Section 245 of the Act (8 U.S.C. 1255) allows the Attorney General, in his discretion, to adjust the status of an alien who has an immigrant visa immediately available to that of a lawful permanent resident (LPR) while the alien remains in the United States in lieu of applying for an immigrant visa at a U.S. consular office abroad, if certain conditions are met. An alien must have been inspected and admitted or paroled, be eligible for an immigrant visa and admissible for permanent residence and, with some exceptions, have maintained lawful nonimmigrant status. The alien must not have engaged in unauthorized employment.

Section 245(i) of the Act (8 U.S.C. 1255(i)) allows certain aliens with an immigrant visa immediately available to them to apply to adjust status upon payment of a $1,000 surcharge, even though the alien entered the United States without inspection or does not meet the maintenance of status and authorized employment requirements of section 245(c) of the Act (8 U.S.C. 1255(c)). Section 245(i) of the Act does not excuse any grounds of inadmissibility under section 212(a) of the Act (8 U.S.C. 1182(a)).

The Departments of Commerce, State, Justice and the Judiciary Appropriations Act of 1998, Public Law 105-119, section 111 (111 Stat. at 2458) (1997), significantly revised Section 245(i) and set a January 14, 1998, sunset date. After January 14, 1998, an alien could file an application for adjustment of status under Section 245(i) of the Act only if that alien was the beneficiary of either (1) an immigrant visa petition under Section 204 of the Act (8 U.S.C. 1154) that was filed with the Attorney General on or before January 14, 1998; or (2) an application for labor certification that was filed pursuant to the regulations of the Secretary of Labor by the alien's employer on or before that date. Such a visa petition or application for labor certification served to “grandfather” the alien beneficiary (that is, to preserve the alien's ability to file an application for adjustment of status under Section 245(i)) if the visa petition or application for labor certification was properly filed on or before the sunset date, under the appropriate regulations, and was approvable when filed.

The Legal Immigration Family Equity Act Amendments of 2000, Title XV of Public Law 106-554, section 1502 (114 Stat. at 2764) (enacted Dec. 21, 2000) (the LIFE Act Amendments) extended the Section 245(i) (8 U.S.C. 1255(i)) sunset date from January 14, 1998, to April 30, 2001. That Act also requires that, if the qualifying visa petition or labor certification application was filed after January 14, 1998, the alien must have been physically present in the United States on the date of enactment (December 21, 2000) to be eligible to apply for adjustment of status under Section 245(i).

The previous regulations relating to Section 245(i) of the Act (8 U.S.C. 1255(i)), 8 CFR 245.10, were never amended to conform to the 1997 statutory changes to Section 245(i). The Department had developed a set of guidelines to implement Section 245(i) for aliens who were grandfathered (i.e., who were the beneficiaries of qualifying visa petitions or labor certification applications filed by the sunset date). In view of the changes made by the LIFE Act Amendments and the apparent intention of Congress to apply the amended law consistently with past interpretations, this rule is intended to conform § 245.10 to the existing standards and to implement the new physical presence requirement. The rule also eliminates provisions from the existing regulation that have been obsolete since the 1997 amendments to Section 245(i).

To be grandfathered for purposes of Section 245(i) of the Act (8 U.S.C. 1255(i)), the alien must be the beneficiary of an immigrant visa petition or a labor certification application that (1) is filed on or before April 30, 2001, and (2) meets the requirements of the Act and these regulations. A visa petition or labor certification application that meets all of the applicable requirements so as to grandfather the alien beneficiary is referred to as a qualifying visa petition or a qualifying labor certification application. In addition, if the qualifying petition or qualifying application was filed after January 14, 1998, the alien beneficiary must also have been physically present in the United States on December 21, 2000, to be eligible to apply for adjustment under Section 245(i). The physical presence requirement is discussed later.

Since Section 245(i) was amended in 1997, the Department has adopted what has come to be known as an “alien-based” reading of Section 245(i). This means that the alien is grandfathered by the filing of a qualifying visa petition or qualifying labor certification application, for purposes of preserving the alien's eligibility to apply to adjust status under Section 245(i), but the alien is not limited to that particular petition or application as the only possible basis for adjustment of status. The qualifying petition or application that grandfathers the alien serves to preserve the alien's opportunity to file for adjustment of status under Section 245(i) at a later time, at which point the grandfathered alien becomes eligible for adjustment of status on any proper basis.

For example, if an alien is properly grandfathered as the beneficiary of a qualifying visa petition or qualifying application that was filed on or before April 30, 2001, the alien would also be eligible to adjust status under Section 245(i) if he or she later won a diversity visa.

Yes, a dependent spouse or child (if eligible under section 203(d) of the Act (8 U.S.C. 1153(d))) who is accompanying or following to join a grandfathered alien is also considered to be grandfathered by the qualifying petition or qualifying application for labor certification, if the relationship exists before the principal alien adjusts his or her status.

The new sunset date of April 30, 2001, is the deadline for the filing of a qualifying visa petition or qualifying labor certification application in order to grandfather the alien beneficiary. To preserve the alien's ability to apply in the future for adjustment of status under Section 245(i) (8 U.S.C. 1255(i)), an alien must be the beneficiary of either (1) a qualifying Section 204 of the Act (8 U.S.C. 1154) immigrant visa petition that is properly filed with the Attorney General on or before April 30, 2001, and which is determined to have been approvable when filed; or (2) a qualifying application for labor certification that is properly filed on or before April 30, 2001, according to the regulations of the Secretary of Labor, and which is determined to have been approvable when filed.

An alien is not required to file his or her application for adjustment of status under Section 245(i) on or before April 30, 2001. If an alien is grandfathered (because he or she is the beneficiary of a qualifying visa petition or qualifying labor certification application filed on or before April 30, 2001), the alien will be able to submit the actual application for adjustment of status under Section 245(i) at any later time when an immigrant visa becomes available to the alien.

An alien becomes grandfathered for purposes of Section 245(i) of the Act (8 U.S.C. 1255(i)) if he or she is the beneficiary of an immigrant visa petition under Section 204 of the Act (8 U.S.C. 1154) on his or her behalf that is properly filed with the Service on or before April 30, 2001. This includes any of the following:

• Form I-130, Petition for Alien Relative, filed on behalf of the alien beneficiary;

• Form I-140, Immigrant Petition for Alien Worker, filed by an employer on behalf of the beneficiary;

• Form I-360, Petition for Amerasian, Widow(er), or Special Immigrant, filed on behalf of the beneficiary or submitted as a self-petition under Section 204(a)(1)(A)(iii) or (a)(1)(A)(iv) filed by an eligible alien; and

• Form I-526, Immigrant Petition by Alien Entrepreneur.

In any case, the visa petition must be determined to have been approvable when filed in order to grandfather the alien for purposes of Section 245(i), as discussed below.

A visa petition does not serve to grandfather the alien beneficiary if that alien has previously obtained lawful permanent resident status on the basis of that visa petition.

Other types of applications or petitions for immigration benefits—including but not limited to asylum applications, diversity visa applications, and diversity visa lottery-winning letters—do not serve to grandfather an alien for purposes of Section 245(i), because they do not satisfy the statutory requirement that the alien must be the beneficiary of a qualifying immigrant visa petition for classification under Section 204 of the Act filed with the Attorney General or a qualifying labor certification application filed with the Secretary of Labor. Under current law, unless an alien is properly grandfathered as the beneficiary of a qualifying visa petition or qualifying application that was properly filed on or before April 30, 2001, the alien will not be able to take advantage of Section 245(i) even if he or she becomes eligible for an immigrant visa at some later date.

To be considered properly filed, for purposes of grandfathering, the immigrant visa petition must be physically received by the Service prior to the close of business on or before April 30, 2001, or if mailed, be postmarked on or before April 30, 2001.

The Service is applying the exception for grandfathering visa petitions contained in the regulations at 8 CFR § 103.2(a)(7), which require that a petition must be physically received and stamped by the Service in order to be considered properly filed. For the purpose of grandfathering under section 245(i) of the Act (8 U.S.C. 1255(i)) only, the Service will accept as properly filed, visa petitions that are postmarked on or before April 30, 2001. In addition, given the April 30, 2001, sunset date, the Service notes that it will accept visa petitions that contain at least the minimum amount of information required by 8 CFR 103.2(a). Petitions that do not contain the names of the petitioner and the beneficiary, the proper fee, and the signature of the petitioner will not be accepted for filing.

Not all immigrant visa petitions that are properly filed on or before April 30, 2001, will serve to grandfather the alien beneficiary for purposes of Section 245(i) of the Act (8 U.S.C. § 1255(i)). In interpreting the language of Section 245(i) since it was amended in 1997, the Department has also required that the visa petition must have been “approvable when filed” to qualify the alien beneficiary for grandfathering.

“Approvable when filed” means that, as of the date of filing the immigrant visa petition, the petition was properly filed, meritorious in fact, and non-frivolous (“frivolous” meaning patently without substance). For example, a visa petition is not approvable when filed if it is fraudulent or if the named beneficiary did not have, at the time of filing, the appropriate family relationship or employment relationship that would support the issuance of an immigrant visa.

As noted, the Department recognizes that some immigrant visa petitions may be filed initially without all of the necessary information for the Service to adjudicate the petition. In that case, the existing regulations at 8 CFR 103.2(b)(8) provide a process for the Service to request additional evidence and to allow the petitioner a period of 12 weeks to submit that additional evidence in support of the petition.

It is important to note, though, that all eligibility requirements must be satisfied before an immigrant visa petition can be approved. A visa petition will not qualify an alien for grandfathering unless the Service is able to determine, based on the available information (including additional evidence submitted by the petitioner after the filing of the petition) that the petition was approvable when filed.

If the Deparment has already approved the visa petition at the time the alien files an application for adjustment of status, it was approvable when filed, except as discussed below, and thus provides a basis for grandfathering. However, a visa petition may still serve as the basis for grandfathering even if it has not been adjudicated by the Service as of April 30, 2001. As discussed below, the adjudication of the visa petition on the merits is distinct from the question of whether the petition qualifies for grandfathering because it was approvable when filed.

An immigrant visa petition on behalf of an alien beneficiary that is properly filed on or before April 30, 2001, but is subsequently denied or withdrawn, or the approval of which is revoked, may still serve to grandfather the alien, depending on the reasons for the disposition of the visa petition. The issue is whether the visa petition was approvable when filed.

As long as a qualifying visa petition was approvable when filed, the petition will still grandfather the alien even if the petition was denied or revoked due to circumstances arising after the filing of the petition as outlined at 8 CFR § 205.1(a)(3)(i) or (ii). Such changed circumstances would include but are not limited to a child who has reached age 21 before the principal alien could adjust status, an employer going out of business, or a valid, bona fide marriage ending in divorce before the alien could adjust status.

These same principles apply where the petitioner withdraws an immigrant visa petition. For example, an employer that had filed an immigrant visa petition for an alien may suffer a business reversal 18 months after the date of filing and, as a result, withdraw the petition. In that case, the alien would still continue to be grandfathered for purposes of Section 245(i) of the Act, if the petition was approvable at the time of filing.

Under the “alien-based” reading, a grandfathered alien is not limited to filing for adjustment of status using the particular visa petition that provided the basis for grandfathering. Thus, a properly grandfathered alien with a petition that was denied or revoked due to circumstances arising after the filing of the petition may apply to adjust status using any other proper basis for adjustment. Although grandfathered by the denied or revoked petition, the alien may not use that petition as an adjustment basis, given that the petition was not approved.

When the Service has denied an immigrant visa petition (or has revoked a prior approval) based on ineligibility at the time of filing, the petition does not qualify to grandfather the alien beneficiary for purposes of section 245(i). Such ineligibility may be based on meritless or fraudulent petitions, such as those in which the claimed family or employment relationship at the time of the filing cannot serve as the basis for issuance of an immigrant visa.

To be considered properly filed, for purposes of grandfathering under Section 245(i) of the Act (8 U.S.C. 1255(i)), a labor certification application must be filed on or before April 30, 2001, according to the regulations established by the Department of Labor, 20 CFR 656.21. The sponsoring employer must properly complete and sign ETA Form 750, Parts A and B. The Labor Department considers an application for labor certification that is filed and accepted at a State Employment Security Agency (SESA) to be properly filed.

Only the alien who was the beneficiary of an application for labor certification on or before April 30, 2001, will be considered to be grandfathered for purposes of Section 245(i) of the Act (8 U.S.C. 1255(i)).

Not all applications for labor certification that are properly filed on or before April 30, 2001, will serve to grandfather the alien beneficiary for purposes of Section 245(i) of the Act (8 U.S.C. 1255(i)). In interpreting the language of Section 245(i) since it was amended in 1997, the Department has also required that the application for labor certification must have been “approvable when filed” to qualify the alien beneficiary for grandfathering.

“Approvable when filed” means that, as of the date of filing of the application for labor certification, the application was properly filed, meritorious in fact, and non-frivolous (“frivolous” meaning patently without substance).

If an alien is already in immigration proceedings and believes that he or she may be eligible to apply to adjust status under Section 245(i) of the Act (8 U.S.C. 1255(i)), he or she should raise the matter with the Immigration Judge or the Board of Immigration Appeals according to the established procedures. Certain aliens in exclusion proceedings and certain arriving aliens, however, cannot apply for Section 245(i) adjustment.

The LIFE Act Amendments contain no special provisions for reopening cases under Section 245(i) of the Act (8 U.S.C. 1255(i)) where an alien already is the subject of a final order of removal, deportation or exclusion. Accordingly, motions to reopen based on Section 245(i) will be governed by the Department's current rules regarding motions to reopen, 8 CFR 3.23 (before the Immigration Judge) and 3.2 (before the Board of Immigration Appeals), which contain time and numerical limitations on the filing of such motions. See 8 CFR 3.23(b)(1) and 3.2(c)(2). The rules, however, do provide for limited exceptions to these time and numerical limitations, among which is a motion to reopen filed jointly by the alien and the Service counsel in the case. Therefore, an alien who is the subject of a final order who alleges eligibility for adjustment of status under Section 245(i) may contact the Service counsel to request the filing of a joint motion to reopen. The Service will exercise its discretion in reviewing these cases. However, there are provisions in the Immigration and Nationality Act which limit the Attorney General's ability to grant certain forms of discretionary relief, including adjustment of status, for a period of time, to particular categories of aliens with final orders, including but not limited to aliens whose orders were entered in absentia for failure to appear, and aliens who failed to voluntarily depart the United States within the time period specified.

An alien's nonimmigrant status in the United States is not affected by the fact that he or she is grandfathered. The petition that serves to grandfather the alien neither extends an alien's nonimmigrant status nor authorizes employment in the United States. The immigrant visa petition or application for labor certification that serves to grandfather the alien does not serve to stay any order of removal, deportation, or exclusion.

The mere filing of a visa petition or application for a labor certification that has the effect of grandfathering the alien has no effect on an alien's unlawful presence in the United States and does not place the alien in a “period of stay authorized by the Attorney General” for purposes of section 212(a)(9)(B) of the Act (8 U.S.C. 1182(a)(9)(B)). Absent some other factor placing the alien in such a period of authorized stay, the alien continues to accrue periods of unlawful presence until he or she properly files an application for adjustment of status. A properly filed application for adjustment of status under Section 245(i) of the Act (8 U.S.C. 1255(i)) places the alien in a “period of stay authorized by the Attorney General” for purposes of section 212(a)(9)(B) and (C) of the Act (8 U.S.C. 1182(a)(9)(B) and (C)).

Filing an application for adjustment of status stops the accrual of unlawful presence, but does not eliminate periods of unlawful presence accrued before such filing.

If an alien is the beneficiary of a qualifying immigrant visa petition, or qualifying application for labor certification, that was filed after January 14, 1998, then the alien must have been physically present in the United States on December 21, 2000, to be eligible to use Section 245(i) of the Act (8 U.S.C. 1255(i)). The physical presence requirement does not apply if the qualifying petition or application was filed on or before January 14, 1998, regardless of when the Section 245(i) application for adjustment of status itself is filed.

Proof of a grandfathered alien's physical presence is not required to be presented when a visa petition or labor certification application is filed; such proof must be presented when the alien files the Section 245(i) application for adjustment of status itself.

Applicants for adjustment under Section 245(i) of the Act (8 U.S.C. 1255(i)) who are covered by the physical presence requirement must submit, at the time they file the Section 245(i) application for adjustment of status, evidence that they were physically present in the United States on December 21, 2000.

The Act is silent as to the methods by which an applicant may demonstrate his or her physical presence in the United States on that date. This rule provides guidance as to what evidence an applicant may submit to prove physical presence in the United States on December 21, 2000. This guidance largely corresponds to the existing regulations at 8 CFR 245.15(i) for aliens who must demonstrate physical presence on a specific date for purposes of the Haitian Refugee Immigrant Fairness Act of 1998 (HRIFA). The rule will incorporate, in part, the forms of documentation accepted in HRIFA regarding physical presence (8 CFR 245.15(i) and (j)(2)) and adopt them as examples of possible proof of physical presence for section 245(i). The Department is also soliciting comments on what type of evidence can be best utilized to demonstrate physical presence on December 21, 2000.

In some cases, a single document may suffice to establish the applicant's physical presence on December 21, 2000. In most cases, however, the alien may need to submit several documents, because most applicants may not possess documentation that contains the exact date of December 21, 2000. In such instances, the applicant should submit sufficient documentation establishing the applicant's physical presence in the United States prior to and after December 21, 2000.

An alien may make the demonstration of physical presence by submitting a photocopy of a Federal, state, or local government-issued document(s) that demonstrates the alien's physical presence in the United States on December 21, 2000 (or before and after that date). If the alien is not in possession of such a document or documents, but believes that a copy is already contained in the Service file relating to him or her, he or she may submit a statement as to the name and location of the issuing Federal, state, or local government agency, the type of document and the date on which it was issued. Examples of such Service issued documents include, but are not limited to, Form I-94, Arrival-Departure Record, Form I-862, Notice to Appear, Form I-122, Notice to Applicant for Admission Detained for Hearing before Immigration Judge, or Form I-221, Order to Show Cause. Examples of such Federal, state, or local government issued documents include, but are not limited to, a state driver's license or identification card, a county or municipal hospital record, a public college or public school transcript, income tax records, a Federal, State, or local governmental record which was created on or prior to December 21, 2000, shows that the applicant was present in the United States at the time, or a transcript from a private or religious school that is registered with, or approved or licensed by, appropriate State or local authorities.

If there are no government-issued documents that demonstrate an alien's physical presence on December 21, 2000, the Service will accept and evaluate non-government issued documents. Such documentation must bear the name of the applicant, have been dated at the time it was issued, and bear the seal or signature of the issuing authority (if the documentation is normally signed or sealed), be issued on letterhead stationery, or be otherwise authenticated. A personal affidavit attesting to physical presence on December 21, 2000, will not be accepted without additional evidence to validate the affidavit. Examples of such non-government issued documents include, but are not limited to, school records, rental receipts, utility bills, cancelled personal checks, employment records, or credit card statements.

In all cases, any doubts as to the existence, authenticity, veracity, or accuracy of the documentation shall be resolved by the official government record, with records of the Service and the Executive Office for Immigration Review (EOIR) having precedence over the records of other agencies. Furthermore, determinations as to the weight to be given any particular document or item of evidence shall be solely within the discretion of the adjudicating authority (i.e., the Service or EOIR). It shall be the responsibility of the applicant to obtain and submit copies of the records of any other government agency that the applicant desires to be considered in support of his or her application.

No, the dependent spouse or children of a grandfathered alien are not required to meet the physical presence requirement. Only the principal beneficiary of an immigrant visa petition or application for labor certification filed after January 14, 1998, and on or before April 30, 2001, needs to demonstrate his or her physical presence in the United States on December 21, 2000.

The Department amends 8 CFR 245.10 to remove language made obsolete by Public Law 105-119 and Public Law 106-554, specifically: language that refers to fee amounts for applications filed before December 29, 1996; and language that ends the application period for adjustment applications on October 23, 1997. The new language conforms the regulations to the existing law and established procedures.

Although this rule falls under the category of major rule as that term is defined in 5 U.S.C. 804(2)(A), the Department finds that under 5 U.S.C. 808(2) good cause exists for immediate implementation of this regulation upon publication in the Federal Register . The reason and necessity for immediate implementation are as follows: Under the statutory (LIFE Act) changes that went into effect on December 21, 2000, individuals who want preserve their ability to adjust their immigration status under section 245(i) of the Act must do so by April 30, 2001. Accordingly, because there is a very short window of opportunity for these individuals to apply, the Department finds that delaying the effective date of this rule is impracticable, unnecessary, and contrary to the public interest.

The Department's implementation of this rule as an interim rule with provisions for post-promulgation comment, and with an immediate effective date, is based on the “good cause” exceptions found at 5 U.S.C. 553(b)(3)(B) and (d)(3). The implementation of this rule without prior notice and comment, and without a delayed effective date, is necessary to implement recently enacted statutory changes that took effect upon enactment on December 21, 2000. There is a very short window of opportunity (ending on April 30, 2001) provided by the new law for the filing of immigrant visa petitions and applications for labor certification, in order to preserve the ability of eligible aliens to adjust their status under Section 245(i) of the Act (8 U.S.C. 1255(i)).

This rule implements a portion of the LIFE Act Amendments by setting forth the procedural instructions on the proper filing of immigrant visa petitions, applications for labor certification, and applications for adjustment of status under Section 245(i). Certain individuals, if they miss the opportunity to use Section 245(i) to adjust their status while in the United States, may be subject to the 3 or 10 year bars to admission under Section 212(a)(9) (8 U.S.C. 1182(a)(9)) if they leave the United States to apply for an immigrant visa at a U.S. consular office abroad. It would be impractical and contrary to the public interest to publish a proposed rule or to delay the effective date of these procedural instructions, because the public comment period and a delayed effective date would consume most of the very limited time statutorily available for qualified applicants to take advantage of the new law. The Department will fully consider all comments about this interim rule that are submitted during the comment period.

The Attorney General, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that this rule will not have a significant economic impact on a substantial number of small entities. This rule affects individuals by temporarily removing certain restrictions on eligibility for adjustment of status in accordance with Public Law 110-119. This rule is intended to eliminate inconvenience to a number of individuals currently in the United States who otherwise would be required to incur significant monetary expenses by traveling abroad to apply for an immigrant visa at a United States consulate or embassy. This interim rule will have no effect on small entities as that term is defined in 5 U.S.C. 601(6).

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100 million or more in 1 year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is a major rule as defined by the Small Business Regulatory Enforcement Act of 1996. This rule will result in an effect on the economy of approximately:

$178,300,000 for 2001,

$99,200,000 for 2002, and

$91,900,000 for 2003.

This increase in cost is directly associated with the expected increase in the number of applications for adjustment of status submitted under section 245(i) of the Act (8 U.S.C. 1255(i)) with the required $1,000 penalty fee and other associated applications. Section 1502 of the LIFE Amendments, Public Law 106-554, reinstates section 245(i) until April 30, 2001. The reinstatement of section 245(i) provides some previously ineligible individuals with the opportunity to file the proper forms to preserve their ability to use section 245(i). The Service projects that in fiscal year 2001, a total 946,000 applications will be submitted because of the reinstatement of section 245(i) of the Act as follows:

500,000 Forms I-130;

50,000 Forms I-140;

148,500 Forms I-765;

82,500 Forms I-131; and

165,000 Forms I-485.

In addition, the Department of Labor projects that at least 40,000 Forms ETA 750 will be submitted. The Service projects that in fiscal year 2002, a total of 324,000 total applications will be submitted as follows:

121,500 Forms I-765;

67,500 Forms I-131; and

135,000 Forms I-485.

The Service projects that in fiscal year 2003, a total of 300,000 applications will be submitted as follows:

112,500 Forms I-765;

62,500 Forms I-131; and

125,000 Forms I-485.

This rule is considered by the Department of Justice to be an “economically significant regulatory action” under Executive Order 12866, Regulatory Planning and Review. Accordingly, this rule has been submitted to the Office of Management and Budget for review.

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

This interim rule meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988.

This interim rule does not impose any new reporting or recordkeeping requirements. The information collection requirements pertaining to this rule were previously approved for use by the Office of Management and Budget (OMB). The OMB control numbers for these collections are contained in 8 CFR 299.5, Display of Control Numbers.

On September 22, 1999 (64 FR 51370), a final rule “ Industry Codes and Standards; Amended Requirements” was published in the Federal Register . The purpose of the rule was to permit the use of improved methods in § 50.55a for construction, inservice inspection and inservice testing of nuclear power plant components. The rule, in part, permits licensees to modify implementation of Appendix VIII to Section XI of the American Society of Mechanical Engineers (ASME) Boiler and Pressure Vessel Code (the Code) provided that certain provisions specified in the regulations were followed. Paragraph (b)(2)(xv)(C) addressed the provisions regarding application of Supplement 4 to Appendix VIII. After the final rule was published, an error was discovered in paragraph (b)(2)(xv)(C)( 1 ). Paragraph (b)(2)(xv)(C)( 1 ) properly stipulated the use of a flaw depth sizing criterion, but failed to specify the use of an appropriate flaw length sizing criterion for reactor vessel qualification. It has always been the intent of the NRC to require the use of both depth and length criteria for flaw sizing qualification. This intent is evident in paragraph (b)(2)(xv)(F)( 2 ) of § 50.55a which stipulates that length sizing qualifications must satisfy the acceptance criterion of Appendix VIII, Supplement 4.

With respect to a length sizing criterion, it was the intent of the NRC to specify in the final rule, the use of 0.75 inch root mean square (RMS) length sizing criterion in lieu of Appendix VIII, Supplement 4, Subparagraph 3.2(b). Since 1995, the NRC has supported the 0.75 inch RMS numeric value as an appropriate length sizing criterion for reactor vessels. This numeric value is the same as the length sizing criterion referenced in (b)(2)(xv)(E)( 3 ).

As published, the Federal Register and the Code of Federal Regulations contain an error which is misleading and needs to be corrected.

On March 7, the Department of the Treasury, United States Secret Service requested that the FAA establish a prohibited area at Crawford, TX, to enhance the level of security provided the President. In order to provide adequate safeguards for the protection of the President, it is necessary to designate certain airspace above the presidential residence at Crawford, TX, as a prohibited area. Under the provision of Section 73.83, no person may operate an aircraft within that area without permission from the using agency. This action responds to that request.

This amendment to 14 CFR part 73 establishes P-49 Crawford, TX. The prohibited area extends from the surface to 5,000 feet above mean sea level (MSL) within a 3-nautical mile (NM) radius of latitude 31°34′57″ N., longitude 97°32′37″ W. Flight within this area is prohibited unless permission is obtained from the using agency.

Because of the immediate need to enhance the security of the President, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable. Section 73.89 of 14 CFR part 73 was republished in FAA Order 7400.8H, dated September 1, 2000.

This regulation is limited to 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 it has been determined that this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action to establish a prohibited area from the surface up to 5,000 feet MSL qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1D, Policies and Procedures for Considering Environmental Impacts. This airspace action is not expected to cause any potentially significant environmental impacts, and there do not appear to be extraordinary circumstances warranting preparation of an environmental assessment.

The genesis of the modern vessel repair statute, 19 U.S.C. 1466, is found in the Act of July 18, 1866, Chapter 24, section 23 (14 Stat. 183). A 50 percent ad valorem duty was imposed on the foreign cost of repairs to United States vessels documented to engage in the foreign or coastwise trade on the northern, northeastern, and northwestern frontiers (practically speaking, Great Lakes, Atlantic, and Pacific Coast trade with Canada). The statute also provided for remission or refund of duties where it was established by sufficient evidence that the vessel had been compelled to seek foreign repairs due to a weather-related or other casualty. The statute was recodified in the Revised Statutes of the United States in 1874 (R.S. 3114 and 3115), but was left largely unamended until the Act of September 21, 1922, at which time the area of consideration for dutiable repairs was expanded to include repairs to all vessels documented under U.S. law to engage in the foreign or coastwise trade, as well as those intended to be so employed.

The statute has undergone amendment several times since 1922 and has been the subject of considerable judicial interpretation over the years as well. Most recently, the statute has been amended in significant ways and a court case with broad impact on the administration of the law has also been decided.

On August 20, 1990, the President signed into law the Customs and Trade Act of 1990 (Pub. L. 101-382), section 484E of which amended the vessel repair statute by adding a new subsection (h). Subsection (h), which by its terms expired on December 31, 1992, included two elements. These concerned the exclusion from vessel repair duty of Lighter Aboard Ship (LASH) barges, and of spare parts and materials for use in vessel repairs abroad which had previously been imported and duty paid at the appropriate rate under the Harmonized Tariff Schedule of the United States (HTSUS).

Two years after the expiration of that legislation, the Congress enacted section 112 of Pub. L. 103-465 which became effective on January 1, 1995. That provision permanently reenacted the previously expired 19 U.S.C. 1466(h)(1) and (2), as discussed above, and also added a new subsection (h)(3) which, as administered by Customs, provides that vessel repair duties will be assessed at the applicable HTSUS rate for spare parts which are necessarily installed on vessels overseas prior to those spare parts ever having been entered into the United States for entry and consumption, such as is necessary under the (h)(2) provision.

The most basic issue to be determined in applying the vessel repair statute to a factual situation is, of course, whether a repair has taken place within the meaning of 19 U.S.C. 1466(a). Courts have ruled extensively on the “repair” cost issue and the result is a continually narrowing field of dutiable repair. One early case ( United States v. George Hall Coal Co., 134 F. 1003 (1905)), was the first to find any of various types of expenses associated with repairs to be classifiable as not subject to the assessment of vessel repair duties. The case established that the expense of drydocking a vessel (regardless of the underlying need to drydock) is not an element of dutiable value in foreign repair costs. Drydocking is a major, but not isolated, expense in general ship repair operations. Many other associated expenses and services are necessary adjuncts to drydocking and are logically inseparable from the drydocking rule. These include such items as drydock block arrangement, sea water supply (for firefighting equipment), hose hook-up and disconnection charges, fire watch services, the services of a crane for drydocking-related operations, the provision of compressed air, cleaning of the drydock following repairs, among numerous others. These necessary services are costly, are supplied at nearly each drydocking, and had until recently been considered to be classifiable as duty-free.

On December 29, 1994, the United States Court of Appeals for the Federal Circuit decided the case of Texaco Marine Services, Inc., and Texaco Refining and Marketing, Inc. v. United States, 44 F.3d 1539, in which the court considered the propriety of several long-standing court cases, including the opinion in George Hall, supra. The court decided that a whole range of charges are subjected to duty consideration which had been insulated from such treatment since 1905.

The significant changes, as described above, in terms of both statutory amendment and judicial interpretation have dictated the need to update the regulatory provisions in § 4.14 of the Customs Regulations (19 CFR 4.14), which implement the vessel repair statute.

Accordingly, by a document published in the Federal Register (64 FR 19508) on April 21, 1999, Customs proposed necessary amendments to § 4.14 to conform with the described statutory and judicial changes, and to set forth these regulatory provisions in a more streamlined and simpler format.

To streamline the process for seeking relief from vessel repair duties, most significantly, Customs proposed to eliminate the Petition for Review process; this process is currently the second of two pre-protest appeals for relief from duty. Also, Customs proposed to vest the Customs field Vessel Repair Units with full authority to process and decide Applications for Relief without restrictions as to the amount of potential duty involved.

Additionally, it was proposed to amend the Customs Regulations in part 159 (19 CFR part 159) to recognize that vessel repair entries are not considered to be subject to liquidation, and to provide that any duties paid pursuant to a vessel repair entry would be considered to be charges or exactions within the meaning of paragraph (a)(3) of section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514), the statute under which decisions of the Customs Service are protested. As charges or exactions, duty determinations on vessel repair entries would be protestable under 19 U.S.C. 1514(a)(3), and would not be subject to voluntary reliquidation or deemed liquidation procedures. This distinction recognizes elements which are unique to the vessel repair entry process such as potential protracted delays in supplying cost information due to difficulty in obtaining proof of foreign expenses from shipyards in a timely fashion.

The period during which public comments could be submitted concerning the proposed rule was extended an additional 30 days by a document published in the Federal Register (64 FR 29975) on June 4, 1999.

A total of six comments were received in response to the proposed rule. Two of these comments were generally supportive of the proposal, four were critical of it, and five of the six comments received suggested that the proposed regulations be changed in various ways. A description, together with Customs analysis, of the issues raised in the comments, is set forth below.

Comment: One commenter generally recommended that the fifty percent vessel repair duty rate be doubled to one-hundred percent.

Customs Response: The duty rate is set by statute and may be amended only by legislative action.

Comment: With reference to proposed § 4.14(a), two commenters objected to the requirement that repairs performed “on the high seas” were subject to vessel repair duty. One commenter asserted that 19 U.S.C. 1466(a) neither required nor contemplated that repairs made on the high seas fall within the scope of the vessel repair statute, and that proposed § 4.14(a) was in conflict with the law. The other commenter found this requirement to be misleading in that it could be misinterpreted to include repairs made by members of a vessel's regular crew while the ship was at sea.

Customs Response: Case law clearly establishes liability for duty under the vessel repair statute (19 U.S.C. 1466) for repairs performed on the high seas (see Mount Washington Tanker Company v. United States, 1 CIT 32, 505 F. Supp. 209 (1980), aff'd 69 CCPA 23, 665 F.2d 340.

However, since the statute does provide an exception for the cost of labor performed by members of the regular crew of a vessel, § 4.14(a) is revised to state that compensation paid to members of the regular crew for repairs made on the high seas is not includable in any reported parts, materials, or equipment costs.

Comment: One commenter suggested that the third sentence of proposed § 4.14(a) be changed so as to avoid any misinterpretation that the vessel repair statute applies to foreign-documented vessels.

Customs Response: We are grateful to the commenter for pointing out the need for clarification with respect to the application of the statute to vessels which are considered to be “intended to be employed” in foreign or coastwise trade within the meaning of the law. On March 18, 1998, Customs published a notice in the weekly Customs Bulletin notifying interested parties that certain prior Customs rulings interpreting the “intended to be employed” language were being revoked and replaced by a new interpretation. The position of Customs since the date of that notice has been that the law is intended to apply as well to vessels which are either undocumented or are foreign-documented at the time of foreign repairs, so long as they are documented under U.S. law at the time of their first arrival in this country following those repairs. Thus, while the law does not apply to foreign-flag vessels arriving in the United States after repairs abroad, it does apply to arriving U.S.-flag vessels which were repaired while they were under foreign documentation.

Comment: Two commenters were concerned about the requirement in proposed § 4.14(a) that all foreign repairs and purchases be declared regardless of their dutiable status.

Customs Response: This requirement has long appeared in the vessel repair regulations (currently, see 19 CFR 4.14(b)(1) (1999)). Customs has decided that it should be retained in § 4.14(a) of this final rule.

Comment: One commenter stated that paragraphs (b)(1) and (b)(2) of proposed § 4.14 were inconsistent, in that the former expressly provided for the submission of the electronic equivalent of declaration and entry forms, whereas the latter made no such provision.

Customs Response: Customs has determined that there is no need to provide for the declaration and entry filing requirements, electronic or otherwise, in either of these provisions since the purpose of these provisions is to merely address the particular types of vessels to which the vessel repair statute applies. Thus, the reference to these filing requirements is removed from § 4.14(b)(1). The general requirements for filing a vessel repair declaration and entry are comprehensively covered in § 4.14(d) and (e). These provisions provide for the filing of electronic equivalents of a vessel repair declaration and entry.

Comment: One commenter urged that proposed § 4.14(b)(2), relating to the applicability of the vessel repair statute to government-owned or chartered vessels, be amended to expressly provide that all such vessels which were not under the jurisdictional control of the Secretary of the Navy would be required to comply fully with all vessel repair regulatory provisions.

Customs Response: Customs disagrees. Section 4.14(b)(2) is applicable to numerous vessels including those under U.S. Navy control, vessels of the Coast Guard, the National Marine Fisheries Service, and the National Oceanographic and Atmospheric Administration, among others.

Comment: One commenter suggested that proposed § 4.14(b)(3) be changed to require, in the case of a vessel which has remained continuously outside the United States for two years or longer, that repairs to such a vessel that are scheduled for completion within fifteen months before the vessel's return to the United States also be made subject to the assessment of duty.

Customs Response: The potential duty liability for applicable repair operations under 19 U.S.C. 1466(e)(1)(B) is expressly limited to those operations that occur during the first six months after the last departure of the vessel from the United States. This six-month rule is statutory and cannot be expanded without amendatory legislation.

Comment: Two commenters were opposed to the use of the phrase “specifically depart” appearing in proposed § 4.14(b)(3), where duty liability would arise in connection with certain vessels that departed from the U.S. specifically to make foreign repairs and purchases. Under 19 U.S.C. 1466(e)(2), duty liability would arise in this context where the vessels departed for the “sole purpose” of making foreign repairs and purchases. The commenters asked that this phrase likewise be used in proposed § 4.14(b)(3).

Customs Response: Customs agrees. Section 4.14(b)(3) is revised as requested. Further, it is noted that § 4.14(b)(3) has been generally revised and restructured for editorial clarity.

Comment: One commenter recommended changing proposed § 4.14(c) to require that the vessel operator file the bond needed to cover potential duty liability under a vessel repair entry directly with the Vessel Repair Unit (VRU) at the time that the operator also files the entry with the VRU, instead of the operator having to submit the bond to Customs at the port of arrival which would then forward it to the VRU. Since Customs at the port of arrival has authority to set bond amounts, the bond being obligated could simply be identified by number, amount and transaction type on the vessel repair declaration that must initially be made to Customs at the port of arrival.

Customs Response: While the Customs officials at the port of arrival retain authority to set bond amounts, the reality is that the vast majority of the bonds utilized in vessel repair entries are of the continuous type. The requirement and practice is that the operator when making an initial declaration at a port of arrival, indicates the name of the surety, the continuous bond number, and the amount of the bond on its Customs Form 226 vessel repair declaration. Based upon this information, Customs at the entry port is able to determine whether an additional single transaction bond will be required. Since in the vast majority of cases no additional bond is needed, the operator would simply list the same information on its Customs Form 226 when it is submitted as a vessel repair entry to the VRU. In those cases in which a single transaction bond is required by Customs to be submitted at an arrival port, the operator would place the identifying information for that bond on both the Customs Form 226 declaration and the subsequent entry. The responsible VRU would contact the arrival port should a copy of that bond form be needed.

Comment: With respect to proposed § 4.14(c), one commenter questioned the need for a deposit of estimated duties or the filing of a bond where a private party operated a vessel owned or chartered by a Federal agency under a contract that obligated the agency for the payment of any duty. The commenter stated that the provision should provide for a deposit or bond only if the contract placed duty liability on the private party.

Customs Response: Customs agrees and has so changed § 4.14(c).

Comment: In proposed § 4.14(d) and (e) addressing the presentation of a vessel repair declaration and entry, respectively, two commenters disagreed with the requirement that the declaration be submitted to Customs at the port of arrival, while the entry had to be filed with Customs at the port where the Vessel Repair Unit (VRU) was located.

Customs Response: The declaration and entry forms are processed in different locations. By requiring the vessel owner, master, or authorized agent to submit the forms directly to the locations in which they will be processed, Customs avoids the additional, internal step of forwarding the entry to the Vessel Repair Unit (VRU), thereby expediting the entire process. VRUs which process vessel repair entries are consolidated in just three locations (San Francisco, New York and New Orleans), in order to enhance administrative efficiency in, and expedite, processing of these entries. Under the amendment, instead of Customs forwarding the entry from the port of arrival to the VRU, as is currently the case, the vessel operator himself will simply send the entry directly to the VRU. However, vessel repair declarations covering foreign repair costs of a vessel must still be made to Customs initially at the first U.S. port of arrival following a foreign voyage. Accordingly, this will necessitate the direct and separate submission by vessel operators of declarations and entries, except, of course, to the extent the port of arrival and the VRU entry port are the same.

Comment: With respect to proposed § 4.14(e), one commenter asked that the time within which a vessel repair entry could be filed be extended to ten working days, as opposed to ten calendar days.

Customs Response: Customs has determined that reliance on calendar days is the most clear-cut means by which to track the entry filing period, and has retained this requirement in 4.14(e).

Comment: Two commenters disagreed with the provision in proposed § 4.14(e), with respect to the filing of a vessel repair entry, that a failure on the part of the vessel operator to submit full supporting evidence of foreign repair costs within the applicable time limits would be considered to be a failure to enter.

Customs Response: Customs has concluded that the requirement to make entry for foreign repairs and purchases under 19 U.S.C. 1466(a) reasonably and responsibly contemplates the filing of an entry which is properly completed within the authorized time limits. In this latter regard, quite significantly, § 4.14(f) provides that evidence to complete a vessel repair entry must be received by the appropriate VRU port within 90 calendar days from the date of the vessel's arrival. Section 4.14(f) also provides for a 30-day extension of this period if a written explanation of need is submitted prior to the expiration of the original 90-day submission period. Furthermore, a request for an extension beyond the 30-day grant issued by a VRU may be made as well, but must be submitted through the VRU to the Entry Procedures and Carriers Branch in Customs Headquarters. Customs believes that these time frames provide a satisfactory and fully adequate opportunity within which to file a complete vessel repair entry.

Comment: One commenter observed that there could be a gap in the jurisdictional coverage of the VRU ports as described in the proposal, which could create uncertainty as to which VRU covered the Customs ports of Newport News and Richmond, Virginia. To eliminate this potential uncertainty, it was suggested that proposed § 4.14(g) be changed to provide that all ports in the State of Virginia would fall within the jurisdiction of the VRU in New Orleans, Louisiana.

Customs Response: Customs agrees. Section 4.14(g) is revised accordingly.

Comment: Several commenters disagreed with the reference to the terms “remission” and “refund” regarding determinations for relief from duty under the proposed regulation (proposed §§ 4.14(h) and (i), in particular). They stated that in the vast majority of cases, Customs would not have received a deposit of any estimated duties which could be remitted or refunded. It was recommended that the proposed rule be revised to eliminate reference to these terms.

Customs Response: The terms in question appear in the current vessel repair statute (19 U.S.C. 1466), as well as its predecessor provisions, the first of which was enacted in 1866. At that time, actual monetary deposits were received and the terms thus had full effect and meaning. However, Customs agrees that the vast majority of vessel repair entries made today are secured by the posting of surety bonds to cover potential liability.

Accordingly, because the use of the terms has been traditionally linked to claims for relief from duty collection under either 19 U.S.C. 1466(a) (refund claims), or 19 U.S.C. 1466(d) (remission claims), Customs has determined to revise § 4.14 to simply reference the applicable statutory provision under which a claim for relief is made, and to eliminate any reference to the terms in question. Specifically, the provisions of § 4.14(h), which include the justifications for obtaining relief from vessel repair duty, are recast as necessary. Also, paragraphs (e), (i), (i)(1), and (i)(1)(i) of § 4.14 are similarly revised.

Also, a new paragraph (h)(3) is added to § 4.14 to include the conditions under which a vessel remaining continuously outside the U.S. for two years or longer may be subject to relief from duty under 19 U.S.C. 1466(e). Further, a new paragraph (h)(4) is added to § 4.14 concerning claims for relief made under 19 U.S.C. 1466(h) in connection with Lighter Aboard Ship (LASH) barges and certain spare repair parts and materials.

Comment: Two commenters were confused by the requirement in proposed § 4.14(h)(2)(i) that any foreign repairs necessitated on a vessel due to stress of weather or other casualty be limited to the cost of the “minimal repairs” needed to secure the safety and seaworthiness of the vessel.

Customs Response: Customs agrees that the provision is unduly vague. Section 4.14(h)(2)(i) is revised by removing this requirement. Also, a corresponding change is made in § 4.14(i)(1)(v).

Comment: Some commenters opposed the elimination, in connection with proposed § 4.14(i), of the Petition for Review, as the last of two appeals for relief from duty (the first being the Application for Relief) that could be made prior to the filing of an administrative protest under 19 U.S.C. 1514. One commenter asserted that over the past three years, approximately two-thirds of the petitions considered resulted in at least partial relief.

Customs Response: It is Customs experience that the procedure for a Petition for Review has not provided benefits sufficient to overcome the significant delays it causes in bringing final resolution to vessel repair entry relief claims.

Most commonly, vessel repair operators do not advance all valid claims for relief initially in their Applications for Relief, which is why some additional relief is later granted when such claims are included in Petitions for Review.

However, notwithstanding the elimination of the Petition for Review, vessel operators may still avail themselves of a full Customs Headquarters review of their duty relief claims through the administrative protest procedure. In this way, claims for relief will be processed and finalized much more expeditiously with regard to future vessel repair entries.

Comment: Several commenters urged that language be added to proposed § 4.14(i)(1) to clearly establish that an extension of time for filing an Application for Relief from vessel repair duty may be allowed, in the same way that additional time is allowed under proposed § 4.14(f) to file necessary evidence that supports the cost of each item covered in a vessel repair entry.

Customs Response: Customs agrees and has so changed § 4.14(i)(1) consistent with § 4.14(f); and § 4.14(f) is changed to state that granting an extension of time within which necessary evidence may be filed will likewise extend the time within which an Application for Relief may be filed.

A provision is also added to § 4.14(i)(1) to note explicitly that there is no requirement that an Application for Relief be filed in relation to a vessel repair entry. However, if no Application is filed, the duty amount on the entry will be determined without regard to any potential claim for relief from duty.

Comment: Two commenters did not know what was meant by the requirement in proposed § 4.14(i)(1)(i) that, in an Application for Relief, the cost of items for which relief from duty was being sought had to be segregated from the cost of other items included in a vessel repair entry for which relief was not being sought.

Customs Response: In § 4.14(i)(1)(i), an Application for Relief must include copies of itemized bills, receipts and invoices covering all foreign voyage expenditures for equipment, parts of equipment, repair parts, materials and labor properly included in the vessel repair entry. In requiring that the cost of items for which relief from duty is sought be segregated in the Application from those items for which relief is not requested, Customs is merely reiterating the position consistently articulated over many years in rulings on vessel repair relief requests. It continues to be the case that if dutiable and non-dutiable purchases are included on a single invoice, the costs attributable to each must be segregated in order that appropriate relief might be correctly and effectively granted.

Comment: Two commenters objected to the certification requirements set forth in proposed § 4.14(i)(1)(iii), (iv) and (v), essentially viewing these provisions as being unnecessary, burdensome, and inconsistent.

Customs Response: Customs disagrees that the certification requirements contained in § 4.14(i)(1)(iii)-(v) pose any problem, as described. Respectively, these certifications quite reasonably provide, as part of an Application for Relief, that the appropriate senior officer must attest to all relevant circumstances relating to any casualty damage and any foreign repair expenditures that are enumerated in the vessel repair entry; and that the master of the vessel must attest that any casualty-related expenditures were necessary to ensure the safety and seaworthiness of the vessel in reaching its U.S. port of destination. These certification requirements have in substance long appeared in the vessel repair regulations (currently, see 19 CFR 4.14(d)(1)(iii)(D) and (E) (1999)). Customs has determined that they should be retained in these regulations.

As already noted, § 4.14(i)(1)(v) is revised consistent with the change made in § 4.14(h)(2)(i).

Comment: One commenter wanted to delete the requirement in proposed § 4.14(i)(1)(vi) that there be included, as part of an Application for Relief, copies of any permits or other documents filed with, or issued to the vessel operator by, other agencies of the United States Government relating to the operation of the vessel. The commenter stated that there could be hundreds of permits variously issued to vessel operators.

Customs Response: The permits or documents that fall within the scope of § 4.14(i)(1)(vi) would, of course, encompass only those that are attendant upon the Application for Relief process. To this end, any submitted permits or documents from other agencies would be expected to bear some relevance to the claim for relief being sought. Consequently, Customs would have no interest in a vessel operator's tax or financing documents in the course of considering repair claims involving, for example, a vessel collision at sea or a grounding incident. A clarifying change is made in this regard to § 4.14(i)(1)(vi).

Comment: One commenter suggested that proposed § 4.14(j)(1) concerning penalties for failure to report, enter or pay duty as required under the vessel repair statute should include a reference to § 162.78 of the Customs Regulations (19 CFR 162.78) (presentations responding to prepenalty notice).

Customs Response: Customs does not believe that a cross reference to § 162.78 is needed. Section 4.14(j)(1) already contains a cross reference to § 162.72 of the Customs Regulations (19 CFR 162.72) which addresses penalty and forfeiture actions under 19 U.S.C. 1466. Customs believes that this is sufficient under the circumstances.

Comment: Several commenters took exception to the proposed amendment of § 159.11(b) (19 CFR 159.11(b)) under which assessments made in connection with vessel repair entries would no longer be subject to liquidation procedures under part 159 (19 CFR part 159), and that such assessments would instead be treated as “charges or exactions” protestable under 19 U.S.C. 1514(a)(3)). The commenters essentially believed that this change was unnecessary.

Customs Response: Customs has concluded that vessel repair entries are distinct from the liquidation criteria as specified in 19 U.S.C. 1500, which is the controlling statute that establishes appraisement, classification, and liquidation procedures for purposes of the duty assessment of imported merchandise. In this regard, Customs believes that vessel repair entries do not involve entries of imported merchandise, as provided in 19 U.S.C. 1500(d). Rather, a vessel repair entry involves the assessment of duties in connection with the cost of repairs that are the result of foreign shipyard operations. The statute, 19 U.S.C. 1466, is self-contained and sets a parallel procedure for making a final determination of the duty due on such repairs. That statute provides for procedures which are unique to the vessel repair entry process.

Consequently, while Customs has also concluded that any assessments determined to be due on a vessel repair entry for the cost of foreign repairs constitute duties, neither the vessel repair entry nor any duties assessed on the entry would be subject to liquidation under 19 U.S.C. 1500 or 19 CFR part 159.

Although vessel repair entries will not be liquidated, any duties assessed on such entries will still be subject to protest under 19 U.S.C. 1514(a)(2). Section 4.14(i)(3) is revised to make this clear and to make clear that the applicable protest period will begin on the date of the issuance of the decision by the VRU giving rise to the protest as indicated on the relevant correspondence from the appropriate Vessel Repair Unit. Also, related changes are made to §§ 159.1 and 159.2 to reflect that vessel repair entries and related duties are not subject to liquidation under 19 CFR part 159.

In view of the foregoing, and following careful consideration of the issues raised by the commenters and further review of the matter, Customs has concluded that the proposed amendments with the modifications discussed above should be adopted.

Part 178, Customs Regulations (19 CFR part 178), which lists the information collection approvals under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), is revised to make provision for the information collection approval which covers this vessel repair regulation.

This final rule revises the Customs Regulations concerning the declaration, entry, assessment of duty and processing of petitions for relief from duty, for subject vessels under the vessel repair statute. The amendments are intended to accurately reflect the existing statutory authority, as well as legal and policy determinations made in this regard as the result of judicial decisions and administrative enforcement experience. As such, pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), it is certified that the amendments will not have a significant economic impact on a substantial number of small entities. Accordingly, they are not subject to the regulatory analysis or other requirements of 5 U.S.C. 603 and 604. Nor does this document meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

The collection of information contained in this final rule has previously been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) under OMB control number 1515-0082. This rule does not make any substantive changes to the existing approved information collection. Part 178, Customs Regulations (19 CFR part 178), is amended to make provision for this information collection approval. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

The principal author of this document was Larry L. Burton, Office of Regulations and Rulings, U.S. Customs Service. However, personnel from other offices participated in its development.

The EPA is publishing this rule without prior proposal because we view this as a noncontroversial rule and do not anticipate adverse comment. However, in the “Proposed Rules” section of today's Federal Register , we are publishing a separate document that will serve as the proposal in the event adverse comments are filed. This rule will be effective on June 25, 2001, without further notice unless we receive any adverse comment by April 25, 2001. The amendment provision for extended compliance times for Georgia-Pacific's Big Island facility, as described in the XL project FPA, is crucial to the company's plan to commercialize black liquor gasification. Given the economic and environmental benefits presented by this technology, its use could eventually become widespread in the pulp and paper industry. The draft FPA, including all details of the project, was made available for public comment through a Federal Register notice on May 8, 2000 (65 FR 26606). No adverse comments were received as a result of that notice, and the FPA subsequently was signed by the EPA, the U.S. Department of Agriculture (USDA) Forest Service, Georgia-Pacific, and Virginia's Department of Environmental Quality.

This site-specific regulation will help implement a project developed under Project XL, an EPA initiative to allow regulated entities to achieve better environmental results at less cost. Project XL—Excellence and Leadership—was announced on March 16, 1995, as a central part of the National Performance Review and the EPA's effort to reinvent environmental protection (60 CFR 27282, May 23, 1995). Project XL provides private and public regulated entities an opportunity to develop a limited number of their own pilot projects, which afford them regulatory flexibility but also produce environmental protection that is superior to what would be achieved through compliance with current and reasonably anticipated future regulations. These efforts are crucial to the Agency's ability to test new regulatory strategies that reduce regulatory burden and promote economic growth while achieving better environmental and public health protection. The Agency intends to evaluate the results of this and other Project XL projects to determine which specific elements of the project(s), if any, should be more broadly applied to other regulated entities for the benefit of both the economy and the environment.

Under Project XL, participants in four categories—facilities, industry sectors, governmental agencies, and communities—are offered the flexibility to develop common sense, cost-effective strategies that will replace or modify specific regulatory requirements on the condition that they produce and demonstrate superior environmental performance. To participate in Project XL, applicants must develop alternative pollution reduction strategies pursuant to eight criteria: superior environmental performance; cost savings and paperwork reduction; local stakeholder involvement and support; test of an innovative strategy; transferability; feasibility; identification of monitoring, reporting and evaluation methods; and avoidance of shifting risk burden. They must have the full support of affected Federal, state and tribal agencies to be selected. For more information about the XL criteria, readers should refer to 60 FR 27282, May 23, 1995 and 62 FR 19872, April 23, 1997, and the September 1999 document “A Guide to Writing Final Project Agreements under Project XL.”

The XL program is intended to allow the EPA to experiment with untried, potentially promising regulatory approaches, both to assess whether they provide benefits at the specific facility affected, and whether they should be considered for wider application. Such pilot projects allow the EPA to proceed more quickly than otherwise would be possible when undertaking changes on a nationwide basis. As part of this experimentation, the EPA may try out approaches or legal interpretations that depart from or are even inconsistent with longstanding Agency practice, so long as those interpretations are within the broad range of discretion enjoyed by the Agency in interpreting statutes that it implements. The EPA may also modify rules, on a site-specific basis, that represent one of several possible policy approaches within a more general statutory directive, so long as the alternative being used is permissible under the statute.

Adoption of such alternative approaches or interpretations in the context of a given XL project does not, however, signal the EPA's willingness to adopt that interpretation as a general matter, or even in the context of other XL projects. It would be inconsistent with the forward-looking nature of these pilot projects to adopt such innovative approaches prematurely on a widespread basis without first determining whether or not they are viable in practice and successful in the particular projects that embody them. Furthermore, as EPA indicated in announcing the XL program, the Agency expects to adopt only a limited number of carefully selected projects. These pilot projects are not intended to be a means for piecemeal revision of entire programs. Depending on the results in these projects, EPA may or may not be willing to consider adopting the alternative interpretation again, either generally or for other specific facilities.

The EPA believes that adopting alternative policy approaches and interpretations, on a limited, site-specific basis and in connection with a carefully selected pilot project, is consistent with the expectations of Congress about EPA's role in implementing the environmental statutes (so long as the Agency acts within the discretion allowed by the statute). Congress' recognition that there is a need for experimentation and research, as well as ongoing reevaluation of environmental programs, is reflected in a variety of statutory provisions, such as sections 101(b) and 103 of the CAA.

Each XL project relies on the input from a project stakeholder group, which usually includes representatives from the project sponsor, EPA, the involved State environmental agency, environmental groups, local community representatives, and other parties with an interest in the project. The stakeholder group works out the provisions of the FPA, which includes the details of the project, a timetable for completion, and the responsibilities of the signatories. The FPA is a statement of the plans and intentions of each signatory with respect to the project, but is not a legally binding document. The stakeholder group for the Georgia-Pacific project included representatives from the EPA, the Virginia Department of Environmental Quality, the USDA Forest Service, the U.S. Department of Energy (DOE), a local environmental group, the Big Island community, and, of course, Georgia-Pacific. A notice that the draft FPA for the Georgia-Pacific project was available for public comment appeared in the Federal Register on May 8, 2000. No comments were received on the draft FPA, and the final FPA was signed on May 31, 2000 by Georgia-Pacific, the EPA, the Virginia Department of Environmental Quality, and the USDA Forest Service (the final FPA has been posted on EPA's website at: http://www.epa.gov/ProjectXL/georgia/index.htm ). In the agreement, EPA committed to undertake this rulemaking.

Georgia-Pacific owns and operates a non-sulfur, non-bleaching pulp and paper mill at Big Island, Virginia. The facility produces two products: corrugating medium, which is used by box manufacturing plants to make the fluted inner layer of corrugated boxes; and linerboard, which is used for the inside and outside layers of the boxes. Corrugating medium is made from semi-chemical (sodium carbonate/sodium hydroxide) hardwood pulp and secondary (recycled) fiber, and linerboard is made from fiber recycled from old corrugated containers, clippings and rejects from corrugated container manufacturing plants, and some mixed office waste paper. The secondary fiber operations supply 100 percent of the fiber for the linerboard mill and about 20 percent of the fiber for the corrugating medium mill. Overall, the mill produces an average 870 tons per day of corrugating medium and 730 tons per day of linerboard.

The mill is located in Bedford County, adjacent to the James River and approximately 20 miles northwest of Lynchburg, Virginia. A principal concern for this area is air quality due to the close proximity of the James River Face Wilderness. The James River Face Wilderness is about 3 miles to the northwest of the mill and under the CAA was classified a Federal Class I air quality area. The USDA Forest Service, a signatory to the FPA, is the designated Federal Land Manager for assuring that the air quality related values for this Class I area are maintained.

The population of Big Island is approximately 400. The population within a 5-mile radius is about 2,100. Within a 25-mile radius of the mill (which includes the city of Lynchburg) is a population of approximately 111,500.

The mill currently handles the spent (“black”) liquor from wood pulping operations by reducing liquor water content using a conventional multiple effect evaporation train and combusting the concentrated (about 60 percent solids) liquor in two smelters. Molten smelt is drawn from the smelters and dissolved in water to recover the sodium carbonate. This solution is used to make up the cooking liquor added to the hardwood chips going to the digesters (cooking vessels) to produce the pulp. Exhaust gases from the smelters pass through a venturi scrubber and are then discharged to the atmosphere.

The mill currently is subject to two emission standards. The first is the so-called “Cluster Rule,” promulgated on April 15, 1998 (40 CFR part 63 subpart S) under the CAA. That rule sets performance standards for regulated emission sources in pulp and paper production plants and is based on maximum achievable control technology (MACT). A second MACT based standard applicable to pulp and paper mills (National Emission Standards for Hazardous Air Pollutants From Chemical Recovery Combustion Sources at Kraft, Soda, Sulfite, and Stand-Alone Semichemical Pulp Mills or “MACT II”), was promulgated in the Federal Register on January 12, 2001 (66 FR 3179) specifically to address hazardous air pollutant emissions from combustion sources associated with the recovery of pulping chemicals. Georgia-Pacific's two existing smelters (a type of semi-chemical combustion unit) are subject to the second rule.

The MACT II rule contains a performance standard to be met, but does not specify a particular technology that must be used. The current emissions from Georgia-Pacific's two existing smelters at Big Island are above the HAP emission standard in the MACT II rule. For Georgia-Pacific's Big Island facility to meet the standard in the MACT II rule, the smelters would have to be upgraded substantially. The age and physical condition of the smelters dictates that they either be rebuilt with additional emission control devices or replaced, such as with a conventional recovery boiler commonly used in the industry. Of these two options, Georgia-Pacific would choose to replace the smelters with conventional recovery technology. However, Georgia-Pacific also investigated a third alternative for chemical recovery, replacing the smelters with a PulseEnhanced TM , steam reforming black liquor gasification system, developed by Stone Chem, Inc. This technology uses steam reforming to convert the organics in black liquor to a hydrogen-rich gas fuel, leaving the residual pulping chemicals (primarily sodium carbonate) for reuse. The gas can then be used as a clean burning energy source for heat in the gasification unit and as an alternative boiler fuel, replacing fossil-fuel based (non-renewable) natural gas. Implementation of such a gasification system is expected to allow the Big Island facility to reduce emissions well below the MACT II HAP emission standards, and to significantly lower emissions of other criteria pollutants, compared to installation of conventional technology.

The signatories to the FPA believe that gasification of black liquor represents a new and better approach for the chemical recovery process and eliminates many of the deficiencies of the conventional recovery furnace and fluid bed combustion technologies. The benefits of gasification to the paper industry generally are expected to include: increased efficiency in energy conversion and chemical recovery, elimination of the smelt-water explosion hazard, reduced operation and maintenance costs, and significantly lower environmental emissions. The emissions expected to be reduced include: particulates (PM, PM 10 ), sulfur dioxide (SO 2 ), total reduced sulfur (TRS), nitrogen oxides (NO X ), volatile organic compounds (VOC), carbon monoxide (CO), hazardous air pollutants (HAP), and greenhouse gases, specifically carbon dioxide (CO 2 ). These benefits are particularly attractive to pulp mills such as Georgia-Pacific's at Big Island that use a semi-chemical non-sulfur process that requires auxiliary fossil fuel to sustain combustion of the black liquor. Projected benefits to the Big Island facility and surrounding areas include significant reductions in NO X , VOC, CO, and particulates. Table 1 below is taken from the FPA and compares actual emissions from the existing smelters to estimated emissions from use of conventional recovery boiler technology and a new gasification system.

Although Georgia-Pacific's feasibility analysis indicated the risks of attempting to construct and operate the new technology would be within acceptable limits from a technical standpoint, the company had two other concerns. The first concern was the cost of the project. Estimated costs to complete a gasification project, the first of its kind, were quite high and considerably more than costs for installing a new conventional recovery boiler. Therefore, Georgia-Pacific sought and has received some co-funding help from the U.S. Department of Energy (DOE). The second concern involved compliance with the MACT II rule. With this demonstration of a new technology come risks that the technology ultimately will not be successful. If this situation occurs, Georgia-Pacific may not have a functioning replacement for their smelters in time to meet the MACT II compliance date, which is March 13, 2004. Therefore, the FPA for this XL project contains EPA's commitment to undertake a rulemaking to provide temporary relief from the MACT II compliance date for this situation (and also for a defined time period in which Georgia-Pacific will run the new gasification system on black liquor from a Kraft pulp mill, to fulfill an obligation under their funding agreement with DOE). The nature of this relief and the rationale for it are discussed more fully in section III.B of this preamble.

As indicated by the schedule in the FPA, Georgia-Pacific has begun preliminary construction activities at Big Island for the black liquor gasification system. The construction schedule calls for completion of equipment installation by August 30, 2002 and completion of activities leading to startup by September 1, 2003. Of course this schedule is subject to some uncertainties, especially considering the technology is being installed for the first time at this scale. Delays may occur not only in the procurement and installation of equipment, but also in the start-up of the system. The system is complex, and individual components must be operated and adjusted before the entire system can be started. Georgia-Pacific anticipates additional adjustments as operation of the entire system is attempted and as production is gradually increased toward capacity.

If the gasification system cannot be operated successfully, Georgia-Pacific will construct a conventional recovery boiler. This will take approximately three years from the time the gasification system is declared a failure. After either successfully starting up the gasification system and conducting the Kraft liquor trials or declaring the gasification system a failure and constructing and starting up a conventional recovery boiler, Georgia-Pacific will shut down and decommission the existing smelters.

There are no current full-scale commercial applications of the black liquor, steam-reforming gasification technology of the type proposed by Georgia-Pacific. Therefore, there is a risk that the gasification system will fail. Although Georgia-Pacific considers this an unlikely occurrence, it is possible that despite Georgia-Pacific's best efforts, the system may never perform as expected or to a level sufficient to warrant continued operation. If this happens, Georgia-Pacific will construct a standard chemical recovery boiler in lieu of a gasification system to comply with MACT II, and will need to continue to operate the existing smelters while the standard recovery boiler is constructed. For this situation also, Georgia-Pacific requested the flexibility to operate the existing smelters past the MACT II compliance date for existing sources.

In addition to the situation described above, Georgia-Pacific requested the flexibility to operate the existing smelters for a short time after the MACT II compliance date, as necessary, to allow Georgia-Pacific to conduct limited trials of the new gasification system on black liquor from a Kraft pulp mill. Kraft mill black liquor has characteristics different from those of the liquor generated by Georgia-Pacific's semi-chemical pulp mill. The Department of Energy is interested, as is EPA, in the potential for widespread use of the gasification technology in the pulp and paper industry. However, the vast majority of pulp mills are of the Kraft type, and only a dozen or so mills in the U.S. are of the semi-chemical type. Therefore, the Department of Energy, in their contract with Georgia-Pacific to fund part of the cost of the gasification system, requested the trials to see how well the new technology could handle Kraft black liquor.

Georgia-Pacific has not requested any other Federal regulatory flexibility. The company intends to comply with all other CAA requirements, including those for new source review of the gasification system construction.

The amendments to the MACT II rule to help implement the Georgia-Pacific XL project are discussed below.

The startup of a new emissions unit is an important event because it defines the point in time that the new unit must be in compliance with an applicable hazardous air pollutant standard. The General Provisions for part 63 (40 CFR part 63 subpart A) defines startup as follows: “Startup means the setting in operation of an affected source for any purpose.” This definition would apply to the startup of the gasification system at Big Island. Georgia-Pacific raised a concern with this general definition, particularly with the possible connotation of operation “for any purpose.” Under this definition, the company felt that the gasification system could be deemed by an enforcement agency to have achieved “startup” before the many components operated together as a system and within the specifications of the manufacturer. Startup of the new gasification system at Big Island likely will occur only after a protracted period of operating and adjusting the many parts of the system, first individually and then all together; a period Georgia-Pacific calls commissioning. The EPA agrees, in this instance, that the General Provisions definition of startup could lead to some confusion as to when startup occurs, especially considering that this new, complex gasification technology has never been started up before on a commercial scale. Therefore, a definition of “startup” applying only to the gasification system at Big Island, has been added to § 63.861—Definitions. The definition makes clear that startup of the new gasification unit will occur at the end of the commissioning period.

Paragraph (c) is added to § 63.863—Compliance Dates to allow compliance date extensions for the Georgia-Pacific Big Island plant in the event of failure of the gasification system and also during the time of the Kraft liquor trials. The compliance extensions are described more fully below.

In the event the gasification system is a failure, the amendments provide Georgia-Pacific a compliance extension for the existing smelters of up to three years from the date the gasification system is declared a failure, but no later than March 1, 2007. The three years provides the company time to build and start up a new conventional recovery boiler to replace the existing smelters. March 1, 2007 is the longest possible duration of the extension, since it is three years after the latest date Georgia-Pacific agreed to declare that the system has failed. To obtain this extension, Georgia-Pacific must provide a notice to the Administrator stating that the system has failed and describing the events leading to that declaration.

Finally, Georgia-Pacific, according to their contract with the Department of Energy, must operate the new gasification system for up to 500 hours using black liquor from a donor Kraft pulp mill. While the gasification system is processing Kraft liquor, the existing smelters must operate to process the black liquor generated by the Big Island plant. Although the Kraft trials will last up to 500 hours, the trials may not run continuously for that period of time. Separate trials may last only a few hours. Between trials various system components may be adjusted in an effort to improve system performance or find optimum performance. Therefore, the total elapsed time to accumulate up to 500 hours of Kraft liquor trials may be as high as 1500 consecutive hours. The smelters must operate during this entire period. If the trials occur after the MACT II compliance date, the amendments allow the existing smelters to operate for up to 1500 hours during the Kraft trials, without the MACT II standard applying. Prior to conducting Kraft liquor trials, Georgia-Pacific must notify the Administrator of the 1500-hour time period in which it intends to conduct the trials (and operate the existing smelters).

Under § 63.866—Recordkeeping requirements, a new paragraph ((c)(7)) requires Georgia-Pacific to record the hours the existing smelters operate during the Kraft liquor trials. This requirement will allow enforcement of the 1500 maximum duration of a compliance waiver for the existing smelters during Kraft liquor trials.

Paragraph (a)(2) has been added to § 63.867—Reporting requirements—to specify notices Georgia-Pacific must send to the EPA Administrator (or his/her authorized representative, such as a State that has been delegated authority to implement the provisions of the rule), prior to invoking one of the compliance extensions.

To obtain the three year extension to build a conventional recovery unit in the event the gasification system fails, Georgia-Pacific must submit a notice providing the date the company declared the system a failure and the reasons why the technology was not successful. The decision to declare the new gasification system a failure rests with Georgia-Pacific alone, since only the company will know the technical information pertaining to failure of the system. Although the decision is theirs, Georgia-Pacific will declare the system a failure only after exhausting all possibilities for success and only as a last resort. Despite funding help from DOE, the company will be spending tens of millions of dollars on the gasification system, and failure of the system means Georgia-Pacific will have to spend additional tens of millions of dollars to scrap the failed system and construct a conventional recovery boiler. Thus, the company has considerable incentive to make the technology work.

Also, prior to conducting any trials using Kraft black liquor, Georgia-Pacific must submit a notice that: (1) Identifies the period in which the trials will take place and (2) explains why the trials could not be run prior to the compliance date applicable to the existing smelters.

For certain defined circumstances (see sections III.B.2 and III.B.3 of this preamble), the rule amendments allow Georgia-Pacific to operate their existing smelters beyond the MACT II standard's compliance date, which is 3 years after the effective date of the standard. Of course, EPA is aware that section 112(i)(3)(A) of the CAA states that compliance with a MACT standard shall be no later than 3 years from the standard's effective date. However, EPA notes that the special circumstances in this instance warrant the flexibility.

First, as described above, without this flexibility, Georgia-Pacific would not proceed to construct the black liquor gasification system. The new gasification system, if successful at Georgia-Pacific's Big Island facility, is expected to produce significant environmental benefits, including reductions in emissions of all regulated air pollutants. These reductions extend beyond those expected from conventional recovery boilers, which are commonly used in the industry and can meet the MACT II standard. (See section II.B.2 of this preamble for a discussion of emission reduction benefits.)

These emission reduction benefits include the effects of the gasification system's greater energy efficiency. The system will convert black liquor into a hydrogen rich gas. Some of this gas will be used to fuel the pulsed heaters providing energy to the gasification process and the remaining gas will be combusted in a boiler to produce steam. Steam generated by the gasification system will offset steam currently generated at Big Island by fossil fuel combustion. Although a conventional recovery boiler also will produce steam, the gasification system at Georgia-Pacific's Big Island facility is expected to do so with somewhat greater energy efficiency, lower air pollution levels, and significantly lower annual operating costs.

Successful completion of this XL project will show this technology to be capable of providing full chemical recovery capacity for a semi-chemical mill. This includes demonstration of the reliability and operational flexibility of the gasification system and all of the associated equipment. Once the technology is demonstrated, the industry can apply it at other pulp and paper facilities to obtain better energy conversion, improved safety, and environmental performance. The Big Island semi-chemical mill is similar in characteristics to 12 other mills in the U.S. producing virgin pulp for containers. Success of black liquor gasification at Big Island and success of the scheduled Kraft liquor trials will contribute significantly to its implementation in the much larger number of Kraft mills. Success also may pave the way for commercial scale application of gasification to the conversion of non-wood liquors, sludges, and agricultural wastes to energy.

In addition to producing steam, gasification technology could be used to generate onsite electricity, thereby offsetting a pulp mill's demand for electricity purchased from the utility grid. By configuring the black liquor gasification system to burn the product gas in a combined cycle gas turbine system, the energy released would be harnessed to generate clean electricity. Although Georgia-Pacific's facility at Big Island is not large enough to make combined cycle energy production economically viable, Kraft process pulp mills in the U.S. are large enough. For a Kraft facility employing black liquor gasification and combined cycle energy production, the reduction in fossil fuel use and greenhouse gas generation would be dramatic.

Compared to average utility grid emissions, generating electricity from a gasification unit would result in lower emissions of combustion related air pollutants. Displacing old, coal based utility boilers with a biomass based fuel, in this instance black liquor, would significantly lower emissions of CO 2 , a pervasive greenhouse gas that can contribute to global climate change. When this technology is successfully demonstrated with combined cycle energy generation and assuming utilization of currently available biomass, studies show that the energy savings could transform the domestic Pulp and Paper Industry from being a net importer of 6 gigawatts of electrical power to a net exporter. The studies also indicate that successful development and deployment of gasification technology would result in a decrease in greenhouse gas emissions of 18 million metric tons per year.

Over the next 10 to 15 years, the industry expects that a large fraction of the existing conventional chemical recovery boilers will reach the end of their useful life and have to be replaced. If black liquor gasification has become a proven technology by the time replacement decisions are made, a large-scale conversion to the new technology could occur.

Beyond the environmental and energy benefits described above, black liquor gasification has a safety benefit over conventional chemical recovery technology. In the gasification process, concentrated black liquor is pyrolyzed in a fluid bed gasifier through indirectly applied heat, liberating a hydrogen rich gas. Sodium carbonate pellets formed during the pyrolysis are drawn from the fluidized bed into a dissolving tank to reconstitute “green” liquor for recycle to the pulping process. Other gasification or conventional recovery technologies employ flame combustion within a reactor vessel or an intermediate smelt phase. The formation of smelt carries the potential for smelt-water explosions, which are a major safety concern in the operation of conventional recovery boilers. The steam reforming, black liquor gasification process to be constructed at Big Island does not produce a smelt phase and, thus, eliminates the potential for smelt-water explosions.

In short, EPA sees that significant environmental, economic, and safety benefits would accrue from successful completion of this XL project, not only at the Big Island plant but potentially nationwide. Nonetheless, these potential benefits must be measured against any potential adverse effects from undertaking the project. Under this project, the potential exists for operation of the existing smelters at Big Island beyond the time they otherwise would have been shut down. Specifically, during the project and under certain situations, current HAP emissions from the existing smelters may continue beyond the MACT II compliance date (March 13, 2004). As stated before, current smelter HAP emissions are above those that would be allowed under the MACT II standard. Without this XL project, Georgia-Pacific would replace the smelters with conventional chemical recovery technology on or before the compliance date. The amounts of “excess” smelter emissions that actually will occur under this XL project depend on how well the construction and startup of the gasification system proceeds.

It is quite possible that Georgia-Pacific will be able to construct and successfully start up the unit according to their current schedule, which allows for several months of commissioning activities leading to startup. Under such a scenario, Georgia-Pacific could shut down the smelters before the MACT II compliance date and not need any compliance flexibility.

Even if Georgia-Pacific is able to start up the new system according to schedule, it is probable that the Kraft liquor trials will occur, at least in part, after the MACT II compliance date. These trials cannot be run until Georgia-Pacific has started up the gasification system and run it for some period under stable operation. Therefore, it is likely that the Kraft trials will require the smelters to operate for up to 1500 hours after the compliance date.

The worst case scenario, which also is the least likely, occurs if Georgia-Pacific is unable to successfully operate the gasification system. If this occurs, Georgia-Pacific would have to construct a new conventional recovery boiler, and would be allowed up to three years to do so. Under such a scenario, the existing smelters would operate until the new conventional unit has achieved startup, which could be as long as March 1, 2007.

Of all the possibilities, the most probable scenario is that the new gasification system will be started up prior to the MACT II compliance date, but the Kraft liquor trials will occur after that date. This means that the greatest likelihood is that the public surrounding the Big Island facility will experience smelter emissions up to 1500 hours longer than they would without this XL project, of course with the prospect of much lower emissions from success of the gasification system.

In summary, the Agency has considered the expected environmental and energy benefits, safety improvement, reduced operation and maintenance costs, and high potential for transfer to the rest of the pulp and paper industry expected from a successful demonstration of the black liquor gasification technology at Georgia-Pacific's Big Island facility. The Agency also has weighed the possibility of allowing the existing emissions from the smelters, which are higher than allowed by the MACT II standard, to persist for a limited time beyond the MACT II compliance date. Finally, the Agency has noted the solid support for the project from all stakeholders involved in the project, including those representing the communities near the Big Island plant. Based on all available information, the Agency has concluded that it is in the best interest of the environment and public health and welfare to grant the regulatory flexibility requested by Georgia-Pacific to undertake this XL project. In the event that the gasification technology should fail, the Agency would regard the Georgia-Pacific mill as a different type of mill essentially part of its own subcategory—a mill that had attempted to operate using a method of pulping liquor recovery—gasification—different from that used by any other source. In the event of failure of gasification, this unique source would then be accorded the statutory 3 year compliance period to use conventional recovery boiler technology to achieve the MACT II emission standard. In addition, as EPA indicated in the MACT I rule, there are rare circumstances where the three year compliance date can serve as such a disincentive to pollution control as to no longer properly be considered MACT. See 63 Federal Register at 18527-528 (acting to avoid discouraging mills from installing advanced water treatment technologies). EPA is similarly acting here to assure that the compliance date not serve as a disincentive to the potentially great benefits of gasification technology. (This same rationale serves to justify any potential compliance extension needed to test the new gasification unit at Big Island, Virginia on kraft mill black liquor.)

The compliance flexibility afforded by these amendments to the MACT II rule is limited to the existing smelters at the Big Island facility, and only for this XL demonstration project.

Because this rule affects only one facility, it is not a rule of general applicability and therefore not subject to OMB review and Executive Order 12866. In addition, OMB has agreed that review of site specific rules under Project XL is not necessary.

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 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 would not have a significant impact on a substantial number of small entities because it only affects one source, the Georgia-Pacific plant at Big Island, VA, which is not a small entity. Therefore, I conclude that this action will not have a significant economic impact on a substantial number of small entities.

This action applies only to one company, and therefore requires no information collection activities subject to the Paperwork Reduction Act, and therefore no information collection request (ICR) will be submitted to OMB for review in compliance with the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

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

As noted above, this rule is limited to Georgia-Pacific's plant in Big Island, Virginia. The EPA has determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any one year. Thus, today's rule is not subject to the requirements of sections 202 and 205 of the UMRA. Nevertheless, in developing this rule, EPA worked closely with the Virginia Department of Environmental Quality and received meaningful and timely input in the development of this rule. The EPA also has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments.

Executive Order 13045, “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. The EPA interprets E.O. 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Order has the potential to influence the regulation. This action is not subject to E.O. 13045 because it is not economically significant as defined in E.O. 12866, and in fact applies only to one source, Georgia-Pacific's facility in Big Island, Virginia. Additionally, this action promotes lower emissions compared to the emissions that would otherwise exist at that facility.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), 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 direct final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Today's rule amends a previously established compliance date, under certain circumstances, for one entity, Georgia-Pacific Corporation's facility in Big Island, Virginia. Thus, this rule does not create any mandates nor impose any enforceable duties on the States in general or the Commonwealth of Virginia specifically. It also will not affect the national government's relationship with the States or the distribution of power among various levels of government. Thus, Executive Order 13132 does not apply to this rule. Nevertheless, in developing this rule, EPA worked closely with the Virginia Department of Environmental Quality and received meaningful and timely input in the development of this rule.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.”

This direct final rule does not have tribal implications. It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. Today's rule does not significantly or uniquely affect the communities of Indian tribal governments. This direct final rule affects only the Georgia-Pacific Corporation's facility in Big Island, Virginia. It does not affect any communities of Indian tribal governments and there are no such communities located in the vicinity of the Georgia-Pacific facility. Thus, Executive Order 13175 does not apply to this rule.

Section 12(d) of NTTAA, Public Law 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary standards.

This rulemaking does not involve technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

The Congressional Review Act, 5. U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 804 exempts from section 801 the following types of rules (1) rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding today's action under section 801 because this is a rule of particular applicability.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The amount of the 2001 pollock TAC in the West Yakutat District of the GOA was established as 2,235 metric tons by the Final 2001 Harvest Specifications and Associated Management Measures for the Groundfish Fisheries Off Alaska (66 FR 7276, January 22, 2001).

NMFS closed the directed fishery for pollock in the West Yakutat District of the GOA under § 679.20(d)(1)(iii) on March 15, 2001 (66 FR 15359, March 19, 2001).

NMFS has determined that currently, approximately 500 mt remain in the directed fishing allowance. Therefore, NMFS is terminating the previous closure and is opening directed fishing for pollock in the West Yakutat District of the GOA.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately implement this action to allow full use of the pollock TAC constitutes good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(3)(B) and 50 CFR 679.20(b)(3)(iii)(A), as such procedures would be unnecessary and contrary to the public interest. Similarly, the need to implement these measures in a timely fashion to allow full use of the pollock TAC constitutes good cause to find that the effective date of this action cannot be delayed for 30 days. In addition, this action relieves a restriction on the harvest of pollock in the West Yakutat District of the Gulf of Alaska. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is hereby waived.

This action is required by § 679.20 and is exempt from review under E.O. 12866.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

NMFS issued a prohibition to directed fishing for pollock effective March 16, 2001, for Statistical Area 610, in accordance with § 679.20(d)(1)(iii) (66 FR 15359, March 19, 2001).

As of March 19, 2001, 600 metric tons (mt) of pollock remain in the B seasonal allowance of the pollock TAC in Statistical Area 610 of the GOA. Section 679.23(b) specifies that the time of all openings and closures of fishing seasons other than the beginning and end of the calendar fishing year is 1200 hrs, A.l.t. Current information shows the catching capacity of vessels catching pollock for processing by the inshore component in Statistical Area 610 of the GOA is about 1,200 mt per day. The Administrator, Alaska Region, NMFS, has determined that the B seasonal allowance of the pollock TAC could be exceeded if a 24-hour fishery were allowed to occur. NMFS intends that the seasonal allowance not be exceeded and, therefore, will not allow a 24-hour directed fishery. NMFS, in accordance with § 679.25(a)(1)(i)and § 679.25(a)(2)(i), is adjusting the B fishing season for pollock in Statistical Area 610 of the GOA by opening the fishery at 1200 hrs, A.l.t., March 21, 2001, and closing the fishery at 2400 hrs, A.l.t., March 21, 2001, at which time directed fishing for pollock will be prohibited. This action has the effect of opening the fishery for 12 hours. NMFS is taking this action to allow a controlled fishery to occur, thereby preventing the overharvest of the B seasonal allowance of the pollock TAC designated in accordance with the Final 2001 Harvest Specifications and Associated Management Measures for the Groundfish Fisheries Off Alaska (66 FR 7276, January 22, 2001) and § 679.20(a)(5)(ii)(C). In accordance with § 679.25(a)(2)(iii), NMFS has determined that prohibiting directed fishing at 2400 hrs, A.l.t., March 21, 2001, after a 12-hour opening is the least restrictive management adjustment to achieve the B seasonal allowance of the pollock TAC and will allow other fisheries to continue in noncritical areas and time periods. Pursuant to § 679.25(b)(2), NMFS has considered data regarding catch per unit of effort and rate of harvest in making this adjustment.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately implement this action to allow full utilization of the pollock TAC constitutes good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(3)(B) and 50 CFR 679.20(b)(3)(iii)(A), as such procedures would be unnecessary and contrary to the public interest. Similarly, the need to implement these measures in a timely fashion to allow full utilization of the pollock TAC constitutes good cause to find that the effective date of this action cannot be delayed for 30 days. In addition, this action relieves a restriction on the harvest of pollock in statistical area 610. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is hereby waived.

Without this inseason adjustment, NMFS could not allow the B seasonal allowance of the pollock TAC in Statistical Area 610 of the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until April 5, 2001.

This action is required by §§ 679.20 and 679.25 and is exempt from review under Executive Order 12866.

In the document closing directed fishing for pollock in the West Yakutat District of the Gulf of Alaska, published at 66 FR 15359, March 19, 2001, FR Doc. 01-6728, the following correction is made:

On page 15360, column 1, under the DATES heading, line 2, “March 1, 2001” is corrected to read “March 15, 2001”.