Karnal bunt is a fungal disease of wheat ( Triticum aestivum ), durum wheat ( Triticum durum ), and triticale ( Triticum aestivum X Secale cereale), a hybrid of wheat and rye. Karnal bunt is caused by the smut fungus Tilletia indica (Mitra) Mundkur and is spread by spores, primarily through the movement of infected seed. In the absence of measures taken by the U.S. Department of Agriculture (USDA) to prevent its spread, the establishment of Karnal bunt in the United States could have significant consequences with regard to the export of wheat to international markets. The regulations regarding Karnal bunt are set forth in 7 CFR 301.89-1 through 301.89-16 (referred to below as the regulations). Among other things, the regulations define areas regulated for Karnal bunt and restrict the movement of certain regulated articles, including wheat seed and grain, from the regulated areas. The regulations also provide for the payment of compensation for certain growers, handlers, seed companies, owners of grain storage facilities, flour millers, and participants in the National Karnal Bunt Survey who incurred losses and expenses because of Karnal bunt during certain years. These provisions are in § 301.89-15, “Compensation for growers, handlers, and seed companies in the 1996-1997 and 1997-1998 crop seasons,” and § 301.89-16, “Compensation for grain storage facilities, flour millers, and National Survey participants for the 1996-1997 and 1997-1998 crop seasons.”

On January 16, 2001, the Animal and Plant Health Inspection Service (APHIS) published in the Federal Register a proposed rule (66 FR 3505-3511, Docket No. 96-016-33) to establish the 1999-2000 compensation levels. We solicited comments on our proposal for 60 days ending March 19, 2001. We received 12 comments by that date. These comments were from custom harvester businesses who all used their combine harvesters in regulated areas in Arizona in 1996 to harvest grain for owners or to conduct preharvest sampling in connection with the National Karnal Bunt Survey. These commenters stated that they suffered equipment damage to their combine harvesters as a result of the bleach treatments required by the regulations before the machinery could be used afterward in nonregulated areas.

The commenters stated that the affected combines suffered paint loss, rusting, destruction of wiring, and other damage, and in some cases were rendered totally unfit for further use. They also stated that their businesses suffered severe revenue loss due to loss of use of this equipment for other contracts. These commenters requested a regulatory change to specifically authorize compensation for their losses.

The proposed rule did not address compensation to harvesters for equipment damage and revenue loss, and we do not intend to make any changes in the final rule concerning this issue.

The USDA has evaluated, and continues to evaluate, individual claims for damage to harvesters caused by Department action, but does not believe it is necessary to address these claims in these regulations.

Several commenters suggested that there would be a continuing need for compensation beyond the 1999-2000 crop season. We agree that some compensation should be authorized for the 2000-2001 crop season and beyond, given that Karnal bunt continues to be identified in new locations. Therefore, we are changing the language of the proposed rule that stated that it applied to the 1999-2000 crop season to state instead that the rule applies to the 1999-2000 and subsequent crop seasons. Until further notice, growers, handlers, and seed companies will be eligible to receive compensation for the loss in value of their wheat in accordance with the regulations. Section 301.89-15(a) states that growers, handlers, and seed companies will be eligible for compensation if: The wheat was grown in a State where the Secretary has declared an extraordinary emergency; and the wheat was grown in an area of that State that became regulated for Karnal bunt after the crop was planted, or for which an Emergency Action Notification (PPQ Form 523) was issued after the crop was planted; and the wheat was grown in an area that remained regulated or under Emergency Action Notification at the time the wheat was sold. This final rule continues the principle stated in the proposed rule, that, in the future, compensation will no longer be made available to persons growing or handling crops that were knowingly planted in previously regulated areas. Growers, handlers, and seed companies in previously regulated areas are eligible for compensation only for 1999-2000 and 2000-2001 crop season wheat.

Also, we are authorizing compensation in accordance with § 301.89-16 for the 1999-2000, 2000-2001, and subsequent crop seasons for grain storage facilities, flour millers, and National Survey participants whose wheat or grain storage facility tests positive for Karnal bunt.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule with the changes discussed above.

This final rule also removes language from the regulations that provides for compensation payments for the 1996-1997 and 1997-1998 crop seasons. Because the deadline for submitting a claim for these crop seasons was October 8, 1998, and October 25, 1999, respectively, we believe that all claims for those years have been submitted and paid.

At this time, for crop seasons beyond the 1999-2000 and 2000-2001 crop seasons, we do not anticipate proposing to provide compensation to growers, handlers, or seed companies who were in regulated areas at the time they made planting and contracting decisions. We believe they know the risks associated with those decisions and can choose to alter their planting or contracting decisions to avoid experiencing losses due to Karnal bunt.

This is a substantive rule that provides compensation to persons who experience economic losses in the 1999-2000 crop season and subsequent crop seasons because of the Karnal bunt regulations and emergency actions. Immediate action is necessary to compensate for these losses. Therefore, pursuant to the provisions of 5 U.S.C. 553, the Administrator of the Animal and Plant Health Inspection Service finds good cause for making this rule effective upon publication in the Federal Register .

This rule has been reviewed under Executive Order 12866. The rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.

This rule establishes compensation provisions for certain growers, handlers, seed companies, owners of grain storage facilities, flour millers, and participants in the National Karnal Bunt Survey to mitigate losses and expenses incurred in the 1999-2000 and subsequent crop seasons because of the Karnal bunt quarantine and emergency actions.

In accordance with Executive Order 12866, this analysis examines the economic effects and the costs and benefits of providing such compensation. The wheat industry within the regulated area is largely composed of businesses that can be considered “small” according to guidelines established by the Small Business Administration (SBA). Therefore, this analysis also fulfills the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), which requires agencies to consider the economic effects of the rule on small entities.

Upon detection of Karnal bunt in Arizona in March 1996, the U.S. Department of Agriculture (USDA) imposed a Federal quarantine and emergency actions to prevent the interstate spread of the disease to other wheat producing areas in the United States. The unexpected discovery of Karnal bunt and subsequent Federal emergency actions disrupted the production and marketing flows of wheat in the quarantined areas. It was estimated that the economic effect of Karnal bunt quarantine and subsequent Federal actions on the wheat industry totaled $44 million in the 1995-1996 crop season.

In order to alleviate some of the economic hardships and to ensure full and effective compliance with the quarantine program, USDA offered compensation to mitigate certain losses incurred by growers, handlers, seed companies, and other affected persons in the areas regulated for Karnal bunt in the 1995-1996, 1996-1997, and 1997-1998 crop seasons. The payment of compensation is in recognition of the fact that, while benefits from regulation accrue to a large portion of the wheat industry outside the regulated areas, the regulatory burden falls predominately on a small segment of the affected wheat industry within the regulated areas. A final rule promulgating compensation regulations for the 1997-1998 crop season was effective and published in the Federal Register on June 25, 1999 (64 FR 34109-34113, Docket No. 96-016-35). The compensation authorized in this document, as it relates to the 1999-2000 and 2000-2001 crop seasons, is the same as the compensation offered for the 1997-1998 crop season.

Growers, handlers, and seed companies are eligible for compensation for losses in the 1999-2000 and 2000-2001 crop seasons due to wheat grain or seed that tested positive for Karnal bunt. Only positive-testing wheat is eligible for compensation because of the lack of restrictions on the movement of negative-testing wheat. As in the 1997-1998 crop season, there are different levels of compensation, depending on whether the wheat was grown in an area under the first regulated crop season or in a previously regulated area. An area in the first regulated crop season is an area that became regulated for Karnal bunt after the crop for that particular season was planted. A previously regulated area is an area that became regulated for Karnal bunt before the crop for that particular season was planted. For the 1999-2000 crop season, there were no areas in the first regulated crop season. However, for the 2000-2001 crop season, four counties in Texas (Young, Throckmorton, Archer, and Baylor) and a portion of Maricopa County in Arizona were in the first regulated crop season.

For growers, handlers, and seed companies in previously regulated areas, the compensation for positive grain or seed is $0.60 per bushel. Growers, handlers, and seed companies in the first regulated crop season are eligible for compensation at a rate not to exceed $1.80 per bushel. These compensation rates apply to both wheat grain and seed. The difference in compensation rates reflects the fact that affected entities in areas under the first regulated crop season would not have known that their area was to become regulated for Karnal bunt at the time that they made planting and contracting decisions and would not have been prepared for the loss in value of their wheat due to Karnal bunt. Growers and handlers in previously regulated areas knew they were in an area regulated for Karnal bunt at the time that they made planting and contracting decisions for the 1999-2000 and 2000-2001 crop seasons. Given the restrictions, growers and handlers could have chosen to alter their planting or contract decisions to avoid experiencing potential losses due to Karnal bunt. The compensation rates are the same as those offered in the 1997-1998 crop season.

For the 1999-2000 growing season, all areas that are regulated for Karnal bunt are previously regulated areas. Approximately 37,000 acres of wheat were harvested in 2000 from the regulated areas. In the 1998-1999 crop season, no wheat grown in the regulated areas tested positive for Karnal bunt. Approximately 1 percent of wheat harvested from the regulated areas tested positive for Karnal bunt in the 1999-2000 crop season, so compensation for wheat grain and seed grown in the regulated areas totals approximately $17,760 (1 percent of 37,000 acres equals 370 acres; using an estimate of 80 bushels per acre crop yield, 370 acres multiplied by 80 equals 29,600 bushels; 29,600 bushels multiplied by $0.60 per bushel equals $17,760). The estimated total compensation of $17,760 translates into a per-grower average of $987, assuming that 18 growers, or 10 percent of the approximately 180 growers in the regulated area, produced wheat that tested positive for Karnal bunt. The positive-testing wheat would have a market value of approximately $73,400 in the absence of Karnal bunt.

For the 2000-2001 crop season, some areas that are regulated for Karnal bunt are previously regulated areas, and some areas are first regulated areas. Approximately 25,200 acres of wheat were harvested in 2001 from previously regulated areas, of which about 7,300 acres, or 29 percent, tested positive for Karnal bunt. The compensation for wheat grain and seed in previously regulated areas is approximately $319,256 (7,274 acres multiplied by 73.15 bushels per acre average crop yield multiplied by $0.60 per bushel).

An estimated 115,600 acres of wheat were harvested in 2001 from first regulated areas, of which about 2,800 acres, or 2 percent, tested positive for Karnal bunt. However, this estimate of positive wheat is preliminary. Better estimates will be available after we finish testing samples from approximately 7 million bushels of wheat that were moved to grain storage facilities in Texas before field testing began. To date, grain storage facility testing in Texas has found approximately 1.75 million bushels of positive wheat. Based on the positive finds to date from both field and facility testing, the compensation for wheat grain and seed in first regulated areas is approximately $3.4 million—$224,485 for the field tested wheat (2,848 acres multiplied by 43.79 bushels per acre average crop yield multiplied by $1.80 per bushel) and $3,156,300 for the storage facility tested wheat (1,753,500 bushels multiplied by $1.80 per bushel).

As of July 16, 2001, estimated total compensation of $3,700,041 for both previously regulated and first regulated areas translates into a per-grower average of $64,913, assuming that 57 growers produced wheat in the 2000-2001 crop season that tested positive for Karnal bunt. The positive testing wheat would have a market value of about $6.3 million in the absence of Karnal bunt.

Estimating the amount of compensation that would be paid in future crop seasons, i.e., 2001-2002 and beyond, is difficult because of the many variables involved, all of which are unknown at this time ( e.g. , acres of wheat harvested, infection rates, crop yields per acre). However, all else being equal, compensation will be less in future crop seasons since growers, handlers, and seed companies in previously regulated areas will not be eligible for compensation as they are now.

To compare, compensation for wheat grain and seed in the 1996-1997 crop season totaled about $149,000. Approximately 122,000 acres of wheat were harvested in the 1996-1997 crop season from regulated areas with a Karnal bunt infection rate of 0.8 percent. Compensation for wheat grain and seed in the 1997-1998 crop season totaled about $1.9 million. Approximately 181,540 acres of wheat were harvested in the 1997-1998 crop season from regulated areas with an infection rate of 3.2 percent. The increase in the amount of compensation paid in the 1997-1998 crop season resulted from wetter weather conditions, which increased the infection rate, and the fact that positive wheat was commingled with negative wheat in grain storage facilities in the certification area in Arizona before it was known that the wheat was positive.

This rule also provides compensation under specific criteria for the decontamination of grain storage facilities found with positive wheat, the treatment of millfeed, and participants in the National Karnal Bunt Survey whose wheat or grain storage facility is found to be positive for Karnal bunt. Compensation for decontamination of grain storage facilities will be on a one-time-only basis for up to 50 percent of the cost of decontamination, not to exceed $20,000. We do not expect total compensation paid for the decontamination of grain storage facilities used in the 1999-2000 season to exceed $30,000. For the 2000-2001 crop season, such compensation is estimated at $159,000.

We are also authorizing compensation for the cost of heat treating millfeed that APHIS requires to be treated, at the rate of $35 per short ton of millfeed. No millfeed made from wheat grown in the regulated area was required to be heat treated in the 1998-1999 crop season. Under current regulations, APHIS requires heat treatment of millfeed made from wheat that tested positive for Karnal bunt. Since little or no positive wheat is expected to be used for milling in the 1999-2000 crop season, compensation for the heat treatment of millfeed in the 1999-2000 crop season will be minimal. However, for the 2000-2001 crop season, compensation for the heat treatment of millfeed is estimated to cost $619,325. (This estimate of $619,325 is preliminary as it was made before the soon-to-begin testing of approximately 7 million bushels of wheat in grain storage facilities in Texas.)

The Regulatory Flexibility Act requires that agencies consider the economic effects of rules on small businesses, organizations, and governmental jurisdictions. Growers and handlers of wheat grain and seed, and wheat seed companies, will be those most affected by this rule. In the 1999-2000 crop season, there were a total of about 180 growers in the four States with regulated areas. In the 2000-2001 crop season, there were an estimated 574 growers in regulated areas, including approximately 411 in first regulated areas in Texas and Arizona. Most of these entities have total annual sales of less than $0.75 million, the SBA's threshold for classifying wheat producers as small entities. Accordingly, the economic effects of this rule will largely be on small entities.

This rule is expected to have a positive economic effect on all affected entities, large and small, but few entities are likely to be affected. As indicated above, only about 18 growers in regulated areas produced wheat that tested positive for Karnal bunt in the 1999-2000 crop season, and only about 57 growers in first regulated and previously regulated areas produced wheat that tested positive for Karnal bunt in the 2000-2001 crop season. Compensation for the loss in value of wheat that tests positive for Karnal bunt serves to encourage compliance with testing requirements within the regulated area, thereby aiding in the preservation of an important wheat growing region in the United States. It also serves to encourage participation in the National Karnal Bunt Survey.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This final rule contains information collection requirements in addition to those described in the proposed rule. This increased burden resulted from changing the final rule to apply to the 1999-2000 crop season and all subsequent seasons, rather than to just the 1999-2000 crop season. Under this final rule, there will be 170 burden hours for the first year the rule is in effect, and 85 burden hours for each subsequent year.

This final rule, like the proposal, requires that growers, handlers, and seed companies provide certain records and documents to a local Farm Service Agency (FSA) office in order to claim compensation. Growers, handlers, and seed companies will also have to sign a Karnal Bunt Compensation Claim form (completed by an employee of FSA using the information provided by the claimant) to attest that the information on the form is accurate and to demonstrate acceptance of the compensation. Owners of grain storage facilities and flour millers must also provide certain records and documents to an APHIS inspector in order to claim compensation. This information collection is necessary in order to verify a claimant's eligibility for compensation and to provide documentation of compensation claims and payments.

In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), these information collection requirements have been submitted for approval to the Office of Management and Budget (OMB). The Office of Management and Budget (OMB) has approved these information collection requirements under OMB control number 0579-0182.

On July 17, 1997, FSIS published a proposed rule in the Federal Register (62 FR 38220) to amend the Federal meat and poultry products inspection regulations to require that labels of sausages encased in natural casings or regenerated collagen casings identify the type of meat or poultry from which the casings were derived, such as beef, swine, or sheep, if the casings were derived from a different type of meat or poultry than any meat or poultry ingredient of the sausage. FSIS also proposed to require that establishments that produce, manufacture, or use natural or regenerated sausage casings maintain records identifying the source of the casings.

FSIS received 30 comments during the comment period that ended on September 15, 1997. Two additional comments were received after that comment period closed; however these were also included as part of the administrative record.

Eleven favorable comments were submitted by individual consumers, religious organizations, and a member of the House of Representatives.

The groups that supported the proposal felt that people have a right to know what they eat, whether for health, religious, or other reasons, and that the proposal would allow health-conscious and interested consumers to accurately identify foods with substances to which they are allergic or food that they did not want to consume.

Twenty-one comments were opposed to the proposal. These comments were from the sausage casings industry, the meat and poultry industry, and a law firm.

The industry comments that opposed the proposal argued that it would not provide all consumers with more information but, rather, would only enable consumers with specific religious dietary concerns to avoid eating casings derived from a different species than the encased meat or poultry block. They asserted that the proposal was not based on a food safety issue. These comments argued that the people with dietary concerns could rely on a private mechanism, such as Kosher or Halal certification, to ensure that they do not consume non-pork sausages that are encased with a pork-derived casing.

While FSIS agrees that buying Kosher or Halal certified products ensures that individuals who do not want to eat pork can comply with religious requirements, FSIS disagrees that the purpose of the proposal was solely to provide a limited number of individuals with information concerning dietary requirements. The intent of the rule is to ensure that all consumers, not just consumers with religious interests, are not misled into believing that they are purchasing a product composed entirely of one species, e.g., beef, when, in fact, it is in a sheep or pork casing. Thus, the rule requires the disclosure of a material fact about the nature of the product.

Some commenters opposing the proposal also stated that if FSIS believed that consumers have a “right to know” what they eat, then FSIS should require that labels of sausage products disclose all ingredients, including gelatin, amino acids, and proteins. One casing manufacturer pointed out that the proposal is inconsistent with FSIS and Food and Drug Administration policy, which does not require source labeling, in general.

The purpose of the proposal was not to address the “right to know” for all ingredients in sausages. FSIS's proposal was narrowly crafted to address a situation where consumers may be misled.

FSIS is, therefore, requiring the source labeling of natural sausage casings, if they are derived from a different type of meat or poultry than the meat or poultry encased in the sausage. FSIS is also requiring establishments producing, manufacturing, or using natural sausage casings to maintain records documenting the source of the casings.

With regard to the proposed requirements for regenerated collagen casings, several commenters from the meat and poultry industry and the sausage casings' industry opposed the labeling and recordkeeping requirements for regenerated collagen casings. These commenters stated that the processing of regenerated collagen casings renders the detection of identifiable species protein impossible.

FSIS agrees with the comments in part. Therefore, FSIS is amending the meat and poultry product regulations to require that the labels of sausage products encased in regenerated collagen casings disclose the use of the regenerated collagen casing, but not the source of the casing. FSIS understands that the processing of regenerated collagen casings renders the detection of the species protein impossible; therefore, no recordkeeping for collagen casings is required.

FSIS concludes that providing the information that the casing is from regenerated collagen will indicate to consumers that they are purchasing a sausage product with a casing not necessarily made from the same type of meat or poultry enclosed in the casing. Thus, this material fact about the nature of the product would be disclosed, and the product would not be misbranded.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. States and local jurisdictions are preempted by the Federal Meat Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA) from imposing any marking, labeling, packaging, or ingredient requirements on federally inspected meat and poultry products that are in addition to, or different from, those imposed under the FMIA and the PPIA. States and local jurisdictions may, however, exercise concurrent jurisdiction over meat and poultry products that are within their jurisdiction and outside official establishments for the purpose of preventing the distribution of meat and poultry products that are misbranded or adulterated under the FMIA and PPIA, or, in the case of imported products, that are not at such an establishment, after their entry into the United States.

This final rule is not intended to have retroactive effect.

Under this rule, administrative proceedings will not be required before parties may file suit in court challenging this rule. However, the administrative procedures specified in 9 CFR 306.5 and 381.35 must be exhausted prior to any judicial challenge of the application of the provisions of this rule, if the challenge involves any decision of an FSIS employee relating to any matters under the FMIA and the PPIA.

This final rule has been determined to be not significant and therefore has not been reviewed by OMB under Executive Order 12866.

In accordance with 5 U.S.C. 603, FSIS performed a regulatory flexibility analysis, which is set out below, regarding the impact of the rule on small entities. FSIS invited comments concerning potential effects on the number, kind and characteristics of small firms that would incur benefits or costs from implementation of this rule.

This final rule will require manufacturers of sausages encased in natural casings to label the source of those casings, if the casings are derived from a different type of meat or poultry than the encased sausage meat or poultry. This rule will also require that sausages encased in a regenerated collagen casing have a statement on the label indicating that the casing is regenerated collagen. FSIS believes the associated labeling costs will be low. Manufacturers will be able to defer the development of new labels for sausage products in natural casings and regenerated collagen casings until their existing stocks of labels are exhausted. Moreover, the new labels can be generically approved; manufacturers will not have to prepare and submit FSIS Form 7234-1, “Application for Labels, Marking, or Device,” or the new label for approval. Identification of the source of natural sausage casings may also be a selling point for some manufacturers.

This regulation will be beneficial to consumers because it will reduce confusion about the source of the casings on sausages and give them additional information with which to make informed choices about the sausages they purchase.

The paperwork and recordkeeping requirements in this final rule have been approved on an emergency basis by OMB under control number 0583-0119. FSIS is seeking comments on the paperwork and recordkeeping requirements in this rule so that the Agency may receive a three year approval for these requirements.

Abstract: Under this final rule, sausage manufacturers will need to label the source of natural sausage casings if they are derived from a different type of meat or poultry than the meat or poultry encased in the sausage and sausage products encased in regenerated collagen casings will have to have a statement on the label disclosing the use of regenerated collagen casings. FSIS will consider the labels they develop to make these declarations to be generically approved in accordance with 9 CFR 317.5 and 381.133.

Establishments producing, manufacturing, or using natural sausage casings, or sausages encased in natural casings, will be required to maintain records documenting the source of the casings.

Estimate of Burden: FSIS estimates that it will take 15 minutes for establishments to make the appropriate labeling changes. FSIS estimates that the recordkeeping for the origin of the casing will occur once a day and take establishments 2 minutes to complete.

Respondents: Establishments manufacturing natural and regenerated collagen sausage casings, and establishments manufacturing sausages encased in natural and regenerated collagen casings.

Estimated number of Respondents: 40 meat and poultry establishments.

Estimated number of Responses per Respondent: 10,000

Estimated Total Annual Burden on Respondents: 344 hours.

