This rule is issued under Marketing Agreement No. 84 and Order No. 905, both as amended (7 CFR part 905), regulating the handling of oranges, grapefruit, tangerines, and tangelos grown in Florida, 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.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, Florida citrus handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable Florida citrus beginning August 1, 2001, and continue until amended, suspended, or terminated. 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 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. Such handler is afforded the opportunity for a hearing on the petition. After the hearing 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 USDA's 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 continues to decrease the assessment rate established for the Committee for the 2001-02 and subsequent fiscal periods from $0.0055 to $0.005 per 4/5 bushel carton or equivalent of citrus handled.

The Florida citrus marketing order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers and handlers of Florida citrus. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2000-01 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on August 29, 2001, and unanimously recommended 2001-02 expenditures of $280,000 and an assessment rate of $0.005 per 4/5 bushel carton of Florida citrus. In comparison, last year's budgeted expenditures were $255,500. The assessment rate of $0.005 is $0.0005 lower than the rate previously in effect. Last fiscal year, Committee revenues exceeded expenses by $38,500. Committee members agreed that the excess revenues should be used to reduce the assessment rate. The $38,500 was added to the anticipated assessment revenue along with interest income for a revenue total of $280,000 for the 2001-02 fiscal period.

The major expenditures recommended by the Committee for the 2001-02 fiscal period include $121,300 for salaries, $25,000 for Manifest USDA-FDACS, $21,000 for insurance and bonds, $18,750 for retirement plan, $44,550 for miscellaneous and reserve, and $10,000 for telephone. Other expenses for 2001-02 total $39,400. Budgeted expenses for these items in 2000-01 were $118,300, $36,000, $19,900, $18,500, $12,450, and $10,000 respectively.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses by expected shipments of fresh Florida citrus. Florida citrus shipments for the year are estimated at 48,000,000 cartons which should provide $240,000 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, will be adequate to cover budgeted expenses. Funds in the reserve (currently $90,334) will be kept within the maximum permitted by the order (one half of one fiscal period's expenses; § 905.42).

The assessment rate will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate is effective for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2001-02 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final 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 11,000 producers of Florida citrus in the production area and approximately 80 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.

Based on industry and Committee data, the average annual f.o.b. price for fresh Florida citrus during the 2000-01 season was approximately $7.92 per 4/5 bushel carton for all shipments, and the total fresh shipments for the 2000-01 season are estimated at 53.8 million 4/5 bushel cartons of Florida citrus. Approximately 68 percent of the handlers handled 93 percent of Florida citrus shipments. Using information provided by the Committee, about 60 percent of citrus handlers could be considered small businesses under the SBA definition. Although specific data is unavailable, USDA believes that the majority of Florida citrus producers may be classified as small entities.

This rule continues to decrease the assessment rate established for the Committee and collected from handlers for the 2001-02 and subsequent fiscal periods from $0.0055 to $0.005 per 4/5 bushel carton of Florida citrus. The Committee unanimously recommended 2001-02 expenditures of $280,000 and an assessment rate of $0.005 per 4/5 bushel carton. The assessment rate of $0.005 is $0.0005 lower than the 2000-01 rate. The quantity of assessable Florida citrus for the 2001-02 fiscal period is estimated at 48 million 4/5 bushel cartons. Thus, the $0.005 rate should provide $240,000 in assessment income. Assessments, along with interest income and funds from the Committee's authorized reserve, will be adequate to cover this year's expenses.

The major expenditures recommended by the Committee for the 2001-2002 fiscal period include $121,300 for salaries, $25,000 for Manifest Department-FDACS, $21,000 for insurance and bonds, $18,750 for retirement plan, $44,550 for miscellaneous and reserve, and $10,000 for telephone. Budgeted expenses for these items in 2000-01 were $118,300, $36,000, $19,900, $18,500, $12,450, and $10,000, respectively.

Last fiscal year, Committee revenues exceeded expenses by $38,500. Committee members agreed that the excess revenues should be used to reduce the assessment rate. The $38,500 was added to the anticipated assessment revenue along with interest income for a revenue total of $280,000 for the 2001-02 fiscal period.

The Committee reviewed and unanimously recommended 2001-02 expenditures of $280,000, which includes increases in some administrative costs. Prior to arriving at this budget, the Committee considered information from various sources, such as the Committee's Budget Subcommittee, the Grapefruit Subcommittee, and the Regulatory Subcommittee. Alternative expenditure levels were discussed by these groups, based upon previous seasons and the general condition of the Florida citrus industry. The assessment rate of $0.005 per 4/5 bushel carton of assessable citrus was then determined by dividing the total recommended budget by the quantity of assessable citrus, estimated at 48,000,000 4/5 bushel cartons for the 2001-02 fiscal period. This rate is expected to generate $240,000. This is $40,000 below the anticipated expenses, which the Committee determined to be acceptable.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for the 2001-02 season could range between $4.60 and $10.70 per 4/5 bushel of oranges, grapefruit, tangerines, and tangelos. Therefore, the estimated assessment revenue for the 2001-02 fiscal period as a percentage of total grower revenue could range between .04 and .1 percent.

This action continues to decrease the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers, and may reduce the burden on producers. In addition, the Committee's meeting was widely publicized throughout the Florida citrus industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the August 29, 2001, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

This action imposes no additional reporting or recordkeeping requirements on either small or large Florida citrus handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

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

An interim final rule concerning this action was published in the Federal Register on November 9, 2001 (66 FR 56595). Copies of that rule were also mailed or sent via facsimile to all Florida citrus handlers. Finally, the interim final rule was made available through the Internet by the Office of the Federal Register and USDA. A 60-day comment period was provided for interested persons to respond to the interim final rule. The comment period ended on January 8, 2002, and no comments were received.

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.

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

This rule is issued under Marketing Agreement No. 125 and Order No. 966, both as amended (7 CFR part 966), regulating the handling of tomatoes grown in Florida, 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.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, Florida tomato handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable tomatoes beginning August 1, 2001, and continue until amended, suspended, or terminated. 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 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. Such handler is afforded the opportunity for a hearing on the petition. After the hearing 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 USDA's 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 continues to decrease the assessment rate established for the Committee for the 2001-02 and subsequent fiscal periods from $0.025 to $0.02 per 25-pound container of tomatoes handled.

The Florida tomato marketing order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers of Florida tomatoes. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 1999-2000 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on September 6, 2001, and unanimously recommended 2001-02 expenditures of $1,666,650 and an assessment rate of $0.02 per 25-pound container of tomatoes. In comparison, last year's budgeted expenditures were $1,910,000. The assessment rate of $0.02 is $0.005 lower than the rate previously in effect. The Committee's authorized reserve is larger than necessary. In an effort to reduce the amount in the reserve fund, the Committee unanimously recommended reducing the assessment rate.

The major expenditures recommended by the Committee for the 2001-02 fiscal year include $700,000 for education and promotion, $418,650 for salaries and benefits, $320,000 for research, $51,500 for employee retirement, and $31,000 for office rent. Budgeted expenses for these items in 2000-01 were $1,000,000, $407,800, $315,700, $44,900, and $24,500, respectively.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses by expected shipments of Florida tomatoes, while considering other factors such as the current balance in the reserve fund. Tomato shipments for the year are estimated at 50,000,000 25-pound containers which should provide $1,000,000 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, will be adequate to cover budgeted expenses. Funds in the reserve (currently $1,900,000) will be kept within the maximum permitted by the order (approximately one fiscal period's expenses, § 966.44).

The assessment rate will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate is effective for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2001-02 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final 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 100 producers of tomatoes in the production area and approximately 82 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.

Based on the industry and Committee data, the average annual price for fresh Florida tomatoes during the 2000-01 season was $9.16 per 25-pound container or equivalent, and total fresh shipments for the 2000-01 season were 53,649,508 25-pound equivalent cartons of tomatoes. Committee data indicates that approximately 21 percent of the Florida handlers handle 80 percent of the total volume shipped outside the regulated area. Based on this information, the shipment information for the 2000-01 season, and the 2000-01 season average price, the majority of handlers would be classified as small entities as defined by the SBA. The majority of producers of Florida tomatoes also may be classified as small entities.

This rule continues to decrease the assessment rate established for the Committee and collected from handlers for the 2001-02 and subsequent fiscal periods from $0.025 to $0.02 per 25-pound container of tomatoes. The Committee unanimously recommended 2001-02 expenditures of $1,666,650 and an assessment rate of $0.02 per 25-pound container. The assessment rate of $0.02 is $0.005 lower than the 2000-01 rate. The quantity of assessable tomatoes for the 2001-02 season is estimated at 50,000,000 25-pound cartons. Thus, the $0.02 rate should provide $1,000,000 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, will be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2001-02 fiscal year include $700,000 for education and promotion, $418,650 for salaries and benefits, $320,000 for research, $51,500 for employee retirement, and $31,000 for office rent. Budgeted expenses for these items in 2000-01 were $1,000,000, $407,800, $315,700, $44,900, and $24,500, respectively.

In the past two seasons, assessments collected have exceeded budgeted expenses, primarily due to a larger than expected supply of tomatoes. This has increased the total in the reserve. In addition, the Committee voted to reduce the education and promotion budget for the 2001-02 season, reducing total recommended expenses by approximately $300,000. The authorized reserve fund is now larger than necessary. In an effort to reduce the amount in the reserve fund and considering the reduced budget, the Committee unanimously recommended reducing the assessment rate. The funds collected from assessments, along with money from the reserve fund will be adequate to cover the Committee's expenditures for the 2001-02 fiscal year.

The Committee reviewed and unanimously recommended 2001-02 expenditures of $1,666,650 which included decreases in office rent, and education and promotion programs. Prior to arriving at this budget, the Committee considered information from various sources, such as the Committee's Executive Subcommittee, Finance Subcommittee, Research Subcommittee, and Education and Promotion Subcommittee. Alternative expenditure levels were discussed by these groups, based upon the relative value of various research projects to the tomato industry. The assessment rate of $0.02 per 25-pound container of assessable tomatoes was then determined by dividing the total recommended budget by the quantity of assessable tomatoes, while considering other factors such as the current balance in the reserve fund. Estimated shipments of tomatoes are 50,000,000 25-pound containers for the 2001-02 fiscal period. At the recommended rate, $1,000,000 in assessment income will be collected. This is approximately $600,000 below the anticipated expenses, which the Committee determined to be acceptable, in view of its goal of reducing its operating reserve.

A review of historical information and preliminary information pertaining to the upcoming season indicates that the grower price for the 2001-02 season could range from $4.25 and $13.53 per 25-pound container of tomatoes. Therefore, the estimated assessment revenue for the 2001-02 season as a percentage of total grower revenue could range between 1.5 and 4.7 percent.

This action continues to decrease the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers, and may reduce the burden on producers. In addition, the Committee's meeting was widely publicized throughout the Florida tomato industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the September 6, 2001, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

This action imposes no additional reporting or recordkeeping requirements on either small or large Florida tomato handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

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

An interim final rule concerning this action was published in the Federal Register on November 9, 2001, (66 FR 56599). Copies of that rule were also mailed or sent via facsimile to all tomato handlers. Finally, the interim final rule was made available through the Internet by the Office of the Federal Register and USDA. A 60-day comment period was provided for interested persons to respond to the interim final rule. The comment period ended on January 8, 2002, and no comments were received.

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.

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

This rule is issued under Marketing Agreement No. 115 and Marketing Order No. 982, both as amended (7 CFR part 982), regulating the handling of hazelnuts grown in Oregon and Washington, 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. It is intended that this action apply to all merchantable hazelnuts handled during the 2000-2001 marketing year (July 1, 2000, through June 30, 2001), or until all restricted hazelnuts from that year are properly disposed of in accordance with marketing order requirements. 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 Secretary 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, 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 USDA's 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 reinstates percentages that allocate the quantity of inshell hazelnuts that may be marketed in domestic markets. The Board is required to meet prior to September 20 of each marketing year to compute its marketing policy for that year, and compute and announce an inshell trade demand if it determines that volume regulations would tend to effectuate the declared policy of the Act. The Board also computes and announces preliminary free and restricted percentages for that year.

The inshell trade demand is the amount of inshell hazelnuts that handlers may ship to the domestic market throughout the marketing season. The order specifies that the inshell trade demand be computed by averaging the preceding three “normal” years' trade acquisitions of inshell hazelnuts, rounded to the nearest whole number. The Board may increase the three-year average by up to 25 percent, if market conditions warrant an increase. The Board's authority to recommend volume regulations and the computations used to determine the percentages are specified in § 982.40 of the order.

The quantity to be marketed is broken down into free and restricted percentages to make available hazelnuts which may be marketed in domestic inshell markets (free) and hazelnuts which must be exported, shelled or otherwise disposed of by handlers (restricted). Prior to September 20 of each marketing year, the Board must compute and announce preliminary free and restricted percentages. The preliminary free percentage releases 80 percent of the inshell trade demand to the domestic market. The purpose of releasing only 80 percent of the inshell trade demand under the preliminary percentage is to guard against an underestimate of crop size. The preliminary free percentage is expressed as a percentage of the total supply subject to regulation (supply) and is based on the preliminary crop estimate.

The National Agricultural Statistics Service (NASS) has estimated hazelnut production at 25,000 tons for the Oregon and Washington area. The majority of domestic inshell hazelnuts are marketed in October, November, and December. By November, the marketing season is well under way.

The Board initially adjusted the crop estimate down to 24,153 tons by taking into consideration the average crop disappearance over the preceding three years (8.32 percent) and the undeclared carry-in (1,234 tons). The Board computed the adjusted inshell trade demand of 3,163 tons by taking the difference between the average of the past three years' sales (4,347 tons) and the declared carry-in from last year's crop (1,184 tons).

The Board computed and announced preliminary free and restricted percentages of 10 percent and 90 percent, respectively, at its August 31, 2000, meeting. The Board computed the preliminary free percentage by multiplying the adjusted trade demand by 80 percent and dividing the result by the adjusted crop estimate (3,163 tons × 80 percent/24,153 tons = 10 percent). The preliminary free percentage thus initially released 2,530 tons of hazelnuts from the 2000 supply for domestic inshell use, and the restricted percentage withheld 21,738 tons for the export and kernel market.

Under the order, the Board must meet again on or before November 15 to recommend interim final and final percentages. The Board uses current crop estimates to calculate interim final and final percentages. The interim final percentages are calculated in the same way as the preliminary percentages and release the remaining 20 percent (to total 100 percent of the inshell trade demand) previously computed by the Board. Final free and restricted percentages may release up to an additional 15 percent of the average of the preceding three years' trade acquisitions to provide an adequate carryover into the following season (i.e., desirable carryout). The order requires that the final free and restricted percentages shall be effective 30 days prior to the end of the marketing year, or earlier, if recommended by the Board and approved by the Secretary. Revisions in the marketing policy can be made until February 15 of each marketing year, but the inshell trade demand can only be revised upward, consistent with § 982.40(e).

The Board met on November 14, 2000, and reviewed and approved an amended marketing policy and recommended the establishment of interim final and final free and restricted percentages. The interim final free and restricted percentages were recommended at 14 percent free and 86 percent restricted. Final percentages, which included an additional 15 percent of the average of the preceding three-years' trade acquisitions for desirable carry-out, were recommended at 17 percent free and 83 percent restricted effective May 1, 2001. The final free percentage releases 3,815 tons of inshell hazelnuts from the 2000 supply for domestic use.

The final marketing percentages are based on the Board's final production estimate and the following supply and demand information for the 2000-2001 marketing year:

The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay issuance of the approval design 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.

Interested persons are invited to submit such written data, views, or arguments as they may desire. Communications should identify the regulatory docket or notice 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. The 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 contract 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 this notice must include a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. CE177.” The postcard will be date stamped and returned to the commenter.

On July 12, 2001, Eclipse Aviation Corporation applied for a type certificate for their new Eclipse Model 500 airplane. The proposed modification incorporates a novel or unusual design feature, such as digital avionics consisting of an electronic displays, electronic engine controls, that is vulnerable to HIRF external to the airplane.

Under the provisions of 14 CFR part 21, § 21.17, Eclipse Aviation Corporation must show that the Eclipse Model 500 airplane meets the following:

(1) Applicable provisions of 14 CFR part 23, effective December 18, 1964, as amended by Amendments 23-1 through 23-54 (September 14, 2000).

(2) Part 34 of the Federal Aviation Regulations effective September 10, 1990, plus any amendments in effect on the date of type certification.

(3) Part 36 of the Federal Aviation Regulations effective December 1, 1969, as amended by Amendment 36-1 through the amendment in effect on the date of type certification.

(4) Noise Control Act of 1972.

(5) Special conditions that are not relevant to these proposed special conditions, if any;

(6) Exemption, if any;

(7) Equivalent level of safety findings, if any; and

(8) Special conditions adopted by this rulemaking action.

If the Administrator finds that the applicable airworthiness regulations (i.e., part 23) do not contain adequate or appropriate safety standards for the Eclipse Model 500 airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions, as appropriate, as defined in § 11.19, are issued in accordance with § 11.38 after public notice and become part of the type certification basis in accordance with § 21.17(a)(2).

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended late to include any other model that incorporates the same novel or unusual design feature, the special conditions would also apply to the other model under the provisions of § 21.101.

The Eclipse Model 500 airplane will incorporate the following novel or unusual design features into an airplane for which the airworthiness standards do not contain adequate or appropriate safety standards for protection from the effects of HIRF. These features include electronic engine control systems, electronic displays, and any other critical systems which are susceptible to the HRF environment, that were not envisaged by the existing regulations for this type of airplane.

Recent advances in technology have given rise to the application in aircraft designs of advanced electrical and electronic systems that perform functions required for continued safe flight and landing. Due to the use of sensitive solid state advanced components in analog and digital electronics circuits, these advanced systems are readily responsive to the transient effects of induced electrical current and voltage caused by the HIRF. The HIRF can degrade electronic systems performance by damaging components or upsetting system functions.

Furthermore, the HIRF environment has undergone a transformation that was not foreseen when the current requirements were developed. Higher energy levels are radiated from transmitters that are used for radar, radio, and television. Also, the number of transmitters has increased significantly. There is also uncertainty concerning the effectiveness of airframe shielding for HIRF. Furthermore, coupling to cockpit-installed equipment through the cockpot window apertures is undefined.

The combined effect of the technological advances in airplane design and the changing environment has resulted in an increased level of vulnerability of electrical and electronic systems required for the continued safe flight and landing of the airplane. Effective measures against the effects of exposure to HIRF must be provided by the design and installation of these systems. The accepted maximum energy levels in which civilian airplane system installations must be capable of operating safely are based on surveys and analysis of existing radio frequency emitters. These special conditions require that the airplane be evaluated under these energy levels for the protection of the electronic system and its associated wiring harness. These external threat levels, which are lower than previous required values, are believed to represent the worst case to which an airplane would be exposed in the operating environment.

