This rule is issued under Marketing Agreement and Order No. 989 (7 CFR part 989), both as amended, regulating the handling of raisins produced from grapes grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, 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 reduces the production cap for the 2002 RDP for NS raisins from 2.75 to 2.0 tons per acre. The cap is specified in the order. Under an RDP, producers receive certificates from the RAC for curtailing their production to reduce burdensome supplies. The certificates represent diverted tonnage. Producers sell the certificates to handlers who, in turn, redeem the certificates with the RAC for raisins from the prior year's reserve pool. The production cap limits the yield per acre that a producer can claim in an RDP. Reducing the cap for the 2002 RDP will bring the figure in line with 2001 crop yields. This action was recommended by the RAC at a meeting on November 13, 2001.

The order provides authority for volume regulation designed to promote orderly marketing conditions, stabilize prices and supplies, and improve producer returns. When volume regulation is in effect, a certain percentage of the California raisin crop may be sold by handlers to any market (free tonnage) while the remaining percentage must be held by handlers in a reserve pool (reserve) for the account of the RAC. Reserve raisins are disposed of through various programs authorized under the order. For example, reserve raisins may be sold by the RAC to handlers for free use or to replace part of the free tonnage they exported; carried over as a hedge against a short crop the following year; or may be disposed of in other outlets not competitive with those for free tonnage raisins, such as government purchase, distilleries, or animal feed. Net proceeds from sales of reserve raisins are ultimately distributed to producers.

The RDP is another program concerning reserve raisins authorized under the order and may be used as a means for controlling overproduction. Authority for the program is provided in § 989.56 of the order, and additional procedures are specified in § 989.156 of the order's administrative rules and regulations.

Pursuant to these sections, the RAC must meet by November 30 each crop year to review raisin data, including information on production, supplies, market demand, and inventories. If the RAC determines that the available supply of raisins, including those in the reserve pool, exceeds projected market needs, it can decide to implement a diversion program, and announce the amount of tonnage eligible for diversion during the subsequent crop year. Producers who wish to participate in the RDP must submit an application to the RAC. Such producers curtail their production by vine removal or some other means established by the RAC and receive a certificate from the RAC which represents the quantity of raisins diverted. Producers sell these certificates to handlers who pay producers for the free tonnage applicable to the diversion certificate minus the established harvest cost for the diverted tonnage. Handlers redeem the certificates by presenting them to the RAC and paying an amount equal to the established harvest cost plus payment for receiving, storing, fumigating, handling, and inspecting the tonnage represented on the certificate. The RAC then gives the handler raisins from the prior year's reserve pool in an amount equal to the tonnage represented on the diversion certificate. The new crop year's volume regulation percentages are applied to the diversion tonnage acquired by the handler (as if the handler had bought raisins directly a producer).

Section 989.56(a) of the order specifies a production cap of 2.75 tons per acre for any production unit of a producer approved for participation in an RDP. The RAC may recommend, subject to approval by USDA, reducing the 2.75 tons per acre production cap. The production cap limits the yield that a producer can claim. Producers who historically produce yields above the production cap can choose to produce a crop rather than participate in the diversion program. No producer is required to participate in an RDP.

Pursuant to § 989.156, producers who wish to participate in a program must submit an application to the RAC by December 20. Producers must specify, among other things, the raisin production and the acreage covered by the application. RAC staff verifies producers production claims using handler acquisition reports and other available information. However, a producer could misrepresent production by claiming that some raisins produced on one ranch were produced on another, and use an inflated yield on the RDP application. Thus, the production cap limits the amount of raisins for which a producer participating in an RDP may be credited, and protects the program from overstated yields.

The RAC met on November 13, 2001, and recommended reducing the production cap from 2.75 to 2.0 tons per acre. With 2001 raisin-type variety grape production down by 31 percent, according to the California Agricultural Statistics Service, the RAC recommended reducing the production cap by about 30 percent to reflect 2001 crop yields. Paragraph (t) in § 989.156 of the order's rules and regulations is revised accordingly.

On November 28, 2001, the RAC met and reviewed data relating to the quantity of reserve raisins and anticipated market needs. With a 2001-02 NS crop estimated at 359,341 tons, and a computed trade demand (comparable to market needs) of 235,850 tons, the RAC projects a reserve pool of 123,491 tons of NS raisins. With such a large anticipated reserve, the RAC announced that 45,182 tons of NS raisins would be eligible for diversion under the 2002 RDP. Of the 45,182 tons, 40,182 tons will be made available to approved producers who submitted applications to the RAC by December 20, 2001, with producers who plan to remove vines receiving priority over those who plan to curtail (abort) production through spur pruning or other means. Section 989.156(d) requires the RAC to give priority to applicants who agree to remove vines. Another 5,000 tons will be made available to approved producers who submit applications to the RAC from December 21, 2001, through May 1, 2002, and plan to remove vines. Authority for this additional opportunity for vine removal is provided in § 989.156(s).

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

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and 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 20 handlers of California raisins who are subject to regulation under the order and approximately 4,500 raisin producers in the regulated area. Small agricultural firms are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. Thirteen of the 20 handlers subject to regulation have annual sales estimated to be at least $5,000,000, and the remaining 7 handlers have sales less than $5,000,000. No more than 7 handlers, and a majority of producers, of California raisins may be classified as small entities.

This rule revises § 989.156(t) of the order's rules and regulations regarding the RDP. Under an RDP, producers receive certificates from the RAC for curtailing their production to reduce burdensome supplies. The certificates represent diverted tonnage. Producers sell the certificates to handlers who, in turn, redeem the certificates with the RAC for raisins from the prior year's reserve pool. The order specifies a production cap limiting the yield per acre that a producer can claim in an RDP. This rule reduces the cap from 2.75 to 2.0 tons per acre to accurately reflect 2001 crop yields. Authority for this action is provided in § 989.56(a) of the order.

Regarding the impact of this action on affected entities, producers who participate in the 2002 RDP will have the opportunity to earn some income for not harvesting a 2002-03 crop. Producers will sell the certificates to handlers next fall and be paid for the free tonnage applicable to the diversion certificate minus the harvest cost for the diverted tonnage. Applicable harvest costs for the 2002 RDP were established by the RAC at $340 per ton.

Reducing the production cap will have little impact on raisin handlers. Handlers will pay producers for the free tonnage applicable to the diversion certificate minus the $340 per ton harvest cost. Handlers will redeem the certificates for 2001-02 crop NS reserve raisins and pay the RAC the $340 per ton harvest cost plus payment for bins ($20 per ton) and for receiving, storing, fumigating, handling (currently totaling $46 per ton), and inspecting (currently $9.00 per ton) the tonnage represented on the certificate. Reducing the production cap will have little impact on handler payments for reserve raisins under the 2001 RDP.

Alternatives to the recommended action include leaving the production cap at 2.75 tons per acre or reducing it to another figure besides 2.0 tons per acre. However, the majority of RAC members believe that a cap of 2.0 tons per acre more accurately reflects 2001 yields.

There was some discussion at the RAC's meeting that the 2.0-ton per acre production cap was too low and would discriminate against producers with high yields. In recent years, cultural practices have evolved to where some producers' yield per acre is reportedly as high as 4 tons. However, as previously stated, the program is voluntary and producers whose vines can produce 4 tons per acre have the option to produce a raisin crop rather than apply for the RDP and be subject to the production cap.

This rule imposes no additional reporting or recordkeeping requirements on either small or large raisin handlers. In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirement referred to in this rule (i.e., the application) has been approved by the Office of Management and Budget (OMB) under OMB Control No. 0581-0178. 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. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Further, the RAC's meeting on November 13, 2001, the RAC's Administrative Issues Subcommittee meeting on that same day but prior to the RAC meeting where this action was deliberated, and the RAC's meeting on November 28, 2001, where a diversion program was announced, were all public meetings widely publicized throughout the raisin industry. All interested persons were invited to attend the meetings and participate in the industry's deliberations. Finally, all interested persons are invited to submit information on the regulatory and information impact of this action on small businesses.

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

A 15-day comment period is provided to allow interested persons to respond to this rule. A 15-day comment period is deemed appropriate because producer applications were due to the RAC by December 20, 2001, and therefore the 2.0 tons per acre production cap should be in place as soon as possible.

After consideration of all relevant material presented, including the information and recommendation submitted by the RAC 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.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect, and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) The submission deadline for producer applications for the 2002 RDP was December 20, 2001; (2) producers are aware of this action which was recommended by the RAC at a public meeting; (3) the program is voluntary, and any producer can choose to produce a raisin crop for delivery in 2002; and (4) this interim final rule provides a 15-day comment period for written comments and all comments timely received will be considered prior to finalization of this rule.

The regulations in 9 CFR part 91, referred to below as the regulations, prescribe conditions for exporting animals from the United States. Among other things, § 91.3(a) provides that all animals intended for exportation be accompanied from the State of origin to the port of embarkation or border by an origin health certificate issued by an Animal and Plant Health Inspection Service (APHIS) representative or an accredited veterinarian. Origin health certificates attest that the animals in a shipment were inspected prior to export and were found free from any evidence of or exposure to communicable disease. The certificates also include identifying information pertaining to the individual animals in the shipment, as well as all test results, certifications, or other statements required by the country of destination.

The regulations in § 91.3(c) further require that all samples for tests be taken by an APHIS inspector or accredited veterinarian in the State of origin of the export movement and that, with certain exceptions, such sampling and testing be conducted within 30 days prior to the date of the export movement. Exceptions include cases in which the country of destination requires testing more than 30 days prior to the date of export. The regulations in 9 CFR part 161 contain requirements and standards for accredited veterinarians. Accredited veterinarians are authorized by APHIS to perform various types of work such as testing and inspecting animals for and issuing origin health certificates—on behalf of the Federal Government. Section 161.3, paragraph (b), states the length of time that certificates and other documents issued by an accredited veterinarian shall be valid. Prior to this final rule, the timeframe was 30 days from the date of inspection of the animal identified on the document, without exception. This meant that animals intended for export had to be inspected for purposes of the origin health certificate within 30 days prior to the date of export, even when sampling and testing could be conducted earlier.

On April 17, 2000, we published in the Federal Register (65 FR 20384-20387, Docket No. 99-053-1) a proposal to amend § 91.3(a) to allow animals intended for exportation to be inspected for origin health certificates more than 30 days prior to the date of export, in accordance with the testing requirements of the country of destination. In conjunction with this proposed action, we also proposed to amend the language in § 91.3(c) to provide that sampling and testing may be conducted more than 30 days prior to the date of export in instances where a receiving country allows rather than just requires, as the regulations previously stated this to occur. In addition, we proposed replacing the phrase “the date of the movement of the animals for export” with “the date of export” in both 91.3(a) and (c). We proposed this change to clarify that animals must be tested and inspected for origin health certificates 30 days or more, if the receiving country requires or allows it prior to the date they are actually exported, rather than 30 days from the date the animals started in transit to the port of embarkation or border. We further proposed to amend § 161.3(b) to allow origin health certificates issued by accredited veterinarians to be valid for more than 30 days in cases where the Administrator allows the animals identified on the document to be inspected more than 30 days prior to the date of export.

We solicited comments concerning our proposal for 60 days ending June 16, 2000. We received five comments by that date—four from livestock exporters, and one from a representative of a livestock export industry association. All supported the proposed rule, stating that, among other things, the proposed changes would improve their efficiency, eliminate costly delays, and help expedite livestock shipments.

However, two of the commenters indicated that, while our action was a step in the right direction, we did not go far enough. These commenters asserted that APHIS should change the validity timeframe of all U.S. origin health certificates and test results from 30 days to 45 days, unless otherwise required by the importing country. These commenters stated that 30 days is an insufficient amount of time to address the numerous problems that may arise during the export process; for example, if reactor animals need to be retested, or if mistakes or delays occur at the diagnostic laboratory. One of these commenters also asserted that extending the validity of origin health certificates for another 15 days would, in serious outbreak situations, give exporters time to avoid flight cancellation fees imposed by the airlines, and give importers time to reschedule quarantine space without incurring penalties. Moreover, this commenter stated that such a change would give APHIS' National Veterinary Services Laboratories (NVSL) more time to perform the necessary export tests.

One of the commenters also objected to our proposal to change the phrase “date of movement for export” in the regulations to “date of export.” This commenter stated that the “previous interpretation” that tests and origin health certificates remained valid if the animals had started in transit to the port of embarkation or border prior to 30 days from the date of the first test or the date of issuance of the certificate had assisted in facilitating livestock shipments on many occasions. The commenter also asserted that this change would likely contribute to the time problems faced by exporters.

We are making no changes to the final rule based on these comments. We agree that 30 days can be a short amount of time in which to complete the numerous steps involved in the export certification process. More to the point, however, the countries of destination— not APHIS— determine and enforce their own import health requirements, including the timeframes within which test results and export origin health certificates are considered valid.

As stated previously, while we recognize that problems and delays can occur with regard to obtaining the necessary tests, inspection, and other documentation required to certify animals for export, our experience shows that 30 days is not an unreasonable amount of time in most cases to complete the steps involved. For example, it typically takes only about 7 to 10 days to obtain test results for brucellosis, as well as for many of the other diseases of concern to importing countries. Nevertheless, APHIS' NVSL has undertaken a number of initiatives to improve its ability to provide efficient and expeditious service to exporters and other customers. For example, NVSL officials have developed guidelines that address the specific test requirements for exporting swine to China. NVSL officials have also developed a booklet that contains information about all currently available tests and reagents, including the length of time required to conduct each test. This document is available on the NVSL website at http://www.aphis.usda.gov/vs/nvsl. To avoid delays in processing the diagnostic tests necessary for export health certification, exporters are also encouraged to contact NVSL and/or the APHIS area veterinarian in charge in the State of origin to make arrangements for testing well in advance of planned shipping dates. Advance notification is particularly important for tests that are not run on a routine basis, such as those for diseases like Salmonella abortus-equi.

It is ultimately the exporters' responsibility to ensure that he or she complies with all requirements for testing and obtaining the appropriate health certification for animals intended for export. Accordingly, while we recognize that flight and quarantine space cancellations caused by delays in completing the steps involved in the export process can be costly to both exporters and importers, such issues are beyond the scope of APHIS' jurisdiction and this rulemaking action. Finally, it was always our intent that the actual date of export—not the date when animals start in transit to the port of embarkation or border—determine the timeframe within which origin health certificates and test results are deemed valid.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, without change.

This is a substantive rule that relieves restrictions and, pursuant to the provisions of 5 U.S.C. 553, may be made effective less than 30 days after publication in the Federal Register . By extending the validity for origin health certificates issued for animals being exported to certain countries, this rule will make the export process less time consuming and expensive for livestock exporters and marketers. We have determined that approximately 2 weeks are needed to ensure that APHIS field personnel receive official notice of this change in the regulations. Therefore, the Administrator of APHIS has determined that this rule should be made effective 15 days after publication in the Federal Register .

This rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

This rule amends the regulations in 9 CFR part 91 to allow animals to be inspected for an origin health certificate as early as the country of destination allows or requires sampling or testing to be performed. We are also amending 9 CFR part 161 to allow an origin health certificate to be valid for more than 30 days when animals are allowed to be inspected more than 30 days prior to the date of movement for export in accordance with § 91.3.

Formerly, exporters who had their animals inspected and obtained an origin health certificate more than 30 days prior to the date of export had to obtain a new origin health certificate when the animals arrived at the port of embarkation or the border. On average, it costs $150 per shipment to have a veterinarian inspect animals for export and issue an origin health certificate. When this final rule becomes effective, the original origin health certificate will still be valid when the animals arrive at the port of embarkation or the border, and the exporter will not incur the costs of obtaining an additional origin health certificate.

United Nations trade data show that U.S. exports of live animals are worth more than $ 1/2 billion dollars a year (see tables 1 and 2). On average, U.S. exports of live animals from 1993 through 1999 were distributed as follows: More than 40 percent went to Mexico and Canada, approximately 13.5 percent went to Japan, 2 percent went to Brazil, 1.1 percent went to the Republic of Korea (South Korea), and less than 1 percent went to Turkey, Egypt, or Taiwan. Of these countries, Brazil, Egypt, Japan, South Korea, Taiwan, and Turkey provide for sampling and testing of live animals more than 30 days prior to exportation from the country of origin.

Kazakhstan, Turkmenistan, and Uzbekistan also provide for sampling and testing of live animals more than 30 days prior to exportation from the country of origin. These three Central Asian countries imported relatively few live animals from 1993 through 1998 and none from the United States; 1999 import data are not currently available. Table 3 shows the value of live animals imported into these three countries and the rest of the world, based on United Nations data.

This final rule will facilitate live animal exports from the United States to Brazil, Egypt, Japan, Kazakhstan, Korea, Taiwan, Turkey, Turkmenistan, Uzbekistan, and other countries that may allow or require animals to be tested, or samples to be taken for testing, more than 30 days prior to export from the United States. Approximately 17.5 percent of live animal exports from the United States went to these countries in the years 1993 through 1999. We do not know how many of these shipments were made by small entities. However, all U.S. entities, including small entities, who export live animals to these countries will benefit from this rule, albeit in a relatively small way, by not having to bear the costs of an additional origin health certificate, estimated at approximately $150 per shipment.

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

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

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

This final rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Accordingly, we are amending 9 CFR parts 91 and 161 as follows:

Screwworm is a pest native to tropical areas of South America, the Indian subcontinent, Southeast Asia, tropical and sub-Saharan Africa, and the Arabian peninsula that causes extensive damage to livestock and other warmblooded animals. The adult female screwworm typically lays her eggs in open wounds on warmblooded host animals. Screwworm larvae hatch in as little as 12 hours and begin to feed on the flesh of the host animal; they are fully grown within 5 to 7 days after hatching. The fully grown larvae then drop from the host and tunnel into the soil, where they form protective cases to house themselves while they pupate. Adult screwworm flies emerge from these pupal cases and are ready to mate again within 3 to 5 days.

Screwworm was eradicated from the United States in 1966. However, in July of 1999, and again in February and March of 2000, screwworm larvae were found in horses that were imported into the United States from Venezuela and Argentina.

The regulations in 9 CFR part 93 (referred to below as the regulations) prohibit or restrict the importation of certain animals and birds into the United States to prevent the introduction of communicable diseases of livestock and poultry. Subparts C, D, E, and F of the regulations govern the importation of horses, ruminants, swine, and dogs, respectively.

In an interim rule effective and published in the Federal Register on November 13, 2000 (65 FR 67617-67624, Docket No. 00-028-1), we amended the regulations to require horses, ruminants, and swine that are imported from regions of the world where screwworm is considered to exist to be inspected and treated, under certain conditions, for screwworm. We also amended the regulations to require dogs that are imported from regions of the world where screwworm is considered to exist to be inspected, and if necessary, treated for screwworm. The interim rule was necessary to prevent the introduction of screwworm into the United States.

We solicited comments concerning the interim rule for 60 days ending January 12, 2001. We received five comments by that date. They were from foreign and State governments, a trade association, and a U.S. veterinary medical association. We have carefully considered all of the comments we received. They are discussed below by topic.

In the interim rule, we set out inspection and treatment requirements for horses, ruminants, swine, and dogs imported from any region of the world where screwworm is considered to exist. Among other requirements, the interim rule established that horses that are imported from screwworm-affected regions be quarantined for a minimum of 7 days upon arrival in the United States at an Animal and Plant Health Inspection Service (APHIS) animal import center. On the seventh day of quarantine, prior to a horse's release, a veterinarian must examine the horse for screwworm at the expense of the owner or broker. For this final examination, the interim rule provided that the veterinarian must anesthetize the horse so that he or she can thoroughly examine the horse's external genitalia. If screwworms are found during this examination, the horse must be held in quarantine and treated until free.

Several commenters took issue with requiring that horses imported from screwworm-affected regions be anesthetized for the final examination. These commenters stated that anesthesia is unnecessary and that tranquilization or sedation will be sufficient in order to perform the final examination. Two of these commenters expressed concern over the physical risk associated with the use of anesthetics. One commenter recommended that if APHIS finds it necessary to examine the horses for screwworm during quarantine, then that examination could be performed on the final day of quarantine without anesthetization. This commenter suggested that if the veterinarian performing the final examination determined that further examination requiring anesthetization was necessary, then the horse could be held and examined at a later point in time.

We agree with these commenters that sedating or tranquilizing the horses will be sufficient so that the veterinarian performing the final examination can thoroughly examine the horses' external genitalia. Many of the horses imported into or entering the United States from screwworm-affected regions are valuable purebred horses. Tranquilizing or sedating the male horses will help to ensure the safety of the horses and the veterinarian during the examination. Therefore, we are amending the regulations to require that horses that are imported from screwworm-affected regions be tranquilized or sedated, rather than anesthetized, for the final examination so that the horses' external genitalia can be thoroughly examined by the veterinarian.

One commenter stated that, while it has been assumed that the tranquilization or sedation requirement applies only to male horses because of the difficulties in examining their external genitalia, the interim rule does not specify only male horses are subject to this requirement. This commenter recommended that we specify that male horses must be tranquilized or sedated for the final examination.

We appreciate this commenter's suggestion. The interim rule required that horses be tranquilized or sedated for the final examination so that the external genitalia of the horses can be thoroughly examined. However, we did not state that this requirement only pertains to male horses. For greater clarity, we are amending the regulations in § 93.301(j)(7) in this final rule to specify that only male horses are subject to this requirement.