Comments are invited on: (a) Whether the final collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (b) the accuracy of the Agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of collection of information on those who are to respond, including through use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

Public awareness of all segments of rulemaking and policy development is important. Consequently, in an effort to better ensure that minorities, women, and persons with disabilities are aware of this final rule, FSIS will announce it and provide copies of this Federal Register publication in the FSIS Constituent Update. FSIS provides a weekly FSIS Constituent Update, which is communicated via fax to over 300 organizations and individuals. In addition, the update is available on-line through the FSIS web page located at http://www.fsis.usda.gov. The update is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, recalls, and any other types of information that could affect or would be of interest to our constituents/stakeholders. The constituent fax list consists of industry, trade, and farm groups, consumer interest groups, allied health professionals, scientific professionals, and other individuals that have requested to be included. Through these various channels, FSIS is able to provide information to a much broader, more diverse audience. For more information and to be added to the constituent fax list, fax your request to the Congressional and Public Affairs Office, at (202) 720-5704.

On November 18, 1999, the NCUA Board (the Board) issued a request for comments in an Advance Notice of Proposed Rulemaking (ANPR) on whether the Board should restructure part 721 of NCUA's regulations and adopt provisions regarding incidental powers within the regulation. 64 FR 66413 (November 26, 1999). At the time, the Board envisioned that it would create four sections within part 721 and expand its test for analyzing the incidental powers of FCUs. After receiving the public's comments on the ANPR, the Board issued a Notice of Proposed Rulemaking on November 16, 2000. 65 FR 70526 (November 24, 2000).

In the proposed rule, the Board restructured part 721 into seven sections. The proposed rule established a definition for an incidental powers activity by using a three-prong test. The proposed rule also set out categories determined to be within an FCU's incidental powers. A majority of the proposed categories are activities NCUA has previously established as within the incidental powers of FCUs in legal opinions. The proposed rule identified the following twelve categories: Certification services, correspondent services, electronic financial services, excess capacity, financial counseling services, finder activities, marketing activities, monetary instrument services, operational programs, stored value products, and trustee or custodial services. Each category in the proposed rule contained examples of incidental powers activities.

The proposed rule provided that FCUs could seek advisory opinions from NCUA's General Counsel as to whether a proposed activity fits into one of the authorized categories or is otherwise an incidental powers activity. It also established a process for FCUs to petition NCUA to approve new activities or categories of activities. The proposed rule also allowed FCUs to receive compensation from any activity determined to be within their incidental powers. Finally, the proposed rule amended the conflicts of interest provision in part 721, to conform to similar conflict provisions in NCUA's regulations.

The legal authority for the expanded activities authorized by the final rule is the incidental powers provision of the Federal Credit Union Act (FCU Act), 12 U.S.C. 1757(17). The FCU Act expressly grants FCUs the power to, among other activities, purchase, hold and dispose of property; make loans to members; make certain investments; accept share, share draft and share certificate accounts; and sell and cash negotiable instruments. 12 U.S.C. 1757(4)-(7), (12), (15). The accompanying incidental powers provision states that an FCU may “exercise such incidental powers as shall be necessary or requisite to enable it to carry on effectively the business for which it is incorporated.” 12 U.S.C. 1757(17).

1. Arnold Tours Standard. To determine whether an activity is authorized under the incidental powers provision, NCUA has looked to whether the activity is convenient or useful in connection with the performance of an FCU's established activities pursuant to its express powers granted by the FCU Act. This standard was established in Arnold Tours, Inc. v. Camp, 472 F.2d 427 (1st Cir. 1972), for determining the incidental powers of national banks. Accord Independent Insurance Agents of America, Inc. v. Hawke, 211 F. 3d 638, 640 (D.C. Cir. 2000) (“Whether a particular banking device's nomenclature harkens to traditional banking activities is not dispositive”); First National Bank of Eastern Arkansas v. Taylor, 907 F.2d 775, 778 (8th Cir.), cert. denied, 498 U.S. 972 (1990) (“Incidental powers are not confined to activities considered essential to the exercise of express powers”); M&M Leasing Corp. v. Seattle First National Bank, 563 F.2d 1377, 1382 (9th Cir. 1977), cert. denied, 436 U.S. 956 (1978) (“powers of national banks must be construed so as to permit the use of new ways of conducting the very old business of banking”). In addition, Arnold Tours recognized certain “agency or informational services” that, although not necessarily rooted in an incidental power, represent a permissible “goodwill” service to customers when provided on a limited and largely uncompensated basis. 472 F.2d at 432.

The convenient or useful standard adopted in Arnold Tours has been acknowledged as proper for analyzing the incidental powers provision of the FCU Act. American Bankers Association v. Connell, 447 F. Supp. 296, 298 (D.D.C. 1978), rev'd, 595 F.2d 887 (D.C. Cir.), cert. denied, 444 U.S. 920 (1979). Relaxing that standard, a subsequent court pronounced it “narrow and artificially rigid,” preferring instead to focus on the “essence” of the service being provided and its functional equivalency to a permitted activity. American Insurance Association v. Clarke, 865 F.2d 278, 281, 284 (D.C. Cir. 1988).

For many years, NCUA has followed the reasoning of Arnold Tours in recognizing various activities either as incidental to an FCU's exercise of its express powers or simply as a permissible “goodwill” service to members. Upon a finding that an activity is either convenient or useful in connection with performance of an expressly granted power, NCUA has authorized FCUs to engage in a broad range of activities, including the authority to: Engage in marketing and promotional activities on behalf of the FCU, provide a variety of loan-related products, perform various payment and money exchange functions for members, make charitable donations and contributions, provide correspondent services, engage in consumer leasing, establish numerous products and services derived from share accounts, and perform various financial functions to assist member business transactions. In addition, NCUA has allowed FCUs to implement new operational programs so that FCUs and their members benefit from technological advancements in the financial services industry, such as: Electronic fund transfers, automated teller machines, payroll deduction and direct deposit services, debit cards, and wire transfer services. Further, NCUA has permitted various activities as informational or goodwill services for members, including promoting the products and services of third parties and permitting FCU endorsement, on a cost reimbursement basis. 50 FR 16462, 16463 (April 26, 1985) (final rule addressing insurance and group purchasing activities).

As shown in the Section-by-Section Analysis below, much of the final rule simply codifies the practices NCUA has approved through legal opinions over the years as incidental powers under Arnold Tours. Further relying on Arnold Tours, the final rule introduces a number of activities that, as explained below, similarly qualify as incidental powers because they are “convenient or useful” in performing an activity established under an express power.

2. VALIC Standard. The U.S. Supreme Court has broadened the standard for considering an expansion of the incidental powers of national banks. In Nationsbank of North Carolina v. Variable Annuity Life Insurance Co. (VALIC), 513 U.S. 251 (1995), the Court stated that the authorization of “incidental powers * * * necessary to carry on the business of banking” is an independent grant of authority, id. at 258, separate from the five activities specifically enumerated in the National Banking Act, 12 U.S.C 24(Seventh). Accord Independent Insurance Agents, 211 F. 3d at 640 (“enumeration of powers is only illustrative and Comptroller may authorize additional activities if encompassed by a reasonable interpretation”); Norwest Bank Minnesota, N.A. v. Sween Corp., 118 F.3d 1255, 1259 (8th Cir. 1997) (analyzing whether activity is closely related to an express power and useful in carrying out business of banks). The Court rejected the argument that the powers of national banks are limited to the five specifically enumerated activities, regarding those activities as “exemplary, not exclusive.” 513 U.S. at 258. The Court held that “the ‘business of banking' is not limited to the enumerated powers in section 24 (Seventh) and that the Comptroller therefore has discretion to authorize activities beyond those specifically enumerated,” provided that discretion is “kept within reasonable bounds.” Id. at 259 n.2.

Applying the reasoning of VALIC to sec. 1757, “the business for which [a credit union] is incorporated” is not limited to the express powers in that section. Rather than linking incidental powers to express powers, VALIC has provided the framework for the Board to adopt a broader and more flexible analysis, giving it discretion to authorize FCUs to engage in activities beyond those specifically enumerated in sec. 1757. Thus, activities may fall within an FCU's incidental powers if they qualify as either “convenient or useful” in connection with an express power or otherwise fall within the scope of “the business for which [a credit union] is incorporated.”

NCUA has relied on the VALIC analysis in recent opinions. For example, a 1999 Office of General Counsel legal opinion authorized FCUs to maintain foreign currency accounts to facilitate member transactions. NCUA reasoned that, by maintaining a foreign bank account to facilitate member transactions, an FCU can: (1) Provide basic credit union services such as lending and deposit taking to members who, due to their residence in a foreign country, are unable to obtain these services from the FCU's domestic offices; and (2) benefit members by providing these services conveniently and at minimal cost in comparison to currency conversion expenses. A deposit account in a foreign bank, which is established for foreign currency exchanges and to facilitate basic services for members located in foreign countries, is closely related to an FCU's deposit taking and lending authority and is useful in carrying out the business of credit unions.

As Congress reiterated most recently in 1998, the FCU Act defines the business for which credit unions are incorporated—to promote thrift among members and to create sources of credit for provident or productive purposes. 12 U.S.C. 1752(1); Public Law No. 105-219, 112 Stat. 913, § 2 (1998). “Thrift” refers to “wise economy in the management of money and other resources.” American Heritage Dictionary of the English Language (4th ed. 2000) at 1802. A purpose is “provident” if it anticipates “providing for future needs or events,” id. at 1411; it is “productive” if it involves “the creation of goods or services to produce wealth or value.” Id. at 1399. NCUA has consistently construed the authority of FCUs broadly to afford them maximum flexibility in providing services to their members. 50 FR 16462, 16463 (April 26, 1985). In this instance, Congress's record of steadily expanding the range of expressly granted powers, combined with the legislative history encouraging NCUA to meet the needs of FCUs and their members, justify, if not require, a broad and ambulatory view of the business for which FCUs are incorporated.

A congressional priority in enacting the FCU Act in 1934 was to “ensure that [credit unions] would remain responsive to members” needs.” First National Bank & Trust Co. v. NCUA, 988 F.2d 1272,1274 (D.C. Cir. 1993). To that end, Congress has since amended the FCU Act, steadily expanding the powers of FCUs, to ensure that they keep pace with changes and developments in the financial services marketplace. The power to make loans was expanded seven times between 1949 and 1987. 12 U.S.C. 1757(5). These amendments included: Raising the maximum maturities limits; extending the range of permissible loan types and purposes, such as loans to credit union service organizations (CUSOs) and participation loans; and even abandoning the limitation that loans be made for “provident and productive purposes.” The power to receive payments on shares, sec. 1757(6), was expanded five times between 1970 and 1980 and included amendments permitting FCUs to offer share certificates and share draft accounts, to accept certain types of nonmember deposits, and to receive payments on shares from the Central Liquidity Facility. The power to invest funds, sec. 1757(7) and (15), has been expanded nine times between 1937 and 1984, extending the list of permissible government guaranteed obligations and entities and allowing FCUs to invest in CUSOs, secondary market instruments, and mortgage-backed securities. The express power to sell and cash checks and money orders for a fee was added in 1959, and, in 1982, it was extended to “similar money transfer instruments,” allowing FCUs to charge a fee in excess of direct costs. 12 U.S.C. 1757(12).

In the course of expanding the powers of FCUs, Congress has repeatedly taken the opportunity to encourage NCUA to be flexible, innovative and responsive in meeting the needs of FCUs and their members. When Congress created NCUA in 1970, the same year that share insurance was introduced, it recognized that “credit unions have become such a significant component of our society that they need and deserve a more responsive and independent regulatory agency.” S. Rep. 91-518 at 2 (1970), reprinted in 1970 U.S.C.C.A.N. 2479, 2480. Further, Congress envisioned that NCUA would have “a great responsibility and an opportunity to make real and substantial contributions to our society,” and “would be able to be more responsive to the needs of credit unions and to provide more flexible and innovative regulation.” Id. at 2481.

When Congress amended the FCU Act in 1977 to add an extensive array of savings, lending and investment powers, it intended to “allow credit unions to continue to attract and retain the savings of their members by providing essential and contemporary services,” and acknowledged that credit unions are entitled to “updated and more flexible authority granting them the opportunity to better serve their members in a highly-competitive and ever-changing financial environment.” H.R. Rep. 95-23 at 7 (1977), reprinted in 1977 U.S.C.C.A.N. 105, 110. Congress acknowledged the difficulty in “regulating contemporary financial institutions within the framework of an Act that has on a continuing basis required major updating by means of regulation.” Id.

When Congress enacted the Garn-St. Germain Depository Institutions Act in 1982, which among other things, extended FCU real estate lending and investment powers, it noted that credit unions “continue to face increasing competition from both within and outside of the financial system * * * as they prepare themselves for a future certain to contain a more rapidly changing financial marketplace than ever previously expected.” S. Rep. No. 97-356 at 34 (1982), reprinted in 1982 U.S.C.C.A.N. 3054, 3088. The purpose of the legislation, said Congress, is “to help credit unions meet the challenges of today's rapidly changing and fiercely competitive financial market and to enhance NCUA's ability to more fairly and effectively carry out its responsibilities.” Id. at 3089.

Following the example and encouragement of Congress to be flexible, innovative and responsive, the Board recognizes that the business of promoting thrift and providing access to credit for provident and productive purposes has witnessed a dramatic shift from the Depression-era economy of 1934, to a post-War, industrial boom economy, to the present information age economy. During this evolution, financial services and products have emerged and matured. Advances in technology and communications have improved, and will continue to improve, the delivery of financial services. The marketplace for financial services has expanded and diversified, and competition has intensified. It is, therefore, a reasonable exercise of discretion for the Board to expand the range of incidental powers accordingly to fit the contemporary business of credit unions. This will equip FCUs to deliver products and services that facilitate the modern day practice of thrift and the provident and productive use of credit.

For these reasons, the final rule authorizes as incidental powers under sec. 1757(17) certain activities that, even if not linked to an expressly granted power, nonetheless are convenient or useful in carrying out “the business for which [credit unions] are incorporated,” as that business has evolved since 1934; are a functional equivalent or logical outgrowth of activities within that business; and involve risks similar in nature to those already assumed as part of that business.

The Board wants to emphasize that, while the final rule identifies categories of activities the Board has identified as within an FCU's incidental powers under the FCU Act, an FCU must comply with all applicable legal requirements and give due consideration to safety and soundness concerns before engaging in an incidental powers activity. 1 To carry out its responsibilities, FCU management must consider whether its policies for new activities are realistic and carefully designed to enable the FCU to serve the interests and needs of the membership. In addition to meeting various legal requirements, many incidental powers activities require management to provide direction and instruction for officers, employees, and committees delegated the responsibility for implementing new activities and services.

FCU management is responsible for developing proper internal safeguards such as management oversight, internal controls and quality control. FCUs must examine the strategic risk, reputation risk, transaction risk and compliance risk before engaging in a new activity. In addition, management must exercise due diligence before devoting resources to a new activity or entering into any arrangements with third parties. Activities that involve the use of new technologies must rely on acceptable information systems and operations architecture. FCUs capable of providing advanced technological services must employ appropriate internal controls to minimize technological and legal risk and to address safety and soundness considerations. FCUs must also adjust their risk management process and insurance coverage to correlate with additional risk taken on by engaging in new activities.

NCUA has published guidance papers to assist FCUs in evaluating the risks and understanding the legal requirements involved in some of these activities. This guidance includes: (1) NCUA Letter to Credit Unions No. 01-CU-02 (February 2001), offering guidance on the privacy of consumer financial information; (2) NCUA Letter to Credit Unions No. 109 (September 1, 1989), discussing risks associated with certain computer operations; (3) NCUA Letter to Credit Unions No. 97-CU-5, addressing electronic financial services, (4) NCUA Letter to Credit Unions No. 00-CU-11, regarding risk management of outsourced technology services, and (5) NCUA Interpretive Ruling and Policy Statement 85-1, covering trustees and custodians of pension plans. NCUA's published guidance, along with NCUA's regulations, are available from the agency's website at www.ncua.gov . The Board also recommends that FCUs review interpretive letters and guidance issued by other federal financial institution regulators for assistance in understanding an activity's risks, for example, OCC Bulletin 2001-12 on bank-provided account aggregation services and OCC Advisory Letter 2000-9 on third-party risk. Depending on the activities an FCU undertakes, it may also need to consult with its own legal counsel and other professional advisers.

In response to the proposed rule, the Board received comments on the following issues: the appropriateness of its incidental powers test, the proposed categories, suggested additions for the proposed rule, the application process for expanding the categories, the compensation provision, and the conflict of interest prohibitions. Although the Board actually received over three hundred comment letters or e-mail messages, NCUA staff has credited multiple comment letters from the same credit union as one comment, for a total of two hundred and seventy-two comment letters.

Two hundred and sixty commenters supported the proposed rule or expanding the incidental powers of FCUs in some manner. These commenters commended the Board for its review of the incidental powers of FCUs. Generally, the commenters noted that the proposal gives FCUs the ability to respond to growing member needs. A majority of these commenters supported the proposed rule because it removes regulatory uncertainty, allows FCUs to offer more services, provides income opportunities and allows FCUs to compete with other financial service providers. Several commenters noted that the regulation allows smaller credit unions that cannot afford to invest in credit union service organizations to offer expanded services to their members.

Three banking trade groups and two credit unions opposed the proposed regulation. Two banking trade groups requested that the proposed rule be withdrawn, arguing that NCUA lacks authority to interpret incidental powers in the manner proposed. These commenters stated that the incidental powers of FCUs must be incidental to the promotion of thrift or creating a source of credit. One commenter stated that FCU incidental powers must be directly tied to an expressly authorized activity. Another stated that FCUs have a limited mission in exchange for tax-exempt status. Two credit unions generally opposed the rule because it expands income generating opportunities.

NCUA received many comment letters from state-chartered credit unions fully supporting adoption of the proposed rule. Several of these commenters stated they will benefit from the expansion of FCU incidental powers because their state laws give state-chartered credit unions parity with FCUs operating in their states. Thirteen commenters asked for a “wildcard” or parity provision for FCUs whereby an FCU could engage in the same activities permitted for state-charters in the state in which the FCU is located. The FCU Act does not contemplate a parity provision as suggested by the commenters. In determining whether an FCU may engage in an activity under its incidental powers, an analysis under the FCU Act is required.

Four commenters asked that the rule also permit FCUs to engage in all of the activities permitted for CUSOs. The Board acknowledges that the final rule permits FCUs to engage in some activities traditionally performed by CUSOs. For example, both FCUs and CUSOs may offer income tax preparation. The authority of FCUs and CUSOs, however, is interpreted under separate provisions of the FCU Act. A CUSO is “any organization as determined by the Board, which is established primarily to serve the needs of its member credit unions, and whose business relates to the daily operations of the credit unions they serve.” 12 U.S.C. 1757(5)(D). Based on this statutory definition of a CUSO, the Board establishes the parameters for CUSOs in part 712. The Board evaluates the incidental powers of FCUs, however, based strictly on its interpretation of sec. 1757(17).

The Board presented the proposed rule in a plain English, question-and-answer format. Only two commenters disapproved of the question-and-answer format, stating it makes the rule awkward to read and difficult to understand and suggesting it is suitable only for appendices. The goal of plain language drafting is to minimize confusion, inadvertent errors and the amount of time interested parties must devote to understanding the rule. The Board believes, for many regulations including this one, it promotes regulatory comprehension, compliance and administrative efficiency.

This section describes the scope of part 721. The final rule covers the incidental powers of federally- chartered, natural-person credit unions under 12 U.S.C. 1757(17).

Two commenters asked if the rule allows FCUs to provide expanded services to member business accounts or restricts these new powers to services for natural person members. An FCU may provide the activities and services authorized under part 721 to all of its members.

Several commenters raised questions about the application of part 721 to corporate credit unions. The Board generally interprets the powers of corporate credit unions in part 704 and does not intend part 721 to apply to corporate credit unions.

Following the reasoning of VALIC discussed in section C.1. supra , the Board believes that it is no longer necessary to link an incidental power directly to an express power granted in the FCU Act. Instead, an activity may generally be considered to fall within an FCU's incidental powers if it is “necessary or requisite to enable it to carry on effectively the business for which it is incorporated.” 12 U.S.C. 1757(17). For the reasons discussed above, the Board believes that the business of FCUs is to provide financial services to their members that, as contemplated by the FCU Act, facilitate the practice of thrift and the provident and productive use of credit.

Reflecting this view, the final rule retains the three-prong test, set forth in the proposed rule, to determine whether an activity is authorized as an appropriate exercise of an FCU's incidental powers: (1) Whether the activity is convenient or useful in carrying out the mission or business of credit unions consistent with the FCU Act; (2) whether the activity is the functional equivalent or logical outgrowth of activities that are part of the mission or business of credit unions; and (3) whether the activity involves risks similar in nature to those already assumed as part of the business of credit unions. An activity must meet all three criteria to qualify as an incidental power. The criteria are substantially similar to those used by the Office of the Comptroller of the Currency (OCC); however, for purposes of identifying the incidental powers of FCUs, they will be applied so as to take into account the distinctive features and functions of credit unions in the context of the business for which they are incorporated, as that business has evolved since 1934. Thus, while the Board may look to other laws and precedents in the financial services industry for guidance in applying these criteria, its analysis may produce a different result than in the case of other types of financial institutions.

Seventy-six commenters specifically supported the proposed three-prong test. Many of these commenters asked that the Board read the test broadly. Several of the commenters noted the similarity between the proposed criteria and the standard used by the OCC when authorizing activities for banks. These commenters found the test appropriate when considering the similarity of financial services offered by credit unions and other financial service providers.

One commenter suggested that, when NCUA analyzes the business of credit unions, it should defer to the marketplace as experienced by credit unions and their members. One commenter advocated changing the first prong of the test to replace the business of credit unions with an analysis of whether the activity is convenient and useful in meeting the economic and social well-being of members consistent with the FCU Act. Four other commenters suggested amending the third prong of the test. One recommended that NCUA look at whether the risks involved in a proposed activity exceed those already assumed as part of the business of credit unions. Another stated that the third prong of the test should require NCUA to analyze the way an FCU manages the risk associated with the proposed activity through a cost/benefit analysis. The Board believes that, after evaluating Arnold Tours, VALIC and the opinions of the OCC, the three-prong test adopted in the final rule is an appropriate method for determining whether an activity is a permissible exercise of an FCU's incidental powers.

Section 721.3 establishes categories of activities the Board has determined to be within an FCU's incidental powers. The final rule also provides a mechanism for approving additional activities in § 721.04.

Eighty commenters supported including categories of approved activities as examples of incidental powers activities within the rule. Those commenters supporting a list generally approved of the identified categories and asked that the activities named within each category remain illustrative of permitted activities and not exclusive. One commenter suggested the rule clarify that FCUs have the authority to determine whether a proposed activity, not specifically given as an example in the rule, fits into one of the preapproved categories. Another commenter asked that the rule state that an activity is permitted unless it is expressly prohibited.

An FCU may only engage in activities that are either expressly authorized by statute or within the FCU's incidental powers. The final rule permits FCUs to analyze for themselves whether a particular activity, not provided as an example in one of the broad categories, falls into one of the preapproved categories. The analysis an FCU should follow in determining whether an activity is permissible is discussed below in the section-by-section analysis of § 721.4.

