The FAA has received numerous reports of in-flight vibrations of the elevator tab on Model 737-600, -700, and -800 (“Next Generation”) series airplanes. These vibrations have been attributed to loose or missing components of the elevator tab assemblies, excessive wear of the elevator tab, excessive tab freeplay, and/or tab weight and center of gravity changes.

In addition, we have determined that repairs of the elevator tab done using certain procedures approved before the effective date of this AD can adversely affect the weight and center of gravity of the elevator tab. Such changes in the tab weight and center of gravity can cause excessive in-flight vibration of the elevator tab. Therefore, updated limitations on repair procedures are necessary to ensure the reliability of the elevator tab in flight. Continued operation of these airplanes in such conditions could result in excessive in-flight vibrations of the elevator tab, and consequent loss of controllability of the airplane.

The FAA has reviewed Boeing All Operator Message M-7200-01-00756, Revision 1, dated May 29, 2001, which describes allowable repair limits for the elevator tab. Repair limits include, but are not limited to, the following:

• Repair can only be one facesheet (upper or lower skin) and honeycomb core in depth.

• Repair of damaged honeycomb core by potting is not permitted.

• Maximum size of damage (allowable damage) that may be sealed using aluminum foil tape is 1 inch in diameter.

• Maximum damage size that could be repaired using 150 degree or 200 degree wet layup is .5 inch across the largest dimension.

• No 250 degree prepreg repairs are permitted.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design, this AD is being issued to prevent installation of repairs that are outside allowable limits of the elevator tab, which could result in excessive in-flight vibrations of the elevator tab, consequent loss of the elevator tab, and loss of controllability of the airplane. This AD prohibits installation of certain repairs of the elevator tab.

This is interim action. The FAA is working with the manufacturer to identify proper action to ensure that unsafe conditions do not exist on airplanes that were repaired before the effective date of this AD. If a corrective action for the existing repairs is necessary, the FAA may consider further rulemaking in this regard.

The manufacturer also 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 additional rulemaking.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this 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 under the caption ADDRESSES. All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

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 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 rule that might suggest a need to modify the 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 that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2001-NM-188-AD.” The postcard will be date stamped and returned to the commenter.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by revising AD 2000-06-13, amendment 39-11654 (65 FR 17583, April 4, 2000); which is applicable to certain Boeing Model 737-200, -200C, -300, and -400 series airplanes; was published in the Federal Register on October 5, 2000 (65 FR 59381). The action proposed to continue to require repetitive visual and high frequency eddy current (HFEC) inspections to detect cracking of the corners of the door frame and the cross beams of the aft cargo door, and corrective actions, if necessary. The action also proposed to continue to mandate accomplishment of a modification to the aft cargo door, which would terminate the repetitive inspection requirements. However, the action proposed to revise the compliance time of the terminating action.

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

One commenter supports the proposed rule.

One commenter requests clarification of Note 4 of the proposed rule. That note states, “Modification of the corners of the door frame and the cross beams of the aft cargo door accomplished prior to the effective date of this AD in accordance with Boeing Service Bulletin 737-52-1079, dated December 16, 1983; Revision 1, dated December 15, 1988; Revision 2, dated July 20, 1989; Revision 3, dated May 17, 1990; or Revision 4, dated February 21, 1991; is considered acceptable for compliance with paragraph (e) of this AD.” The commenter states that certain repair angles installed per those service bulletins may have been installed with inadequate edge margin, and the commenter questions whether repair angles installed without cracks but with inadequate edge margin are acceptable for compliance with paragraph (e) of this AD. Furthermore, the commenter notes that Revision 6 of the service bulletin, dated November 18, 1999, requires that certain repair angles installed with a short edge margin be repetitively inspected, and questions whether these repetitive inspections would be required by the proposed AD.

The FAA does not concur that any change to Note 4 of this AD is necessary. To be acceptable for compliance with paragraph (e) of this AD, the modification of the corners of the door frame must have been properly installed according to the referenced service bulletins. To properly install any repair or modification, all fastener edge margins must meet normal rework requirements which are explicitly stated in the Boeing Structural Repair Manual and other service information. If the edge margins for an installation of the terminating modification are not adequate, as specified in the service bulletin, then the repetitive inspections identified in the service bulletin would be necessary for the modification to be considered to have been accomplished “in accordance with the service bulletin.” No change to the final rule is necessary in this regard.

In paragraph (d) of the proposed rule, an editing error resulted in that paragraph including a compliance time of “Within 4,500 flight cycles or one year after the effective date of this AD.” The paragraph should have referenced the effective date of AD 2000-06-13, which is May 9, 2000. Therefore, paragraph (d) of this final rule has been revised to correct this error and specify a compliance time of 4,500 flight cycles or 1 year after May 9, 2000.

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

There are approximately 1,636 Model 737 series airplanes of the affected design in the worldwide fleet. The FAA estimates that 707 airplanes of U.S. registry are affected by this AD. This AD adds no new requirements, but only extends a compliance time for an action already required by AD 2000-06-13. Thus, this AD adds no new additional economic burden on affected operators, other than the cost of additional repetitive inspection cycles if operators elect to accomplish the modification at a later compliance time as allowed by this AD. The current costs associated with this amendment are reiterated in their entirety (as follows) for the convenience of affected operators:

The detailed visual inspections currently required by AD 2000-06-13 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 these currently required inspections on U.S. operators is estimated to be $84,840, or $120 per airplane, per inspection cycle.

The HFEC inspections currently required by AD 2000-06-13 take approximately 4 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of these inspections on U.S. operators is estimated to be $169,680, or $240 per airplane, per inspection cycle.

The modification currently required by AD 2000-06-13 takes approximately 144 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Required parts cost approximately $4,530 per airplane. Based on these figures, the estimated cost impact of this modification on U.S. operators is estimated to be $9,311,190, or $13,170 per airplane.

The cost impact figures discussed above are based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all Boeing Model 757-200 series airplanes modified by Supplemental Type Certificate (STC) SA1727GL was published in the Federal Register on March 2, 2001 (66 FR 13183). That action proposed to require deactivation of the air-to-ground telephone system approved by that STC.

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

Paragraph (b) of the proposed rule states that “no person shall install an [in-flight entertainment system (IFE)] system in accordance with STC SA1727GL * * *” The FAA finds that, where we used the generic term “IFE system,” we should have used the more specific term “air-to-ground telephone system.” Therefore, we have revised paragraph (b) of this final rule for clarity.

After careful review of the available data, the FAA has determined that air safety and the public interest require the adoption of the rule with the change previously described. The FAA has determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

Because the STC holder is no longer in business, the FAA is unable to determine how many U.S.-registered Boeing Model 757-200 series airplanes modified by STC SA1727GL will be affected by this AD.

For an airplane subject to this AD, it will take approximately 3 work hours per airplane to accomplish the required actions, at an average labor rate of $60 per work hour. Required parts will cost approximately $35 per airplane. Based on these figures, the cost impact of this AD is estimated to be $215 per affected airplane.

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

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all McDonnell Douglas Model DC-10-30 series airplanes modified by Supplemental Type Certificate (STC) ST00054SE was published in the Federal Register on March 2, 2001 (66 FR 13189). That action proposed to require removal of the in-flight entertainment (IFE) system installed by that STC.

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

After careful review of the available data, the FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

As explained in the proposed rule, the STC holder has informed the FAA that the subject IFE system has been removed from all affected McDonnell Douglas Model DC-10-30 series airplanes modified by STC ST00054SE. Therefore, the FAA expects that there will be no future cost impact on U.S. operators as a result of the adoption of this rule.

However, if an airplane subject to this AD is identified, the FAA estimates that removal of the IFE system will take approximately 12 work hours per airplane, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this AD on an affected airplane is estimated to be $720 per airplane.

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

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

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

The FAA has received a report of an electrical fire on the left landing light switch on the cockpit pedestal of a Cessna Model 560XL airplane. Investigation revealed that a wire bundle was burned approximately eight inches below the landing light switch and that the switch was overheated and damaged. The investigation also revealed that wires from KZ041 in the J-box (a terminal located below the mounting plate for power relays) had shorted to the battery bus. The findings of the investigation indicated that incorrect routing of certain wiring had resulted in chafing of certain wiring. Such chafing of wiring could cause shorting to the ground of the electrical power and result in electrical fire in the landing light switch, associated components, and the wiring of the aft J-box fairing light relays.

The FAA has reviewed and approved Cessna Alert Service Letter (ASL) ALS560XL-33-02, dated May 4, 2001, which describes procedures for a visual inspection to detect any chafing, discoloration, or damaged wiring of the right KZ032 and left KZ-41 light relays and any associated components, and procedures for routing the light relay wiring correctly. For any wiring or associated components that are chafed, discolored, or damaged, the ASL provides procedures for accomplishing additional follow-on inspections of certain switch assemblies and associated wiring, and replacement of any discrepant wiring or associated components. Accomplishment of the actions specified in the ASL 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 airplanes of the same type design, this AD is being issued to prevent shorting to the ground of the electrical power due to chafing of wiring, which could result in electrical fire in the wiring of the landing light switch, associated components, and the wiring of the aft J-box fairing light relays. This AD requires accomplishment of the actions specified in the ASL described previously.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this 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 under the caption ADDRESSES. All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

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 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 rule that might suggest a need to modify the 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 that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2001-NM-146-AD.” The postcard will be date stamped and returned to the commenter.

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

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

The Direction Ge ne rale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified the FAA that an unsafe condition may exist on all Airbus Model A300 B2 and B4 series airplanes. The DGAC advises of the reported failure of the rear pressure bulkhead on an Airbus Model A300 series airplane during flight, which led to rapid cabin decompression. The rupture occurred at the junction between the pressure bulkhead and the fuselage/frame 80. The main damage was circumferential on the inner and outer rim attachment angles from stringers 48LH to 34RH. The airplane had accumulated approximately 50,000 total flight hours and 25,000 total flight cycles. The initial investigation revealed heavy corrosion on the inner and outer rim attachment angles, which extended underneath the sealant bead covering the junction. The exact cause and sequence of this bulkhead failure is under investigation. Undetected corrosion in this area of the lower bulkhead attachment could significantly affect the structural integrity of the rear pressure bulkhead. This condition, if not corrected, could result in damage to components of the flight control, hydraulic, and auxiliary power unit fuel systems.

Airbus has issued All Operators Telex (AOT) A300-53A0361, dated June 14, 2001. The AOT describes procedures for a one-time detailed visual inspection (including the removal of sealant from stringer 27LH to stringer 27RH) to detect corrosion in the area between the cleat profile and the inner rim attachment angle of the lower bulkhead attachment, and repair if necessary. The DGAC classified this AOT as mandatory and issued French telegraphic airworthiness directive 2001-245(B), dated June 16, 2001, to ensure the continued airworthiness of these airplanes in France.

The AOT refers to Airbus Service Bulletin A300-53-217, Revision 4, dated January 14, 1997, as an additional source of service information for accomplishment of the inspection. The AOT additionally specifies that the sealant be removed before the inspection, which is not specified in the service bulletin.

These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DGAC has kept the FAA informed of the situation described above. The FAA has examined the findings of the DGAC, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design registered in the United States, this AD is being issued to detect and correct corrosion of the lower bulkhead attachment, which could result in reduced structural integrity of the rear pressure bulkhead and consequent damage to components of the flight control, hydraulic, and auxiliary power unit fuel systems. This AD requires accomplishment of the actions specified in the AOT described previously, except as discussed below.

Operators should note that, although the AOT implies that the manufacturer may be contacted for disposition of certain repair conditions, this AD requires the repair of those conditions to be accomplished in accordance with a method approved by either the FAA or the DGAC (or its delegated agent). In light of the type of repair required to address the identified unsafe condition, and in consonance with existing bilateral airworthiness agreements, the FAA has determined that, for this AD, a repair approved by either the FAA or the DGAC is acceptable for compliance with this AD.

This is considered to be interim action until final action is identified, at which time the FAA may consider further rulemaking.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this 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 under the caption ADDRESSES. All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

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 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 rule that might suggest a need to modify the 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 that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket 2001-NM-214-AD.” The postcard will be date stamped and returned to the commenter.

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

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

The Securities and Exchange Commission today is adopting new rule 5b-3 [17 CFR 270.5b-3] and conforming amendments to rules 2a-7 [17 CFR 270.2a-7] and 12d3-1 [17 CFR 270.12d3-1] under the Investment Company Act of 1940 [15 U.S.C. 80a] (“Investment Company Act” or “Act”). 1

Repurchase agreements provide investment companies (“funds”) with a convenient means to invest excess cash on a secured basis, generally for short periods of time. In a typical fund repurchase agreement, a fund enters into a contract with a broker, dealer, or bank (the “counterparty” to the transaction) for the purchase of securities. The counterparty agrees to repurchase the securities at a specified future date, or on demand, for a price that is sufficient to return to the fund its original purchase price, plus an additional amount representing the return on the fund's investment.

The Commission is adopting rule 5b-3, which permits a fund, subject to certain conditions, to treat a repurchase agreement as an acquisition of the underlying collateral in determining whether it is in compliance with (i) the investment criteria for diversified funds set forth in section 5(b)(1) of the Act 2 and (ii) the prohibition on fund acquisition of an interest in a broker-dealer in section 12(d)(3) of the Act. 3 Rule 5b-3 also provides for similar “look-through” treatment for purposes of section 5(b)(1) of the Act in the case of an investment in state or municipal bonds, the payment of which has been fully funded by escrowed U.S. government securities.

The new rule codifies and updates staff interpretive and no-action letters. It is intended to adapt the Act to economic realities of repurchase agreements and pre-refunded bonds and reflects recent developments in bankruptcy law protecting parties to repurchase agreements.

Repurchase agreements provide funds with a means to invest idle cash at competitive rates for short periods. While a repurchase agreement has legal characteristics of both a sale and a secured transaction, economically it functions as a loan from the fund to the counterparty, in which the securities purchased by the fund serve as collateral for the loan and are placed in the possession or under the control of the fund's custodian during the term of the agreement. 4

Two provisions of the Act may affect a fund's ability to invest in repurchase agreements. Section 12(d)(3) of the Act generally prohibits a fund from acquiring an interest in a broker, dealer, or underwriter. Because a repurchase agreement may be considered to be the acquisition of an interest in the counterparty, section 12(d)(3) may limit a fund's ability to enter into repurchase agreements with many of the firms that act as counterparties. 5 Section 5(b)(1) of the Act limits the amount that a fund that holds itself out as being a diversified investment company may invest in the securities of any one issuer (other than the U.S. Government). This provision may limit the amount of repurchase agreements that a diversified fund may enter into with any one counterparty.

A fund investing in a properly structured repurchase agreement looks primarily to the value and liquidity of the collateral rather than the credit of the counterparty for satisfaction of the repurchase agreement. In two separate no-action positions issued in 1979 and 1980, the staff stated that, for purposes of sections 12(d)(3) and 5(b)(1) of the Act, a fund may treat a repurchase agreement as an acquisition of the underlying collateral if the repurchase agreement is “collateralized fully.” 6 Because most repurchase agreements are collateralized fully by highly liquid U.S. government securities, this “look-through” treatment allowed funds to treat repurchase agreements as investments in government securities. As a result, a fund could invest in repurchase agreements with the same counterparty without the limitations of section 12(d)(3) or 5(b)(1). 7

On September 23, 1999, the Commission issued a release proposing to codify and update these staff no-action positions. 8 We proposed new rule 5b-3 that would permit a fund, under certain circumstances, to look through repurchase agreements to the underlying securities for purposes of sections 5(b)(1) and 12(d)(3) of the Act. The proposed rule included conditions for looking through a repurchase agreement that were substantially similar to the conditions governing “look-through” treatment for money market funds under rule 2a-7 for purposes of complying with the rule's diversification requirements. 9 We also proposed to codify a 1993 staff no-action position that permits funds, under certain conditions, to look through pre-refunded bonds to the escrowed government securities for purposes of the section 5(b)(1) diversification requirements. 10 Finally, we proposed to eliminate a note to rule 12d3-1, which makes the rule's limited exemption from section 12(d)(3) of the Act unavailable for repurchase agreements, including those that were not collateralized fully.

The Commission received letters from four commenters on the Proposing Release, including the Investment Company Institute, which supported adoption of the rule. 11 We are adopting rule 5b-3, amendments to rule 2a-7, and amendments to rule 12d3-1, with certain changes suggested by these commenters.

New rule 5b-3(a) allows funds to treat the acquisition of a repurchase agreement as an acquisition of the underlying securities for purposes of sections 5(b)(1) and 12(d)(3) of the Act if the obligation of the seller to repurchase the securities from the fund is “collateralized fully.” 12 A repurchase agreement is “collateralized fully” if: (i) The value of the underlying securities (reduced by the costs that the fund reasonably could expect to incur if the counterparty defaults) is, and at all times remains, at least equal to the agreed resale price; 13 (ii) the fund has perfected its security interest in the collateral; (iii) the collateral is maintained in an account of the fund with its custodian or a third party that qualifies as a custodian under the Act; 14 (iv) the collateral for the repurchase agreement consists entirely of: (A) Cash items; (B) U.S. government securities; (C) securities that at the time the repurchase agreement is entered into are rated in the highest category by the “Requisite NRSROs'; 15 or (D) unrated securities that are of comparable quality to securities that are rated in the highest rating category by the Requisite NRSROs, as determined by the fund's board of directors or its delegate; and (v) the repurchase agreement qualifies for an exclusion from any automatic stay of creditors' rights against the counterparty under applicable insolvency law in the event of the counterparty's insolvency.