Two commenters questioned the rationale for requiring the tranquilization or sedation of only horses for the final examination; both commenters noted that there is no similar requirement for ruminants or swine. One of these commenters asked if APHIS had determined that tranquilizing or sedating ruminants and swine is unnecessary to thoroughly examine their external genitalia, or if APHIS had gathered information from other countries confirming that screwworm infestations are not found on the prepuce of ruminants and swine. Another commenter stated that if horses are tranquilized or sedated for the final examination so that the veterinarian can thoroughly examine the horses' external genitalia, then the genitals of all species should be examined because screwworm infestations do not occur exclusively on the prepuce of horses. This commenter also stated that, because of the final examination requirement and extended quarantine period for horses that are imported from screwworm-affected regions, the interim rule placed a greater regulatory burden on the horse industry than on importers of other species mentioned in the rule.

Protocol requirements for ruminants and swine are the same as for horses, other than for the 7-day quarantine and final examination of the tranquilized or sedated animal. Due to the life cycle of screwworm, a minimum quarantine period of 7 days is necessary to ensure the detection of screwworm infestations in animals that were infested just prior to their export to the United States. Because ruminants and swine are already required under the regulations to be quarantined for at least 7 days, it was not necessary to adjust the length of time those animals must be held in quarantine. It was necessary, however, to extend to 7 days the length of time that horses, when imported from screwworm-affected regions, must be held in quarantine, given the life cycle of the pest.

After hatching, screwworm larvae are fully grown within 5 to 7 days. Because horses are released from quarantine close to the time that any screwworm infestations that may have occurred just prior to export would mature and become visible upon inspection, it is necessary to perform an examination on the final day of quarantine to ensure that any infestations are detected and eliminated. Due to the difficulties in examining the external genitalia of male horses, those animals must be tranquilized or sedated for that examination so that the veterinarian can thoroughly examine the external genitalia while ensuring his or her own safety, as well as the safety of the horses.

Screwworm infestations can be detected on the prepuce of ruminants and swine. However, except for those ruminants imported from Central America and the West Indies, ruminants and swine are already required under §§ 93.411 and 93.510 of the regulations to be quarantined for 15 and 30 days, respectively. During this period, the animals are observed for disease or infestation with animal pests. These quarantine and inspection requirements provide ample time and opportunity to detect and eliminate any screwworm infestations on these animals. Therefore, a final examination for these animals is unnecessary.

Ruminants from Central America and the West Indies are subject to different importation requirements than ruminants from all other regions. Out of those countries and regions that constitute Central America and the West Indies, only Panama is affected by screwworm. Panama does not have a history of ruminant exports to the United States; within the last 10-15 years, only one ruminant, a prized bull, was imported from Panama into the United States. In the event that ruminants were imported from Panama, or in the event that ruminants were imported from any other region in Central America or the West Indies that becomes affected by screwworm, the ruminants are required under § 93.423 to be quarantined for 7 days upon arrival in the United States, during which time they are subject to dippings and blood tests or other tests necessary to determine if these animals are free from communicable diseases. We believe that these requirements are sufficient to prevent the introduction of screwworm from ruminants imported from those regions.

Several commenters questioned the need to quarantine horses for 7 days before performing the final examination for screwworm infestation and recommended alternative treatment protocols. One of these commenters suggested that if ivermectin was administered at recommended doses 2 weeks prior to export and again 24 hours prior to export, there would be sufficient tissue concentration of the drug to ensure that any larvae present are killed. Another commenter questioned whether the 7-day quarantine could be cut to 5 days with a second administration of ivermectin upon arrival in the United States.

Research has shown that ivermectin is effective within 3 to 5 days after treatment against the early stages of screwworm infestation, which are difficult to observe during visual inspection of the animals. Screwworm larvae hatch in as little as 12 hours and are fully grown within 5 to 7 days after hatching. Although additional doses of ivermectin administered just prior to export or upon arrival in the United States would reduce the risk of the horses becoming infested with screwworm, a 7-day quarantine is necessary to allow time for any screwworms that infested the animals just prior to export to the United States to mature and for any infestations to become visible upon inspection.

One commenter expressed concern over the cancellation policy for reservations at quarantine facilities maintained by APHIS. This commenter stated that reservation fees should not be forfeited if services provided by carriers are unavailable within the required period because of unforseen circumstances. In particular, this commenter was concerned that transportation services for livestock from Argentina to the United States are unreliable due to a limited number of regularly scheduled flights and frequent, unscheduled delays that exceed 24 hours.

The regulations in § 93.304(a)(3) set out the reservation fee requirements for securing space at quarantine facilities for horses. The importer or importer's agent must pay or ensure payment of a reservation fee for each lot of horses to be quarantined in a facility maintained by APHIS. With certain exceptions, reservation fees will be forfeited if the importer or the importer's agent fails to present for entry, within 24 hours following the designated time of arrival, the horse for which the reservation was made. The reservation system is necessary in order to ensure that there is sufficient space in the quarantine facilities and that APHIS recovers its expenses for providing these services. Because this system is necessary and applies to all horses quarantined at an APHIS quarantine facility, not just those horses imported from screwworm affected regions, and because the interim rule did not make any changes to the reservation system, this comment falls outside the scope of this rulemaking. Therefore, we are not making any changes to the rule as a result of this comment.

One commenter requested that APHIS consider allowing registered thoroughbred horses imported temporarily into the United States and registered thoroughbred horses returning to the United States from screwworm-affected regions to enter the United States without meeting the extended 7-day quarantine requirement. This commenter argued that the risk of screwworm being introduced into the United States would be negligible provided that these horses are kept under intensely managed and controlled conditions while in the screwworm-affected region.

We are not making changes in this final rule as a result of this comment. We do not currently have an assessment of the risk associated with the importation of horses under the conditions described by the commenter and, therefore, cannot confirm that importing horses under those conditions would ensure against the further introduction of screwworm into the United States. However, we may consider amending the regulations in future rulemaking to address the issues raised by this commenter.

Two commenters expressed concern over the lack of space in, and the limited numbers of, APHIS animal import centers approved as 7-day quarantine facilities. One of these commenters was concerned that, because the quarantine facility located at Hollywood Park, CA, is not approved as a 7-day quarantine center, horses entering the United States to race at Hollywood Park from screwworm-affected countries must be quarantined at another facility approved as a 7-day quarantine facility. The other commenter argued that no scientific rationale supports limiting approved quarantine centers to APHIS-owned facilities. This commenter requested that APHIS consider authorizing those public or private quarantine facilities that are equipped to undertake the required inspection and testing protocols for screwworm as approved 7-day quarantine centers.

Authorizing public or private quarantine facilities as approved 7-day quarantine centers is outside the scope of this rulemaking. Therefore, we are not making any changes to the rule based on this comment. However, because recent demand for quarantine services for horses has exceeded the space available at existing facilities, we are considering developing standards for allowing the establishment of permanent, privately owned quarantine facilities.

In a final rule published in the Federal Register on August 28, 2000 (65 FR 51997-52010, Docket No. 97-058-2), we changed our user fees for import- and export-related services for animals, animal products, birds, germ plasm, organisms, and vectors. That final rule increased user fees for quarantine services, among other services, for fiscal years 2001 through 2004. One commenter requested that APHIS review those increases in user fees for quarantine services in light of the increased costs associated with the additional inspection and quarantine requirements for horses imported from screwworm-affected countries.

The annual increases in user fees for quarantine services set out in the August 2000 final rule mentioned above reflect standard annual increases in expenses and are necessary for APHIS to recover the anticipated cost of providing those services each year. Because the user fees must be adjusted annually for APHIS to recover its expenses, and because the interim rule did not make any changes to the user fees, reviewing or making changes to the user fees charged for quarantine services falls outside the scope of this rulemaking.

One commenter objected to the issuance of an interim rule “without sufficient time to consider the issues.” This commenter stated that, at the time of publication, the United States was not facing such emergency conditions that would have warranted an interim rule.

We disagree with this comment. Screwworm was eradicated from the United States in 1966. However, in July 1999, and again in February and March 2000, screwworm larvae were found in horses imported into the United States from Argentina and Venezuela. The Administrator of APHIS determined that immediate action was necessary to prevent further introductions of screwworm into the United States. Prior notice was impracticable and contrary to public interest under these circumstances. The preembarkation requirements for ruminants, swine, and dogs and preembarkation and postarrival requirements for horses imported from any region of the world where screwworm is considered to exist were considered necessary on an emergency basis to safeguard the United States from screwworm.

One commenter stated that the economic information presented in the interim rule underestimated the number of horses exported from the United Arab Emirates to the United States between 1995 and 1998. In the interim rule, we stated that, out of those screwworm-affected regions where other diseases that would require at least a 7-day quarantine are not known to exist, only Argentina is a significant source of horses imported into the United States. To support this point, we stated that China, the Philippines, Taiwan, and the United Arab Emirates also exported horses to the United States during the period 1995-1998, but collectively they exported only 5 horses in 1995, 9 horses in 1996, 14 horses in 1997, and 13 horses in 1998. The commenter stated that the number of horses exported from the United Arab Emirates alone in each of those years exceeded the collective number of horses exported from China, the Phillippines, Taiwan, and the United Arab Emirates cited in the interim rule.

This commenter is indeed correct; while the interim rule's economic analysis accurately estimated the number of horses imported permanently into the United States from those regions, it did not account for horses imported under temporary permits, such as competition or race horses. Out of all breeding, commercial, competition, purebred, and race horses imported, both permanently and temporarily, from screwworm-affected regions, Argentina accounted for 83 percent (1,730 of 2,094) of horses imported between 1996 and 2001. The United Arab Emirates supplied 14 percent (299 of 2,094) of horses imported from affected regions during the same 6-year period. The remaining 3 percent of horses imported from screwworm-affected regions were from China, India, Malaysia, Philippines, Qatar, Singapore, Taiwan, and Thailand. However, because only 2 percent (1,952 of 94,729) of all horses imported into the United States between 1996 and 2001 were from screwworm-affected regions, we continue to expect that the interim rule will not have a significant economic effect on a substantial number of small entities.

Several commenters expressed concern that the economic effects of the interim rule on the horse industry were underestimated in the interim rule's economic analysis. Several commenters stated that the costs associated with the additional inspection and quarantine requirements for horses imported from screwworm-affected regions will have a significant impact on the U.S. horse industry, especially in light of the increase in quarantine fees at APHIS quarantine facilities. Several commenters also opposed the additional inspection and quarantine requirements because the resulting cost increases, along with reservation deposits, time away from training for horses, additional post-quarantine time to allow for drug residues to be eliminated prior to competition, and any potential complications, will inhibit the movement of foreign horses to and from the United States. For example, one commenter stated that these costs alone exceed the value of a green polo pony from Argentina.

The additional inspection requirement for horses contained in the interim rule affects only those importers moving horses into the United States from regions of the world where screwworm is considered to exist. In addition, the quarantine period is extended to 7 days only for those horses that are imported from screwworm-affected regions where other diseases that require at least a 7-day quarantine are not known to exist. These requirements affect a limited number of regions. As mentioned above, Argentina and the United Arab Emirates accounted for 83 percent and 14 percent, respectively, of horses imported from regions subject to these requirements during the period 1996-2001. The remaining 3 percent of horse imports from affected regions were from China, India, Malaysia, Philippines, Qatar, Singapore, Taiwan, and Thailand during that same 6-year period. Furthermore, the additional costs borne by importers moving horses into the United States from screwworm-affected regions as a result of the additional inspection and treatment requirements are small when compared to the import value of the horses. For example, the average value of purebred horses imported from screwworm-affected countries in the Western Hemisphere, excluding Argentina, between 1998 and 2000 was $10,697. The costs for the preembarkation inspection of and treatment for screwworm represent 1 to 2 percent of this average value.

For horses imported from screwworm-affected regions that are not already affected by other diseases that require at least a 7-day quarantine, the additional cost will have a larger impact. Between 1998 and 2000, the average value of purebred horses imported from Argentina was $6,625; the preembarkation inspection and treatment costs for screwworm, as well as the 4 additional days in quarantine, are about 13 to 14.6 percent of the average value of these horses. 1 However, a relatively small percentage of horses imported into the United States are expected to be affected. Out of 94,729 horses imported into the United States between 1996 and 2001, only 2 percent (1,952 of 94,729) were from screwworm-affected regions.

As only a small percentage of horses are imported into the United States from screwworm-affected regions, it can be concluded that the additional requirements set out in the interim rule will not significantly impact the entire U.S. horse industry nor inhibit the movement of foreign horses to and from the United States. The largest impact will be borne by the importers of horses from Argentina and other countries that must quarantine their animals for 4 additional days. Nonetheless, we continue to expect that the interim rule will not have a significant economic effect on a substantial number of small entities.

In addition to the changes mentioned above, we are adding, to §§ 93.301, 93.405, 93.505, and 93.600, the Office of Management and Budget control numbers assigned to the information collection requirements associated with the interim rule, as required by the Paperwork Reduction Act.

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

This final rule also affirms the information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act.

Pursuant to the administrative procedure provisions in 5 U.S.C. 553, we find good cause for making this rule effective less than 30 days after publication in the Federal Register . The interim rule adopted as final by this rule was effective on November 13, 2000. This rule provides that horses that are imported from regions of the world where screwworm is considered to exist must be sedated or tranquilized, rather than anesthetized, for the purposes of the examination on the seventh day of quarantine. In addition, this rule specifies that only male horses must be sedated or tranquilized during that examination. Immediate action is necessary to provide for the use of an appropriate level of chemical restraint and clarify that female horses do not require such restraint. These changes are, therefore, necessary to relieve requirements that we no longer find warranted. Therefore, the Administrator of the Animal and Plant Health Inspection Service has determined that this rule should be effective upon publication in the Federal Register .

The regulations in 9 CFR, chapter I, subchapter D, and 7 CFR, chapter III, require inspection, laboratory testing, certification, or quarantine of certain animals, animal products, plants, plant products, or other commodities intended for importation into, or exportation from, the United States.

When these services must be provided by an employee of the Animal and Plant Health Inspection Service's Veterinary Services (VS) program on a Sunday, holiday, or at any other time outside the VS employee's regular duty hours, the Government charges a fee for the services in accordance with 9 CFR part 97. Under circumstances described in § 97.1(a), this fee may include the cost of commuted traveltime. Section 97.2 contains administrative instructions prescribing commuted traveltime allowances, which reflect, as nearly as practicable, the periods of time required for VS employees to travel from their dispatch points and return there from the places where they perform Sunday, holiday, or other overtime duty.

We are amending § 97.2 of the regulations by adding a commuted traveltime allowance for travel between Olympia and Sumas in the State of Washington. The new allowance is set forth in the rule portion of this document. This action is necessary to inform the public of the commuted traveltime between the dispatch and service locations.

The commuted traveltime allowances appropriate for employees performing services at ports of entry, and the features of the reimbursement plan for recovering the cost of furnishing port of entry services, depend upon facts within the knowledge of the Department of Agriculture. It does not appear that public participation in this rulemaking proceeding would make additional relevant information available to the Department.

Accordingly, pursuant to the administrative procedure provisions in 5 U.S.C. 553, we find upon good cause that prior notice and other public procedure with respect to this rule are impracticable and unnecessary; we also find good cause for making this rule effective less than 30 days after publication of this document in the Federal Register .

This final rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review process required by Executive Order 12866.

The number of requests for overtime services of a VS employee at the locations affected by this rule represents an insignificant portion of the total number of requests for these services in the United States.

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

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is intended to have preemptive effect with respect to any State or local laws, regulations, or policies that conflict with its provisions or that would otherwise impede its full implementation. This rule is not intended to have retroactive effect. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule or the application of its provisions.

This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Section 218(a) of the Nuclear Waste Policy Act of 1982, as amended (NWPA), requires that “[t]he Secretary [of the Department of Energy (DOE)] shall establish a demonstration program, in cooperation with the private sector, for the dry storage of spent nuclear fuel at civilian nuclear power reactor sites, with the objective of establishing one or more technologies that the [Nuclear Regulatory] Commission may, by rule, approve for use at the sites of civilian nuclear power reactors without, to the maximum extent practicable, the need for additional site-specific approvals by the Commission.” Section 133 of the NWPA states, in part, that “[t]he Commission shall, by rule, establish procedures for the licensing of any technology approved by the Commission under section 218(a) for use at the site of any civilian nuclear power reactor.”

To implement this mandate, the NRC approved dry storage of spent nuclear fuel in NRC-approved casks under a general license by publishing a final rule in 10 CFR part 72 entitled, “General License for Storage of Spent Fuel at Power Reactor Sites” (55 FR 29181; July 18, 1990). This rule also established a new subpart L within 10 CFR part 72, entitled “Approval of Spent Fuel Storage Casks” containing procedures and criteria for obtaining NRC approval of spent fuel storage cask designs. The NRC subsequently issued a final rule on March 9, 2000 (65 FR 12444) that approved the NAC-MPC cask design and added it to the list of NRC-approved cask designs in § 72.214 as CoC No. 1025.

NAC International, the certificate holder for CoC No. 1025, submitted an application to the NRC to amend the CoC on May 19, 2000; supplemental information to support the application was submitted on September 6, October 2, and 12, 2000; and April 13, September 6, October 5, 10, and 15, and November 21, 2001. The applicant requested an amendment to permit a part 72 licensee to store a new type of fuel in the NAC-MPC. The NAC-MPC system component modifications include increased length of the fuel basket and canister, transfer cask, and vertical concrete cask. Changes include a redesigned fuel basket to accommodate 26 fuel assemblies, with an alternate 24-fuel assembly configuration and increased transfer cask radial shielding. The CoC has been revised in its entirety to include a reference to the new type of fuel and a revised format. No other changes to the NAC-MPC cask system design were requested in this application. The NRC staff performed a detailed safety evaluation of the proposed CoC amendment request and found that an acceptable safety margin is maintained. In addition, the NRC staff has determined that there is still reasonable assurance that public health and safety and the environment will be adequately protected.

This direct final rule revises the NAC-MPC cask design listing in § 72.214 by adding Amendment 2 to CoC No. 1025. The amendment includes a revision of the TS in their entirety to revise the format of the TS and to include specifications for the new type of fuel and new operational limits. Details on specific changes to the TS are discussed in the SER.

The redesigned NAC-MPC cask system, when used in accordance with the conditions specified in the CoC, the TS, and NRC regulations, will meet the requirements of Part 72; thus, adequate protection of public health and safety will continue to be ensured.

On December 21, 2000, the President signed into law the Commodity Futures Modernization Act of 2000 (CFMA), Pub. L. 106-554, which extensively revised the Commodity Exchange Act (Act). Among other things, the CFMA removed the restriction in the Act on the trading of futures contracts on individual equity securities and narrow-based indices of equity securities. 1 Under the revised law, these products are now referred to as “security futures products” (SFPs)  2 and may be traded on designated contract markets, notice-designated contract markets and registered derivatives transaction execution facilities.

SFPs, like all other commodities traded on Commission-designated markets, will be subject to the Commission's large trader reporting rules. Those rules require futures commission merchants, clearing members and foreign brokers to report to the Commission position information of the largest futures and options traders and require the traders themselves to provide certain identifying information. Reporting levels are set for individual futures and option markets under the authority of sections 4i and 4c of the Act to ensure that the Commission receives adequate information to carry out its market surveillance programs. These market surveillance programs are designed to detect and to prevent market congestion and price manipulation and to enforce speculative position limits. They also provide information regarding the overall hedging and speculative use of, and foreign participation in, the futures markets and other matters of public interest. Generally, large trader reports are filed by the firm carrying the reportable trader's position. 3

Based upon its experience in administering the large trader reporting system, the Commission proposed establishing a reporting level of 1000 contracts for SFPs involving an individual security  4 and 200 contracts for SFPs involving a narrow-based index of securities. 5 66 FR 64383 (December 13, 2001). In its proposal, the Commission stated its intent to review these levels an appropriate amount of time after trading in SFPs commences to determine if they provide adequate coverage for effective market surveillance. At that time, the Commission will also consider actual trading experience—including trading volume, open interest and the number and position sizes of individual traders—to determine whether these levels are too high or too low for effective market surveillance.

The Commission noted in its proposal that the rules require the reporting of positions in SFPs on notice-designated contract markets. Notice-designated contract markets are entities that are otherwise regulated by the Securities and Exchange Commission (such as registered national securities exchanges and registered national securities associations) that apply for and, pursuant to a notice-filing procedure, become designated as contract markets by the Commission for the limited purpose of trading SFPs. 6 The Act and the Commission's regulations exempt notice-designated contract markets from certain provisions of the Act and the Commission's regulations; these trading facilities, however, are subject to the Commission's large trader reporting system. 7 Thus, futures commission merchants (whether registered under a full or a notice filing-procedure under rule 3.10  8 ), clearing members, foreign brokers and others who have reporting and other obligations under parts 15 through 21 of the Commission's rules will have concomitant obligations with respect to SFPs traded on notice-designated contract markets.

The Commission received two comment letters on its proposal—one from a contract market, the Chicago Mercantile Exchange (CME), and one from a national securities exchange that, in connection with listing and trading SFPs, is required to become a notice-designated contract market, the American Stock Exchange (AMEX). Both the CME and the AMEX generally supported the reporting levels. The CME specifically noted that the levels appropriately balance the protection of market integrity with administrative burdens. AMEX commented that, based on actual trading experience, the Commission may in the future need to establish higher reporting levels. AMEX also suggested that it may be appropriate for the Commission to tier reporting levels to take into account capitalization, trading volume and/or public float of the underlying security. 9

The Commission is adopting the reporting levels as proposed. As stated in the proposal, and consistent with the comments, the Commission will review these levels an appropriate amount of time after trading in SFPs commences to determine if they provide adequate coverage for effective market surveillance. At that time, the Commission will also consider actual trading experience—including trading volume, open interest and the number and position sizes of individual traders—to determine whether the levels are too high or too low for effective market surveillance. While the Commission does not anticipate tiered reporting levels, due to the administrative difficulties inherent in such a system, the Commission has not ruled out such an approach and will consider it, as appropriate. 10

Section 15 of the Act, as amended by section 119 of the CFMA, requires the Commission to consider the costs and benefits of its action before issuing a new regulation under the Act. By its terms, section 15 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 simply requires the Commission to “consider the costs and benefits” of the subject rule.

