the “Time Limits” section for Model ATR42-200, -300, and -320 series airplanes, dated July 1999, is in the process of review and approval by the appropriate airworthiness authorities. The manufacturer suggests that issuance of the final rule be delayed until approval of this latest revision is granted.

The FAA has received and reviewed the latest revisions of the service information. Revision 2 of the “Time Limits” section, dated January 1997, was referenced in the proposed AD as the appropriate source of service information for all Model ATR42 series airplanes. Revision 4 of the “Time Limits” section for Model ATR42-200, -300, and -320 series airplanes, dated July 1999, differs from Revision 2 in that a life limit for certain equipment is removed, and a note is added to clarify the compliance threshold for a structural inspection. The FAA has determined that the actions required by this AD must be accomplished in accordance with Revision 4 of the “Time Limits” section of the MPD for these airplanes, and has revised the final rule accordingly. Since Revision 4 imposes no additional burden on operators of Model ATR42-200, -300, and -320 series airplanes beyond the action specified in Revision 2, additional notice and opportunity for public comment is not considered necessary.

However, Revision 3 of the “Time Limits” section for Model ATR42-500 series airplanes, dated February 1999, adds new inspections and life limits for those airplanes. Therefore, the FAA has determined that revision to the Airworthiness Limitations Section of the Instructions for Continued Airworthiness for Model ATR42-500 series airplanes should be addressed in separate rulemaking action, and has limited the applicability of this AD to Model ATR42-200, -300, and -320 series airplanes only. The Cost Impact paragraph, below, has also been revised to reflect the reduced number of airplanes affected by this AD.

One commenter requests that the FAA revise the proposed AD to refer to the current revision of the “Time Limits” section of the MPD, “or later approved revisions.”

The commenter suggests that only referring to the current revision in the AD may lead to confusion about the validity of subsequent revisions.

The FAA does not concur. To use the phrase “or later approved revisions” in an AD when referring to future revisions of service information violates Office of the Federal Register (OFR) regulations regarding approval of materials that are “incorporated by reference” in rules. The AD may only refer to the service information that was submitted and approved by the OFR for “incorporation by reference.” For operators to use later revisions of the service information, either the FAA must revise the AD to reference the specific later revisions, or operators must request approval of any later revisions as alternative methods of compliance with this AD. No change to the AD is necessary in this regard.

Two commenters state that, although the “Time Limits” section of the MPD is incorrectly referenced in the proposed AD as Section 9, the correct reference is Section 13. The FAA acknowledges the correction. However, the FAA has removed the reference to the exact section of the “Time Limits” section of the MPD in paragraph (a) of this AD to avoid any confusion in case the section number changes in the future.

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

The FAA estimates that 75 airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required actions, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $4,500, or $60 per airplane.

The cost impact figure discussed above is 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.

On March 22, 2000, the Office of Multifamily Housing Assistance Restructuring (OMHAR) within HUD published a final rule for the Mark-to-Market program authorized by the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA). That final rule, which took effect on April 21, 2000, replaced an interim rule published on September 11, 1998 (63 FR 48926). The final rule contained some errors that need correction.

The purpose of this document is to make various corrections to the final rule, as follows:

1. § 401.2. “NHA” is substituted for “NA” as the defined term for the National Housing Act. Related corrections are made in §§ 401.450(b), 401.472(a)(3), and 401.473 (heading and text).

2. § 401.99(a)(2). The word “or” is added between “sale” and “transfer” to conform to the rest of the rule.

3. § 401.99(c). A reference to § 402.4 is now identified as a reference to § 402.4 “of this chapter”.

4. § 401.310(d)(1)(ii). The word “notices” is corrected to “notification” to conform to the preceding sentence in the rule.

5. § 401.450(b). The acronym “CA” (referring to a comprehensive needs assessment) is corrected to read “CNA”. The same correction is made in § 401.503(a)(1).

6. § 401.501(b)(2). An extraneous semi-colon is removed.

7. § 401.502(a). A missing parenthesis is added, the word “comparable” is removed from the phrase “comparable market rent” to match a forthcoming revision to § 402.6(a)(2), “of this chapter” is added after three references to sections from part 402, a reference to § 400.500 is corrected to refer to § 401.500, and a reference to a comprehensive needs assessment is added to conform to a change made in § 401.450 of the final rule.

8. § 401.550(b). The rule is corrected to require a Participating Administrative Entity (PAE) to review annually a project with an “executed” Restructuring Plan rather than an “approved” Plan, because no annual PAE review is required if a project owner refuses to execute a Restructuring Plan approved by OMHAR.

9. § 401.558. An extraneous comma is removed from the first sentence.

10. § 401.595. The word “a” in the first sentence was misplaced and this is corrected. Also, we removed “initial and subsequent” from the phrase “initial and subsequent contract renewals under this part [401]”. The language that is removed was unnecessary. In addition, it could cause confusion because the “subsequent” renewal would be governed by 24 CFR part 402 rather than part 401 if the “initial renewal” is approved as part of an approved Restructuring Plan under part 401.