These special conditions require qualification of systems that perform critical functions, as installed in aircraft, to the defined HIRF environment in paragraph 1 or, as an option to a fixed value using laboratory tests, in paragraph 2, as follows:

(1) The applicant may demonstrate that the operation and operational capability of the installed electrical and electronic systems that perform critical functions are not adversely affected when the aircraft is exposed to the HIRF environment defined below:

(2) The applicant may demonstrate by a system test and analysis that the electrical and electronic systems that perform critical functions can withstand a minimum threat of 100 volts per meter, peak electrical field strength, from 10 kHz to 18 GHz. When using this test to show compliance with the HIRF requirements, no credit is given for signal attenuation due to installation.

A preliminary hazard analysis must be performed by the applicant, for approval by the FAA, to identify either electrical or electronic systems that perform critical functions. The term “critical” means those functions whose failure would contribute to, or cause, a failure condition that would prevent the continued safe flight and landing of the airplane. The systems identified by the hazard analysis that perform critical functions are candidates for the application of HIRF requirements. A system may perform both critical and non-critical functions. Primary electronic flight display systems, and their associated components, perform critical functions such as attitude, altitude, and airspeed indication. The HIRF requirements apply only to critical functions.

Compliance with HIRF requirements may be demonstrated by tests, analysis, models, similarity with existing systems, or any combination of these. Service experience alone is not acceptable since normal flight operations may not include an exposure to the HIRF environment. Reliance on a system with similar design features for redundancy as a means of protection against the effects of external HIRF is generally insufficient since all elements of a redundant system are likely to be exposed to the fields concurrently.

As discussed above, these special conditions are applicable to the Eclipse Model 500 airplane. Should Eclipse Aviation Corporation apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the special conditions would apply to that model as well under the provisions of § 21.101.

This action affects only certain novel or unusual design features on one model of airplane. 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 airplane.

The substance of these special conditions has been subjected to the notice and comment period 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 condition 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, the Federal Aviation Administration (FAA) issues the following special conditions as part of the type certification basis for the Eclipse Aviation Corporation Model 500, Airplane.

1. Protection of Electrical and Electronic Systems from High Intensity Radiated Fields (HIRF). Each system that performs critical functions must be designed and installed to ensure that the operations, and operational capabilities of these systems to perform critical functions, are not adversely affected when the airplane is exposed to high intensity radiated electromagnetic fields external to the airplane.

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 FAA has received a report from the type certificate holder that a condition exists that could cause the Cirrus Airplane Parachute System (CAPS) installed on certain Cirrus Design Corporation (Cirrus) Model SR20 and SR22 airplanes not to activate in the event of an emergency. Ballistic Recovery Systems (BRS), the supplier of the CAPS, discovered the condition during a supplemental type certificate (STC) certification test of the same unit on another airplane.

Investigation revealed that the rocket cone could allow for variance in the internal diameter at the threaded end of the rocket cone. This variance could result in the retaining nut internal to the cone adapter not to be fully secured on the affected parachutes. When the igniter end of the cable housing is unsecured, the cable will not pull the igniter pin free to release the parachute.

This condition is prevalent on a manufacturing lot of 187 systems that BRS developed under a process change. The condition could exist on the other earlier systems that BRS developed.

Section 23.221 of the Federal Aviation Regulations (14 CFR 23.221) requires that single-engine, normal category airplanes demonstrate compliance with either the one-turn spin or the spin-resistant requirements. The airplane, for spin recovery compliance, must recover from a one-turn spin or a three-second spin, whichever takes longer, in not more than one additional turn after the controls have been applied for recovery. The Cirrus SR20/SR22 are not certificated to meet the spin requirements or spin resistant requirements of 14 CFR 23.221. Instead, Cirrus installed an Airplane Parachute System (CAPS) that was FAA-approved as part of the SR20/SR22 type design.

Failure of the igniter end of the cable housing to release the igniter pin, if not corrected, could result in CAPS not activating in an emergency situation. This would result in occupant injury and/or loss of life and loss of aircraft.

Cirrus Design has issued Alert Service Bulletin SB A20-95-01, Issued: February 25, 2002, and Alert Service Bulletin A22-95-01, Issued: February 25, 2002. These service bulletins specify modifying the CAPS activation cable assembly in accordance with Ballistic Recovery Systems Inc. Service Bulletin SB 95-01, Issued: February 25, 2002. This service bulletin includes procedures for installing a cable clamp external to the cone adapter.

The FAA has reviewed all available information, including the service information referenced above; and determined that:

This AD requires you to:

In preparation of this rule, we contacted type clubs and aircraft operators to obtain technical information and information on operational and economic impacts. We have included, in the rulemaking docket, a discussion of information that may have influenced this action.

Because the unsafe condition described in this document could result in failure of the CAPS activation system in an emergency situation, we find that notice and opportunity for public prior comment are impracticable. Therefore, good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule and was not preceded by notice and opportunity for public comment, FAA invites your comments on the rule. You may submit whatever written data, views, or arguments you choose. You need to include the rule's docket number and submit your comments to the address specified under the caption ADDRESSES . We will consider all comments received on or before the closing date specified above. We may amend this rule in light of comments received. Factual information that supports your ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether we need to take additional rulemaking action.

We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify the rule. You may view all comments we receive before and after the closing date of the rule in the Rules Docket. We will file a report in the Rules Docket that summarizes each FAA contact with the public that concerns the substantive parts of this AD.

If you want us to acknowledge the receipt of your mailed comments, you must include a self-addressed, stamped postcard. On the postcard, write “Comments to Docket No. 2002-CE-06-AD.” We will date stamp and mail the postcard back to you.

These regulations 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, FAA has determined that this final rule does not have federalism implications under Executive Order 13132.

We have determined that this regulation is an emergency regulation that must be issued immediately to correct an unsafe condition in aircraft, and 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 (otherwise, an evaluation is not required). A copy of it, if filed, may be obtained from the Rules Docket.

On December 15, 2000, Congress passed the Commodity Futures Modernization Act of 2000 (“CFMA”), which was signed by the President and became effective on December 21, 2000. Among other things, the CFMA, which substantially amended the Commodity Exchange Act (“Act”), establishes two categories of markets subject to Commission regulatory oversight, DCMs and DTFs. 1 In addition, Title II of the CFMA repeals the longstanding ban on single stock futures and directs the Commission and the Securities and Exchange Commission (“SEC”) to implement a joint regulatory framework for security futures products.

On July 11, 2001, the Commission published proposed regulation 41.27 (“proposing release”), which generally restricts floor brokers from dual trading security futures products through open outcry during the same trading session, in accordance with the statutory mandate of section 4j(a) of the Act, as amended by section 251(c) of the CFMA. 2 Section 4j(a), as amended, also requires that the Commission permit exceptions to the dual trading restriction in order to ensure fairness and orderly trading in security futures product markets. 3 Moreover, section 2(a)(D)(i) of the Act sets forth listing standards for security futures products traded on a DCM or DTF. In particular, section 2(a)(D)(i)(VI) requires that security futures products be subject to the dual trading restriction of section 4j of the Act and the regulations thereunder or section 11(a) of the Securities Exchange Act of 1934 (“ '34 Act”) and the regulations thereunder. 4

Section 5f of the Act provides that any board of trade that is registered with the SEC as a national securities exchange or as a national securities association, or as an alternative trading system, shall be considered a DCM in security futures products, provided that certain enumerated requirements are satisfied upon filing a notice with the Commission. Section 5f(b)(1)(B), however, specifically exempts such notice-registered entities from section 4j of the Act. Similarly, section 6(g) of the '34 Act, as amended by section 202(a) of the CFMA, provides that any board of trade that has been designated as a contract market by the Commission or has registered with the Commission as a DTF may register with the SEC as a national securities exchange by filing notice with the SEC solely for the purposes of trading security futures products, provided that certain enumerated requirements are satisfied. DCMs and DTFs that notice register with the SEC for the purpose of trading security futures products are exempt from section 11(a)(1) of the '34 Act.

The Commission received four comment letters on a variety of issues regarding the proposing release. 5 CME fully supported proposed regulation 41.27, and stated that, “the Commission's proposed dual trading regulation for security futures products appropriately balances customer protection with regulatory oversight.” CBOT, AMEX, and NYBOT raised several issues regarding the proposing release's definition of “customer” and “dual trading,” application of the dual trading restriction under certain circumstances to electronic trading systems, and the possible addition of a low volume exception. Those comments are discussed, as appropriate, below.

Proposed regulation 41.27(a)(4) defined “customer” to mean an account owner for which a trade is executed other than (i) an account in which a floor broker's ownership interest or share of trading profits is ten percent or more; (ii) an account for which a floor broker has discretion; (iii) an account controlled by a person with whom a floor broker has a relationship through membership in a broker association; (iv) a house account for a floor broker's clearing member; or (v) an account for another member present on the floor of a DCM or DTF or an account controlled by such other member. To make the regulation more consistent with section 11(a) of the '34 Act, the Commission has modified the language of section 41.27(a)(4)(i) by deleting the reference to “ten percent or more.”  6 Thus, § 41.27(a)(4)(i), as adopted, provides, “(c)ustomer means an account owner for which a trade is executed other than (i) an account in which such floor broker has any interest.”  7

CBOT and NYBOT commented regarding the proposed definition of “customer” in § 41.27(a)(4). NYBOT commented that proposed § 41.27(a)(4)(iv) and (v) included two categories of non-customer accounts, a house account for a floor broker's clearing member, and an account for another member present on the floor of a DCM or DTF or an account controlled by such other member, that were not considered non-customer accounts under regulation 155.5. 8 Specifically, NYBOT believes that regulation 155.5 permitted a floor broker to trade security futures products for a customer and for the house account of a floor broker's clearing member or for another member present on the floor during the same trading session. 9

After carefully reviewing regulation 155.5, the Commission believes that although it intended that a house account for a floor broker's clearing member and an account for another member present on the floor or an account controlled by such other member be considered non-customer accounts, the language in regulation 155.5 was ambiguous. Accordingly, regulation 41.27 clearly expresses the Commission's intent that floor brokers be prohibited from trading the same security futures product for a customer and for a house account for a floor broker's clearing member or for an account for another member present on the floor or an account controlled by such member during the same trading session. In this regard, the Commission believes that to allow otherwise could disadvantage customers because a floor broker may be motivated to obtain a better fill for its clearing member or for another member present on the floor. Regulation 41.27, however, would permit a floor broker to trade the same security futures product for his or her own account and non-customer accounts enumerated under regulation 41.27(a)(4)(i)-(v) during the same trading session.

Additionally, the Commission requested comment as to whether accounts for clearing members other than the house account of a floor broker's clearing member and members not present on the floor should be considered non-customer accounts for the purpose of regulation 41.27(a)(4). By defining these accounts as non-customer accounts, a floor broker would be permitted to trade for these accounts and the floor broker's personal account during the same trading session. NYBOT and CBOT commented that accounts for clearing members other than the house account of a floor broker's clearing member and members not present on the floor, should not be included as non-customer accounts in § 41.27(a)(4). 10 The Commission therefore has determined that the accounts of clearing members other than the floor broker's clearing member, and the accounts of members not present on the floor of a DCM or DTEF, should be included as customer accounts for purposes of this rule.

Section 41.27(a)(6) of the proposing release, which is renumbered as § 41.27(a)(5) in the final rule, defined “dual trading” as the “execution of customer orders by a floor broker through open outcry during the same trading session in which the floor broker executes, directly or indirectly, either through open outcry or through a trading system that electronically matches bids and offers, a transaction for the same security futures product on the same designated contract market or registered derivatives transaction execution facility for an account” of a non-customer.

This definition referred to a floor broker executing “directly or indirectly” a transaction for a non-customer account, but did not explain what was meant by “indirectly.” Rather, in discussing the various sections of the proposed rule, the proposing release noted that the word “indirectly” was intended to prevent a floor broker from executing a customer order and during the same trading session initiating and passing an order for a non-customer account identified by regulations 41.27(a)(4)(i)-(v) to another broker for execution. CBOT commented that to avoid ambiguity, the Commission should explicitly state what it means by “indirect execution” in the final regulation, similar to the dual trading definition in regulation 155.5(a)(4). 11 The Commission agrees and has made the appropriate change in the final regulation.

Additionally, the Commission is amending the language of the dual trading definition that describes an electronic trading system not subject to the dual trading prohibition to make it more precise and consistent with current practices. Specifically, the words “a trading system that electronically matches bids and offers” has been amended in § 41.27(a)(5) of the regulation to read “a trading system that electronically matches bids and offers pursuant to a predetermined algorithm.”  12

The proposing release also defined the terms “trading session,” “member,” “broker association,” and “security futures product.”  13 The term “security futures product” will be deleted from § 41.27(a) in the final regulation because of a final Commission rulemaking subsequent to the proposing release that defined the term. 14 No comments were received regarding § 41.27(a)(1)-(3) of the proposing release and the Commission has determined to adopt those sections as proposed.

In the proposing release, the Commission stated that under the plain language of section 4j of the Act, as amended, the dual trading restriction would not apply to a DCM or DTF that trades security futures products solely through an electronic trading system. This interpretation takes into account the plain language of the statute, which refers to “floor brokers” who “execute” orders. 15 In addition, this interpretation recognizes that a floor broker who executes a customer order through open outcry has more control over that order than a customer order entered into an electronic trading system that matches bids and offers pursuant to a predetermined algorithm where members do not have a time and place advantage. In the latter instance, the floor broker does not have the ability to influence or guide the order once it enters the system because the order is matched pursuant to a predetermined algorithm.

The Commission also acknowledged in the proposing release that a DCM or DTF may permit the simultaneous trading of security futures products through open outcry on a trading floor and on an electronic trading system for the same product, also known as “side-by-side trading.” The Commission would permit a floor broker, during the same trading session, to enter a bid or offer for a security futures product for a customer account on an electronic trading system and to trade the same product for non-customer accounts listed in §§ 41.27(a)(4)(i)-(v) through open outcry. However, recognizing the extent of control that a floor broker exercises with respect to an open outcry customer order, the Commission noted that a floor broker would be prohibited during the same trading session from executing a customer order for a particular security futures product through open outcry and entering a bid or offer on an electronic trading system for the same product for non-customer accounts.

NYBOT and AMEX contend that the Act does not limit the dual trading restriction to open outcry trading and commented that a dual trading restriction also should be applicable to the trading of security futures products on electronic trading systems. CBOT disagrees with NYBOT and AMEX, and commented that it believes the Commission correctly determined that under the Act a dual trading restriction is not applicable to a DCM or DTF that trades security futures products solely through an electronic trading system, because there is no floor broker involved in the trade. 16 CBOT, however, disagrees with the Commission's application of the dual trading restriction with respect to side-by-side trading. Specifically, CBOT does not believe that a dual trading restriction should be applicable to side-by-side trading, regardless of whether the customer order is executed though open outcry or entered on an electronic trading system.

The Commission is not persuaded by the comments that its interpretation and application of the dual trading restriction is inconsistent with the Act. In this connection, NYBOT commented that “the definition of “floor broker” must be read in the light of the evolution of the markets to electronic trading, and the dual trading restrictions applied to all orders that are intermediated, regardless of the ultimate mode of execution.” In adopting the CFMA, however, Congress did not substantively amend the definition of “floor broker,” nor does the Act, as amended, include language demonstrating that Congress intended to apply a dual trading restriction to security futures products traded on an electronic trading system.

Nonetheless, the Commission has separately determined, given the possibility of further developments in electronic markets and electronic trading systems, to adopt § 41.27(b)(2). 17 Section 41.27(b)(2) would require a DCM or DTF that operates an electronic market or electronic trading system that provides market participants with a time or place advantage, or the ability to override a predetermined algorithm, to submit an appropriate rule proposal to the Commission pursuant to the procedures enumerated in regulation 40.5. Specifically, the proposed rule must prohibit electronic market participants with a time or place advantage or with the ability to override a predetermined algorithm from trading a security futures product for accounts in which these same participants have any interest during the same trading session that they also trade the same security futures product for other accounts. 18 The Commission notes, however, that § 41.27(b)(2) would not apply to execution priorities or quantity guarantees granted to market makers who perform that function, or to market participants who receive execution priorities based on price improvement activity, in accordance with rules governing the DCM or DTF.

As the Commission indicated in the proposing release, prior to listing a security futures product for trading on a trading floor where bids and offers are executed through open outcry, a DCM or DTF must adopt a rule prohibiting dual trading. Under regulation 41.27(c)(1), a DCM must submit such a rule to the Commission in accordance with regulation 40.6, along with a written certification that the rule complies with the Act and the regulations promulgated there-under, or must obtain Commission approval of such a rule pursuant to regulation 40.5. Under regulation 41.27(c)(2), a DTF must notify the Commission in accordance with regulation 37.7(b) that it has adopted a rule prohibiting dual trading or obtain Commission approval of such a rule pursuant to regulation 37.7(c). No comments were received regarding § 41.27(c). Accordingly, the Commission is adopting § 41.27(c) as proposed.

Proposed regulation 41.27(d) would implement the directive of sections 4j(a)(2)(A) and (B) of the Act to permit certain exceptions to the dual trading restriction. Regulation 41.27(d)(1)-(4) provides exceptions to the dual trading restriction to permit the correction of errors resulting from the execution of a customer order, to permit a customer to designate in writing a floor broker to dual trade while executing orders for the customer's account, to permit a broker who unsuccessfully attempts to leg into a spread transaction to take the executed leg into his or her personal account and to offset such position, and to address market conditions that result in a temporary emergency. As the Commission indicated in the proposing release, a DCM or DTF, prior to permitting such exceptions to a dual trading prohibition, would have to adopt a rule permitting the specific exceptions and submit the rule to the Commission or obtain Commission approval pursuant to the rule submission procedures of regulations 41.27(e)(1) or (2). 19

One comment was received regarding § 41.27(d). CBOT encouraged the Commission to add a low volume exception to regulation 41.27. The CBOT believes that adding a low volume exception may assist fledgling security futures products to become established before a trading prohibition would become applicable, and would improve liquidity. CBOT noted that section 11(c) of the '34 Act permits the SEC, upon application of an exchange, to grant a low volume exemption from section 11(a).

