This rule is issued under Marketing Order No. 920, as amended (7 CFR part 920), regulating the handling of kiwifruit grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with the USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing the USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review the USDA ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule allows handlers to pack more individual pieces of fruit per 8-pound sample for seven size designations, eliminates one size designation, and adds two new size designations. These changes were unanimously recommended by the Committee and are expected to increase grower returns and enable handlers to compete more effectively in the marketplace.

Under the terms of the order, fresh market shipments of kiwifruit grown in California are required to be inspected and meet grade, size, maturity, pack, and container requirements. Section 920.52 authorizes the establishment of pack requirements. Section 920.302(a)(4) of the order's administrative rules and regulations outlines pack requirements for fresh shipments of California kiwifruit. Section 920.302(a)(4)(iv) establishes a maximum number of fruit per 8-pound sample for each numerical count size designation for fruit packed in bags, volume fill, or bulk containers.

The amount of kiwifruit supplied to the domestic market by California handlers has declined 40 percent since the 1992-93 season. In addition, grower prices have steadily declined in spite of a continuous increase in the U.S. per capita consumption of kiwifruit. When the order was implemented in 1984, the average Free-on-Board (FOB) value was $1.14 per pound. In 1997-1998, the Committee reviewed FOB values and determined that the average FOB value for the 1992-93 season through the 1997-98 season was $0.55 per pound.

The Committee met on July 8, 1998, and decided to address the confusion in the marketplace and the differences in size designations between California kiwifruit and imported kiwifruit, by revising the numerical counts per size designation. Section 920.302(a)(iv) of the order's administrative rules and regulations was revised by an interim final rule issued on September 3, 1998 (63 FR 46861).

While this rule increased the number of fruit that could be packed in size designations 30 through 42, experience has shown that further refinement of the California kiwifruit size designations is needed to help California handlers compete more effectively with imported fruit in the marketplace. Handlers want to better meet buyer preferences and buyers generally prefer to purchase containers with a greater number of pieces of fruit in the box. This relaxation of pack requirements will permit handlers to pack more individual pieces of fruit in an 8-pound sample for various size designations, and, thus, better meet buyer preferences.

During the spring of 2001, the production area was hit with a severe frost, heavy winds and hail storms. A shortened bloom period in late spring reduced the pollination of the crop and resulted in less fruit development and growth. Unusually hot temperatures during the summer months added further stress to the vines.

On July 11, 2001, the Committee considered the impact of the severe weather conditions, and estimated the 2001-2002 crop would be 6.5 million tray equivalents. During September the Committee staff conducted a pre-harvest check for sizing, quality, and maturity and found the crop was not sizing as expected. Based on the more recent observations, the field staff estimated that the amount of packable fruit would be approximately 5 million tray equivalents, versus the 6.5 million estimated at the July 11, 2001, meeting.

Because of these factors, the Committee called an emergency meeting on September 19, 2001, to discuss the marketing of the short crop and smaller sized fruit. As previously mentioned, the rules and regulations specify a maximum number of fruit per 8-pound sample for each numerical count size designation for kiwifruit packed in bags, volume fill, or bulk containers. To enable the industry to better market the short 2001 crop, the Committee unanimously recommended relaxing the pack regulations under § 920.302(a)(iv) by increasing the maximum number of fruit per 8-pound sample for size designations 42 through 25, eliminating size designation 21, and adding new size designations 20 and 23. These changes are shown in the following chart:

This chart is commonly referred to as the “Size Designation Chart” in the industry. Increasing the maximum number of fruit per 8-pound sample will allow some smaller-sized fruit to be packed into a larger-size category. This rule allows one more piece of fruit to be packed per 8-pound sample in size designations 42 and 39, three more pieces of fruit to be packed in size designation 36, seven more pieces of fruit to be packed in size designation 33, and five more pieces of fruit to be packed in size designations 27/28 and 25 respectively.

Additionally, handlers have the option of packing fruit as size designations 23, 20, or 45. This rule reduces the percentage of fruit packed in the 40 series and increases the percentage of fruit packed in the 20 and 30 series. The Committee estimated that increasing the maximum number of fruit per 8-pound sample for size designation 39 would move approximately 600,000 pounds of kiwifruit from the former size designation 42 into the new size 39 designation. Increasing the maximum number of fruit per 8-pound sample for size designation 33 will allow handlers to pack approximately 2,500,000 pounds more kiwifruit into the new size 33 designation. Thus, handlers will be better able to meet the needs of buyers, because kiwifruit sells by the piece, and buyers desire as much fruit in each container as the container can comfortably hold. This change does not affect the minimum size and will not allow fruit currently considered “undersized” to be shipped. The Committee further believes that increasing the maximum number of fruit in the 8-pound sample will help reduce the sizing differences between California and imported kiwifruit. This should help California handlers compete more effectively in the marketplace.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 50 handlers of California kiwifruit subject to regulation under the marketing order and approximately 360 growers in the production area. Small agricultural service firms are defined as those whose annual receipts are less than $5,000,000, and small agricultural growers are defined by the Small Business Administration (13 CFR 121.201) as those whose annual receipts are less than $750,000. None of the 50 handlers subject to regulation have annual kiwifruit sales of at least $5,000,000. In addition, 354 of the 360 growers have annual sales less than $500,000. Therefore, a majority of the kiwifruit handlers and growers may be classified as small entities.

This rule allows handlers to pack more individual pieces of fruit per 8-pound sample for seven size designations, eliminates one size designation, and adds two new size designations. These changes were unanimously recommended by the Committee and are expected to increase grower returns and enable handlers to compete more effectively in the marketplace. Authority for this action is provided in § 920.52 of the order.

The Committee unanimously recommended relaxing the pack requirements by increasing the maximum number of fruit per 8-pound sample for size designations 42 through 25, eliminating size designation 21, and adding size designations 20 and 23 as shown in the following chart:

This chart is commonly referred to as the “Size Designation Chart” in the industry. Increasing the maximum number of fruit per 8-pound sample will allow some smaller-sized fruit to be packed into a larger-size category. This rule allows one more piece of fruit to be packed per 8-pound sample in size designations 42 and 39, three more pieces of fruit to be packed in size designation 36, seven more pieces of fruit to be packed in size designation 33, and five more pieces of fruit to be packed in size designations 27/28 and 25.

Additionally, handlers have the option of packing fruit in size designations 23 and 20, as well as size designation 45. This rule reduces the percentage of fruit packed in the 40 series and increases the percentage of fruit packed in the 20 and 30 series. The Committee estimated that increasing the maximum number of fruit per 8-pound sample for Size 39 would move approximately 600,000 pounds of fruit from the former size designation 42 into the new size 39 designation. U.S. retailers prefer size 33 kiwifruit. Increasing the maximum number of fruit per 8-pound sample for size 33 will allow handlers to pack approximately 2,500,000 pounds more kiwifruit into the new size 33 designation. Thus, handlers will be better able to meet the needs of buyers, because kiwifruit sells by the piece, and buyers desire as much fruit in each container as the container can comfortably hold. This change does not affect the minimum size and will not allow fruit currently considered “undersized” to be shipped. Imports from Europe have increased 1,409 percent since 1992-93. During the 2000-01 season approximately 3.2 million tray equivalents were imported from Europe.

The Committee further believes that relaxing the pack requirements to permit more individual pieces of fruit in an 8-pound sample for various size designations will reduce the sizing differences between California and imported kiwifruit. Reducing the size designation differences should help California handlers compete more effectively in the marketplace, as buyers apparently choose to purchase containers with more pieces of fruit per container, and this relaxation permits increases in the number of pieces of fruit in bags, volume-fill, and bulk containers. The Committee has estimated that utilizing the new size designations will yield the California kiwifruit industry $24,407,981 in FOB value versus the $22,442,648 received for the 2000-2001 season. This is an additional $1.9 million in FOB value for the 2001-2002 season.

The Committee wants to maintain the reputation California has established for uniformly packed containers of kiwifruit and believe that these changes will not significantly impact uniformity. The increase in the maximum number of fruit per 8-pound sample is not so significant that consumers or retailers will notice a visual size difference in the fruit being offered. The California Kiwifruit Commission, which administers a State program utilized to promote kiwifruit grown in California, conducted kiwifruit-sizing studies several years ago. These studies show that there is only an average of 3/32-inch to 4/32-inch difference in fruit length between sizes, and 2/32-inch to 3/32-inch difference in fruit width. These differences are indistinguishable to the eye.

