The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay certification of the airplane and thus delivery of the affected airplanes. The FAA therefore finds that good cause exists for making these special conditions effective upon issuance.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.

We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning these special conditions. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this preamble between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays.

We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions in light of the comments we receive.

If you want the FAA to acknowledge receipt of your comments on this final action, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

On January 10, 2002, Garrett Aviation Services, 1200 North Airport Drive—Capital Airport, Springfield, IL 62707, applied for a supplemental type certificate (STC) to modify Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes approved under Type Certificate No. A7EU. The Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 are small transport category airplanes powered by two turbofan engines, with a maximum takeoff weight of 29,000 pounds. These airplanes operate with a 2-pilot crew and can hold up to 10 passengers. The modification incorporates the installation of a Rockwell Collins ProLine 21 Display System, consisting of dual Electronic Primary Flight Display systems which replace the existing Primary Flight Display systems, and a Rockwell Collins Attitude Heading Reference System, consisting of dual Electronic Primary Attitude Source systems. These systems have the potential to be vulnerable to high-intensity radiated fields (HIRF) external to the airplane.

Under the provisions of 14 CFR 21.101, Garrett Aviation Services must show that the Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. A7EU, or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The certification basis for the modified Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes includes CAR 4b, dated December 1953, through Amendment 4b-12 and SR422B; and 14 CFR part 25, dated February 1, 1965, through Amendment 25-41, except for special conditions and exceptions noted in Type Certificate Data Sheet (TCDS) A7EU.

If the Administrator finds that the applicable airworthiness regulations (i.e., CAR 4b and 14 CFR part 25, as amended) do not contain adequate or appropriate safety standards for the Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes because of novel or unusual design features, special conditions are prescribed under the provisions of § 21.16.

Special conditions, as defined in § 11.19, are issued in accordance with § 11.38, and become part of the type certification basis in accordance with § 21.101(b)(2).

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

As noted earlier, the Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes modified by Garrett Aviation Services will incorporate dual Electronic Primary Flight Display systems and dual Electronic Primary Attitude Source systems that will perform critical functions. The existing airworthiness standards of part 25 do not contain adequate or appropriate safety standards for the protection of this equipment from the adverse effects of HIRF. Accordingly, these systems are considered to be novel or unusual design features.

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

To ensure that a level of safety is achieved equivalent to that intended by the regulations incorporated by reference, special conditions are needed for the Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes modified by Garrett Aviation Services. These special conditions require that new avionics/electronics and electrical systems that perform critical functions be designed and installed to preclude component damage and interruption of function due to both the direct and indirect effects of HIRF.

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

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

1. A minimum threat of 100 volts rms (root-mean-square) per meter electric field strength from 10 KHz to 18 GHz.

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

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

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

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

As discussed above, these special conditions are applicable to Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes modified by Garrett Aviation Services. Should Garrett Aviation Services apply at a later date for design change approval to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would apply to that model as well under the provisions of § 21.101(a)(1).

This action affects only certain design features on Dassault Aviation Fan Jet Falcon, Fan Jet Falcon Series C, D, E, and F, and Mystere-Falcon 20-C5, 20-D5, 20-E5, and 20-F5 airplanes modified by Garrett Aviation Services. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

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

The authority citation for these special conditions is as follows:

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to Boeing Model 737-100, -200, -200C, -300, -400, and -500 series airplanes was published as a supplemental notice of proposed rulemaking (NPRM) in the Federal Register on August 2, 2001 (66 FR 40162). That action proposed to expand the applicability and remove the optional terminating action of the proposed AD. For certain airplanes, that action proposed to require new repetitive inspections for discrepancies of the rear spar attachments and cracks in the upper flange of the inboard track at the rear spar attachment of each outboard flap, and eventual rework of the flap track assembly and rear spar attachments, including replacement of the flap track with a new track, if necessary. For all airplanes, that action proposed to require repetitive inspections for cracks in the upper flange of the inboard flap tracks at the rear spar attachments, and corrective action, if necessary.

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

Several commenters note that in paragraphs (a) and (c)(1) of the Supplemental NPRM, the phrase “whichever occurs later,” is used when only one compliance time is given. They ask that the compliance time be clarified.

The FAA concurs that clarification is required and, accordingly, has deleted the phrase “whichever occurs later” from paragraphs (a) and (c)(1) of this final rule.

One commenter points out that paragraph (a) of the Supplemental NPRM is applicable to all Model 737 series airplanes with line numbers 1 through 1585, whereas the service bulletin cited is effective only for the Model 737-100, -200, and -200C series airplanes. The commenter requests clarification as to the applicability of paragraph (a) of the AD.

The FAA concurs that clarification is necessary. Our intent was to have paragraph (a) of this AD apply only to the Model 737-100, -200, and -200C series airplanes. Accordingly, we have inserted the phrase “[for] Model 737-100, -200, and -200C series [airplanes]” in paragraph (a) of this final rule to specify the correct applicability.

Another commenter suggests that the part of paragraph (a) of the Supplemental NPRM which reads “* * * and airplanes with [line numbers] L/N 870 through 1585 on which the original flap tracks have been replaced with certain tracks as specified in Boeing Service Bulletin 737-57A1249, Revision 1 * * *” could be interpreted in two different ways. The commenter requests clarification.

The FAA agrees that the sentence could be misunderstood and, accordingly, has revised the language in paragraph (a) of this final rule to read “* * * and those airplanes with L/Ns 870 through 1585 inclusive, which either still have their original flap tracks or which have had the original flap tracks replaced with certain tracks as specified in Boeing Service Bulletin 737-57A1249, Revision 1 * * *”

One commenter states that the Supplemental NPRM does not specify which flap tracks are affected by paragraph (a) of the AD. The commenter requests that specific part numbers and dash numbers be listed in the final rule.

The FAA does not concur. The intent of paragraph (a) of this AD is to include all flap tracks for Model 737-100, -200, and -200C series airplanes with L/Ns 1 through 1585, except for certain flap tracks which are specifically excluded in the effectivity of the service bulletin. Accordingly, no change has been made to the final rule in this regard.

One commenter indicates that paragraph (d) of the Supplemental NPRM, which requires repetitive inspections for cracking in the upper flange of the inboard track of each outboard flap at the rear spar attachments, should refer to Part I of the Accomplishment Instructions rather than Part II of those instructions.

The FAA concurs. The original reference in the Supplemental NPRM to Part II was an error. The language in paragraph (d) of this final rule has been changed accordingly.

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

There are approximately 2,890 Boeing Model 737-100, -200, -200C, -300, -400, and -500 series airplanes of the affected design in the worldwide fleet. The FAA estimates that 1,100 airplanes of U.S. registry will be affected by this AD.

It will take approximately 4 work hours per airplane to accomplish the required inspections at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the required inspections on U.S. operators is estimated to be $264,000, or $240 per airplane.

It will take approximately 12 work hours per airplane to accomplish the required rework at an average labor rate of $60 per work hour. Required parts will cost approximately $532. Based on these figures, the cost impact of the required rework on U.S. operators is estimated to be $1,377,200, or $1,252 per airplane.

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

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

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

A proposal to amend 14 CFR part 39 by superseding AD 86-09-11, Amendment 39-5298 (51 FR 17009, May 8, 1986), for Sikorsky Model S76A helicopters, was published in the Federal Register on October 12, 2001 (66 FR 52073). That action proposed retaining a life limit based on hours TIS but also allowing the life limit to be based on cycles for certain landing gear parts. That action also proposed selecting a method for calculating the life limit of the landing gear parts, recording that method in the rotorcraft history or equivalent records, and using only that method throughout the life of the part. A cycle is defined as one takeoff to a hover or other mode of flight and one landing.

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

The manufacturer suggests removing all references to specific dates and pages in the maintenance manual because those references could change in future revisions and lead to confusion for the operators. The FAA agrees; however, that information was only included in the NPRM as part of the discussion and was not included in the regulatory text and is not included in the final rule.

That commenter also states that in Table 1 the correct part number for the main landing gear axle is 1945E85 and not 195E85, and the life limit for the main landing gear retraction actuator piston is 33,000 and not 33,300 hours TIS. The FAA agrees and has corrected this AD accordingly.

After careful review of the available data, including the comment noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes described previously. The FAA has determined that these changes are minor corrections and will only minimally increase the economic burden on operators and will not increase the scope of the AD.

The FAA estimates that 87 helicopters of U.S. registry will be affected by this AD, that it will take approximately 2 work hours per helicopter to accomplish the required actions, and that the average labor rate is $60 per work hour. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be $10,440.

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

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

In rule FR Doc. 02-5563 published on March 8, 2002, (67 FR 10611), BXA makes the following correction. On page 10613, in the first column, under Rulemaking Requirements #1, revise the phrase “not significant” to read “significant.”

In rule FR Doc. 02-5562 published on March 8, 2002, (67 FR 10608), BXA makes the following corrections.

—On page 10608, in the third column, add 743 to the listing of 15 CFR parts.

—On page 10610, in the first column, under Rulemaking Requirements #1, revise the phrase “not significant” to read “significant.”

—On page 10610, in the second column, in the List of Subjects, revise “15 CFR Part 740” to read “15 CFR Parts 740 and 743.”

—On page 10610, in the second column, under the List of Subjects, revise the phrase “Accordingly, parts 734, 740, 742, and 774” to read “Accordingly, parts 734, 740, 742, 743, and 774.”

The Bureau of Export Administration (BXA) maintains controls on certain military related items, such as military vehicles and certain specially designed commodities to be used to manufacture military equipment. These controls ensure regional stability in support of foreign policy. BXA also maintains controls on certain crime control and detection instruments and equipment, and related technology and software as a matter of foreign policy, to promote the observance of human rights throughout the world. Countries to which exports and reexports of these items are controlled are identified in Supplement No.1 to part 738 of the EAR, the Commerce Country Chart, by an X in the regional stability (RS) column identifier RS 2; and crime control (CC) column identifiers: CC 1, CC 2, or CC 3. This rule amends the license requirements for certain crime control items destined to the Czech Republic, Hungary and Poland because these countries were recently admitted to NATO. The EAR is amended to correctly reflect the status of these countries as NATO members.

1. This final rule has been determined to be not significant for purposes of E.O. 12866.

2. Notwithstanding any other provision of law, no person is required to respond nor shall any person be subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid OMB Control Number. This rule involves a collection of information subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq. ). This collection has been approved by the Office of Management and Budget under control number 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 45 minutes for a manual submission and 40 minutes for an electronic submission.

3. This rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under Executive Order 13132.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (See 5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this final rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 5 U.S.C. 553 or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable.

Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Sheila Quarterman, Regulatory Policy Division, Bureau of Export Administration, Department of Commerce, P.O. Box 273, Washington, DC 20044.

Accordingly, Parts 738 and 742 of the Export Administration Regulations (15 CFR parts 730-774) are amended as follows:

On February 1, 2001, the Commission published in the Federal Register interim and proposed rules amending the Hart-Scott-Rodino rules (“HSR rules”) contained in 16 CFR parts 801, 802 and 803. The interim rules took effect upon publication in the Federal Register and implemented amendments to section 7A of the Clayton Act enacted on December 21, 2000 (“2000 Amendments”). The proposed rules recommended other changes improving and updating the HSR rules and did not take effect upon publication. Both sets of rules invited public comments.

The Commission, with the concurrence of the Assistant Attorney General, is adopting the proposed rules, previously published on February 1, 2001, as final with certain further changes in response to the public comments, as described below. The Commission received eighteen public comments addressing either or both the interim rules (66 FR 8679-8721) and the proposed rules (66 FR 8723-8729). Fifteen of the eighteen public comments received pertained to the proposed rules.

The following provided public comments on the proposed rules to the Commission:

No public comments were received concerning Part 801 of the proposed rules. These proposed changes include updating examples in §§ 801.4, 801.14 and 801.90; and amending § 801.15 to reflect the $50 million nexus with U.S. commerce threshold for foreign transactions and give proper reference to other rules sections. The Commission is adopting those proposed rules as final without change.

The proposed rules would amend § 802.2(g), mainly by removing “associated agricultural assets” from the agricultural real property exemption. Under the current rules, such assets are defined as assets that are integral to the agricultural business activities conducted on the property, including inventory (e.g., livestock, poultry, crops, fruit, vegetables, milk, eggs), structures that house livestock raised on the real property, fertilizer, and animal feed.

Comment 12 questioned the justification for removing the associated agricultural assets—particularly structures and inventories of crops, animal feed or fertilizer—from the exemption. The comment suggested that acquisitions of these assets would not potentially be of substantive antitrust interest.

The Commission has concluded that it is appropriate to remove associated agricultural assets from this real property exemption, as proposed. As the Statement of Basis and Purpose (“SBP”) to the Proposed Rules states, doing so will eliminate whatever ambiguity may arguably exist in the definition of “associated agricultural assets.” It also refocuses the rule on agricultural real property which was the initial intent of the exemption when promulgated. The more-than-threefold increase in the statutory size-of-transaction test to $50 million will continue to exempt acquisitions of agricultural property unless the additional assets being acquired—whether within or beyond the definition of “associated agricultural assets”—are valued in excess of $50 million. The Commission believes that the elimination of “associated agricultural assets” from the agricultural property exemption simplifies the rule without significantly limiting the applicability of that exemption. If a significant number of agricultural property transactions are reported under HSR because of the “associated agricultural assets” conveyed in the transaction, the Commission can revisit the language of § 802.2(g).

Proposed § 802.6(b) was revised to state a general rule regarding mixed transactions rather than one that is industry specific. No comments were received regarding this rule revision, therefore the Commission is adopting this Proposed Rule as final without change.

Proposed § 802.8 corrected a typographical error. No comments were received regarding this rule revision, therefore the Commission is adopting this Proposed Rule as final without change.

The Proposed Rules would restructure and amend the exemptions contained in §§ 802.50 and 802.51. The Commission received fifteen comments regarding these proposed rules. One proposed amendment to these rules increases the thresholds for measuring nexus with U.S. commerce to $50 million from $15 million and $25 million. No comments were received concerning the increase to $50 million of the $15 million and $25 million nexus with U.S. commerce thresholds contained in these exemptions. Consequently, these increased thresholds will be implemented without change from the Proposed Rules.

