Brucellosis is a contagious disease affecting animals and humans, caused by bacteria of the genus Brucella.

The brucellosis regulations contained in 9 CFR part 78, subpart B (referred to below as the regulations) restrict the interstate movement of cattle in order to prevent the spread of brucellosis.

The regulations provide a system for classifying States or portions of States according to the rate of Brucella infection present and the general effectiveness of a State's brucellosis eradication program. The classifications are Class Free, Class A, Class B, and Class C. States or areas that do not meet the minimum standards for Class C are placed under Federal quarantine.

The brucellosis Class Free classification is based on a finding of no known brucellosis in cattle for the 12 months preceding classification or reclassification as Class Free. The Class C classification is for States or areas with the highest rate of brucellosis. Class A and Class B fall between these two extremes. Restrictions on moving cattle interstate become less stringent as a State approaches or achieves Class Free status.

Currently, the regulations at § 78.14 require rodeo bulls moving interstate to be tested for brucellosis once every 365 days. However, the regulations in § 78.14 do not take into account the classification of the States from which or into which the rodeo bulls are being moved.

Since cattle being moved from a Class Free State are not required to be tested for brucellosis, this requirement for rodeo bulls moving between such States is more restrictive than the requirements for other test-eligible cattle. The annual testing requirement for all rodeo bulls was considered necessary at the time the current regulations were established because brucellosis was more prevalent in the United States at that time than it is now. Rodeo bulls, owing to the peripatetic nature of the rodeo industry, move between States more frequently than do other cattle and thus were more likely to be shipped to or from Class A, B, or C States at a time when more States held those classifications. In recent years, however, the number of Class Free States has increased to the point where 48 of the 50 States now qualify as brucellosis Class Free, greatly reducing the risk of brucellosis transmission via interstate movement of rodeo bulls. Therefore, we propose to update our brucellosis regulations by eliminating the annual testing requirement for rodeo bulls moving between Class Free States, while retaining the testing requirement for rodeo bulls that are moved interstate into or from States that are not Class Free. This proposed change would make the requirements for moving rodeo bulls more consistent with the requirements for moving other test-eligible cattle between Class Free States.

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

This proposed rule would amend the brucellosis regulations in § 78.14 by eliminating the annual brucellosis testing requirement for rodeo bulls moving interstate in cases where the bulls are being moved only between brucellosis Class Free States.

This proposed rule would primarily affect stock contractors who raise and supply bulls for rodeo events. More specifically, this rule would affect stock contractors who are located in States other than Texas and Missouri—the only two States not currently classified as Class Free States—and who do not move their bulls interstate to Texas and Missouri. The number of stock contractors who fall into this category, as well as the total number stock contractors nationally, is unknown.

Those stock contractors who move their bulls interstate only between Class Free States would realize a cost savings of about $25 to $30 per animal per year ( i.e., the cost of a brucellosis test and associated veterinary fees). Thus, a stock contractor with 20 bulls would see a savings of about $500 to $600 per year in testing expenses.

While stock contractors are not specifically categorized in the Small Business Administration's (SBA) table of small business size standards, they could be considered under either Subsector 112 of that table (Animal Production), which has a small entity threshold of $750,000, or Subsector 711 (Performing Arts, Spectator Sports and Related Industries), which has a small entity threshold of $6 million in annual sales. According to the National Agricultural Statistics Service, over 99 percent of all operations raising cattle and calves ($750,000 threshold) are small entities, while large operations account for less than 1 percent. Therefore, it is likely that most, if not all, stock contractors would be considered small entities under SBA size standards.

Given that the potential savings per animal in foregone testing costs ($25 to $30) can be expected to make up only a small percentage of the total expenses associated with maintaining a rodeo bull ( e.g., feed and routine veterinary care), the potential economic impact of this proposed rule is expected to be small.

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

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

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this proposed rule is adopted: (1) All State and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.

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

The Commission is seeking public comments on proposed revisions to 11 CFR part 111, subpart B, which would: (1) Reduce the levels of civil money penalties in the fine schedules set forth in 11 CFR 111.43(a) and (b); (2) create additional levels-of-activity brackets and broaden some existing brackets within those schedules; (3) clarify that all notifications and other communications to respondents in the administrative fines program will be made by mailing them to a political committee's address as listed in the committee's most recently filed Statement of Organization or amendment thereto; and (4) change the citations to the U.S. Department of Treasury and Department of Justice regulations governing debt collection procedures to conform with amendments made to those regulations after the final administrative fines rules were promulgated. The Commission also seeks public comments on (1) whether it should revise its current method of calculating civil money penalties so some types of receipts and disbursements are not included in the level of activity to which the penalty schedules apply, and (2) whether it should revise 11 CFR 111.35 to clarify what will be considered unacceptable defenses to reason to believe determinations.

The Commission issued final rules on May 19, 2000 (which included a new subpart B of 11 CFR Part 111, and technical amendments to 11 CFR 104.5, 111.8, 111.20, and 111.24) to establish the administrative fines program that Congress authorized in amendments to section 437g(a)(4) of the Federal Election Campaign Act of 1971, as amended. See 65 Federal Register 31787 (May 19, 2000). These amendments were enacted as part of the Treasury and General Government Appropriations Act, 2000, Pub. L. No. 106-58, 106th Cong., § 640, 113 Stat. 430, 476-77 (1999). Subsequently, section 642 of the Treasury and General Government Appropriations Act, 2002, extended the sunset date of the administrative fines program to include all reports that cover activity between January 1, 2000 and December 31, 2003. Consequently, the Commission revised its regulations to extend the administrative fines sunset date in accordance with that statutory amendment. See 66 FR 59680 (Nov. 30, 2001) and 11 CFR 111.30.

Under 2 U.S.C. 434, treasurers of political committees are required to file reports with the Commission by specified deadlines. The purpose of the administrative fines program is to enable the Commission to adjudicate reporting violations of 2 U.S.C. 434(a) without using the traditional enforcement and conciliation procedures set out at 2 U.S.C. 437g that are used for more serious violations.

The Commission proposes to lower the civil money penalties in the schedules set forth in 11 CFR 111.43(a), applicable to non-election sensitive reports and 11 CFR 111.43(b), applicable to election-sensitive reports.

The current civil money penalty schedules for late filers have two components: a base amount that increases with the level of activity reflected in a report, and an additional per day charge. Similarly, the current schedules for nonfilers consist of a base amount that increases with the level of activity. Both late filers and nonfilers are subject to a recidivist escalator that increases the penalty by 25% for each previous violation. Election sensitive reports are considered not filed if they are not filed prior to four days before an election. Non-election sensitive reports are deemed not filed if they are filed more than 30 days late or not filed at all.

Based on its experience with the administrative fine program to date, the Commission is concerned that fines for committees with lower levels of activity, generally below $50,000 in a reporting period, may be too high. Committees with activity below $50,000 are often those of candidates who have lost an election and fail to continue filing the required disclosure reports after the loss but before they are eligible to terminate. Fines for these committees can be relatively high due to their failure to file because the civil money penalties are calculated using the estimated level of activity from previously filed reports. Therefore, the fines may create a hardship for some committees and their treasurers, since many losing candidates lack fundraising ability and their treasurers, who are sometimes volunteers, are legally liable for the fines. Given the current level of civil money penalties, it may be possible to lower the fines at the lower levels of activity without significantly reducing the incentive to file reports. More generally, the Commission is concerned that the overall civil money penalty schedules may result in fines that are substantial compared with civil penalties for other types of FECA violations approved in enforcement conciliation agreements. This concern is exacerbated given that the 25% recidivist factor is beginning to take effect for repeat violations now that the administrative fine program has been operating since July 2000.

The proposed revisions to 11 CFR 111.43(a) and (b) would change the civil money penalty schedules in the following ways: (1) By reducing either the base amount or the per day charge in each activity bracket for late filers and nonfilers on both the non-election and election sensitive schedules; (2) by splitting the existing brackets covering levels of activity between $1 to $24,999.99 into three brackets, so that civil money penalties at the lowest levels of activity would be further reduced; and (3) by creating broader brackets for levels of activity of $200,000 and above and reducing the number of brackets for levels of activity over $600,000 from five to three. The Commission does not propose to alter the 25% recidivist factor for each prior violation under the penalty schedules in 11 CFR 111.43(a) and (b).