These changes address the marketing and shipping needs of the kiwifruit industry and are in the interest of growers, handlers, buyers, and consumers. The impact of these changes is expected to be beneficial to all growers and handlers, regardless of size. There is widespread agreement in the industry to relax the pack requirements.

The Committee considered other alternatives to relaxing packing requirements but determined that these suggestions will not adequately address the industry problems.

One suggestion was to change the minimum size. The Committee did not adopt this suggestion because it believes that lowering the minimum size will diminish the quality image of California kiwifruit.

Another suggestion presented was to leave the size designation chart unchanged. The Committee did not adopt this suggestion because it believes that handlers would benefit from the size designation changes.

After considering these alternatives, the Committee recommended relaxing the pack requirements for seven size designations, eliminating one size designation, and adding two new size designations. Small and large growers and handlers are expected to benefit from this relaxation. It is estimated that grower returns will increase by approximately $1.00 per box.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large kiwifruit handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sectors.

In addition, the USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Further, the Committee's meeting was widely publicized throughout the kiwifruit industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the September 19, 2001, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

This rule invites comments on relaxing a pack requirement currently prescribed under the California marketing order. Any comments received prior to finalization of this rule.

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that this interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) This rule relaxes pack requirements; (2) the 2001-02 harvest is expected to begin during October and this relaxation should cover as much of the harvest as possible; (3) the Committee unanimously recommended these changes to provide handlers more marketing flexibility at a public meeting and interested parties had an opportunity to provide input; and (4) this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule.

The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay certification of the airplane and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance.

The FAA has determined that good cause exists for making these special conditions effective upon issuance; however, interested persons are invited to submit such written data, views, or arguments, as they may desire. Communications should identify the regulatory docket number and be submitted in duplicate to the address specified above. All communications received on or before the closing date for comments will be considered by the Administrator. These special conditions may be changed in light of the comments received. All comments received will be available in the Rules Docket for examination by interested persons, both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerning this rulemaking will be filed in the docket. Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to these special conditions must include a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. NM200.” The postcard will be date stamped and returned to the commenter.

On June 5, 2001, Aircraft Systems & Manufacturing, Georgetown, Texas, applied for a Supplemental Type Certificate (STC) to modify Boeing Model 727-100/-200 series airplanes. These airplanes are low-wing, pressurized transport category airplanes with three fuselage-mounted jet engines. They are capable of seating between 120 and 189 passengers, depending upon the model and configuration. The modification incorporates the installation of new electronic air data systems consisting of a single air data computer, electronic altimeter for display of No. 1 altitude data and an air data display unit for display of No. 2 altitude data. These systems have a potential to be vulnerable to high-intensity radiated fields (HIRF) external to the airplane.

Under the provisions of 14 CFR 21.101, Aircraft Systems & Manufacturing must show that the Boeing Model 727-100/-200 series airplanes, as modified to include the new electronic air data systems, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A3WE or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The specific regulations included in the certification basis for the Boeing Model 727-100/-200 series airplanes include Civil Air Regulations (CAR) 4b, as amended by amendment 4b-1 through 4b-11.

If the Administrator finds that the applicable airworthiness regulations (i.e., CAR 4b, as amended) do not contain adequate or appropriate safety standards for the Boeing Model 727-100/-200 series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions, as appropriate, are issued in accordance with § 11.49, as required by §§ 11.28 and 11.29, and become part of the airplane's type certification basis in accordance with § 21.101(b)(2).

Special conditions are initially applicable to the model for which they are issued. Should Aircraft Systems & Manufacturing apply at a later date for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under the provisions of § 21.101(a)(1).

As noted earlier, the Boeing 727-100/-200 series airplanes modified by Aircraft Systems & Manufacturing will incorporate new electronic air data systems that will perform critical functions. These systems may be vulnerable to high-intensity radiated fields external to the airplane. The current airworthiness standards of part 25 do not contain adequate or appropriate safety standards for the protection of this equipment from the adverse effects of HIRF. Accordingly, these systems are considered to be a novel or unusual design features.

There is no specific regulation that addresses requirements for protection of electrical and electronic systems from HIRF. Increased power levels from ground-based radio transmitters and the growing use of sensitive electrical and electronic systems to command and control airplanes have made it necessary to provide adequate protection.

To ensure that a level of safety is achieved that is equivalent to that intended by the regulations incorporated by reference, special conditions are needed for the Boeing Model 727-100/-200 series airplanes modified by Aircraft Systems & Manufacturing. These special conditions will require that these systems, which perform critical functions, must be designed and installed to preclude component damage and interruption of function due to both the direct and indirect effects of HIRF.

With the trend toward increased power levels from ground-based transmitters, plus the advent of space and satellite communications coupled with electronic command and control of the airplane, the immunity of critical digital avionics systems to HIRF must be established.

It is not possible to precisely define the HIRF to which the airplane will be exposed in service. There is also uncertainty concerning the effectiveness of airframe shielding for HIRF. Furthermore, coupling of electromagnetic energy to cockpit-installed equipment through the cockpit window apertures is undefined. Based on surveys and analysis of existing HIRF emitters, an adequate level of protection exists when compliance with the HIRF protection special condition is shown in accordance with either paragraph 1 OR 2 below:

1. A minimum threat of 100 volts rms per meter electric field strength from 10 KHz to 18 GHz.

a. The threat must be applied to the system elements and their associated wiring harnesses without the benefit of airframe shielding.

b. Demonstration of this level of protection is established through system tests and analysis.

2. A threat external to the airframe of the following field strengths for the frequency ranges indicated. Both peak and average field strength components from the Table are to be demonstrated.

The threat levels identified above are the result of an FAA review of existing studies on the subject of HIRF, in light of the ongoing work of the Electromagnetic Effects Harmonization Working Group of the Aviation Rulemaking Advisory Committee.

As discussed above, these special conditions are applicable to the Boeing Model 727 -100/-200 series airplanes modified by Aircraft Systems & Manufacturing to install new electronic air data systems. Should Aircraft Systems & Manufacturing apply at a later date for a design change approval to modify any other model included on Type Certificate A3WE to incorporate the same novel or unusual design feature, these special conditions would apply to that model as well under the provisions of § 21.101(a)(1).

This action affects only certain design features on the Boeing Model 727 -100/-200 series airplanes modified by Aircraft Systems & Manufacturing to include the new electronic air data systems. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplanes.

The substance of the special conditions for these airplanes has been subjected to the notice and comment procedure in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. For this reason, and because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions immediately. Therefore, these special conditions are being made effective upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the supplemental type certification basis for the Boeing Model 727-100/-200 series airplanes as modified by Aircraft Systems & Manufacturing.

1. Protection from Unwanted Effects of High-Intensity Radiated Fields (HIRF). Each electrical and electronic system that performs critical functions must be designed and installed to ensure that the operation and operational capability of these systems to perform critical functions are not adversely affected when the airplane is exposed to high-intensity radiated fields.

2. For the purpose of these special conditions, the following definition applies: Critical Functions: Functions whose failure would contribute to or cause a failure condition that would prevent the continued safe flight and landing of the airplane.

The Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, recently notified the FAA that an unsafe condition may exist on certain Airbus Model A300 B2 and B4 series airplanes. The DGAC advises that two reports were received which indicated that, during regularly scheduled maintenance, damage to the variable lever arm (VLA) of the rudder control system was found. Further investigation revealed that the VLA spring box mountings, the mounting trunnion, and a tie rod also were damaged. Such damage was attributed to corrosion of the spring boxes. Both affected spring boxes were installed per the pre-vendor service bulletin (VSB) 27-21-1H standard, causing stiff operation of the springs and subsequent damage. Failure of one spring box of the VLA does not affect safety of flight, but failure of both spring boxes could result in loss of rudder control and consequent reduced controllability of the airplane.

Airbus has issued All Operators Telex (AOT) A300-27A0196, dated September 20, 2001, which describes procedures for determining the part and amendment numbers of the variable lever arm (VLA) of the rudder control system to verify the spring boxes were installed using the post-VSB 27-21-1H standard, and corrective actions, if necessary. The corrective actions include a detailed visual inspection of the VLA tie rod for damage (bent or ruptured rod) if the part and amendment numbers of the VLA are incorrect, and replacement of any damaged tie rod with a new tie rod.

The DGAC classified this AOT as mandatory and issued French telegraphic airworthiness directive T 2001-447(B), dated September 24, 2001, in order to assure the continued airworthiness of these airplanes in France.