One commenter recommended that the rule require NCUA to review the list of categories biannually to determine if the agency should add new categories to the list, while two others asked for a periodic or annual review of the categories. The Board believes a periodic review requirement in the rule, itself, is unnecessary. The final rule establishes a procedure for FCUs to request amendments when they have identified activities that they contend are necessary or requisite to carry on their business. In addition, NCUA has a process for periodically updating, clarifying and simplifying all existing regulations. NCUA Interpretive Ruling and Policy Statement Number 87-2 (September 1987), 52 FR 35231 (September 18, 1987).

Ten commenters opposed using a list of categories within the regulation, stating that the use of list, although drafted with the intent of being illustrative, may be construed as precedent or exclusive over time. These commenters suggested that, instead of a list, NCUA should place the categories in a commentary or appendix to the regulation as examples of permitted activities. Forty-nine commenters disapproved of the use of categories in the rule and recommended that NCUA allow FCUs to determine on their own whether an activity is within their incidental powers. These commenters stated that the list of categories is restrictive and will become outdated. They also stated the process for expanding the list is cumbersome and time-consuming. Many suggested that the Board set a clear standard so that FCUs could determine their own incidental powers.

As discussed further below in connection with § 721.4, the final rule provides for regulatory approval to identify additional incidental powers activities, recognizing the deference to which the NCUA as regulator is entitled in making this determination. The Board believes that regulatory identification of permissible activities, provided in the rule's list of categories or as approved through an application process, provides assurance to FCUs that the activities in which they engage are legal.

Some of the commenters asked that NCUA expand the list of categories identified; however, they did not suggest particular activities or categories. Several commenters specifically requested that NCUA add particular categories or additional activities within the existing categories. These comments are reflected below in the discussion of each category.

The Board has identified various certification services, such as notary services, electronic signature authentications and signature guarantees, as within the incidental powers of an FCU.

The provision of notary services has been an exercise of an FCU's incidental powers for many years. A notary administers oaths, verifies the identity of a signer, attests to the verification, records signatures, and authenticates commercial transactions. By providing notary services to members, an FCU facilitates transactions for its members that require the certification of signatures. This service allows for timely processing of credit union transactions as compared with sending members elsewhere for notarizations. Therefore, this service is convenient and useful in carrying out an FCU's business by allowing it to operate efficiently and effectively.

Similarly, the Board has determined that the authentication of electronic signatures is analogous to notarization. Like a notary, a certification authority (CA) verifies the identity of the signer and authenticates the signature or electronic equivalent in accordance with contractually agreed upon standards. Like the OCC, the Board finds that the CA activity is the functional equivalent of notary and other authentication services provided by credit unions, and a logical outgrowth of identification and verification methods. See OCC Conditional Approval No. 267 (January 1998). The risks borne by an FCU acting as a CA are similar to a notary's risk of improper verification and are similar to those risks inherent in providing electronic services.

FCUs, as eligible guarantor institutions, are permitted to issue signature guarantees for the transfer of securities. 17 CFR 240.17Ad-15. A signature guarantor warrants the authority of the signer as well as the genuineness of the signature. FCUs may offer signature guarantees for stock transfers and U.S. Treasury transactions, as provided by law, under their incidental powers because this type of identity verification is the functional equivalent or logical outgrowth to the provision of notarial services. Like notary services, this activity conveniently facilitates members' financial transactions. The final rule also includes share draft certifications as an example of a permissible certification service. NCUA's longstanding position has been that the certification of share drafts is convenient and useful to an FCU in carrying out its express authority to offer share draft accounts to its members.

Correspondent services have been an exercise of an FCU's incidental powers for many years. Correspondent services are services or functions provided by an FCU to another credit union that the FCU is authorized to perform for its own members or as part of its operation. Parties to a correspondent credit union arrangement must establish a written agreement addressing the credit unions' responsibilities under the service arrangement. Correspondent services may include receiving share and loan payments, disbursing share withdrawals and loan proceeds, cashing share drafts, cashing and selling money orders, processing loans, and performing other back office operations or member services for another credit union. An FCU, however, cannot be in the business of managing other credit unions. One commenter suggested that the category of correspondent services include loan servicing, escrow services and internal audits. The Board agrees that these are additional examples of correspondent services and has added them to the rule.

A correspondent service is offered in the same manner it is performed within the FCU's operation and entails the same risks as those assumed by the FCU for its operation. Correspondent service agreements enable credit unions to extend a greater array of services to their members. This activity is convenient and useful to a recipient of a correspondent service in carrying out many of its express powers when the credit union may have difficulty in performing the service on its own. Often, correspondent service programs are implemented when distance prevents members' ready access to their own credit union's place of business. Correspondent relationships also allow credit unions to assist other credit unions that lack resources or expertise.

One commenter noted that the proposed rule and preamble did not address the interplay of the proposed rule with 12 CFR 701.26, Credit Union Service Contracts. This commenter stated that the proposed rule either conflicts with § 701.26 or works to negate it. The Board wishes to clarify any perceived inconsistencies on this issue. The rule governing credit union service contracts covers contracts between FCUs and third party vendors or other organizations for assets or services related to an FCU's daily operations. It also allows an FCU to represent another credit union in contractual arrangements with vendors, but § 701.26 does not give FCUs the authority to provide services, like data processing, directly to other credit unions. 54 FR 48110 (November 21, 1989). FCUs are authorized to provide their services directly to other credit unions under various express powers and the incidental powers clause of the FCU Act, as discussed above. Therefore, the Board does not believe that a conflict exists between the correspondent services permitted under the final rule and § 701.26 because these rules govern two different types of activities.

The final rule provides that FCUs may offer, through electronic means and facilities, any activity, function, product or service they are otherwise authorized to provide under their express or incidental powers. FCUs may establish their own web sites to promote credit union services and effect member transactions, such as electronic bill payment, bill presentment, account aggregation, account inquiries and transfers. Web sites have become the electronic equivalent of newsletters, office signs and teller services. They provide a convenient and useful means for FCUs to carry out their business.

Through a transactional web site, an FCU may advertise and communicate with its members and others within its field of membership. Features, such as electronic bill payment and bill presentment, allow members to schedule payments and complete transactions without handwritten drafts or visits to a brick and mortar facility. As noted by the OCC, the risks confronted in providing financial services over the Internet are similar to the risks associated with the permissible activities of providing these services via electronic means generally. OCC Interpretive Letter No. 742 (August 1996).

As part of the electronic delivery of traditional products or services, the Board believes FCUs have the authority under their incidental powers to engage in new activities or services due to the changing commercial environment, such as Internet access. By providing Internet access services to its members, an FCU offers its members a device to receive electronic products and services from the FCU. It also assures the FCU that members will access the FCU's home page when they initially connect to the Internet, positioning the FCU to market its products successfully. Members using the FCU's Internet access and transactional web site can retrieve account information and process transactions just as they would through tellers, automated teller machines or telephone response systems.

Similarly, account aggregation services over the Internet enable FCUs to serve as their members' primary financial institution. In providing this service, an FCU may gather a member's publicly available and personal account information from a variety of sources on the Web, allowing convenient access to the member's information. Members grant FCUs access to their information because they view their FCU as a trusted financial intermediary. Account aggregation services are convenient and useful to an FCU's offering of loans, share drafts and share certificates, all expressly granted powers. With access to their consolidated financial portfolio, members have the opportunity to evaluate and compare similar products sold by the FCU. The FCU may also offer members the ability to initiate transactions or obtain financial advice as a result of this service.

One commenter suggested that the electronic financial services category include automated teller machines. Four commenters suggested that the rule place account aggregation services within the category of electronic services. The Board agrees with both of these suggestions and has included these services as examples in the rule.

The Board recognizes that, in planning for future expansion and offering new products and services to their members, FCUs should be able to sell their excess capacity as a matter of good business practice. The sale of excess capacity offers FCUs the opportunity to provide financial services to its members, even though member demand for the services does not initially meet the FCU's capacity. The opportunity to sell excess capacity may involve leasing excess office space, sharing employees, or using data processing systems to process information for third parties. As the business of FCUs is to provide financial services to their members, the Board believes that the sale of excess capacity is within an FCU's incidental powers under two conditions: (1) The FCU properly established the service or made the investment with the good faith intent of serving its members; and (2) the FCU reasonably anticipates that the excess capacity will be taken up by the future expansion of services to its members.

Two commenters suggested that NCUA allow low-income credit unions and credit unions serving the underserved to build or acquire real property without a plan for the FCU's future use in order to facilitate the services to others within the low-income community. The Board does not find legal justification for establishing a different analysis of the incidental powers of FCUs that relies on the field of membership of an FCU. FCUs, including low-income credit unions and credit unions serving the underserved, may sell a service or the use of an asset in excess of the FCU's needs only under the conditions identified in this rule.

Four commenters asked for a liberalization of the concept of excess capacity. These commenters stated that an FCU should not need to anticipate that its members will eventually use any excess capacity; they should be allowed simply to take advantage of economies of scale that result from, for example, processing larger volumes of daily transactions or purchasing technology. The Board does not agree with these commenters. NCUA has consistently held the position that an FCU has limited authority in the leasing of fixed assets and the sale of excess data processing capacity. FCUs are not in the business of providing others with data processing capacity or any other service that is not within their express or incidental powers; rather, they are cooperative financial institutions organized to provide financial services to their members.

Another commenter stated that the regulatory text does not include the two-prong analysis for excess capacity as discussed in the proposed rule's preamble. The absence of this language, the commenter stated, allows for an interpretation that is broader than suggested by the preamble's discussion. The Board agrees that clarification of the definition of excess capacity is necessary and has inserted the excess capacity analysis into the final rule.

The Board believes that, as part of providing credit and saving opportunities for their members, FCUs have the responsibility of promoting provident planning through consumer education and responsible investment. Educating and counseling members in financial matters is convenient and useful to an FCU in exercising its express powers of lending and receiving shares. Members who are well-informed and educated in financial matters tend to be prudent and responsible when obtaining financial products and repaying debt, which in turn reduces losses at an FCU. The Board believes it is part of the business of FCUs to provide financial counseling services to their members including estate planning, income tax preparation and filing, and investment and retirement counseling. One commenter recommended that this category include debt and budget counseling. The Board has added this example to the final rule.

One commenter supported the ability of FCUs to offer financial counseling, but asked NCUA to provide guidance regarding registration requirements and cross-jurisdictional issues that may arise between NCUA and other regulators, such as the Securities and Exchange Commission. As discussed further in the analysis of § 721.5, the final rule identifies activities that are within the incidental powers of FCUs, but an FCU must still comply with other legal requirements pertaining to an identified activity. Depending on the particular activity, an FCU may be subject to other federal, state or local law. Some of these legal requirements may be extensive and it would be impossible to incorporate them completely within this rule. Just as an FCU is responsible for making its own determination regarding the safety and soundness of a particular activity, it is incumbent on an FCU to apprise itself of any legal requirements associated with the activity.

Two commenters asked that the final rule permit financial planning under the category of financial counseling. Five commenters suggested that the final rule include brokerage services in a category, such as financial counseling. One commenter supported the proposed rule's description of financial counseling but believed that the proposed rule conflicted with NCUA Letter to Credit Unions No. 150 (Letter 150), which governs sales of nondeposit investment products through third parties. This commenter asked that NCUA discuss the interplay between Letter 150 and this category.

The final rule defines financial counseling services as advice, guidance or services that an FCU offers to its members to promote thrift or to otherwise assist members in financial matters. Under this activity, FCUs may counsel members about financial matters, such as setting budgets, establishing financial goals, and managing tax liabilities. Other examples within this category may include counseling members on money management, paying down debt, saving for the future, types of investments, and diversification principles. This category applies only to financial counseling provided by an FCU to its members and does not encompass activities that require SEC registration as a broker, dealer or investment adviser.

Letter 150 provides guidance for third party sales of securities to FCU members, a finder activity. Third party sales of securities entail an FCU introducing its members to vendors who engage in the sale of nondeposit investment products. This differs from an FCU directly providing financial counseling, as defined above, to its members. Therefore, as a result of the final rule, Letter 150 remains unchanged with the exception of the Letter's paragraph f. Paragraph f of Letter 150 limits reimbursement to an FCU from a third party vendor at the total direct and indirect costs of any administrative functions the FCU performed for the vendor. As addressed in detail in the following category and in the discussion regarding § 721.6, the final rule removes compensation restrictions on finder activities as contemplated in Letter 150. FCUs, should note however, that they may be subject to other regulatory restrictions regarding commissions or fees paid to an FCU in conjunction with the sale of mutual funds or nondeposit investment products.

The final rule allows FCUs to engage in finder activities through their role as financial service providers and intermediaries of financial services. The rule authorizes an FCU to introduce or otherwise bring together outside vendors with its members for the negotiation and consummation of transactions. Another fundamental aspect to finder activities is providing information to members about the products or services of third parties.

The Board believes that finder activities are member services that are necessary or requisite to enable FCUs to carry on their business effectively. FCUs can serve as their members' primary financial institution by bringing members together with providers of services and products. Although the FCU does not act as a broker, the FCU may negotiate group discounts or benefits on behalf of its membership with vendors. Additionally, these referrals enhance the quality of service FCUs offer their members and afford the FCU the opportunity to promote its own products as well. Examples of finder activities include placing third party vendor advertisements in the FCU's account statements, newsletters or as a link to the vendor's web site on the FCU's home page.

One commenter requested that NCUA offer guidance that distinguishes finder activities from marketing activities. Under the category of finder activities, FCUs are authorized to act as an intermediary between their members and outside parties for the sole purpose of bringing the parties together. Although this activity may subject an FCU to reputation risk by identifying particular vendors to its membership, an FCU does not represent the vendor or the member when the two parties negotiate or enter into a transaction. Finder activities differ from the category of marketing activities because, as the “finder,” an FCU simply identifies an outside party with a product or service the FCU believes its members would be interested in obtaining. The category of marketing activities consists of an FCU's promotion or marketing of its own products and operation.

One commenter asked that the finder activities category include the finding of real estate brokers and agents, but that NCUA warn FCUs to comply with other applicable laws, such as the Real Estate Settlement Procedures Act. Similarly, another commenter suggested that the rule authorize FCUs to offer real-estate services under their finder authority, including assistance to members in finding a home mortgage loan, real estate broker or real estate agent. One commenter asked that NCUA allow debt and budget counseling to members through third-party arrangements. An FCU may act as a finder for a variety of products or services that it finds suitable to introduce to its members. An FCU may find real estate brokers or insurance companies, among the numerous possibilities. Therefore, the Board, has removed any reference to a particular product or service in the final rule. This category simply provides examples of types of finder activities.

The proposed rule specifically noted that the offering of a third party's insurance products as an example in the category of finder activities. One commenter found that the insurance products or activities listed in the category could be construed to limit an FCU's offering of insurance products to only those listed, all of which are related to the share or loan products. One commenter stated that the activities listed in the rule should include property and casualty insurance products. Another commenter requested that this category also include long-term care insurance products. One commenter found the regulatory text unclear as to whether FCUs could offer automobile, term and whole life, homeowner's liability, and healthcare insurance products. As mentioned above, the Board recognized from the comment letters that, for clarity, the rule should avoid references to particular products offered by third party vendors. Therefore, while insurance products from third party insurers are examples within the category of finder activities, the Board has removed this reference from the regulatory text. FCUs are not limited in the types of products they may introduce to their members. Rather, an FCU must exercise judgment and due diligence when choosing to introduce or bring together an outside vendor with its members.

The Board notes that the final rule describes finder activities to include the sale of statistical information about an FCU's membership and consumer financial information to outside vendors to facilitate the sale of their products to members. The Board reminds FCUs that, as discussed throughout the preamble, although an activity is authorized as within an FCU's incidental powers, an FCU must comply with all applicable laws prior to engaging in the activity. FCUs must comply with NCUA's privacy of consumer financial information regulation (12 CFR part 716), the Fair Credit Reporting Act (15 U.S.C. 1681 et seq. ) and any applicable state laws before selling or otherwise communicating consumer information to third parties.

This category recognizes the ability of FCUs to engage in credit-related activities to protect the FCU against credit-related risks. The FCU Act grants FCUs the express authority to lend. 12 U.S.C. 1757(5) In a lending transaction, the terms of a loan include interest rates, payment dates, and the consequences of default, such as repossession. This category provides examples of activities, services, or products an FCU may negotiate and provide to its members that are incidental to the exercise of an FCU's express power to lend. The Board notes, however, that FCUs must ensure that members receive all of the necessary consumer protections provided in applicable laws and regulations, such as the Truth in Lending Act, 15 U.S.C. 1601 et seq. , and Regulation Z, 12 CFR part 226, so that members make informed choices about whether to purchase these ancillary products or services.

In the proposed rule, the Board identified debt cancellation and debt suspension agreements as permissible activities within the incidental powers of FCUs. The proposed rule, however, placed these activities within the category of finder activities. Three commenters asked that the final rule create an additional category for certain two-party agreements such as debt cancellation, payment suspension and waiver products. The Board agrees that these two-party agreements between an FCU and its member are not finder activities but activities engaged in directly by the FCU with its member to mitigate loan loss.

Both debt cancellation and debt suspension agreements provide a convenient and useful way for an FCU and its members to manage the risk of nonpayment due to financial hardship. FCUs receive compensation for assuming the risk of nonpayment and the additional cost of foregoing the collection of principal or interest. These agreements are appropriate financial tools for FCUs and their members. They provide a source of compensation to the FCU for the credit risk implicit in a lending transaction, and they protect the member from credit damage during a period of financial hardship. Similarly, FCUs may negotiate compensation for uninsured physical damage loss to repossessed property used in a lending transaction.

To clarify the extent of this category further, the Board also has identified two, additional products that NCUA has long considered to be within the incidental powers of FCUs: Leases and letters of credit. The preamble of the Board's recent final leasing regulation contains a discussion regarding an FCU's authority to engage in direct or indirect leasing. 65 FR 34581 (May 31, 2000). A letter of credit is a commitment on the part of the issuing FCU that it will pay a draft presented to it under the terms of credit. If the obligation is to be discharged by the payment of money into a share account, the letter of credit is incidental to the creation of the account. If the obligation is to be discharged by a loan to the member, then the letter of credit is incidental to the FCU's loan commitment under its lending authority. In either case, the letter of credit is incidental to an expressly granted power.

This section states that credit union management may use its longstanding incidental power to advertise and market its services in any legally permissible manner. The Board received no comments on this category and has adopted it in the final rule as proposed. The Board has added language to the final rule to clarify that an FCU may market membership in the credit union, as well as the products and services offered to members.

This section allows an FCU to provide monetary instrument services to its members. This section derives from and expands on the express authority of an FCU “to sell to members negotiable checks (including travelers checks), money orders and other similar money transfer instruments; and to cash checks and money orders for members, for a fee. * * *” 12 U.S.C. 1757(12).

The section allows an FCU to maintain deposits in foreign financial institutions to facilitate member transactions. The provision does not, however, allow an FCU to maintain foreign accounts for speculative purposes.

Two commenters requested that this provision include check-cashing authority for nonmembers. As noted above however, this section of the rule is based on expressed statutory authority that is limited to members. Also, one commenter requested the authority to offer international monetary transfer services to both members and nonmembers. International monetary transfers for members are included as a permissible service in this section.

There may be circumstances where it would permissible to provide a monetary service to a nonmember, for example cashing paychecks issued by the credit union's sponsor company. Any other circumstance that might warrant the provision of monetary services to certain nonmembers would necessarily be addressed on a separate basis, outside the scope of this section.

One credit union commenter requested authority to provide services under this category to an underserved community. As stated in the excess capacity discussion, the Board does not find legal justification for establishing a different analysis of the incidental powers of FCUs based upon an FCU's field of membership. The Board notes, however, that there are two other ways in which low-income individuals may receive FCU services. First, FCUs may apply to add underserved areas to their fields of membership without regard to the location of the underserved area. The requirements and process for adding an underserved area are set out in the NCUA Field of Membership and Chartering Manual (NCUA Chartering Manual). NCUA Chartering Manual, Chapter 3, Section III. Once added, anyone in the underserved area is eligible to join the credit union. Second, an FCU with a low-income designation may open share accounts, including regular share, share certificate and share draft accounts, for nonmembers. 12 U.S.C. 1757(6); 12 CFR 701.32. 701.34; NCUA Chartering and Field of Membership Manual (Chartering Manual), Chapter 3, Section II.B.

The final rule identifies certain operational programs as within an FCU's incidental powers. Operational programs are programs that an FCU establishes within its business to establish or deliver products and services that enhance member service and promote safe and sound operation. One commenter asked NCUA to expand the operational programs category to include the following activities: Money orders, remote cash dispensing, savings bond purchases and redemptions, drafts (vehicle and sight), collections, traveler's checks, cashier's checks, tax payment services, treasury security redemptions, and wire transfers. Another commenter suggested that the category of operational programs include, in addition to safe deposit boxes, other repositories for items of value. The Board has included several of these suggestions in the final rule. The Board excluded the remaining suggested programs because they are already within an FCU's express powers, within another incidental powers activity category such as monetary instruments, or substantially similar to examples in this category.

This category in the final rule identifies stored value products or alternate media as within an FCU's incidental powers. As noted in an OCC decision, these products represent a member's prepayment for a merchant's goods or services and are, therefore, a form of bill payment. OCC Interpretive Letter No. 718 (April 1996). An FCU simply transfers funds from a member's share account to a merchant's account. The FCU acts as an intermediary by transferring funds from a member to a merchant, a traditional role for FCUs. Therefore, the activity poses no more additional risk than that already assumed by credit unions.

Two commenters suggested that the definition of stored value products should include products to which an FCU transfers non-monetary information of value to members. These commenters did not elaborate on the type of information or product they envisioned. The Board has determined to leave this category unchanged from the proposed but recognizes that developing technology may affect future interpretation of this category.

Although FCUs do not have express trust powers under the FCU Act, they have long served as trustees and custodians where that authority has been granted under other provisions of law such as the Internal Revenue Code. Under this authority, FCUs are able to provide individual retirement accounts (IRA), education saving accounts such as the Roth IRA, and other savings opportunities that are of importance to modest savers. The ability of FCUs to provide these saving opportunities to their members fits within the historic role of FCUs in encouraging thrift among their members and creating a source of credit for provident purposes.

Four commenters suggested that NCUA authorize FCUs to offer full trust company services to members. The Board disagrees. Under the National Bank Act, the OCC is authorized to “grant by special permit to national banks * * * the right to act as trustee, executor, administrator * * * or in any other fiduciary capacity in which State banks, trust companies, or other corporations * * * are permitted to act” in the state in which the bank is located. 12 U.S.C. 92a. The FCU Act does not provide equivalent authority for FCUs to act in a fiduciary capacity for its members.

