The Board administers the Thrift Savings Plan (TSP), which was established by the Federal Employees' Retirement System Act of 1986 (FERSA), Public Law 99-335, 100 Stat. 514, codified, as amended, largely at 5 U.S.C. 8351 and 8401-8479. The TSP is a tax-deferred retirement savings plan for Federal employees, similar to a cash or deferred arrangement established under section 401(k) of the Internal Revenue Code (26 U.S.C. 401(k)). Sums in the Thrift Savings Plan are held in trust for TSP participants.

On December 27, 1996, and May 1, 1998, the Board published final regulations in the Federal Register concerning the correction of administrative errors (61 FR 67472 and 63 FR 24380). Those regulations were codified at 5 CFR part 1605. On March 12, 2001, the Board published a final regulation in the Federal Register changing the time period during which errors must be corrected by an employing agency, the Board, or the TSP record keeper, as the case may be, and when they may be corrected in the sound discretion of these parties (66 FR 14448).

On January 7, 1991, the Board published interim regulations with a request for comment in the Federal Register concerning the payment to participants' TSP accounts of lost earnings attributable to employing agency errors (56 FR 606). Those regulations were codified at 5 CFR part 1606.

On September 19, 2000, Congress enacted the Federal Erroneous Retirement Coverage Corrections Act, title II of Public Law 106-265, 114 Stat. 762, which permits Federal employees and annuitants who were placed in the wrong retirement system to choose between FERS and CSRS. The Office of Personnel Management (OPM) has primary responsibility for implementing FERCCA. On March 19, 2001, OPM published an interim rule in the Federal Register (66 FR 15606) implementing its obligations under FERCCA.

This regulation implements the Board's obligations under FERCCA. It also amends the existing regulations to incorporate changes in the current TSP record keeping system which will become effective on May 1, 2001. In addition, it incorporates other policy changes as described below.

The amendment primarily renumbers and reorganizes the existing part. The substantive changes are described below.

Section 1605.1 contains definitions that apply to error correction, such as Board error and late contributions, as does the existing regulation. Definitions of some terms that are generally applicable throughout the Board's regulations are removed. The definition of investment fund election is eliminated because it is obsolete; the definition of agency contributions is eliminated because it is the same as the definition of employer contributions.

In subpart B, the Board explains proposed procedures for agencies to use in correcting employing agency errors in TSP participants' accounts. Section 1605.11 replaces and is substantially the same as existing § 1605.2; it explains the process for correcting errors which prevent participants from receiving the TSP contributions they are entitled to receive. Paragraph (c)(4) explains that the current rule prohibiting a participant from making contributions for six months following a financial hardship in-service withdrawal also prohibits a participant from making up contributions during this period. In paragraph (c)(8), the Board proposes to remove the current restriction on participants' making partial payments under a schedule for employee makeup contributions. The Board proposes to remove this restriction because agencies have requested that they be given the flexibility to accept such payments.

Section 1605.12 replaces existing § 1605.3 and explains the process for agencies to follow in removing erroneous contributions from a participant's account (negative adjustments). To avoid administrative complications, the Board proposes to calculate negative adjustments without regard to intervening interfund transfers.

Section 1605.13 replaces existing § 1605.4 and provides rules for makeup contributions resulting from back pay awards and other retroactive pay adjustments. Currently, § 1605.4(a)(1) provides that, on reinstatement, a participant must be given the opportunity to submit a contribution election to make current contributions; the contribution election is made retroactive to the first day of the first full pay period in the most recent TSP election period. The amendment eliminates this retroactive effect; instead, the contribution election will take effect as soon after it is received as administratively possible. The participant also has the opportunity to elect makeup contributions under proposed § 1605.13(a)(2); all makeup contributions will be invested as provided in paragraph proposed § 1605.13(a)(3). The proposed rule incorporates without change the provision of the final rule published in the Federal Register on March 12, 2001 (66 FR 14446), that lost earnings will be calculated based upon the G Fund rates of return or otherwise as agreed by the parties or ordered by the court or other tribunal with jurisdiction over the back pay case.

Section 1605.14, formerly § 1605.5, is amended to adopt new procedures for the correction of errors as provided in FERCCA.

Section 1605.15 has been reserved.

Section 1605.16, formerly § 1605.6, explains the procedure and time limitations for a participant to file a claim against his or her employing agency. The section is renumbered but otherwise incorporates without change the procedures published in the Board's final regulation on March 12, 2001 (66 FR 14446); the section is published here in its entirety for completeness. However, participants should also take note of amended § 1606.15, which provides that a participant's claim must be filed within six months of the participant's receipt of the earliest of a TSP participant statement, TSP loan statement, employing agency earnings and leave statement, or any other document that indicates that an employing agency error has affected the participant's TSP account.

Subpart C discusses the correction of Board or TSP record keeper errors. Section 1605.21 remains substantially the same as existing § 1605.7. The Board proposes to eliminate § 1605.7(a)(3), which gives participants the choice of whether or not to have an error corrected; instead, the TSP would correct any of its (or its record keeper's) errors that are timely discovered or brought to its attention. Also, the proposed amendment deletes 1605.7(b) because it is redundant; errors in reporting a taxable distribution are processed no differently than are other miscellaneous errors under § 1605.21(b).

Section 1605.22, formerly § 1605.8, discusses the procedures for submitting claims for the correction of Board or TSP record keeper errors. The section is renumbered but otherwise incorporates without change the procedures published in the Board's final regulation on March 12, 2001 (66 FR 14446); the section is published here in its entirety for completeness.

In subpart D, the Board proposes to include miscellaneous provisions, such as § 1605.31, which addresses retroactive employer and employee contributions that are not the result of error, but are permitted by the Uniformed Services Employment and Reemployment Rights Act (USERRA), 5 U.S.C. 8432b. (Eligibility for retroactive employer and employee contributions due to military service is determined under part 1620, subpart E.) The proposed amendment gives eligible participants the right to choose whether lost earnings on makeup employer contributions will be computed using the rates of return for the G Fund or using the rates of return consistent with the participant's contribution allocation that was on file immediately before he or she separated for military service.

Only minor changes are made to part 1606 to make it consistent with the proposed amendments to part 1605.

In § 1606.2, the definitions have been changed to conform to those in part 1605.

The amendments to § 1606.5 reflect changes in how participants will submit contribution allocations after May 1, 2001. (This change was first explained in the Board's proposed amendment to 5 CFR part 1600, published in the Federal Register on March 26, 2001 (66 FR 16411).) At present, participants submit contribution allocations to their employing agencies, on the same form (Form TSP-1) as their contribution elections. After May 1, 2001, participants will continue to file contribution elections with their employing agencies but will file their contribution allocations using Form TSP-50 with the TSP record keeper, or using the TSP Web site or the ThriftLine. Thus, for lost earnings on contribution errors occurring on or before April 30, 2001, the employing agency will continue to report the investment fund to which a makeup or late contribution would have been made on the lost earnings record. The Board proposes to compute lost earnings on contributions to an incorrect investment fund occurring before May 1, 2001, without regard to intervening interfund transfers. For lost earnings on contribution errors occurring on or after May 1, 2001, the TSP record keeper will determine the proper fund allocation.

Finally, in amending § 1606.5, the Board proposes to remove references to the investment restrictions applicable to errors that occurred prior to December 31, 1990, because there are very few of these errors left to be corrected, if any. A similar amendment is made to § 1606.7.

Section 1606.7, describing how agencies correct contribution allocation errors, is modified because after April 30, 2001, agencies will no longer be able to make contribution allocation errors.

The Board proposes to amend § 1606.8 to delete paragraph (b), which is obsolete, and to include a reference to the change in participants' submission of contribution allocations directly to the TSP.

The Board proposes to amend § 1606.9 to allocate lost earnings pro rata based upon the participant's most recent valued account balance.

The Board proposes to amend § 1606.11 to reflect modifications to agencies' submission of lost earnings records.

The Board proposes to amend § 1606.13 to reflect changes to the lost earnings calculation.

The Board proposes to amend § 1606.15(a) to incorporate the claims filing procedures that were incorporated into 1605.16 by the Board's final regulation published in the Federal Register on March 12, 2001 (66 FR 14446).

I certify that these regulations will not have a significant economic impact on a substantial number of small entities. They will affect only employees of the Federal Government.

I certify that these regulations do not require additional reporting under the criteria of the Paperwork Reduction Act of 1980.

Pursuant to the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 602, 632, 653, and 1501-1571, the effects of this regulation on state, local, and tribal governments and the private sector have been assessed. This regulation will not compel the expenditure in any one year of $100 million or more by state, local, and tribal governments in the aggregate, or by the private sector. Therefore, a statement under section 1532 is not required.

For the reasons set out in the preamble, 5 CFR chapter VI is proposed to be amended as set forth below:

1. Part 1605 is revised to read as follows:

On August 11, 2000 (65 FR 49207), the NRC published a notice of receipt of a petition for rulemaking filed by Charles T. Gallagher, of Gammatron, Inc., Houston , Texas. The petitioner requested that NRC amend its financial assurance requirements for materials licensees.

The petitioner requested that NRC amend its requirements in the following principal respects, or address the following issues:

(1) NRC should provide a greater opportunity for comment to Agreement State licensees when new regulations are put in place. The petitioner states that Agreement state licensees were not provided adequate opportunity for comment when the financial assurance requirements were established.

(2) The petitioner believes that NRC's financial assurance requirements are arbitrary. The petitioner advocates basing the amount of financial assurance required on other factors in addition to possession limits because safety programs in smaller licensees may be not as good as those carried out by larger licensees.

(3) The petitioner wanted financial assurance to be required of all licensees, not just the larger licensees.

(4) The petitioner believes that additional mechanisms for financial assurance should be established that impose less of a financial burden on small businesses. According to the petitioner, the NRC should add financial assurance mechanisms that allow the cost of financial assurance to be spread out over time.

(5) Finally, the petitioner wanted the NRC regulations to exempt orphan sources from financial assurance requirements. The petitioner believes that there are no disposal facilities that accept this waste, so that requiring financial assurance for licensees possessing this type of waste is unnecessary.

Four comments were received, including one from the petitioner. The following is a summary of the comments received.

This comment opposes the portion of the petition requesting that NRC modify it's financial assurance regulations to require financial assurance of all licensees. The letter expresses no comment on the rest of the petition, but states that ample opportunity for comment on the financial assurance regulations was provided the petitioner.

This comment states that the petitioner, along with other licensees in Texas, and the general public, had opportunity to comment on regulations established for financial assurance. The commenter does not agree that financial assurance should be required for all licensees. The letter also disagrees with the petitioner's belief that financial assurance should be provided by a small business licensee over a longer period of time, rather than all at one time upon licensing. The letter agrees with the petitioner's belief that it is impractical for regulatory agencies to determine the costs of disposal of orphan waste.

The Nuclear Energy Institute (NEI) believes that Agreement States and their licensees had adequate opportunity for comment on the financial assurance regulations, and that licensed facilities had ample time to prepare for the funding requirement imposed by the regulations. NEI does not support the petitioner's request that all licensees have financial assurance. Some licensees handle materials that do not require a decommissioning fund, and other types of licensees should not be required to tie up capital as financial assurance that could be used for better purposes. NEI believes that current regulations allow a licensee to accumulate funds during the life of a facility, citing the example of a licensee initially posting a bond and retiring it with a sinking fund. NEI disagrees with the petitioner's point that licensees possessing greater than Class C waste be exempted from financial assurance requirements. NEI states that disposal is only one part of decommissioning. The licensee must have funding available to clean up a site and package the waste for disposal. NEI states that the Department of Energy (DOE) will currently accept greater than Class C waste if there is no alternative for storage or other facility that can accept the waste.

The petitioner sent in a comment responding to other comments that were posted on NRC's website. The petitioner notes that few comments were received and faults the regulatory agencies for not adopting a method to notify more of the public of regulatory actions, such as by e-mail. The petitioner responds to the American College of Nuclear Physicians/Society of Nuclear Medicine (ACNP/SNM) comment by stating that ample opportunity for comment on the financial assurance regulations was not provided. He also opposes the statement in the ACNP/SNM letter that nuclear medicine licensees provide a public benefit, stating that industrial licensees also provide a public benefit.