11. § 401.600. The references to a section 8 contract “extension” or similar term, in the heading and text of this section, are changed to contract “renewal” or similar term. MAHRA occasionally refers to “extension” of an expiring section 8 contract rather than “renewal” of the contract, as in section 514(d) of MAHRA which corresponds to § 401.600. However, HUD's use of these terms in part 401 has not always been consistent with the use in the corresponding MAHRA provisions. In practice HUD has found no need to distinguish between contract extensions and renewals, and the statutory and regulatory definition of “renewal” does not exclude extensions. Therefore, to avoid confusion and to match the usage in the forthcoming related final 24 CFR part 402, part 401 is corrected so that it no longer refers to both extensions and renewals, but will only refer to renewals. Related changes are made to §§ 401.408(k), 401.421(b), 401.554, 401.602(a)(1) and (2), and 401.602(c)(1)(i).

12. § 401.602(a)(1)(i). A missing parenthesis is added.

13. § 401.602(a)(2). The parenthetical reference to section 8(c)(8)(C) of the United States Housing Act of 1937 is removed because that provision no longer existed when the final rule was issued. It was combined with section 8(c)(8)(A) by recent amendments to that Act and section 8(c)(8)(A) is already referenced in this provision of the rule. We also added “of this chapter” after “§ 402.4” and removed an apostrophe from “month's”.

This document contains amendments to 26 CFR part 1 under section 411(d)(6) of the Internal Revenue Code of 1986 (Code).

Section 411(d)(6) generally provides that a plan will not be treated as satisfying the requirements of section 411 if the accrued benefit of a participant is decreased by a plan amendment. Section 411(d)(6)(B), which was added by the Retirement Equity Act of 1984 (REA), Public Law 98-397 (98 Stat. 1426), provides that a plan amendment that eliminates an optional form of benefit is treated as reducing accrued benefits to the extent that the amendment applies to benefits accrued as of the later of the adoption date or the effective date of the amendment. However, section 411(d)(6)(B) authorizes the Secretary of the Treasury to provide exceptions to this requirement. This authority does not extend to a plan amendment that would have the effect of eliminating or reducing an early retirement benefit or a retirement-type subsidy. Section 204(g)(2) of the Employee Retirement Income Security Act of 1974 (ERISA), Public Law 93-406 (88 Stat. 829), provides a parallel rule to section 411(d)(6)(B) of the Code that applies under Title I of ERISA, and authorizes the Secretary of the Treasury to provide exceptions to this parallel ERISA requirement. Thus, Treasury regulations issued under section 411(d)(6)(B) of the Code apply as well for purposes of section 204(g)(2) of ERISA.

Final regulations regarding section 411(d)(6)(B) (the 1988 regulations) were published in the Federal Register on July 8, 1988. The 1988 regulations, and subsequent amendments to the regulations, define the optional forms of benefit that are protected under section 411(d)(6)(B) and provide for certain exceptions to the general rule of section 411(d)(6)(B). In general, these regulatory exceptions to the application of section 411(d)(6)(B) to optional forms of benefit have been developed to address certain specific practical problems. For example, § 1.411(d)-4, Q&A-3(b) of the 1988 regulations permits a plan-to-plan transfer of a participant's entire nonforfeitable benefit to be made at the election of the participant, without a requirement that the transferee plan preserve all section 411(d)(6) protected benefits, but only if the participant is eligible to receive an immediate distribution and certain other conditions are satisfied. In addition, some regulatory exceptions to the application of section 411(d)(6)(B) to optional forms of benefit address plan amendments that are related to statutory changes. See Q&A-2(b) and Q&A-10 of § 1.411(d)-4.

The IRS and Treasury recognize that the accumulation of a variety of payment choices in a plan may increase the cost and complexity of plan operations. For example, an employer that initially adopted a plan for which the plan document was prepared by a prototype sponsor may now be using a different prototype plan that offers a different array of distribution forms. The requirement to preserve virtually all preexisting optional forms for benefits accrued up to the date of change in the prototype plan may present significant practical problems in certain cases. Similar issues arise where employers merge with or acquire other businesses. These employers often face issues of whether to maintain separate plans, terminate one or more of the plans, or merge the plans. If the employer chooses to merge the plans, the resulting plan may accumulate a wide variety of optional forms, some of which may differ in insignificant ways or may entail special administrative costs. Because the elective transfer rule of § 1.411(d)-4, Q&A-3(b) of the 1988 regulations has applied only to situations in which a participant's benefits have become distributable, its applicability has been limited.

In recent years, it has become easier for individuals to replicate the various payment choices available from qualified plans through other means. The Unemployment Compensation Amendments of 1992, Public Law 102-318 (106 Stat. 290), substantially expanded participants' ability to transfer distributions from qualified plans to individual retirement arrangements (IRAs) on a tax-deferred basis. Individuals who receive single-sum distributions from qualified plans frequently roll those distributions over directly to IRAs, under which distributions can be made in a wide variety of payment forms. There are also indications that the vast majority of participants in defined contribution plans who are given a choice of distribution forms that includes a single-sum distribution elect the single-sum distribution.

The IRS and Treasury issued Notice 98-29 (1998-1 C.B. 1163) to request public comment on several ways of providing regulatory relief from the requirements of section 411(d)(6)(B) for defined contribution plans in view of these considerations. Most of the public comments received in response to Notice 98-29 indicated that, particularly for defined contribution plans, the section 411(d)(6)(B) requirement that a plan continue to offer all existing payment options often imposes significant administrative burdens that are disproportionate to any corresponding benefit to participants. After considering the comments received in response to Notice 98-29, the IRS and Treasury issued proposed regulations (REG-109101-98), which were published in the Federal Register (65 FR 16546) on March 29, 2000, to propose relief from the requirements of section 411(d)(6)(B) in a wide range of circumstances.