The comments focused on five other aspects of the proposed rules: (1) The period used to determine sales in or into the U.S.; (2) the method of valuation used for assets located in the U.S.; (3) the elimination of the $110 million aggregate U.S. sales and assets exemption for transactions valued in excess of $200 million; (4) the elimination of the absolute exemption for acquisitions of assets located outside of the U.S. by a foreign person; and (5) the applicability of aggregation of the sales and assets of multiple foreign issuers from the same acquired person to both U.S. and foreign acquiring persons.

The Commission is adopting Proposed §§ 802.50 and 802.51 as final, with two changes in response to these public comments. First, the measure of sales in or into the U.S. will be sales of the most recent fiscal year, rather than the sum of the most recent fiscal year's sales and sales year-to-date, as proposed. The Commission believes that the burden on the parties of determining any measure of sales in or into the U.S. beyond the most recent fiscal year of the parties may well outweigh the benefit to the agencies in capturing transactions involving a recent upswing in U.S. sales. Second, § 802.51 will be amended to correct a drafting error which resulted in aggregation of sales in or into the U.S. and assets located in the U.S. being applicable only to foreign persons acquiring multiple foreign issuers from the same acquired person. This error was discovered shortly after publication and will be corrected with additional language in paragraph (a) of the rule. This correction makes it clear that this aspect of the rule is intended to apply to acquisitions by both U.S. and foreign acquiring persons. These provisions, as well as others addressed by the comments, are discussed below. Finally, in a technical correction, the reference to § 801.40(c)(2) in paragraphs 802.50(b)(3), 802.51(a)(1), 802.51(b)(1), and 802.51(c)(3), has been changed to § 801.40(d)(2) to reflect the renumbering of that section.

Comments 1-6 and 10-17 criticized the proposed requirement that sales in or into the U.S. be calculated by adding those sales from the last fiscal year to such sales generated to date since the end of that fiscal year, calculated no more than sixty days prior to the filing of notification or if notification is not required, within sixty days prior to the consummation of the acquisition. This proposed change reflected the recognition that sales figures based on a party's most recent fiscal year may be several months out of date and was intended to ensure that where U.S. sales generated by foreign assets and voting securities trend steeply upward prior to the acquisition, a filing would be required if that trend resulted in over $50 million in U.S. sales. The comments expressed a variety of concerns and offered several alternatives.

Comment 1 stated that this proposed method of calculating combined sales would, in many transactions, remove all benefit of the increased $50 million threshold for U.S. sales. It further noted that the requirement to combine sales could result in a filing obligation even where U.S. sales have been stagnating or even declining. The comment suggested that the requirement would produce widely disparate results based solely on when the transaction closes ( i.e., transactions that propose to close later in the year will be less likely to be able to claim the exemption than those that close early in the year). The comment proposed that the agencies' goal could be accomplished by requiring the comparison of U.S. sales over a two year period, and determining the applicability of an exemption based on the greater of U.S. sales for a single year in that period.

Comments 2, 3, 13 and 15 addressed the same concerns and suggested an alternative approach of using the higher of the most recent fiscal year's sales or estimated sales for the current year-to-date. Comment 13 further predicted that the proposed change would substantially narrow the exemption previously available and increase the number of transactions that are reportable.

Comment 4 suggested that a more equitable method would be to determine sales in the twelve months prior to filing or closing the transaction, calculated within sixty calendar days prior to filing notification or, if no filing is required, within sixty calender days of closing.

Comment 5 stated that determining the value of sales in or into the U.S. is often extraordinarily complex and time-consuming and that the proposed revisions do not reduce that burden. It further noted that while corporations have methods for analyzing such data, these methods are generally geared toward quarterly and annual assessments and are virtually never performed on an ad hoc basis. Outside of the audit procedures currently in place, it suggested that it is not practical, and perhaps not even possible, to take a meaningful snapshot of current revenues. The comment recommended deleting the requirement that current year sales be analyzed.

Comment 6 observed that throughout the rules, the determination of sales is always on an annual basis and is found in the reporting person's last year-end, consolidated statement of operations. It further opined that there is no suggestion that anti-competitive mergers have escaped review because of sharp upward trends in U.S. sales.

Comment 10 questioned why the rules for a foreign exemption should be particularly concerned about changes to sales since the end of the last fiscal year, when § 801.11 (measuring net sales for the size-of-person test) is not. Comment 12 similarly questioned why the change seeks to address an issue (a recent increase in U.S. sales) which arises in both foreign and domestic transactions, and no similar change is proposed for dealing with domestic transactions. It also suggested the possible approach of using the greater of the previous year's sales or sales year-to-date, but noted that the approach would still suffer from inconsistency with other provisions in the rules and further observed that current information is often difficult to obtain from foreign entities.

Comments 11, 14, and 16 noted that requiring the aggregation of sales since the end of the preceding fiscal year will lead in certain cases to uncertainty as to whether or not a transaction is reportable and places on the parties to a transaction the added burden of monitoring the sales of a foreign target while negotiations are in progress. Comment 14 suggested two alternative methods of calculation. One method was to determine a twelve month average of sales by adding the last fiscal year to the sales year-to-date, dividing the total by the number of months included, and multiplying this figure by twelve. The second suggested method was to use the most recent twelve months calculated within sixty days of filing or closing.

Finally, Comment 17 asserted that the proposed change, setting forth the time in which the calculation must be made, is unclear and imposes undue burden upon the parties that could generate delays in transactions. It proposed an alternative test of considering the greater of sales in the most recent fiscal year or sales over the last four available fiscal quarterly periods. It further stated that the parties should be entitled to a consistent cut-off date for calculating sales in or into the U.S., regardless of whether the transaction proves to be subject to notification. The comment recommended that the parties measure these sales as of the end of the most recent quarterly period available as of the date the parties enter into an agreement, so long as no more than 135 days have elapsed since the end of that quarterly period. It suggested that this approach would provide the parties certainty; allow sufficient time to gather information that is not always readily available; minimize the burden imposed by requiring sales for a fiscal year that has not yet ended; properly take into account sales trends; and allow most parties to rely upon their existing reporting practices.

The Commission recognizes the burden on the parties in determining sales in or into the U.S. for any period of time other than the filing person's most recent fiscal year. The Commission also agrees with the observation that aggregating sales from the most recent fiscal year with those year-to-date may have the undesirable result of making acquisitions reportable where sales in or into the U.S. in the current year may be steady or even declining. The Commission considered the many alternative methods suggested in the comments ( e.g. , most recent four quarters, most recent twelve months, greater of two years, greater of year-to-date or last fiscal year, twelve-month average) but was unable to discern how any of these methods would be significantly less burdensome than the approach put forth in the Proposed Rules. All of these approaches would also require compilation of data that is not captured in the ordinary course of business by many persons filing notification. Consequently, in the Final Rules, the measure of sales in or into the U.S. for purposes of §§ 802.50 and 802.51 will be those of the most recently completed fiscal year.

Comments 1, 3, 6 and 13 objected to the proposed change from book value to fair market value for measuring assets located in the U.S. The Commission believes that this change is appropriate in order to reflect more accurately a foreign person's nexus with U.S. commerce, to harmonize these sections with the rest of the rules, and to address questions frequently asked of the PNO concerning the use of book value to make this determination. Specifically, intangible assets such as U.S. patents and other intellectual property were often not carried on the books of a foreign person, and the question has frequently arisen as to what value should be attributed to these intangible assets and what method should be used to determine their book value. In these instances, the PNO advised parties to use fair market value.

Comment 1 asserted that the Commission's proposal is inconsistent with the rest of the rules and that the implementation of a fair market value test would impose a new, substantial burden upon parties in voting securities transactions. It argued that the size-of-person test is based on an existing balance sheet, not on a market valuation, and that it is only for assets that are being acquired that the rules require a fair market valuation. The comment suggested that in a stock deal, the market value of assets is not easily determinable, and any excess over the book value of the assets of the acquired company is reflected as goodwill on the balance sheet of the acquired company, precisely in recognition of the difficulties of a market value appraisal. It further maintained that the competitive significance and impact on U.S. commerce of a proposed acquisition will likely not turn upon whether the value of the acquired company's assets located in the U.S. has increased since its last book value calculation.

Comment 3 also argued that an additional burden is placed on the parties to extract the specific U.S. assets and determine their fair market value. It states that fair market valuation may be subject to dispute by the agencies, thus subjecting the parties to possible penalties, while book value is a simple, readily available value and provides certainty to parties seeking to determine whether the exemption is available. Comment 13 agreed that an additional burden is imposed by fair market valuation and also complained that some measure of certainty is lost since the agencies could dispute that valuation.

Lastly, Comment 6 claimed that the Commission's stated justification for the proposed rule change appeared to lack a factual foundation, arguing that consistency throughout the rules requires that book value be retained as the measure of value. It further submitted that book value is readily available and that requiring the acquiring person to determine the fair market value of the acquired person's, and in some cases its own, U.S. property imposes an unreasonable new burden. The comment concluded that, absent compelling evidence that a significant number of anticompetitive transactions will escape premerger review without this change, the book value of U.S. assets should continue to govern.

The Commission recognizes that in some instances the requirement to calculate the fair market value of assets located in the U.S. may impose additional burden on the acquiring person. However, in the vast majority of cases it will be readily apparent that the value of the assets clearly is above or below the $50 million threshold, and determination of whether or not the exemption is applicable will require a minimal amount of effort by the acquiring person.

As to the alleged inconsistency with the methodology used in determining the size-of-person of a party, the Commission notes that the $50 million threshold in §§ 802.50 and 802.51 is not a size-of-person test, but rather a “size-of-nexus with the U.S.” test. The fair market value of assets located in the U.S. is a far more accurate assessment of the true nexus with U.S. commerce at the present time. The book value may be out of date and may not reflect the true value, especially in the case of assets which constitute an ongoing business, since a portion of the value of those assets may be carried on the books as goodwill. Also, assets may be carried on the books showing significant depreciation that does not reflect their actual value.

For these reasons, the Commission believes that the potential burden on a small number of transactions is outweighed by the benefit to the agencies in requiring a current and meaningful measure of a transaction's nexus with U.S. commerce. Therefore, the Commission will adopt the proposed change to fair market value for calculating the value of assets located in the U.S.

Comments 1 and 13 asserted that the elimination of this exemption for transactions valued in excess of $200 million is inappropriate. Comment 1 contended that there is no discussion in the 1978 SBP of the import now apparently attributed by the Commission to the overall value of a transaction in determining whether a transaction may have an anticompetitive impact on U.S. commerce. It argued that the result of this proposed change is not consistent with the original rationale for creating this exemption, and that the value of a transaction outside of the U.S. does not indicate in any way the transaction's potential anticompetitive effects in the U.S. Comment 13 states that the elimination of this portion of the exemption will greatly narrow its reach.

While this change may marginally narrow the exemptions, the general increase in the reporting threshold to over $50 million, together with the increase in the $15 million and $25 million nexus tests to $50 million, will significantly expand the number of exempt foreign transactions.

In the SBP for the Proposed Rules, the Commission referenced the 1978 SBP which explains that the $110 million threshold was adopted to approximate the size-of-person criteria of Section 7A(a)(2), as it seemed appropriate and consistent with congressional intent not to exempt a transaction involving two foreign persons with a U.S. presence similar in size to the general criteria of the act for all persons. 43 FR 33498 (July 31, 1978). Since the new legislation removes the size-of-person test for acquisitions valued at over $200 million, the Commission likewise believes that it is appropriate and consistent to require filings from foreign persons, regardless of the size of their U.S. presence, where the transaction is valued at over $200 million and the $50 million nexus test of these exemption rules is satisfied.

Comment 13 claimed that the Commission sets forth no explanation as to why such transactions are likely to raise competitive issues in the U.S. in order to justify removing the exemption. The Commission clearly stated in the SBP to the Proposed Rules that experience at both agencies has shown that foreign asset acquisitions can and do have a direct impact on the U.S. economy and that this is more likely to be true where the assets generate over $50 million in sales in or into the U.S. Thus, the Commission continues to believe that it is appropriate to require that their acquisition be reported where there is a substantial nexus to U.S. commerce. This approach makes the rule consistent with the treatment of U.S. acquiring persons.

Comments 11 and 17 correctly noted a section numbering error in § 802.51. The intent was to require the aggregation of sales and assets of multiple foreign issuers, which are being acquired from the same acquired person, by both foreign and U.S. acquiring persons. This numbering error was discovered shortly after publication of the Proposed Rules and is corrected by adding paragraph (a)(3) which reads: “If interests in multiple foreign issuers are being acquired from the same acquired person, the assets located in the United States and sales in or into the United States of all the issuers must be aggregated to determine whether the $50 million thresholds are exceeded.” This revision will make the intent of the rule clear. An example has been added to illustrate the aggregation requirement.

The example in Section 802.52 has been amended to reflect the new $50 million threshold for measuring nexus with U.S. commerce.

In addition to the above noted comments, Comment 8 opposed all proposed changes to the foreign exemptions on the grounds that they narrowed the scope of the exemptions. It recommended broadening the exemptions instead, but offered no suggestions as to how this should be accomplished. This comment, as well as Comments 1 and 3, based its recommendation on the International Competition Policy Advisory Committee (“ICPAC”) (Report to the Attorney General of the International Competiton Policy Advisory Committee (February 2000)) finding that there were far too many filings in fiscal year 1999 involving foreign transactions. The ICPAC report dealt with filings subject to the prior $15 million size-of-transaction threshold and does not take into consideration changes in the level of filings as a result of the 2001 Amendments to the statute. Despite the marginal narrowing of the exemption in the areas discussed above, the Commission believes that the increase in the statutory size-of-transaction threshold to $50 million and the increase in the dollar thresholds in §§ 802.50 and 802.51 will dramatically reduce the number of foreign transaction filings overall.

The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the agency conduct an initial and final regulatory analysis of the anticipated economic impact of the proposed amendments on small businesses, except where the agency head certifies that the regulatory action will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605.