New rule 5b-3 specifies the types of collateral that may be used to “collateralize fully” a repurchase agreement eligible for “look-through” treatment under the rule. We have expanded acceptable collateral to include unrated securities that are of comparable quality to securities that are rated in the highest rating category by the Requisite NRSROs, as determined by the investment company's board of directors or its delegate. 16 We are not, however, adopting a recommendation by two commenters that we altogether eliminate the rule's requirements regarding the credit quality of the collateral. A requirement that the underlying collateral be of highest quality limits a fund's exposure to the ability of the counterparty to maintain sufficient collateral. As we noted in the Proposing Release, securities of lower quality may be subject to greater price fluctuation. In the event of a steep drop in the market value of the collateral, the counterparty would have to deliver additional securities sufficient to ensure that the repurchase agreement remains fully collateralized. If the counterparty does not deliver sufficient additional securities and thus defaults, the fund may be unable to realize the full value of the repurchase agreement upon liquidation of the collateral. In addition, high quality securities are more readily liquidated than lower quality securities, in the event of a counterparty default.

Rule 5b-3 extends “look-through” treatment only to repurchase agreements that qualify for an exclusion from any automatic stay of creditors' rights under applicable bankruptcy laws. 17 Most comments supported this provision, which we are adopting as proposed. Failure of a repurchase agreement to qualify for an exclusion from an automatic stay would make “look-through” treatment inappropriate because the credit and liquidity risks assumed by the fund would be tied directly to the counterparty rather than the issuer of the underlying collateral.

We are eliminating the requirement, included in the staff no-action positions, and our proposal, that the fund's board of directors or its delegate evaluate the creditworthiness of the counterparty to a repurchase agreement. As one commenter observed, the creditworthiness assessment was required under the staff no-action letters because, at the time the letters were written, it was not clear whether a repurchase agreement would be subject to the automatic stay provision in the Bankruptcy Code, in the event that the counterparty became insolvent. 18 In light of subsequent amendments to the Code protecting the parties to repurchase agreements and our requirement that funds relying on the rule qualify for Bankruptcy Code protection, 19 we conclude that it is not necessary for the rule to contain a specific requirement that the fund's directors or their delegate assess the creditworthiness of the counterparty. 20

We are adopting, as proposed, new rule 5b-3(b) which codifies, for purposes of section 5(b)(1), the conditions specified in the staff's no-action position permitting a fund to treat an investment in a “refunded security” as an investment in the escrowed U.S. government securities. 21 Under the rule, a “refunded security” is defined as a debt security the principal and interest payments of which are to be paid by U.S. government securities that have been irrevocably placed in an escrow account and are pledged only to the payment of the debt security. 22 The escrowed securities must not be redeemable prior to their final maturity, and the escrow agreement must prohibit the substitution of the escrowed securities unless the substituted securities are also U.S. government securities. 23 Finally, an independent certified public accountant must have certified to the escrow agent that the escrowed securities will satisfy all scheduled payments of principal, interest and applicable premiums on the refunded securities. 24 This treatment corresponds to the treatment that has been given to pre-refunded bonds in rule 2a-7. 25

Commenters expressed support for the changes made by rule 5b-3(b), and we are adopting this provision as proposed.

We are adopting, as proposed, an amendment to rule 12d3-1 that eliminates a note appended to the rule. Rule 12d3-1 provides limited exemptive relief from the prohibition in section 12(d)(3) of the Act against a fund acquiring an interest in a broker-dealer or a bank engaged in a securities-related business. 26 As discussed above, a fund that enters into a repurchase agreement with a broker-dealer or other counterparty that is engaged in securities related activities may be in violation of section 12(d)(3) of the Act, unless it is permitted to look through the agreement to the underlying collateral. The note appended to rule 12d3-1 has made the rule unavailable for repurchase agreements. With the elimination of this note, funds may rely on rule 12d3-1 even if the repurchase agreement does not meet the requirements for “look-through” treatment in rule 5b-3. 27

We are also adopting conforming amendments to rule 2a-7. These amendments replace the definitions of “collateralized fully,” “event of insolvency,” and “refunded security,” currently set forth in rule 2a-7, with cross-references to the corresponding definitions in rule 5b-3. 28

The new rule and rule amendments will be effective August 15, 2001. 29

The Commission is sensitive to the costs and benefits imposed by its rules. For the most part, rule 5b-3 codifies current staff positions, and therefore will result in few marginal costs or benefits. 30 By codifying a number of staff no-action positions issued over a nearly twenty year period, the rule will give greater transparency to the Commission's rules in this area. In addition, the rule uses standards that are similar to those currently specified in rule 2a-7 for the treatment of repurchase agreements and pre-refunded bonds by money market funds. With this similar treatment, fund complexes that include money market funds may be more efficient in monitoring compliance with the requirements of the rules for all types of funds.

The rule is more restrictive than current requirements in two respects. First, as discussed above, rule 5b-3 is limited to repurchase agreements in which the underlying collateral consists of cash items, U.S. government securities, securities that are rated in the highest rating category by the Requisite NRSROs and unrated securities that are of comparable quality to securities that are rated in the highest rating category by the Requisite NRSROs, as determined by an investment company's board of directors or its delegate. This requirement is intended to ensure that the market value of the collateral will remain fairly stable and that the fund will be able to liquidate the collateral quickly in the event of a default. This limitation on collateral is more restrictive than the staff's position with respect to the treatment of repurchase agreements for purposes of section 12(d)(3), 31 but less restrictive than the staff's position with respect to section 5(b)(1). 32 Since most repurchase agreements are collateralized by U.S. government securities, which clearly fall within the rule's limitations, it appears that the limitation will not have any significant impact on funds.

Second, the rule is limited to repurchase agreements that qualify for an exclusion from any automatic stay under applicable insolvency law. Although this requirement is included in rule 2a-7, it was not a feature of the staff positions, which generally pre-dated the relevant changes in the Bankruptcy Code. Again, because most repurchase agreements qualify for an exclusion, this limitation should not have any significant impact on funds. The limitation will, however, provide important protections for investors by ensuring that a fund can liquidate the collateral quickly in the event of the counterparty's bankruptcy.

The use of rule 5b-3 is optional: even if a fund can look through a repurchase agreement, it may choose to look to the counterparty rather than the underlying securities in meeting the diversification requirements in section 5(b)(1). Thus, a fund may choose not to use rule 5b-3 if it determines that the costs of complying with the rule's requirements outweigh the benefits of being able to look through the repurchase agreement to the underlying securities.

The amendment to rule 12d3-1 eliminates the “Note” to the rule that renders the rule unavailable for repurchase agreements. This amendment will provide additional flexibility for funds without impairing investor protection.

Section 2(c) of the Investment Company Act requires the Commission, when engaging in rulemaking that requires it to consider or determine whether an action is consistent with the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. 33 Rule 5b-3 and the amendments to rules 2a-7 and 12d-3 are being adopted pursuant to the authority in section 6(c) and 38(a) of the Act. 34 Section 6(c) conditions rulemaking authority on the requirement that the rule be “necessary or appropriate in the public interest”; therefore, the requirements of section 2(c) apply to rule 5b-3 and the rule amendments.

The Commission has considered whether this rulemaking will promote efficiency, competition, and capital formation. The rule and rule amendments generally codify the requirements for looking through repurchase agreements and pre-refunded bonds to the underlying securities for purposes of complying with sections 5(b)(1) and 12(d)(3) of the Act. Consistent with staff no-action positions, funds have been looking through repurchase agreements and pre-refunded bonds for a number of years. The few changes made by the rule and rule amendments generally are intended to reflect recent developments in bankruptcy law protecting parties to repurchase agreements and to adapt the Act to economic realities of repurchase agreements and pre-refunded bonds. These changes should not have a significant impact on funds. In addition, since the use of rule 5b-3 is optional, funds may choose to look to the repurchase agreement counterparty rather than the underlying securities in meeting the diversification requirements in section 5(b)(1). Given these factors, we believe that the rule and rule amendments will have no significant impact on efficiency, competition, and capital formation.

The Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) in accordance with 5 U.S.C. 604 regarding rule 5b-3, and the amendments to rules 2a-7 and 12d3-1. A summary of the Initial Regulatory Flexibility Analysis (“IRFA”), which was prepared in accordance with 5 U.S.C. 603, was published in the Proposing Release. The following is a summary of the FRFA.

Rule 5b-3 generally codifies the staff's position that a fund may look through a fully collateralized repurchase agreement to the underlying securities for purposes of sections 5(b)(1) and 12(d)(3) of the Act. The rule also permits a fund to treat the acquisition of certain pre-refunded bonds as an acquisition of the escrowed securities for purposes of section 5(b)(1) of the Act. In addition, the amendment to rule 12d3-1 eliminates the “Note” appended to the rule in order to allow funds to rely on rule 12d3-1 even if the repurchase agreement is not collateralized fully. Finally, the amendments to rule 2a-7 are intended to simplify and update the provisions of that rule that address repurchase agreements and refunded securities.

The Commission received no comments on the IRFA.

For purposes of the Investment Company Act and the Regulatory Flexibility Act, a fund is a small entity if the fund, together with other funds in the same group of related funds, has net assets of $50 million or less as of the end of its most recent fiscal year. 35

Rule 5b-3 and the amendment to rule 12d3-1 will affect any fund that invests in a repurchase agreement with a broker, dealer, underwriter, or bank that is engaged in a securities-related business, when the investment may otherwise be prohibited by section 12(d)(3) of the Act. In addition, rule 5b-3 will affect any fund that holds itself out as a diversified investment company under section 5(b)(1) of the Act and that invests in repurchase agreements or pre-refunded bonds.

As of December 31, 2000, there were approximately 4,145 registered funds that were not money market funds. The Commission staff estimates that 196 of these funds are small entities. We assume that all funds enter into repurchase agreements, and that many of these agreements are with broker-dealers or other counterparties that are engaged in a securities-related business. Therefore, we anticipate that all of the estimated 196 small entities will be affected by the rule's treatment of investments in repurchase agreements for purposes of section 5(b)(1) and 12(d)(3) of the Act, and the amendment to rule 12d3-1.

The FRFA explains that rule 5b-3 should not have a significant economic impact on these funds. The rule would not effect significant changes to the current treatment of repurchase agreements and pre-refunded bonds, but instead would generally codify and update a number of no-action positions that have been taken by the Commission staff. In addition, the amendment to rule 12d3-1 would benefit these funds by allowing them to rely on the rule even if the repurchase agreement does not meet the requirements for “look-through” treatment.

The amendments to rule 2a-7 affect money market funds. As of December 31, 2000, there were approximately 300 registered funds with one or more portfolios that are money market funds. The Commission staff estimates that approximately six of these funds are small entities. The amendments replace the definitions of “collateralized fully,” “event of insolvency,” and “refunded security” in rule 2a-7 with cross-references to the corresponding definitions in rule 5b-3. The cross-reference to the definition of “collateralized fully” in rule 5b-3 will allow money market funds to use unrated securities that are of comparable quality to securities that are rated in the highest rating category by the Requisite NRSROs to collateralize fully their repurchase agreements. This change will not have a significant impact on small entities because most repurchase agreements are collateralized fully by U.S. government securities. In addition, the cross-references to the definitions of “event of insolvency” and “refunded security” in rule 5b-3 will not have a significant impact on small entities because the cross-references do not involve any change in substantive requirements.

Rule 5b-3 and the amendments to rule 2a-7 and 12d-3 will not impose any new reporting or recordkeeping requirements. These provisions do not involve major changes in compliance requirements because they mainly codify existing Commission staff positions. There are no rules that duplicate, overlap or conflict with the rule and rule amendments.

The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant economic impact on small entities. In connection with rule 5b-3 and the rule amendments, the Commission considered the following alternatives: (i) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (ii) the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for small entities; (iii) the use of performance rather than design standards; and (iv) an exemption from coverage of the rule, or any part thereof, for small entities. The FRFA notes that rule 5b-3 and the rule amendments are not intended to effect major substantive changes to the current treatment of repurchase agreements and pre-refunded bonds, but would essentially codify a number of no-action positions taken by the Commission staff. Because rule 5b-3 and the rule amendments are designed to clarify the appropriate treatment of investments by funds in repurchase agreements and pre-refunded bonds for various purposes of the Act, and to provide investment flexibility for funds of all sizes, it would be inconsistent with the purposes of the Regulatory Flexibility Act to propose to exempt small entities from their coverage. Further clarification, consolidation, or simplification of the rules, or specification of different compliance standards for small entities, would not be appropriate, because the rules set forth the minimum standards consistent with investor protection. For the same reasons, the use of performance standards would be inappropriate. Overall, rule 5b-3 and the rule amendments will not have an adverse effect on small entities.

The FRFA is available for public inspection in File No. S7-21-99, and a copy may be obtained by contacting Hugh Lutz, Attorney, at (202-942-0690), Office of Regulatory Policy, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549-0506.

The Commission is adopting new rule 5b-3, and amending rule 2a-7 and rule 12d3-1, pursuant to the authority set forth in sections 6(c) and 38(a) of the Act [15 U.S.C. 80a-6(c) and 80a-37(a)]. The Commission is amending Form N-SAR pursuant to authority set forth in sections 13, 15(d) and 23(a) of the Securities Exchange Act of 1934 [15 U.S.C. 78m, 78o(d), and 78w(a)] and sections 8, 30 and 38 of the Investment Company Act of 1940 [15 U.S.C. 80a-8, 80a-29 and 80a-37].

Heinold Feeds, Inc., P.O. Box 377, Kouts, IN 46347, has requested that FDA withdraw approval of NADA 95-628 for Tylosin® Antibiotic Premix and NADA 127-506 for Tylan® Sulfa-G Premixes because the products are no longer manufactured or marketed.

Following the withdrawal of approval of these NADAs, Heinold Feeds, Inc., is no longer the sponsor of any approved applications. Therefore, 21 CFR 510.600(c) is amended to remove entries for this sponsor.

As provided below, the animal drug regulations are amended to reflect the withdrawal of approvals.

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

1. The authority citation for 21 CFR part 510 continues to read as follows:

2. Section 510.600 Names, addresses, and drug labeler codes of sponsors of approved applications is amended in the table in paragraph (c)(1) by removing the entry for “Heinold Feeds, Inc.,” and in the table in paragraph (c)(2) by removing the entry for “043727”.

3. The authority citation for 21 CFR part 558 continues to read as follows:

4. Section 558.625 Tylosin is amended by removing and reserving paragraph (b)(9).

5. Section 558.630 Tylosin and sulfamethazine is amended in paragraph (b)(10) by removing “043727,”; and by removing “and 051359, 053389” and by adding in its place “051359, and 053389”.

The Louisville & Nashville Drawbridge provides a vertical clearance of 46.4 feet above normal pool in the closed-to-navigation position. Navigation on the waterway consists primarily of commercial tows and recreation watercraft. During normal river stages most vessels are able to pass beneath the closed span. In order to repair the bent shaft and install new lift rails the bridge must be kept inoperative and in the closed-to-navigation position. This deviation has been coordinated with waterway users who do not object.

This deviation allows the bridge to remain closed to navigation from 7 a.m., August 13, 2001, to 5 p.m., August 24, 2001. The drawbridge normally opens on signal.

The Rock Island Railroad & Highway Drawbridge provides a vertical clearance of 23.8 feet above normal pool in the closed-to-navigation position. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This deviation has been coordinated with waterway users who do not object.

This deviation allows the bridge to remain closed-to-navigation from 6 a.m. to 2 p.m., August 4, 2001. The drawbridge normally opens on signal.

The Rock Island Railroad & Highway Drawbridge provides a vertical clearance of 23.8 feet above normal pool in the closed-to-navigation position. Navigation on the waterway consists primarily of commercial tows and recreational watercraft. This deviation has been coordinated with waterway users who do not object.

This deviation allows the bridge to remain closed-to-navigation from 6 a.m. to 6 p.m., July 17, 2001. The drawbridge normally opens on signal and will open on signal at all other times.

The Federal East Coast Railroad Bridge across the St. Johns River at Jacksonville, is a single leaf bridge with a vertical clearance of 9 feet above mean high water (MHW) measured at the fenders in the closed position with a horizontal clearance of 195 feet. The current operating regulation in 33 CFR 117.325(c) allows the draw to operate as an automated railroad bridge.

On May 1, 2001, the drawbridge owner requested a deviation from the current operating regulations to allow the owner to conduct a study to determine if the removal of the automation of this bridge will improve navigational safety for vessels, and increase efficiency of rail traffic.

The District Commander has granted a temporary deviation from the operating requirements listed in 33 CFR 117.325(c) for the purpose of conducting this study. Under this deviation, the Florida East Coast Railroad Bridge shall open on signal and a radiotelephone shall be maintained at the bridge for safety of navigation. The draw will close when a train approaches and remain closed for the passage of the train for a period of not more than sixteen minutes. The draw may be allowed to remain in the last used position until the next passage of a vessel or train. The deviation is effective from 8 a.m., August 2, 2001, to 4 p.m., August 31, 2001.

We encourage you to participate in this rulemaking of the test schedule by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this deviation [CGD07-01-052], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know if they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. The comment period will end on September 30, 2001.