1. Issue—Agreement State Licensees Were not Provided Opportunity to Comment on the Original Financial Assurance Regulations. The petitioner states that Agreement State licensees were not provided an opportunity to comment on the original financial assurance regulations and that the NRC accepted comments only from NRC licensees and Agreement State regulatory personnel. The petitioner further states that Agreement State regulatory agencies did not request comments from their licensees, and that they did not recognize the impact that the rulemaking represented.

Response. The financial assurance requirements for materials licensees were established as part of the decommissioning rule, “General Requirements for Decommissioning Nuclear Facilities” promulgated in 1988. The proposed decommissioning rule was issued for public comment on February 11, 1985 (50 FR 5600). NRC received comments from 143 groups or individuals, including 10 comment letters from Agreement States on a variety of issues, including financial assurance. Comments were accepted from all groups and individuals; NRC did not impose any restrictions, such as accepting comments “only from NRC licensees and from Agreement State regulatory personnel,” as stated by the petitioner. Since that time, the financial assurance for decommissioning regulations have been amended several times. In each case, the proposed amendments were published for public comment, and comments were received from a wide range of State governments, trade associations, individuals, and businesses.

There is no basis to the petitioner's argument that Agreement State licensees were not provided an opportunity to comment on the original financial assurance regulations by the NRC. The comment letter from the State of Texas indicates that Texas offered its licensees and the general public an opportunity to comment on Texas' equivalent financial assurance regulations, when they were published in 1993.

2. Issue—Financial Assurance Should Not be Based on Amounts of Material Possessed. The petitioner states that current financial assurance requirements, which are based on the quantity of licensed material possessed, are arbitrary. The petitioner disputes the premise that risk is greater for licensees that possess larger quantities of materials on the basis that these larger licensees often have more extensive safety programs and more careful handling procedures. According to the petitioner, the amount of financial assurance required should not be based on possession limits.

Response. The basis for NRC's financial assurance requirements is not arbitrary. Quantities and types of materials are considered. Larger amounts of materials used by a licensee generally require larger amounts of financial assurance. Possession of an equivalent amount of radioactive material in the form of sealed sources has lower financial assurance amount requirements than if the material is in unsealed form. The NRC stated its belief in the general principle of basing financial assurance on type and quantity of material in an amendment to the decommissioning requirements published in 1995. Addressing the 1988 decommissioning rule, the NRC said “The rule established a graded structure for financial assurance that is based on the assumption that the kinds and quantities of radioactive materials authorized in the license provide a reasonably good correlation to the amount of contamination that has to be remediated.” (60 FR 38235; July 26, 1995—final rule “Clarification of Decommissioning Funding Requirements”). The NRC continues to support this view. NRC's experience to date with the financial assurance program for materials licensees does not indicate that a change in emphasis away from possession limits is needed.

The petition does not recognize that a licensee has the option under current NRC regulations of not using the certification amounts, which are based on possession limits, as a basis for financial assurance. The regulations on financial assurance in Parts 30, 40, and 70 allow licensees (except for licensees using very large quantities of materials) to use one of two methods for determining the amount of financial assurance required. The methods are either: to submit a decommissioning plan with a cost estimate, or use one of the certification amounts. A licensee may submit a decommissioning plan that includes a decommissioning cost estimate. This estimate may take into account other factors in addition to type and amount of material possessed. The estimate, when approved by NRC, becomes the basis for the amount of financial assurance required. Most materials licensees that are required to have financial assurance choose to use one of the certification amounts, instead of submitting a facility-specific decommissioning cost estimate.

The State of Texas comment letter notes that the petition appears to ignore potential costs of disposal of materials, focusing only on decontamination costs. Decommissioning costs associated with disposal depend directly on the quantity of material possessed by a licensee. From this perspective, basing financial assurance on possession limits is a sound method of ensuring that decommissioning costs are fully covered.

Regarding the petitioner's argument that larger licensees have more extensive safety programs and more careful handling procedures, the petitioner has not set forth any supporting material for this assertion and, therefore, has not provided a basis in this respect for a rulemaking to amend the regulations.

The petition does not provide sufficient information on decommissioning costs or how to establish a new financial assurance system to provide a basis for the NRC to consider changing to an alternative method for establishing financial assurance requirements.

3. Issue—Require Financial Assurance for All Materials Licensees. The petitioner states that financial assurance should be required of all licensees.

Response. The decommissioning rule required financial assurance only of large licensees because the NRC considered that the risks involved when adequate funds are not available for timely decommissioning vary according to the amount and type of radioactive materials that a licensee may possess. Financial assurance, except for instances where a letter of intent or parent or self guarantee is used, 1 is a cost burden on a licensee. In deciding what licensees should be required to have financial assurance, NRC must weigh the potential decommissioning costs that might be required for categories of licensees against the cost burden on licensees to provide that financial assurance. The majority of licensees do not possess a quantity of radioactive materials likely to pose significant risks to public health and safety. Therefore, financial assurance would be an unnecessary burden for these licensees. Type of licensed material possessed is also a factor, as the risks from sealed sources were considered lower than material in unsealed form.

The petitioner has not provided a sufficient basis for changing this approach. The comment from the Society of Nuclear Medicine and American College of Radiology states that imposing financial assurance on smaller licensees would be an unnecessary burden on these licensees. There is inadequate information in the petition to justify imposing the burden of financial assurance on all NRC licensees.

4. Issue—Spreading Over Time the Funding of Financial Assurance. The petitioner states that financial assurance requirements are too burdensome for small business. Licensees should not be required to provide financial assurance at one time, upon licensing, but should be allowed to fund it over the life of the licensed facility. The Environmental Protection Agency (EPA) and its designated State agencies allow this type of funding. Large businesses and public institutions are the only types of licensee that can obtain surety bonds, parent company guarantees, etc. If the purpose of financial assurance regulations is to require licensee cleanup of their facilities, rather than taxpayer funded cleanup, the regulations must allow a method of providing financial assurance that does not force the small business licensee out of business.

Response. This issue was considered in the decommissioning rulemaking (50 FR 5600; February 11, 1985). The types of financial assurance mechanisms required of licensees take into account the stability of the source of revenues to the licensee. In the NRC's financial assurance regulations, only electric utilities, as defined in 10 CFR 50.2, were provided an opportunity to use sinking funds. 2 Under a regulated electric utility system where a utility is granted a monopoly in providing electric service, revenues would be stable and thus sources of funding were reasonably predictable. The regulator could adjust the price of electric service so that a utility would have revenues sufficient for decommissioning. Even premature shutdown of a plant, before the sinking fund fully covered decommissioning costs, could be accommodated by a regulatory authority that allowed the utility to recover decommissioning costs from utility service area ratepayers. For other licensees, it is the NRC's position that the required amount of financial assurance for decommissioning must be available when operations commence. Revenues are not stable and predictable, and there is a possibility that the licensee could cease operations prior to the sinking fund being fully funded. To guard against this possibility, the full amount of financial assurance required to decommission a facility was required “up front”.

The Commission further recognized this principle in the recent rulemaking on financial assurance for power reactor licensees (Financial Assurance Requirements for Decommissioning Nuclear Power Reactors—63 FR 50465; September 22, 1998). Under the new requirements, designed to address potential electric utility deregulation, when a reactor licensee loses its regulated monopoly status, it is no longer allowed to use a sinking fund, and must provide the full amount of financial assurance up front.

This does not mean that licensees not using a sinking fund cannot pay for financial assurance over a long time frame. Several financial assurance mechanisms permit this approach. A surety bond or letter of credit can be used to provide financial assurance; the cost of these mechanisms is on a yearly or multi-yearly basis. A licensee may use a sinking fund, in combination with a surety bond or another mechanism that covers the portion of required financial assurance not covered by accumulated funds in the sinking fund. Also, several financial assurance mechanisms—statement of intent, and parent and self guarantee—do not impose any direct costs on the licensee. However, it is true that these guarantee mechanisms are not likely to be available to most small business licensees.

EPA does allow a graduated trust to be used for financial assurance under several of its regulations applicable to solid waste management, hazardous waste management, and other types of facilities. For example, EPA's regulations at 40 CFR 264.143, “Financial assurance for closure,” allow financial assurance to be provided by annual payments into a trust fund over a period that is the shorter of (1) the term of the initial RCRA permit, or (2) the remaining life of the facility. However, these EPA financial assurance regulations generally apply to all regulated facilities, even the smallest. In contrast, NRC's financial assurance regulations apply only to the largest licensees; less than 15 percent of NRC materials licensees are required to provide financial assurance. NRC's financial assurance requirements thus pose less of a regulatory burden on smaller licensees.

The petitioner does not present sufficient information to warrant a change by NRC in its regulations.

5. Issue—Financial Assurance for Orphan Sources. The petitioner states that orphan waste (waste which has no disposal “home”) should be exempted from financial assurance requirements because the DOE is responsible for disposal of this category of waste. A licensee that has this type of waste should not be required to calculate and fund its disposal when there is no disposal site that will accept it. An example cited by the petitioner where DOE has taken steps to implement the responsibility that the petitioner addresses, is americium-241. The DOE is compiling a list of unwanted or abandoned sources for the ultimate recovery of the americium-241.

Response: Orphan sources do pose a significant problem for a licensee. DOE, NRC, EPA, and State regulatory agencies are all working to address this issue, and ensure that proper disposition is provided for orphan sources. DOE has initiated a pilot program, working with NRC, to identify orphan sources. However, this program is in the pilot stage, and DOE does not now have a program in place to accept all orphan sources. Moreover, DOE is required by law to recover costs of any program that is established by charging a disposal fee to accept orphan sources.

Financial assurance is especially important for orphan sources. Many of these sources are accepted by waste brokers either for reuse or for storage. However, the cost of using these services can be very high. Using the example of americium-241, costs are significantly higher relative to other isotopes.

In addition to funding of disposal costs, there are other decommissioning cost concerns involved in this issue, as noted in the Nuclear Energy Institute comment. A damaged/leaking source could cause contamination at a licensee's facility, which would need remediation. Waste packaging would also require funding. Thus, the rationale for requiring financial assurance would remain, even if disposal were assured by DOE. It is premature to change NRC's financial assurance regulations until a national orphan source recovery program is fully implemented. At that time, a review of financial assurance amounts required for these types of sources may be warranted.

For reasons cited in this document, the NRC denies the petition.

The FDIC is authorized to approve or disapprove applications for federal deposit insurance. See 12 U.S.C. 1815. In determining whether to approve deposit insurance applications, the FDIC considers seven factors set forth in the Federal Deposit Insurance Act (FDI Act). These factors are (1) the financial history and condition of the depository institution; (2) the adequacy of the institution's capital structure; (3) the future earnings prospects of the institution; (4) the general character and fitness of the management of the institution; (5) the risk presented by the institution to the Bank Insurance Fund or the Savings Association Insurance Fund; (6) the convenience and needs of the community to be served by the institution; and (7) whether the institution's corporate powers are consistent with the purposes of the FDI Act. 12 U.S.C. 1816. Also, under the FDI Act, the FDIC must determine as a threshold matter that an applicant is a “depository institution which is engaged in the business of receiving deposits other than trust funds * * *.” 12 U.S.C. 1815(a)(1). Applicants that do not satisfy this threshold statutory requirement are ineligible for deposit insurance.

The FDIC applies the seven statutory factors in accordance with a “Statement of Policy on Applications for Deposit Insurance”. See 63 FR 44752 (August 20, 1998). The Statement of Policy discusses each of the factors at length; however, it does not address the threshold requirement that an applicant be “engaged in the business of receiving deposits other than trust funds”.