Seventeen written comments responding to the notice of proposed rulemaking were received. No public hearing was requested or held. Nearly all of the written comments expressed support for the provisions of the proposed regulation that would provide relief from the requirements of section 411(d)(6)(B) and requested clarifications or extensions of that relief in various ways. After consideration of all of the written comments, the IRS and the Treasury Department are adopting the proposed regulations as revised by this Treasury Decision for the reasons summarized below.

These final regulations under section 411(d)(6)(B) do not affect other requirements of the Code. For example, a money purchase pension plan (or a plan otherwise described in section 401(a)(11)(B)) generally must satisfy certain requirements relating to qualified joint and survivor annuities and qualified preretirement survivor annuities, and those requirements are not affected by these final regulations. Similarly, these final regulations do not affect the requirements of section 401(a)(31) relating to direct rollovers.

In order to simplify plan administration, these final regulations adopt a modified version of the rule set forth in the proposed regulations that significantly expands the permitted changes that may be made to alternative forms of payment under a defined contribution plan. Under the rule in the proposed regulations, a defined contribution plan would not violate the requirements of section 411(d)(6) merely because the plan was amended to eliminate or restrict the ability of a participant to receive payment of the participant's accrued benefit under a particular optional form of benefit if, after the plan amendment became effective with respect to the participant, the distribution choices available to the participant included both payment of the accrued benefit in a single-sum distribution form and payment of the accrued benefit in an extended payment form (such as, for example, an annuity distribution), each of which was otherwise identical to the eliminated or restricted optional form of benefit. In the preamble to the proposed regulations, the IRS and the Treasury Department requested comments on whether an extended payment form should be required to be preserved as part of such a plan amendment, or should be required to be preserved in particular circumstances.

In general, comments stated that the rule set forth in the proposed regulations would simplify plan administration. However, most commentators also indicated that requiring the retention of an extended payment form would perpetuate administrative burdens that would not be justified by any comparative advantage to plan participants. These commentators pointed out various administrative burdens associated with retaining an extended payment form, such as maintaining a system to administer the extended payment form for the few (if any) participants who choose that payment form, including descriptions of the extended payment form in participant materials, explaining the extended payment form in response to participant inquiries, dealing with participant requests to accelerate distributions under the extended payment form, complying with the minimum required distribution rules of section 401(a)(9), and handling the problems that result from an increased incidence of missing participants. These commentators also pointed out the special burdens that maintenance of an extended payment option imposes in mergers and acquisitions. These commentators took the position that, in light of a participant's ability to roll over distributions to one or more IRAs, which commonly offer a far wider array of alternative payment forms, and in light of the ability of many participants to choose to retain their full vested account balance in the qualified plan, there is little or no advantage to the participant in rules requiring the plan sponsor to retain an option to receive extended payments from a qualified defined contribution plan.

After considering these comments regarding the desirability of requiring the retention of an extended payment form, and in light of the ability of participants to replicate any extended payment form that a defined contribution plan may offer by rolling over a single-sum distribution to an IRA, the IRS and the Treasury Department have determined that any advantages of requiring the retention of an extended payment form are outweighed by the countervailing considerations. Accordingly, these final regulations generally provide that a defined contribution plan does not violate the requirements of section 411(d)(6) merely because the plan is amended to eliminate or restrict the ability of a participant to receive payment of accrued benefits under a particular optional form of benefit if, after the plan amendment is effective with respect to the participant, the alternative forms of payment available to the participant include payment in a single-sum distribution form that is otherwise identical to the optional form of benefit that is being eliminated or restricted. The final regulations adopt the rules set forth in the proposed regulations for determining whether a single-sum distribution is otherwise identical to an optional form of benefit that is being eliminated or restricted.

However, the final regulations include a provision that protects participants taking distributions shortly after the plan is amended, who may have planned on the availability of the payment form that is being eliminated or restricted. Under this provision, a plan amendment that eliminates or restricts the ability of a participant to receive a particular optional form of benefit cannot apply to any distribution that has an annuity starting date earlier than the 90th day 1 after the date the participant receiving the distribution has been furnished a summary that reflects the amendment and that satisfies the requirements of the Labor Department regulations at 29 CFR 2520.104b-3 relating to a summary of material modifications for pension plans (or, if earlier, the first day of the second plan year following the plan year in which the amendment is adopted).

As noted above, the final regulations do not affect the survivor annuity requirements of sections 401(a)(11) and 417 or the direct rollover requirements of section 401(a)(31).

One commentator expressed concern that permitting plan amendments that eliminate alternative forms of payment would have the effect of permitting the elimination of subsidized early retirement benefits (i.e., distribution forms available upon early retirement that have a higher actuarial value than the normal retirement benefit that has been accrued at the time the distribution begins). These regulations, however, permit plan amendments eliminating alternative forms of payment only in certain circumstances involving defined contribution plans. Under a defined contribution plan, a participant is entitled to a distribution, in whatever form may be provided under the plan, only to the extent of the participant's individual account, plus earnings thereon. Accordingly, no alternative form of payment can be subsidized relative to any other payment form available under a defined contribution plan. Thus, these regulations do not have the effect of permitting the elimination of any early retirement subsidy or any other subsidized benefit forms.