Section 15(a) further specifies that the costs and benefits of the proposed rule shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission may, in its discretion, give greater weight to any one of the five enumerated areas of concern and may, in its discretion, determine that, notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the Act.

The Commission's proposal contained an analysis of its consideration of these costs and benefits and solicited public comment thereon. 66 FR at 64384. 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. The Commission has considered the two comment letters received, neither of which specifically addressed the Commission's analysis of the costs and benefits of the proposed rules.

The Commission has considered the costs and benefits of the proposed rules and has decided to adopt the rules as discussed above.

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., requires that federal agencies, in proposing rules, consider the impact of those rules on small entities. The Commission has previously determined that large traders and FCMs are not “small entities” for purposes of the RFA. 11 The amendment to reporting requirements primarily impacts FCMs. Similarly, foreign brokers and foreign traders report only if carrying or holding reportable, i.e., large positions. The Commission invited comments from any firm believing that these rules would have a significant economic impact on its operations. No comments were received in response to that invitation,

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) (PRA), which imposes certain requirements on federal agencies (including the Commission) in connection with their conducting or sponsoring any collection of information as defined by the PRA, does not apply to this rule. The Commission believes that the rule amendment does not contain information requirements which require the approval of the Office of Management and Budget. The purpose of this rule is to establish a specific reporting level for security futures products.

The PBGC's regulations prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits of terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions are intended to reflect current conditions in the financial and annuity markets.

Three sets of interest assumptions are prescribed: (1) A set for the valuation of benefits for allocation purposes under section 4044 (found in appendix B to part 4044), (2) a set for the PBGC to use to determine whether a benefit is payable as a lump sum and to determine lump-sum amounts to be paid by the PBGC (found in appendix B to part 4022), and (3) a set for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology (found in appendix C to part 4022).

Accordingly, this amendment (1) adds to Appendix B to Part 4044 the interest assumptions for valuing benefits for allocation purposes in plans with valuation dates during April 2002, (2) adds to Appendix B to Part 4022 the interest assumptions for the PBGC to use for its own lump-sum payments in plans with valuation dates during April 2002, and (3) adds to Appendix C to Part 4022 the interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology for valuation dates during April 2002.

For valuation of benefits for allocation purposes, the interest assumptions that the PBGC will use (set forth in appendix B to part 4044) will be 5.50 percent for the first 25 years following the valuation date and 4.25 percent thereafter. These interest assumptions represent a decrease (from those in effect for March 2002) of 0.10 percent for the first 25 years following the valuation date and are otherwise unchanged.

The interest assumptions that the PBGC will use for its own lump-sum payments (set forth in appendix B to part 4022) will be 4.25 percent for the period during which a benefit is in pay status, and 4.00 percent during any years preceding the benefit's placement in pay status. These interest assumptions represent a decrease (from those in effect for March 2002) of 0.25 percent for the period during which a benefit is in pay status and are otherwise unchanged.

For private-sector payments, the interest assumptions (set forth in appendix C to part 4022) will be the same as those used by the PBGC for determining and paying lump sums (set forth in appendix B to part 4022).

The PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect, as accurately as possible, current market conditions.

Because of the need to provide immediate guidance for the valuation and payment of benefits in plans with valuation dates during April 2002, the PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

The PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.

Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

The Treasury Tax and Loan (TT&L) program, 31 CFR part 203 (part 203), encompasses two separate components—a depositary component through which we collect Federal tax deposits and payments from business taxpayers for employee withholding and other types of taxes, and an investment component through which we invest short-term operating balances not needed for immediate cash outlays.

Through the TT&L depositary component, which comprises nearly 10,000 commercial financial institutions and Federal Reserve Banks (FRBs), we collected over $1.6 trillion in Fiscal Year 2001, representing approximately 80 percent of the total Federal annual tax receipts, from approximately 5 million business taxpayers.

Nearly 1,400 of the TT&L depositaries borrow excess short-term Treasury operating funds by participating in the investment component of the TT&L program. Through agreements executed under this Part, participating depositaries borrow Treasury funds in the form of a note secured with collateral pledged to Treasury and pay interest to the Treasury on these balances. In Fiscal Year 2001, we earned nearly $1 billion in interest income through the TT&L investment component.

The Secretary is required to consider the prevailing market in prescribing the rate of interest. (31 U.S.C. 323) In 1978 when the interest rate formula was implemented, the overnight repurchase agreement market was not mature and a published rate was not available. Thus, the TT&L rate was set as an approximation of an overnight repurchase agreement rate. At that time, it was generally believed that the Federal funds rate averaged twenty-five basis points above the volume-weighted average interest rate from overnight repurchase agreements secured by Treasury securities and select Agency securities, and executed by the Federal Reserve Bank of New York for its monetary operations. Historically, the overnight repurchase agreement rate and the Federal funds rate generally have moved broadly in tandem.

On July 30, 1999, we published in the Federal Register a notice of proposed rulemaking (NPRM) at 64 FR 41748. The NPRM proposed a change to the interest rate we charge on funds loaned through the TT&L program, including funds loaned through the direct investment and special direct investment programs, from the Federal funds rate less twenty-five basis points to an overnight repurchase agreement rate. The closing date for submission of comments was September 28, 1999. Copies of the comments are available on the Financial Management Service's (FMS) web site at http://www.fms.treas.gov/eftps. Based on the comments we received, we have reconsidered that change. Instead, we are amending Part 203 to allow the Secretary the flexibility to adjust the rate of interest, taking into consideration prevailing market conditions.

The NPRM also sought comment on the extent to which TT&L participants were interested in obtaining TT&L funds for a predetermined period of time. Given the level of interest expressed for this concept, Treasury is considering offering an investment option which incorporates a term feature. Amending Part 203 will enable us to proceed with the design and testing of this option. The new TT&L investment option under consideration is called the term investment option and will be designed so that the Treasury may earn a market based rate of return on investments with a fixed term. The term investment option will provide an additional investment option for current TT&L participants and may also increase participation in the TT&L program. Treasury expects that the rate of interest earned on term investments will reflect a market rate of return for similar funds.

At a later date, Treasury will also be publishing an NPRM for Part 203 to reflect terminology changes brought about by the October 2000 implementation of the Treasury Investment Program (TIP), the component of the TT&L program that receives tax collections, invests funds, and monitors collateral pledged to secure invested funds and public money.

By the close of the comment period on September 28, 1999, we received comment letters on the NPRM from 56 financial institutions and 3 industry trade associations. Following is a discussion of the issues:

All of the commenting financial institutions and one industry trade association opposed the change in the TT&L rate of interest proposed in the NPRM. All commenting financial institutions stated that the proposed rate change (from the Federal funds rate less twenty-five basis points to a rate based on the overnight repurchase agreement rate) would decrease the level of participation in the TT&L program. Several financial institutions, including the largest TT&L investment program participants, commented that the proposed TT&L rate of interest did not take into account certain characteristics of the program such as Treasury's ability to place or call funds with little or no notice and prescribed collateral requirements, both of which should be factored into the rate. Also, many commenting financial institutions expressed concerns about the source and availability of the overnight repurchase agreement rate and the lack of historical data associated with this rate.

We agree with the respondents that a TT&L rate based on the overnight repurchase agreement rate does not adequately take into consideration the embedded option to place or call funds with little or no advance notice, nor the administrative costs associated with posting and transferring TT&L collateral. Thus, the proposed rate does not meet our goal of establishing a rate reflective of the prevailing market for a transaction with characteristics economically similar to the TT&L investment program. We have therefore deleted those provisions of the NPRM that would change the TT&L rate of interest to an overnight repurchase rate.

Nevertheless, we have determined that the best way to ensure that the Treasury continues to earn the prevailing market rate of return is to periodically review the TT&L rate of interest and make any necessary adjustments as market conditions dictate. The final rule therefore allows the Secretary to periodically adjust the rate taking into consideration the prevailing market for a transaction with characteristics similar to the TT&L investment program. This will provide Treasury greater flexibility in earning a market based rate of return on investments. The rate will be established through TT&L Special Notices to Depositaries and will be published in the Federal Register and on the FMS web site. A TT&L Special Notice to Depositaries is included herein establishing the TT&L rate of interest as the Federal funds rate less twenty-five basis points.

The NPRM sought comment on the extent to which TT&L participants were interested in obtaining TT&L funds for a predetermined period of time. The majority of commenters noted that the call feature associated with TT&L funds made participation in the program less desirable for financial institutions. Of the 15 commenters who specifically commented on their interest in obtaining TT&L funds for a predetermined period of time, 11 expressed some interest in the concept. In further discussions with financial institutions regarding the benefits of holding funds for a predetermined period of time, financial institutions again generally reacted favorably to the concept. Based upon these comments, we are considering a new investment component of TT&L, referred to as the term investment option.

The term investment option would provide Treasury with an option to invest excess operating funds with participating financial institutions for a predetermined period of time. This option is in the early stages of development and we anticipate that it will be offered initially on a pilot basis. Under this option, Treasury will determine the rate of interest taking into consideration the prevailing market and will either establish a predetermined rate based on a benchmark or establish the rate of interest based on the results of a bidding process. The term investment option may be offered by the Treasury at any time there are excess operating funds, providing an additional cash management tool for placing excess funds. The addition of this option may also expand the total capacity within the TT&L program by providing an additional investment option for financial institutions, and may encourage greater participation. This rule is being amended to give us the flexibility to offer this option on a pilot basis and, after evaluating the pilot, on an ongoing basis if warranted. Additional details regarding the term investment option will be published in procedural instructions provided to financial institutions.

Main note balance —the phrase main note balance has been added to section 203.2 of the final rule to describe the existing open-ended note balance maintained by financial institutions currently participating in the TT&L investment program. This phrase has been added as a means of differentiating between the existing open-ended note balance and the new term note balance. The phrase main note balance is used in §§ 203.3; 203.13; 203.19; 203.21; and 203.23 as necessary to clarify that certain features of the existing investment program, such as how funds move in and out of the main note balance, are not applicable to the new term investment option. The features of the existing investment program are unchanged. Where the phrase note balance is used, it is intended to refer to both the main note balance and the term note balance as, for example, in § 203.24 (g).

Term investment option —the phrase term investment option has been added to § 203.2 of the final rule to describe the new investment option introduced in this rule. Through the term investment option, financial institutions will have the ability to hold excess Treasury operating funds for a predetermined period of time. Section 203.23 (f) describes the features of this option.

Term note balance —the phrase term note balance has been added to § 203.2 of the final rule to describe the note balance maintained by financial institutions participating in the term investment option.

Treasury Tax and Loan rate of interest —the definition of Treasury Tax and Loan (TT&L) rate of interest has been changed in § 203.2 of the final rule to clarify that the phrase TT&L rate of interest refers only to the rate of interest charged on the main note balance. The phrase TT&L rate of interest does not describe the rate of interest charged on the term note balance which is addressed in § 203.23. The definition of the TT&L rate of interest has also been changed to give the Secretary greater flexibility to change the TT&L rate of interest when market conditions warrant.

Collateral requirements. Section 203.24 (b) describes the collateral requirements for the term note balance. Financial institutions participating in the term investment option will be required to pledge collateral sufficient to cover the total term note balance prior to the time the term investment is placed. Collateral will be pledged in the same manner as collateral for the main note balance, although specific collateral requirements may differ. As with main note balances, types and valuations of acceptable collateral for the term note balance will be published on the Bureau of the Public Debt's web site at www.publicdebt.treas.gov.

This is notice to Treasury Tax and Loan (TT&L) depositaries regarding the rate of interest the Department of the Treasury charges on TT&L main note balances, including funds invested through the direct investment and special direct investment programs. Effective April 15, 2002, the TT&L rate of interest is the Federal funds rate published weekly by the Board of Governors of the Federal Reserve System less twenty-five basis points.

This final rule does not meet the criteria for a “significant regulatory action” as defined in Executive Order 12866. Therefore, the regulatory review procedures contained therein do not apply.

It is herein certified that this final rule will not have a significant economic impact on a substantial number of small entities. The basis for this certification is that this final rule does not require any actions on the part of or impose any new requirements on small entities. Accordingly, a regulatory flexibility analysis is not required.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. On September 11, 2001, two commercial aircraft were hijacked from Logan Airport in Boston, Massachusetts and flown into the World Trade Center in New York, New York inflicting catastrophic human casualties and property damage. A similar attack was conducted on the Pentagon with a plane launched from Newark, NJ on the same day. National security and intelligence officials warn that future terrorist attacks against civilian targets may be anticipated.

For these same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . This rulemaking is urgently required to prevent future terrorist strikes within and adjacent to waters within the areas protected by these safety and security zones. The delay inherent in the NPRM process is contrary to the public interest insofar as it may render individuals, vessels and facilities within and adjacent area vulnerable to subversive activity, sabotage or terrorist attack.

On September 27, 2001, we published a temporary final rule creating anchorage area restrictions, three regulated navigation areas and five safety and security zones in the Boston Marine Inspection Zone and Captain of the Port Zone. (66 FR 49280). One of the safety and security zones, § 165.T01-171 (a)(4), for Pilgrim Nuclear Power Plant has been removed by a different temporary final rule (67 FR 1607, January 14, 2002), which was followed by an NRPM for a permanent rule (67 FR 4218, January 29, 2002).

We have determined that the anchorage area restrictions and three regulated navigation areas will not be needed after their current expiration date, March 16, 2002.

As indicated by an NPRM we published last month, and in the reasons supporting our finding of good cause, we do see a need to continued the four remaining safety and security zones in temporary 33 CFR 165.T01-171. (67 FR 8915, February 27, 2002). We are extending the effective period of these zones until June 30, 2002, to allow us to issue a supplemental NPRM with a longer comment period on the proposal to make these safety and security zones permanent.

The rule extends the effective period for four distinct safety and security zones, having identical boundaries. Three of these zones are being established by reference to a radius around a particular coordinate or easily identifiable landmark. One zone is being established by reference to readily identifiable boundaries. All of the zones are being established in order to protect the waterfront facilities, terminals, power plants, as well as persons and vessels from subversive or terrorist acts. No person or vessel may enter or remain in the prescribed safety and security zones at any time without the permission of the Captain of the Port. Each person or vessel in a safety and security zone shall obey any direction or order of the Captain of the Port.

The Captain of the Port may take possession and control of any vessel in a safety and security zone and/or remove any person, vessel, article or thing from a security zone. No person may board, take or place any article or thing on board any vessel or waterfront facility in a security zone without permission of the Captain of the Port. Any violation of any safety or security zone described herein, is punishable by, among others, civil penalties (not to exceed $25,000 per violation, where each day of a continuing violation is a separate violation), criminal penalties (imprisonment for not more than 10 years and a fine of not more than $100,000), in rem liability against the offending vessel, and license sanctions.

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

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary. This regulation may have some impact on the public, but these potential impacts will be minimized for the following reasons: there is ample room for vessels to navigate around some of the safety and security zones in Boston Harbor and the zone in Salem Harbor; and the local maritime community will be informed of the zones via marine information broadcasts. While recognizing the potential impacts, the Coast Guard still deems that these safety and security zones are need to protect the ports of Boston and Salem and the public.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule does not have a significant economic impact on a substantial number of small entities. This rule may affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit or anchor in a portion of Boston and Salem Harbor in which entry would be prohibited by safety or security zones.

This rule does not have a significant impact on a substantial number of small entities because the majority of the zones are limited in size, leaving ample room for vessels to navigate around the zones. The zones will not significantly impact commuter and passenger vessel traffic patterns, and mariners will be notified of the zones via local notice to mariners and marine broadcasts. Also, the Captain of the Port will make broad allowances for individuals to enter the zones during periods when the potential threats to the Port of Boston are deemed to be low.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. If this rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact LT Dave Sherry, Maritime Security Operations, Marine Safety Office Boston, at 617-223-3030.

This rule does not call for new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. We invite your comments on how this rule might impact tribal governments, even if that impact may not constitute a “tribal implication” under the Order.

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

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

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

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

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

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

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

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

All state regulations and supporting information approved by EPA under section 502 of the CAA are incorporated into the Federally approved operating permit program. Records of such actions are maintained in the CFR at Title 40, part 70, appendix A, entitled “Approval Status of State and Local Operating Permits Program.”

Enforcement of the state regulation before and after it is incorporated into the Federally approved operating permit program is primarily a state responsibility. However, after the state program is Federally approved, we oversee the program and review proposed permits submitted by the state in accordance with 40 CFR part 70. We are also authorized to enforce the permit program and individual permits issued under the program. Citizens are also offered legal recourse to address violations as described in section 304 of the CAA.

The Iowa Department of Natural Resources (IDNR) has adopted amendments to 567 Iowa Administrative Code (IAC) 22.108(3). The purpose of the amendments is to incorporate IDNR's existing Title V Periodic Monitoring Guidance into its rules. Periodic monitoring is required by 40 CFR 70.6 and 71.6 where the applicable requirement does not require periodic testing or instrumental or noninstrumental monitoring. Also, the amendments to 567 IAC 22.108(3) adopt by reference Compliance Assurance Monitoring (CAM) that is required to be included in 40 CFR part 70 or 71 operating permits for major stationary sources of air pollution that are required to obtain operating permits under Title V of the CAA. Periodic monitoring and CAM are needed to provide reasonable assurance of compliance with applicable requirements under the CAA. The amendments were adopted and filed by the Environmental Protection Commission on June 21, 2001; published on July 11, 2001; and became effective on August 15, 2001.

As a part of our review of these amendments, EPA requested clarification from IDNR regarding the list of factors to be considered in evaluating the type of periodic monitoring appropriate for an applicable requirement, as set forth in the narrative of the June 18, 2001, Periodic Monitoring Guidance. This narrative lists numerous factors to be considered, while Attachment 1 to that guidance contains a decision matrix considering only type of source and whether the source is controlled or uncontrolled. In response to EPA's request, IDNR sent EPA a November 7, 2001, letter in which the state clarified that it has flexibility in deciding to follow the matrix which is found in appendix A to that guidance or to make a case-by-case determination that differs from the periodic monitoring guidance and the matrixes. EPA believes that the state's ability to deviate from the guidance on a case-by-case basis is essential to implementation of this program, and our approval of the state program revisions is based, in part, on the state's assurance that it retains authority to establish appropriate periodic monitoring on a case-by-case basis. EPA reserves our authority to object to permit provisions regarding periodic monitoring if they do not meet the requirements of the CAA or 40 CFR 70.6(a)(3).

On January 11, 2002, we proposed to approve this rule revision. In the proposal, EPA expressly stated its understanding that IDNR retained authority to establish periodic monitoring on a case-by-case basis, and also stated that it retained authority to object to periodic monitoring which did not meet the requirements of the CAA (67 FR 1432). The public comment period was open through February 11, 2002. No comments were received.

This Federal Register document takes final action to approve the amendments to Iowa's Title V operating permit program to incorporate existing periodic monitoring guidance and adopt by reference compliance assurance monitoring requirements.

Our review of the material submitted indicates the state has amended rules for the Title V program in accordance with the requirements of section 502 of the CAA and the Federal rule, 40 CFR part 70, and met the requirement for a program revision as established in 40 CFR 70.4(i).

EPA is hereby approving amendments to Iowa rule, 567 IAC 22.108(3), effective August 15, 2001, as supplemented on November 7, 2001, as a revision to the Iowa Title V operating permit program.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does 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 action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing Title V operating permit program submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove an operating permit program submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews an operating permit program submission, to use VCS in place of an operating permit program submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by May 14, 2002. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

An electronic copy of this document may be downloaded by using a computer, modem and suitable communications software from the Government Printing Office's Electronic Bulletin Board Service at (202) 512-1661. Internet users may reach the Office of the Federal Register's home page at http://www.nara.gov/fedreg and the Government Printing Office's database at: http://www.access.gpo.gov/nara .

Section 1012 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, (Public Law 107-56, 115 Stat. 272 at 396, (October 26, 2001)), amends chapter 51 of title 49 United States Code, by adding a new section 5103a, relating to limitations on issuance of licenses to individuals who operate motor vehicles transporting hazardous materials in commerce. The new provision is best administered by the FMCSA, which is responsible for the commercial driver's license (CDL) program. This delegation broadens the FMCSA Administrator's delegated authority relating to hazardous materials transportation programs.

This final rule updates the delegations of authority from the Secretary to the FMCSA Administrator to reflect the organizational posture of the Department. As such, the final rule is ministerial in nature and relates only to Departmental management, organization, procedure, and practice. Since this amendment relates to departmental organization, procedure and practice, notice and comment are unnecessary under 5 U.S.C. 553(b).

Furthermore, this rule does not impose substantive requirements on the public. Also, this final rule expedites the Department of Transportation's ability to implement section 1012 of the USA PATRIOT ACT. Consequently, the Department finds that there is good cause under 5 U.S.C. 553(d)(3) to make this rule effective on the date of publication in the Federal Register .

The final rule is not considered a significant regulatory action under Executive Order 12866 and the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11034). There are no costs associated with this rule.

This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, dated August 4, 1999. This final rule does not have a substantial direct effect on, or sufficient federalism implications for, the States, nor would it limit the policymaking discretion of the States. Therefore, the consultation and funding requirements do not apply.

This final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13084 (“Consultation and Coordination with Indian Tribal Governments”). Because this final rule does not significantly or uniquely affect the communities of the Indian tribal governments and does not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13084 do not apply.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an agency to review regulations to assess their impact on small entities unless the agency determines that a rule is not expected to have a significant impact on a substantial number of small entities. I hereby certify this final rule, which amends the CFR to reflect a delegation of authority from the Secretary to the FMCSA Administrator, will not have a significant economic impact on a substantial number of small businesses.