On the proposed fine schedule for non-election sensitive reports that are filed late, the per day charge would be reduced for all report activity up to $600,000. For report activity from $600,000 through $749,999, the per day charge would remain at the current $200. For activity between $750,000 through $999,999, the per day charge would increase from $200 to $225, and for activity of $1,000,000 or greater the per day charge would increase from $200 to $250. The base penalties for all levels of activity on non-election sensitive reports that are filed late would be reduced except for levels of activity between $10,000 through $49,999 which would remain the same. The base penalties for levels of activity below $10,000 would be reduced between $50 and $75. The base penalties for levels of activity between $50,000 and $499,999 would be reduced between $50 and $1,250. The base penalties for levels of activity of $500,000 and above would be reduced between $1,000 and $3,000. The proposed revisions would reduce the civil money penalties for non-election sensitive reports between 11.4% and 79.4%.

Similarly, on the proposed fine schedule for election-sensitive reports that are filed late, the per day late charge would be reduced for all activity brackets up to $400,000. For financial activity from $400,000 through $499,999, the per day charge would remain at the current $200. From $500,000 through $599,999, the per day charge would increase from $200 to $225; from $600,000 through $749,999, it would increase from $200 to $250; from $750,000 through $999,999 it would increase from $200 to $275; and for activity of $1,000,000 or greater the per day charge would increase from $200 to $300. The base penalties for all levels of activity on election-sensitive reports that are filed late would be reduced except for levels of activity between $10,000 through $99,999 which would remain the same. The base penalties for levels of activity below $10,000 would be reduced between $50 and $100. The base penalties for levels of activity between $100,000-$499,999 would be reduced between $100 and $2,000. The base penalties for levels of activity of $500,000 and above would be reduced between $1,750 and $5,000. These proposed revisions would reduce the civil money penalties for election-sensitive reports between 4.3% and 65.7%.

In the case of nonfilers, the base penalties would be reduced for all non-election sensitive and election-sensitive reports. The reductions in base penalties for non-election sensitive reports would range from $400 for reports with activity of $10,000 through $24,999 to $4,000 for reports with activity of $250,000 through $299,999 and $350,000 through $399,999. These proposed revisions would reduce the civil money penalties for non-filed non-election sensitive reports between 16.7% and 72.2%. The reduction in base penalties for non-filed election-sensitive reports would range from $100 for reports with activity between $10,000 through $24,999 to $4,000 for reports with activity between $950,000 through $999,999. These proposed revisions would reduce the civil money penalties for non-filed election-sensitive reports between 8.3% and 50%.

The proposed schedules also include adjustments to some of the levels of activity. The fines for committees with under $25,000 in activity in a reporting period would be reduced by the introduction of additional brackets at the lowest levels of activity. The existing $1 to $24,999.99 bracket would be split into three brackets: $1 to $4,999.99, $5,000 to $9,999.99, and $10,000 to $24,999.99. As a result of creating these additional brackets, penalties for late-filed non-election sensitive reports would be reduced between 12% and 79.4% and penalties for late-filed election sensitive reports would be reduced between 8.6% and 65.7%. Similarly, creating these additional brackets would reduce penalties for non-filed, non-election sensitive reports between 66.7% and 72.2%, and between 10% and 50% for non-filed, election sensitive reports.

Finally, the proposed schedules would also alter some of the current level-of-activity brackets, although the total number of brackets would remain at fifteen. The schedules would create three broader brackets for levels of activity above $200,000, and the number of brackets for levels of activity of $600,000 and above would be reduced from five brackets to three. The bracketing for levels of activity between $25,000 and $199,999.99 would not change. The consolidation of brackets for reports with activity of $600,000 and above would reduce penalties for all non-election sensitive reports between 11.4% and 57.2%. For all election-sensitive reports, the consolidation of brackets for reports with activity above $600,000 would reduce penalties between 7.1% and 64%.

The Commission requests comments as to whether these substantial reductions in penalties for political committees with levels of activity below $50,000 would still provide sufficient incentive for committees to file their reports in a timely manner. Given that the proposed schedules would also reduce the level of civil money penalties for levels of activity above $50,000 as well, the Commission seeks comments as to whether these reduced penalties would substantially diminish or eliminate political committees' incentives to file in a timely manner, and thus become merely the cost of doing business. The Commission also seeks comments as to whether these reductions would affect committees' decisions to challenge reason to believe findings and proposed civil money penalties.

As an alternative to reducing the civil money penalty schedules at all levels of activity, the Commission seeks comment as to whether it should reduce the fines only for levels of activity below $50,000. Another alternative may be to reduce the civil money penalty schedule for only non-election sensitive reports and to retain the current civil money penalty schedule for election-sensitive reports. Please note that these alternatives are not reflected in the draft rules that follow.

The Commission is considering revising the administrative fines regulations to change the way it defines the level of activity used to calculate civil money penalties. Please note that no draft language on this issue has been included in the proposed rules that follow.

Currently, the Commission calculates civil money penalties by applying the fine schedules at 11 CFR 111.43 to a political committee's “level of activity” defined at 11 CFR 111.43(d) as the total receipts and disbursements for the reporting period covered by a late or non-filed disclosure report. The “level of activity” is the Commission's interpretation of the statutory requirement in 2 U.S.C. 437g(a)(4)(C) that civil money penalties take into account “the amount of the violation involved” since under 2 U.S.C. 434 political committees are required to disclose in their reports all receipts and disbursements. See Explanation and Justification for Final Rules on Administrative Fines, 65 FR 31792 (May 19, 2000). In some cases, using total receipts and disbursements as the basis for the penalty calculation results in higher fines for political committees who finance non-federal activity through their federal accounts. For example, unauthorized committees that finance activities in connection with both federal and non-federal elections must allocate disbursements for those activities between their federal and non-federal accounts and must pay for those expenses through their federal accounts or separate federal allocation accounts. Non-federal funds must be transferred into the federal accounts to pay for the non-federal activity, thereby resulting in higher total receipts and disbursements for those committees than for political committees that do not have allocable activity.

The Commission requests comments as to whether the level of activity on which civil money penalties are based should exclude all receipts or disbursements of a political committee to the extent they finance activity or programs that are not for the purpose of influencing a Federal election. For example: Should the civil money penalty calculation exclude the disbursements of a principal campaign committee (or other authorized committee) that are made to influence the election of a candidate for State or local office? Should the civil money penalty calculation exclude the disbursements of a principal campaign committee (or other authorized committee) that are made to the non-federal account of another political committee? Should the civil money penalty calculation exclude the disbursements of a principal campaign committee (or other authorized committee) that are made to defray the expenses of supporting the Federal candidate's duties as a holder of Federal office; that is, as a Member of Congress?

Similarly, should the civil money penalty calculation exclude the disbursements of a party committee, separate segregated fund or non-connected committee that are made to pay the non-federal share of the committee's allocable administrative expenses, generic voter drive costs, fundraising expenses and, in the case of party committees, exempt activities expenditures under 11 CFR 106.5 and 106.6? Should the calculation similarly exclude the receipts of an unauthorized committee that are set aside for payment of its allocable non-federal expenditures? Should the calculation exclude the committee's reported disbursements to candidates for non-federal offices if made to influence the payee's election to a non-federal office?

The Commission proposes to amend 11 CFR 111.32, 111.34, 111.36 and 111.37 to make clear in the administrative fines regulations its current practice with respect to notifying political committees and their treasurers of its actions under Subpart B of Part 111. Notification of Commission reason to believe findings and proposed civil penalties under 11 CFR 111.32 and Commission final determinations under 11 CFR 111.34 would continue to be mailed to political committees and their treasurers at the political committee's address listed in its most recent Statement of Organization, or amendment thereto, on file with the Commission at the time of the notification. Notification of Commission final determinations and other actions under 11 CFR 111.37 and any communication under 11 CFR 111.36 between the administrative fines reviewing officer and respondent political committees and their treasurers will be sent to the political committee's address listed in its most recent Statement of Organization, or amendment thereto, on file with the Commission at the time of the notification, unless a statement designating counsel has been filed in accordance with 11 CFR 111.23. Section 102.2 of the regulations requires that treasurers of political committees file a Statement of Organization with the Commission disclosing, among other things, the address of the committee. Any changes or corrections to the information appearing in the Statement of Organization are required to be reported no later than ten days following the change or correction. If a treasurer does not promptly notify the Commission of a committee address change, the treasurer and the committee may not receive timely notice of Commission actions. Clarifying the Commission's notification policy in the regulations is intended to ensure that all political committees have notice of how the Commission intends to fulfill its obligation to provide political committees and their treasurers with notice of actions taken under Subpart B of Part 111. These proposed amendments are also intended to encourage treasurers to file any address changes for their committees with the Commission in a timely manner.