Under certain circumstances, the 1988 regulations permitted elimination of optional forms of benefit in connection with transfers of benefits from one plan to another with a participant's consent. See § 1.411(d)-4, Q&A-3(b) (as contained in 26 CFR part 1 revised April 1, 2000). The proposed regulations contained a number of changes to the 1988 regulations that would significantly liberalize the application of these elective transfer provisions. These final regulations generally finalize the provisions of the proposed regulations relating to elective transfers, with certain modifications that are described below.

The 1988 regulations permitted an elective transfer from one qualified plan to another only if the participant's benefit under the transferring plan was immediately distributable (a distributable event transfer). This condition precluded use of the elective transfer provision in the 1988 regulations in connection with merger and acquisition transactions involving plans with a cash or deferred arrangement under section 401(k) in cases in which benefits under the cash or deferred arrangement were not distributable because section 401(k)(10) was not applicable. In response to Notice 98-29, many commentators stated that permitting elective transfers from the former employer's section 401(k) plan to the new employer's section 401(k) plan under these circumstances would allow employers to permit employees to keep their previously earned retirement benefits in a qualified plan together with their newly earned retirement benefits, particularly in cases where the new employer chooses not to maintain the former employer's plan.

Section 1.411(d)-4, Q&A-3(c) of these final regulations retains and modifies the previously applicable section 411(d)(6) relief for distributable event transfers, and § 1.411(d)-4, Q&A-3(b) of these final regulations adds new section 411(d)(6) relief for transfers in connection with certain corporate mergers and acquisitions or changes in the participant's employment status (transaction or employment change transfers). As a result, relief from section 411(d)(6) applies in each of the following cases:

• Direct rollover. Existing rules provide that if a direct rollover is made from one qualified retirement plan to another, as described in section 401(a)(31), the receiving plan is not required by section 411(d)(6) to offer the same optional forms of benefit as the sending plan offered. See § 1.401(a)(31)-1, Q&A-14.

• Distributable event transfer. As discussed further below, in any case in which a participant is entitled to a distribution from either a defined benefit plan or a defined contribution plan but the participant is not eligible to receive an immediate distribution of the participant's entire nonforfeitable accrued benefit in a single-sum distribution that can be entirely rolled over, these final regulations provide section 411(d)(6) relief for a voluntary transfer. Thus, these regulations modify the distributable event transfer provisions of the 1988 regulations.

• Transaction or employment change transfer. As discussed further below, even if a participant is not entitled to a distribution to which the preceding rules would apply, these final regulations, like the proposed regulations, allow a voluntary transfer from a defined contribution plan to another defined contribution plan of the same type if the transfer occurs in connection with a corporate merger or acquisition or a change in the participant's employment status. See § 1.411(d)-4, Q&A-3(b).

Under certain circumstances, it may be possible to accomplish a voluntary transfer of a participant's benefit from one defined contribution plan to another that could be structured as either a distributable event transfer or a transaction or employment change transfer. In such a situation, the plans would be required to comply with the requirements applicable to either one of those sets of rules with respect to the transfer.

1. Expansion of Section 411(d)(6) Relief for Distributable Event Transfers

Under section 401(a)(31), which was enacted after the issuance of the 1988 regulations, any eligible rollover distribution may be directly rolled over to an IRA or to another eligible retirement plan. The section 411(d)(6) requirements do not apply to amounts that have been distributed, including distributions that are directly rolled over to another plan under section 401(a)(31). Accordingly, for amounts that are distributable in an eligible rollover distribution, the elective transfer rules of the 1988 regulations have largely been duplicated by the enactment of section 401(a)(31) because the same section 411(d)(6) result generally is available through a direct rollover. These final regulations generally eliminate this duplication. Under these final regulations, for transfers occurring on or after January 1, 2002, the distributable event transfer rules are not available if the participant is eligible to receive an immediate distribution of the participant's entire nonforfeitable accrued benefit in a single-sum distribution that would consist entirely of an eligible rollover distribution within the meaning of section 401(a)(31)(C). (Instead, the plan must offer a section 401(a)(31) direct rollover.) However, in other situations, including situations in which a single-sum distribution is not available or the participant's benefit includes an amount attributable to after-tax employee contributions, the distributable event transfer rules will be available.

Some commentators requested that plans have the ability to characterize a transfer that could be accomplished totally or in part as a direct rollover under section 401(a)(31) as a direct transfer to which section 411(d)(6) relief applies. They point out that this procedure is permitted under the 1988 regulations and that this procedure would simplify plan administration. These final regulations clarify that plans are not required to bifurcate a transaction into a partial section 401(a)(31) direct rollover and a partial elective transfer to which section 411(d)(6) relief applies, but that plans are permitted, as an alternative to bifurcation, to treat such a transaction entirely as an elective transfer to which section 411(d)(6) relief applies. However, as noted above, for transfers occurring on or after January 1, 2002, this section 411(d)(6) relief for distributable event transfers does not apply to an elective transfer that occurs at a time at which the participant is eligible to receive an immediate distribution of the participant's entire nonforfeitable account balance in a single-sum distribution that would consist entirely of an eligible rollover distribution within the meaning of section 401(a)(31)(C). Instead, a similar result could be achieved by means of a direct rollover to which section 401(a)(31) applies.