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

The Department has determined that the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply to this rulemaking.

On December 31, 1998, FRA and the STB issued a joint notice of proposed rulemaking (“NPRM”) establishing procedures for developing and implementing SIPs by railroads proposing to engage in certain specified merger, consolidation, or acquisition of control transactions with another railroad. 63 FR 72225, Dec. 31, 1998. FRA's proposed rule would have required railroads seeking to consummate any mergers, acquisitions, or consolidations of property involving (i) Class I railroads, (ii) Class II railroads when the railroads would directly interchange freight with each other, (iii) transactions in which the consummation of operations would produce revenue in excess of the Class I threshold, (iv) a passenger railroad (intercity or commuter) with another passenger railroad, a Class I railroad, or a Class II railroad; or (v) start-up operations on a rail line or lines in which the commencement of operations would either involve passenger service or produce revenue in excess of the Class II threshold, to file a proposed SIP for the agency's review and approval. (Class I railroads are rail carriers generating operating revenue, measured in inflation-adjusted 1991 dollars, in excess of $250 million per year for a period of three successive years. Class II railroads are rail carriers generating operating revenue, measured in inflation-adjusted 1991 dollars, between $20 million and $250 million.) Concurrently, the STB's proposed rule would have required railroads seeking to engage in all transactions addressed in FRA's NPRM other than start-up operations to file a SIP with the Board for its review and approval.

The proposed rules set out specific procedures governing the development, approval, and implementation of SIPs, and explained that FRA and the Board are jointly responsible for promoting a safe rail transportation system. Under FRA's proposed rules, railroads seeking to consummate a covered transaction would be required to file a proposed SIP with FRA contemporaneously with the filing of the SIP with the STB. FRA would review the proposed SIP and advise the Board as to whether it provides a reasonable assurance of safety for the transaction. The proposed rule required a railroad to have a SIP approved by FRA before it could execute operations over property subject to the transaction. Where the Board has been involved in authorizing the transaction, FRA would consult with the Board at all appropriate stages of implementation.

Likewise, under the STB's proposed rules, rail carriers seeking to carry out a transaction within the Board's jurisdiction that would require a SIP would file their SIP with the Board and FRA. FRA would review the SIP and file written comments with the Board's SEA. After reviewing the SIP, SEA's analysis, and comments provided by interested persons during the Board's environmental review process, the Board would then independently evaluate the transaction and decide whether to approve it. Should the Board approve the transaction, the railroads would coordinate with FRA in implementing the SIP, including any amendments made to the plan, and FRA would monitor the implementation process and apprise the Board about the railroad's progress in carrying out the plan until FRA advised the Board that the proposed integration had been safely completed. Both FRA and the Board would be authorized to exercise their full independent enforcement remedies should either FRA or the Board reject the proposed SIP or a railroad fail to implement the terms of an approved SIP.

FRA and the STB received written comments on the proposal from 11 entities and conducted a joint public hearing at the request of one of the commenters in Washington, D.C., on May 4, 1999. Based on the comments received, the testimony at the public hearing, and further analysis of the rules proposed, FRA and the Board now publish these joint final rules. As will be discussed below, both agencies underscore the importance of SIPs when Class I railroads seek to engage in mergers, consolidations, or acquisitions. These are railroads transporting large volumes of freight, frequently including hazardous materials. Given the size and complexity of their operations, careful advance planning is critical to ensure that safety is maintained as the transactions are implemented.

The agencies, however, agree with certain of the comments that the final rules should be limited to consolidations, mergers, or acquisitions of control involving either two or more Class I railroads or a Class I railroad and a Class II railroad with which it proposes to “amalgamate operations” as defined by FRA at 49 CFR 244.9. ( See also the STB's final rule at 49 CFR 1106.2.) Only the complexity and difficulty of these very large transactions are now believed to present sufficient dangers to merit a SIP under these rules. This substantially comports with the recommendations of some commenters.

In its final rule, FRA has modified the subject matter areas to be addressed in a SIP to cover those disciplines that a regulated transaction affects, and has decided not to require an applicant to file a SIP when a transaction does not involve an amalgamation of operations. In response to the comments, FRA and the Board have “fine tuned” their respective procedures governing the filing, review, and approval of a SIP, and their oversight of an approved plan. The final rules also clarify the respective roles of the two agencies. It is made clearer that (i) the STB is regulating the economic transaction and, in the course of doing so, fulfilling its responsibility to assess environmental impacts, as required by the National Environmental Policy Act (“NEPA”), 42 U.S.C. 4321 et seq. , and promote a safe transportation system, and (ii) FRA is regulating the safety of the implementation of any transaction the STB may approve, just as FRA regulates all other aspects of railroad safety. FRA is not approving or disapproving the transaction in any respect, and both agencies state explicitly that FRA has no “veto power,” either explicit or implicit as some commenters alleged, over transactions regulated by the STB. If the STB approves a transaction, a railroad must conduct operations over properties that are part of the transaction in compliance with a SIP approved by FRA, just as it must conduct those operations in compliance with the railroad safety statutes and implementing regulations administered by FRA.

FRA and the STB received written comments from various railroads and their representative organizations, labor organizations, and public service organizations. The railroad interests were represented by the Association of American Railroads (“AAR”), American Short Line and Regional Railroad Association (“ASLRRA”), National Railroad Passenger Corporation (“Amtrak”), Guilford Transportation Industries (“GTI”), and the Wheeling & Lake Erie Railway Company (“W&L”). The American Train Dispatchers Department of the International Brotherhood of Locomotive Engineers (“ATDD”), Transportation Trades Department, American Federation of Labor-Congress of Industrial Organizations (“TTD”), Brotherhood of Railway Carmen Division of the Transportation Communications International Union (“BRC”), and Brotherhood of Maintenance of Way Employes (“BMWE”) represented the interests of rail labor. The public service organizations were represented by the American Public Transit Association, now the American Public Transportation Association (“APTA”), and the Oklahoma Department of Transportation (“OK DOT”). At the public hearing held on May 4, 1999, two organizations participated: the TTD and the AAR. The commenters raised questions about the proposal itself, suggested alternative language to some of the proposed rule text, and requested clarification about the meaning and application of certain proposed rules. The discussion that follows highlights the principal issues advanced by the commenters and explains how the final rules reflect the comments received. Because many of the comments focus on the rules proposed by one agency and not the other, FRA and the Board present separate sections addressing the comments and each agency's conclusions.

Several comments addressed the types of transactions that warrant preparation of a SIP under these rules. The ATDD and TTD, for instance, endorsed the breadth of FRA's proposed rule, asserting that that type of rule is necessary to ensure the safety of railroad employees and the public. The ATDD commented that operational changes, i.e. , changes in traffic volume and traffic patterns, timetable schedules, and labor reductions, needed to be evaluated for safety concerns. The TTD added that the rulemaking action should be transferred to FRA's Railroad Safety Advisory Committee (“RSAC”) to secure fuller labor input in the development of FRA's final rule. Amtrak also supported the proposition of the SIP rules, agreeing that “mega-mergers” present unique safety issues that should be identified and addressed at the application stage to enable FRA and the Board to handle proposed transactions as safely as possible.

GTI disagreed with the premise of the SIP rules. Specifically, GTI claimed that FRA need not issue any regulations governing mergers, consolidations, or acquisitions of control because the agency already has the regulations necessary to ensure safe operations subject to a proposed regulated transaction. GTI further postulated that FRA is without expertise in regulating these transactions and that self-regulation was most appropriate in this instance because merging railroads recognize that unsafe operations lead to increased costs and decreased returns on an investment. In other words, GTI recommended that the agencies terminate this rulemaking action and apply the existing regulations that govern regulated transactions.

The AAR argued that SIPs should be limited to consolidation, merger, and acquisition of control proceedings involving at least two Class I railroads and not to other less complex proceedings. The AAR also argued that only the Board should have approval authority over SIPs and that FRA's role should be limited to advising the Board. According to the AAR, any regulations purporting to vest FRA with authority to approve a SIP would be contrary to law and in derogation of the Board's “exclusive” authority to approve merger transactions under 49 U.S.C. 11321.

FRA strongly endorses the concept of the SIP rules and their importance in regulating the complex railroad transactions involving mergers, consolidations, and acquisitions of large railroads where operations are amalgamated. As the agencies explained in the NPRM, acquisitions, consolidations, and mergers must be carefully planned and implemented to maintain safety. See 63 FR 72226-27. Transactions involving Class I railroads significantly change the carrier landscape and raise potential safety issues relating to integrating operations, facilities, personnel, safety practices, and corporate cultures. The NPRM noted FRA's concerns regarding safety problems that resulted from inadequate safety planning before implementation of the merger of the Union Pacific Railroad Company (“UP”) and the Southern Pacific Transportation Company (“SP”) (collectively referred to as “UP/SP”) and the merger of the Burlington Northern Railroad Company (“BN”) and the Atchison, Topeka and Santa Fe Railway Company (“ATSF”) (collectively referred to as “BNSF”). See 63 FR 72227. The chief executive officers of the Norfolk Southern Railway Company and CSX Transportation, Incorporated, which acquired and divided Consolidated Rail Corporation (“Conrail”), amplified this point when they testified before the STB about the operational and safety difficulties they encountered in implementing their respective transactions, even with the planning and experiences of earlier mergers to guide them and having prepared SIPs. See Public Views on Major Rail Consolidations, STB Ex Parte No. 582, slip op. at 4-5 (STB served Mar. 17, 2000).

FRA believes that the final SIP rules accomplish the objective of ensuring safe railroad operations during and after implementation of an approved transaction. First, the regulations set out subject matter areas that are critical to railroad safety that an applicant must address in a proposed SIP. These requirements address safety issues unique to the amalgamation of large, complex railroad operations that are not covered in any existing Federal regulations, necessitating their issuance here. Second, FRA has the necessary expertise in railroad safety to review, analyze, approve, and oversee the implementation of a proposed SIP. FRA has officials and inspectors with knowledge, training, and experience in five railroad disciplines—operating practices, motive power and equipment, signal and train control, track safety, and hazardous materials—that cover the ambit of railroad operations. Therefore, the final rules provide for FRA a mechanism to evaluate and approve SIPs and monitor their implementation if the transactions to which they relate are approved by the Board. As discussed in greater detail below, FRA is regulating the safety aspects of how a railroad implements a transaction permitted by the Board and not whether the railroad is permitted to consummate the transaction or on what economic terms. FRA concludes that the SIP rules are a step forward in providing railroad safety and therefore adopts these final rules. Although FRA entertained TTD's suggestion to add this proceeding to those addressed by FRA's RSAC, the agency decided that a joint rulemaking with the Board, using the complementary authority of both agencies, would be the best way to proceed.

The AAR and GTI commented that the STB and not FRA is authorized to issue any regulations governing acquisitions, consolidations, and mergers. Relying on statutory authority, 49 U.S.C. 11321, and decisional law, Schwabacher v. United States, 334 U.S. 182, 197 (1948); Norfolk & Western Rwy. v. ATDA, 499 U.S. 117, 127-34 (1991); and City of Auburn v. United States, 154 F.3d 1025 (9th Cir. 1998), cert. denied, 527 U.S. 1022 (1999), the AAR claims that the Board is vested with exclusive authority to issue regulations that are within the STB's jurisdictional purview. GTI echoed the AAR's position, maintaining that an application to consummate an acquisition, consolidation, or merger is an economic transaction, which is fully within the Board's authority.

FRA agrees that the Board has sole authority to regulate the economic transactions, but disagrees with these commenters that issuance of FRA's final rule trespasses upon that jurisdiction. FRA believes that it and the STB have so interpreted their respective statutes and jurisdiction as to reconcile them seamlessly, thereby serving the public interest by assuring that all parts of the affected statutes are given effect and the purposes of Congress are fully carried out. Tyrrell v. Norfolk Southern Rwy. Co. , 248 F.3d 517, 523 (6th Cir. 2001) (FRA's and the STB's “complementary exercise of their statutory authority accurately reflects Congress's intent for the (Interstate Commerce Commission Termination Act) and the (Federal Railroad Safety Act) to be construed in pari materia ”). The Supreme Court provides that “it is a cardinal principle of construction that * * * when there are two acts upon the same subject, the rule is to give effect to both.” United States v. Borden Co. , 308 U.S. 188, 198 (1939). Congressional intent behind one Federal statute should not be thwarted by the application of another Federal statute if it is possible to give effect to both laws, id. , and courts should “construe the relevant statutes in a manner that most fully effectuates the policies to which Congress was committed.” Commonwealth of Pennsylvania v. Lynn , 501 F.2d 848, 857 (D.C. Cir. 1974); see also Food and Drug Administration v. Brown & Williamson Tobacco Corp. , 529 U.S. 120, 134 (2000) (a reviewing court should “examin[e] a particular statutory provision * * * (in) context and with a view to [its] place in the overall statutory scheme”); Blanchette v. Connecticut General Ins. Corp. , 419 U.S. 102, 133-34 (1974) (statutory repeals by implication are disfavored). The agencies have done so in a manner entirely consistent with the cases cited by the commenters. Tyrrell , 248 F.3d at 523 (“while recognizing their joint responsibility for promoting rail safety in their 1998 Safety Integration Plan rulemaking, FRA exercised primary authority over rail safety matters under 49 U.S.C. 20101 et seq. , while the STB handled economic regulation and environmental impact assessment(,)” citing the NPRM at n.2).

As FRA and the Board explained in the NPRM:

FRA has “primary jurisdiction, expertise and oversight responsibility in rail safety matters' under 49 U.S.C. 20101 et seq. , as delegated by the Secretary of Transportation to the Federal Railroad Administrator at 49 CFR 1.49, and has the authority “to issue regulations to promote safety in every area of railroad operations and reduce railroad-related accidents and injuries” under 49 U.S.C. 20101 and 20102. 63 FR 72225. Specifically, 49 U.S.C. 20103 confers authority on FRA to “prescribe regulations” “for every area of railroad safety,” 49 U.S.C. 20103(a), and “in prescribing regulations[,]” FRA “shall consider existing relevant safety information and standards.” 49 U.S.C. 20103(c). Congress intended that FRA would possess the authority to regulate “all those means of rail transportation as are commonly included within the term * * * in addition to those areas currently regulated.” H.R. No. 91-1194, Federal Railroad Safety and Hazardous Materials Transportation Control Act of 1970, Pub. L. 91-458, reprinted in 1970 USCCAN 4104, 4114 (1970). In other words, Congress authorized FRA to promulgate regulations to ensure railroad safety after analyzing safety data.

A key element in the argument of the AAR and other commenters is that, by approving a SIP, FRA is encroaching upon the STB's jurisdiction, supposedly because approving a SIP is equated with approving a transaction and because the NPRM states that the railroad resulting from a covered transaction “shall have an FRA approved Safety Integration Plan before changing its operations to implement a proposed transaction * * *.” See proposed 49 CFR 244.21(a) at 63 FR 72241. These commenters have misinterpreted both FRA's intentions and the meaning of the text. FRA has amended the text to eliminate the possibility of interpreting it as giving FRA authority to approve a transaction, and to clarify FRA's intentions. See the discussion of § 244.21(a) below. This change makes clear that FRA has no intention of approving or disapproving or vetoing a transaction covered by this part. FRA agrees that approving or disapproving a transaction covered by this part is wholly within the jurisdiction of the STB. FRA's role in the STB's process is an advisory one, providing expert advice to the STB on safety issues presented by a transaction. As the STB said in the NPRM, it relies upon FRA's safety expertise, and it is clearly in the public interest that FRA make its expertise available to the STB.

On the other hand, regulation of “every area of railroad safety” is FRA's jurisdiction. In approving or disapproving a SIP under this part, and enforcing one, FRA is regulating the safety aspects of how a railroad implements a transaction permitted by the STB and not whether the railroad is permitted to consummate the transaction or on what economic terms. This is an appropriate exercise of the “plenary safety authority with respect to the safety of rail operations—before, during, and after a transaction,” which the AAR acknowledges that FRA enjoys. AAR comments at 9. In that regard, approval of a SIP is no different than approval of an engineer certification program under 49 CFR part 240. There is no question that a railroad must have an engineer certification program approved by FRA and operate in accordance with it at all times, whether or not the railroad is involved in a transaction within the STB's jurisdiction. The commenters' view would require a repeal by implication of some portion of the Federal railroad safety laws (“safety laws”), 49 U.S.C. 5101 et seq. and 20101 et seq. , to except from them railroad operations conducted during implementation of transactions approved by the STB. Such repeals by implication are strongly disfavored. See Tyrrell , 248 F.3d at 523. Here, there is obviously no need to infer any such repeal.

In FRA's view, it is necessary for safety purposes for the agency to approve or disapprove SIPs to provide a baseline for enforcement. First, FRA approval or disapproval denotes whether a railroad has submitted a proposed SIP meeting the requirements of the rule. Upon disapproval of a proposed SIP, FRA can take enforcement action if the railroad does not change its SIP to bring it into compliance with the law. Upon approval of a SIP, FRA can take enforcement action if the railroad fails to implement the SIP. Absent FRA approval, it is hard to see how FRA could take enforcement action in this arena.

FRA believes that the suggestion that FRA could veto a transaction by disapproving a proposed SIP is a red herring because only the STB can approve and veto a transaction. In any event, the standard set by the rule for approval of a proposed SIP can easily be met by any Class I or Class II railroad, and FRA cannot arbitrarily or capriciously reject a SIP that meets the standard. If FRA disapproves a proposed SIP because it fails to be thorough, complete, or clear, FRA must articulate to the railroad what is missing or unclear. If FRA disapproves a proposed SIP because it fails to describe a logical and workable transition or because it is insufficiently detailed, FRA must articulate how the proposed SIP is illogical or unworkable or lacking in detail. In either of those cases, upon receiving FRA's reasons for disapproval, a railroad can readily remedy its submission. In practice, FRA will continue to work informally with railroads proposing a covered transaction to assure that their proposed SIPs comply. It should be easy for applicants to secure FRA approval of their proposed SIPs in time for the Board's SEA to include the proposed SIP in the draft environmental documentation for the STB proceeding. FRA has no interest in blocking transactions and has a powerful interest in seeing that transactions are implemented safely.

The text also makes clear that FRA is not prescribing any particular way to implement covered transactions. Instead, FRA is requiring the railroads involved to be thorough and logical, and to maintain a reasonable assurance of safety at every step of the proposed transaction.

Correspondingly, FRA recognizes that the STB is also vested with authority to promote a safe rail transportation system in determining whether a proposed transaction should be permitted and, if so, on what economic terms. As discussed in Tyrrell and in the NPRM, the rail transportation policy (“RTP”), 49 U.S.C. 10101, which was adopted in the Staggers Rail Act of 1980, Pub. L. 96-448, 94 Stat. 1895, and amended in the Interstate Commerce Commission Termination Act of 1995 (“ICCTA”), Pub. L. 104-88, 109 Stat. 803 (1995), provides the foundation for which all of the statutory provisions the Board administers must be analyzed. See Tyrrell , 248 F.3d at 522-23. The RTP provides, in relevant part, that, “(i)n regulating the railroad industry, it is the policy of the United States Government * * * to promote a safe and efficient rail transportation system” * * * (by allowing rail carriers to) “operate transportation facilities and equipment without detriment to the public health and safety * * *.” 49 U.S.C. 10101(8). The STB applies the RTP to all transactions within its jurisdiction, authorizing it to consider the impact a merger, consolidation, or acquisition of control has on safety of railroad operations. See Major Rail Consolidation Procedures , STB Ex Parte No. 582 (Sub-No. 1), slip op. at 5 (STB served Mar. 31, 2000) (49 U.S.C. 10101, in part, directs the Board to ensure that safety concerns are addressed in railroad merger cases).

FRA submits that the cases AAR cited are misplaced. Read together, Schwabacher, ATDA , and City of Auburn stand for the proposition that the STB and its predecessor, the Interstate Commerce Commission, have exclusive authority to examine, condition, and approve mergers, consolidations, or acquisitions of control. The statute at issue, 49 U.S.C. 11321 (formerly, 49 U.S.C. 11341), specifically exempts a railroad from complying with all other laws to the extent “necessary to (let that railroad) carry out an approved transaction,” ATDA , 499 U.S. at 134, thereby preempting any Federal or state law remedies. City of Auburn , 154 F.3d at 1030. FRA's SIP rule will not impede or restrict the Board in approving or rejecting a proposed transaction and, since the STB contemplates requiring a SIP when it approves covered transactions, a railroad could not logically assert that an exemption from FRA's rule would be “necessary to carry out an approved transaction.” Instead, the rule provides that FRA will determine whether a SIP provides a reasonable assurance of safety for the subject transaction and provide expert advice to the STB on safety issues presented by a proposed transaction. The Board, in turn, will rule on the application based in part on FRA's recommendations. This process employs FRA's plenary authority over railroad safety and respects and complements the Board's role of determining whether a transaction should be approved. At bottom, FRA believes that it and the Board each are fully exercising their respective statutory authorities by examining a transaction for its safety aspects (FRA), and the impact that safety has on an application as a whole (STB).

In FRA's view, the final SIP rule fulfills this objective. The rule responds to critical safety shortcomings and errors in planning and implementation of significant transactions that may have occurred in the past where no SIP was prepared. FRA documented its concerns in the NPRM by examining the difficulties of the BNSF and UP/SP mergers. See 63 FR 72227-28. To illustrate, after the UP/SP merger, five employees were killed in accidents during the Summer of 1997, and employee injuries rose nine percent in 1998. FRA determined that the BNSF and UP/SP mergers faced significant challenges in harmonizing information systems; training dispatchers; modifying operational practices and procedures; implementing personnel policies directed toward safety; determining appropriate staffing requirements; and providing adequate rail facilities, infrastructure and rolling stock and equipment.

