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

The Regulatory Flexibility Act is not applicable to this interim rule because the Commodity Credit Corporation is not required by 5 U.S.C. 553 or any other provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.

It has been determined by an environmental evaluation that this action will have no significant impact on the quality of the human environment. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

This rule contains no Federal mandates (under the regulatory provisions of Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

The title and number of the Federal Assistance Program, as found in the Catalog of Federal Domestic Assistance, to which this final rule applies are: Commodity Loans and Purchases—10.051.

This program is not subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June 24, 1983).

This final rule has been reviewed in accordance with Executive Order 12988. The provisions of this rule do not preempt State laws to the extent that such laws are consistent with the provisions of this rule. Before any legal action is brought regarding determinations made under provisions of 7 CFR part 1446, the administrative appeal provisions set forth at 7 CFR parts 11 and 780 must be exhausted.

The procedures set out in 7 CFR parts 11 and 780 apply to appeals of adverse decisions made under the regulations adopted in this notice.

The information reporting requirements contained in this rule have been approved by OMB and assigned OMB control number 0560-0014. The provisions of this rule do not impose new reporting requirements or changes in existing information collection requirements.

In the August 5, 1998, Federal Register , CCC issued changes in the peanut poundage quota regulations at 7 CFR Part 1446 with respect to determining Segregation 3 peanuts. The rule modified the definition of Segregation 3 peanuts found in § 1446.103 by providing that peanuts found to have visible A. flavus mold upon a visual inspection at a buying point may be reconditioned and regraded in certain limited instances. For many years peanuts found to have visible A. flavus mold were required to be marketed as additional loan peanuts or as quota peanuts returned to the farm for seed. Although no cleaning was allowed, the impact of the inspection on farmers was mitigated by the availability of “disaster transfers” which allowed a transfer of additional loan peanuts to a quota loan pool. Those transfers did not change the ultimate use of the peanuts but did allow the farmer to receive a return close to that for quota peanuts if the farmer otherwise had unused quota.

The Federal Agriculture Improvement and Reform act of 1996 (1996 Act) substantially limited the quantity and price on such transfers but did not mandate the particular procedures by which peanuts would be classified as Segregation 3 peanuts. To mitigate possible harm to individual farmers with Segregation 3 peanuts, farmers whose peanuts are found to contain visible A. flavus mold were allowed by the interim rule to have the peanuts reconditioned by removing foreign material and loose shelled kernels (LSK's) in accordance with directions to be issued by the Director of the Tobacco and Peanuts Division of the Farm Service Agency. Comments were requested on the interim rule. Also, the preamble to that rule requested comments on whether there should be chemical testing undertaken with respect to the delivery of all farmers stock peanuts. It was noted, however, that chemical testing for wholesomeness was already being undertaken, under other authorities, at a later marketing stage. Specifically, comments were requested with respect to the efficiency of such testing, standards for such testing and the assignment of costs for such testing.

A total of 25 comments was received during the comment period, representing three area peanut grower associations, seven State peanut grower organizations, a State peanut organization, a State farmer organization, a national peanut sheller organization, six members of Congress, three Senators, an individual sheller/handler, a national peanut manufacturer organization, and a law firm representing certain peanut producers.

One area peanut grower association, one State peanut grower organization, the national peanut manufacturer organization, and the national peanut shellers association opposed the change to allow regrading. The remaining 21 respondents generally supported the change to allow cleaning and reinspection. The respondents raised three primary issues: (1) Since not all buying points have cleaning facilities, there is a need for removing peanuts from the buying point to a location having such facilities, (2) tracking loads of peanuts cleaned and presented for reinspection may present problems, and (3) producers may need more than 24 hours to have peanuts cleaned and reinspected.

First of all, with respect to the general issues raised (whether to allow recleaning at all) it remains the view of the agency that the rule should allow for regrading and recleaning. That allowance can help avoid hardship to farmers. So far, the allowance of recleaning has not appeared to present a problem as far as the administration of the price support system. The only material potential problem would be the potential diversion to quota loan pools of peanuts that have been recleaned but which might not be purchased out of the inventory at full price because a buyer knows that the peanuts have been recleaned. So far, there does not appear to be any loan problems of that kind. However, because pool losses can spread to all farmers under the statutory system that is now in place, the agency will continue to monitor this situation to insure fairness to all.

We now address the other issues raised and the two additional rule changes undertaken in this notice:

Twelve respondents, both those in support of the rule and those opposed, expressed concern about tracking those loads of peanuts removed from the buying point for cleaning to assure the same peanuts were returned for regrading. One area peanut grower association in support of the interim rule stated that buying points without cleaning facilities should be allowed off-site cleaning in order to implement the interim rule on a fair and equitable basis for all buying points. One State grower association and one area peanut grower association opposed the interim rule based, in part, on the premise it would be necessary for peanuts to be removed for cleaning if the buying point did not have cleaning facilities. Also, in support of the rule, a State grower association and a State peanut commission commented that they believed loads of peanuts removed from the buying point could be tracked and monitored. An area peanut grower association and three State peanut grower associations supported the interim rule as issued and emphasized that peanuts should not leave the buying point.

In some cases it may well be that the buying point to which the farmer takes the farm's peanuts may not be a location where recleaning is possible. Accordingly, not allowing the peanuts to be recleaned elsewhere could have a serious effect on the marketing decisions made by producers and could interfere with normal operations of private buying points and producers. On the other hand, control of the peanuts is important because of the possible effect on the loan program if buyers refuse to buy peanuts that have been moved for fear that the presence of the mold has been obscured by re mixing of the peanuts. Such fears, should they occur, could affect the marketability of the peanuts. In turn, the lack of marketability could produce price support loan losses. Hence, this raises the same general concern as the question of whether to allow recleaning at all and we reach the same result as with the general question as there does not appear to be strong evidence to indicate that there will be serious interference with the price support program if this allowance is made. In the absence of such evidence, the agency is reluctant to interfere with established marketing relationships. Accordingly, the final rule does not require that recleaning take place at the same location where the peanuts are first presented for marketing if that buying point does not have its own cleaning facilities.

In the interim rule, the agency generally allowed 24 hours for the recleaning to take place but did provide explicitly for authority to extend that period if the Director of the Tobacco and Peanuts Division (TPD) of the Farm Service Agency (FSA) saw fit to do so. A number of comments addressed this issue. One area peanut grower association and three State peanut grower associations supported the interim rule as written with a 24-hour reinspection turnaround. One area peanut grower association, three State peanut grower associations, one State peanut organization, six members of Congress, and three Senators supported the interim rule but also suggested either a 24-hour turnaround was not enough time or requested allowing 72 hours for peanuts to be cleaned and reinspected. One area peanut grower association and one State peanut grower association opposed the interim rule based, in part, on the assertion that 24 hours was not enough time to have the peanuts cleaned and regraded.

Following issuance of the interim rule, FSA issued procedures implementing the changes to allow reconditioning and reinspection of farmers stock peanuts. As the marketing of 1998 crop peanuts began, certain buying points that did not have cleaning facilities but had peanut producers who wanted their peanuts cleaned and regraded requested that TPD grant relief to allow the peanuts to be cleaned at a different buying point. In order to provide equity to all producers, under the provisions of the interim rule, the Director of TPD, FSA, issued instructions to allow 72 hours for cleaning and regrading and buying points without cleaning facilities to move the peanuts to an alternate buying point for cleaning and reinspection.

We have estimated that fewer than 350 loads of peanuts were cleaned and reinspected during the 1999 crop with most occurring in the Southeast marketing area. This represents a 30 percent decrease from year-earlier amounts of peanuts cleaned and reinspected under this provision. We estimate that about 65 percent of the reinspected peanuts were able to qualify as Segregation 1 peanuts.

Here also, the same concerns are at play. Those concerns were identified in the comments of several respondents who expressed the concern that reinspected peanuts would be viewed as “hot” with respect to undetected A. flavus mold and thereby cause pool losses. However, the relative small amount of peanuts cleaned and reinspected did not have a significant impact on the peanut price support loan program. Having decided that off-premises recleaning should be allowed, it follows that the recleaning period should not be limited to 24 hours as it may not be possible for the recleaning to be done in that period of time. However, this concern is not limited only to those situations, as 24 hours may also be too short in some instances at buying points with cleaning facilities at times when many peanuts are being delivered at once or whether there is an equipment failure or, for that matter, a holiday. Accordingly, subject to continued oversight, the rule allows for a 72 hour period for the process of recleaning and regrading to be completed.

With respect to chemical testing, the issue has been whether or not there would be a requirement of some kind of chemical testing before farmers stock peanuts can be marketed—currently, there is a visual inspection of the peanuts though, as indicated, such inspections are designed for the administration of the price support program and assigning a value to the peanuts. Wholesomeness concerns with respect to the human consumption of peanuts takes place as needed further along in the marketing process and is not under the jurisdiction of CCC. Nor is CCC, as such, a regulator of the marketing of peanuts except as needed to operate the price support program itself and to administer the production restriction provisions which are tied into the price support system. However, because of concerns that undetected problems could produce losses to buyers later on, there has been a debate within the industry about whether there should be chemical testing of all farmer stock peanut deliveries. In light of that debate and its connection with the recleaning issue, the interim rule asked for comment on whether chemical testing should be required for all marketings, as opposed to being left to individual determinations by individual buyers. A number of comments were received.

One area peanut grower association and four State peanut grower organizations opposed the use of chemical testing of farmers stock peanuts. Concerns about adverse impacts on peanut producers, increased expense, delays in peanut delivery and environmental impacts of chemicals used for testing were issues raised by the respondents.

A national peanut sheller organization and a national peanut product manufacturer organization, two State peanut grower organizations and a State peanut commission supported the use of chemical testing as a more accurate and consistent test for reflecting the aflatoxin content in farmers stock peanuts. These respondents pointed to studies that show occurrences of excess aflatoxin in peanuts graded as Segregation 1 and relatively low levels of aflatoxin in peanuts grading Segregation 3. The respondents emphasized that the studies show that the current visual inspection method of grading farmers stock peanuts for A. flavus mold is not a definitive indicator of aflatoxin content of the inspected peanuts.

A sheller/handler acknowledged the need to enhance the peanut grading system and, without addressing chemical testing directly, stressed the need to remove subjectivity from the testing process. Several respondents urged using available technology in the grading process while protecting the integrity of the peanut price support program and its function for peanut producers.

Discussion by respondents included incorporation of marketing and grading procedures based on the field application of beneficial mold that studies suggest decreases the likelihood of the occurrence of aflatoxin in peanuts produced on such fields. In addition, several respondents suggested that incoming grade requirements with respect to visual inspection for A. flavus mold or aflatoxin content be eliminated for commercial peanut sales. Since handlers are subject to outgoing quality standards based on chemical testing for aflatoxin, the respondents reasoned that there is no real justification for testing farmers stock peanuts.

Discussions on the issue of chemical testing of farmer stock peanuts continue in the industry and, so far, no consensus has been reached. Thus for example, no provisions have been added to the Peanut Marketing Agreement, an agreement which for the most part is the product of recommendations of a joint group of producers and buyers. Issues which come into play in the question concern the type of testing that would be required, whether it would be required in all cases, and who would pay for the testing. Given that lack of unanimity on this issue and the lack of unanimity of treatment in the marketplace, there does not appear to be an established market practice which the price support system needs to insure that peanuts are properly valued for price support purposes to avoid pool losses. For that reason and given the limited purposes of the price support program, there does not appear to be reason at this time for a change in the program regulations regarding this issue. However, private concerns remain free to engage in whatever additional testing they feel is needed to protect their interests in the marketplace.

In § 1446.307 of the regulations, specifically in paragraph (g) of that section, it is provided that disaster transfers cannot be made from an additional peanut loan pool to a quota loan pool if the producer has executed a waiver of the right in connection with the acquisition of crop insurance benefits from the Federal Crop Insurance Corporation (FCIC), or other federal agency. Apparently, FCIC has, in the past, been the only federal agency to require such a waiver. Because, however, it is understood that such waivers are no longer required by FCIC, this provision is removed in this rule.

In § 1446.102, provisions are set out which govern the general administration of the price support program. In that connection, in order to assure maximum flexibility for the agency in dealing with new problems as they may arise, a new provision is being added to the regulations which allows the Director of TPD, FSA, to approve variances from the regulations where the variance does not involve a statutory requirement and where such a variance would serve the purposes of the overall administration of the program. This authority would, however, only be used sparingly to deal with new and developing issues or to resolve disputes and supplements whatever flexibility is already granted by other terms of the regulations, or granted elsewhere.

On October 10, 2000, the Department of Energy (DOE) published an interim final rule in the Federal Register (65 FR 60291) that amended DOE's nuclear safety regulations in 10 CFR Part 830 (Interim Final Rule). DOE provided a 30-day public comment period for the Interim Final Rule and subsequently received comments to the rule from over 30 parties. As a result of the comments that were received to that Interim Final Rule, DOE became aware of a number of minor errors in the published version of the rule and the preamble, as well as a number of minor changes to the rule that would clarify and simplify implementation of the amended rule. We are republishing the rule as a final rule with those changes. Finally, we are summarizing the issues raised in the comments to the Interim Final Rule and providing DOE's responses to the major issues. Many of the comments concerned rule implementation issues that will be addressed in the rule implementation guides.

The following changes to 10 CFR Part 830 are being made in response to comments to the Interim Final Rule.

We are amending paragraph 830.2(d) to exclude the mixed oxide fuel fabrication and irradiation facilities that the Nuclear Regulatory Commission (NRC) has the authority to license and regulate under § 3134 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105-261). Section 3134 amends the Energy Reorganization Act of 1974 to add § 202(5) (42 U.S.C. 5842). This exclusion will make clear that these facilities will be licensed by the NRC and must be designed and constructed to meet NRC regulations. Thus, these facilities are excluded from the requirement to meet 10 CFR Part 830 before and after a license is issued by the NRC.

We are revising the following definitions in § 830.3:

We are revising the words “identified by the documented safety analysis” to “determined from safety analyses” to make the definition consistent with those for “safety structures, systems, and components” and “safety significant structures, systems, and components.”

We are revising the definition of TSRs to express it more clearly. As revised, the definition of TSRs means the limits, controls, and related actions that establish the specific parameters and requisite actions for the safe operation of a nuclear facility and include, as appropriate for the work and the hazards identified in the documented safety analysis for the facility: Safety limits, operating limits, surveillance requirements, administrative and management controls, use and application provisions, and design features, as well as a bases appendix. The documented safety analysis identifies the need for TSRs, but the actual limits are identified in the TSRs. The revisions make clear that the TSRs address the specific numerical limits and related actions necessary for safe operation of a nuclear facility. Because the TSRs identify the limits and actions necessary in specific situations, it is not appropriate to use the graded approach to justify the use of different limits and actions than those set forth in the TSRs. The change made to the graded approach section is consistent with this change.

We received a number of comments requesting us to clarify where a contractor must use a graded approach and how the graded approach documentation should be submitted. We are revising the language in § 830.7 to clarify that a contractor may not use a graded approach in implementing the unreviewed safety question (USQ) process or in implementing the technical safety requirements. We are addressing the documentation question in Section III. I of this preamble.

a. Unreviewed safety question (USQ) procedure. In § 830.203 of the Interim Final Rule we stated that the contractor must submit a USQ “process.” In fact, the document that specifies how the USQ process is to be performed is the USQ “procedure.” We are changing the rule language in § 830.203 to reflect that a contractor is to submit “a procedure for its USQ process,” rather than a “USQ process.” Conforming changes are being made in Appendix A to Subpart B as well. These changes should be considered when reading the USQ discussions in the preamble to the Interim Final Rule.

b. Existing USQ procedure. In § 830.203, we deleted the words “DOE-approved” from the requirement for contractors to continue to use their existing USQ procedure pending approval of the USQ procedure to be submitted under the rule by April 10. This will ensure that contractors who have not received DOE-approval for their current USQ procedures will continue to use their existing USQ procedures.

c. Editorial changes. We made some editorial changes to § 830.203 to make it easier to read.

We received a number of comments on the application of the requirements for a preliminary documented safety analysis to new nuclear facilities and major modifications to nuclear facilities that were nearly ready to operate. We agree that the purpose of the requirement is to ensure that DOE and the contractor agree on design considerations during the design and early construction phases of the modification, and that the final documented safety analysis will document those considerations during the final construction efforts. Consequently, we are revising § 830.206 to apply to hazard category 1, 2, and 3 new nuclear facilities and major modifications for which construction begins after December 11, 2000.

We are adding the words, “or as approved by DOE on a later date,” to paragraph 830.207(b) to clarify that the contractor must perform work to the approved safety basis in effect on October 10, 2000 unless there is a more recent DOE-approved safety basis. The applicable safety basis for the nuclear facility is the latest DOE-approved safety basis.

1. We are adding two “safe harbor” provisions for transportation activities in Table 2. This change is discussed in more detail in the response to comments.

2. We are making conforming changes in the appendix to be consistent with the change to the definition of TSRs.

3. Editorial Changes.

a. We are adding a reference to Table 1 in paragraph C in Appendix A to Subpart B, Scope.

b. We are revising language in paragraph C in Appendix A to Subpart B to read, “all DOE nuclear facilities, including radiological facilities,* * *” to clarify that radiological facilities are considered to be a subset of nuclear facilities.

c. We are adding a “3” to the last item of Table 1 in Appendix A to Subpart B where it was inadvertently omitted.

d. We are editing Table 2 in Appendix A to Subpart B to correct the alignment and to correct language in paragraph (6)(2) of the table.

e. We are changing the reference to “DOE-STD-3009-94” to read “DOE-STD-3009, Change Notice 1, January 2000,” throughout the rule.

DOE received written comments from over 30 interested organizations (primarily DOE contractors) and individuals on the amendments in the Interim Final Rule for the DOE Nuclear Safety Management requirements of 10 CFR Part 830. You may examine written comments between 9 AM and 4 PM at the U.S. Department of Energy Freedom of Information Reading Room, Room 1E-190, 1000 Independence Avenue, SW, Washington, DC 20585, (202) 586-3142.

This section of the Supplementary Information summarizes the issues raised in the comments and gives DOE's response. Many of the comments raised questions and positions related to the implementation of the requirements. These comments will be considered in the development of the implementation guides that were discussed in the preamble to the Interim Final Rule.

A. Comment: In the Summary of Changes in the preamble to the Interim Final Rule, paragraph G, several commentors noted that the paragraph that reads “The USQ process has two steps * * *” is incorrect and should be entirely deleted.

Response: We agree.

B. Comment: Several commentors provided editorial corrections.

Response: We agree with the following editorial corrections to the preamble:

1. In the “Summary of Changes” in the preamble to the Interim Final Rule, paragraph II.D.f, “Existing DOE nuclear facility and new DOE nuclear facility,” the date for new nuclear facilities was erroneously listed as April 9, 2000. The correct date is April 9, 2001.

2. In the “Summary of Changes” in the preamble to the Interim Final Rule, paragraph II.D.2.d.vi, on page 60297, “electronic microscopes” should be “electron microscopes.”

C. Comment: A number of commentors objected to expanding the scope of the rule to cover activities performed offsite. One commentor suggested limiting the offsite applicability by setting a dollar threshold for procurement actions, exempting procurement of commercial items, limiting the applicability to components having nuclear safety significance, or reducing fines for offsite work.

Response: We have considered the suggestions for limiting the applicability of the rule offsite and do not agree that such limitations should be adopted. In 1995, we gave notice that we were considering an option that would expand the scope of Part 830 to cover conduct that could affect the safe management of nuclear facilities without any limitation that such conduct must occur at nuclear facilities. See the Notice of Limited Reopening of the Comment Period, 60 FR 45381, 45384 (Aug. 31, 1995). In adopting this option to cover offsite activities, we noted that the scope of the rule would apply not only to prime contractors responsible for a nuclear facility, but also to subcontractors, suppliers, and other contractors, including those who provide items (such as pumps, valves, waste containers, piping, and electrical or mechanical devices) or services (such as design, engineering, maintenance, and welding) that affect, or may affect, nuclear safety of DOE nuclear facilities. Thus, the provision of items and services taking place offsite which affect nuclear safety would be covered by the rule. DOE expects that contractors will establish specifications and standards in their procurement documents and flow them down to all tiers of subcontractors and suppliers, regardless of whether items will be provided or services will be performed onsite or offsite.

We also recognize that in some cases contractors may not flow down specifications but may choose to procure commercial grade items and materials and to perform the tests or other actions that are necessary to upgrade these materials or items to allow them to be used as items important to nuclear safety. Contractors may choose to perform the required actions to upgrade these materials or items either for economic reasons or because qualified vendors cannot be found. In these cases, the supplier is responsible for meeting the requirements for commercial grade materials or items as specified in the procurement documents and the contractor is responsible for ensuring the requirements are met for using these materials or items as items important to nuclear safety.

We believe that the alternatives suggested for limiting the offsite application of the rule are not necessary or advisable. Commercial products as well as small dollar purchases may affect nuclear safety of DOE nuclear facilities depending on their intended use. All the facts and circumstances involved in the failure of an item procured from an offsite vendor or supplier will be looked at in any subsequent enforcement action. Civil penalties can be appropriately mitigated or adjusted in accordance with the enforcement discretion in 10 CFR Part 820.

D. Comment: A number of commentors questioned how they should apply the requirements of this rule to transportation activities not regulated by the Department of Transportation (DOT).

Response: We are amending the rule to add two additional “safe harbor” methods in Table 2 of Appendix A to Subpart B for transportation activities covered by this rule. The new safe harbor methods will endorse the methods and processes described in DOE-O-460.1A, Packaging and Transportation Safety, and its associated guide and DOE-O-461.1, Packaging and Transportation of Materials of National Security Interest, and its associated manual, as acceptable ways to satisfy the rule requirements for transportation activities covered by the provisions of this rule.

E. Comment: A commentor stated that an exclusion to the requirements of this rule should be provided for the mixed plutonium-uranium oxide fuel fabrication and irradiation facilities for the period prior to licensing by the Nuclear Regulatory Commission (NRC).

Response: We already exclude any activity licensed by the NRC in paragraph 830.2(a). The NRC has licensing and related regulatory authority for any facility under contract with DOE that is used for the express purpose of fabricating mixed plutonium-uranium oxide nuclear reactor fuel for use in a commercial nuclear reactor licensed under the AEA, other than any such facility that is utilized for research, development, demonstration, testing or analysis purposes. See Section 3134(a) of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Pub. L. 105-261) which amends the Energy Reorganization Act of 1974 to add Section 202(5) (42 U.S.C. 5842). The design and construction of these facilities will be required to meet NRC nuclear safety regulations and, therefore, we are revising § 830.2 to make clear that we are excluding these facilities from the provisions of 10 CFR Part 830. This exclusion is similar to the exclusion for activities under the Nuclear Waste Policy Act.

F. Comment: A commentor stated that the terms “safety analysis,” “documented safety analyses,” and “hazard analyses” are used inconsistently in the definitions of “safety class structures, systems, and components;” “safety significant structures, systems, and components;” and “safety structures, systems, and components.”

Response: We are revising the words “Documented safety analysis” to “safety analyses” to make the definition consistent with those for “safety structures, systems, and components” and “safety significant structures, systems, and components.”

G. Comment: A number of commentors noted that some terms used in the rule, such as the terms “limited operational life” and “short remaining operational period” are not defined in the rule and guidance should be provided on what these terms mean.

Response: We agree with the comment and we will address these and other terms in the implementation guides for this rule.

H. Comment: A number of commentors raised questions regarding the use of the graded approach and the appropriate place to document it.

Response: We received a number of comments requesting us to clarify where a contractor must use a graded approach and how the graded approach documentation should be submitted. As stated in the preamble to the Interim Final Rule, contractors are already required to implement the quality assurance requirements using a graded approach. In the appendix, we stated that DOE expects a contractor to use a graded approach to develop a documented safety analysis and describe how the graded approach was applied. The preamble provided that use of the graded approach is not appropriate in implementing the USQ process or in implementing technical safety requirements. We are revising the requirements in § 830.7 to add a sentence to clarify that the graded approach is not appropriate in implementing the USQ process or in implementing technical safety requirements. The graded approach remains applicable to the implementation of quality assurance and to the documented safety analysis.

We also received comments concerning the documentation requirements explaining how the graded approach was applied. Section 830.7 requires a contractor to document the basis of the graded approach used and to submit that documentation to DOE. While the rule does not prescribe when and where such documentation should be submitted, it is expected that the documentation and justification for grading would be submitted in the documents in which it is used. Grading methodology and its application would then be reviewed by the DOE officials who have the authority to approve the documents. Grading approaches for site-wide programs or facility-specific applications are explained further in guidance documents.

I. Comment: Several comments expressed concern that failure to perform work consistent with all “contract” requirements might be subject to enforcement actions under the provisions of the Price-Anderson Amendments Act of 1988 (PAAA).

Response: Paragraph 830.122(e)(1) of Subpart A of the rule requires contractors to: “Perform work consistent with technical standards, administrative controls, and other hazard controls adopted to meet regulatory or contract requirements, using approved instructions, procedures, or other appropriate means.” However, both this rule and the DOE PAAA enforcement process in 10 CFR Part 820 are limited to contractor activities that affect, or may affect, the safety of DOE nuclear facilities. Thus, contract requirements that do not have an effect on nuclear safety are not subject to the work process provisions of Subpart A of this rule and will not be subject to PAAA enforcement. DOE has other contract remedies to address noncompliance with contract requirements and work processes that have no affect on nuclear safety.

J. Comment: A number of comments questioned how the work process requirements apply to subcontractors and suppliers.

Response: Section 830.121(a) is explicit that all contractors, including subcontractors and suppliers, must conduct work in accordance with the quality assurance criteria listed in § 830.122, including the work processes criteria in paragraph 830.122(e). Moreover, the general rule in paragraph 830.4(a) is clear that subcontractors and suppliers may not take any action inconsistent with the requirements in Part 830. In addition to these direct requirements, paragraph 830.121(c)(4) makes the prime contractor responsible for ensuring subcontractors and suppliers satisfy the quality assurance criteria of paragraph 830.122(e). DOE expects that in most cases, prime contractors would satisfy this requirement through the flowdown of requirements and standards in procurement documents. The prime contractor will be subject to regulatory enforcement if a subcontractor or supplier does not meet the quality assurance criteria when providing items and services that could affect nuclear safety of DOE nuclear facilities. This responsibility of the prime contractor, however, does not relieve the subcontractors and suppliers from the requirements imposed directly upon them.

K. Comment: A number of commentors asked why DOE is requiring contractors to identify consensus standards that are used in the Quality Assurance Program (QAP).

Response: DOE has a long history of requiring the use of appropriate national and international standards for implementing its quality assurance requirements. DOE is strongly committed to this philosophy to ensure that its contractors develop and implement effective and efficient QAPs. Each DOE quality assurance criterion is stated as a performance expectation and does not specify the methods to achieve the desired performance result. National and international standards ( e.g., ASME NQA-1, ASQ E-4, or ISO 9001) and their supplemental guidance include a number of proven methods for achieving DOE's performance expectations. DOE has found cases where failure to use these standards to develop implementing processes has led to noncompliance with the DOE quality assurance criteria. DOE is concerned that all of its contractors are not taking full advantage of the benefits standards offer. Use of national and international standards will help contractors to develop effective and efficient QAPs that are also aligned with their customer's and supplier's QAPs. The DOE implementation guide for the quality assurance requirements in the rule(DOE-G-414.1-2) includes a discussion of standards use and references to the most widely accepted national and international standards for quality assurance. Contractor use of this implementation guide and the clear identification and the documented use of standards will also help DOE meet its responsibilities to review contractor QAPs to ensure that they meet the rule requirements and to oversee contractors to ensure that they fully implement their DOE-approved QAPs.

L. Comment: A commentor stated that § 803.201 does not add to the rule's substantive requirements, and because the word “work” is not defined, it could lead to unjustified applications or too narrow interpretations.

Response: Other sections of the safety basis requirements (Subpart B) define the requirements for derivation and documentation of the safety basis for a nuclear facility. Section 803.201 requires that the activities within them must be conducted in accordance with the safety basis. It is essential to have this element for the safety basis requirements be more than a paper exercise.

M. Comment: Several commentors asked how the authorization basis is different from the safety basis.

Response: The rule defines the safety basis as the documented safety analysis and the hazard controls that provide reasonable assurance that a DOE nuclear facility can be operated safely and in a manner that adequately protects workers, the public, and the environment. The authorization basis is defined in DOE-G-450.4-1A, Integrated Safety Management System Guide for Use with Safety Management System Policies (DOE-P-450.4, DOE-P-450.5, and DOE-P-450.6); the Functions, Responsibilities, And Authorities Manual (DOE-M-411.1-1B); and the Department of Energy Acquisition Regulation (DEAR) 48 CFR 970.5223-1, as safety documentation that supports the decision to allow a process or facility to operate. Included are corporate operational and environmental requirements as found in regulations and specific permits, and, for specific activities, work packages or job safety analyses. In general, the safety basis as defined in the rule is a subset of the authorization basis as the authorization basis includes documents relating to environmental issues, such as permits, as well as safety documentation.

N. Comment: Several commentors asked why DOE-STD-1027 is listed as a requirement for hazard categorization, instead of a safe harbor method.

Response: In general, each of the safe harbor standards listed in Table 2 of Appendix A to Subpart B of the rule can be effectively applied to specified types of facilities and activities. In allowing the contractor to choose the appropriate safe harbor standard for developing the safety basis, DOE expects the contractor to select the standard that best fits the application. However, DOE wants contractors to be consistent when determining the hazard classification for its nuclear facilities; hence we are requiring the consistent use of DOE-STD-1027 which has an established history for this purpose.

O. Comment: A commentor asked what is a “below hazard category 3” nuclear facility.

Response: In DOE-STD-1027, these facilities are categorized as having no potential for significant offsite, onsite, or localized consequences. A “below hazard category 3” nuclear facility is a DOE facility or activity that meets the definition of a nuclear facility but does not meet the threshold in DOE-STD-1027 for a hazard category 3 nuclear facility. These facilities are sometimes referred to as “radiological facilities.” See also Table 1 in Appendix A to Subpart B of the rule.

P. Comment: Two commentors questioned a statement in the preamble to the Interim Final Rule, in paragraph III.D on segmentation that said “If a hazardous materials could be transported to other segments by common confinement systems or the lack of other physical barriers, the facility cannot be segmented for the purposes of this rule.”

Response: We agree that the statement could be misleading and the individual circumstances would need to be evaluated to determine the effect on operations in the other segment before making the determination of whether segmentation would be permitted for purposes of categorizing the facility and establishing an appropriate safety basis. Additional discussion on segmenting nuclear facilities can be found in DOE-STD-1027.

We emphasize, however, that in considering segmentation a contractor must be mindful of its overriding obligation to ensure adequate protection of workers, the public, and the environment. A contractor will have the burden of proof to demonstrate that segmentation is appropriate.