The threshold requirement for obtaining federal deposit insurance is set forth in section 5 of the FDI Act. See 12 U.S.C. 1815(a)(1). The language used by section 5 (“engaged in the business of receiving deposits other than trust funds”) also appears in section 8 and section 3 of the FDI Act. Under section 8, the FDIC is obligated to terminate the insured status of any depository institution “not engaged in the business of receiving deposits, other than trust funds * * *.” 12 U.S.C. 1818(p). In section 3, the term “State bank” is defined in such a way as to include only those State banking institutions “engaged in the business of receiving deposits, other than trust funds * * *.” 12 U.S.C. 1813(a)(2).

The statute is ambiguous. For example, it does not specify whether a depository institution must hold a particular dollar amount of deposits in order to be “engaged in the business of receiving [non-trust] deposits”. Similarly, it does not specify whether a depository institution must accept a particular number of deposits within a particular period in order to be “engaged in the business of receiving [non-trust] deposits”. In addition, it does not specify whether a depository institution must accept non-trust deposits from the general public as opposed to accepting deposits only from one or more members of a particular group (such as the institution's trust customers or employees or affiliates).

One possible interpretation is that an insured depository institution must receive a continuing stream of non-trust deposits from the general public. This interpretation would be based upon the statute's use of the word “receiving” (suggesting repetition) and the plural word “deposits”.

Another possible interpretation is that an insured depository institution may hold—and periodically renew—a limited number of deposit accounts or even a single deposit account. This interpretation would be based upon the fact that the statute defines “deposit” in such a way as to equate “receiving” and “holding.” See 12 U.S.C. 1813(l)(1). Also, the statute recognizes that a single deposit can be accepted or “received” many times through rollovers. See 12 U.S.C. 1831f(b). Indeed, the periodic accrual of interest on a single deposit represents the “receiving” of multiple new “deposits”. Although the depositor might withdraw the interest regularly (rather than allowing the interest to be added to the principal), the accrued interest nonetheless would be a “deposit” until such withdrawal. See 12 CFR 330.3(i)(1) (for insurance purposes, a deposit consists of principal plus ascertainable interest as of the date of the depository institution's failure).

The ambiguity of the statute results from the nature of the banking business. The opening of a deposit account does not represent a completed, isolated transaction. Rather, the opening of an account initiates a continuing business relationship with periodic withdrawals, deposits, rollovers and the accrual of interest. These deposits, rollovers and accruals represent the “receiving” of “deposits”.

In applying the statutory standard (“engaged in the business of receiving deposits other than trust funds”), the FDIC has approved applications from many institutions that did not intend to accept non-trust deposits from the general public. Also, the FDIC has approved applications from institutions that only intended to hold one type of deposit account ( e.g., certificates of deposit) or that did not intend to hold more than one or a few non-trust deposit accounts. The FDIC's long-standing practice of approving applications from such non-traditional depository institutions has not been sufficient to remove uncertainty as to the meaning of being “engaged in the business of receiving deposits other than trust funds.” In order to clarify its interpretation of the law, the FDIC published General Counsel Opinion No. 12. This opinion is discussed in greater detail below.

In March of 2000, the FDIC published General Counsel Opinion No. 12. See 65 FR 14568 (March 17, 2000). General Counsel Opinion No. 12 is attached as an appendix. In that opinion, the FDIC's General Counsel stated that the statutory requirement of being “engaged in the business of receiving deposits other than trust funds” can be satisfied by the continuous maintenance of one or more non-trust deposit accounts in the aggregate amount of $500,000.

General Counsel Opinion No. 12 is based upon a number of factors. First, the statute is ambiguous (as discussed above). Second, as discussed at length in General Counsel Opinion No. 12, the legislative history is inconclusive. See H.R. Rep. No. 2564, reprinted in 1950 U.S.C.C.A.N. 3765, 3768. Third, the FDIC has approved applications from many non-traditional depository institutions that did not intend to maintain more than one or a very limited number of non-trust deposit accounts (as mentioned above). This practice began at least as early as 1969 with Bessemer Trust Company (Bessemer) located in Newark, New Jersey. Bessemer offered checking accounts to its own trust customers but did not offer checking accounts or any other type of non-trust accounts to the general public. Despite this limitation on Bessemer's deposit-taking activities, the FDIC approved Bessemer's application for deposit insurance. The FDIC continued to approve such applications (i.e., applications from institutions with very limited deposit-taking activities) from the 1970s to the present. These non-traditional depository institutions have included trust companies, credit card banks and other specialized institutions. For example, one depository institution planned to hold no accounts except escrow accounts relating to mortgage loans. Another depository institution planned to offer deposits to nobody except its affiliate's customers.

Fourth, the Bank Holding Company Act (BHCA) contemplates the existence of depository institutions that are insured by the FDIC even though they do not accept a continuing stream of non-trust deposits from the general public. See 12 U.S.C. 1841(c). In the BHCA, the definition of “bank” includes banks insured by the FDIC. See 12 U.S.C. 1841(c)(1). A list of exceptions includes institutions functioning solely in a trust or fiduciary capacity if several conditions are satisfied. The conditions related to deposit-taking are: (1) All or substantially all of the deposits of the institution must be trust funds; (2) insured deposits of the institution must not be offered through an affiliate; and (3) the institution must not accept demand deposits or deposits that the depositor may withdraw by check or similar means. See 12 U.S.C. 1841(c)(2)(D)(i)-(iii). The significant conditions are (1) and (2). The first condition provides that all or substantially all of the deposits of the institution must be trust funds; the second condition involves “insured deposits”. Thus, the statute contemplates that a trust company—functioning solely as a trust company and holding no deposits (or substantially no deposits) except trust deposits—could hold “insured deposits”. In other words, the BHCA contemplates (without requiring) that an institution could be insured by the FDIC even though the institution does not accept non-trust deposits from the general public.

Fifth, the leading case indicates that a depository institution may be “engaged in the business of receiving [non-trust] deposits” even though the institution holds a very small amount of non-trust deposits. See Meriden Trust and Safe Deposit Company v. FDIC, 62 F.3d 449 (2d Cir. 1995). Indeed, this case indicates that an amount as small as $200,000 is a sufficient amount of non-trust deposits.

Sixth, some State banking statutes contemplate the existence of FDIC-insured depository institutions that are severely restricted in their ability to accept non-trust deposits from the general public. For example, a Virginia statute provides that a general business corporation may acquire the voting shares of a “credit card bank” only if certain conditions are satisfied. See Va. Code 6.1-392.1.A. These conditions comprise the definition of a “credit card bank.” See Va. Code 6.1-391. These conditions include the following: (1) The bank may not accept demand deposits; and (2) the bank may not accept savings or time deposits of less than $100,000. Indeed, the statute provides that a “credit card bank” may accept savings or time deposits (in amounts in excess of $100,000) only from affiliates of the bank having their principal place of business outside the State. See Va. Code 6.1-392.1.A.3-4. In other words, the Virginia statute prohibits the acceptance of any deposits from the general public. At the same time, the statute requires the deposits of the bank to be federally insured. See Va. Code 6.1-392.1.A.4.

Each of the factors above was discussed in detail in General Counsel Opinion No. 12. See 65 FR 14568 (May 17, 2000). The purpose of General Counsel Opinion No. 12 was to remove uncertainty as to the meaning of being “engaged in the business of receiving deposits other than trust funds”. In fulfilling this purpose, the General Counsel opinion was unsuccessful. In a recent case known as Heaton v. Monogram, the statutory interpretation set forth in General Counsel Opinion No. 12 was rejected by a federal district court. See Heaton v. Monogram Credit Card Bank of Georgia, 2001 WL 15635 (E.D. La. January 5, 2001). In that case, the district court declared that the FDIC's interpretation ignores the statute because the statute refers to “deposits” in the plural. In the court's opinion, a depository institution cannot be “engaged in the business of receiving deposits other than trust funds” unless the institution maintains more than one deposit account.

As a result of the court's ruling, uncertainty continues to exist as to the meaning of being “engaged in the business of receiving deposits other than trust funds”. Also, the court's ruling creates a situation with serious implications. The situation includes two components. First, the FDIC has extended federal deposit insurance to a particular financial institution on the basis that the financial institution is “engaged in the business of receiving deposits other than trust funds”. Second, notwithstanding the action by the FDIC, the court has ruled that the financial institution is not “engaged in the business of receiving deposits other than trust funds”. The implications of this situation (conflicting decisions by the FDIC and a court) are discussed below.

The granting of an application for deposit insurance by the FDIC invests the depository institution with certain privileges. The FDIC does not extend these privileges as a matter of contract; rather, the privileges are statutory in nature. For example, the FDI Act provides that all deposits at an insured depository institution (i.e., an institution approved by the FDIC) are insured up to the $100,000 limit. See 12 U.S.C. 1815, 1816, 1821. This federal insurance will assist the depository institution in attracting depositors. Indeed, the depository institution often is required by its chartering authority to obtain federal deposit insurance as a condition to conducting business. See, e.g., Fla. Stat. 658.995(3); Va. Code 6.1-392.1.A.4.

Another example of a privilege or benefit is provided by section 27 of the Act, which enables State-chartered insured depository institutions to operate under a single State's interest rate laws rather than to operate under a separate set of laws for each State in which the institution conducts business. See 12 U.S.C. 1831d. As a result, an insured State nonmember bank is able to avoid certain State restrictions on fees and interest rates when operating outside the institution's State of incorporation.

The privileges and benefits arising under the Act are accompanied by certain responsibilities and restrictions. For example, insured depository institutions are subject to assessments by the FDIC. See 12 U.S.C. 1817. Also, insured depository institutions are required to operate in a safe and sound manner. See 12 U.S.C. 1818(b). Restrictions on lending are applicable. See 12 U.S.C. 1828(j). Another example of a restriction is provided by section 24 of the Act, which places limits on the activities of insured State banks. See 12 U.S.C. 1831a. In addition, insured State nonmember banks are subject to FDIC examinations. See 12 U.S.C. 1820(b). These include examinations for compliance with a number of Federal consumer laws. If violations of these laws are discovered, the bank is subject to enforcement actions. See, e.g., 12 U.S.C. 1818(b), 1818(e), 1818(i)(2).

Nothing in the FDI Act suggests that Congress intended depository institutions to enjoy the privileges arising under the Act without assuming the responsibilities. On the contrary, Congress created one broad scheme applicable to “insured depository institutions”. Under this scheme, the deposits at a particular institution cannot be insured unless that institution is subject to assessments. Similarly, a State bank should not be able to avoid State fees and interest rates under section 27 of the Act unless the bank also is subject to the restrictions imposed by section 24. Conversely, a State bank should not be subject to the restrictions imposed by section 24 unless the bank is able to enjoy the benefit of section 27.

For “State banks” (as opposed to federally chartered depository institutions), the benefits as well as the burdens provided by the Act rest upon the premise that the depository institution is “engaged in the business of receiving deposits, other than trust funds.” See 12 U.S.C. 1813(a)(2) (defining “State bank” in such a way as to include only those institutions “engaged in the business of receiving deposits, other than trust funds”). For this reason, the phrase “engaged in the business of receiving deposits other than trust funds” should be interpreted consistently. It should not be interpreted one way under section 5 of the Act (involving applications for deposit insurance) and another way under section 24 (imposing restrictions on the activities of State banks) and yet another way under section 27 (enabling State banks to avoid certain restrictions on fees and interest rates). Similarly, a particular section of the Act incorporating the phrase (“engaged in the business,” etc.) should not be interpreted one way by a court in one State but another way by a different court in another State. Inconsistent interpretations could lead to irrational results, e.g., the existence of a State bank insured by the FDIC (on the basis of a finding by the FDIC that the bank is “engaged in the business of receiving deposits other than trust funds”) but free from the restrictions imposed by section 24 in one State (on the basis of a finding by a court in that State that the bank is not “engaged in the business of receiving deposits other than trust funds”) but perhaps subject to such restrictions in another State (on the basis of a finding by a court in the second State that the bank is “engaged in the business of receiving deposits other than trust funds”).