The Commission notes that similar notification issues can arise under Subpart A of Part 111. This rulemaking is not intended to address those issues.

The Commission is proposing a technical amendment to 11 CFR 111.45 to correct citations to regulations establishing the Federal Claims Collection Standards. After the Commission's administrative fines rules were promulgated, the Department of Justice and the Department of Treasury, in place of the General Accounting Office, revised and recodified the Federal Claims Collection Standards at 31 CFR parts 900 through 904. The proposed amendment to 11 CFR 111.45 would replace the former regulatory citations with the new citations.

Currently, 11 CFR 111.35 sets out the requirements for written responses challenging Commission reason to believe findings in the administrative fines program. Written responses must include the reasons why respondents are challenging the Commission's finding and/or the proposed civil money penalty, which may consist of factual errors, improper calculation of the penalty, and the existence of extraordinary circumstances beyond the respondents' control that were for a duration of at least 48 hours and prevented them from timely filing the report. Section 111.35(b)(4) currently provides four broad examples of circumstances that will not be considered extraordinary circumstances. During the operation of the administrative fines program, however, respondents have sought to raise a number of defenses that the Commission has determined do not constitute extraordinary circumstances. Two of the most common defenses raised in challenges are: (1) The unavailability of the treasurer and committee staff, sometimes due to the illness or death of the treasurer, committee staff or their relatives; and (2) the inexperience of the treasurer or committee staff resulting from vacancies or turnover in these positions.

The Commission seeks comments on whether Section 111.35 should be revised to more specifically state the kinds of circumstances that will not be considered acceptable defenses. Please note that draft language on this issue has not been included in the proposed rules that follow.

The attached proposed rules would not, if promulgated, have a significant economic impact on a substantial number of small entities. The basis for this certification is that the attached proposed rules, if promulgated, would impose civil money penalties that are lower than those currently imposed and would be scaled to better take into account the amount of financial activity on reports filed by political committees. Thus, committees with lower levels of financial activity would be subject to lower fines than political committees with higher amounts. Therefore, the attached proposed rules, if promulgated, will not have a significant economic impact on a substantial number of small entities.

For the reasons set forth in the preamble, the Federal Election Commission proposes to amend subchapter A of chapter I of title 11 of the Code of Federal Regulations as follows:

Section 8.6(c) of the OCC's regulations provides that assessments for independent trust banks will include a “managed asset component” in addition to the assessments calculated under § 8.2. Under § 8.6(c)(1)(i), all independent trust banks must pay a minimum fee. In addition, under § 8.6(c)(1)(ii), independent trust banks with “managed assets” in excess of $1 billion must pay an additional amount. Currently, 12 CFR 8.6(c)(1)(ii) defines the asset base upon which the additional assessment is applied by reference to Schedule A, Line 18 of the Annual Report of Trust Assets (FFIEC Form 001). FFIEC Form 001 was replaced effective December 31, 2001 by FFIEC forms 031 and 041, Schedule RC-T—Fiduciary and Related Assets.

The proposal amends the definition of “Trust assets” in § 8.6(c)(3)(iv). The defined term is changed to “Fiduciary and related assets” to reflect the terminology used in Schedule RC-T of FFIEC forms 031 and 041. The proposal replaces the reference to FFIEC Form 001 that now appears with a reference to assets reported on Schedule RC-T of FFIEC forms 031 and 041, any successor form issued by the FFIEC, and any other fiduciary and related assets defined in the Notice of Comptroller of the Currency Fees. “Fiduciary and related assets” reported on Schedule RC-T reflect the types of assets, managed in a trust or fiduciary related-capacity, covered by the now-outdated cross-reference in the current rule, plus certain other similarly managed assets (corporate trust and agency accounts), not reported on the previous FFIEC form due to imprecisions in the instructions to the form.

The proposal also removes references in §§ 8.6(c)(1) and (c)(1)(ii) to “managed assets” and “trust assets under management,” and replaces them with the new term “fiduciary and related assets,” which is used in Schedule RC-T of FFIEC forms 031 and 041.

The proposal would also make a technical correction to § 8.1, correcting the reference to “12 U.S.C. 93A” to “12 U.S.C. 93a.”

Finally, we note that the changes made in this proposal affect a small number of banks that are already aware of the change in FFIEC forms. In addition, this amendment is intended to eliminate any confusion caused by the outdated cross-reference in the current rule for trust banks calculating their assessments for the upcoming period due on July 31, 2002. For these reasons, we have concluded that an abbreviated comment period is adequate under the circumstances.

The OCC invites comment on all aspects of the proposed regulation.

Section 722 of the Gramm-Leach-Bliley Act, Pub. L. 106-102, sec. 722, 113 Stat. 1338, 1471 (Nov. 12. 1999), requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. We invite your comments on how to make this proposal easier to understand. For example:

• Have we organized the material to suit your needs? If not, how could this material be better organized?

• Are the requirements in the proposed regulation clearly stated? If not, how could the regulation be more clearly stated?

• Does the proposed regulation contain language or jargon that is not clear? If so, which language requires clarification?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes to the format would make the regulation easier to understand?

• What else could we do to make the regulation easier to understand?

An agency must prepare a Regulatory Flexibility Analysis if a rule it proposes will have a “significant economic impact” on a “substantial number of small entities.” 5 U.S.C. 603, 605. If, after an analysis of a rule, an agency determines that the rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) provides that the head of the agency may so certify.

The OCC has reviewed the impact this proposed rule will have on small national banks. For purposes of this Regulatory Flexibility Analysis and proposed regulation, the OCC defines “small national banks” to be those banks with less than $100 million in total assets. Based on that review, the OCC certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities. The basis for this conclusion is that only 9 trust banks will be affected. The OCC believes, as a result, that the rulemaking will not have an impact on a substantial number of small institutions.

The OCC has determined that this proposal is not a significant regulatory action under Executive Order 12866.

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency prepare a budgetary impact statement before promulgating any rule likely to result in a federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. The OCC has determined that the proposed rule will not result in expenditures by state, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, this rulemaking requires no further analysis under the Unfunded Mandates Act.

For the reasons set forth in the preamble, part 8 of chapter I of title 12 of the Code of Federal Regulations is proposed to be amended as follows:

Congress enacted the Parity Act  1 in 1982 to stimulate credit in an unusually high interest rate environment by encouraging variable rate mortgages and other creative financing. In hearings before the Senate in 1981, mortgage bankers testified that statutes in 26 states barred state-chartered mortgage bankers and lending institutions from originating alternative mortgage loans, or imposed significantly higher restrictions on such loans than applied to federally chartered lenders operating under federal regulations. Congress wanted to make more housing credit available by giving those state-chartered housing creditors  2 parity with federally chartered institutions and eliminate the discriminatory impact of the state laws by authorizing those creditors to make, purchase, and enforce alternative mortgage loans. 3

The Parity Act applies to loans with any “alternative” payment features that vary from conventional fixed-rate, fixed term mortgage loans, such as variable rates, balloon payments, or call features. It allows state licensed and regulated housing creditors to engage in “alternative mortgage transactions” notwithstanding “any State constitution, law, or regulation,” provided the transactions are in conformity with regulations that would apply to a comparable federally chartered housing creditor. 4

To qualify as a state housing creditor and take advantage of preemption, the Parity Act specifically provides that the creditor must be “licensed under applicable State law and [remain or become] subject to the applicable regulatory requirements and enforcement mechanisms provided by State law.”  5 Housing creditors, other than state-chartered banks and state-chartered credit unions, 6 that wish to make an alternative mortgage transaction under the authority of the Parity Act, must abide by designated OTS regulations. Those regulations are enforced by each state housing creditor's applicable state regulator.

The Parity Act directed the Federal Home Loan Bank Board (Bank Board), OTS's predecessor agency, to identify, describe, and publish those portions of its regulations that were inappropriate for, and thus inapplicable to, non-federally chartered, non-bank, non-credit union housing creditors. 7 In 1982, the Bank Board published a “Notice to Housing Creditors” (1982 Notice). 8 The 1982 Notice provided that state housing creditors, other than commercial banks, credit unions or federal associations, may make alternative mortgage loans subject to the Bank Board's requirements on adjustments to rate, payment, balance or term of maturity and disclosure.