At this time, the Commission does not have data on the trading volume of security futures products upon which to base a threshold amount to create a low volume exception. However, similar to section 11(c) of the '34 Act with respect to the SEC, section 4j(a)(2)(C) of the Act affords the Commission broad authority to permit exceptions to “further the public interest consistent with the promotion of market efficiency, innovation, and expansion of investment opportunities.” Specifically, § 41.27(f) would allow DCMs and DTFs to permit, pursuant to a rule, an exception to the dual trading prohibition to address an agreement, contract, or transaction that presents a unique or special characteristic, or to address a unique or special characteristic of the specific DCM or DTF. Accordingly, an exchange seeking a low volume exception to the dual trading restriction could seek to implement such an exception by making a submission pursuant to the procedures set forth in § 41.27(f).

The Commission did not receive any other comments regarding § 41.27(d) or (f) and is adopting those sections as proposed.

In order to facilitate the promulgation of proposed regulation 41.27, the Commission also is promulgating procedural amendments to regulations 37.2 and 38.2. Regulations 37.2 and 38.2 generally exempt DCMs and DTFs from certain Commission regulations and list those regulations that are applicable under the Act. Regulation 41.27 is hereby added to the list of regulations that remain applicable to DCMs and DTFs pursuant to regulations 37.2 and 38.2. 20

Additionally, the Commission is amending regulation 41.34(b) to exempt notice designated contract markets in security futures products (“SFPCMs”) from regulation 41.27. 21 As discussed earlier, section 5f(b)(1)(B) of the Act specifically exempts boards of trade that register with the SEC as a national securities exchange, a national securities association, or as an alternative trading system from section 4j of the Act, upon filing notice with the Commission. 22 Regulation 41.34(b) generally exempts SFPCMs from certain Commission regulations. Therefore, because regulation 41.27 is being promulgated pursuant to section 4j of the Act, the Commission is adding regulation 41.27 to the list of 41.34(b) exemptions.

Section 15(a) of the Act, as amended by the CFMA, requires the Commission to consider the costs and benefits of its action before issuing a new regulation under the Act. Section 15(a) does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the proposed regulation outweigh its costs. Rather, section 15(a) simply requires the Commission to consider the costs and benefits of its action in light of five broad areas of market and public concern: Protection of market participants and the public; efficiency, competitiveness, and financial integrity of futures markets; price discovery; sound risk management practices; and other public interest considerations.

The Commission's proposing release contained an analysis of the consideration of the costs and benefits and solicited public comment thereon. 23 The Commission specifically invited commenters to submit any data that they had quantifying the costs and benefits of the proposed rules with their comment letters. 24 The Commission did not receive any comments on this issue.

Compliance with regulation 41.27 would impose costs on DCMs and DTFs with respect to enacting and enforcing rules restricting dual trading of security futures products traded through open outcry on a trading floor. The costs of enacting and enforcing rules associated with regulation 41.27 are either balanced or outweighed by the increased protection of market participants and the public. The Commission's exercise of its discretion in implementing the Congressional directive to restrict dual trading, as set forth in section 4j of the Act, would not unreasonably increase costs related to efficiency, competitiveness, and financial integrity of financial markets; price discovery; or sound risk management practices. After considering these factors, the Commission has determined to adopt regulation 41.27.

The Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601 et seq. , requires federal agencies, in promulgating regulations, to consider the impact of those regulations on small entities. The regulation adopted herein would affect DCMs, DTFs, and floor brokers. The Commission previously has established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its regulations on small entities in accordance with the RFA. 25 In its previous determinations, the Commission has concluded that contract markets are not small entities for the purpose of the RFA. 26 The Commission has recently determined that DTFs, for reasons similar to those applicable to contract markets, are not small entities for purposes of the RFA. 27

As the Commission stated in its proposing release, certain floor brokers would be affected by proposed regulation 41.27. The Commission, however, believes that regulation 41.27 as adopted will not have a significant economic impact on a substantial number of small entities. The Commission requested comment on this issue, but received no comments. Therefore, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the rule amendments will not have a significant impact on a substantial number of small entities.

This rule contains information collection requirements. As required by the Paperwork Reduction Act of 1995, (44 U.S.C. 3507(d)) the Commission has submitted a copy of this rule to the Office of Management and Budget for its review. No comments were received in response to the Commission's invitation in the proposing release to comment on any potential paperwork burden associated with this regulation.

Blue Ridge Pharmaceuticals, Inc., 4249-105 Piedmont Pkwy., Greensboro, NC 27410, filed ANADA 200-270 that provides for veterinary prescription use of IVERHART (ivermectin) Tablets for prevention of canine heartworm disease by elimination of the tissue stage of heartworm ( Dirofilaria immitis ) larvae for a month after infection. Blue Ridge's IVERHART Tablets is approved as a generic copy of Merial Ltd.'s HEARTGARD Tablets, approved under NADA 138-412. ANADA 200-270 is approved as of November 30, 2001, and 21 CFR 520.1193 is amended to reflect the approval. The basis of approval is discussed in the freedom of information summary.

In accordance with the freedom of information provisions of 21 CFR part 20 and 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

FDA has determined under 21 CFR 25.33(d)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

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

Pursuant to Treasury Order 120-01 (formerly 221), dated June 6, 1972, the Secretary of the Treasury delegated to the Director of the Bureau of Alcohol, Tobacco and Firearms (ATF), the authority to enforce, among other laws, the provisions of chapter 51 of the Internal Revenue Code of 1986 (IRC) and the Federal Alcohol Administration (FAA) Act. The Director has subsequently redelegated certain of these authorities to appropriate subordinate officers by way of various means, including by regulation, ATF delegation orders, regional directives, or similar delegation documents. As a result, to ascertain what particular officer is authorized to perform a particular function under chapter 51 of the IRC or the FAA Act, each of these various delegation instruments must be consulted. Similarly, each time a delegation of authority is revoked or redelegated, each of the delegation documents must be reviewed and amended as necessary.

ATF has determined that this multiplicity of delegation instruments complicates and hinders the task of determining which ATF officer is authorized to perform a particular function. ATF also believes these multiple delegation instruments exacerbate the administrative burden associated with maintaining up-to-date delegations, resulting in an undue delay in reflecting current authorities.

Accordingly, this final rule rescinds all authorities of the Director in part 251 that were previously delegated and places those authorities with the “appropriate ATF officer.” All of the authorities of the Director that were not previously delegated are also placed with the “appropriate ATF officer.” Along with this final rule, ATF is publishing ATF Order 1130.12, Delegation of the Director's Authorities in 27 CFR part 251, Importation of Distilled Spirits, Wines, and Beer, which delegates authorities to appropriate ATF officers. The effect of these changes is to consolidate all delegations of authority in part 251 into one delegation instrument. This action both simplifies the process for determining what ATF officer is authorized to perform a particular function and facilitates the updating of delegations in the future. As a result, delegations of authority will be reflected in a more timely and user-friendly manner.

In addition, this final rule also eliminates all references in the regulations that identify the ATF officer with whom an ATF form is filed. This is because ATF forms indicate the officer with whom they must be filed. Similarly, this final rule also amends part 251 to provide that the submission of documents other than ATF forms (such as letterhead applications, notices and reports) must be filed with the “appropriate ATF officer” identified in ATF Order 1130.12. These changes will facilitate the identification of the officer with whom forms and other required submissions are to be filed.

This final rule also makes various technical amendments to Subpart A—Scope of Regulations of 27 CFR part 251. First, a new § 251.3 is added to recognize the authority of the Director to delegate regulatory authorities in part 251 and to identify ATF Order 1130.12 as the instrument reflecting such delegations. Second, § 251.2 is amended to provide that the instructions for an ATF form identify the ATF officer with whom it must be filed.

ATF has made or will make similar changes in delegations to all other parts of Title 27 of the Code of Federal Regulations through separate rulemakings.

Section 136(a) of Public Law 103-465 (108 Stat. 4841), known as the Uruguay Round Agreements Act, repealed section 5001(a)(3) of the Internal Revenue Code of 1986. This section had previously imposed a tax on perfumes imported into the United States containing distilled spirits, a tax of $13.50 per wine gallon. Consequently, we are removing sections in part 251 of the Code of Federal Regulations that refer to this repealed tax.

Sections 251.55 and 251.59 are being amended to remove references to obsolete regulations and an obsolete form.

The provisions of the Paperwork Reduction Act of 1995, Pub. L. 104-13, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this final rule because there are no new or revised recordkeeping or reporting requirements.

Because no notice of proposed rulemaking is required for this rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply. A copy of this final rule was submitted to the Chief Counsel for Advocacy of the Small Business Administration in accordance with 26 U.S.C. 7805(f). No comments were received.

It has been determined that this rule is not a significant regulatory action because it will not: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

Because this final rule merely makes technical amendments and conforming changes to improve the clarity of the regulations, it is unnecessary to issue this final rule with notice and public procedure under 5 U.S.C. 553(b). Similarly it is unnecessary to subject this final rule to the effective date limitation of 5 U.S.C. 553(d).

The principal author of this document is Robert Ruhf, Regulations Division, Bureau of Alcohol, Tobacco and Firearms.

Since December 21, 2001, the date of the promulgation of the interim final rule, I have been engaged in meetings and conversations with September 11 victims, their families, public officials, representatives of private charities and interested concerned citizens of our nation and foreign nations as well. I have listened carefully to both supporters and critics of the interim final rule. I have benefitted tremendously from their input. I believe that, as a direct result of that varying input, this final rule constitutes a product worthy of support by all those interested in a just, fair and efficient compensation program.

No amount of money can right the horrific wrongs done on September 11, 2001. Nor can any of us who has not shared such immediate and irrevocable loss fully understand the depths of suffering that families and victims are enduring.

The September 11th Victim Compensation Fund is a unique federal program created by Congress in recognition of the special tragic circumstances these victims and their families confront. The Fund provides an alternative to the significant risk, expense, and delay inherent in civil litigation by offering victims and their families an opportunity to receive swift, inexpensive, and predictable resolution of claims. The Fund provides an unprecedented level of federal financial assistance for surviving victims and the families of deceased victims.

There has been significant public commentary regarding the Fund's proposed structure. The plan has been described as “about as fair as it could possibly be” ( Newsweek, December 31, 2001), “a good start on the road to recovery” ( The New York Times, December 23, 2001), “an eminently fair plan” ( The New York Daily News, December 28, 2001), and a program that “offers speedy and rational compensation” ( The Washington Post, January 18, 2002). I believe that—when compared to the alternative of a protracted, uncertain lawsuit—the Fund provides a vastly preferable method of assuring fair compensation to all eligible claimants.

The comments submitted to the Department of Justice have been starkly divided regarding the methodologies for calculating awards and, in particular, the “presumed award” charts I released at the same time as the interim final rule. Many have argued that the presumed awards are too high, particularly for victims who had high incomes. Others, in contrast, have argued, for differing reasons, that the high end “presumed awards” should be even higher.

Under the “presumed award” methodology, presumed awards ranged from several hundred thousand dollars to more than $3 million for certain eligible applicants. We have spent considerable time carefully evaluating the comments on the “presumed award” methodology and have made certain adjustments that have the effect of increasing the expected presumed awards. In addition, we have clarified the definition of “collateral source compensation” in a manner that should have an additional, upward impact on awards.

As I have repeatedly stated to the victims and their families, there are many aspects of the Fund that are mandated by Congress and cannot be changed by me or by the Department. Indeed, many of the most controversial aspects of the Fund—such as the requirement that awards be offset by life insurance and other collateral source compensation—are specifically required by Congress. I have no power to usurp or disregard congressional mandates. Rather, my goal has always been to provide the most fair and appropriate compensation within the parameters established by Congress.

Accordingly, within the discretion available, we have made the following clarifications and improvements in the final rule:

• Definition of Collateral Sources. As already indicated, the final rule clarifies the definition of “collateral source” compensation by expressly stating that certain government benefits, such as tax relief, contingent Social Security benefits, and contingent workers' compensation benefits (or comparable contingent benefits for government employees), need not be treated as collateral source compensation. Also, because we do not believe that Congress intended to treat a victim's savings accounts or similar investments as collateral source compensation, the collateral-source offsets will not include moneys or other investments in victims' 401(k) accounts.

• Valuation of Collateral-source offsets. While Congress left us little choice on whether to make certain collateral source deductions, we have slightly more discretion in how to calculate the appropriate deduction. For example, we will adjust the collateral source offset for pensions and life insurance policies to ensure that we are not counting “self-contributions” or premium payments as part of the offset. In addition, for collateral source compensation that claimants will receive through future payments, we will employ present value methodologies to apply a proper discount to the amount actually deducted from a victim's award. This obviously has the effect of reducing offsets and, in turn, increasing awards. Finally, to ensure that the impact of collateral-source offsets is clear to potential claimants before they decide whether to participate in the Fund, we will also make available an advisory service to provide additional information for potential applicants as to how the Fund will treat different types of collateral source compensation.

• Discretion Where the Recipients of Collateral Source Compensation Are Not Beneficiaries of Awards. In cases where the recipients of collateral source compensation are not beneficiaries of the awards from the Fund, the Special Master will have discretion to exclude such compensation from the collateral source offset where necessary to prevent beneficiaries from having their awards reduced by collateral source compensation they will not receive.

• Clarification of Definition of Charitable Donations. The final rule clarifies that benefits from charities disbursing private donations will not be treated as collateral source compensation, even if such charities were created or managed by governmental entities.

• Increase in Compensation for Non-economic Losses. The amount of additional presumed non-economic loss compensation for the spouse and each dependent of a deceased victim is doubled from $50,000 to $100,000. This increase is in addition to the $250,000 presumed non-economic loss that is awarded on behalf of all decedents. This means that a family of a victim who was survived by a spouse and two minor children would be entitled to a presumed non-economic award of over half a million dollars before collateral-source offsets.

• Adjustments to the Presumed Economic Loss Methodology. The Special Master has adjusted his methodology for determining presumed economic losses in several respects that are described herein. As a result, no presumed awards are lower than under the original methodology, and most are higher.

• Policy Toward Final Awards. The Act requires that collateral source compensation be deducted from all final awards. The Act, therefore, does not permit us to create a mandatory legal rule requiring minimum payouts for all eligible claimants after collateral source deductions. Nevertheless, the Special Master is permitted to consider the individual circumstances of each claimant, including the needs of the victim's family. Having personally met with thousands of individual family members, discussing with them their various needs, I anticipate that, when the total needs of deceased victims' families are considered, it will be very rare that a claimant will receive less than $250,000, except in unusual situations where a claimant has already received very substantial compensation from collateral sources.

• Physical Harm Requirements. The time period for obtaining medical treatment under the definition of “physical harm” is increased from 24 hours to 72 hours for those victims who were unable to realize immediately the extent of their injuries or for whom appropriate health care was not available on September 11. The Special Master has discretion to extend the time period even further on a case-by-case basis for rescue personnel who otherwise meet this requirement but did not seek or were not able to seek medical treatment within 72 hours.

• Time for Hearings. Under the interim final rule, claimants had the option of requesting a formal hearing. This option remains part of the final rule, but we have eliminated the suggested two-hour hearing limitation.

Congress offered little guidance regarding the procedural framework for resolving claims. Nevertheless, we have provided varied procedural options for applicants because we know that one size and one system will not fit all. Victims who so choose may take a simple and direct route, filing forms and accepting payment within a matter of weeks. Other victims may opt for a more detailed and lengthy process, electing for a hearing and exercising their opportunity to present their cases personally in greater detail.

Some have argued that it is essential that each claimant know how much he or she will recover from the Fund before a formal application is submitted, particularly in light of the congressional requirement that each participating claimant waive the right to file a civil lawsuit in connection with the September 11 attacks. Others, however, have argued precisely the opposite—namely, that no formula can account for all of a claimant's individual circumstances, and that recovery should therefore be determined solely on the basis of an individualized hearing.

The Act requires that the award be determined only after the application is submitted and after a review of the requested economic and other information. It would therefore be inappropriate for me to provide any binding estimates of individual awards before we go through that process. However, to ensure that potential applicants have the ability to estimate roughly the possible ranges of their own recoveries, we have produced tables of presumed awards, and our consultants are available to provide additional guidance on the methodology for valuing different types of pension benefits and other collateral-source offsets. Accordingly, no claimant will be required to waive litigation options before receiving some indication from the Special Master as to how collateral-source offsets will be treated generally.

The efforts that I have taken to inform potential claimants of the likely range of their awards should not be mistaken for some sort of “cap” on awards. Although we still anticipate that awards in excess of $3 or $4 million will be rare, we emphasize again that there are no “caps” under this program. To the contrary, each claimant has the option to ask for a hearing at which he or she may assert additional individualized circumstances and argue that the presumed award methodology is inadequate to resolve his or her particular claim in a fair manner. We will consider all such individual circumstances, including, but not limited to, the financial needs of victims and victims' families.

One final concern should be addressed. I have received during the comment period, and have read in the newspapers, comments from a few American citizens expressing the opinion that the victims and their families are “greedy” in seeking additional compensation. As I have repeatedly stated, both publicly and privately, I believe that such a characterization is unfair. This Fund, and the comments of distressed family members, are not about “greed” but, rather, reflect both the horror of September 11 and the determination of family members to value the life of loved ones suddenly lost on that tragic day. I believe the American people understand this and in no way associate the efforts of family members to secure compensation with any characterization of “greed.” This Fund represents the best spirit and compassion of the American people. I believe that America is unique in creating such a Fund that expresses the compassion, concern and determination of its people in coming to the aid of the victims of September 11.

In sum, we believe the changes adopted in this final rule best ensure that claimants will receive fair and appropriate awards. I remain personally committed to ensuring that every claimant is compensated fairly.

This preamble discusses the public comments regarding the interim final rule and the additions and amendments to that rule that have been adopted through this final rulemaking. It does not purport to provide a complete overview of the program or an explanation of all of the many aspects of the interim final rule that remain unchanged. For an explanation of those aspects that remain unchanged, the reader is directed to the Department's interim final rule, published at 66 FR 66274 (Dec. 21, 2001). In addition, more detailed information regarding the program, including a flow chart of applicable procedures, a revised table of the Special Master's estimated or “presumed” awards, claim forms, and answers to frequently asked questions are available on the Victim Compensation Fund website at www.usdoj.gov/victimcompensation.

The President signed the “September 11th Victim Compensation Fund of 2001” (the “Fund”) into law on September 22, 2001, as Title IV of Public Law 107-42 (“Air Transportation Safety and System Stabilization Act”) (the “Act”). The purpose of this Fund is to provide compensation to eligible individuals who were physically injured as a result of the terrorist-related aircraft crashes of September 11, 2001, and compensation through a “personal representative” for those who died as a result of the crashes. Generally, eligibility is limited to: (1) Individuals on the planes at the time of the crashes (other than the terrorists); and (2) individuals present at the World Trade Center, the Pentagon, or the site of the crash in Pennsylvania at the time of the crashes or in the immediate aftermath of the crashes.