Under the proposed regulations, the section 411(d)(6) relief for transfers of immediately distributable amounts other than eligible rollover distributions would only have applied to transfers between plans of the same type (i.e., transfers from defined benefit plans to defined benefit plans and transfers from defined contribution plans to defined contribution plans), notwithstanding that the 1988 regulations granted section 411(d)(6) relief to transfers between plans of different types (i.e., transfers from defined benefit plans to defined contribution plans and vice versa). The preamble specifically requested comments on whether section 411(d)(6) relief was needed for distributable event transfers between different types of plans, given the availability of direct rollovers. Several commentators stated that this section 411(d)(6) relief provided under the 1988 regulations was still valuable and also requested clarification that the relief applied to transfers of amounts that were immediately distributable only in the form of periodic payments commencing immediately. These final regulations adopt both of these recommendations.

Section 1.411(d)-4, Q&A-3(b) of these final regulations retains and, in some respects, expands provisions of the proposed regulations that grant, subject to certain conditions, broad section 411(d)(6) relief for many types of elective transfers of a participant's entire benefit under a defined contribution plan, whether or not the benefit is immediately distributable (and whether or not the participant would be eligible for a distribution of the participant's entire benefit in a single-sum distribution that would be an eligible rollover distribution). In order to ensure that the participant's election occurs in connection with an independent event (and is not, in effect, a mere waiver), the transfer must be made either in connection with certain corporate transactions (such as a merger or acquisition) or in connection with a participant's change in employment status (for example, the participant's transfer to a different subsidiary or division of the employer, without regard to whether the transfer constitutes a separation from service) to an employment status with respect to which the participant is not entitled to additional allocations under the transferor plan, even if the event is not one that triggers the right to an immediate distribution. Such elective transfers can be made to a plan that is outside the employer's controlled group, to another plan of the same employer, or to a plan that is maintained by another member of the employer's controlled group.

A transaction or employment change transfer may involve benefits that are not fully vested under the transferor plan. However, where a participant's benefit that is not fully vested under the transferor plan is transferred pursuant to these rules, the vesting schedule amendment requirements of section 411(a)(10) must be satisfied.

A transaction or employment change transfer generally is only permitted between defined contribution plans of the same type (e.g., from a qualified cash or deferred arrangement under section 401(k) to another qualified cash or deferred arrangement). The restrictions on the types of plans between which transaction or employment change transfers are permitted facilitate administration of the qualified plan distribution rules by ensuring that amounts transferred to the receiving plan, in a transfer that is not itself a distribution, will be subject to similar legal restrictions with respect to in-service distributions. See Rev. Rul. 94-76 (1994-2 C.B. 46). In the case of transfers from plans that are subject to the survivor annuity requirements of sections 401(a)(11)(A) and 417, those survivor annuity requirements would in any event apply to the receiving plan with respect to the transferred amount as a result of the transferee plan rule of section 401(a)(11)(B)(iii)(III).

In response to comments, the final regulations clarify that the right to a transaction or employment change transfer is an other right or feature for purposes of section 401(a)(4) (unlike a distributable event transfer, which is treated as an optional form of benefit for purposes of section 401(a)(4)). In applying section 401(a)(4) to a transaction or employment change transfer right, the final regulations permit certain conditions to be disregarded. Thus, for example, section 401(a)(4) would be satisfied if, with respect to all participants: (1) The plan provides a transfer right in the event that an employee ceases to be covered by the plan because of any asset or stock disposition, merger or other similar business transaction involving a change of the employer; (2) the plan provides a transfer right in the event that an employee ceases to be covered by the plan because of an identified asset or stock disposition, merger or other similar business transaction that involves a change of the employer; or (3) the plan provides a transfer right in the event that an employee ceases to be covered by the plan because of a transfer of employment to a position covered by another plan within the employer's controlled group.

The final regulations clarify and modify the rules regarding the application of the protections of section 411(d)(6)(B) to a right to receive benefit distributions in kind from defined contribution plans and defined benefit plans. Provisions for distribution in kind are sometimes found, for example, in plans invested in annuity contracts or in marketable mutual funds. The right to a particular form of investment is not a protected optional form of benefit. However, the investments made by a plan generally are subject to fiduciary requirements, including the prudence requirement of section 404(a)(1)(B) of ERISA. The 1988 regulations state that the right to a medium of distribution, such as cash or in-kind payments, is an optional form of benefit to which section 411(d)(6)(B) applies.

The proposed regulations provided that, if a defined benefit plan included an optional form of benefit under which benefits were distributed in the medium of an annuity contract, that optional form of benefit could be modified by substituting cash for the annuity contract. The proposed regulations separately provided a similar rule for defined contribution plans that provided an annuity optional form of benefit and for distribution of an annuity contract, and that substituted a non-annuity optional form of benefit for the annuity form. These final regulations combine and simplify these two rules. The final regulations clarify that a participant's right to receive a particular benefit in the form of cash payments from either a defined benefit plan or a defined contribution plan and a participant's right to receive that benefit in the form of the distribution of an annuity contract that provides for cash payments that are otherwise identical in all respects to those cash payments from the plan are not separate optional forms of benefit. Therefore, for example, if a plan includes an optional form of benefit under which benefits are distributed in the medium of an annuity contract that provides for cash payments, that optional form of benefit may be modified by a plan amendment that substitutes cash payments from the plan for the distribution of the annuity contract, where those cash payments from the plan are identical to the cash payments payable from the annuity contract in all respects except for the source of the payments. Of course, a defined contribution plan that continues to offer a life annuity form of distribution must purchase an annuity contract from an insurance carrier in order to provide that optional form (and the plan may either distribute that contract to the participant or hold the contract as a plan asset from which it makes the payments for the participant).