Two commenters suggested that this category include medical savings accounts. Likewise, one of these commenters recommended that the category of trustee or custodial services include special accounts for first-time homebuyers or other similar accounts authorized under state law. The Board will not include the accounts suggested by the commenter at this time. The Board is considering an amendment to part 724 to authorize FCUs to serve as trustees for tax-deferred medical savings accounts but has not yet made a determination. See 64 FR 55871, 55872 (October 15, 1999). As for those accounts created under state law, NCUA evaluates each statute to ascertain whether an FCU has only limited custodial responsibilities under the governing law.

This section allows FCUs to seek approval from NCUA to engage in an activity that is not within the ambit of the broad categories in the rule. It provides that an application for a new activity is treated as an application to amend the regulation. It does not set time frames in which NCUA must respond to a request for a new activity or category although the preamble to the proposed rule states that “NCUA will endeavor to respond * * * within 60 days as to whether it will propose an amendment.” 65 FR 70526, 70531 (November 24, 2000). This section also permits FCUs to seek an advisory opinion from NCUA's Office of General Counsel before engaging in the petition process to determine whether a proposed activity fits into one of the authorized categories or is otherwise within an FCU's incidental powers. Thirty-three commenters supported the proposed application process. Seven commenters approved of an application process but suggested that NCUA amend the process. One commenter supported the voluntary nature of the process and agrees that FCUs will rarely need to use the process.

Nine commenters asked that the proposed rule place a time limitation on NCUA to respond to an applicant seeking approval of an activity or category not previously approved as within the incidental powers authority. These commenters suggested various time frames. The Board believes that setting a time frame to act on an application could result in less activities being approved. These activities may involve complex issues that require not only a thorough legal analysis but an assessment of risk. The Board's experience in dealing with the issue of incidental powers leads it to believe that maximum flexibility is necessary when reviewing these applications. Although the applicant may want an expeditious decision, most importantly, it wants a correct decision. This decision is not only important for the applicant but also for the agency and the National Credit Union Share Insurance Fund. The Board, therefore, is not setting a definitive time frame for rendering a decision, but will attempt to notify an applicant anytime a decision cannot be reached within 60 days. The Board is cognizant of the need for an applicant to receive a decision as soon as reasonably possible. Accordingly, every effort will be made to process and consider all applications expeditiously for approval of an activity or category not previously approved as within the broad incidental power categories.

One commenter supported the NCUA's Office of General Counsel's authority to determine whether an activity not found within the list of categories is permissible under the incidental powers of an FCU. One commenter disagreed with this approach. One commenter requested that the final rule clarify that an FCU need only seek an advisory opinion from the Office of General Counsel if a proposed activity clearly fails to fall within one of the preapproved categories. This commenter is correct. If a proposed activity does not appear to fall within one of the preapproved categories, FCUs may seek an advisory opinion from the Office of General Counsel as to whether the activity fits within a category or is otherwise an incidental powers activity.

A number of commenters misconstrued the Board's description of the review and approval process for activities that are not provided as examples within the preapproved categories. In general, these commenters were confused about when the General Counsel advisory opinion process is used and when it would be necessary to apply to the Board to amend the regulation. Forty-nine commenters generally opposed the use of categories and the application process. Many of these commenters found the application process burdensome and recommended a more streamlined process or no application process at all. Again, the Board believes some of these commenters misconstrued how the Board intends the process to work.

The Board wishes to clarify how it intends the process to work and the analytic steps an FCU should follow in determining if an activity is permissible. The activities listed under the broad categories are intended as illustrations, not an exhaustive list of what is permissible under the categories set out in the rule. Therefore, the first step, if an FCU does not find an activity identified in the rule, is to consider whether, although not listed as a specific example, it is within the ambit of one of the broad categories in the rule. If an FCU concludes that it is within the ambit of one of the broad categories of the rule, an FCU need not contact NCUA for a legal opinion or apply for an amendment of the rule. FCUs are encouraged to consult with their own legal counsel in making this determination.

Second, if an FCU is not sure if an activity fits within a preapproved category, it may request a legal opinion or consult informally with NCUA's Office of General Counsel. An FCU is not required to obtain an opinion from NCUA's Office of General Counsel, however, there are several advantages in doing so. If it is unclear whether an activity is permissible, an FCU runs the risk of engaging in an impermissible activity and being subject to supervisory action. NCUA, not FCUs, has the discretion to determine if an activity is within an FCU's incidental powers. The Office of General Counsel, which is specifically authorized to provide the public with legal interpretations of the FCU Act and NCUA regulations, 12 CFR 790.2(b)(8), may determine that an activity is already covered by one of the rule's broad categories although not specifically identified. The Office of General Counsel may also, as it has done in the past, render a legal opinion that an activity is a permissible exercise of an FCU's incidental powers even though the activity is not covered by the broad categories in the rule. The Board contemplates that new activities identified by the Office of General Counsel will be routinely added to the rule as part of the Office of General Counsel's ongoing regulatory review process.

Third, an FCU may go through the application process set out in the rule. The Board wants to reiterate that it believes the application process will rarely be necessary because of the manner in which the categories are set out in § 721.3.

One commenter stated that the rule should require an FCU applicant to include only a description of the proposed activity, an explanation of how the activity qualifies as an incidental power and any other information as necessary to describe the activity. This commenter noted that the rule should not require the applicant to provide any business considerations in the application. Two commenters stated that NCUA's determination to approve an activity should not be based on whether it is a good business decision for the particular applicant but whether the activity is within the incidental powers of all FCUs. In general, the Board agrees that business considerations should not be part of the decision on whether an activity is deemed incidental and has modified the rule accordingly. Three commenters requested that the final rule clarify that an activity approved for one applicant is permissible for all FCUs. The Board agrees with this comment and is clarifying that once an activity is approved for one credit union it is legally permissible for all FCUs to engage in this activity.

Finally, most of the commenters who objected to the application process favored a flexible approach that they contend is similar to the OCC's. They advocated an incidental powers analysis whereby NCUA establishes broad parameters of what constitutes a permissible activity so that FCUs could determine whether an activity falls within their incidental powers. These commenters requested that the final rule grant FCU boards of directors or their private attorneys the ability to assess whether an activity is legal without seeking approval from the NCUA. Many commenters also objected to the statement in the proposed rule's preamble that indicates NCUA may reach a different conclusion in its analysis of incidental powers than the OCC. Two commenters suggested that NCUA should routinely review the powers granted to banks and conclude that these activities are permissible for FCUs unless they pose safety and soundness concerns or are contrary to the FCU Act. These commenters apparently misunderstand the OCC's approach.

Banks and their operating subsidiaries may engage in activities the OCC has authorized through regulations as within the powers of a bank. In addition, the OCC determines whether a novel activity is within the business of banking or incidental thereto, through interpretive letters that rely on the facts presented by the applicant. As explained earlier, NCUA has the authority and responsibility to determine whether an activity is incidental. The Board believes it cannot and should not delegate that authority and responsibility. The Board is concerned about potential safety and soundness concerns as well as the problems that could ensue if an FCU invested a significant amount of personnel and dollars in an activity that was later determined to be impermissible. Finally, an FCU's incidental authority is different than the incidental authority of a bank and, therefore, requires a distinct and separate analysis.

This section acknowledges the distinction between an FCU's authority to engage in an activity deemed to be within its incidental powers and the requirement that an FCU comply with any conditions or regulations that apply to the activity. When engaging in an authorized activity, FCUs must comply with conditions or constraints on the activity established in applicable federal and state law, NCUA regulations, and legal opinions. For example, FCUs are responsible for ensuring their compliance with applicable state licensing laws relating to insurance sales. Another example is the use of raffles in promotional activities that may be regulated or prohibited under local law. The regulation does not preempt FCUs from compliance with these laws.

One commenter suggested that the Board remove this section as unnecessary because FCUs are already obligated to obey such laws. The Board disagrees. The Board believes that including this provision enhances awareness of the compliance risk involved in new activities. Before engaging in any of the activities identified in the final rule, FCUs must ascertain whether they need to obtain licenses or meet other legal requirements before engaging in an activity.

The proposed rule provided that an FCU may receive unlimited compensation from its incidental powers activities. For finder activities, the proposed rule would allow FCUs to charge third parties that solicit members through the FCU.

One hundred and forty-one commenters agreed that compensation should be unlimited. Although FCUs are currently authorized to conduct administrative work in connection with a group purchasing activity and receive reimbursement of their cost amount for extending group purchasing plans, many commenters supported the proposal because they stated a need to increase income due to decreasing operating and interest rate margins. Those in support of this provision uniformly stated that only the business decisions of FCU directors should limit the amount of income an FCU receives when engaging in incidental powers activities. Two credit union commenters objected to the ability of FCUs to obtain unlimited compensation from their incidental powers. In light of the overwhelming number of comments in favor of proposed § 721.6 and the fact that this derivation of income is simply an extension of fees the FCU already has received in connection with the current group purchasing authority, the Board is adopting this section in the final rule as proposed.

This section prohibits senior management employees, officials, and their immediate family members from receiving any compensation or benefit, directly or indirectly, from activities covered in the regulation. Of the twenty-four commenters that expressed an opinion on the conflicts of interest provision, fourteen stated that the provision is adequate. One stated that the provision prevents the misappropriation of funds and is in the best interests of an FCU's membership. Nine commenters suggested several amendments to this section. One commenter suggested that the reference to “indirectly receiving” requires clarification because it could be subject to wide interpretation. The preamble to the proposed rule stated that this section only prohibits compensation that is linked to products or services provided by third party vendors. In addition, the NCUA Board provided an example of compensation that is not prohibited. 65 FR 70526, 70531 (November 24, 2000).

One commenter requested that the final rule clarify proposed § 721.7(a). Two commenters believed that the reference to compensation received “directly or indirectly” could disallow salaries for senior management. The Board is clarifying that this conflicts of interest section does not prohibit salaries for senior management.

Four commenters stated that the rule should allow senior management to receive bonuses or incentives for finder activities or other incidental powers activities. The Board disagrees. As with other activities that can lead to significant abuse, the Board believes senior management should be primarily concerned with the financial health of the institution and be free from the undue influences of third party vendors. Such a prohibition is a good policy for the FCU, its members and ultimately senior management officials. Avoiding the appearance of a conflict of interest will insulate senior management from charges that their business decisions are based on their own pecuniary interest. This type of conflict of interest provision adopted in the final rule has worked extremely well in the context of other NCUA regulations and the Board believes such a provision is necessary in the context of expanded incidental powers activities.

One commenter asked that the rule establish an exception allowing an official to receive dividends from publicly traded corporations if the official does not have a material ownership interest in the corporation. The Board wishes to clarify that the conflict of interest provision does not apply to the situation presented by this commenter.

One commenter stated that § 721.7(b) is inconsistent with the conflicts provision of NCUA's lending regulation, which governs compensation in connection with any loan made by an FCU. 12 CFR 701.21(c)(8). This commenter asserted that many third party loan-related products and services will be offered under part 721 and that compensation arrangements related to these products and services will be subject to different requirements under the two rules. The Board appreciates the need to provide further guidance regarding the final rule's conflict of interest provision and has amended the language in the final rule to simplify this provision consistent with the Board's intent and other conflict of interest provisions throughout NCUA's regulations.

As noted above, the final rule prohibits compensation to a senior management employee, official, or his or her immediate family member that is received directly or indirectly by such individual as a result of third-party products or services. The Board does not prohibit compensation to these individuals, however, if the compensation is: (1) Fixed in amount; (2) not related to the amount of products sold or services used; and (3) received by no more than one director or official of the credit union, who is recused from the credit union decision concerning its business with the third party vendor. The Board again provides the following example of permissible compensation:

The rule also prohibits compensation to non-senior management employees or their immediate family members that is received directly or indirectly by such individual as a result of third-party products or services, unless the FCU's board of directors has established written policies regarding third-party compensation and has determined that no conflict of interest exists. This provision allows employees to receive compensation from persons other than the FCU provided that the employee's relationship with the third-party does not conflict with the interests of the FCU or its members.

Under this exception, an employee may not receive a commission or other compensation from a third-party for referring members to the third-party because an inherent conflict exists in the employee's promotion of a particular third-party product or service for the employee's pecuniary interest. If the employee's motivation is purely self-interest, this incentive works to the detriment of the FCU or its members. The final rule, however, allows the FCU to pay incentives to non-senior management employees in connection with incidental powers activities when an FCU's board of directors determines that an incentive or bonus is an appropriate means to promote its business as an FCU. In addition, the final rule permits employees to receive compensation from a third-party when no conflict of interest exists, such as in a dual employment scenario when the employee's position outside of the FCU does not affect the FCU.

These restrictions are consistent with the intent of NCUA's other conflicts of interest provisions. The Board, however, maintains that conflicts of interest provisions tailored to particular activities are still necessary. Therefore, individuals affiliated with FCUs are still required to comply with conflicts of interest provisions within other sections of NCUA's regulations. The final rule provides that where a specific conflicts of interest provision applies to a particular activity, that provision controls the conduct of the parties. For example, the conflicts of interest provision in the lending regulation was adopted to “ensure that lending decisions are made in the best interests of the credit union and its members, and not in the personal interests of individual officials or employees.” 48 FR 52475 (November 18, 1983). The Board continues to believe that this provision in the lending regulation is necessary to promote the safety and soundness of FCUs. Therefore, individuals subject to the conflicts of interest provision in the lending rule remain subject to this provision when offering loan-related products, an activity authorized under part 721.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact any regulation may have on a substantial number of small entities. For purposes of this analysis, credit unions under $1 million in assets will be considered small entities.

The Board has determined and certifies that this rule will not have a significant economic impact on a substantial number of small entities. This rule identifies activities that FCUs are authorized to engage in under their incidental powers without imposing any additional regulatory burden or expense to credit unions. Accordingly, NCUA has determined that a Regulatory Flexibility Analysis is not required.

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedures Act. 5 U.S.C. 551. The Office of Management and Budget has determined that this is not a major rule.

NCUA has determined that the proposed regulation does not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their regulatory actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. This rule applies only to federally-chartered credit unions. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that the rule does not constitute a policy that has federalism implications for purposes of the executive order.

NCUA has determined that this rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

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 Fokker Model F.28 Mark 1000, 2000, 3000, and 4000 series airplanes was published in the Federal Register on June 11, 2001 (66 FR 31192). That action proposed to require a one-time inspection to detect the presence of filler plates of the engine support fittings, and corrective action, if necessary.

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

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

The FAA estimates that 22 airplanes of U.S. registry will be affected by this AD, that it will take approximately 2 work hours per airplane to accomplish the required actions, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $2,640, or $120 per airplane.

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

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Airbus Model A300 B2 and B4; A310; and A300 B4-600, B4-600R, and F4-600R (collectively called A300-600) series airplanes; was published in the Federal Register on May 2, 2001 (66 FR 21893). That action proposed to require modification of certain components related to the fuel level sensors.

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 asks that the “spare parts” paragraph in the proposed rule be deleted for the following reasons:

• This is not a requirement of the French airworthiness directive.

• It is not clear to the commenter why the spares paragraph is necessary. It will force operators to accomplish at least a portion of the referenced service bulletin prior to the effective date of the AD. The level sensor connectors are not unsafe components, and replacing a connector with a new, improved connector does not improve safety. The intent of the proposed AD is to address a possible 115V alternating current short somewhere upstream of the tank, not to replace faulty connectors. A mechanic may wish to replace a level sensor connector for troubleshooting, or because the existing connector is damaged, but that connector position is as safe as other tank connectors on the airplane that have not been replaced and do not require replacement until 18 months after the effective date of the proposed rule. This type of requirement is used in other ADs when the part being replaced may create a safety problem, which does not apply in this case.

• Prohibiting the use of the spare parts specified in paragraph (b) as of the effective date of the proposed rule creates an undue burden for the operator. Parts to accomplish the referenced service bulletins may not be available at that time, and this could cause an operator to ground an airplane while waiting for parts to be obtained. The airplane mechanic uses the Illustrated Parts Catalog, wiring diagrams, maintenance manuals, etc., when replacing parts on the airplane, and this requirement does not allow time to revise these manuals and create other documentation that will address the procedures specified in the service bulletins. Mechanics may inadvertently violate the proposed rule because the manual used is not revised to include the latest information.

The FAA agrees with the commenter for the reasons submitted, and has removed paragraph (b) of the final rule. By removing the spare parts paragraph, the operators are given time to acquire the redesigned part from the supplier, and install the spare parts specified during the 18-month timeframe required by paragraph (a) of the final rule.

One commenter asks that the proposed rule be revised to add a statement specifying that previous accomplishment of the French airworthiness directive is acceptable for compliance with the actions specified in the proposed rule, and adds that the French airworthiness directive includes a statement that reads, “All later approved revisions of these service bulletins are acceptable.” The commenter states that adding these statements would save both the commenter and the FAA the time and effort it takes to go through the alternative method of compliance process.

The FAA partially agrees, as follows:

We agree that previous accomplishment of the French airworthiness directive (which references accomplishment of the actions specified in the service bulletins) is acceptable for compliance with the actions specified in the final rule. However, all ADs contain the phrase, “Compliance: Required as indicated, unless accomplished previously,” so no change to the final rule is necessary in this regard.

We do not agree that subsequent revisions of the referenced service bulletins are acceptable for accomplishment of the actions required by the final rule. To use the phrase, “or later approved revisions,” in an AD when referring to the service document violates Office of the Federal Register (OFR) regulations regarding approval of materials “incorporated by reference” in rules. In general terms, these OFR regulations require that either the service document contents be published as part of the actual AD language, or the service document be submitted for approval by the OFR as “referenced” material, in which case it may be only referred to in the text of an AD. The AD may only refer to the service document that was submitted and approved by the OFR for “incorporation by reference.” In order for operators to use later revisions of the referenced document (issued after the publication of the AD), either the AD must be revised to reference the specific later revisions, or operators must request the approval to use them as an alternative method of compliance with this final rule under the provisions of paragraph (b) of the final rule.

Two commenters ask for an extension of the compliance time specified in the proposed rule. One commenter states that the parts manufacturer it orders from will have an influx of purchase orders when the final rule is published, which will delay deliveries. The commenter asks that the FAA allocate time to receive all the parts required to modify its airplanes before releasing the final rule. The commenter also asks for an extension of the compliance time from 18 to 30 months after the effective date of the AD because such an increase would allow it to accomplish the requirements of paragraph (a) of the proposed AD during a regular maintenance check. The commenter adds that any less than 30 months would require field accomplishment.

Another commenter asks that the compliance time in paragraph (a) of the proposed rule be extended from 18 to 24 months after the effective date of the AD. The commenter states that if the 18-month limitation is equivalent to most “C” check intervals, allowing for a heavy check in order to comply with the modification, airlines operating under Section 19 of the Airbus A300 Maintenance Planning Document should be given similar consideration for the “Low Utilization Program (LUP).” The commenter adds that, for the LUP operator, the heavy check equivalent to a “C” check is the “M24” check, which is accomplished every 24 months. The “M24” check also is limited to 4,000 flight hours, which is the same flight hour limitation specified in the Airbus service bulletin referenced in the proposed rule. The commenter notes that it will probably accomplish the modification on some of its airplanes during a light check if the 18-month limitation is not changed, but adds that opening and venting every fuel tank is a complex task to accomplish during a light check.

The FAA does not agree with the commenters' requests. Although the referenced service bulletins specify accomplishment of the modification required by paragraph (a) of this final rule within 4,000 flight hours after the effective date of the AD, the French airworthiness directive clearly specifies an 18-month compliance time. In developing an appropriate compliance time for this action, we considered not only the degree of urgency associated with addressing the subject unsafe condition, but the Direction Générale de l'Aviation Civile recommendation as to an appropriate compliance time, and the practical aspect of accomplishing the required modification within an interval of time that parallels normal scheduled maintenance for the majority of affected operators. We have determined that within 18 months after the effective date of this AD represents an appropriate compliance time allowable for the modification to be accomplished during scheduled maintenance intervals. However, under the provisions of paragraph (b) of the final rule, we may approve requests for adjustments to the compliance time if data are submitted to substantiate that such an adjustment would provide an acceptable level of safety.

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 described previously. The FAA has determined that this change will neither increase the economic burden on any operator nor increase the scope of the AD.

The FAA estimates that 157 airplanes of U.S. registry will be affected by this AD, that it will take approximately the number of work hours per airplane specified in the table below to accomplish the required modifications, and that the average labor rate is $60 per work hour. Approximate required parts costs and costs per airplane are listed in the table below:

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 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 certain Bombardier Model CL-600-2B16 series airplanes was published in the Federal Register on May 23, 2001 (66 FR 28402). That action proposed to require modification of the wiring for the internal fuel/defuel panel.

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

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

The FAA estimates that 18 Model CL-600-2B16 series airplanes of U.S. registry will be affected by this AD, that it will take approximately 60 work hours per airplane to accomplish the required actions, and that the average labor rate is $60 per work hour. The manufacturer has committed previously to its customers that it will bear the cost of labor and replacement parts. As a result, those costs are not attributable to this AD.

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 certain BAe Systems (Operations) Limited Model BAe 146 and Avro 146-RJ series airplanes was published in the Federal Register on June 5, 2001 (66 FR 30103). That action proposed to require identifying the discharge valves and cabin pressure controllers, and replacing them with new parts if necessary.

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

The FAA notes a typographical error in paragraph (b) of the proposed AD. The final rule has been revised to correctly identify the foreign civil airworthiness authority in that paragraph as “the Civil Aviation Authority (CAA).”

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

The FAA estimates that 20 airplanes of U.S. registry will be affected by this AD, that it will take approximately 3 work hours per airplane to accomplish the required actions, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $3,600, or $180 per airplane.

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

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Airbus Model A319, A320, and A321 series airplanes was published in the Federal Register on May 15, 2001 (66 FR 26815). That action proposed to require modifications of route segregation between the low voltage wire bundles of the fuel quantity indicating system and the high voltage wire bundles of the ground power control unit.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

The FAA estimates that 291 airplanes of U.S. registry will be affected by this AD, that it will take approximately 24 to 42 work hours per airplane to accomplish the required modifications, depending on the wiring configuration of the airplane, and that the average labor rate is $60 per work hour. Required parts will cost approximately $1,300 per airplane. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be between $797,340 and $1,111,620, or between $2,740 and $3,820 per airplane.

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

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Raytheon Model Hawker 800XP series airplanes and certain Model Hawker 800 (U-125A military) airplanes was published in the Federal Register on May 4, 2001 (66 FR 22482). That action proposed to require a one-time inspection of an attachment bolt in the main landing gear (MLG) door system to determine whether the bolt's protruding threads have been peened; and corrective action, if necessary.

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

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

The FAA estimates that 115 Model Hawker 800XP series airplanes and certain Model Hawker 800 (U-125A military) airplanes of U.S. registry will be affected by this AD, that it will take approximately 1 work hour per airplane to accomplish the required inspection, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $6,900, or $60 per airplane.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The 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 certain BAe Systems (Operations) Limited Model Avro 146-RJ series airplanes was published in the Federal Register on May 1, 2001 (66 FR 21703). That action proposed to require modification of the passenger service units.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments have been received.