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

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design registered in the United States, this AD is being issued to prevent failure of both spring boxes of the variable lever arm (VLA) due to corrosion damage, which could result in jammed rudder pedals, loss of rudder control, and consequent reduced controllability of the airplane. This AD requires a one-time inspection to determine the part number of the VLA of the rudder control system, and follow-on actions, if necessary. The actions are required to be accomplished in accordance with the AOT described previously.

This is considered to be interim action. The manufacturer is gathering data that will enable it to obtain better insight into the nature, cause, and extent of the corrosion damage, and eventually to develop final action to address the unsafe condition. Once final action has been identified, 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-300-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 .

On August 16, 1976, the FAA issued AD 76-17-08, Amendment 39-2700 (41 FR 36015, August 26, 1976). On September 16, 1976, the FAA revised that AD issuing AD 76-17-08 R1, Amendment 39-3043 (42 FR 51563, September 29, 1977), for EHC Model F-28, F-28A, and 280 helicopters to establish service time limits after which all unmodified shafts must be replaced. That AD was prompted by FAA's determination, after a review of the service experience, that shaft crack sites may be introduced by allowing the shafts to remain in service for extended periods without modification. That condition, if not corrected, could result in shaft failure and subsequent loss of control of the helicopter.

Since the issuance of that AD, EHC has issued Service Directive Bulletin No. 0094, Revision 1, dated May 31, 2001, specifying certain inspections for a crack in certain shafts due to failure of a shaft on an EHC Model F-28A helicopter.

The FAA and the National Transportation Safety Board (NTSB) investigated the accident involving the failure of a shaft on the EHC Model F28A helicopter. The shaft was designed with a small upper fillet radius of 0.13 inch and failed due to a fatigue crack. Such a shaft design causes a high stress concentration. That, coupled with the occurrence of more frequent than anticipated high flight load conditions, can accelerate the development of fatigue cracks. Preliminary investigation revealed that the shaft installed in the transmission, P/N 28-13101-1-R, failed because of a fatigue crack in the fillet area of the shaft directly beneath the main rotor hub. The FAA concluded, based on its investigation and after reviewing NTSB Report 01-052, dated April 13, 2001, that an inspection should be made of such shafts for cracks before further flight. The FAA determined that since inspections for cracks are imprecise and detection of all existing cracks is uncertain, a shaft with a small radius fillet should be replaced with an airworthy shaft with a large radius fillet on certain model helicopters within 300 hours time-in-service (TIS).

We have identified an unsafe condition that is likely to exist or develop on other helicopters of the same type designs. This AD supersedes AD 76-17-08 and 76-17-08 R1 for EHC Model F-28, F-28A, and 280 helicopters to add Model F-28C, F-28F, 280C, 280F, and 280FX helicopters, to require the following:

• Before further flight, determine the transmission P/N and the radius of the shaft fillet.

• For certain models, replace any transmission having a shaft with a small radius fillet with an airworthy transmission before further flight.

• For certain other models, replace the transmission having a small radius shaft fillet that is not P/N 28-13101-1 or -1-R with an airworthy transmission before further flight.

• For certain models with transmission, P/N 28-13101-1 or -1-R, having a small radius shaft fillet installed:

• Before further flight and at recurring intervals, visually inspect the shaft for a crack. If a crack is suspected, dye penetrant inspect the shaft before further flight.

• Within 5 hours TIS and thereafter at specified intervals, dye penetrant inspect the shaft for a crack, and polish out specified nicks and scratches.

• If a crack is found or if a nick or scratch exceeds a specified limit, replace the transmission with an airworthy transmission before further flight.

• Within 300 hours TIS or at the next transmission overhaul after the effective date of this AD, whichever occurs first, replace transmission, P/N 28-13101-1 or -1-R, with an airworthy transmission having a large radius shaft fillet.

The short compliance time involved is required because the previously described critical unsafe condition can adversely affect the controllability and structural integrity of the helicopter. Therefore, determining the transmission P/N and the shaft fillet radius, conducting the required inspections, and replacing any unairworthy transmission with an airworthy transmission are required before further flight, and this AD must be issued immediately.

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.

The FAA estimates that 17 helicopters will be affected by this AD, that it will take approximately 1.4 work hours to accomplish the inspections and that the average labor rate is $60 per work hour. A replacement shaft will cost approximately $3,000 per helicopter, and overhauling the transmission and replacing the shaft will cost approximately $12,000. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be $256,428 assuming replacement of the transmission after an inspection of every helicopter affected by this AD.

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 should 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.

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 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 mailed comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 2001-SW-28-AD.” The postcard will be date stamped and returned to the commenter.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Bombardier Model DHC-8-102, -103, -106, -201, -202, -301, -311, and -315 series airplanes was published in the Federal Register on August 23, 2001 (66 FR 44322). That action proposed to require modifying the oxygen flow control valve.

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 150 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 actions, and that the average labor rate is $60 per work hour. The cost for required parts will be negligible. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $9,000, 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) by superseding AD 2000-14-04, amendment 39-11813 (65 FR 43219, July 13, 2000), which is applicable to all Boeing Model 747 series airplanes, was published in the Federal Register on June 5, 2001 (66 FR 30109). The action proposed to require a one-time inspection of the fuselage skin adjacent to the drag splice fitting to detect cracking, and follow-on actions, if necessary. The action also proposed to mandate new repetitive inspections for cracking of the fuselage skin adjacent to the drag splice fitting.

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 Boeing Alert Service Bulletin 747-53A2444, Revision 2, dated May 24, 2001 (referenced as the appropriate source of service information for accomplishment of certain actions in the proposed rule), be added to paragraph (a) of the proposed rule, which referenced Revision 1 of the bulletin, as another source of service information for accomplishment of the external detailed visual inspection. The FAA agrees that Revision 2 of the service bulletin can be added to paragraph (a) of the final rule, and we have revised the final rule accordingly.

One commenter asks that Note 5 of the proposed rule, which gives credit for inspections and repairs accomplished before July 28, 2000, be changed to also give credit for previous accomplishment of the determination of a secondary inspection, as specified in paragraph (c) of the proposed rule. The commenter does not provide a reason for this request. The FAA agrees and we have changed Note 5 of the final rule, for clarification, to include previous accomplishment of the determination of a secondary inspection. We also have removed “repairs” from the note because the original release of the service bulletin does not provide instructions for repairs.

The same commenter asks that the title “Repetitive Inspections,” which precedes paragraph (d) of the final rule, be changed to “Initial and Repetitive Inspections.” We agree and have changed the title accordingly.

One commenter asks for clarification of the compliance time for the repetitive inspections specified in paragraph (d) of the proposed rule for operators who previously accomplished the initial inspections in that paragraph per Figure 4 of the Work Instructions of Boeing Alert Service Bulletin 747-53A2444, dated May 25, 2000, or Revision 1, dated June 15, 2000. The commenter wants clarification that if it did the inspections per either of those service bulletins, it is only required to continue the repetitive inspections per Figures 4, 5, 6, or 7 of the Work Instructions of Boeing Alert Service Bulletin 747-53A2444, Revision 2, dated May 24, 2001, at 3,000 flight cycle intervals.

The FAA infers that the commenter is asking to do the repetitive inspections specified in paragraph (d) of the final rule within 3,000 flight cycles after doing the initial inspections per Boeing Alert Service Bulletin 747-53A2444, dated May 25, 2000, or Revision 1, dated June 15, 2000. We do not concur because the inspections specified in Revision 2 involve more comprehensive inspection procedures than those in the previous versions of the service bulletin. Operators that have done the initial inspections per previous versions of the service bulletin do not meet the requirements for the repetitive inspection intervals specified in paragraph (d) of the final rule until the initial inspections have been done per Revision 2. As specified in the preamble of the proposed rule, since the issuance of AD 2000-14-04, we received a report of severe cracking on a Model 747 series airplane, and Revision 2 of the service bulletin was issued to address that additional cracking. No change to the final rule is necessary in this regard.

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

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

There are approximately 1,301 airplanes of the affected design in the worldwide fleet. The FAA estimates that 260 airplanes of U.S. registry will be affected by this AD.

The actions that are currently required by AD 2000-14-04 take approximately 2 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the currently required actions on U.S. operators is estimated to be $31,200, or $120 per airplane.

The new inspections that are required by this AD action will take approximately 7 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the new requirements of this AD on U.S. operators is estimated to be $109,200, or $420 per airplane, per inspection cycle.