Because of the size of the transactions necessary to invoke a Hart-Scott-Rodino filing, the premerger notification rules rarely, if ever, affect small businesses. Indeed, the recent amendments to Section 7A of the Clayton Act, which these rule amendments implement, were intended to reduce the burden of the premerger notification program by exempting all transactions valued at $50 million or less. Further, none of the rule amendments expands the coverage of the premerger notification rules in a way that would affect small business. Accordingly, the Commission certifies that these rules will not have a significant economic impact on a substantial number of small entities. This document serves as the required notice of this certification to the Small Business Administration.

The Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3518, requires agencies to submit requirements for “collections of information” to the Office of Management and Budget (“OMB”) and obtain clearance prior to instituting them. Such collections of information include reporting, recordkeeping, or disclosure requirements contained in regulations. The HSR premerger notification rules and Form contain information collection requirements as defined by the PRA that have been reviewed and approved by OMB under OMB Control No. 3084-0005 (preceding the latest HSR amendments). Because the Final Rules would not affect the information collection requirements of the premerger notification program beyond those of the proposed rules, they are not being resubmitted to OMB for review pursuant to the PRA. The Supporting Statement accompanying the Request for OMB Review states that the total burden imposed on the members of the public subject to the requirements of the Act, including the final rules, is estimated to be 192,089 hours per year (based on fiscal year 2000 filings). This constitutes approximately a 47% reduction from what the burden estimate would be absent the final rules and based on the number of fiscal year 2000 filings. The Commission is seeking 3-year clearance with the requisite submissions to OMB.

On February 1, 2001, the Commission published in the Federal Register and sought comment on Interim and Proposed Rules to amend the Hart-Scott-Rodino rules (“HSR rules”) contained in 16 CFR parts 801, 802 and 803. See 66 FR 8679-8721. The Interim Rules took effect upon publication and implemented amendments to Section 7A of the Clayton Act enacted on December 21, 2000 (“2000 Amendments”). The Commission has decided that it needs more time to consider whether to make the Interim Rules final. A primary focus of this analysis is whether the Commission should make final the dollar-based reporting thresholds that were newly introduced by the Interim Rules. In light of the public comments, however, the Commission has determined to make final at this time an amendment to interim § 802.21(b), containing a transitional filing rule that was scheduled to expire on February 1, 2002, as explained below.

Interim § 802.21 (Acquisitions of voting securities not meeting or exceeding greater notification threshold) contained paragraph (b), which addressed acquisitions of voting securities up to the next notification threshold by “transitional” filers, i.e., acquiring persons who filed using the 1978 notification thresholds and who have met or crossed the threshold for which they filed within a year of the waiting period's expiration, but whose five-year period for making additional acquisitions under § 802.21(a) had not expired as of February 1, 2001 (the effective date of the 2000 Amendments).

Section 802.21(b), as published in the Interim Rules, allowed these transitional filers until February 1, 2002 (one year from the effective date of the 2000 Amendments) to acquire up to what was the next reporting threshold at the time that they filed, and permitted them to do so without filing another notification, even though they might cross a new 2001 threshold. Thereafter, these acquiring persons, along with any other acquiring persons filing on or after February 1, 2001, were required to observe the 2001 thresholds contained in § 801.1(h). Interim § 802.21(b) was an effort to strike a balance between the reliance of transitional filers on rules that were in effect when they filed, and minimizing the agency's burden of administering two different sets of notification thresholds after February 1, 2001.

The Commission received five comments on this transition rule. 1 Comment 3 stated that any burden imposed on the Commission in maintaining two sets of thresholds is vastly outweighed by the burden on the parties who are required to prepare filings and pay additional filing fees, and the burden on the agencies in reviewing these additional filings, which were previously exempt for up to an additional four years. Comment 8 similarly claimed that the burden to the parties would outweigh the burden on the Commission and also expressed concern that the short notice prior to effecting the rule was unfair to parties who had filed recently with the good faith expectation that they would have five years to acquire additional securities. Comment 9 suggested that the transition rule remain unchanged, but that the full five-year period should be extended to acquisitions where a filing was made for an acquisition valued in excess of a 2001 threshold and the subsequent acquisition would not cross another 2001 threshold. For example, if “A” acquired $60 million of B's voting securities and filed indicating the $15 million notification threshold, “A” should be able to acquire up to $100 million of B's voting securities during the five-year period without a new filing. Comments 13 and 15 recommended elimination of the transition rule as an adjunct to restoring intermediate percentage notification thresholds.

The Commission agrees that any burden in administering two sets of notification thresholds for five years may well be outweighed by the burden to transitional filers. Therefore, the final rule restores to parties who filed prior to February 1, 2001, the full five-year period following expiration of the waiting period to acquire up to the next notification threshold that was in effect at the time of filing. With this modification, the change suggested by Comment 9 becomes unnecessary.

The Commission has previously solicited public comment on this rule provision. Since the Commission believes that this final rule adequately addresses the commenters' concerns, the Commission finds that further public comment is unnecessary. See 5 U.S.C. 552(b)(3). Although the Commission believes this rule is strictly procedural in nature, to the extent, if any, that it is substantive, the Commission believes it grants or recognizes an exemption and relieves a restriction that would have taken effect upon expiration of the time period that was set forth in interim § 802.21(b). See 5 U.S.C. 553(b)(B). Accordingly, the Commission is adopting this rule as final and effective upon publication and will apply it retroactively to February 2, 2002, in order to ensure the continuity and clarity of the filing procedures that apply to transitional filers, as explained above.

The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that the agency conduct an initial and final regulatory analysis of the anticipated economic impact of the proposed amendments on small businesses, except where the agency head certifies that the regulatory action will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605.

Because of the size of the transactions necessary to invoke a Hart-Scott-Rodino filing, the premerger notification rules rarely, if ever, affect small businesses. Further, this rule amendment does not expand the coverage of the premerger notification rules in a way that would affect small business. Accordingly, the Commission certifies that this rule will not have a significant economic impact on a substantial number of small entities. This document serves as the required notice of this certification to the Small Business Administration.

The Paperwork Reduction Act of 1995 (“PRA”), 44 U.S.C. 3501-3518, requires agencies to submit requirements for “collections of information” to the Office of Management and Budget (“OMB”) and obtain clearance prior to instituting them. Such collections of information include reporting, recordkeeping, or disclosure requirements contained in regulations. The HSR premerger notification rules and Form contain information collection requirements as defined by the PRA that have been reviewed and approved by OMB under OMB Control No. 3084-0005. This final rule implements amendments to sction 7A of the Clayton Act, which reduces the burden of the premerger reporting program by exempting all transactions valued at $50 million or less. Because this final rule does not affect the information collection requirements of the premerger notification program as implemented by the interim rules, it has not been resubmitted to OMB under the PRA for review.

1. The Federal Energy Regulatory Commission (Commission) is amending § 284.12(c)(1)(ii) of its open access regulations to require that interstate pipelines permit releasing shippers to recall released capacity and renominate that recalled capacity at any of the scheduling opportunities provided by interstate pipelines. Recalls of released capacity will not be permitted to reduce (bump) already scheduled volumes for replacement shippers unless the replacement shippers are provided with at least one opportunity to rescheduled any bumped volumes, which is similar to the protection afforded interruptible shippers. This rule creates greater flexibility for firm capacity holders on interstate pipelines by synchronizing the Commission's regulation of recalled capacity with its standards for intra-day nominations. The rule also will enhance competition by freeing up capacity that otherwise would not be released and creating greater parity between scheduling of capacity release transactions and pipeline interruptible service.

3. In Order No. 636, the Commission adopted regulations permitting shippers (releasing shippers) to release their capacity to other shippers (replacement shippers). 1 Under these regulations, releasing shippers were permitted to “release their capacity in whole or in part, on a permanent or short-term basis, without restriction on the terms and conditions of the release.”  2 The regulation permits releasing shippers to impose terms for a release transaction under which the releasing shipper reserves the right to recall that capacity to use the capacity itself. As an example, a shipper might include a recall condition in the event that temperature drops below a pre-determined level. 3

4. In July 1996, in Order No. 587, 4 the Commission incorporated by reference consensus standards approved by the Gas Industry Standards Board (now the North American Energy Standards Board (NAESB))  5 designed to standardize business practices and communication protocols of interstate pipelines in order to create a more integrated and efficient pipeline grid. NAESB is a private, consensus standards developer whose wholesale natural gas standards are developed by representatives from all segments of the natural gas industry.

5. One aspect of NAESB's standards adopted in Order No. 587 covered capacity release transactions. Of relevance here, two standards, 5.3.6 and 5.3.7, apply to recalls of capacity release transactions.

6. In 1996, when NAESB first adopted these standards, NAESB's standards provided for one nomination, at 11:30 a.m. CCT  10 for the next gas day and only one intra-day nomination at an indeterminate time. In order to create a more standardized intra-day nomination schedule, 11 NAESB amended its standards to provide for three standardized intra-day nomination opportunities: an Evening nomination at 6 p.m. CCT to take effect at 9 a.m. CCT the next gas day, an Intra-Day 1 nomination at 10 a.m. CCT to take effect at 5 p.m. CCT on the same gas day, and an Intra-Day 2 nomination at 5 p.m. CCT to take effect at 9 p.m. CCT on the same gas day. 12

Under the Federal Alcohol Administration Act (27 U.S.C. 201 et seq. ) (FAA Act), wine labels must provide the consumer with adequate information as to the identity of the product. The FAA Act also requires that the information appearing on wine labels not mislead the consumer.

To help carry out these statutory requirements, ATF has issued regulations, including those that designate grape varieties. Under 27 CFR 4.23(b) and (c), a wine bottler may use a grape variety name as the designation of a wine if at least 75 percent of the wine (51 percent in the case of wine made from Vitis labrusca grapes) is derived from that grape variety. Under § 4.23(d), a bottler may use two or more grape variety names as the designation of a wine if all of the grapes used to make the wine are of the labeled varieties, and the percentage of the wine derived from each variety is shown on the label.

Treasury Decision ATF-370 (61 FR 522), January 8, 1996, adopted a list of grape variety names that ATF determined to be appropriate for use in designating American wines. The list of prime grape names and their synonyms appears at § 4.91, while alternative grape names temporarily authorized for use are listed at § 4.92. We believe the listing of approved grape variety names for American wines will help standardize wine label terminology and prevent consumer confusion.

Under § 4.93, any interested person may petition ATF to add additional grape varieties to the list of prime grape names. The petitioner should provide evidence of the following:

• Acceptance of the grape variety;

• The validity of the name for identifying the grape variety;

• That the variety is used or will be used in winemaking; and

• That the variety is grown and used in the United States.

Documentation submitted with the petition may include:

• A reference to the publication of the variety's name in a scientific or professional journal of horticulture or a published report by a professional, scientific or winegrowers' organization;

• A reference to a plant patent, if patented; and

• Information about the commercial potential of the variety, such as the acreage planted and its location or market studies.

Section 4.93 also places certain eligibility restrictions on the approval of grape names. We will not approve a name:

• If it has previously been used for a different grape variety;

• If it contains a term or name found to be misleading under § 4.39; or

• If a name of a new grape variety contains the term “Riesling.”

The Director will not approve the name of a new grape variety developed in the United States if the name contains words of geographical significance, place names, or foreign words which are misleading under § 4.39.

In Notice 924, published on July 19, 2001, ATF proposed to add the names Albariño, Alvarinho, Black Corinth, and Fiano to the list of approved grape variety names in § 4.91. We based the proposal on the petitions and evidence described below. We received no comments to the notice. Because the petitioners provided sufficient evidence to support the requirements of § 4.93, we are adding the new names to the approved list.

Havens Wine Cellars of Napa, California, petitioned ATF to add “Albariño” to the list of prime grape names approved for the designation of American wines. Grown for centuries in Spain and Portugal, Albariño, a white Vitis vinifera grape, is relatively new to the United States. In Portugal the grape is called “Alvarinho.”

The petitioners stated that Albariño has long been recognized in Europe and in academic communities. As evidence of this, the petitioners submitted the following supporting documents provided by Professor Carole Meredith of the Viticulture and Enology Department at the University of California at Davis (UC Davis):

• European Union Regulation 3201/90: This regulation permits the use of the name “Albariño” on labels of Spanish wines, and the name “Alvarinho” on labels of Portuguese wines.

• Two scientific papers published in the American Journal of Enology and Viticulture: “Effects of Grapevine Leafroll-Associated Virus 3 on the Physiology and Must of Vitis vinifera L. cv. Albariño Following Contamination in the Field,” (Vol. 50, 1999) which discusses a study conducted on Albariño grape vines, and “Contribution of Saccharomyces and Non-Saccharomyces Populations to the Production of Some Components of Albariño Wine Aroma,” (Vol. 47, 1996) which describes a study conducted on Albariño musts.

• “The Genetic Resources of Vitis”: This listing of international grape variety names and synonyms, published in 1988 by the German Federal Grape Breeding Institute, lists Alvarinho as the prime name for the grape varietal with Albariño as a synonym.

• An abstract of an article from the Journal of the American Society for Horticultural Science: “Molecular marker analysis of Vitis vinifera ‘Albariño’ and some similar grapevine cultivars,” published September 1998, describing a DNA analysis conducted on Albariño grapevines.

ATF contacted Professor Meredith and asked her if the name “Alvarinho” should be added to the list as a synonym of Albariño. She replied that both names are well established in Europe and are equally valid names for the grape. She stated that because the grape is relatively new to the U.S., she didn't know which name is most commonly used by U.S. winemakers. She noted that UC Davis has an example of the grapevine in its collection and uses the name “Alvarinho”, most likely because the plant originally came from Portugal.

Havens Wine Cellar reported that it has 2 1/2 acres of Albariño in production, with the first crop picked in 1999. We also know of two other California wineries and a Virginia winery that are growing Albariño. Since the evidence submitted satisfies the requirements of § 4.93, we are adding Albariño and Alvarinho to the list of prime grape names in § 4.91.

Hallcrest Vineyards of Felton, California, petitioned ATF to add the grape variety Black Corinth to the list of prime grape names approved for the designation of American wines. Black Corinth grapes are widely grown in California, where the vast majority of them are dried into raisins and marketed under the name “Zante Currant.”

As evidence of the grape's acceptance and use in California, Hallcrest Vineyards submitted the following statistical reports issued by the State of California:

• Final Grape Crush Report for the 1999 crop, issued by the California Department of Food and Agriculture.