The Fund is designed to provide a no-fault alternative to tort litigation for eligible claimants. Congress has determined that others who may have suffered losses as a result of those events ( e.g., those without identifiable physical injuries but who lost employment) are not included in this special program. Accordingly, compensation will be provided only for losses caused on account of personal physical injuries or death, even though the victims may have suffered other losses, such as property loss. For this reason, the Department and the Special Master anticipate that all awards from the Fund will be free of federal taxation. See I.R.C. section 104(a)(2) (stating that damages received “on account of personal physical injuries or physical sickness” are excludable from gross income for purposes of federal income taxation).

A claimant who files for compensation waives any right to file a civil action (or to be a party to an action) in any federal or state court for damages sustained as a result of the terrorist-related aircraft crashes of September 11, 2001, except for actions to recover collateral source obligations or civil actions against any person who is a knowing participant in any conspiracy to hijack any aircraft or to commit any terrorist act.

Determinations of eligibility and the amount of compensation are to be made by the Special Master. After determining whether an individual is an eligible claimant under the Act, the Special Master is to determine the amount of compensation to be awarded based upon the harm to the claimant, the facts of the claim, and the individual circumstances of the claimant.

The law also provides that the Special Master make a final determination on any claim within 120 days after filing of the claim and, if an award is made, to authorize payment within 20 days thereafter. The determinations of the Special Master are final and not reviewable by any court. Claims with the Fund must be filed on or before December 21, 2003, two years after the effective date of the interim final rule. Payments from the Fund are made by the United States Government, which in turn obtains the right of subrogation to each award.

The Department is promulgating this final rule pursuant to section 407 of the Act, which provides that the Department, in consultation with the Special Master, must promulgate regulations on the following matters:

(1) Forms to be used in submitting claims;

(2) The information to be included in such forms;

(3) Procedures for hearing and the presentation of evidence; and

(4) Procedures to assist an individual in filing and pursuing claims under this title.

In addition, section 407 authorizes, but does not require, the Department to issue additional rules to implement the program. This final rule addresses issues beyond the four specifically required by the Act in order to create a program that will be efficient, will treat similarly situated claimants alike, and will allow potential claimants to make informed decisions regarding whether to file claims with the Fund. Nonetheless, the Department recognizes that it cannot anticipate all of the issues that will arise over the course of the program and that there will inevitably be many difficult issues the Special Master will have to resolve in the course of making determinations on individual claims.

On November 5, 2001, the Department requested public input on a number of issues. See 66 FR 55901. The Department noted that, at that time, the Special Master had not yet been appointed, but that it wanted as much public comment as feasible before issuing the regulations by December 21, 2001. On November 26, 2001, the Attorney General appointed Kenneth R. Feinberg as Special Master.

The Department reviewed the more than 800 comments submitted in response to the Department's Notice of Inquiry. On December 21, 2001, the Department promulgated an interim final rule governing the Fund. 66 FR 66274. The interim final rule had immediate force of law and allowed the Special Master to begin accepting applications and providing “Advance Benefits” to certain classes of eligible claimants. In addition, the Rule provided for a 30-day public comment period on the interim final rule.

The Department has received thousands of comments since the December 21 publication of the interim final rule. The Department and the Special Master's Office have reviewed each of these comments, and the Special Master has met personally with more than 1,000 victims, victims' advocates, public officials, and others. As was the case with the interim final rule, the Department and the Special Master have considered all comments in promulgating the final rule.

Congress created the Victim Compensation Fund to compensate those injured or killed in the September 11 terrorist attacks. A number of people commented on whether or not Congress should have created this program in the first place.

Scores of commenters—recognizing Congress' belief that the airlines were facing imminent bankruptcy and could be effectively judgment proof—described the Fund as a testament to Congressional and taxpayer generosity. Many described the Fund as compassionate and critical to meet the needs of victims of September 11. A few noted that they wish Congress had enacted similar legislation prior to September 11 to care for the needs of those in previous tragedies, and voiced their support for similar programs in the future.

Many others, however, expressed their disapproval of Congress for creating the Fund. For example, several argued that Osama bin Laden and his al Qaeda network are the sole responsible parties and that the government should not expend taxpayer dollars to compensate those who are not in immediate financial need. Several commenters indicated that taxpayer revenue should instead be spent on the homeless and other social programs “that currently lack adequate funding.”

Others expressed their regret that victims of other tragedies were not given the same benefit of compensation. These commenters raised several questions, including: Why were not the victims of the Oklahoma City bombing given the same opportunities? What about victims on the U.S.S. Cole? Victims of anthrax? Those who died in the embassy bombings in East Africa? Why are the soldiers in the United States military not included? What about those who volunteered or were drafted to fight in World War II, Vietnam, and other arenas of combat who died defending the United States? What about those who perished in floods, hurricanes, snowstorms, fires, tornados, earthquakes, and other domestic tragedies? What about those persons who were murdered on September 10 and 12?

On the other hand, a number of commenters who indicated that they are eligible to file a claim with the Fund voiced concerns that Congress had inappropriately limited their right to sue potentially liable third parties for their loss. Some of these commenters argued that several companies and agencies “contributed” to the September 11 attacks and “should be held responsible” for their alleged “negligence.”

While the Department and the Special Master have reviewed the many comments both in favor and in opposition to the Fund, such comments principally address Congress' legislation. The Department's regulations are designed to implement the Act as written; we cannot rewrite the Act or nullify Congressional intent. The goal in this final rule was simply to create the best and fairest program possible within the requirements set by Congress.

The Act does not specify the amount of the awards for individual claimants. Instead, the Act gives the Special Master discretion to determine the amount of the award “based on the harm to the claimant, the facts of the claim, and the individual circumstances of the claimant.” Section 405(b)(1)(B)(ii). The Act further provides that the Special Master's determination “shall be final and not subject to judicial review.” Section 405(b)(3).

The Act thus permits the Special Master to determine the amount of awards on a case-by-case basis without giving any guidance to potential claimants regarding the awards that they would likely receive if they waived their rights to litigation and opted into the Fund. Further, such case-by-case determinations would not be subject to judicial review. As a practical matter, of course, the Special Master would need some methodology to ensure a measure of consistency among awards to similarly situated claimants, to give potential claimants some idea of their likely range of awards, and to make the Fund administratively feasible. The Department and the Special Master decided that the interests of potential claimants would be best served by providing, where reasonably possible, information concerning the Special Master's methodology for calculating awards. The Special Master has not imposed any “cap” on awards nor limited claimants from presenting evidence of their individual circumstances.

On December 20, 2001, Kenneth R. Feinberg, the Special Master of the Fund, publicly announced the completion of the interim final rule and, along with the rule, unveiled several charts illustrating in a general way presumptive, non-binding estimated awards available for those eligible claimants filing on behalf of certain deceased victims. Furthermore, in heeding the Attorney General's instruction to help the neediest victims as quickly as possible, Mr. Feinberg also introduced a means by which most eligible claimants could receive immediate, advance benefits in the amount of $50,000 for decedents and $25,000 for most of those with serious physical injuries. The interim final rule permitted claimants either to accept the presumed award or to argue for a greater award either at an individual hearing or, at the claimant's option, on submitted documentation.

While the Special Master's presumed award charts are not part of the Department's rulemaking, the amount of compensation reflected on those charts received more public comments than any other subject. Both the Department and the Special Master's office have considered those comments, just as they have considered the comments regarding the interim final rule.

The comments regarding the presumptive awards varied greatly. While many described the presumptive awards as just and fair, others criticized them as either too high or too low. These disagreements were based in large part upon differing views regarding the purposes of the Fund. Some commenters began with the presumption that the Act's provision of recovery for both economic and non-economic losses, accompanied by the requirement that claimants waive their right to civil litigation, indicated that the amount of compensation under the Fund should mirror past jury awards in airline litigation. Those commenters, for the most part, concluded that the presumed awards were insufficient, particularly for victims with the highest incomes.

Many other commenters took a very different view of the program. These commenters viewed the program not as a replication of the tort system, but instead as a government program designed to assist the victims and their families. Those commenters therefore concluded that there should not be a disparity among the awards based upon the income of the victim. Some vigorously criticized the proposition that the wealthiest victims should receive more from the taxpayers than many of the public safety officers and Pentagon employees would receive. Indeed, some commenters expressed frustration that people are demanding more than the presumed awards, contending that the awards are “more than generous” and that it is inappropriate for the federal government to “make victims' families millionaires with taxpayer money.”

Other commenters noted the competing goals of the Act and the complexities of placing dollar figures on a life and determining awards within the prescriptions of the Act. For example, one commenter stated that “[t]here is no way for distribution of these funds to be totally fair in the eyes of everyone. That's just the way it is.” Those commenters, by and large, praised the efforts of the Special Master.

The Department and the Special Master have thoroughly reviewed and considered the differing views regarding the amounts of compensation reflected in the Special Master's presumed award charts and have concluded that no single analogy should dictate the compensation under the Fund. Civil litigation often takes years, with awards varying greatly from one claimant to another, particularly where the incomes of the victims vary. Indeed, under the tort system, while many claimants receive extremely large awards, many others walk away empty-handed due to the requirement that plaintiffs prove fault. In contrast, the Fund is a no-fault alternative to civil litigation designed to provide fair compensation in a matter of months.

At the same time, the Department and the Special Master do not believe that any other federal government program provides a perfect analogy for determining the amount of awards. The Fund is a unique program that provides compensation for both economic and non-economic losses and requires that claimants waive their rights to civil litigation.

The final rule makes some important changes that will increase the amount of compensation in the Special Master's presumed award charts. While the Department and the Special Master believe that the original presumed award charts are entirely sound and are based upon neutral, current data and generally accepted methodologies, the public comments did suggest certain adjustments that we determined were appropriate to implement. Specifically, as described in more detail below, the final rule increases the amount of non-economic loss compensation by providing that the presumed awards will include $100,000, rather than $50,000, for the spouse and each dependent of a deceased victim (in addition to the $250,000 presumed non-economic award for each deceased victim). In connection with publication of this final rule, the Special Master will also announce revised presumed award charts that modify presumed economic loss in a manner that will further increase presumed awards. In addition, as explained below, the definition of collateral source compensation is clarified in a manner that will lead to higher final awards than many in the public had assumed.

Of course, it bears repeating that the Special Master's “presumed award charts” are estimates and do not determine the final award for claimants who request individualized hearings. Rather, the Special Master stands prepared to depart from the presumed awards for individual claims based upon the extraordinary circumstances of the claimants.

Although prescribed by the Act, many commenters expressed frustration that a victim's income is considered in calculating economic loss. One commenter stated that “rich people do not deserve more because they are rich.” Others believed that the distribution of taxpayer dollars should be equal to all victims regardless of income levels. At least one commenter noted that persons with substantial incomes should not receive higher awards because they are the ones, he argued, with the “financial savvy” to protect their loved ones with life insurance.

Several commenters raised issues with respect to deriving a victim's average annual income from the years 1998-2000 in determining the foundation for calculating economic loss. One commenter noted that only the last year of annual income should be included. Many comments on this subject, however, contended that the three-year period used to obtain the average encompasses the wrong period of years. These commenters suggested the Special Master use the average income from 1999-2001 (rather than 1998-2000), arguing that 2001 is more indicative of a victim's actual earning potential. In addition, several families of victims of the Pentagon attack expressed concern that the description of income in the interim final rule did not account fully for income of employees of the military, which often uses terms of art to describe various forms of compensation.

In response to these suggestions, the interim final rule is amended to allow the Special Master discretion to consider on a prorated basis a victim's income from 2001 as well as published salary scales for government or military employees. In addition, the interim final rule is amended to clarify that military service members' and uniformed service members' compensation includes all of the various components of compensation, including, but not limited to, basic pay (BPY), basic allowance for housing (BAH), basic allowance for subsistence (BAS), federal income tax advantage (TAD), overtime bonuses, differential pay, and longevity pay.

Several comments also raised issues regarding the fact that the Special Master's schedules, tables, and charts only identify presumed economic determinations of economic loss up to a salary level commensurate with the 98th percentile of individual income in the United States. Commenters had mixed reactions to this component of the calculations. Some complained that the program is inappropriately “making millionaires” of victims' families and that the high end presumed awards for earners at the 98th percentile were inordinately high when compared to the average or lower end awards. One commenter stated that the percentile should be lowered because, as currently implemented, it “unfairly discriminates against lower-income families.” Other commenters, however, indicated that those same presumed awards that many regarded as too high were actually too low—that the amounts at the 98th percentile failed to fully redress losses for the most successful of all victims (in the top 2% of annual income). These commenters often inaccurately described the 98th percentile as a “cap” on awards.

The final rule does not change the interim final rule's provision that the presumed award charts will address incomes only up to the 98th percentile of income in the United States. Many of the criticisms of that provision were based upon the incorrect assumption that the provision constitutes a “cap” on economic loss recovery. To be absolutely clear: The fact that the “presumed awards” address incomes only up to the 98th percentile does not indicate that awards from the Fund are “capped” at that level. In extending the presumed awards only up to the 98th percentile, we merely recognized that calculation of awards for many victims with extraordinary incomes beyond the 98th percentile could be a highly speculative exercise and that, moreover, providing compensation above that level would rarely be necessary to ensure that the financial needs of a claimant are met. Calculation of an award beyond that point using the presumed award methodology without a detailed record could very well produce inappropriate results. Accordingly, we permitted applicants with extraordinary prior earnings to accept awards at the 98th percentile or seek calculation of an award based upon a more detailed record. We also note that the Special Master has express authority under the Act to consider the “individual circumstances of the claimant” in fashioning awards, including the financial needs of victims and surviving families in rebuilding their lives. As indicated, the Special Master will strive to deliver a fair and equitable sum to each eligible claimant.

Many commenters argued for changes in other components of the economic calculations, the effect of which would increase awards. Some commenters stated that the wage growth rates used in the economic calculations are too low. A few commenters noted their opposition to consumption factors being used. Another stated that a person engaged to be married should not be straddled with an unmarried person's consumption rate. Some suggested that the work life estimates are outdated and gender biased. One commenter stated that the promotion and merit assumptions are inconsistent and unfair to particular age groups. Another indicated that taxes should not be deducted from future lost earnings. One commenter stated that economic loss for foreign nationals should be calculated by percentages. She suggested that the Special Master determine the percentile of the foreign national's income in his or her own country (in light of national averages), and calculate the economic loss in light of the income of the corresponding percentage in the United States. Finally, some commenters were worried that victims just out of school (but with degrees or professional licenses in industries offering top-level salaries), and without any income history, would be treated unfairly.

On the other hand, several commenters argued that the calculations were too generous and suggested changes, the effect of which would decrease awards. Some indicated that the wage growth rates are too high. One commenter suggested that personal representatives of single claimants should not be entitled to economic losses because they would not have benefitted from the decedent's economic gain absent death. Another commenter generally agreed with that proposition, but stated that economic loss should be limited to any amount a single deceased victim was obligated or ordered to pay in child support. Other commenters argued that economic awards should not assume that surviving spouses or other family members will never work again. Lastly, one commenter stated that divorce rates should be factored in to the economic loss calculations.

The new presumed award charts released by the Special Master make several changes that are designed to improve the economic loss methodology in light of the comments. While this methodology is not part of the Department's rulemaking, we believe it is helpful to offer this explanation here. These changes will have the overall effect of increasing presumed awards for all claimants. Specifically:

(1) The Special Master's original presumed economic loss methodology relied upon expected work life data from the publication “A Markov Process Model of Work-Life Expectancies Based on Labor Market Activity in 1997-1998,” by James Ciecka, Thomas Donley, and Jerry Goldman in the Journal of Legal Economics, Winter 1999-2000. Contrary to the assertions of some commenters, the Special Master did not use data from the 1970s; rather, the study was conducted in 1997 and 1998. Also, the Special Master's original presumed award methodology did not, as some suggested, discriminate against women. Rather, the original methodology relied upon the same assumptions for men and women—the combined average of All Active Males and All Active Females. However, in order to increase awards for all claimants by maximizing the duration of expected foregone earnings and accommodating potential increases by women in the labor force, the Special Master's revised presumed economic loss methodology uses the most generous data available. Specifically, the new methodology uses the All Active Males table for all claimants.

(2) To address concerns about wage growth assumptions and the application of wage growth assumptions to different age groups, the Special Master has adjusted the wage growth assumptions to growth rates that incorporate annual adjustments for inflation, productivity in excess of inflation and life cycle increases using data from the March 2001 Current Population Survey conducted by the Bureau of the Census for the Bureau of Labor Statistics. For life cycle increases, the Special Master is applying the higher age-specific life cycle increases (those for males) for all claimants. For inflation and productivity increases, the Special Master has applied rates of 2 percent and 1 percent, respectively. These rates are consistent with the long-term relationship between wage growth and risk-free interest rates. The net effect of this adjustment is to better represent the expected earnings pattern of the victims over their expected careers as compared to the original methodology, which based anticipated wage growth on the victim's age at death. The original assumptions reflected and indeed emphasized the fact that real increases are typically higher in the earlier stages of a career but was subject to some criticism because it did not adjust the growth continually throughout the work life and thus created differentials at specific ages (particularly, age 31 and age 51). By adopting the revised assumptions, the Special Master adjusts wage growth throughout the duration of the work life, thus reducing the differences between age groups. In addition, although the data indicate that wages actually fall at a certain stage in the career, the Special Master has chosen to assume that peak earnings remain constant and do not decline at any stage in the career.

(3) As with the original presumed award calculations, the Special Master subtracts from the annual projected compensable income the victim's “consumption” as a percentage of after-tax income instead of before-tax income. While the consumption adjustment is standard, the application of the adjustment to after-tax income lowers the amount of the consumption offset below the amount that would typically apply in an economic loss calculation. In addition, as with the initial model, the Special Master's assumptions eliminate some of the components typically used in estimating consumption, thereby further limiting the consumption deduction.

(4) To better reflect typical life cycle earnings expectation, the Special Master has incorporated into the calculation a factor to account for risk of unemployment—again, a common factor in the calculation of future lost earnings.

(5) Finally, the Special Master has elected to use three blended after-tax discount rates to compute the present value of the award and has adjusted the discount rate to reflect current yields on mid-to long-term U.S. Treasury securities. Although this adjustment creates a more complex computational process, the Special Master believes that the effect will be to better reflect the different ages of the victims and the fact that the survivors will receive awards reflecting different assumed future years of work life.

Overall, it is important to understand that the basic factor that affects the economic loss analysis is the victim's own data: each presumed award will be calculated using the victim's data regarding actual compensation, including fringe benefits and forms of compensation and effective tax rate. It is also important to emphasize that the presumed award methodology is intended to facilitate the computation of a large number of awards without the detailed review that might typically be employed in a lengthy economic loss analysis in an individual case. To achieve this objective, the Special Master specifically adopted assumptions that are intended to be favorable to claimants and to enable prompt analysis and payment. Needless to say, a case specific analysis that took into account the actual consumption and savings rates of a particular individual could require a substantial amount of time and could very well produce lower awards in some cases.