Q. Comment: A commentor stated that USQ determinations related to potential inadequacies of the safety analysis (PISA) are not always done in a timely manner and a definite time period for the performance of a USQ determination should be provided in paragraph 830.203(e)(3).

Response: The implementation guide for the USQ requirements of the rule (DOE-G-424.X) will provide DOE's expectation that the contractor's USQ procedure should define the period for the performance of a USQ determination related to a PISA and that this time period should be on the order of days, not weeks or months.

R. Comment: Several commentors asserted that a PISA should not be classified as a USQ until a USQ determination confirms that the safety analysis is inadequate.

Response: The fact that the safety analysis could be inadequate, either because of a deficiency in the analysis or because of an as-found condition, indicates that there is a safety question that has not yet been reviewed (in other words, a USQ). When a contractor discovers a PISA, DOE requires the contractor to take action to place the facility in a safe condition and to notify DOE of the potential inadequacy. The performance of a subsequent USQ determination is to confirm a positive USQ determination or a negative USQ determination through the application of the risk-related criteria for a USQ. If the finding is negative, this would support a request to DOE to remove any operational restrictions imposed when the PISA was discovered.

S. Comment: Section 830.203 requires contractors for existing nuclear facilities to continue to use their existing DOE-approved USQ procedure. One commentor asked what it should do if DOE has not yet approved its USQ procedure.

Response: We have deleted the word “DOE-approved” from the requirement. Contractors are expected to continue to use their existing USQ procedures pending DOE approval of the USQ procedure to be submitted to DOE for approval by April 10, 2001 under the rule.

T. Comment: The definition of a USQ in § 830.3 of the rule states that a situation involves a USQ if a margin of safety could be reduced. A commentor proposed that the margins of safety described in the bases appendix to be considered should be limited to the margins of safety described in the bases section of the technical safety requirements.

Response: Not all nuclear facilities are required to have technical safety requirements. For example, certain environmental restoration activities are not required to develop technical safety requirements. The safety basis implementation guides will clarify how the margin of safety criterion should be implemented.

U. Comment: A commentor stated that paragraph 830.204(b)(2), should specify that the documented safety analysis must address both hazards for the facilities and the activities therein, instead of just the hazards associated with the facility.

Response: We agree. In fact, the definition for a nonreactor nuclear facility includes facilities, activities, and operations. No change to the rule is necessary.

V. Comment: Several commentors questioned why a contractor must submit a preliminary documented safety analysis for a major modification rather than using the USQ process to address the changes.

Response: Several commentors recommended that contractors use the USQ process and modify an existing documented safety analysis, rather than submitting a preliminary documented safety analysis for a major modification. This suggestion would defeat the purpose of the review and approval of the safety aspects of design of the modification prior to procurement and construction, which is to ensure that DOE agrees with the design before the modification is implemented. If the contractor proceeded to modify the existing documented safety analysis for the facility and submit it for approval, prior to design and construction, the documented safety analysis would be instantly out of compliance because it would no longer reflect the current configuration of the nuclear facility.

W. Comment: Several commentors indicated that by tying the definition for a major modification to the initial operation date, rather than the design date, contractors could be required to develop preliminary documented safety analyses for major modifications that were already designed by now and possibly under construction, and for which documented safety analysis would also be required. A commentor recommended that the requirement for a preliminary documented safety analyses for a major modification or new facility be linked to the initiation of conceptual design.

Response: The purpose of the preliminary documented safety analysis is to ensure that DOE and the contractor agree on design considerations during the design and early construction phases of the modification. We are, therefore, amending § 830.206 to apply to hazard category 1, 2, and 3 new DOE nuclear facilities and major modifications for which construction begins after December 11, 2000.

X. Comment: A commentor stated that the preliminary documented safety analysis should identify safety systems in addition to safety programs.

Response: Safety systems will, of necessity, be identified as part of the safety analysis that derives the aspects of design that are necessary to satisfy the nuclear safety design criteria. This is expressed in the definition of preliminary documented safety analysis.

Y. Comment: Several commentors asked if a preliminary documented safety analysis is needed for environmental restoration, and decontamination and decommissioning?

Response: As stated in paragraph F.6 of Appendix A to Subpart B of the rule, as a general matter, DOE does not expect preliminary documented safety analyses to be needed for activities that do not involve significant construction such as environmental restoration activities, decontamination and decommissioning activities, specific nuclear explosives operations, or transition surveillance and maintenance activities.

Z. Comment: One commentor stated that we should discuss how the integrated safety management principles would be used for design.

Response: The implementation guide for the documented safety analysis (DOE-G-421.X, Implementation Guide for Use in Developing Documented Safety Analyses to Meet Subpart B of 10 CFR Part 830) specifies that a preliminary documented safety analysis should show how the nuclear safety design criteria of DOE Order 420.1 (DOE-O-420.1), Facility Safety, will be satisfied. The implementation guide for DOE-O-420.1 says that an iterative process between safety analysis and design should begin as early as possible so safety is integrated into the design process as early as possible. This is consistent with the integrated safety management system process.

AA. Comment: A number of commentors asked how contractors should address normal and abnormal conditions in a documented safety analysis.

Response: Contractors should refer to DOE implementation guides for additional information on how to meet DOE's expectations regarding the requirements in this rule. In particular, contractors should refer to DOE-STD-3009, section 3.3, page 35 for additional information on how to address normal and abnormal conditions in the documented safety analysis. This section of the standard describes how all modes of normal operation are to be considered.

BB. Comment: Several commentors asked how a contractor should ensure that a safety basis contains all the required contents of the rule when using a “safe harbor” standard to prepare a documented safety analysis.

Response: In general, “safe harbor” standards listed in Table 2 of Appendix A to Subpart B of the rule are the standards currently used in the DOE complex to develop documented safety analyses and they reflect years of experience developing adequate documented safety bases. DOE is confident that these standards provide good methods for developing a documented safety analysis. If a contractor uses a “safe harbor” methodology, that methodology should result in a contractor satisfying the regulatory requirements for a documented safety analysis. However, the contractor is responsible for meeting the requirements of the rule, even if it uses a safe harbor standard to prepare its documented safety analysis.

CC. Comment: A commentor asked what a contractor should do if it developed a documented safety analysis using a safe harbor method, but did not meet every criterion of a safe harbor method.

Response: As discussed in the preamble to the Interim Final Rule, if a contractor uses a method other than a safe harbor method it must obtain DOE approval of the method before developing the documented safety analysis. If a contractor uses a safe harbor method to develop the documented safety analysis, but does not follow the method completely, the contractor should request DOE approval of the method with the specific deviations identified.

DD. Comment: Section 830.204 of the rule does not limit the documented safety analysis to only nuclear hazards. Several commentors asked if controls for non-nuclear hazards are enforceable.

Response: As stated in paragraph V.F of the preamble to the Interim Final Rule, we expect our contractors to address all radioactive and nonradioactive hazards, as well as the controls necessary to provide adequate protection to the public, the workers, and the environment from these hazards, in the documented safety analysis for category 1, 2, or 3 nuclear facilities. However, as stated in the General Statement of Enforcement Policy (Appendix A to 10 CFR Part 820), we will only pursue enforcement actions through the procedures in Part 820 for those noncompliances that have nuclear safety significance.

EE. Comment: A commentor asked why DOE listed criticality safety requirements separately in § 830.204.

Response: DOE chose to specifically call out certain content requirements for the documented safety analysis in the rule because of their importance to nuclear safety. Among these are the criticality safety requirements. The criticality safety requirements in § 830.204 are consistent with the current criticality safety requirements in DOE-O-420.1 which is listed as a safe harbor method for the design criteria for a new nuclear facility. In addition, DOE-G-421.X, Implementation Guide for Use in Developing Documented Safety Analyses to Meet Subpart B of 10 CFR Part 830, will address the role of criticality safety.

FF. Comment: A commentor stated that we should specifically incorporate the criticality standards identified in DOE-O-420.1 in the requirements for the documented safety analysis in § 830.204.

Response: The rule addresses this issue in several ways. First, DOE-O-420.1 is invoked in § 830.206 relative to the design criteria to be used for the preliminary documented safety analysis. DOE-O-420.1 addresses the design features important for criticality safety. Second, Appendix A to Subpart B invokes DOE-O-420.1 in two places: (1) paragraph F.6 of the appendix describes the design criteria for a preliminary documented safety analysis and (2) section G of the appendix states that “Order 420.1 provides DOE's expectations with respect to fire protection and criticality safety.” DOE-G-421.X will provide additional discussion of the importance of DOE-O-420.1 with respect to criticality safety standards. We believe these requirements and associated guidance provide sufficient direction to contractors regarding DOE's expectations for criticality safety.

GG. Comment: A commentor asked if the rule permits a documented safety analysis to reflect a final categorization that would permit segmentation or the application of unmitigated release parameters more appropriate to the actual situation.

Response: Yes. Several commentors misinterpreted the requirement in § 830.202 for classification according to DOE-STD-1027 as not allowing for documented safety analysis to contain a final categorization that would permit segmentation or the application of unmitigated release parameters more appropriate to the actual situation. The suggestion was made to allow for these modifications as part of the initial categorization. However, no change to the rule is needed because DOE-STD-1027 does permit these modifications as part of a safety analysis, and DOE-STD-3009 calls for final categorization as part of the documented safety analysis.

HH. Comment: Paragraph 830.205(c) should include reference to DOE-STD-1120.

Response: Section 830.205 does not reference DOE-STD-1120. However, DOE-STD-1120 is referenced in Table 2 of Appendix A to Subpart B to the rule as a safe harbor for environmental restoration activities. We believe that this is the appropriate reference to DOE-STD-1120 for the rule.

II. Comment: Several commentors stated that including design features as a section in the technical safety requirements, instead of allowing the design features to be included in the documented safety analysis, is expensive and provides no safety benefit.

Response: It is important that certain design features be included in the technical safety requirements. The design features to be included in a section of the technical safety requirements are those which are regarded as important in establishing the safety basis. These design features should not be changed without DOE approval. Since changes to the technical safety requirements must be approved by DOE, any changes to design features identified as technical safety requirements would require prior DOE approval. If these important design features are just included in the description of the facility in the documented safety analysis, alterations would be subject to the USQ process. If the contractor determines that the change does not involve a USQ, then the change may not be submitted for prior DOE approval.

JJ. Comment: Several commentors asked why a contractor is required to submit the annual update of the documented safety analysis to DOE for approval when DOE will have already approved any changes to be incorporated in the documented safety analysis through the USQ process.

Response: DOE requires contractors to obtain DOE approval of the annual update of the documented safety analysis to assure that both the changes made pursuant to the USQ process and any changes not covered by the USQ process have been properly included in the update. If the USQ process has been followed properly, the annual approval of the documented safety analysis should require minimal effort. The annual update will not require DOE to review USQs already approved by DOE.

KK. Comment: A commentor asked if DOE has already approved a safety basis, does the contractor need to resubmit the safety basis for approval.

Response: Yes. However, if a contractor determines that its current safety basis meets the requirements of the rule, it may request DOE to approve that safety basis under the rule through the provisions in paragraph 830.207(c).

LL. Comment: A commentor asked what safety basis applies if a contractor has submitted a new safety basis to DOE for approval as of October 10, 2000, but DOE has not yet approved it.

Response: The effective safety basis is the DOE-approved safety basis. When DOE approves a new safety basis, that becomes the new effective safety basis as of the date of the approval. We are adding the words, “or as approved by DOE at a later date,” to paragraph 830.207(b) to clarify that a safety basis may be superseded by later revisions with DOE approval.

MM. Comment: Paragraph 830.207(c) states that if a contractor believes that its current safety basis meets the rule, it should notify DOE by April 9, 2001 and request DOE to approve the safety basis under the rule. Further, it states that if DOE does not issue a safety evaluation report (SER) by October 10, 2001, a contractor must submit a safety basis to DOE for approval. Several commentors suggested that existing safety bases which are asserted to be compliant with the rule should be assumed to be approved by DOE if DOE does not issue an SER by October 10, 2001, instead of being assumed to be deficient. A commentor also suggested that DOE might not approve the safety basis within 6 months because of lack of resources.

Response: It is desired that both the contractor and DOE take positive action in establishing safety bases under the rule. The contractor should maintain cognizance of the status of DOE reviews and work with DOE to resolve the status of the safety basis submitted in a timely fashion. If the safety basis was originally developed using one of the safe harbors of the rule, the safety evaluation report for the safety basis was issued approving the safety basis and the safety basis and the safety evaluation report are current, then the DOE effort to verify compliance with rule provisions should be small.

NN. Comment: A commentor stated that in Appendix A, paragraph G should refer to “requirements” in DOE-O-420.1, not “expectations.”

Response: We agree that the provisions in DOE-O-420.1 are requirements if the order is included in a contract for the facility or if the order is adopted by the contractor in its work processes. If not, the order still provides DOE's expectations.

OO. Comment: A commentor noted that the sentence preceding Table 3 in Appendix A to Subpart B of the rule says that Table 3 defines the specific nuclear facilities referenced in Table 2 that are not defined in § 830.3; however, Table 3 defines both facilities and activities. Consequently, the commentor stated that the reference should state it defines “facilities or activities.”

Response: The commentor is correct that the table refers to both facilities and activities. However, the term used is “nuclear facilities.” Nuclear facilities, as defined in the rule, includes both reactor and nonreactor nuclear facilities. The definition of “nonreactor nuclear facilities” includes facilities, operations, and activities. Therefore, no change is required.

PP. Comment: One commentor stated that DOE should make the safety bases documents available to the public and a second commentor expressed concern that DOE protect classified documents from being released.

Response: As stated in the last paragraph of Appendix A to Subpart B, DOE will maintain a public list on the internet that provides the status of the safety basis for each hazard category 1, 2, or 3 DOE nuclear facility and, to the extent practicable, provides information on how to obtain a copy of the safety basis and related documents for a facility. In accordance with applicable laws, regulations, and directives, DOE will not release classified documents to the public. However, many of the safety basis documents are not classified and, therefore, can be made available to the public.

QQ. Comment: A commentor asked, if there is no single contractor responsible for a facility, who is responsible to ensure the requirements of the rule are met?

Response: At some DOE sites, management and operating (M&O) contractors or management and integration (M&I) contractors are responsible for ensuring that the responsibilities of an activity are properly integrated. In such cases, the M&O contractor or the M&I contractor, respectively, would be responsible for ensuring the requirements at a facility, including the safety bases requirements of Subpart B of 10 CFR Part 830 are met. For other facilities, DOE may have assumed the role of the integrator and may be responsible to ensure that the requirements are met. During an enforcement action, DOE will weigh the facts and circumstances surrounding an action to determine the responsible party.

RR. Comment: A commentor asked if DOE expects contractors to modify contracts and Safety Management Systems to include the new requirements in the rule.

Response: Regulatory requirements are legal requirements and they apply whether or not they are incorporated in contracts or Safety Management Systems. In addition, Department of Energy Acquisition Regulation (DEAR) 48 CFR 970.5204-2 (Laws Clause) states that a contractor is obligated to comply with applicable Federal, state, and local laws and regulations, unless relief has been granted in writing by the appropriate regulatory agency and to flow down applicable regulations to subcontractors and suppliers. It further states that omission of any applicable law or regulation from List A does not affect the obligation of the contractor to comply with such law or regulation.

SS. Comment: A commentor asked if contractors and subcontractors are required to report defects and operational events through the Occurrence and Processing Reporting System (ORPS).

Response: DOE expects its prime contractors to continue to report defects and operational events through ORPS, as required by contracts. Use of this system may be enforceable through the quality assurance requirements of Subpart A, but the particular circumstances of the situation would need to be assessed. Subcontractors will continue to report through the prime contractors. Both DEAR 48 CFR 970.5223-1 and the procurement requirements of Subpart A, require prime contractors to flowdown requirements to subcontractors.

TT. Comment: A commentor asked if exemptions granted to contractors under DOE order requirements would be automatically continued under the rule.

Response: No. New exemptions will need to be requested under the provisions of Subpart E of 10 CFR Part 820.

We have reviewed this amendment to 10 CFR Part 830 under the National Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq. ) and the Council on Environmental Quality regulations for implementing NEPA (40 CFR Part 1500). Prior to publishing the notice of proposed rulemaking to add Part 830 to Title 10 of the CFR, and under the NEPA procedures then in existence, we concluded that the potential environmental impacts of Part 830 would be clearly insignificant. We decided that neither an environmental impact statement nor an environmental assessment was required in connection with the promulgation of this rule. Since that time, we have issued regulations establishing implementing procedures for complying with NEPA's requirements [See 10 CFR Part 1021]. We have further considered Part 830 under these regulations. The regulations include a list of typical classes of actions, referred to as categorical exclusions, that normally do not require the preparation of either an environmental impact statement or an environmental assessment. Part 830 is covered by several categorical exclusions including, among others, information gathering, data analysis, and document preparation (A9); training exercises and simulations (B1.2); routine maintenance activities and custodial services (B1.3); and site characterization and environmental monitoring (B3.1) [See 10 CFR Part 1021, Appendices A and B to Subpart D].

We have concluded that the amendment to 10 CFR Part 830 does not represent a major federal action having significant impact on the environment under NEPA (42 U.S.C. 4321 et seq. (1976)), the Council on Environmental Quality's regulations (40 CFR Parts 1500-08), and DOE's implementing regulations (10 CFR Part 1021). Therefore, the amendment to this rule does not require an environmental impact statement or an environmental assessment pursuant to NEPA.

This regulatory action has been determined not to be “a significant regulatory action” under Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Accordingly, this action was not subject to review under that Executive Order by the Office of Information and Regulatory Affairs of the Office of Management and Budget (OMB).

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , requires that a Federal agency prepare a regulatory flexibility analysis for any rule for which the agency is required to publish a general notice of proposed rulemaking. The requirement to prepare an analysis does not apply, however, if the agency certifies that a rule will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). The impact of the changes to Part 830 are primarily with respect to major contractors. Subcontractors and suppliers are expected to satisfy the provisions of Part 830 primarily through the programs and procedures established by prime contractors. Consequently, the impacts to small entities with respect to changes to Part 830 are expected to be minor. The economic impact on contractors of this filing requirement is negligible. On this basis, DOE certifies that the rule will not have a significant economic impact on a substantial number of small entities and, therefore, no analysis has been prepared.

The information collection provisions of this rule are not substantially different from those contained in DOE contracts with DOE prime contractors covered by this rule and were previously approved by the Office of Management and Budget (OMB) and assigned OMB Control No. 1910-0300. Accordingly, no additional Office of Management and Budget clearance is required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and the procedures implementing that Act, 5 CFR 1320.1 et seq.

Executive Order 13132 (64 FR 43255, August 10, 1999), requires agencies to develop an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have “federalism implications.” Policies that have federalism implications are defined in the Executive Order to include regulations that have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. DOE has examined the changes to Part 830 and determined that they do 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 various levels of government. No further action is required by Executive Order 13132.

Title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531 et seq. , requires each Federal agency, to the extent permitted by law, to prepare a written assessment of the effects of any Federal mandate in an agency rule that may result in the expenditure by State, local, and tribal governments, in the aggregate or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This rule amends 10 CFR Part 830, and applies only to activities conducted by or for DOE. Any costs resulting from implementation of DOE's management, operation, and enforcement of its nuclear safety program are ultimately borne by the Federal government. Therefore, the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform” (61 FR 4729, February 7, 1996) imposes on Executive agencies the general duty to (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met. DOE has completed the required review and determined that, to the extent permitted by law, Part 830 meets the relevant standards of Executive Order 12988.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of the rule prior to its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(3).

The Luftfahrt-Bundesamt (LBA), which is the airworthiness authority for Germany, recently notified FAA that an unsafe condition may exist on certain Stemme Model S10 and S10-V sailplanes. The LBA reports that the current design airbrake eyebolts could cause aerodynamic flutter of the upper airbrake straps at high airspeeds. This can cause damage to the airbrake system.

One reported occurrence resulted in flutter of the upper covering straps on the airbrake cover, which resulted in an uncommanded yawing condition and separation of the landing gear door from the sailplane. This caused damage to the horizontal stabilizer.

This condition, if not corrected, could result in aerodynamic flutter of the upper covering straps on the airbrake cover and damage to the airbrake system and landing gear doors. Continued operation with such damaged components could result in loss of control of the sailplane.

Stemme has issued Service Bulletin No. A31-10-055 (pages 5 through 8 English translation), dated October 9, 2000. This service bulletin includes procedures for:

The LBA classified this service bulletin as mandatory and issued German AD 2000-369, effective November 30, 2000, in order to assure the continued airworthiness of these sailplanes in Germany.

These sailplane models are manufactured in Germany and are type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement.

Pursuant to this bilateral airworthiness agreement, LBA has kept FAA informed of the situation described above.

The FAA has examined the findings of LBA; reviewed all available information, including the service information referenced above; and determined that:

This AD requires you to accomplish the actions previously specified in accordance with Stemme Service Bulletin No. A31-10-055 (pages 5 through 8 English translation), dated October 9, 2000.

Because the unsafe condition described in this document could result in airbrake system failure with possible loss of control of the sailplane, FAA finds that notice and opportunity for public prior comment are impracticable. Therefore, good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule and was not preceded by notice and opportunity for public comment, we invite your comments on the rule. You may submit whatever written data, views, or arguments you choose. You need to include the rule's docket number and submit your comments in triplicate to the address specified under the caption ADDRESSES. We will consider all comments received on or before the closing date specified above. We may amend this rule in light of comments received. Factual information that supports your ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether we need to take additional rulemaking action.

The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify the rule. You may examine all comments we receive before and after the closing date of the rule in the Rules Docket. We will file a report in the Rules Docket that summarizes each FAA contact with the public that concerns the substantive parts of this AD.

We are reviewing the writing style we currently use in regulatory documents, in response to the Presidential memorandum of June 1, 1998. That memorandum requires federal agencies to communicate more clearly with the public. We are interested in your comments on whether the style of this document is clear, and any other suggestions you might have to improve the clarity of FAA communications that affect you. You can get more information about the Presidential memorandum and the plain language initiative at http://­www.plainlanguage.gov.

If you want us to acknowledge the receipt of your comments, you must include a self-addressed, stamped postcard. On the postcard, write “Comments to Docket No. 2000-CE-81-AD.” We will date stamp and mail the postcard back to you.

These regulations 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, FAA has determined that this final rule does not have federalism implications under Executive Order 13132.

The FAA has determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and is not a significant regulatory action under Executive Order 12866. It has been determined further that this action involves an emergency regulation under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979). If it is determined that this emergency regulation otherwise would be significant under DOT Regulatory Policies and Procedures, a final regulatory evaluation will be prepared and placed in the Rules Docket (otherwise, an evaluation is not required). A copy of it, if filed, may be obtained from the Rules Docket.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Gulfstream Model G-1159A (G-III) series airplanes was published in the Federal Register on October 12, 2000 (65 FR 60593). That action proposed to require modification of the master caution panel by installing an additional legend labeled “BATT ON BUS” and associated wiring to indicate when the airplane batteries are powering the direct current (DC) essential bus.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.

The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

There are approximately 198 airplanes of the affected design in the worldwide fleet. The FAA estimates that 144 airplanes of U.S. registry will be affected by this AD, that it will take approximately 55 work hours per airplane to accomplish the required modification, and that the average labor rate is $60 per work hour. Required parts will cost approximately $1,587 per airplane. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $703,728, or $4,887 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 cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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

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

On September 25, 2000, a proposal to amend part 71 of the Federal Aviation Regulations (14 CFR part 71) to establish the Class E airspace at Indian Mountain, AK, was published as a Notice of Proposed Rulemaking (NPRM) in the Federal Register (65 FR 57573). The proposal was requested by the U.S. Air Force to create controlled airspace for the instrument approach and departure procedures to RWY 16 and from RWY 34 at Indian Mountain, AK. This action is necessary in order for the approach and departure procedures to be published in the U.S. Government Flight Information Publication, U.S. Terminal Procedures—Alaska. This rule provides adequate controlled airspace for aircraft flying IFR operations at Indian Mountain, AK.

Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the commenters and the FAA. Public comments to the proposal were submitted by two pilots from United States Fish and Wildlife Service (USFWS), Alaska Aviation Safety Foundation, Alaska Airmen's Association, and Alaska Communications Systems (ACS) Chief Pilot. Each expressed concern with the size of the proposed Class E airspace. The substance of their concern was that the proposed Class E airspace was larger than needed. In addition, Mr. Felix M. Maguire representing both the Alaska Airmen's Association and ACS as their Chief Pilot expressed concern that the approach was barely within the proposed airspace and that the missed approach was entirely outside the proposed airspace. The U.S. Air Force pointed out that the procedures used by Mr. Maguire to evaluate airspace needs were not developed by the U.S. Air Force and therefore have no validity in correctly analyzing the requested airspace. The FAA has considered these comments. The U.S. Air Force, after re-evaluation, responded with a revised request for Class E airspace at Indian Mountain (PAIM). This request substantially reduced the size of the original request and did not include any additional airspace, outside what was proposed in the original NPRM. As for Mr. Maguire's concern about the approach procedure being barely within the proposed airspace and that the missed approach was entirely outside the proposed airspace, the FAA concurs. The additional airspace south of Indian Mountain (PAIM) needed for missed approach and departure procedures is already 1,200 foot Class E airspace and therefore, is not needed in this rulemaking. The majority of the revised requested airspace encompasses the primary holding assessment area in accordance with FAA Order 7130.3. The FAA has determined that the requested airspace is needed to provide adequate controlled airspace for aircraft flying IFR operations at Indian Mountain LRRS, Alaska. The coordinates for Indian Mountain LRRS were published with an error in the latitude coordinates and is corrected to read as follows: (lat. 65° 59′ 34″ N., long. 153° 42′ 16″ W.). The airspace description does overlap existing Class E airspace and the exclusionary verbiage was inadvertently left out. The following verbiage has been added to the end of the airspace description: “excluding the existing Class E airspace.” Accordingly, as discussed, since the revised airspace description is less of a burden to the public, the rule is adopted with the incorporated airspace revisions.

The area will be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. The Class E airspace areas designated as 700/1200 foot transition areas are published in paragraph 6005 of FAA Order 7400.9H, Airspace Designations and Reporting Points, dated September 1, 2000, and effective September 16, 2000, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be revised and published subsequently in the Order.

This amendment to 14 CFR part 71 establishes Class E airspace at Indian Mountain, AK, through a request by the U.S. Air Force to create controlled airspace for the instrument approach and departure procedures to RWY 16 and from RWY 34 at Indian Mountain, AK. This action is necessary in order for the approach and departure procedures to be published in the U.S. Government Flight Information Publication, U.S. Terminal Procedures—Alaska. The area will be depicted on aeronautical charts for pilot reference. The intended effect of this rule is to provide adequate controlled airspace for IFR operations at Indian Mountain, AK.

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

In the Federal Register of January 5, 1999 (64 FR 396), FDA published a direct final rule that removed from the agency's regulations references to the now-repealed statutory provision of the Federal Food, Drug, and Cosmetic Act (the act) under which the agency certified antibiotic drugs (conforming regulation). Section 314.430(f) (21 CFR 314.430(f)) provides that safety and effectiveness data and information in an application may be disclosed to the public when certain events happen. Prior to the conforming regulation, § 314.430(f)(6) read: “For applications or abbreviated applications submitted under sections 505(j) and 507 of the act, when FDA sends an approval letter to the applicant”.

The conforming regulation inadvertently changed “section 505(j)” to “section 505” and failed to remove the word “applications” from the introductory clause the first time it appeared. This document corrects those errors. Publication of this document constitutes final action under the Administrative Procedure Act (5 U.S.C. 553). FDA has determined that notice and public comment are unnecessary because this amendment is nonsubstantive.

Alpharma Inc., One Executive Dr., P.O. Box 1399, Fort Lee, NJ 07024, filed NADA 141-149 that provides for use of DECCOX® (27.2 gram per pound (g/lb) decoquinate), Rumensin® (20, 30, 45, 60, 80, or 90.7 g/lb monensin activity as monensin sodium) and TYLAN® (10, 40, or 100 g/lb tylosin phosphate) Type A medicated articles to make three-way combination Type B and Type C medicated feeds for use in growing-finishing cattle fed in confinement for slaughter. The Type C medicated feeds contain 13.6 to 27.2 g/ton decoquinate, 5 to 30 g/ton monensin, and 8 to 10 g/ton tylosin, and are used for the prevention of coccidiosis caused by Eimeria bovis and E. zuernii , improved feed efficiency, and reduction of incidence of liver abscesses caused by Fusobacterium necrophorum and Actinomyces pyogenes . The NADA is approved as of November 16, 2000, and the regulations in 21 CFR 558.195 and 558.625 are being amended to reflect the approval. The basis for approval is discussed in the freedom of information summary.

In accordance with the freedom of information provisions of 21 CFR part 20 and 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

The agency has determined under 21 CFR 25.33(a)(2) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Written comments concerning the direct final rule were to be submitted on or before December 3, 1999. FDA stated that the effective date of the direct final rule would be February 11, 2000. If no timely significant comments were submitted to FDA during the comment period, FDA intended to publish a document in the Federal Register within 30 days after the comment period ended, confirming the effective date of the final rule. If timely significant comments were received, the agency intended to publish a document in the Federal Register withdrawing the direct final rule before its effective date. Because of complex issues related to this rulemaking and because of competing priorities, FDA did not issue a document either confirming or withdrawing the direct final rule before its effective date. Therefore the Code of Federal Regulations was revised as of April 1, 2000, to codify the regulations in the direct final rule.

The agency received significant comments to the docket. If a significant adverse comment applies to an amendment, paragraph, or section of the rule and that provision can be severed from the remainder of the rule, FDA may adopt as final those provisions of the rule that are not subjects of significant adverse comments.

Thus, FDA is confirming in part the direct final rule (sections listed in table 1 of this document) effective February 11, 2000.

The agency is making technical amendments to 21 CFR 640.25(c), 640.56(c), and 640.71(a) by replacing “Clinical Laboratories Improvement Act of 1967 (CLIA)” with “Clinical Laboratories Improvement Amendments of 1988 (CLIA).” This action is necessary for consistency when referring to CLIA in the regulations.

FDA received significant adverse comments on certain provisions of the rule, listed in table 2 of this document. Accordingly in this rulemaking, because these provisions became effective on February 11, 2000, the agency is amending these sections identified in table 2 of this document to reinstate the former provisions.

Comments received by the agency regarding the reinstated portions of the rule will be applied to the corresponding portion of the companion proposed rule (64 FR 45375, August 19, 1999), and will be considered in developing a final rule using the usual Administrative Procedure Act notice and comment procedures.