• California Grape Acreage report for 1999, issued by the California Agricultural Statistics Service, in cooperation with the U.S. Department of Agriculture.

Both reports include statistical tables with the data broken down by grape varietal. Black Corinth is one of the listed varietals. The petitioner stated that this is clear evidence that the grape is grown in California and is recognized by the California Department of Food and Agriculture.

Other documentation included The Oxford Companion to Wine (Jancis Robinson, Oxford University Press, 1999), which states that Black Corinth is one of the most commonly used grape varieties in the world raisin industry, and is occasionally used in winemaking.

Hallcrest Vineyards stated it has made a fruity, blush dessert wine from the Black Corinth grape. We are aware of at least one other winery using the grape to produce a table wine. Because the evidence satisfies the requirements of § 4.93, we are adding Black Corinth to the list of prime grape names in § 4.91. Because we believe the name “Zante Currant” could mislead consumers into thinking the wine is made from currants and not grapes, we did not propose that name as a synonym.

United Distillers and Vintners North America, Inc. (UDV) petitioned ATF to add the name “Fiano” to the list of prime grape names approved for the designation of American wines. UDV owns three wineries in California—Beaulieu Vineyards, Glenn Ellen Carneros Winery, and Blossom Hill.

Fiano is a white varietal, long grown in the Campania region of Italy where it is used to produce the Denominazione di Origine Controllata wine Fiano di Avellino. According to information submitted by the petitioner, Fiano is an old grape with a history dating back to the ancient Romans. Records show that Holy Roman Emperor Frederick II (1215-1250) placed an order for Fiano wine and that Charles d'Anjou (1227-1285) planted 16,000 Fiano vines. Modern reference sources referring to the Fiano grape include The New Sotheby's Wine Encyclopedia (Tom Stevenson, DK Publishing, Inc., 1997) and The Oxford Companion to Wine (Jancis Robinson, Oxford University Press, 1999).

As evidence of the grape's use in the United States, UDV submitted a price list from Herrick Grapevines in St. Helena, California, listing Fiano in its grapevine inventory. According to this inventory, the Fiano was planted in 1997 and was obtained from Duarte Nursery in Modesto, California. UDV further stated that Beaulieu Vineyard has produced two vintages of Fiano wine, and submitted evidence that at least three other California vineyards and one New York vineyard are also growing Fiano. The petitioner submitted a letter from Monterey Pacific, one of the California growers, stating that they have five years of experience with Fiano and find it to be a grape with distinctive varietal character.

Based on the evidence presented in the petition, we are adding the Fiano grape to the list of approved prime names in § 4.91.

The provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this rule. This rule does not require winemakers to collect any additional information.

We certify that this final regulation will not have a significant economic impact on a substantial number of small entities. This regulation will permit the use of new grape varietal names. We do not expect any negative impact on small entities. We are not imposing new requirements. Accordingly, the act does not require a regulatory flexibility analysis.

This is not a significant regulatory action as defined by Executive Order 12866. Therefore, the order does not require a regulatory assessment.

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

The Coast Guard received a letter from the bridge manager, requesting a temporary deviation from the current operating schedule of the Route 9/Beesleys Point Bridge to undertake repairs. The draw currently is required to open on signal at all times. This requirement is included in the general operating regulations at 33 CFR 117.5. The work involves ironwork repairs to the bascule span of the bridge. To facilitate the repairs, the bascule span will be locked in the closed position so that concrete can undergo the curing process. This work requires completely immobilizing the operation of the bascule span. In the event of an emergency, openings of the span will be provided as quickly as possible, but may take up to 48 hours to accomplish. Requests for emergency openings can be made by calling the bridge manager at (609) 390-3190 or (609) 624-0949.

In accordance with 33 CFR 117.35, the District Commander approved the contractor's request for a temporary deviation from the governing regulations in a letter dated February 22, 2002.

The Coast Guard has informed the known commercial users of the waterway of the bridge closure so that these vessels can arrange their transits to minimize any impact caused by the temporary deviation.

The temporary deviation allows the Route 9/Beesleys Point Bridge across Great Egg Harbor, mile 3.5, between Somers Point and Beesleys Point, New Jersey to remain closed Monday through Friday from 7 a.m. on March 11, 2002, until 5 p.m. on April 5, 2002.

We encourage you to comment on this test schedule by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this notice [CGD07-02-009], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to the Seventh Coast Guard District Bridge Branch at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid in the Discussion of the Test Schedule, we will hold one at a time and place announced by a separate notice in the Federal Register .

The existing regulations of the Commercial Boulevard bridge (SR 870), mile 1059.0, at Lauderdale-by-the-Sea allow the draw to open on signal, except that, from November 1 through May 15 from 8 a.m. to 6 p.m., Monday through Friday, the draw need open only on the hour, quarter-hour, half-hour, and three-quarter-hour, and from 8 a.m. to 6 p.m. on Saturdays, Sundays, and federal holidays, the draw need open only on the hour, 20 minutes after the hour, and 40 minutes after the hour.

The City of Fort Lauderdale requested on January 3, 2002, that the Coast Guard review the existing regulation of the Commercial Boulevard bridge as they believe the existing regulations are not meeting the needs of vehicle and vessel traffic. This test deviation will allow the draw to open only on the hour, 20 minutes after the hour, and 40 minutes after the hour. We will utilize the data collected from this test deviation to determine if new operating regulations need to be created for this bridge to facilitate vehicle and vessel traffic movement.

The District Commander has granted a test deviation from the operating requirements listed in 33 CFR 117.261(ee) to evaluate the effect of this new schedule on vehicle and vessel traffic. Under this deviation, the Commercial Boulevard Bridge need open only on the hour, 20 minutes after the hour, and 40 minutes after the hour from April 17, 2002, until July 16, 2002.

The CSX Transportation railroad bascule span drawbridge across the Pascagoula River, mile 1.5 at Pascagoula, Mississippi has a vertical clearance in the closed-to-navigation position of 0.8 feet above mean high water and 2.4 feet above mean low water. The bridge provides unlimited vertical clearance in the open-to-navigation position. Navigation on the waterway consists of small cargo ships, tugs with tows, fishing vessels and recreational craft including sailboats and power boats. Presently, the draw opens on signal.

CSX Transportation requested a temporary deviation for the operation of the drawbridge to accommodate maintenance work. The work involves replacement of the deficient wiring in the electrical system of the operating mechanism. This work is essential for continued operation of the draw span of the bridge and is expected to eliminate frequent breakdowns resulting in emergency bridge closures.

This deviation allows the draw of the CSX Transportation railroad bascule span drawbridge to remain closed to navigation from 8 a.m. until 5 p.m. on March 18, 2002.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553 (b) (B), the Coast Guard finds that good cause exists for not publishing an NPRM, and under 5 U.S.C. 553 (d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Publishing a NPRM and delaying its effective date would be contrary to public interest since immediate action is needed to respond to the security risks associated with recreational, passenger, or commercial fishing vessels entering the Corpus Christi Inner Harbor.

On September 11, 2001, both towers of the World Trade Center and the Pentagon were attacked by terrorists. In response to these terrorist acts, heightened awareness and security of our ports and harbors is necessary therefore, the Captain of the Port, Corpus Christi is establishing a temporary security zone within the Corpus Christi Inner Harbor.

The Port of Corpus Christi is the fourth largest petro-chemical port within the United States. A large number of these petro-chemical waterfront facilities are located within the Inner Harbor that serves as a major industrial channel. These petro-chemical waterfront facilities conduct business with both United States and foreign deep draft vessels. The Port of Corpus Christi is also designated as an alternate military strategic load-out port with docks and facilities located within the Inner Harbor. These docks and facilities are vital to the national security interest of the United States.

The Inner Harbor channel is approximately 8 miles long and 300-to-800 feet wide, and has a controlling depth of 45 feet. Restricting the access of recreational, passenger and commercial fishing vessels reduces potential methods of attack on a vessel or waterfront facility within the zone. This security zone is designed to limit the access of vessels that do not have business to conduct with facilities or structures within the Corpus Christi Inner Harbor. Entry of recreational vessels, passenger vessels, or commercial fishing vessels into this zone is prohibited unless specifically authorized by the Captain of the Port Corpus Christi.

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

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

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. Recreational vessels, passenger vessels, and commercial fishing vessels do not frequent the Corpus Christi Inner Harbor. The Inner Harbor is an industrial area primarily used for bulk material transfers. Should a recreational vessel, passenger vessel, or commercial fishing vessel need to enter the Inner Harbor to conduct business with a small entity, such as a ship yard facility, there is no cost and little burden associated with obtaining permission from the Captain of the Port prior to entry.

If you are a small business entity and are significantly affected by this regulation please contact LTJG C. J. Bright, Chief Waterways Section, Coast Guard Captain of the Port Corpus Christi at (361) 888-3162.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

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

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

On January 31, 2002 we published a notice of proposed rulemaking (NPRM) entitled “Safety Zone; Ouzinkie Harbor, Ouzinkie, Alaska” in the Federal Register (67 FR 4692). We did not receive any comments from the public. No public hearing was requested, and none was held.

Because we received the request late, we find that good cause exists, under 5 U.S.C. 553(d)(3), for making this rule effective less than 30 days after publication in the Federal Register .

The U.S. Army Corps of Engineers, through its contractor Western Marine Construction, Inc., will be conducting dredging and blasting operations on portions of Ouzinkie Harbor (Army Corps Of Engineers project number DACW85-01-C-0010). This dredging project will help maintain safe navigation within Ouzinkie Harbor. A 500-yard safety zone around the barge SWINOMOSH and a safety zone closing the harbor and evacuating all vessels from the harbor during blasting operations, is necessary to ensure the safety of the maritime community from the potential hazards associated with dredging and blasting operations.

We did not receive any comments but we made a few technical and clarification changes to the rule. In paragraph (a) of section 165.T17-002, we changed the phrase “dredging and blasting operations” to “dredging or blasting operations,” to clarify that the barge zone will be enforced when the barge SWINOMOSH was engaged in dredging alone. We changed the start date for the effective period in paragraph (b) to reflect a delay in the start of the dredging operations, and clarified that blasting and dredging operations will only occur in daylight hours. We also added the time zone in which this safety zone will occur. In paragraph(c) we added wording to clarify how the tug WALDO will notify vessels of blasting operations about to occur.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12886, 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 10(e) of the regulatory policies and procedures of DOT is unnecessary. This finding is based on the fact that the safety zone around the barge SWINOMOSH will not restrict vessels from transiting through the harbor. Also, the safety zone closing Ouzinkie Harbor during blasting operations will be announced well in advance so as to allow vessels ample time to plan ahead, and the actual blasting operations will be short in duration. The areas will not affect maritime vessel traffic transiting the shipping channel at Ouzinkie Narrows. Vessel traffic at this time of the year is minimal.

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 will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit or anchor in the vicinity of Ouzinkie Harbor during the time this zone is activated.

These safety zones will not have a significant economic impact on a substantial number of small entities for the following reasons. The safety zone area around the barge SWINOMOSH will not restrict vessels from transiting through Ouzinkie Harbor and vessels could pass safely around it. Also, the safety zone closing Ouzinkie Harbor during blasting operations will be announced well in advance so as to allow vessels ample time to plan ahead, and the actual blasting operations will be short in duration. Limited vessel traffic occurs in this area during these months. Before and during the effective period, we will issue a broadcast notice to mariners to warn maritime vessel traffic of the safety zones and operations occurring within the safety zones.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process.

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

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

On July 18, 1997, EPA revised the ozone NAAQS (62 FR 38856). At that time, EPA indicated it would implement the 8-hour ozone NAAQS under the less detailed requirements of subpart 1 of part D of title I of the CAA rather than more detailed requirements of subpart 2 requirements. Various industry groups and States challenged EPA's final rule promulgating the 8-hour ozone NAAQS in the U.S. Court of Appeals for the District of Columbia Circuit. 1 In May 1999, the Appeals Court remanded the ozone standard to EPA on the basis that EPA's interpretation of its authority under the standard-setting provisions of the CAA resulted in an unconstitutional delegation of authority. American Trucking Assns., Inc. v. EPA , 175 F.3d 1027, aff'd , 195 F.3d 4 (D.C. Cir. 1999). In addition, the Court held that EPA improperly interpreted the statute to provide for implementation of the 8-hour standard under subpart 1, but also determined that EPA could not implement a revised ozone standard under subpart 2. The EPA sought review of these two issues by the U.S. Supreme Court. In February 2001, the Supreme Court upheld the constitutionality of the air quality standard setting. Whitman v. American Trucking Assoc. , 121 S. Ct. 903. In addition, the Supreme Court held that EPA has authority to implement a revised ozone standard but that EPA could not ignore subpart 2 when implementing the 8-hour standard. Specifically, the Court noted EPA could not ignore the provisions of subpart 2 that “eliminate[s] regulatory discretion” allowed by subpart 1. After determining that EPA could not ignore the provisions of subpart 2, the Court went on to identify several portions of the classification scheme that are “ill-fitted” to the revised standard, but left it to EPA to develop a reasonable approach for implementation. Any implementation approach that EPA develops must address the requirements of the CAA, as interpreted by the Supreme Court.

The EPA has initiated a process to obtain stakeholder feedback on options the Agency is developing for implementation of the 8-hour ozone NAAQS. The EPA plans to issue a final rule on the implementation strategy prior to designating areas for the 8-hour ozone NAAQS. The implementation rule will provide specific requirements for State and local air pollution control agencies and tribes to prepare implementation plans to attain and maintain the 8-hour NAAQS. States with areas that are not attaining the 8-hour ozone NAAQS will have to develop—as part of its State implementation plan (SIP)—emission limits and other requirements to attain the NAAQS within the time frames set forth in the CAA. 2 Tribal lands that are not attaining the 8-hour ozone standard may be affected, and could voluntarily submit a tribal implementation plan (TIP), but would not be required to submit a TIP. However, in cases where a TIP is not submitted, EPA would have the responsibility for planning in those areas.