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 all Dassault Model Mystere-Falcon 50, Mystere-Falcon 900, and Falcon 900EX series airplanes was published in the Federal Register on April 17, 2001 (66 FR 19727). That action proposed to require revising the Emergency Procedures and Abnormal Procedures sections of the airplane flight manual to advise the flightcrew to immediately don oxygen masks in the event of significant pressurization or oxygen level changes.

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

The manufacturer reports the issuance of certain AFM changes, which correspond to the Figures associated with paragraphs (a) through (f) of this AD. The following AFM changes have been issued:

The FAA has accordingly revised the final rule to replace Note 1 of the proposed AD with new paragraph (g) of the final rule. Paragraph (g) specifies that the insertion of those AFM changes (also listed in Table 1 of this AD) into the AFM are acceptable for compliance with the corresponding requirements of this AD.

After careful review of the available data, including the comment 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 137 airplanes of U.S. registry will be affected by this AD. It will take approximately 1 work hour per airplane to accomplish the actions, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this AD on U.S. operators is estimated to be $8,220, 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, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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

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

On April 5, 2001, the FAA proposed (66 FR 18055) to amend 14 CFR part 73 to increase the vertical limits of R-6312 from 12,000 feet above MSL to FL 230. The FAA took this action in response to a request from the U.S. Navy indicating that current upper limit of R-6312 (12,000 feet above MSL) is not suitable for their training requirements. Specifically, altitudes up to FL230 are essential to fulfill their requirement to conduct high altitude release bombing training. Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on this proposal to the FAA.

In response to the Notice of Proposed Rule-making, the FAA received one comment in opposition to the change. The commenter indicated that the proposed increase to the ceiling from 12,000 feet MSL to FL 230 would cause visual flight rules (VFR) operations transiting the area to circumnavigate the restricted area. They requested an increase in the height of the east/west corridor through the restricted area from 1,000-feet AGL to 4,500 feet MSL to preclude the compression of transiting VFR aircraft into the corridor. The FAA disagrees with this comment because the predominant flow of VFR traffic in the area is north to south and visa versa. The affected aircraft would be higher than 12,000 feet and would not be likely to descend to 4,500 feet and circle to the east or west to pass through the east/west corridor rather than flying approximately 10nm to circumnavigate the restricted area. Further, increasing the height of the corridor would have a significant negative impact on military training without a significant benefit to civil VFR traffic in that it would prohibit low altitude awareness training.

Additionally, the commenter requests that the controlling agency's contact frequency be published in the tabular portion of the sectional aeronautical chart. The FAA agrees that it would be beneficial to display the contact frequency on the chart and will publish the contact frequency either in the tabular area or on the face of the sectional aeronautical chart.

This amendment to 14 CFR part 73 raises the vertical limits of R-6312 from 12,000 feet above MSL to FL 230. This additional altitude is required in order to meet the Navy's requirement for high altitude release bombing training. No other change to R-6312 is made by this action. Section 73.63 of 14 CFR part 73 was republished in FAA Order 7400.8H, dated September 1, 2000.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current.

It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The United States Navy (USN) determined that this amendment of the restricted area's designated altitude qualifies for a categorical exclusion. The FAA has reviewed the USN's environmental documentation and concludes that this action is categorically excluded in accordance with FAA Order 1050.1D, Procedures for Handling Environmental Impacts, and the FAA/DOD Memorandum of Understanding of 1998 regarding Special Use Airspace actions.

Previous related rulemakings: Express Mail market response rules: 60 FR 12119; expedited minor classification cases, market test rules for classification changes; limited provisional service changes; and multi-year test period rules: 61 FR 24453—61 FR 24457.

Current rulemaking: 66 FR 39560 (7/13/01) and 66 FR 38602 (7/25/01).

In order no. 1319, the Commission requested interested persons to comment on the advisability of reissuing five sets of rules of practice that had expired through operation of five-year sunset provisions. PRC Order No. 1319 (July 18, 2001). These rules, which provide for expedited consideration of certain Postal Service requests for a recommended decision, are of two types. The first concerns changes in Express Mail rates and fees;  1 the second encompasses four sets of rules addressing certain limited classification changes. 2

Four sets of comments were filed. The comments reflect no unanimity, ranging from the Postal Service's suggestion that, at a minimum, each rule be reissued, to United Parcel Service's (UPS's) position that none of the rules be reissued. The comments, which are briefly summarized below, are available for public inspection at the Commission's offices and via the Commission's Web site, www.prc.gov.

Upon consideration of the comments and an assessment of the rules, the Commission has determined to reissue the rules for an additional five-year period. The Commission, however, declines to broaden the scope of this proceeding beyond the affected rules.

The Postal Service urges the Commission to reissue and to consider broadening the scope of the rules. The Postal Service asserts that, at a minimum, the limited classification rules should be reissued, suggesting further that the Commission should consider expanding the concept of multi-year test periods, rule 181, to include alternative test periods in rate and classification proceedings before the Commission. Postal Service Comments at 1-2, 12.

Second, the Postal Service advocates that the Express Mail rules be reissued, while suggesting the possibility that those procedures be expanded to other services. Id. at 2-3. Recognizing that this suggestion may be beyond the reach of this proceeding, the Postal Service concludes that the concept “is worthy of consideration at some point in the future.” Id. at 3.

Third, the Postal Service raises issues not covered by the expired rules, i.e., rate bands and negotiated service agreements, concluding that “these and other measures of ratemaking flexibility would be worthwhile topics of a future rulemaking.” Ibid.

In support of reissuing the rules, the Postal Service focuses on the flexibility they afford, particularly the limited classification rules. The infrequency with which these rules have been invoked is not, according to the Postal Service, an indication that they lack value. Rather, a combination of events has lessened the Postal Service's ability to invoke the rules, e.g., its caseload before the Commission. Id. at 4-5. Underscoring the point, it notes that the Commission's rules governing experimental classification proposals, 39 U.S.C. 3001.67-67d, were employed only once in the first fifteen years of their existence. Id. at 4. Beginning in 1996, however, they have been invoked numerous times.

Turning to the rules, the Postal Service discusses the instances in which the limited classification rules have been invoked. It concludes that these rules, involving market tests, provisional services, and minor classification changes, while from its perspective somewhat imperfect, worked sufficiently well to warrant their renewal. Id. at 7-11. Concerning multi-year test periods, a rule that it has yet to invoke, the Postal Service notes the importance of having an opportunity to recover start-up costs over an appropriate period. In addition, it broaches the issue of expanding the Commission's rules to permit alternate test periods “in all Commission proceedings conducted pursuant to 39 U.S.C. 3622 and 3623.” Id. at 12. Noting that this issue has been previously considered, the Postal Service states that such an expansion would promote rate proposals based on phased rate schedules “over a predetermined rate cycle.” Id. at 13.

Finally, citing their potential utility, the Postal Service urges the Commission to renew the Express Mail rules. It would prefer, however, if the rules were expanded “to other services facing market pressures similar to Express Mail.” Id. at 15. As noted above, the Postal Service recognizes that this suggestion may exceed the scope of this rulemaking. Id. at 2-3.

The NNA submitted brief comments advocating that each of the expired rules be reissued.

The OCA frames the issue whether to reissue the rules by posing several questions, e.g., whether the rules were invoked, whether they are likely to be used, and whether the rules need to be revised. OCA Comments at 2. Having considered these questions, the OCA recommends against reissuing the Express Mail rules, but favors renewing those involving limited classification changes.

Citing the history of the rules, i.e., their never being invoked and the Postal Service's failure to seek their renewal, the OCA claims that the Express Mail rules are unnecessary. In addition, the OCA asserts that the Commission can, on an ad hoc basis, accommodate requests for expedition should it be warranted. Id. at 3.

In general, the OCA finds renewal of the limited classification rules is justified because the rules have proved useful, workable, and practical. Id. at 3-6. The OCA supports reissuing rule 181, multi-year test periods, because among other things, the rule signals the Commission's willingness to consider new services requiring a longer test period. Id. at 7. 3

UPS opposes reissuing the rules, contending that they are neither necessary nor useful. UPS Comments at 1-2. UPS advances three arguments against reissuing the Express Mail rules. First, it notes that they have never been employed by the Postal Service. Id. at 2. Second, it asserts that the market for expedited letters is mature, implying that there is no need for the Express Mail rules. Ibid. Third, UPS argues that the Commission's regular rules are adequate to address requests for expedition. Id. at 3; see also 6-9.