Likewise, FRA identified serious safety shortcomings in CSX Transportation, Incorporated's (“CSXT”), and the Norfolk Southern Railway Company's (“NS”) initial filings in the Conrail Acquisition   1 proceeding before the Board. The agency determined that the railroads had not articulated a detailed plan explaining the manner in which they individually and collectively intended to implement the transaction, and thus they had not thoroughly assessed the safety impacts of the proposed acquisition. As a result, FRA requested that the Board require the carriers to provide information detailing how they proposed to provide for the safe integration of their corporate cultures and operating systems, if the Board were to approve the proposed transaction. The Board agreed with FRA's suggestion and directed the applicants to file detailed SIPs pursuant to guidelines developed by FRA. 2 The railroads complied with the STB's order and after FRA approved the respective SIPs, the Board, concluding that applicants had satisfactorily addressed the safety implementation concerns presented by the transaction to date, approved the transaction in 1998. Nevertheless, FRA, while monitoring the railroads' implementation of their respective SIPs, 3 has concluded that more needs to be done, and that, among other things, the railroads should address information technology problems resulting in a lack of hazardous materials documentation on trains, and conduct more advanced safety training of supervisory and operating personnel at designated terminals to ensure adequate staffing and retention of institutional knowledge. See Conrail Merger Surveillance: NS, CSXT, and CRCX Second Safety Integration Plan/Safety Update, pp. 1-3 (June 23, 2000) (hereinafter “SIP Update ”). In short, FRA believes, based on its experience in recent cases, that “mega-mergers,” consolidations, or acquisitions of control present safety challenges during implementation, which are best remedied by requiring SIPs for these complex transactions. FRA concludes that SIPs achieve a safety purpose within the purview of 49 U.S.C. 20103, and thus are within FRA's rulemaking authority. Tyrrell , 248 F.3d at 523 (FRA's responsibility in the SIP joint rulemaking action focuses on rail safety matters); see also Brown & Williamson , 529 U.S. at 134 (“if Congress has not specifically addressed the (precise question at issue), a reviewing court must respect the agency's construction of the statute so long as it is permissible”); accord Oklahoma Natural Gas Company v. Federal Energy Regulatory Comm'n , 28 F.3d 1281, 1283-84(D.C. Cir. 1994) (agency is afforded Chevron   4 deference in interpreting its statutory authority); Western Coal Traffic League v. Surface Transportation Board , 216 F.3d 1168, 1171 (D.C. Cir. 2000) (judicial review of agency's statutory jurisdiction is premised on Chevron standards); Transmission Access Policy Study Group v. Federal Energy Regulatory Comm'n , 225 F.3d 667, 694 (D.C. Cir. 2000) (“it is the law of (the D.C.) (C)ircuit that the deferential standard of Chevron applies to an agency's interpretation of its own statutory jurisdiction” (citing Oklahoma Natural Gas )), affirmed sub nom. New York v. FERC , 2002 U.S. LEXIS 1380 (U.S. Mar. 4, 2002). See generally Chrysler Corp. v. Brown , 441 U.S. 281, 302 (1979) (regulations issued by an agency must be promulgated pursuant to statutory authority in which “the grant of authority contemplates the regulations issued”).

The AAR commented that the SIP process is best employed through the issuance of policy guidelines adopting the model procedures that were used in the Conrail Acquisition and Canadian National Railway Company/Illinois Central Railroad Company  5 control transactions, and embodied in the memoranda of understanding (“MOU”) between FRA and the STB entered in these cases. See 63 FR at 72228. Under this approach, the Board would determine when a SIP would be required for a transaction within its jurisdiction.

The AAR based its position on three points. First, this approach would ensure that each agency would respect each other's division of authority and role in overseeing the SIP process. Second, an MOU would offer the flexibility for an applicant to meet changing customer needs and market opportunities, such as staffing levels reached through collective bargaining agreements (“CBAs”), infrastructure improvements for highway-grade crossings, and designating repair facilities and computer software operating systems. Finally, a rule along the lines suggested by the NPRM would, according to AAR, represent government micromanagement of rail operations and implementation programs and could potentially delay integration, leaving an applicant at a competitive disadvantage with other railroads.

FRA respectfully disagrees with the AAR's proposal. The agency believes that the issuance of final rules ensures that all applicants seeking to consummate a regulated transaction will execute a SIP and complete the SIP process as enunciated in the rules. These final rules codify the prescribed requirements and stake out the legal landscape for regulating complex railroad transactions. See Attorney General's Manual on the Administrative Procedure Act 14-15 (1947) (“(t)he object of [a] rulemaking proceeding is the implementation or prescription of law or policy for the future * * *.”). In other words, the rules will prescribe substantive and procedural standards that will govern each application filed with the STB to carry out a transaction and the safety of operations during implementation of transactions the STB approves. Cf . the Administrative Procedure Act, 5 U.S.C. 551(4), which, in part, defines a rule as “the whole or part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy.” FRA believes that the SIP process should be mandatory in large mergers, acquisitions of control, and consolidations cases because of the unique nature of the transactions involved and the complexity of safely integrating operations that are part and parcel of the transactions.

On the other hand, guidelines are simply recommendations issued by an agency that do not prescribe or mandate any standards on the regulated community. See Industrial Safety Equipment Ass'n, Inc. v. EPA , 837 F.2d 1115 (D.C. Cir. 1988). Rather than impose a regimen for conduct or action, guidelines do not “change any law or official policy presently in effect,” id. at 1119-21, nor do they “implement, interpret, or prescribe law or policy.” 5 U.S.C. 551(4); see also National Ornament & Elec. Light Christmas Ass'n v. Consumer Product Safety Comm'n , 526 F.2d 1368 (2d Cir. 1975). Without sufficient “effect” to regulate conduct, guidelines have an “advisory character” without any firm commitment to law or policy. FRA believes that the issuance of guidelines would preclude the agencies from mandating standards or binding applicants to meet these requirements, creating an illusion of adequate safety oversight. FRA, like the Board, is committed to safe integration of complex railroad transactions and believes that these rules can best achieve that objective.

FRA also maintains that these rules enable the agencies to articulate interpretations of their respective statutes and reconcile them effectively, thereby preserving and recognizing each agency's authority to regulate aspects of these transactions. See Tyrrell , 248 F.3d at 523. The joint rules ensure that the agencies' roles and responsibilities complement each other in establishing SIP procedures and standards, and complete the rulemaking process announced in the NPRM. Lastly, the final rules will provide uniformity in regulating SIPs and preempt other efforts to regulate the safety of implementing transactions. FRA concludes that the issuance of rules is the most effective instrument in defining each agency's function in the SIP process and requirements a railroad must satisfy for transactions that warrant a SIP.

Concurrently, FRA takes issue with the reasons supporting the AAR's recommendation. First, as previously explained, the final rules cement the division of authority and prescribe textual interface between the agencies in regulating SIPs. Next, FRA believes that the SIP contents and subject matter areas capture the operations that are affected by a complex transaction. Although an applicant may propose a flexible plan to address these topics, the SIP elements themselves should not be compromised to ensure a safe transition of operations.

Finally, FRA rejects the notion that the rules represent government micromanagement of rail operations and implementation programs. The premise of the rules focuses on an applicant's preparation, issuance, and implementation of a plan that provides safe integration of rail operations. FRA's and the STB's individual and collective roles are to review and approve the railroad's SIP, and monitor its implementation. The agencies' oversight is to ensure that the SIP provides a reasonable assurance of safety. It is not to “second guess” the proposed migration or deployment of resources necessary to carry out a plan. Therefore, FRA characterizes its role as that of a “gatekeeper” to cross-check the SIP and its implementation against the safety aspects in integrating operations.

FRA received several comments from interested parties about the framework of the proposed SIP rules. The comments focused on two issues-scope and applicability of the joint rules, and the approval and disapproval process of an application.

FRA proposed to require certain railroads seeking to merge, consolidate, or acquire control of another railroad, or “start-up” operations as a railroad to file proposed SIPs with FRA before consummating the regulated transaction. The NPRM proposed covering the following transactions: (1) A Class I railroad, a railroad providing intercity passenger service such as Amtrak, or a commuter railroad seeking to acquire, merge, or consolidate with a Class I or Class II railroad, a railroad providing intercity passenger service, or a commuter railroad; (2) a Class II railroad proposing to consolidate, merge, or acquire another Class II railroad with which it connects so as to involve the integration of operations; (3) any merger, consolidation, or acquisition resulting in operations that would generate revenue in excess of the Class I railroad threshold, except those transactions involving Class III freight only railroads; and (4) all start-up operations involving the establishment of a new line for passenger or freight service generating revenue that would exceed the Class II railroad threshold. Correspondingly, the Board proposed covering all transactions addressed in FRA's NPRM with the exception of “start-up” operations.

The AAR, Amtrak, and OK DOT commented that the STB lacks jurisdiction to regulate Amtrak or commuter railroads, citing 49 U.S.C. 10501(c) and Norfolk & Western Railway Company-Petition for Declaratory Order-Lease of Lines, STB Finance Docket No. 32279 (STB served February 3, 1999), for the proposition that the Board may not regulate any mass transportation provided by any local governmental authority, and arguing that the Amtrak Reform and Accountability Act of 1997, Pub. L. 105-134, 111 Stat. 2570, 2585, amending 49 U.S.C. 24301(c)(1)(C), prohibits the Board from regulating Amtrak. Accordingly, the commenters recommended that the scope of the joint rules be curtailed.

FRA agrees that the scope of the joint rules should be narrowed to cover unique complex transactions. After considering the comments, the agency has determined that acquisitions, consolidations, or mergers involving large railroads present transactions of significant size and complexity that warrant a SIP. These transactions generally involve substantial changes in railroad operations that impact effective communications, coordination, and execution of operations, i.e., all aspects of safety. The final rules narrow the scope and applicability sections to capture these significant transactions because of the correlation between complexity of large rail entities and operational safety. As a result, the joint final rules only apply to transactions in which a Class I railroad proposes to merge, consolidate with, or acquire control of another Class I railroad or a Class II railroad with which it also proposes to amalgamate operations.

Some of the comments addressed each agency's independent approval process for a SIP, and any amendments thereto. The TTD endorsed the proposed two-step disposition process in which FRA and then the Board would review and approve a proposed SIP before an applicant could consummate a transaction. The AAR disagreed, claiming that FRA is without the authority to sanction a transaction that is within the STB's jurisdiction.

FRA believes that the safe transition of integrating operations is best achieved when FRA and the STB work together using their respective jurisdictions. As discussed above and in the NPRM, FRA enjoys primary jurisdiction, expertise, and oversight responsibility in railroad safety matters and is best positioned to ensure that a plan will comply with the safety laws and otherwise provide for safe railroad operations. See Canadian Pacific Limited, et al.—Purchase and Trackage Rights—Delaware & Hudson Railway Company, STB Finance Docket No. 31700, slip op. at 1, 5 (served Mar. 2, 2000) (hereinafter “ CP Purchase ”) (FRA entitled to “great weight” in identifying potential safety problems before STB imposes conditions on a transaction). At the same time, the Board, which has expertise in economic regulation and assessment of environmental impacts in the railroad industry, Tyrrell , 248 F.3d at 523, considers safety in the transactions that it regulates. Id. (STB's “duty [is] to encourage “safe and suitable working conditions” for railway employees through its assessment of individual railway proposals subject to its authority”). FRA believes that these final rules meet the safety objectives of both agencies while interpreting their respective jurisdictions in a complementary way that is in the public interest.

FRA received comments from three interested parties about the elements set out in the proposed rule. Generally, the labor organizations supported the subject matter areas contained in the regulatory text because they addressed the “four adequates”—adequate work force, adequate training, adequate rest, and adequate familiarity with the subject territory. In fact, the TTD went further, contending that an applicant should detail information in the subject matter areas that are required in a SIP to prevent a railroad from pledging vague commitments in filing a plan.

The AAR, however, objected to the proposed rule's SIP elements on two grounds. First, the AAR asserted that the subject matter areas go beyond the scope of assuring safe integration. The AAR maintained that a SIP should center on railroad lines that will experience changes in motive power and equipment, signal and train control, dispatching operations, highway-rail grade crossings, personnel staffing, capital investment, and relationships between freight and passenger service; and changes in operations or traffic volume that will affect a railroad's systems or programs. These requirements, the AAR posited, should be captured in a SIP to enable FRA to review an applicant's practices and procedures to ensure that they provide a “reasonable assurance of safety.” The AAR added that the proposed SIP rules impose new standards on the railroad industry that are not required under the existing regulations and serves as a “back door” vehicle for issuing substantive regulations that impact selected transactions. These rules, the AAR reflects, impose new burdens, costs, and delays on an applicant, which leaves it at a competitive disadvantage with other railroads.

FRA agrees in part and disagrees in part with the AAR's comments. The agency has amended the subject matter areas in its proposed rule to require an applicant to focus its SIP on changes in railroad operations during the integration phase. The agency believes that a plan must analyze the major changes that will occur as railroads subject to a regulated transaction integrate their operations from commencement to completion. Advance planning will require an applicant to consider the nature of operations involved in the transaction and the migration or transition from two or more entities to one entity. The final rule satisfies these concerns.

FRA disagrees with AAR's characterization that the SIP rules are a “back door” approach to regulating subject matter areas that are not already covered under the existing regulations. The integration of very large and complex railroad operations present safety hazards not found (or not found to a degree sufficient to merit regulatory attention) either before a transaction or after operations have been successfully integrated. It is entirely appropriate for FRA to address those hazards in the limited context in which they are found. For example, integrating the operations of two railroads will usually require choosing a set of operating rules that differ in important respects from the operating rules used by one of the railroads. The employees of that railroad will have to be trained in the new operating rules and will have to overcome the bias common among railroaders that the railroad on which they started had the best way of running a railroad.

There are several essential tasks that affect railroad safety, e.g., training, qualifications, fatigue, hazardous materials inspection programs, and information system compatibility. Failing to address such issues adequately can jeopardize railroad safety, as some recent mergers have demonstrated. FRA believes that UP/SP, for instance, faced increased exposure to accidents, injuries, and fatalities as overworked officials and employees encountered workforce reductions, inadequate infrastructure and equipment, and service delays and disruptions. Between June 22 and August 31, 1997, UP/SP experienced five major train collisions that resulted in the deaths of five UP/SP employees and two trespassers. These accidents were in addition to a series of yard switching accidents that claimed the lives of four UP/SP train crew employees. In connection with the UP/SP merger, for example, FRA launched a comprehensive review of UP/SP's operations, including its dispatching operations. FRA observed inefficient and unsafe practices by supervisors and dispatchers caused by inadequate training and work overload. FRA made specific recommendations, which UP/SP accepted, such as creating additional dispatch operations, realigning dispatcher territories to better balance the workload, hiring new dispatchers, tripling the number of dispatching supervisors, making improvements to the software in UP/SP's CAD computer system, and forming a working group consisting of representatives of FRA, rail labor, and UP/SP management to continually monitor and address dispatching issues that may arise. As a result of FRA's effort, UP/SP's safety performance recovered rapidly; UP/SP's fatalities due to train collisions dropped from seven in 1997 to none in 1998.

Similarly, FRA believes that most of the other recent mergers involving Class I railroads had safety integration problems. The BNSF merger, for example, resulted in the merged entity having incompatible electronic database systems used by BN and ATSF. This incompatibility resulted in terminal offices generating and transmitting inaccurate and incomplete train consist lists and waybills, which compromised the safety of train crews transporting the shipments. Even at a very simple level, BN and ATSF each had locomotives bearing the same number; this problem was not addressed before integrated operations began, resulting in dangerous confusion for dispatchers and train crews. In NS's and CSXT's acquisition of Conrail, both railroads also grappled with information technology shortcomings in preparing hazardous materials shipping papers, and training deficiencies in the computer software programs and the safety laws.

Based on observation, professional experience and judgment, and empirical evidence, FRA believes that there is a nexus between safe integration of large railroads and the subject matter areas identified in the SIP rule. Although filing a SIP will involve certain costs, burdens, and delays, FRA reasons that the safety benefits that will result from the SIP process outweigh these impediments.

Finally, there was some confusion within the regulated community that the SIP rules would impose explicit standards for the elements the railroads would have to address in their SIPs. FRA therefore clarifies that its rule only requires a railroad to identify measures, efforts, commitments, and targeted completion dates that it will take to completely integrate those elements identified in § 244.13. See § 244.11 for the contents required in a SIP. FRA's review and approval is predicated on whether the details in executing the elements in the plan provide “a reasonable assurance of safety.” 49 CFR 244.19. As enunciated in the NPRM, FRA reiterates that:

The final rule contains significant changes from the proposed rule in response to the written comments received, the testimony at the public hearing, and further review and reflection within FRA. This section of the preamble explains the changes made in the final rule to the provisions of the NPRM. FRA informs interested parties that this section focuses on the specific requirements of FRA's proposed and final rules as applied to the coextensive authority of the STB to regulate the transactions identified, and respectfully refers the regulated community to the agency's Section-by-Section Analysis of the NPRM for a full discussion of those aspects of the proposed rule that remain unchanged in the final rule. See 63 FR 72228-35.

Proposed rule: FRA proposed that a railroad seeking to consummate certain discrete transactions would be required to file a SIP. Section 244.1(a)(1) proposed that a Class I railroad, a railroad providing intercity passenger service, or a commuter railroad seeking to acquire, merge, or consolidate with a Class I or Class II railroad, a railroad providing intercity passenger service, or a commuter railroad would be subject to this part. The rule further proposed that a Class II railroad applying to acquire, consolidate, or merge with another Class II railroad with which it would connect so as to involve the integration of operations would also be required to file a SIP. Additionally, part 244 would apply to any merger, consolidation, or acquisition, excluding a transaction involving a Class III freight-only railroad, that would result in operations generating revenue in excess of the Class I railroad threshold, and all start-up operations as defined in § 244.9.

Paragraph (b) of this section explained that the proposed rule was designed to mandate that a railroad detail a plan before it would merge, consolidate, or acquire another railroad to ensure that safety interests were advanced before integrating operations of complex transactions. Section 244.1(c) informed the regulated community that part 244 applied only to FRA's disposition of an application filed pursuant to this part, and did not apply to the STB's rules, 49 CFR part 1106, governing transactions under the STB's authority.

Comments: FRA received several comments addressing a wide range of views on the proposed scope of the SIP rule. The AAR recommended that the rule should cover only Class I—Class I or Class I—passenger operations transactions because of the magnitude and complexity of these transactions and the lack of evidence that the other proposed transactions demonstrated a compromise to railroad safety. The ASLRRA and W&L suggested that the rule regulate only Class I transactions given that Class II railroad operations are less complex than their Class I counterparts, e.g., lower volume, slower speeds, shorter consists, and more condensed networks, and the weight of the evidence shows that only Class I railroads need to be regulated. The ASLRRA and W&L added that Class II railroads should be regulated on an ad hoc basis and that the proposed coverage of start-up operations should be dropped. Amtrak commented on start-ups as well, expressing its position that a SIP should only be required when a start-up involves a new railroad and not existing railroads commencing operations over newly constructed track. APTA opined that the rule should not apply to start-ups covering existing commuter railroads that commence operations over newly constructed track or extending service on existing track.

Conversely, the BMWE, BRC, and TTD suggested that the scope of the rule be expanded to cover Class II and Class III railroads. The BRC, for instance, asserted that although Class III railroads present less complex operations than their Class I counterparts, shortline railroads use less sophisticated roadway equipment and track maintenance practices because of their lower revenue base, and employ workers who may not understand the complexities of Class I rail traffic control systems with which they interchange. The TTD supported its position by claiming that shortline railroads lack sufficient capital resources, training requirements, and staffing levels to execute transactions, and that these railroads have higher casualty and accident rates than Class I railroads.

Final Rule: Having considered the entire spectrum of comments, FRA believes that the SIP rule should apply only whenever a Class I railroad proposes to merge with, consolidate with, or acquire control of another Class I railroad or a Class II railroad with which it also proposes to amalgamate operations. The agency has re-examined the anecdotal and empirical evidence and determined that there is a correlation between large-scale transactions and compromises to railroad safety in the absence of advance planning and the preparation of a SIP. As the recent UP/SP and BNSF mergers illustrated, large-scale transactions present unique challenges in operations that can affect the resulting carrier's ability to conduct business while complying with the safety laws. (Indeed, CSXT and NS may have experienced the same shortcomings in the Conrail Acquisition had FRA and the STB not required the railroads to file individual SIPs addressing a systematic plan that assessed the safety effects of the transaction and explaining the manner in which they intended to implement the transaction.) Integrating cultures and differing work rules, migrating work forces, deploying capital resources, and adopting information systems are initial steps that must be planned before consummation and implemented during integration to ensure the safety of railroad employees and the public, and the protection of the environment. Therefore, to combat safety and operational problems associated with complex transactions, FRA is requiring a SIP for Class I—Class I transactions and Class I—Class II transactions when there is an amalgamation of operations. The agency believes that advance safety planning by an applicant will promote safety of its lines and minimize exposure to unnecessary accidents, incidents, injuries, or fatalities.

Although FRA recognizes that transactions not involving Class I railroads ( e.g., Class II railroads, passenger railroads, and start-ups) can be sophisticated operations, the agency has decided to withhold regulating these transactions for the time being. Nevertheless, FRA reserves the right to revisit the scope section should evidence or experience warrant expanding the reach of the SIP rule.

FRA also notes that paragraph (b) of this section has been modified from the proposed regulatory text to read, “This part does not preclude a railroad from taking additional measures not inconsistent with this part to provide for safety in connection with a transaction.” The meaning and application of this paragraph, however, remains unchanged.