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

The FAA estimates that 40 Model BAe Systems (Operations) Limited Model Avro 146-RJ series airplanes of U.S. registry will be affected by this AD, that it will take approximately 5 work hours per airplane to accomplish the required actions, and that the average labor rate is $60 per work hour. Required parts will be provided at no cost to the operators. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $12,000, or $300 per airplane.

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

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 98-16-24, amendment 39-10701 (63 FR 42220, August 7, 1998), which is applicable to all British Aerospace Model BAe 146 and certain Model Avro 146-RJ series airplanes, was published as a supplemental Notice of Proposed Rulemaking (NPRM) in the Federal Register on February 21, 2001 (66 FR 10976). The action proposed to require repetitive inspections for “drill marks” and corrosion on the underside of the wing top skin, and corrective actions, if necessary, until all corrective actions and protective treatment actions are done.

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

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

There are approximately 39 Model BAe 146 and Model Avro 146-RJ series airplanes of U.S. registry that will be affected by this AD.

The repetitive inspection for “drill marks” and corrosion that is required by this AD will take approximately 10 work hours per airplane (including access and close) to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this repetitive inspection on U.S. operators is estimated to be $600 per airplane, per inspection cycle.

The one-time inspection for paint debris and inadequacy of the existing protective treatment coating that is required by this AD will take approximately 8 work hours per airplane (including access and close) to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this one-time inspection on U.S. operators is estimated to be $480 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 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 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 Civil Aviation Administration of Israel (CAAI), which is the airworthiness authority for Israel, notified the FAA that an unsafe condition may exist on certain Israel Aircraft Industries, Ltd., Model Astra SPX series airplanes. The CAAI advises that inspection of some affected airplanes revealed insufficient clearance on the left and right electrical wire bundles routed next to the pilot and copilot air data reference and reversionary switching panels. This location is subject to frequent handling by mechanics. During ground inspection of an affected airplane, a chafed wine bundle was discovered. Such chafing, if not corrected, could result in loss of flight-critical displays or system functions, and potential fire.

Israel Aircraft Industries, Ltd., has issued Astra Alert Service Bulletin 1125-31A-236, dated April 16, 2001, which describes procedures for a one-time inspection to detect insufficient clearance on the left and right electrical bundles routed next to the pilot and copilot air data reference and reversionary switching panels. The alert service bulletin also describes procedures for installing additional clamping to electrical bundles that have insufficient clearance. Accomplishment of the actions specified in the alert service bulletin is intended to adequately address the identified unsafe condition. The CAAI classified this service bulletin as mandatory and issued Israeli airworthiness directive 31-01-04-10, dated May 8, 2001, to ensure the continued airworthiness of these airplanes in Israel.

This airplane model is manufactured in Israel and is type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the CAAI has kept the FAA informed of the situation described above. The FAA has examined the findings of the CAAI, 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 prevent chafing of the electrical wire bundles, which could result in loss of flight-critical displays or system functions, and potential fire. This AD requires accomplishment of the actions specified in the service bulletin 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 2001-NM-235-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 Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified the FAA that an unsafe condition may exist on certain Airbus Model A330-301, -321, -322, -341, and -342 series airplanes, and certain Model A340 series airplanes. The DGAC advises that, during fatigue tests, cracking was found in several structural parts of the aft cargo compartment door. The cracking was detected between 42,944 and 67,605 simulated flights. This condition, if not corrected, could result in reduced structural integrity of the airplane.

Airbus has issued Service Bulletins A330-52-3043 (for Model A330 series airplanes) and A340-52-4053 (for Model A340 series airplanes), both dated March 2, 2001. The service bulletins describe procedures for repetitive detailed visual inspections to detect cracking of the aft cargo compartment door, and corrective action, if necessary. The DGAC classified this service bulletin as mandatory and issued French airworthiness directives 2001-126(B) and 2001-124(B), both dated April 4, 2001, to ensure the continued airworthiness of these airplanes in France.

Airbus has also issued Service Bulletins A330-52-3044 (for Model A330 series airplanes) and A340-52-4054 (for Model A340 series airplanes), both dated March 2, 2001. These service bulletins describe procedures to modify the aft cargo compartment door. The modification involves either cold expanding the fastener holes and installing interference fit fasteners, or reinforcing the affected area. Accomplishment of the modification eliminates the need to continue the repetitive inspections.

These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.19) 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 that may be registered in the United States at some time in the future, this AD is being issued to detect and correct cracking of the aft cargo compartment door, which could result in reduced structural integrity of the airplane. This AD requires accomplishment of the actions specified in Service Bulletins A330-52-3043 and A340-52-4053, except as discussed below in “Differences Between the AD and the Service Bulletins.” This AD also provides for optional terminating action for the repetitive inspections.

Operators should note that, to be consistent with the findings of the DGAC, the FAA has determined that the repetitive inspections required by this AD can be allowed to continue in lieu of accomplishment of a terminating action. Additionally, the FAA has determined that, for certain instances where cracking is detected, the repair may be deferred for a specified period of time. In making these determinations, the FAA considers that, in the case of this AD, long-term continued operational safety will be adequately assured by accomplishing the repetitive inspections to detect cracking before it represents a hazard to the airplane, and by accomplishing repairs within the specified time limits.

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

Although Service Bulletins A330-52-3043 and A340-52-4053 specify 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 that would be 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 would be acceptable for compliance with the requirements of this AD.

None of the airplanes affected by this action are on the U.S. Register. All airplanes included in the applicability of this rule currently are operated by non-U.S. operators under foreign registry; therefore, they are not directly affected by this AD action. However, the FAA considers that this rule is necessary to ensure that the unsafe condition is addressed in the event that any of these subject airplanes are imported and placed on the U.S. Register in the future.

Should an affected airplane be imported and placed on the U.S. Register in the future, it would take approximately 8 work hours to accomplish the required inspection, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this AD would be $480 per airplane, per inspection cycle.

Should an operator elect to accomplish the optional terminating action, the cost would vary depending on the kit installed. It would take approximately 2 to 45 work hours to accomplish the modification, at an average labor rate of $60 per work hour. Required parts would cost approximately $60 to $5,010 per airplane. Based on these figures, the cost impact of this AD would be as little as $180, and as much as $7,710, per airplane.

Since this AD action does not affect any airplane that is currently on the U.S. register, it has no adverse economic impact and imposes no additional burden on any person. Therefore, prior notice and public procedures hereon are unnecessary and the amendment may be made effective in less than 30 days after publication in the Federal Register .

Although this action is in the form of a final rule and was not preceded by notice and 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 proposed AD is being requested.

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

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the 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-136-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.

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.

Transport Canada Civil Aviation (TCCA), which is the airworthiness authority for Canada, notified the FAA that an unsafe condition may exist on certain Bombardier Model DHC-8-311, -314, and -315 series airplanes. TCCA advises that distorted door stops on the baggage bulkhead may prevent the internal baggage door from latching or may cause the door to jam in the closed position. This condition, if not corrected, could result in the inability to gain access to the baggage compartment for fire fighting during flight.

Bombardier has issued Service Bulletin 8-25-306, dated May 5, 2000, which describes procedures for replacing the door stops on the baggage bulkhead with new, improved door stops. Accomplishment of the actions specified in the service bulletin is intended to adequately address the identified unsafe condition. TCCA classified this service bulletin as mandatory and issued Canadian airworthiness directive CF-2000-22, dated August 4, 2000, in order to assure the continued airworthiness of these airplanes in Canada.

While the Canadian airworthiness directive applies to certain Model DHC-8-311, -314, and -315 series airplanes, this AD applies only to certain Model DHC-8-311 and -315 series airplanes. Model DHC-8-314 series airplanes are not type certificated for operation in the United States.

This airplane model is manufactured in Canada and is type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.19) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, TCCA has kept the FAA informed of the situation described above. The FAA has examined the findings of TCCA, 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 that may be registered in the United States at some time in the future, this AD is being issued to prevent the internal door on the baggage bulkhead from jamming in the closed position, precluding access to the baggage compartment, which is critical for fire fighting during flight. This AD requires replacement of the door stops on the baggage bulkhead with new, improved door stops. The actions are required to be accomplished in accordance with the service bulletin described previously.

None of the Bombardier Model DHC-8-311 and -315 series airplanes affected by this action are on the U.S. Register. All airplanes included in the applicability of this rule currently are operated by non-U.S. operators under foreign registry; therefore, they are not directly affected by this AD action. However, the FAA considers that this rule is necessary to ensure that the unsafe condition is addressed in the event that any of these subject airplanes are imported and placed on the U.S. Register in the future.

Should an affected airplane be imported and placed on the U.S. Register in the future, it would require approximately 1 work hour to accomplish the required actions, at an average labor rate of $60 per work hour. Required parts are available from the manufacturer at no charge to operators. Based on these figures, the cost impact of this AD would be $60 per airplane.

Since this AD action does not affect any airplane that is currently on the U.S. register, it has no adverse economic impact and imposes no additional burden on any person. Therefore, prior notice and public procedures hereon are unnecessary and the amendment may be made effective in less than 30 days after publication in the Federal Register .

Although this action is in the form of a final rule and was not preceded by notice and 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 2000-NM-340-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.

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 Rijksluchtvaartdienst (RLD), which is the airworthiness authority for the Netherlands, notified the FAA that an unsafe condition may exist on certain Fokker Model F27 Mark 050 series airplanes. The RLD advises that, during a product review, Fokker discovered that the standards for installation of the top antenna for the TCAS are structurally inadequate. If an antenna for the TCAS is installed in accordance with those standards, the area under the antenna will be subject to fatigue. This condition, if not corrected, could result in cracking due to fatigue in the area under the antenna for the TCAS, which could result in reduced structural capability of the airplane.

Fokker has issued Service Bulletin SBF50-53-054, dated May 1, 2000, which describes procedures for installing a filler plate and a doubler as reinforcement under the top antenna for the TCAS. Accomplishment of the actions specified in the service bulletin is intended to adequately address the identified unsafe condition. The RLD classified this service bulletin as mandatory and issued Dutch airworthiness directive 2000-152, dated November 30, 2000, in order to assure the continued airworthiness of these airplanes in the Netherlands.

This airplane model is manufactured in the Netherlands and is type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.19) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the RLD has kept the FAA informed of the situation described above. The FAA has examined the findings of the RLD, 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 that may be registered in the United States at some time in the future, this AD is being issued to prevent cracking due to fatigue in the area under the antenna for the TCAS, which could result in rapid depressurization, followed by uncontrolled flight, due to structural failure of the airplane. This AD requires installation of a filler plate and a doubler to reinforce the area under the top antenna for the TCAS. The actions are required to be accomplished in accordance with the service bulletin described previously.

None of the Fokker Model F27 Mark 050 series airplanes affected by this action are on the U.S. Register. All airplanes included in the applicability of this rule currently are operated by non-U.S. operators under foreign registry; therefore, they are not directly affected by this AD action. However, the FAA considers that this rule is necessary to ensure that the unsafe condition is addressed in the event that any of these subject airplanes are imported and placed on the U.S. Register in the future.

Should an affected airplane be imported and placed on the U.S. Register in the future, it would require approximately 4 work hours to accomplish the required actions, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this AD would be $240 per airplane.

Since this AD action does not affect any airplane that is currently on the U.S. register, it has no adverse economic impact and imposes no additional burden on any person. Therefore, prior notice and public procedures hereon are unnecessary and the amendment may be made effective in less than 30 days after publication in the Federal Register .

Although this action is in the form of a final rule and was not preceded by notice and 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-141-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.

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 numerous reports of failures of the flexshaft of the thrust reverser actuation system (TRAS) lock (also known as electro-mechanical brake) between the upper actuator and the TRAS lock on Boeing Model 767-200, -300, -300F, and -400ER series airplanes equipped with General Electric Model CF6-80C2 series engines. These failures were detected during operational checks required by paragraph (f) of AD 2000-09-04, amendment 39-11712 (65 FR 25833, May 4, 2000) (described further below). The TRAS lock provides a fail-safe level of protection against in-flight deployment of the thrust reverser by retaining the thrust reverser drive shaft. Investigation revealed that when the flexshaft fails, the TRAS lock cannot retain the thrust reverser drive shaft and is effectively removed from the thrust reverser system. There is no airplane system to detect this failure and the cause is unknown at this time. This condition, if not corrected, could result in the loss of the fail-safe level of protection against an in-flight thrust reverser deployment. Such a loss increases the risk of an in-flight thrust reverser deployment, which could result in loss of controllability of the airplane.

The FAA has previously issued AD 2000-09-04, which requires tests, inspections, and adjustments of the thrust reverser on Boeing Model 767 series airplanes equipped with General Electric Model CF6-80C2 series engines. That AD also requires installation of a terminating modification, and repetitive follow-on actions. The tests and inspections of the TRAS lock (electro-mechanical brake) required by paragraph (f) of that AD were intended to detect and correct latent failures of the TRAS lock. Because of the numerous reports above, we find that further rulemaking action is necessary to address the identified unsafe condition. However, this AD will not affect the current requirements of AD 2000-09-04.

The FAA has reviewed and approved Boeing Alert Service Bulletin 767-78A0090, Revision 1, dated July 5, 2001 (for Model 767-200, -300, and -300F series airplanes), and Boeing Alert Service Bulletin 767-78A0091, Revision 1, dated July 5, 2001 (for Model 767-400ER series airplanes). The service bulletins describe the following procedures:

1. Repetitive general visual inspections of the bullnose seal to detect discrepancies (i.e., wear, tears, cracks, missing segments, and improper folds, as applicable) and assess damage; and replacement of the bullnose seal with a new bullnose seal, if necessary.

2. Repetitive tests of the electrical connector P3/P4 of the left and right position switch modules of the center drive unit (CDU) of the thrust reverser for electrical continuity (0.50 ohms or less) between pins 3 and 4 and between pins 5 and 6; and replacement of the left and right position switch modules with new modules, if necessary.

3. Repetitive “hot short” protection tests to verify that the resistance between pins 1 and 2 of each connector of the TRAS lock on the left and right engines is 4.0 ohms or less; and corrective actions (i.e., additional testing, replacement of the relay, and troubleshoot the connecting wires; as applicable), if necessary.

4. Repetitive “hot short” protection tests to verify that the resistance between pins 1 and 2 of connection P5 of the directional pilot valve (DPV) is 4.0 ohms or less, and corrective actions, if necessary.

In addition, the FAA has reviewed and approved Boeing Alert Service Bulletin 767-78A0081, Revision 2, dated April 19, 2001 (for Model 767-200, -300, and -300F series airplanes), and Boeing Alert Service Bulletin 767-78A0088, dated April 19, 2001 (for Model 767-400ER series airplanes). These service bulletins describe procedures for a functional test on both thrust reversers for the electro-mechanical brakes (i.e., TRAS locks) and CDU cone brakes of both engines to verify proper holding torque; and corrective actions, if necessary. The corrective actions involve ensuring proper torque, installing or replacing components with new components, and performing additional inspections; as applicable.

Since an unsafe condition has been identified that is likely to exist or develop on other Boeing Model 767-200, -300, -300F, and -400ER series airplanes equipped with General Electric Model CF6-80C2 series engines of the same type design, this AD is being issued to ensure that the fail-safe features of the thrust reverser are fully functional and to protect against an in-flight thrust reverser deployment, which could result in loss of controllability of the airplane. This AD requires accomplishment of the actions specified in the applicable service bulletins described previously, except as discussed below.

The 767 Master Minimum Equipment List (MMEL) allows the thrust reverser under certain conditions, to be deactivated for up to 10 days; however, it does not describe procedures for accomplishment of such a task. The deactivation procedures are described in Section 2-78-31-1 of Boeing Document D630T002, “Boeing 767 Dispatch Deviation Guide,” Revision 20, dated August 18, 2000. Therefore, the FAA finds that, in lieu of certain corrective actions described in Boeing Alert Service Bulletin 767-78A0090, Revision 1, dated July 5, 2001 (for Model 767-200, -300, and -300F series airplanes), and Boeing Alert Service Bulletin 767-78A0091, Revision 1, dated July 5, 2001 (for Model 767-400ER series airplanes), the thrust reverser may be deactivated per the MMEL for up to 10 days provided that the following actions are done:

1. Before further flight, the deactivation is done per Section 2-78-31-1 of Boeing Document D630T002, “Boeing 767 Dispatch Deviation Guide,” Revision 20, dated August 18, 2000;

2. Within 10 days following accomplishment of the deactivation, the applicable corrective action(s) specified in paragraph (b) of this AD are done; and

3. Before further flight following accomplishment of the applicable corrective action(s), the thrust reverser is reactivated.

We find that accomplishment of the optional deactivation procedures above for up to 10 days is acceptable for affected airplanes to continue to operate without compromising safety.

Operators should note that, although Boeing Alert Service Bulletin 767-78A0081, Revision 2, dated April 19, 2001 (for Model 767-200, -300, and -300F series airplanes), and Boeing Alert Service Bulletin 767-78A0088, dated April 19, 2001 (for Model 767-400ER series airplanes), recommend accomplishing the functional test on both thrust reversers for the electro-mechanical brakes (i.e., TRAS lock) and CDU cone brakes of both engines within 650 flight hours (after the receipt of the service bulletin), the FAA has determined that an interval of 650 flight hours would not address the identified unsafe condition in a timely manner. In developing an appropriate compliance time for this proposed AD, the FAA considered not only the manufacturer's recommendation, but the degree of urgency associated with addressing the subject unsafe condition, as well as the numerous reports of failures of the flexshaft of the TRAS lock (described above). In light of all of these factors, we find that accomplishing the functional test prior to installation of a General Electric Model CF6-80C2 engine to be warranted, in that it represents an appropriate interval of time allowable for affected airplanes to continue to operate without compromising safety.

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 Number 2001-NM-137-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 Civil Aviation Administration of Israel (CAAI), which is the airworthiness authority for Israel, recently notified the FAA that an unsafe condition may exist on certain Israel Aircraft Industries, Ltd., Model 1125 Westwind Astra series airplanes. The CAAI advises that certain fuel-immersed electrical harnesses are made with Kapton insulation, which can crack over time. Cracked Kapton wire insulation could result in electrical arcing in the area of fuel vapors and consequent explosion and/or fire in the fuel tank.

Israel Aircraft Industries has issued Astra Alert Service Bulletin 1125-28A-230, dated March 13, 2001. The alert service bulletin describes procedures for removing the left and right transfer valve/jettison valve electrical harnesses and the forward and aft interconnect valve electrical harnesses, and replacing them with modified parts. The replacement harnesses are sealed and will therefore have no direct contact with fuel. Accomplishment of the actions specified in the alert service bulletin is intended to adequately address the identified unsafe condition. The CAAI classified this alert service bulletin as mandatory and issued Israeli airworthiness directive 28-01-02-08, dated May 30, 2001, to ensure the continued airworthiness of these airplanes in Israel.

This airplane model is manufactured in Israel and is type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the CAAI has kept the FAA informed of the situation described above. The FAA has examined the findings of the CAAI, 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 prevent electrical arcing in the area of fuel vapors, which could result in potential explosion and/or fire in the fuel tank. This AD requires accomplishment of the actions specified in the alert service bulletin 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 2001-NM-202-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 (“Commission”) has adopted an amendment to Rule 30-3 of its Rules of Organization and Program Management governing Delegations of Authority to the Director of the Division of Market Regulation (“Director”). 1 The amendment adds new subparagraph (iii) to paragraph (a)(73) of Rule 30-3 authorizing the Director to extend deadlines for submission of comments to (a) applications for registration as a national securities exchange filed under Section 6 of the Exchange Act of 1934 (“Exchange Act”), 2 (b) applications for an exemption from registration based on limited volume filed under Section 6 of the Exchange Act, and (c) amendments to such applications.

The delegation of authority to the Director to extend deadlines for submission of comments is intended to conserve Commission resources by permitting Division staff to extend the deadline for submission of comments to such applications and amendments to such applications. The Division has received several applications for registration as a national securities exchange that must be published for comment. The Division anticipates that, when an application for registration as a national securities exchange or exemption from registration based on limited volume is filed and published for comment, there will be significant comment on the application. Granting the Division delegated authority to extend deadlines for submission of comments to applications and amendments to such applications filed pursuant to Section 6 of the Exchange Act will provide the Division with greater flexibility to respond to commenters' requests, and may expedite the process of publishing amendments to the Form 1. Nevertheless, the staff may submit matters to the Commission for consideration as it deems appropriate.

The Commission finds, in accordance with Section 553(b)(3)(A) of the Administrative Procedure Act, 3 that this amendment relates solely to agency organization, procedure, or practice, and does not relate to a substantive rule. Accordingly, notice, opportunity for public comment, and publication of the amendment prior to its effective date are unnecessary.

In the Federal Register of August 19, 1999 (64 FR 45375), FDA published a proposed rule to amend the biologics regulations by removing, revising, or updating specific regulations applicable to blood, blood components, and Source Plasma. The proposed rule was intended to make the regulations more consistent with current practices in the blood industry and to remove unnecessary or outdated requirements. The proposed rule was a companion document to a direct final rule published in the Federal Register of August 19, 1999 (64 FR 45366). Written comments were to be submitted on or before December 3, 1999. FDA stated that the effective date of the direct final rule would be February 11, 2000, unless any significant adverse comment was submitted to FDA during the comment period. If a significant adverse comment applies to an amendment, paragraph, or section of the rule and that provision can be severed from the remainder of the rule, FDA may adopt as final those provisions of the rule that are not subjects of significant adverse comments.

Eight letters of comment were submitted to the docket. After reviewing the comments, the agency issued in the Federal Register on January 10, 2001 (66 FR 1834), a confirmation in part of the direct final rule and technical amendment which confirmed the effective date of February 11, 2000, for those provisions that did not receive significant comment and a technical amendment which reinstated the former provisions that received significant adverse comments. The document also made editorial corrections to the regulations.

FDA received eight letters of comment on the proposed rule. The comments were submitted by manufacturers, blood establishments, trade associations, and individuals. Two of the eight comments specifically supported FDA’s goal of removing, revising, or updating the specific regulations to be more consistent with current practices in the blood industry. Each of the eight comments submitted recommended changes to certain provisions of the rule. FDA summarizes and responds to the received comments in the following section.

The proposed rule would amend the sections by removing the reference to serological tests and making the definition more general to apply to all tests performed, including computer crossmatching to establish the matching of a donor’s blood or blood components with that of a recipient.

(Comment 1) One comment on § 606.3(j) suggested that the proposed term “tests performed” be changed to another term such as “procedures performed.” Another comment noted that the same terminology occurs in § 606.151(c) and suggested that the phrase be changed to “Procedures to demonstrate incompatibility between the donor’s cell type and the recipient’s serum type.”