Citing their infrequent use, UPS also opposes reissuing the rules concerning limited classification changes. Id. at 3-4. Further, UPS asserts that the rules for minor classification cases, provisional changes, and market tests are ambiguous and thus “invite litigation over whether the proper set of rules is being applied.” Id. at 5.

UPS argues that the Commission's regular rules are sufficiently flexible to address the Postal Service's rate and classification requests. In support, it cites, inter alia, rule 1 (the rules are to be liberally construed to achieve a just and speedy result), rule 23(a)(1) (concerning the presiding officer's hearing authority), and rule 22 (concerning waivers). Id. at 6-7. In addition, UPS suggests that the rules governing experimental changes provide sufficient flexibility “to accommodate situations that the regular rules do not cover.” Id. at 8.

Finally, UPS contends that reissuing the rules poses certain risks. These include: predetermined procedural tracks that may not be appropriate, more rules add complexity and confusion and, assuming the rules are unnecessary, raising the “potential for implicating due process concerns.” Id. at 10.

The Commission's decision to reissue the rules is influenced by several factors. First, the rules were previously enacted. Thus not only are they well known to participants, there has been ample opportunity to consider and to comment on the rules. Second, the rules are narrowly drawn and have not engendered significant controversy. Third, they afford the Postal Service procedural flexibility while, concomitantly, protecting intervenors' rights to participate meaningfully in any such proceeding. Fourth, the rules have proven to be workable, or provide an option that, on balance, continues to have merit. Finally, renewing the rules, including the sunset provisions, will enable the Postal Service and parties to gain further experience while also tolling their existence should they become unnecessary or obsolete.

The limited classification rules have proven to be workable and useful. See OCA Comments at 3 et seq. , Postal Service Comments at 7 et seq. For example, the market test rules, 39 CFR 3001.161-166, were successfully invoked in docket no. MC98-1, Mailing Online. The rules permitting minor classification changes, 39 CFR 3001.69-69c, were successfully employed in docket no. MC99-4, Bulk Parcel Return Service. The settlement which resulted in that proceeding was facilitated, at least in part, by the operation of the rules. The Postal Service invoked the rules concerning provisional services, 39 CFR 3001.171-176, in docket no. MC97-5. While the packaging service proposal in that proceeding was never implemented, the rules operated effectively, allowing the Postal Service to introduce a new product. Similarly, the multi-year test period rules, 39 CFR 3001.181-182, while not yet invoked, provide a useful tool for assessing new services. Taken as a whole, the rules provide a simplified means for the Postal Service to present and the Commission to consider innovations and refinements in its service offerings.

UPS's claim that the rules are ambiguous is not sufficient reason not to reissue them. First, the claim has not been borne out in practice. The rules have worked reasonably well. Second, UPS's suggestion that the regular rules are an adequate ad hoc surrogate for the instant rules is not persuasive. The argument implicitly assumes that were the Postal Service to request a waiver of the regular rules it would engender no controversy in its own right. In practice, such a result would appear to be unlikely. On occasion, controversy may be an unavoidable byproduct of any rules, but this does not establish a legitimate basis to discard the instant rules. 4

The Express Mail market rules, 39 CFR 3001.57-57c (1999), present a closer question. 5 Two commenters favor and two commenters oppose their renewal. Those opposing note that the rule has never been invoked. UPS Comments at 2; OCA Comments at 2. They assert this demonstrates that the rule is unnecessary. Lack of use, however, is not necessarily dispositive. As the Postal Service notes, the rules governing experimental classification changes were used but once in their first 15 years of existence, but have been employed seven times in the last six years. 6 Furthermore, the Postal Service cites various factors that weighed on its use of these rules. Postal Service Comments at 14. In addition, the Postal Service touts the potential value of the rules.

The Commission concludes that reissuing the Express Mail Service rules is appropriate. Lack of use is not, in this instance, compelling enough to foreclose the flexibility afforded by this option. The rules provide adequate safeguards to protect the interests of all interested persons. Furthermore, inclusion of the sunset provision will ensure that these rules will be reviewed again within five years or expire on their own accord.

The Commission declines to act on the Postal Service's suggestion that its rules be expanded. See, e.g., Postal Service Comments at 2-3. This proceeding was commenced solely to consider the status of the expired rules. Expanding it to include new issues would raise concerns about timing and notice. This is not to suggest that the topics do not merit further attention, but simply that this is not the appropriate vehicle.

In conclusion, pursuant to the foregoing discussion, the Commission hereby amends its rules of practice as set forth in the attachment to this order.

It is ordered:

1. The Commission's rules of practice are amended as set forth in the attachment.

2. The attached rules are effective November 28, 2001.

3. The acting secretary shall cause this order to be published in the Federal Register .

This section provides additional information by addressing the following questions:

Title V of the CAA Amendments of 1990 required all state and local permitting authorities to develop operating permit programs that met certain federal criteria. In implementing the title V operating permit programs, the permitting authorities require certain sources of air pollution to obtain permits that contain all applicable requirements under the CAA. The focus of the operating permit program is to improve enforcement by issuing each source a permit that consolidates all of the applicable CAA requirements into a federally enforceable document. By consolidating all of the applicable requirements for a facility, 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 the title V program include: “major” sources of air pollution and certain other sources specified in the CAA or in EPA's implementing regulations. For example, all sources regulated under the acid rain program, regardless of size, must obtain operating permits. Examples of major sources include those that have the potential to emit 100 tons per year or more of volatile organic compounds (VOCs), carbon monoxide, lead, sulfur dioxide, nitrogen oxides ( NO X ), or particulate matter (PM 10 ); those that emit 10 tons per year of any single hazardous air pollutant (specifically listed under the CAA); or those that emit 25 tons per year or more of a combination of hazardous air pollutants (HAPs). In areas that are not meeting the National Ambient Air Quality Standards for ozone, carbon monoxide, or particulate matter, major sources are defined by the gravity of the nonattainment classification. For example, in ozone nonattainment areas classified as “serious,” major sources include those with the potential of emitting 50 tons per year or more of VOCs or NO X .

Where a title V operating permit program substantially, but not fully, met the criteria outlined in the implementing regulations codified at 40 Code of Federal Regulations (CFR) part 70, EPA granted interim approval contingent on the state revising its program to correct the deficiencies. Because the Alabama, Huntsville, and Jefferson County programs substantially, but not fully, met the requirements of part 70, EPA granted interim approval to these programs in a rulemaking (60 FR 57346) published on November 15, 1995. The interim approval notice described the conditions that had to be met in order for the Alabama, Huntsville, and Jefferson County programs to receive full approval. Interim approval of these programs expires on December 1, 2001.

The Alabama Department of Environmental Management, the City of Huntsville's Division of Natural Resources, and the Jefferson County Department of Health have fulfilled the conditions of the interim approval granted on November 15, 1995. On August 28, 2001, EPA published a notice in the Federal Register (see 66 FR 45253) proposing full approval of the Alabama, Huntsville, and Jefferson County title V operating permit programs, and proposing approval of other program revisions. Since EPA did not receive any comments on the proposal, this action promulgates final full approval of the Alabama, Huntsville, and Jefferson County programs and final approval of the other program changes described in the proposal.

Copies of the Alabama, Huntsville, and Jefferson County submittals and other supporting documentation used in developing the final full approval are contained in docket files maintained at the EPA Region 4 office. The docket is an organized and complete file of all the information submitted to, or otherwise considered by, EPA in the development of this proposed full approval. The primary purposes of the docket are: (1) To allow interested parties a means to identify and locate documents so that they can effectively participate in the approval process, and (2) to serve as the record in case of judicial review. The docket files are available for public inspection at the location listed under the ADDRESSES section of this document.

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

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 is not an economically significant regulatory action as defined in Executive Order 12866, and it does not involve decisions intended to mitigate environmental health or safety risks.

This rule does not have Federalism implications because it will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, “Federalism” (64 FR 43255, August 10, 1999). This rule merely approves existing requirements under state law, and does not alter the relationship or the distribution of power and responsibilities between the state and the federal government established in the CAA.

This rule does not have tribal implications because it will 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, “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000).

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

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

This rule will not have a significant impact on a substantial number of small entities because operating permit program approvals under section 502 of the CAA do not create any new requirements but simply approve requirements that the state is already imposing. Therefore, because this approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

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

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

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.