In 1983, the Bank Board published a final rule codifying a revised Notice to Housing Creditors. The 1983 final rule identified three provisions that were an integral part of, and particular to, alternative mortgage transactions. These included provisions governing the authority to make partially amortized or non-amortized loans and to adjust the interest rate payment, balance or term of maturity; limitations on adjustments on loans secured by borrower-occupied property; and requirements for disclosures on loans secured by borrower-occupied property that are not fixed-rated and fully amortized. 9

When the 1982 Notice was issued, federal savings associations had a limited ability to impose prepayment penalties on alternative mortgage transactions. 10 While the ability of federal thrifts to impose prepayment penalties was expanded in 1984, 11 restrictions were not removed completely until 1993. At that time OTS allowed prepayment penalties at any time and in any amount authorized by the loan contract for both adjustable rate and fixed-rate mortgages. 12

In January 1996, OTS proposed to designate additional rules as applicable under the Parity Act. Specifically, OTS proposed to designate all of proposed part 560 (rules on the lending powers of federal savings associations and safety and soundness-based lending provisions applicable to all savings associations) and proposed § 563.99 (fixed and adjustable-rate mortgage loan disclosures, adjustment notices, and interest rate caps). 13 In the final rule, OTS deleted the general reference to part 560, and specifically identified applicable regulations, including new references to late charges and prepayment provisions. 14 The list of OTS regulations currently applicable to state housing creditors now includes the following sections:

• § 560.33. This reference permits state housing creditors to impose late charges for any delinquent periodic payment and sets out certain limitations on the assessment of such late charges.

• § 560.34. This reference permits state housing creditors to impose a prepayment penalty and indicates how prepayments must be applied.

• § 560.35. This section addresses adjustments to interest rate, adjustments to the payment and loan balance, and the use of indices.

• § 560.210. This reference requires state housing creditors to provide initial disclosures and adjustment notices for variable rate transactions.

Housing creditors must comply with these requirements to obtain the benefit of the Parity Act's preemption of state laws.

On April 5, 2000, OTS published an advance notice of proposed rulemaking (ANPR) entitled “Responsible Alternative Mortgage Lending. 65 FR 17811. The ANPR sought public comment on various questions in connection with its review of mortgage lending regulations. OTS specifically sought comment about possible amendments to § 560.220. To the extent that commenters addressed these issues, they are discussed below.

Consumer groups and states generally urged OTS to limit the applicability of the Parity Act regulations to enable the states to better regulate non-depository state housing creditors. These commenters contended that state housing creditors are taking advantage of OTS regulations on prepayment penalties and late fees by structuring otherwise fixed-rate, fixed term loans with features to make them alternative mortgages and thus avoid state restrictions on these charges. These commenters specifically suggested removing prepayment penalties and late fees provisions from the list of regulations applicable to state housing creditors because those provisions apply to all mortgage loans (not just alternative transactions), arguing that they allow non-depository institutions to piggy back on federal preemption and facilitate predatory practices. 15

Financial institutions and their trade organizations generally supported the existing Parity Act rules as enhancing credit availability and enabling lenders to develop new mortgage options. They argued that if the scope of the Parity Act regulations were significantly narrowed, state financial institutions potentially could be required to comply with 51 sets of state requirements, and that this would increase lending costs to consumers. Some commenters argued the Parity Act does not limit the scope of regulations applicable to housing creditors to those provisions concerning only alternative mortgage transactions.

OTS has reviewed the designation of the regulations on prepayments and late charges in light of the comments on the ANPR and the purposes of the Parity Act, and is proposing to delete these rules from the list of provisions that apply to state housing creditors under the Parity Act.

The Parity Act directs the Bank Board (now OTS), OCC and NCUA to identify, describe, and publish those regulations that are “inappropriate for and inapplicable” to state housing creditors. The Parity Act, however, provides little guidance to the agencies in determining which regulations are appropriate. As a result, NCUA, OCC, OTS, and the Bank Board have taken substantially different approaches to the designation of rules.

NCUA, for example, has identified all of its lending regulations as applicable to alternative mortgage transactions by state-chartered credit unions. 16 These mortgage regulations address such matters as the term of the loan, requirements governing security instruments, notes, and liens, due-on-sale provisions, and assumptions and, as required under the Federal Credit Union Act, specifically prohibit prepayment penalties.

In contrast, OCC has designated as applicable to state-chartered commercial banks its rules that directly relate to adjustable rate mortgages. 17 OCC's designated regulations define ARM loans, authorize certain indexes and allow prepayment fees.

The Bank Board initially identified as appropriate and applicable those regulations that “describe and define” alternative mortgage transactions and not those regulations intended for the general supervision of federal associations. Because agency rules on prepayment penalties and late charges applied to loans generally (as distinguished from rules that bear directly on the unique features of alternative mortgage loans), the Bank Board's Parity Act regulation did not identify these provisions.

In 1996, OTS took a different tack and added provisions on prepayment and late charges to the list of designated regulations. The designation occurred as part of a larger regulatory project to update and reorganize all of its lending and investment regulations. The proposed and final rules did not explain the reason for OTS departure from its predecessor agency's standard.

The proposed rule merely stated in one sentence that OTS would identify as appropriate and applicable to alternative mortgage transactions all of part 560 and § 563.99. The preamble to the final rule, again in one sentence, merely stated that the rule was being “revised to identify the appropriate sections with greater specificity,” and the rule itself then designated four particular provisions.

Between publication of the proposed and final rules, OTS issued a legal opinion to address a particular state law on prepayment penalties. 18 The opinion concluded that the application of the Parity Act to a state prepayment provision fell into a gray area between laws clearly preempted by the Act (those barring variable rate loans) and those clearly not (those governing liens and foreclosures.) The opinion recognized that the OTS prepayment provisions applied to all real estate loans for federal thrifts not just alternative mortgage transactions, but then simply stated that state housing creditors would be “disadvantaged vis-à-vis federal thrifts” if they had to comply with the state law restricting prepayment penalties and so concluded that it was preempted.

The purpose of the Parity Act was to enable all housing creditors to provide credit with alternative mortgage vehicles and to preempt state laws that would prevent that type of credit. 19 The designation of § 560.35 and § 560.210 is essential to enable state housing creditors to continue to provide alternative mortgages. Accordingly, to provide parity with federal thrifts, OTS's proposed rule continues to designate these two provisions.

On the other hand, the OTS prepayment and late fee provisions are not intrinsic to the ability to offer alternative mortgages. We note that credit unions are barred by statute from imposing prepayment penalties on any loan, while OCC has specifically designated a prepayment penalty provision as applying to alternative mortgages. As for late fees, NCUA has designated its late fee provision as applying, while OCC has not. As these various approaches illustrate, the agencies have exercised broad discretion in their designations of appropriate regulations under the Parity Act and have struck different balances depending upon their statutory and regulatory scheme.

Certainly there are advantages and disadvantages to each charter and licensing scheme for the various types of housing creditors. Federal thrifts operate under a uniform system of safety and soundness and compliance rules nationwide, with regular examinations and close supervision. State thrifts have a somewhat similar system governing operations within their own jurisdictions. Other types of housing creditors are not bound by these restrictions and have more latitude in their operations.

OTS is proposing to delete § 560.34 and § 560.33 from the list of regulations designated for alternative mortgages. These two regulations apply to real estate loans in general and are part of a broader regulatory scheme governing the lending operations for federal thrifts.

OTS recognizes that state housing creditors may view this proposal as having a discriminatory impact on their ability to offer alternative mortgages. States that restrict prepayment penalties and late fees generally apply those restrictions to all real estate loans, not just to alternative mortgage transactions. The states' laws in these areas are not directed at restricting alternative mortgage transactions but in regulating mortgage transactions in general.