The State Road A1A (North Bridge) Drawbridge across the Atlantic Intracoastal Waterway at Fort Pierce, Florida, is a double leaf bridge with a vertical clearance of 26 feet above mean high water (MHW) measured at the fenders in the closed position with a horizontal clearance of 90 feet. The current operating regulation in 33 CFR 117.5 requires the draw to open on signal.

On June 27, 2001, the drawbridge owner requested a deviation from the current operating regulations to allow the owner to complete emergency repairs to the corroded decking.

The District Commander has granted a temporary deviation from the operating requirements listed in 33 CFR 117.5 for the purpose of completing these repairs. Under this deviation, the State Road A1A (North Bridge) shall operate on single leaf from 8:30 a.m. to 4:30 p.m. from July 23, 2001 through July 25, 2001. Double leaf openings shall be provided with two hours advance notice.

The Lehigh Valley (Upper Bay) railroad bridge, at mile 4.3, across Newark Bay has a vertical clearance of 35 feet at mean high water, and 39 feet at mean low water in the closed position. The existing operating regulations are listed at 33 CFR 117.735.

The bridge owner, Conrail, requested a temporary deviation from the operating regulations to facilitate replacement of the main counterweight sheave assembly at the bridge.

This deviation to the operating regulations will allow the owner of the bridge to keep the bridge in the closed position from 6 a.m., on July 23, 2001 through 6 p.m., on July 27, 2001. Vessels that can pass under the bridge without an opening may do so at all times.

In accordance with 33 CFR 117.35(c), this work will be performed with all due speed in order to return the bridge to normal operation as soon as possible. This deviation from the operating regulations is authorized under 33 CFR 117.35.

The LA 77 bridge across the Lower Grand River, mile 47.0 (Alternate Route) at Grosse Tete, Iberville Parish, Louisiana, has a vertical clearance of 2 feet above high water in the closed-to-navigation position and unlimited clearance in the open-to-navigation position. Navigation on the waterway consists mainly of tows with barges and some recreational craft. The Louisiana Department of Transportation and Development requested a temporary deviation from the normal operation of the bridge in order to replace a defective part that controls the opening and closing of the bridge.

This deviation allows the draw of the LA 77 swing drawbridge across the Lower Grand River, mile 47.0 (Alternate Route), at Grosse Tete, Iberville Parish, Louisiana, (33 CFR 117.478(b)), to remain in the closed-to-navigation position from 7 a.m. until 5 p.m. on Tuesday July 24, 2001. Presently, the draw of the LA 77 bridge, mile 47.0 (Alternate Route) at Grosse Tete, shall open on signal; except that, from about August 15 to about June 5 (the school year), the draw need not be opened from 6 a.m. to 8 a.m. and from 2:30 p.m. to 4:30 p.m., Monday through Friday except Federal holidays. The draw shall open on signal at any time for an emergency aboard a vessel.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM, and under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The permit application was not received in time to publish an NPRM followed by a final rule before the necessary effective date. Delaying this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property. The Coast Guard has not received any complaints or negative comments with regard to this event.

This temporary safety zone is necessary to ensure the safety of vessels and spectators from hazards associated with a fireworks display. Based on recent accidents that have occurred in other Captain of the Port zones, and the explosive hazard of fireworks, the Captain of the Port Chicago has determined firework launches in close proximity to watercraft pose significant risks to public safety and property. The likely combination of large numbers of recreational vessels, congested waterways, darkness punctuated by bright flashes of light, alcohol use, and debris falling into the water could easily result in serious injuries or fatalities. Establishing a safety zone to control vessel movement around the location of the launch platforms will help ensure the safety of persons and property at these events and help minimize the associated risks.

Entry into, transit through or anchoring within this safety zone is prohibited unless authorized by the Captain of the Port, Chicago or his designated on-scene representative. The designated on-scene representative may be contacted on VHF/FM Marine Channel 16.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040, February 26, 1979). The Coast Guard expects the economic impact of this proposal to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

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

This rule will affect the following entities: the owners or operators of vessels intending to transit or anchor in a portion of Lake Michigan from 9 p.m. to 10 p.m., July 28, 2001. This regulation would not have a significant economic impact for the following reasons. The regulation is only in effect for only 1 hour on one day. The designated area is being established to allow for maximum use of the waterway for commercial vessels to enjoy the fireworks display in a safe manner. In addition, commercial vessels transiting the area can transit around the area. The Coast Guard will give notice to the public via a Broadcast to Mariners that the regulation is in effect.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

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

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

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

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

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

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

We have considered the environmental impact of this rule and concluded that under figure 2-1, paragraph (34)(g), of Commandant Instruction M16475.lC, this rule is categorically excluded from further environmental documentation. A “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under ADDRESSES .

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it 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.

Pursuant to 5 U.S.C. 553, a notice of proposed rulemaking (NPRM) was not published for this regulation. Good cause exists for not publishing a NPRM and for making this regulation effective in less than 30 days after Federal Register publication. Conclusive information about this event was not provided to the Coast Guard until June 22, 2001, making it impossible to draft or publish a NPRM or a final rule 30 days in advance of its effective date. Any delay encountered in this regulation's effective date would be contrary to public interest since immediate action is needed to prevent traffic from transiting a portion of the Chelsea River, Boston, Massachusetts, and provide for the safety of life on navigable waters. Additionally, this temporary safety zone only closes the waterway for a 2-day and 3-day period and should have negligible impact on vessel transits due to the fact that vessels are not precluded from using any portion of the waterway upstream or downstream except the safety zone area itself, public notifications will be made prior to the effective period via safety marine information broadcasts and local notice to mariners.

This regulation establishes a safety zone one hundred (100) yards upstream and downstream of the McArdle Bridge in Boston Harbor. The safety zone will be in effect for two closure periods: the first from 6 a.m. to 6 p.m. on June 27 until 29, 2001; and the second from sunrise on July 10 until sunrise on July 13, 2001.

The safety zone restricts movement within this portion of Boston Harbor and is needed to allow the Great Lakes Dredge Company to conduct dredging in the vicinity of the McArdle Bridge. The Captain of the Port anticipates minimal negative impact on vessel traffic due to this event. Public notifications will be made prior to the effective period via safety marine information broadcasts and local notice to mariners.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not significant under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040, February 26, 1979).

The Coast Guard expects the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary.

Although this regulation will prevent traffic from transiting a portion of Boston Harbor during the effective periods, the effects of this regulation will not be significant due to the planning that took place between marine and cargo stakeholders and Coast Guard Marine Safety Office Boston representatives. To minimize impact on the port community it was decided that these new channel closures should overlap previously scheduled closures published in the Federal Register (66 FR 21284, April 30, 2001) under CGD01-01-021. Other elements reducing the impact of this regulation include: the minimal time that vessels will be restricted from the area and the advance notifications which will be made to the local maritime community by safety marine information broadcasts and local notice to mariners.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), the Coast Guard considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit or anchor in a portion of Chelsea River between June 27, 2001 and July 13, 2001, during the designated closures. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons: the minimal time that vessels will be restricted from the area and the advance notifications which will be made to the local maritime community by safety marine information broadcasts and local notice to mariners.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard offered to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. The Coast Guard coordinated a meeting to achieve this on June 21, 2001.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

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

The Coast Guard analyzed this rule under Executive Order 13132 and has determined that this rule does not have implications for federalism under that Order.

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

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

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

The Coast Guard analyzed this rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not pose an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. A rule with tribal implications has 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.

The Coast Guard considered the environmental impact of this rule and concluded that, under figure 2-1, (34)(g), of Commandant Instruction M16475.lC, this proposed rule is categorically excluded from further environmental documentation. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that publishing an NPRM is unnecessary because this rule removes a safety zone that is no longer needed because fireworks are no longer launched or exploded over the River.

The rule creating the safety zone was published in the Federal Register (56 FR 30508) on July 3, 1991. The rule established a safety zone around a barge that launched fireworks every year on the Fourth of July. The safety zone was needed to prevent damage or injury from falling fireworks debris and to prevent the accidental discharge of the fireworks prior to their launching. The regulation was in effect July 4 each year. Starting in 2000 the fireworks launch area was moved inland. The safety zone is no longer needed and the Coast Guard is removing the regulation.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that order. The office of Management and Budget has not reviewed it under that order. It is not significant under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040; February 26, 1979).

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities because this rule removes an obsolete safety zone.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offer to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small entities may contact the person listed under FOR FURTHER INFORMATION CONTACT for assistance in understanding and participating in this rulemaking. We also have a point of contact for commenting on actions by employees of the Coast Guard. Small business may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with Federal regulations to the Small Business and Agriculture Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

The Coast Guard has considered the environmental impact of this proposed rule and concluded that, under figure 2-1, paragraph 34(g), of Commandant Instruction M16475.lC, this proposed rule is categorically excluded from further environmental documentation.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it 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.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a significant energy action under that order because it is not a significant regulatory action under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

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

On December 15, 2000 (65 FR 78434), EPA proposed a limited approval and limited disapproval of the rules in Table 1 that were submitted by CARB for incorporation into the California SIP.

Our proposed action contains more information on the rules and our evaluation.

EPA's proposed action provided a 30-day public comment period. During this period, we received comments on SJVUAPCD Rules 4201 and 4901. We will address these comments in a separate action.

We are not taking action on SJVUAPCD Rules 4201 and 4901 at this time. No comments were submitted that change our assessment of the other rules as described in our proposed action. Therefore, as authorized in sections 110(k)(3) and 301(a) of the CAA, EPA is finalizing a limited approval of submitted rule MBUAPCD Rule 403. This action incorporates the submitted rule into the California SIP, including those provisions identified as deficient. As authorized under section 110(k)(3), EPA is simultaneously finalizing a limited disapproval of the rule. No sanctions will be imposed for MBUAPCD Rule 403, because the area is PM-10 attainment and the rule is not required to maintain attainment.

EPA is also finalizing a limited approval of submitted rules ICAPCD Rules 420 and 701. This action incorporates the submitted rules into the California SIP, including those provisions identified as deficient. As authorized under section 110(k)(3), EPA is simultaneously finalizing a limited disapproval of the rules. As a result, sanctions will be imposed for ICAPCD Rules 420 and 701 unless EPA approves subsequent SIP revisions that correct the rule deficiencies within 18 months of the effective date of this action. These sanctions will be imposed under section 179 of the Act as described in 59 FR 39832 (August 4, 1994). In addition, EPA must promulgate a federal implementation plan (FIP) under section 110(c) unless we approve subsequent SIP revisions that correct the rule deficiencies within 24 months. Note that the submitted rules have been adopted by the local agencies, and EPA's final limited disapproval does not prevent the local agency from enforcing them.

EPA is finalizing full approval of submitted rules ICAPCD Rule 101, ICAPCD Rule 408, ICAPCD Rule 409, ICAPCD Rule 421, ICAPCD Rule 702, and SCAQMD Rule 1138 for incorporation into the California SIP. EPA is finalizing full approval of the recision of submitted rules MBUAPCD Rule 405 and MBUAPCD Rule 406 from the California SIP.

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

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

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

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

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

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

This final rule does not have tribal implications. It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

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

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

EPA's disapproval of the state request under section 110 and subchapter I, part D of the Clean Air Act does not affect any existing requirements applicable to small entities. Any pre-existing federal requirements remain in place after this disapproval. Federal disapproval of the state submittal does not affect state enforceability. Moreover, EPA's disapproval of the submittal does not impose any new Federal requirements. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities.

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

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

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

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

EPA believes that VCS are inapplicable to today's action because it does not require the public to perform activities conducive to the use of VCS.

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 10, 2001. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Section 112(l) of the Act enables the EPA to delegate Federal air toxics programs or rules to be implemented by States in State air toxics programs. The Federal air toxics program implements the requirements found in section 112 of the Act pertaining to the regulation of hazardous air pollutants. Approval of an air toxics program is granted by the EPA if the Agency finds that the State program: (1) Is no less stringent than the corresponding Federal program or rule, (2) the State has adequate authority and resources to implement the program for all sources, (3) the schedule for implementation and compliance is sufficiently expeditious, and (4) the program is otherwise in compliance with Federal guidance. Once approval is granted, the air toxics program can be implemented and enforced by State or local agencies, as well as EPA. Implementation by local agencies is dependent upon appropriate subdelegation.

On March 31, 1995, Ohio submitted to EPA a request for delegation of authority to implement and enforce the air toxics program under section 112 of the Act. Additional letters supplementing this request were sent on June 27, 1995, August 23, 1996, June 1, 1999, and July 8, 1999. On July 22, 1999, EPA found the State's submittal complete. OEPA notified us through a letter dated December 13, 2000, that it is not requesting delegation of the Coke Oven standard (40 CFR part 63, subpart L). In this document EPA is taking final action to approve the program of delegation for Ohio for part 70 and non-part 70 sources with the exception of sources subject to the Coke Oven standard (40 CFR part 63, subpart L).

Requirements for approval, specified in section 112(l)(5), require that a State's program contain adequate authorities, adequate resources for implementation, and an expeditious compliance schedule. These requirements are also requirements for an adequate operating permits program under part 70 (40 CFR 70.4). In an August 15, 1995 rulemaking, EPA promulgated a final full approval under part 70 of the State of Ohio's Operating Permit Program. The document did not include the approval of a 112(l) mechanism for delegation of all section 112 standards for sources subject to the part 70 program. Sources subject to the part 70 program are those sources that are operating pursuant to a part 70 permit issued by the State, local agency or EPA. Sources not subject to the part 70 program are those sources that are not required to obtain a part 70 permit from either the State, local agency or EPA (see 40 CFR 70.3).

This Ohio program of delegation will not include delegation of section 112(r) authority. (The 112(r) program has been delegated to OEPA under a separate document.) The program will, however, include the delegation of the 40 CFR part 63 general provisions to the extent that they are not reserved to the EPA and are delegable to the State, as set forth at 65 FR 55810 (September 14, 2000).

As stated above, this document constitutes EPA's approval of Ohio's program of straight delegation of all existing and future air toxics standards, except for section 112(r) standards and the Coke Oven standard. Straight delegation means that the State will not promulgate individual State rules for each section 112 standard promulgated by EPA, but will implement and enforce without change the section 112 standards promulgated by EPA. The Ohio program of straight delegation is as follows: Upon promulgation of a section 112 standard, OEPA will issue or reopen the appropriate permit to include the section 112 standard for sources which are subject according to the permit issuance schedule in the MOA. OEPA will be able to implement and enforce the terms of the permit containing the section 112 standard requirement. OEPA must notify EPA within 45 days of the final promulgation of the standard if OEPA does not intend to take delegation of the standard. OEPA will incorporate section 112 standards into the Title V permits, new source review permits and federally enforceable state operating permits according to the schedule of implementation in the MOA for each source in Ohio subject to the section 112 standard. The delegation will be implemented on a source by source basis upon the issuance of the applicable permit to that source. Ohio will assume responsibility for the timely implementation and enforcement required by each standard, as well as any further activities agreed to by OEPA and EPA. Some activities necessary for effective implementation of a standard include receipt of initial notifications, recordkeeping, reporting and generally assuring that sources subject to a standard are aware of its existence. When deemed appropriate, OEPA will utilize the resources of its Small Business Assistance Program to assist in general program implementation. The details of this delegation mechanism will be set forth in a memorandum of agreement between EPA and OEPA, copies of which will be placed in the docket associated with this rulemaking.

On November 26, 1993, EPA promulgated regulations to provide guidance relating to the approval of State programs under section 112(l) of the Act. 40 FR 62262. These rules were revised on September 14, 2000. 40 FR 55809. That rulemaking outlined the requirements of approval with respect to various delegation options. The requirements for approval pursuant to section 112(l)(5) of the Act, for a program to implement and enforce Federal section 112 rules as promulgated without changes, are found at 40 CFR 63.91. Any request for approval must meet all section 112(l) approval criteria, as well as all approval criteria of § 63.91. A more detailed analysis of the State's submittal pursuant to § 63.91 is contained in the Technical Support Document included in the official file for this rulemaking.

Under section 112(l) of the Act, approval of a State program is granted by the EPA if the Agency finds that: (1) It is “no less stringent” than the corresponding Federal program, (2) the State has adequate authority and resources to implement the program for all sources, (3) the schedule for implementation and compliance is sufficiently expeditious, and (4) the program is otherwise in compliance with Federal guidance.

EPA is approving Ohio's mechanism of delegation because the State's submittal meets all requirements necessary for approval under section 112(l). The first requirement is that the program be no less stringent than the Federal program. The Ohio program is no less stringent than the corresponding Federal program or rule because the State has requested straight delegation of all standards unchanged from the Federal standards. Second, the State has shown that it has adequate authority and resources to implement the program. The Ohio Statutes authorize OEPA to require and issue Title V permits to part 70 sources and new source review permits and federally enforceable state operating permits to non-part 70 sources of regulated pollutants to assure compliance with all applicable requirements of the Act. The authority to issue permits includes the authority to incorporate permit conditions that implement Federal section 112 standards. Furthermore, Ohio has the authority to implement each section 112 regulation, emission standard or requirement, perform inspections, request compliance information, incorporate requirements into permits, and bring civil and criminal enforcement actions to recover penalties and fines. OEPA will enforce section 112 standards applicable to part 70 sources by including such section 112 standards in Title V operating permits according to the schedule in the MOA. For section 112 standards applicable to non-part 70 sources by including such section 112 standards in new source review and federally enforceable state operating permits according to the schedule in the MOA. Regardless of type of permit holding the requirements of the standard, the permit must be effective prior to the first substantial compliance date for all future standards. Adequate resources will be obtained through State matching funds, and through any monies from the State's Title V program that can be used to fund acceptable Title V activities.