Arguably, the FDIC could create consistency by terminating the insured status of a depository institution whenever any court in any State determines that the institution is not “engaged in the business of receiving deposits other than trust funds”. Perhaps the FDIC, at the same time, could terminate the insured status of all similar depository institutions. Such an approach would raise grave concerns for the owners and customers of the institutions. Also, such an approach would be unfair because the organizers of depository institutions should be able to rely on the FDIC's determination—in granting insurance—that the institutions are “engaged in the business of receiving deposits other than trust funds.” Finally, such an approach would ignore the fact that other courts in other States might view the same institutions as being “engaged in the business of receiving deposits other than trust funds.”

Uniformity is needed. Both banks and the public need to know that the applicable Federal banking laws will be applied equally throughout the United States. Moreover, they need assurance that once the FDIC grants insurance to a bank or thrift, the deposits at that bank or thrift will remain insured.

At present, uniformity is threatened because the meaning of the statute is subject to doubt. Under the FDIC's interpretation as set forth in General Counsel Opinion No. 12, a depository institution is “engaged in the business of receiving deposits other than trust funds” if the institution holds one or more non-trust deposit accounts in the aggregate amount of $500,000. Under the interpretation adopted by the Heaton court, however, a depository institution cannot be “engaged in the business of receiving deposits other than trust funds” unless the institution holds some indeterminate number of deposit accounts greater than one.

The inconsistency between the FDIC's interpretation and a court's interpretation could produce irrational and harmful results. For this reason, the meaning of the statute must be clarified so that a uniform interpretation may be applied.

The promulgation of a regulation has been requested through a petition submitted to the FDIC's Board of Directors by the Conference of State Bank Supervisors (CSBS). This organization represents State officials responsible for chartering, regulating and supervising State-chartered banks.

An opposing letter has been submitted by the plaintiff in the Heaton v. Monogram litigation. In this opposing letter, the plaintiff has argued that the promulgation of a regulation at this time would represent an “abuse of discretion” and a “conflict of interest”. The plaintiff believes that no regulation should be promulgated until the litigation is completed.

The FDIC does not agree that the initiation of the rulemaking process would constitute an “abuse of discretion”. On the contrary, the FDIC believes that rulemaking is necessary in order to remove the existing uncertainty and confusion. See Smiley v. Citibank, N.A., 517 U.S. 735, 116 S. Ct. 1730 (1996). Accordingly, the FDIC has decided to publish this notice of proposed rulemaking.

Of course, the publication of this notice does not mean that the FDIC necessarily will adopt the proposed rule as a final rule. The FDIC is interested in receiving comments from all interested members of the public—not just the plaintiff and the defendant in the Heaton litigation—because the final rule (if any) will be effective nationwide. The comments may address all aspects of the proposed rule.

Comments are requested to address all ambiguities in the statute. As previously mentioned, the statute does not specify whether a depository institution must hold a particular dollar amount of deposits in order to be “engaged in the business of receiving deposits other than trust funds”. Similarly, the statute does not specify whether a depository institution must maintain a particular number of deposit accounts or accept a particular number of deposits within a particular period in order to be “engaged in the business of receiving deposits other than trust funds”. Likewise, the statute does not specify whether a depository institution must accept non-trust deposits from the general public as opposed to accepting deposits from one or more members of a particular group (such as trust customers or employees or affiliates).

Over the years, the FDIC has granted deposit insurance to banks that intended to accept only one or a limited number of deposits from its trust customers, its employees, or its affiliates. The court in the Heaton litigation questioned whether a single deposit is adequate. In its recent ruling, the court noted that the statute refers to “deposits” in the plural. On the basis of this word (“deposits”), the court found that the FDIC had “ignored” the statutory language in adopting the interpretation set forth in GC12. See Heaton v. Monogram Credit Card Bank of Georgia, 2001 WL 15635, *3 (E.D. La. January 5, 2001).

In fact, the FDIC in GC12 discussed the statutory language at length. See 65 FR 14568, 14569 (March 17, 2000). As explained in GC12, the statute defines “deposit” in such a way as to equate “receiving” and “holding”. See 12 U.S.C. 1813(l)(1). Moreover, the statute recognizes that a single deposit can be accepted or “received” many times through rollovers. See 12 U.S.C. 1831f(b) (dealing with the acceptance of brokered deposits). Thus, the word “receiving” in the statute can be reconciled with the holding—and periodic renewal or rollover—of a single certificate of deposit. Similarly, the plural word “deposits” is not inconsistent with the holding of a single deposit account because multiple deposits of funds can be made into a single account. A depositor might, for example, make a deposit of funds every month into the same account. The accrual of interest would represent an additional deposit into the same account. In the case of a certificate of deposit, the deposit would be replaced with a new deposit at maturity.

In any event, the FDIC is interested in comments as to whether one deposit account should be considered enough. Also, the FDIC is interested in comments as to whether there should be a minimum amount of non-trust deposits. Commenters should explain the reasons supporting their opinions.

Under the proposed rule, a depository institution would be “engaged in the business of receiving deposits other than trust funds” if the institution maintains one or more non-trust deposit accounts in the aggregate amount of $500,000.

The figure of $500,000 is being proposed for several reasons. First, it is more than a nominal sum. Indeed, it is greater than the amount involved in the leading case of Meriden Trust and Safe Deposit Company v. FDIC, 62 F.3d 449 (2d Cir. 1995). In that case, the court found that only $200,000 of non-trust deposits was a sufficient amount. Second, the figure of $500,000 is not so great that it would prevent non-traditional depository institutions from obtaining FDIC insurance when necessary. As previously mentioned, the Bank Holding Company Act contemplates the existence of depository institutions that are insured by the FDIC even though they do not accept a continuing stream of non-trust deposits from the general public. See 12 U.S.C. 1841(c). Also, some State banking statutes contemplate the existence of FDIC-insured depository institutions that are severely restricted in their ability to accept non-trust deposits from the general public. See, e.g., Va. Code 6.1-392.1.A.4. Third, $500,000 is the amount of non-trust deposits allowed by the FDIC in recent years in connection with a number of applications for deposit insurance. Applications involving the precise amount of $500,000 can be traced as far back as 1991. This circumstance indicates that an understanding or expectation may have developed in the banking industry that the holding of $500,000 of non-trust deposits represents a reliable “safe harbor.”

As previously explained, the purpose of the proposed regulation is to create uniformity and certainty. The choice of any specific dollar figure would serve this purpose. For the reasons set forth above, the FDIC has chosen $500,000. Commenters are free to suggest alternative amounts or alternative standards.

In summary, the FDIC is interested in comments as to whether the proposed $500,000 minimum level is appropriate or whether the minimum should be higher or lower and why. If a minimum level is to be established by regulation, the FDIC is interested in whether an exception should be made for a new depository institution (i.e., whether a new depository institution should be given a certain period of time to reach the minimum level).

The court in the Heaton litigation questioned the appropriateness of permitting a bank to accept deposits from its affiliates only as opposed to accepting deposits from the general public. The FDI Act does not specify whether deposits must originate from a particular source. In any event, the FDIC is interested in comments as to whether deposits must be accepted from the public at large or whether deposits may be limited to a particular group (such as the bank's trust customers or employees or affiliates).

Finally, the FDIC notes that banking has evolved over the years. The typical brick-and-mortar full-service bank is no longer the only type of institution offering banking services. Today, for example, Internet banks offer banking services through a medium never imagined when the FDIC was created. In light of these changes, the FDIC is interested in comments as to whether the adoption of a regulatory definition of being “engaged in the business of receiving [non-trust] deposits” might stifle innovation in the banking industry or stifle the development or evolution of new types of banks.

The FDIC's Board of Directors (Board) is seeking comments on whether the agency should adopt a regulatory standard for determining whether a depository institution is “engaged in the business of receiving deposits other than trust funds”. Under the proposed rule, a depository institution would be “engaged in the business of receiving [non-trust] deposits” if the institution maintains one or more non-trust deposit accounts in the amount of $500,000 or more.

Commenters are free to suggest different standards. Indeed, commenters are free to suggest that the FDIC at this time should adopt no standard. The Board invites comments on all of the following questions:

1. Should the FDIC adopt a regulatory standard for determining whether a depository institution is “engaged in the business of receiving deposits other than trust funds”?

2. If so, should the standard be based on a particular number and/or amount of non-trust deposits? Or should the standard be based on other factors, such as the institution's legal authority to accept non-trust deposits or the institution's policies with respect to the acceptance of non-trust deposits?

3. Assuming a minimum amount of non-trust deposits is required, should the standard be based on a particular number of non-trust deposit accounts? If so, should that number be one? If not, what should be the minimum number of non-trust deposit accounts? Why?

4. Assuming that the standard should be based on a particular amount of non-trust deposits, should that amount be $500,000? If not, what should be the minimum amount of non-trust deposits? Why?

5. Should a depository institution be required to accept deposits from the public at large (as opposed to accepting deposits from a particular group such as the institution's trust customers or employees or affiliates) in order to be “engaged in the business of receiving deposits other than trust funds”? If so, why?

6. Should a depository institution be required to offer a selection of different types of deposits (e.g., demand deposits, savings deposits, certificates of deposit) in order to be “engaged in the business of receiving deposits other than trust funds”? If so, why?

7. Should the FDIC create any exceptions for special circumstances? For example, should a new institution be given a certain period of time to reach the minimum number of non-trust deposit accounts or to attain the minimum amount of non-trust deposits?

8. Should operating insured depository institutions be held to the same standard as applicants for deposit insurance? In other words, should the standard under section 8 of the FDI Act (involving terminations) be the same as the standard under section 5 (involving applications)? Should the FDIC terminate the insured status of any operating institution that does not meet the chosen standard? Should an operating insured institution be given a certain period of time to regain the level of $500,000 after falling below that level?

9. Should the same standard apply to the definition of “State bank” under section 3 of the FDI Act? If not, what standard should apply? Why?

The proposed rule would not involve any collections of information under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ). Consequently, no information has been submitted to the Office of Management and Budget for review.

The proposed rule would not have a significant economic impact on a substantial number of small businesses within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The proposed rule would apply to all FDIC-insured depository institutions and would impose no new reporting, recordkeeping or other compliance requirements. Although the proposed rule specifies that depository institutions must hold non-trust deposits in the amount of $500,000 or more in order to be “engaged in the business of receiving deposits other than trust funds,” the rule does not create a new requirement. Rather, the proposed rule clarifies an existing requirement. Moreover, the proposed rule is consistent with the standard already applied to depository institutions by the FDIC. Accordingly, the Act's requirements relating to an initial regulatory flexibility analysis are not applicable.

The proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681).

The Board of Directors of the Federal Deposit Insurance Corporation hereby proposes to amend part 303 of title 12 of the Code of Federal Regulations as follows:

Interested persons are invited to participate in the making of the proposed rule by submitting such written data, views, or arguments as they may desire. Communications shall identify the Rules Docket number and be submitted in triplicate to the address specified above. All communications received on or before the closing date for comments, specified above, will be considered before taking action on the proposed rule. The proposals contained in this action may be changed in light of the comments received.

Submit comments using the following format:

• Organize comments issue-by-issue. For example, discuss a request to change the compliance time and a request to change the service bulletin reference as two separate issues.

• For each issue, state what specific change to the proposed AD is being requested.

• Include justification (e.g., reasons or data) for each request.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the proposed rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report summarizing each FAA-public contact concerned with the substance of this proposal will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-331-AD.” The postcard will be date stamped and returned to the commenter.

Any person may obtain a copy of this NPRM by submitting a request to the FAA, Transport Airplane Directorate, ANM-114, Attention: Rules Docket No. 2000-NM-331-AD, 1601 Lind Avenue, SW., Renton, Washington 98055-4056.

On April 19, 2000, the FAA issued AD 2000-08-21, amendment 39-11707 (65 FR 25281, May 1, 2000), applicable to all Boeing Model 747 series airplanes, to require repetitive inspections to detect cracking of the forward and aft inner chords and the splice fitting of the forward inner chord of the station 2598 bulkhead, and repair, if necessary. That action was prompted by reports of fatigue cracking found in those areas. The requirements of that AD are intended to detect and correct such cracking, which could result in reduced structural capability of the bulkhead and the inability of the structure to carry horizontal stabilizer flight loads.