It is also relevant to note comments suggesting that the economic loss calculations fail to incorporate sufficiently replacement services loss. The Special Master recognizes that such losses are variable, and thus claimants may present at a hearing individualized data to support a departure from the presumed award.

After extensive fact finding, public outreach, and review of public comments, the Special Master and the Department concluded that the most rational and just way to approach the imponderable task of placing a dollar amount on the pain, emotional suffering, loss of enjoyment of life, and mental anguish suffered by the thousands of victims is to assess the non-economic losses for categories of claimants. The regulations, therefore, set forth presumed awards for non-economic losses sustained. The presumed non-economic loss awards for decedents in the interim final rule were $250,000, plus an additional $50,000 for the spouse and each dependent of the deceased victim. Notably, the regulations further provide the option of a hearing for those claimants who feel the presumed awards do not take into account their extraordinary circumstances.

While many lauded the decision not to distinguish (at least presumptively) between the pain and suffering of victims or loved ones, many others voiced their disapproval and urged that all presumptions be removed. Many of the comments addressing this topic focused on the pain and suffering of those left behind, while others referred to the pain and suffering experienced by the victims who lost their lives.

Those in favor of presumed equality pointed out the alleged difficulty in drawing distinctions. For instance, one commenter (speaking of the pain and suffering she has experienced) focused on another commenter's assertions that he deserved more money for pain and suffering because he spoke to his wife (who was in the World Trade Center) after one of the planes hit her building but before she lost her life. She stated that—although she did not talk to her husband prior to his death—she experienced just as much (if not more) pain and suffering because she never had the opportunity to say goodbye to him.

Other commenters, however, expressed their views on how distinctions should be made. For example, one family member (speaking of his son's pain and suffering) proposed the creation of a separate category of pain and suffering that differentiates between those victims who were trapped above the impact area of each World Trade Center building from those who were physically located below it. He believes his son's pain and suffering was greater than those who died below the respective impact zones. Moreover, proposed distinctions were made depending on whether someone was an emergency worker or not. Some argued that emergency workers should receive more by way of non-economic losses because they sacrificed their lives to save victims. In contrast, others argued that emergency workers should receive less because “they knew [the] risks when they pursued their careers in public service.”

Further, some argued the presumed awards as a whole were inadequate, while others stated they were too high. Many commenters stated that a victim's life is priceless and suggested that the non-economic presumptions be raised to acknowledge the grief suffered by family members. At least one commenter stated that non-economic losses usually are not available for wrongful death actions and, therefore, should be minimal under the Fund, if recognized at all.

One commenter urged that consequential and incidental damages be included in the non-economic calculations. Another indicated that non-economic losses should not be comparable to military benefits. Finally, at least one commenter argued that those who died without children are being “forgotten” or “penalized.”

It is important once again to emphasize that the final rule specifies only the presumed non-economic losses award, and any claimant may request a hearing to present individualized evidence. However, the Special Master believes that it is important to have some measure of consistency among awards, so that he does not have to “play Solomon” by attempting to place a value on human lives on an ad hoc basis.

The selection of a dollar value for non-economic losses is inherently subjective. The Department and the Special Master concluded that an appropriate starting point is the compensation that Congress has made available under existing federal programs for public safety officers who are killed while on duty and members of our military who are killed in the line of duty while serving our nation. See 38 U.S.C. 1967 (military personnel); 42 U.S.C. 3796 (Public Safety Officers Benefit Program). That amount ($250,000) is not a cap.

The Department and the Special Master also decided to include an additional component for the spouse and each dependent of deceased victims. The interim final rule set that amount at $50,000 for the spouse and each dependent. After reviewing the public comments and meeting with numerous families of victims, we have decided to double that amount to $100,000 for the spouse and each dependent. Obviously, this will have an upward impact on the amount of the awards for many families of victims. In addition, the definition of “dependents” is modified to include those who meet the IRS” definition of “dependent” even where the victim did not include the individual as a dependent on his or her most recent federal tax return.

In enacting the Fund, Congress required that awards be offset by “collateral source compensation” such as life insurance benefits, employer death benefits, and benefits from other government programs. Under the law, the Special Master must make these offsets. Nevertheless, the law does give the Special Master some measure of discretion regarding charitable donations, and the interim final rule states that such donations will not be deducted from victims' awards.

Many commenters focused on issues that are beyond the Department's authority to regulate. For example, many commenters addressed the appropriateness of reducing final awards by collateral compensation at all. Many commenters suggested that it was inappropriate to reduce awards for the families of victims who planned ahead by purchasing life insurance or other means of ensuring financial compensation to their families. On the other hand, those comments in favor of maintaining collateral-source offsets shared a similar theme; namely, in their opinion, the intent of the Fund was to “make sure that nobody's loss is compounded by sudden destitution,” not to enrich those who already have the financial means to make ends meet.

Despite the unequivocal language in the Act that mandates the Special Master deduct life insurance proceeds from awards, a substantial percentage of comments focused on this issue. While the majority of those comments urged that such proceeds not be deducted—a course that only Congress can prescribe—several commenters had more limited suggestions. For instance, a few commenters suggested that premiums that were contributed by the policyholder should be subtracted from the proceeds in calculating offsets. Other commenters similarly insisted that “cash values” not be included in the deductions.

Additionally, a few commenters were worried that life insurance proceeds that are not paid to a victim's personal representative (or any member of the decedent's current family) would be deducted from the award paid to the personal representative. One commenter proposed that “[l]ife insurance proceeds should only be offset to the extent they were payed to those persons who are the beneficiaries or distributees of the estate of a deceased victim.”

There also was a high volume of comments regarding workers' compensation. Several commenters stated they are uncertain whether or not workers' compensation benefits constitute a collateral source under the rule. Many argued that such benefits should not be deducted. Others argued they should. Some suggested that offsetting workers' compensation benefits would be impracticable because several “unknowns” exist. For example, survival benefits, under certain state laws, are forfeited if and when the recipient remarries, and such benefits, they contend, “cannot accurately be reduced to present value.” One organization specializing in New York workers' compensation law raised important technical issues and proposed preemptive solutions.

Although the topic of private charitable awards (as a potential component of collateral source) provoked a large percentage of the comments submitted in response to the Department's Notice of Inquiry, scant mention was made of it in response to the interim final rule. At least one commenter insisted that charities be deducted. Others sought further clarification on the scope of the definition of “charity” under the rule.

An important point needs to be made here regarding the differences between the private and federal compensation efforts arising out of the attacks of September 11. Many commenters confused this Victim Compensation Fund, which was created by Congress and is financed by taxpayer revenue, with the private charities ( e.g., American Red Cross). For example, some were upset with the Special Master because their private charitable donations were not being divided equally. Others were angry at the Special Master for not disseminating private charitable donations in a more timely fashion. It should be reiterated that the Special Master administering this Fund is not in charge of, nor does he maintain any control over, the private charitable organizations or the money they have collected.

Many comments raised additional collateral source issues. These comments consisted of proposals that, if adopted, would either increase or decrease the amount of offsets. Those wanting decreased offsets argued that pension funds, 401(k) plans, and IRAs essentially are “savings plans” and, therefore, should not be offset. Others contended that collateral offsets should affect only the amount of economic loss, rather than economic and non-economic losses combined. At least one commenter urged that money paid into Social Security on behalf of a victim (over his or her lifetime) be subtracted from any offset. One commenter asked that collateral offsets not be considered over $500,000.

Similarly, some commenters argued that pensions and other forms of retirement are, in fact, compensation (or incentives) for either accepting higher risk (in the case of emergency workers) or lower salaries (in the case of government employees). Others proposed that the regulations include a floor whereby every claimant, notwithstanding the amount of collateral-source offsets, is entitled to receive a considerable amount of compensation. These commenters expressed concern that—after collateral-source offsets—they could end up receiving nothing under the Fund.

The public's questions and comments make it clear that the determination of the appropriate collateral source offset will in many situations involve an individualized case-by-case review. It also appears from questions and from reports in the media that some individuals may be over-valuing the collateral source compensation and therefore assuming a much greater offset than would likely be applicable and that there is a great deal of uncertainty regarding the types of compensation that would be subject to the offset. Indeed, many commenters over-valued their particular collateral source compensation by failing to reduce future periodic payments or benefits to present value, a calculation that in many circumstances has a substantial effect on offset amounts. It is both necessary and appropriate therefore to provide more detailed guidance to the victims and their families so that they can make educated choices regarding participation in the program. The following clarifications regarding the interpretation and application of the collateral source compensation provisions of the Act should allow potential claimants to make more informed choices.

The Act defines collateral sources to mean all such sources, including life insurance, pension funds, death benefit programs, and payments by federal, state, or local governments related to the terrorist-related aircraft crashes of September 11, 2001. The Act and the rule require the Special Master to reduce the total amount of compensation by the amount of the collateral source compensation the claimant (or, in the case of a Personal Representative, the victim's beneficiaries) has received or is entitled to receive as a result of the terrorist-related aircraft crashes. In administering the Fund, consistent with the purpose and terms of the Act, the Special Master will exercise discretion in valuing the appropriate deductions for collateral offsets, including by determining: (1) Whether the particular offsets fall within the definition of collateral sources; (2) whether beneficiaries of the Fund are “entitled” to receive compensation from those collateral sources; (3) whether the collateral source compensation is certain or can be computed with sufficient certainty to enable its deduction while ensuring that the beneficiaries receive the total compensation that is appropriate; and (4) the appropriate amount of the compensation that should be deducted, taking into account the time value of money and contributions made before death by the victim in the nature of investment or savings.

While it is not possible to define in advance every possible collateral source deduction, a few general illustrations should provide guidance: First, the Special Master has discretion to exclude from consideration life insurance proceeds that are distributed to persons other than the beneficiaries of this Fund; second, the Special Master has discretion to adjust the amount of offsets to exclude premiums or assets that were accumulated by the victim through self-contributions paid into a life insurance program to build up a tax-deferred cash value; third, the Special Master may reduce the amount of the offset for a pension to take account of self-contributions to that plan over the decedent's lifetime.

In addition, the final rule provides that tax benefits received from the federal government as a result of the enactment of the Victims of Terrorism Tax Relief Act of 2001 ( Pub. L. 107- 134) will not be treated as collateral source compensation. The Victims of Terrorism Tax Relief Act of 2001 provides income and estate tax relief to the families of victims of terrorism. The law waives the income tax liability of a victim who died in one of the attacks for both the year of the attack and the previous year, and ensures that a minimum benefit of $10,000 is provided to the family of each victim. In addition, the law shields the first $8.5 million of a victim's estate from the federal estate tax. For example, prior to the new law, citizens or residents of the United States who died in the September 11, 2001 terrorist attacks, were able to utilize the maximum state death tax credit allowed for federal estate tax purposes, and had made no prior taxable gifts would have had federal estate tax liabilities as follows: a decedent with a federal taxable estate valued at $2,000,000 would have had a federal estate tax liability of approximately $460,650; a decedent with a federal taxable estate valued at $4,000,000 would have had a federal estate tax liability of approximately $1,339,850; and a decedent with a federal taxable estate valued at $8,000,000 would have had a federal estate tax liability of approximately $3,047,050. As a result of the new law, no estate tax would be due in each case. The Victims of Terrorism Tax Relief Act of 2001 therefore provides very substantial tax relief to many victims, and that relief will not be treated as collateral source compensation for purposes of determining awards from the Fund. Nevertheless, substantial income tax rebates could bear on financial need, and therefore could conceivably be considered by the Special Master in the context of a hearing.

Some survivors may be eligible for benefits or payments from certain programs that provide periodic payments subject to adjustment or termination depending on potential future events that cannot be predicted. Examples include Social Security survivor benefits paid to the spouse of a victim. Such benefits are paid only under certain conditions and only for certain periods of time. Further, the benefits are paid periodically over a period of years.

Where the benefits to be paid due to death of the victim are uncertain, unpredictable, or contingent on unknown future events, the amount of the compensation to which the survivor is entitled can be impossible to compute with reasonable certainty. In those instances, the Special Master has discretion not to require a full deduction where the amount of the collateral source compensation cannot be determined with reasonable certainty. Thus, for example, the Special Master has determined that workers' compensation benefits that are payable only if the spouse does not re-marry will only be offset to the extent they have already been paid. Likewise, Social Security and similar benefits payable to a surviving spouse only if the spouse does not re-marry or does not earn income above a certain threshold will be offset only to the extent they have already been paid. By contrast, survivor benefits from the Social Security Administration and from the military to children of victims—who generally are entitled by law to periodic payments until they reach the age of 17 or 18—can be reasonably computed and will be offset.

In light of numerous questions regarding the valuation of collateral source compensation, it is important to clarify that in computing the offset for any collateral source that is to be paid over a period of time, the Special Master will only offset the present value of that collateral source compensation. This has the effect of decreasing offsets and, thus, increasing the amount of awards. As an example, in the case of Social Security children's benefits, the Special Master would determine the monthly benefit to the child, multiply that benefit by the number of months remaining until the child reaches age 17 (taking into account possible limits such as maximum family benefits available), include—if consistent with Social Security guidelines—a factor for inflation, and then discount the total to present value to determine the amount of the offset.

The interim final rule provides that charitable donations distributed to beneficiaries of the decedent, to the injured claimant, or to the beneficiaries of the injured claimant by “private charitable entities” are not collateral source compensation. § 104.47(b)(2). The interim final rule further provides that the Special Master may determine that funds provided through a private charitable entity constitute, in substance, a payment described in the definition of collateral sources, and therefore should be used to offset the award.

Some commenters have expressed concern that the interim final rule's definition could require that privately funded charities would be treated as collateral sources if a governmental entity created or manages the charity. In order to avoid this confusion, the provision is amended to provide that money received from “privately funded charitable entities” do not constitute collateral source compensation, subject to the same exception described above.

Through this preamble, the Special Master announces his intention to permit applicants to meet with the Special Master or his representative consultants in order to advise such applicants whether particular types of collateral source compensation will fall within the definition of “collateral source compensation,” and how such types of collateral sources will be valued. This service is an attempt to deal with an issue raised during the comment period; namely, that potential claimants should not be required to waive their right to sue without having some indication of how particular types of collateral offsets will be treated. The final rule attempts to deal with this problem by striking a careful balance.

The Act does not permit the Special Master to provide claimants any precise estimate of their award prior the claimant opting into the Fund. Indeed, the Special Master and his staff will carefully review the information submitted in any claim before reaching any conclusions regarding an award. Nevertheless, by permitting applicants to inquire as to how the offsets will be calculated for differing types of collateral sources, this provision of the final rule should assist applicants to make a considered election concerning whether to participate in the Fund or not. To be clear, this consultation will focus on broad categories of benefits and will not provide applicants with a precise estimate of their eventual award. The determination of an appropriate award requires a deliberative review of a victim's file, including the types of detailed financial records that the application requires. The Special Master cannot, and will not, give a precise computation of an award before a claim is filed. This provision helps to assure claimants a better understanding of their award without requiring the Special Master to engage in individual computation not permitted by the Act.

Finally, some commenters expressed concern that their collateral-source deductions could eliminate their awards altogether. The Act requires that collateral source compensation be deducted from all final awards. The Act, therefore, does not permit us to create a mandatory legal rule requiring minimum payouts for all eligible claimants after collateral source deductions. Nevertheless, the Special Master is permitted to consider the individual circumstances of each claimant, including the needs of the victim's family. The Special Master has announced his expectation that, when the total needs of deceased victims' families are considered, it will be very rare that a claimant will receive less than $250,000, except in unusual situations where a claimant has already received very substantial compensation from collateral sources.

The Act requires the Special Master to determine whether a claimant is an “eligible individual.” “Eligibility,” in turn, is defined by the Act to include: (1) Individuals (other than the terrorists) aboard American Airlines flights 11 and 77 and United Airlines flights 93 and 175; (2) individuals who were “present at” the World Trade Center, the Pentagon, or the site of the aircraft crash at Shanksville, Pennsylvania at the time or in the immediate aftermath of the crashes; or (3) personal representatives of deceased individuals who would otherwise be eligible. Moreover, to be eligible for an award, an individual must have suffered physical harm or death as a result of one of the terrorist-related air crashes. The rule addresses eligibility by defining the terms “present at,” “immediate aftermath,” “physical harm,” and “personal representative.”

Many commenters submitted comments regarding eligibility issues. However, although the rule defined several terms important to eligibility requirements, the majority of comments concerning this topic discussed the scope of the terms “physical harm” and “personal representative.”

To be eligible for compensation under the Fund, victims who did not lose their lives in the terrorist attacks of September 11 must demonstrate that they suffered physical harm. “Physical harm” is defined in the interim final rule as “a physical injury to the body that was treated by a medical professional within 24 hours of the injury having been sustained or within 24 hours of rescue.” Additionally, such injury must have: (i) Required hospitalization as an in-patient for at least 24 hours; or (ii) caused, either temporarily or permanently, partial or total physical disability, incapacity or disfigurement.

The Act does not extend eligibility to those who suffered emotional distress without physical injury. A few commenters therefore urged that the Act be rewritten to include such harm, or that regulations be drafted to interpret emotional distress as a physical injury. At least one commenter stated that those suffering from post-traumatic stress disorder should be eligible under the Fund. Another lauded the program for its restrictions on eligibility based on physical injury.

Several commenters stated that the rule's definition of “physical harm” strikes an appropriate balance between compensating victims and preventing fraud or abuse. A few, however, indicated they were severely injured in the immediate aftermath of the terrorist attacks, yet would not be eligible for the Fund because they were not “treated by a medical professional within 24 hours of the injury having been sustained.” These commenters urged that the rule be adjusted to allow a longer period of time for treatment by a medical professional. At least one commenter indicated that—despite being seriously injured—he spent more than 24 hours trying to locate his family members and friends who worked in the World Trade Center. Another commenter described how many individuals with serious physical injuries either were reluctant to seek immediate treatment or were persuaded not to seek treatment in the 24 hours following the attacks in order to allow physicians to care for those suffering potentially life-threatening injuries.

The final rule expands the time period in which victims must have obtained medical treatment from 24 hours to 72 hours for those victims who were unable to realize immediately the extent of their injuries or for whom appropriate medical care was not available on September 11. The Special Master has discretion to extend the time period even further for rescue personnel or possibly others who otherwise meet this requirement but did not seek or were not able to seek medical treatment within 72 hours. Of course, the Special Master will continue to require evidence that victims suffered physical injury at the time of, or in the immediate aftermath of, the aircraft crashes, as defined in § 104.2 of this rule.