Third, upon promulgation of a standard, Ohio will immediately begin activities necessary for timely implementation of the standard. These activities will involve identifying sources subject to the applicable requirements and notifying these sources of the applicable requirements. Such schedule is sufficiently expeditious for approval.

Fourth, nothing in the Ohio program for straight delegation is contrary to Federal guidance.

OEPA notified us through a letter dated December 13, 2000, that it is not requesting delegation of the Coke Oven standard (40 CFR part 63, subpart L). Since OEPA is not accepting delegation of the Coke Oven standard, EPA will be the primary enforcement authority. The Coke Oven standard remains an applicable requirement for the sources subject to this standard. Therefore, OEPA must include the standard as an applicable requirement in Title V permits for subject sources and sources subject to this standard must continue to comply with its requirements.

In approving this delegation, the State will obtain concurrence from EPA on any matter involving the interpretation of section 112 of the Clean Air Act or 40 CFR part 63 to the extent that implementation, administration, or enforcement of these sections have not been covered by EPA determinations or guidance.

The EPA is promulgating final approval of the June 1, 1999, request by the State of Ohio of a mechanism for straight delegation of section 112 standards unchanged from Federal standards because the request meets all requirements of 40 CFR 63.91 and section 112(l) of the Act as it applies to part 70 and non-part 70 sources. After the effective date of this document, upon signing of the MOA and the issuance of the appropriate permit, the implementation and enforcement of all existing section 112 standards applicable to the part 70 or non-part 70 sources, excluding the Coke Oven standard (40 CFR part 63, subpart L) and section 112(r), which have been incorporated into the appropriate permits (Title V, New Source Review, or federally enforceable state operating permit), are delegated to the State of Ohio. As for the section 112 standards which have not yet been incorporated into permits, the implementation authority for these standards is delegated to the State of Ohio after the effective date of this action, upon signing of the MOA, and the issuance of the appropriate permit containing that standard. The enforcement authority and the future delegation of the section 112 standards to the State will occur according to the procedures outlined in the MOA.

Effective immediately, all notifications, reports and other correspondence required under section 112 standards should be sent to the State of Ohio after the permit is issued. Affected sources should send this information to: Robert F. Hodanbosi, Division of Air Pollution Control, OEPA, 122 South Front Street, P.O. Box 1049, Columbus, Ohio 43266-7049

EPA is publishing this action without prior proposal because EPA views this action as a noncontroversial revision and anticipates no adverse comments. However, in a separate document in this Federal Register publication, EPA is proposing to approve the State Plan should adverse or critical written comments be filed. This action will be effective without further notice unless EPA receives relevant adverse written comment by August 10, 2001. Should EPA receive such comments, it will publish a final rule informing the public that this action will not take effect. Any parties interested in commenting on this action should do so at this time. If no such comments are received, the public is advised that this action will be effective on September 10, 2001.

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

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. This action merely approves state law as meeting federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 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 Clean Air Act. This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

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

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective September 10, 2001 unless EPA receives adverse written comments by August 10, 2001.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 10, 2001. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

The USMMA and state maritime schools require a midshipman/cadet who is a U.S. citizen and who enters the USMMA or a state maritime school in the student incentive payment (SIP) program after April 1, 1982 to sign a service obligation contract which obligates the midshipman/cadet to certain post graduate employment. Prior regulations required an employment reporting date of July 1 for all USMMA and state maritime school SIP graduates irrespective of whether the graduation date was in June or deferred. This presented a situation in which some graduates were allowed less time to submit an employment report under their service obligations. This final rule will allow a USMMA or state maritime school SIP graduate to submit his or her employment report 13 months following his or her graduation and each succeeding 12 months for a total of five consecutive years for USMMA graduates and for a total of three years for state maritime school SIP graduates. This will afford all graduates (whether June or deferred) an equal amount of months to report employment under their service obligations rather than require a July 1 report date for all graduates including those having deferred graduation dates.

This rulemaking does not require notice and comment because it is a rule of agency organization, procedure, and practice (5 U.S.C. 553(b)). Additionally, we find good cause under 5 U.S.C. 553(d) to make this final rule effective upon publication because this rule is noncontroversial and allows a timely as well as fair and efficient reporting criterion. An immediate effective date of this final rule will provide USMMA and state maritime school (SIP) graduates with equal reporting time irrespective of graduation date.

This final rule is not considered a significant regulatory action under section 3(f) of Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget. This final rule is not likely to result in an annual effect on the economy of $100 million or more. This final rule is also not significant under the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034; February 26, 1979). The economic impact, if any, should be so minimal that no further regulatory evaluation is necessary. This final rule is intended only to allow timely as well as fair and efficient employment reporting criterion.

MARAD certifies that this final rule will not have a significant economic impact on a substantial number of small entities. This final rule only provides an equal reporting time for all USMMA and state maritime school graduates irrespective of graduation date.

We analyzed this final rule in accordance with the principles and criteria contained in E.O. 13132 (“Federalism”) and have determined that it does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement. These regulations have no substantial effects on the States, or on the current Federal-State relationship, or on the current distribution of power and responsibilities among the various local officials. Therefore, consultation with State and local officials was not necessary.

MARAD does not believe that this final rule will significantly or uniquely affect the communities of Indian tribal governments when analyzed under the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Therefore, the funding and consultation requirements of this Executive Order would not apply.

We have analyzed this final rule for purposes of compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and have concluded that under the categorical exclusions provision in section 4.05 of Maritime Administrative Order (“MAO”) 600-1, Procedures for Considering Environmental Impacts, 50 FR 11606 (March 22, 1985), the preparation of an Environmental Assessment and an Environmental Impact Statement, or a Finding of No Significant Impact for this final rule is not required. This final rule involves administrative and procedural regulations that have no environmental impact.

This final rule does not impose an unfunded mandate under the Unfunded Mandates Reform Act of 1995. It does not result in costs of $100 million or more, in the aggregate, to any of the following: State, local, or Native American tribal governments, or the private sector. This final rule is the least burdensome alternative that achieves the objective of the rule.

This final rule contains information collection requirements covered by OMB approval number 2133-0509, under 5 CFR part 1320, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Adopted: June 28, 2001.

Released: July 2, 2001.

By the Commission:

1. By this Report and Order, the Commission concludes a proceeding to revise its Schedule of Regulatory Fees to collect the amount of regulatory fees that Congress, pursuant to section 9(a) of the Communications Act, as amended, has required us to collect for Fiscal Year (FY) 2001. 1

2. Congress has required that we collect $200,146,000 through regulatory fees to recover the costs of our competition, enforcement, spectrum management, and consumer information activities for FY 2001. 2 See Attachment G for a description of these activities. This amount is $14,392,000 or approximately 7.75% more than the amount that Congress designated for recovery through regulatory fees for FY 2000. 3 We are revising our fees in order to collect the amount that Congress has specified, as illustrated in a new fee schedule in Attachment D.

3. In revising our fees, we adjusted the payment units and revenue requirement for each service subject to a fee, consistent with section 159(b)(2). The current Schedule of Regulatory Fees is set forth in §§ 1.1152 through 1.1156 of the Commission's rules. 4

4. Section 9(a) of the Communications Act of 1934, as amended, authorizes the Commission to assess and collect annual regulatory fees to recover the costs, as determined annually by Congress, that it incurs in carrying out enforcement, policy and rulemaking, international, and user information activities. 5 In our FY 1994 Fee Order, 6 we adopted the Schedule of Regulatory Fees that Congress established, and we prescribed rules to govern payment of the fees, as required by Congress. 7 Subsequently, we modified the fee schedule to increase the fees in accordance with the amounts Congress required us to collect in each succeeding fiscal year. We are also amending the rules governing our regulatory fee program based upon our prior experience in administering the program. 8

5. As noted, for FY 1994 (59 FR 30984, June 16, 1994) we adopted the Schedule of Regulatory Fees established in section 9(g) of the Act. For fiscal years after FY 1994, however, sections 9(b)(2) and 9(b)(3), respectively, provide for “Mandatory Adjustments” and “Permitted Amendments” to the Schedule of Regulatory Fees. 9 Section 9(b)(2), entitled “Mandatory Adjustments,” requires that we revise the Schedule of Regulatory Fees to reflect the amount that Congress requires us to recover through regulatory fees. 10

6. Section 9(b)(3), entitled “Permitted Amendments,” requires that we determine annually whether additional adjustments to the fees are warranted, taking into account factors that are in the public interest, as well as issues that are reasonably related to the payer of the fee. These amendments permit us to “add, delete, or reclassify services in the Schedule to reflect additions, deletions or changes in the nature of its services * * *”  11

7. Section 9(i) requires that we develop accounting systems necessary to adjust our fees pursuant to changes in the cost of regulating various services that are subject to a fee, and for other purposes. 12 The Commission is in the process of planning a new cost accounting system, which we expect to be in place in FY 2002. For FY 1997 (62 FR 59822, November 5, 1997), we relied for the first time on cost accounting data to identify our regulatory costs and to develop our FY 1997 fees based upon these costs. Also, in FY 1997, we found that some fee categories received disproportionately high cost allocations. We adjusted for these high cost allocations by redistributing the costs, and maintained a 25% limit on the extent in which service fee categories can be increased. We believed that this 25% limit would enable cost-based service fees to be implemented more gradually over time. We thought that this methodology, which we continued to use for FY 1998 (63 FR 35847, July 1, 1998), would enable us to develop a regulatory fees schedule that reflected our cost of regulation. Over time, as the cost of regulation increases or decreases, this methodology would enable us to revise the fee schedule to reflect those services whose regulatory costs had changed.

8. However, we found that developing a regulatory fee structure based on available cost information sometimes did not permit us to recover the amount that Congress required us to collect. In some instances, the large increases in the cost of regulation did not normalize to an acceptable level. We concluded that it would be best to discontinue attempts to base the entire schedule on our available cost data. Instead, we chose to base the FY 1999 (64 FR 35831, July 1, 1999) and FY 2000 (65 FR 44575, July 18, 2000) fees on the basis of “Mandatory Adjustments” only. We have found no reason to deviate from this policy for FY 2001. However, we are applying the “Mandatory Adjustments” differently to better incorporate changes in payment units. As noted above, however, we expect to have a new cost accounting system in place in FY 2002. Finally, section 9(b)(4)(B) requires us to notify Congress of any permitted amendments 90 days before those amendments go into effect. 13

9. As noted above, Congress has required that the Commission recover $200,146,000 for FY 2001 through the collection of regulatory fees, representing the costs applicable to our enforcement, policy and rulemaking, international, and user information activities. 14

10. In developing our FY 2001 fee schedule, we first estimated the number of payment units  15 for FY 2001. Then we compared the FY 2000 revenue estimate amount to the $200,146,000 that Congress has required us to collect in FY 2001 and pro-rated the difference among all the existing fee categories. Finally, we divided the FY 2001 payment unit estimates into the pro-rated FY 2001 revenue estimates to determine the new FY 2001 fees. See Attachment C.

11. Once we established our tentative FY 2001 fees, we evaluated proposals made by Commission staff concerning “Permitted Amendments” to the Fee Schedule and to our collection procedures. However, we are not making any “Permitted Amendments.” Collection procedure matters are discussed in paragraphs 31-37.

12. Finally, we have incorporated, as Attachment F, proposed Guidance containing detailed descriptions of each fee category, information on the individual or entity responsible for paying a particular fee and other critical information designed to assist potential fee payers in determining the extent of their fee liability, if any, for FY 2001. In the following paragraphs, we describe in greater detail our methodology for establishing our FY 2001 regulatory fees.

14. We compared the sum of all estimated revenue requirements for FY 2000 to the amount that Congress has required us to collect for FY 2001 ($200,146,000), which is approximately 7.75% more total revenue than in FY 2000. We increased each FY 2000 fee revenue category estimate by 7.75% to provide a total FY 2001 revenue estimate of $200,146,000. Attachment C provides detailed calculations showing how we determined the revised revenue amounts to be raised for each service.

15. Once we determined the revenue requirement for each service and class of licensee, we divided the revenue requirement by the number of estimated payment units (and by the license term for “small” fees) to obtain actual fee amounts for each fee category. These calculated fee amounts were then rounded in accordance with section 9(b)(2) of the Act. See Attachment C.

16. We examined the results of our calculations to determine if further adjustments of the fees and/or changes to payment procedures were warranted based upon the public interest and other criteria established in 47 U.S.C. 159(b)(3). Unless otherwise noted herein, nothing in this proceeding is intended to change any policies or procedures established or reaffirmed in the FY 2000 Order (65 FR 44575).

17. Amateur licensee Juddie D. Burgess supports the proposal to reduce the amateur vanity call sign regulatory fee for FY 2001, but questions why licensees must continue to pay a regulatory fee upon each renewal. Section 9 of the Communications Act, as amended, provides for recovery of the Commission's costs associated with its enforcement, policy and rulemaking, user information, and international activities. 17 Each day, the Commission's staff is engaged in activities protecting the assignment of vanity call signs from complaints of improper assignment, illegal use of call signs assigned to another, requests to be assigned a call sign already assigned to another, and so forth. We continue to believe that it is appropriate to assess a regulatory fee at the time of renewal upon holders of amateur vanity call signs.

18. WorldCom, Inc. (“WorldCom”) objects to the amount of increase proposed for MDS licensees, from $275 in FY 2000 to $450 in FY 2001, an increase of 64 percent. WorldCom argues that sections 9(i) and 9(b)(3) of the Communications Act, as amended, require regulatory fees to be based on the cost of regulating each industry, and contends that the Commission's methodology, which relies on a proportional increase in the fees allotted to each service, is contrary to these provisions. In any event, WorldCom asks the Commission to make a permitted amendment under section 9(b)(3) to reduce the MDS fee to eliminate the allegedly discriminatory treatment of MDS. WorldCom argues that the proposed 64 percent increase in the MDS fee does not reflect a 64 percent increase in regulatory costs, but rather reflects the fact that the Commission's estimate of the number of MDS licenses dropped from 3,036 to 2,000 following an update of the Commission's database. WorldCom asserts that there is no justification for raising the fee based on this factor and proposes that the fee be raised to no more than $295, reflecting the 7.75 percent proportional increase in revenues for FY 2001. Alternatively, WorldCom proposes that the increase in fees be limited to 25 percent, as was done in FY 1997, which would result in a fee of $345.

19. As to WorldCom's general disagreement with our “mandatory adjustment” methodology, we disagree that this methodology violates the statutory requirement of basing fees on costs. Our previous use, through FY 1998, of a cost-based accounting system represented our best efforts to take into account all of the statutory criteria for determining fees, and we are confident that we did so to the extent permitted by the accounting system available to us. As we learned in FY 1997 and FY 1998, however, the existing cost accounting system did not allow us to fully match costs with appropriations, resulting in a shortfall in the revenues we would collect through fees. This has required us to adopt a procedure to “normalize” the revenue required from each service to meet the statutory requirement of fully funding our appropriations through fees. Attempting to use the available inadequate cost accounting system to recalculate costs does not, in our view, provide a means to ameliorate the situation. We believe that the mandatory adjustment methodology we proposed for FY 2001 represents the most valid method of normalizing revenue requirements pending the development of an improved cost accounting system and thereby enables us to best comply with the statute.

20. We do not believe that WorldCom has justified making a “permitted” amendment although the 64 percent increase in fees to which it would be subject is substantial. The increase in fees merely represents the use of updated, more accurate figures for the number of payment units. The use of more accurate data does not necessitate any amendment in order to conform to the standards of the statute. We recognize, as WorldCom points out, that our methodology might result in some anomalies, such as in the case of the international public fixed service, where it is estimated that there is only one licensee. In such cases, we would consider granting a partial waiver. We do not, however, consider the MDS fee to fall within this category.

21. The Wireless Communications Association International, Inc. (“WCA”) seeks clarification that the MDS fee applies only to the “master” call sign, and not to any separate response hub and booster call signs associated with the “master” call sign. Likewise, IPWireless, Inc. requests clarification for the MMDS stations referring to the “lead” call sign rather than response station hubs and booster stations. Sprint Corporation, in its reply comments, supports the positions of WCA and WorldCom. For FY 2001, the Commission has not extended the MDS regulatory fee to response hubs and boosters. We reserve the right to reconsider this decision in the future.

22. Winstar Communications, Inc. (“Winstar”) urges the Commission to reclassify Local Multipoint Distribution Service (LMDS) to place it into the microwave fee category with other part 101 services. We agree with Sprint, however, that, although LMDS and Microwave services may utilize the same equipment, LMDS is operationally similar to MDS and MMDS. This functional categorization has proven adequate for more than two years. Hence, we see no reason to change the classification.