In reviewing operating permit programs, EPA's role is to approve state choices, provided that they meet the criteria of the CAA and EPA's regulations codified at 40 CFR part 70. In this context, in the absence of a prior existing requirement for the state to use VCS, EPA has no authority to disapprove an operating permit program for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews an operating permit program, to use VCS in place of an operating permit program that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of NTTAA do not apply.

This action will not impose any collection of information subject to the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., other than those previously approved and assigned OMB control number 2060-0243. For additional information concerning these requirements, see 40 CFR part 70. 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 Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

This is a summary of a Seventh Report and Order ( 7th R&O ) in WT Docket No. 97-82, adopted on September 19, 2001 and released on September 27, 2001. The full text of this document is available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

1. In the 7th R&O, the Commission adopts modifications to § 1.2105(c) of the Commission's rules, the competitive bidding “anti-collusion rule.” Specifically, the Commission amends the rule so that its language clearly reflects the Commission's practice of prohibiting communications regarding bids or bidding strategies only between auction applicants that have applied to bid on licenses in any of the same geographic areas. In addition, the Commission amends the rule to (i) clarify that it prohibits an auction applicant from discussing a competing applicant's bids or bidding strategies even if the first applicant does not discuss its own bids or bidding strategies, and (ii) require auction applicants that make or receive a prohibited communication of bids or bidding strategies to report the communication immediately to the Commission in writing.

2. The Commission adopted § 1.2105(c)(1) to deter anticompetitive conduct during auctions of spectrum licenses and to ensure the competitiveness of post-auction markets. The Commission's anti-collusion rule seeks to foster a level competitive playing field during auctions and to “ensure that the government receives a fair market price for the use of the spectrum.” In promulgating the rule, the Commission was particularly concerned that some firms might engage in behavior that would unfairly disadvantage other bidders. Communications that violate § 1.2105(c)(1) have the potential to undermine the competitiveness of our auction process and public confidence in the integrity of that process.

3. In the Third Further Notice of Proposed Rule Making ( FNPRM ), 65 FR 6113 (February 8, 2000) the Commission proposed to amend § 1.2105(c)(1) to prohibit an auction applicant from discussing another applicant's bids or bidding strategies even if the first applicant does not discuss or disclose its own bids or bidding strategies. The Commission also proposed to amend § 1.2105(c) to require any auction applicant that makes or receives a communication of bids or bidding strategies prohibited under § 1.2105(c)(1) to report such a communication to the Commission promptly. In addition, the Commission sought comment on whether other changes to § 1.2105(c)(1) may be warranted at this time in light of Congress's mandate that the Commission ensure competitive auctions. The Commission received one comment on the amendments proposed in the FNPRM.

4. Background. Subject to certain exceptions, § 1.2105(c)(1) prohibits auction applicants that have applied to bid on any common license area from communicating their bids or bidding strategies with each other from the short-form application filing deadline to the post-auction down payment deadline, unless such applicants are members of a bidding consortium or other joint bidding agreement reported on their short-form applications. In other words, if two auction applicants (that have not entered into an agreement and identified each other on the FCC Form 175) are each eligible to bid on numerous license areas but there is only one license area for which they are both eligible to bid, they may not discuss or disclose to each other their bids or bidding strategies relating to any license area that either of them is eligible to bid on.

5. Discussion. Applicants subject to § 1.2105(c)(1). Section 1.2105(c)(1) of the Commission's rules states that “all applicants” are prohibited from discussing or disclosing their bids or bidding strategy from the short-form application filing deadline until after the down payment deadline. Notwithstanding the term “all applicants,” the Commission has applied the prohibitions of the rule only to auction applicants that have applied to bid for licenses in any of the same geographic license areas, and thus are competing applicants. Thus, as noted, even if two auction applicants that have not identified each other as parties to an agreement on the FCC Form 175 are each eligible to bid on only one license area in common, they may not discuss or disclose to each other their bids or bidding strategies relating to any license area that either of them is eligible to bid on. For example, two applicants not listed on each other's short-form applications for an auction of broadband PCS licenses may not discuss bids or bidding strategies with each other if they are bidding for licenses in any of the same MTAs or BTAs, even if they are not bidding for the same frequency blocks. On the other hand, auction applicants that have not applied to bid on licenses in any of the same geographic areas, and thus are not competing applicants, are not subject to the prohibitions of § 1.2105(c)(1).

6. The Commission finds that it would be helpful to auction applicants to amend § 1.2105(c)(1) so that it accurately reflects the Commission's application of the rule. Thus, the Commission amends § 1.2105(c)(1) to make clear that only auction applicants that have applied for licenses in any of the same geographic license areas are prohibited from discussing with or disclosing to each other their bids or bidding strategy. The Commission also cautions auction applicants that apply to bid for licenses in any of the same geographic license areas (and that are not listed on each other's FCC Form 175) against indirectly communicating their bids or bidding strategies to each other through third-party discussions or disclosures to other auction applicants that have not applied to bid on licenses in any of the same geographic license areas.

7. Communications regarding other applicants' bids or bidding strategies. In the Western PCS Order, 14 FCC Record 21571 (1999), the Commission provided auction applicants with official notice that § 1.2105(c)(1) prohibits an auction applicant from cooperating or collaborating with respect to, or discussing or disclosing, another applicant's bids or bidding strategies. Thus, an auction applicant may violate § 1.2105(c)(1) even if it does not discuss its own bids or bidding strategies. Nevertheless, the Commission stated in the FNPRM that it believes that auction applicants would benefit if the text of the rule plainly stated that it prohibits an auction applicant from discussing another applicant's bids or bidding strategies even if it does not discuss or disclose its own bids or bidding strategies.

8. The Commission amends § 1.2105(c)(1) to clarify the prohibition against an auction applicant cooperating or collaborating with respect to, discussing with, or disclosing to a competing applicant the substance of the bids or bidding strategies of any competing applicant. The Commission believes that the rule's prohibition against discussing, or disclosing, bids or bidding strategy would have minimal deterrent force if an applicant to whom a competing applicant's bidding information is disclosed could discuss such information with either that or another competing applicant without violating the rule. For instance, absent such a prohibition, it would be easy to circumvent the rule's prohibitions as Bidder A could pass on to competing Bidder C bidding strategy information of Bidder B with whom Bidder A has a bidding agreement. The Commission believes that an applicant's discussion with a competing applicant of any other competing applicant's bids or bidding strategy could have a deleterious effect on the integrity and competitiveness of our auctions and that it is therefore essential to explicitly prohibit such discussions.

9. Background. Whenever the information furnished in a pending application is no longer substantially accurate and complete in all significant respects, § 1.65(a) of the Commission's rules requires the applicant to amend the application so as to furnish additional or corrected information “as promptly as possible and in any event within 30 days * * *.” Pursuant to § 1.65(a), auction applicants are required to maintain the accuracy and completeness of their pending short-form applications. Because the short-form application contains a certification under penalty of perjury that the applicant has not entered and will not enter into any agreements other than those identified in its application, auction applicants that engage in communications of bids or bidding strategies that result in a bidding agreement, arrangement or understanding not already identified on their short-form applications are required to promptly disclose any such agreement, arrangement or understanding to the Commission by amending their pending applications. Thus, even though competing applicants are prohibited by § 1.2105(c)(1) from communicating their bids or bidding strategies to each other after the short-form application filing deadline, applicants that engage in such prohibited discussions are nonetheless required by § 1.65(a) to promptly disclose any resulting agreements or understandings by amending their pending applications. Failure to make the notification required by § 1.65(a) would constitute a separate violation of our rules in addition to the underlying violation of § 1.2105(c)(1).

10. In the FNPRM, the Commission sought comment on whether the integrity and competitiveness of its auction process would be enhanced if it required auction applicants that make or receive communications prohibited under § 1.2105(c)(1) to report promptly such communications to the Commission even if the communications do not result in an agreement, arrangement or understanding that must be reported to the Commission under § 1.65(a). The Commission invited comment on whether would-be disseminators of prohibited bidding or bidding strategy information, knowing that recipients of such prohibited information would have an affirmative duty to disclose promptly such communications to the Commission, would be deterred from making such communications. The Commission also solicited comment on any potential burden that may be associated with such a reporting requirement, and the appropriate deadline for making such a report.