Since the issuance of AD 2000-08-21, the FAA has received reports indicating the detection of fatigue cracking on certain Boeing Model 747 series airplanes. Investigation revealed that on an airplane having 7,325 total flight cycles, a 2.8-inch-long crack was found on the inner chord of the station 2598 bulkhead; on another airplane having 5,845 total flight cycles, a 2.1-inch-long crack was found in the same area. Cracks also have been found on the frame support of the station 2598 bulkhead, which was not included in the inspection area specified in the existing AD.

The FAA has reviewed and approved Boeing Alert Service Bulletin 747-53A2427, Revision 2, dated October 5, 2000, which describes procedures for initial and repetitive surface high frequency eddy current (HFEC) inspections of the forward and aft inner chords, the frame support, and the splice fitting of the forward inner chord of the upper corner of the station 2598 bulkhead to detect cracking. The repetitive HFEC inspections of an expanded area eliminate the need for the inspections required by the existing AD. The compliance time for doing the new initial inspection is reduced from the compliance time for doing the initial inspection that is specified in Boeing Alert Service Bulletin 747-53A2427, Revision 1, dated October 28, 1999 (recommended as the appropriate source of service information for accomplishment of the actions specified in the existing AD); and the new repetitive inspections specified in Revision 2 of the service bulletin are to be accomplished more frequently than the repetitive inspections specified in Revision 1 of the service bulletin.

Since an unsafe condition has been identified that is likely to exist or develop on other products of this same type design, the proposed AD would supersede AD 2000-08-21 to continue to require repetitive inspections to detect cracking of the forward and aft inner chords and the splice fitting of the forward inner chord of the station 2598 bulkhead, and repair, if necessary. This proposal would add repetitive surface HFEC inspections of the forward and aft inner chords, the frame support, and the splice fitting, to find cracks, and repair, if necessary. Doing the new HFEC inspections would end the inspections specified in the existing AD. The actions would be required to be accomplished in accordance with the service bulletin described previously, except as discussed below.

Operators should note the following:

The service bulletin specifies that the manufacturer may be contacted for disposition of certain repair conditions, but this proposed AD would require the repair of those conditions to be accomplished per a method approved by the FAA, or per data meeting the type certification basis of the airplane approved by a Boeing Company Designated Engineering Representative who has been authorized by the FAA to make such findings.

The service bulletin specifies the effectivity as line numbers 1 through 1241 inclusive, due to incorporation of a production change (cold working certain fastener holes of the station 2598 bulkhead) on airplanes manufactured after line number 1241. Since issuance of the service bulletin, the manufacturer has determined that the chords with the cold-worked fastener holes also are susceptible to fatigue cracking. Due to this determination, the applicability in this proposed AD includes line numbers 1 through 1307 inclusive.

For airplanes having line numbers 1242 through 1307 inclusive, one option for the compliance time for doing the initial inspection would be before the accumulation of 16,000 total flight cycles. The service bulletin specifies before the accumulation of 6,000 total flight cycles.

This is interim action. The manufacturer has advised that it currently is developing a modification that will positively address the unsafe condition addressed by this AD. Once this modification is developed, approved, and available, the FAA may consider further rulemaking.

There are approximately 1,115 airplanes of the affected design in the worldwide fleet. The FAA estimates that 258 airplanes of U.S. registry would be affected by this proposed AD.

The HFEC inspection that currently is required by AD 2000-08-21 takes approximately 2 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this inspection is estimated to be $120 per airplane.

The detailed visual inspection that currently is required by AD 2000-08-21 takes approximately 2 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this inspection is estimated to be $120 per airplane, per inspection cycle.

The HFEC inspections that are proposed in this AD action would take approximately 2 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the proposed inspection is estimated to be $120 per airplane, per inspection cycle.

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

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

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

Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:

Interested persons are invited to participate in the making of the proposed rule by submitting such written data, views, or arguments as they may desire. Communications shall identify the Rules Docket number and be submitted in triplicate to the address specified above. All communications received on or before the closing date for comments, specified above, will be considered before taking action on the proposed rule. The proposals contained in this action may be changed in light of the comments received.

Submit comments using the following format:

• Organize comments issue-by-issue. For example, discuss a request to change the compliance time and a request to change the service bulletin reference as two separate issues.

• For each issue, state what specific change to the proposed AD is being requested.

• Include justification (e.g., reasons or data) for each request.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the proposed rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report summarizing each FAA-public contact concerned with the substance of this proposal will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-346-AD.” The postcard will be date stamped and returned to the commenter.

Any person may obtain a copy of this NPRM by submitting a request to the FAA, Transport Airplane Directorate, ANM-114, Attention: Rules Docket No. 2000-NM-346-AD, 1601 Lind Avenue, SW., Renton, Washington 98055-4056.

The FAA has received reports that operators have found fatigue cracks in the strap and inner chord angle at the station 800 frame, between stringers 14 and 18, on certain Boeing Model 747-100 and -200 series airplanes. The cracks can initiate at certain fastener holes. Fatigue cracks in this area, if not found and fixed, can extend and fully sever the frame. If the frame is severed, skin cracks could occur, which could result in rapid depressurization of the airplane.

The FAA has reviewed and approved Boeing Alert Service Bulletin 747-53A2451, including Appendix A, dated October 5, 2000, which describes procedures for repetitive inspections for cracking of the station 800 frame assembly between stringers 14 and 18. The procedures involve removal of fasteners; detailed visual, surface high frequency eddy current (HFEC), and open hole HFEC inspections, as applicable, for cracking of the inner chord strap, angles, and exposed web at station 800; and installation of new or serviceable fasteners. If any cracking is detected, the service bulletin says to contact Boeing for repair instructions.

Since an unsafe condition has been identified that is likely to exist or develop on other products of this same type design, the proposed AD would require accomplishment of the actions specified in the service bulletin described previously, except as discussed below.

Operators should note that, although the service bulletin specifies that the manufacturer may be contacted for repair instructions, this proposed AD would require repair according to a method approved by the FAA, or according to data meeting the type certification basis of the airplane approved by a Boeing Company Designated Engineering Representative who has been authorized by the FAA to make such findings.

There are approximately 258 airplanes of the affected design in the worldwide fleet. The FAA estimates that 139 airplanes of U.S. registry would be affected by this proposed AD, that it would take up to 14 work hours per airplane to accomplish the proposed inspections, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the proposed AD on U.S. operators is estimated to be as much as $116,760, or $840 per airplane, per inspection cycle.

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

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

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

Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:

Interested persons are invited to participate in the making of the proposed rule by submitting such written data, views, or arguments as they may desire. Communications shall identify the Rules Docket number and be submitted in triplicate to the address specified above. All communications received on or before the closing date for comments, specified above, will be considered before taking action on the proposed rule. The proposals contained in this action may be changed in light of the comments received.

Submit comments using the following format:

• Organize comments issue-by-issue. For example, discuss a request to change the compliance time and a request to change the service bulletin reference as two separate issues.

• For each issue, state what specific change to the proposed AD is being requested.

• Include justification (e.g., reasons or data) for each request.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the proposed rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report summarizing each FAA-public contact concerned with the substance of this proposal will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-337-AD.” The postcard will be date stamped and returned to the commenter.

Any person may obtain a copy of this NPRM by submitting a request to the FAA, Transport Airplane Directorate, ANM-114, Attention: Rules Docket No. 2000-NM-337-AD, 1601 Lind Avenue, SW., Renton, Washington 98055-4056.

On July 10, 1998, the FAA issued AD 98-15-14, amendment 39-10665 (63 FR 38464, July 17, 1998), applicable to certain McDonnell Douglas Model MD-11 series airplanes, to require a revision of the Airplane Flight Manual (AFM) to alert the flightcrew that both flight management computers (FMC) must be installed and operational. That action was prompted by a report indicating that, due to incorrect multiplexers that were installed in the FMC's during production, certain data busses failed simultaneously during a ground test. The requirements of that AD are intended to prevent loss of airspeed and altitude indications on both primary flight displays in the cockpit, and/or loss or degradation of the autopilot functionality, and consequent failure of the data busses.

In the preamble of AD 98-15-14, the FAA indicated that the actions required by that AD were considered “interim action” and that further rulemaking action was being considered. The FAA now has determined that further rulemaking action is indeed necessary, and this proposed AD follows from that determination.

The FAA has reviewed and approved McDonnell Douglas Service Bulletin MD11-34-085, Revision 01, dated September 20, 1999, which describes procedures for an inspection to verify if modification “AS” is on the front and rear identification plates of FMC-1 and FMC-2, and applicable follow-on and corrective actions. The follow-on actions include test(s) of the FMC in the flight compartment to ensure that a certain modification is operational, and applicable corrective actions, if necessary. The corrective actions include installation of new software; reidentification of FMC-1 and FMC-2 as 4059050-912; and installation of modification “AS.” Accomplishment of the actions specified in the service bulletin is intended to adequately address the identified unsafe condition.

Since an unsafe condition has been identified that is likely to exist or develop on other products of this same type design, the proposed AD would supersede AD 98-15-14 to continue to require a revision of the AFM to alert the flightcrew that both FMC's must be installed and operational. The proposed AD also would require accomplishment of the actions specified in the service bulletin described previously, which would allow the AFM revision to be removed from the AFM.

There are approximately 174 Model MD-11 series airplanes of the affected design in the worldwide fleet. The FAA estimates that 59 airplanes of U.S. registry would be affected by this proposed AD.

The actions that are currently required by AD 98-15-14, and retained in this proposed AD, take approximately 1 work hour per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the currently required actions on U.S. operators is estimated to be $3,540, or $60 per airplane.

The new actions that are proposed in this AD action would take approximately 1 work hour per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the proposed requirements of this AD on U.S. operators is estimated to be $3,540, or $60 per airplane.

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

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

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

Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:

The CFMA, signed into law on December 21, 2000, effected, among other things, removal of the restriction in the Commodity Exchange Act (the “Act”)  1 on the trading of futures contracts on individual equity securities and narrow-based indices of equity securities. 2 Under the revised law, security futures products  3 may be traded on a designated contract market or on a registered derivatives transaction execution facility (“DTF”). 4

Section 4d of the Act provides that any person who engages in soliciting or accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any designated contract market or DTF—e.g., for a security futures product—must be registered with the Commission as: (1) a futures commission merchant (“FCM”), if it also accepts any money, securities, or property, or extends credit in lieu thereof, to margin, guarantee, or secure futures contracts; or (2) an introducing broker (“IB”) if it does not accept money or other property to margin, guarantee or secure futures contracts. 5 Section 4f(a)(1) of the Act provides that application for registration as an FCM or IB “shall be made in such form and manner as prescribed by the Commission.”  6 Pursuant to this authority, the Commission adopted Rule 3.10, which currently requires that an applicant for registration as an FCM or IB file prescribed registration and financial report forms. 7

However, as a result of the CFMA, new Section 4f(a)(2) of the Act  8 now provides that, notwithstanding Section 4f(a)(1), any BD  9 that is registered with the SEC shall be registered as an FCM or IB, as applicable, “effective contemporaneously with the submission of notice,” if:

(A) the broker or dealer limits its solicitation of orders, acceptance of orders, or execution of orders, or placing of orders on behalf of others involving any contracts of sale of any commodity for future delivery, on or subject to the rules of any contract market or registered derivatives transaction execution facility to security futures products;

(B) the broker or dealer files written notice with the Commission in such form as the Commission, by rule, may prescribe containing such information as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors;

(C) the registration of the broker or dealer is not suspended pursuant to an order of the Securities and Exchange Commission; and

(D) the broker or dealer is a member of a national securities association registered pursuant to section 15A(a) of the Securities Exchange Act of 1934.