23. The Cellular Telecommunications & Internet Association (“CTIA”) and Verizon Wireless (“Verizon”), argue that the Commission's mandatory adjustment approach is inconsistent with the requirements of the statute. For the reasons set forth in paragraph 19, above, we reject this argument. CTIA and Verizon also argue that the application of the mandatory adjustment approach has discriminated against fast growing services such as CMRS. CTIA observes that the number of CMRS subscribers has increased by some 62 percent since FY 1999, when the fee was $0.32 per subscriber. CTIA suggests that the CMRS fee should have declined substantially from the FY 1999 level because the total revenue requirement is now divided among more subscribers. Instead, they point out that the proposed FY 2001 fee, $0.30, is only three percent less than it was in FY 2000 (and six percent less than in FY 1999). CTIA and Verizon assert that, as a result, CMRS” share of revenues has increased from eight percent to 16 percent since FY 1999, and CMRS is effectively subsidizing other services. Verizon proposes that the FY 2001 fee should be no more than $0.18 per subscriber.

24. The arguments of CTIA and Verizon in this regard are misplaced. The methodology we proposed for FY 2001 is intended to avoid the problem that CTIA and Verizon point out. To calculate the revenue requirement for FY 2001, we increased the total revenue for the various services proportionately without regard to the number of payment units in each service. We did not calculate the shortfall by taking last year's fees and applying them to the current number of payment units. CTIA correctly suggests that this rejected method would have resulted in fast growing services absorbing an increased share of revenues, since their growth would reduce the overall shortfall and the need to raise fees in other services. Although this may have been the result in the past, we do not believe it is appropriate to retroactively address past increases in revenues collected from CMRS. Therefore, because there are contrary positions on the impact of rapid growth on regulatory costs, we see no basis for a departure from our current approach until an improved cost accounting system is implemented.

25. CTIA also claims that the Commission has “wrongfully imposed a burden on CMRS licensees by increasing regulatory fees to compensate for a shortfall in part caused by the Commission's failure to properly enforce its fee schedule.” The Commission, however, is committed to enforcement of the fee schedule and does not intend to use overpayments as a substitute for enforcement. In this regard, we anticipate that as licensees comply with the FCC Registration Number (FRN) requirements in the future, this will assist us in enforcement. Although our estimates of CMRS growth have taken into account the actual levels of revenue received, we have done this in order to ensure that our estimates are realistic, not to avoid enforcement.

26. Finally, CTIA maintains that “the Commission's FY 2001 subscriber unit estimate is wrong and thus it has overestimated the CMRS mobile service industry's regulatory fee liability.” According to CTIA's figures, CMRS subscribership was approximately 109 million in December 2000, not 90 million, as we estimated. We will revise our fee computation for CMRS. The recent Local Telephone Competition Report, Status as of December 31, 2000, Industry Analysis Division, Common Carrier Bureau (May 21, 2001), has presented a revised figure for CMRS subscribership of 101,212,054. It is appropriate for us to take this new information into account and revise our fee computation accordingly. Our past experience, however, does not support CTIA's claim that use of its own data is necessary to avoid overpayment by CMRS operators. On the contrary, use of its data has resulted in a shortfall in the fees collected. See Assessment and Collection of Regulatory Fees for Fiscal Year 1999, FCC 00-352 (October 10, 2000) at paragraph 7. Accordingly, we modify our estimate of CMRS subscribership to 101 million, resulting in a recomputed fee of $0.27.

27. Paxson Communications Corporation (“Paxson”) asserts that fees for UHF television are excessive. In particular, Paxson observes that the fee for UHF construction permits has increased 43 percent over FY 2000 and is now $1,000 higher than for a VHF construction permit (although Congress originally set lower fees for UHF). Paxson asserts that increases in UHF fees are inconsistent with the more favorable treatment of faster growing services, which presumably receive greater regulatory benefits and impose greater regulatory costs. In Paxson's view, UHF television fees should reflect the heavy burden that licensees bear during the digital transition period, UHF's competitive handicaps, and the impact on UHF of downturns in the economy. Paxson asks for interim relief pending the adoption of an adequate cost accounting system.

28. Although Paxson's arguments raise significant questions, they do not provide a reasonably definite basis to recompute fees for UHF television. We therefore decline to make a “permitted” amendment in FY 2001. We anticipate that development of a new cost accounting system will be in place for FY 2002 and, at that time, we can re-examine the UHF television fees, as well as other issues.

29. On June 1, 2001, COMSAT Corporation (COMSAT) submitted an ex parte filing asking the Commission not to impose the geostationary satellite fee on satellites owned by INTELSAT. COMSAT notes that it has appealed the Commission's determination that COMSAT is liable for such fees, and urges that the fee not be collected pending the disposition of this appeal. See Assessment and Collection of Regulatory Fees for Fiscal Year 2000, 15 FCC Rcd 14478, 14485-90, paragraphs 17-27 (2000), appealed sub nom. COMSAT Corp. v. FCC, No. 00-1458 (D.C. Cir. July 14, 2000). For the reasons set for in the FY 2000 fee order, we believe that the fee should be assessed against COMSAT. COMSAT has not sought a stay of the FY 2000 fee order, either before the Commission or the court, and has not demonstrated the prerequisites for a stay. Accordingly, we have included the INTELSAT satellites in our computation of the geostationary satellite fee, and we expect COMSAT to pay its share.

30. In our Notice of Proposed Rulemaking (NPRM), we proposed to require the use of an FRN by anyone subject to the regulatory fee program. We proposed that fee filers, those who are exempt from regulatory fees, and entities paying on behalf of others, be required to obtain and use the FRNs assigned to them. Furthermore, we sought comment on how to treat submissions that did not contain an FRN at the time that regulatory fee payments are due. We proposed that in those situations, we would afford a 10-day grace period for the filer to obtain and provide the FRN. Finally, we invited comment on whether to impose a penalty on entities subject to these rules, but who did not provide an FRN within the grace period.

31. We did not receive any comments on these issues. We remain convinced that the use of the FRN should be made mandatory for those who are subject to the regulatory fee program, as proposed. Because of unrelated implementation issues, we have decided to resolve the FRN issues raised here, including the effective date of the new requirement, in the pending FRN proceeding. 18 Although the use of the FRN will not be mandatory for the FY 2001 regulatory fee cycle, we strongly encourage entities subject to the regulatory fee program to use the FRN assigned to them so that their payments (or exempt status) can be properly recorded and tracked. Entities not using an FRN may continue to experience delays in the proper recognition of their payments. As a result, these entities (or the entities on whose behalf the payment is being made) will be subject to billing notices and will need to provide information (e.g. cancelled check or other identifying information) showing that they did, in fact, pay their regulatory fees on a timely basis.

32. We are retaining the procedures that we have established for the payment of regulatory fees. See paragraphs 32-37. Section 9(f) requires that we permit “payment by installments in the case of fees in large amounts, and in the case of small amounts, shall require the payment of the fee in advance for a number of years not to exceed the term of the license held by the payer.” See 47 U.S.C. 159(f)(1). Consistent with section 9(f), we are again establishing three categories of fee payments, based upon the category of service for which the fee payment is due and the amount of the fee to be paid. The fee categories are: (1) “standard” fees, (2) “large” fees, and (3) “small” fees. With the exception of new payment due dates for FY 2001, the procedures outlined in this section are not new. Procedural text is provided for information and purposes of clarity.

33. As we have in the past, we are treating regulatory fee payments by certain licensees as “standard fees” which are those regulatory fees that are payable in full on an annual basis. Payers of standard fees are not required to make advance payments for their full license term and are not eligible for installment payments. All standard fees are payable in full on the date we establish for payment of fees in their regulatory fee category. The payment dates for each regulatory fee category will begin September 10, 2001 and end at close of business on September 21, 2001.

34. Time constraints will preclude an opportunity for installment payments. Therefore, regulatees in any category of service will be required to submit their required fees in a single payment by the last day that the regulatory fee payment is due. The payment dates for each regulatory fee category will begin September 10, 2001 and end at close of business on September 21, 2001.

35. As we have in the past, we are treating regulatory fee payments by certain licensees as “small” fees subject to advance payment consistent with the requirements of section 9(f)(2). Advance payments will be required from licensees of those services that we decided would be subject to advance payments in our FY 1994 Report and Order , and to those additional payers noted. 19 Payers of advance fees will submit the entire fee due for the full term of their licenses when filing their initial, renewal, or reinstatement application. Regulatees subject to a payment of small fees shall pay the amount due for the current fiscal year multiplied by the number of years in the term of their requested license. In the event that the required fee is adjusted following their payment of the fee, the payer would not be subject to the payment of a new fee until filing an application for renewal or reinstatement of the license. Thus, payment for the full license term would be made based upon the regulatory fee applicable at the time the application is filed. The effective beginning date for payment of small fees established in this proceeding is September 10, 2001, and it will remain in effect until the FY 2002 fee schedule is implemented.

36. As we have in the past, we are establishing that regulatees whose total regulatory fee liability, including all categories of fees for which payment is due by an entity, amounts to less than $10 will be exempted from fee payment in FY 2001.

37. For licensees and permittees of Mass Media services, the responsibility for payment of regulatory fees normally rests with the holder of the permit or license on October 1, 2000. However, in instances where a Mass Media service license or authorization is transferred or assigned after October 1, 2000, and arrangements to make payment have not been made by the previous licensee, the fee is still due and must be paid by the licensee or holder of the authorization on the date that the fee payment is due. For licensees, permittees and holders of other authorizations in the Common Carrier and Cable Services whose fees are not based on a subscriber, unit, or circuit count, fees must be paid for any authorization issued on or before October 1, 2000. Regulatory fees are due and payable by the holder of record of the license or permit of the service as of October 1, 2000. A pending change in the status of a license or permit that is not granted as of that date is not effective, and the fee is based on the classification that existed on that date. Where a license or authorization is transferred or assigned after October 1, 2000, the fee shall be paid by the licensee or holder of the authorization on the date that the payment is due.

38. For regulatees whose fees are based upon a subscriber, unit or circuit count, the number of a regulatees' subscribers, units or circuits on December 31, 2000 , will be used to calculate the fee payment. 20 Regulatory fees are due and payable by the holder of record of the license or permit of the service as of December 31, 2000. A pending change in the status of a license or permit that is not granted as of that date is not effective, and the fee is based on the classification that existed on that date. Where a license or authorization is transferred or assigned after December 31, 2000, the fee shall be paid by the licensee or holder of the authorization on the date that the payment is due.

39. The Commission's Schedule of Regulatory Fees for FY 2001 is contained in Attachment D of this Report and Order .

40. We are also amending §§ 1.1117(c) and 1.1166(a) of the Rules regarding the filing of requests for waivers, reductions and deferrals of both application (Section 8) and regulatory fees (Section 9). We are amending the rules to clarify that all such filings must be filed as separate pleadings, and each pleading must be clearly marked for the attention of the Managing Director. We hope the revised rules will eliminate the confusion regarding the proper filing procedures to be followed for such requests, as well as to facilitate prompt disposition.

41. As required in 47 U.S.C. 159(c), an additional charge shall be assessed as a penalty for late payment of any regulatory fee. A late payment penalty of 25 percent of the amount of the required regulatory fee will be assessed on the first day following the deadline date for filing of these fees. Failure to pay the regulatory fees and/or any late penalty will be subject to additional provisions as set forth in the Debt Collection Improvement Act of 1996, as well as 47 CFR 1.1112.

42. Accordingly, it is ordered that the rule changes specified herein be adopted. It is further ordered that the rule changes made herein will become effective September 9, 2001, which is no less than 30 days from the date of publication in the Federal Register . A Final Regulatory Flexibility Analysis (FRFA) has been performed and is found in Attachment A, and it is ordered that the Federal Communications Commission's Consumer Information Bureau, Reference Information Center, send this to Small Business Administration (SBA). Finally, it is ordered that this proceeding is terminated.

43. This action is taken pursuant to sections 4(i) and (j), 8, 9, and 303(r) of the Communications Act of 1934, as amended. 21

44. Further information about this proceeding may be obtained by contacting the FCC Consumer Center at (888) 225-5322.

1. As required by the Regulatory Flexibility Act (RFA), 22 an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities was incorporated in the Notice of Proposed Rulemaking, In the Matter of Assessment and Collection of Regulatory Fees for Fiscal Year 2001. 23 The Commission sought written public comments on the proposals in its FY 2001 regulatory fees NPRM, including comments on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA. 24

2. This rulemaking proceeding was initiated to collect regulatory fees in the amount of $200,146,000, the amount that Congress has required the Commission to recover. The Commission seeks to collect the necessary amount through its revised fees, as contained in the attached Schedule of Regulatory Fees, in the most efficient manner possible and without undue burden on the public.

3. None.

4. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. 25 The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 26 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 27 A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 28 A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” 29 Nationwide, as of 1992, there were approximately 275,801 small organizations. 30 “Small governmental jurisdiction” 31 generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” 32 As of 1992, there were approximately 85,006 governmental entities in the United States. 33 This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96%, have populations of fewer than 50,000. 34 The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, we estimate that 81,600 (96%) are small entities. Below, we further describe and estimate the number of small entity licensees and regulatees that may be affected by these rules.

5. The SBA has developed a definition of small entities for cable and other pay television services, which includes all such companies generating $11 million or less in revenue annually. 35 This definition includes cable systems operators, closed circuit television services, direct broadcast satellite services, multipoint distribution systems, satellite master antenna systems and subscription television services. According to the Census Bureau data from 1992, there were 1,788 total cable and other pay television services and 1,423 had less than $11 million in revenue. 36

6. The Commission has developed its own definition of a small cable system operator for purposes of rate regulation. Under the Commission's rules, a “small cable company” is one serving fewer than 400,000 subscribers nationwide. 37 Based on our most recent information, we estimate that there were 1,439 cable operators that qualified as small cable system operators at the end of 1995. 38 Since then, some of those companies may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused them to be combined with other cable operators. Consequently, we estimate that there are fewer than 1,439 small entity cable system operators.

7. The Communications Act of 1934, as amended, also contains a definition of a small cable system operator, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” 39 The Commission has determined that there are 67,700,000 subscribers in the United States. 40 Therefore, we estimate that an operator serving fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with the total annual revenues of all of its affiliates, do not exceed $250 million in the aggregate. 41 Based on available data, we estimate that the number of cable operators serving 677,000 subscribers or less totals 1,450. 42 We do not request nor collect information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250,000,000, 43 and therefore are unable at this time to estimate more accurately the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

8. Other Pay Services. Other pay television services are also classified under the North American Industry Classification System (NAICS) codes 51321 and 51322, which includes cable systems operators, closed circuit television services, direct broadcast satellite services (DBS), 44 multipoint distribution systems (MDS), 45 satellite master antenna systems (SMATV), and subscription television services.

9. The most reliable source of information regarding the total numbers of certain common carrier and related providers nationwide appears to be data the Commission publishes annually in its Carrier Locator report, which encompasses data compiled from FCC Form 499-A Telecommunications Reporting Worksheets. 46 According to data in the most recent report, there are 4,822 interstate service providers. 47 These providers include, inter alia, incumbent local exchange carriers, competitive access providers (CAPS)/competitive local exchange carriers (CLECs), local resellers and other local exchange carriers, interexchange carriers, operator service providers, prepaid calling card providers, toll resellers, and other toll carriers.

10. We have included small incumbent local exchange carriers (LECs)  48 in this present RFA analysis. As noted above, a “small business” under the RFA is one that, inter alia , meets the pertinent small business size standard ( e.g. , a telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of operation.”  49 The SBA's Office of Advocacy contends that, for RFA purposes, small incumbent LECs are not dominant in their field of operation because any such dominance is not “national” in scope. 50 We have therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action has no effect on Commission analyses and determinations in other, non-RFA contexts.

11. Total Number of Telephone Companies Affected. The Census Bureau reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. 51 This number contains a variety of different categories of carriers, including local exchange carriers, interexchange carriers, competitive access providers, operator service providers, pay telephone operators, and resellers. It seems certain that some of these 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not “independently owned and operated.”  52 It seems reasonable to conclude that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by these revised rules.

12. Wireline Carriers and Service Providers. The SBA has developed a definition of small entities for telephone communications companies other than radiotelephone (wireless) companies. The Census Bureau reports that there were 2,321 such telephone companies in operation for at least one year at the end of 1992. 53 According to the SBA's definition, a small business telephone company other than a radiotelephone (wireless) company is one employing no more than 1,500 persons. 54 All but 26 of the 2,321 non-radiotelephone (wireless) companies listed by the Census Bureau were reported to have fewer than 1,000 employees. Even if all 26 of the remaining companies had more than 1,500 employees, there would still be 2,295 non-radiotelephone (wireless) companies that might qualify as small entities or small incumbent LECs. Although it seems certain that some of these carriers are not independently owned and operated, we are unable at this time to estimate with greater precision the number of wireline carriers and service providers that would qualify as small business concerns under SBA's definition. Therefore, we estimate that fewer than 2,295 small telephone communications companies other than radiotelephone (wireless) companies are small entities or small incumbent LECs that may be affected by these revised rules.

13. Local Exchange Carriers (LECS), Competitive Access Providers (CAPs), Interexchange Carriers (IXCs), Operator Service Providers (OSPs), Payphone Providers, and Resellers. Neither the Commission nor the SBA has developed a definition for small LECs, competitive access providers (CAPs), interexchange carriers (IXCs), operator service providers (OSPs), payphone providers, or resellers. The closest applicable definition for these carrier-types under SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. 55 The most reliable source of information that we know regarding the number of these carriers nationwide appears to be the data that we collect annually in connection with the TRS. 56 According to our most recent data, there are 1,395 incumbent and other LECs, 349 CAPs and competitive local exchange carriers (CLECs), 204 IXCs, 21 OSPs, 758 payphone providers, 21 prepaid calling card providers, 17 other toll carriers, and 541 local and toll resellers. 57 Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of these carriers that would qualify as small business concerns under the SBA's definition. Therefore, we estimate that there are fewer than 1,395 small entity incumbent and other LECs, 349 CAPs/CLECs, 204 IXCs, 21 OSPs, 758 payphone providers, and 541 local and toll resellers that may be affected by these revised rules.