Proposed Rule: FRA proposed this section to inform the public of its views regarding the preemptive effect of the proposed rule. The rule would provide that 49 U.S.C. 20106 preempts any State regulatory agency rule covering the same subject matter as the regulations proposed with the exception of a provision directed at an essentially local safety hazard.

Comments: The AAR commented that FRA's reading of the preemption provision of the safety laws is incompatible with the STB's exclusive jurisdiction over economic regulation of railroads.

Final Rule: The final rule adopts the proposed rule in full. (The AAR's comments and FRA's response are discussed in the preamble above.)

Proposed Rule: FRA proposed § 244.5 to identify the penalties that the agency may assess upon any person, including a railroad or employees of a carrier, that violated any requirement of this part. The provision would provide that any person who violates any requirement of this part or causes the violation of any such requirement is subject to a civil penalty of at least $500 and not more than $11,000 per violation, and FRA may assess a penalty of up to $22,000 per violation where a grossly negligent violation or a pattern of repeated violations creates an imminent hazard of death or injury to persons, or causes death or injury. Each day would constitute a separate offense, and the agency could assess civil penalties against individuals for only willful violations of this part. Criminal penalties would be available for persons knowingly and willfully falsifying entries or reports required by the SIP rule.

Paragraph (b) of this section would authorize FRA to exercise any of its other enforcement remedies available under the safety laws if an applicant failed to comply with this part. For instance, FRA could issue an emergency or compliance order or seek the issuance of a mandatory or prohibitory injunction should a railroad violate § 244.21.

Comments: Two parties commented on this section. The TTD suggested that the agency clarify the penalty provision to reflect that an individual may be subject to the maximum penalty under the safety laws. The AAR restated its jurisdictional argument that was discussed earlier, asserting that FRA lacks the authority to assess penalties against an applicant, and that conditions or remedies imposed by the STB, such as a cease and desist order, would suffice to address a noncomplying condition.

Final Rule: FRA adopts the proposed rule in full. FRA refers the TTD to the definition of “person” contained in § 244.9, which covers individuals such as managers, supervisors, officials, or other employees or agents of a railroad, and independent contractors providing goods or services to a railroad. As explained earlier in the preamble, the agency believes that the safety laws authorize the issuance of this final rule and its penalty provisions. FRA further reasons that enforcement is a necessary and effective tool to promote compliance with the safety laws. Such enforcement actions include assessing civil penalties, issuing compliance, disqualification, or emergency orders, seeking equitable remedies in Federal court, or referring selected incidents to the Department of Justice for criminal investigation and prosecution. In the SIP rule, these sanctions are necessary to ensure that applicants obtain agency approval of a proposed SIP before implementing a regulated transaction, and execute all measures provided in an approved plan. FRA approval or disapproval of a SIP serves as a baseline for enforcement. Should the agency disapprove of a SIP or portions thereof, this provision provides various remedies if the railroad does not change its SIP to bring it into compliance with the law. Likewise, FRA can take enforcement action if the railroad fails to implement specific requirements of an approved SIP that currently exist under the safety laws. In summary, FRA believes that this section will ensure compliance with the SIP rule by identifying the legal and equitable remedies available.

At this time, FRA has decided not to include a schedule of civil penalties for this rule. The agency received no comments from interested parties about the appropriate penalties corresponding to the sections violated in the rule. Therefore, FRA will reserve Appendix A to 49 CFR part 244 until further notice. Because such penalty schedules are statements of policy, notice and comment are not required before their issuance. See 5 U.S.C. 553(b)(3)(A).

Proposed Rule: Proposed § 244.7 would provide the procedures for seeking a waiver of compliance with the requirements of the SIP rule. Any railroad subject to part 244 could petition for such a waiver, and FRA would conduct its own independent investigation to determine whether an exception to the general criteria existed to warrant granting the waiver, provided that the waiver would not compromise or diminish rail safety.

Comments: The AAR suggested that FRA's waiver provision be modified to meld it with the STB's waiver provision.

Final Rule: The proposed rule is adopted with the addition of paragraph (d). FRA believes that its rule text is closely aligned with the STB's counterpart, but informs interested parties that its waiver provision governs only FRA's disposition of a petition for a waiver. An applicant must still seek a waiver from the STB to be free and clear of any SIP requirements under 49 CFR parts 244 and 1106. This caveat is spelled out in paragraph (d) of this section.

Of special note, FRA informs applicants that a petition for a waiver in which a Class I railroad seeks to consummate a transaction with a small Class II railroad with which it proposes to amalgamate operations may be received more favorably than a waiver request in a transaction involving two Class I railroads. Presently, FRA intends to focus its energies on monitoring transactions involving Class I and large-scale Class II railroad operations, e.g., the Canadian National Railway Company's acquisition of the Wisconsin Central Transportation Corporation, 6 where it believes systemic operating deficiencies are most likely to manifest themselves during the integration phase if no SIP is prepared and implemented. Although transactions involving smaller-scale Class II railroads may present safety challenges, FRA opines that not every merger, consolidation, or acquisition covered in this rule should face a comprehensive SIP review. Rather, FRA invites applicants seeking to execute less complex transactions to petition for a waiver of this rule's requirements. FRA will then review the petition on an ad hoc basis and may grant it should the agency determine that it is in the public interest and is consistent with rail safety.

FRA reminds the regulated community that it reserves the right to impose any conditions as it believes are necessary to promote rail safety. The agency further advises that it has plenary authority to approve or reject a petition for a waiver of this rule, and its decision is “agency discretion by law.” 5 U.S.C. 701(a)(2); see also Heckler v. Chaney, 470 U.S. 821 (1985).

Proposed Rule: The NPRM proposed an extensive set of definitions that would introduce the regulations. As FRA explained in the proposed rule, the definitions were issued to clarify the meaning of important terms as employed in the rule text and were designed to minimize any possible misinterpretation of the rule. Because the commenters only responded to two proposed definitions, FRA will focus on these terms. The agency refers interested parties to the NPRM for a complete recitation of the meaning and application of those definitions that are adopted as proposed. See 63 FR 72230.

FRA proposed defining “corporate culture” to mean the attitudes, commitments, directives, and practices of railroad management with respect to safe railroad operations. The concept was to cover a railroad management's attitudes, directives, planning and resource allocations when safety was at issue. “Best practices” was defined to mean the safest and most efficient rules or instructions governing rail operations that a railroad issued.

Comments: FRA received two comments on “corporate culture.” The AAR represented that the definition as applied could not be quantified in an objective fashion to place an applicant on notice about the measures that must be taken to comply with this element. At the same time, the BMWE wanted to expand the definition to include modifications or changes to CBAs that were not negotiated under the Railway Labor Act that the applicants wished to have the STB impose under the authority of 49 U.S.C. 11321 (commonly referred to as “cram downs”). See 49 U.S.C. 11324(c).

The AAR also questioned the definition of “best practices,” asserting two reservations. First, the AAR asserted that the clause “railroad industry standards” is code for FRA practices. Second, the railroad organization claimed that the proposed definition invited the agency to formulate business decisions. In response, the AAR recommended qualifying the definition to permit an applicant to select the “best practices” of the parties that are subject to the transaction, which would best promote the safety interests.

Final Rule: FRA amends the proposed definitions. “Corporate culture” is now defined as “the totality of the commitments, written and oral directives, and practices that make up the way a railroad's management and its employees operate their railroad.” The notion is to capture the business directives issued by a railroad's management and the practices implementing these directives by labor to encompass a wide range of field operations. These activities include the formulation, development, issuance, and execution of measures and programs related to safe railroad operations that involve consultations between railroad management and railroad employees. The heart of the safety issue involved is that FRA has observed (1) that a railroad tends to operate more safely when all of its employees understand that the railroad has a defined way of operating and comply with it and (2) that employees coming from different railroads will tend to continue to do their jobs as they learned them on their first railroad until they are taught to operate differently. This part of the rule is intended to get the railroads subject to a covered transaction to observe their differences, choose how the resulting railroad is to operate, and assure that their employees adopt the chosen culture. FRA does not intend to impose its own choice of corporate safety culture, but insists that the railroad choose and implement its choice.

FRA grappled with “corporate culture” in light of the AAR's comments about how objectively the agency could apply its meaning in evaluating a proposed SIP, and in light of BMWE's suggestion that it be expanded to include “cram downs.” FRA believes that “corporate culture” quantifies sufficient elements to provide for meaningful and objective agency review, and given the spirited debate over cram downs, and the recent settlement among most Class I railroads and labor organizations representing most rail employees, including the BMWE, on the issue of CBA overrides, FRA cannot adopt the BMWE's suggestion that cram downs be considered a part of the definition of corporate culture.

“Best practices” is modified to read those “measures that are tried, tested, and proven to be the safest and most efficient rules or instructions governing railroad operations.” This amended definition incorporates the change recommended by the AAR. To reiterate, FRA does not intend to substitute its judgment for that of a railroad in determining which legally permissible safety and efficiency measures to use, but instead will defer to a railroad's construction and application of its operating rules and practices that promote these interests. Put another way, the agency believes that the railroad has the prerogative in identifying the best practices to be employed within the law.

Proposed Rule: FRA proposed § 244.11 to frame the structure of a SIP that a railroad must file. The section would require an applicant to prepare a roadmap or playbook detailing the practices and procedures, financial commitment, and timetable for integrating or commencing field operations identified as subject matter areas under § 244.13. In particular, the NPRM would require a plan to propose a timetable from commencement to completion to implement the transaction.

Comments: Only one interested party commented on this section. The AAR generally agreed with FRA's proposal with one exception. The railroad organization opposed the timetable provision in paragraph (f) because it was perceived as being too rigid to afford flexibility in reaching proposed milestones in the plan. The AAR countered with its own textual proposal to require a general overview of steps and order in which the steps would be implemented.

Final Rule: The rule is adopted as proposed with minor textual changes and paragraphs (c)-(e) redesignated as paragraphs (d), (e), and (c), respectively. Paragraph (a) replaces the conjunctive clause “and the best practices of these railroads” with “including the rules or instructions governing railroad operations of these railroads,” and paragraph (b) adds the text “including a reconciliation of the differing rules or instructions governing railroad operations of the railroads involved in the transaction” at the end of the provision to narrow the scope of the information on integrating operating practices a SIP must provide. Paragraph (f) inserts the word “targeted” in lieu of “stated” to enable an applicant to set benchmarks for completing the specified elements. FRA understands the dynamics of assimilating disparate operating practices and procedures and recognizes the flexibility needed to achieve their integration. The change of the operative word “stated” to “targeted” thus assuages the AAR's concern. FRA intends to hold a railroad accountable for conducting front-end planning measures and executing the same within identified milestones to complete the integration of operations.

FRA believes that the final rule should delineate the SIP contents and SIP subject matter areas as separate regulatory functions. The contents provision provides the basis for identifying and addressing the subject matter areas and facilitates a well organized plan that will articulate the execution and implementation of these elements. Section 244.11 best exemplifies the roadmap or playbook concept necessary to address the subject matter areas provided in § 244.13. Accordingly, the section's regulatory heading and introductory text remain unchanged.

FRA received several comments expressing a wide variety of opinions about the contents of § 244.13. To improve the flow of this analysis, each paragraph will be treated as a separate section, summarizing the proposal, comments, and final rule. FRA refers interested parties to the NPRM's Section-by-Section Analysis for the background of the elements identified in this section, and the justification for requiring these subject matter areas for transactions that involve an amalgamation of operations. Because FRA received no comments about the basis for or scope of proposed § 244.13, the introductory text of the regulation is adopted as proposed.

Proposed Rule: FRA proposed paragraph (a) to require an applicant to explain the basis for its safety culture. Specifically, the regulation would require a railroad to identify and describe differences in corporate cultures for each safety-related area; describe how these cultures lead to different practices governing rail operations; and explain how the proposed integration of corporate cultures would result in a system of ‘best practices’ when the proposed transaction was implemented.

Comments: Management and labor organizations commented on the “corporate culture” provision. APTA wanted “corporate culture” to address the safety of passenger operations, and the TTD suggested that a railroad detail similarities and differences in corporate culture to avoid issuing “boilerplate language” in its proposed SIP. Concurrently, the AAR agreed with the proposed rule text because it provided sufficient flexibility in accounting for different organizational structures, styles, and operations.

Final Rule: The proposed rule is adopted with revisions to § 244.13(a)(1), and (3). Subparagraph (1) is refined to mandate that an applicant “(i)dentify and describe differences for each safety-related area between the corporate cultures of the railroads involved in the transaction(,)” and subparagraph (3) is changed to read that the railroad must “(d)escribe, in step-by-step measures, the integration of these corporate cultures and the manner in which it will produce a system of ‘best practices’ when the transaction is implemented.” These provisions draw a closer nexus between safety and corporate culture than the proposed rule and require a railroad to detail the incremental measures it will take to integrate disparate cultures that will culminate in adopting safe and efficient standards governing railroad operations.

As FRA explained in the proposed rule, safety culture is an instrumental element in achieving rail safety. Acquisitions, consolidations, and mergers of large rail operations are complicated transactions that require a railroad to adopt an operating structure that underscore safety and good communications among management, employees, and the employees' union representatives. Such a structure should unify the different cultures under which railroads operate that draw upon the best practices of each to facilitate the formulation, development, issuance, and implementation of safety practices and procedures within a seamless merged company.

To carry out this task, an applicant needs to describe how it will successfully integrate the underlying priorities, practices, and philosophies while implementing the transaction. For example, UP recently published a three-step directive to its officials. First, the railroad indicated that it would focus, in part, on adequate staffing levels and predictable work schedules. Second, it would direct its attention to values, leadership development, training, and quality. Finally, the railroad pledged that it would build a new relationship with its employees. At the same time, NS has established a culture that elevates training, professionalism, commonality of purpose, and rules compliance to achieve safety on its railroad. NS has acknowledged that rules compliance is most fundamental to avoid accidents or incidents, and has stressed effective communications between management and the rank-and-file workers to implement this measure. CSXT has amplified the importance of safety culture by establishing a cooperative program comprising management officials and labor union members that educates, counsels, and improves the performance of safety-sensitive employees who commit operating rules violations, and instituting safety culture offices that ensure that safety is foremost in job performance. See SIP Update at 22.

At bottom, FRA posits that it will not dictate attitudes, directives, planning, or resource allocation criteria under this part. Rather, the agency intends to defer to proposed and implemented planning processes that promote and value railroad safety. It is incumbent on a railroad to resolve different cultures, direct and carry out programs that emphasize safety practices, and engage management and labor to develop, issue, and implement an iteration process to execute these programs. To this end, FRA endorses the corporate culture concept and incorporates the textual standards accordingly.

Proposed Rule: The proposed rule would require a railroad to discuss its training and educational programs to ensure that its employees and supervisors who are responsible for field operations would be proficient and qualified. FRA identified the employment crafts that would be covered in the NPRM, which were train and engine service employees, dispatchers or operators, roadway workers, signal employees, mechanical officials, and hazardous materials personnel.

Comments: FRA received diverse comments from interested parties. The TTD, for example, wanted the rule to set minimum qualifications and training requirements, and require an applicant to detail the number of class and on-the-job training hours and file a report on hazardous materials training. At the same time, the BRC wanted to establish qualification and training standards for car inspectors when defect ratios exceed three percent for an applicant, and the ATDD suggested training and qualification requirements for dispatchers. The AAR agreed with the regulatory concept, but opposed new training requirements that are not prescribed under the safety laws because such standards do not present an integration issue.

Final Rule: FRA adopts the proposed rule with some substantive changes to the introductory text and paragraph (b)(6). The rule centers on ensuring that designated employees, including information technology personnel affecting hazardous materials transportation, are proficient, qualified, and familiar with the operating rules and operating tasks of territory assigned when these employees are moved to a new territory or the operating rules on a given territory are changed. Training impacts integration of operations when employees are either transferred to new divisions or subdivisions, or when operating rules, timetables, or timetable special instructions, e.g. , superintendent bulletins, are changed in an assigned territory. In other words, when operating circumstances change, the “front line” employees must be familiar with all aspects of their crafts or occupations. A SIP should also include details identifying the scope and depth of the type of training operating personnel will receive, discuss the resources allocated to conduct and complete training, and a proposed schedule for reaching this milestone.

FRA and the AAR are in agreement about the concept of the SIP rule. It is not the agency's intention to prescribe new substantive standards in this rulemaking action. Instead, the rule requires a railroad seeking to consummate a transaction to inaugurate and implement certain programs when integration commences. In this instance, an applicant needs to make certain that its operating employees are conversant in logistics, operations, and equipment handling in unfamiliar localities, and when operating rules, timetables, or timetable special instructions are changed in an assigned territory. Although FRA is receptive to the labor organizations' recommendations, the agency believes that training standards are more appropriate in another rulemaking action and therefore, declines the invitation.

Proposed Rule: FRA proposed requiring a railroad to provide operating practices information that would address operating rules, accidents/incidents, hours of service laws, and the alcohol and drug and locomotive engineer qualification and certification programs. The regulation would also require an applicant to discuss the efforts taken to minimize fatigue of covered service employees, i.e. , employees who perform train and engine service, dispatching, or signal system service, to enhance safety in the field and reduce the likelihood of committing errors while performing safety-sensitive functions.

Comments : Four parties filed comments on this proposal. The labor union commenters supported the proposal, but suggested changes. The BMWE wanted the rule to also require a railroad to consider fatigue management of roadway workers because of the physical demands of their labor and the travel necessary to carry out their assigned tasks. The BRC recommended that the proposed accident/incident reporting procedures be amended to require an applicant to certify the integrity of electronic data entered and a security system to reflect any amendments to initial data entries. The TTD supported the provision, but suggested four changes. First, the labor organization wanted a railroad to identify the size of current operating crews and detail the injuries, fatalities, and expenditures on safety-related claims. Second, it recommended that an applicant file a compilation of all alcohol and drug tests performed and their results for the previous three years, and an explanation of its options for substance abuse treatment. Next, it wanted a railroad to specify the measures necessary to minimize employee fatigue. Lastly, the TTD wanted a SIP to identify how an engineer would be qualified on the physical characteristics to operate over any new territory.

The AAR also commented on paragraph (c). The railroad organization agreed with the operating rules provision because of its integral nature in governing operations on a new railroad system, but opposed the accident/incident reporting and alcohol and drug testing provisions on the ground that they are not integration issues unique to regulated transactions.

Final Rule: FRA adopts the proposed rule with two modifications. The agency amends § 244.13(c)(1) to add “freight and passenger service” to the provision requiring a railroad to identify the operating rules, timetables, and timetable special instructions that govern railroad operations. The inclusion of this proviso renders § 244.13(l) redundant, which substantiates its withdrawal from the final rule. FRA also drops proposed paragraph (c)(2) from the final rule, agreeing with the AAR that there is no correlation between accident/incident reporting procedures and safe integration of operations. The agency has determined that accidents/incidents reporting is not a safety problem with the transactions it has reviewed. FRA believes that the current regulations under 49 CFR part 225 achieve the interests of safety for reporting accidents or incidents and establishing an internal control plan under § 225.33. Therefore, the accidents/incidents provision is unnecessary and is withdrawn.

FRA believes that the final rule captures the information a railroad needs to address in a SIP to ensure that operations are performed safely during the integration phase. Although the agency considered expanding the reach of the operating practices area, it decided to focus on those employees and practices that will be most affected by a transaction, particularly those aspects that involve logistics, operations, and equipment handling in unfamiliar territories, and the need to retain institutional knowledge on lines experiencing operational changes. A railroad, for instance, needs to identify the alcohol and drug testing programs that will apply after it consummates operations to facilitate continuity and consistency during the transition period. Again, the rule's objective is to require an applicant to conduct advance planning of operations that impact rail safety. The operating practices enumerated in the rule text are such critical operations that mandate detailed planning. This rationale thus undergirds the requirements contained in this provision.

Proposed Rule: Section 244.13(d) would require an applicant to identify the qualification standards for employees who inspect, maintain, or repair rolling stock and designate the facilities that will repair the rolling equipment, and provide adequate assurances that mechanical officials who are responsible for performing required inspections and tests of the equipment are proficient in mechanical practices to safeguard the use of freight or passenger cars and locomotives on a railroad.

Comments: The AAR, BRC, and TTD shared their respective comments with FRA about the proposed rule. The AAR agreed that the regulation should be adopted with the proviso that a railroad be afforded flexibility to change the designation of repair facilities without the need of agency approval. The BRC took issue with the provision “designation of facilities that will repair such equipment” because it implies that a railroad would be authorized to assign repair facility locations irrespective of safety concerns. The BRC recommended that the sentence read, in part, that an applicant must identify “all facilities being used, and that will be used following consummation of the transaction, to repair such equipment,” to enable FRA to determine whether a railroad is eliminating redundant repair facilities or increasing the distance noncomplying cars may be permitted to travel. The TTD also wanted to amend the provision to require a railroad to identify the average and mean age of engines owned by an applicant and the location of new repair facilities.

Final Rule: FRA agrees with the BRC that a SIP must identify all repair facilities that are being used or will be used after a transaction is consummated. The agency is concerned about the safety of rolling stock and believes that the modification will enable it to determine whether an applicant is eliminating redundant repair facilities or increasing the distance in which noncomplying rolling equipment may travel, thereby compromising rail safety. FRA thus rewords the last clause in the provision to read “the designated facilities used, or to be used, to repair such equipment” to reflect this amendment.

Proposed Rule: The NPRM would require a railroad to identify the signal and train control systems used, and maintenance, capital improvement, and research and development projects planned for signal and train control operations.

Comments: The TTD supported the proposed requirement, but recommended that the rule should also require an applicant to identify signal malfunctions and false signal reports, dark territory, and accidents in signal and non-signal territory. The AAR opposed the TTD's suggestion to require a railroad to identify signal malfunction reports, asserting that it does not present an integration issue.