Accordingly, in a separate Federal Register release the Commission is proposing to amend Rule 3.10 to provide for FCM and IB notice registration thereunder. 10

New Section 4f(a)(3) of the Act  11 provides a similar exemption (without the notice filing requirement) from the requirement under Section 4e of the Act to register as a floor broker (“FB”) or floor trader (“FT”). An FB or FT is exempt from registration as such if:

(A) the floor broker or floor trader is a broker or dealer registered with the Securities and Exchange Commission;

(B) the floor broker or floor trader limits its solicitation of orders, acceptance of orders, or execution of orders, or placing of orders on behalf of others involving any contracts of sale of any commodity for future delivery, on or subject to the rules of any contract market to security futures products;  12 and

(C) the registration of the floor broker or floor trader is not suspended pursuant to an order of the Securities and Exchange Commission.

Persons registered as FCMs or IBs pursuant to the notice registration procedure of new Section 4f(a)(2) and persons who are exempt from FB or FT registration pursuant to new Section 4f(a)(3) are expressly exempted by new Section 4f(a)(4)  13 from certain enumerated provisions of the Act, as well as those of the Commission's rules that were promulgated under those provisions. 14 In addition to the statutory exemption granted to such persons from the foregoing specified sections of the Act, under the CFMA the Commission is authorized, by rule, regulation or order, to exempt, conditionally or unconditionally, from any provision of the Act or the Commission's rules, any BD subject to the notice filing requirements of new Section 4f(a)(2) or exempt from FB or FT registration under new Section 4f(a)(3), to the extent the exemption is necessary or appropriate in the public interest and is consistent with the protection of investors. 15 By this Federal Register release, the Commission is seeking comments regarding specific sections of the Act or provisions of the Commission's rules, beyond those already specified in the CFMA, from which such BDs should be made exempt by rule.

The CFMA also directs the Commission to determine, by rule or regulation, the procedures under which an order under new Section 4f(a)(4)(B) shall be granted. 16 In response to this directive, the Commission is proposing the rule changes set forth herein. 17

New Section 4f(a)(4)(B)(i) of the Act provides that the Commission may issue an order to exempt, conditionally or unconditionally, any BD subject to notice registration under new Section 4f(a)(2) of the Act, or any BD exempt from floor broker or floor trader registration pursuant to new Section 4f(a)(3), from any provision of the Act or any provision of the Commission's regulations to the extent that the exemption is necessary or appropriate in the public interest and is consistent with the protection of investors. New Section 4f(a)(4)(B)(ii) directs the Commission to determine the procedures by which an exemptive order under Section 4f(a)(4)(B) shall be granted, and vests the Commission with sole discretion to decline to entertain any application for such an order. 18 Accordingly, the Commission is proposing, in this rulemaking, procedures for applying for an exemptive order under Section 4f(a)(4)(B) of the Act. Of course, exemption from the sections of the Act listed in Section 4f(a)(4)(A) is automatic. Accordingly, it is unnecessary for persons to request such orders.

Proposed Rule 41.41 calls for applicants to supply either a written application or an electronic mail submission containing the applicant's name, main business address and phone number, information about the applicant's registration status with the SEC (and assurance that the registration is not subject to a suspension), the specific section(s) of the Act or provision(s) of Commission rules from which exemption is sought, any applicable analogous provisions of the securities laws and regulations, an explanation of the facts and circumstances under which the applicant believes that the requested exemptive relief is necessary or appropriate in the public interest; and an explanation of the extent to which the requested exemptive relief is consistent with the protection of investors. The last two items constitute the basis upon which the CFMA requires the Commission to base the grant of a request for an order. The proposed rule also states that the grant or denial of a request is within the Commission's sole discretion (as specifically provided in the CFMA).

The Commission is proposing to delegate to the Director of the Division of Trading and Markets authority to grant or deny applications for exemptive orders under proposed Rule 41.41. With respect to the granting and denying of applications for exemptive orders the delegation is intended to expedite the procedure and to place it with the staff members most directly involved in exemptive matters. The Commission believes that this delegation will maximize regulatory efficiency with respect to these proposed rule changes.

The Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601-611 (1994), requires that agencies, in proposing rules, consider the impact of those rules on small businesses. The rule amendments discussed herein would affect persons registered under notice-registration procedures as FCMs or as IBs, and persons who are exempt from FB or FT registration pursuant to new Section 4f(a)(3). The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its rules on such entities in accordance with the RFA. 19 The Commission previously determined that registered FCMs are not small entities for the purpose of the RFA. 20 With respect to IBs, the Commission has stated that it would evaluate within the context of a particular rule proposal whether all or some affected IBs would be considered to be small entities and, if so, the economic impact on them of any rule. 21

The amendments proposed herein do not impose any new burdens upon persons registered as FCMs or IBs pursuant to the notice registration procedure of new Section 4f(a)(2) and persons who are exempt from FB or FT registration pursuant to new Section 4f(a)(3). Rather, these amendments establish procedures for requesting additional exemptive relief from provisions of the Act and/or the Commission's regulations for such persons. Consequently, the Commission believes that the adoption of these rule amendments will in many cases reduce the burden of compliance by persons notice-registered as FCMs or IBs and persons who are exempt from FB or FT registration pursuant to new Section 4f(a)(3). Accordingly, the Acting Chairman of the Commission hereby certifies, pursuant to 5 U.S.C. 605(b), that the proposed rule will not have a significant economic impact on a substantial number of small entities. Nonetheless the Commission specifically requests comment on the impact this proposed rule may have on small entities.

The Paperwork Reduction Act of 1995 (“PRA”)  22 imposes certain requirements on federal agencies (including the Commission) in connection with their conducting or sponsoring any collection of information as defined by the PRA. The Commission has submitted a copy of this part to the Office of Management and Budget (“OMB”) for its review.

Requests for no-action, exemptive and interpretative letters. OMB Control Number 3038-0049.

The effect of the proposed rule will be to increase the burden previously approved by OMB by 1,000 hours because of the application for exemptive orders. The burden associated with the proposed addition of Rule 41.41 is estimated to be 1,000 hours, which will result from the application for exemptive orders by persons currently registered as BDs with the SEC who either choose to register as FCMs or IBs pursuant to the notice registration procedure of new Section 4f(a)(2) of the Act, or are exempt from FB or FT registration pursuant to new Section 4f(a)(3).

The estimated burden of the proposed new rule was calculated as follows:

Estimated number of respondents: 5,000.

Reports annually by each respondent: .4.

Total annual Responses: 2,000.

Estimated average Number of Hours Per Response: .5.

Estimated Total Number of Hours of Annual Burden in Fiscal Year: 1,000.

Organizations and individuals desiring to submit comments on the information collection requirements should direct them to the Office of Information and Regulatory Affairs, OMB, Room 10235 New Executive Building, Washington, DC 20503, Attention: Desk Officer for the Commodity Futures Trading Commission.

The Commission considers comments by the public on this proposed collection of information in—

• Evaluating whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;

• Evaluating the accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

• Enhancing the quality, usefulness, and clarity of the information to be collected; and

• Minimizing the burden of collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

OMB is required to make a decision concerning the collection of information contained in these proposed regulations between 30 and 60 days after publication of this document in the Federal Register . A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. This does not affect the deadline for the public to comment to the Commission on the proposed regulations.

Copies of the information collection submission to OMB are available from the CFTC Clearance Officer, 1155 21st Street, NW, Washington, DC 20581, (202) 418-5160.

Section 119 of the CFMA amended Section 15 of the Act to require that the Commission, before promulgating a regulation under the Act or issuing an order, consider the costs and benefits of the Commission's action in light of five criteria. 23 The main considerations relevant to this proposal are the first two considerations set forth in the Act, “protection of market participants and the public” and “efficiency, competitiveness and financial integrity of the futures markets.” The Commission notes that the CFMA specifically mandates that procedures be established by which notice-registered FCMs and IBs and persons exempt from registering as FBs or FTs may seek orders granting additional exemptive relief beyond that specifically granted by the CFMA to such persons. The CFMA further authorizes the Commission to provide such exemptive relief, conditionally or unconditionally, by means of rulemaking. Accordingly, this proposal to adopt Rule 41.41 and the accompanying request for comments on provisions as to which further exemptive rulemaking may be appropriate are published in compliance with requirements that Congress has determined to be in the public interest.

For the reasons stated in the preamble, the Commission proposes to amend Chapter I of Title 17 of the Code of Federal Regulations as follows:

This proposal addresses the following local rules: BAAQMD 8-40 and ICAPCD 426.

In the Rules and Regulations section of this Federal Register , we are approving these local rules in a direct final action without prior proposal because we believe these SIP revisions are not controversial. If we receive adverse comments, however, we will publish a timely withdrawal of the direct final rule and address the comments in subsequent action based on this proposed rule. We do not plan to open a second comment period, so anyone interested in commenting should do so at this time. If we do not receive adverse comments, no further activity is planned. For further information, please see the direct final action.

This proposal concerns the following VCAPCD rules: Rule 74.12—Surface Coating of Metal Parts & Products; Rule 74.13—Aerospace Assembly & Component Manufacturing; Rule 74.18—Motor Vehicle and Mobile Equipment Coating; Rule 74.19—Graphic Arts; Rule 74.24—Marine Coatings; and, Rule 74.30—Wood Products Coatings. In the Rules and Regulations section of this Federal Register , we are approving these local rules in a direct final action without prior proposal because we believe these SIP revisions are not controversial. However, if we receive adverse comments, we will publish a timely withdrawal of the direct final rule and address the comments in subsequent action based on this proposed rule. We do not plan to open a second comment period, so anyone interested in commenting should do so at this time. If we do not receive adverse comments, no further activity is planned. For further information, please see the direct final action.

Throughout this document whenever “we, us, or our” is used, we mean EPA. This section provides additional information by addressing the following questions:

• What is the scope of this proposed rule?

• What are the requirements for RACM under section 172(c)(1) of the CAA?

• How do the Missouri and Illinois SIPs for the St. Louis area address the RACM requirements?

• What are the requirements for contingency measures under section 172(c)(9) of the CAA?

• How do the Missouri and Illinois SIPs for the St. Louis area address the contingency measure requirements?

• Do the Missouri and Illinois SIPs meet the RACM and contingency measure requirements?

• What actions are we proposing today?

• What is the scope of this proposed rule?

This supplemental proposal addresses how Missouri and Illinois have addressed the RACM requirements of the CAA and the contingency measure requirements. Written comments on the issues discussed in this proposal may be submitted during the next 30 days. Although these requirements are separate from the approvability of the attainment demonstration, we will respond to any written comments on the issues discussed in this proposal in our final action on the Missouri and Illinois ozone St. Louis attainment demonstrations.

• What are the requirements for RACM under section 172(c)(1) of the CAA?

Section 172(c)(1) of the Act requires that SIPs provide for the implementation of all RACM as expeditiously as practicable. EPA has previously provided guidance interpreting the RACM requirements of 172(c)(1). (See 57 FR 13498, 13560.) In that guidance, EPA indicated its interpretation that potentially available measures that would not advance the attainment date for an area would not be considered RACM. EPA concluded that a measure would not be reasonably available if it would not advance attainment. EPA also indicated in that guidance that states should consider all potentially available measures to determine whether they were reasonably available for implementation in the area, and whether they would advance the attainment date. Further, states should indicate in their SIP submittals whether measures considered were reasonably available or not. If measures are deemed reasonably available, they must be adopted as RACM. Finally, EPA indicated that states could reject potential RACM measures either because they would not advance the attainment date, would cause substantial widespread and long-term adverse impacts, or for various reasons related to local conditions, such as economics or implementation concerns. EPA also issued a recent memorandum on this topic confirming its earlier guidance, “Guidance on the Reasonably Available Control Measures (RACM) Requirement and Attainment Demonstration Submissions for Ozone Nonattainment Areas,” John S. Seitz, Director, Office of Air Quality Planning and Standards, November 30, 1999. Web site: http://www.epa.gov/ttn/oarpg/t1pgm.html.

• How do the Missouri and Illinois SIPs for the St. Louis area address the RACM requirements?