14. The Commission has not developed a definition of small entities applicable to licensees in the international services. Therefore, the applicable definition of small entity is generally the definition under the SBA rules applicable to Communications Services, Not Elsewhere Classified (NEC). 58 This definition provides that a small entity is expressed as one with $11.0 million or less in annual receipts. 59 According to the Census Bureau, there were a total of 848 communications services providers, NEC, in operation in 1992, and a total of 775 had annual receipts of less than $10.0 million. 60 The Census report does not provide more precise data.

15. International Broadcast Stations. Commission records show that there are 17 international high frequency broadcast station authorizations. We do not request nor collect annual revenue information, and are unable to estimate the number of international high frequency broadcast stations that would constitute a small business under the SBA definition. However, the Commission estimates that only five international high frequency broadcast stations are subject to regulatory fee payments.

16. International Public Fixed Radio (Public and Control Stations). There is one licensee in this service subject to payment of regulatory fees, and the licensee does not constitute a small business under the SBA definition.

17. Fixed Satellite Transmit/Receive Earth Stations. There are approximately 2,784 earth station authorizations, a portion of which are Fixed Satellite Transmit/Receive Earth Stations. We do not request nor collect annual revenue information, and are unable to estimate the number of the earth stations that would constitute a small business under the SBA definition.

18. Fixed Satellite Small Transmit/Receive Earth Stations. There are approximately 2,784 earth station authorizations, a portion of which are Fixed Satellite Small Transmit/Receive Earth Stations. We do not request nor collect annual revenue information, and are unable to estimate the number of fixed small satellite transmit/receive earth stations that would constitute a small business under the SBA definition.

19. Fixed Satellite Very Small Aperture Terminal (VSAT) Systems. These stations operate on a primary basis, and frequency coordination with terrestrial microwave systems is not required. Thus, a single “blanket” application may be filed for a specified number of small antennas and one or more hub stations. There are 492 current VSAT System authorizations. We do not request nor collect annual revenue information, and are unable to estimate the number of VSAT systems that would constitute a small business under the SBA definition.

20. Mobile Satellite Earth Stations. There are 15 licensees. We do not request nor collect annual revenue information, and are unable to estimate the number of mobile satellite earth stations that would constitute a small business under the SBA definition.

21. Radio Determination Satellite Earth Stations. There are four licensees. We do not request nor collect annual revenue information, and are unable to estimate the number of radio determination satellite earth stations that would constitute a small business under the SBA definition.

22. Space Stations (Geostationary). There are presently 66 Geostationary Space Station authorizations. We do not request nor collect annual revenue information, and are unable to estimate the number of geostationary space stations that would constitute a small business under the SBA definition.

23. Space Stations (Non-Geostationary). There are presently six Non-Geostationary Space Station authorizations, of which only three systems are operational. We do not request nor collect annual revenue information, and are unable to estimate the number of non-geostationary space stations that would constitute a small business under the SBA definition.

24. Direct Broadcast Satellites. Because DBS provides subscription services, DBS falls within the SBA-recognized definition of “Cable and Other Pay Television Services.”  61 This definition provides that a small entity is one with $11.0 million or less in annual receipts. 62 Currently, there are nine DBS authorizations, though there are only two DBS companies in operation at this time. We do not request nor collect annual revenue information for DBS services, and are unable to determine the number of DBS operators that would constitute a small business under the SBA definition.

25. Commercial Radio and Television Services. The proposed rules and policies will apply to television broadcasting licensees and radio broadcasting licensees. 63 The SBA defines a television broadcasting station that has $10.5 million or less in annual receipts as a small business. 64 Television broadcasting stations consist of establishments primarily engaged in broadcasting visual programs by television to the public, except cable and other pay television services. 65 Included in this industry are commercial, religious, educational, and other television stations. 66 Also included are establishments primarily engaged in television broadcasting and which produce taped television program materials. 67 Separate establishments primarily engaged in producing taped television program materials are classified under another NAICS number. 68 There were 1,509 television stations operating in the nation in 1992. 69 That number has remained fairly constant as indicated by the approximately 1,663 operating television broadcasting stations in the nation as of September 30, 2000. 70 For 1992, 71 the number of television stations that produced less than $10.0 million in revenue was 1,155 establishments. 72 Only commercial stations are subject to regulatory fees.

26. Additionally, the SBA defines a radio broadcasting station that has $5 million or less in annual receipts as a small business. 73 A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public. 74 Included in this industry are commercial, religious, educational, and other radio stations. 75 Radio broadcasting stations, which primarily are engaged in radio broadcasting and which produce radio program materials, are similarly included. 76 However, radio stations which are separate establishments and are primarily engaged in producing radio program material are classified under another NAICS number. 77 The 1992 Census indicates that 96 percent (5,861 of 6,127) of radio station establishments produced less than $5 million in revenue in 1992. 78 Official Commission records indicate that a total of 11,334 individual radio stations were operating in 1992. 79 As of September 30, 2000, Commission records indicate that a total of 12,717 radio stations were operating, of which 8,032 were FM stations. 80 Only commercial stations are subject to regulatory fees.

27. The rules may affect an estimated total of 1,663 television stations, approximately 1,281 of which are considered small businesses. 81 The revised rules will also affect an estimated total of 12,717 radio stations, approximately 12,209 of which are small businesses. 82 These estimates may overstate the number of small entities because the revenue figures on which they are based do not include or aggregate revenues from non-television or non-radio affiliated companies. There are also 2,366 low power television stations (LPTV). 83 Given the nature of this service, we will presume that all LPTV licensees qualify as small entities under the SBA definition.

28. Auxiliary, Special Broadcast and Other Program Distribution Services. This service involves a variety of transmitters, generally used to relay broadcast programming to the public (through translator and booster stations) or within the program distribution chain (from a remote news gathering unit back to the station). The Commission has not developed a definition of small entities applicable to broadcast auxiliary licensees. The applicable definitions of small entities are those, noted previously, under the SBA rules applicable to radio broadcasting stations and television broadcasting stations. 84

29. The Commission estimates that there are approximately 2,700 translators and boosters. The Commission does not collect financial information on any broadcast facility, and the Department of Commerce does not collect financial information on these auxiliary broadcast facilities. We believe that most, if not all, of these auxiliary facilities could be classified as small businesses by themselves. We also recognize that most commercial translators and boosters are owned by a parent station which, in some cases, would be covered by the revenue definition of small business entity discussed above. These stations would likely have annual revenues that exceed the SBA maximum to be designated as a small business (either $5 million for a radio station or $10.5 million for a TV station). Furthermore, they do not meet the Small Business Act's definition of a “small business concern” because they are not independently owned and operated. 85

30. Multipoint Distribution Service (MDS). This service has historically provided primarily point-to-multipoint, one-way video services to subscribers. 86 The Commission recently amended its rules to allow MDS licensees to provide a wide range of high-speed, two-way services to a variety of users. 87 In connection with the 1996 MDS auction, the Commission defined small businesses as entities that had annual average gross revenues for the three preceding years not in excess of $40 million. 88 The Commission established this small business definition in the context of this particular service and with the approval of the SBA. 89 The MDS auction resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (BTAs). 90 Of the 67 auction winners, 61 met the definition of a small business. At this time, we estimate that of the 61 small business MDS auction winners, 48 remain small business licensees. In addition to the 48 small businesses that hold BTA authorizations, there are approximately 392 incumbent MDS licensees that are considered small entities. 91 After adding the number of small business auction licensees to the number of incumbent licensees not already counted, we find that there are currently approximately 440 MDS licensees that are defined as small businesses under either the SBA or the Commission's rules. Some of those 440 small business licensees may be affected by the proposals in this Order.

31. Cellular Licensees. Neither the Commission nor the SBA has developed a definition of small entities specific to cellular licensees. Therefore, the applicable definition of small entity is the definition under the SBA rules applicable to radiotelephone (wireless) companies. This provides that a small entity is a radiotelephone (wireless) company employing no more than 1,500 persons. 92 According to the Census Bureau, only twelve radiotelephone (wireless) firms from a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. 93 Even if all twelve of these firms were cellular telephone companies, nearly all cellular carriers were small businesses under the SBA's definition. In addition, we note that there are 1,758 cellular licenses; however, a cellular licensee may own several licenses. According to the most recent Telecommunications Reporting Worksheets data, 806 wireless telephony providers reported that they were engaged in the provision of either cellular service, Personal Communications Service (PCS) services, and SMR telephony carriers, which are placed together in the data. 94 We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and are unable at this time to estimate with greater precision the number of cellular service carriers that would qualify as small business concerns under the SBA's definition. We estimate that there are fewer than 806 small wireless service providers that may be affected by these revised rules.

32. 220 MHz Radio Service—Phase I Licensees. The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a definition of small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, we apply the definition under the SBA rules applicable to Radiotelephone (wireless) Communications companies. This definition provides that a small entity is a radiotelephone (wireless) company employing no more than 1,500 persons. 95 According to the Census Bureau, only 12 radiotelephone (wireless) firms out of a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. 96 If this general ratio continues in 2001 in the context of Phase I 220 MHz licensees, we estimate that nearly all such licensees are small businesses under the SBA's definition.

33. 220 MHz Radio Service—Phase II Licensees. The Phase II 220 MHz service is a new service, and is subject to spectrum auctions. In the 220 MHz Third Report and Order, 62 FR 16004, April 3, 1997, we adopted criteria for defining small and very small businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. 97 We have defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. A very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years. 98 The SBA has approved these definitions. 99 Auctions of Phase II licenses commenced on September 15, 1998, and closed on October 22, 1998. 100 In the first auction, 908 licenses were auctioned in three different-sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold. 101 Thirty-nine small businesses won licenses in the first 220 MHz auction. The second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses. 102

34. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, we adopted criteria for defining small businesses and very small businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments.  103 We have defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. Additionally, a very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. An auction of 52 Major Economic Area (MEA) licenses commenced on September 6, 2000, and closed on September 21, 2000. 104 Of the 104 licenses auctioned, 96 licenses were sold to 9 bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses commenced on February 13, 2001 and closed on February 21, 2001. All eight of the licenses auctioned were sold to three bidders. One of these bidders was a small business that won a total of two licenses. 105

35. Private and Common Carrier Paging. In the Paging Third Report and Order, we adopted criteria for defining small businesses and very small businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. 106 We have defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. Additionally, a very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. 107 The SBA has approved these definitions. 108 An auction of Metropolitan Economic Area licenses commenced on February 24, 2000, and closed on March 2, 2000. 109 Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies claiming small business status won. At present, there are approximately 24,000 Private-Paging site-specific licenses and 74,000 Common Carrier Paging licenses. According to the most recent Telecommunications Industry Revenue data, 172 carriers reported that they were engaged in the provision of either paging or “other mobile” services, which are placed together in the data. 110 We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and therefore are unable at this time to estimate with greater precision the number of paging carriers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 172 small paging carriers that may be affected by these revised rules. We estimate that the majority of private and common carrier paging providers would qualify as small entities under the SBA definition.

36. Broadband Personal Communications Service (PCS). The broadband PCS spectrum is divided into six frequencies designated A through F, and the Commission has held auctions for each block. The Commission defined “small entity” for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. 111 For Block F, an additional classification for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. 112 These regulations defining “small entity” in the context of broadband PCS auctions have been approved by the SBA. 113 No small businesses within the SBA-approved definition bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 small and very small business bidders won approximately 40% of the 1,479 licenses for Blocks D, E, and F. 114 On March 23, 1999, the Commission re-auctioned 347 C, D, E, and F Block licenses; there were 48 small business winning bidders. An additional classification for “very small business” was added for C Block and is defined as “an entity that together with its affiliates and persons or entities that hold interest in such entity and their affiliates, has average annual gross revenues that are not more than forty million dollars for the proceding three years. 115 The SBA approved this definition.”  116 Based on this information, we conclude that the number of small broadband PCS licensees will include the 90 winning C Block bidders and the 93 qualifying bidders in the D, E, and F blocks, plus the 48 winning bidders in the re-auction, for a total of 231 small entity PCS providers as defined by the SBA and the Commission's auction rules. On January 26, 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in this auction, 29 qualified as small or very small businesses.

37. Narrowband PCS. To date, two auctions of narrowband PCs licenses have been conducted. Through these auctions, the Commission has awarded a total of 41 licenses, out of which 11 were obtained by small businesses. For purposes of the two auctions that have already been held, small businesses were defined as entities with average gross revenues for the prior three calendar years of $40 million or less. To ensure meaningful participation of small business entities in the auctions, the Commission adopted a two-tiered definition of small businesses in the Narrowband PCS Second Report and Order. 117 A small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A very small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. These definitions have been approved by the SBA. 118 In the future, the Commission will auction 459 licenses to serve Metropolitan Trading Areas (MTAs) and 408 response channel licenses. There is also one megahertz of narrowband PCS spectrum that has been held in reserve and that the Commission has not yet decided to release for licensing. The Commission cannot predict accurately the number of licenses that will be awarded to small entities in future auctions. However, four of the 16 winning bidders in the two previous narrowband PCS auctions were small businesses, as that term was defined under the Commission's Rules. The Commission assumes, for purposes of this FRFA, that a large portion of the remaining narrowband PCS licenses will be awarded to small entities. The Commission also assumes that at least some small businesses will acquire narrowband PCS licenses by means of the Commission's partitioning and disaggregation rules.

38. Rural Radiotelephone Service. The Commission has not adopted a definition of small entity specific to the Rural Radiotelephone Service. 119 A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio Systems (BETRS). 120 We will use the SBA's definition applicable to radiotelephone (wireless) companies, i.e., an entity employing no more than 1,500 persons. 121 There are approximately 1,000 licensees in the Rural Radiotelephone Service, and we estimate that almost all of them qualify as small entities under the SBA's definition.

39. Air-Ground Radiotelephone Service. The Commission has not adopted a definition of small entity specific to the Air-Ground Radiotelephone Service. 122 We will use the SBA's definition applicable to radiotelephone (wireless) companies, i.e., an entity employing no more than 1,500 persons. 123 There are approximately 100 licensees in the Air-Ground Radiotelephone Service, and we estimate that almost all of them qualify as small under the SBA definition.

40. Specialized Mobile Radio (SMR). Pursuant to 47 CFR 90.814(b)(1), the Commission has defined “small business” for purposes of auctioning 900 MHz SMR licenses, 800 MHz SMR licenses for the upper 200 channels, and 800 MHz SMR licenses for the lower 230 channels on the 800 MHz band, as a firm that has had average annual gross revenues of $15 million or less in the three preceding calendar years. 124 The SBA has approved this small business size standard for the 800 MHz and 900 MHz auctions. 125 Sixty winning bidders for geographic area licenses in the 900 MHz SMR band qualified as small business under the $15 million size standard. The auction of the 525 800 MHz SMR geographic area licenses for the upper 200 channels began on October 28, 1997, and was completed on December 8, 1997. 126 Ten winning bidders for geographic area licenses for the upper 200 channels in the 800 MHz SMR band qualified as small businesses under the $15 million size standard. 127 An auction of 800 MHz SMR geographic area licenses for the General Category channels began on August 16, 2000 and was completed on September 1, 2000. Of the 1,050 licenses offered in that auction, 1,030 licenses were sold. Eleven winning bidders for licenses for the General Category channels in the 800 MHz SMR band qualified as small business under the $15 million size standard. In an auction completed on December 5, 2000, a total of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were sold. Of the 22 winning bidders, 19 claimed small business status. Thus, 40 winning bidders for geographic licenses in the 800 MHz SMR band qualified as small businesses. In addition, there are numerous incumbent site-by-site SMR licenses on the 800 and 900 MHz band.

41. These revised fees in the Report and Order apply to SMR providers in the 800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained extended implementation authorizations. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR service pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. We assume, for purposes of this FRFA, that all of the remaining existing extended implementation authorizations are held by small entities, as that term is defined by the SBA.

42. Private Land Mobile Radio (PLMR). PLMR systems serve an essential role in a range of industrial, business, land transportation, and public safety activities. These radios are used by companies of all sizes operating in all U.S. business categories. The Commission has not developed a definition of small entity specifically applicable to PLMR licensees due to the vast array of PLMR users. For the purpose of determining whether a licensee is a small business as defined by the SBA, each licensee would need to be evaluated within its own business area.

43. The Commission is unable at this time to estimate the number of small businesses which could be impacted by the rules. The Commission's 1994 Annual Report on PLMR  128 indicates that at the end of fiscal year 1994 there were 1,087,267 licensees operating 12,481,989 transmitters in the PLMR bands below 512 MHz. Because any entity engaged in a commercial activity is eligible to hold a PLMR license, the revised rules in this context could potentially impact every small business in the United States.

44. Amateur Radio Service. We estimate that 8,000 applicants will apply for vanity call signs in FY 2001. These licensees are presumed to be individuals, and therefore not small entities. All other amateur licensees are exempt from payment of regulatory fees.