One of the congressional findings underlying the Parity Act was that OTS and the other federal regulators had adopted regulations authorizing their federally chartered institutions to offer alternative mortgages, and that the purpose of the Act was to eliminate the discriminatory impact of those regulations. 20 OTS regulations on prepayment penalties and late fees, however, were not adopted to enable federal thrifts to engage in alternative mortgage financing, but rather to permit federal thrifts the flexibility to exercise their lending powers under a uniform federal scheme. See 12 CFR 560.2(a). Therefore, OTS does not believe that Congress intended that regulations such as these would offer a basis for claiming discriminatory treatment or were needed to provide parity with federally chartered institutions. Indeed, OTS broadly allows federal thrifts to impose loan-related fees (e.g., initial charges and servicing fees) on any loan including alternative mortgages, notwithstanding any state law to the contrary. OTS also allows federal thrifts to process and originate any loan including alternative mortgages, without regard to state law. There is no basis for distinguishing prepayment penalties and late fees from these other OTS rules that apply generally to loans.

Accordingly, OTS proposes to delete the prepayment and late charge regulations from the list of regulations that apply to state housing creditors under the Parity Act. Under the proposed rule, OTS would identify only § 560.35 (adjustments to home loans) and § 560.210 (disclosures for variable rate transactions) as appropriate and applicable for state housing creditors.

OTS solicits comments on all aspects of this proposal and specifically requests comments on the following questions:

1. Has OTS correctly identified the factors it must weigh in determining whether a specific rule should be designated as applicable for state housing creditors? If not, which factors should OTS consider?

2. Has OTS appropriately and fairly applied these factors? Should OTS add any other regulations to the proposed list of designated regulations? Should OTS delete any regulation from the proposed list?

3. The Parity Act requires OTS to designate regulations for state housing creditors that include both depository institutions (state-chartered savings associations) and non-depository institutions. By contrast, OCC and NCUA designations, like the underlying regulations themselves, apply only to depository institutions ( i.e. , state chartered commercial banks and credit unions). Because state-chartered savings associations are subject to a safety and soundness regulatory scheme that is similar to that of federal thrifts and substantially different from other types of state-housing creditors, should OTS treat state-chartered savings associations differently under the Parity Act? Should OTS, for example, designate §§ 563.33 and 563.34 for state housing creditors that are depository institutions, but not for other types of state housing creditors? Does the Parity Act authorize OTS to differentiate between state housing creditors on this basis?

4. Sections 560.33 and 560.34 can be viewed as helping to promote safe and sound operations. For example, § 560.34 permits federal thrifts to moderate prepayment risk through the assessment of prepayment penalties; § 560.33 allows federal thrifts to encourage the timely payment of loans and to recover costs associated with late payments. In light of this, is it appropriate to apply these rules to state-chartered housing lenders that are depository institutions? Similarly, based on these safety and soundness considerations, should OTS apply these rules to all real estate loans made by state savings associations? What studies or empirical data exist to support the need to apply these rules to state savings associations?

The majority of consumer groups and some states commenting on the ANPR advocated that OTS recommend that Congress repeal the Parity Act. These commenters asserted that the Parity Act is no longer needed to circumvent state restrictions on adjustable rate mortgages since nearly all states now allow such transactions. These commenters contended that state housing creditors are now using the Parity Act to defeat states' attempts to impose reasonable consumer protection laws. Financial institutions addressing this issue generally opposed repeal of the Parity Act, because the Act enables financial institutions to offer uniform loan products across state lines, thereby lowering credit costs and increasing credit availability. These commenters contended that other federal laws exist to address predatory lending and consumer issues.

Legislative actions affecting the Parity Act are, of course, beyond the scope of this rulemaking. OTS believes, however, that Congress should revisit the Parity Act, possibly in the context of broader mortgage reform legislation involving the Real Estate Settlement Procedures Act (RESPA), 21 the Home Ownership and Equity Protection Act (HOEPA), 22 or predatory lending. In contrast to the situation in the late 1970s and early 1980s, state regulators tell us that all states but one currently allow alternative mortgage transactions. If Congress believes that alternative mortgage transactions merit special treatment, it may want to consider whether it should enact a statute that applies equally to all entities providing alternative mortgage transactions, along the model of Regulation Z.

OTS has two additional recommendations in the event of Congressional review of the Parity Act. First, if the Act remains in place, states should be permitted another opportunity to opt out of the preemption provided by the Parity Act. 23 Congress originally gave the states a choice to opt out of the preemption provision so that housing creditors in that state would be bound by the state's regulations with respect to alternative mortgage transactions. Initially, the states had three years from the effective date of the Parity Act, from 1982 to 1985, to opt out of the preemption provisions. At the time, only a handful of states decided to reject preemption. However, today, with credit more readily available, the acceptance of alternative mortgage transactions by the states, and the rising incidence of potentially predatory lending practices, additional states might possibly elect to opt out of the Parity Act if given the opportunity.

Second, OTS recommends that state housing creditors lending under the authority of the Parity Act be required to identify themselves to the states. Currently, although the Parity Act provides the states with a mechanism to remove its preemption benefits from certain housing creditors, it is difficult for the states to do so without a reliable means of knowing who is a Parity Act creditor. Housing creditors may enjoy preemption benefits on alternative mortgage transactions only if those transactions are in substantial compliance with applicable federal regulations and the creditor timely cures any error. Loans made under the aegis of the Parity Act lose the benefit of preemption and therefore must comply with state law if the housing creditor fails to cure any error within sixty days of discovery. The recommended notification provision would permit the states to better monitor the housing creditors taking advantage of the Parity Act preemption benefits and those in particular that fail to timely cure any errors.

Part 590 implements section 501 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) (12 U.S.C. 1735f-7a), 24 which provides for the permanent preemption of state laws expressly limiting the rate or amount of interest, discount points, finance charges, or other charges assessed in connection with certain “federally-related” residential loans. 25

This preemption does not apply to loans secured by a first lien on a residential manufactured home unless the terms and conditions of the loan comply with consumer protections provisions specified in OTS regulations at 12 CFR 590.4. These regulations address such matters as balloon payments, prepayment penalties, late charges, deferral fees, notice before repossession or foreclosure, and the refund of prepaid interest. Section 590.4(f) specifically addresses late charges. Among other requirements, this paragraph states: “To the extent that applicable state law does not provide for a lower charge * * * a late charge on any installment * * * may not exceed the lesser of $5.00 or five percent of the unpaid amount of the installment.”

Thus, unless the installment on a manufactured housing loan is less than $100, OTS's rule permits a maximum $5.00 fee for late payments on such loans. Over the years, OTS has received requests from representatives of manufactured housing lenders seeking the revision of this provision. These lenders argue that the $5 amount is too small to deter late payments. They assert that the absence of a tangible penalty has contributed to a run-up of delinquencies and repossessions, and to increases to their costs of funds. Accordingly, these lenders have sought the deletion of the $5.00 limit.

In today's rule, OTS is proposing to eliminate the $5.00 limit. Under the proposed rule, the late fee would be limited to five percent of the unpaid amount of the installment, unless applicable state law imposes a lesser charge. OTS specifically requests comment whether this five percent limitation should also be deleted from the final rule.

OTS regulations at 12 CFR 591 implement section 341 of the Garn St Germain Depository Institutions Act of 1982 (12 U.S.C.A. 1701j-3). 26 This part governs the permissibility of due-on-sale clauses in real estate loans and the preemption of state prohibitions on such clauses.

OTS is proposing a minor technical change to the definition of reverse mortgage at 12 CFR 591.2(n). The rule would clarify that a reverse mortgage is not limited to a loan that provides for periodic payments, but also includes a loan that provides for a lump sum payment. This change is consistent with OTS legal opinions. 27

Section 722 of the Gramm-Leach Bliley Act  28 requires federal banking agencies to use “plain language” in all proposed and final rules published after January 1, 2000. OTS invites comments on how to make this proposed rule easier to understand. For example:

(1) Have we organized the material to suit your needs? If not, how could the material be better organized?

(2) Do we clearly state the requirements in the rule? If not, how could the rule be more clearly stated?

(3) Does the rule contain technical language or jargon that is not clear? If so, what language requires clarification?

(4) Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand? If so, what changes to the format would make the rule easier to understand?

The Director of OTS has determined that this proposed rule does not constitute a “significant regulatory action” for purposes of Executive Order 12866.

Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4 (Unfunded Mandates Act), requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a federal mandate that may result in expenditure by state, local, and tribal governments, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, Section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. OTS has determined that the proposed rule will not result in expenditures by state, local, or tribal governments or by the private sector of $100 million or more. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Act of 1995.