Final Rule: FRA agrees with the AAR that the TTD's proposal does not present an integration issue but instead, an operational issue affecting the routine movement of engines, equipment, or trains. The TTD's suggestion is therefore not adopted. The final rule tailors the proposed rule text to require a railroad to address “any planned amendments or modifications to capital improvement” to focus an applicant on advance planning of signal systems integration to prevent any incompatibility between signal and train control systems and reconcile or harmonize signal practices and standards when dissimilar systems exist.

Proposed Rule: FRA would require a railroad to identify the maintenance and inspection programs for track and bridges to ensure that its infrastructure was safe or would be repaired, rehabilitated, or replaced, if necessary.

Comments: The labor organizations, led by the BMWE and TTD, wanted the regulation to require an applicant to identify the qualification standards for trackside workers to track the requirements contained in § 244.13(d). The AAR opposed the NPRM, claiming that Track Safety Standards and bridge structures do not present an integration issue.

Final Rule: Based on FRA's recent assessment of the Conrail Acquisition , the agency believes that track safety does present an integration issue that should be addressed in the final rule. FRA's audit found that CSXT experienced track maintenance and inspection practices shortcomings after the implementation of the Conrail Acquisition . In 1999, FRA determined that the railroad's track defects ratios did not improve from the previous year, and track-related accidents remained a problem on its lines. These accidents were caused by wide gage and defective switch points and track hardware at turn-outs, which were easily preventable and evidence the need for the railroad to redouble its efforts in upgrading its track program. See SIP Update at 24. Because track maintenance and inspection programs are essential elements to promote safe rail operations during integration, FRA believes that the roadway or trackside workers should be qualified in carrying out these tasks. As a result, the final rule adopts the labor organizations' recommendation by requiring a SIP to identify the qualification standards for these workers.

Proposed Rule: Section 244.13(g) proposed requiring an applicant to address hazardous materials in a SIP. First, a railroad would have to identify a hazardous materials inspection program that covered field inspection practices, communication standards, and emergency response procedures. Second, the applicant would have to discuss its development and deployment of an automated system at designated locations for immediate retrieval of hazardous materials shipping papers.

Comments: Three parties commented on the proposal. The BMWE and TTD wanted an applicant to provide an emergency action hazardous materials plan. Conversely, the AAR opposed the requirement of developing and delivering computer software operating systems because there was insufficient evidence that the regulation would promote the safe integration of hazardous materials safety programs.

Final Rule: FRA has reorganized paragraph (g) by requiring a railroad to identify a hazardous materials inspection program that covers four discrete areas. The first three are identical to the proposed rule. The fourth area reconfigures proposed § 244.13(g)(2) to require the program to address information technology (“IT”) systems and employees who are responsible for shipping papers accompanying hazardous materials shipments. The provision also stipulates that a SIP should identify preventive measures that an applicant will use in responding to IT integration and hazardous materials documentation problems.

FRA believes that IT systems that transmit and receive hazardous materials information must employ programs that properly place cars in train consists and identify the contents of hazardous materials shipments to the hostler and train and engine crews. The agency documented several IT deficiencies in implementing the Conrail Acquisition , finding improper hazardous materials shipping papers and inaccurate train consists hauling hazardous materials shipments because of, in part, the lack of familiarity with the data systems used to process hazardous materials documentation. See SIP Update at 2, 25, and 28. To prevent recurrences, FRA believes that a railroad should test the computer systems that will be responsible for handling hazardous materials paperwork to detect and eliminate any incompatibility problems found and provide for information accuracy. FRA's revision captures the lesson learned from a recent transaction.

Proposed Rule: Paragraph (h) would require a railroad to identify the dispatching system to be adopted, the migration of the existing system to the adopted one, if applicable, the qualifications for determining duties performed by dispatchers or operators, and the volume of work assigned to the dispatchers or operators.

Comments: The ATDD and AAR provided disparate comments on this proposal. The ATDD opined that a railroad should be required to address the familiarity of the dispatchers with the territory that is subject to the transaction, whereas the AAR opposed this recommendation because no current substantive regulation exists and proper training alone may provide adequate territory familiarization. The AAR also asserted that the dispatching requirements should apply only to operations that are affected by the transaction.

Final Rule: FRA adopts the suggestions that were provided. The proposals are incorporated in § 244.13(b) introductory text and § 244.13(b)(4) by requiring a SIP to identify training programs for dispatchers to ensure familiarity with the operating tasks of the territory assigned when these employees are assigned to a new territory or the rules governing an assigned territory are changed. Otherwise, the term “workload” is added to paragraph (h)(3) and paragraph (h)(4) is withdrawn. This cosmetic change retains the sum and substance of the information on dispatcher workloads in a SIP without setting out a separate regulatory function.

Proposed Rule: The NPRM would require a SIP to address highway-rail grade crossing signal system safety, emergency response measures, public education initiatives, and proposals to improve grade crossings and grade crossing system warning devices.

Comments: Only one party commented on the proposal. The AAR maintained that the proposed regulation was inappropriate because railroads already discuss grade crossing issues and upgrades with state highway departments, and FRA's insertion into the process may create conflicts with these government agencies and impose unnecessary burdens on an applicant. Alternatively, the AAR suggested that a SIP require a railroad to discuss grade crossing safety programs and the integration of the programs in a transaction.

Final Rule: The final rule adopts the AAR's suggestion in part and breaks out the information required in a SIP in more detail. The regulation mandates that an applicant identify the grade crossings that will experience an increase in traffic as a result of the transaction, the existing grade crossing programs of the railroads as they apply to these crossings, the integration of the grade crossing programs of the railroads that are subject to the transaction to the extent the programs differ, emergency response action plans, measures to avoid blocking or obstructing grade crossing systems, and signs used for changes to rail traffic patterns.

FRA believes that grade crossing safety is a critical element that a SIP must address. As was explained in the NPRM, statistics show that the vast majority of fatalities and injuries during railroad operations occur at grade crossings due to collisions or trespass incidents. 63 FR 72233. A complex transaction presents its own challenges given that a railroad acquiring, consolidating, or merging with another railroad will dedicate traffic on certain corridors or lines. The SIP rule requires an applicant to consider the impact of increased traffic density in a territory on the safety of grade crossings.

Again, FRA's role is not to approve or reject specific measures, such as upgrading grade crossings, a railroad may take during the course of a transaction. Rather, the agency reviews the applicant's proposed plan within the context of providing a “reasonable assurance of safety.” FRA does not foresee that such a review process will interfere with a railroad's consultations with a state highway agency or impose a substantial burden on the railroad. The interests of safety direct an applicant to develop and implement a grade crossing program that will reduce accidents, incidents, injuries, and fatalities that occur at crossings. The grade crossing element is thus retained in the final rule.

The rule also sets out discrete new items-avoidance of blocked crossings and signs used for changes in traffic patterns-that a railroad must address in its grade crossing program. Blocked crossings are of particular concern to FRA and communities that will experience increased rail traffic over its crossings. To illustrate, the agency found that a significant number of NS crossings were blocked for extended periods of time in the State of Ohio during the end of 1999. See SIP Update at 20. The agency has determined that this deficiency is more systematic and frequent than previously believed, creating unnecessary challenges for emergency response vehicles and creating congestion at crossings. To reduce the likelihood of similar problems occurring in the future, FRA believes that a railroad should identify in its SIP practices to alleviate blocked crossings, which may include identifying additional sidings required, crew change points, and other actions or construction needed. (The agency notes that this requirement is similar to the STB regulations requiring applicants to submit evidence about potentially blocked grade crossings as a result of anticipated merger-related traffic increases. See 49 CFR 1105.7(e)(7) and 49 CFR 1180.1(f)(3)(ii) and 1180.8(a)(2), requiring an applicant to identify specific measures to be employed to avoid blocking crossings that may result otherwise due to the consummation of a transaction, at 66 FR 32582, 32585 and 32589, June 15, 2001.) The SIP must also discuss the signs used for changes in traffic patterns. FRA believes that these signs serve to advise motorists and pedestrians of the frequency of rail traffic traversing crossings to protect them from possible collisions.

Proposed Rule: Paragraph (j) would require a SIP to cover personnel staffing in terms of the number of employees, both current and proposed, for certain occupations carrying out safety-sensitive service in the railroad industry.

Comments: FRA received two comments to this proposal. The ATDD agreed with the regulatory text as proposed. The AAR wanted to clarify the proposal by authorizing a railroad to file a copy of its Labor Impact Exhibit that is filed with an application to the STB under 49 CFR part 1180 to avoid any redundancies in information provided pursuant to an application.

Final Rule: FRA adopts the proposed rule with one minor modification. An applicant need only address the personnel staffing element when it projects a change of operations that will impact workforce duties or responsibilities. A railroad may omit this section if it expects operations will remain constant after the transaction is consummated. Otherwise, it must address the full litany of job functions that are provided in subparagraphs (1)-(8).

FRA declines to accept AAR's suggestion in authorizing a railroad to file a copy of its Labor Impact Exhibit to satisfy this provision. Under 49 CFR 1180.6(a)(2)(v), also known as the Labor Impact Exhibit requirement, the STB only requires an applicant to address projected changes that a transaction will impact on its employees by class or craft, the geographic locations where the impact will occur, the timeframe of the impact, and whether any employee protection agreements have been reached. The Board's regulation thus does not cover current employees and does not enunciate specific job duties that are prescribed here. Because the two regulations are not congruent, the filing of a Labor Impact Exhibit alone will fall short of the requirements enumerated in this section. Nevertheless, a railroad may use the same information provided in its Labor Impact Exhibit to meet portions of this regulation where appropriate.

Proposed Rule: Paragraph (k) would require an applicant to explain its capital investment program by describing its intended investments in the company's infrastructure and addressing changes to existing investment forecasts.

Comments: The TTD agreed with the capital investment proposal.

Final Rule: FRA adopts the rule as proposed.

Proposed Rule: FRA proposed requiring a railroad to describe the relationship of freight and passenger service on railroad lines subject to a transaction.

Comments: The agency received comments from APTA and OK DOT about proposed paragraph (l). APTA requested that the regulation enunciate the schedule changes involving commuter and freight service on operations subject to the transaction. OK DOT, on the other hand, wanted the provision to require an applicant to address the density of combined freight and passenger operations.

Final Rule: Upon further consideration, FRA has concluded that freight and passenger service should be addressed within the context of the operating rules that will govern their operations. The agency reasons that safe integration is premised on identifying those rules and practices that will govern these services on property that is the subject of a transaction. Service alone does not present an integration issue that warrants separate analysis and requiring a railroad to address schedule changes or density concerns serves to “micromanage” an application, which is contrary to the purpose of the SIP rule. Service falls within the rubric of railroad operations that must be evaluated to identify the potential safety impact and the measures directed to minimize any consequences during integration. Based on this analysis, FRA withdraws proposed paragraph (l) and transfers “freight or passenger service” to paragraph (c)(1).

Proposed Rule: Section 244.13(m) proposed requiring a railroad to address the steps it intended to execute to provide a single interface of data on train consists, freight car and locomotive movements and movement history, also known as “wheel reports,” dispatching operations, accident/incident reporting and recordkeeping requirements, and emergency cessation of operations.

Comments: Both the BMWE and TTD suggested expanding the regulation to require information systems to address movement and movement history of roadway equipment and hi-rail vehicles.

Final Rule: FRA adopts the proposed rule, now redesignated as § 244.13(l), with two changes. First, the final rule removes proposed subparagraph (4), which addressed accident/incident reporting and recordkeeping requirements within the information systems context. As explained in its discussion of Section 244.13(c)(2) above, FRA has concluded that accidents/incidents reporting is not a problem warranting a SIP. The agency therefore believes that requiring an applicant to explain the transmission and receipt of such information when integrating computer technologies is unnecessary. Consequently, the provision is withdrawn.

Second, this section adds one provision. A SIP must also address the compatibility of information systems that are responsible for transporting hazardous materials to ensure their safe movement while a railroad is switching or converting hardware, software, or program systems. The agency found that both NS and CSXT experienced difficulties in identifying and tracking hazardous materials shipments through their respective computer systems after they switched over from Conrail's “CATS” system in June 1999. See, e.g. , SIP Update at 25, 28, and 32. For example, CRCX employees, who work for the Shared Assets Areas in the Conrail Acquisition , reportedly had difficulty in obtaining documentation from CSXT and NS computer systems to properly place hazardous materials shipments in train consists. Id . at 32. Hazardous materials shipping papers must represent the contents of shipments being transported on the railroad. To this end, the IT systems must be capable of receiving and transmitting accurate hazardous materials documentation to ensure the seamless and efficient flow of information during the interchange of shipments. FRA, however, disagrees with expanding the regulation to include roadway equipment or hi-rail vehicles. There has been no evidence of problems associated with these service vehicles during the integration of complex transactions. Therefore, FRA demurs on the suggestion.

Proposed Rule: FRA proposed, in part, requiring a railroad engaging in a transaction that did not involve an amalgamation of operations to file a SIP that covered only the training, personnel staffing, and capital investment elements.

Comments: The AAR opposed requiring a SIP for a “paper transaction” because such a transaction does not present operational changes and only serves to impose an unnecessary burden on an applicant without any consummate safety benefit. In response, the AAR proposed revising the provision to require a SIP on an ad hoc basis when no operational changes exist.

Final Rule: FRA agrees with the AAR's rationale that a “paper transaction” presents minimal changes in operations that will affect rail safety and revises the regulation as suggested. An applicant seeking to consummate a transaction that does not propose an amalgamation of operations need not file a SIP unless FRA directs the railroad to do so.

As we explained in the NPRM, FRA distinguishes “operational transactions” that present a migration of personnel or equipment, or infrastructure changes from “paper transactions” that are limited to changes in company letterhead. See 63 FR 72234. FRA advises interested parties, however, that changes in operating rules, timetables, bulletins, special instructions, or any other written directives that affect the movement of locomotives or rolling stock impact safety and are therefore designated as “operational transactions,” requiring the filing of a SIP. FRA thus adopts a broad interpretation of “amalgamation of operations” by mandating a SIP for transactions that propose only changes in practices or procedures governing railroad operations.

Proposed Rule: The NPRM proposed a set of procedures that would govern the filing and handling of an application to carry out a transaction. Section 244.17(a) provided that a railroad would be required to file a SIP with FRA and the STB no later than the date it submitted its request for authority to the Board. Under paragraphs (b) and (c), FRA would review and comment on the proposed SIP, and the railroad would provide additional information supporting its plan should the agency require it. Paragraph (d) proposed requiring FRA to issue its factual findings and conclusions on the proposed SIP to the STB before the Board ruled on the application. Section 244.17(e) would require a railroad to coordinate with FRA in implementing a proposed SIP approved by FRA and the STB until integration was complete. The proposed rule also set out the interplay between FRA and the Board during the implementation phase of the transaction in paragraph (f).

Comments: The AAR maintained that the proposal to require the contemporaneous filing of a proposed SIP and a request for authority with the STB was unrealistic, as the same employees generally would write both the operating plan for the STB application and the SIP. The organization also questioned the proposal because it may compromise the quality of the SIP and was inconsistent with the Conrail Acquisition proceeding in which the STB gave NS and CSXT four months to file their separate plans after they filed their respective applications. As an alternative, the AAR proposed that the rule provide a railroad 30-90 days after it files its application with the Board to file a proposed SIP.

The AAR further opposed proposed paragraph (b) on the ground that the regulatory text called for information that was beyond the scope of the rule. The organization recommended amending the text to authorize FRA to obtain additional information on matters that address specific safety concerns. Finally, the AAR requested that proposed paragraph (f) be amended to establish a three-year window of regulatory oversight of a railroad's SIP implementation, and that the section add a provision covering the confidential treatment of information provided by an applicant to the agency to safeguard proprietary and competitively sensitive information.

Final Rule: FRA revises § 244.17 to reflect the proposals advanced by the AAR and to clarify the procedural requirements governing the SIP process. Paragraph (a) is amended to give a railroad up to 60 days after it files an application with the STB to file a proposed SIP with FRA. FRA believes that a two-month interim will provide sufficient time for the company to complete its SIP after filing its operating plan. The agency also adds the phrase “to satisfy the requirements of this part” to paragraph (b) to assuage the AAR's concerns. Restated, the regulation now requires a railroad to provide additional information in a SIP that FRA may require to meet the rule's requirements, such as the operational elements within the framework of the plan's contents as provided in § 244.11. The final rule also has been revised to delete the reference to “exemptions” filed with the STB, because Class I carriers typically file applications in consolidation transactions.

FRA adds paragraph (f) to § 244.17 to require a railroad to communicate with the agency about any changes and refinements to its plan in response to unfolding developments, and file any amendments to its plan with FRA for approval. Proposed paragraph (f) is redesignated paragraph (g), and the last sentence of the proposed provision is amended to reflect that FRA will oversee the implementation of a SIP for a period of five years, for a period prescribed by an order issued by the Board, or when FRA advises the Board in writing that the integration of operations is complete, whichever is shorter. The oversight period is necessary to ensure that the SIP is being implemented as intended, that the railroads are adhering to the representations made in the SIP, that no unforeseen circumstances have arisen requiring FRA to exercise any of its enforcement remedies, and that the milestones established in the SIP are being met in a timely fashion.

Finally, the agency adds paragraph (h) to provide a procedural mechanism for an applicant to request that advance drafts of a proposed SIP and information filed in support of the proposed or approved plan receive confidential treatment should an outside party submit a request for the documents under the Freedom of Information Act (“FOIA”), 5 U.S.C. 552. The regulation directs the railroad to comply with the procedures enumerated under 49 CFR 209.11 to petition for such treatment. Nevertheless, FRA reminds the regulated community that the agency alone will decide whether to grant or deny a request, but that it will afford a company whose request was denied an opportunity to respond no less than five days before the agency discloses the information. See 49 CFR 209.11(e). It should be noted, however, that FRA, like the STB, will not treat a proposed or approved SIP that is filed pursuant to the regulations prescribed under 49 CFR 244.17(a) and 1106.4(a) as confidential because the proposed plan will be incorporated in the Board's environmental documentation, which will be made available for public review and comment.

Proposed Rule: Section 244.19 would enunciate FRA's review and approval process of a proposed SIP. The regulation proposed requiring a plan that detailed a logical and workable transition from conditions existing before the proposed transaction to conditions intended to exist after the transaction was consummated. FRA would review the SIP on a “reasonable assurance of safety” standard, meaning that the agency would conduct rational basis review of the plan to ensure that it was reasonably sufficient to comply with the safety laws, provide for safe railroad operations, and satisfy expectations of integration of operations. The agency would then issue its notice of approval should the SIP prove satisfactory, provided that the railroad implemented the plan as proposed.

The rule also would authorize amendments to a SIP. A railroad could amend its plan as needed with FRA's approval or the agency could mandate changes consistent with rail safety should it identify deficiencies during implementation of an approved plan that were unforeseen while the plan was under review. Again, SIP approval would be contingent on a railroad's fulfillment of the subject matter elements in the plan and the execution of operations necessary to implement the plan.

Comments: The AAR was the only commenter to the proposed section. The railroad organization opposed FRA's formal review and approval process of a SIP, and any amendments thereto, on the grounds of the agency's lack of jurisdiction to consider transactions within the STB's scope of authority, and the need to maximize flexibility in updating and improving safety plans and minimize the burdens imposed by the rule. The AAR proposed four revisions to the section. First, FRA would advise the Board in reviewing a proposed SIP on practices and procedures relating to rail safety, with the STB to determine whether to approve or disapprove of a plan based on its adequacy after FRA comments on it. Second, an applicant would be permitted to file any amendments with FRA and explain the need for the changes should the agency request the same. Third, the section would authorize amendments to take effect within 20 days after they are filed with the agency and remove the review process of amendments. Finally, the AAR recommended modifying paragraph (b) by replacing “later developments” with “amendments to a SIP.”

Final Rule: FRA adopts the core of the proposed rule and certain changes advanced by the AAR. Paragraph (a) is rewritten to articulate the standard of review for a proposed SIP, and any amendments thereto, up front. The rule further explains the structure of the plan to be filed, which the NPRM set out. Recast, the SIP must be thorough, complete, and clear; and address a logical and workable transition of railroad operations from conditions before the transaction to conditions intended after the transaction is consummated that provide a reasonable assurance of safety at every step during implementation. FRA intends to work informally with an applicant both before and after the transaction is approved and consummated to ensure that the SIP complies with the regulations and that the transaction is safely implemented.

Consistent with the AAR's proposal, FRA amends paragraph (b) by inserting “any amendments to the plan approved by FRA” in lieu of “all later developments subject to FRA approval that could not be completed before approval of it.” This revision clarifies an applicant's role in fulfilling the elements of an approved SIP by requiring it to implement all of the plan's measures and any amendments to the plan. The agency notes that it may approve portions of a SIP while disapproving other portions if it concludes that the actions under the plan can be segregated without jeopardizing safety.

Section 244.19(c) is also amended by requiring a railroad to substantiate any changes to its SIP and communicate with the agency to resolve any comments about the amendments. The regulation also prescribes that any amendments approved by FRA will take effect within 20 days of approval, and the agency may “request” rather than “require” a railroad to amend its approved plan should circumstances dictate. The operative word “request” is inserted to afford the agency discretionary review of the plan while it is being implemented and sufficient leverage to proffer a change that promotes safety interests.

FRA takes issue with the AAR's suggestion that the agency lacks authority to adopt a formal review and approval process of SIPs. As FRA explained earlier, the agency believes that it has the authority to regulate railroad safety during implementation of mergers, consolidations, and acquisitions that are approved by the STB. FRA has always done so for the hazards presented by railroading generally. In this rule, FRA is exercising its existing jurisdiction and expertise in regulating the safety hazards presented by the proposed integration of operations of different railroads. See 49 U.S.C. 20103. In short, the transaction that is approved by the STB is the context within which the potential safety hazards are presented and dealt with, but the transaction itself is not regulated by FRA. The rule does not authorize FRA to sanction or veto a transaction subject to STB approval or to impose conditions upon which approval of the transaction is authorized because those functions are exclusively vested with the STB. See 49 U.S.C. 11321-24.