FDA agrees that the use of the proposed term “tests performed” in §§ 606.3(j) and 606.151(c) should be clarified. The use of the term “tests performed” could be interpreted to not allow for computer crossmatching. Therefore, FDA is amending these sections in the final rule. Section 606.3(j) will define compatibility testing to mean “procedures performed to establish the matching of a donor’s blood or blood components with that of a potential recipient” and § 606.151(c) will require standard operating procedures for compatibility testing to include “procedures to demonstrate incompatibility between the donor’s cell type and the recipient’s serum or plasma type.”

The proposed rule would amend these sections to be more consistent with current practices with respect to compatibility testing.

(Comment 2) Two comments on § 606.151(b) and (c) stated that the use of either serum or plasma should be permitted for compatibility testing/pretransfusion testing, as the use of plasma samples is not uncommon for some tests.

FDA agrees with the comment and has made the appropriate changes in the final rule to § 606.151(b) and (c).

The proposed rule would amend the section to be consistent with current practices with regard to entering containers of blood and blood components prior to issue.

(Comment 3) One comment on proposed § 640.2 requested clarification of the proposed language that “blood containers shall not be entered prior to issue for any purpose except for blood collection.” The comment asked if FDA intends to preclude activities such as filtering to make a unit leukoreduced, washing to make a unit IgA deficient, splitting to make a unit appropriate for a transfusion to a neonate, and pooling of platelets or cryoprecipitate since all these procedures involved entering the unit for special processing.

FDA does not intend to preclude activities such as those described in the comment, and is revising the first sentence in § 640.2(b) of the final rule to read “[T]he blood container shall not be entered prior to issue for any purpose except for blood collection or if the method of processing requires the use of a different container.”

The proposed rule would amend these sections to specify that donors who have a history of hepatitis before the age of 11 could be eligible to be donors of Whole Blood or Source Plasma. The proposed change is consistent with current FDA recommendations in the FDA memorandum dated April 23, 1992, entitled “Exemptions to Permit Persons With a History of Viral Hepatitis Before the Age of Eleven to Serve as Donors of Whole Blood and Plasma: Alternative Procedure.”

(Comment 4) One comment on proposed §§ 640.3(c)(1) and 640.63(c)(11) stated that reference is made to a person with a history of hepatitis “after the age of eleven” and that the meaning of “after the age of eleven” is unclear and needs further clarification.

FDA agrees and is changing the phrase to “after the eleventh birthday” for clarification in both sections.

The proposed rule would amend these sections with regard to use of current terminology for test specimens.

(Comment 5) One comment stated that the proposed change of terminology from “pilot tubes,” “pilot sample tubes,” and “pilot samples,” to “samples” and “segments” in §§ 640.4(g) and 640.15 is confusing. The comment also asked if FDA meant to imply that “segment identification” must occur and if this excludes the more critical sample identification that must occur at the time of the collection of the unit.

FDA is not implying any procedural changes by changing the phrases “pilot tubes” and “pilot sample tubes” to “samples” and the phrase “pilot samples” to “segments.” FDA is making the changes as proposed, to reflect current terminology used for test specimens. The proposed headings and introductory text for §§ 640.4(g) and 640.15 are revised in the final rule to be consistent with the terminology change.

The proposed rule would amend the section to be more consistent with current terminology used in the determination of the Rh factors.

(Comment 6) One comment stated that in § 640.5 the use of the term “D u ” is inappropriate as the term “weak D” is currently accepted and reflects the significant changes in Anti-D reagents over the past years.

FDA agrees with the comment and is replacing the term “Rh o variant (D u )” with the term “weak D (formerly D u ).”

The proposed rule would amend these sections by changing the specific timeframes prescribed for certain practices and procedures in component preparation. The proposed changes would allow more flexibility by permitting different timeframes depending upon the directions for use of the particular blood collection device (blood collecting, processing, and storage system) being used.

The Postal Service published a proposed rule on December 27, 2000, to amend 39 CFR 266.9 to apply certain Privacy Act exemptions to the OIG Investigative File System. The Office of Inspector General (OIG) is a component of the Postal Service that performs as one of its principal functions investigations into violations of criminal law in connection with Postal Service programs and operations, pursuant to the Inspector General Act of 1978, as amended. 5 U.S.C. App.3. The OIG Investigative File System falls within the scope of subsections (j)(2), (k)(2), and (k)(5) of the Act. Comments on the proposed rule were due on or before January 26, 2001. We did not receive any comments. Therefore, the rule is adopted as final without any changes.

The Postal Service has exempted certain systems of records that it maintains from specific provisions of the Privacy Act. At the time it adopted the exemptions contained in its Privacy Act regulations (39 CFR 266.9), the Postal Service stated its reason for each exemption in the preamble of the notice of proposed rulemaking (40 FR 37227, August 26, 1975). These reasons were added to the text of § 266.9 by final rule published July 13, 1994 (59 FR 35625). This proposed rule does not change the current application of exemptions, except to apply certain exemptions to the OIG Investigative File System.

Pursuant to sections 182(b)(2) and 182(f) of the Clean Air Act (CAA), the Commonwealth of Pennsylvania (the Commonwealth or Pennsylvania) is required to establish and implement RACT for all major VOC and NO X sources. The major source size is determined by its location, the classification of that area and whether it is located in the ozone transport region (OTR). Under section 184 of the CAA, RACT as specified in sections 182(b)(2) and 182(f) applies throughout the OTR. The entire Commonwealth is located within the OTR. Therefore, RACT is applicable statewide in Pennsylvania.

State implementation plan revisions imposing reasonably available control technology (RACT) for three classes of VOC sources are required under section 182(b)(2). The categories are:

(1) All sources covered by a Control Technique Guideline (CTG) document issued between November 15, 1990 and the date of attainment;

(2) All sources covered by a CTG issued prior to November 15, 1990; and

(3) All major non-CTG sources. The regulations imposing RACT for these non-CTG major sources were to be submitted to EPA as SIP revisions by November 15, 1992 and compliance required by May of 1995.

The Pennsylvania SIP already includes approved RACT regulations for all sources and source categories covered by the CTGs. On February 4, 1994, the Pennsylvania Department of Environmental Protection (PADEP) submitted a revision to its SIP to require major sources of NO X and additional major sources of VOC emissions (not covered by a CTG) to implement RACT. The February 4, 1994 submittal was amended on May 3, 1994 to correct and clarify certain presumptive NO X RACT requirements. The regulations contain technology-based or operational “presumptive RACT emission limitations” for certain major NO X sources. For other major NO X sources, and all major non-CTG VOC sources (not otherwise already subject to RACT under the Pennsylvania SIP), the regulations contain a “generic” RACT provision. A generic RACT regulation is one that does not, itself, specifically define RACT for a source or source categories but instead allows for case-by-case RACT determinations. The generic provisions of Pennsylvania's regulations allow for PADEP to make case-by case RACT determinations that are then to be submitted to EPA as revisions to the Pennsylvania SIP. On March 23, 1998 EPA granted conditional limited approval to the Commonwealth's generic VOC and NO X RACT regulations (63 FR 13789). In that action, EPA stated that the conditions of its approval would be satisfied once the Commonwealth either (1) certifies that it has submitted case-by-case RACT proposals for all sources subject to the RACT requirements currently known to the Pennsylvania Department of Environmental Protection (PADEP); or (2) demonstrate that the emissions from any remaining subject sources represent a de minimis level of emissions as defined in the March 23, 1998 rulemaking. On April 22, 1999, PADEP made the required submittal to EPA certifying that it had met the terms and conditions imposed by EPA in its March 23, 1998 conditional limited approval of its VOC and NO X RACT regulations by submitting 485 case-by-case VOC/NO X RACT determinations as SIP revisions and making the demonstration described as condition 2, above. EPA determined that Pennsylvania's April 22, 1999 submittal satisfied the conditions imposed in its conditional limited approval published on March 23, 1998. On May 3, 2001 (66 FR 22123), EPA published a rulemaking action removing the conditional status of its approval of the Commonwealth's generic VOC and NO X RACT regulations on a statewide basis. The regulation currently retains its limited approval status. Once EPA has approved the case-by-case RACT determinations submitted by PADEP to satisfy the conditional approval, limited approval of Pennsylvania's generic VOC and NO X RACT regulations shall convert to a full approval.

It must be noted that the Commonwealth has adopted and is implementing additional “post RACT requirements” to reduce seasonal NO X emissions in the form of a NO X cap and trade regulation, 25 Pa Code Chapters 121 and 123, based upon a model rule developed by the States in the OTR. That rule's compliance date is May 1999. That regulation was approved as SIP revision on June 6, 2000 (65 FR 35842). Pennsylvania has also adopted regulations to satisfy Phase I of the NO X SIP call and submitted those regulations to EPA for SIP approval. Pennsylvania's SIP revision to address the requirements of the NO X SIP Call Phase I consists of the adoption of Chapter 145—Interstate Pollution Transport Reduction and amendments to Chapter 123—Standards for Contaminants. On May 29, 2001 (66 FR 29064), EPA proposed approval of the Commonwealth's NO X SIP call rule SIP submittal. EPA expects to publish the final rulemaking in the Federal Register in the near future. Federal approval of a case by case RACT determination for a major source of NO X in no way relieves that source from any applicable requirements found in 25 PA Code Chapters 121, 123 and 145.

On August 1, 1995, November 15, 1995, December 8, 1995, January 10, 1996, February 20, 1996, April 16, 1996, May 2, 1996, September 13, 1996, October 18, 1996, January 21, 1997, May 29, 1998, April 9, 1999, April 20, 1999, October 26, 1999 and May 1, 2000, PADEP submitted formal revisions to its SIP to establish and impose case by case RACT for several major sources of VOC and NO X . This rulemaking pertains to twenty-five of those sources. The other sources are the subject of separate rulemaking actions.

On September 13, 1996, November 15, 1995, December 8, 1995, January 10, 1996, October 18, 1996, May 29, 1998 and October 26, 1999, the Commonwealth submitted supplemental information pertaining to Armstrong World Industries; Bemis Company Inc., Film Division; Brentwood Industries, Inc.; Certainteed Corp., Mountaintop; CNG Transmissions, Ardell and Finnefrock Stations; Consolidated Rail Corporation, Holiday and Juanita locations; Equitrans Inc., Pratt and Rogersville Stations; Erie Coke Corp.; Fleetwood Folding Trailer Inc.; Gichner Systems Group Inc.; Offset PaperBack Manufacturing Inc.; and Stroehmann Bakeries Inc. On May 1, 2000, PADEP made a submittal for Gichner Systems Group Inc. which replaced the earlier February 20, 1996 submittal.

It is important to note that none of the sources covered by this rulemaking are located in the Philadelphia-Wilmington-Trenton or Pittsburgh-Beaver Valley designated ozone nonattainment areas. Accordingly, no emission reductions achieved by imposing RACT at these sources has been credited in any rate-of-progress plan or attainment demonstration.

EPA is approving revisions to the Pennsylvania SIP establishing and requiring VOC and/or NO X RACT for these twenty-five major sources. The RACT determinations and requirements are included in plan approvals or operating permits. Several of the plan approvals and operating permits issued by PADEP contain provisions which are no relevant to its case by case RACT determinations for NO X and/or VOC. These provisions are not part of Pennsylvania's SIP revision requests.

The following table identifies the individual plan approval (PA) or operating permits (OP) that EPA is approving.

This Supplementary Information section is organized as follows:

EPA is approving a revision to the ozone maintenance plan for Muskegon County, Michigan. The revision will change the MVEB for VOC and NO X that is used for transportation conformity purposes. The revision will keep the total emissions for the area below the attainment level required by law. This action will allow state or local agencies to maintain air quality while providing for transportation growth.

Primarily, this revision will affect the transportation sector represented by West Michigan Regional Planning Commission, the Michigan Department of Transportation and persons traveling through Muskegon County. The conformity rule, provides that if a “safety margin” exists in a state's maintenance plan, then the state may allocate the safety margin to the transportation sector via the mobile source budget.

On March 22, 2001, Michigan submitted to EPA a SIP revision request for the Muskegon County ozone maintenance area. The Michigan Department of Environmental Quality (MDEQ) held a public hearing on this proposal on March 1, 2001. No one from the public commented on the proposed revisions.

In the submittal, Michigan requested a new 2010 MVEB for VOC and NO X for the Muskegon County, Michigan, ozone maintenance area. The State requested that 2.14 tons/day VOC and 3.27 tons/day of NO X be allocated from the maintenance plan's safety margin to the MVEB. The MVEB is used for transportation conformity purposes.

Transportation conformity means that the level of emissions from the transportation sector (cars, trucks and buses) must be consistent with the requirements in the SIP to attain and maintain the air quality standards. Section 176(c) of Clean Air Act, 42 U.S.C. 7506(c), that transportation plans, programs and projects conform to an effective implementation plan. On November 24, 1993, EPA published a final rule establishing criteria and procedures for determining whether transportation plans, programs and projects funded or approved under Title 23 of the U.S. Code or the Federal Transit Act conform to the SIP.

The transportation conformity rules require an ozone maintenance area, such as Muskegon County, to compare the actual projected emissions from cars, trucks and buses on the highway network, to the MVEB established by a maintenance plan. The Muskegon County area has an approved ozone maintenance plan. Our approval of the maintenance plan established the MVEB for transportation conformity purposes.

An emissions budget is the level of controlled emissions from the transportation sector (mobile sources) projected by the state and included in the SIP. The SIP controls emissions through regulation, for example, of fuels and exhaust levels for cars. The emissions budget concept is further explained in the preamble to the November 24, 1993, transportation conformity rule (58 FR 62188). The preamble also describes how states establish the MVEB in the SIP and revise the emissions budget. The transportation conformity rule allows a state to change its MVEB as long as the total level of emissions from all sources remains below the attainment level.

A “safety margin” is the difference between the attainment level of emissions (from all sources) and the projected level of emissions (from all sources) in the maintenance plan. The attainment level of emissions is the level of emissions during one of the years in which the area met the air quality health standard. For example: Muskegon County monitored attainment of the one hour ozone standard during the 1996-1998 time period. The State used 1996 as the attainment level of emissions for Muskegon County. The emissions from point, area and mobile sources in 1996 equaled 32.54 tons per day of VOC and 32.21 tons per day of NO X . The MDEQ projected emissions out to the year 2010 and projected a total of 24.36 tons per day of VOC and 25.93 tons per day of NO X from all sources in Muskegon County. The safety margin for Muskegon County is the difference between these amounts, or 8.18 tons per day of VOC and 6.28 tons per day of NO X .

Tables 1 and 2 give detailed information on the estimated emissions from each source category and the safety margin calculation. The 2010 emission projections reflect the point, area and mobile source reductions and are illustrated in Tables 1 and 2

The emissions are projected to maintain the area's air quality consistent with the air quality health standard. Michigan requests that only a portion of the safety margin credit be allocated to the transportation sector. The total emission level, even with this allocation, will be below the attainment level or safety level and, therefore, is acceptable.

Approval of Michigan's revised safety margin and MVEB raises the VOC and NO X emissions for the MVEB. The maintenance plan is designed to provide for future growth while still maintaining the ozone air quality standard. Growth in industries, population, and traffic is offset with reductions from cleaner cars and other emission reduction programs. Through the maintenance plan the state and local agencies can manage and maintain air quality while providing for growth.

In the submittal, Michigan allocates part of the Muskegon County area's safety margin to the MVEB. The area's safety margin is the difference between the 1996 attainment inventory year and the 2010 projected emissions inventory (8.18 tons/day VOC safety margin, and 6.28 tons/day NO X safety margin) as shown in Tables 1 and 2. The SIP revision requests the allocation of 2.14 tons/day VOC and 3.27 tons/day of NO X into the area's MVEB from the safety margin. The 2010 VOC and NO X MVEB budget showing the safety margin allocations that will be used for transportation conformity purposes are outlined in Tables 3 and 4.

Tables 3 and 4, below, illustrate that the requested portion of the safety margin can be allocated to the 2010 mobile source budget and that total emissions will still remain below the 1996 attainment level of total emissions for the Muskegon County maintenance area. Since the area would still be below the 1996 attainment level for the total emissions, the conformity rule allows this allocation.

The requested allocation of the safety margin for the Muskegon County area is approvable because the new MVEB for VOC and NO X maintains the total emissions for the area below the attainment year inventory level as required by the transportation conformity regulations. The conformity rule allows this allocation because the area would still be below the 1996 attainment level for the total emissions.

The EPA believes the motor vehicle emissions budgets for VOC and NO X are adequate for conformity purposes and approvable as part of the maintenance plan.

Interested parties may comment on the adequacy and approval of the budgets by submitting their comments on this direct final rule.

If EPA receives adverse written comments with respect to the adequacy and approval of the Muskegon budgets, or any other aspect of our approval of this SIP, by the time the comment period closes, we will publish a timely withdrawal of the direct final rule informing the public that the rule will not take effect. In this case, we will either respond to the comments on the emissions budgets in our final action or proceed with the adequacy process as a separate action.

We will also announce our action on the Muskegon emissions budgets on EPA's conformity website: http://www.epa.gov/oms/traq, (once there, click on the “Conformity” button, then look for “Adequacy Review of SIP Submissions for Conformity”).

EPA is approving the requested allocation of the safety margin to the VOC and NO X MVEB for the Muskegon County ozone maintenance area.

EPA is publishing this action without prior proposal, because EPA views this 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 SIP revision should adverse written comments be filed. This action will be effective without further notice unless EPA receives relevant adverse written comments by September 5, 2001. Should the Agency receive such comment, we 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 we do not receive comments, this action will be effective on October 5, 2001.

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, nor does it significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). This rule also does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Act. This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTA), 15 U.S.C. 272, requires federal agencies to use technical standards that are developed or adopted by voluntary consensus to carry out policy objectives, so long as such standards are not inconsistent with applicable law or otherwise impracticable. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Act. Absent a prior existing requirement for the state to use voluntary consensus standards, EPA has no authority to disapprove a SIP submission for failure to use such standards, and it would thus be inconsistent with applicable law for EPA to use voluntary consensus standards in place of a SIP submission that otherwise satisfies the provisions of the Act. Therefore, the requirements of section 12(d) of the NTTA 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, and has determined that the rule's requirements do not constitute a taking. 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 has submitted 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. section 804(2). This rule will be effective October 5, 2001 unless EPA receives adverse written comments by September 5, 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 October 5, 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).)

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

On March 29, 2001 (66 FR 17131), EPA proposed actions on the rules in Table 1 that were submitted for incorporation into the California SIP.

We proposed a limited approval of VCAPCD Rules 57 and 68, because we determined that the rules improve the SIP and are largely consistent with the relevant CAA requirements. The limited approval implied that these rules were also given a limited disapproval, because some rule provisions conflict with section 110 and part D of the CAA. We also proposed a full approval of the BAAQMD Manual of Procedures, volume I, section 5, because the rule met all the requirements of the CAA. Our proposed action contains more information on the rules and our evaluation.

EPA's proposed action provided a 30-day public comment period. We received comments on the VCAPCD rules after the comment period closed, but we are considering these comments from the following party:

• Ashley Garrigan, Bryn Mawr College; letter postmarked May 1, 2001 and received May 4, 2001.

The comments and our responses are summarized below.

Comment I: Ms. Garrigan requested clarification of the meaning of “These small uncontrolled sources are included in the air quality management plan for the District without any credit taken for controls.”

Response: This refers to the District's PM-10 Maintenance Attainment Plan. Such a Plan is required, when a District is now in attainment with the National Ambient Air Quality Standards (NAAQS) but was once in nonattainment, to show what emission reductions through controls are needed to maintain attainment. In this case, the District does not take any credit for PM-10 emission reduction from controls on the exempted sources in order to maintain attainment. Allowing no PM-10 controls on the exempted sources is consistent with section 110(l) of the CAA, which requires that plan revisions would not interfere with any applicable requirement concerning attainment or any other applicable requirement of the CAA.

The District is in attainment for CO and has made a demonstration that allowing no controls for CO on the exempted sources would be consistent with section 110(l) of the CAA.

Comment II: Ms. Garrigan is concerned that the point of revisions is to strengthen the SIP and not weaken it (such as by allowing exemptions). Ms. Garrigan is also concerned that any amount of PM-10 and CO emissions is considered approved when such emissions harm human health and the environment.

Response: Strengthening the SIP is usually the goal of revisions. Exemptions are allowed only if they comply with section 110(l) of the CAA, thus maintaining attainment. In the case of test jet engines, the District granting exemptions is reasonable, due to the experimental nature of the test jet engines and the difficulty and cost of applying controls.

EPA is required by the CAA to set NAAQS to protect human health and the environment. This implies that, unless the NAAQS are zero, some emission of pollutants is “approved”. We may not approve emissions that exceed the NAAQS.

As authorized in sections 110(k)(3) and 301(a) of the Act, EPA is finalizing a limited approval of VCAPCD Rules 57 and 68. 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 these rules. This limited disapproval, although not specifically stated in the proposed rule, is implied by the limited approval. No sanctions under section 179 are associated with this final action, because control of these sources is not required for attainment of the NAAQS. Note that the submitted rules have been adopted by the VCAPCD, and EPA's final limited disapproval does not prevent the local agency from enforcing them.

EPA is also finalizing full approval of BAAQMD Manual of Procedures, volume I, section 5.

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 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 Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

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

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

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely 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 Clean Air Act. 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.

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

Under section 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to 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 October 5, 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).)

Throughout this document whenever “we, us, or our” is used, we mean EPA.

This section provides additional information by addressing the following questions:

Section 110 of the Clean Air Act (CAA) requires states to develop air pollution regulations and control strategies to ensure that state air quality meets the national ambient air quality standards established by us. These ambient standards are established under section 109 of the CAA, and they currently address six criteria pollutants. These pollutants are: carbon monoxide, nitrogen dioxide, ozone, lead, particulate matter, and sulfur dioxide.

Each state must submit these regulations and control strategies to us for approval and incorporation into the Federally enforceable SIP.

Each Federally approved SIP protects air quality primarily by addressing air pollution at its point of origin. These SIPs can be extensive, containing state regulations or other enforceable documents and supporting information such as emission inventories, monitoring networks, and modeling demonstrations.

In order for state regulations to be incorporated into the Federally enforceable SIP, states must formally adopt the regulations and control strategies consistent with state and Federal requirements. This process generally includes a public notice, public hearing, public comment period, and a formal adoption by a state-authorized rulemaking body.

Once a state rule, regulation, or control strategy is adopted, the state submits it to us for inclusion into the SIP. We must provide public notice and seek additional public comment regarding the proposed Federal action on the state submission. If adverse comments are received, they must be addressed prior to any final Federal action by us.

All state regulations and supporting information approved by us under section 110 of the CAA are incorporated into the Federally approved SIP. Records of such SIP actions are maintained in the Code of Federal Regulations (CFR) at Title 40, part 52, entitled “Approval and Promulgations of Implementation Plans.” The actual state regulations which are approved are not reproduced in their entirety in the CFR outright but are “incorporated by reference,” which means that we have approved a given state regulation with a specific effective date.