When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (RFA) requires the agency to “prepare and make available for public comment an initial regulatory flexibility analysis” which will “describe the impact of the proposed rule on small entities.” 5 U.S.C. § 603(a). Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

Parts 590 and 591. OTS has not prepared an initial regulatory flexibility analysis (IRFA) for the proposed revisions to part 590 and part 591. The proposed change to part 590 affects creditors making federally-related loans secured by first liens on residential manufactured housing. The proposed change would provide these creditors with greater flexibility in charging late fees, while retaining the benefits of preemption of state usury laws under section 501 of DIDMCA. The current rule permits a limited late fee of $5, which has proven to be too small to deter late payments. The proposed change permitting the imposition of a more tangible penalty will benefit all creditors making such loans, including small businesses. Part 591 permits all lenders, whether federally- or state-chartered, to exercise due-on-sale clauses in real property loans without regard to state law. OTS proposes a clarifying change broadening the definition of reverse mortgage. Since this change codifies an existing OTS interpretation of the term which broadens the availability of preemption under part 591, any impact on lenders should be beneficial. Accordingly, OTS certifies to the Chief Counsel of Advocacy of the Small Business Administration that the proposed changes to parts 590 and 591 will not have a significant economic impact on a substantial number of small entities.

Section 560.210. OTS has performed an IRFA for the proposed changes to § 560.210. 29 A description of the reasons why OTS is considering the proposed change and a statement of the objectives of, and legal basis for, this aspect of the proposed rule are included in the supplementary material above. In addition, OTS has addressed the following topics.

The proposed change to § 560.220 would apply to state housing creditors other than credit unions or commercial banks. OTS does not compile data on the total number of state housing creditors that may utilize § 560.220. Moreover, except for state-chartered savings associations, OTS does not have any authority to require state housing creditors to identify themselves or submit other data to OTS. Similarly, the Parity Act does not require state housing creditors to notify the states that they are taking advantage of the Act. As a result, OTS has little information regarding how many state housing creditors may use § 560.220 or how many of these creditors are small businesses.

Nonetheless, OTS estimates that 6,386 small state housing creditors may be affected by this regulation. United States Census data indicates that 7,257 firms (excluding depository institutions) engage in real estate credit. OTS estimates approximately 6,300 of these firms are small businesses. 30 Based on the most recent TFR data for thrifts, OTS estimates that an additional 86 state-chartered savings associations are small businesses. 31 For the purposes of this analysis, we have assumed that all 6,386 of these small businesses engage in alternative mortgage transactions.

OTS believes that this number may overstate the number of small businesses that may be affected by the changes to the proposed rule for several reasons. First, the use of the Parity Act is solely at the election of the state housing creditors. State housing creditors may, for whatever reason, decline to use the Parity Act for their alternative mortgage transactions. Moreover, many small state housing creditors will conduct alternative mortgage transactions that are governed by laws in states that either:

• Opted out of the Parity Act. State housing creditors conducting alternative mortgage transactions governed by these laws currently cannot use § 560.220 to preempt state law; or

• Enacted statutes that do not impose any substantive prohibitions and restriction on prepayment penalties or late charges for the loans. State housing creditors may continue to charge penalties and fees on alternative mortgage transactions in these states, notwithstanding the proposed changes to § 560.220.

OTS's estimate of 6,386 small businesses is based on the best information available to it. However, OTS encourages any commenter with access to more complete and more accurate data to submit information regarding the number of state housing creditors (other than credit unions or commercial banks) that may be affected by this rule. OTS also requests information regarding how many of these creditors that may be small businesses.

The Parity Act permits certain state housing creditors to make, purchase, and enforce alternative mortgage transactions without regard to any state constitution, law or regulation, provided that they comply with regulations designated by OTS. As described more fully in the supplementary information section, the proposed rule would revise OTS's designation of applicable regulations so that it would no longer designate rules on prepayment and late charges. As a result, these state housing creditors would be subject to state laws limiting prepayment penalties and restricting late charges.

OTS is unable to quantify the impact of the proposed revision on small state housing creditors for several reasons. Based on available data, it is difficult to determine how many alternative mortgage transactions were made under the OTS Parity Act regulations. Industry-wide data is available only for one type of alternative mortgage transaction—adjustable rate mortgages (ARMs). Other types of mortgages with alternative features are generally reported as fixed rate mortgages. The available data, however, indicates that all housing lenders originated $243.6 billion and $256 billion in ARMs in 2001 and 2000 respectively. 32 The most recent data available indicated that state housing creditors (excluding commercial banks and thrifts) account for approximately 56.3 percent of all lending or $137.1 billion and $144.1 billion of ARMs in 2001 and 2000. 33 OTS estimates that $14.7 billion and $15.4 billion of these ARM loans were originated by small state housing creditors in 2001 and 2000. 34 This available data, however, does not distinguish between transactions that are made under the Parity Act, and those that are not. As noted above, OTS has no authority to require state housing creditors that use § 560.220 to provide this information. 35

In the ANPR, OTS attempted to obtain additional information on the extent to which state housing creditors engage in alternative mortgage transactions under the Parity Act. Commenters, however, provided no reliable information on this subject. 36 Nonetheless, OTS encourages any commenter with access to more complete and more accurate data to submit information regarding the extent to which small state housing creditors engage in alternative mortgage lending under § 560.220.

OTS further requests information concerning the amount of late fees and prepayment penalties generated by these alternative mortgage transactions. OTS notes, however, that reliable estimates of the amount of late fees and prepayment penalties would not accurately reflect the impact of the deletion of the preemption of prepayment charge provisions and late charge provisions. The 6,386 small state creditors that may be affected by the proposed rule would become subject to a broad range of state laws. For example, some of these laws would continue to permit the imposition of prepayment penalties. Others may prohibit or restrict prepayment charges. Still other laws would subject prepayment penalties to a range of restrictions, such as prohibiting penalties for a set period after execution of the note or mortgage or limiting the amount of the prepayment penalty. Based on this wide variety of restrictions and the fact that current state laws will change over time, it is difficult to estimate how much of the income would be lost by small state housing creditors under the proposed rule. 37

Moreover, the impact of the loss of prepayment penalties may be ameliorated somewhat through other techniques. For example, lenders often impose a higher overall interest rate where prepayment penalties are excluded from the loan agreement. 38 In addition, some commentators assert that the payment of points upon origination and the imposition of a prepayment penalty are economically equivalent transactions. Since a mortgage with points includes an implicit and easily calculable prepayment penalty, state housing creditors may substitute points where prepayment penalties are prohibited. 39

OTS requests information quantifying the impact that the proposed revision will have on small state housing creditors.

Section 603(c) of the RFA requires OTS to describe any significant alternatives to the proposed rule that accomplish the stated objectives of the rule while minimizing any significant economic impact of the rule on small entities. Section 603(c) lists several examples of significant alternatives, including: (1) Establishing different compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarifying, consolidating, or simplifying compliance and reporting requirements for small entities; (3) using performance standards rather than design standards; and (4) excepting small entities from coverage of the rule or a part of the rule.

OTS considered retaining its current designation of regulations for all state housing creditors. For the reasons noted in the preamble above, OTS believes that this course is inappropriate. OTS also considered whether it should continue to designate the existing regulations for small state housing creditors, but not for other state housing creditors. However, given its analysis of the purposes and goals of the Parity Act, OTS has concluded that it is inappropriate to distinguish between small and large state housing creditors. OTS solicits comment from any other alternatives that would minimize the burdens on small state housing creditors.

Various federal rules or statutes duplicate or overlap with the proposed rule. NCUA has identified all of its lending regulations as applicable to alternative mortgage transactions by state-chartered credit unions. 12 CFR 701.21(a). These regulations address such matters as the term of the loan, requirements governing security instruments, notes, liens, due-on-sale provisions, and assumptions and, as required under the Federal Credit Union Act, specifically prohibit prepayment penalties. OCC, on the other hand, had designated as applicable to state-chartered commercial banks, its rules that directly relate to adjustable rate mortgages. OCC's designated regulations define ARM loans, authorize certain indexes, and allow prepayment fees. 12 CFR 34.24. In addition, other federal statutes and rules may preempt the application of state laws on prepayment penalties and late fees for alternative mortgage transactions by state housing creditors. See e.g. , 12 CFR part 590 (preemption of state usury laws under section 501 of DIDMCA ) and 12 CFR part 591 (preemption of state due on sale clauses under section 341 of Garn St Germain Depository Institutions Act of 1982).