45. Aviation and Marine Radio Service. Small businesses in the aviation and marine radio services use a marine very high frequency (VHF) radio, any type of emergency position indicating radio beacon (EPIRB) and/or radar, a VHF aircraft radio, and/or any type of emergency locator transmitter (ELT). The Commission has not developed a definition of small entities specifically applicable to these small businesses. The applicable definition of small entity is the definition under the SBA rules for radiotelephone (wireless) communications. 129

46. Most applicants for recreational licenses are individuals. Approximately 581,000 ship station licensees and 131,000 aircraft station licensees operate domestically and are not subject to the radio carriage requirements of any statute or treaty. For purposes of our evaluations and conclusions in this FRFA, we estimate that there may be at least 712,000 potential licensees which are individuals or are small entities, as that term is defined by the SBA. We estimate that only 16,800 will be subject to FY 2001 regulatory fees.

47. Fixed Microwave Services. Microwave services include common carrier, 130 private-operational fixed, 131 and broadcast auxiliary radio services. 132 At present, there are approximately 22,015 common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services. The Commission has not yet defined a small business with respect to microwave services. For purposes of this FRFA, we will use the SBA's definition applicable to radiotelephone (wireless) companies— i.e., an entity with no more than 1,500 persons. 133 We estimate that all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as small entities under the SBA definition for radiotelephone (wireless) companies.

48. Public Safety Radio Services. Public Safety radio services include police, fire, local government, forestry conservation, highway maintenance, and emergency medical services. 134 There are a total of approximately 127,540 licensees within these services. Governmental entities  135 as well as private businesses comprise the licensees for these services. As indicated supra in paragraph four of this FRFA, all governmental entities with populations of less than 50,000 fall within the definition of a small entity. 136 All licensees in this category are exempt from the payment of regulatory fees.

49. Personal Radio Services. Personal radio services provide short-range, low power radio for personal communications, radio signaling, and business communications not provided for in other services. The services include the citizen's band (CB) radio service, general mobile radio service (GMRS), radio control radio service, and family radio service (FRS). 137 Since the CB, GMRS, and FRS licensees are individuals, no small business definition applies for these services. We are unable at this time to estimate the number of other licensees that would qualify as small under the SBA's definition; however, only GMRS licensees are subject to regulatory fees.

50. Offshore Radiotelephone Service. This service operates on several UHF TV broadcast channels that are not used for TV broadcasting in the coastal areas of states bordering the Gulf of Mexico. 138 There are presently approximately 55 licensees in this service. We are unable to estimate at this time the number of licensees that would qualify as small under the SBA's definition for radiotelephone (wireless) communications.

51. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation and digital audio broadcasting satellite uses. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions. 139 The FCC auctioned geographic area licenses in the WCS service. In the auction, there were seven winning bidders that qualified as very small business entities, and one that qualified as a small business entity. We conclude that the number of geographic area WCS licensees affected includes these eight entities.

52. 39 GHz Service. The Commission defined “small entity” for 39 GHz licenses as an entity that has average gross revenues of less than $40 million in the three previous calendar years. 140 An additional classification for “very small business” was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. 141 These regulations defining “small entity” in the context of 39 GHz auctions have been approved by the SBA. The auction of the 2,173 39 GHz licenses began on April 12, 2000 and closed on May 8, 2000. The 18 bidders who claimed small business status won 849 licenses.

53. Local Multipoint Distribution Service. The auction of the 1,030 Local Multipoint Distribution Service (LMDS) licenses began on February 18, 1998 and closed on March 25, 1998. The Commission defined “small entity” for LMDS licenses as an entity that has average gross revenues of less than $40 million in the three previous calendar years. 142 An additional classification for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. 143 These regulations defining “small entity” in the context of LMDS auctions have been approved by the SBA. 144 There were 93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very small business bidders won approximately 277 A Block licenses and 387 B Block licenses. On March 27, 1999, the Commission re-auctioned 161 licenses; there were 40 winning bidders. Based on this information, we conclude that the number of small LMDS licenses will include the 93 winning bidders in the first auction and the 40 winning bidders in the re-auction, for a total of 133 small entity LMDS providers as defined by the SBA and the Commission's auction rules.

54. 218-219 MHz Service. The first auction of 218-219 MHz spectrum resulted in 170 entities winning licenses for 595 Metropolitan Statistical Area (MSA) licenses. Of the 594 licenses, 557 were won by entities qualifying as a small business. For that auction, we defined a small business as an entity that, together with its affiliates, has no more than a $6 million net worth and, after federal income taxes (excluding any carry over losses), has no more than $2 million in annual profits each year for the previous two years. 145 In the 218-219 MHz Report and Order and Memorandum Opinion and Order, we defined a small business as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and their affiliates, has average annual gross revenues not to exceed $15 million for the preceding three years. 146 A very small business is defined as an entity that, together with its affiliates and persons or entities that hold interests in such an entity and its affiliates, has average annual gross revenues not to exceed $3 million for the preceding three years. 147 We cannot estimate, however, the number of licenses that will be won by entities qualifying as small or very small businesses under our rules in future auctions of 218-219 MHz spectrum. Given the success of small businesses in the previous auction, and the above discussion regarding the prevalence of small businesses in the subscription television services and message communications industries, we assume for purposes of this FRFA that in future auctions, all of the licenses may be awarded to small businesses, which would be affected by these revised rules.

55. With certain exceptions, the Commission's Schedule of Regulatory Fees applies to all Commission licensees and regulatees. Most licensees will be required to count the number of licenses or call signs authorized, complete and submit an FCC Form 159 (“FCC Remittance Advice”), and pay a regulatory fee based on the number of licenses or call signs. 148 Interstate telephone service providers must compute their annual regulatory fee based on their interstate and international end-user revenue using information they already supply to the Commission in compliance with the Form 499-A, Telecommunications Reporting Worksheet, and they must complete and submit the FCC Form 159. Compliance with the fee schedule will require some licensees to tabulate the number of units ( e.g. , cellular telephones, pagers, cable TV subscribers) they have in service, and complete and submit an FCC Form 159. Licensees ordinarily will keep a list of the number of units they have in service as part of their normal business practices. No additional outside professional skills are required to complete the FCC Form 159, and it can be completed by the employees responsible for an entity's business records.

56. Each licensee must submit the FCC Form 159 to the Commission's lockbox bank after computing the number of units subject to the fee. Licensees may also file electronically to minimize the burden of submitting multiple copies of the FCC Form 159. Applicants who pay small fees in advance and provide fee information as part of their application must use FCC Form 159.

57. Licensees and regulatees are advised that failure to submit the required regulatory fee in a timely manner will subject the licensee or regulatee to a late payment fee of 25 percent in addition to the required fee. 149 Until payment is received, no new or pending applications will be processed, and existing authorizations may be subject to rescission. 150 Further, in accordance with the Debt Collection Improvement Act of 1996, federal agencies may bar a person or entity from obtaining a federal loan or loan insurance guarantee if that person or entity fails to pay a delinquent debt owed to any federal agency. 151 Nonpayment of regulatory fees is a debt owed the United States pursuant to 31 U.S.C. 3711 et seq. , and the Debt Collection Improvement Act of 1996, Public Law 194-134. Appropriate enforcement measures, e.g., interest as well as administrative and judicial remedies, may be exercised by the Commission. Debts owed to the Commission may result in a person or entity being denied a federal loan or loan guarantee pending before another federal agency until such obligations are paid. 152

58. The Commission's rules currently provide for relief in exceptional circumstances. Persons or entities that believe they have been placed in the wrong regulatory fee category or are experiencing extraordinary and compelling financial hardship, upon a showing that such circumstances override the public interest in reimbursing the Commission for its regulatory costs, may request a waiver, reduction or deferment of payment of the regulatory fee. 153 However, timely submission of the required regulatory fee must accompany requests for waivers or reductions. This will avoid any late payment penalty if the request is denied. The fee will be refunded if the request is granted. In exceptional and compelling instances (where payment of the regulatory fee along with the waiver or reduction request could result in reduction of service to a community or other financial hardship to the licensee), the Commission will accept a petition to defer payment along with a waiver or reduction request.

59. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities. As described in Section IV of this FRFA, supra, we have created procedures in which all fee-filing licensees and regulatees use a single form, FCC Form 159, and have described in plain language the general filing requirements. We have also created Attachment F, infra, which gives “Detailed Guidance on Who Must Pay Regulatory Fees.” Because the collection of fees is statutory, our efforts at proposing alternatives are constrained and, throughout these annual fee proceedings, have been largely directed toward simplifying the instructions and necessary procedures for all filers. We have sought comment on other alternatives that might simplify our fee procedures or otherwise benefit small entities, while remaining consistent with our statutory responsibilities in this proceeding.

60. The Omnibus Consolidated and Emergency Supplemental Appropriations Act for FY 2000, Public Law 106-553 requires the Commission to revise its Schedule of Regulatory Fees in order to recover the amount of regulatory fees that Congress, pursuant to Section 9(a) of the Communications Act, as amended, has required the Commission to collect for Fiscal Year (FY) 2001. 154 As noted, we have also previously sought comment on the proposed methodology for implementing these statutory requirements and any other potential impact of these proposals on small entities.

61. With the use of actual cost accounting data for computation of regulatory fees, we found that some fees which were very small in previous years would have increased dramatically and would have a disproportionate impact on smaller entities. The methodology we are adopting in this Report and Order minimizes this impact by limiting the amount of increase and shifting costs to other services which, for the most part, are larger entities.

62. Several categories of licensees and regulatees are exempt from payment of regulatory fees. See, e.g., footnote 148, supra, and Attachment F of the Report and Order, infra.

Report to Small Business Administration: The Commission will send a copy of this Report and Order , including a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration. The Report and Order and FRFA (or summaries thereof) will also be published in the Federal Register .

Report to Congress: The Commission will send a copy of this Final Regulatory Flexibility Analysis, along with this Report and Order, in a report to Congress pursuant to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).

This is a summary of the Commission's Order on Remand, CC Docket No. 96-149, FCC 01-140, adopted April 23, 2001 and released April 27, 2001. The complete text of this Order is available for inspection and copying during normal business hours in the FCC Reference Information Center, Courtyard Level, 445 12th Street, SW., Washington, DC, and also may be purchased from the Commission's copy contractor, International Transcription Services, (ITS, Inc.), CY-B400, 445 12th Street, SW., Washington, DC.

1. Section 271 of the Communications Act of 1934, as amended (Communications Act or Act), states that neither a Bell operating company (BOC) nor its affiliate may provide “interLATA services” except as set forth in that section. In the Non-Accounting Safeguards Order, the Commission concluded that the term “interLATA services” as used in section 271 encompasses interLATA telecommunications services and interLATA information services. Following the Commission's reconsideration of other aspects of the Non-Accounting Safeguards Order, the Bell Atlantic telephone companies (now known as the Verizon telephone companies) and US WEST, Inc. (now known as Qwest Communications International Inc.) (collectively, Petitioners) petitioned for judicial review of the Commission's determination that interLATA information services fall within the scope of interLATA services. Because the arguments advanced by the Petitioners in their appellate brief had not been raised in the administrative proceeding, the Commission moved for a voluntary remand to consider further the issues raised by the Petitioners. The D.C. Circuit granted the Commission's motion.

2. In this Order on Remand, the Commission examines the scope of the term “interLATA services” and reaffirms the Commission's conclusion in the Non-Accounting Safeguards Order that the term “interLATA services” as used in section 271 encompasses interLATA information services as well as interLATA telecommunications services. As summarized, the Commission finds that conclusion the most reasonable given the statutory language, structure, and history. The Commission also finds that its 1998 Universal Service Report to Congress is not inconsistent with this conclusion. A BOC therefore may provide interLATA information services only in accordance with the provisions of section 271.

3. Our conclusion reaffirms the longstanding view of the federal courts and this Commission that limitations on BOC provision of interLATA extend to interLATA information services. The D.C. Circuit examined precisely this question within the contours of the MFJ and explicitly rejected claims by some BOCs that information service cannot also constitute the provision of interLATA telecommunications in the context of the MFJ's interLATA prohibition. The Commission also reached this same conclusion in the Non-Accounting Safeguards Order, finding that an information service that contains a bundled interLATA telecommunications component includes “telecommunications” between points located in different LATAs, and thereby satisfies the statutory definition of an “interLATA service.”

4. Even though, under the Communications Act of 1934, as amended, the terms “information service” and “telecommunications service” are mutually exclusive, each is a subset of the broader term “interLATA services” insofar as each type of service involves telecommunications that cross LATA boundaries. Indeed, this matter apparently was so clear in 1996 that the BOCs themselves urged the same construction of the statutory language. In a reversal of their prior position, the Petitioners claimed that the statutory language “clearly” requires precisely the opposite of what they previously asserted was the “clear” meaning. We reject their latest position as contrary to the Act's text, structure, history, and purpose.

5. Whether section 271's restriction on the BOC's provision of interLATA services includes interLATA information services depends on the statutory language.

6. The BOCs contend that a straightforward reading of the Act's definitions shows that a BOC that provides an information service via telecommunications cannot also be deemed to be providing an “interLATA,” which is defined as a form of telecommunications. We conclude that the relevant statutory definitions, either separately or in combination, do not clearly indicate whether “interLATA services” in section 271 includes or excludes information services. Rather, we find that including interLATA information services within the scope of “interLATA services” in section 271 is the interpretation that most reasonably fits with the statutory language.

7. In the BOCs' view, the “telecommunications” referenced in the definition of “interLATA service” must comprise a separate offering to the customer and cannot be an input in the offering of an information or other service. Such an interpretation, however, is not supported in the statute because “interLATA service” does not require that the telecommunications aspect of such a service be provided directly to end-users rather than as a component in an unbundled offering. It suffices under the broad “interLATA services” definition that the information service is conveyed via telecommunications that is interLATA in nature.

8. The term “provide” in section 271 must be construed in the context of the unique terms, structure, history, and purposes of that section. Use of the term “provide” in section 271(a) therefore must be considered in light of that section's dual purposes of preventing the BOCs from using bottleneck local facilities to discriminate in favor of their owned or leased interLATA facilities and giving the BOCs maximum incentive to open their local markets to competition. Thus, section 271's use of “provide” should be read to apply to information services that include interLATA transmission components.

9. Our conclusion that interLATA services encompass information services permits a uniform application of the terms and structure of sections 271 and 272. Section 271(g) explicitly exempts some information services from the interLATA services restriction in section 271(a). By exempting these services, the statute presupposes that “incidental interLATA services” are a subset of the broader category of interLATA services to which the restriction applies. If information services identified in section 271(g), when conveyed via interLATA telecommunications, were not also “interLATA services,” it would have been unnecessary for Congress to exempt them from section 271(a)'s restriction.

10. The BOC's claim that Congress enacted certain provisions of section 271(g) as mere “extra, unnecessary assurance” that certain specified information services were not intended to be included within section 271(a)'s interLATA service restriction even though, under the BOC's rationale, such services should already be excluded from the section 271(a) restriction, under the plain meaning of section 271(a). This argument is flawed in multiple respects. First, it fails to interpret the statutory language in a manner that gives meaning to each word. Moreover, the BOC's argument conflicts with section 271(h), which states that the exceptions in section 271(g) are to be narrowly construed. Finally, the BOC's position would cause tension between section 271 and certain provisions of section 272, which requires the BOCs to provide both interLATA telecommunications services and interLATA information services through a separate affiliate.

11. Allowing the BOCs immediately to provide information services across LATA boundaries would reduce the BOC's incentive to comply with the Section 271 market-opening requirements. We find no evidence that Congress intended to blunt the effectiveness of this incentive by excluding BOC provision of in-region, interLATA information services from the restrictions of section 271.

12. Prior to the 1996 Act, the service offerings of the BOCs were governed by the consent decree, commonly known as the Modification of Final Judgment or MFJ, that settled the Department of Justice's antitrust suit against AT&T and required the divestiture of the BOCs. The MFJ prohibited the BOCs from entering certain lines of business, including interexchange (i.e., long distance) services and information services (provided on either an interLATA or intraLATA basis). Although the district court overseeing the decree eventually lifted the restriction on providing information services within a LATA, in the Gateway Services Appeal the court left intact the MFJ's “core” interLATA restrictions, which prevented the BOCs from providing information services on an interLATA basis.

13. The 1996 Act enacted market-opening mechanisms to remove impediments to competition and give all carriers an opportunity to provide local services. Section 271 established a process for the BOCs to gain entry into the long distance market. However, Congress chose to maintain the MFJ's restriction on BOC provision of in-region, interLATA services until the BOC's local markets are open to competition.

14. In enacting the 1996 Act, Congress modified the interLATA restriction explicitly to allow the immediate provision of out-of-region interLATA services. The BOCs claim that this action somehow shows that Congress also intended to lift the MFJ's restriction on interLATA transmission of information services. However, nothing in the 1996 Act or its legislative history suggests that Congress intended to overrule the Gateway Services Appeal. We are not persuaded that Congress would preserve the in-region, interLATA restriction using language similar to that used in the decree yet intend a result sharply divergent from the D.C. Circuit's interpretation of that restriction. To the contrary, when Congress intended to modify the MFJ's restrictions, as in the case of out-of-region interLATA services, it did so explicitly.