Section 3.0 of Missouri's November 1999 15% Rate-of-Progress Plan (ROPP), which was approved by EPA on May 18, 2000 (65 FR 31485), 1 is dedicated to the evaluation of potential control measures. The state considered an extensive list of potential control measures and has documented the measures which are not practicable based on considerations such as cost effectiveness and enforceability. Some examples of control measures that were not selected for implementation include rule effectiveness improvements, limits on volatile organic compound (VOC) content of pesticides, limits on VOC emissions from wineries and micro breweries, and various transportation control measures (TCM). Based on reviews of the state's analysis of additional measures and lists of control measures which have been implemented in other nonattainment areas, EPA believes that there are no other measures that Missouri could have implemented that would have substantially accelerated achievement of the target level of VOC emissions for the state's ROPP. EPA is not aware of other practicable measures which will result in comparable emissions reductions that can be implemented sooner than those contained in Missouri's ROPP.

In a June 30, 1995, submittal, 2 initially intended as an update to the state's attainment demonstration, Illinois stated, “In adopting these measures, the State has demonstrated our commitment to seek all reasonable volatile organic compound (VOC) reduction measures that can be applied in that area [metro-east St. Louis] * * *.”  3 Illinois considered a number of measures for point, area and mobile sources. Illinois went beyond the CAA requirements for moderate areas by implementing an enhanced inspection and maintenance (I/M) program and improved rule effectiveness on stationary sources. Illinois held a public hearing on December 21, 1994, on these materials and took public comment on the modeling and conclusions. In the documentation materials, Illinois states “Additional control of local emission sources, if implemented, would provide only marginal air quality improvements, and at significantly greater expense. All practicable controls have been, or will soon be, implemented.”

In addition, Illinois submitted documentation on VOC reduction measures which the state implemented in conjunction with its 15% ROPP. These measures resulted in emissions reductions beyond those required to meet the state's rate-of-progress obligations under section 182(b)(1)(A) of the CAA. Under this provision of the Act, the state was obligated to achieve VOC emissions reductions of 26.66 tons per day (TPD). Accounting for a separate requirement to implement contingency control measures (to be implemented if the area failed to achieve reasonable further progress), which would achieve further VOC reductions of 3 percent of the adjusted base year requirement or 4.96 TPD, the total reduction required was 31.62 TPD. Illinois' ROPP, which was approved by EPA on December 18, 1997 (62 FR 66279), included emissions reductions of 38.12 TPD. A number of TCMs were included as implemented measures which contributed 0.2 TPD reduction. The TCM selection process has been documented by the East-West Gateway Coordinating Council (EWGCC), St. Louis' metropolitan planning organization (MPO), in its report, “Transportation Control Measures Completion Report” dated February 1998. A copy of that report can be found in the docket for this proposed rule or via the World Wide Web at http://www.ewgateway.org/trans/TransReadingRoom/transreadingroom.htm#Rpts.

EPA has performed an analysis to evaluate emission levels of oxides of nitrogen (NO X ) and VOCs and their relationships to the application of current and anticipated control measures expected to be implemented in the Illinois portion of the St. Louis one-hour ozone nonattainment area. This analysis was done to determine if additional stationary source RACM are available after adoption of the CAA-required measures for this area. The analysis EPA conducted demonstrates that a number of possible stationary source emission control measures have been evaluated for their emission reductions. It further demonstrates that the measures evaluated would not advance the attainment date for the area, and therefore would not be considered RACM under the Act. Based on this analysis which is contained in the docket and available for public review, EPA concluded these measures would not advance the attainment date in the area and therefore are not considered RACM. The VOC and NO X controls potentially available are about 4.2 percent and 3.0 percent, respectively, of the total emissions reductions needed for attainment from 1990 to the 2004 attainment year in the entire nonattainment area.

EPA believes controls on these categories are not considered RACM. EPA reached this conclusion primarily because the reductions expected to be achieved by the potential RACM measures are relatively small, 9.2 tons per day of VOC and 8.4 tons per day of NO X for stationary sources, as compared to the emissions reductions needed within the nonattainment area to reach attainment.

EWGCC, the MPO for St. Louis, in conjunction with the Illinois and Missouri air quality agencies, evaluated TCMs for implementation in the St. Louis area. In 1993, Apogee Research Inc., prepared a report entitled, “ St. Louis Region TCM Analysis. ” This report identified a number of TCMs which had the potential to be implemented before 1997 and which could be expected to result in significant air quality benefits. Each TCM was evaluated in terms of its emission reduction benefits and its cost effectiveness. All of the short-term measures suggested in the report were endorsed by the Council, subject to funding and, where necessary, legislative changes. These measures included: activity center based trip reduction; areawide ridesharing; work trip reduction; transit improvements; signal timing; intersection improvements; incident management; traffic flow improvements; and a Missouri fuel tax increase. These TCMs were identified in both the Missouri and Illinois ROPPs which EPA has approved. The emissions reductions associated with these measures were estimated to be 2.06 TPD for Missouri and 0.29 TPD for Illinois and were to be achieved by 1997.

In addition to the TCMs in the SIP, other TCMs were identified and implemented that were not credited in the SIP. These include: bus replacement; bicycle transportation program; bicycle facilities for transit; bikeway or bike trail; bike and pedestrian way; transportation management association; and demand management. The calculated benefits from these TCMs however, were small in terms of emission reductions. The February 1998 document Transportation Control Measures Completion Report gives a status report on the implementation and effectiveness of the TCMs from the Apogee report that were implemented in the St. Louis area. One of the more effective TCMs was the Metrolink which opened in 1994 with a recorded 7 million riders during 1994, and expanded to 14 million riders by 1997.

The TCMs identified in these reports are all the potential TCMs that were considered reasonably available. These types of TCMs have continued to be implemented and reductions estimated for future years. Many of the TCMs have been funded with money from the Congestion Mitigation and Air Quality program funds. There are no additional TCM measures identified as RACM that can advance the attainment date.

In addition, the St. Louis nonattainment area relies in part on reductions from outside the nonattainment area from EPA's NO X SIP call or section 126 rule (65 FR 2674, January 18, 2000) to reach attainment. In the NO X SIP call (63 FR 57356), EPA concluded that reductions from various upwind states were necessary to provide for timely attainment of the ozone standard in various downwind states, including in Missouri and Illinois. The NO X SIP call therefore established requirements for control of sources of significant emissions in all upwind states. However, these reductions are not slated for full implementation until May 2004.

The Missouri and Illinois attainment demonstrations for the St. Louis nonattainment area indicate that the ozone benefit expected to be achieved from regional NO X reductions (such as the NO X SIP call) are substantial. (See the attainment demonstrations in the docket.) Therefore, EPA concludes, based on the available documentation, that since the reductions from potential RACM measures do not nearly equate to the reductions needed to demonstrate attainment, none of the potential RACM measures could advance the attainment date prior to full implementation of NO X emission control rules in 2004 and implementation by 2004 of all local measures already included in the states' ozone attainment demonstrations, and thus none of these potential measures can be considered RACM.

Furthermore, both states have submitted air quality modeling results which show that additional VOC and NO X controls within the nonattainment area will not accelerate attainment of the national ambient air quality standard (NAAQS) for ozone. The previously discussed, June 30, 1995, air quality modeling included the results of various “sensitivity” analyses. 4 In these analyses, Illinois and Missouri tested the air quality benefits (with respect to ozone concentrations) of further VOC and NO X reductions within the nonattainment area. Relative to their 1996 nonattainment area emissions inventories, the states tested the impacts of: (1) reducing VOC by 30 percent; (2) reducing NO X by 30 percent; and (3) reducing both VOC and NO X by 30 percent. The results of that modeling showed that reductions of these magnitudes would not accelerate attainment of the ozone standard. It was only when the states tested the impacts of VOC and NO X reductions beyond boundaries of the nonattainment area that the modeling indicated improvements in air quality to the degree necessary to attain the standard. In other words, the transport of ozone and precursor emissions from upwind areas significantly contribute to St. Louis' nonattainment problem. Air quality modeling which EPA performed in association with the NO X SIP call (63 FR 57356) confirmed the states' analyses. This conclusion has been expressed in previous rulemakings pertaining to the St. Louis area as the basis for proposing to extend the area's attainment date (66 FR 17647).

Based on the information presented above, EPA believes the states have identified and implemented all RACM. Any additional measures would be unlikely to achieve the levels of local precursor emissions reductions needed to have a significant impact on ozone concentrations and hence accelerate attainment. Furthermore, the states and EPA have demonstrated that reductions in upwind emissions are necessary for attainment of the standard, and that these upwind emission reductions provide a significantly greater improvement in local peak ozone concentrations than do available local emission reductions.

• What are the requirements for contingency measures under section 172(c)(9) of the CAA?

Section 172(c)(9) of the Act requires SIPs to contain additional measures that will take effect without further action by the state or EPA if an area fails to attain the standard by the applicable date. The CAA does not specify how many contingency measures are needed or the magnitude of emissions reductions that must be provided by these measures. However, EPA provided guidance interpreting the control measure requirements of 172(c)(1) in the April 16, 1992, General Preamble for Implementation of the Clean Air Act Amendments (CAAA) of 1990. (See 57 FR 13498, 13510.) In that guidance, EPA indicated that states with moderate and above ozone nonattainment areas should include sufficient contingency measures so that, upon implementation of such measures, additional emissions reductions of up to 3 percent of the emissions in the adjusted base year inventory (or such lesser percentage that will cure the identified failure) would be achieved in the year following the year in which the failure has been identified. States must show that their contingency measures can be implemented with minimal further action on their part and with no additional rulemaking actions such as public hearings or legislative reviews. The additional 3 percent reduction would ensure that progress toward attainment occurs at a rate similar to that specified under the reasonable further progress requirements for moderate areas (i.e., 3 percent per year), and that the state will achieve these reductions while conducting additional control measure development and implementation as necessary to correct the shortfall in emissions reductions.

EPA has also determined that Federal measures can be used to analyze whether the contingency measure requirements of section 179(c)(9) have been met. While these measures are not SIP-approved contingency measures which would apply if an area fails to attain, EPA believes that existing Federally enforceable measures can be used to provide the necessary substantive relief. Therefore, Federal measures may be used in the analysis, to the extent that the attainment demonstration does not rely on them or take credit for them. (See, e.g., 66 FR 586, 615 (January 3, 2001).)

• How do the Missouri and Illinois SIPs for the St. Louis area address the contingency measure requirements?

Calculation of Missouri's total 1990 adjusted base year inventory for VOC emissions for the Missouri portion of the nonattainment area is detailed in EPA's February 7, 2000, technical support document for Missouri's 15% ROPP, which we approved on May 18, 2000 (65 FR 31485). Missouri's 1990 adjusted base year inventory of VOC emissions is 315.70 TPD. Per EPA's guidance, Missouri's contingency measures must achieve VOC reductions equivalent to 3 percent of the adjusted base year inventory, or 9.47 TPD.

The Missouri Department of Natural Resources (MDNR) submitted a Contingency Plan for the St. Louis ozone nonattainment area in October 1997. In that submittal, MDNR reviewed various control measures and proposed two contingency measures, implementation of a state rule regulating the use of solvents for metal cleaning, and implementation of a Federal rule limiting emissions from small gasoline powered engines. State rule 10 CSR 10-5.300, “Control of Emissions from Solvent Metal Cleaning,” was adopted by the Missouri Air Conservation Commission (MACC) on February 3, 1998, and approved by EPA on May 18, 2000, 65 FR 31485. It is projected to reduce VOC emissions in the nonattainment area by 9.0 TPD. The Federal small engine rule was projected to reduce VOC emissions in the nonattainment area by 1.22 TPD. However, a part of the reductions resulting from the solvent metal cleaning rule (0.64 TPD) and all of the reductions resulting from the Federal small engine standards rule (1.22 TPD) were accounted for in EPA's approval of Missouri's 15% ROPP, leaving a balance of 8.36 TPD of reductions from these two measures that remained creditable toward the state's obligation to provide measures that could reduce emissions by 9.47 TPD. This created a shortfall of 1.11 TPD with respect to the contingency measure requirement. MDNR has addressed this shortfall by submitting a supplement to its contingency plan. On April 5, 2001, Missouri submitted an analysis of the VOC reductions that will be achieved through the implementation of the Federal Tier 2/low sulfur gasoline rule during 2005 and 2006. 5

Based on MDNR's analysis, implementation of the Tier 2/low sulfur gasoline rule will result in VOC emissions reductions of 1.59 TPD during this period. Implementation of Missouri's revised Contingency Plan which includes the state's metal cleaning rule and substitutes the Federal Tier 2/low sulfur gasoline rule for the small engine standards rule, would result in emissions reductions of 10.59 TPD. Subtracting out the 0.64 TPD previously applied to Missouri's 15% ROPP, the state's revised Contingency Plan provides for VOC emissions reductions of 9.95 TDP which exceeds the required reductions of 9.47 TPD.