The EPA is holding this meeting in order to obtain stakeholder feedback regarding the options that EPA has developed as well as to listen to any new or different ideas that stakeholders may be interested in presenting. The following topics will be covered at the meeting: (1) Classifications and attainment dates; (2) designations and transport; (3) attainment demonstration issues and transportation planning; and (4) other general SIP issues. New Source Review (NSR) programs that accompany nonattainment designations will not be the subject of this meeting since the EPA is currently considering whether and how to change the NSR program regulations in other contexts. The EPA has placed a variety of materials regarding implementation options, and which will be the focus of the meeting, on the website: www.epa.gov/ttn/rto/ozonetech/o3imp8hr/o3imp8hr.htm. Additional material will be placed on the website as they are developed. Anyone interested in attending the meeting should check the website for new material on a regular basis prior to the meetings.

The materials that are available on the website are also available at: Air and Radiation Docket and Information Center, Docket Number A-2001-31, U.S. EPA, 401 M Street, SW., Room M-1500 (Mail Code 6102), Washington, DC 20460. The docket is available for public inspection and copying between 8:00 a.m. and 5:30 p.m., Monday through Friday, excluding legal holidays. A reasonable fee may be charged for copying.

In 1990, Congress amended the Clean Air Act to address, among other things, continued nonattainment of the PM-10 NAAQS. 1 Public Law 101-549, 104 Stat. 2399, codified at 42 U.S.C. 7401-7671q (1991). On the date of enactment of the 1990 Clean Air Act Amendments, PM-10 areas, including the San Joaquin Valley planning area, meeting the qualifications of section 107(d)(4)(B) of the amended Act, were designated nonattainment by operation of law. See 56 FR 11101 (March 15, 1991). EPA codified the boundaries of the San Joaquin Valley PM-10 nonattainment area at 40 CFR 81.305.

Once an area is designated nonattainment for PM-10, section 188 of the CAA outlines the process for classifying the area and establishing the area's attainment deadline. In accordance with section 188(a), at the time of designation, all PM-10 nonattainment areas, including the San Joaquin Valley, were initially classified as moderate.

Section 188(b)(1) of the Act provides that moderate areas can subsequently be reclassified as serious before the applicable moderate area attainment date if at any time EPA determines that the area cannot “practicably” attain the PM-10 NAAQS by the moderate area attainment deadline, December 31, 1994. On January 8, 1993 (58 FR 3334, 3337), EPA made such a determination and reclassified the San Joaquin Valley nonattainment area as serious.

In accordance with section 189(b)(2) of the Act, SIP revisions for the San Joaquin Valley addressing the requirements for serious PM-10 nonattainment areas in section 189(b) and (c) of the Act were required to be submitted by August 8, 1994 and 1994 and February 8, 1997.

The serious area PM-10 requirements, as they pertain to the San Joaquin Valley nonattainment area, include:  2

(a) A comprehensive, accurate, and current inventory of actual emissions from all sources of the relevant pollutant, here, PM-10 and its precursors (CAA section 172(c)(3));

(b) A demonstration (including air quality modeling) that the plan will provide for attainment as expeditiously as practicable but no later than December 31, 2001, or an alternative demonstration that attainment by that date would be impracticable and that the plan provides for attainment by the most expeditious alternative date practicable (CAA section 189(b)(1)(A)(i) and (ii));

(c) Quantitative milestones that are to be achieved every 3 years and that demonstrate reasonable further progress toward attainment by December 31, 2001 (CAA section 189(c)); and

(d) Provisions to assure that the best available control measures (BACM), including best available control technology (BACT), shall be implemented no later than four years after the reclassification of the area to a serious nonattainment area (CAA section 189(b)(1)(B).

The State of California submitted on October 12, 1994 the “San Joaquin Valley PM-10 BACM SIP Submittal” to EPA as a proposed revision to the California PM-10 SIP. On July 17, 1997, CARB submitted to EPA the serious area “PM-10 Attainment Demonstration Plan” (Serious PM-10 Plan). The 1997 Plan incorporated and superseded the 1994 San Joaquin Valley PM-10 BACM SIP (1997 Plan, p. 1-1).

As discussed further in section III below, EPA intended to propose to disapprove the Serious PM-10 Plan for the San Joaquin Valley by March 1, 2002. However, just as the Agency was preparing the proposed disapproval notice for signature by the Regional Administrator and publication in the Federal Register , the State notified EPA that it had withdrawn the Plan from consideration by the Agency. See letter (with enclosures) from Michael Kenny, Executive Officer, California Air Resources Board, to Wayne Nastri, Regional Administrator, EPA Region 9, faxed to EPA on February 26, 2002. As a result, EPA is unable to move forward with its proposed plan disapproval.

The CAA establishes specific consequences if EPA finds that a State has failed to meet certain requirements of the CAA. Of particular relevance here is CAA section 179(a)(1), the mandatory sanctions provision. Section 179(a) sets forth four findings that form the basis for application of a sanction. The first finding, that a State has failed to submit a plan required under the CAA, is the finding relevant to this rulemaking because withdrawal of a plan is tantamount to failing to submit it.

If California has not made the required complete submittal (in this case resubmittal) within 18 months of the effective date of today's rulemaking, pursuant to CAA section 179(a) and 40 CFR 52.31, the offset sanction identified in CAA section 179(b) will be applied in the affected area. If the State has still not made a complete submission 6 months after the offset sanction is imposed, then the highway funding sanction will apply in the affected area, in accordance with 40 CFR 52.31. 3 The 18-month clock will stop and the sanctions will not take effect if, within 18 months after the date of the finding, EPA finds that the State has made a complete submittal of a plan addressing the applicable serious area PM-10 requirements for the San Joaquin Valley.

In addition, CAA section 110(c)(1) provides that EPA must promulgate a federal implementation plan (FIP) no later than 2 years after a finding under section 179(a) unless EPA takes final action to approve the submittal within 2 years of EPA's finding.

In a separate action, EPA is today also proposing to find that the San Joaquin Valley failed to attain the PM-10 NAAQS by the statutory deadline, December 31, 2001. EPA has the responsibility, pursuant to sections 179(c) and 188(b)(2) of the Act, of determining within 6 months of the applicable attainment date (i.e., June 30, 2002), whether the area has attained the annual and 24-hour NAAQS. Section 179(c)(1) of the Act provides that these determinations are to be based upon an area's “air quality as of the attainment date,” and section 188(b)(2) is consistent with this requirement. Under CAA section 189(d), serious PM-10 nonattainment areas that fail to attain are required to submit within 12 months of the applicable attainment date, “plan revisions which provide for attainment of the PM-10 air quality standards and, from the date of such submission until attainment, for an annual reduction in PM-10 or PM-10 precursor emissions within the area of not less than 5 percent of the amount of such emissions as reported in the most recent inventory prepared for such area.”

As noted above, California now has an obligation to develop and submit a new PM-10 attainment plan for the San Joaquin Valley. In order to assist in these efforts, we outline below some of the bases on which we intended to disapprove the Serious PM-10 Plan: 4

(a) The emissions inventory is neither accurate nor comprehensive because, among other reasons, it contains no emissions for ammonia, a PM-10 precursor that contributes to PM-10 exceedances; the inventory combines together in one category a number of sources that constitute 83% of the total primary PM-10 inventory; the inventory is not representative of a number of areas in the Valley; and there is no supporting documentation for the motor vehicle emissions;

(b) The Plan does not provide for attainment of the annual standard by December 31, 2001 as evidenced by NAAQS exceedances cited in our proposed finding of failure to attain. For the 24-hour standard, the State in the Plan sought an extension of the attainment deadline to December 31, 2006 pursuant to CAA section 188(e), but did not provide the supporting documentation required by that section;

(c) The Plan does not meet the requirements of CAA section 189(b)(1)(B) and EPA guidance for best available control measures (BACM): the Plan does not provide for BACM for each significant source category; it does not document the State's selection of BACM; and the Plan's BACM commitments are not being met; and

(d) The Plan does not provide for quantitative milestones to be achieved every three years until the area is redesignated attainment and does not demonstrate reasonable further progress (RFP) toward attainment by December 31, 2001.

Efforts are underway by the State and local air district to develop a plan that will bring clean air to Valley residents as quickly as possible. EPA is committed to working closely with the State and local regulators, the regulated community, and the public to ensure that such plan is technically sound and protective of public health.

EPA is today making a finding that the State of California failed to submit a SIP revision addressing the CAA's serious area PM-10 requirements to attain the 24-hour and annual PM-10 NAAQS for the San Joaquin Valley PM-10 nonattainment area.

Today's action will be effective on February 28, 2002. Under the Administrative Procedures Act (APA), 5 U.S.C. 553(d)(3), an agency rulemaking may take effect before 30 days after the date of publication in the Federal Register if an agency has good cause to mandate an earlier effective date. Today's action concerns a SIP submission that is already overdue and the State has been aware of applicable provisions of the CAA relating to overdue SIPs. In addition, today's action simply starts a “clock” that will not result in sanctions for 18 months, and that the State may “turn off” through the submission of a complete SIP submittal. These reasons support an effective date prior to 30 days after the date of publication.

This final agency action is not subject to the notice-and-comment requirements of the APA, 5 U.S.C. 533(b). EPA believes that because of the limited time provided to make findings of failure to submit regarding SIP submissions, Congress did not intend such findings to be subject to notice-and-comment rulemaking. However, to the extent such findings are subject to notice-and-comment rulemaking, EPA invokes the good cause exception pursuant to the APA, 5 U.S.C. 553(d)(3). Notice and comment are unnecessary because no EPA judgment is involved in making a nonsubstantive finding of failure to submit SIPs required by the CAA. Furthermore, providing notice and comment would be impracticable because of the limited time provided under the statute for making such determinations. Finally, notice and comment would be contrary to the public interest because it would divert Agency resources from the critical substantive review of submitted SIPs. See 58 FR 51270, 51272, note 17 (October 1, 1993); 59 FR 39832, 39853 (August 4, 1994).

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

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

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

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

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

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

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

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

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

This final rule will not have a significant impact on a substantial number of small entities because findings of failure to submit required SIP revisions do not by themselves create any new requirements. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities.

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

EPA has determined that today's action does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. The CAA provision discussed in this notice requires states to submit SIPs. This notice merely provides a finding that California has not met that requirement. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by May 17, 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).)

The Office of Inspector General's (OIG's) exclusion authorities are intended to protect the Federal health care programs and their beneficiaries from untrustworthy health care providers, i.e., individuals and entities whose behavior has demonstrated that they pose a risk to program beneficiaries or to the integrity of these programs. These authorities encompass both mandatory exclusions (section 1128(a) of the Social Security Act (the Act)) and permissive exclusions (section 1128(b) of the Act). The mandatory exclusion authorities require the OIG to exclude from program participation any individual or entity convicted of a “program-related” crime; patient abuse or neglect; or certain felonies related to health care delivery, governmental health care programs or controlled substances. Mandatory exclusions must be imposed for a minimum 5-year period. The permissive authorities do not require the imposition of an exclusion, and may either be (1) “derivative” exclusions that are based on actions previously taken by a court or other law enforcement or regulatory agencies, or (2) “non-derivative” exclusions that are based on OIG-initiated determinations of misconduct, e.g., poor quality care or submission of false claims for Medicare or Medicaid payment. With certain exceptions, there are no specified minimum periods of exclusion under these permissive authorities.

In addition, as an administrative remedy to remedy health care fraud and abuse, section 1128A of the Act allows the OIG to seek civil money penalties (CMPs), assessments and exclusions against those engaged in filing false claims (and certain other offenses) against the Department's programs and beneficiaries. Since enactment in 1981, the CMP provisions have been expanded to apply to numerous types of fraud and abuse activities related to Medicare and other Federal health care programs. Providers who may be subject to any of the OIG's administrative sanctions have full due process rights, including administrative hearings and appeals to the Federal courts.

On October 20, 2000, the OIG published a proposed rule in the Federal Register (65 FR 63035) that proposed several revisions and technical corrections to the OIG regulations codified in 42 CFR chapter V.

In response to the proposed rule, the OIG received a total of 6 timely-filed public comments from organizations, associations and other interested parties. Set forth below is a brief explanation of the intended revisions set forth in the proposed rule, a summary of the comments received and a response to those concerns, and a description of the final changes and clarifications being made to 42 CFR chapter V as a result of this final rule.

Proposed change: In response to questions raised as to whether a limitations period is applicable to the imposition of OIG program exclusions, the OIG proposed to clarify § 1001.1 to clarify that there is no time limitation on the imposition of a program exclusion. In Wesley J. Hammer v. IG, DAB 1693 (1999), the Departmental Appeals Board ruled that exclusion under section 1128(b)(7) of the Act, where such exclusion is based on an act which is described in section 1128A of the Act, is subject to the 6 year statute of limitations contained in section 1128A.

Comment/Response: The proposed rule stated that there would be no time limitation on the OIG's imposition of a program exclusion since no statute of limitations is specified in the Act with respect to exclusions under section 1128, and program exclusions are remedial in nature. Two commenters questioned this interpretation. The commenters suggested that if a program exclusion is based on the Secretary's determination that there has been a violation of another statute, the program exclusion action should be subject to the same limitations period that would apply to an action taken under the other statute. If not, the commenters believed that an individual or entity could be excluded for activities that occurred years before and that do not bear on their current trustworthiness or integrity. In addition, the commenters expressed concern that after the passage of significant time, evidence becomes difficult or impossible to gather and thus there is a need for a statute of limitations with respect to the imposition of program exclusions.

The comments raise concerns about exclusions under section 1128(b)(7) of the Act, the only exclusion authority that is based upon the Secretary's determination that there was an act committed that is a violation of another statute. 1 Based on the concerns raised by the commenters, the OIG has chosen not to finalize the proposed revision, but to leave the current regulation unchanged.

Proposed change: With regard to financial loss and threshold amounts with respect to exclusion actions, we proposed to revise §§ 1001.102(b)(1) and 1001.201(b)(2)(i) to increase the financial loss considered to be an aggravating factor from $1,500 to $5,000 to more properly reflect the current health care economy and establish a more reasonable threshold amount as a basis for lengthening a period of exclusion, and to reflect as an aggravating factor both the actual and intended loss to the programs associated with the conduct of the sanctioned individual or entity. The OIG received two public comments on this proposed revision.