11. Discussion. The Commission amends § 1.2105(c) to require auction applicants that make or receive a communication of bids or bidding strategies prohibited under § 1.2105(c)(1) to report such a communication to the Commission immediately, even if the communication does not result in an agreement, arrangement or understanding that must be reported under § 1.65(a). As it noted in the FNPRM, the Commission has found that even when a prohibited communication of bids or bidding strategies is limited to one applicant's bids or bidding strategies, it may unfairly disadvantage the other bidders in the market by creating an impermissible asymmetry of information. Thus, when one bidder is privy to a competing bidder's strategic bidding information without reporting this fact, it may use such information to manipulate the auctions process and gain an unfair competitive advantage over other bidders in the market who are unable to access, analyze, and act upon this strategic information in making bidding decisions. Section 1.2105(c)(1) of the Commission's rules attempts to address this concern by prohibiting all auction applicants that have applied to bid on any of the same geographic areas from cooperating or collaborating with respect to, discussing or disclosing to each other in any manner the substance of their bids or bidding strategies. The Commission has encountered instances of violations of § 1.2105. In some instances, there has been concern expressed about a bidder's obligation to report information received from another bidder that potentially violates the Commission's rule, and it has previously counseled applicants that the safest course of action for a recipient of a prohibited communication during the period in which § 1.2105(c) prohibitions are in effect would be to terminate the discussion and promptly report the communication to the Commission. Therefore, the Commission further clarifies the anti-collusion rule by including a reporting requirement, as a deterrent to would-be disseminators of prohibited information regarding bids or bidding strategies. This will, the Commission believes, make clear the responsibility to report such behavior and will thereby enhance the competitiveness and fairness of our spectrum auctions.

12. Thus, an applicant's duty under § 1.2105(c) is two-fold. Applicants may not engage in prohibited communications with competing applicants, and they are obligated to report to the Commission all communications prohibited under § 1.2105(c)(1). Thus, an applicant's failure to report a prohibited communication pursuant to § 1.2105(c)(6) may constitute a rule violation distinct from any act of collusion that violates § 1.2105(c)(1). Moreover, the § 1.2105(c)(6) reporting requirement the Commission adopts today applies even if the communication of bids or bidding strategies does not result in a bidding arrangement, agreement or understanding that must be reported to the Commission under § 1.65(a). As explained previously, applicants have always had, under § 1.65(a), an affirmative duty to report any communications of bids or bidding strategies that result in a bidding arrangement, agreement or understanding after the filing of a short-form application. By requiring applicants to update pending applications to reflect such prohibited collusive agreements and communications, the Commission has sought to ensure the integrity and transparency of its auction processes. By now amending its rules to include an affirmative reporting requirement that applies even if a communication does not rise to the level of that which must be reported under § 1.65(a), the Commission can ensure that all bidders remain on a level playing field throughout the course of an auction. The reporting requirement the Commission adopts today does not relieve any applicant from its duty pursuant to § 1.65(a) to update its pending application any time a communication of bids or bidding strategies results in an arrangement, agreement, or understanding. Of course, the fact that a party complies with the reporting requirements of § 1.65(a) and § 1.2105(c)(6) will not insulate it from any sanctions that may be appropriate in connection with a violation of the § 1.2105(c)(1) prohibition against collusive communications.

13. The Commission disagrees with one commenter's suggestion that recipients of bidding information should be exempt from the requirement to report such communications to the Commission. Section 1.2105(c) does not distinguish between initiators and recipients in terms of their duty to avoid a collusive communication. Rather, the anti-collusion rule focuses on the content of the communication (i.e., the discussion or disclosure must involve direct or indirect information that affects, or could affect, bids or bidding strategy, or the negotiation of settlement agreements) that occurs between auction applicants for any of the same geographic license areas after the short-form filing deadline. Thus, all auction applicants that have applied for a license in the same geographic area, and have not reported in their short-form applications that they have an agreement with each other, must affirmatively avoid all communications with each other that disclose their or a competing applicant's bids or bidding strategy. In light of the fact that the Commission's current rules do not focus on whether a party is initiating or receiving a communication, the Commission does not believe that it should limit the reporting requirement it adopts today to initiators of prohibited communications. Moreover, because initiators of collusive communications are less likely to report such communications, the Commission considers recipients of prohibited oral or written communications regarding bids or bidding strategies to be an important deterrent against collusive behavior. The Commission also believes that recipients should be held to the same reporting standard as initiators because, even if a recipient does not reach an agreement or understanding with the initiator, a recipient nevertheless derives substantial benefit from obtaining details of a competitor's bids or bidding strategy prior to or during an auction. If the Commission were to allow recipients to possess strategic bidding information that other applicants are not privy to, it would unfairly disadvantage other bidders in the market by sanctioning an asymmetry of information that could be used to manipulate the auction process. Therefore, the mere occurrence of a communication by or among auction applicants for the same geographic license area about their own or a competing applicant's bids or bidding strategy triggers the reporting requirement.

14. The Commission does not believe that there is any merit to one commenter's assertion that compliance with this reporting requirement will expose recipients of communications to substantial legal liability. In the past the Commission has indicated that auction applicants, rather than the Commission, are in the best position to determine in the first instance when communications may constitute potential violations of the rule. The Commission continues to believe that this is the case and that, rather than requiring it to take on the impossible task of screening all applicant communications, it should place the responsibility for identifying potentially unauthorized communications on auction applicants. Applicants, during the course of their day-to-day operations, are better equipped to identify and report such communications. Nonetheless, the Commission emphasizes that applicants are not responsible for deciding whether a violation of the anti-collusion rule has occurred. Thus, the purpose of the reporting requirement the Commission adopts today is to obligate parties to notify the Commission of communications that appear to violate the anti-collusion rule and to allow the Commission to determine whether a violation has occurred. The determination of whether a violation of the rule has occurred rests with the Commission, not with bidders. Thus, while the reporting requirement places an affirmative duty on all auction applicants to report what they perceive to be prohibited communications, auction applicants are required only to act in good faith and to report truthfully the facts and circumstances of what they perceive to be a communication covered by § 1.2105(c). The Commission will then investigate these reports and reach a judgment as to whether a violation has occurred. By simply reporting the facts, auction applicants can insulate themselves from liability.

15. The Commission also finds that any burden associated with the reporting requirement it establishes today will be slight, particularly in comparison with the potential benefits to the auction process and bidders. Applicants will be required only to submit a letter to the Commission describing the facts of a communication that appears to be prohibited.

16. In sum, the Commission amends § 1.2105(c) to require all auction applicants to report prohibited discussions or disclosures regarding bids or bidding strategy to the Commission in writing immediately, but in no case later than five business days after the communication occurs. Thus, an auction applicant must report a prohibited communication within five business days even if the communication does not result in an agreement or understanding regarding bids or bidding strategy. Although the Commission believes that applicants generally should need less than five business days to make such reports, it will not impose a shorter deadline because it finds that there may be circumstances in which applicants, particularly small businesses, may need five business days to file a report. An auction applicant that receives a communication prohibited under § 1.2105(c)(1) orally should respond immediately and unequivocally that it is unwilling to participate in any violation of § 1.2105(c)(1). If a prohibited communication is received other than orally, an auction applicant should respond immediately in writing that it is unwilling to participate in any violation of § 1.2105(c)(1). In either case, the auction applicant must report the improper communication to the Commission in writing within five business days after the communication occurs.

17. In the 7th R&O , the Commission amends § 1.2105(c)(1) of the Commission's rules to clarify that the rule prohibits only auction applicants that have applied to bid for licenses in any of the same geographic license areas from cooperating or collaborating with respect to, or discussing or disclosing to each other bids or bidding strategies. The Commission also amends the rule to clarify that it prohibits such auction applicants from cooperating or collaborating with respect to, or discussing or disclosing to each other any competing applicant's bids or bidding strategies. Thus, the rule may be violated even if an applicant does not discuss or disclose its own bids or bidding strategies. Finally, the Commission amends § 1.2105(c) to require any auction applicant that makes or receives a communication of bids or bidding strategies prohibited under § 1.2105(c)(1) of our rules to report such communication to the Commission in writing immediately, but in no case later than five business days after the communication occurs.

18. The Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) of the possible significant economic impact on small entities of the rule amendments adopted herein. The Commission's Reference Information Center, Consumer Information Bureau, will send a copy of the 7th R&O , including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

19. The 7th R&O contains a new information collection, which was proposed in the FNPRM . As required by the Paperwork Reduction Act of 1995, the Commission sought comment from the public and from the Office of Management and Budget (OMB) on this proposed change to the Commission's information collection requirements. This new information collection was submitted to OMB for approval, as prescribed by the Paperwork Reduction Act. On October 17, 2001, the Commission received emergency approval from OMB for the information collection contained in the rules (OMB No. 3060-0995).