These final regulations permit a defined contribution plan to be amended to replace the ability to receive a distribution in the form of marketable securities (other than employer securities) with the ability to receive a distribution in the form of cash. Thus, the right to distributions from a defined contribution plan in the form of cash, employer securities or other property that is not marketable securities is generally protected. The protection for employer securities reflects the potential value of the special tax treatment provided to net unrealized appreciation (NUA) on employer securities under section 402(e)(4). The protection for assets that are not marketable securities reflects that possibility that a participant may assign a higher value to such assets than the plan without the participant having the ability to acquire the asset after receiving a cash distribution.

The proposed regulations would permit a defined contribution plan that gives a participant the right to an in-kind distribution (including employer securities and property that is not marketable securities) to be amended to limit the types of property in which distributions can be made to a participant to specific types of property allocated to the participant's account at the time of the amendment (and with respect to which the participant had the right to receive an in-kind distribution before the plan amendment). In addition, the proposed regulations would permit a defined contribution plan giving a participant the right to a distribution in a type of property to be amended to specify that the participant is permitted to receive a distribution in that type of property only to the extent that the plan assets allocated to the participant's account at the time of the distribution include that type of property.

These provisions of the proposed regulations were supported by commentators and have been adopted in these final regulations. In response to commentator suggestions, the examples from the proposed regulations have been modified in these regulations to clarify that a plan amendment that limits the right of a distribution in specified types of property to certain participants, as permitted by these regulations, need not itself contain a list of those participants. These provisions of the final regulations do not permit a plan to be amended in a way that affects protected features of optional forms of benefit other than the medium of distribution.

These final regulations are effective September 6, 2000. These final regulations apply to plan amendments that are adopted and effective on or after September 6, 2000, except as provided in § 1.411(d)-4, Q&A-2(e)(1)(ii) and Q&A-3(c)(1)(ii).

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulation does not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Drafting Information: The principal author of these regulations is Linda S. F. Marshall of the Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and Treasury participated in their development.

You can find detailed background on the actions proposed in this document in a notice of final rulemaking pertaining to the Kentucky program published on May 10, 2000 (65 FR 29949).

We received one comment supporting the proposed action to preempt.

Pursuant to section 505(b) of SMCRA and 30 CFR 730.11(a), we preempt and supersede certain portions of KRS 350.060(16). The complete text of KRS 350.060 (16) reads as follows:

Any permit renewal shall be for a term not to exceed the period of the original permit. Application for permit renewal shall be made at least one hundred twenty (120) days prior to the expiration of the valid permit. However, if a permit has expired or if a permit renewal application has not been timely filed, and the operator or permittee desires to continue the surface coal mining operation, the cabinet shall forthwith cause a notice of noncompliance to be issued. The notice of noncompliance shall be deemed to have been complied with, and the permit may be renewed, if the cabinet receives a permit renewal application within thirty (30) days of the receipt of the notice of noncompliance. Upon the submittal of a permit renewal application, the operator or permittee shall be deemed to have timely filed the permit renewal application and shall be entitled to continue, under the terms of the expired permit, the surface coal mining operation, pending the issuance of the permit renewal. Failure to comply with the remedial measures of the notice of noncompliance shall result in the cessation of the surface coal mining operation.

The specific wording for preemption and supersession are the phrase “if a permit has expired or * * *” and the following sentence:

We are taking this action because we have initially determined that these provisions are inconsistent with section 506 of SMCRA and less effective than 30 CFR 843.11 based on the reasons cited under “Director's Findings” in a separate notice of final rulemaking as noted above. This will require the State to operate and enforce the approved program as if the preempted and superseded provisions did not exist.

Because 30 CFR 732.17(g) provides that no changes to state laws or regulations can take effect for purposes of a State program until approved as an amendment, it is generally not necessary to use the preemption provision of 30 CFR 730.11(a) and section 505(b) of SMCRA. However, Kentucky has enacted legislation that is clearly less stringent than section 506 of SMCRA and less effective than 30 CFR 843.11.

Therefore, to remove any ambiguity regarding the status of those portions of KRS 350.060(16) described in the “Director's Findings and Decision ” above, we are preempting that section of the Kentucky law. This action clarifies that this provision cannot be implemented or enforced by any party.

This rule is exempted from review by the Office of Management and Budget under Executive Order 12866.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart federal regulation.

This rule does not have federalism implications. SMCRA delineates the roles of the federal and state governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that state laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that state programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that, to the extent allowed by law, this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments since each such program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR Parts 730, 731, and 732 have been met.

Section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that a decision on a proposed state regulatory program provision does not constitute a major federal action within the meaning of section 102(2)(C) of the National Environmental Policy Act (NEPA) (42 U.S.C. 4332(2)(C)). A determination has been made that such decisions are categorically excluded from the NEPA process (516 DM 8.4.A).

This rule does not contain information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3507 et seq.).

The Department of the Interior has determined 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.). The state submittal which is the subject of this rule is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. Accordingly, this rule will ensure that existing requirements previously promulgated by OSM will be implemented by the state. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

a. Does not have an annual effect on the economy of $100 million.

b. Will not cause a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S. based enterprises to compete with foreign-based enterprises.

This determination is based upon the fact that the state submittal which is the subject of this rule is based upon counterpart federal regulations for which an analysis was prepared and a determination made that the federal regulation was not considered a major rule.