Enforcement of the state regulation before and after it is incorporated into the Federally approved SIP is primarily a state responsibility. However, after the regulation is Federally approved, we are authorized to take enforcement action against violators. Citizens are also offered legal recourse to address violations as described in the CAA.

The CAA Amendments of 1990 require all states to develop operating permits programs that meet certain Federal criteria. In implementing this program, the states are to require certain sources of air pollution to obtain permits that contain all applicable requirements under the CAA. One purpose of the 40 CFR part 70 operating permits program is to improve enforcement by issuing each source a single permit that consolidates all of the applicable CAA requirements into a Federally enforceable document. By consolidating all of the applicable requirements for a facility into one document, the source, the public, and the permitting authorities can more easily determine what CAA requirements apply and how compliance with those requirements is determined.

Sources required to obtain an operating permit under this program include: “major” sources of air pollution and certain other sources specified in the CAA or in our implementing regulations. For example, all sources regulated under the acid rain program, regardless of size, must obtain permits. Examples of major sources include those that emit 100 tons per year or more of volatile organic compounds, carbon monoxide, lead, sulfur dioxide, nitrogen dioxide, or PM 10 ; those that emit 10 tons per year of any single hazardous air pollutant (HAP) (specifically listed under the CAA); or those that emit 25 tons per year or more of a combination of HAPs.

Revisions to the state and local agencies operating permits program are also subject to public notice, comment, and our approval.

The state of Missouri has requested that EPA approve as a revision to the Missouri SIP and the 40 CFR part 70 Operating Permits Program recently adopted revisions to rule 10 CSR 10-6.110, “Submission of Emission Data, Emission Fees, and Process Information.”

This rule applies to sources that are required to obtain a construction or Title V permit and to sources seeking an exemption from major source permitting requirements. The rule requires the submittal of an Emission Inventory Questionnaire (EIQ) and payment of emission fees based on information submitted in the EIQ.

Revisions made in this annual update include no longer requiring the payment of a service fee by Phase I acid rain sources. However, these sources will now be required to pay Title V emission fees. The state deleted the requirement for payment of fees by charcoal production sources. Both of these provisions were included in the state statute which established the Title V operating permit program. Other minor revisions, corrections, and clarifications were also made. The annual emission fee was not revised, so it remains at twenty-five dollars and seventy cents ($25.70) per ton. This fee, along with program cash reserves, is sufficient to fund the cost of administering the 40 CFR part 70 program.

Further discussion and background information is contained in the technical support document prepared for this action, which is available from the EPA contact listed above.

The state submittal has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submittal also satisfied the completeness criteria of 40 CFR part 51, appendix V. In addition, as explained above and in more detail in the technical support document which is part of this document, the revisions meet the substantive SIP requirements of the CAA, including section 110 and implementing regulations. Finally, the submittal meets the substantive requirements of Title V of the 1990 CAA Amendments and 40 CFR part 70.

EPA is processing this action as a direct final action because the revisions make routine changes to the existing rules which are noncontroversial, and make regulatory revisions required by state statute. Therefore, we do not anticipate any adverse comments.

Final action: EPA is approving as an amendment to the Missouri SIP revisions to rule 10 CSR 10-6.110, “Submission of Emission Data, Emission Fees, and Process Information” pursuant to section 110. EPA is also approving this rule as a program revision to the state's part 70 Operating Permits Program pursuant to part 70.

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. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). 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 preexisting requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). For the same reason, this rule also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13084 (63 FR 27655, May 10, 1998). This rule will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. 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, our role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), we have no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, we have 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. We will submit a report containing this rule and other required information to the United States Senate, the United States 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).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 5, 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).)

Docket. The docket reflects the full administrative record for this action and includes all the information relied upon by EPA in the development of these petition denials. The docket is a dynamic file because material is added throughout the rulemaking process. The docketing system is intended to allow members of the public and industries involved to readily identify and locate documents so that they can effectively participate in the rulemaking process. Along with the proposed and promulgated standards and their preambles, the contents of the docket will serve as the record in the case of judicial review. (See section 307(d)(7)(A) of the Clean Air Act (CAA).) The regulatory text and other materials related to this final rulemaking are available for review in the docket or copies may be mailed on request from the Air Docket by calling (202) 260-7548. A reasonable fee may be charged for copying docket materials.

World Wide Web (WWW). In addition to being available in the docket, an electronic copy of today's action will also be available on the WWW through the Technology Transfer Network (TTN). Following the Administrator's signature, a copy of the action will be posted on the TTN's policy and guidance page for newly proposed or promulgated rules http://www.epa.gov/ttn/oarpg. The TTN provides information and technology exchange in various areas of air pollution control. If more information regarding the TTN is needed, call the TTN HELP line at (919) 541-5384.

Regulated Entities. The regulated category and entities affected by this action include:

This table is not intended to be exhaustive, but rather provides a guide for readers likely to be interested in the amendments to the standards affected by this action. To determine whether your facility is regulated by this action, you should carefully examine all of the applicability criteria in § 63.1310 of the Group IV Polymers and Resins NESHAP. If you have any questions regarding the applicability of these amendments to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

On September 12, 1996, the EPA promulgated the Group IV Polymers and Resins NESHAP (61 FR 48208). Following promulgation, we received two petitions for reconsideration regarding the LDAR program provisions of the rule, and additional data in support of these petitions. The EPA also received petitions regarding other sections of the promulgated rule and is responding to those separately.

The petitions raised two primary issues. One issue stated that the light liquid LDAR program was more costly than EPA estimated, was not cost effective, and should not have been required. The other issue contended that we had not performed a substantive analysis on the heavy liquid LDAR program, which was added between proposal and promulgation, to determine whether the cost per ton of HAP emissions reductions was reasonable; thus, the EPA failed to meet its obligation under section 112(d)(2) of the CAA. The petitioners requested that we revise the cost and cost per ton of HAP emissions reductions of the equipment leak program based on new cost and emissions data they provided in support of the petitions. The petitioners stated that this revised analysis would show that the costs of the LDAR requirements are not reasonable and would lead us to delete the equipment leak provisions for PET facilities from the Group IV Polymers and Resins NESHAP.

In response to the two petitions, in October 1998, we performed an analysis that revised the cost and emission reduction estimates that supported the equipment leak provisions of the Group IV Polymers and Resins NESHAP. Based on that analysis, we proposed to deny the petitions for reconsideration in a Federal Register notice that was published on June 8, 1999 (64 FR 30456). Based on the comments received, we performed a final equipment leak analysis in December 2000 entitled, “Final Analysis of Equipment Leak Program for PET Facilities Subject to the Group IV Polymers and Resins NESHAP,” which is available in Docket A-92-45.

Several comments on the proposal to deny the petitions concerned costs and the emission factors used to calculate the cost per ton of HAP emissions reductions of the equipment leak program. Specifically, commenters stated that we had underestimated the costs of the portion of the light liquid program based on EPA Method 21 of 40 CFR 60, appendix A, monitoring of equipment leaks. They also stated that the use of synthetic organic chemical manufacturing industry (SOCMI) emission factors is inappropriate for PET facilities, and that the use of those factors resulted in an overestimation of the HAP emissions reductions resulting from the equipment leak provisions as applied to PET production facilities. The commenters stated that we should not combine portions of equipment leak programs based on one-time equipment modifications with portions that require EPA Method 21 monitoring when determining whether the cost of the equipment leak program is reasonable.

In response to comments, in the December 2000 final analysis, we revised the cost of the EPA Method 21 portion of the equipment leak program based on data provided by the commenters. We continue to believe that use of SOCMI emission factors is appropriate for PET facilities. This is because, in general, the SOCMI and PET facilities have comparable process design and process operation, use the same types of equipment, and use similar feedstocks. However, in order to determine the impact of the differences between the SOCMI emission factors and the equipment leak data provided by commenters, we performed a final equipment leak cost analysis using industry-supplied leak data. The results of that final analysis indicate that the incremental cost per ton of additional HAP emissions reductions for the equipment leak program is reasonable. (See the December 2000 final equipment leak analysis, which is available in Docket A-92-45.)

We did not perform cost analyses which separate portions of the equipment leak programs that require one-time equipment modifications from the portions that are based on EPA Method 21 monitoring. We consider the LDAR program to be a whole program designed to reduce HAP emissions from equipment leaks across the total facility. The leaks from individual equipment components are considered together due to the similarity of the cause of the emissions and the control techniques. We do not believe it is appropriate nor necessary to disaggregate equipment leak programs by individual component types.

One commenter stated that there was a discrepancy between heavy liquid pump requirements for PET facilities and light liquid pumps for polystyrene plants. Specifically, for certain polystyrene pumps, an indication of liquids dripping from pump seal bleed ports is not considered to be a leak because dripping of fluid is a required feature of this type of seal. There are also certain ethylene glycol pumps that require dripping of fluid for proper seal operation. In response to comments, we have modified the definition of a leak for ethylene glycol pumps with this type of seal. Additional details on comments and responses may be found in “Responses to Comments” memo dated December 2000 in Docket A-92-45.

The following table presents the cost per ton of HAP emissions reductions ratios by subcategory for the December 2000 final analysis supporting this final denial of the petitions for reconsideration, the October 1998 analysis supporting the proposed denial, the April 1996 analysis supporting the promulgated Group IV Polymers and Resins NESHAP, and the March 1995 analysis supporting the proposed Group IV Polymers and Resins NESHAP. These ratios represent the incremental cost per additional ton of HAP emissions reductions of going beyond the floor of no controls for leaks to requiring facilities to implement an LDAR program. In the October 1998 analysis, the cost-per-ton ratios ranged from $1,300 to $2,100 per ton of HAP emissions reductions. The cost-per-ton ratios of the equipment leak program under the December 2000 final analysis range from $1,600 to $3,300 per ton of HAP emissions reductions.

Even after analyzing the cost-per-ton ratios using industry-supplied leak frequency data in lieu of SOCMI emission factors, and industry-supplied cost data, we have determined that the costs of the equipment leak provisions of the promulgated rule are reasonable. Therefore, we are not removing the equipment leak standards from the promulgated NESHAP for Group IV Polymers and Resins, and we are not modifying any provisions within the equipment leak program of 40 CFR part 63, subpart H, except as noted in the following section.

On February 26, 2001, we issued a direct final rule amendment (66 FR 11543) to extend compliance dates contained in the promulgated Group IV Polymers and Resins NESHAP to August 27, 2001. The revisions extended the compliance dates specified in 40 CFR 63.1311(b) and (d)(6) for PET affected sources. These compliance extensions were approved pursuant to the CAA section 301(a)(1) in order to complete reconsideration of equipment leak provisions and any necessary revisions to the NESHAP.

After reconsideration of the equipment leak provisions, we are retaining the equipment leak provisions of the promulgated NESHAP. However, we are extending the dates for compliance with the equipment leak provisions for the PET affected sources to August 6, 2002, so that they are able to develop their equipment leak programs.

In reviewing the comments received on the June 1999 proposed denial of petition, we are modifying the definition of a leak for certain ethylene glycol pumps which are designed to weep fluids from the seals. Seals that are designed to weep fluid will not be considered to be leaking. This change was made to be consistent with a similar provision for polystyrene pumps.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the EPA must determine whether the regulatory action is “significant” and, therefore, subject to review by Office of Management and Budget (OMB) on the basis of the requirements of the Executive Order. The Executive Order defines “significant regulatory action” as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

Today's action does not fall within any of the four categories described above. Instead, it finalizes the denial of the petitions for reconsideration, makes a minor revision to the equipment leak provisions of the Group IV Polymers and Resins rule and provides a compliance extension. The final action does not add any additional control requirements. Therefore, this is not a “significant regulatory action” within the meaning of Executive Order 12866 and was not required to be reviewed by OMB.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

These final rule amendments do not have federalism implications. They will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This is because the final action applies to affected sources in PET facilities, not to States or local governments. Nor will State law be preempted, or any mandates be imposed on States or local governments. Thus, the requirements of section 6 of the Executive Order do not apply to this final action.

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. Today's final action does not significantly or uniquely affect the communities of Indian tribal governments because they do not own or operate any of the sources affected by this final rule. Thus, Executive Order 13175 does not apply to this final rule.

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

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This action is not subject to Executive Order 13045 because it is not an economically significant regulatory action as defined in Executive Order 12866, and it is based on technology performance, and not on health or safety risks.

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 F.R. 28355 (May 22, 2001)) because it is not a significant regulatory action under Executive Order 12866.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, we must generally prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year. Before promulgating a rule for which a written statement is needed, section 205 of the UMRA generally requires us to identify and consider a reasonable number of regulatory alternatives and adopt the least-costly, most cost-effective, or least-burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows us to adopt an alternative other than the least-costly, most cost-effective, or least-burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before we establish any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of our regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

The EPA has determined that today's action does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any 1 year. This action does not impose any enforceable duties on State, local, or tribal governments, i.e., they own or operate no sources subject to the Group IV Polymers and Resins NESHAP and, therefore, are not required to purchase control systems to meet the requirements of the NESHAP. Regarding the private sector, today's action will affect only 23 existing facilities nationwide. The EPA projects that annual economic effects will be far less than $100 million. Thus, today's action is not subject to the requirements of sections 202 and 205 of the Unfunded Mandates Reform Act.

We have also determined that this action contains no regulatory requirements that might significantly or uniquely affect small governments. This action does not impose any enforceable duties on small governments, i.e., they own or operate no sources subject to the NESHAP and, therefore, are not required to purchase control systems to meet the requirements of the NESHAP.

The EPA has determined that it is not necessary to prepare a regulatory flexibility analysis in connection with these final rule amendments. The EPA has also determined that these rule amendments will not have a significant impact on a substantial number of small entities because no small entities are subject to the NESHAP.

For the Group IV Polymers and Resins NESHAP, the information collection requirements were submitted to OMB under the Paperwork Reduction Act. The OMB approved the information collection requirements and assigned OMB control number 2060-0351. An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15. The EPA has amended 40 CFR part 9, to indicate the information collection requirements contained in the Group IV Polymers and Resins NESHAP.

Today's action has no impact on the information collection burden estimates made previously. Therefore, the ICR has not been revised.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law. 104-113, section 12(d) (15 U.S.C. 272 note), directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, business practices, etc.) that are developed or adopted by voluntary consensus standard bodies. The NTTAA requires EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

The Group IV Polymers and Resins NESHAP includes technical standards. Therefore, the EPA searched for applicable voluntary consensus standards by searching the National Standards System Network (NSSN) database. The NSSN is an automated service provided by the American National Standards Institute for identifying available national and international standards.

The EPA searched for methods potentially equivalent to the methods required by the Group IV Polymers and Resins NESHAP, all of which are methods previously promulgated by EPA. The NESHAP includes methods that measure: (1) Determination of excess air correction factor (percent oxygen)(EPA Method 3B); (2) sampling site location (EPA Method 1 or 1A); (3) volumetric flow rate (EPA Methods 2, 2A, 2C, or 2D); (4) gas analysis (EPA Method 3); (5) stack gas moisture (EPA Method 4); (6) concentration of organic HAP (EPA Method 18 or 25A); and (7) organic compound equipment leaks (EPA Method 21). These EPA methods are found in appendix A to 40 CPR part 60.

No potentially equivalent methods for the methods in the final rule were found in the NSSN database search, and none were brought to our attention in comments on the proposed action. Therefore, the EPA has decided to use the methods listed above.

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. The EPA will submit a report containing this final 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 final 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). These final rule amendments will be effective on August 6, 2001.

The San Diego serious ozone nonattainment area, which consists of San Diego County, is currently designated a serious ozone nonattainment area. The statutory ozone attainment date, as prescribed by section 181(a) of the Clean Air Act (“the Act”), was November 15, 1999. On May 15, 2000, the State of California requested a one-year attainment date extension to November 15, 2000. EPA granted that extension on October 11, 2000 (65 FR 60362). On February 7, 2001, California requested a second one-year extension to November 15, 2001.

Section 107(d)(4) of the Act required the States and EPA to designate areas as attainment, nonattainment, or unclassifiable for ozone as well as other pollutants for which national ambient air quality standards (NAAQS) have been set. Section 181(a)(1) required that ozone nonattainment areas be classified as marginal, moderate, serious, severe, or extreme, depending on their air quality.

In a series of Federal Register documents, we completed this process by designating and classifying all areas of the country for ozone. See, e.g., 56 FR 58694 (Nov. 6, 1991), and 57 FR 56762 (Nov. 30, 1992). San Diego County was originally classified as severe, but was reclassified as serious based upon our determination that the ozone value used in the original classification was incorrect. See 60 FR 3771 (Jan. 19, 1995).

Areas designated nonattainment for ozone are required to meet attainment dates specified under the Act. As noted, the San Diego ozone nonattainment area was reclassified as serious. By this classification, its attainment date became November 15, 1999. A discussion of the attainment dates is found in EPA's General Preamble for Implementation of Title I of the Clean Air Act Amendments of 1990. See 57 FR 13498 (April 16, 1992).

Section 181(b)(2)(A) requires the Administrator, within six months of the attainment date, to determine whether ozone nonattainment areas attained the NAAQS. For ozone, we determine attainment status on the basis of the expected number of exceedances of the NAAQS over the three-year period up to, and including, the attainment date. See General Preamble, 57 FR 13506. In the case of serious ozone nonattainment areas, the three-year period is 1997-1999.

A review of the actual ambient air quality ozone data from the EPA Aerometric Information Retrieval System (AIRS) shows that three air quality monitors located in the San Diego ozone nonattainment area recorded exceedances of the NAAQS for ozone during the three-year period from 1997 to 1999 and the three-year period from 1998 to 2000. 1 (See Table 1.) Over the three-year period of 1997 to 1999, there were 9 exceedances at the Alpine monitor. There were 8 exceedances at the Alpine monitor for the period 1998 to 2000, all of which occured in 1998. For both of these three-year periods, this constitutes a violation of the ozone NAAQS for the San Diego area, since the average annual exceedance at the Alpine monitor is more than 1.0. Thus, the area met neither the November 15, 1999 attainment date nor the November 15, 2000 extended attainment date, and the area continues to violate the 1-hour ozone NAAQS because of multiple exceedances recorded in 1998, which must be included in the calculation of average annual exceedances over the most recent 3-year period.

The reader should also refer to the Proposed Rule at 64 FR 09295 and the Immediate Final Rule at 64 FR 09278, both published on February 25, 1999.

We received written comments from twenty-eight parties during the comment period; six recommended we grant authorization; ten requested that we withhold approval of Wyoming's authorization revision until SF 147 could be revised; and four requested that we withdraw the State's RCRA primacy.

The majority of commenters expressed concerns over a potential loss of environmental protections due to the passage of SF 147. We agreed with the concerns regarding the ability of Wyoming's Department of Environmental Quality (WDEQ) to manage an adequate and equivalent RCRA authorized program in light of SF 147 and decided to withhold approval of Wyoming's program revisions until SF 147 could be revised.

As noted above, we withdrew the Immediate Final Rule on April 23, 1999. On March 10, 2000, Wyoming passed Senate File 15 (SF 15) which repealed and substituted SF 147 with a significantly modified voluntary remediation program. More recently, Wyoming passed Senate File 130 (SF 130) which amended and clarified SF 15. Many of the concerns raised by commenters on the Proposed Rule and Immediate Final Rule have been addressed through these legislative changes.

As a result of the changes to Wyoming's law since the passage of SF 147, EPA Region VIII has determined that approval of the revisions to Wyoming's authorized RCRA program should proceed. Therefore, we are granting final approval of Wyoming's RCRA program revisions as listed in the Immediate Final Rule found at 64 FR 09278 on February 25, 1999.

The Office of Management and Budget (OMB) has exempted this action from the requirements of Executive Order 12866 (58 FR 51735, October 4, 1993) and, therefore, this action is not subject to review by OMB. This action authorizes State requirements for the purpose of RCRA 3006 and imposes no additional requirements beyond those imposed by State law. Accordingly, I certify that this action 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 action authorizes 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 (Public Law 104-4). For the same reason, this action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13084 (63 FR 27655, May 10, 1998). This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely authorizes State requirements as part of the State RCRA hazardous waste program without altering the relationship or the distribution of power and responsibilities established by RCRA. This action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks.

Under RCRA 3006(b), EPA grants a State's application for authorization as long as the State meets the criteria required by RCRA. It would thus be inconsistent with applicable law for EPA, when it reviews a State authorization application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. 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 Taking” 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. ).

EPA, Region 7 is publishing this direct final notice of deletion of the Kem-Pest Laboratories Superfund Site from the NPL. The EPA identifies sites that appear to present a significant risk to public health or the environment and maintains the NPL as the list of those sites. As described in § 300.425(e)(3) of the NCP, sites deleted from the NPL remain eligible for remedial actions if conditions at a deleted site warrant such action.

Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication of a notice of intent to delete. This action will be effective September 20, 2001, unless EPA receives adverse comments by August 20, 2001. If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely withdrawal of this direct final deletion before the effective date of the deletion and the deletion will not take effect. EPA will, as appropriate, prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received. There will be no additional opportunity to comment.

Section 300.425(e) of the NCP provides that releases may be deleted from the NPL where no further response is appropriate. In making a determination to delete a release from the NPL, EPA shall consider, in consultation with the state, whether any of the following criteria have been met:

i. Responsible parties or other persons have implemented all appropriate response actions required;

ii. All appropriate Fund-financed (Hazardous Substance Superfund Response Trust Fund) response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or

iii. the remedial investigation has shown the release poses no significant threat to public health or the environment and, therefore, the taking of remedial measures is not appropriate.

Even if a site is deleted from the NPL, where hazardous substances, pollutants, or contaminants remain at the deleted site above levels that allow for unlimited use and unrestricted exposure,CERCLA section 121(c), 42 U.S.C. 9621(c) requires that a subsequent review of the site be conducted at least every five years after the initiation of the remedial action at the deleted site to ensure that the action remains protective of public health and the environment. If new information becomes available which indicates a need for further action, EPA may initiate remedial actions. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system.

The following procedures apply to deletion of the Site:

(1) The EPA consulted with the state of Missouri on the deletion of the Site from the NPL prior to developing this direct final notice of deletion.

(2) The state of Missouri concurred with deletion of the Site from the NPL.

(3) Concurrently with the publication of this direct final notice of deletion, a notice of the availability of the parallel notice of intent to delete published today in the “Proposed Rules” section of the Federal Register is being published in a major local newspaper of general circulation at or near the Site and is being distributed to appropriate federal, state and local government officials and other interested parties; the newspaper notice announces the 30-day public comment period concerning the notice of intent to delete the Site from the NPL.

(4) The EPA placed copies of documents supporting the deletion in the Site information repositories identified above.

(5) If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely notice of withdrawal of this direct final notice of deletion before its effective date and will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received.

Deletion of a site from the NPL does not itself create, alter, or revoke any individual's rights or obligations. Deletion of a site from the NPL does not in any way alter EPA's right to take enforcement actions, as appropriate. The NPL is designed primarily for informational purposes and to assist EPA management. Section 300.425(e)(3) of the NCP states that the deletion of a site from the NPL does not preclude eligibility for future response actions, should future conditions warrant such actions.