20. Authority for issuance of the 7th R&O is contained in sections 4(i), 4(j), 303(r), 309(j) and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 303(r), 309(j) and 403.

21. Accordingly, it is ordered that part 1 of the Commission's rules is amended as specified herein and shall become effective November 28, 2001.

22. It is further ordered that the Commission's Reference Information Center, Consumer Information Bureau, shall send a copy of the 7th R&O , including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

23. As required by the Regulatory Flexibility Act (“RFA”), an Initial Regulatory Flexibility Analysis (“IRFA”) was incorporated in the FNPRM in this proceeding. The Commission sought written public comment on the proposals in the FNPRM , including comment on the IRFA. This present Final Regulatory Flexibility Analysis (“FRFA”) conforms to the RFA.

24. An RFA certification, rather than an analysis, is appropriate where “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” The Commission believes that the rule amendments it has adopted will not have a significant economic impact on a substantial number of small entities. The Commission nonetheless voluntarily performs this FRFA in order to thoroughly explain this conclusion and to address concerns raised in comments submitted by the Small Business Administration (“SBA”). The Commission discusses our conclusion further in section B, infra .

25. The amendments to 47 CFR 1.2105(c) adopted in the 7th R&O are intended to enhance the competitiveness and integrity of the Commission's auctions. First, the Commission amends § 1.2105(c)(1) so that its language clearly reflects the Commission's application of the rule to prohibit communications regarding bids or bidding strategies only between applicants that have applied to bid on licenses in any of the same geographic areas. Second, the Commission clarifies § 1.2105(c)(1) to explicitly prohibit auction applicants that have applied to bid on licenses in any of the same geographic areas from discussing with or disclosing to each other any competing applicant's bids or bidding strategies. Although the Commission has previously interpreted the rule to prohibit an applicant's discussion of a competing applicant's bids or bidding strategies, it believes that all auction applicants would benefit from this amendment, which ensures that the text of the rule is unambiguous. Third, the Commission amends § 1.2105(c) to require any auction applicant that makes or receives a communication of bids or bidding strategies prohibited by 47 CFR 1.2105(c)(1) to report such communication to the Commission. The Commission believes that this reporting requirement will act as a deterrent to would-be disseminators of prohibited information and will thereby enhance the competitiveness and fairness of our auctions.

26. The SBA filed comments in response to the IRFA. The SBA asserts that the Commission failed to describe the impact its proposed rules would have on small businesses as required by the RFA. Further, the SBA states that the Commission's proposals would expand the obligations that applicants must meet when they participate in an auction. The SBA states that the amended anti-collusion rule would impose reporting requirements on applicants, cover a broader range of communications, and increase the risk of punitive action, including monetary forfeitures. The SBA asserts that small businesses have far fewer financial resources than their larger counterparts and they are therefore less able to absorb the costs of forfeitures. According to the SBA, the Commission did not discuss the potential burden posed by the risk of punishment as it should have. The SBA also states that the Commission failed to propose any alternatives designed to minimize the impact of its proposed rules on small business, as the RFA requires.

27. The Commission acknowledges that the amendment to § 1.2105(c) that it proposed in the FNPRM, and that it adopts today, imposes a reporting requirement on all auction participants, including small businesses. However, the Commission has previously urged parties to report communications prohibited under § 1.2105(c)(1) to the Commission, and parties have done so in the past. Thus, the Commission views the adoption of this requirement as consistent with conduct that the Commission has urged on applicants in the past. Further, the amendment to § 1.2105(c)(1) that the Commission adopts today to prohibit auction applicants from discussing the bids or bidding strategies of competing applicants merely clarifies the text of the rule to make it consistent with the interpretation it announced in the Western PCS Order. Nonetheless, the Commission recognizes that these amendments to our anti-collusion rule impose increased duties and present the possibility of sanctions against auction applicants, including small entities, that do not comply with the revised rules.

28. Based on past experience, however, the Commission does not believe the impact of these amendments on small businesses will be significant. In all of its auctions held to date except for the auctions for broadcast licenses, 1,513 out of a total of 1,881 qualified bidders have been small businesses as that term has been defined under rules adopted by the Commission for specific services, but only two forfeitures have been assessed in all, i.e., against businesses of all sizes. Thus, despite the large number of small businesses that have participated in the auctions program since its inception, an extremely small percentage of auction participants have made or received communications that have violated the anti-collusion rule. The Commission believes that the vast majority of applicants comply with the its rules and do not engage in prohibited behavior, and that this will continue to be the case. Therefore, the Commission expects these amendments to have little impact on small businesses generally. The amended rules will deter the few that would try to gain an advantage unfairly by creating an asymmetry of information that is detrimental to other participants.

29. Moreover, while the Commission acknowledges that the reporting requirement it adopts today constitutes a potential burden, it expects the actual burden to be slight. In addition to the fact that the Commission expects there to be few instances of prohibited communications to be reported, it notes that the new filing requirement will place a de minimis reporting burden upon auction participants because it merely requires those who make or receive a communication of bids or bidding strategies prohibited by § 1.2105(c)(1) to send a letter to the Secretary. Furthermore, section 223 of the SBREFA allows agencies to reduce or eliminate fines or other enforcement actions taken against small entities. Indeed, section 223 requires agencies to provide for the reduction, and under appropriate circumstances for the waiver, of civil penalties for violations of a statutory or regulatory requirement by a small entity. Under appropriate circumstances, an agency may consider ability to pay in determining penalty assessments on small entities. In amending § 1.80 of its rules in 1997 to incorporate guidelines for assessing forfeitures, the Commission also made clear that its forfeiture policies are consistent with this approach. The Commission cannot in good conscience alter the uniform standards of behavior required of all auction participants, even if to do so might assist small businesses. Public confidence in the fairness of our auction process could be undermined if all entities were not subject to the same standards of behavior. However, in light of the provisions of the SBREFA and for the other reasons discussed, the Commission concludes that the amendments it adopts today are not likely to have a significant economic impact on a substantial number of small entities.

30. The Commission also believes generally that any burden associated with these rule amendments is outweighed by the advantages presented by a fair auction process that does not allow some bidders to gain an advantage over others through collusive behavior. Thus, the Commission finds that the rule amendments that it adopts today will benefit all bidders, including small businesses. First, the Commission believes that the amendments will enhance the competitiveness and fairness of its auction process to the benefit of small auction applicants. Second, under the amendments, general confidence in the integrity of our auctions should increase. In short, the Commission concludes that the public policy benefits of the amendments substantially outweigh the minimal impact the reporting requirement imposes on small entities.

31. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small organization,” “small business,” and “small governmental jurisdiction.” The term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96 percent, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, the Commission estimates that 81,600 (91 percent) are small entities. According to SBA reporting data, there were 4.44 million small business firms nationwide in 1992.

32. The amendments to § 1.2105(c) adopted in the 7th R&O will apply to all entities that apply to participate in Commission auctions, including small entities. The number of entities that may apply to participate in future Commission auctions is unknown. The number of small businesses that have participated in prior auctions has varied. As stated previously, small businesses, as defined under the Commission's rules, have accounted for 1,513 out of a total of 1,881 qualified bidders in all prior auctions, not including broadcast auctions. Given these statistics, the Commission expects a large percentage of participants in its auctions program generally to be small businesses in the future, although this may not be the case in each individual auction.

33. As a result of the actions taken in the 7th R&O, disseminators and recipients of communications prohibited by § 1.2105(c)(1) will be required to report such communications to the Commission, in writing, within five business days after the communication occurs.

34. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives, among others: (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities. In the 7th R&O, the Commission amends § 1.2105(c) to require auction applicants that make or receive a communication of bids or bidding strategies prohibited by § 1.2105(c)(1) of its rules to report such a communication in writing to the Commission immediately, but in no case later than five business days after the communication occurs. The Commission considered, but decided against, imposing a shorter deadline for such reports. The Commission believes that five business days will lessen the burden of the reporting requirement, particularly for small businesses. The Commission also considered not applying the requirement to recipients of prohibited communications. However, the Commission believes that recipients of prohibited communications are more likely to report such communications and thus serve as an important deterrent against collusive behavior. Moreover, the Commission believes that recipients of prohibited communications must be held to the same enforcement standard as initiators, because a recipient may derive substantial unfair benefit from obtaining details of a competitor's bids or bidding strategy.

35. The Commission will send a copy of the 7th R&O, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the 7th R&O, including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.