Comment: Commenters objected to allowing “intended loss” to be considered as an aggravating factor, asserting that the concept of intent is subjective and allows for speculation and difficulty in questions of proof and defense. They indicated that while an objective approach is used to determine whether an actual loss has occurred, it is subjective to determine whether an individual or entity intended to cause a loss when no actual loss has occurred. One commenter indicated that an internal OIG decision should not carry the same weight as a decision that was adjudicated by a third party. Because the OIG would be able to consider “intended losses” based on “similar acts not adjudicated,” commenters believed the OIG would have significant latitude to give weight to “unsubstantiated allegations, charges supported by inadmissible evidence, statements that have not been subject to cross-examination * * *” that would not be supported by the judicial process.

Response: We have clarified and amended the proposed change to this section to provide that the OIG will consider acts “that caused, or reasonably could have been expected to cause, a financial loss. * * *” The purpose of this provision is to consider the magnitude of the individual or entity's conduct when determining the appropriate length of exclusion. The trustworthiness of an individual or entity relates to the amount of loss their conduct reasonably could have been expected to cause, regardless of whether the conduct was discovered before or after the payment was made. For example, the fact that a Medicare contractor detected a false claim prior to payment, and therefore no loss was incurred by the program, does not reduce the culpability and untrustworthiness of those responsible for the submission of the false claim.

The OIG intends to consider “reasonably expected loss” only in those situations where there is adequate reliable evidence to discern the amounts that would have been paid as a result of the individual's or entity's false claim or other improper conduct had the conduct not been detected prior to the payment of the claims.

Comment: Regarding the proposed increase of the threshold amount for an aggravating factor to $5,000 (from $1,500), one commenter asked whether the $5,000 amount would also apply to intended loss as well as to actual loss. The commenter also questioned whether the higher threshold amount would mean that prosecution would not be pursued if the loss is less than $5,000.

Response: We will consider the total reasonably expected loss in assessing whether this $5,000 threshold has been met for the purpose of determining the length of exclusion. This threshold is only relevant to determine the length of exclusion and has no relationship with a prosecutor's decision or whether to pursue certain cases.

Final rule revision: We are revising the language in §§ 1001.102(b)(1) and 1001.201(b)(2)(i) to indicate that among the factors that may be considered to be aggravating and a basis for lengthening the period of exclusion are acts resulting in the conviction, or similar acts, “that caused, or reasonably could have been expected to cause, a financial loss” to a Government program or to one or more entities of $5,000 or more.

Proposed change: Section 4331(c) of the Balanced Budget Act (BBA) of 1997 extended the scope of all OIG exclusions beyond Medicare and State health care programs to all Federal health care programs. While several revisions to implement this expansion were made to the OIG exclusion regulations in the final rulemaking addressing BBA (July 22,1999; 64 FR 39420), conforming revisions were not made in §§ 1001.102(c), 1001.951 and 1001.952. We proposed to amend these regulatory sections to accurately reflect this expanded authority. The OIG received no public comments on this proposed change.

Final rule revision: We are revising §§ 1001.102(c), 1001.951 and 1001.952 to accurately reflect the scope of an OIG exclusion beyond the Medicare and State health care programs to all other Federal health care programs.

Proposed change: The OIG proposed a minor technical change in § 1001.102 that would have involved inserting the word “even” before the limiting clause “if the adverse action is based on the same * * * ” in existing paragraph (b)(9) of this section.

Comment: One commenter believed that the effect of this change would be that the exclusion period could be lengthened based on an adverse action, whether or not the action served as the basis of the imposition of the exclusion.

Response: Upon further review, the OIG has decided not to make this change to § 1001.102(b)(9).

Proposed change: We proposed several clarifying wording changes in the safe harbor discount provision, set forth in § 1001.952(h), to be consistent with similar context language used in the same paragraph, and clarifying the definition of the term “rebate” in paragraph (h)(4) of this section to make clear that a rebate is a price reduction after the time of sale.

Comment/Response: We received several comments regarding these proposed revisions and clarifications to § 1001.952(h) and other technical corrections to our other safe harbor regulations. The OIG is continuing to evaluate these comments and plans to address specific changes to § 1001.952 at a future date through separate rulemaking.

Final rule revision: As indicated above in section II.C., at this time we are only revising those portions of § 1001.952 to correct technical errors appearing in the regulations text to extend the scope of any OIG exclusion beyond the Medicare and State health care programs to all other Federal health care programs.

Proposed change: The current regulation at § 1001.1501 provides that an individual will be excluded until the Public Health Service (PHS) notifies the OIG that the obligations have been resolved to the PHS's satisfaction. Because the regulatory language is unclear as to exactly when a determination may be made that a default is cured or that the financial obligations have been adequately resolved, the proposed rule provided for exclusion “until such time as PHS notifies the OIG that . . . there is no longer an outstanding debt.” Specifically, we proposed to revise paragraph (b) of this section to clarify that once an individual is excluded, he or she will be reinstated only (1) after the debt is repaid by the individual, or (2) where there is no longer an outstanding debt as determined by the PHS ( e.g., the debt has been written off).

Comment: One commenter believed it was unclear what effect the changing of “right to request reinstatement” in the current rule to “right to apply for reinstatement” in the proposed rule will be. The commenter requested that any revision should minimize the administrative delay in reinstating such individuals once the PHS has concluded that there is no longer an outstanding debt.

Response: This is a minor revision concerning internal communications between PHS and the OIG that will cause no administrative delays in allowing individuals eligible to apply for reinstatement. All individuals who have been excluded under this authority must formally apply for such reinstatement in accordance with the procedures that are set forth in their exclusion letter and the applicable regulations.

Final rule revision: We are clarifying and revising § 1001.1501 to indicate that, with respect to an exclusion resulting from the default of a health education loan or scholarship obligations, an individual will be excluded until such time as PHS notifies the OIG that the default has been cured or that there is no longer an outstanding debt, and upon such notice, the OIG will inform the individual of his or her right to apply for reinstatement.

Proposed change: We proposed to amend § 1001.1801 to permit any Federal health care program to request the waiver of an exclusion. This amendment was designed to conform the waiver provisions of section 1128 of the Act to statutory amendments that broadened the scope of an OIG program exclusion to all Federal health care programs.

Response: While the OIG received no public comments on this proposed change, we have determined that this revision would be more appropriately addressed through the legislative process. Although Congress expanded the OIG's exclusion authority in the Health Insurance Portability and Accountability Act (Pub. L. 104-191) to all “Federal health care programs,” it did not make a corresponding change to the statutory waiver for exclusions (sections 1128(c)(3)(B) and 1128(d)(3)(B) of the Act), i.e., only States are authorized to request such waivers. We now believe that legislative action, rather than a regulatory change, is necessary to address this issue.

Proposed change: Section 1001.2007 has contained a provision that precludes the relitigation of the underlying determination in the administrative appeal of exclusions. We proposed to clarify in this section that a civil judgment rendered by a Federal, State or local court is an additional type of prior determination that may be given collateral estoppel effect in an exclusion action, and may not be relitigated in the exclusion proceeding. The OIG received no public comments on this proposed change.

Final rule revision: We are revising § 1001.2007(d) consistent with the language set forth in the earlier proposed rule.

Proposed change: With respect to appeals of exclusions, § 1001.3005 does not specify at what point in the appeal process reinstatement will occur where an OIG action is reversed or vacated on appeal. We proposed to amend this section to provide that when an exclusion action is reversed or vacated at any stage of an administrative appeal process, the OIG will reinstate the individual or entity at that time retroactive to the effective date of the underlying exclusion. The OIG received no public comments on this proposed change.

Final rule revision: We are amending § 1001.3005, Reversed or vacated decisions, by revising paragraph (a) and adding a new paragraph (e) to specify at what point in the appeal process retroactive reinstatement will occur.

Proposed change: To reflect the varying reimbursement systems and mechanisms in place, we proposed to modify the definition of the term “item or service” in § 1003.101 to clarify that, in addition to itemized claims or cost reports, the term also includes any item or service that is reimbursed through any health care payment mechanism, such as a prospective payment system. The OIG received no public comments on this revised definition.

Final rule revision: The OIG is adopting the change as proposed.

Proposed change: The existing language in § 1003.106(a)(4) allows the OIG to take into account a “prior history of offenses” with respect to patient dumping in determining the amount of CMP imposed for a patient dumping violation. We proposed an amendment to § 1003.106(a)(4)(iii) that would allow the OIG and the administrative law judge (ALJ) to consider other “instances”—and not just “offenses”—regardless of when they occurred, that is, not just “prior to” the matter conduct upon which the CMP action is based.

Comment: Commenters expressed the view that CMP amounts in patient dumping cases should be based only on judgments and other actions which have been adjudicated, such as convictions or administrative sanctions. The commenters believed that allowing the OIG the authority to “bypass” courts and the administrative appeals process would penalize physicians for alleged behavior that has not been ruled upon by a court or an ALJ. One commenter stated that in determining CMP amounts under this provision, the OIG should only be allowed to cite subsequent offenses to the same extent that the OIG now considers prior offenses. Without such limitation, the commenter believed that physicians' due process rights would be violated since they would not be able to contest the underlying alleged behavior.

Response: In assessing the appropriate CMP amount in a dumping case, we continue to believe that it is appropriate to include matters which occurred after the events that resulted in the OIG's issuance of a letter to a provider proposing a CMP. Specifically, with respect to the provider's “prior history,” we have found instances, which may occur several years later between the time of the initial event and the initiation of litigation, where a provider has committed other acts similar in nature to the violation that is the basis for the proposed CMP. The OIG believes that those other similar acts should be considered so that an appropriate CMP can be determined and assessed. By considering not just “prior history” as a factor, an appropriate penalty may be higher, for example, for a party with multiple instances of problematic conduct, as compared to a party who has only one such instance.

With respect to amending the current reference of “offenses” to “instances,” we believe that the current term restricts consideration of incidents that are relevant to the provider's culpability but have not resulted in convictions, or judicial or administrative decisions. Because these prior similar incidents generally become known during the administrative appeals process, we believe that the term “offenses” is too limiting, and that the revision in the regulations will allow the OIG and the ALJs a broader range of conduct and options to consider in their determinations. The primary concerns expressed by the commenter do not apply because the ALJ will be able to fully evaluate all evidence in the record in deciding the amount of a CMP and give appropriate weight to such evidence. When the OIG is able to consider subsequent instances of conduct by the provider, the ALJ, Departmental Appeals Board and the courts will still remain free to accept or reject this additional information and evidence in determining an appropriate CMP amount.

Final rule revision: We are amending § 1003.106 by adding a new paragraph (a)(4)(iii) to include as a factor in determining the amount of penalty for patient dumping violations any other instances where the respondent failed to provide appropriate emergency medical screening, stabilization and treatment of individuals coming to a hospital's emergency department, or to effect an appropriate transfer.

Proposed change: To ensure that the hearing process proceeds in an orderly and timely manner, and to allow parties a reasonable period of time to produce requested documents or object to a request, we proposed to expand the specified time frames set forth in § 1005.7(e)(1) from the current 15 days to 30 days. The OIG received no public comments on this proposed change.

Final rule revision: We are revising § 1005.7(e)(1) to expand the specified time frames governing the discovery process to 30 days.

Proposed change: We proposed to amend § 1005.16 to give the ALJs discretion to admit prior written sworn expert testimony that has been subject to cross-examination. The OIG received no public comments on this proposed revision.

Final rule revision: We are revising paragraph (b) of § 1005.16, Witnesses, to specifically state that the ALJ may, at his or her discretion, admit prior sworn testimony of experts which has been subject to adverse examination, such as a deposition or trial testimony.

Proposed change: In order to protect the credibility of witnesses from being inappropriately attacked through the introduction of evidence regarding bad character, we proposed to amend § 1005.17, Evidence, to require adherence to Rule 608 of the Federal Rules of Evidence (FRE) in administrative proceedings.

Response: While the OIG received no public comments on this proposed change, there is a concern that requiring ALJs to apply specific evidentiary rules in an administrative hearing would unnecessarily restrict the evidence the ALJ may consider. The OIG will continue to evaluate the scope of this amendment, and has chosen not to finalize the proposed revision to § 1005.17 at this time.

Proposed changes: Minor technical errors in §§ 1003.100 and 1008.37 were also proposed for correction in the proposed rule. The OIG received no public comments on this proposed change.

Final rule revisions: We are making technical revisions to § 1003.100(b) to properly reflect the basis and purpose of the OIG's CMP and assessment authorities that were set forth in two different OIG rulemakings. Specifically, we are amending § 1003.100 by revising paragraphs (b)(1)(iv), (b)(1)(xii) and (b)(1)(xiii), and by adding paragraphs (b)(1)(xiv) and (b)(1)(xv) to accurate reflect the range of existing CMP and assessment authorities delegated to the OIG . In addition, we are correcting a typographical error appearing for a United States Code citation which appears in § 1008.37, as indicated in the proposed rule.

We have examined the impacts of this rule as required by Executive Order 12866 September 1993, Regulatory Planning and Review) and the Regulatory Flexibility Act (RFA) (September 19, 1980; Public Law 96-354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Public Law 104-4), and Executive Order 13132. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any given year).

This is not a major rule as defined at 5 U.S.C. 804 (2), and it is not economically significant since it will not have a significant effect on program expenditures and there are no additional substantive costs to implement the resulting provisions. The revisions in this rule are either technical in nature or are designed to further clarify OIG statutory requirements. Specifically, these provisions are intended to clarify the scope of the OIG's existing authorities to exclude individuals and entities from Medicare, Medicaid and all other Federal health care programs, and to strengthen current legal authorities pertaining to the imposition of CMPs against individuals and entities engaged in prohibited actions and activities. We believe that any aggregate economic effect of these revised regulatory provisions will be minimal and will impact only those limited few who engage in prohibited behavior in violation of the statute. As such, we believe that the aggregate economic impact of these final regulations is minimal and would have no appreciable effect on the economy or on Federal or State expenditures.

The RFA, and the Small Business Regulatory Enforcement and Fairness Act of 1996 which amended the RFA, requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and Government agencies. Most hospitals (and most other providers) are considered to be small entities, either by nonprofit status or by having revenues of $5 million to $25 million or less in any 1 year. Individuals and States are not included in the definition of a small entity.