This rule will not impose a cost of $100 million or more in any given year on any governmental entity or the private sector.

On July 28, 2000, we published a notice of proposed rulemaking entitled “Traffic Separation Scheme: In the Approaches to Los Angeles-Long Beach, CA” in the Federal Register (65 FR 46378). We received no letters commenting on the proposed rule. No public hearing was requested, and none was held.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective in less than 30 days after publication in the Federal Register. Per our request, IMO suspended the existing TSS effective September 1, 2000. We are making this rule effective on the date of publication so that a TSS is in place on September 1st or as soon thereafter as possible.

This rule amends the existing TSS in the approaches to Los Angeles-Long Beach adopted by the International Maritime Organization (IMO) in 1975 (“Ships Routing,” Sixth Edition 1991, IMO). These amendments—

a. Expand the Precautionary Area approximately 2.2 nautical miles to the south;

b. Shift the western traffic lane approximately 2.2 nautical miles to the south; and

c. Shift the southern traffic lane approximately 3 miles to the west.

In addition, this rule codifies the amended TSS into Title 33 part 167 of the Code of Federal Regulations (CFR).

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).

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary. The costs and benefits of this rule are summarized below.

The amendments to the TSS's in the approaches to Los Angeles-Long Beach will result in a slight increase in transit times and operating costs for vessels using the TSS's to call on the Los Angeles-Long Beach Port complex. Most of the vessels using the TSS are large commercial vessels such as container ships and tankers. The following calculations assume vessels arriving or departing from the north or south are using the proposed western and southern TSS's, respectively. The distance for vessels arriving from the north (3600/year) will increase by approximately 2.35 nautical miles (nm). The distance for vessels departing to the north (3100/year) will increase by approximately 1.6 nm. The distance for vessels arriving from the south (2100/year) will increase by approximately 0.40 nm. The distance for vessels departing to the south (2600/year) will increase by approximately 1.2 nm. Assuming an average transit speed of 12 knots, the time per transit arriving from the north would increase by .20 hr, departing to the north by .14 hr, arriving from the south by .04 hr, and departing to the south by .10 hr. This corresponds to 1154 additional hours per year for vessels arriving or departing to the north [(3600 transits × .20hr/transit) + (3100 transits × .14 hr/transit)] and 344 additional hours per year for vessels arriving or departing to the south [(2100 transits × .04hr/transit) + (2600 transits × .1 hr/transit)]. Assuming a fuel cost of approximately $600.00 per hour, the estimated increase in costs for the industry would be $898,800.00 per year [(1154 hours + 344 hours) × $600/hr].

Vessel operators will incur the minimal cost of plotting new coordinates on their existing charts or purchasing updated charts, when available.

The amendments to the TSS's in the approaches to Los Angeles-Long Beach will increase the margin of safety for all vessels utilizing the Ports of Los Angeles and Long Beach. The larger Precautionary Area and amended traffic lanes will decrease the chance of collisions and groundings, particularly for the deepest draft vessels, which require significant room to maneuver.

The larger Precautionary Area will give vessels of all types, sizes, and drafts more time and room to maneuver in their approach to or departure from the ports. The expanded Precautionary Area is also well adapted to the lengthened Los Angeles entrance channel.

The existing western and southern TSS's do not yield safe or practical approaches to the improved Long Beach and Los Angeles entrance channels. The lengthened entrance channels extend beyond the entrance to the existing western traffic lane. This rule shifts the western TSS to the south and the southern TSS to the west. These changes will reduce the maneuvering difficulties for vessels approaching and departing the Los Angeles-Long Beach Port Complex. The shifts will allow even the largest vessels safe transit between both ports and the western lane.

Relocating the southern TSS westward will align the southern TSS with Long Beach channel and will allow a more direct approach to Los Angeles channel. In addition, the oil platforms will no longer be in the southern lane separation zone, which will increase the safety of the platforms and transiting vessels.

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 have a minimal economic impact on vessels operated by small entities. The rule amends existing TSS's. This action improves safety for commercial vessels using the TSS by reducing the risk of collisions, allisions, and groundings. Vessels voluntarily transiting the TSS's will have to transit an additional 1.6 to 3.95 nautical miles per trip, depending on the route traveled. The additional transit distance results in increased vessel operating costs ranging from approximately $84 to $204 per trip. Vessels that tend to use the TSS's are commercial vessels such as containerships, freighters, and tankers. These vessels by their very nature are large in size and capable of operating in an offshore environment. Because of their large size most of them would not qualify as small entities. However, even if a vessel does qualify as a small entity, the impact of the additional $84 to $204 per trip would be an insignificant increase to the overall cost of its complete voyage.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking. If the rule affects your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult George Detweiler, Coast Guard, Marine Transportation Specialist, at 202-267-0574.

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 E.O. 13132 and have determined that it does not have implications for federalism under that Order.

Title I of the Ports and Waterways Safety Act (33 U.S.C. 1221 et. seq.) (PWSA) authorizes the Secretary to promulgate regulations to designate and amend traffic separation schemes (TSS's) to protect the marine environment. In enacting PWSA in 1972, Congress found that advance planning and consultation with the affected States and other stakeholders was necessary in the development and implementation of a TSS. Throughout the history of the development of the TSS in the approaches to Los Angeles—Long Beach, California, we consulted with the LA/LB Harbor Safety Committee (“HSC”), the affected state and federal pilot's associations, vessel operators, users, and all affected stakeholders. The LA/LB HSC, which was established by the State of California, includes all the principal waterway users of the LA/LB ports and other key agencies. The HSC was an active participant in various meetings with the Coast Guard and contributed to this rulemaking.

Presently, there are no California State laws or regulations concerning the same subjects as are contained in this rule. We understand the state does not contemplate issuing any such rules. However, it should be noted, that by virtue of the PWSA authority, the TSS in this rule will preempt any state rule on the same subject.

In order to be applicable to foreign flag vessels on the high seas, TSS's must be submitted to, approved by, and implemented by the International Maritime Organization (IMO). Individual states are not represented at IMO; that is the role of the federal government. The Coast Guard is the principal United States agency responsible for advancing the interests of the United States at IMO. We recognize, however, the interest of all local stakeholders as we work at IMO to advance the goals of this TSS. We continued to work closely with such stakeholders in implementing the final rule to ensure that the waters in the approaches to Los Angeles—Long Beach affected by this rule are made safer and more environmentally secure.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their regulatory actions not specifically required by law. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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.

We considered the environmental impact of this rule and concluded that, under figure 2-1, paragraph (34)(I) of Commandant Instruction M16475.lC, this rule is categorically excluded from further environmental documentation. This rule amends an existing traffic separation scheme. These amendments will enhance safety by routing commercial vessels farther offshore which will provide an extra margin of safety and environmental protection in the San Pedro Channel area and the entrances to the Ports of Los Angeles and Long Beach. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

(b) Pilot boarding areas are located within the precautionary area described in paragraph (a) of this section. Specific regulations pertaining to vessels operating in these areas are contained in 33 CFR 165.1109(d).

In the Federal Register of October 28, 1999 (64 FR 58318), The Indian Health Service (we) intended to republish the eligibility regulations that were still in effect due to a Congressional moratorium but which no longer appeared in the Code of Federal Regulations. We also intended to renumber the rules subject to the moratorium from part 36 to part 36a and suspend them. However, in the amendatory instructions, we did not specify that only subparts A through G were being renumbered as part 36a and suspended while subparts H through J remained in the current part 36.

The Federal Emergency Management Agency published an interim final rule on August 28, 2000 that sets out procedures for applicants to obtain assistance for injuries and property damage resulting from the Cerro Grande fire in New Mexico in May 2000. As published the final rule includes an erroneous date that can be misleading to applicants.

Accordingly, the final rule published as FR Doc. 00-21926 on August 28, 2000, 65 FR 52260 through 52279, is corrected as follows:

On page 52260, in the third column, last paragraph, the date October 2, 2000 is corrected to read October 27, 2000.

The modified base flood elevations are not listed for each community in this interim rule. However, the address of the Chief Executive Officer of the community where the modified base flood elevation determinations are available for inspection is provided.

Any request for reconsideration must be based upon knowledge of changed conditions, or upon new scientific or technical data.

The modifications are made pursuant to section 201 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are in accordance with the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq., and with 44 CFR part 65.

For rating purposes, the currently effective community number is shown and must be used for all new policies and renewals.

The modified base flood elevations are the basis for the floodplain management measures that the community is required to either adopt or to show evidence of being already in effect in order to qualify or to remain qualified for participation in the National Flood Insurance Program.

These modified elevations, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own, or pursuant to policies established by other Federal, state or regional entities.

The changes in base flood elevations are in accordance with 44 CFR 65.4.

This rule is categorically excluded from the requirements of 44 CFR Part 10, Environmental Consideration. No environmental impact assessment has been prepared.

The Associate Director, Mitigation Directorate, certifies that this rule is exempt from the requirements of the Regulatory Flexibility Act because modified base flood elevations are required by the Flood Disaster Protection Act of 1973, 42 U.S.C. 4105, and are required to maintain community eligibility in the National Flood Insurance Program. No regulatory flexibility analysis has been prepared.

This interim rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

This rule involves no policies that have federalism implications under Executive Order 12612, Federalism, dated October 26, 1987.

This rule meets the applicable standards of section 2(b)(2) of Executive Order 12778.

The Federal Emergency Management Agency (FEMA or Agency) makes final determinations listed below of base flood elevations and modified base flood elevations for each community listed. The proposed base flood elevations and proposed modified base flood elevations were published in newspapers of local circulation and an opportunity for the community or individuals to appeal the proposed determinations to or through the community was provided for a period of ninety (90) days. The proposed base flood elevations and proposed modified base flood elevations were also published in the Federal Register.

This final rule is issued in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR part 67.

The Agency has developed criteria for floodplain management in floodprone areas in accordance with 44 CFR part 60.

Interested lessees and owners of real property are encouraged to review the proof Flood Insurance Study and Flood Insurance Rate Map available at the address cited below for each community.

The base flood elevations and modified base flood elevations are made final in the communities listed below. Elevations at selected locations in each community are shown.

This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. No environmental impact assessment has been prepared.

The Associate Director, Mitigation Directorate, certifies that this rule is exempt from the requirements of the Regulatory Flexibility Act because final or modified base flood elevations are required by the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and are required to establish and maintain community eligibility in the National Flood Insurance Program. No regulatory flexibility analysis has been prepared.

This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

This rule involves no policies that have federalism implications under Executive Order 12612, Federalism, dated October 26, 1987.

This rule meets the applicable standards of section 2(b)(2) of Executive Order 12778.