OTS is aware of no federal rules or statutes that conflict with the proposed rule.

Executive Order 13132 imposes certain requirements on an agency when formulating and implementing policies that have federalism implications or taking actions that preempt state law. In accordance with those requirements, OTS has consulted with the Conference of State Bank Supervisors and the National Association of Attorneys General concerning this proposed change.

Accordingly, the Office of Thrift Supervision proposes to amend 12 CFR parts 560, 590, and 591 as set forth below:

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (COTP Western Alaska 02-001), 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 may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Coast Guard Marine Safety Office Anchorage at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

In light of the terrorist attacks in New York City and Washington, DC on September 11, 2001, the Coast Guard is proposing to establish permanent security zones on the navigable waters of Cook Inlet, Alaska to protect the LNG tankers that frequently traverse these waters, the Nikiski marine terminals, the community of Nikiski and the maritime community from potential sabotage or subversive acts and incidents of a similar nature.

This rulemaking proposes to make permanent the temporary security zones published on February 13, 2002 in the Federal Register (67 FR 6650) under temporary section 165.T17-006 of Title 33 of the Code of Federal Regulations (CFR). That rulemaking established temporary security zones with identical boundaries in the rulemaking proposed herein. This rulemaking is necessary to provide permanent protection of the LNG tankers when moored at the Phillips Petroleum LNG Pier and when transiting Cook Inlet.

We propose to establish a 1000-yard radius security zone around LNG tankers while the vessels are moored at the Phillips Petroleum LNG Pier, Nikiski, Alaska. Our proposed rule would also create a 1000-yard radius moving security zone around the LNG tankers during their inbound and outbound transits in Cook Inlet, Alaska; specifically, starting and ending at the Homer Pilot Station in Cook Inlet, AK. These security zones prohibit entry into or movement within the specified areas. The security zones are designed to permit the safe and timely mooring, loading and departure of the vessels and the safe transit through Cook Inlet by minimizing potential waterborne threats to this operation. The limited size of the zone is designed to minimize impact on other mariners transiting through the area while ensuring public safety by preventing interference with the safe and secure loading and transit of the tankers.

This rule also adds a collection of information requirement in paragarph 165.1709(b)(1)(ii)(B) for vessels fishing in the vicinity of the Phillips Petroleum LNG Pier that would penetrate the 1000-yard security zone when the LNG tankers are moored at the pier. This collection of information was not required in the temporary final rule published in the Federal Register (67 FR 6650; February 13, 2002) because the fishing season does not occur in this area until the summer months. We require this information from fishing vessels to ensure the security of the LNG tankers and LNG facility against terrorism, sabotage or other subversive acts and incidents of a similar nature.

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 minimal and 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 minimal time that vessels will be restricted from the zone, that vessels may still transit through the waters of Cook Inlet and dock at other Nikiski marine terminals.

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 the Phillips Petroleum LNG Pier during the time this zone is activated; and the owners or operators of fishing vessels fishing in the vicinity of the Phillips Petroleum LNG Pier during the months of June through August.

These security zones will not have a significant economic impact on a substantial number of small entities for the following reasons. Marine traffic will still be able to transit through Cook Inlet during the zones' activation. Additionally, vessels with cargo to load or offload from other Nikiski marine terminals in the vicinity of the zone will not be precluded from mooring at or getting underway from the terminals. The owners of fishing vessels that typically fish in the vicinity of the LNG pier during the summer months will be required to notify and provide information to the local Coast Guard Marine Safety Detachment in Kenai before being allowed to fish at the LNG pier. The Coast Guard will collect current information from them that is essential to keeping the pier secure from sabotage or subversive activities.

This rule modifies an existing collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. The title and description of the information collection, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.

Title: Ports and Waterways Safety.

OMB Control Number: 2115-0540.

Summary of the Collection of Information: The Captain of the Port, Western Alaska requires information on fishing vessel owners and operators, and their vessels, desiring to fish in the security zone around the Phillips Petroleum LNG Pier.

Need for Information: To ensure port and vessel safety and security and to ensure the fishing industry openings are uninterrupted.

Proposed use of Information: This information is required to control vessel traffic, develop contingency plans, and enforce regulations.

Description of the Respondents: The respondents are owners, operators, or persons in charge of fishing vessels operating in the vicinity of the Phillips Petroleum LNG Pier.

Number of Respondents: The existing OMB-approved collection number of respondents is 1,329. This proposed rule would increase the number of respondents by 10 to a total of 1,339.

Frequency of Response: The existing OMB-approved collection annual number of responses is 1,329. This temporary rule will increase the number of responses by 10 to a total of 1,339.

Burden of Response: The existing OMB-approved collection burden of response is 2 and 1/4 hours. This proposed rule would not change the burden of response because it will take less time for the responders to complete this response. Their vessels and crew are smaller.

Estimate of Total Annual Burden: The existing OMB-approved collection total annual burden is 2,924 hours. This proposed rule would increase the total annual burden by 5 hours to a total of 2,929 hours.

We ask for public comment on the collection of information to help us determine how useful the information is; whether it can help us perform our functions better; whether it is readily available elsewhere; how accurate our estimate of the burden of collection is; how valid our methods for determining burden are; how we can improve the quality, usefulness, and clarity of the information; and how we can minimize the burden of collection.

If you submit comments on the collection of information, submit them both to OMB and to the Docket Management Facility where indicated under ADDRESSES , by the date under DATES .

You need not respond to a collection of information unless it displays a currently valid control number from OMB. The OMB approval is valid until November 30, 2003.

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 proposed 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 proposed 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 proposed 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 proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This proposed 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 proposed 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.

To help the Coast Guard establish regular and meaningful consultation and collaboration with Indian and Alaskan Native tribes, we published a notice in the Federal Register (66 FR 36361, July 11, 2001) requesting comments on how to best carry out the Order. We invite your comments on how this proposed rule might impact tribal governments, even if that impact may not constitute a “tribal implication” under the Order.

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

We considered the environmental impact of this proposed 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 security zone. A “Categorical Exclusion Determination” is available in the docket 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:

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

Table 1 lists the rules addressed by this proposal with the dates that they were adopted by local air agencies and submitted by the California Air Resources Board (CARB).

On October 6, 2000, July 20, 2001, and July 20, 2001, respectively, these submittals were found to meet the completeness criteria in 40 CFR part 51 appendix V, which must be met before formal EPA review.

We approved into the SIP ICAPCD Rule 415 on August 11, 1978 (43 FR 35694) and ICAPCD Rule 415.1 on November 10, 1980 (45 FR 74480). These rules were combined into submitted ICAPCD Rule 415.

We approved into the SIP a version of VCAPCD Rule 70 on May 13, 1997 (64 FR 66393).

We approved into the SIP a version of SBCAPCD Rule 346 on January 24, 1995 (60 FR 4562).

A purpose of revisions to ICAPCD Rule 415 is to combine Rule 415 and 415.1 into a single rule to which the gasoline storage provisions from Rule 414 were also added. Another purpose is to add or make more stringent gasoline vapor emission requirements and to add test methods and recordkeeping requirements. ICAPCD Rule 415 regulates gasoline storage and transfer at bulk terminals, bulk plants, and gasoline dispensing stations.

One purpose of revisions to VCAPCD Rule 70 is to exempt gasoline dispensing facilities on Anacapa Island and San Nicolas Island from testing requirements. A second purpose is to delete the preemption of test methods and test frequencies by those specified by the California Air Resources Board (CARB) Executive Order for vapor recovery equipment, unless the CARB requirement is more frequent. A third purpose is to increase the frequency of reverification testing for the air-to-liquid volume ratio to once per year.

The purposes of revisions to SBCAPCD Rule 346 are to add a limit of 20,000 gallons per day of organic liquid transfer into cargo vessels from a loading facility, to add a compliance schedule, and to revise which test methods are specified.

Generally, SIP rules must be enforceable (see section 110(a) of the CAA), must require Reasonably Available Control Technology (RACT) for major sources in nonattainment areas (see section 182(a)(2)(A)), and must not relax existing requirements (see sections 110(l) and 193).

The VCAPCD and SBCAPCD regulate severe ozone nonattainment areas (see 40 CFR 81), therefore Rules 70 and 346 must fulfill RACT requirements for VOCs.