In addition, section 1102(b) of the Social Security Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural providers. This analysis must conform to the provisions of section 604 of the RFA. While these provisions may have some impact on small entities and rural providers, we believe that the aggregate economic impact of this rulemaking will be minimal since it is the nature of the conduct and not the size or type of the entity that will result in a violation of the statute and the regulations. As a result, this rule should not have a significant impact on a substantial number of small entities, or a significant impact on the operations of a substantial number of small rural providers.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local or tribal Governments, in the aggregate, or by the private sector, of $110 million. We believe that there are no significant costs associated with these revisions that would impose any mandates on State, local or tribal governments, or the private sector that will result in an expenditure of $110 million or more (adjusted for inflation) in any given year.

Executive Order 13132, Federalism, establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirements costs on State and local Governments, preempts State law, or otherwise has Federalism implications. In reviewing this rule under the threshold criteria of Executive Order 13132, we have determined that this rule will not significantly effect the rights, roles and responsibilities of States or local Governments. The Office of Management and Budget has reviewed this rule in accordance with Executive Order 12866. In Paperwork Reduction Act —The provisions of these regulations impose no new reporting or recordkeeping requirements necessitating clearance by OMB.

The Office of Science and Technology Policy issued a final Federal research misconduct policy on December 6, 2000 in 65 FR 76260-76264 (“the Federal policy”). The Federal policy consists of a definition of research misconduct and basic guidelines to help Federal agencies and Federally funded research institutions respond to allegations of research misconduct. The policy directs Federal agencies that support or conduct research to implement it within one year.

On January 25, 2002, NSF published a proposed rule to revise its existing misconduct regulations (45 CFR part 689) to make them fully consistent with the Federal policy. (67 FR 3666-3669). NSF invited public comment on the proposed rule. NSF received four comments that were supportive of the proposed rule.

Three of these commenters, however, expressed general concern for the protection of confidentiality of inquiries and investigations of alleged research misconduct. They suggested that NSF add language to the regulation that provides that to the extent permitted by law, NSF will protect research misconduct investigative and adjudicative files as exempt from mandatory disclosure under the Freedom of Information Act and the Privacy Act. The commenters noted that this language is consistent with the Federal policy.

NSF stated in the preamble to the proposed rule that, consistent with the Federal policy, we would continue to protect research misconduct investigative and adjudicative files as exempt from mandatory disclosure under the Freedom of Information Act and the Privacy Act, to the extent permitted by law. (67 FR 3666). In response to these comments, we will include this language in § 689.2 of the final rule.

One of the commenters also expressed concern over the preponderance of evidence standard of proof for a finding of research misconduct. The commenter expressed concern that this standard will increase the risk of a false finding of research misconduct, and recommended a higher standard of proof such as “clear and convincing evidence” or “beyond a reasonable doubt.”

The Federal policy adopted the preponderance of evidence standard. In the preamble to the Federal policy, OSTP noted that this is the uniform standard of proof for most civil fraud cases and most Federal administrative proceedings, including debarment. (65 FR 76262). Awardee institutions have the discretion to apply a higher standard of proof in their internal misconduct proceedings. However, if a higher standard is used, and the awardee institution wishes for NSF to defer to its investigation, the awardee institution should also evaluate whether the allegation is proven by a preponderance of evidence.

The Office of Management and Budget has reviewed this final rule under Executive Order 12866. The rule is not an economically significant rule or a major rule under the Congressional Review Act. The Congressional Review Act provides that agencies shall submit a report, including a copy of all final rules, to each House of Congress and the Comptroller General of the United States. The Foundation will submit this report, identifying this rule as non-major, prior to the publication of this rule in the Federal Register .

The Unfunded Mandate Reform Act of 1995, in sections 202 and 205, requires that agencies prepare several analytic statements before proposing a rule that may result in annual expenditures of $100 million by State, local and Indian tribal governments, or by the private sector. As any final rule would not result in expenditures of this magnitude, such statements are not necessary. As required by the Regulatory Flexibility Act, it is hereby certified that this rule will not have a significant impact on a substantial number of small businesses.

The provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. 3501 et seq. , and its implementing regulations, 5 CFR Part 1320, do not apply to this rule because there are no new or revised recordkeeping or reporting requirements. Finally, NSF has reviewed this rule in light of Section 2 of Executive Order 12778 and certifies that this rule meets the applicable standards provided in sections 2(a) and 2(b) of that order.

The AFA imposes new citizenship requirements for the owners of vessels of 100 feet or greater in registered length which hold a fishery endorsement or for which a fishery endorsement is sought and for entities holding a preferred ship mortgage on such vessels. We are required by the AFA to “rigorously” scrutinize any transfer of ownership and control over fishing vessels, fish processing vessels and fish tender vessels. In so doing, we must pay particular attention to leases, charters, financing arrangements, mortgages, and other documents to determine if they constitute an impermissible conveyance of control to persons not eligible to own a vessel with a fishery endorsement.

MARAD's detailed regulations, 46 CFR part 356, were published in the Federal Register on July 19, 2000 (65 FR 44859), following notice and opportunity for submission of comments. The new citizenship requirements became effective on October 1, 2001. Vessel owners were directed to submit citizenship affidavits and other documents to us by June 1, 2001. We have provided information on the new requirements on MARAD's web site, http:/marad.dot.gov/afa.html, mailed information to owners of fishing industry vessels and conducted briefings open to the public.

The new regulations applied for the first time to a population of individuals who had not communicated or worked with MARAD. Therefore, we were concerned about circumstances and issues that were not anticipated by us or the public and that could not be resolved in the short period of time before October 1, 2001. In addition, we were concerned that some confusion may have arisen for the public because the U.S. Coast Guard will administer the AFA's citizenship requirements with regard to vessels under 100 feet in registered length under its own procedures. Our concerns were based on actual contacts between MARAD staff and the public that brought to our attention the potential for certain inequitable results that could stem from the implementation of the regulations if MARAD did not have the ability to waive certain procedural requirements. At that time, we expected to review about 500 affidavits along with underlying articles of incorporation, bylaws, charters, management agreements, sales agreements and other documents.

In the course of reviewing this large number of complicated business arrangements, it became apparent that there were circumstances, often not the fault of the vessel owner, that prevented us in several instances from making a complete citizenship finding by October 1, 2001. Our regulations provide the opportunity for the applicant to work with us to resolve matters prior to issuing a determination whether the applicant qualifies as a U.S. citizen. However, the AFA rule would have caused the vessel owner's fishery endorsement to be deemed invalid on October 1, 2001 if we had not issued a citizenship determination. Thus, there were times when a waiver of our procedures would have been appropriate to avoid this result. Accordingly, MARAD promulgated this amendment to 46 CFR part 356, on August 31, 2001 at 66 FR 45945, which allows us to waive procedural provisions of the rule not mandated by the AFA. The waiver provision is not applicable to the substantive requirements set out in the AFA and the rule. In addition, any waiver must be supported by good cause shown.

The waiver provision became effective as an interim measure immediately upon publication on August 31, 2001 so that it was in place before October 1, 2001, the date when MARAD was required to determine the U.S. citizenship status of 500-700 vessel owners and operators. The need to fairly administer the new and intricate requirements of the AFA within the stringent time constraints fully supports a finding of good cause, under the Administrative Procedure Act, 5 U.S.C. 553(b) and (d), that the final rule should be effective upon publication.

Our practical experience with the waiver authority validated our original assumptions. More than a dozen waivers have been issued so far. Each waiver was well justified in that they allowed vessel owners some additional time to revise troublesome provisions of complicated vessel charters or corporate documents or provided needed time for us to resolve complex issues. Going forward, we expect the waiver provision to be used sparingly. However, there is still a need for the waiver provision, because vessel owners enter into new business arrangements constantly, and we need to ensure a thorough review of such arrangements.

We received no comments from the public either in favor or opposed to making the interim final rule a final rule.

After discussing compliance requirements with interested vessel owners, operators and mortgagees, we became aware of a need to have a waiver provision in the AFA regulations so that non-material discrepancies in a vessel's documentation would not arbitrarily cause a vessel owner to lose their fishery endorsement. The waiver provision will not entail any cost to vessel owners, mortgagees, charterers, or other parties regulated by 46 CFR part 356.

This final rule is not a significant regulatory action under section 3(f) of Executive Order 12866. Consequently, it was not reviewed by the Office of Management and Budget. The economic impact, if any, should be minimal; therefore, no further analysis is necessary. This final rule is not significant according to the Regulatory Policies and Procedures of the Department of Transportation, 44 FR 11034 (February 26, 1979) as it merely allows waiver of administrative and procedural requirements.

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

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

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires us to consider whether our proposals will have a significant economic impact on a substantial number of small entities. “Small entities” include independently owned and operated small businesses that are not dominant in their field and that otherwise qualify as “small business concerns” under section 3 of the Small Business Act (15 U.S.C. 632). This rulemaking may reasonably be expected to affect small businesses or entities that currently own documented fishing vessels, fish processing vessels, or fish tender vessels, that have financed such vessels, or that are engaging in the fisheries of the United States with such vessels. The Small Business Administration defines businesses within the fishing industry that have annual receipts of $3 million or less as small businesses, 13 CFR 121.201. We believe that any cost to small business entities to comply with this final rule will be minimal, if any, because this final rule allows waiver of procedural (i.e., administrative) requirements that may cause a vessel owner to lose its fishery endorsement. Therefore, MARAD certifies that this rule will not have a significant economic impact on a substantial number of small entities.

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

This rulemaking does not establish any new requirement for the collection of information.

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

A regulation identifier number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN number contained in the heading of this document can be used to cross reference this action with the Unified Agenda.

For the reasons discussed in the preamble, MARAD amends 46 CFR part 356 as follows:

On September 5, 2000, NMFS published a proposed rule (65 FR 53692) on regulatory adjustments governing the harvest of precious coral resources managed under the FMP. The rule contained eight measures intended to conserve and reduce the risk of overfishing the precious coral resource; promote optimal utilization of the resource and minimize waste; and protect the precious coral beds in the NWHI that provide foraging habitat for the endangered Hawaiian monk seal. In December 2000, and January 2001, President Clinton issued Executive Order 13178 and Executive Order 13196, respectively, which together established the Reserve. NMFS has determined that two of the proposed precious coral measures that apply only to precious coral beds around the NWHI are inconsistent with Executive Order 13178 and Executive Order 13196.

This final rule implements the following six measures: (1) Suspends the harvest of gold coral at Makapu’u Bed off the Island of Oahu; (2) redefines “dead precious coral” as coral that has no live coral polyps or tissue, and redefines “live precious coral” accordingly; (3) applies minimum size restrictions only to live precious corals; (4) prohibits the harvest of black coral unless it has attained a minimum stem diameter of 1 inch (2.54 cm) or a minimum height of 48 inches (122 cm), except in certain cases; (5) prohibits the use of non-selective fishing gear to harvest precious corals; and (6) applies the current minimum size restriction for pink coral to all permit areas.

One letter was received commenting on the proposed rule.

Comment : The measures to define live coral as coral harboring living polyps and to apply size and quota restrictions to live coral only, mean that the harvest of dead gold coral will be unregulated. Unrestricted takes of dead gold coral may have negative impacts on live gold coral as there is some evidence from the NWHI that dead coral may be the preferred substrate for resettlement (i.e., seeding) of new gold coral colonies.

Response : NMFS shares this concern. The amount of information on the relationship between dead gold coral and the seeding of new colonies is limited at this time. NMFS however believes the concern is mitigated by restrictions imposed on commercial harvesting of precious corals, under Executive Order 13178 and Executive Order 13196 establishing the Reserve.

NMFS is not implementing two precious coral measures that would have (a) revised the boundaries of the Brooks Banks Bed, NWHI, reduced this bed’s harvest quota for pink coral, and suspended the harvest quota (i.e., reduced to zero) for gold coral; and (b) established a NWHI precious coral permit area, French Frigate Shoals (FFS) Gold Pinnacles Bed, and classified this bed as a “conditional” bed with a zero harvest quota for all species of precious corals. The final rule is changed from the proposed rule because continued management of precious coral fisheries around the NWHI is inconsistent with Executive Order 13178 and Executive Order 13196. Specifically, the measures establishing pink and gold coral harvest quotas at NWHI Brooks Banks Bed are inconsistent with section 7(b)(5) of the Executive Order 13178 and Executive Order 13196. In this section, the Executive Order establishes zero harvest in the Reserve where the Brooks Banks Bed is located. Establishment of a quota for pink coral at Brooks Banks Bed also conflicts with the Executive Order 13178 and Executive Order 13196 since they generally prohibit the harvest of living and nonliving resources throughout the Reserve. Although creation of a new FFS Gold Pinnacles Bed and its classification as a “conditional” bed are not literally contrary to the E.O.s, a zero harvest quota duplicates restrictions in the E.O.s, and therefore is unnecessary.

Another change between the final rule and proposed rule is that § 660.86 (b)(2) has been revised to allow for expedient issuance of exemptions from black coral harvest size requirements. This change allows NMFS to streamline the exemption process by relying on a State of Hawaii precious corals database to determine eligible harvesters.

The final rule contains a technical correction to the location of the Wespac Bed, Permit Area R-1, by redefining the current position of 28°50.2′ N. lat. to 23°18′ N. lat.

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

NMFS prepared a FRFA describing the impact of the action on small entities. The IRFA was summarized in the proposed rule published on September 5, 2000(65 FR 53692). None of the comments received on the proposed rule directly or indirectly addressed the results of the IRFA, which also provided analysis on the proposed measures that are not included in the final rule. The following is a summary of the FRFA (March 1, 2002).

The Council considered eight adjustments to management measures in the FMP. Six of those management measures are discussed below. The remaining two management measures, that involve the Reserve, were not approved by NMFS for the reasons stated above. This partial disapproval is not expected to have any economic impact because no commercial precious coral harvest is currently occurring in the Reserve.