The following information provides EPA's rationale for deleting the Site from the NPL:

The Kem-Pest Laboratories Superfund Site is located in Cape Girardeau County, Missouri, approximately three miles northeast of the city of Cape Girardeau and east of Missouri State Highway 177 in the southwest part of section 22, Township 31 north, Range 14 East. The Mississippi River is located approximately 1,000 feet south of the Site.

The 6.5 acre Site is located in a rural setting, and once housed a 40 x 100 foot concrete cinder block formulation building on the northeast portion of the Site. The building was located 900 feet north of the Mississippi River and was demolished in 1996. A two celled lagoon was located approximately 40 feet southwest of the building.

The Kem-Pest Laboratories plant was constructed in 1964. From 1965 to 1977, the company formulated various pesticide products including liquid pesticides, granular insecticides and herbicides, and pesticide dust. Wastes generated from the formulation processes contained several pesticides including aldrin, dieldrin, endrin, and heptachlor. The plant wastes were disposed of in the on-site lagoon. There have been no production or disposal activities at the Site since 1977. The lagoon was backfilled with clay by the owner in 1981.

A preliminary assessment of the Site was conducted by the EPA in September 1981. In April 1984, EPA installed five on-site groundwater monitoring wells and collected groundwater, soil, and sediment samples. Pesticides, volatile organic compounds (VOCs), and semi-volatile organic compounds were detected in the soil, sediment, and groundwater samples. The Kem-Pest Site was proposed for the National Priorities List (NPL) in January 1987 (52 FR 2492). The NPL designation became final in October 1989 (54 FR 41000). The NPL identifies sites that warrant further evaluation to determine the type of responses that may be required to protect human health and the environment.

In February 1989, EPA initiated a Remedial Investigation (RI), which included collection of soil and sediment samples, installation of six monitoring wells down-gradient of the Site and a background well up-gradient of the Site, and collection of groundwater samples from on-site and off-site monitoring wells and two nearby private wells. Based on the soil, sediment, and groundwater samples collected, remediation alternatives were developed and evaluated and can be found in the Remedial Investigation/Feasibility Study (Operable Unit 1), dated August 1989. Further remedial investigation results can be found in the Remedial Investigation Report (Operable Unit 2), dated November 1990. These reports provide a summary of analytical results that were used to characterize the risk that this Site posed to human health and the environment.

The RI field activities included sampling for potential exposure to pesticide contamination in the formulation building. Using the data collected during the RI, the EPA prepared a Baseline Risk Assessment to characterize the risk that the Site posed to human health and the environment. The only pathway considered to be complete under current or future land use conditions was future use of the building. An industry occupying the Site in the future might use the formulation building, and workers might be exposed to chemicals in the building through direct contact with contaminated surfaces and through inhalation. Wipe samples were collected as part of the RI and the human health assessment was conducted for the following chemicals at the surface of the formulation building: aldrin, chlordane, DDT, dieldrin, and heptachlor. These chemicals were found present on wipe samples at levels to 140 times for each individual chemical. These chemicals were considered to be the primary source of contamination for the formulation building.

The RI report also concluded that removal of the primary source of contamination to groundwater at the on-site lagoon (via soil excavation), including the removal of the lagoon, would eliminate the risk posed by ingestion by residents. No Ecological Assessment was prepared since no known critical habitats, sensitive environments, or endangered species were affected by contamination in the groundwater.

The Feasibility Study Report, dated August 1989, evaluated the remedial alternatives and provided the bases for EPA's preferred alternative. In November 1990, Addendum I and II to the Phase I RI report, The Formulation Building Operable Unit Feasibility Study report, and the Proposed Plan were made available to the public in the administrative record file located at the Cape Girardeau Public Library. The start of the public comment period was November 27, 1990.

The September 1989 (OU1) and December 1990 (OU2) Records of Decision (RODs) document the remedial alternatives selected by EPA to address the potential exposure to soil, sediment, and groundwater contamination at the Site. The selected remedies addressed the threat posed by the pesticides, volatile organic compounds (VOCs), and semi-volatile organic compounds at the Site and required the following actions:

• Lagoon

1. Excavation of 4,050 cubic yards* of contaminated soil and sediment; and

2. Disposal at an offsite land disposal facility in compliance with the requirements of Subtitle C of the Resource Conservation and Recovery Act(RCRA) and other applicable laws or regulations.

• Groundwater:

1. No remedial action. Monitoring will be conducted to verify that no unacceptable exposure to risks posed by conditions at the Site occur in the future.

2. Wells to be monitored include existing monitoring wells, and additional wells to be installed during remedial design, and private drinking water wells located off of the Site.

• Formulation Building **

1. Decontamination by surface layer removal and off-site incineration of decontamination and dismantling debris.

2. Institutional controls that limit future use of the build to commercial or industrial activities.

*An explanation of significant differences (ESD) was written to set the actual cubic yards of land disposed to 6,479.7.

**The December 1990 ROD was amended on February 2, 1993, to allow for the complete demolition of the formulation building with off-site disposal of the demolition debris material; and the establishment of institutional controls that limit future use of the property to commercial or industrial activities. However, because of the completion of the cleanup, no institutional controls to limit land use were necessary.

Pursuant to an Administrative Order on Consent entered into by EPA and the property owners (Charles and Ruth Knote) in November 1988, the owners conducted limited sampling in December 1988. However, in February 1989, EPA initiated a RI, which included collection of soil and sediment samples, installation of six monitoring wells down-gradient of the Site and the background well up-gradient of the Site, and collection of groundwater samples from on-site and off-site monitoring wells and two nearby private wells.

In February 1993, the EPA amended the ROD for OU 2 based on information collected during the design phase, and decided to demolish and dispose of the formulation building. The EPA immediately initiated construction activities to remove the formulation building, but these actions were halted as a result of litigation between the property owner and the United States. The litigation was settled in 1995, and the construction activities for OU2 were completed in 1996. Further information related to the Remedial Design/Remedial Action activities can be found in the Remedial Action Report for Operable Unit 1, dated September 1993 and the Remedial Action Report for Operable Unit 2, dated September 1997.

In March 1992, EPA initiated remedial clean-up action of the soils and sediment operable unit. Remedial action was complete in May 1992. The selected remedy for OU1 included the excavation and off-site disposal of 6,479.7 cubic yards of contaminated soils and sediment and their transportation to Peoria Disposal Company, Peoria, Illinois, a RCRA approved commercial hazardous waste landfill.

The soil and sediment with contaminant concentrations above protective soil concentrations were excavated using conventional earthmoving equipment. Soil and sediment lifts were initially taken in one and two foot increments. Soil sampling was then conducted to confirm whether the horizontal and vertical extent of excavation was sufficient to remove contamination above cleanup levels. This process was repeated until clean up levels were achieved. Clean soil was then backfilled into the excavated areas, compacted and graded. Vegetation and gravel was then placed onsite to minimize erosion. The RA Report approved by EPA on September 30, 1993, concluded that no further action was required for OU1 dealing with the soils and sediment. The cleanup standards that governed the remedial action for OU2 included the hazardous debris rule (57 FR 37194) for decontamination of the former pesticide formulation building, and risk-based cleanup goals for arsenic and selected pesticides in soil, established by EPA. The hazardous debris rule requires porous surfaces, like the concrete block walls and the concrete floor of the building to be decontaminated by removing at least 0.6 centimeters (cm) (or approximately 1/4 ”) of material from the surface and inspecting the decontaminated surface to ensure they are visibly clean and that no more than 5% of each square inch of surface area remains visibly contaminated. Removal of all building structures was required to a maximum of 3 feet below the existing grade. The hazardous debris rule decontamination for the Site was expanded to include all building structures, and the building basement. Following decontamination, the former pesticide formulation building and basement were demolished. Decontaminated debris, which met the hazardous debris rule criteria, was segregated and transported to a solid waste landfill. Debris which did not meet the hazardous debris rule decontamination criteria was sent to a RCRA permitted hazardous waste incinerator. The demolition of the building, including its basement, was completed in August 1, 1996. Backfilling in the building footprint was completed on August 29, 1996, after analytical results showed that cleanup goals were met at the former building location. The December 1990 OU2 ROD directed that five years of groundwater monitoring be conducted at the Site to assure continued protectiveness of the remedy. Five years of monitoring of this Site have been completed and no significant concerns have been discovered with regard to the groundwater. Further information related to the Remedial Action activities can be found in Remedial Action Report for Operable Unit 2, dated September 1997. There are no land use restrictions for the Site. Neither is it on Missouri's Registry of Confirmed, Abandoned, or Uncontrolled Hazardous Waste Sites in Missouri.

The pre-final inspection included a full system walk-through witnessed by representatives from EPA, the U.S. Army Corps of Engineers (USACE) and MDNR on June 16, 1992 and minor deficiencies were noted. These were corrected. Final acceptance of completion of the work was certified by the USACE, and the remedy was deemed operational and functional on September 4, 1992. After that date, EPA determined that no further action was required.

On September 17, 1996, EPA conducted along with MDNR, the final inspection at the location of the formulation building to ensure that deficiencies noted during the substantial completion inspection were corrected. EPA concluded that the deficiencies had been corrected. On December 2-3, 1996, MDNR visited the Site to inspect the vegetative cover. MDNR noted deficiencies in the amount of vegetative cover. The Site owner corrected these deficiencies by reseeding in early March 1997. EPA and MDNR again visited the Site on April 16-17, 1997 to inspect the vegetative cover; no deficiencies were noted. In addition, groundwater sampling results from the groundwater monitoring indicate no significant concerns in regard to the groundwater. As a result, EPA, at the request of MDNR, abandoned the monitoring wells at the Site on June 13, 2001.

Section 121(c) of CERCLA, as amended, and Section 300.430(f)(4)(ii) of the National Oil and Hazardous Substances Pollution Contingency Plan require that periodic reviews (at least once every five years) be conducted for sites where hazardous substances, pollutants, or contaminants remain at the site above levels that allow for unlimited use or unrestricted exposure following the completion of all remedial actions for the site. This type of five-year review is referred to as a statutory review. Since the monitoring wells have been abandoned, and the remains of the building and contaminated soil have been disposed of, there will be no need for a five-year review.

Public participation activities have been satisfied as required in CERCLA section 113(k), 42 U.S.C. 9613(k), and CERCLA section 117, 42 U.S.C. 9617. A Community Relations Plan was prepared for the Site in January 24, 1989. An information repository was established for the Site at the Cape Girardeau Public Library. The Addendum I and II to the Phase I RI report, The Formulation Building Operable Unit Feasibility Study report, and the Proposed Plan were made available for public comment November 27, 1995 to December 27, 1995. Fact sheets providing site updates were distributed to individuals on the mailing list as established by the Community Relations Plan. Documents which EPA relied on for recommendation of the deletion from the NPL are available to the public in the information repositories.

The EPA, with concurrence of the state of Missouri, has determined that all appropriate responses under CERCLA have been completed, and that no further response actions, under CERCLA, other than Inspection and Maintenance of the vegetative cover, is necessary. Therefore, EPA is deleting the Site from the NPL. Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication. This action will be effective September 20, 2001, unless EPA receives adverse comments by August 20, 2001. If adverse comments are received within the 30-day public comment period, EPA will publish a timely withdrawal of this direct final notice of deletion before the effective date of the deletion and it will not take effect. EPA will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to delete and the comments already received.

There will be no additional opportunity to comment.

On May 10, 2001, we published at 66 FR 23874 a rule proposing to increase the “expense allowance” under the Financial Assistance/Subsidy Arrangement between the Federal Insurance Administrator and the private sector insurers that sell and service flood insurance under the Write Your Own (WYO) program. (The “expense allowance” is a portion of the premiums charged for flood insurance policies that participating insurers sell under the WYO program.) The expense allowance is based on data for the property/casualty industry published, as of March 15 of the prior Arrangement year, in Part III of the Insurance Expense Exhibit in A.M. Best Company's Aggregates and Averages for five property coverages.

Based on our analysis of recent expense information from the companies, we believe that we should increase the current expense allowance under the Arrangement.

During the comment period, we received three sets of comments on the proposed rule. One respondent agreed with the rule as proposed. The other two respondents agreed with the proposed increase in the expense allowance. One of those however was disappointed that the proposed rule did not address marketing incentives, which are referred to in the Arrangement but not included in the Arrangement itself. The other recommended a change in the marketing incentives for larger WYO companies.

As has been our practice, we consulted during the past year with WYO company representatives on the marketing incentives. We are planning to liberalize those incentives for the coming year. Since the marketing incentives are outside the Arrangement proper and therefore outside the scope of this rulemaking, we will not make any adjustment to the rule as proposed.

One commenter also recommended that we consider increasing the unallocated loss adjustment expense allowance from its current 3.3%. That commenter also recommended that the expense allowance be linked directly to the individual WYO company's flood insurance expense as identified in the insurance expense exhibit of the annual statement. (The commenter recommended both these changes for the 2002-3 Arrangement Year.) We plan to review the entire system for reimbursing WYO companies, and we will look at both of those recommendations as part of that review. We are prepared to propose any appropriate changes during the next rulemaking cycle.

In summary, the rule increasing the expense allowance, as proposed, will be adopted as a final rule.

During August 2001, we will send a copy of the offer for the 2001-2002 Arrangement year, together with related materials and submission instructions, to all private insurance companies participating under the current 2000-2001 Arrangement. Any private insurance company not currently participating in the WYO program but wishing to consider FEMA's offer for 2001-2001 may request a copy by writing: Federal Emergency Management Agency, Deputy Administrator, Federal Insurance and Mitigation Administration, WYO Program, Washington, DC 20472.

NEPA imposes requirements for considering the environmental impacts of agency decisions. It requires that an agency prepare an Environmental Impact Statement (EIS) for “major federal actions significantly affecting the quality of the human environment.” If an action may or may not have a significant impact, the agency must prepare an environmental assessment (EA). If, as a result of this study, the agency makes a Finding of No Significant Impact (FONSI), no further action is necessary. If it will have a significant effect, then the agency uses the EA to develop an EIS.

Categorical Exclusions . Agencies can categorically identify actions (for example, repair of a building damaged by a disaster) that do not normally have a significant impact on the environment. The purpose of this final rule is to adjust the expense allowance under the Financial Assistance/Subsidy Arrangement between the Federal Insurance Administrator and the private sector insurers that sell and service flood insurance.

Accordingly, we have determined that this rule is excluded from the preparation of an environmental assessment or environmental impact statement under 44 CFR 10.8(d)(2)(ii), where the rule is related to actions that qualify for categorical exclusion under 44 CFR 10.8(d)(2)(i), which addresses the preparation, revision, and adoption of regulations, directives, and other guidance documents related to actions that qualify for categorical exclusions. We have not prepared an environmental assessment or environmental impact statement as defined by NEPA.

We have prepared and reviewed this final rule under the provisions of E.O. 12866, Regulatory Planning and Review. Under Executive Order 12866, 58 FR 51735, October 4, 1993, a significant regulatory action is subject to OMB review and the requirements of the Executive Order. The Executive Order defines “significant regulatory action” as one that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;

(2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

For the reasons that follow we have concluded that the final rule is neither an economically significant nor a significant regulatory action under the Executive Order. The rule adjusts the expense allowance under the Financial Assistance/Subsidy Arrangement between the Federal Insurance Administrator and the private sector insurers that sell and service flood insurance. The adjustment increases by approximately $14 million the expense allowance paid to the WYO private sector insurers. It does not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, the insurance sector, competition, or other sectors of the economy. It creates no serious inconsistency or otherwise interfere with an action taken or planned by another agency. It does not materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof. Nor does it raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

The Office of Management and Budget has not reviewed this final rule under the principles of Executive Order 12866.

This rule does not contain a collection of information and is therefore not subject to the provisions of the Paperwork Reduction Act.

Under the Regulatory Flexibility Act agencies must consider the impact of their rulemakings on “small entities” (small businesses, small organizations and local governments). When 5 U.S.C. 553 requires an agency to publish a notice of proposed rulemaking, the Act requires a regulatory flexibility analysis for both the proposed rule and the final rule if the rulemaking could “have a significant economic impact on a substantial number of small entities.” The Act also provides that if a regulatory flexibility analysis is not required, the agency must certify in the rulemaking document that the rulemaking will not “have a significant economic impact on a substantial number of small entities.”

This final rule revises the NFIP regulations to adjust the expense allowance under the Financial Assistance/Subsidy Arrangement between the Federal Insurance Administrator and the private sector insurers that sell and service flood insurance. Therefore, I certify that a regulatory flexibility analysis is not required for this rule because it will not have a significant economic impact on a substantial number of small entities.

Executive Order 13132 sets forth principles and criteria that agencies must adhere to in formulating and implementing policies that have federalism implications, that is, regulations that have substantial direct effects on the States, or on the distribution of power and responsibilities among the various levels of government. Federal agencies must closely examine the statutory authority supporting any action that would limit the policymaking discretion of the States, and to the extent practicable, must consult with State and local officials before implementing any such action.

We have reviewed this final rule under E.O.13132 and have determined that the rule does not have federalism implications as defined by the Executive Order. The rule adjusts the expense allowance under the Financial Assistance/Subsidy Arrangement between the Federal Insurance Administrator and the private sector insurers that sell and service flood insurance. The rule in no way that we foresee affects the distribution of power and responsibilities among the various levels of government or limits the policymaking discretion of the States.

Electronic Access: This Federal Register document is also accessible via the internet at the website of the Office of the Federal Register: http://www.access.gpo.gov/sudocs/aces/aces140.html

This final rule revises the Pacific Coast groundfish fishery limited entry program regulations at 50 CFR 660 to modify the restriction on frequency and timing of limited entry permit transfers and also updates and re-organizes the regulations in a manner that is consistent with current NMFS permitting activities and practices. Re-organizing limited entry program regulations will not change the effect or intent of the regulations. This rule is based on recommendations of the Council, under the authority of the Pacific Coast Groundfish Fishery Management Plan (FMP) and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The background and rationale for the Council's recommendations are summarized below. Further detail appears in the EA/RIR prepared by NMFS for this action.

This final rule modifies the limited entry program regulations to remove outdated provisions, rearrange and clarify currently applicable regulations into a more readable and user-friendly format, and incorporate November 2000 Council recommendations on the frequency and timing of permit transfers. At that time, the Council recommended revising the restriction on the frequency of limited entry permit transfers from once every 12 months to once per calendar year. Clarifications of existing requirements include: revising the definition of “lessee” to specify that lessees do not have the right to transfer permits; revising the prohibition against operating a limited entry vessel without a limited entry permit so that the prohibition is clear without needing reference to other regulations; rearranging the limited entry program regulations into a more logical format; removing permit regulations that deal with permit applications that are no longer accepted; and clarifying documentation needs for the different permit action requests that permit owners make to the NMFS Fisheries Permits Office.

The proposed rule to implement changes to the allowed frequency of limited entry permit transfers and to update the limited entry program regulations was published on May 30, 2001 (66 FR 29276). NMFS requested comments on the proposed rule through June 19, 2001. During the comment period on the proposed rule, NMFS received one letter of comment. The commenter expressed concern about the Federal fisheries management process and the involvement of fishers in decisions made about regulations affecting their fisheries, citing a wish that fish remain available for future generations. This rule does not address the Federal fisheries management process, which is governed by the Magnuson-Stevens Act. Overall, this final rule is a minor action that clarifies regulations and increases business flexibility for limited entry permit holders. This final rule will not provide new or increased fishing opportunities and thus is not expected to have any effect on the environment.

In the proposed rule for this action (May 30, 2001, 66 FR 29276), 50 CFR 660.335 (d)(3), “Effective date,” ended with the sentence: “No transfer is effective until the limited entry permit has been reissued as registered with the new vessel and the permit is in possession of the new permit holder.” The phrase “and the permit is in possession of the new permit holder” was removed in this final rule, as it is redundant with 50 CFR 660.306, “Prohibitions,” paragraph (n), which states that it is unlawful for any person to “fail to carry on board a vessel that vessel’s limited entry permit if required.”

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

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration when this rule was proposed, that this rule, if adopted as proposed, would not have a significant economic impact on a substantial number of small entities. No comments were received on the economic impacts of this final rule on small entities and the basis for this certification has not changed. Accordingly, a regulatory flexibility analysis was not prepared.

The Assistant Administrator for Fisheries, NOAA (AA), finds good cause, namely that it would be contrary to the public interest, to waive the 30-day delay in effectiveness for this rule pursuant to 5 U.S.C. 553 (d)(3). This final rule concerns transfers of limited entry permits and affects permitting activities in the limited entry fleet. It is linked to another more complex regulation under consideration by NMFS. This is a proposed rule that was published on June 8, 2001 (66 FR 30869), that would implement Amendment 14 to the FMP by allowing permit stacking in the limited entry fixed gear sablefish fishery.

NMFS anticipates that the limited entry, fixed gear sablefish fishery will begin on August 15, 2001. The start date and mode of management for this fishery depend upon whether NOAA approves Amendment 14 to the FMP and implements it by a final rule. If Amendment 14 is not approved, this fishery will be a brief derby-style fishery with a single sablefish cumulative limit per vessel. If Amendment 14 is approved, the fishery will be 2-3 months in duration, and each vessel will be allowed to carry up to three permits and harvest the sablefish limits associated with those permits. Limited entry permit holders with sablefish-endorsed permits are waiting for the NOAA approval decision, which is scheduled to be made by August 8, 2001, to decide whether to transfer their permits for this season.

A 30-day delay in effectiveness of this final rule could unnecessarily restrict permit transfer activities and cause financial harm to sablefish fishery participants. In some parts of the West Coast, difficult autumn ocean conditions arise in September. Thus, a delay in effectiveness of this final rule could also prevent permit holders from participating in the sablefish season during the more favorable August weather. Accordingly, the AA finds good cause, to waive the 30-day delay in effectiveness for this rule pursuant to 5 U.S.C. 553 (d)(3).

Since this final rule will give limited entry permit holders the flexibility to use their permits to their best advantage for participation in an August fishery, regardless of the NOAA decision on Amendment 14, it relieves a restriction under 5 U.S.C. 553 (d)(1), and it is not subject to a delay in the effective date.

This final rule contains collection-of-information requirements subject to review and approval by OMB under the Paperwork Reduction Act (PRA). The requirements for limited entry permit applications, permit transfer applications, and appeals have been approved under OMB control number 0648-0203. Public reporting burden for each of these collections of information is estimated to average 20 minutes per individual response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate, or any other aspect of these data collections, including suggestions for reducing the burden to NMFS at the ADDRESSES above, and to OMB at the Office of Information and Regulatory Affairs, OMB, Washington, DC. 20503 (Attention: NOAA Desk Officer).

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

Administrative practice and procedure, American Samoa, Fisheries, Fishing, Guam, Hawaiian Natives, Indians, Northern Mariana Islands, Reporting and recordkeeping requirements.