This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 125 of the Internal Revenue Code (Code). Section 125 generally provides that an employee in a cafeteria plan will not have an amount included in gross income solely because the employee may choose among two or more benefits consisting of cash and qualified benefits. A qualified benefit generally is any benefit that is excludable from gross income under an express provision of the Code, including coverage under an employer-provided accident or health plan under sections 105 and 106, group-term life insurance under section 79, elective contributions under a qualified cash or deferred arrangement within the meaning of section 401(k), dependent care assistance under section 129, and adoption assistance under section 137. 1 Qualified benefits can be provided under a cafeteria plan either through insured arrangements or arrangements that are not insured.

In 1984 and 1989, proposed regulations were published relating to cafeteria plans. 2 In general, the 1984 and 1989 proposed regulations require that, for benefits to be provided on a pre-tax basis under section 125, an employee may make changes during a plan year only in certain circumstances. Specifically, Q&A-8 of § 1.125-1 and Q&A-6(b), (c), and (d) of § 1.125-2 permit participants to make benefit election changes during a plan year pursuant to changes in cost or coverage, changes in family status, and separation from service.

In 2000, final regulations  3 were issued permitting a participant in a cafeteria plan to change his or her accident or health coverage election during a period of coverage in specific circumstances such as where special enrollment rights arise under section 9801(f) (added to the Code by the Health Insurance Portability and Accountability Act of 1996 (HIPAA)(110 Stat. 1936), where eligibility for Medicare or Medicaid is gained or lost, or where a court issues a judgment, decree, or order requiring that an employee's child or foster child who is a dependent receive health coverage. In addition, the final regulations permit an employee to change his or her accident or health coverage election or group-term life insurance election if certain change in status rules are satisfied.

On the same day that the final regulations were issued, proposed regulations  4 were also issued containing change in status rules that apply to other types of qualified benefits ( i.e., dependent care assistance and adoption assistance) and describing the circumstances under which changes in the cost or coverage of qualified benefits provide a basis for changes in cafeteria plan elections. The IRS and Treasury received written comments on the proposed regulations and held a public hearing on August 17, 2000. Having considered the comments and the statements made at the hearing, the IRS and Treasury revise the final regulations and adopt the proposed regulations as modified by this Treasury decision. The comments and revisions are discussed below.

With respect to group-term life insurance and disability coverage, the final regulations issued earlier this year provided flexibility by stating that, in the event of a change in an employee's marital status or a change in the employment status of the employee's spouse or dependent, an employee may elect either to increase such coverage or to decrease such coverage. 5 Commentators recommended that this rule also apply in the case of birth, adoption, placement for adoption, or death. The argument was made that in these other situations—because these types of coverage are generally designed to provide income, instead of expense reimbursements—it may be appropriate for the employee to seek to increase or decrease the coverage. In accordance with these recommendations and in the interest of simplicity, the final regulations have been modified to allow participants to increase or decrease these types of coverage for all change of status events. Further, as also suggested by commentators, the final regulations have been modified to expand the rule to apply to coverage to which section 105(c) (which is coverage for permanent loss or loss of use of a member or function of the body) applies.

Commentators requested clarification as to how the election change rules with respect to special enrollment rights under section 9801(f) (enacted under HIPAA) apply to a participant who marries if the group health plan allows the participant to change his or her health coverage election retroactively to the date of the marriage. In response to this comment, language has been added to an example in the final regulations to clarify that an election change can be funded through salary reduction under a cafeteria plan only on a prospective basis, except for the retroactive enrollment right under section 9801(f) that applies in the case of an election made within 30 days of a birth, adoption, or placement for adoption.

With respect to accident or health coverage, the consistency rule in the final regulations requires that any employee who wishes to decrease or cancel coverage because he or she becomes eligible for coverage under a spouse's or dependent's plan due to a marital or employment change in status can do so only if he or she actually obtains coverage under that other plan. Commentators requested clarification as to the type of proof an employer must receive to satisfy this rule, expressing concern that a plan could not implement a change on a timely basis because of a need to obtain proper proof of the other coverage. An example in the final regulations has been revised to make it clear that employers may generally rely on an employee's certification that the employee has or will obtain coverage under the other plan (assuming that the employer has no reason to believe that the employee certification is incorrect).

The final regulations allow a participant to change his or her election if a judgment, decree or order resulting from a divorce, legal separation, annulment, or change in legal custody requires that an employee's spouse, former spouse, or other individual provide accident or health coverage for the employee's child or for a foster child who is a dependent of the employee. The final regulations were modified to clarify that the participant can only change his or her election if the spouse, former spouse, or other individual actually provides accident or health coverage for the child.

The final regulations being issued today are generally consistent with the proposed regulations that were issued earlier this year, but include various modifications.

The proposed regulations included rules allowing election changes in connection with a significant increase in cost or a significant curtailment in coverage, irrespective of whether the plan is insured or not insured. These cost and coverage rules (and the other rules in paragraph (f) of § 1.125-4) do not apply with respect to coverage under a health FSA. 6 However, all of the rules in paragraphs (a) through (e) and paragraph (g) of the final regulations under § 1.125-4 do apply with respect to coverage under a health FSA. One modification reflected in the final regulations is to clarify that the cost increase rules apply when the amount of an employee's elective contributions under section 125 increases either due to the employee contributing a larger portion of the total cost of the qualified benefits plan (which might occur, for example, if part-time employees pay a larger portion of a plan's cost and the employee switches to part-time status) or due to an increase in the total cost of the qualified benefits plan.

In response to comments, modifications were also made to allow election changes during a period of coverage when there is a significant decrease in the cost of a qualified benefits plan or in the cost of a benefits package option under the qualified benefits plan, as well as when there is a significant increase. Under the regulations as modified, if there is a significant decrease in the cost of a qualified benefits plan during the plan year, the final regulations permit a cafeteria plan to allow all employees, even those who have not previously participated in the cafeteria plan, to elect to participate in the qualified benefits plan through the cafeteria plan. Similarly, if there is a significant decrease in the cost of a benefits package option during the plan year, the final regulations permit a cafeteria plan to allow all eligible employees to elect that option (including employees who have elected another option, as well as those who have not previously participated in the cafeteria plan).

Further, in response to comments, modifications were also made to allow midyear election changes when there is a significant improvement in the coverage provided under a benefit package option, as well as when there is a new benefit package option offered under the plan.

Commentators also requested clarification as to whether a cafeteria plan could allow participants to drop coverage in response to a significant change in the cost or coverage of a qualified benefit. The final regulations clarify this issue, and provide that, if there is no other similar coverage, employees may drop coverage (including a change from family to single coverage) in response either to an increase in the cost of a qualified benefit or to a loss of coverage. The regulations also permit an employee to elect similar coverage in response to a significant curtailment in coverage. However, the regulations do not allow an employee to drop coverage altogether if there is a significant curtailment in coverage that does not constitute a loss of coverage. The regulations list the curtailments that are treated as a loss of coverage for this purpose, and include a complete loss of coverage (such as when an HMO ceases to be available in an area where an individual resides, or when an employee or a covered member of the employee's family loses all coverage under a benefit package option by reason of a lifetime or annual limitation). In addition, the final regulations allow a cafeteria plan, in its discretion, 7 to treat certain other events as a loss of coverage. These events include a substantial decrease in medical care providers (such as a major hospital ceasing to be a member of a preferred provider network or a substantial decease in the physicians participating in a preferred provider network or an HMO), a reduction in the benefits for a specific type of medical condition or treatment with respect to which the employee or the employee's spouse or dependent is currently in a course of treatment, 8 or any other similar fundamental loss of coverage.

For purposes of these rules, a significant curtailment occurs only if there is an overall reduction in coverage provided so as to constitute reduced coverage generally ( i.e., a reduction in the fair market value of the coverage). Therefore, in most cases, the loss of one particular physician in a network does not constitute a significant curtailment.

In response to comments, the rule under the proposed regulations that allowed an employee to change his or her election in response to a change made under a spouse's or dependent's plan has been clarified and broadened. Under the final regulations, the rule applies to coverage available from any employer plan, including any plan of the same employer and any plan of a different employer. In addition, the regulations have been modified to allow an employee to elect to participate in a cafeteria plan if the employee (or the employee's spouse or dependent) loses coverage under a group health plan sponsored by a governmental or educational institution, such as a state program under the State Children Health Insurance Program (SCHIP). 9 The regulations do not allow a cafeteria plan participant to cease participation in a cafeteria plan if he or she becomes eligible for SCHIP coverage during the year because of a concern that such a rule would violate a fundamental principle of Title XXI of the Social Security Act that SCHIP coverage not supplant existing public or private coverage.

These final regulations address all of the changes in status for which a cafeteria plan may permit election changes, including changes with respect to accident or health coverage, group-term life insurance, dependent care assistance and adoption assistance. In addition, the regulations contain guidance concerning election changes that are permitted because of changes in the cost or coverage of a qualified benefit plan.

Unless specifically noted, these regulations do not override other cafeteria plan requirements such as the rules pertaining to health flexible spending arrangements, and the rules concerning the Family and Medical Leave Act (Public Law 103-3 (107 Stat. 6)). 10

The changes made by these regulations with respect to the March 2000 final regulations are applicable for cafeteria plan years beginning on or after January 1, 2001, except that the clarification made in paragraph (d)(1)(ii)(B) of these regulations (relating to a spouse, former spouse, or other individual obtaining accident or health coverage for an employee's child in response to a judgment, decree, or order) is applicable for cafeteria plan years beginning on or after January 1, 2002. With respect to the change made in paragraph (d)(1)(ii)(B) of these regulations, taxpayers may, until January 1, 2002, rely on either paragraph (d)(1)(ii)(B) of these regulations or the final regulations published in March 2000 (as § 1.125-4(d)(1)(ii)).

The changes made from the March 2000 proposed regulations (including the rules relating to cost or coverage in paragraph (f) of these regulations) are applicable for cafeteria plan years beginning on or after January 1, 2002. With respect to these changes (including the rules relating to cost or coverage in paragraph (f) of these regulations), taxpayers may, until January 1, 2002, rely on either these regulations, the proposed regulations published in March 2000 (under § 1.125-4), or the cost or coverage change rules in the 1989 proposed regulations (at § 1.125-2 (Q&A-6(b)).

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 Internal Revenue Code, these regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal authors of these regulations are Christine L. Keller and Janet A. Laufer, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and Treasury Department participated in their development.

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) imposes continuation coverage requirements on group health plans in certain situations. This document contains amendments to the COBRA health care continuation coverage regulations in 26 CFR part 54. Proposed regulations interpreting COBRA were published in the Federal Register on June 15, 1987 (52 FR 22716). On February 3, 1999, final COBRA regulations were published in the Federal Register (64 FR 5160) (the 1999 final regulations), and a notice of proposed rulemaking (REG-121865-98) was published the same day (64 FR 5237) for certain issues not addressed in the final regulations (the 1999 proposed regulations). A public hearing was held on June 8, 1999. In addition, written comments responding to the notice of proposed rulemaking and to the final regulations were received. After consideration of all the comments, the proposed regulations are adopted as amended by this Treasury decision. The revisions are discussed below.

Group health plans maintained by an employer that had fewer than 20 employees on a typical business day in the previous calendar year are not subject to COBRA. The 1999 proposed regulations relating to plans maintained by an employer with fewer than 20 employees in the previous calendar year are adopted as final regulations without change. Unlike the 1987 proposed regulations, the 1999 proposed regulations use a full-time equivalency method in counting part-time employees for purposes of determining if an employer had fewer than 20 employees. Several commenters expressed disapproval of this approach or inquired why it was being considered.

The 1987 proposed regulations contained rules about how to count part-time employees. An example can be used to illustrate how the 1987 rules were proposed to apply. In a calendar year two employers each employ 15 full-time employees and 12 part-time employees. Each part-time employee works 15 hours per week. Each employer has six typical business days each week. One employer schedules all 12 of the part-time employees to work two-and-a-half hours each typical business day per week. The other employer staggers the schedule of the part-time employees so that they each work seven-and-a-half hours on two typical business days per week, so that four part-time employees work on each typical business day. Under the 1987 proposed regulations, the part-time employees of the first employer counted as 12 employees whereas the part-time employees of the second employer counted only as four employees. In the following calendar year, a group health plan maintained by the first employer would have been subject to COBRA (because the first employer employed 27 employees on a typical business day in the preceding calendar year) but a group health plan maintained by the second employer would not have been subject to COBRA (because the second employer employed only 19 employees on a typical business day in the preceding calendar year).

The exception for employers with fewer than 20 employees reflects Congress' judgment that the costs and administrative burden associated with COBRA should not be imposed on small employers and that imposing such requirements on small employers may discourage them from providing group health coverage to their employees. There is no reason to distinguish, as the approach in the 1987 proposed regulations would have done, between two employers with identical numbers of full- and part-time employees based on the particular days that the part-time employees work.

In contrast to the result under the 1987 proposed regulations, the 1999 proposed regulations and these final regulations provide for the uniform treatment of employers employing the same number of part-time employees for equivalent periods, regardless of how the hours are scheduled. The full-time equivalency approach therefore avoids creating an incentive for employers to schedule the work of their part-time employees in a manner that is inconsistent with the convenience of the employees or the needs of the business.

One commenter asked if it is permissible to count part-time employees on an aggregate basis rather than an individual basis. On an individual basis, the number of part-time employees is computed by dividing the hours worked by each part-time employee by the hours required to be considered working full-time and then by adding all the quotients together. On an aggregate basis, the number of part-time employees is computed by adding all the hours worked by part-time employees and dividing that sum by the number of hours required for one worker to be considered working full-time. Because the two methods produce identical results, both methods are permissible.

The 1999 proposed regulations relating to the determination of the number of plans that an employer or employee organization maintains are modified and reorganized. Under the 1999 proposed regulations, the number of plans is determined by the instruments governing the employer's or employee organization's arrangement or arrangements to provide health care benefits (the instruments rule). Another rule (the default rule) in the 1999 proposed regulations provides that if there are no instruments or if the instruments are unclear about whether there is one plan or more than one plan, all health care benefits (except benefits for long-term care) provided by a corporation, partnership, or other entity or trade or business, or by an employee organization, constitute one group health plan.

Under these final regulations, these rules are reorganized so that the default rule, under which all health care benefits provided by one entity or trade or business are treated as one plan, is presented first. The default rule applies unless it is clear from the instruments governing an arrangement or arrangements to provide health care benefits that the benefits are being provided under separate plans and the arrangement or arrangements are operated pursuant to such instruments as separate plans. In effect, this rule revises the instruments rule in the 1999 proposed regulations by adding the requirement that the arrangement or arrangements must be operated pursuant to the instruments as separate plans to avoid the application of the default rule. These organizational and substantive changes from the 1999 proposed regulations were developed at the suggestion of and with substantial assistance from the U.S. Department of Labor, Pension and Welfare Benefits Administration.

The 1999 proposed regulations relating to health flexible spending arrangements (health FSAs) are adopted with one minor change and one addition. The minor change is the cross-reference in which a health FSA is defined. The 1999 proposed regulations cite the definition in proposed regulations under section 125. These final regulations cite the definition in section 106(c)(2) of the Internal Revenue Code. (Regulations published recently under section 125 also use the section 106(c)(2) definition. See 65 FR 15548, 15553 (March 23, 2000).)

The one addition is a clarification that, to the extent a health FSA is obligated to make COBRA continuation coverage available to a qualified beneficiary, all the general COBRA continuation coverage rules apply in the same way that they apply to coverage under other group health plans, including the rule for how plan limits on coverage apply to someone on COBRA continuation coverage. This addition was made in response to the request of one commenter and numerous inquiries about how the annual election of a certain dollar amount by an employee under a health FSA applies once there is a qualifying event.

Several commenters were pleased with the limited exception from the COBRA rules for health FSAs under the 1999 proposed regulations and asked that the final regulations go even further. They requested that when participants under a health FSA experience a qualifying event (and the benefits under the health FSA are excepted benefits under sections 9831 and 9832), the final regulations should allow the health FSA to compute the contributions made during that plan year on the participant's behalf, reduce that amount by reimbursements already made during the plan year, and—instead of requiring the health FSA to offer COBRA continuation coverage in those cases in which there is a positive balance—allow the participant to spend whatever balance remains during the remainder of the plan year without requiring or allowing additional contributions. However, such an approach is inconsistent with the requirements under sections 125 and 4980B and thus has not been adopted.

One commenter requested that the final regulations clarify that the applicable premium includes any employer subsidy. The statute makes clear that the applicable premium is computed based on the total cost of coverage, regardless of whether paid by the employer or employee. The regulations generally do not address how to calculate the applicable premium. However, the example for the health FSA exception makes clear that the maximum amount a plan is permitted to charge for COBRA coverage under a health FSA includes any employer subsidy.

One commenter requested that the final regulations clarify that a health FSA is obligated to make COBRA continuation coverage available only in connection with qualifying events that are a termination of employment or reduction of hours of employment. This suggestion is not adopted in the final regulations because it is inconsistent with the statute. If health care expenses incurred for a spouse or dependent child of an active employee can be reimbursed under a health FSA, but, were it not for the COBRA continuation coverage rules, would not be reimbursed after the death of the employee, the divorce from the employee, or a dependent child's ceasing to be a dependent child under the generally applicable requirements under the health FSA, then the spouse or dependent child has experienced a qualifying event and is entitled to continue coverage under the health FSA to the same extent as they would following termination of the employee's employment.

The 1999 final regulations provide, in describing what constitutes a loss of coverage for determining whether a qualifying event has occurred, that any increase in premium or contribution that must be paid for coverage as a result of one of the events that can be a qualifying event is a loss of coverage. Several commenters questioned why this rule was adopted and pointed out that it creates administrative burdens in two situations without apparently providing any advantage to the people whose premium is being increased. The two situations concern retiring employees and full-time employees reducing their work hours to become part-time employees. In both situations, often employers will grant the employees access to the same coverage but will require them to pay a premium that is higher than what active employees pay though still significantly less than the 102 percent rate permitted under COBRA. The commenters wondered why it is necessary to provide these individuals with a COBRA notice if it is always advantageous for the individual to take the other coverage. They suggested that a loss of coverage should not be considered to have occurred if employees (or other qualified beneficiaries) can get access to the same coverage for less than the applicable premium under COBRA.

The IRS and Treasury were mindful of these situations before they adopted the rule in the 1999 final regulations. However, if a mere increase in premium were not considered a loss in coverage, the person whose premium is being increased would not be entitled by law to a 60-day election period nor to a 45-day period after the election for making the first premium payment. Although in many cases a qualified beneficiary might prefer a lower premium over these procedural protections under COBRA, in some cases these procedural protections might be more valuable. The likelihood of the COBRA procedural protections being more valuable than the lower premium becomes substantial as the amount required to be paid for part-time or retiree coverage approaches the amount of the applicable premium. Accordingly, the final regulations retain the rule in the 1999 final regulations so as not to deprive qualified beneficiaries of potentially valuable rights.

The 1999 final regulations provide that if coverage is reduced or eliminated in anticipation of an event, the elimination or reduction is disregarded in determining whether the event causes a loss of coverage. The regulations provide examples of an employer eliminating an employee's coverage in anticipation of a termination of employment and of an employee eliminating a spouse's coverage in anticipation of a divorce.

One commenter requested a clarification that a reduction or elimination more than six months before an event could not be considered to be in anticipation of the event. However, in many cases where coverage is eliminated by an employee in anticipation of a divorce, the divorce will follow the elimination by more than six months. Whether a reduction or elimination of coverage is in anticipation of a qualifying event is a question to be resolved based on all the relevant facts and circumstances. Thus, these final regulations do not amend the rule in the 1999 final regulations to limit the window during which an anticipatory reduction or elimination can be considered to have occurred.

The commenter also requested a clarification that the coverage the qualified beneficiary is entitled to in such a situation is the coverage the qualified beneficiary had before coverage was reduced or eliminated. The general rule in the 1999 final regulations for determining what is COBRA continuation coverage applies in this situation. Under the rule in the 1999 final regulations, the qualified beneficiary will generally be entitled to the coverage that the qualified beneficiary had before the qualifying event. However, if between the date of the elimination or reduction in coverage and the date of the qualifying event coverage is modified for similarly situated nonCOBRA beneficiaries, then the modified coverage must be made available to the qualified beneficiary.

The 1999 final regulations require employers and employee organizations to make alternative coverage available to qualified beneficiaries moving outside the service area of a region-specific benefit package. One commenter asked for a clarification that the alternative coverage must be made available immediately and cannot be deferred until the beginning of the plan's next open enrollment period. These final regulations clarify that the alternative coverage must be made available not later than the date of the qualified beneficiary's relocation, or, if later, the first day of the month following the month in which the qualified beneficiary requests the alternative coverage.

Another commenter expressed concern that a plan might have to incur extraordinary costs (such as negotiating for a separate network of providers in an indemnity plan with a preferred provider organization, or establishing a separate schedule of usual, customary, and reasonable costs) to provide coverage in areas to which a qualified beneficiary might relocate but in which there were no active employees of the employer or employee organization. The rule in the 1999 final regulations does not require employers or employee organizations to incur extraordinary costs to extend coverage to qualified beneficiaries in areas in which the employer or employee organization does not have active employees. In the case of an indemnity plan with a preferred provider organization, the plan need only provide benefits at the standard rate (that is, not at the rate for preferred providers) to a qualified beneficiary who moves outside the service area of the preferred provider network. Similarly, a plan is not required to establish a separate schedule of usual, customary, and reasonable costs solely for qualified beneficiaries who reside in a region where no active employees work or reside (regardless of whether this is to the qualified beneficiary's benefit or detriment based on prevailing costs in the region where the qualified beneficiary resides). Accordingly, these final regulations do not modify the rule in the 1999 final regulations based on this commenter's concern.

The 1999 final regulations provide that, in the case of an indemnity or reimbursement arrangement, claims incurred during the election period do not have to be paid before the election (and, if applicable, payment for the coverage) is made. In the case of indemnity or reimbursement arrangements that allow retroactive reinstatement of coverage, the 1999 final regulations provide that coverage for qualified beneficiaries can be terminated and then reinstated when the election is made. One commenter asked if these two rules mean that coverage must be reinstated at the time of the election even if payment is not made but that no claims need be paid under that coverage until payment for the coverage is made. The commenter pointed out that this would a pose a problem for employers and employee organizations maintaining insured plans in that they would have to pay the insurer premiums for the coverage even if payment for the coverage was never made (whereas the insurer would never have to pay any claim under the coverage). These final regulations clarify this rule by explicitly providing that in the case of indemnity plans and reimbursement arrangements that allow retroactive reinstatement of coverage, coverage can be terminated and later reinstated when the election (and, if applicable, payment for the coverage) is made. Thus, under these final regulations, the rules for when coverage must be reinstated and when claims must be paid are the same.

The 1999 proposed regulations relating to the maximum coverage period are adopted as final regulations with a minor change to a cross-reference.

The 1999 final regulations prescribe how plans are to treat payments for COBRA continuation coverage that are short by an amount that is not significant. They require the plan to treat the payment as full payment unless the plan notifies the qualified beneficiary of the amount of the deficiency and grants a reasonable period for payment of the deficiency. The regulations provide as a safe harbor that a period of 30 days after the notice is provided is a reasonable period for this purpose.

Many commenters requested that the regulations specify what is considered a significant amount. These final regulations provide that a shortfall is not significant if it is no greater than the lesser of $50 (or another amount specified by the Commissioner in guidance of general applicability) or 10 percent of the required amount.

Several commenters also requested that the regulations specify a period shorter than 30 days for payment of the deficiency to be considered timely, but these final regulations do not adopt this suggestion. The regulations require only that a plan grant a reasonable period for payment of the deficiency. In some circumstances, a period shorter than 30 days may be reasonable. However, in other circumstances, a shorter period might not be reasonable. The IRS and Treasury believe it is useful to provide the certainty of a safe harbor, but they do not believe that a period shorter than 30 days is sufficiently long in all cases.

The 1999 proposed regulations relating to business reorganizations are adopted as final regulations with two clarifications. The proposed regulations provide that, in an asset sale (which is defined as the sale of substantial assets such as a plant or division or substantially all the assets of a trade or business), a purchaser of assets is considered a successor employer if the seller ceases to provide any group health plan to any employee in connection with the sale and if the buyer continues the business operations associated with those assets without substantial change or interruption. Several inquiries raised the question whether this rule applies if the assets are purchased as part of a bankruptcy proceeding. The final regulations clarify this rule for assets purchased in bankruptcy by providing that a buying group does not fail to be a successor employer in connection with an asset sale merely because the sale takes place in connection with a bankruptcy proceeding. Thus, the general rule for determining whether a buyer is a successor employer applies in bankruptcy the same way that it does outside of bankruptcy.

These final regulations also clarify that asset sale includes not only sales but other transfers as well.

Comments were received about other aspects of the proposed rules for business reorganizations. Several commenters requested additional guidance on the amount of assets that would constitute “substantial assets” for purposes of the asset sale rules. The final regulations retain the definition in the proposed regulations. This definition is intended to be flexible enough to apply reasonably to the myriad situations in which this issue arises. The asset sale rules, including the definition of asset sale, are similar to the various formulations of successor employer rules that have been fashioned by the courts for various labor law purposes, adapted to the peculiar circumstances that the COBRA continuation coverage requirements create. In those cases, as in the final rule, a case-by-case approach is favored. See, for example, Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973); Howard Johnson Co. v. Detroit Local Joint Executive Board, Hotel & Restaurant Employees & Bartenders International Union, 417 U.S. 249 (1974); John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964); NLRB v. Burns International Security Services, Inc., 406 U.S. 272 (1972); Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987); EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086 (6th Cir. 1974); In re National Airlines, Inc., 700 F.2d 695 (11th Cir. 1983); Upholsterers' International Union Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323 (7th Cir. 1990); Central States, Southeast & Southwest Areas Pension Fund v. PYA/Monarch of Texas, Inc., 851 F.2d 780 (5th Cir. 1988).

One commenter requested clarification that the cessation of a plan shortly before an asset sale is in connection with the sale (and thus that the buying group would be responsible for making COBRA continuation coverage available to M&A qualified beneficiaries in connection with the sale if the buying group is a successor employer). The regulations have not been modified for this request. In many circumstances, cessation of a plan shortly before an asset sale would be considered to be in connection with the sale. However, there may be cases in which the plan was being terminated for an unrelated reason. The application of this rule in any particular case depends on all the relevant facts and circumstances.

The preamble to the 1999 proposed regulations included a description of a potential rule that the IRS and Treasury were considering adopting and solicited comments on that potential rule. The rule would have provided that no loss of coverage occurs, and thus no qualifying event occurs, if a purchaser of assets maintains substantially the same plan for continuing employees for what would otherwise be the maximum coverage period (generally 18 months). The IRS and Treasury also acknowledged in the 1999 preamble concerns about protecting the rights of qualified beneficiaries in this situation. After consideration of the comments, the IRS and Treasury have determined not to adopt such a special rule. Thus, under these final regulations, in an asset sale, employees who terminate employment with the seller and who no longer get health coverage from the seller experience a qualifying event with respect to the seller's plan even though they are employed by the buyer at the same jobs they had with the seller and have the same health coverage through the buyer.

Like the 1999 proposed regulations, these final regulations do not address how the obligation to make COBRA continuation coverage available is affected by the transfer of an ownership interest in a noncorporate entity. However, it is intended that, in general, the principles reflected in the rules in the final regulations for transfers of ownership interests in corporate entities should apply in a similar fashion in analogous cases involving the transfer of ownership interests in noncorporate entities.

The 1999 proposed regulations relating to employer withdrawals from a multiemployer plan are adopted with two changes and two additional examples to illustrate the rules as changed. The general approach of the 1999 proposed regulations is retained. However, the proposed rule renders an employer who stops contributing to a multiemployer plan responsible for making COBRA continuation coverage available to qualified beneficiaries associated with that employer only if the employer establishes a new plan to cover active employees formerly covered under the multiemployer plan. Several commenters suggested that the employer should also be responsible for COBRA if the coverage provided to employees formerly covered under the multiemployer plan comes from an existing plan of the employer (rather than from a new plan). The final rules have been revised to apply the general approach to existing plans as well as to new plans.

The 1999 proposed regulations also place a threshold condition on the obligation of an employer or subsequent multiemployer plan to make COBRA coverage available to existing qualified beneficiaries associated with the withdrawing employer. That threshold is that the employer or subsequent multiemployer plan must cover a significant number of the employer's employees formerly covered under the multiemployer plan. Several commenters requested further guidance on what a significant number was in this context. Some of them also wanted to know what purpose this threshold condition serves. The intent in imposing this threshold condition in the proposed regulations was to leave responsibility for COBRA compliance with the existing multiemployer plan in a case where, for example, only one or two of the employees formerly covered under the multiemployer plan were transferred into management and became covered under a plan of the employer for which union employees were not eligible. The final rule has been revised to more clearly accomplish this intent. This threshold condition has been revised so that the employer plan or subsequent multiemployer plan has responsibility for COBRA compliance once coverage under the plan is available to a class of employees formerly covered under the multiemployer plan. New examples illustrate the application of this standard.

Several commenters expressed concern that the proposed regulations would require multiemployer plans to begin investigating why an employer stops contributing to the multiemployer plan and to determine whether the withdrawing employer subsequently covered union (or former union) employees under a single employer plan. Concern was also expressed that the proposed regulations would require the multiemployer plan to keep employer-by-employer data for qualified beneficiaries receiving COBRA continuation coverage. The IRS and Treasury recognized when they proposed these rules that in many industries it is impracticable for multiemployer plans to determine whether an employer that stops contributing to a multiemployer plan covers union employees under its own plan and that it is impracticable to maintain employer-specific data on employees and qualified beneficiaries. If a multiemployer plan finds it easier to make COBRA coverage available for the maximum coverage period, these final regulations do not require the plan to start gathering information that is difficult to assemble. Such a plan can comply with the COBRA continuation coverage requirements by making COBRA continuation coverage available to existing qualified beneficiaries in accordance with the general rules for the duration of COBRA continuation coverage (in § 54.4980B-7).

One commenter requested clarification of the proposed rules if an employer establishes a plan for employees formerly covered under the multiemployer plan but applies a waiting period before the employees are eligible for coverage under that plan. These final regulations clarify that the employer's obligation does not arise until the employer makes coverage available. Thus, the multiemployer plan would be responsible for COBRA coverage until the waiting period under the employer's plan had expired for a class of employees formerly covered under the multiemployer plan.

Several commenters submitted substantially similar comments requesting that the rules be revised so that a multiemployer plan no longer receiving contributions from a certain employer would not be required to make COBRA continuation coverage available to any qualified beneficiaries affiliated with that employer. Such an approach, however, would not resolve the problem of qualified beneficiaries not having access to COBRA coverage, and the statutory basis for such a position is questionable in situations in which none of the statutory reasons for ending a plan's obligation to make COBRA coverage available to a particular qualified beneficiary is present. The final regulations do not adopt this suggestion.

The IRS and Treasury received an inquiry about who has the obligation to make COBRA continuation coverage available to existing qualified beneficiaries in a situation that reverses the situation addressed in the proposed rules, one in which employees cease to be covered under a plan maintained by their employer and commence to be covered under a multiemployer plan. In such a situation, the existing qualified beneficiaries should get the same coverage that similarly situated nonCOBRA beneficiaries are receiving, that is, the coverage under the multiemployer plan. The 1999 final regulations suggest this result in describing what COBRA continuation coverage is. However, the language used in the 1999 final regulations can be read to suggest that this is the result only when coverage is under the same plan: “If coverage under the plan is modified for similarly situated nonCOBRA beneficiaries, then the coverage made available to qualified beneficiaries is modified in the same way.” (Q&A-1(a) of § 54.4980B-5; emphasis added.) These final regulations delete the phrase “under the plan” from the quoted language to make clear that if coverage for the similarly situated nonCOBRA beneficiaries is modified by switching from one plan to another, then coverage for the qualified beneficiaries is modified by switching to the other plan too. Although this amendment is being made due to an inquiry about a switch from a single-employer plan to a multiemployer plan, it applies in any situation in which coverage for nonCOBRA beneficiaries is terminated under one plan and commences under another, including those situations in which a single employer maintains both plans.

The 1999 proposed regulations relating to how COBRA applies in connection with leave taken under the Family and Medical Leave Act of 1993 (FMLA) are adopted as final regulations with one minor addition. One commenter observed that the 1999 proposed regulations suggest by way of cross reference in an example that the Labor regulations in 29 CFR part 825, not the COBRA regulations, determine when FMLA leave ends. This commenter requested that this suggestion in an example be made express in the text of the rules. The final regulations add in the text of the rules (preceding the examples) that the end of FMLA leave is not determined under these regulations but under the regulations in 29 CFR part 825.

This Treasury decision applies with respect to qualifying events occurring on or after January 1, 2002, except as provided in the following paragraphs.

Paragraphs (d), (e), and (f) in Q&A-5 of § 54.4980B-2 (relating to the counting of employees for purposes of the small employer plan exception) are applicable beginning January 1, 2002 for determinations made with reference to the number of employees in calendar year 2001 or later.

Q&A-4 of § 54.4980B-7 (describing the maximum coverage period) is applicable with respect to individuals who are qualified beneficiaries on or after January 1, 2002. (See Q&A-1(f) of § 54.4980B-3, under which an individual ceases to be a qualified beneficiary once the plan's obligation to provide COBRA continuation coverage to the individual has ended.)

Q&A-1 through Q&A-8 of § 54.4980B-9 (containing rules for business reorganizations) are applicable with respect to business reorganizations that take effect on or after January 1, 2002.

Q&A-9 and Q&A-10 of § 54.4980B-9 (containing rules for employer withdrawals from a multiemployer plan) are applicable with respect to cessations of contributions that occur on or after January 1, 2002. For this purpose, a cessation of contributions occurs on or after January 1, 2002 if the employer's last contribution to the plan is made on or after January 1, 2002.

Section 54.4980B-10 (relating to the interaction of COBRA and FMLA leave) is applicable with respect to FMLA leave that begins on or after January 1, 2002.

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 regulations do not impose a collection of information requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding these regulations was submitted to the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is Russ Weinheimer, Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and Treasury Department participated in their development.

Q-3: What is a multiemployer plan?

A-3: For purposes of §§ 54.4980B-1 through 54.4980B-10, a multiemployer plan is a plan to which more than one employer is required to contribute, that is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, and that satisfies such other requirements as the Secretary of Labor may prescribe by regulation. Whenever reference is made in §§ 54.4980B-1 through 54.4980B-10 to a plan of or maintained by an employer or employee organization, the reference includes a multiemployer plan.

On December 14, 1987, we published a final rule in the Federal Register (52 FR 47526), in which we set a Federal standard for intoxication applicable to recreational vessel operators using a .10 BAC. The rule adopted any enacted State BAC standard of intoxication as the Federal BAC standard, and applied the State BAC standard to recreational vessel operators within that State. If a State did not have an enacted BAC standard for “intoxication,” a provision allowed us to adopt a State BAC standard for “under the influence” or “while impaired,” instead of “intoxicated.” In that final rule, we noted that we would consider revising the Federal BAC standard if the States developed a trend toward adopting the .08 BAC standard for operating a vessel on the water.

We began this rulemaking project in response to recommendations from the National Boating Safety Advisory Council (NBSAC), to update the existing regulations, and to ensure that terminology in our regulations conforms with current statutory authorities.

Although the number of boating deaths dropped from 1100 in 1986 to 734 in 1999, the number of fatal incidents where alcohol was reported as a causal factor remains stable at about 120. A review of statistics on recreational boating accidents during 1999 showed that there was evidence, or a reasonable likelihood, that alcohol involvement in reported accidents accounted for 26 percent of all boating fatalities.

The Oil Pollution Act of 1990 revised 46 U.S.C. 2302(c) by substituting the term “under the influence of alcohol, or a dangerous drug in violation of a law of the United States” for the term “intoxicated.” As a result, the terms “intoxication” and “intoxicated,” used in 33 CFR parts 95 and 177, no longer conform to the statutory authority. This rule revises them accordingly.

After studying recreational boating safety regulations in October 1997, NBSAC recommended that the Coast Guard track State BAC levels. They suggested that if we found a trend toward revising State standards to .08 BAC, then we should support that effort by revising the Federal standard, found in 33 CFR 95.020, to .08 BAC as well.

In 1987 only 21 States had enacted statutes using a BAC to define “intoxication” or “under the influence” for recreational vessel operation. Nineteen States used a .10 BAC and two States used a .08 BAC. Today 54 State jurisdictions, as defined in 46 U.S.C. 2101(36), have a BAC standard. Thirty-four use .10 BAC, nineteen use .08 BAC, and one uses .08 BAC only when there has been an injury. Also, eleven of the original twenty-one States and three additional States that initially set a .10 BAC standard have revised their standard from .10 BAC to .08 BAC. We acknowledge that the trend among States is toward using a .08 BAC standard, and we are revising the Federal BAC standard accordingly. We will continue to adopt a State's BAC standard for waters under the State's jurisdiction.

In a memorandum dated March 3, 1998, the President directed the Secretary of Transportation to develop an Action Plan to promote adoption of the .08 BAC standard for operating a vehicle on “Federal property, including areas in national parks, and on Department of Defense installations, and ensuring strong enforcement and publicity of this standard.” The Secretary's Action Plan included the proposed revision of the Federal BAC standard for operator's of recreational vessels, providing support for the DOT effort on water as well as on land. The Federal BAC standard for operators of vessels that are inspected, or subject to inspection under Chapter 33 of Title 46, United States Code, will remain at .04 BAC.

On March 16, 2000, we published a notice of proposed rulemaking entitled Revision to Federal Blood Alcohol Concentration (BAC) Standard for Recreational Vessel Operators in the Federal Register ( 65 FR 14223 ). We received 20 letters commenting on the proposed rule. No public hearing was requested and none was held.

We received a total of 20 comments on the proposed revisions to the regulations during the comment period. Two of the comments were from State Boating Law Administrators and an additional comment was submitted by the National Association of State Boating Law Administrators (NASBLA). Two other comments were submitted by the National Boating Federation (NBF) and the Boaters Against Drunk Driving (BADD).

Twelve of the comments, including the comments from the Missouri and the California Boating Law Administrators, NASBLA, NBF and BADD, generally supported revising the Federal BAC standard from .10 BAC to .08 BAC.

One comment supporting the BAC revision suggested that in addition to lowering the BAC standard, the Coast Guard needs to increase its detection and arrest of intoxicated operators; enforcement cannot be borne solely by the States.

Eight of the comments generally opposed revising the Federal BAC standard from .10 BAC to .08 BAC, several suggesting that the change would do little or nothing to reduce the number of drunk boaters.

One comment stated that there is not enough funding to enforce the new .08 BAC level.

Several other comments stated that we needed something else instead of new laws, either more education, more boater awareness, more enforcement, or more life saving.

Another comment suggested that not many accidents actually involved individuals with a BAC between .10 and .08.

One comment stated that machines testing BAC are inaccurate compared to blood tests, are polluted by previous tests administered, that individual health condition, fat to muscle ratio, and age determines the effect of alcohol on the individual, and suggested that behavior is a better indicator than BAC level.

One comment expressed concern that the change would send the wrong message to law enforcement officers and adversely affect the wrong people, the dinner crowd.

Another comment asserted that most arrests for BUI are made in harbors to people in dinghies or powerboats exceeding the 6 knot speed limit and that most accidents occur outside of harbors where speed, adherence to rules of the road and sheer stupidity are not monitored.

When setting the initial standard at .10 BAC, we decided against .08 BAC because the majority of States then used a .10 BAC. However, in view of the Presidential initiative to establish a .08 BAC standard on the land and the increasing number of States setting a .08 BAC standard on the water, we've decided it is now appropriate to revise the Federal standard on the water to .08 BAC. The revised standard is not an attempt at zero tolerance policy and will neither increase the cost of enforcement nor change the effectiveness of the BAC testing equipment currently in use.

This rulemaking would impose no costs for the boating public or even to the Government, since the Coast Guard Boarding Officer personnel already enforce the .08 BAC or other BAC level in those States with such a BAC level. Boating accident statistics show that alcohol use remains a significant cause of recreational boating deaths, and we support the trend in State boating laws toward the .08 BAC standard. The rule should reduce the number of recreational boating deaths and injuries resulting from accidents caused by operators under the influence of alcohol or a dangerous drug.

The Coast Guard will continue its efforts to make boaters more aware of the effects of alcohol on operation of a recreational vessel and to work with State law enforcement officers to ensure appropriate levels of enforcement on the water. We will continue to enforce all appropriate laws and regulations, including negligent operation of a vessel and the navigation rules. Comments suggesting changes related to increasing State funding and revising the BAC standard for commercial vessel operators are beyond the scope of this rulemaking.

After considering all of the above comments, the Coast Guard has decided to adopt the revision to the BAC standard and make other technical changes as proposed.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, 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 (OMB) has not reviewed this rule under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040, February 26, 1979).

A final Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT follows:

This rulemaking would impose no costs for the boating public. Costs to the government would be non-existent as well because the Coast Guard already trains its Boarding Officer personnel on use of the .08 BAC level to properly prepare them for working in those States with such a BAC level.

This rule is appropriate because boating accident statistics show that alcohol use remains a significant cause of recreational boating deaths and because we support a trend in State boating laws toward the .08 BAC standard. The rule is expected to reduce the number of recreational boating deaths and injuries resulting from accidents caused by operators under the influence of alcohol or a dangerous drug.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this rule would have a significant economic effect 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 revision of the Federal BAC standard applies to operators of recreational vessels on waters subject to the jurisdiction of the United States, as defined in 33 CFR 2.05-30. This revision of the Federal BAC standard will continue to apply to recreational vessels owned in the United States, while operating on the high seas, as defined in 33 CFR 2.05-1. Further, since this rule would continue to adopt State enacted BAC standards, recreational vessel operators in States with enacted BAC standards would not be subject to a new BAC standard unless a State changes its own enacted BAC standard. Only those recreational vessel operators in States without enacted BAC standards and on navigable waters of the U.S. outside of the States would be subject to a new BAC standard.

Because the provisions of the Regulatory Flexibility Act do not apply to individuals, 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 can better evaluate its effect on them and participate in the rulemaking. We provided the name, telephone number and e-mail address of a contact for small entities if they felt that the rule would affect their small business, organization, or governmental jurisdiction and if they had questions concerning its provisions or options for compliance. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

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

We have analyzed this rule under Executive Order 13132, Federalism, and have determined that, because the Federal BAC standard will not supercede or preempt any enacted State BAC standard, this rule does not have implications for federalism under that Order.

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 will 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 Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

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

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

We considered the environmental impact of this rule and concluded that, under figure 2-1, paragraph (34)(a), of Commandant Instruction M16475.1C, this rule is categorically excluded from further environmental documentation. The rule makes a minor revision to the Federal BAC standard for the level at which an operator of a recreational vessel is deemed to be impaired. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

On November 2, 1998, we published a notice of proposed rulemaking (NPRM) entitled “Drawbridge Operation Regulations, Elizabeth River, Eastern Branch, Norfolk, VA” in the Federal Register (63 FR 58676). We also distributed local notice of the Federal Register publication. We received 652 comments on the proposed rule. Most of the comments were on “form letters”, signatures on a petition, and letters that although individually drafted contained the same language. These and other comments opposed the proposed changes and favored maintaining the current regulations or slightly increasing the hours of on-signal openings on weekend and holiday nights. Other suggestions included requiring the bridge to remain in the open position unless actually being used for train traffic, automating the operation of the bridge, and requiring the bridge to open on-signal at all times. On May 15, 2000, we published a supplemental notice of proposed rulemaking (SNPRM) entitled “Drawbridge Operation Regulations; Elizabeth River, Eastern Branch, Norfolk, VA” in the Federal Register (65 FR 30938). We also distributed local notice of the Federal Register publication. We received seven (7) comments on the supplemental proposed rule. No public hearing was requested, and none was held.

33 CFR 117.1007(a) currently requires the Norfolk Southern Railroad Bridge (formerly called the Norfolk and Western Railroad Bridge), mile 2.7, across the Eastern Branch of the Elizabeth River, to open on signal from 6 a.m. to 10 p.m., seven days a week, year round. At all other times, the bridge only opens with at least a three-hour advance notice.

Norfolk Southern Corporation (NSC) initially requested in 1998 a change to the regulations that would have reduced the hours during the day and times of the year when on-signal openings are required. NSC based their request on data from the 1996 and 1997 drawlogs. We reviewed the drawlogs and made recommendations to NSC changing their request to reflect more closely with the data obtained from the drawlogs. On November 2, 1998, a notice of proposed rulemaking (NPRM) was published in the Federal Register (63 FR 58676) proposing on-signal openings from April 15 to November 30, Monday through Thursday, from 10 a.m. to 6 p.m., and Friday through Sunday from 6 a.m. to 11 p.m. At all other times the bridge would only have to open for vessel traffic after three hours advance notice. As a result of this proposal, 652 comments were received all objecting to the proposed changes. We facilitated a meeting on April 20, 1999 during which NSC, local government representatives, and other interested attendees discussed the proposed rule. A written summary of the meeting is available for public review in the public docket. Based on all information received, we revised our original proposal to keep the original hours as in the current regulations using a “half-cycle operation”, reducing the number of openings during the on-signal hours and reducing the current advance notice requirement from three hours to two hours during the 10 p.m. to 6 a.m. period. The Coast Guard's goal is to provide practical and feasible scheduled opening times for drawbridges during seasons of the year, and during times of the day, when scheduled openings would benefit users and owners of the bridge as well as users of the waterway.

We received seven (7) comments to the supplemental notice of proposed rulemaking. Six (6) responded in favor of the proposed change to the operating schedule of the Norfolk and Western Railroad Bridge. One (1) comment opposed the proposed change referring to it as being a more restricted schedule. This supplemental proposal is more lenient that the current schedule since it will provide “half cycle” operation, that is, the bridge goes from the closed position to the open position or vice versa, but does not complete the “cycle” to its original position. This provides boaters freer access of the river. Reducing the advance notification from three (3) to two (2) hours will allow waterway users greater flexibility in planning their transit of the bridge while not burdening the bridge owner with extended hours of on-signal operation unnecessarily. Based on this and the comments received since the publication of the SNPRM, we are amending 33 CFR 117.1007(a) which governs the Norfolk and Western Railroad Bridge, across the Elizabeth River, Eastern Branch, mile 2.7, at Norfolk, Virginia.

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 reached this conclusion based on the fact that the proposed changes will not impede maritime traffic but actually serve to increase the ease of use by waterway users, while still providing for the needs of the bridge owner.

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 less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This final rule would affect the following entities, some of which might be small entities: The owners and operators of vessels that desire to transit the waterway and homeowners associations representing property owners upstream of the drawbridge. This rule will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will increase the amount of time the drawbridge is open during peak waterway usage and decreases the notification requirement for off-peak opening of the drawbridge.

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 process. This was accomplished through the solicitation of comments from local waterway users during a Coast Guard field study, and through publication of the NPRM and SNPRM in the Federal Register in which comments were solicited.

This rule calls for no collection of information under the Paperwork Reduction Act (44 U.S.C. 3510-3520).

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

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

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

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

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

The Coast Guard considered the environmental impact of this rule and concluded that under figure 2-1, paragraph (32)(e) of Commandant Instruction M16475.1C this rule is categorically excluded from further environmental documentation. This rule involves the operating schedule of an existing drawbridge and will have no impact on the environment. A “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under ADDRESSES.

On November 9, 2000, the Secretary of Agriculture adopted a final rule which revised the land and resource management planning rules at 36 CFR part 219 and removed the administrative appeal of plan decisions at 36 CFR part 217 (65 FR 67514). The revised rule at 36 CFR part 219 establishes requirements for the implementation, monitoring, evaluation, amendment, and revision of land and resource management plans, and affirms sustainability as the overall goal for National Forest System planning and management. The intended effects of the rule are to simplify, clarify, and otherwise improve the planning process. To help achieve these intended effects, § 219.32 of the recently revised planning rule establishes an objection process to replace the appeals process embodied in part 217. Section 219.35 of the recently revised rule provides direction to govern the transition from the previous planning process.

Questions have arisen regarding interpretation and application of administrative appeal and review processes in the context of the transitional language provided in § 219.35. As a consequence, the Department is issuing this interpretive rule which adds a note to appear as an appendix to § 219.35 to explain how these provisions operate together. A description of the matters addressed in this interpretive rule follows.

Terminology. Paragraph (b) of § 219.35 uses the term “initiated” in the context of plan revisions or amendments under way prior to November 9, 2000. The Department is clarifying the term “initiated” to avert misinterpretation of the Department's intended application of the rule. This interpretive rule clarifies that “initiated” refers to the published public notification of a proposed plan amendment or revision.

Options. Paragraph (b) of § 219.35 grants an option to proceed at the responsible official's discretion either under the 1982 regulations in effect prior to November 9, 2000, or under the revised regulations. This interpretive rule makes clear that paragraph (b) specificially includes the option to select either the administrative appeal and review procedures of 36 CFR part 217 in effect prior to November 9, 2000, or the new objection procedures to complete a plan amendment or revision process initiated under the 1982 regulations.

This rulemaking consists of an interpretive rule and is issued by the agency to advise the public of the agency's preexisting construction of one of the rules it administers—that is, 36 CFR 219.35, in the context of National Forest System land and resource management planning. See, e.g., Shalala, Secretary of Health and Human Services v. Guernsey Memorial Hosp., 514 U.S. 87, 99 (1995). Therefore, under 5 U.S.C. 553(b)(A), this rulemaking is exempt from the notice and comment requirements of the Administrative Procedure Act, and, pursuant to 5 U.S.C. 553(d)(2), this rule is effective immediately upon publication in the Federal Register .

It has been determined that this is not a significant rule. This interpretive rule will not have an annual effect of $100 million or more on the economy, or adversely affect productivity, competition, jobs, the environment, public health or safety, or State or local governments. This rulemaking will not interfere with an action taken or planned by another agency, or raise new legal or policy issues. Finally, this rulemaking will not alter the budgetary impacts of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients of such programs. Accordingly, this rulemaking is not subject to Office of Management and Budget (OMB) review under Executive Order 12866. Moreover, this rulemaking has been considered in light of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). It is therefore certified that this rule will not have a significant economic impact on a substantial number of small entities as defined by the Act. This rule will not impose recordkeeping requirements; will not affect their competitive position in relation to large entities; and will not affect their cash flow, liquidity, or ability to remain in the market.

This rulemaking has no direct or indirect effect on the environment, but merely clarifies the relationship of certain planning actions to their respective appeal procedures. Section 31.1b of Forest Service Handbook 1909.15 (57 FR 43180; September 18, 1992) excludes from documentation in an environmental assessment or impact statement rules, regulations or policies to establish Service-wide administrative procedures, program processes, or instructions. Based on the nature and scope of this rulemaking, the agency has determined that the interpretive rule falls within this category of actions and that no extraordinary circumstances exist which would require preparation of an environmental assessment or environmental impact statement.

This rulemaking has been analyzed in accordance with the principles and criteria contained in Executive Order 12360, and it has been determined that this rule will not pose the risk of a taking of private property, as the interpretive rule is limited to clarification of the transition procedures in the new planning rule.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. The rule (1) does not preempt State and local laws and regulations that conflict with or impede its full implementation; (2) has no retroactive effect; and (3) will not require administrative proceedings before parties may file suit in court challenging its provisions.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), which the President signed into law on March 22, 1995, the agency has assessed the effects of this rule on State, local and tribal governments and the private sector. This rule will not compel the expenditure of $100 million or more by any State, local, or tribal government or anyone in the private sector. Therefore, a statement under section 202 of the Act is not required.

This rule does not contain any recordkeeping or reporting requirements or other information collection requirements as defined in 5 CFR part 1320. Accordingly, the review provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and implementing regulations at 5 CFR part 1320 do not apply.

On April 27, 2000, the Maryland Department of the Environment (MDE) submitted a revision to its SIP to meet the requirements of the NO X SIP Call. The revision consists of the adoption of two new chapters COMAR 26.111.29— NO X Reduction and Trading Program and COMAR 26.11.30—Policies and Procedure Relating to Maryland's NO X Reduction and Trading Program.

On October 19, 2000 (65 FR 62671), EPA published a notice of proposed rulemaking (NPR) for the State of Maryland proposing to approve the April 27, 2000 SIP revision. That NPR provided for a public comment period ending on November 9, 2000. On November 9, 2000 (65 FR 67319), EPA published a notice extending the comment period to November 20, 2000. A detailed description of this SIP revision and EPA's rationale for approving it was provided in the October 19, 2000 NPR and will not be restated here. One letter of comment was submitted on EPA's proposal. A summary of the comments expressed in that letter and EPA's response is provided in section II, below.

Comment: A letter of comment was submitted expressing concerns over the impact an expansion of the Baltimore/Washington International (BWI) Airport expansion would have on Maryland's ability to limit both emissions of NO X and volatile organic compounds (VOCs) sufficiently to meet the National Ambient Air Quality Standard for ozone. The commenter states his overarching concern that planned “growth” in the Baltimore and Washington, DC areas from such projects as the expansion of BWI airport and the Ann Arundel Mills Mall is occurring at a rate such that compliance with the Maryland's program to satisfy the NO X SIP call could be jeopardized. The commenter expresses concerns that although Maryland is “required” to abide by a regional cap and trade program that is intended to significantly reduce NO X emissions generated within the Ozone Transport Region, that effort will fail unless the impact of the BWI airport is properly documented to include the cumulative impact of the airport's NO X emissions, due to cars, buses, transport vehicles, maintenance facilities, rental cars, and aircraft.

Response: The commenter is correct that VOC and NO X emissions resulting from growth in the Baltimore and Washington DC areas from projects such as BWI airport and the Ann Arundel Mills Mall must be considered by the State of Maryland in meeting its requirements under the Clean Air Act for attainment and maintenance of the NAAQS for ozone. Increases in both NO X and VOC emissions from such projects must be demonstrated to conform to plans and provisions of the Maryland SIP established to accommodate such “growth.” Approval of Maryland's regulations and requirements to satisfy the NO X SIP call in no way relieves the State from the applicable requirements and obligations under the Clean Air Act's transportation and general conformity provisions. In determining the appropriate control levels, the NO X SIP Call rulemaking assumed certain amounts of growth from all source categories. The comment seems to imply that EPA was not cognizant of growth, any such implication is incorrect. Moreover, the requirements of the NO X SIP Call and Maryland's SIP will be satisfied if the sources subject to controls implement those controls, and if the emissions cap applicable to electric generating units (EGUs) is adhered to. Under the federal NO X SIP Call, states were allowed the flexibility to decide what sources of emissions to control to achieve the required reductions in NO X . EPA did provide information that those reductions could be achieved in the most cost effective manner by controlling large stationary sources. EPA finds that Maryland's NO X Reduction and Trading Program meets the requirements of the NO X SIP Call. However, neither the federal NO X SIP Call rule nor Maryland's Program to satisfy that rule alters either of the mandated conformity programs' requirements. Moreover, while the NO X SIP Call rule specifically establishes requirements to reduce NO X emissions, the transportation and general conformity provisions of the Clean Act require that both NO X and VOC emissions increases be accounted for and conform with a state's plan(s) to attain and maintain the NAAQS for ozone. For these reasons, EPA believes that approval of Maryland's regulations and requirements to satisfy the NO X SIP call strengthens the SIP and does not alter or make less stringent the State's obligation to meet the conformity requirements of the Clean Air Act and its SIP.

EPA is approving the Maryland's SIP revision consisting of its NO X Reduction and Trading Program, which was submitted on April 27, 2000. EPA finds that Maryland's submittal is fully approvable because it meets the requirements of the NO X SIP Call. In addition, EPA is approving Maryland's NO X Reduction and Trading Program because it supports the one-hour attainment demonstration plans for the Baltimore, Metropolitan Washington, DC and Philadelphia-Wilmington-Trenton ozone nonattainment areas.

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by March 12, 2001. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action to approve Maryland's NO X Reduction and Trading Program may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

This Supplementary Information section is organized as follows:

The New Hampshire Department of Environmental Services (DES) submitted a revision to the New Hampshire SIP on September 4, 1998 and November 20, 1998 for a vehicle ­I/M program. The submittal requested further flexibility from requirements applicable to areas in the OTR in light of the air quality status of the ozone nonattainment areas in New Hampshire. The SIP revision includes New Hampshire Code of Administrative Rules, Part Saf-C 3220 “Official Motor Vehicle Inspection Requirements” and Part Saf-C 5800 “Roadside Diesel Opacity Inspection” and additional supporting material including authorizing legislation, administrative items, and a description of the program being implemented.

Section 184(b)(1)(A) of the Act requires areas with a population of at least 100,000 in a metropolitan statistical area in the OTR to adopt and implement an inspection and maintenance program meeting EPA's enhanced I/M performance standard. EPA's I/M rule was established on November 5, 1992 (57 FR 52950). EPA made significant revisions to the I/M rule on September 18, 1995 (60 FR 48035) and on July 25, 1996 (61 FR 39036). Under EPA's I/M rule, enhanced I/M programs would be required in the Portsmouth-Dover-Rochester, New Hampshire area, and the New Hampshire portion of the Boston-Worcester-Lawrence area 1 . This program was initially submitted to fulfill the State's obligations to implement I/M pursuant to these requirements. The I/M regulation was codified at 40 CFR part 51, subpart S, and requires States subject to the I/M requirement to submit an I/M SIP revision that includes all necessary legal authority and the items specified in 40 CFR 51.350 through 51.373.

EPA proposed approval of New Hampshire's I/M program under the concept of OTR “restructuring” on December 17, 1998 (63 FR 69589). EPA stated that the New Hampshire areas and all nearby areas had met the one-hour national ambient air quality standard (NAAQS) for ozone. Because of this, and because of the technical demonstration made by the State, EPA made a determination that emission reductions from I/M under section 184 would not significantly contribute to the attainment of the one-hour standard anywhere in the OTR, and the I/M requirement could be “restructured.” EPA then proposed approval of the I/M SIP as a SIP strengthening measure under section 110 of the Clean Air Act. EPA received no comments on its proposal.

Due to the disapproval of an earlier ­I/M SIP submitted by the State of New Hampshire, the Clean Air Act's offset sanction was applicable in New Hampshire beginning December 6, 1998. Based on the December 17, 1998 proposed approval (63 FR 69589) on that same day, EPA published an interim final rule in the Federal Register which stayed that sanction and deferred the imposition of the highway funding sanction in New Hampshire (63 FR 69557). In that action EPA said that the stay and deferral would remain in effect until EPA took final action on the New Hampshire I/M SIP proposed on that same day or retracted its proposed approval.

Today EPA is issuing a final, full approval of New Hampshire's submitted I/M program SIP revision, and a final determination that the CAA requirement for an enhanced I/M program for areas in the OTR does not apply for New Hampshire. Accordingly, all sanctions and FIP clocks started based on EPA's earlier disapproval of New Hampshire's I/M program are terminated upon the effective date of today's action.

Section 176A of the Clean Air Act is entitled “Interstate Transport Commissions,” and discusses the criteria used to add or remove areas from transport regions. Section 176A(a)(2) states that the “Administrator * * * may remove any State * * * from the [OTR] whenever the Administrator has reason to believe that control of emissions in that State * * * pursuant to [the Act's requirements for the OTR] will not significantly contribute to attainment of the standard in the region.” Implicit in EPA's authority to remove a State from the OTR entirely is the authority to eliminate or “restructure” specific control requirements for States that remain in the OTR, provided the State demonstrates that the control of emissions from such requirement will not significantly contribute to attainment of the one-hour ozone standard anywhere in the OTR.

In the December 1998 notice proposing to approve New Hampshire's ­I/M SIP, we noted that this program is designed to get the emission reductions required by EPA's I/M regulation for enhanced I/M programs in the OTR. Nevertheless, the program did not meet these enhanced I/M requirements primarily due to the Act's requirement for a registration-based enforcement program. We proposed that since New Hampshire had demonstrated that it did not affect any other one-hour ozone nonattainment areas in the OTR that were violating that standard, this area could have “opted-out” of the OTR under section 176A. New Hampshire is also attaining the 1-hour ozone standard. But since New Hampshire did not want to “opt-out” of the OTR, and merely wanted flexibility on enhanced I/M, we proposed to accept the I/M program that New Hampshire had submitted as a SIP strengthening measure under section 110. The proposal was also based on air quality data that demonstrated that all of the remaining nearby ozone nonattainment areas in Massachusetts, Maine, and Rhode Island had achieved the 1-hour standard. EPA had proposed to revoke the 1-hour standard based on these air quality data. That proposal to revoke the one-hour ozone standard in each of these areas was finalized on June 9, 1999 (64 FR 30911).

However, due to uncertainty regarding the status of implementing EPA's 8-hour ozone standard, on October 25, 1999 (64 FR 57424), EPA proposed that the one-hour standard should apply again in all areas where it was previously revoked. That action was finalized on July 20, 2000 (65 FR 45182). Many of these areas that were previously designated nonattainment have air quality which meets the one-hour ozone NAAQS, including all the areas noted in EPA's December, 1998 proposed action. It should be noted that air quality monitoring data averaged over the years 1997 through 1999 showed that the Portland, Maine area (consisting of York, Cumberland and Sagadahoc Counties) a downwind area, had a design value of 0.125 ppm. During this period, this area was exceeding the one-hour ozone standard, albeit by a small margin. But more recent data based on 1998 through 2000 monitoring data, and earlier data which was the basis for our proposal (1996 through 1998 monitoring data), shows that the Portland area is attaining the one-hour ozone standard. EPA is basing this determination upon three years of complete, quality-assured, ambient air monitoring data for the 1998 to 2000 ozone seasons that demonstrate that the Portland area has attained the one-hour ozone NAAQS, as recorded in EPA's Aerometric Information Retrieval System (AIRS). All other areas in Maine, New Hampshire, eastern Massachusetts and Vermont have continued to measure air quality that meets the one-hour ozone standard. Therefore, EPA has concluded that its earlier finding under section 176A is still valid and we are finalizing approval of the December 1998 proposed action.

EPA is approving New Hampshire's I/M submittal. EPA has reviewed the State submittal against the requirements of the Act and EPA's final I/M rule. The SIP submission does not meet all of the requirements of EPA's final rule for enhanced I/M. The program does, however, contribute to air quality improvement. Therefore, EPA is approving New Hampshire's I/M program because it is a SIP strengthening measure under section 110. The EPA is also determining that an enhanced I/M program in New Hampshire would not significantly contribute to attainment in any other State in the OTR.

EPA is approving the SIP revision New Hampshire submitted on September 4, 1998, and November 20, 1998 as a revision to the New Hampshire SIP for I/M. EPA is approving the New Hampshire I/M program as strengthening the State's SIP under section 110 of the Act. EPA is also taking final action removing the detailed CAA requirements for an enhanced I/M program in the OTR for New Hampshire. Accordingly, all sanctions and FIP clocks related to approval of New Hampshire's I/M program are terminated upon the effective date of today's action.

Nothing in this action should be construed as permitting or establishing a precedent for any future request for revision to any State implementation plan. Each request for revision to the State implementation plan shall be considered separately in light of specific technical, economic, and environmental factors and in relation to relevant statutory and regulatory requirements.

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

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

This final rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely approves a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

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

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

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

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

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

This final rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by March 12, 2001. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

This Supplementary Information section is organized as follows:

Maine DEP submitted a revision to the Maine SIP on November 19, 1998 for a vehicle I/M program. This submittal requested further flexibility from requirements applicable to states in the OTR in light of the air quality status of the area at that time. The SIP revision includes sections of the “Maine Safety Inspection Manual,” and additional supporting material including detailed authorizing legislation (L.D. 2223, “An Act to Reduce Air Pollution from Motor Vehicles and to Meet Requirements of the Federal Clean Air Act”), administrative items, and a description of the program being implemented.

Section 184(b)(1)(A) of the Act requires areas with a population of at least 100,000 in a metropolitan statistical area in the OTR to adopt and implement an inspection and maintenance program meeting EPA's enhanced I/M performance standard. EPA's I/M rule was established on November 5, 1992 (57 FR 52950). EPA made significant revisions to the I/M rule on September 18, 1995 (60 FR 48035) and on July 25, 1996 (61 FR 39036). Maine is subject to the requirements of the Act for an I/M program in the Portland, Maine area. Maine's program was initially submitted to fulfill the State's obligations to implement I/M pursuant to these requirements. The I/M regulation was codified at 40 CFR part 51, subpart S, and requires States subject to the I/M requirement to submit an I/M SIP revision that includes all necessary legal authority and the items specified in 40 CFR 51.350 through 51.373.

EPA proposed approval of Maine's I/M program under the concept of OTR “restructuring” on December 17, 1998 (63 FR 69594). EPA stated that the Portland, Maine area and all nearby areas had met the one-hour national ambient air quality standard (NAAQS) for ozone. Because of this, and because of the technical demonstration made by the State, EPA made a determination that emission reductions from I/M under section 184 would not significantly contribute to the attainment of the one-hour ozone standard anywhere in the OTR, and the I/M requirement could be “restructured.” EPA then proposed approval of the I/M SIP as a SIP strengthening measure under section 110 of the Clean Air Act. EPA received no comments on its proposal.

Due to the disapproval of an earlier I/M SIP submitted by the State of Maine, the Clean Air Act's offset sanction was applicable in Maine beginning December 6, 1998. Based on the December 17, 1998 proposed approval (63 FR 69594) on that same day, EPA published an interim final rule in the Federal Register which stayed that sanction and deferred the imposition of the highway funding sanction in Maine (63 FR 69559). In that action EPA said that the stay and deferral would remain in effect until EPA took final action on the Maine I/M SIP proposed on that same day or retracted its proposed approval.

Today EPA is issuing a final, full approval of Maine's submitted I/M program SIP revision, and a final determination that the CAA requirement for an enhanced I/M program for areas in the OTR does not apply for Maine. Accordingly, all sanctions and FIP clocks started based on EPA's earlier disapproval of Maine's I/M program are terminated upon the effective date of today's action.

Section 176A of the Clean Air Act is entitled “Interstate Transport Commissions,” and discusses the criteria used to add or remove areas from transport regions. Section 176A(a)(2) states that the “Administrator . . . may remove any State . . . from the [OTR] whenever the Administrator has reason to believe that control of emissions in that State . . . pursuant to [the Act's requirements for the OTR] will not significantly contribute to attainment of the standard in the region.” Implicit in EPA's authority to remove a State from the OTR entirely is the authority to eliminate or “restructure” specific control requirements for States that remain in the OTR, provided the State demonstrates that the control of emissions from such requirement will not significantly contribute to attainment of the one-hour ozone standard anywhere in the OTR.

In the December 17, 1998 notice proposing to approve Maine's I/M SIP, we noted that this program is designed to get the emission reductions required by EPA's I/M regulation for enhanced I/M programs mandated solely pursuant to OTR requirements in section 184(b)(1)(A). Nevertheless, the program did not meet these enhanced I/M requirements primarily due to the Act's requirement for a registration-based enforcement program. We proposed that since Maine had demonstrated that it did not affect any other one-hour ozone nonattainment areas in the OTR that were violating that standard, this area could have “opted-out” of the OTR under section 176A. Maine is also attaining the 1-hour ozone standard. But since Maine did not want to “opt-out” of the OTR, and merely wanted flexibility on enhanced I/M, we proposed to accept the I/M program that Maine had submitted as a SIP strengthening measure under section 110. The proposal was also based on air quality data that demonstrated that all of the remaining nearby ozone nonattainment areas in Massachusetts, New Hampshire, and Rhode Island had achieved the 1-hour standard. EPA had proposed to revoke the 1-hour standard based on these air quality data. That proposal to revoke the one-hour ozone standard in each of these areas was finalized on June 9, 1999 (64 FR 30911).

However, due to uncertainty regarding the status of implementing EPA's 8-hour ozone standard, on October 25, 1999 (64 FR 57424), EPA proposed that the one-hour standard should apply again in all areas where it was previously revoked. That action was finalized on July 20, 2000 (65 FR 45182). Many of these areas that were previously designated nonattainment have air quality which meets the one-hour ozone NAAQS, including all the areas noted in EPA's December, 1998 proposed action. It should be noted that air quality monitoring data averaged over the years 1997 through 1999 showed that the Portland, Maine area (consisting of York, Cumberland and Sagadahoc Counties) had a design value of 0.125 ppm. During this period, this area was exceeding the one-hour ozone standard, albeit by a small margin. But more recent data based on 1998 through 2000 monitoring data, and earlier data which was the basis for our proposal (1996 through 1998 monitoring data), shows that the Portland area is attaining the one-hour ozone standard. EPA is basing this determination upon three years of complete, quality-assured, ambient air monitoring data for the 1998 to 2000 ozone seasons that demonstrate that the Portland area has attained the one-hour ozone NAAQS, as recorded in EPA's Aerometric Information Retrieval System (AIRS). All other areas in Maine, New Hampshire, eastern Massachusetts and Vermont continue to measure air quality that meets the one-hour ozone standard. Therefore, EPA has concluded that its earlier finding under section 176A is still valid and we are finalizing approval of the December 1998 proposed action.

EPA is approving Maine's I/M submittal. EPA has reviewed the State submittal against the requirements of the Act and EPA's final I/M rule. The SIP submission does not meet all of the requirements of EPA's final rule for enhanced I/M. The program does, however, contribute to air quality improvement. Therefore, EPA is approving Maine's I/M program because it is a SIP strengthening measure under section 110. The EPA is also determining that an enhanced I/M program in Maine would not significantly contribute to attainment in any other State in the OTR.

EPA is approving the SIP revision Maine submitted on November 19, 1998 as a revision to the Maine SIP for I/M. EPA is approving the Maine I/M program as strengthening the State's SIP under section 110 of the Act. EPA is also taking final action removing the detailed CAA requirements for an enhanced I/M program in the OTR for Maine. Accordingly, all sanctions and FIP clocks related to approval of Maine's I/M program are terminated upon the effective date of today's action.

Nothing in this action should be construed as permitting or establishing a precedent for any future request for revision to any State implementation plan. Each request for revision to the State implementation plan shall be considered separately in light of specific technical, economic, and environmental factors and in relation to relevant statutory and regulatory requirements.

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

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

This final rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely approves a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

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

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

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

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

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

This final rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co. , v. U.S. EPA , 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register. This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by March 12, 2001. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this action might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http://www.epa.gov/. To access this document, on the Home Page select “Laws and Regulations,” “Regulations and Proposed Rules,” and then look up the entry for this document under the “ Federal Register —Environmental Documents.” You can also go directly to the Federal Register listings at http://www.epa.gov/fedrgstr/. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.

2. In person . The Agency has established an official record for this action under docket control number OPP-309091. The official record consists of the documents specifically referenced in this action, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Mall # 2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

EPA, on its own initiative, in accordance with sections 408(e) and 408 (l)(6) of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, is establishing tolerances for residues of the insecticide tebufenozide benzoic acid, 3,5-dimethyl-1-(1,1-dimethylethyl-2-(4-ethylbenzoylhydrazide in or on vegetable, legume, group at 2.0 parts per million (ppm); vegetable, foliage of legume, group at 7.0 ppm; sunflower at 1.5 ppm; beet, garden, root at 0.3 ppm; and beet, garden, tops at 9.0 ppm. These tolerances will expire and are revoked on December 31, 2002. EPA will publish a document in the Federal Register to remove the revoked tolerance from the Code of Federal Regulations.

Section 408(l)(6) of the FFDCA requires EPA to establish a time-limited tolerance or exemption from the requirement for a tolerance for pesticide chemical residues in food that will result from the use of a pesticide under an emergency exemption granted by EPA under section 18 of FIFRA. Such tolerances can be established without providing notice or period for public comment. EPA does not intend for its actions on section 18 related tolerances to set binding precedents for the application of section 408 and the new safety standard to other tolerances and exemptions. Section 408(e) of the FFDCA allows EPA to establish a tolerance or an exemption from the requirement of a tolerance on its own initiative, i.e., without having received any petition from an outside party.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Section 18 of the FIFRA, authorizes EPA to exempt any Federal or State agency from any provision of FIFRA, if EPA determines that “emergency conditions exist which require such exemption.” This provision was not amended by the Food Quality Protection Act (FQPA). EPA has established regulations governing such emergency exemptions in 40 CFR part 166.

The state of California requested the use of tebufenozide on table beets to control beet armyworms and the state of Texas requested the use of tebufenozide on legume vegetables and sunflowers to control beet armyworms. EPA has authorized under FIFRA section 18 the use of tebufenozide on legume vegetables and sunflowers in Texas and table beets in California for control of the beet armyworm. After having reviewed the submissions, EPA concurs that emergency conditions exist for these States.

As part of its assessment of these emergency exemptions, EPA assessed the potential risks presented by residues of tebufenozide in or on legume vegetables, sunflowers and table beets. In doing so, EPA considered the safety standard in FFDCA section 408(b)(2), and EPA decided that the necessary tolerances under FFDCA section 408(l)(6) would be consistent with the safety standard and with FIFRA section 18. Consistent with the need to move quickly on the emergency exemption in order to address an urgent non-routine situation and to ensure that the resulting food is safe and lawful, EPA is issuing these tolerances without notice and opportunity for public comment as provided in section 408(l)(6). Although these tolerances will expire and are revoked on December 31, 2002, under FFDCA section 408(l)(5), residues of the pesticide not in excess of the amounts specified in the tolerance remaining in or on the legume vegetable group, foliage of legume vegetable group, sunflowers, garden beet roots and garden beet tops after that date will not be unlawful, provided the pesticide is applied in a manner that was lawful under FIFRA, and the residues do not exceed a level that was authorized by these tolerances at the time of that application. EPA will take action to revoke these tolerances earlier if any experience with, scientific data on, or other relevant information on this pesticide indicate that the residues are not safe.

Because these tolerances are being approved under emergency conditions, EPA has not made any decisions about whether tebufenozide meets EPA's registration requirements for use on legume vegetables, sunflowers or table beets or whether permanent tolerances for these uses would be appropriate. Under these circumstances, EPA does not believe that these tolerances serve as a basis for registration of tebufenozide by a State for special local needs under FIFRA section 24(c). Nor do these tolerances serve as the basis for any State other than California and Texas to use this pesticide on these crops under section 18 of FIFRA without following all provisions of EPA's regulations implementing section 18 as identified in 40 CFR part 166. For additional information regarding the emergency exemption for tebufenozide, contact the Agency's Registration Division at the address provided under FOR FURTHER INFORMATION CONTACT .

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances November 26, 1997 (62 FR 62961) (FRL-5754-7).

Consistent with section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of tebufenozide and to make a determination on aggregate exposure, consistent with section 408(b)(2), for time-limited tolerances for residues of tebufenozide in or on vegetable, legume, group at 2.0 ppm; vegetable, foliage of legume, group at 7.0 ppm; sunflower at 1.5 ppm; beet, garden, root at 0.3 ppm; and beet, garden, tops at 9.0 ppm. EPA's assessment of the dietary exposures and risks associated with establishing the tolerance follows.

The dose at which no observed adverse effects (NOAEL) are from the toxicology study identified as appropriate for use in risk assessment is used to estimate the toxicological endpoint. However, the lowest dose at which adverse effects of concern are identified (LOAEL) is sometimes used for risk assessment if no NOAEL was achieved in the toxicology study selected. An uncertainty factor (UF) is applied to reflect uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. An UF of 100 is routinely used, 10X to account for inter-species differences and 10X for intra-species differences.

For dietary risk assessment (other than cancer the Agency uses the UF to calculate an acute or chronic reference dose (RfD) acute or chronic RfD where the RfD is equal to the NOAEL divided by the appropriate UF (RfD = NOAEL/UF, where an additional safety factor is retained due to concerns unique to the FQPA, this additional factor is applied to the RfD by dividing the RfD by such additional factor. The acute or chronic Population Adjusted Dose (aPAD or cPAD) is a modification of the RfD to accommodate this type of FQPA Safety Factor.

For non-dietary risk assessments (other than cancer) the UF is used to determine the level of concern (LOC). For example, when 100 is the appropriate UF (10X to account for interspecies differences and 10X for intraspecies differences) the LOC is 100. To estimate risk, a ratio of the NOAEL to exposures margin of exposure (MOE) = NOAEL/exposure is calculated and compared to the LOC.

The linear default risk methodology Q* is the primary method currently used by the Agency to quantify carcinogenic risk. The Q* approach assumes that any amount of exposure will lead to some degree of cancer risk. A Q* is calculated and used to estimate risk which represents a probability of occurrence of additional cancer cases (e.g., risk is expressed as 1 x10 -6 or one in a million). Under certain specific circumstances, MOE calculations will be used for the carcinogenic risk assessment. In this non-linear approach, a “point of departure” is identified below which carcinogenic effects are not expected. The point of departure is typically a NOAEL based on an endpoint related to cancer effects though it may be a different value derived from the dose response curve. To estimate risk, a ratio of the point of departure to exposure (MOE cancer = point of departure/exposures is calculated. A summary of the toxicological endpoints for tebufenozide used for human risk assessment is shown in the following Table 1:

1. Dietary exposure from food and feed uses. Tolerances have been established 40 CFR 180.482 for the residues of tebufenozide, in or on a variety of raw agricultural commodities (RAC). Currently, established tolerances for residues of tebufenozide are listed under 40 CFR 180.482 and include permanent tolerances for residues in/on pecans 0.01 ppm and walnuts 0.1 ppm, tolerances for residues in/on imported apples 1.0 ppm and wine grapes 0.5 ppm, and time-limited tolerances for residues in/on various plant and animal commodities. Risk assessments were conducted by EPA to assess dietary exposures from tebufenozide in food as follows:

i. Acute exposure. Acute dietary risk assessments are performed for a food-use pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a one day or single exposure. An acute dietary exposure risk assessment is not required because the Agency did not identify an acute dietary endpoint that was applicable to females (13+ years) or to the general population, including infants and children.

ii. Chronic exposure . In conducting this chronic dietary risk assessment the Dietary Exposure Evaluation Model (DEEM tm ) analysis evaluated the individual food consumption as reported by respondents in the USDA 1989-1991 nationwide Continuing Surveys of Food Intake by Individuals (CSFII) and accumulated exposure to the chemical for each commodity. The following assumptions were made for the chronic exposure assessments: For the chronic analysis, tolerance level residues and some percent crop treated (%CT) and some market share assumptions were used. Where market share information was available, it was used in preference over %CT data since it is the larger, more conservative number and therefore, more protective of human health. The highest chronic dietary exposure was for non-nursing infants <1 year at 0.015071 mg/kg/day, 84% of the cPAD. The chronic dietary assessment should be viewed as conservative. Further refinement, using anticipated residue levels and additional CT data, would result in lower exposure rates. Water modeling data were used to calculate residues (EECs) to compare to the drinking water levels of comparison (DWLOC) for chronic exposures.

iii. Cancer . Because tebufenozide has been classified as a “Group E” carcinogen, a cancer risk assessment is not required.

iv. Anticipated residue and %CT information . Section 408(b)(2)(F) states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if the Agency can make the following findings:

Condition a. that the data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain such pesticide residue. Condition b. that the exposure estimate does not underestimate exposure for any significant subpopulation group; and, Condition c, if data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area. In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of percent crop treated (PCT) as required by section 408(b)(2)(F), EPA may require registrants to submit data on PCT.

The Agency used percent crop treated (PCT information as follows:

The Agency believes that the three conditions listed above have been met. With respect to Condition (1), PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. EPA uses a weighted average PCT for chronic dietary exposure estimates. This weighted average PCT figure is derived by averaging State-level data for a period of up to 10 years, and weighting for the more robust and recent data. A weighted average of the PCT reasonably represents a person's dietary exposure over a lifetime, and is unlikely to underestimate exposure to an individual because of the fact that pesticide use patterns (both regionally and nationally) tend to change continuously over time, such that an individual is unlikely to be exposed to more than the average PCT over a lifetime. For acute dietary exposure estimates, EPA uses an estimated maximum PCT. The exposure estimates resulting from this approach reasonably represent the highest levels to which an individual could be exposed, and are unlikely to underestimate an individual's acute dietary exposure. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions (2) and (3), regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available information on the regional consumption of food to which tebufenozide may be applied in a particular area.

2. Dietary exposure from drinking water. The Agency lacks sufficient monitoring exposure data to complete a comprehensive dietary exposure analysis and risk assessment for tebufenozide in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the physical characteristics of tebufenozide.

The Agency uses the Generic Estimated Environmental Concentration (GENEEC) or the Pesticide Root Zone/Exposure Analysis Modeling System (PRZM/EXAMS) to estimate pesticide concentrations in surface water and SCI-GROW, which predicts pesticide concentrations in ground water. In general, EPA will use GENEEC (a tier 1 model) before using PRZM/EXAMS (a tier 2 model) for a screening-level assessment for surface water. The GENEEC model is a subset of the PRZM/EXAMS model that uses a specific high-end runoff scenario for pesticides. GENEEC incorporates a farm pond scenario, while PRZM/EXAMS incorporate an index reservoir environment in place of the previous pond scenario. The PRZM/EXAMS model includes a percent crop area factor as an adjustment to account for the maximum PC coverage within a watershed or drainage basin.

None of these models include consideration of the impact processing (mixing, dilution, or treatment) of raw water for distribution as drinking water would likely have on the removal of pesticides from the source water. The primary use of these models by the Agency at this stage is to provide a coarse screen for sorting out pesticides for which it is highly unlikely that drinking water concentrations would ever exceed human health levels of concern.

Since the models used are considered to be screening tools in the risk assessment process, the Agency does not use estimated environmental concentrations (EECs) from these models to quantify drinking water exposure and risk as a %RfD or %PAD. Instead drinking water levels of comparison (DWLOCs) are calculated and used as a point of comparison against the model estimates of a pesticide's concentration in water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food, and from residential uses. Since DWLOCs address total aggregate exposure to tebufenozide they are further discussed in the aggregate risk sections below.

Based on the GENEEC and SCI-GROW models the EECs of tebufenozide for chronic exposures are estimated to be 16.5 parts per billion (ppb) for surface water and 1.04 ppb for ground water.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets.

The Agency determined that there are potential short-term non-occupational/residential postapplication exposures (incidental non-dietary ingestion) to toddlers for the use of tebufenozide on ornamentals. However, since acute dietary endpoints were not selected, the short-term postapplication exposure/risk assessment is not required. Intermediate-term and chronic incidental non-dietary exposures are not expected for ornamental uses. Risk assessments for residential applications are not needed due to the absence of dermal and inhalation endpoints.

4. Cumulative exposure to substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA does not have, at this time, available data to determine whether tebufenozide has a common mechanism of toxicity with other substances or how to include this pesticide in a cumulative risk assessment. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, tebufenozide does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that tebufenozide has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the final rule for Bifenthrin Pesticide Tolerances November 26, 1997 (62 FR 62961).

1. In general . FFDCA section 408 provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for pre-natal and post-natal toxicity and the completeness of the data base on toxicity and exposure unless EPA determines that a different margin of safety will be safe for infants and children. Margins of safety are incorporated into EPA risk assessments either directly through use of a MOE analysis or through using uncertainty (safety) factors in calculating a dose level that poses no appreciable risk to humans.

2. Developmental toxicity studies . In prenatal developmental toxicity studies in rats and rabbits, there was no evidence of maternal or developmental toxicity; the maternal and developmental NOAELS were 1,000 milligrams/kilograms/day (mg/kg/day) highest dose tested (HDT).

3. Reproductive toxicity study . In 2-generation reproduction studies in rats, toxicity to the fetuses/offspring, when observed, occurred at equivalent or higher doses than in the maternal/parental animals.

4. Prenatal and postnatal sensitivity. The data provided no indication of increased sensitivity of rats or rabbits to; in utero and/or postnatal exposure to tebufenozide. No maternal or developmental findings were observed in the prenatal developmental toxicity studies at doses up to 1,000 mg/kg/day in rats and rabbits. In the 2-generation reproduction studies in rats, effects occurred at the same or lower treatment levels in the adults as in the offspring.

5. Conclusion . There is a complete toxicity data base for tebufenozide and exposure data is complete or is estimated based on data that reasonably accounts for potential exposures. Data provided no indication of increased sensitivity of rats or rabbits to in utero and/or postnatal exposure to tebufenozide. Based on this, EPA concludes that reliable data support the use of the standard 100-fold UF, and that the 10X safety factor to protect infants and children should be removed.

To estimate total aggregate exposure to a pesticide from food, drinking water, and residential uses, the Agency calculates DWLOCs which are used as a point of comparison against the model estimates of a pesticide's concentration in water EECs. DWLOC values are not regulatory standards for drinking water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and residential uses. In calculating a DWLOC, the Agency determines how much of the acceptable exposure (i.e., the PAD) is available for exposure through drinking water e.g., allowable chronic water exposure mg/kg/day = cPAD - (average food + chronic non-dietary, non-occupational exposure). This allowable exposure through drinking water is used to calculate a DWLOC.

A DWLOC will vary depending on the toxic endpoint, drinking water consumption, and body weights. Default body weights and consumption values as used by the USEPA Office of Water are used to calculate DWLOCs: 2L/70 kg (adult male), 2L/60 kg (adult female), and 1L/10 kg (child). Default body weights and drinking water consumption values vary on an individual basis. This variation will be taken into account in more refined screening-level and quantitative drinking water exposure assessments. Different populations will have different DWLOCs. Generally, a DWLOC is calculated for each type of risk assessment used: acute, short-term, intermediate-term, chronic, and cancer.

When EECs for surface water and ground water are less than the calculated DWLOCs, OPP concludes with reasonable certainty that exposures to tebufenozide in drinking water (when considered along with other sources of exposure for which OPP has reliable data would not result in unacceptable levels of aggregate human health risk at this time. Because OPP considers the aggregate risk resulting from multiple exposure pathways associated with a pesticide's uses, levels of comparison in drinking water may vary as those uses change. If new uses are added in the future, OPP will reassess the potential impacts of tebufenozide on drinking water as a part of the aggregate risk assessment process.

1. Acute risk . No toxicological endpoint was identified for acute toxicity. Therefore, no acute aggregate risk assessment is needed.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to tebufenozide from food will utilize 25% of the cPAD for the U.S. population, 83% of the cPAD for non-nursing infants < 1 year old and 61% of the cPAD for children 1-6 years old. Based on the use pattern, chronic residential exposure to residues of tebufenozide is not expected. In addition, despite the potential for chronic dietary exposure to tebufenozide in drinking water, after calculating DWLOCs and comparing them to conservative model estimated environmental concentrations of tebufenozide in surface and ground water, EPA does not expect the aggregate exposure to exceed 100% of the cPAD, as shown in the following Table 2:

3. Short-term risk . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level.

Though residential exposure could occur with the use of tebufenozide, no toxicological effects have been identified for short-term toxicity. Therefore, the aggregate risk is the sum of the risk from food and water, which were previously addressed.

4. Intermediate-term risk . Intermediate-term aggregate exposure takes into account non-dietary, non-occupational exposure plus chronic exposure to food and water (considered to be a background exposure level).

Though residential exposure could occur with the use of tebufenozide, no toxicological effects have been identified for intermediate-term toxicity. Therefore, the aggregate risk is the sum of the risk from food and water, which were previously addressed.0

5. Aggregate cancer risk for U.S. population . Tebufenozide is classified as Group E (no evidence of carcinogenicity in humans, and therefore, no cancer risk assessment is required.

6. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, and to infants and children from aggregate exposure to tebufenozide residues.

Adequate enforcement methodology (example - gas chromotography) is available to enforce the tolerance expression. The method may be requested from: Calvin Furlow, PRRIB, IRSD (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW, Washington, DC 20460; telephone number: (703) 305-5229; e-mail address: furlow.calvin@epa.gov.

There are no Codex, Canadian, or Mexican maximum residue limits (MRLs) for tebufenozide in or on legume vegetables, sunflowers, and garden beets. International harmonization is not a concern for these actions.

Rotational crop restrictions. The following restrictions are required for these proposed uses. Crops which the label allows to be treated directly can be planted at anytime. All other crops can be planted 30- days after application. The previous 12 month plantback interval for cereal grains, grasses and non-grass animal feeds is no longer necessary with the establishment of rotational crop tolerances.

Therefore, the tolerances are established for residues of tebufenozide, in or on the following: vegetable, legume, group at 2.0 ppm; vegetable, foliage of legume, group at 7.0 ppm; sunflower at 1.5 ppm; beet, garden, root at 0.3 ppm;, and beet, garden, tops at 9.0 ppm.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA of 1996, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d), as was provided in the old FFDCA sections 408 and 409. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket control number OPP-309091 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before March 12, 2001.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk 1900, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460. You may also deliver your request to the Office of the Hearing Clerk in Rm. C400, Waterside Mall, 401 M St., SW., Washington, DC 20460. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 260-4865.

2. Tolerance fee payment . If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.”

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division, 7505C Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division, 7502C Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

3. Copies for the docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VII.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.2. Mail your copies, identified by the docket control number OPP-30901, to: Public Information and Records Integrity Branch, Information Resources and Services Division, 7502C Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.2. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes time limited tolerances under FFDCA section 408. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review October 4, 1993 (58 FR 51735). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any prior consultation as specified by Executive Order 13084, entitled Consultation and Coordination with Indian Tribal Governments May 19, 1998 (63 FR 27655), special considerations as required by Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations February 16, 1994 (59 FR 7629), or require OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks April 23, 1997 (62 FR 19885). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a FIFRA section 18 exemption under FFDCA section 408, such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism August 10, 1999 (64 FR 43255). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4).

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

The existing regulations in 43 CFR part 3100 allow for agreements to compensate the Federal Government for drainage of (oil and gas) mineral resources. Those regulations and the regulations at part 3160 require the lessee or operating rights owner to drill and produce wells necessary to prevent drainage or, instead, to pay compensatory royalties. These regulations are based on BLM's authority under the Mineral Leasing Act of 1920 (MLA), as amended and supplemented, and other cited authorities to issue a rule to carry out their purposes. The existing regulations and the standard oil and gas lease terms make express covenants to protect the lessor against drainage that is implicit in the law of all oil and gas producing states. An audit by the Department's Office of the Inspector General and a BLM Internal Control Review in 1990, both recommended we revise our regulations on drainage protection to clarify:

(1) When the obligations of the lessee or operating rights owner begin and end; and

(2) What steps to take to determine if drainage is occurring.

In 1995, BLM's Director appointed the Bureau Performance Review Bonding and Unfunded Liability Team to review a broad range of liability issues. The Team recommended we revise and clarify our regulations on lessee and operating rights owner liability for drainage prevention, compensatory royalty payments, well plugging and abandonment, lease site reclamation and environmental remediation. This final rule enables BLM to fulfill its responsibility to ensure that the public and Indian lessors receive full value for their oil and gas resources.

In addition to addressing drainage issues, the final rule clarifies the current regulations concerning the responsibilities of assignors and assignees of record title or operating rights interests. The current version of 43 CFR 3106.7-2 expressly states that an assignor is fully responsible after the assignment and prior to BLM approval of the assignment, but the current rule is not clear as to the responsibility of the assignor after approval. The final rule makes clear that the assignor continues to be responsible for satisfying those obligations that accrued prior to the approval of the assignment.

The final rule clarifies that assignees have responsibilities for certain plugging and abandonment, reclamation and environmental liabilities that arose prior to their assignment and which were evident to a purchaser exercising due diligence.

The final rule implements a change in the definition of the term “lessee” to include the operating rights owner, consistent with the substantive provisions of the proposed rule.

The final rule reorganizes the order of the questions and answers, renumbers subpart 3162, and locates the sections into a more logical sequence. Some commenters suggested these regulations should also apply to Indian oil and gas leases. The final rule adopts the suggestion to make these regulations apply to both Federal and Indian oil and gas leases. To accomplish this result, the final rule consolidates all drainage provisions in part 3160. The following table lists the section numbers in the proposed and final rule.

On January 13, 1998, (63 FR 1936), BLM published in the Federal Register the proposed rule on oil and gas drainage. In a notice published on February 24, 1998, (63 FR 9171), we extended the comment period for 60 days. In response to several requests, we reopened the comment period for 60 days in a notice published on December 3, 1998, (63 FR 66776). We reopened the comment period to consult with Indian Tribes, under Executive Order 13084, on the issue of whether the proposed rule should apply to Tribal and individual Indian oil and gas leases. We extended the reopened comment period by notice published on January 13, 1999 (64 FR 2166), with the comment period ending April 5, 1999, and extended the reopened comment period again in a notice published on April 12, 1999 (64 FR 17598) with the comment period ending on June 4, 1999. Some provisions were proposed for comment in another rule (see 63 FR 66840). We received 40 written comments on the proposed rule from industry, organizations, and individuals.

A commenter objected to the question and answer format and suggested these regulations were repetitive, poorly organized, and required a reader to look in multiple sections to find related information. The final rule simplifies the question and answer format and utilizes plain language in accordance with the Administration's Reinventing Government Initiative. We believe this format will help everyone find relevant topics more easily. We restructured the final rule to better group topic related sections.

A commenter suggested we should not apply this rule to reinterpret the meaning of terms in existing leases. Except where changes are expressly acknowledged in this preamble, the final rule is consistent with and interprets existing lease provisions and so may lawfully apply to existing leases. In addition, all Federal and Indian oil and gas leases are subject to future regulations except to the extent such regulations are inconsistent with express lease provisions or the rights granted in the lease.

A commenter suggested it was not worthwhile for BLM to adopt a rule that generates $250,000 in revenues while increasing Federal expenditures by $150,000 and driving industry to move to private lands or abroad. The final rule did not adopt this suggestion. Our previous estimates were based on the assumption that no revenues other than additional compensatory royalty assessments would be generated from drainage cases. In addition, the compensatory royalties estimates were understated due to insufficient data. Based on our recent survey of State offices, if the number of potential drainage cases and the success rate of case retirements remain at the 1998 level (1,665 cases and 8.82 percent respectively), we expect additional revenues around $9.2 million from the oil and gas drainage program. These revenues include royalties from protective wells, compensatory royalty assessments, unitization and communitization agreements, or bonus bid payments on previously unleased lands. Besides the additional revenues, lessees benefit from the implementation of this rule because they have a better understanding of when, why, and how to fulfill their obligations to protect Federal and Indian minerals from drainage. By adopting this final rule, the Federal Government benefits because it reduces the time needed to correspond with the lessees regarding procedural matters, and thus leads to greater efficiency in performing technical and economic analyses to determine whether prudent operators need to drill an offset well. Further, it reduces the need for reviews and appeals to the State Director. The estimate of $150,000 is equivalent to 10 percent of the annual expense for the oil and gas drainage program, and a one-time cost for implementing these regulations. These expenses may increase if we postpone the implementation of this rule.

A commenter suggested this rule violates the Administrative Procedure Act because the preamble to the proposed rule was misleading in characterizing the rule as merely a clarification of existing law. The section-by-section analysis of the proposed rule described every modification to the existing rule so that all potentially affected parties were properly advised of its provisions. While the rule does provide greater detail than existing regulations with respect to both drainage and the duties of parties holding various interests in a lease, the substantive obligations remain those established in the lease and existing regulations.

Some commenters suggested we should not cover plugging and abandonment issues in this “drainage” rule. The final rule retains the provision for well plugging and abandonment. Nothing precludes us from promulgating rules on several topics in a single rulemaking if we provide adequate notice to the affected public.

Several commenters suggested the rule reverses IBLA interpretations of the lease and current regulations, particularly with respect to who bears the burden of proof of drainage. The final rule preserves IBLA's precedent that BLM bears the burden of proof that drainage exists and the lessee's notice or knowledge of drainage, but the rule shifts the burden of proof after BLM has established a prima facie case ( i.e., sufficient evidence absent rebuttal by the lessee). This shift of the burden of proof to the lessee is warranted because the lessee, by undertaking the duty to protect, agreed to take the responsibility to monitor activities that could result in drainage of Federal or Indian mineral resources. Moreover, the lessee is in a better position to obtain and interpret relevant geologic and reservoir data.

Some commenters suggested it is uneconomical for lessees who hold leases for speculative purposes, with no intent to drill, to monitor activity on adjacent leases for drainage. The final rule did not adopt this suggestion. The duty to detect drainage and drill to protect the Federal or Indian lessor from drainage is not a new requirement, but is a lease obligation voluntarily entered by lessees. A lessee who cannot protect the Federal or Indian lessor from drainage should not acquire a Federal or Indian lease. To allow anyone to hold a Federal or Indian lease without requiring an agreement to prevent the uncompensated loss of valuable mineral resources is not in the interest of the public or Indian mineral owners.

A commenter suggested that if BLM directs the drilling of a protective well and the well does not return a reasonable profit to the lessee, BLM should pay the cost of drilling, completing and equipping the well. The final rule did not adopt this suggestion. However, we address the issue of uneconomic wells under § 3162.2-5.

Several commenters suggested economic self-interest leads lessees to drill protective wells when it is economic to do so. Therefore, the rule is not necessary. While we agree with the suggestion that economic self-interest motivates an operator to drill protective wells; we cannot permit a reluctant operator to allow the uncompensated loss of mineral resources that belongs to the American public or to an Indian mineral owner. We have the responsibility to issue regulations we feel in the best interest of the public and Indian mineral owners. We also have the responsibility to ensure that lessees drill all necessary wells to protect public and Indian mineral interest owners from drainage at the earliest possible time. This final rule better serves the oil and gas industry by ensuring it has a clearer understanding of obligations to protect its oil and gas leases from drainage.

Several commenters believe that inasmuch as existing regulations provide for BLM to make drainage determinations, additional responsibilities for drainage detection could not be imposed on lessees. The final rule permits us to make drainage determinations and assess compensatory royalty damages against lessees as we have done in the past. Lessees are not excused from their lease obligations to take initiatives to protect the Federal or Indian lessors. This final rule simply provides additional detail on how a lessee should fulfill existing lease obligations.

A commenter suggested we notify adjacent lessees when we approve an Application for Permit to Drill (APD). The final rule did not adopt the suggestion. However, we post APD's for 30 days in State Office public rooms before we approve them. The oil and gas data service industry publishes information on the approval status of APD's on a regular basis. It is the lessees' responsibility to monitor APD approvals to ensure that they protect Federal and Indian lessors from drainage.

One commenter suggested the arbitrary decisions about what constitutes drainage might be avoided by standardizing drainage parameters at 330 feet from the lease line. The final rule did not adopt the suggestion. The characteristics and performance of the oil and gas reservoir are primary factors which determine the necessary actions to take to protect the lease from drainage. Since each oil and gas reservoir is unique and has different characteristics and performance capabilities, it is inappropriate to adopt a single baseline standard for drainage.

An Alaska environmental group recommended that these regulations state that BLM has the authority to address drainage by prohibiting the removal of its oil and gas. It also wanted these regulations to make clear that BLM is not obliged to lease or permit drilling. The final rule is quite clear that we have discretion when to lease and regulatory authority over drilling. We do not possess the practical ability to prohibit removing oil and gas from beneath Federal surface because fluid minerals follow no political or property boundaries. Where we cannot permit surface disturbance, lessees must pursue other means of protecting the lessor from drainage such as horizontal drilling or through communitization when feasible.

An Alaska environmental group suggested that the authority citations be broadened to include additional sections of the Federal Land Policy and Management Act of 1976 (FLPMA) and the Mineral Leasing Act of 1920 (MLA), as well as the Alaska National Interests Lands Conservation Act, the National Wildlife Refuge Administration Act, and the Naval Petroleum Reserves Production Act of 1976. The final rule uses the appropriate citations to sections that grant relevant rulemaking authority to the Secretary of the Interior. BLM does not administer the Naval Petroleum Reserves. The National Wildlife Refuge Administration Act does not grant regulatory authority with respect to mineral production.

The final rule renumbers many sections. In the following discussion, we reference the section number of the proposed rule and indicate in parentheses where the section appears in the final rule. We also describe the final rule and how, if at all, it differs from the proposed rule. Further, we respond to comments on the section.

The final rule amends § 3160.0-5 to alphabetize and add these definitions: “drainage,” “lessee,” “operating rights owner,” “protective well” and “record title holder.” We modified the definitions of “lessee” and “operating rights owner” and added new definitions for “drainage,” “protective well,” and “record title holder.”

Several commenters suggested that we modify the drainage definition to refer to “oil or gas” rather than hydrocarbons, inert gases or associated resources. The final rule did not adopt this suggestion because “inert gases” is needed to make clear that the rule applies to drainage of non-petroleum gases such as carbon dioxide.

A commenter suggested that the drainage definition does not allow for the concept of counter drainage and suggested that we include the phrase “and not offset by counter drainage” at the end of the definition. The final rule did not adopt this suggestion because the drainage definition already contemplates only the net loss after consideration of counter drainage.

Some commenters suggested that we modify the protective well definition to include the options of well deepening, plugging back an existing well bore, adding laterals to address drainage situations, or recompleting existing wells, and removing the language “on nearby or adjacent lands” from the definition. The final rule modifies the “protective well” definition to provide for wells drilled “or modified” and by dropping the reference to nearby or adjacent lands. We agree with commenters that ways exist to protect the lease from drainage other than drilling new wells.

This section indicates the steps BLM will take to ensure the Federal Government and Indian lessors are compensated for drainage of mineral resources. The final rule differs from the proposed rule. We modified the question of this section to make clear that Indian lessees must protect the leased resources from drainage. We changed the language in this section from “wells draining oil or gas” to “wells draining mineral resources” to clarify the rule applies to other mineral resources. We deleted the phrase “on adjacent lands” from the rule text as unnecessary. We modified paragraph (a) to clarify we will consider applicable Federal, State, or Tribal rules, regulations, and spacing orders when determining which drainage protective action to take. We modified paragraph (b) to clarify that the Secretary may enter into agreements with owners of the draining well to compensate for drainage of leased or unleased Federal minerals or (in consultation with the Indian mineral owner and BIA) leased or unleased Indian minerals. We also deleted the reference to “Federal lands.” We modified paragraph (c) to clarify we may offer for lease any qualifying unleased mineral resources under part 3120 and deleted the phrase referring to “offering unleased lands” from the rule text. We added paragraph (d) to conform to the provisions of § 3181.5.

Some commenters suggested that we apply these regulations to “Federal minerals” instead of “Federal lands.” The final rule amends this section to clarify that these regulations apply to Federal minerals not Federal surface in a split-estate situation. The lessee of Federal minerals owes the duty of drainage protection and surface ownership is not relevant.

Some commenters questioned whether BLM found owners of an adjacent well willing to enter into a drainage compensation agreement. We have found owners in the past willing to enter into such agreements. This final rule implements the provision of Section 17 of the MLA on agreements to compensate the Federal Government for drainage.

One commenter wanted to know what we reported to Congress about drainage compensatory royalty agreements. We reported annually to Congress as required by statute until the reporting requirement was repealed in 1987.

Some commenters questioned the BLM's authority to communitize an unleased tract. The final rule clarifies if spacing precludes us from authorizing the drilling of a well on our land, as a mineral owner, we have the right to communitize an unleased tract with others in the spacing unit. We recognize that a mineral owner who does not contribute to drilling costs is subject to receiving a smaller share of production than if BLM were able to share in the costs of drilling a well.

A trade association suggested that BLM be required to notify prospective bidders that a sale tract was being drained and questioned the interest in bidding for such a tract. The final rule did not adopt this suggestion. We notify prospective bidders of drainage tracts in the oil and gas lease sale notices. In the past, there have been bidders who bid on such drainage tracts.

Some commenters expressed concern over whether BLM had authority to order operators to drill protective wells or to order the lessees to enter into communitization agreements without considering State spacing orders. These commenters suggested to BLM to include the following language “When determining which action to take, the BLM will give consideration to the existing State rules, regulations, and spacing orders.” The final rule modifies the language to adopt this suggestion. However, spacing determinations for Federal minerals are made by the BLM under 43 CFR 3162.2-2(a).

This section clarifies when lessees are responsible for protecting their leases from drainage. The final rule differs from the proposed rule. In response to comments, we modified this section to:

We also combined the provisions concerning drainage by wells in other units or communitization agreements.

This section provides a list of actions BLM may require a lessee to take to provide drainage protection. The final rule differs from the proposed rule. We modified the question to make clearer what we may require the lessee to do to protect leases from drainage. We modified paragraph (a) to include the language “drill or modify and produce all wells that are necessary to protect the leased mineral resources from drainage” and deleted the language “leased lands from drainage, subject to provisions of § 3100.70” to clarify that we refer to leased mineral resources not leased lands. We modified paragraph (b) to delete the cross reference to subpart 3105 and part 3180.

A commenter suggested that we give lessees the option of paying compensatory royalty rather than drilling a protective well because BLM is not authorized to require either communitization or the drilling of a protective well. The final rule does not represent a change from the previous regulations that require the BLM's consent to propositions to pay compensatory royalty in lieu of drilling protective wells. We agree that a lessee may have to estimate the compensatory royalties due to compensate Federal or Indian lessors for all drainage that has occurred, is occurring, or will occur; however, there is no guarantee that such compensation is adequate. Requiring payment of royalties on production from an economic protective well is the most effective way of ensuring that the amount of compensation that is due for drainage is accurate. Additionally, certain spacing and mineral ownership scenarios dictate well drilling for correlative right protection. We did not adopt the suggestion.

Some commenters expressed concern over whether lessees are liable for compensatory royalties if drainage involves an area in which BLM will not permit drilling due to a wilderness area, environmental reasons, or a no surface occupancy stipulation. In the final rule, we state a lessee who cannot, as a practical manner, drill a protective well for reasons not specified in the lease itself will not be required to pay compensatory royalties. The lessee will have an obligation to consider the feasibility of the other means of compliance: drilling directional or horizontal wells or entering into agreements with the owner of the well causing the drainage.

This section specifies that all record title holders are jointly and severally liable for paying compensatory royalties when more than one person owns record title interest in the same lease. Operating rights owners having an interest in the same lease are jointly and severally liable with one another and with the record title holders for the compensatory royalties attributable to drainage. The final rule is unchanged from the proposed rule.

Several commenters suggested that only operating rights owners with an interest in the mineral resources in the horizon or formation being drained are responsible for drainage protection. The final rule did not adopt the suggestion. Operating rights owners with interest only in other formations are not liable; but a sublease does not exempt any record title holder from liability. The record title holder has an interest in all horizons and formations and the sublease of operating rights does not diminish the record title holder's responsibility for compliance with all lease terms.

Several commenters suggested that the responsibility for drainage protection be imposed only on the operating rights owners and not on the record title holders. They argue that without operating rights, you have no right to drill a protective well. These commenters suggested we should not demand drainage protection from record title holders until we exhaust demands against the operating rights owners. The final rule continues the policy found at 43 CFR 3100.0-5 of the previous regulations which requires the lessee to retain the responsibility for complying with lease obligations when it subleases operating rights to another party. We do demand performance first of the designated operator who represents all parties with interest in the lease. It is the responsibility of the lessee who creates subleases of operating rights to make sure that the sublessee performs all lease obligations.

Some commenters suggested that joint and several liability for compensatory royalties is contrary to 30 U.S.C. 1712(a) as amended by the Royalty Simplification and Fairness Act. These commenters suggested that IBLA has recognized that joint and several liability for drainage protection or compensatory royalty is unfair. We do not know of any IBLA cases on this point. The provisions in 30 U.S.C. 1712(a) address lease obligations to pay money such as rentals and royalties. The duty to protect from drainage is not an obligation to pay money. Rather, it is the nonperformance of an obligation of diligent development for which we may assess compensatory royalties. Compensatory royalties are not true royalties payable on lease production. Rather, they are liquidated damages for nonperformance of the obligation. We measure damages by the royalty value of resources the lessee has allowed to be drained. Each party to a BLM or Indian lease makes the same promise as every other lessee and is responsible for full performance of those obligations, regardless of the inability of its co-lessees to share in the performance. A lessee may choose to pay compensatory royalty instead of drilling a protective well or we may assess compensatory royalties as damages if the lessee does not take direct protective action. However, this action does not make the drainage obligation a monetary one.

This section specifies the responsibility for drainage protection and compensatory royalties after assignment or transfer of operating rights. The final rule combines two sections of the proposed rule (3100.40 and 3100.45) to form § 3162.2-8. The final rule differs from the proposed rule. We modified the question of these two sections to read “Does my responsibility for drainage protection end when I assign or transfer my lease interest?” to specify the responsibility for drainage protection and compensatory royalties after assignment or transfer. We modified the section to address lessee obligations for drainage protection and payment of compensatory royalties after assignment or transfer.

One commenter suggested that it was not clear whether BLM is to assess compensatory royalty against an assignee for drainage that occurred before acquiring the interest. The final rule clarifies that as an assignee, your liability to pay compensatory royalties begins on the date you acquire the lease interest. We believe this rule makes clear that an assignee is not responsible for drainage that occurred before acquiring the lease interest.

Some commenters suggested that we include the following language in this section: “Your liability for paying compensatory royalties will begin a reasonable period of time after notice from the BLM or after a reasonably prudent operator knew or should have known that drainage was occurring. If you acquire your lease interest after this time, your liability to pay compensatory royalties begins the date you acquire the lease interest.” The final rule adopts the language “If you assign your record title interest in a lease or transfer your operating rights, you are not liable for drainage that occurs after the date we approve the assignment or transfer” in response to comments.

Some commenters suggested that BLM uses an undefined and arbitrary standard for when a prudent operator should have known when drainage began. These commenters believe that BLM sets an impossible compliance standard in drainage situations. The final rule clarifies when a prudent operator has constructive notice that drainage may be occurring under § 3162.2-6. When a lessee signs a lease, the lessee has agreed to protect the lessor (the United States or an Indian mineral owner) against drainage. Nothing in the lease terms conditions this obligation on BLM notifying lessees of drainage. We believe it is reasonable to expect that a lessee will:

(1) Evaluate the potential for drainage at the earliest time it can receive information about a well drilled on an adjacent lease; and

(2) Immediately consider the economic feasibility of taking protective action.

A commenter suggested that the responsibilities of an assignor for drainage should end the earlier of 30 days after an assignment is properly submitted to BLM or on the approval date. The final rule did not adopt this suggestion because we disagree with the commenter. In section 30a of the MLA, 30 U.S.C. 187a, it is clear that an assignor of a partial interest remains responsible for all lease obligations that accrued before BLM approved the assignment. We believe Congress intended not to release the assignor of accrued obligations upon assigning all record title interest.

This section clarifies when we deem a party with interest in a lease to have constructive notice that drainage may be occurring. The final rule is unchanged from the proposed rule except to change the order of the clauses in paragraph (b).

Some commenters suggested that we should not utilize the information in this section as constructive notice to lessees because such information does not reflect drainage occurrence. These commenters believe that lessees need enough time to evaluate production information from the well to determine if drainage is occurring. The final rule did not adopt the suggestion because IBLA has long recognized that a lessee may be on constructive notice of drainage. This final rule clearly defines what constitutes constructive notice of potential drainage (see § 3162.2-6) and allows the lessee to rebut the occurrence of drainage (see § 3162.2-9). It also allows a lessee to state that the information then available is not adequate to make a conclusive determination of drainage; but will continue to monitor the situation and make a further report at a later date (see § 3162.2-9(c)).

Several commenters suggested that a well completion report never gives enough information to determine if a well is capable of draining the minerals covered by the adjacent Federal lease. The commenters also suggested that drainage protection should not be required until sufficient production information is available to show potential drainage, including information adequate to determine the type of reservoir, the drive mechanism, the depletion rate, the permeability and porosity of the formation, and many other factors before you can determine if drainage is occurring. A commenter suggested that impressive initial production may not be sustained and encouraging drill stem results may be disproved by later well performance. Therefore, the rule should not use these items as a basis for constructive notice. The final rule did not adopt these suggestions. Well completion reports and first production reports from a draining well provide sufficient information to alert a prudent operator or lessee that drainage may be occurring. If the lessee does not have an interest in the draining well, the lessee is not required to take action to protect the lease from drainage until information sufficient to determine whether an economic well can be drilled becomes publicly available. Drill stem tests may be one factor used to determine well performance; but the lessee must gather other information as soon as it is available to determine whether to drill an economic well.

This section clarifies the duty of lessees and operating rights owners to monitor the drilling of wells in the same or adjacent spacing units and gather sufficient information to determine whether drainage may be occurring. The final rule differs from the proposed rule. We modified paragraph (a) to include the language “in the same or adjacent spacing units” and deleted the phrase “on adjacent lands” from the rule text to establish clear limits of responsibility on a lessee. We modified this section to change the words “offending well” to “draining well” to establish a clearer description of a well draining Federal or Indian mineral resources. Commenters suggested we modify paragraph (a)(1) to include the language “specify the amount of drainage from production of the draining well.” We modified paragraph (a)(3) to delete the cross reference to § 3100.50. We modified paragraph (b) to change the cross reference from “§ 3100.50” to “§ 3162.2-4” to clarify that an election of remedies is envisioned, not a detailed plan of action. We modified paragraph (c) to indicate that if you do not have sufficient information to comply, you must indicate when you will provide the information to BLM. We added paragraph (d) to clarify that you must provide BLM with the analysis within 60 days after we request it.

One commenter objected to requirements to monitor wells on adjacent lands and to gather information sufficient to determine whether drainage is occurring. The commenter suggested that such monitoring was impossible and the requirement would lead many to relinquish their Federal or Indian leases because such requirements prevent operators from having sufficient time to pursue exploration and production. As stated above, the final rule adopts a change to specify that you must monitor wells in the same or adjacent spacing units. This change better defines the area which a lessee and operating rights owner must normally protect from drainage. When a lessee undertook the duty to protect against drainage, the lessee agreed to be responsible for, and aware of, activities that might result in drainage of Federal or Indian oil and gas. In addition, the lessee is in a better position to obtain and interpret geologic and reservoir data than the BLM.

A commenter suggested that basing the prudent operator economic analysis on the facts at a time when the lease is owned by another party is an illegal retroactive application of a new law to events of years past. It is not. The rule only applies to those who acquire an interest hereafter. It will not change the prudent operator standard for those who already hold interests.

A commenter suggested that we should not apply these regulations to prior lessees unless the lessees or operating rights owners had an interest in the draining well or BLM notified them of potential drainage before they assigned their lease interest. The final rule did not adopt this suggestion. The final rule does not change the obligations of those who disposed of their interest before these regulations take effect. Under existing law, constructive notice triggers the obligation to protect against drainage. It is not necessary for BLM to notify the lessee of such drainage.

A commenter suggested that we should not require lessees to develop plans in all instances since the duty to take protective action arises only when drilling an economic well. The commenter also suggested that BLM be more concerned with the lessee taking protective measures rather than filing “useless” plans. The final rule did adopt a change in response to the comment. The final rule clarifies that operators need only inform BLM of the form of drainage protection they will provide, not a detailed plan. Further, the lessee must choose a remedy only when drilling a protective well is economic.

Some commenters suggested that the 60-day time period is unrealistic to provide BLM with drainage protection plans. These commenters indicated that much of the required information may be confidential or unavailable within 60 days. The final rule did adopt a change from this suggestion. We added paragraph (c) to this section to allow you to choose an appropriate schedule.

A commenter suggested that we replace “is” with the word “may be” prior to the word “occurring” in the first sentence. The final rule did not adopt this suggestion because the purpose of this section is to determine if you must protect the lease from drainage.

This section clarifies when BLM will provide a demand letter to lessees on drainage protection. The final rule is substantively unchanged from the proposed rule. Ordinarily, BLM will serve record title holders, operators, and operating rights owners.

A commenter suggested that the question might mislead operators into thinking that they may wait until they received the demand letter from BLM before taking action. The final rule was not changed in response to this suggestion. We disagree with the comment, because the rule clearly states that the duty of the lessee to take protective measures is not dependent on the BLM sending a demand letter.

Some commenters suggested that we retain the current regulations, which anticipate BLM sending a drainage demand letter. The final rule did not adopt this suggestion. The lessee has the duty to monitor and take protective action. IBLA already recognizes that a lessee may have constructive notice of drainage without a BLM demand letter. Significant Federal and Indian oil and gas resources may already be drained before the lessee receives BLM's demand letter. The lessee is in a better position than BLM to know whether drainage is occurring.

Some commenters expressed concern with BLM's demand letter time frame and the assessing of compensatory royalty damages. The lessee or operating rights owner is allowed a reasonable time from when the draining well establishes production to take protective action. Since there is no average reasonable time for every drainage situation, we will determine what is a reasonable time on a case-by-case basis.

This section clarifies the burden of proof in a drainage contest. BLM has the burden in a drainage contest of establishing a prima facie case that drainage is occurring. The burden then shifts to the lessee and operator to refute the existence of drainage, to prove the lessee could not have known of drainage or to prove that a protective well is not economic. The final rule is substantively unchanged from the proposed rule.

Some commenters expressed concern that lessees are at a distinct disadvantage in their ability to refute BLM's prima facie case that drainage is occurring. These commenters oppose shifting the burden of proof for drainage to the lessees. The final rule did not adopt this comment. Once we establish the existence of drainage and constructive notice, the lessee and operating rights owner under current precedent have the burden of proving that drainage has not occurred or that they could not have known of drainage. Under current precedent, the lessee and operating rights owner have the burden of proving that a protective well would not be economic.

BLM is also confident that we and IBLA will continue to fairly consider all geological and engineering data that the operator furnishes on the existence of drainage and will not hold lessees to an impossible standard of proof.

This section clarifies what is a reasonable time to take protective action after a draining well begins to produce oil or gas resources with the actual time determined on a case-by-case basis. The final rule differs from the proposed rule. We modified this section to delete these words “earliest,” “oil or gas,” “offending wells,” and “lands adjacent or nearby” to establish a clearer understanding of this section as commenters suggested. We changed the format and the leading sentences to the answer to form paragraph (a). We added paragraph (b) to clarify some of the factors we consider when determining whether the lessee took protective action within a reasonable time. We added paragraph (c) to clarify that if you take protective action but do not do so in a timely fashion, you are responsible for compensatory royalty for the period of the delay as provided in § 3162.2-12. In response to comments, we modified paragraph (d) to change the word “assessments” to “analysis,” which is a more accurate term.

A commenter suggested that we add “split estate” to the list of factors we consider in determining what might be a reasonable time to take protective action. The final rule did not adopt this suggestion. It is not practical to attempt to list all of the relevant data on cost and revenue in the regulation. Depending on the circumstances of each case, it may or may not require a different amount of time to take protective action where there is separate surface estate ownership.

A commenter suggested that it is impractical to interrupt an ongoing drilling schedule to drill an offset well. The final rule did not change in response to this comment. The lessee is obligated by its lease terms to take protective action. If the lessee does not want to interrupt its drilling schedule, it can request BLM's approval to pay compensatory royalty or communitize the lease with the tract containing the draining well.

Some commenters suggested that the title question of this section should read: “How soon must I take protective action?” The commenters also suggested that we delete the first sentence of the section. The final rule adopted the language to change the question to read “How soon after I know of the likelihood of drainage must I take protective action?” We adopted the suggestion to delete the first sentence of this section. We reformatted this section and formed new paragraphs (a) and (b). The lessee or operating rights owner is responsible for initiating action at a reasonable time after constructive notice that drainage is occurring.

Some commenters suggested that we establish a time frame for protection instead of the “earliest reasonable time.” These commenters also suggested that BLM provide specific guidelines or criteria for determining what is the “earliest reasonable time.” The final rule did not adopt the suggestion to establish a specific time frame. We deleted the word “earliest” because all reasonable time requirements vary greatly for each situation. We must determine the reasonable time on a case-by-case basis.

A commenter suggested that we include “time required for acquisition and evaluation of geological and/or geophysical data” in paragraph (b). The final rule adopted the language time required to evaluate the characteristics and performance of the draining well” for paragraph (b)(1), but did not include the geological/geophysical data.

This section describes the period of time for which the Department will assess compensatory royalties against a lessee or operating rights owner who does not drill and produce from a protective well or enter into a unitization or communitization agreement to protect the lease from drainage. The final rule differs from the proposed rule. We deleted the word “earliest” to establish a clearer time frame for which the Department will assess compensatory royalties against a lessee or operating rights owner. We deleted the cross reference to § 3100.60. In response to comments, we modified paragraph (a) to include the word “economic.” In response to comments, we modified paragraph (b) to change the language “the lands being drained” to “the mineral resources being drained” to clarify that we refer to mineral resources not lands. In response to comments, we modified paragraph (c) to change the phrase “ceases production” to “stops producing.” In response to comments, we modified paragraph (d) to change the language “the oil and gas lease interests in spacing units, lots, or aliquot parts of the Federal lands being drained” to “your interest in the Federal or Indian lease.”

A commenter suggested that we change the language to add “economic” before “protective” in paragraph (a) and add “until drainage ceases in the offending well” to paragraph (c). The final rule adopted a change to paragraph (a) to add the word “economic,” but not to paragraph (c). We did not change paragraph (c) because the duty to pay compensatory royalty stops when the draining well stops producing. The level of compensation required is based on determining the percentage of the draining well's overall production attributed to the lease with mineral resources being drained.

A commenter suggested that the obligation to pay compensatory royalty ends when the drilling of a protective well demonstrates insufficient production to recover drilling and operating costs. The final rule did not adopt this suggestion because it was unnecessary. No compensatory royalty is to be paid because drilling a protective well satisfies the obligation to protect against drainage. In the lease, the lessee has promised to protect the Federal or Indian lessor from drainage.

A commenter suggested that we change paragraph (d) to read “You relinquish the oil and gas lease interests in spacing units, lots, or aliquot parts in the geological horizon(s) of the Federal land being drained.” We do not recognize the division of record title by geological horizon(s). Therefore, we did not adopt that comment.

This section, as in the proposed rule, states that you do not have to take action under § 3162.2-4 if you can demonstrate that it is not possible to do so and get a reasonable profit above the cost of drilling, completing, and operating the protective well. The final rule differs from the proposed rule. We modified the question of this section to read “Must I take protective action when a protective well is uneconomic?” We modified the first sentence to change the language “will not assess you compensatory royalty” to “you are not required to take any of the actions listed in § 3162.2-4” to establish a clearer understanding of when a lessee does not take action for drainage protection.

This section informs an assignee or transferee that if they acquire a lease being drained, they will be assessed compensatory royalty for all drainage obligations accruing on and after the approval date of the assignment of record title or transfer of operating rights. The final rule is substantively unchanged from the proposed rule with the exception of including the word “Indian” to clarify that this section applies to Indian assignees or transferees.

A commenter suggested that we notify an assignee or transferee of a lease interest that is subject to drainage and the obligation to pay compensatory royalty or drill a protective well. The final rule did not adopt this suggestion because a prudent purchaser of a lease interest should examine the lease file prior to purchase. After BLM approves an assignment of record title or transfer of operating rights, the assignee or transferee assumes all lease obligations including the obligation to protect the lease from drainage.

This section indicates that a lessee or operating rights owner may request BLM State Director review as outlined in 43 CFR 3165.3, and appeal to IBLA as outlined in 43 CFR Parts 4 and 1840, a BLM decision to require drainage protective measures. The final rule includes language that a lessee or operating rights owner may request for a BLM State Director review. This language was omitted in the proposed rule in anticipation of a new appeals rule.

This section specifies that an assignor or transferor remains responsible for all obligations accruing prior to the approval of the assignment or transfer, including the payment of compensatory royalties for drainage and the plugging and abandonment of any unplugged wells drilled or used prior to the effective of the transfer. The final rule differs from the proposed rule. We modified this section to change the question to read “If I transfer my lease, what is my continuing obligation?” to better reflect that the purpose of the section is to inform the lessee of its continuing obligations. Also, we reformatted the section to make it easier to understand.

A commenter suggested that we recognize the terms of assignment agreements that specify which responsibilities are assigned or transferred. The final rule did not adopt this suggestion because we cannot be bound by agreements to which we are not a party.

A commenter suggested that we clarify that the assignee merely assumes reclamation responsibilities and not all wells must immediately be plugged when we approve the assignment. The final rule did not adopt this suggestion. We do not believe that the rule implies otherwise. If additional beneficial uses for the wells exist, you do not need to plug the wells immediately.

Some commenters suggested that the original lessee or operator should not be responsible for plugging and abandoning when control and all obligations have been conveyed to other parties. The final rule did not adopt this suggestion. While we first look to the current lessee for lease compliance, we believe it prudent to reserve our rights against all parties who had the potential to benefit from the well's existence.

This section informs a transferee of its obligations to comply with the original lease terms, including plugging and abandonment of unplugged wells, reclaiming the lease site, remediating environmental problems in existence which should have been known at the time of assignment, as well as maintaining an adequate bond to ensure performance of those responsibilities. The final rule differs from the proposed rule. We modified this section to add paragraphs (a) and (b) to differentiate between record title holders and operating rights owners.

This section adds a requirement that where more than one party holds record title interest in the same lease, all such parties must sign the relinquishment form. In addition, all parties relinquishing the lease are still responsible for settling all outstanding lease obligations, including placement of all wells on the lease in proper condition for suspension or abandonment, and for reclaiming leased land in accordance with an approved plan. The final rule is substantially unchanged from the proposed rule. In response to comments, we deleted the phrase “leased land” in the rule text.

This section amends the cross reference of these provisions. The final rule amends the cite to read “§ 3162.2.”

This section adds “lessees” to the persons who must satisfy the requirement of drilling and producing operations related to drainage. The final rule differs from the proposed rule. We modified this section to consolidate the previous drainage requirements of Part 3100 with those of Part 3160. We also modified this section to remove paragraph (a) and to redesignate current paragraphs (b) and (c) as paragraphs (a) and (b).

A commenter suggested that we should not require the lessees to have the same development responsibilities as the operating rights owners if they are not the same entity. The final rule did not adopt this suggestion because we must ensure that if either party is negligent in its responsibilities, we have a recourse by holding the other party responsible for fulfilling the lease obligations. A sublease does not relieve the lessee of the responsibility for lease performance.

This section adds “lessee” to the list of parties notified by BLM in the case of an alleged violation of the lease or regulations pertaining to operations on an oil and gas lease. The final rule differs from the proposed rule. We modified this section to add the phrase “and the lessee(s)” after “appropriate party” in the first sentence of paragraph (a) to clarify that we will notify lessees of alleged violations of the lease or regulations.

This section adds a provision specifying that an appeal of BLM's determination of drainage does not stay the determination and that compensatory royalties and interest will accrue during the appeal. The final rule is substantively unchanged from the proposed rule.

In accordance with the criteria in Executive Order 12866, this rule is not a significant regulatory action and is not subject to review by the Office of Management and Budget (OMB).

(a) This rule will not have an annual economic effect of $100 million or adversely affect an economic sector, productivity, jobs, the environment, or other units of government. Since fiscal year 1996, the drainage protection program has generated an average of about $16.1 million to the U.S. Treasury per year, with about 10 percent of these revenues attributed to compensatory assessments. These revenues are from payments by lessees and operating rights owners obligated to pay royalties and compensatory royalties under the drainage protection program. The adoption of this final rule could result in the generation of additional revenues from compensatory royalty assessments, royalties from the drilling of new protective wells, and royalties from entering unitization or communitization agreements totaling about $2 million. This is far below the $100 million threshold set out in the Executive Order.

(b) This rule will not create inconsistencies with other agencies' actions. This rule does not change the relationships of the drainage protection program with other agencies' actions.

(c) This rule will not materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients. This final rule clarifies ambiguities in the existing regulations and does not add new requirements to protect the lessor from drainage to those in the lease itself or impose new obligations on lessees and operating rights owners. Since the final rule merely clarifies how a lessee meets the terms in the lease that created their property interest, and imposes no limits on the use of the property, there will be no rights or obligations impaired as a result.

(d) This rule will not raise novel legal or policy issues.

Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as amended (5 U.S.C. 601-612), to ensure that government regulations do not unnecessarily or disproportionately burden small entities. The RFA requires a Regulatory Flexibility Analysis if a rule has a significant economic impact, either detrimental or beneficial, on a substantial number of small entities. The Department certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). A Regulatory Flexibility Analysis and a Small Entity Compliance Guide are not required. This final rule does not produce an impact of $100 million or more on the economy. Its initial annual impact is estimated at $20.2 million or about one-third of one percent of revenues generated by oil and gas leases. Our estimate on the drainage liabilities is based on the average yearly amount of revenues recovered by BLM from successfully retired drainage cases. These revenues include royalties on protective wells, compensatory royalty assessments, royalties generated through protective agreements, or bonus bid payments on unleased lands.

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 or more.

b. Does not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. This final rule would not affect costs or prices for consumers that are associated with the actions of this rulemaking.

The Department has determined that this final rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This final rule is not a major rule because annual total royalty revenues we anticipate receiving through drainage protections, including any increases as a result of these regulations, barely exceed $25 million.

We have determined that in accordance with the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501, et seq. ):

a. This rule will not “significantly or uniquely” affect small governments. A Small Government Agency Plan is not required. The final rule would not change the relationship between BLM and small governments.

b. This rule will not produce a Federal mandate of $100 million or greater in any year, i.e., it is not a “significant regulatory action” under the Unfunded Mandates Reform Act. This final rule does not impose an unfunded mandate on State, local, or tribal governments, or the private sector of more than $100 million per year. The final rule does not have a significant or unique effect on State, local, or tribal governments, or the private sector. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq. ) is not required.

We have considered the impact of this rule on the interests of Tribal governments under the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951) and Department of the Interior Manual (512 DM 2). BLM did consult with Indian Tribes, under Executive Order 13084, on the issue of whether these regulations should apply to Tribal and individual Indian oil and gas leases. This complies with Executive Order 13175 which takes effect on January 6, 2001. However, we have determined the government-to-government relationship will not be affected as a result of the consultation on the applicability of these regulations. This rule will enhance the protection of Indian oil and gas resource owners.

In accordance with Executive Order 12630, the final rule does not represent a government action capable of interfering with constitutionally protected property rights. A takings implication assessment is not required. The Department has determined that the final rule would not cause a taking of private property or require further discussion of takings implications under this Executive Order. Since the final rule merely clarifies how a lessee meets the terms in the lease that created their property interest, and imposes no limits on the use of the property, there will be no private property rights impaired as a result.

We have considered the effect of the final rule in accordance with Executive Order 13132 and have determined that it does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement. The final rule does 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 various levels of government.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that this final rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order. This final rule clarifies the drainage obligations of lessees and operating rights owners and ambiguities in the existing regulations.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection required by these regulations has been approved by the Office of Management and Budget under Approval No. 1004-0185 which expires May 31, 2002.

BLM has determined that this final rule is not subject to the review process established by the National Environmental Policy Act (NEPA) of 1969, since it is categorically excluded under 516 Departmental Manual (DM), Chapter 2, Appendix 1, Item 1.10, and 516 DM, Chapter 2, Appendix 2. We also determined that the final rule does not meet any of the ten criteria for exceptions to categorical exclusion listed in 516 DM, Chapter 2, Appendix 2. Pursuant to Council on Environmental Quality regulations (40 CFR 1508.4) and the environmental policies and procedures of the Department of the Interior, the term “categorical exclusion” means a category of actions that have been found not individually or cumulatively to have a significant effect on the human environment and in procedures adopted by a Federal agency for which neither an environmental assessment nor an environmental impact statement is required.

The environmental effects of this rule are too speculative or conjectural to lend themselves to meaningful analysis. Although this rulemaking requires that Federal lessees and operating rights owners protect their leases from drainage of oil and gas resources by producing wells on adjacent lands, there are several steps that must be taken before it is determined that an operator will take actions subject to NEPA review. The lessee must monitor well activities on adjacent lands, and then conduct an analysis of information available to determine if the adjacent well is too far away to be capable of draining the Federal lease. Even if draining the Federal lease, the lessee might be able to exercise options such as forming a unitization or communitization agreement with the owners of the draining well or paying compensatory royalties. These two options are exercised in more than 80 percent of the cases where there is economic drainage and a NEPA analysis is not required.

In about 10 percent of all drainage cases identified, it might be determined that drilling a protective well is the only option for protecting the lease from drainage. However, the lessee might prove that even if it drilled a protective well, it might not be economic. This is perhaps true in 75 percent of the cases where drilling a protective well is considered. If the lessee determines it can drill an economic protective well, then obtaining approval to drill the well is subject to a review under procedures established by BLM to comply with NEPA.

Authors : The principal author of this rule making is Donnie Shaw, Fluid Minerals Group, assisted by Shirlean Beshir, Regulatory Affairs Group.

Historically, railroads assess a track's ability to maintain gage through visual inspections of crossties and rail fastening systems. The maintenance decisions which determine crosstie and rail fastener replacement within the industry today rely heavily on those visual inspections made by maintenance personnel whose subjective knowledge is based on varying degrees of experience and training. The subjective nature of these inspections sometimes results in inconsistent determinations about the ability of individual crossties and rail fasteners to maintain adequate gage restraint.

Crossties may not always exhibit strong indications of good or bad condition. If a crosstie in questionable condition is removed from track prematurely, its maximum service life is unnecessarily shortened resulting in added maintenance costs for the railroad. Yet, crossties of questionable condition left too long in track can cause a wide-gage derailment with its inherent risk of injury to railroad personnel and passengers and damage to property. In many instances of gage failure caused by defective crossties and/or rail fasteners, the static or unloaded gage is within the limits prescribed by the Federal Track Safety Standards contained in 49 CFR part 213. However, when a train applies an abnormally high lateral load to a section of track which contains marginal crosstie or rail fastener conditions, the result is often a wide-gage derailment.

Statistics taken from the Federal Railroad Administration's (FRA's) Annual Accident/Incident Bulletins indicate that wide gage resulting from defective crossties and rail fasteners has been, and continues to be, the largest single cause of reportable track-caused derailments. In response to this problem, a long-standing joint FRA/industry research project has developed a non-destructive performance-based technology to objectively measure the gage restraint capacity of crossties and rail fasteners. The GRMS applies known lateral and vertical loads to the track structure, measures the gage deflection under those loads, and then projects what the gage would become under severe track loading conditions of 24,000 pounds lateral and 33,000 pounds vertical. From this data, a gage widening ratio is calculated as a measure of overall track strength.

In 1993, FRA granted CSX Transportation (CSXT) a waiver of compliance from portions of the Track Safety Standards so that it could conduct a test program to evaluate a GRMS performance-based standard. In lieu of implementing existing crosstie and rail fastener requirements, CSXT used FRA's research vehicle to judge track strength of nearly 500 miles of track in various segments. The experience gained from this test program has afforded FRA and the industry the opportunity to adjust the operational and conditional requirements of a GRMS program to make it a more consistent method of objectively determining crosstie and rail fastener effectiveness.

During the past several years, CSXT contracted for the design and construction of two GRMS vehicles which are in use over its system, including the waiver territory. The former Consolidated Rail Corporation used a GRMS vehicle over its system, and several other Class I railroads have expressed a serious interest in obtaining GRMS vehicles. FRA believes that the GRMS technology has now advanced to the point where railroads can use it to reliably assist in determining compliance with crosstie and rail fastener requirements contained in the Track Safety Standards.

On April 2, 1996, the Railroad Safety Advisory Committee (RSAC) agreed to provide advice and recommendations to FRA for revision of the Track Safety Standards. The RSAC then assigned that responsibility to a specialized working group comprised of approximately 30 representatives from labor, railroads, trade associations, state government groups, track equipment manufacturers, and FRA.

The Track Working Group met monthly from May, 1996, through October, 1996, to provide to FRA advice on the development of a draft Notice of Proposed Rulemaking (NPRM) to recommend to the RSAC. Although the Track Working Group discussed extensively the subject of GRMS, it was unable to reach consensus about how GRMS technology should be addressed in the revised Track Safety Standards. Representatives of the railroads had anticipated that the revised track standards would include a provision allowing railroads to use GRMS technology in place of inspection requirements already outlined in Part 213. Labor representatives, however, expressed strong reluctance to agree to a change that could replace some of the discretion and judgment already allowed track inspectors. They expressed fear that the judgment of track inspectors would be overruled completely by GRMS technology.

At a public meeting on October 31, 1996, the Track Working Group presented its proposed rule to the RSAC. The proposed rule did not include a provision for GRMS. The RSAC therefore appointed a small task group to evaluate the possibility of developing GRMS standards to be added to the revised Track Safety Standards at a later time.

The proposed rule, based on recommendations received from the Track Working Group, was approved by a majority consensus of the RSAC, which in turn, recommended the proposal to FRA for adoption. On July 3, 1997, FRA issued an NPRM largely based upon that proposal. See 62 FR 36168. FRA conducted a public hearing and received mostly favorable comments from 12 respondents. On June 22, 1998, FRA issued a final rule, based upon its NPRM and the comments it received in response. See 63 FR 33992. Both the NPRM and the final rule identified and discussed the relevant issues concerning GRMS.

A specialized Task Group met five times from June 1997, through February 1998, to advise FRA on regulatory language which addresses the use of GRMS technology for possible inclusion into the Track Safety Standards. The Task Group was comprised of approximately 12 representatives from labor, railroads, trade associations, state government groups, the Department of Transportation's Research and Special Programs Administration, and FRA. A member of the National Transportation Safety Board also participated in an advisory capacity.

The Task Group discussed at length whether GRMS technology should replace, or merely supplement, traditional inspection methods and the requirements for crossties and rail fasteners. Representatives of labor organizations argued that the technology should be used in conjunction with traditional inspection methods and existing requirements. Representatives of railroad management argued that GRMS technology should more than supplement existing standards because the use of GRMS technology produces an objective determination of whether crossties are able to continue effectively maintaining adequate gage restraint, or are approaching the end of their service lives and must be replaced. In some cases, the traditional method of crosstie evaluation would not necessarily agree with the GRMS evaluation.

To resolve this disagreement, the Task Group agreed that a GRMS provision in the Track Safety Standards should provide for discretion of employees fully qualified under § 213.7 to use Portable Track Loading Fixtures (PTLFs) between GRMS inspections to make individual judgements about a track's ability to maintain gage. A PTLF is a hand-carried gage measuring device that exerts a lateral force between rails to test a track's ability to maintain gage under that pressure. Although the PTLF does not exert vertical force, as does the GRMS vehicle, it nevertheless functions as a surrogate measurement of track strength between inspections with the full-sized GRMS vehicle.

This amendment to the Track Safety Standards reflects the resolution reached by the Task Group. Under this amendment, railroads may designate track segments to be evaluated regularly by GRMS technology. Employees fully qualified under § 213.7 will use the PTLF as an additional analytical tool to determine compliance with the crosstie and fastener requirements. If a location passes the PTLF criteria, but the employee is uncomfortable with the condition of the track at that location, the employee retains the discretion to take additional remedial actions, such as placing slow orders at that location. On lines designated by the railroads to be evaluated by GRMS, FRA inspectors will determine compliance with the crosstie and fastener requirements solely on the basis of a PTLF measurement.

This amendment provides for two levels of compliance exceptions on track designated as GRMS track. This method closely follows the current procedures in effect on the CSXT waiver territory. First level exceptions are those locations which require the railroads to immediately place a 10 mph speed restriction, followed by verification and corrective action. Second level exceptions are those locations which do not appear to require immediate attention but must be monitored to ensure that they do not become defects before the next GRMS inspection.

The amendment also requires track owners to implement a formal training program for employees who are fully qualified under § 213.7 and whose territories are subject to the operation of a GRMS vehicle. The training program should provide affected employees with the necessary information to locate and verify GRMS defects, prescribe and record the appropriate remedial action, and provide specific instructions on the use and calibration of the PTLF.

In developing recommendations for inspection frequency requirements for GRMS, the Task Group considered such factors as class of track, amount of traffic, and whether or not the line is used for passenger transportation. In consideration of these varying factors, this amendment adopts a simplified but conservative approach by requiring annual GRMS inspections, not to exceed 14 months between inspections, on all line segments where the annual tonnage exceeds two million gross tons (MGTs) or where the maximum operating speed for passenger trains is more than 30 mph. On line segments where the traffic is two MGTs or less, and the maximum operating speed for passenger trains does not exceed 30 mph, the interval between inspections must not exceed 24 months. This longer inspection interval makes the technology more accessible to short lines which may not have the same equipment or financial resources available to the larger railroads.

Paragraph (a) provides for the implementation of a GRMS, supplemented by the use of a PTLF, to determine compliance with the crosstie and rail fastener requirements specified in §§ 213.109 and 213.127. Track owners electing to implement this technology must provide the appropriate FRA Regional Office with notification that specifically identifies the line segment(s) where GRMS will be used. The appropriate FRA office is the headquarters location for the FRA region in which the GRMS designated line segment is located.

The notification must be provided to FRA at least 30 days prior to the designation of any line segment which will be subject to the requirements of this section. Track owners must also provide FRA with at least 10 days notice prior to the removal of a line segment from GRMS designation.

This paragraph specifies what information track owners should include in their notifications to FRA about line segments designated for GRMS inspection. The information must include, at a minimum, the segment's timetable designation, milepost limits, track class, million gross tons of traffic per year, and any other identifying characteristics of the segment.

This paragraph describes minimum design requirements for GRMS vehicles. Track owners must submit to FRA sufficient technical data so that the agency can establish whether or not the track owner is in compliance with these design requirements. The paragraph requires that gage must be measured between the heads of the rail at an interval not exceeding 16 inches. The paragraph provides for design flexibility by establishing acceptable ranges for the lateral/vertical load ratio and the resulting lateral load severity, both of which can be satisfied by various load configurations, provided that the applied vertical load is not less than 10,000 pounds per rail.

The mathematical formulas prescribed in these paragraphs are to be used in the calculation of the Gage Widening Ratio (GWR) and the Projected Loaded Gage 24 (PLG 24). The accurate measurements of unloaded gage, GRMS loaded gage, and the lateral load applied are of critical importance because these measurements are used in the calculation of PLG 24 values and the values for GWR, values which comprise a direct measure of track strength. Therefore, to avoid any influence from adjacent loads, design requirements specify that the unloaded track gage must be measured by the GRMS vehicle at a point no less than 10 feet from any lateral or vertical load application. Loaded track gage measured by the GRMS vehicle shall be measured at a point no more than 12 inches from the lateral load application point.

The Task Group recommended that the loaded track gage measurement be taken at the point of application of the lateral load, as is the practice on existing in-service GRMS vehicles that use displacement transducers mounted on the instrumented wheelset. This final rule provides for the use of other gage measuring technologies, such as optical and laser gage measuring systems, by allowing the measurement of loaded gage to be taken no more than 12 inches from the lateral load application point.

GRMS vehicles must be also capable of producing strip chart traces of all the parameters specified in paragraph (l) of this section, as well as a printed exception report listing by magnitude and location all exceptions from these parameters. The exception report listing must be provided to the appropriate person designated as fully qualified under § 213.7 prior to the next inspection required under § 213.233 of this part.

The track owner is required to institute procedures that will ensure the integrity of data collected by the GRMS and PTLF systems. Track owners must maintain documented calibration procedures on each GRMS vehicle and make them available upon request from an FRA representative. FRA understands that common procedure is for GRMS systems to be calibrated at least once per day. Therefore, the rule requires that the procedures must specify that calibration is done at least once per day. Track owners must also develop and implement the necessary PTLF inspection and maintenance procedures so that the 4,000-pound reading is accurate within plus/minus five percent.

This paragraph recognizes the need for all persons designated as fully qualified under § 213.7 and whose territories are subject to the requirements of this section to receive training on the implementation of GRMS technology. The track owner, therefore is required to develop a formal GRMS training program which must be made available to FRA upon request.

The training program must provide detailed instruction on the specific areas identified in this paragraph. In particular, the training must address basic GRMS operational procedures, interpretation and handling of exception reports, how to locate and verify GRMS defects in the field, remedial action requirements to be initiated when defects are verified, how to use and calibrate the PTLF, and the recordkeeping requirements associated with the implementation of GRMS technology.

This paragraph specifies the parameters and threshold levels to be reported as a record of lateral restraint following an inspection by a GRMS vehicle. The regulation requires that two levels of exceptions are reported during the GRMS inspection. Specific remedial actions are required for each level, as identified in the Remedial Action Table in this section. First Level exceptions are required to be immediately protected by a 10 mph speed restriction until verification and corrective action can be instituted. Second Level exceptions are to be monitored and maintained within the PTLF criteria outlined in paragraph (m) of this section.

Footnote 2 in the Remedial Action Table of this section recognizes that typical good track will increase in total gage by as much as 1/4 inch due to outward rail rotation under GRMS loading conditions. Accordingly, for Class 2 and Class 3 track, the GRMS loaded track gage values are also increased by 1/4 inch to a maximum of 58 inches. GRMS loaded track gage values in excess of 58 inches must always be considered First Level exceptions. This 1/4 inch allowance in gage applies only to GRMS loaded gage, and does not apply to PTLF gage measurements or to measurements made by more traditional methods.

Paragraph (m) describes the manner in which a PTLF must be used as an additional analytical tool, between GRMS inspections, to assist fully qualified § 213.7 individuals in determining compliance with the crosstie and rail fastener requirements specified in §§ 213.109 and 213.127. At locations identified by a GRMS record of inspection, or at any other location along the track, compliance with the crosstie and rail fastener requirements will be demonstrated when a PTLF is applied and (1) the total gage widening at that location does not exceed 5/8 inch when increasing the applied force from 0 to 4,000 pounds, and (2) the gage of the track measured under 4,000 pounds of applied force does not exceed the allowable gage prescribed in § 213.53(b) of this section for the class of track involved. Gage widening in excess of the 5/8 inch must constitute a deviation from Class 1 standards.

At locations where compliance with the crosstie and rail fastener requirements have been demonstrated through the use of a PTLF, a fully qualified § 213.7 individual retains the discretionary authority to prescribe additional remedial actions, such as the placement of speed restrictions, if the individual deems it necessary. FRA inspectors will determine compliance with the crosstie and fastener requirements solely on the basis of the PTLF measurements.

When a functional PTLF is not available to a fully qualified § 213.7 individual during a scheduled inspection under § 213.233 of this part, the track owner must repair or replace the PTLF prior to the next inspection required under § 213.233, or crosstie and rail fastener compliance will be based solely on the requirements specified in §§ 213.109 and 213.127.

At locations where crosstie or rail fastening compliance is questioned and vertical loading of the track structure is necessary to restore contact with the lateral rail restraint components, the crossties must be raised until lateral restraint contact is restored and a PTLF measurement must then be made.

The track owner must maintain a record of the two most recent GRMS inspections at locations meeting the requirements specified in § 213.241(b). The records must indicate the location and nature of each First Level exception and, the nature and date of initiated remedial action, if any, for each First Level exception. First Level exceptions are described in the Remedial Action Table in Paragraph (l).

The track owner is not required to maintain records of Second Level exceptions. However, as required in paragraph (i), reports of all exceptions, including Second Level exceptions, must be provided to the appropriate fully qualified § 213.7 individuals prior to the next inspection required under § 213.233. Second Level exceptions are also described in the Remedial Action Table in Paragraph (l).

On line segments where the annual tonnage exceeds two million gross tons, or where the maximum operating speeds for passenger trains exceeds 30 mph, GRMS inspections must be performed annually, with no more than 14 months between inspections. The maximum interval of 14 months is intended to provide some flexibility for scheduling when it may not be possible to schedule annual inspections within the same calendar month each year.

On line segments where the annual tonnage is two million gross tons or less and the maximum operating speed for passenger trains does not exceed 30 mph, the interval between GRMS inspections cannot exceed 24 months. This extended frequency is an attempt to make the technology more accessible to short line operators who may not have the financial or equipment resources available to larger railroads.

This list of definitions is offered to provide explanation of terms that are essential to the implementation of GRMS technology.

This final rule has been evaluated in accordance with existing policies and procedures. The final rule amending the Track Safety Standards is considered to be non-significant under both Executive Order 12866 and DOT policies and procedures (44 FR 11034, February, 26, 1979). FRA has prepared and placed in the docket a regulatory analysis addressing the economic impact of the rule. Document inspection and copying facilities are available at 1120 Vermont Avenue, N.W., Seventh Floor, Washington, D.C. Photocopies also may be obtained by submitting a written request to the FRA Docket Clerk, Office of Chief Counsel, Federal Railroad Administration, 1120 Vermont Avenue, NW., Mail Stop 10, Washington, DC 20590.

Ordinarily, in conducting an analysis of the costs and benefits of a proposed or final rule, FRA gathers more extensive economic data than was made available in this proceeding. However, in light of the consensus in the GRMS Task Group, the Track Working Group, and the majority vote of the RSAC members, FRA does not believe more data is necessary. FRA has relied principally on the recommendations and experience of the railroad industry and labor representatives who, through the RSAC process, helped develop this rule. The GRMS Task Group members provided valuable non-quantitative data on their preferences. Thus, their unanimous consensus on the contents of the rule allows FRA to conclude that the rule is cost beneficial.

The main benefit of GRMS technology is that a railroad can improve safety by replacing ties that are not providing lateral restraint, and leave in service ties that may not look good but are providing adequate lateral restraint. The railroads using a GRMS will probably replace fewer ties initially, but by objectively determining through performance testing which ties need to be replaced, will be better able to ensure that existing ties will provide adequate lateral restraint. The primary reduction in costs to the railroad would result from a reduction in the number of ties replaced. In addition, the railroads would benefit from reduced accident costs and lower maintenance costs in attempting to maintain the geometry of track. The Association of American Railroads (AAR) estimates employment of a GRMS would reduce the requirement for new ties by 600,000 per year in the early years, although this benefit is likely to later shrink somewhat due to the finite life expectancy of crossties which a GRMS cannot extend. At $40 per tie, the benefit to the industry would be about $24 million in the first year. The 20-year discounted net present value would be about 10 times that amount, or $240 million, assuming some later shrinkage in the benefit and a seven percent discount rate. Assuming there are approximately 200,000 miles of track in the Nation, and each mile includes approximately 3,300 crossties, FRA believes this projection is reasonable.

A GRMS also provides a safety benefit. Wide gage derailments cost the railroad industry about $60 million per year. If GRMS can reduce the number of wide gage derailments by half, the railroad industry will save $30 million per year. The 20-year discounted benefit would be approximately 10 times that amount, or $300 million, assuming systemwide adoption of a GRMS.

This final rule provides the use of a GRMS as an option. It is not mandatory. Therefore, a railroad will not implement a GRMS unless the railroad believes that the benefit of the system will exceed its cost. A GRMS vehicle costs approximately $3 million. About 10 of them would be needed nationwide to test all of the railroads. Therefore, the cost of the vehicles to the railroad industry would be $30 million. The costs of operating a GRMS is approximately $300,000. The 20-year discounted cost therefore would be $3 million. In addition, the railroad industry would need approximately 1,000 PTLFs. At a cost of about $1,200 each, the total cost to the industry for PTLFs would be approximately $1.2 million.

In addition to the equipment costs, railroads would expend about $800 each to train track inspectors on the use of PTLFs. Assuming one track inspector per PTLF, the cost to the railroad industry for training would be $800,000. The total initial investment by the railroad industry, including equipment and training, would be $32 million.

Assuming maintenance costs about 10 percent of the initial investment, and maintenance most likely would not be needed the first year, the 20-year discounted cost of maintenance would be about nine times 10 percent, or 90 percent of $32 million: $28.8 million. Thus the total 20-year discounted cost would be about $60.8 million.

This non-mandatory provision for use of GRMS could return as much as $540 million in discounted benefits to the railroad industry, at a discounted cost of only $60.8 million, assuming GRMS procedures are adopted nationwide. The railroad industry will most likely gain financially while improving safety.

This final rule has been analyzed according to the principles of Executive Order 13132 (“Federalism”). The GRMS Task Group which developed this amendment to the Track Safety Standards included a representative of the American Association of State Highway and Transportation Officials (AASHTO). In addition, the task group included railroad and labor union representatives who operate in a number of different states. As far as FRA has been able to discern, there are no states which require, provide for, or otherwise regulate the use of GRMS procedures for inspecting and maintaining track gage. Therefore, this amendment to Part 213 does not have any federalism implications.

This amendment to the Track Safety Standards provides for an alternative option for railroads to use in evaluating gage restraint capabilities of track. The use of a GRMS is not mandatory. Therefore, FRA concludes that this amendment will have no measurable impact on small units of government, businesses, or other organizations. FRA certifies that this amendment does not impose a significant economic impact on a substantial number of small entities. Therefore, the preparation of a Regulatory Flexibility Analysis is not required in accordance with 5 U.S.C. 605(b).

Because an analysis under the Regulatory Flexibility Act is not required for this amendment to the Track Safety Standards, FRA is likewise not required to issue a Small Entity Compliance Guide to summarize the requirements of this rule, pursuant to section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 601 et seq. ).

The information collection requirements in this amendment have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq. The sections that contain the new information collection requirements of the new section, which will be added to those of the Track Safety Standards (49 CFR Part 213), and the estimated time to fulfill each requirement are as follows:

All estimates include the time for reviewing instructions, searching existing data sources, gathering or maintaining the needed data, and reviewing the information. Pursuant to 44 U.S.C. 3506(c)(2)(B), the FRA solicits comments concerning: whether these information collection requirements are necessary for the proper performance of the function of FRA, including whether the information has practical utility; the accuracy of FRA's estimates of the burden of the information collection requirements; the quality, utility, and clarity of the information to be collected; and whether the burden of collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology, may be minimized. Information or a copy of the paperwork package submitted to OMB may be obtained by contacting Robert Brogan, Federal Railroad Administration, Office of Safety Analysis, at 202-493-6292.

FRA believes that soliciting public comment will promote its efforts to reduce the administrative and paperwork burdens associated with the collection of information mandated by Federal regulations. In summary, FRA reasons that comments received will advance three objectives: (1) Reduce reporting burdens; (2) ensure that it organizes information collection requirements in a “user friendly” format to improve the use of such information; and (3) accurately assess the resources expended to retrieve and produce information requested. See 44 U.S.C. 3501.

Comments must be received no later than March 12, 2001. Organizations and individuals desiring to submit comments on the collection of information requirements should direct them to Robert Brogan, Federal Railroad Administration, Office of Safety Analysis, Mail Stop 17, 1120 Vermont Ave., NW., Washington, DC 20590.

OMB is required to make a decision concerning the collection of information requirements contained in this proposed rule between 30 and 60 days after publication of this document in the Federal Register . Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication.

FRA cannot impose a penalty for violating information collection requirements on persons who do not display a current OMB control number, if required. FRA intends to obtain current OMB control numbers for any new information collection requirements resulting from this rulemaking action prior to the effective date of a final rule. The OMB control number, when assigned, will be announced by separate notice in the Federal Register .

FRA has evaluated this amendment to the Track Safety Standards in accordance with its procedures for ensuring full consideration of the potential environmental impacts of FRA actions, as required by the National Environmental Policy Act (42 U.S.C. 4321, et seq. ) and related directives. This amendment meets the criteria that establish it as a non-major action for environmental purposes.

The 1994 Amendments to the MMPA (section 104(c)(5)(A)) allow for the issuance of permits to import sport-hunted polar bear trophies from Canada when we can make certain legal and biological findings. On February 18, 1997, we published regulations in the Federal Register (62 FR 7302) that established standards for the issuance of permits to allow the import of sport-hunted polar bear trophies (50 CFR Part 18.30). It made aggregate findings applicable for multiple harvest seasons for five populations, including M'Clintock Channel, as follows: (a) Canada has a sport-hunting program that allows us to determine before import that each polar bear was legally taken; (b) Canada has a monitored and enforced program that is consistent with the purposes of the 1973 International Agreement on the Conservation of Polar Bears; (c) Canada has a sport-hunting program that is based on scientifically sound quotas ensuring the maintenance of the affected population stock at a sustainable level for certain populations; and (d) the export of sport-hunted trophies from Canada and their subsequent import into the United States would be consistent with CITES and would not likely contribute to illegal trade of bear parts. A subsequent final rule on January 11, 1999 (64 FR 1529), made aggregate findings that approved two additional populations.

In Canada, management of polar bears has been delegated to the Provinces and Territories. However, the Canadian Wildlife Service, Canada's national wildlife agency, maintains an active research program and is involved in the management of populations that are shared between jurisdictions, particularly between Canada and other nations. In addition, Native Land Claims have resulted in Co-Management Boards for most of Canada's polar bear populations. The Federal/Provincial/Territorial Polar Bear Technical Committee (PBTC) and Polar Bear Administrative Committee meet annually to ensure a coordinated management process between these parties.

The basis of the Government of Northwest Territories (GNWT) and Government of Nunavut (GNUN) polar bear management program is that the human-caused killing of polar bears (e.g., harvest, defense, or incidental) must remain within the sustainable yield, with the anticipation of slow growth for any population. The program has several components including: (a) Use of scientific studies to determine and monitor changes in population size and establish population boundaries; (b) involvement of the resource users and incorporation of traditional knowledge to enrich and complement scientific studies; (c) harvest data collection and a license tracking system; and (d) enforcement measures through regulations and management agreements.

Regulations and management agreements between the GNWT, GNUN, and Native land claim beneficiaries provide the rules for polar bear harvest in the Northwest Territories (NWT) and Nunavut. Sport hunting of polar bears is presently legal only in NWT and Nunavut and includes additional requirements. All sport hunts must be conducted under Canadian jurisdiction and guided by a Native hunter. In addition, transportation during the hunt must be by dog sled, the tags must come from the community quota, and quota tags from unsuccessful sport hunts may not be used again. All bears taken by sport hunters must be accounted for within existing quota tags. Not all communities participate in sport hunting as it reduces hunting opportunities for local hunters. You should refer to the February 18, 1997 (62 FR 7302), and January 11, 1999 (64 FR 1529), rules for more extensive information on Canada's polar bear management program.

As described in our February 18, 1997 (62 FR 7302) final rule, in the mid-1970s, Canada estimated the M'Clintock Channel population to be 900 polar bears based on a 6-year mark-recapture population study. Subsequently, local hunters advised that 700 might be a more accurate estimate. However, we note that new information submitted to us by Canada indicates the 1978 population inventory estimate was 350 bears and that it was revised upward to 700 based on the belief that the initial estimate was too low. Under a Local Management Agreement between Inuit communities that share this population, the harvest quota for this area was revised to levels expected to achieve slow growth based on the population estimate of 700 polar bears. Although Canada considered the population estimate information as poor, we approved this population since Canada, in conjunction with the local communities, agreed to the reduction (from 900 to 700) in the population estimate, hunting had been at a 2 male to 1 female sex ratio for several years, and there was a management agreement in place.

Canada initiated a new study of the polar bear population in M'Clintock Channel in 1998 to assess the population size currently being used to calculate harvest quotas. At the 2000 PBTC meeting, the GNUN presented preliminary results of the mark-recapture analysis based on data collected during 1998 and 1999. Although cautioning that the results were incomplete, the polar bear managers estimated that the newly revised population size for the M'Clintock Channel population was between 360 and 390 bears, considerably lower than the previous estimate of 700. The GNUN considered the reliability of the new estimate “poor;” and noted that a more accurate estimate was to be calculated following the end of the 3-year mark-recapture study.

Following the end of the study in 2000, the GNUN provided us with preliminary results based on data collected in 1998, 1999, and 2000. The recalculated population estimate of polar bears in M'Clintock Channel is between 238 and 399 bears, with 288 as the best estimate. Based on this updated estimate, the GNUN recalculated the maximum sustainable harvest that would sustain the population at its current level, with no population growth, at 8 bears per year (4 males and 4 females). The current quota is 32 bears (22 males and 10 females). The GNUN is currently reconstructing age data from polar bear teeth that will be used to calculate survival estimates which is expected to result in a more accurate population estimate. The analyses are expected to be completed by the beginning of 2001 and presented at the PBTC Meeting in February 2001.

The GNUN indicates that at the current rate of harvest, the population is declining and would be reduced to zero in 10 years. With no harvest, the population would increase at only 4 percent annually. Thus, recovery of this population will be slow and each year of over-harvest will delay recovery time by a minimum of 2 years. The GNUN will be evaluating future management goals for this population such as identifying a target population recovery level.

Canada has made no adjustment to quotas to reflect the new population information since polar bears are co-managed with local communities through agreements and any modification requires community consultation. Discussions with local communities to develop the best plan of action were recently completed. Community consultation is expected to result in a change in quotas. The GNUN anticipates that conservation measures will be implemented before further significant harvest in the population occurs. Although the hunting season in M'Clintock Channel opened August 1, 2000, except for defense kills, no harvest is expected to occur before February 2001. Sport hunts are typically conducted in the spring, between March and May. The hunting season is limited by factors such as the lack of sea ice, the number of daylight hours, and winter weather conditions.

Table 1 summarizes the polar bear harvest in the M'Clintock Channel population during the 1989/1990 to 1998/1999 harvest seasons. Sport harvest in M'Clintock Channel began in 1991 with no sport hunts conducted from 1992 through 1994. A total of 266 bears were harvested over the past ten years, ranging from an annual harvest of 17 to 37 bears. Of these bears, 52 (47 male, 4 female, 1 unknown) were sport hunted. As of December 31, 1999, a total of 48 import permits, including 3 pre-Amendment bears, had been issued for bears sport hunted from this population by U.S. citizens. Since the MMPA was amended in 1994 to allow for the import of certain sport-hunted trophies, the number of bears taken in sport hunts in M'Clintock Channel as a percentage of the total annual harvest has ranged from a low of 29 percent (1994/1995) to a high of 57 percent (1996/1997), and decreased to 41 percent in 1998/1999. The total harvest of polar bears for all purposes did not exceed the annual quota nor did sport hunting increase the number of bears taken annually over the past 10 years.

The GNUN estimates that females comprise 65 percent of the current sex ratio of the adult (age 3+) population in M'Clintock Channel. This suggests that the number of adult males has been reduced, so that any continuing harvest will likely be increasingly composed of adult females. Protection of the female component of the population was an important consideration in developing sustainable harvest limits. Any additional take of females will further prolong the recovery time for this population.

We are amending our import regulations to reflect that bears sport hunted in the M'Clintock Channel population after May 31, 2000, the close of the 1999/2000 Canadian hunting season, will no longer be eligible for import under the 1997 finding which approved this population for multiple harvest seasons. Any person who hunts in the M'Clintock Channel population after this date is taking a risk that he or she may never be able to legally import the polar bear trophy into the United States.

The Canadian Wildlife Service has provided us with new information for the M'Clintock Channel polar bear population which indicates that the population is severely depleted and current harvest quotas are unsustainable. The MMPA requires us to review the best scientific information available; if we receive substantial new information on a population, we must review it and make a new finding as to whether to continue to approve the population. The new information for the M'Clintock Channel population reveals that scientifically sound quotas ensuring the maintenance of the population at a sustainable level are not in place and that terms of the 1973 International Agreement on the Conservation of Polar Bears, that requires the Parties to “manage polar bear populations in accordance with sound conservation practices based on the best available scientific data” are not being met. The report also indicates that, even with remedial steps, the population will not likely recover for some time. Due to the dramatic change in population status, we are using an emergency interim rule to make the changes to our regulations effective immediately.

Under the Administrative Procedure Act (5 U.S.C. 551-553), our normal practice is to publish regulations with a 30-day delay in effective date. But in this case, we are using the “good cause” exemption under 5 U.S.C. 553(b) and (d)(3) to issue this rule without first invoking the usual notice and public comment procedure and to make this rule effective upon publication for the following reasons: (1) Official information submitted by the government of Canada shows that the M'Clintock Channel population no longer meets the import requirements of the MMPA, (2) as a matter of fairness to the regulated community it is necessary to put the public on notice immediately that bears sport hunted in the M'Clintock Channel population after May 31, 2000, the end of the 1999/2000 Canadian hunting season, will no longer be eligible for import under the finding which approved this population for multiple harvest seasons, and (3) it would be contrary to the public interest to maintain regulatory findings that purport to allow the importation of these polar bear trophies when those findings are no longer consistent with the MMPA.

After the 60-day comment period closes, we will consider all comments received, determine whether the emergency interim rule should be modified, and publish a final rule in the Federal Register . The final rule will include a discussion of any comments we receive and any amendments we are making to the rule as a result of the comments.

Besides restricting the importation of polar bears from the M'Clintock Channel population, we are updating our regulations at 50 CFR 18.30 to reflect that sport hunting of polar bears is legal in both the NWT and Nunavut Territory and that approved populations may now fall under either the GNWT and/or GNUN jurisdiction. Since the publication of the February 18, 1997 (62 FR 7302), and January 11, 1999 (64 FR 1529), final rules, the Nunavut Territory, formerly part of the NWT, officially joined the Federation of Canada on April 1, 1999. Prior to this, legal sport hunting of polar bears in Canada took place only in the NWT; now the majority of polar bear populations lie within or are shared with Nunavut. All GNWT legislative laws and agreements (including the polar bear management agreements) in place still stand in Nunavut. Inter-jurisdictional management agreements are being drafted or revised to reflect the change in government. Management agreements between participating communities and the GNWT and/or the GNUN (formerly part of GNWT), are still in effect for the approved polar bear populations as described in the February 18, 1997, and January 11, 1999, rulemakings. Management of polar bear populations now fall under the Department of Resources, Wildlife, and Economic Development (formerly the Department of Renewable Resources), GNWT, and/or the Department of Sustainable Development, GNUN.

Canada lifted its five-year harvest moratorium in the Viscount Melville Sound population effective August 1, 1999. This population was added to the list of populations approved for the import of sport-hunted polar bear trophies in our February 18, 1997 (62 FR 7302), rulemaking, subject to the lifting of the harvest moratorium. The GNUN/GNWT set the 1999/2000 annual harvest quota at four bears, with one female take allowed. We have received preliminary data on this population and will continue to coordinate with Canada on monitoring its status.

We invite comments on this interim rule from affected or concerned government agencies, the public, the scientific community, industry, environmental organizations, and any other interested party. We will consider all comments submitted to us by the deadline indicated above in DATES .

Our practice is to make comments, including names and home addresses of respondents, available for public review during normal business hours. Individual respondents may request that we withhold their home address from the rulemaking record, which we will honor to the extent allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

In accordance with the criteria in Executive Order 12866, this rule is not a significant regulatory action. The Office of Management and Budget (OMB) makes the final determination under Executive Order 12866.

This rule will not have an annual economic effect of $100 million or adversely affect an economic sector, productivity, jobs, the environment, or other units of government. A cost-benefit and economic analysis is not required. The economic effects of this rule will impact a relatively small number of U.S. sport hunters. Since the trophies are for personal use and may not be sold in the United States, there are no expected market, price, or competitive effects adverse to U.S. business interests, or to any small entity. Some incidental economic benefits received by the sports-hunting travel/airline, taxidermist, and sport-hunting industries are expected to remain unchanged by this interim rule. If an estimated 10 U.S. citizens hunted a polar bear in M'Clintock Channel, Canada each year at a total cost of $21,000 (US) for each hunt, then $210,000 would be expected to be spent, mostly in Canada. Because the small number of U.S. hunters that hunt for polar bears in M'Clintock Channel, Canada, are the only group affected by this rule, the fact that no commercial activity in bear products is involved, and the effect of such hunts for U.S. outfitters and transportation services is likely to be small, this interim rule is not expected to be a major rule and will not have a significant economic effect.

Although we are amending our import regulations to reflect that bears sport hunted in the M'Clintock Channel population after the close of the 1999/2000 Canadian hunting season will no longer be eligible for import under the 1997 finding which approved this population for multiple harvest seasons, there are 6 other populations, including Viscount Melville Sound, from which U.S. sport hunters will continue to be able to import legally hunted bears. Thus, we expect there will be no substantial loss to U.S. hunters. The revision of our regulations at 50 CFR 18.30 to include the new territory of Nunavut will have no economic effect as we are simply updating our regulations to reflect that populations approved for the import of sport-hunted polar bear trophies may now fall under either GNWT and/or GNUN jurisdiction.

b. This rule will not create inconsistencies with other agencies' actions. Since 1972, responsibility for implementing the MMPA has been split between two federal agencies. Acting on behalf of the Secretary, Department of the Interior, we have been delegated the MMPA authority for several species of marine mammals, including the polar bear. The National Marine Fisheries Service (NMFS) implements the MMPA authority of the Secretary, Department of Commerce for whales, dolphins, and most pinnipeds ( i.e., seals and sea lions). Currently, there are no special provisions in the MMPA for import of sport-hunted marine mammal species other than polar bear. Since the only federal agencies with authority for marine mammals are the NMFS and us, and the NMFS has not been delegated MMPA authority for this species and does not have any comparable action for other marine mammal species, this rule will not create inconsistencies with that agency's actions.

c. This rule will not materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients. The groups most affected by this rule are the relatively small number of U.S. sport hunters who would have chosen to hunt polar bear in the M'Clintock Channel population in Canada, and a comparatively small number of U.S. outfitters, taxidermists, and personnel who provide transportation services for travel from the United States to Canada. The revision of our regulations at 50 CFR 18.30 to include the new territory of Nunavut will have no effect as we are merely updating our regulations to reflect that populations approved for the import of sport-hunted polar bear trophies may now fall under either Government of Northwest Territories and/or Government of Nunavut jurisdiction. Similarly, the announcement of the lifting by Canada of a harvest moratorium in the Viscount Melville Sound population will also have no effect as this population was previously added to the list of populations approved for the import of sport-hunted polar bear trophies in our February 18, 1997 (62 FR 7302), rulemaking, subject to the lifting of the harvest moratorium.

d. This rule will not raise novel legal or policy issues. This interim rule is limited to the Service's review of new information obtained from Canada on one polar bear population previously approved for issuance of permits to import polar bear trophies personally sport hunted by U.S. residents. Under section 104(c)(5)(A) of the MMPA, before issuing a permit for the import of a polar bear trophy, we must make certain legal and scientific findings. In a previous rule published in 1997 [62 FR 7302], we put the public on notice that if we receive substantial new information on a population, we would review it and make a new finding, if necessary, after consideration of public comment. After reviewing the new information, we find that the M'Clintock Channel population no longer meets the import requirements of the MMPA. Due to the dramatic change in population status, we are using an emergency interim rule to make the changes to our regulations effective immediately. At the same time, we are soliciting comments and will consider those comments in issuing a final rule. The revision of our regulations at 50 CFR 18.30 to include the new territory of Nunavut will also not raise novel legal or policy issues as we are merely updating our regulations to reflect that populations approved for the import of sport-hunted polar bear trophies may now fall under either GNWT and/or GNUN jurisdiction. Similarly, we are merely announcing Canada's lifting of the harvest moratorium in the Viscount Melville Sound population, a population we previously added to the list of populations approved for the import of sport-hunted polar bear trophies in our February 18, 1997 (62 FR 7302), rulemaking, subject to the lifting of the harvest moratorium.

The Department of the Interior certifies that this rule will not have a significant economic effect on a substantial number of small entities as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). An initial Regulatory Flexibility Analysis is not required. Accordingly, a Small Entity Compliance Guide is not required. Based upon its analysis of the factors identified above, we have determined that no individual industries within the United States will be significantly affected and no changes in the demography of populations are anticipated. This rule involves the importation of polar bear trophies for personal, non-commercial use only, and therefore will have no effect on the commercial fur trade market. Polar bear sport hunting is not allowed within the United States. Therefore, sport hunting of polar bears in Canada can have no effect on polar bear sport hunts in the United States since such hunts are currently prohibited. For these reasons, and those described under the EO 12866 required determination above, we have, therefore, determined that the rule will not have a significant economic effect on a substantial number of small entities as defined in the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , and have determined that a small entity flexibility analysis study is not necessary.

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 or more. The economic effects of this rule will impact a relatively small number of U.S. sport hunters. A total of 50 polar bears have been taken in sport hunts from the M'Clintock Channel between 1995 and 1999 with a range of 5 to 16 bears taken per year; approximately 74% of sport hunters are U.S. citizens. The announcement of the lifting by Canada of a harvest moratorium in the Viscount Melville Sound population will have no economic effect as this population was previously added to the list of populations approved for the import of sport-hunted polar bear trophies in our February 18, 1997 (62 FR 7302), rulemaking, subject to the lifting of the harvest moratorium. Since the trophies are for personal use and may not be sold in the United States, there are no expected market, price, or competitive effects adverse to U.S. business interests, or to any small entity. The revision of our regulations to include the new territory of Nunavut will have no economic effect as we are merely updating our regulations to reflect the change in government jurisdiction for populations approved for the import of sport-hunted polar bear trophies.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The importation of polar bear trophies is for personal, non-commercial use only. The small benefits gained by U.S. outfitters and transportation services as U.S. hunters travel to Canada will most likely remain unchanged as most sport hunters will simply redirect their hunting efforts from the M'Clintock Channel to one of the 6 other approved populations. The revision of our regulations to include the new territory of Nunavut will have no effect as we are merely updating our regulations to reflect a change in government jurisdiction.

This rule will not have substantial direct effects on the States, in their relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government.

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. The groups most affected by this rule are the extremely small number of U.S. sport hunters who would have chosen to hunt polar bear in M'Clintock Channel, Canada, and a small number of U.S. outfitters, taxidermists, and personnel who provide transportation services for travel from the United States to Canada. The importation of legally taken sport trophies is still approved for 6 other populations from Canada, including Viscount Melville Sound, and it is anticipated that most sport hunters will simply redirect their hunting efforts to one of the 6 other populations. The revision of our regulations to include the new territory of Nunavut will have no effect as we are merely updating our regulations to reflect a change in government jurisdiction.

In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501, et seq. ):

a. This rule will not “significantly or uniquely” affect small governments. A Small Government Agency Plan is not required. This rule is limited to our review of new information obtained from Canada on one polar bear population that we previously approved for issuance of permits to import polar bear trophies personally sport hunted by U.S. residents. We are revising our regulations to include the new territory of Nunavut merely to reflect a change in government jurisdiction.

b. This rule will not produce a Federal mandate of $100 million or greater in any year, i.e., it is not a “significant regulatory action” under the Unfunded Mandates Reform Act.

In accordance with Executive Order 12630, the rule does not have significant takings implications. A takings implication assessment is not required. We have determined that the rule has no potential takings of private property implications as defined by Executive Order 12630, for the reasons described under the EO 12866 required determination above.

This rule will place the hunting community on immediate notice that our 1997 finding that approved the M'Clintock Channel population for multiple harvest seasons is no longer in effect after May 31, 2000, the end of the 1999/2000 Canadian hunting season. If hunters nonetheless proceed to take polar bears from this population after the emergency rule is published, they do so with full notice that the M'Clintock Channel population no longer meets the eligibility criteria set out in the MMPA for the issuance of import permits.

In accordance with Executive Order 13132, the rule does not have significant Federalism effects. A Federalism assessment is not required since the rule is limited to the importation of personal sport-hunted polar bear trophies for personal (non-commercial) use, only by the person who sport hunted the trophy.

This rule will not have substantial direct effects on the States, in their relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that the rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order. This interim rule is limited to our review of new information obtained from Canada on one polar bear population previously approved for issuance of permits to import polar bear trophies personally sport hunted by U.S. residents. Under section 104(c)(5)(A) of the MMPA, before issuing a permit for the import of a polar bear trophy, the Service must make certain legal and scientific findings. In a previous rule published in 1997 [62 FR 7302], the Service told the public that the findings that approved populations as published in the CFR are aggregate findings applicable in subsequent years. However, it also put the public on notice that if we receive substantial new information on a population, we would review it and make a new finding after consideration of public comment. After reviewing the new information, we find that M'Clintock Channel no longer meets the import requirements of the MMPA and are amending our regulations to reflect that bears sport hunted in this population after May 31, 2000, the close of the 1999/2000 Canadian hunting season, will no longer be eligible for import under the 1997 finding which approved this population for multiple harvest seasons. Due to the dramatic change in population status, we are using an emergency interim rule to make the changes to our regulations effective immediately. At the same time, we are soliciting comments and will consider those comments in issuing a final rule.

This regulation does not contain new or revised information for which OMB approval is required under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). The information collection associated with Federal Fish and Wildlife permits is covered by an existing OMB approval, and is assigned clearance number 1018-0093, Form 3-200-45, with an expiration date of February 28, 2001. Details of the information collection requirements for the import of sport-hunted polar bear trophies appear at Title 50 of the Code of Federal Regulations, Section 18.30(a). We may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

We have analyzed this rule in accordance with the criteria of the National Environmental Policy Act. The Department of the Interior has determined that the issuance of this action is categorically excluded under the Department's NEPA procedures in Part 516 of the Department Manual, Chapter 2, Appendix 1.10.

In accordance with the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951) and 512 DM 2, we have evaluated possible effects on Federally recognized Indian tribes and have determined that there are no effects. The rule is limited to our review of new information obtained from Canada on the M'Clintock Channel polar bear population. Polar bear sport hunting is not allowed within the United States. Therefore, sport hunting of polar bears in Canada can have no effect on polar bear sport hunts in the United States since such hunts are currently prohibited.

Executive Order 12866 requires each agency to write regulations that are easy to understand. We invite your comments on how to make this rule easier to understand, including answers to questions such as the following: (1) Are the requirements in the rule clearly stated? (2) Does the rule contain technical language or jargon that interferes with its clarity? (3) Does the format of the rule (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce its clarity? (4) Would the rule be easier to understand if it were divided into more (but shorter) sections? (5) Is the description of the rule in the “Supplementary Information” section of the preamble helpful in understanding the rule? What else could we do to make this rule easier to understand?

Send a copy of any comments that concern how we could make this rule easier to understand to: Office of Regulatory Affairs, Department of the Interior, Room 7229, 1849 C Street, NW, Washington, D.C. 20240. You may also email comments to: Exsec@ios.doi.gov

NMFS published final regulations implementing the HMS FMP on May 28, 1999 (64 FR 29090). Those regulations require all pelagic longline fishermen to report hourly using a NOAA-approved VMS. In June 1999, after the final regulations were published, a coalition of commercial pelagic longline fishermen and dealers sued the Secretary of Commerce, challenging, among other measures, the VMS requirements of the final rule. On September 25, 2000, Judge Richard W. Roberts, U.S. District Court for the District of Columbia, issued an order that found that there was inadequate evidence in the record to support fleet-wide application of the VMS requirements under national standards 7 and 8 of the Magnuson-Stevens Fishery Conservation and Management Act. The Judge indicated that “the Secretary failed to set forth a rational connection between the factual record and the choice to impose a blanket VMS requirement on all pelagic longline fishers, regardless of whether they are geographically located near a time/area closure....” Judge Roberts ordered that the agency further consider the scope of the VMS requirements in light of potential conservation benefits compared to costs.

In the biological and economic analyses of the HMS FMP that accompanied publication of the regulations, NMFS included information concerning fishery conservation benefits and the potential enforcement and communication benefits of VMS to both fishery managers and fishermen. Those benefits include increased communications for fishermen and real-time monitoring, which significantly improves enforcement of large offshore closed areas. For example, NMFS and the U.S. Coast Guard would be able to detect and to document unlawful incursions into closed areas. Without the VMS, such violations could only be detected with costly at-sea monitoring efforts. Monitoring the Atlantic pelagic longline fleet through the use of VMS would require only a small percentage of the cost of traditional surveillance methods.

NMFS did not include in its original analyses supporting the rulemaking all of the background information that has been used by NMFS and fishery managers and enforcement agencies world-wide as a standard for application of VMS requirements. Pursuant to Judge Roberts’ order, NMFS is now reviewing that background information and the results of VMS programs implemented in other fisheries around the world.

In addition, new circumstances that may influence NMFS’s consideration of the scope of VMS requirements have arisen since the final regulations were published in 1999. Specifically, on August 1, 2000, NMFS published regulations establishing three new closed areas to reduce bycatch and incidental catch in the pelagic longline fishery in the Gulf of Mexico and the Southeast Atlantic Ocean off the coasts of South Carolina, Georgia, and Florida. Also, on October 13, 2000 (65 FR 60889), NMFS established one more closed area in the North Atlantic Ocean to reduce the serious injury and mortality of threatened and endangered sea turtles incidentally caught in this fishery.

In addition to the fishing closures implemented under the HMS FMP and its Amendment 1, U.S. pelagic longline fishermen are also subject to closures in the Exclusive Economic Zones (EEZs) of other nations unless contractual arrangements have been made by vessel operators. Pelagic longline vessels are very mobile, with some vessels fishing in the South Atlantic Ocean (e.g., off the coasts of Namibia or Brazil). U.S. Atlantic pelagic longline vessels frequently traverse waters close to or within the EEZs of Canada, Mexico, the Bahamas, and other Caribbean nations on the way to high seas fishing grounds.

The United States supports recent international initiatives, including those undertaken by the International Commission for the Conservation of Atlantic Tunas (ICCAT) to eliminate illegal, unregulated, and unreported fishing activities. NMFS was recently informed at the 2000 ICCAT meeting that at least one U.S. longline vessel is fishing in the Mediterranean Sea. The fishing activities of that vessel have not been reported by that vessel to NMFS. Noting the obligation of every ICCAT Contracting Party to monitor the fishing activities of all vessels throughout the ICCAT management unit in order to comply with ICCAT conservation and management measures, it is clear that the United States must monitor pelagic longline activities ocean-wide.

NMFS also notes that VMS operating cost estimates have decreased by 25 to almost 50 percent since the HMS FMP economic analyses were completed. Currently, the cost of the VMS is approximately $1,800 to $3,800 per vessel for the initial purchase of the equipment, depending on which model is chosen by the vessel owner. Installation of the equipment could cost up to $1,000, and communication charges for required automated position reports range $1.00-5.00 per day. Repair and maintenance costs may approach $1,000 per year.

NMFS has considered mitigating costs to pelagic longline fishermen, but alternatives such as low-interest loans from the government and outright purchase by the agency were not adopted in the final regulations. The western Pacific pelagic longline VMS program was funded by the government as a pilot program solely for the purposes of testing the viability and effectiveness of VMS technology when utilized in longline fisheries. That study has been completed, and the study report is available from NMFS (See ADDRESSES ).

The VMS requirement is imposed fleet-wide in the western Pacific pelagic longline fishery due to the mobility of that fleet. The program is successful and meets the enforcement and monitoring needs of NMFS and the United States Coast Guard (USCG), such as near-real time detection of unlawful incursions into closed areas. Considering the experience in the Western Pacific pelagic longline pilot program, NMFS has pursued the use of VMS in several other U.S. fisheries. Installation of a VMS unit is now required at the vessel owners’ or operators’ expense in the Western Pacific crustacean fishery, the Atlantic sea scallop fishery, and the Alaska Atka mackerel fishery.

The Atlantic pelagic longline VMS program would allow NMFS and USCG to monitor vessel position on a real-time basis anywhere in the Atlantic Ocean. This is particularly important for enforcement of time/area closures due to the mobility of this fleet. While some pelagic longline vessels are small and do not venture far from shore, many vessels are large enough to follow the migrations of swordfish and other HMS up and down the east coast, through the Caribbean, or even into the Eastern Atlantic Ocean, South Atlantic Ocean, and Mediterranean Sea. In light of this information and the Court’s concerns regarding the necessity of a fleet-wide VMS program, NMFS is reconsidering the scope of the VMS program with respect to costs and benefits to the Atlantic pelagic longline fishery.

NMFS requests comments on alternatives for implementing VMS requirements in the Atlantic pelagic longline fishery. Specifically, NMFS requests comments on the scope of the program:

How can NMFS achieve the goal of effectively monitoring, on a real-time basis, the location of U.S. pelagic longline vessels?

Should NMFS apply VMS requirements fleet-wide in the Atlantic pelagic longline fishery in order to monitor all fishing activities?

Should NMFS impose VMS requirements only on certain sectors of the fleet based on geographic location of home port or other criteria?

Additionally, NMFS seeks input on the costs and benefits of a VMS program:

Should NMFS consider other alternatives for enforcing time/area closures and monitoring the fleet other than VMS and existing reporting strategies?

NMFS will consider comments received prior to the close of the comment period when responding to the Court. Send comments to NMFS at the specified location (see ADDRESSES ).

The VMS requirement specified at 50 CFR 635.69 initially was to be effective September 1, 1999. On August 9, 1999, NMFS delayed the effective date of this final rule until January 1, 2000 (64 FR 43101). On October 14, 1999, NMFS again delayed the effective date of this final rule until June 1, 2000 (64 FR 55633). NMFS further delayed the effective date of this final rule until October 1, 2000 (65 FR 49941, August 16, 2000). NMFS now stays indefinitely the effectiveness and implementation of §635.69, the VMS regulations, pending the Court’s ruling on the agency’s reconsideration. NMFS will notify the public at such time as the stay is removed and an implementation date is specified or the regulations are amended pursuant to the direction of the Court.