The Act provides that in the case of an individual who is deceased but who otherwise meets the other criteria for eligibility, a claim may be filed by the personal representative of the decedent. In many or most cases the identity of the personal representative will not be in dispute. Where disputes exist, however, at least two issues arise: (1) What are the rules for determining who is the personal representative; and (2) who should apply the rules and resolve the dispute?

As to the first issue, the regulations rely upon state law. With respect to the second issue, the regulations provide that the Special Master is not obligated to arbitrate, litigate, or otherwise resolve disputes as to the identity of the personal representative. The regulations do provide, however, that the disputing parties may agree in writing on a personal representative to act on their behalf—who may seek and accept payment from the Fund—while those disputing parties work to settle their dispute. Further, in appropriate cases, the Special Master may determine an award, but place the payment in escrow until the dispute regarding the personal representative is ultimately resolved.

While several commenters agreed that state law should govern personal representative issues, others did not. Most commenters who were dissatisfied with the rule's reliance upon state law in this area expressed concern that state law determinations would preclude recovery by particular individuals who lost loved ones in the terrorist attacks. Others, however, expressed concerns regarding possible uncertainty and the lack of uniformity among different states' laws. Consequently, several commenters contended that the rule should provide eligibility requirements that displace state law.

One of the topics receiving the most comments was the eligibility of domestic partners. Many comments submitted on behalf of members of Amnesty International urged that there be “equal access to benefits under the Fund for all victims, regardless of sexual orientation or marital status.” Members of this organization, and several other individuals, stated that eligibility should be extended to surviving partners of gays and lesbians. Others urged that partners in common law marriages be eligible. Another group of commenters suggested that eligibility should be construed more broadly to include all partners “in long standing stable relationships * * *.” In contrast, scores of comments were submitted by those who feel “funds should be limited to spouses and other family members * * * and should not extend to domestic partners, including surviving partners of gays and lesbians.”

In addition to fiancees who may be part of a domestic partnership, many other fiancees (and those commenting on their behalf) similarly expressed frustration they are not (or may not be) eligible under the Fund. Some noted that their state of domicile does not place fiancees in the line of intestate succession. One asked, rhetorically, “Why am I eligible to recover money from certain private charities, but yet am ineligible under the Fund?” On a related note, more than one commenter indicated that ex-spouses should be eligible.

The final rule continues to rely upon state law for the determination of the personal representative. Reliance on state law is necessary in part because those who file for recovery under the Fund waive their rights to recover through litigation, in which state law would determine the identity of the appropriate representatives of the decedent, or the decedent's estate, to bring suit. Thus, if the identity of personal representatives for purposes of this Fund were determined by federal regulation, there could be many situations in which the representative as defined by state law would choose litigation while the personal representative as defined by federal regulation would seek to recover from the Fund. While many have voiced criticisms of some of the potentially applicable state laws, those criticisms are more properly directed toward state officials. It is important to note, however, that state intestacy laws are relevant only in the absence of a valid will. Thus, to the extent that some or all of the award would pass by will, the will may determine the identity of some or all of the beneficiaries.

Many commenters stated they are angry that men and women in the United States armed forces who have died (or may die) fighting terrorism in Afghanistan are not eligible under the Fund. One commenter noted that “military victims bleed and die like everyone else.” One commenter argued that more than one claim per family should be allowed under the Act. At least one commenter suggested that the term “dependent” be construed more broadly to include all children, including sons and daughters who have reached the age of majority. Another commenter stated that siblings who lived in the same household of the decedent should be compensated. A few commenters urged that all parents and siblings be compensated, even when state law does not provide for it. Last, one commenter noted that those who are found ineligible to recover from the Fund should not have to waive their rights to sue in a court of law.

Congress explicitly provided that only those who suffered physical harm as a result of the air crashes and the personal representatives of those who were killed as a result of the air crashes are eligible claimants. Congress did not, however, address who could ultimately receive compensation. Indeed, the 120-day statutory deadline for adjudicating claims on the Fund could in many instances preclude the Special Master from fairly determining how best to disburse awards among family members. Because state laws routinely serve that type of function, it makes the most sense that they generally provide the bases for distribution. Thus, issues regarding whether siblings and adult offspring of victims can receive part of the award will generally be determined by reference to state (or relevant foreign) law.

The interim final rule allows the Special Master to issue awards in a lump sum to eligible claimants. One commenter implied that the rule was not clear on how funds will be distributed once a lump payment is made to a personal representative. She stated her concern that certain distributees under state law may be left out. One organization stated its concern that absent a regulation creating the option of structured awards, the tax-free status of awards may be compromised. Finally, at least one commenter indicated that the option to create a trust is necessary to prevent beneficiaries from squandering lump sums.

The interim final rule provided that the Special Master has discretion to provide claimants with information regarding annuities or other financial planning devices or to offer structured awards with periodic payments. The Special Master is encouraged to provide information to claimants regarding the availability of annuities and other financial planning devices and services. The Special Master strongly recommends that personal representatives or beneficiaries consider annuities and structured settlements.

It has come to the Department's attention that the classification of awards as “pain and suffering” awards or as “wrongful death” awards will affect the distribution of the awards under the laws of some states. Some, including the judges of New York's Surrogate's Courts, have explained that it would be difficult to determine the appropriate distribution without some guidance from the Special Master regarding the nature of the awards. Therefore, the Special Master has discretion, where appropriate, to specify the amount of the final award that is attributable to economic loss and the amount that is attributable to non-economic loss and other relevant information necessary in order to provide guidance to personal representatives and state courts in determining the proper distribution of awards or in reviewing the distribution plan.

Certain commenters proposed substantive changes to the interim final rule. A few commenters, however, raised concerns with the procedural framework it envisioned. Most of these commenters criticized the use of presumed awards. Specifically, they contended that presumptive awards should be eliminated altogether, and that all awards made under Fund should be decided primarily on evidence presented at a mandatory hearing. These commenters contended there should exist no rebuttable presumption whatsoever or, in the alternative, surmised that the “extraordinary circumstances” burden was too high to have any practical effect on increasing awards. In order to effectuate these proposed changes, a few commenters proposed that hearings not be limited to two hours. Rather, in their opinion, there should exist an unlimited time period at the hearings to discuss each case and present oral testimony or other evidence. One commenter stated that the rule needs to be clear as to whether or not there is risk of receiving less than the presumed award when someone opts for a hearing under Track B.

The final rule leaves intact the “presumed award” approach, under which claimants may choose to receive the presumed award and seek review if appropriate, or instead proceed directly to an individualized hearing. With regard to the suggestion that the Special Master jettison the presumed awards altogether in favor of a purely individualized, case-by-case adjudication, we do not believe that such a “black box” approach would serve the best interests of the claimants. While the regulations are designed to provide claimants an opportunity to present their individual circumstances, claimants should not waive their rights to litigation without some indication of what they might recover under the Fund.

At the same time, it is important that the Special Master have an opportunity to consider circumstances that are not accounted for in the presumed award charts. The term “extraordinary circumstances” is not intended to signal that there is an unsustainable burden to justify departure from the presumed award. Instead, it reflects the Special Master's sense that the presumed award methodology should be fair and appropriate for a substantial majority of claims. A number of factors could support a determination to depart from the presumed award methodology. For victims who had extremely high incomes (beyond the 98th percentile of individuals in the United States), the Special Master may consider any relevant individual circumstances, including whether the financial needs of those victims' families are being met.

In addition, the final rule explains that there will be no firm time limit for hearings.

This rule provides for compensation to eligible individuals who were physically injured and to the personal representatives of those who were killed as a result of the terrorist-related aircraft crashes of September 11, 2001. On December 21, 2001, the Department published its interim final rule and provided a thirty-day period for public comments.

The Department finds “good cause” for exempting this rule from the provision of the Administrative Procedure Act providing for a delayed effective date. 5 U.S.C. 553(d). Delaying the opportunity for eligible claimants to avail themselves of the final rule's changes to the regulations would be contrary to the public interest. The interim final rule is already in effect, and it is in the public interest to minimize the amount of time during which nonfinal rules are in effect. In addition, potential claimants may prefer to have their claims resolved under the final rule, and it is in the public interest to allow them to file and, if eligible, receive awards as soon as possible.

The Administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget has designated this final rule as a “major rule” as that term is defined by the Congressional Review Act (“CRA”), 5 U.S.C. 801 et. seq. Pursuant to section 808(2) of the CRA, the Department finds that “good cause” exists for making this rule effective upon publication because delay would be contrary to the public interest favoring prompt disbursement of benefits.

The Department of Justice (DOJ), Civil Division has submitted the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the emergency review procedures of the Paperwork Reduction Act of 1995. OMB approval has been requested by March 6. The proposed information collection is published to obtain comments from the public and affected agencies. Two associated information collections, the Registration/Eligibility Form and Application for Emergency Benefits from the Victim Compensation Fund (OMB 1105-0073, SM-001) and the Victim Compensation Fund Objection Form (OMB 1105-0077, SM-002) have already received OMB approval. The Death Compensation Form for the September 11 Victim Compensation Fund (SM-003) and the Personal Injury Compensation Form for the September 11 Victim Compensation Fund (SM-004) are currently under OMB review. If granted, the emergency approval is only valid for 180 days. Comments should be directed to OMB, Office of Information and Regulatory Affairs, Attention: Department of Justice Desk Officer, Washington, D.C. 20530.

During the first 60 days of this same review period, a regular review of this information collection will be undertaken. All comments and suggestions, or questions regarding additional information, including obtaining a copy of the proposed information collection instrument with instructions, should be directed to Office of the Special Master, U.S. Department of Justice, 950 Pennsylvania Avenue, NW., Washington, DC 20530. We request written comments and suggestions from the public and affected agencies concerning the proposed emergency collection of information.

Your comments should address one or more of the following four points:

(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

(3) Enhance the quality, utility, and clarity of the information to be collected; and

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

(1) Type of Information Collection: New Collection

(2) Title of the Form/Collection: Death Compensation Form for the September 11 Victim Compensation Fund and Personal Injury Compensation Form for the September 11 Victim Compensation Fund.

(3) Agency form number, if any, and the applicable component of the Department of Justice sponsoring the collection: Form Number: SM-003 (Death Compensation Form) and SM-004 (Injury Compensation Form), Office of the Special Master, Department of Justice.

(4) Affected public who will be asked or required to respond, as well as a brief abstract: Primary: The primary affected public will be individuals who were physically injured and the Personal Representatives of those killed as a result of the terrorist-related aircraft crashes of September 11, 2001. Abstract: Physically injured victims as a result of the terrorist-related attacks of September 11, 2001 will use the Injury Compensation Form and Personal Representatives of those killed as a result of September 11 will use the Death Compensation Form. Both forms will be used to provide information needed to determine eligibility for the program and to calculate compensation awards.

(5) An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond: 5,000 claimants with an average of 15 hours per response.

(6) An estimate of the total public burden (in hours) associated with the collection: 75,000 hours.

If additional information is required contact: Robert B. Briggs, Department Clearance Officer, Information Management and Security Staff, Justice Management Division, United States Department of Justice, 601 D Street NW., Suite 1600, Washington, DC 20004.

The Department of Justice, Civil Division (CIV) has established a new Privacy Act system of records entitled “September 11th Victim Compensation Fund of 2001 File System,” JUSTICE/CIV-008. By law, regulations addressing certain administrative matters for the September 11th Victim Compensation Fund of 2001 were to be issued within the 90-day period established by Congress. In compliance with that time period, the Privacy Act notice was published on December 21, 2001 at 66 FR 65991, with no routine uses, and was effective on the date published. It is likely that amendments to this notice, including routine uses, will be published at a later date, with the opportunity to comment. In the interim, disclosures necessary to process claims are being made, and will be made, only with the prior written consent of claimants or as otherwise authorized under 5 U.S.C. 552a(b).

These regulations set forth procedures by which the Federal government will award compensation benefits to eligible victims of the September 11, 2001 terrorist attacks. Under 5 U.S.C. 601(6), the term “small entity” does not include the Federal government, the party charged with incurring the costs attendant to the implementation and administration of the Victims Compensation Fund. To the extent that small entities, including small government entities, will be economically affected by the promulgation of these regulations, such effects will likely be minimal. Further, the number of entities that will be affected will, in all probability, fall short of a “substantial number” of small entities. In fact, the Department believes that the promulgation of these rules will play a considerable role in reducing the amount of complex, private litigation, wherein a substantial number of small (and large) entities would undoubtedly be significantly impacted.

Accordingly, the Department has reviewed this rule in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)) and by approving it certifies that this rule will not have a significant economic impact on a substantial number of small entities because it provides compensation to eligible individuals who were physically injured as a result of the terrorist-related aircraft crashes of September 11, 2001, and compensation through a “personal representative” for those who were killed as a result of those crashes. This rule provides compensation to individuals, not to entities.

This rule will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation. The Department of Justice has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review, and accordingly this rule has been reviewed by the Office of Management and Budget.

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment. However, the Department of Justice has worked cooperatively with state and local officials in the affected communities in the preparation of this rule. Also, the Department individually notified national associations representing elected officials of the initial Notice of Inquiry and the subsequent interim final rule, and the Department will be taking similar action in connection with the final rule.

Citizens concerned with water quality in Idaho may be interested in this rulemaking. Entities discharging pollutants to Shields Gulch, its tributaries, and waters they flow into could be affected by this rulemaking since water quality standards are used in determining NPDES permit limits. Currently, we are not aware of any entities discharging pollutants to Shields Gulch, however, potentially affected categories and entities could include:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be potentially affected by this action. This table lists the types of entities that EPA is now aware could potentially be affected by this action. Other types of entities not listed in the table could also be affected. If you have any questions regarding the applicability of this action to a particular entity, consult Lisa Macchio, listed in the preceding FOR FURTHER INFORMATION CONTACT section.

On July 31, 1997, pursuant to section 303(c) of the Clean Water Act (CWA), EPA promulgated cold water biota as a designated beneficial use for several water body segments, including Shields Gulch (PB 148S)—below mining impact. In designating beneficial uses, EPA relied on the rebuttable presumption implicit in the CWA and EPA's regulations at 40 CFR part 131, that in the absence of data to the contrary, “fishable” uses are attainable. EPA concluded that the presumption that fishable uses were attainable had not been rebutted for the water body segments in question.

On March 19, 1999, the Idaho Mining Association challenged EPA's promulgation in the U.S. District Court of Idaho. On March 14, 2000, the Court, while upholding the legality of the rebuttable presumption approach under the CWA, found that EPA was arbitrary and capricious in determining that the presumption of a fishable use had not been rebutted for Shields Gulch. Therefore, the Court ordered that portion of the EPA rule designating Shields Gulch for cold water biota uses vacated and remanded to the EPA for further consideration. To conform with the Court's order, EPA is withdrawing the cold water biota designated use for Shields Gulch. The State has revised its water quality standards since EPA's July 31, 1997, promulgation and now applies the cold water biota use to Shields Gulch as a matter of State law. Therefore, withdrawing the Federal use designation will not result in a change in the level of environmental protection for Shields Gulch.

Section 553 of the Administrative Procedure Act, 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. EPA has determined that there is good cause for making today's rule final without prior proposal and opportunity for comment because this is a strictly legal issue of the impact of the District Court decision on the July 31, 1997, Federal designated use for Shields Gulch. Thus, notice and public procedure are impracticable. EPA finds that this constitutes good cause under 5 U.S.C. 553(b)(B).

EPA has also determined that good cause exists under section 553(d) of the Administrative Procedure Act to waive the requirement for a 30-day period before the rule becomes effective because this rule relieves a restriction. Therefore, the rule will be effective March 13, 2002.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget. Because the agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the Administrative Procedure Act or any other statute, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This rule does not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian Tribes, or on the distribution of power and responsibilities between the Federal government and Indian Tribes, as specified in Executive Order 13175 (65 FR 67249, November 6, 2000).

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

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 significant regulatory action under Executive Order 12866.

This action does not involve technical standards; thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Section 7 of the Endangered Species Act (16 U.S.C. 1656 et seq. ), requires Federal agencies, in consultation with the U.S. Fish and Wildlife Service and National Marine Fisheries Service, to ensure that their actions are unlikely to jeopardize the continued existence of listed species or adversely affect designated critical habitat of such species. EPA has determined that this action has no effect on listed species or critical habitat because there are no listed species in Shields Gulch.

The Congressional Review Act (5 U.S.C 801 et seq. ), as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. This determination must be supported by a brief statement. 5 U.S.C. 808(2). As stated previously, EPA has made such a good cause finding, including the reasons therefor, and established an effective date of March 13, 2002. 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 . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

This rule may directly affect any person who might petition the Agency for new tolerances, hold a pesticide registration with existing tolerances, or anyone who is interested in obtaining or retaining a tolerance in the absence of a registration. This group can include pesticide manufacturers or formulators, companies that manufacture chemicals used in formulating pesticides, importers of food, grower groups, or any person who seeks a tolerance. The vast majority of potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. Other types of entities not listed above could also be regulated. If available, the four-digit Standard Industrial Classification (SIC) codes or the six-digit North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this rule applies to certain entities. To determine whether you or your business may be affected by this action, you should carefully examine the applicability provisions in the rule (see Unit IV). If you have any questions regarding the applicability of this action to a particular entity, consult the technical person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document and various support documents from the EPA Internet Home Page at http://www.epa.gov/. On the Home Page select “Laws and Regulations” “Regulations and Proposed Rules” and then look up the entry for this document under the “ Federal Register —Environmental Documents.” You can also go directly to the “ Federal Register ” listings at http://www.epa.gov/homepage/fedrgstr/.

2. In person or by phone . If you have any questions or need additional information about this action, you may contact the technical person identified under FOR FURTHER INFORMATION CONTACT . In addition, the official record for this rule, including the public version, has been established under docket control number OPP-30118. A public version of this record, including printed, paper versions of any electronic comments, which does not include any information claimed as CBI, is available for inspection in Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Highway, Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The Public Information and Records Integrity Branch telephone number is (703) 305-5805.

With this rule, the Agency is increasing the fees charged for processing tolerance petitions for pesticides under the Federal Food, Drug, and Cosmetic Act (FFDCA). The pay raise in 2000, 2001, and 2002 for Federal General Schedule (GS) employees working in the Washington, DC/Baltimore, MD metropolitan pay area is 4.94%, 3.81%, and 4.77%, respectively. This increase in the fees charged for processing tolerance petitions reflects these recent pay raises.

EPA is charged with the administration of section 408 of FFDCA. Section 408 authorizes the Agency to establish tolerance levels and exemptions from the requirements for tolerances for raw agricultural commodities. Section 408(o) requires the Agency to collect fees that will, in the aggregate, be sufficient to cover the costs of processing petitions for pesticide products. EPA is publishing this action pursuant to 40 CFR 180.33(o).