Illinois has identified surplus emission reductions that occur thru the year 2006 that are available as contingency measure reductions. These contingency measure reductions are not the same reductions as were approved as contingency measures for the 15% Plan for Illinois (62 FR 37494). The contingency measure reductions approved at that time were implemented by 1998 and were included in the most recent attainment demonstration modeling for the St. Louis area. Thus, these measures have already been “used” to demonstrate attainment. Contingency measures for the ozone attainment demonstration must be above and beyond (or surplus to) the measures that were modeled in the attainment demonstration or used to show attainment of the one-hour ozone standard. Illinois also submitted an updated emission inventory in support of a 2004 attainment date in connection with its attainment demonstration. The reductions listed here have been reviewed for their applicability as contingency measures surplus to any previous reductions or crediting.

The total amount of reduction needed for Illinois to meet the contingency measure requirement in the Metro-East St. Louis nonattainment area is 3 percent of the adjusted base year emissions inventory or 4.96 TPD. The control measures to achieve the required reductions are listed in the following table:

Illinois is relying on a number of Federal rules to serve as contingency measures. The mobile source measures consist of incremental reductions from the Federal motor vehicle control program and other measures already in place. In addition, several other Federal measures are relied upon which include the OBD rule, the Non-Road Engine Standards, and the Tier 2/low sulfur fuel rule. Illinois has documented the methodology for the calculations of the emission reductions and this material is available in the docket. The measures and the reduction calculations are summarized here.

The OBD test standards have already been adopted by Illinois in Title 35 Subtitle B subpart H Part 240. These rules required Illinois to begin OBD testing in its I/M program on January 1, 2001. However, on March 28, 2001, the EPA Administrator signed a final rulemaking to amend the vehicle I/M program requirements to incorporate a check of the OBD system and extend the date that states needed to comply until January 1, 2002. Implementation of this check during the already implemented I/M program in the Metro-East St. Louis area starting in January 2002 is estimated to result in the 2.86 TPD emissions reduction. Because Illinois did not include any OBD emissions reductions in its attainment demonstration emission estimates, the entire 2.86 TPD are creditable toward the contingency measures requirement.

The non-road engine standards apply to all sizes of non-road diesel engines. These engines include lawn and garden equipment, larger industrial equipment, marine engines, recreational vehicles, locomotives, and aircraft engines. The standards are phased in with Tier 2 standards from 2001-2006 and more stringent Tier 3 standards for larger engines from 2006-2008. The emissions reduction for the contingency measure is the difference between the 2004 estimated emissions and the 2006 estimated emissions (or 1.99 TPD). More detail on the emissions calculation is provided in the docket.

The Tier 2/low sulfur fuel rule promulgated by EPA begins to take effect in 2004. Illinois used EPA's MOBILE5 information sheet #8 to estimate reductions. The reduction listed in the table represents the difference between the 2006 estimate (0.97 TPD) and the 2004 estimate (0.89 TPD).

These reductions meet the criteria for reductions to be used as contingency measures. The measures are already adopted for implementation and will provide for specific emission control measures if the area fails to attain the ozone standard. The measures will take effect without any further action by the state or by the EPA Administrator. The reductions are surplus to the attainment demonstration. Therefore, EPA proposes to find that these measures meet the contingency measure requirements for the Illinois Metro-East St. Louis ozone area.

• Do the Missouri and Illinois SIPs meet the RACM and contingency measure requirements?

EPA has reviewed the submitted sensitivity analyses, the process used by the MPO to review and select TCMs, the states' evaluation of potential stationary source control measures, and the attainment year emissions inventories for the St. Louis area. While the CAA requires nonattainment areas to implement available RACM measures, EPA does not believe that section 172(c)(1) requires implementation of potential RACM measures that either require costly implementation efforts or that produce relatively small emissions reductions that will not accelerate attainment of the ozone standard.

Sensitivity modeling for the St. Louis moderate ozone area indicates that the ozone benefit expected to be achieved from regional NO X reductions (such as the NO X SIP call) are far greater than reductions that could be achieved by implementing the measures which have been rejected as RACM. Therefore, EPA believes that the reductions from such measures would not accelerate attainment of the ozone NAAQS.

In addition, EPA believes that both Missouri and Illinois have identified adequate contingency measures. In Missouri's case, implementation of its solvent cleaning rule, 10 CSR 10-5.300, will provide for emissions reductions of 8.36 TPD and implementation of the Federal Tier 2/low sulfur gasoline rule will provide for emissions reductions of 1.59 TPD for combined emissions reductions of 9.95 TPD which exceeds the required reductions of 9.47 TPD. In the case of Illinois, Illinois has identified emissions reductions of 6.54 TPD from OBD, Tier 2, Non-Road Engine Standards and other mobile source measures which exceed the required reductions of 4.96 TPD. Therefore, EPA believes that both Missouri and Illinois have identified contingency measures which will provide for a 3 percent reduction in VOC emissions from the 1990 adjusted base year inventory, as required by section 172(c)(9) of the CAAA.

EPA is proposing to find that the St. Louis nonattainment area SIPs adequately provide for RACM and contingency measures. EPA is also proposing to approve the contingency measures SIP submitted by Missouri in October 1997, as supplemented by a letter dated April 5, 2001.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. This proposed action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule proposes to approve preexisting requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). This rule also does not have a substantial direct effect on one or more Indian tribes, 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 by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This proposed rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this proposed rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the Executive Order. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

This is a synopsis of the Commission's Notice of Proposed Rule Making, MM Docket No. 01-85, adopted April 6, 2000, and released April 9, 2000. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, Inc., (202) 857-3800, 1231 20th Street, NW., Washington, DC 20036.

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MM Docket No. 01-82, adopted April 6, 2001, and released April 9, 2001. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Center 445 12th Street, S.W., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, Inc., (202) 857-3800, 1231 20th Street, NW, Washington, DC 20036.

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MM Docket No. 01-84, adopted April 6, 2001, and released April 9, 2001. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Center 445 12th Street, S.W., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Services, Inc., (202) 857-3800, 1231 20th Street, NW, Washington, DC 20036.

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows:

On March 30, 2001, NMFS published a proposed rule (66 FR 17387) to implement two recommendations that were agreed to by the Inter-American Tropical Tuna Commission (IATTC) and approved by the Department of State in accordance with the Act. The first recommendation would establish measures implementing a 1-year pilot program to reduce bycatch in the tuna purse seine fisheries conducted by vessels from members of the IATTC. The second would require commercial fishermen who fish in the Convention Area (set forth at 50 CFR part 300, subpart C) to report certain information about their vessels for a regional vessel register being developed by the IATTC. Under the Act, a public hearing must be held before implementing IATTC recommendations.

Requests for sign language interpretation or other auxiliary aids should be directed to Svein Fougner (see ADDRESSES ), 562-980-4040 (voice) or 562-980-4047 (facsimile), at least 5 days prior to the hearing date.

The petition filed by TSA maintains that overfishing has been occurring in the Gulf of Mexico red snapper fishery and will occur again in 2001, thereby necessitating emergency rulemaking to reduce the 2001 TAC for the directed fisheries. Included in the requested emergency action for TAC reduction is a request to shorten the recreational fishing season (currently April 21-October 31, 2001).

The TSA petition states that the following are causes of previous and continuing overfishing: (1) TSA asserts that the current definition of “optimum yield” (OY) in the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico does not conform to the more rigorous definition of OY required by the Sustainable Fisheries Act of 1996, which amended the Magnuson-Stevens Act; (2) TSA asserts that NMFS’ scientific studies indicate that bycatch reduction devices required in shrimp trawls in the exclusive economic zone of the Gulf of Mexico west of Cape San Blas, Florida, have reduced juvenile red snapper mortality by 40 percent or less instead of the 50 to 60 percent reduction necessary as a basis for the present 9.12-million-lb (4.14-million kg) TAC. Further, TSA asserts that NMFS and the Gulf of Mexico Fishery Management Council (Council) have greatly exaggerated the importance (positive impact) of bycatch reduction for rebuilding the red snapper stock; (3) TSA asserts that recent scientific information presented to the Council's Scientific Advisory Committee indicates that the overfished condition of the red snapper fishery is a result of excessive fishing pressure by the directed fisheries, in particular the recreational sector of the fishery, and not because of bycatch mortality associated with shrimp harvest; (4) TSA states that the recreational sector of the directed fishery continues to exceed its annual quota under the present season opening and closing dates; (5) TSA states that NMFS is significantly underestimating fishing effort in the recreational sector, which allows that sector to harvest red snapper in excess of its share of the TAC; and (6) TSA asserts that NMFS has failed to make a reduction in the recreational sector's share of the TAC to account for these excessive harvests.

NMFS will consider public comments received in determining whether or not to proceed with the development of the emergency regulations requested by TSA. Upon determining whether or not to initiate the requested rulemaking, the Assistant Administrator for Fisheries, NOAA, will publish a notice of the agency's final disposition of the TSA petition request in the Federal Register .

After introductions, the Council will receive reports on recent activities from the Council Chairman, Executive Director, the NMFS Regional Administrator, Northeast Fisheries Science Center and Mid-Atlantic Fishery Management Council liaisons, NOAA General Counsel and representatives of the U.S. Coast Guard, NMFS Enforcement and the Atlantic States Marine Fisheries Commission. An expanded enforcement briefing will be provided by the U.S. Coast Guard. NMFS also will report to the Council about funds dispersed through the Northeast Marine Fisheries Initiative. These reports will be followed by a NMFS presentation on the status of the North Atlantic right whale. During the afternoon session, the Council staff will present issues and options under consideration by the Herring Committee for a limited entry/controlled access system for Area 1A (inshore Gulf of Maine) as described in the Atlantic Herring Fishery Management Plan (FMP). The Red Crab Committee will request approval of management measures to be analyzed in the Draft Environmental Impact Statement for the Red Crab FMP.

The Council’s Skate Committee will request approval of goals and objectives for the Northeast Skate Complex FMP. The Council will spend the rest of the day addressing groundfish issues. The Groundfish Committee will ask the Council for approval of draft management measures to be analyzed in the Draft Supplemental Environmental Impact Statement for Amendment 13 to the Northeast Multispecies FMP. Measures under consideration include: (1) habitat-related alternatives (methods to designate Essential Fish Habitat, Habitat Areas of Particular Concern designations, and measures to minimize adverse impacts associated with fishing activities); (2) refinement of status quo measures using existing management tools; (3) an area-based regime using area specific measures that may include measures to address unused days-at-sea; and (4) the allocation of resources to different industry sectors that may include measures to address unused days-at-sea. The Council meeting will adjourn after addressing any other outstanding business.

Although other non-emergency issues not contained in this agenda may come before this Council for discussion, those issues may not be the subjects of formal action during this meeting. Council action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notification that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided that the public has been notified of the Council's intent to take final action to address the emergency.

The Council will consider public comments at a minimum of two Council meetings before making recommendations to the NMFS Regional Administrator on any framework adjustment to a fishery management plan. If she concurs with the adjustment proposed by the Council, the Regional Administrator has the discretion to publish the action either as proposed or final regulations in the Federal Register. Documents pertaining to framework adjustments are available for public review 7 days prior to a final vote by the Council.

This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Paul J. Howard (see ADDRESSES ) at least 5 days prior to the meeting date.