FRA believes that there is a need to codify an ongoing SIP approval process to allow for appropriate enforcement. There are two parts to this process. First, a railroad must submit a proposed SIP for agency review and approval to determine whether the plan meets the requirements of the rule. Second, assuming the proposed SIP, including any amendments thereto, is approved, the railroad must implement the SIP as approved. Should FRA disapprove a SIP, or portions thereof, or the railroad fail to implement the SIP, the rule authorizes the agency to take enforcement action to ensure safety. See 49 CFR 244.21(b).

Proposed Rule: Proposed § 244.21 would require a railroad to have an FRA-approved SIP before it could change its operations to implement a transaction. Additionally, the rule would authorize the agency to use any of its enforcement remedies available under the safety laws should the railroad either change its operations without an approved plan or fail to execute any measure in an approved plan. The regulation also provided that FRA would consult with the STB at all appropriate stages of SIP implementation for a transaction that involved Board authorization.

Comments: The AAR objected to this proposal, asserting that FRA is not authorized to take any enforcement action against a railroad under this part because the STB is the only agency with jurisdiction to approve or disapprove a proposed SIP.

Final Rule: FRA revises § 244.21(a) to clarify that, in approving a SIP, FRA is regulating the safety of railroad operations and is neither approving nor disapproving the transaction before the STB nor exercising an alleged veto over whether that transaction can be consummated if it should be approved by the STB. FRA also withdraws proposed paragraph (c) because it duplicates the requirements provided under § 244.17(g). The regulation now requires a railroad implementing a transaction to operate in compliance with the SIP approved by FRA until all of its operations are completely integrated. The rule is rewritten in this fashion to eliminate the possibility of interpreting the rule, as some commenters did, to equate FRA's approval or disapproval of a SIP with approving or disapproving an application to the STB to approve a transaction. As explained above, FRA agrees that the STB has exclusive authority to approve or disapprove a transaction covered by this part.

Correspondingly, FRA's role in the STB's process is to advise the Board on safety issues identified in a transaction. Indeed, the Board's own proposed and final rule relies upon the FRA's safety expertise as the Board evaluates the merits of a transaction and disposes of an application. See 49 CFR 1106.4; see also Tyrrell, 248 F.3d at 523; CP Purchase, slip op. at 5-6 (the STB gives “great weight” to FRA's expert view on rail safety in determining whether to impose any conditions on a proceeding).

Briefly stated, regulation of “every area of railroad safety” is FRA's jurisdiction. Tyrrell, 248 F.3d at 523 (“FRA exercise[s] primary authority over rail safety matters under 49 U.S.C. 20101 et seq. ”). In approving or disapproving a SIP under this part, and enforcing one, FRA is regulating the safety aspects of how a railroad operates while implementing a transaction permitted by the STB, not whether the railroad is permitted to consummate the transaction or on what economic terms. This is an appropriate exercise of the “plenary safety authority with respect to the safety of rail operations-before, during, and after a transaction” which the AAR acknowledges that FRA has. AAR comments at 9. In that regard, approval of a SIP is no different than approval of an engineer certification program under 49 CFR part 240. There is no question that a railroad must have an engineer certification program approved by FRA and operate in accordance with it at all times, whether or not the railroad is involved in a transaction within the STB's jurisdiction.

In summary, FRA is authorized to exercise any of its legal or equitable enforcement remedies should a railroad either not operate in accordance with an approved SIP or not comply with any element provided in that plan.

FRA is adopting rules that will require merging or acquiring railroads to adopt SIPs before commencing merged operations. Two railroads, NS and CSXT, prepared such plans for their acquisition of the Conrail system. One of those railroads has informed FRA that its SIP cost $300,000, the other said it cost $212,000. The main difference is that the more expensive plan was developed almost exclusively by a contractor, while the other was mostly done in-house. It is unlikely that any SIP would cost much more. It is possible that a SIP for a smaller Class I railroad might cost less. A likely range for the cost of a SIP is $150,000 to $400,000. A SIP for a Class II railroad might cost much less. The Class II railroad's business plan will be smaller, and the safety information will be easier to gather. A SIP for a Class II might cost $25,000 to $100,000. It is a one-time expense for any railroad. The assumed total cost of the SIP rule to a railroad is twice the initial cost of preparing the SIP, to account for such vagaries as SIP modifications and restrictions on training.

Although FRA cannot with certainty say which of the several accidents following mergers were the result of poor planning, it appears extremely likely that at least one of them could have been prevented with a SIP. Assuming that the SIP would prevent two fatalities and $600,000 in damage implies that a SIP for the UP/SP merger would have saved at least $6,000,000 in accident costs. FRA believes that one or more of these accidents could have been prevented based on its findings when it did a detailed analysis of the UP/SP operations. For other railroads the accident savings might vary. For a larger railroad, the accident savings might be twice as much ($12,000,000), while for smaller Class I railroads the safety benefits might be one-fourth that much ($1,500,000). FRA does not have as much information on Class II railroads, but it appears that the accident savings on a Class II railroad might be one percent ($60,000) or as much as twenty percent ($1,200,000) of the savings that would have been available for the UP/SP. These figures are roughly based on ratios of reported accidents, noting that when railroads merge, they become larger entities than they are now.

FRA's careful review of the impacts of mergers that have taken place in the recent past has clearly revealed that mergers and acquisitions disrupt existing safety and operating patterns. Because these transactions are generally justified in significant part by cost savings, there is pressure to close redundant facilities and eliminate positions. This can lead to degradation of safety programs unless formal, written, systematic, and detailed plans are prepared to ensure that safety programs are continued and closely followed. Any less attention to safety could produce catastrophic results, both in terms of economic cost and, more importantly, loss of life.

The final rule will cost $300,000 to $800,000, and will prevent $1,500,000 to $12,000,000 in accident costs for Class I railroads, and will cost $50,000 to $200,000, and will prevent $60,000 to $1,200,000 for Class II railroads. The final rule will not apply to small entities, i.e., the Class III railroads. In addition, the railroad may avoid substantial service difficulties by carrying through the safety planning process. This could save the railroad hundreds of millions or billions of dollars. In the first three quarters of 1998, UP reported losses exceeding $900,000,000 due to service difficulties. The societal losses of these delays is probably much greater, as the figures only account for costs to UP. FRA notes that although numerous parties have submitted data to the STB regarding the impact of the service difficulties, the Board has not attempted to quantify the societal costs of these service problems. See Rail Service in the Western United States, STB Ex Parte No. 573 (STB Decision served Feb. 25, 1998).

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601 et seq. , requires an assessment of the impact of rules on “small entities.” The final rule relates to acquisitions, consolidations, and mergers involving only Class I railroads and a Class I railroad with a Class II railroad where there is a proposed amalgamation of operations. Given FRA's recently published interim policy establishing “small entities” as being railroads that meet the line haulage revenue requirements of a Class III railroad, FRA certifies that this proceeding will not have a significant economic impact on a substantial number of small businesses. See Interim Statement of Policy Concerning Small Entities Subject to the Railroad Safety Laws, 62 FR 43024, Aug. 11, 1997.

The information collection requirements (“ICRs”) in this final rule have been submitted for approval to the Office of Management and Budget (“OMB”) under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq. The sections that contain the ICRs and the estimated time to fulfill each requirement are as follows:

All estimates include the time for reviewing instructions, searching existing data sources, gathering or maintaining the needed data, and reviewing the information. Pursuant to 44 U.S.C. 3506(c)(2)(B), FRA solicits comments concerning whether these ICRs are necessary for the proper performance of the agency's function, including whether the information has practical utility; the accuracy of FRA's estimates of the burden of the information collection requirements; the quality, utility, and clarity of the information to be collected; and whether the burden of collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology, may be minimized.

Organizations and individuals desiring to submit comments on the ICRs should direct them to the Office of Management and Budget, FRA Desk Officer, Washington, DC 20503. OMB is required to make a decision concerning the ICRs contained in this final rule between 30 and 60 days after publication of this document in the Federal Register . Therefore, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication.

FRA hereby notices that it cannot impose a penalty on persons for violating ICRs that do not display a current OMB control number, if required. FRA intends to obtain a current OMB control number for any new ICRs resulting from this rulemaking action before the effective date of the agency's final rule. The OMB control number, when assigned, will be announced by separate notice in the Federal Register .

FRA has evaluated the final rule in accordance with its procedures for ensuring full consideration of the potential environmental impacts of FRA actions, as required by NEPA, other environmental statutes, Executive Orders, and related directives. This rule meets the criteria that establish this action as a non-major action for environmental purposes.

The final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13132, and it has been determined that this action does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

The final rule has been reviewed in accordance with Executive Order 13211 (66 FR 28355, May 22, 2001), which requires agencies to prepare a Statement of Energy Effects describing the effects of certain regulatory actions on energy supply, distribution, or use when such measures are identified as “significant energy actions.” FRA certifies that this rulemaking action is not a significant energy action to warrant the preparation of such a statement.

The circumstances that led to the promulgation of these rules are set out in the NPRM. As explained there, in the advance notice of proposed rulemaking (“ANPRM”) published in the Federal Register on December 4, 1997, at 62 FR 64193, the Board requested comments on the extent to which railroads should be required to provide information pertaining to the manner in which they intend to provide for the safe implementation of merger and acquisition authority granted by the Board. The Board explained that for several years the Board and its predecessor agency, the Interstate Commerce Commission (“ICC”), have considered the issue of safety along with other relevant issues in individual cases. As particularly pertinent here, in the Conrail Acquisition proceeding,  7 the Board for the first time required applicants to submit detailed information on how they proposed to provide for the safe integration of their corporate cultures and operating systems, if the Board were to approve the proposed transaction.  8 (The Board required the same type of showing in the CN/IC merger,  9 which the Board approved on May 25, 1999. A SIP also was prepared and adopted in the CN/WCTC merger proceeding.  10

Specifically, the Board's practice in recent railroad merger proceedings involving Class I and Class II railroads has been to require applicants to file detailed SIPs based on guidelines issued by FRA. The railroads' submissions are made part of the environmental record in those proceedings and addressed in the ongoing environmental review process in those proceedings. This allows review and comment by FRA, other interested parties, and the public. The Board's environmental staff, SEA, also independently reviews the plans.

Moreover, the Board has entered into an MOU with FRA, with DOT's concurrence, to establish an ongoing monitoring process during implementation of these transactions. The MOU clarifies the actions that FRA and the Board will take to ensure the successful implementation of the SIP. Under the terms of the MOU, FRA monitors, evaluates, and reviews the applicants' progress in implementing the approved SIP. The MOU provides that FRA may request action by the Board in the exercise of its oversight authority over the applicants to correct safety deficiencies identified and to address other safety-related concerns resulting from the approved transaction. FRA also agrees to report to the Board at least on a biannual basis regarding the applicants' implementation of the SIP. In those circumstances in which FRA informs the Board of safety deficiencies that may require Board action, FRA will identify the deficiencies and provide recommendations for correcting them. FRA's reporting will continue until FRA advises the Board in writing that the proposed integration of operations has been safely completed.

The Board's ANPRM explained that, having developed a vehicle by which to evaluate safety integration issues in the Conrail Acquisition , it was appropriate to consider promulgating rules extending this process to other rail transactions subject to the Board's jurisdiction. Accordingly, the Board solicited comments from FRA and any other interested persons on how the Board should proceed to ensure the safe implementation of rail transactions subject to its jurisdiction ( i.e. , whether the STB should proceed broadly by general rule or exclusively on a case-by-case basis, and whether procedures other than those adopted in Conrail Acquisition might be preferable in Board-approved transactions outside the merger area).  11

Based on the comments received and the Board's experience with the SIP process in Conrail Acquisition , the Board issued its decision served on July 27, 1998, finding sufficient merit to warrant further exploration of establishing regulations addressing the safe implementation of Board approved transactions. Safe Implementation of Board-Approved Transactions , STB Ex Parte No. 574 (STB served July 27, 1998). The Board directed its staff to develop a joint notice of proposed rulemaking with FRA that would address the issues that have arisen in this proceeding and that are of concern to FRA.

Following the issuance of the Board's July 27, 1998, decision, the Board's staff met informally with FRA staff regarding the development of an appropriate proposal that would accomplish the objectives of both agencies, avoid gaps and inconsistencies in the two agencies' regulatory requirements, and impose as little burden as possible on the participating parties. The NPRM was published in the Federal Register on December 31, 1998, at 63 FR 72225. On May 4, 1999, a public hearing was held jointly with FRA to hear testimony on the proposed rules. 12

As noted, eleven parties representing labor, freight and passenger railroads, and state departments of transportation filed comments on the NPRM. Many of the commenters endorsed the objectives of the SIP rules and indicated that they were generally satisfied with the approach used in the Conrail Acquisition and CN/IC proceedings. 13 However, they offered a number of recommendations on how the proposed rules could be clarified and improved. In issuing final rules, the Board has taken into account all the concerns raised in the parties' written comments and presented at the hearing. As discussed below, the Board is adopting some of the suggestions offered.

A number of commenters expressed concerns about the scope of the STB's proposed rules. The AAR and Amtrak asserted that the proposed inclusion of transactions that involve a passenger railroad or commuter service in a metropolitan area would exceed the Board's jurisdiction.  14 ( See proposed 49 CFR 1106.2.) In response to the comments, the definitions of “applicant” and “transaction” in § 1106.2 have been amended. The new definitions clarify that the SIP requirement applies only to a Class I railroad proposing to merge, consolidate, or acquire another Class I railroad or a Class II railroad with which it proposes to “amalgamate operations,” as defined in FRA's regulations at 49 CFR 244.9. (The Board also adds FRA's definition of “amalgamation of operations” to its rule.) The changed definitions coincide with the scope of the transactions covered by FRA's final rule, which will promote consistency and efficiency in the interplay between FRA and the Board.

Rail labor interests took the position that the Board's SIP rule should apply to transactions involving Class III carriers,  15 i.e., those railroads that generate revenue, measured in 1991 dollars, of less than $20 million per year, whereas the railroad interests argued that it is not necessary to require the preparation of a SIP for transactions that do not involve two or more Class I railroads.  16 Commenters also suggested that freight traffic density or combined freight and passenger traffic (rather than the Class of railroad) could serve as a benchmark for determining the necessity of a SIP.  17

The Board's final rule covers Class I railroads and Class II railroads that will have their operations amalgamated by a Class I railroad. The Board believes that this scope of coverage is reasonable because it is consistent with the scope of FRA's rule and Congress has treated Class II railroads more like Class I railroads than like Class III railroads in ICCTA.  18 The Board believes that it would be unduly burdensome to expand the proposed rules to cover transactions involving Class II railroads or Class III railroads as a matter of course. Under §§ 1106.5 and 1106.6 of the final rule, however, the Board retains the flexibility to require a SIP for such transactions if warranted, or to waive or modify SIP requirements on a case-by-case basis, if it concludes that doing so is appropriate for particular transactions. 19

AAR indicated that the Board should allow an additional 30 to 90 days for preparing and filing a proposed SIP, rather than requiring the SIP to be submitted simultaneously with the application. This request is reasonable. Therefore, section 1106.4(a) of the STB's final rule provides 60 days from the date of the application  20 for the filing of a proposed SIP.

The BMWE urged that the Board clarify proposed § 1106.4(b)(4), which, it argued, could be construed to give the Board discretion to approve a transaction without a SIP or without requiring compliance with the SIP. To eliminate any possible confusion, the Board's final rule has been clarified to specifically state that, if the Board approves the transaction and adopts the SIP, the Board will require compliance with the SIP as a condition to its approval of the transaction.

The regulations are designed to assure adequate and coordinated consideration of safety integration issues by the Board and FRA in implementing certain transactions subject to the Board's jurisdiction.

This section sets forth definitions used in this part; these definitions are self explanatory.

This section explains which transactions require a railroad to file a SIP with the Board. As noted above, a Class I railroad proposing to merge, consolidate, or acquire another Class I railroad, or a Class II railroad with which it proposes to amalgamate operations, as defined in FRA's rule at 49 CFR 244.9, will be subject to the requirements of this rule. Where the filing of a SIP is required by the Board's rules, the Board will enforce the requirement with appropriate sanctions, including suspending the processing of the application or, in extreme cases, dismissing the application itself.

Section 1106.4 sets out the procedures for an applicant to file a proposed SIP, and the procedures by which the Board will consider a proposed SIP in connection with its approval of transactions for which the Board has concluded such consideration is required. A railroad seeking to carry out a covered transaction must file a proposed SIP prepared in accordance with FRA's regulations with the STB's SEA and FRA no later than 60 days from the date the application is filed with the Board. The proposed SIP will become part of the environmental documentation in the Board proceeding, and will be considered in the Board's environmental review process conducted in accordance with NEPA and the Board's environmental rules at 49 CFR part 1105. Generally, covered transactions will be subject to environmental review because the nature of the transaction involves operational changes that exceed the regulatory thresholds established under 49 CFR 1105.7(e)(4) or (5). See 49 CFR 1105.6(b)(4)(i). In the event that a SIP should be required in a transaction that would not be subject to environmental review, see 49 CFR 1105.6(c)(2), the Board intends to develop appropriate case-specific SIP procedures. 21

After FRA reviews the proposed SIP, FRA will issue its findings and conclusions on the adequacy of the plan and will provide its analysis of the proposed SIP early enough to permit incorporation in the Board's draft environmental assessment or draft environmental impact statement. Nevertheless, recognizing that the SIP is an ongoing and fluid process, as in the Conrail Acquisition proceeding, FRA may comment on the plan and on an applicant's progress in completing a SIP, without endorsing the plan in full. The Board agrees with FRA that flexible procedures for FRA's response are necessary to enable an applicant to complete a comprehensive plan.

Additionally, this approach will enable the Board to incorporate FRA's comments in its draft environmental documentation, which, in turn, will encourage the public to review and comment on the proposed SIP. SEA will then independently review the proposed SIP and respond to comments received on the plan in its final environmental documentation. Finally, the Board will consider the entire environmental record, including information concerning the SIP, in deciding whether to approve the proposed transaction. Should the Board approve the transaction and adopt the SIP, it will require that the applicants comply with the SIP as a condition to its approval and require each applicant to coordinate with FRA in implementing the SIP, including any amendments to the plan, if necessary. ( See FRA's Section-By-Section Analysis discussing amendments to 49 CFR 244.17 for a more complete discussion.)

As explained in FRA's Section-By-Section Analysis of § 244.17(g), FRA will advise the Board about its findings on the ongoing implementation process in accordance with an agreement that the agencies will enter into and execute (1) over a five-year period, (2) during any other oversight period for the transaction established by the Board, or (3) until FRA advises the Board that, in its view, the proposed integration of the applicants' operations has been safely completed, whichever is shortest. 22 Should FRA identify shortcomings or deficiencies during the integration process, the Board reserves jurisdiction to reopen the proceeding and impose terms and conditions on the transaction to ensure that the transaction is safely implemented.

The Board can waive or modify the requirements of this part where a carrier shows that relief is warranted or appropriate.

The Board reserves the right to require the filing of a SIP in transactions other than those provided in this part or to adopt modified SIP requirements in individual cases if it concludes that doing so is necessary to properly consider an application or other request for authority.

The Board certifies that its decision to adopt regulations requiring Class I and Class II railroads to prepare safety integration plans under certain circumstances will not have a significant effect on a substantial number of small entities.

This action will not significantly affect either the quality of the human environment or the conservation of energy resources.

Even though the Board is an independent regulatory agency, it recognizes the importance of the policy objective in Executive Order 13212 to expedite consideration of projects that would increase the production, transmission, or conservation of energy. The SIP rulemaking action, however, should not affect the production, transmission, or conservation of energy.

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.

Within any fishing year, underage or overage of a seasonal allowance may be added to or subtracted from subsequent seasonal allowances in a manner to be determined by the Administrator, Alaska Region, NMFS (Regional Administrator), provided that the sum of the revised seasonal allowances does not exceed 30 percent of the annual TAC apportionment for the Central and Western Regulatory Areas in the GOA (§ 679.20 (a)(5)(ii)(C)). For 2002, 30 percent of the annual TAC for the Central and Western Regulatory Areas is 15,187 mt. For 2002, the Regional Administrator has determined that within each area for which a seasonal allowance is established, any overage or underage of harvest at the beginning of the next season(s) shall be subtracted from or added to the following season provided that the resulting sum of seasonal allowances in the Central and Western Regulatory Areas does not exceed 15,187 mt in any single season. The B season allowance of the pollock TAC in Statistical Area 610 of the GOA is 2,916 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). The Regional Administrator hereby reduces the B season pollock TAC by 141 mt. This amount is the A season pollock over harvest in Statistical Area 610 and provides for an aggregate B season allowance in the Central and Western Regulatory Areas that does not exceed 15,187 mt. In accordance with § 679.20 (a)(5)(ii)(C), the B season allowance of pollock TAC in Statistical Area 610 is 2,775 mt.

In accordance with § 679.20(d)(1)(i), the Regional Administrator has determined that the B season allowance of the pollock TAC in Statistical Area 610 will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 2,725 mt, and is setting aside the remaining 50 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20 (d)(1)(iii), the Regional Administrator finds that this directed fishing allowance will soon be reached. Consequently, NMFS is prohibiting directed fishing for pollock in Statistical Area 610 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 B season pollock TAC specified for Statistical Area 610 of the GOA 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 2002 B season pollock TAC specified for Statistical Area 610 of the GOA 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.