The current fee schedule for tolerance petitions published in the Federal Register of May 26, 1999 (64 FR 28384) (FRL-6056-6), codified at 40 CFR 180.33, and became effective on June 26, 1999. At that time the fees were increased 3.68% in accordance with a provision in the regulation that provides for automatic annual adjustments to the fees based on annual percentage changes in Federal salaries (40 CFR 180.33(o)).

The Federal Employees Pay Comparability Act of 1990 (FEPCA) initiated locality-based comparability pay, known as ``locality pay.'' The intent of the legislation is to make Federal pay more responsive to local labor market conditions by adjusting General Schedule salaries on the basis of a comparison with non-Federal rates on a geographic, locality basis. The processing and review of tolerance petitions is conducted by EPA employees working in the Washington, DC/Baltimore, MD pay area.

The pay raise in 2000, 2001, and 2002 for Federal General Schedule employees working in the Washington, DC/Baltimore, MD metropolitan pay area is 4.94%, 3.81%, and 4.77%, respectively; therefore, the tolerance petition fees are being increased by 4.94%, 3.81%, and 4.77%, respectively. The entire revised fee schedule is presented in § 180.33 of the regulatory text for the reader's convenience. (All fees have been rounded to the nearest $25.00.)

EPA is publishing this action as a final rule pursuant to 40 CFR 180.33(o), which reads in part:

This final rule amends the fees charged for processing tolerance petitions under FFDCA to reflect automatic adjustments based on the GS pay scale and is issued as a final rule pursuant to 40 CFR 180.33(o). Under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” subject to review by the Office of Management and Budget (OMB), nor is this final rule subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001).

This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

Since the Agency is authorized to make automatic adjustments based on the GS pay scale by issuing a final rule under 40 CFR 180.33(o), and is not required to issue a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .) do not apply.

In addition, the Agency has determined that this action will not have a substantial direct effect on 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, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4).

For these same reasons, the Agency has determined that this final rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.”

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

Yes. 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 this rule in the Federal Register . This is not a “major rule” as defined by 5 U.S.C. 804(2).

Whenever the terms “we” or “Agency” are used throughout this document, they refer to the Environmental Protection Agency (EPA).

The docket index for the rule is available in electronic format on the Internet at: <http://www.epa.gov/epaoswer/hazwaste/recycle/battery.htm> .

We will keep the official record for this action in paper form. The official record is the paper record maintained at the RCRA Information Center, also referred to as the Docket, at the address provided in the ADDRESSES section at the beginning of this document.

EPA is taking today's action in response to vacaturs ordered by the United States Court of Appeals for the District of Columbia Circuit in Association of Battery Recyclers, v. EPA 208 F.3d 1047 (2000). After EPA promulgated the final Phase IV LDR rule on May 26, 1998 (63 FR 28556), the Association of Battery Recyclers, the National Mining Association and other trade groups challenged this rule. On April 21, 2000, the D.C. Circuit issued a decision that vacated two parts of the Phase IV LDR rule. The court vacated the portion of the rule that asserted jurisdiction and imposed conditions over mineral processing characteristic by-products and sludges being stored prior to being recycled in beneficiation or primary mineral processing operations. The court also vacated the portion of the rule providing for use of the TCLP for determining whether MGP waste exhibits the characteristic of toxicity. Association of Battery Recyclers v. EPA, 208 F.3d 1047 (2000).

Regarding the mineral processing secondary materials, the Phase IV LDR rule revised a 1985 rule that defined the circumstances under which EPA classified secondary mineral processing materials undergoing reclamation as solid wastes under Subtitle C of RCRA. The 1998 Phase IV LDR rule amended the 1985 rule and relaxed jurisdiction over spent materials reclaimed within the mineral processing industry, provided certain conditions were met. The Phase IV LDR rule also asserted jurisdiction over some previously-unregulated secondary materials (characteristic by-products and sludges) reclaimed within the mineral processing industry. The rule classified these by-products and sludges as wastes if they were stored without meeting the same conditions. EPA codified the conditions under which the materials would be regulated as solid wastes at 40 CFR 261.4(a)(17) and inserted references to these conditions into the regulation asserting authority over reclamation in 40 CFR 261.2(c)(3). Today, in response to the D.C. Circuit Court's decision, EPA is codifying the vacatur by deleting a parenthetical statement in the second sentence of 40 CFR 261.2(c)(3) and making conforming changes to 40 CFR 261.4(a)(17). In § 261.4(a)(17), EPA is replacing the term “secondary materials” (which includes sludges and by-products, as well as spent materials) with the more narrow term “spent materials.” These changes inform the public that mineral processing characteristic sludges and by-products being reclaimed are not solid wastes, and mineral processing characteristic spent materials remain eligible for the conditional exclusion when being reclaimed.

To further the goal of encouraging legitimate recycling while protecting human health and the environment, EPA has decided to undertake a separate future rulemaking to propose additional revisions to its current recycling regulations. We believe that removing the specter of RCRA control where it is not necessary can spur increased reuse and recycling of hazardous waste, and will lead to better resource conservation and improved materials management overall. For materials undergoing reclamation, in the proposed rule we expect to request comment on how interested parties would distinguish materials that are discarded from materials that remain in use in a continuous industrial process and anticipate proposing a definition of “continuous industrial process.” In addition, EPA has been working with a group of stakeholders concerned with recycling in the metal finishing industry and we are committed to proposing, either as part of that action or as a separate rule, removal of regulatory barriers in order to increase recycling of sludges from metal finishing operations.

Although EPA has not established a formal comment period, we anticipate moving quickly to propose this rule; interested parties are welcome to submit suggestions now for this future proposal, directing them to Ms. Ingrid Rosencrantz at the address given in the For Further Information Contact section.

The court's decision in ABR also addressed another provision of the Phase IV LDR Rule providing for use of the Toxicity Characteristic Leaching Procedure (TCLP) to determine whether mineral processing waste, and manufactured gas plant  1 (MGP) wastes, are RCRA hazardous wastes under 40 CFR 261.24 (63 FR 28597-98; May 26, 1998).

In its ruling in ABR, the court found that EPA produced sufficient evidence that the TCLP bears a “rational relationship” to plausible mineral processing waste management practices, and upheld the use of the TCLP to evaluate mineral processing wastes. Regarding MGP waste, the court found that EPA produced insufficient evidence that co-disposal of MGP waste from remediation sites with municipal solid waste (MSW) has happened or is likely to happen. The court concluded that “* * * the EPA has not justified its application of the TCLP to MGP waste” and consequently “* * * vacate[d] the Phase IV rule insofar as it provides for the use of the TCLP to determine whether MGP waste exhibits the characteristic of toxicity.” ABR v. EPA, 208 F.3d at 1064. EPA is taking final action today to codify this vacatur by promulgating language exempting MGP wastes from the Toxicity Characteristic regulation.

Section 553 of the Administrative Procedure Act, 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public comment procedure are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. EPA has determined that there is good cause for removal of these provisions without prior proposal and opportunity for comment. As a matter of law, the order issued by the United States Court of Appeals for the District of Columbia Circuit on April 21, 2000, vacated the provisions of the final Phase IV LDR rules described above, making them non-binding and unenforceable. It is, therefore, unnecessary to provide notice and an opportunity for comment on this action, which merely carries out the court's order. For the same reasons, EPA finds that it has good cause to make the revisions immediately effective under 5 U.S.C. 553(d) and section 3010(b) of RCRA. 42 U.S.C. 6930(b). Further, the rule imposes no new requirements, so members of the regulated community do not need time to come into compliance.

This final rule applies to the owners and operators of facilities that generate or reclaim characteristically hazardous by-products or sludges within the mineral processing industry and to generators of manufactured gas plant wastes. We plan to further consider other revisions to the definition of solid waste (40 CFR 261.2) and will propose these revisions, as appropriate, in the future.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget (OMB). Because the EPA has made a “good cause” finding that this action is not subject to notice and comment requirements under the Administrative Procedure Act or any other statute, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of the UMRA. This action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 6, 2000). This action does not have substantial direct effects on the States, or on the relationship between the national government and the States, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is not economically significant.

This action does not involve the application of new technical standards; thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (15 U.S.C. 272) do not apply. This action also does not involve special consideration of environmental justice related issues as required by Executive Order 12898 (59 FR 7629, February 16, 1994). In issuing this action, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct, as required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996). 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 significant regulatory action under Executive Order 12866. This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). The Congressional Review Act (5 U.S.C. 801 et seq. ), as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the Congressional Review Act if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary, or contrary to the public interest. This determination must be supported by a brief statement (5 U.S.C. 808(2)). As stated previously, the EPA has made such a good cause finding, including the reasons therefore, and established an effective date of March 13, 2002. The 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 rule 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 the Commission's Report and Order in CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, and 95-116, FCC 02-43 released on February 26, 2002. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC 20554.

1. In the Report and Order, we adopt certain modifications to the existing federal universal service contribution system. Based on examination of the record, we conclude that these modifications are warranted because they will streamline and improve the current system.

2. In the Notice of Proposed Rulemaking initiating this proceeding, see 66 FR 28718 (May 24, 2001), we recognized the need to reassess periodically the current contribution methodology to ensure that it remains consistent with the goals of the Act as the telecommunications marketplace evolves. Although we are seeking more focused comment on specific proposals to reform the Commission's universal service contribution methodology, we conclude that certain modifications to the current revenue-based contribution assessment methodology should be adopted now to ensure that the goals of the Act are maintained in the short term. Specifically, the measures we adopt in the Order will ensure that universal service funding remains specific and predictable while we consider whether to implement more substantial changes to the contribution methodology. In addition, these modifications will ensure that the recovery of universal service contributions is more understandable for consumers. These measures also will further reduce the regulatory costs of complying with universal service obligations and will ensure that the assessment of contributions remains equitable and nondiscriminatory.

3. First, we revise the Commission's rules to exclude universal service contributions from a contributor's assessable gross-billed interstate telecommunications revenues. This modification addresses “circularity” in the current methodology that may cause contributors to mark-up line items. Second, we amend the rules to permit contributors to submit revenue data on a consolidated basis on behalf of commonly-owned subsidiaries. Third, we increase from eight to 12 percent the amount of domestic interstate revenues a contributor may have and still qualify for the limited international revenues exception to our universal service contribution requirements.

4. We adopt our proposal to exclude universal service contributions from a contributor's assessable gross-billed interstate telecommunications revenues, so-called “circularity.” This measure will eliminate one cause for contributors to recover amounts in excess of the contribution factor.

5. We clarify how the exclusion of contributor contributions from the contribution base will operate in practice. Contributors will continue to file the Form 499-Q with their gross-billed interstate telecommunications revenues from the prior quarter. A contributor's reported gross-billed interstate telecommunications revenues from the prior quarter serve as the basis for its contributions in the next quarter. The Universal Service Administrative Company (USAC) will subtract from a contributor's contribution base in the upcoming quarter those amounts contributed to universal service in the prior quarter. Contributions will be credited in the quarter in which they are received by USAC. We direct USAC to begin excluding carrier contributions from the contribution base in the third quarter of 2002.

6. We modify our reporting requirements to enable contributors meeting certain criteria to file the Form 499 Worksheet on a consolidated basis. The criteria we adopt for permitting consolidated filings are designed to ensure that a contributor actually functions as a single entity, and to obtain essential revenue and contact information from such a contributor. The ability to file a consolidated Worksheet may substantially decrease the administrative burdens on some contributors. For example, it may ameliorate the need of some contributors to artificially divide their whole company revenues into separate revenue amounts for their subsidiaries solely for Worksheet reporting purposes. We anticipate that many wireless contributors will qualify and choose to file the Worksheet on a consolidated basis. Furthermore, this revision may dramatically decrease the number of Worksheets filed with USAC, thereby reducing the administrative burden on the Commission's data collection agent and fund administrators. Most importantly, permitting contributors to have the option of filing on a consolidated basis will have no negative impact on the integrity of the information contained in the Worksheet.

7. Under the modified reporting requirements we adopt here, consolidated filing will be permitted only if the filing entity certifies that all of the following conditions are met:

(1) A single entity oversees the management of the affiliated systems;

(2) A single entity sends bills to customers and these bills identify a single entity (or trade name) as the service provider, rather than identifying the individual legal entities;

(3) All revenues are posted to a single general ledger;

(4) To the extent that separate revenue and expense accounts exist, they are derived from one consolidated set of books and the consolidated filing must cover all revenues contained in the consolidated books;

(5) Customers have a single point of contact;

(6) The consolidated filer acknowledges that process served on the consolidated filer would represent process served on any or all of the affiliated legal entities;

(7) The consolidated filer agrees to document and resolve all slamming complaints that might be served on either the filing entity or any of the affiliated legal entities;

(8) The consolidated filer obtains a separate FRN from those assigned to its affiliated legal entities;

(9) The consolidated filer acknowledges that its obligations with regard to universal service, Telecommunications Relay Services, Local Number Portability, North American Numbering Plan Administrator, and regulatory fees will be based on the data provided in consolidated Worksheet filings, that it bears the responsibility to satisfy those obligations, and that all legal entities covered by the filing are jointly and severally liable for such obligations; and

(10) The consolidated filer acknowledges that it: (A) Was not insolvent on the date it undertook to make payments on a consolidated basis or on the date of actual payments to universal service, Telecommunications Relay Services, Local Number Portability, the North American Numbering Plan, and regulatory fees, and did not become insolvent as a result of such undertaking or payments; (B) was not left with unreasonably small capital as a result of such undertaking or payments; and (C) was not left unable to pay debts as they matured as a result of such undertaking or payments.

8. Each year, entities choosing to file on a consolidated basis must file a statement certifying that they meet all of the above conditions. Such certification also must include: (1) A list of the legal names of all legal entities that are covered by the filing; (2) the Form 499 identification numbers of all legal entities that are covered by the filing; (3) the consolidated filer's FCC Registration Number (FRN); and (4) for wireless carriers, a list of all radio licenses (call signs) issued to each legal entity covered by the filing. Consolidated filers should file this certification with the Commission's Data Collection Agent. Furthermore, a contributor choosing to file on a consolidated basis should recognize that any penalties associated with failure to pay or with underpayment of any of its obligations will be assessed on the total revenue reported on the consolidated basis, rather than on a separate legal entity basis. We direct USAC to begin accepting such consolidated Worksheets in the second quarter of 2002.

9. We also amend § 54.702 by removing § 54.702(f) of our rules. Under § 54.702(f) of our rules, USAC is required to periodically compare information from “Telecommunications Relay Services Fund Worksheets” with information submitted on “Universal Service Worksheets.” In 1999, however, the Commission established the FCC Form 499 Telecommunications Reporting Worksheet, which consolidated reporting requirements for the universal service mechanisms, the Telecommunications Relay Services Fund, the cost recovery mechanism for administration of the North American Numbering Plan, and the cost recovery mechanism for administration of long-term number portability. As a result, § 54.702(f) was made obsolete, but inadvertently was not removed at that time. Accordingly, we remove it now.

10. We conclude that the limited international revenues exception should be increased from eight to 12 percent. Consistent with section 254(d) of the Act, we conclude that raising the threshold to 12 percent will ensure that a contributor's universal service contribution does not exceed the amount of its interstate end-user telecommunications revenues by providing a margin of safety to account for any possible increases to the contribution factor over time. When the limited international revenues exception was implemented in November 1999, the universal service contribution factor was 5.8995 percent, and the Commission anticipated that the universal service contribution factor would not exceed eight percent in the near future. The Commission recently established a universal service contribution factor of 6.808 percent. As a result of many factors, including possible decreases in assessable revenues and increases in universal service funding requirements over time, modest increases to the contribution factor may occur in the foreseeable future. If the universal service contribution factor increases to eight percent, a contributor may become obligated to contribute to the universal service mechanisms an amount that exceeds the amount of its interstate end-user telecommunications revenues. With the elimination of “circularity” and anticipated implementation of interstate access support for non-price cap carriers, Commission staff projects that the contribution factor may exceed 8 percent in 2002. This projection is predicated on the removal of prior period universal service contributions from the contribution base, the continuation of the current assessment system based on revenues, anticipated growth in the universal service mechanisms, and continued modest growth in assessable interstate end-user telecommunications revenues. Large-scale migration to services that are not easy to categorize by jurisdiction or marketplace disruptions, such as a prolonged recession, may result in additional increases to the contribution factor over time. We therefore conclude that increasing the threshold to qualify for the international revenues exception to 12 percent will ensure that contributors are not required to contribute more to universal service than they derive from interstate end-user telecommunications revenues. We direct USAC to begin applying the higher threshold to qualify for the international revenues exception in the second quarter of 2002.

11. Our adoption of a 12 percent threshold to qualify for the limited international revenues exception should not be taken as an indication that we expect the contribution factor to rise to that level in the near future. To the contrary, we choose 12 percent because it will provide for a more than adequate margin of safety if the current contribution factor increases over time.

12. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the 2001 Notice , (66 FR 28718, May 24, 2001). The Commission sought written public comment on the proposals in the 2001 Notice , including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

13. In the Order, we adopt modifications to our current universal service contribution methodology, which will further refine and streamline the assessment of universal service contributions. First, we exclude universal service contributions from contributors' assessable gross-billed interstate telecommunications revenues. This modification addresses “circularity” in our current methodology that may cause contributors to mark-up line items. Second, we amend our rules to permit contributors to submit revenue data on a consolidated basis on behalf of commonly-owned subsidiaries. This modification will allow certain carriers to reduce the burdens associated with complying with the reporting requirements of the universal service fund. Third, we increase from eight to 12 percent the amount of domestic interstate revenues a contributor may have and still qualify for the limited international revenue exception to our universal service contribution requirements. Examination of the record in this proceeding demonstrates the need for these modifications, which address specific concerns raised by commenters to the 2001 Notice .

14. The Commission received comments related to the needs of small local telephone companies. In particular, the Small Business Administration's Office of Advocacy suggested that the Commission should retain the current contribution methodology to avoid raising the administrative costs on small businesses associated with compliance. While we retain the current methodology, we note that the Commission, concurrent with the issuance of the Order, adopted a Further Notice (published elsewhere in this issue) that seeks comment on proposals to fundamentally reform the contribution methodology. The proposals detailed in the Further Notice of Proposed Rulemaking may result in a program with significantly reduced administrative burdens.

15. In the Order, however, the Commission adopts certain modifications to the existing methodology. In particular, the Commission adopted a proposal suggested by many wireless carriers to allow certain contributors to file on a consolidated basis, which should alleviate some of the administrative burden associated with complying with the universal service fund. Additionally, the Commission's reform of the limited international revenue exception should help continue to ensure that contributors are not required to contribute more to universal service than they derive from interstate end-user telecommunications revenues. The Commission has through these modifications minimized potential burdens created by its contribution methodology.

16. 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 rules adopted herein. The RFA generally defines “small entity” as having the same meaning as the term “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act, unless the Commission has developed one or more definitions that are appropriate to its activities. Under the Small Business Act, a “small business concern” is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the SBA.

17. The SBA has defined a small business for Standard Industrial Classification (SIC) categories 4812 (Radiotelephone Communications) and 4813 (Telephone Communications, Except Radiotelephone) to be small entities when they have no more than 1,500 employees. We first discuss the number of small telephone companies falling within these SIC categories, then attempt to refine further those estimates to correspond with the categories of telecommunications companies that are commonly used under our rules.

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

19. The most reliable source of information regarding the total numbers of common carrier and related providers nationwide, including the numbers of commercial wireless entities, appears to be data the Commission publishes annually in its Trends in Telephone Service report. According to data in the most recent report, there are 4,822 interstate carriers. These carriers include, inter alia, incumbent local exchange carriers, competitive local exchange carriers, competitive access providers, interexchange carriers, other wireline carriers and service providers (including shared-tenant service providers and private carriers), operator service providers, pay telephone operators, providers of telephone toll service, wireless carriers and services providers, and resellers.

20. Total Number of Telephone Companies Affected. The United States Bureau of the Census (“the Census Bureau”) reports that, at the end of 1992, there were 3,497 firms engaged in providing telephone services, as defined therein, for at least one year. This number contains a variety of different categories of carriers, including local exchange carriers, interexchange carriers, competitive access providers, cellular carriers, mobile service carriers, operator service providers, pay telephone operators, PCS providers, covered SMR providers, and resellers. It seems certain that some of those 3,497 telephone service firms may not qualify as small entities or small incumbent LECs because they are not “independently owned and operated.” For example, a PCS provider that is affiliated with an interexchange carrier having more than 1,500 employees would not meet the definition of a small business. It seems reasonable to conclude, therefore, that fewer than 3,497 telephone service firms are small entity telephone service firms or small incumbent LECs that may be affected by the decisions and rules adopted in the Order.

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

22. Local Exchange Carriers, Interexchange Carriers, Competitive Access Providers, Operator Service Providers, Payphone Providers, and Resellers. Neither the Commission nor SBA has developed a definition particular to small local exchange carriers (LECs), interexchange carriers (IXCs), competitive access providers (CAPs), operator service providers (OSPs), payphone providers or resellers. The closest applicable definition for these carrier-types under SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. The most reliable source of information regarding the number of these carriers nationwide of which we are aware appears to be the data that we collect annually on the Form 499-A. According to our most recent data, there are 1,335 incumbent LECs, 349 CAPs, 204 IXCs, 21 OSPs, 758 payphone providers and 541 resellers. Although it seems certain that some of these carriers are not independently owned and operated, or have more than 1,500 employees, we are unable at this time to estimate with greater precision the number of these carriers that would qualify as small business concerns under SBA's definition. Consequently, we estimate that there are fewer than 1,335 incumbent LECs, 349 CAPs, 204 IXCs, 21 OSPs, 758 payphone providers, and 541 resellers that may be affected by the decisions and rules adopted in the Order.

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

24. 220 MHz Radio Service—Phase I Licensees. The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a definition of small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, we apply the definition under the SBA rules applicable to Radiotelephone Communications companies. This definition provides that a small entity is a radiotelephone company employing no more than 1,500 persons. According to the Bureau of the Census, only 12 radiotelephone firms out of a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. If this general ratio continues in the context of Phase I 220 MHz licensees, we estimate that nearly all such licensees are small businesses under the SBA's definition.

25. 220 MHz Radio Service—Phase II Licensees. The Phase II 220 MHz service is a new service, and is subject to spectrum auctions. In the 220 MHz Third Report and Order (62 FR 16004, April 3, 1997), we adopted criteria for defining small and very small businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. We have defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. A very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA has approved these definitions. An auction of Phase II licenses commenced on September 15, 1998, and closed on October 22, 1998. Two auctions of Phase II licenses have been conducted. In the first auction, nine hundred and eight (908) licenses were auctioned in 3 different-sized geographic areas: Three nationwide licenses, 30 Regional Economic Area Group Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold. Companies claiming small business status won: one of the Nationwide licenses, 67% of the Regional licenses, and 54% of the EA licenses. The second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses.

26. Private and Common Carrier Paging. In the Paging 220 MHz Third Report and Order, we adopted criteria for defining small businesses and very small businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. We have defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. Additionally, a very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA has approved these definitions. An auction of Metropolitan Economic Area (MEA) licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies claiming small business status won. At present, there are approximately 24,000 Private-Paging site-specific licenses and 74,000 Common Carrier Paging licenses. According to the most recent Trends Report, 427 carriers reported that they were engaged in the provision of paging and messaging services. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and therefore are unable at this time to estimate with greater precision the number of paging carriers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 427 small paging carriers that may be affected by the decisions and rules adopted in the Order. We estimate that the majority of private and common carrier paging providers would qualify as small entities under the SBA definition.

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

28. Narrowband PCS. To date, two auctions of narrowband PCS licenses have been conducted. Through these auctions, the Commission has awarded a total of 41 licenses, out of which 11 were obtained by small businesses. For purposes of the two auctions that have already been held, small businesses were defined as entities with average gross revenues for the prior three calendar years of $40 million or less. To ensure meaningful participation of small business entities in the auctions, the Commission adopted a two-tiered definition of small businesses in the Narrowband PCS Second Report and Order (65 FR 35875, June 6, 2000). A small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A very small business is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. These definitions have been approved by the SBA. In the future, the Commission will auction 459 licenses to serve MTAs and 408 response channel licenses. There is also one megahertz of narrowband PCS spectrum that has been held in reserve and that the Commission has not yet decided to release for licensing. The Commission cannot predict accurately the number of licenses that will be awarded to small entities in future auctions. However, four of the 16 winning bidders in the two previous narrowband PCS auctions were small businesses, as that term was defined under the Commission's Rules. The Commission assumes, for purposes of this IRFA, that a large portion of the remaining narrowband PCS licenses will be awarded to small entities. The Commission also assumes that at least some small businesses will acquire narrowband PCS licenses by means of the Commission's partitioning and disaggregation rules.

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

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

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

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

33. For geographic area licenses in the 900 MHz SMR band, there are 60 who qualified as small entities. For the 800 MHz SMRs, 38 are small or very small entities.

34. Pursuant to the Order, the only new or modified reporting requirement is that we amend our rules to permit contributors to submit revenue data on a consolidated basis on behalf of commonly-owned subsidiaries. The Commission based its decision in part on the fact that the reduction in administrative costs for these carriers would be significant. The Commission will seek OMB approval for this new or modified reporting requirement when it submits the modified Form 499-Q for approval.

35. 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.

36. The Commission has taken numerous steps to minimize significant economic impacts on small entities of modifying the universal service contribution methodology adopted in the Order. By eliminating circularity that exists under the current contribution methodology, we reduce one cause for contributors to recover amounts in excess of the current contribution factor and will help address consumer concerns regarding the disparate recovery of universal service contributions through line items. Further, by amending our rules to permit contributors to submit revenue data on a consolidated basis on behalf of commonly-owned subsidiaries, we substantially decrease the administrative burdens of some contributors. We anticipate that many wireless contributors, for example, will choose to file on a consolidated basis. Finally, by increasing the international revenue exception from 8 percent to 12 percent, we ensure that a contributor's universal service obligation does not exceed the amount of its interstate end-user telecommunications revenues.

37. The Commission will send a copy of the Order, including the FRFA analysis, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Order, including the FRFA analysis, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order and FRFA analysis (or summaries thereof) also will be published in the Federal Register .

38. None.

39. The action contained herein has been analyzed with respect to the Paperwork Reduction Act of 1995 and found to impose no new or modified reporting and recordkeeping requirement on the public, although it may eliminate certain reporting requirements for some entities.

40. Pursuant to the authority contained in sections 4(i), 4(j), 254, and 303(r) of the Communications Act of 1934, as amended, the Report and Order is adopted.

41. Part 54 of the Commission's rules, 47 CFR part 54, is amended, effective April 12, 2002.

42. The Commission's Consumer Information Bureau, Reference Information Center shall send a copy of the Report and Order to the Chief Counsel for Advocacy of the Small Business Administration.

The Endangered Species Act requires that all fish and wildlife, with only limited exceptions, be imported and exported through designated ports. Designated ports facilitate U.S. efforts to monitor wildlife trade and enforce wildlife protection laws and regulations by funneling wildlife shipments through a limited number of locations. The Secretary of the Interior, with approval of the Secretary of the Treasury, designates ports for wildlife trade by regulation after holding a public hearing and collecting and considering public comments. The Service presently has 13 designated ports of entry for the importation and exportation of wildlife: Los Angeles, California; San Francisco, California; Miami, Florida; Honolulu, Hawaii; Chicago, Illinois; New Orleans, Louisiana; New York, New York; Seattle, Washington; Dallas/Fort Worth, Texas; Portland, Oregon; Baltimore, Maryland; Boston, Massachusetts; and Atlanta, Georgia. The Service maintains a staff of wildlife inspectors at each designated port to inspect and clear wildlife shipments. Regulatory exceptions allow certain types of wildlife shipments to enter or leave the country through ports that are not designated. Under certain conditions, importers and exporters can obtain a permit from the Service authorizing their use of non-designated ports. The importer or exporter will accrue additional fees associated with the inspection and permit authorizing use of a non-designated port.

Section 9(f) of the Endangered Species Act of 1973, 16 U.S.C. 1538 (f)(1), requires that the public be given an opportunity to comment at a hearing before the Secretary of the Interior confers designated port status on any port. The Service published a proposed rule in the Federal Register of August 20, 2001 (66 FR 43554), to make Anchorage, Alaska, a designated port under section 9 (f) and to announce a public hearing.

Accordingly, the Service held a public hearing on September 17, 2001, beginning at 6 p.m., at the Fish and Wildlife Service Alaska Regional Office, Anchorage, Alaska. The Service received oral comments from two persons in the import and export arena: A manager from the Federal Express Corporation and the director of the Alaska Export Assistance Center, U.S. Department of Commerce.

One commenter stated that his company has supported the Service's effort to designate the Port of Anchorage for a long time. The second commenter said that the opportunity to use Anchorage as a designated port for wildlife trade promised continued expansion of Alaska's business potential and would facilitate increased exports from the State.

The Service appreciates the oral comments received at the public hearing in support of the designation of Anchorage as a designated port. No written comments were submitted to the Service in response to the proposed rule.

The proximity of Anchorage to the Asian continent has prompted the State of Alaska, the City of Anchorage, and private groups such as international express carriers, the Alaskan tourism industry, and the outdoor recreational industry to target foreign trade markets as a way to bring increased economic growth to Anchorage. Stevens International Airport is expanding and a 100,000-square-foot warehouse is being constructed to accommodate both the growth in airline passengers and the 20 million tons of air freight that already pass through Anchorage each year. This volume is one of the highest for any airport in the United States, and future increases of 11.1 percent per year are projected. International cargo off-loaded in Anchorage has been estimated at 341 million pounds for the year 2000.

Two large international express carriers have regional hubs in Anchorage. Since 1995, both carriers have experienced an annual increase in the volume of international shipments of between 18 to 22 percent. Parallel growth has occurred in the number of wildlife shipments. Since the Service charges higher fees for inspecting and clearing shipments at Anchorage and other non-designated ports, wildlife importers using these facilities have asked that over 70 percent of their shipments be cleared at designated ports of entry in the lower 48 States. Making Anchorage a designated port will facilitate clearance of these shipments and reduce costs for all importers and exporters bringing wildlife through this city.

Increases in international visitors to Alaska have also affected the number of wildlife shipments requiring clearance. The number of U.S. and foreign hunters requesting clearance of wildlife trophies in Anchorage has increased by nearly 300 percent in the last 5 years. Since 1995, the number of foreign hunters exporting Alaskan big game trophies has jumped by 73 percent, adding substantially to the total number of wildlife shipments cleared in Anchorage.

The Service's data for fiscal year 2000 show that the port of Anchorage handled a total of 3,555 wildlife shipments with a declared value of $9.3 million. Anchorage has the highest number of declared wildlife shipments per wildlife inspector of any port in the Nation. The Service projects that the number of wildlife shipments will triple over the next 3 to 5 years following the establishment of Anchorage as a designated port. This projection is based on trends associated with the designation of the ports of Dallas-Fort Worth, Portland, and Atlanta.

Existing and projected increases in air and express cargo along with substantial growth in the number of airline passengers, international visitors, and hunters seeking clearance of wildlife imports and exports justify the designation of the port of Anchorage. This change will improve service to international mail carriers, small businesses, and the public while maintaining effective regulation of U.S. wildlife trade.

In accordance with 5 U.S.C. 553(d)(1), we are making this rule effective upon publication because it recognizes an exemption to the restriction in 50 CFR 14.11.

This final rule has not been reviewed by the Office of Management and Budget (OMB) under Executive Order 12866. In accordance with the criteria in Executive Order 12866, this rule is not a significant regulatory action.

a. This rule will not have an annual economic effect of $100 million or adversely affect an economic sector, productivity, jobs, the environment, or other units of government. A cost-benefit and economic analysis is not required.

The purpose of this rule is to confer designated port status on Anchorage, Alaska. This conferral will have very little or no adverse effect on the economic sector, productivity, jobs or the environment, or other units of government. It is intended to decrease the administrative and financial burden on wildlife importers and exporters by allowing them to use the port of Anchorage for all varieties of wildlife shipments. This rule provides a small benefit to those businesses that deal in wildlife trade by allowing the inspection of shipments in Anchorage, and will result in a savings of approximately $65 per shipment for the importer or exporter.

The funds necessary to confer designated port status on Anchorage have been specifically allocated by the United States Congress as part of the FY 2001 budget.

b. This rule will not create inconsistencies with other agencies' actions. The Service is responsible for regulating the import and export of wildlife, and their parts and products. Therefore, this proposed policy has no effect on other agencies' responsibilities and will not create inconsistencies with other agencies' actions.

c. This rule will not materially affect entitlements, grants, loan programs, or the rights and obligations of their recipients. It will, however, affect user fees. User fees will be decreased or cancelled depending on the importer or exporter's status as a licensee. 50 CFR 14.91 specifies that persons engaged in business as importers or exporters of wildlife are required to be licensed by the Service. Engage in business is defined as devoting time, attention, labor, or profit to an activity for gain or profit. As stated in 50 CFR 14.94, the inspection fees during normal working hours at non-designated ports (Anchorage) for licensees and non-licensees are $55 plus a two-hour minimum at $20/hr. A $25 designated port exception permit is also required to use the port of Anchorage. The inspection fee associated with designated ports during normal working hours is $55 for licensees and no charge for non-licensees. As a consequence, licensees will save approximately $65 per shipment by having inspection capability in Anchorage for all wildlife shipments.

d. This rule will not raise novel legal or policy issues. This rule will not raise novel legal or policy issues because it is based upon specific language in the Endangered Species Act and the Code of Federal Regulations which has been applied numerous times to various ports around the country.

The Department of the Interior (Department) has determined that this rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The Service anticipates that the addition of the port of Anchorage to the list of Service-designated ports for the importation and exportation of wildlife will have no adverse effect upon individual industries and cause no demographic changes in populations. In addition, the Service anticipates that this rule will not increase direct costs for small entities and will have no effect upon information collection and record keeping requirements. In light of this analysis, the Service has determined that the rule will not have a significant economic effect on a substantial number of small entities as defined in the Regulatory Flexibility Act, 5 U.S.C. 601 et seq.

The Service has determined that this rule will not affect energy supplies, distribution, and use as described in Executive Order 13211. Therefore, this action is not a significant energy action and no Statement of Energy Effects is required.

This final rule has no private property takings implications as defined in Executive Order 12630. The only effect of this rule will be to make it easier for businesses to import and export wildlife directly through Anchorage, Alaska.

This action does not contain any federalism impacts as described in Executive Order 13132.

This final rule does not contain any information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

These changes in the regulations in part 14 are regulatory and enforcement actions covered by a categorical exclusion from National Environmental Policy Act procedures under 516 Department Manual, Chapter 2, Appendix 1.10.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that this rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

A determination has been made under Section 7 of the Endangered Species Act that this revision of Part 14 will not affect federally listed species.

In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq. ), this rule will not “significantly or uniquely” affect small governments.

This final rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

a. Does not have an annual effect on the economy of $100 million or more. The port of Anchorage currently clears imports when the shipper requests clearance in Anchorage, as opposed to continuing under U.S. Customs bond to a designated port. The economic impact of authorizing Anchorage as a designated port can be approximated by multiplying the average number of shipments by the average difference in fees associated with designated and non-designated ports. The estimated annual benefit to importers and exporters will be roughly $250,000. This benefit will accrue primarily to small businesses involved in the wildlife trade.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

In accordance with the presidential memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951), Executive Order 13175, and 512 DM 2, we have evaluated possible effects on federally recognized Indian tribes and have determined that there are no effects. Individual tribal members are subject to the same regulatory requirements as other individuals who engage in the import and export of wildlife.

The originator of this final rule is Special Agent Julie Scully, Division of Law Enforcement, U.S. Fish and Wildlife Service, Washington, D.C.

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

The 2002 A season Pacific cod TAC apportioned to vessels catching Pacific cod for processing by the inshore component in the Central Regulatory Area is 13,387 metric tons (mt) as established by an emergency rule implementing 2002 harvest specifications and associated management measures for the groundfish fisheries off Alaska (67 FR 956, January 8, 2002).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the A season amount of the Pacific cod TAC apportioned to vessels catching Pacific cod for processing by the inshore component of the Central Regulatory Area of the GOA will be reached. In accordance with § 679.20(a)(11)(iii), Pacific cod bycatch taken between the closure of the A season and opening of the B season shall be deducted from the B season TAC apportionment. Therefore, the Regional Administrator is establishing a directed fishing allowance of 13,387 mt. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance will soon be reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by vessels catching Pacific cod for processing by the inshore component in the Central Regulatory Area of the GOA.

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

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately implement this action to prevent exceeding the amount of the 2002 A season Pacific cod TAC specified for the inshore component in the Central Regulatory Area constitutes good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(3)(B) and 50 CFR 679.20(b)(3)(iii)(A), as such procedures would be unnecessary and contrary to the public interest. Similarly, the need to implement these measures in a timely fashion to prevent exceeding the 2001 A season Pacific cod TAC specified for the inshore component in the Central Regulatory Area constitutes good cause to find that the effective date of this action cannot be delayed for 30 days. Accordingly, under 5 U.S.C. 553(d), a delay in the effective date is hereby waived.

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