15. We disagree with the BOCs that our construction of section 271 undermines Congress's goal of “opening all telecommunications markets to competition.” Congress did not seek to achieve the market-opening aspects of the 1996 Act by permitting the BOCs to provide interLATA immediately. We also reject the BOC's argument that treating interLATA information services as interLATA services will somehow subject information service providers to regulation as common carriers. The BOC's argument ignores the Act's distinction between “telecommunications” and “telecommunications service.” We also are not persuaded that the current state of the law results in a competitive disadvantage for the BOCs.

16. Finally, the BOCs contend that our conclusion that the term “interLATA services” in section 271 includes interLATA information services is inconsistent with statements the Commission made in a 1998 Universal Service Report to Congress. The BOCs rely heavily on certain statements read in isolation and taken out of context to suggest that the terms “information services” and “telecommunications” are mutually exclusive. That language, however, is properly interpreted as distinguishing between information services and telecommunications services, both of which include and use telecommunications.

17. In fact, the Report to Congress recognized that in cases in which an information service provider owns the underlying transmission facilities, and engages in data transport over those facilities in order to provide an information service, one could argue that the information service provider is “providing” telecommunications to itself by furnishing raw transmission capacity for its own use. Although the Commission does not currently require such information service providers to contribute to universal service mechanisms, the Commission indicated that it might be appropriate to reexamine that result. Moreover, the Commission examined the services provided by information service providers in general, leaving room for a different conclusion in specific situations.

The final regulations that are the subject of these corrections were published on September 29, 1999. Those regulations implemented the Sitka Sound LAMP, which is intended to address user conflicts resulting from decreased availability of Pacific halibut within Sitka Sound, an area defined in the implementing regulations at § 300.63(d)(1) of the Code of Federal Regulations. In a recent review of this regulation, NMFS discovered a typographical error in the geographic coordinates of Cape Edgecumbe, one of the points describing the boundary of Sitka Sound within which the LAMP management measures apply.

As published, § 300.63(d)(1)(i) correctly identifies Cape Edgecumbe as the starting point for the southwestern boundary of Sitka Sound, but incorrectly states that Cape Edgecumbe is located at 57°59′54″ N. lat., 135°51′27″ W. long., a geographic position that is one full degree (60 nautical miles) north of the true location of Cape Edgecumbe. This action amends section 300.63(d)(1)(i) and its associated Figure 1 to Subpart E by correctly describing the geographic coordinates of Cape Edgecumbe at 56°59′54″ N. lat., 135°51′27″ W. long.

The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately correct the published coordinates of Cape Edgecumbe will eliminate a potential source of confusion as to its location and the boundary of the Sitka Sound LAMP area and constitutes good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to authority set forth at 5 U.S.C. 553(b)(3)(B), as such procedures would be unnecessary and contrary to the public interest. Similarly, as this action does not change the designation of Cape Edgecumbe as one of the points describing the boundary of Sitka Sound and does not substantively alter the area within which the LAMP management measures apply, the Assistant Administrator for Fisheries, NOAA, waives the 30-day delay in effective date pursuant to 5 U.S.C. 553(d).

2. Remove “57°59′54″” and replace it with “56°59′54″” in the following places:

(a) In § 300.63(d)(1)(i) and

(b) In Figure 1 to Subpart E-Sitka Sound Local Area Management Plan Boundaries b. Coordinates, under heading Southern Boundaries, paragraph (1).

The recreational summer flounder fishery is managed through an annual evaluation process, with annual measures established to achieve a coastwide recreational harvest limit. After the annual coastwide recreational harvest limit recommendation has been made by the Mid-Atlantic Fishery Management Council (Council) and the Atlantic States Marine Fisheries Commission (Commission), the Summer Flounder Monitoring Committee (Committee) meets in December to recommend measures necessary to achieve the recreational harvest limit (seasons, possession limits and/or minimum fish sizes). The Council reviews the Committee’s recommendations and any public comment prior to submitting its recommendations to NMFS. NMFS then is responsible for reviewing the Council’s recommendation and assuring the measures will have at least a 50-percent likelihood of achieving the harvest limit.

Because the recreational summer flounder fishery is currently managed on a coastwide basis, the FMP requires that the same management measures apply to each state. However, summer flounder migration patterns have created differences in the availability of summer flounder to the recreational fisheries of the states. While coastwide measures achieve the target overall, they have a differential impact on the states because the availability of summer flounder to the recreational sector is not uniform across the states.

On September 9, 1999, NMFS enacted interim measures to allow states to implement in state waters conservation measures that were equivalent to the annual Federal summer flounder measures. The temporary interim measures were in effect while the Council developed a more comprehensive mechanism to address this issue on a permanent basis. Under the interim rule, states could select either an individualized combination of minimum fish sizes, possession limits, and closed seasons, or the coastwide management measures to constrain recreational landings to the harvest limit. The state conservation equivalency provision was utilized in the summer flounder recreational fishery in 1999. However, a loophole was discovered during the implementation of the interim rule. By allowing states to choose between conservation equivalent measures and coastwide measures, states had the ability to select management measures that did not achieve the required percentage reduction in harvest. In 1999, a 41-percent reduction in recreational summer flounder landings was required coastwide. Each state had the option to select either the coastwide measures or state-specific measures to achieve the reduction. The coastwide measures achieved the 41-percent reduction overall, but resulted in reductions in individual states that ranged from 11 percent to 39 percent. Some states selected the coastwide measures because they actually impacted their fishery by less than 41 percent. Therefore, by allowing states to choose between coastwide and state specific measures, the overall required 41-percent reduction was not achieved.

On April 28, 1999, NMFS approved a framework adjustment process as part of Amendment 12 to the FMP, which allows the Council to use this process to change the annual specification quota setting process and recreational management measures. This framework adjustment specifies that the Council and Commission will decide on an annual basis whether to recommend a coastwide recreational harvest limit or require states to implement summer flounder recreational management measures that achieve equivalent conservation. To eliminate the loophole revealed during the implementation of the interim rule, states will not be authorized to choose between the coastwide and state equivalency measures but will all manage on either a coastwide basis or on a state equivalent basis. If coastwide measures are recommended, NMFS will publish proposed coastwide measures as currently specified in the FMP, solicit public comment and then publish final coastwide measures. If conservation equivalent measures are recommended, NMFS will publish a proposed rule that will include: (1) the overall percentage adjustment required in each state to achieve the recreational harvest limit; (2) a recommendation to implement state conservation equivalent measures and precautionary default measures; and (3) coastwide measures.

Precautionary default measures are measures that would achieve at least the overall required adjustment in landings for each state. For example, in 1999 a 41-percent reduction in landings was required. An appropriate 1999 precautionary default measure would have been a one-fish possession limit and a 15.5-inch minimum size limit. These measures would have achieved at least a 41-percent reduction in each state, assuming the regulations achieve 85-percent effectiveness. Precautionary default measures will be recommended at the joint Commission/Council meeting when conservation equivalency measures are chosen.

Under conservation equivalency, states will not be allowed to implement measures by method of fishing (mode) or area within a state unless the proportional standard error (PSE) derived from the Marine Recreational Statistical Survey landings, estimated by mode or area, is less than 30 percent for each respective state. PSE expresses the standard error of a landings estimate as a percentage of that estimate, and is a measure of the precision of the landings estimate. The 30-percent PSE threshold was specified by the Council and Commission.

Each state will use state-specific tables created by the Committee to develop and propose equivalent management measures to achieve the recreational harvest limit for the summer flounder fishery. Tables will be adjusted to account for effectiveness of the regulations based on review of prior years’ data. Using these tables, each state will develop a suite of management measures composed of possession limits, minimum size restrictions, and seasonal restrictions to achieve landings consistent with the recreational harvest limit for the summer flounder fishery.

States will submit their proposed suite of recreational measures to the Commission for review. Any state that does not submit a proposal or submits a proposal that is determined to not achieve the adjustment target will be assigned the precautionary default measures. At the discretion of the Commission, states that have been assigned the precautionary default measures may be authorized to resubmit revised management measures, and if those are consistent with the adjustment target, the state could implement them in place of the precautionary default measures.

During the proposed rule comment period, the Commission will complete its review of state proposals and notify NMFS of its findings. Although the Council and Commission may recommend state conservation equivalency to NMFS, NMFS has the responsibility of ensuring that the measures will achieve the harvest limit. Therefore, NMFS retains the final authority to approve either coastwide or state equivalency and will publish its determination in the final rule for recreational measures. Should NMFS approve state conservation equivalent measures, NMFS will publish in the final rule the state conservation equivalent and/or precautionary default measures for each respective state for the exclusive economic zone (EEZ). For states with approved conservation equivalent measures, NMFS will also announce as part of the final recreational measures that it is waiving the permit condition found at § 648.4(b), which requires federally permitted vessels to comply with the more restrictive management measures when state and Federal measures differ. In the case of states that are initially assigned precautionary default measures, but subsequently receive Commission approval of customized state measures, NMFS will publish a notification in the Federal Register announcing the waiver of the permit condition at § 648.4(b).

The potential impacts that may result from this action have been considered in the EA and RIR. This action proposes a management system that will provide the Council and Commission the flexibility to recommend cooperatively either coastwide management measures or customized state summer flounder recreational management to achieve the recreational summer flounder harvest limit, rather than relying solely on coastwide management measures. Should the Council and Commission choose to allow states to customize summer flounder recreational management measures, states will be able to set management measures that will maintain traditional fishing practices within each respective state. This action is not, therefore, expected to result in negative impacts to charter/party vessels participating in the recreational summer flounder fishery compared to the no-action alternative of solely relying on coastwide management measures. Other alternatives were considered, including conservation equivalency by sub-regions, conservation equivalency by state using sub-regional data, conservation equivalency as established through the interim action, and state by state allocations for recreational fishing. While several of these would also provide greater flexibility than the current measures in the FMP, none were identified as minimizing impacts in comparison to the adopted measures.

NMFS is making these revisions to the regulations under the framework abbreviated rulemaking procedure codified at 50 CFR part 648, subpart G. This procedure requires the Council, when making specifically allowed adjustments to the regulations, to develop and analyze the actions over the span of at least two Council meetings. The Council must provide the public with advance notice of both the proposals and the analysis, and with an opportunity to comment on them at the first meeting and prior to and at the second Council meeting. Upon review of the analysis and public comment, the Council may recommend to the Administrator, Northeast Region, NMFS, that the measures be published as a final rule if certain conditions are met. NMFS may publish the measures as a final rule, or as a proposed rule if additional public comment is necessary.

The public was provided the opportunity to comment on the management measures contained in Framework 2 at the Council’s December 12-14, 2000, and February 6-8, 2001, meetings. Documents summarizing the Council’s proposed action and the analysis of biological and economic impacts of this and alternative actions were available for public review at the December 12-14, 2000, meeting and prior to the final February 8, 2001, meeting, as is required under the framework adjustment procedures. Written comments could be submitted up to and during the final meeting. No comments were received.

The Regional Administrator determined that this framework adjustment to the FMP is necessary for the conservation and management of the summer flounder fishery and that it is consistent with the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) and other applicable laws.

Because prior notice and opportunity for public comment are not required for this rule by 5 U.S.C. 553 et seq. , or any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , are inapplicable. Nevertheless, the impacts of this action on affected small entities were considered in the RIR contained in the supporting analyses for Framework 2. The impacts are described in the SUPPLEMENTARY INFORMATION section of the preamble to this final rule.

The Assistant Administrator for Fisheries, NOAA (AA), finds that, because public meetings held by the Council to discuss the management system implemented by this final rule provided adequate prior notice and opportunity for public comment, further notice and opportunity to comment on this final rule is unnecessary. Therefore, the AA, under 5 U.S.C. 553 (b)(B), finds good cause exists to waive prior notice and additional opportunity for public comment.

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

Fisheries, Fishing, Reporting and recordkeeping requirements.

Regulations governing the ocean salmon fisheries at 50 CFR 660.409(b)(1)(v) state that the Regional Administrator, in consultation with the Chairman of the Pacific Fishery Management Council (Council) and the appropriate State Directors, may, under the flexible inseason management provisions, modify boundaries, including landing boundaries.

In the 2001 annual management measures for ocean salmon fisheries (66 FR 23185, May 8, 2001), NMFS announced that the area from the U.S.-Canada Border to Cape Falcon would open May 1 through the earlier of June 30 or a 17,000-chinook guideline. The 17,000-chinook guideline includes a subarea guideline of 12,000 chinook for the subarea between the U.S.-Canada border and the Queets River. Vessels were required to land and deliver their fish within the area (U.S.-Canada Border to Cape Falcon) or in adjacent areas that are closed to all commercial non-Indian salmon fishing, and within 24 hours of any closure of this fishery. In addition, Washington State regulations required that fishermen fishing within the U.S.-Canada Border to Queets River subarea, and intending to land their catch outside of this subarea, notify the Washington Department of Fish and Wildlife (WDFW) before they leave the subarea. However, by restricting fishermen fishing in the area (U.S.-Canada Border to Cape Falcon) to land and deliver their catch within the area, or in adjacent areas closed to all commercial non-Indian salmon fishing, the 2001 annual management measures for ocean salmon fisheries inadvertently prohibited salmon caught north of Cape Falcon from being landed in Oregon. There are no qualifying Oregon ports for fishermen fishing north of Cape Falcon. This situation came to light after the annual management measures were sent by the Council to NMFS for approval after the April 2001 meeting. Therefore, the State of Oregon requested an inseason modification to the 2001 annual management measures to modify the area landing requirements.

The Regional Administrator consulted with representatives of the Council, the Oregon Department of Fish and Wildlife (ODFW), and WDFW regarding this adjustment on May 3, 2001. Oregon recommended that the management measures for the north of Cape Falcon area be changed to allow fish to be landed in ports south of Cape Falcon. The State of Oregon has implemented landing notification requirements to ensure that proper catch accounting (accounting for the number of fish caught) is done for the area catch.

In certain quota fisheries, it is necessary to restrict landing to certain areas in order to ensure accurate and timely catch accounting. This was the reason for the initial landing restriction. However, NMFS and the states have realized that the existing language was particularly restrictive on fishermen who want to land south of Cape Falcon, and the catch accounting problem can be solved by the State of Oregon. Oregon has now implemented a reporting system for catch from north of Cape Falcon, which will allow accurate and timely catch accounting. Therefore, NMFS is implementing this modification of the annual management measures.

The adjusted regulatory language has been approved by NMFS and reads as follows:

May 1 through earlier of June 30 or 17,000-chinook guideline (see C.7.a of the 2001 annual salmon management measures). All salmon except coho. No more than 4 spreads per line beginning June 1 (see gear restrictions in C.2 of the 2001 annual salmon management measures). Cape Flattery and Columbia Control Zones closed (C.4.a and C.4.b of the 2001 annual salmon management measures). The 17,000-chinook guideline includes a subarea guideline of 12,000 chinook for the area between the U.S.-Canada border and the Queets River. Vessels must land and deliver their fish within the area (U.S.-Canada Border to Cape Falcon), or in Oregon ports south of Cape Falcon, and within 24 hours of any closure of this fishery. Washington State regulations require that fishermen fishing within the U.S.-Canada Border to Queets River subarea and intending to land their catch outside of this subarea notify WDFW before they leave the subarea. Oregon State regulations require that vessels intending to land their catch in an Oregon port south of Cape Falcon must notify ODFW (541-867-0300 ext. 252) before leaving the area to report the name of the vessel, the intended port of landing, the estimated time of arrival, and the catch aboard. Inseason actions may modify harvest guidelines in later fisheries to achieve or prevent exceeding the overall allowable troll harvest impacts (see C.7.a of the 2001 annual salmon management measures).

As provided by the inseason notification procedures at 50 CFR 660.411, actual notice to fishermen of these actions was given by telephone hotline number 206-526-6667 or 800-662-9825, and by U.S. Coast Guard Notice to Mariners broadcasts on Channel 16 VHF-FM and 2182 kHz.

Because of the need for immediate action in order to provide flexibility to the fishermen, NMFS has determined that good cause exists for this document to be issued without affording a prior opportunity for public comment. This document does not apply to other fisheries that may be operating in other areas.

This action is authorized by 50 CFR 660.409 and 660.411 and is exempt from review under Executive Order 12866.

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

The 2001 TAC of Pacific ocean perch for the Eastern Aleutian District was established as 2,683 metric tons (mt) by the Final 2001 Harvest Specifications and Associated Management Measures for the Groundfish Fisheries Off Alaska (66 FR 7276, January 22, 2001).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2001 TAC for Pacific ocean perch in the Eastern Aleutian District will be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 2,433 mt, and is setting aside the remaining 250 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific ocean perch in the Eastern Aleutian District of the BSAI.

Maximum retainable bycatch amounts may be found in the regulations at § 679.20(e) and (f).

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately implement this action to avoid exceeding the 2001 TAC of Pacific ocean perch for the Eastern Aleutian District of the BSAI constitutes good cause to waive the requirement to provide prior notice opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(3)(B) and 50 CFR 679.20(b)(3)(iii)(A), as such procedures would be unnecessary and contrary to the public interest. Similarly, the need to implement these measures in a timely fashion to avoid exceeding the 2001 TAC of Pacific ocean perch for the Eastern Aleutian District of the BSAI constitutes good cause to find that the effective date of this action cannot be delayed for 30 days. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is hereby waived.

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