Under Management Objective 1, (reduce the potential for overfishing of gold coral at the Makapu’u Bed), four alternatives were considered including the preferred alternative. Under the preferred alternative, the harvest quota for gold coral at the Makapu’u Bed will be suspended until further information on the impact of harvesting on subsequent recruitment of gold coral is available. A gold coral quota of zero would likely have some adverse economic impact on potential harvesters. However, the density of gold coral at the Makapu’u Bed is already very low. It is likely that any harvest effort occurring at Makapu’u bed will be directed mainly toward pink coral because this coral is relatively abundant at the bed and has a higher market value than gold coral ($440/kg for pink coral (C. secundum) vs. $330/kg for gold coral according to Maui Divers of Hawaii, Ltd.). A suspension of the quota is not expected to have an adverse economic impact on processors of precious corals in Hawaii. The fishery in the EEZ around Hawaii for deep-water species of precious coral, including pink, gold and bamboo coral, has been nearly dormant for two decades. Consequently, the processors of these corals in Hawaii have relied almost exclusively on imported material.

Three alternatives were considered and rejected for the first management objective. The first rejected alternative would have maintained the biennial gold coral quota of 600 kg (132 lb) at Makapu’u Bed. Maintaining the current biennial harvest quota of 600 kg (132 lb) for gold coral at Makapu’u Bed would continue to make available to prospective harvesters a quantity of gold coral worth $198,000 every two years ($99,000 annually) if the actual stock is of sufficient size to support such a harvest. However, a recent survey of the bed revealed that the current standing stock of gold coral is low and may not yield the current harvest quota. In addition, the adverse economic impacts over the long term would be significant if further harvesting diminishes the number of colonies to the point that no recovery is possible.

The second rejected alternative would have suspended the harvest quota for gold coral at all established and conditional beds until additional information is available on the impact of harvesting on subsequent recruitment of gold coral. The total harvest quota for gold coral at all established and conditional beds is 1,080 kg (238 lb) every two years, with an estimated dockside value of $356,400. However, the gold coral quota at the Makapu’u Bed accounts for more than half of this total. As noted above, the current standing stock of gold coral at the Makapu’u Bed may not yield the current biennial harvest quota of 600 kg (132 lb). If no gold coral is harvested from the Makapu’u Bed the amount of potential gross revenues foregone by suspending the harvest quota at all established and conditional beds is estimated to be about $158,400 every two years.

The third rejected alternative would have implemented a minimum size limit for gold coral at the Makapu’u Bed. This alternative was rejected because the calculation of an appropriate minimum size requires estimates of growth rates, mortality rates and size at reproductive maturity. These data estimates are lacking for gold coral. Without this information the size limit established may be too low, thereby insufficiently protecting the coral from overfishing and eventually leading to reduced economic returns, or may be too high, thereby resulting in an overly conservative size limit that unnecessarily reduces potential economic returns.

Under Management Objective 2 (reduce the potential for harvest of coral which has live coral polyps or tissue), three alternatives were considered including the preferred alternative. Under the preferred alternative, dead precious coral will be defined as precious coral that no longer has any live coral polyps or tissue, and live precious coral will be defined as precious coral that has live polyps or tissue. Only live coral will be counted toward the quotas limiting the amount of precious coral that may be taken in any permit area during the fishing year. It is possible that some of the coral at a given bed that was regarded as dead under the current definition would be regarded as live under the alternative definition, and therefore be subject to the harvest quota for that bed. However, the amount of additional coral that would be subject to the quota is likely to be small, as coral colonies that contain holes from borers or are discolored or encrusted generally no longer have any living polyps or tissue. There is insufficient information on the amount of coral meeting this definition at different beds to quantify this economic impact.

Two alternatives were considered and rejected for the second management objective. The first rejected alternative would have maintained the current definition of dead precious coral as any precious coral that contains holes from borers or is discolored or encrusted at the time of removal from the seabed. This alternative was rejected because allowing the harvest of coral that is currently defined as dead and is believed to provide foraging habitat to the endangered Hawaiian monk seal may lead to emergency closures of specific sites or alterations of fishing operations. The economic impact of closures or other measures would depend on the length of time that these measures are in effect.

The second rejected alternative would have defined dead precious coral as precious coral that is no longer standing upright, and define live precious coral as precious coral that is standing upright. However, the amount of additional coral that would be subject to the quota is likely to be small, as coral colonies that contain holes from borers or are discolored or encrusted are often no longer standing upright. There is insufficient information on the amount of coral meeting this definition at different beds to quantify this economic impact.

Under Management Objective 3, (allow greater utilization of dead coral resources), two alternatives were considered including the preferred alternative. Under the preferred alternative, size limits will be applied only to live coral. This alternative will allow greater utilization of dead coral resources and thus increase potential income to harvesters. There is insufficient information on the quantity of dead coral at different beds to quantify this economic impact.

The rejected alternative would have maintained the application of minimum size limits to both live and dead coral. This alternative was rejected because it prohibits the harvest of dead coral that is below the minimum size limit despite the fact that the harvest of dead coral is not considered to be detrimental. There is insufficient information on the quantity of dead coral at different beds to quantify the economic impact.

Under Management Objective 4 (regulate the harvest of black coral), four alternatives were considered including the preferred alternative. Under the preferred alternative, the harvest of black coral will be prohibited unless it has attained either a minimum stem diameter of 1 inch (2.54 cm), measured no less than 1 inch (2.54 cm) from the top of the living holdfast, or a minimum height of 48 inches (122 cm), measured from the base to the greatest distal extremity of the colony. Persons who reported a landing of black coral to the State of Hawaii within 5 years before the effective date of the final rule may apply for an exemption which allows the hand harvest of black coral that has attained a 3/4 inch (1.905 cm) base diameter, measured on the widest portion of the skeleton at a location just above the holdfast.

Three alternatives were considered and rejected for this management objective. The first rejected alternative would have maintained the current situation of no restrictions on the harvest of black coral. This alternative was rejected because it would allow fishing pressure to increase in an uncontrolled manner and could lead to overfishing of black coral.

The second rejected alternative would have prohibited the harvest of black coral unless it has attained a minimum base diameter of 3/4 inch (1.905 cm), which is believed to inadequately protect black coral resources from overfishing.

The third rejected alternative would have established a weight quota for black coral and was rejected because a weight quota may not be as effective as a size limit in avoiding overfishing of the resource. Information on the standing stock and sustainable yield of managed species of black coral is limited. The use of minimum size limits based on knowledge of the reproductive biology of precious corals is the preferred basis for management of the fishery when selective harvesting is expected to be economically feasible as information on the standing stock and its sustainable yield in terms of weight is limited.

Under Management Objective 5 (protect precious coral resources and essential fish habitat (EFH) from the effects of ecologically destructive and wasteful harvest gear), three alternatives were considered including the preferred alternative. The preferred alternative will require that selective gear be used to harvest precious corals from all permit areas. The cost of purchasing an unmanned submersible (i.e., remotely operated vehicle) may be as low as $50,000, which is roughly equal to the capital investment in gear required to initiate a non-selective harvest operation using tangle nets. Although the capital and operating costs of manned submersibles may be high, they are not economically prohibitive, as is evidenced by the recent interest of two firms in using this type of selective gear to harvest precious corals in the waters around Hawaii. In addition, it is likely that some harvesters of precious coral will be able to defray the costs of using selective gear by finding other lucrative uses for the gear, such as salvage and research. The use of non-selective gear to harvest precious corals is an inefficient use of fishery resources. Non-selective gear tends to damage the precious coral trees as it harvests them, thereby greatly reducing the value of the coral. In contrast, selective gear harvests coral so that it retains its highest value.

Two alternatives were considered and rejected for the fifth management objective to protect precious coral resources and EFH from the effects of ecologically destructive and wasteful harvest gear.

The first rejected alternative would have maintained the current regulations requiring selective gear only at the Makapu’u, Keahole Point, and Kaena Point Beds. This alternative was rejected because the use of non-selective gear to harvest precious corals is not an efficient use of fishery resources. The value of precious coral colonies is dependent on its size, color and condition. Large, completely intact trees of coral have the greatest value. Non-selective gear such as dredges harvest pieces of broken coral knocked down by the dredge stone and entangled in the nets as the dredge is pulled along the sea floor. Breakage may reduce a coral’s value by as much as 80 percent.

Allowing the continued use of this relatively inexpensive gear in exploratory areas may encourage the discovery and exploration of new beds. However, the use of non-selective gear is unlikely to provide sufficient data to develop reliable estimates of the standing stock and maximum sustained yield (MSY) for newly discovered beds because this gear cannot discriminate or differentiate between types, size, quality or characteristics of living or dead corals. Further, the degradation of precious coral beds may reduce monk seal foraging habitat. The economic impact of such adverse modifications would be likely to include emergency closures of specific sites, including Brooks Bank, or alteration of fishing operations. The specific cost of closures or other measures would depend on the length of time that these measures are in effect.

The second rejected alternative would have required that selective gear be used to harvest precious corals from all established and conditional beds. This alternative was rejected as it would fail to protect those precious coral resources located outside of these beds.

Under Management Objective 6 (reduce the potential for overfishing of pink coral at conditional beds and exploratory areas), three alternatives were considered including the preferred alternative. Under the preferred alternative, the current 10 inch size limit for pink coral will be applied to all established beds, conditional beds, and exploratory areas. The feasibility of this alternative is contingent on a prohibition on the use of non-selective gear to harvest precious corals for commercial purposes in all permit areas. Applying the size limit for pink coral to all permit areas is unlikely to have a significant negative economic impact because the potential financial return from harvesting colonies of pink coral that are less than 10 inches (25.4 cm) in height is low. According to Maui Divers of Hawaii, Ltd., harvesting colonies less than 10 inches (25.4 cm) is not economically practical, because the return does not justify the time spent harvesting.

Two alternatives were considered and rejected for the sixth management objective. The first rejected alternative would have maintained the application of the 10-inch (25.4 cm) size limit for pink coral at the established Makapu’u, Keahole Point, and Kaena Point Beds only, and was rejected because long-term negative impacts on harvest levels and gross revenues could be potentially large if the resources are overfished. Given the life-history characteristics of pink coral, such as slow growth and long generation time, overfishing could degrade the productivity of affected precious coral beds for many years.

The second rejected alternative would have applied the current 10-inch (25.4 cm) size limit for pink coral only to established and conditional beds. This alternative would have had economic impacts similar to the preferred alternative. However, it was rejected because it would not provide protection for the minimum sizes to pink corals located in exploratory areas.

This final rule could affect five to seven small businesses. There are three to five small-boat fishermen who harvest black coral using scuba gear in beds overlapping State of Hawaii and Federal waters, as well as two historical or potential operations targeting other precious corals. Between 1990 and 1997, the total annual harvest of black coral in Hawaii varied from a low of 864 lbs (391 kg) to a high of 6,017 lbs (272 kg), with a yearly average of 3,084 lbs (139 kg). The 415 lbs (188 kg) of black coral sold in 1997 had a dockside value of about $10,394, assuming a price of $25/lb. NMFS cannot determine the proportions of the harvest of black coral made in State and Federal waters based on the available information. Details on the harvest of other precious corals cannot be released due to confidentiality requirements as there have been less than three operations active in the past decade.

Due to the low level of participation in the western Pacific precious coral fishery, aggregate economic impacts resulting from the final rule will be minimal. The analysis, however, shows that prohibiting the harvest of gold coral at Makapu’u Bed could result in the loss of potential revenues of approximately $100,000 annually in the short term, if the actual stock is of sufficient size to support the current harvest quota. Establishment of a universal minimum harvest size for all pink coral management unit species could result in a positive economic impact in the form of long-term maintenance of MSYs. On the other hand, imposing a minimum harvest size for black corals could have a negative economic impact on fishery revenues, except for five harvesters expected to be exempt from the minimum harvest size requirement. A prohibition on the use of non-selective gear to harvest precious corals could result in additional costs for future participants. Hand-harvesters for black corals would be unaffected by this prohibition. The exact costs of selective gear technologies are unknown, although a remotely operated submersible coral harvester can now be obtained for $50,000, which may be approximately equal to the cost of setting up a non-selective harvest operation using tangle nets. The effective yield is higher for selective harvesting of precious corals using submersibles compared to the wasteful practice of harvesting precious corals using non-selective gear.

Due to a lack of information on the long term effects of alternative management measures on coral stocks, harvest effort or catch rates, a detailed quantitative analysis of the costs and benefits of alternative management measures is not possible at this time.

Although long-term data are unavailable, analysis of this fishery is ongoing, and may lead to simulation models capable of predicting the biological (and economic) effects of each alternative. From a conceptual point of view, the precious corals fishery represents a difficult economic analysis. Although standard bioeconomic theory suggests that the harvest rate should be no more than the growth rate of the coral population at its MSY (accounting for economic production cost relationships and the discount rate), the growth rate of coral is so slow that a mining approach might be considered preferable, i.e., that the resource might be allowed to be over-fished in the short-term, and then harvesting prohibited for the many years which would be required for it to be fully restored. However, this approach was rejected because it would be inconsistent, with National Standard 1 of the Magnuson-Stevens Act which prohibits overfishing. It is anticipated by NMFS that by allowing the coral populations to maintain their long-term sustainability, there will be a larger standing stock of corals which will optimize harvest rates and reduce the relative costs of harvesting (due to increased density). By limiting the harvest rates to those allowed by MSY, the likelihood that long-term benefits will exceed costs is increased. In addition, these restrictions may preclude new entry into the fishery, therefore improving social benefits (i.e., avoiding over-capacity). To the extent that these initial explorations are successful in identifying additional coral resources for harvesting, and as new economic information is acquired, a re-evaluation of the relative benefits and costs of these management measures would be warranted.

None of the alternatives considered is expected to have significant social impacts on fishery participants or Hawaii fishing communities in terms of employment, enjoyment of the fishery, vessel and crew safety, social or cultural activity in the fishery, or other social factors.

To minimize impact, this final rule removes size limits for dead corals. However, this revision could cause some risk to certain corals, such as gold corals, that may use dead corals for resettlement of new colonies.

This final rule does not contain any reporting or record- keeping requirements.

An informal consultation under the Endangered Species Act was conducted to determine whether this regulatory amendment was likely to affect any endangered or threatened species, including Hawaiian monk seals. This consultation was completed on December 20, 2000, and concluded that this regulatory amendment is not likely to adversely affect any endangered or threatened resources. The disapproval of the two NWHI measures does not affect that determination.

This final rule is consistent with Executive Order 13089, which is intended to preserve and protect the biodiversity, health, heritage, and social and economic value of U.S. coral reef ecosystems and the marine environment.