However, the ICAPCD regulates a section 185A transitional area for ozone. 40 CFR 81. We originally designated Imperial County as nonattainment for oxidant (now ozone) under the provisions of the CAA Amendments of 1977 (1977 Act). 43 FR 8962 (March 3, 1978). On April 1, 1980, we published a notice of proposed rulemaking (NPRM) on revisions to the Imperial County portion of the California SIP that were submitted to us to address planning requirements for nonattainment areas under Part D of the 1977 Act. 45 FR 21297 (April 1, 1980). Our 1980 NPRM indicated that Imperial County sought to comply with the Part D requirement for application of RACT through two local regulations: ICAPCD rule 415.1, Gasoline Loading into Tank Trucks and Trailers, and ICAPCD rule 413, Storage of Petroleum Products, but we concluded that an additional RACT rule, one controlling emissions from cutback asphalt, would also be required. On November 10, 1980, we published our final rule conditionally approving the Imperial County Plan to Attain National Ambient Air Quality Standards for Oxidants (October 31, 1978) (Plan). 45 FR 74480 (November 10, 1980).

ICAPCD Rule 415 contains enforcement-related deficiencies that preclude full approval. According to the General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990, 57 FR 13525 (April 16, 1992) and our conditional approval of the Plan, we may impose CAA section 179 sanctions for enforcement-related deficiencies only on three pre-1990 VOC RACT rules: Rule 415.1, Gasoline Loading into Tank Trucks and Trailers (Phase I), Rule 413, Storage of Petroleum Products, and Rule 418.1, Cutback Asphalt. The enforcement related deficiencies cited above for Rule 415 do not originate from the Rule 415.1 (Phase I) portion of Rule 415. Therefore, we can not impose sanctions if the deficiencies are not corrected.

Guidance and policy documents that we used to define specific enforceability and RACT requirements include the following:

• Requirements for Preparation, Adoption, and Submittal of Implementation Plans, U.S. EPA, 40 CFR Part 51

• Portions of the proposed post-1987 ozone and carbon monoxide policy that concern RACT, 52 FR 45044 (November 24, 1987).

• Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations; Clarification to Appendix D of November 24, 1987 Federal Register Notice, (Blue Book), notice of availability published in the May 25, 1988 Federal Register .

• Draft Model Rule, Gasoline Dispensing Facility-Stage II Vapor Recovery, EPA (August 17, 1992).

• Gasoline Vapor Recovery Guidelines, EPA Region IX (April 24, 2000).

• Model Volatile Organic Compound Rule for Reasonably Available Control Technology (RACT),” Office of Air Quality Planning and Standards (June 1992).

• Control of Hydrocarbons from Tank Truck Gasoline Loading Terminals, EPA-450/2-77-026.

• Control of Volatile Organic Emissions from Bulk Gasoline Plants, EPA-450/2-77-035.

ICAPCD Rule 415 improves the SIP by establishing new or more stringent emission limits and by adding monitoring and recordkeeping provisions. VCAPCD Rule 70 improves the SIP by increasing the frequency of some testing. These rules are largely consistent with the relevant policy and guidance regarding enforceability, RACT, and SIP relaxations. Rule provisions which do not meet the evaluation criteria are summarized below and discussed further in the TSD.

SBCAPCD Rule 346 improves the SIP by limiting the quantity of daily gasoline transfer into cargo vessels and by adding a compliance schedule.

This deficiency in VCAPCD Rule 70 conflicts with section 110 and part D of the CAA and prevents full approval:

• Sections H.1.c, H.2.b, H.3, and H.7.a: Reverification of the performance tests of the vapor recovery system originally required by the CARB Executive Order should be performed more frequently. EPA recommends reverification of performance tests once every 6-12 months in order to fulfill RACT.

These deficiencies in ICAPCD Rule 415 conflict with section 110 and part D of the CAA and prevent full approval:

• Section B.5: Performance tests on Phase II vapor recovery systems should be performed within 30 days of modification or installation.

• Section B.5: Reverification of performance tests on Phase II vapor recovery systems should be performed periodically to verify continued proper operation.

• Section C: Specific test methods on Phase II vapor recovery systems should be provided, at a minimum, for the following initial performance tests typically used at various types of gasoline dispensing stations: Static Pressure Test, Dynamic Back Pressure Test, Air-to-Liquid Volume Ratio Test, and Liquid Removal Rate Test.

The TSDs describe additional rule revisions that do not affect EPA's current action but are recommended for the next time the local agency modifies the rules.

As authorized in sections 110(k)(3) and 301(a) of the CAA, EPA is proposing a limited approval of ICAPCD Rule 415 and VCAPCD Rule 70 to improve the SIP. If finalized, this action would incorporate the submitted rules into the SIP, including those provisions identified as deficient. This approval is limited because EPA is simultaneously proposing a limited disapproval of the rules under section 110(k)(3). If the disapproval of ICAPCD Rule 415 is finalized, sanctions will not be imposed. If the disapproval of VCAPCD Rule 70 is finalized, sanctions will be imposed under section 179 of the CAA unless EPA approves subsequent SIP revisions that correct the rule deficiency within 18 months. These sanctions would be imposed as described in 59 FR 39832 (August 4, 1994). A final disapproval would also trigger the federal implementation plan (FIP) requirement under section 110(c). Note that the submitted rules have been adopted by the ICAPCD and VCAPCD, and EPA's final limited disapproval would not prevent the local agencies from enforcing them.

EPA is also proposing a full approval of SBCAPCD Rule 346 to improve the SIP.

We will accept comments from the public on the proposed limited approvals and limited disapprovals for the next 30 days.

VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires states to submit regulations that control VOC emissions. Table 2 lists some of the national milestones leading to the submittal of these local agency VOC rules.

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

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

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 proposed rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely acts on a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. Thus, the requirements of section 6 of the Executive Order do not apply to this proposed 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 proposed 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. In the spirit of Executive Order 13175, and consistent with EPA policy to promote communications between EPA and tribal governments, EPA specifically solicits additional comment on this proposed rule from tribal officials.

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 proposed rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the CAA do not create any new requirements but simply act on requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

EPA's proposed disapproval of the state request under section 110 and subchapter I, part D of the CAA does not affect any existing requirements applicable to small entities. Any pre-existing federal requirements remain in place after this disapproval. Federal disapproval of the state submittal does not affect state enforceability. Moreover, EPA's disapproval of the submittal does not impose any new Federal requirements. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities.

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

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

EPA has determined that the proposed 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. This proposed Federal action acts on pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

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

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

FEMA proposes to make determinations of BFEs and modified BFEs for each community listed below, in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR 67.4(a).

These proposed BFEs and modified BFEs, together with the floodplain management criteria required by 44 CFR 60.3, are the minimum that are required. They should not be construed to mean that the community must change any existing ordinances that are more stringent in their floodplain management requirements. The community may at any time enact stricter requirements of its own, or pursuant to policies established by other Federal, State, or regional entities. These proposed elevations are used to meet the floodplain management requirements of the NFIP and are also used to calculate the appropriate flood insurance premium rates for new buildings built after these elevations are made final, and for the contents in these buildings.

National Environmental Policy Act. This proposed rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. No environmental impact assessment has been prepared.

Regulatory Flexibility Act. The Acting Administrator, Federal Insurance and Mitigation Administration certifies that this proposed rule is exempt from the requirements of the Regulatory Flexibility Act because proposed or modified BFEs are required by the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and are required to establish and maintain community eligibility in the NFIP. No regulatory flexibility analysis has been prepared.

Regulatory Classification. This proposed rule is not a significant regulatory action under the criteria of Section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 12612, Federalism. This proposed rule involves no policies that have federalism implications under Executive Order 12612, Federalism, dated October 26, 1987.

Executive Order 12778, Civil Justice Reform. This proposed rule meets the applicable standards of Section 2(b)(2) of Executive Order 12778.

Accordingly, 44 CFR Part 67 is proposed to be amended as follows:

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 02-76, adopted April 3, 2002, and released April 12, 2002. The full text of this Commission decision is available for inspection and copying during regular business hours in the FCC's Reference Information Center at Portals II, 445 12th Street, SW, CY-A257, Washington, DC 20554. This document may also be purchased from the Commission's duplicating contractors, Qualex International, Portals II, 445 12th Street, SW, Room CY-B402, Washington DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

The provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding.

Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR § 1.1204(b) for rules governing permissible ex parte contacts.

For information regarding proper filing procedures for comments, see 47 CFR §§ 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR Part 73 as follows: