Bovine tuberculosis is a contagious, infectious, and communicable disease caused by Mycobacterium bovis. It affects cattle, bison, deer, elk, goats, and other species, including humans. Tuberculosis in infected animals and humans manifests itself in lesions of the lung, bone, and other body parts, causes weight loss and general debilitation, and can be fatal.

At the beginning of the 20th century, tuberculosis caused more losses of livestock than all other livestock diseases combined. This prompted the establishment of the National Cooperative State/Federal Bovine Tuberculosis Eradication Program for bovine tuberculosis in livestock.

Federal regulations implementing this program are contained in 9 CFR part 77, “Tuberculosis” (referred to below as the regulations), and in the “Uniform Methods and Rules—Bovine Tuberculosis Eradication” (UMR), which is incorporated by reference into the regulations. The regulations restrict the interstate movement of cattle, bison, and captive cervids to prevent the spread of bovine tuberculosis. Subpart B of the regulations contains requirements for the interstate movement of cattle and bison not known to be infected with or exposed to tuberculosis. The interstate movement requirements depend upon whether the animals are moved from an accredited-free State or zone, modified accredited advanced State or zone, modified accredited State or zone, accreditation preparatory State or zone, or nonaccredited State or zone.

The status of a State or zone is based on its freedom from evidence of tuberculosis in cattle and bison, the effectiveness of the State's tuberculosis eradication program, and the degree of the State's compliance with the standards for cattle and bison contained in the UMR. In an interim rule published in the Federal Register and effective on November 22, 2000, (65 FR 70284-70286, Docket No. 99-092-1), we recognized two separate zones with different classifications in Texas. Portions of El Paso and Hudspeth Counties were classified as a modified accredited advanced zone, and the remainder of the State was classified as an accredited-free zone.

Recently, two tuberculosis-affected herds (a beef herd in the summer of 2001 and a dairy herd in the fall of 2001) were detected in the accredited-free zone of Texas. Under the regulations in § 77.7(c), if two or more affected herds are detected in an accredited-free State or zone within a 48-month period, the State or zone will be removed from the list of accredited-free States or zones and will be reclassified as modified accredited advanced. Therefore, we are amending the regulations by removing the split-State status of Texas and classifying the entire State as modified accredited advanced.

The two affected herds detected in the former accredited-free zone in Texas have been depopulated and a complete epidemiological investigation into the potential sources of the disease has been conducted. In addition, we have heightened our surveillance activities at slaughtering plants in Texas and in the surrounding States. We will continue increased surveillance activity for up to 20 years after the State (or any future zone) has been classified accredited free.

Under the regulations in § 77.10, cattle or bison that originate in a modified accredited advanced State or zone, and that are not known to be infected with or exposed to tuberculosis, may be moved interstate only under one of the following conditions:

• The cattle or bison are moved directly to slaughter at an approved slaughtering establishment (§ 77.10(a));

• The cattle or bison are sexually intact heifers moved to an approved feedlot, or are steers or spayed heifers; and are either officially identified or identified by premises of origin identification (§ 77.10(b));

• The cattle or bison are from an accredited herd and are accompanied by a certificate stating that the accredited herd completed the testing necessary for accredited status with negative results within 1 year prior to the date of movement (§ 77.10(c)); or

• The cattle or bison are sexually intact animals, are not from an accredited herd, are officially identified, and are accompanied by a certificate stating that they were negative to an official tuberculin test conducted within 60 days prior to the date of movement (§ 77.10(d)).

Nationally, most animals that are moved interstate are sexually intact heifers moving to feedlots or steers and spayed heifers. Prior to this interim rule, the identification requirements for such animals found in §§ 77.10(b) and 77.10(d) applied only to approximately 120 cattle moved annually from the small modified accredited advanced zone in Texas. However, this interim rule's classification of the entire State of Texas as modified accredited advanced will necessitate the identification of all sexually intact heifers moving from Texas to feedlots (both approved feedlots and other feedlots) and all steers and spayed heifers moving interstate from Texas to destinations other than an approved slaughtering establishment. Approximately 3 million cattle per year are moved interstate from Texas.

Given the large number of animals that will now require identification before being moved interstate from Texas, we recognize that additional time will be needed before full compliance with the identification requirements of §§ 77.10(b) and 77.10(d) can be achieved. Identification devices must be obtained, the procedures and processes for numbering the identification must be developed, and a new State-Federal system to record the data from the identification may need to be developed, if the existing State-Federal system is not adequate to deal with the volume of cattle. Once the system of identification is developed, it must be communicated to the State and Federal animal health officials and the industry before it can be coordinated and implemented. Since the system and procedures to be implemented have not yet been determined, we do not know if any new information collection or recordkeeping requirements will be necessary.

The primary purpose of the identification requirements in §§ 77.10(b) and 77.10(d) is to allow for traceback in the event an animal is determined to be infected with or exposed to tuberculosis. If an animal is found to be infected with or exposed to tuberculosis in slaughter channels, it is necessary for control and eradication purposes to be able to identify the premises from which the animal originated as well as the places it has moved through since. Individual unique identification provides the most effective traceback capability. However, if an animal is moved from its premises of origin without identification, the value of any individual identification that might be applied at some later point is diminished. Because most of Texas held accredited free status prior to this interim rule, animals that have been moved from their premises of origin into channels leading to slaughter have not been required to be identified. Animal health officials in Texas have suggested, and we agree, that identification efforts should be concentrated on animals that are still on their premises of origin. Those officials expect that all animals that have already been moved from their premises of origin will have completed their movement through normal industry channels by January 1, 2003.

Therefore, in the former accredited-free zone that encompassed most of Texas, we are delaying the date of compliance with the following interstate movement requirements of § 77.10 until January 1, 2003:

• The identification of sexually intact heifers moving to approved feedlots and steers and spayed heifers (§ 77.10(b));

• The identification requirements for sexually intact heifers moving to feedlots that are not approved feedlots (§ 77.10(d)); and

• Because identification is required for certification, the certification requirements for sexually intact heifers moving to unapproved feedlots (§ 77.10(d)).

The identification requirements of §§ 77.10(b) and 77.10(d) will remain in place under a memorandum of understanding with the State of Texas for animals in the former modified accredited advanced zone in El Paso and Hudspeth Counties. All other applicable provisions of the regulations will be in effect as of the effective date of this rule.

In addition to requesting comments on this specific change in the tuberculosis classification status of Texas, we are requesting comments on the current regulatory provisions of the domestic bovine tuberculosis eradication program. Based on our experience enforcing the regulations, on information received from the public, and on the availability of new testing strategies and disease prediction models, we are examining whether certain changes to the regulations would be appropriate.

Although we are inviting comments on all regulatory aspects of the domestic tuberculosis eradication program, we are particularly seeking comment on the following issues, which are discussed at greater length below:

• Identification requirements associated with the interstate movement of sexually intact heifers;

• Timeframes for tuberculosis prevalence in determining a State or zone's qualification for a particular disease risk status;

• Appropriate exceptions to disease prevalence levels governing a State or zone's status when there are a limited number of herds in a State or zone; and

• Conditions under which animals could be moved from nonaccredited areas without incurring an unacceptable risk of spreading tuberculosis.

The risk of an animal spreading tuberculosis is much higher in breeding animals than in animals destined for slaughter. Heifers are currently considered as breeding animals because they are sexually intact. However, heifers that move through feedlots could be destined for slaughter without being bred. The regulations do not distinguish between heifers intended for breeding and heifers destined for slaughter. Therefore, we are asking for comments on distinguishing between the destination of heifers and where in the movement process to apply any identification. We are also requesting comments on what type of identification, such as applying brands to heifers destined for slaughter, could be used to distinguish the destination of heifers.

The regulations stipulate the periods of time States or zones must retain certain tuberculosis prevalence levels to qualify for a particular risk classification, which vary depending on the risk classification and other factors. For example, § 77.9(f) provides that, to qualify for accredited-free status, a modified accredited advanced State or zone must demonstrate, among other things, that it has zero percent prevalence of affected cattle and bison herds and has had no findings of tuberculosis in any cattle or bison in the State or zone for the previous 5 years. However, the requirement of freedom from tuberculosis is 2 years from the depopulation of the last affected herd in States or zones that were previously accredited free and in which all herds affected with tuberculosis were depopulated, 3 years in all other States or zones that have depopulated all affected herds, and 3 years in States or zones that have conducted surveillance that demonstrates that other livestock herds and wildlife are not at risk of being infected with tuberculosis, as determined by the Administrator based on a risk assessment conducted by the Animal and Plant Health Inspection Service.

Based on recently developed tuberculosis disease models that use mathematical simulation to predict the occurrence and spread of disease, we believe it may be necessary to reevaluate our criteria for advancing from one State or zone classification to the next to determine if appropriate timeframes and prevalence levels are being used. Therefore, we are asking for scientific data on whether the timeframes and disease prevalence levels currently being used to classify the tuberculosis risks in States and zones are appropriate and, if not, what timeframes and disease prevalence levels would be appropriate for each classification.

Although risk classifications are based on tuberculosis prevalence levels as set forth in the regulations, the regulations also provide for exceptions to those prevalence levels in cases where a State or zone has a limited number of herds. When the number of herds in a State or zone is less than 10,000 for modified accredited status or less than 30,000 for modified accredited advanced status, disease prevalence may be based on an absolute value of 10 or 3 affected herds, respectively, depending on the veterinary infrastructure, livestock demographics, and tuberculosis control and eradication measures in the State or zone. In addition to comments on the timeframes and disease prevalence criteria, we are asking for scientific data for using different numbers of herds and for other approaches that will give us the same level of confidence that a State or zone is at the appropriate disease prevalence level for the risk classification.

Finally, we are asking for comments on allowing the interstate movement of animals from nonaccredited areas if there are mitigating factors in place, and we are asking for comments on what those mitigating factors should include. Currently, the regulations do not allow cattle or bison to be moved interstate from nonaccredited States or zones. However, because new testing strategies and new models are now available that better predict infection within a State or zone and the ability for that infection to move out of the State or zone, we are inviting comments on whether interstate movement from nonaccredited States or zones could be allowed under certain conditions without an undue risk of the spread of tuberculosis and what those conditions might be.

This rulemaking is necessary on an emergency basis to prevent the spread of tuberculosis in the United States. Under these circumstances, the Administrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this rule effective less than 30 days after publication in the Federal Register .

We will consider comments we receive during the comment period for this interim rule (see DATES above). After the comment period closes, we will publish another document in the Federal Register . The document will include a discussion of any comments we receive regarding this rule's reclassification of the State of Texas and any amendments we are making to the rule as a result of the comments.

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

Prior to this rule, the majority of Texas was listed as an accredited-free zone, and the remaining portion was listed as a modified accredited advanced zone. Under this rule, the entire State of Texas is reclassified as modified accredited advanced.

The 1997 Census of Agriculture reports that there are 144,354 farms in Texas with cattle and calves. Statistics on the number of farms in Texas with bison were not available, but the number is believed to be very small. While it can be assumed that the majority of these farms are located within the former accredited-free zone that encompassed most of Texas, the number of farms that move animals interstate is unknown. However, cattle operators commonly move their animals interstate for breeding, slaughter, or feeding. In fact, approximately 3 million cattle are moved interstate from the State of Texas each year.

The Regulatory Flexibility Act requires that agencies consider the economic impact of their rules on small entities. The businesses primarily affected by this rule are cattle owners in Texas, most of whom are small in size. Based on data from the 1997 Census of Agriculture, the average cattle and calf sales per farm for all 144,354 farms in Texas with cattle inventories was $49,650, well below the U.S. Small Business Administration's criterion of $750,000 in annual sales for businesses primarily engaged in cattle farming. Of the 144,354 farms in Texas with cattle inventories in 1997, 92 percent had herds of fewer than 200 cattle.

This rule potentially affects all cattle and bison herd owners in Texas who are located in the former accredited-free zone in that State and who move cattle or bison interstate. Herd owners affected by this rule will see additional interstate movement requirements and associated costs. The tuberculin tests for sexually intact animals and official identification of certain animals will result in minimal costs to the herd owner.

The total cost for tuberculin tests will depend on the number of animals that are being moved interstate. The average cost of the tuberculin test is about $380 per herd. The cost per animal varies depending on the size of the herd. For an average-sized herd of 101 animals, the average cost would be approximately $3.76 per animal. Assuming that 5 percent of the cattle in the average-sized herd are sexually intact animals that move interstate, tuberculin testing for such animals would cost approximately $19 per herd.

Herd owner costs for applying official identification or premises of origin identification should also be minimal. Herd owners can apply approved premises of origin identification without the services of a veterinarian. The cost of each eartag is about 4 cents, and the cost of the eartag applicator is only about $12. Assuming that 10 percent of the cattle in the average-sized herd are moved interstate and require identification, the cost of materials for individual identification would be only about 40 cents per herd.

We do not expect that the increased costs stemming from this rule will have a significant economic impact on herd owners. The cost increases are small when compared to the overall value of the animals. According to Agricultural Statistics 2001, the average value per head for all 13.7 million cattle and calves in Texas was $610. The approximate $3.76 cost per animal for the tuberculin testing and the 4-cent cost per animal for identification are equivalent to less than 1 percent of the per-head value of the animals.

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

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

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

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

The contents of this preamble are listed in the following outline:

The Interstate Act  1 provides expanded authority for a domestic or foreign bank to establish or acquire a branch in a State other than the bank's home State. Section 109 of the Interstate Act requires the Agencies to prescribe uniform rules that prohibit the use of the Act's interstate branching authority primarily for the purpose of deposit production. 2 Congress enacted section 109 to ensure that the new interstate branching authority provided by the Interstate Act would not result in the taking of deposits from a community without banks reasonably helping to meet the credit needs of that community. See H.R. Conf. Rep. No. 103-651, at 62 (1994).

As required by section 109, the Agencies issued a joint final rule implementing section 109, 62 FR 47728 (September 10, 1997). This rule provides that, beginning no earlier than one year after a bank establishes or acquires a covered interstate branch, the appropriate agency will determine whether the bank satisfies a loan-to-deposit ratio screen  3 that has been established by section 109.

If the bank's statewide loan-to-deposit ratio is at least 50 percent of the host State loan-to-deposit ratio, no further analysis is required. If, however, the appropriate agency determines that the bank's statewide loan-to-deposit ratio is less than 50 percent of the host State loan-to-deposit ratio, then the agency must perform a credit needs determination. 4 Under the credit needs determination, the appropriate agency reviews the activities of the bank, such as its lending activity and its performance under the Community Reinvestment Act (CRA), and determines whether the bank is reasonably helping to meet the credit needs of the communities served by the bank in the host State.

A bank that fails the loan-to-deposit ratio screen and that receives a determination that it is not reasonably helping to meet the credit needs of the communities served by the bank's interstate branches could be subject to sanctions under section 109.

Section 106 of the Gramm-Leach-Bliley Act of 1999 (GLBA), Public Law 106-102, 113 Stat. 1338 (November 12, 1999), amends section 109 by changing the definition of an “interstate branch” to include any branch of a bank controlled by an out-of-State bank holding company (as defined in section 2(o)(7) of the Bank Holding Company Act of 1956 (BHC Act)). This joint final rule conforms the Agencies' uniform regulations to the GLBA amendment.

On April 9, 2001, the Agencies published a notice of proposed rulemaking in the Federal Register (66 FR 18411). The Agencies received four comments on the proposal. Two of the comments were from trade associations and two were from banks.

There were no objections to the proposed rule and three of the comments generally supported it. One commenter noted that the rule simply effectuates the amendments required by the GLBA. Another commenter stated that the amendment supports the efforts of community banks and the needs of businesses and consumers they serve.

One commenter believed that the proposal should cover institutions that use brokers to market their certificates of deposit in communities where the institution has no intention of lending. The Agencies believe that such coverage goes beyond the scope of section 109 of the Interstate Act as amended. Thus, the Agencies have not made any changes from the proposal in response to this comment.

While not objecting to the rule, one commenter raised a question about the definition of a bank holding company's “home State.” Section 106 of the GLBA incorporated by reference the BHC Act definition of “out-of-State bank holding company.” The proposed rule therefore tracked the BHC Act definition. It provided that the home State of a bank holding company is the State where the total deposits of all the banking subsidiaries were the largest as of the later of July 1, 1966 or the date on which the company becomes a bank holding company. The commenter noted that because deposit levels change over time, using this definition to determine the home State of a bank holding company would lead to distortions that would become more and more pronounced. However, as the commenter recognized, the Agencies are obligated to use the Bank Holding Company Act's definition due to its incorporation into section 106 of the GLBA. 5

As discussed in the Background section, section 109 prohibits the use of the interstate banking and branching authority granted by the Interstate Act to engage in interstate branching primarily for the purpose of deposit production. Prior to the GLBA, this prohibition applied to any bank that established or acquired, directly or indirectly, a branch under the authority of the Interstate Act or amendments to any other provision of law made by the Interstate Act. In accordance with the amendment to section 109 adopted by the GLBA, the final rule broadens this prohibition to apply not only to branches established pursuant to the Interstate Act, but also to any bank or branch of a bank controlled by an out-of-State bank holding company. Thus, the final rule amends the definition of the term “covered interstate branch” to include any bank or branch of a bank controlled by an out-of-State bank holding company. We also have made conforming changes to our respective regulations  6 to revise the definition of “host State” and to clarify that the loan-to-deposit ratio screen will be applied to a bank, or branch of a bank, controlled by an out-of-State bank holding company in the same manner as the screen is applied to a covered interstate branch. The final rule is substantively identical to the proposed rule. We have made only technical changes to each agency's proposed regulations.

Prior to the GLBA, section 109's deposit production office prohibition applied only to an interstate branch in a host State that is acquired or established by an out-of-State bank pursuant to the Interstate Act or any amendment made by the Interstate Act. As amended, the prohibition also applies to any branch of a bank controlled by an out-of-State bank holding company. The legislative history of this amendment indicates that Congress intended that this amendment would expand the scope of section 109 to cover any bank or branch of a bank controlled by an out-of-State bank holding company, as discussed below.

Coverage of the final rule extends to banks controlled by out-of-State bank holding companies, including banks consisting only of a main office. The Agencies determined that extension of the regulation to cover a bank's main office, whether or not the bank also has branches, is appropriate because the purpose of the legislation is to prevent out-of-State bank holding companies from taking deposits out of a community without helping to meet the credit needs of that community. See 145 Cong. Rec. H11529 (daily ed. Nov. 4, 1999); 145 Cong. Rec. H5217 (daily ed. July 1, 1999); 144 Cong. Rec. H3133 (daily ed. May 13, 1998). This purpose would be negated if banks consisting only of a main office were excluded. For example, out-of-State bank holding companies could take deposits from a host State simply by establishing separately chartered, single-office banks in a host State. Therefore, banks consisting only of a main office and controlled by an out-of-State bank holding company are subject to the joint final rule.

The amendment to section 109 expands the scope of the rule to include all branches of a bank that is controlled by an out-of-State bank holding company. Indeed, Congress intended to apply the section 109 rule to “all branches of a bank owned by an out-of-State holding company,” not just to previously exempt branches owned by such banks. See H.R. Rep. No. 106-74, pt. 1 at 128 (1999) (emphasis added). Thus, the final rule applies to all branches of a bank when the bank and its controlling bank holding company have different home States.

Section 106 of the GLBA expands the definition of “interstate branch” to any branch of a bank controlled by an out-of-State bank holding company and incorporates by reference the BHC Act definition of an “out-of-State bank holding company.” 12 U.S.C. 1841(o)(7). We have used the BHC Act definition of “control” to determine the controlling bank holding company. This is the top tier bank holding company in a multi-tier bank holding company structure.

The BHC Act defines “home State” with respect to a bank holding company as the State where total deposits of all banking subsidiaries of each bank holding company are the largest on the later of July 1, 1966 or the date on which a company becomes a bank holding company. 12 U.S.C. 1841(o)(4). To determine the home State of a bank holding company, the Agencies will determine, from sources available at the Agencies, the State where the total deposits of all the banking subsidiaries were the largest as of the later of July 1, 1966, or the date the bank holding company was formed. We recognize that, in certain cases, the State where the total deposits of all of a bank holding company's subsidiary banks were largest on July 1, 1966, or at the date of formation of the bank holding company, may not be the same State in which the bank holding company's subsidiary banks hold the largest amount of deposits now or at a future date. However, the amendment to section 109 made by the GLBA adopts the BHC Act definition of “out-of-State bank holding company,” and the BHC Act definition of “home State” is incorporated into that definition.

Section 106 of the GLBA also necessitates an amendment to the definition of “home State” for foreign banks with banking operations in the United States. Under U.S. banking law and regulation, foreign banks may be treated as banking institutions, bank holding companies, or both, depending on the nature of their operations in the United States. For purposes of determining whether a U.S. branch of a foreign bank is a covered interstate branch, a foreign bank's home State is determined under section 5 of the International Banking Act of 1978 (12 U.S.C. 3103), § 211.22 of the Federal Reserve's Regulation K (12 CFR 211.22), § 28.11(o) of the OCC regulations, and § 347.202(j) of the FDIC regulations. For purposes of determining whether a branch of a U.S. bank controlled by a foreign bank is a covered interstate branch, a foreign bank's home State is determined in accordance with 12 U.S.C. 1841(o)(4) as discussed above in section III. C. of this preamble regarding U.S. bank holding companies. A foreign bank may have different home States with respect to direct offices and subsidiary banks.

The final rule is unlikely to have any impact on the vast majority of banks. Consistent with section 109 when it was first enacted, the final rule does not impose any new recordkeeping requirements on affected institutions. We use existing data to determine the loan-to-deposit ratio screen.

Moreover, there is no additional burden imposed as a result of the credit needs determination. In order to make that determination, the appropriate agency will review the activities of the bank, such as its lending activity and its performance under the CRA, 7 and evaluate whether the bank is reasonably helping to meet the credit needs of the communities served by the bank in the host State.

The only circumstance in which the final rule would impose a burden on a bank is if the bank fails both the loan-to-deposit ratio screen and the credit needs determination. Accordingly, while the statutory amendment and this final rule extend the scope of the DPO rule, this extended scope is unlikely to affect most institutions.

The Agencies have determined that this final rule does not involve a collection of information pursuant to the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

OCC: Pursuant to section 605(b) of the Regulatory Flexibility Act, the OCC certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The rule would extend coverage of section 109 to some additional institutions, including small entities. However, based on previous examination experience, we expect very few institutions will experience any cost in connection with complying with the rule. Review for compliance with section 109 is conducted at the same time that the Community Reinvestment Act review is performed. Section 109 requires that the Agencies use only available information to conduct their analyses. Consistent with this requirement, this final rule does not impose any additional paperwork or regulatory reporting requirements. Accordingly, we have concluded that the final rule would not have a significant economic impact on a substantial number of small entities.

BOARD: Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the Board certifies that the final rule will not have a significant economic impact on a substantial number of small entities. The rule would extend coverage of section 109 to some additional institutions, including small entities. Review for compliance with section 109 is conducted at the same time that the Community Reinvestment Act review is performed. Consistent with the requirement that the Agencies use only available information to conduct a section 109 review, the final rule does not impose any additional regulatory burden on banks beyond what is required by statute. The burden to conduct the review and use only available data is on the banking regulatory Agencies. Thus, the final rule will not have a significant economic impact on a substantial number of small entities.

FDIC: Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small entities. The rule would extend coverage of section 109 to some additional institutions, including small entities. However, based on previous examination experience, we estimate that one or fewer institutions per year will experience any cost in connection with complying with the rule. Thus, the final rule will not have a significant economic impact on a substantial number of small entities.

The OCC has determined that its portion of the final rule is not a significant regulatory action under Executive Order 12866.

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 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, 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 this final rule will not result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more. Accordingly, the OCC has not prepared a budgetary impact statement or specifically addressed the regulatory alternatives considered.

The FDIC has determined that this final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681.

Section 722 of the GLBA (12 U.S.C. 4809) requires each federal banking agency to use plain language in all proposed and final rules published after January 1, 2000. Toward this end we have used a variety of “plain language” techniques such as topical headings, a table of contents, and the use of pronouns as appropriate. We specifically invited comments on how to make the changes proposed by this rulemaking easier to understand. No commenters addressed this issue. Accordingly, we made no changes to the proposed style or format.

Raytheon notified FAA of an incident where the pilot had to return to the departing airport after declaring an emergency because of smoke in the cockpit. After investigation, FAA determined that the cause of smoke in the cockpit was a result of damage to the rotating beacon circuit breaker switch caused by an improper length electroluminescent panel retaining screw. The damaged circuit breaker switch failed to shutdown the electrical current to the rotating beacon. Failure of the circuit breaker switch caused the wiring to burn through the insulation and the other wires in the wire bundle that were routed with the wiring to the rotating beacon circuit breaker switch.

This condition, if not corrected, could result in failure of the rotating beacon circuit breaker switch or any other switch in the same location. Failure of the circuit breaker switch could result in smoke and/or fire in the cockpit.

We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to certain Raytheon Models E55, E55A, A56TC, 58, 58A, 58P, 58PA, 58TC, and 58TCA airplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on January 31, 2002 (67 FR 4683). The NPRM proposed to require you to:

The FAA encouraged interested persons to participate in the making of this amendment. We did not receive any comments on the proposed rule or on our determination of the cost to the public.

After careful review of all available information related to the subject presented above, we have determined that air safety and the public interest require the adoption of the rule as proposed except for minor editorial corrections. We have determined that these minor corrections:

Raytheon Mandatory Service Bulletin No. SB 33-3452, Issued: May, 2001, is applicable to Models E55, A56TC, 58, 58P, and 58TC airplanes. We have expanded the applicability of this AD to include Models E55A, 58A, 58PA, and 58TCA airplanes. The serial number ranges of the affected models indicated in the service information include these models as indicated on Type Certificate Data Sheet 3A16, dated January 15, 2000.

Raytheon Mandatory Service Bulletin No. SB 33-3452, Issued: May, 2001, specifies that you accomplish the inspection within 25 hours time-in-service (TIS) or 10 days after the effective date of the AD. We require that you inspect within 100 hours TIS after the effective date of this AD.

We do not have justification to require this action within 25 hours TIS. We use compliance times such as this when we have identified an urgent safety of flight situation. We believe that 100 hours TIS will give the owners or operators of the affected airplanes enough time to have the actions accomplished without compromising the safety of the airplanes.

We estimate that this AD affects 1,636 airplanes in the U.S. registry.

We estimate the following costs to accomplish the inspection:

We estimate the following costs to accomplish any necessary replacements that will be required based on the results of the inspection. We have no way of determining the number of airplanes that may need such replacements:

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

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

The Civil Aviation Authority (CAA), which is the airworthiness authority for the United Kingdom (UK), recently notified the FAA that an unsafe condition may exist on RR RB211 Trent 875, 877, 884, 892, 892B, and 895 series turbofan engines with certain P/N LPC fan blades installed. The CAA advises there has been an incident involving the loss of an LPC fan blade during takeoff. The release of the blade occurred as the result of the initiation and propagation of a crack in the LPC fan blade root, convex side, located on either side of the shear key slot. A subsequent “around the fleet inspection” revealed a similar condition in four additional LPC fan blades. The effects of dry film lubrication and improved blade root lubrication (Metco 58) were determined to be critical in preventing the initiation of cracking in the root of the LPC fan blade. In addition, blade root configurations, airplane type, and engine ratings were found to affect initial and repetitive inspection requirements.

RR has issued service bulletin (SB) RB.211-72-D344, Revision 4, dated March 15, 2002, that provides procedures to ultrasonic-inspect the blade root on LPC fan blades. The CAA classified this service bulletin as mandatory and issued AD 001-02-2001, dated February 2, 2000, in order to assure the airworthiness of these RR engines in the UK.

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

Since an unsafe condition has been identified that is likely to exist or develop on other RR RB211 Trent 875, 877, 884, 892, 892B, and 895 series turbofan engines of the same type design, this AD is being issued to prevent multiple LPC fan blade failures due to cracks, which could result in uncontained engine failure and possible damage to the airplane. This AD requires ultrasonic inspection of the dovetail roots of LPC fan blades P/N's FK30838, FK30840, FK30842, FW12960, FW12961, FW12962, and FW13175. The actions must be done in accordance with the service bulletin described previously.

Since a situation exists that requires the immediate adoption of this regulation, it is found that notice and opportunity for prior public comment hereon are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

Although this action is in the form of a final rule that involves requirements affecting flight safety and, thus, was not preceded by notice and an opportunity for public comment, comments are invited on this rule. Interested persons are invited to comment on this rule by submitting such written data, views, or arguments as they may desire. Communications should identify the Rules Docket number and be submitted in triplicate to the address specified under the caption ADDRESSES . All communications received on or before the closing date for comments will be considered, and this rule may be amended in light of the comments received. Factual information that supports the commenter's ideas and suggestions is extremely helpful in evaluating the effectiveness of the AD action and determining whether additional rulemaking action would be needed.

Comments are specifically invited on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify the rule. All comments submitted will be available, both before and after the closing date for comments, in the Rules Docket for examination by interested persons. A report that summarizes each FAA-public contact concerned with the substance of this AD will be filed in the Rules Docket.

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2001-NE-17-AD.” The postcard will be date stamped and returned to the commenter.

This final rule does not have federalism implications, as defined in Executive Order 13132, because it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the FAA has not consulted with state authorities prior to publication of this final rule.

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

In the rule document published on page 30544 in the Federal Register of Tuesday, May 7, 2002, The RIN number is corrected to read “RIN 2700-AC53.”

On October 19, 2000, the United States updated its encryption export regulations to provide consistent treatment with regulations adopted by the European Union (EU) easing export and reexport restrictions among the 15 EU member states and Australia, Czech Republic, Hungary, Japan, New Zealand, Norway, Poland and Switzerland. Subsequent to the publication of this amendment to the Export Administration Regulations (EAR), the member nations of the Wassenaar Arrangement agreed to remove key length restrictions on encryption hardware and software that is subject to the Cryptography Note (Note No. 3) to Category 5—part II (Information Security) of the Commerce Control List (CCL). This action effectively removed “mass market” encryption products from the list of dual-use items controlled by the Wassenaar Arrangement.

The U.S. encryption export control policy continues to rest on three principles: review of encryption products prior to sale, streamlined post-export reporting, and license review of certain exports of strong encryption to foreign government end-users. Consistent with these principles, this amendment updates the U.S. encryption export control policy in several areas.

For “mass market” encryption hardware and software products, this rule removes Encryption Item (“EI”) and National Security (“NS”) controls on such products after a 30-day review As a result of the removal these controls, these items may be exported without regard to any post-shipment reporting requirements. In addition, the standard de minimis treatment for foreign products containing such encryption products apply, i.e., exports from a foreign country of foreign-made products containing 25 percent or less of controlled U.S. content are not subject to the EAR, except to embargoed and designated terrorist supporting countries. For other encryption items, this rule clarifies the existing provisions under License Exceptions ENC and TSU. In addition, this rule clarifies existing review requirements for certain encryption items such as commercial encryption products that implement elliptic curve cryptography, perform short-range wireless functions, or incorporate encryption source code that would be considered publicly available. Finally, this rule amends the EAR by adding new paragraph headers, updating cross-references between relevant sections of the EAR, and restructuring existing provisions for clarity.

This rule does not change any other existing licensing requirements for encryption items, including encryption technology and items that provide an open cryptographic interface (OCI).

This action will continue to protect our national security and foreign policy interests without impairing the ability of U.S. companies to compete effectively in global markets. It also will promote secure electronic commerce and privacy, and help to protect our critical infrastructure.

The EAR is amended as follows:

1. Revised instructions for submitting encryption items for review to determine eligibility under License Exception ENC or for “mass market” treatment. Except to embargoed or designated terrorist supporting countries and sanctioned persons, you may be able to export and reexport your encryption item without a license, after your item is reviewed by the Bureau of Industry and Security (BIS) and the ENC Encryption Request Coordinator. For encryption items under License Exception ENC, and for mass market encryption products with symmetric key length exceeding 64 bits, a review request must contain: (1) A completed BIS-748P hardcopy form or an equivalent electronic SNAP form (both capture general information about the review request, such as the name of the item, manufacturer, ECCN and a brief commodity description), and (2) support documentation containing technical specifications of the item, including answers to the questions set forth in Supplement No. 6 to part 742. To clarify that separate classification by BIS is not required, previous references to “classification” in §§ 732.2, 732.3, 734.4, 740.17, 742.15, Supplement No. 6 to Part 742, 748.3 and 770.2 are revised to read “review”. Exporters are instructed to insert the phrase “Mass market encryption” or “License Exception ENC” (whichever is applicable) in Block 9 (“Special Purpose”) of the application form. Failure to insert the appropriate phrase may delay receipt of your request by BIS. (For compatibility with current application processing systems, exporters should continue to place an “X” in the box marked “Classification Request” in Block 5: “Type of Application”.) A copy of your review request must also be sent to the ENC Encryption Request Coordinator, via courier or mail. Insufficient or missing documentation may delay or interrupt your authority to export and reexport your encryption item. A fax number is now published for review requests submitted to BIS via SNAP. Refer to Supplement No. 6 to part 742 and §§ 740.17(d), 742.15(b)(2) and 748.3(d) for information on submitting encryption review requests.

2. Clarification of review and notification requirements. Except as elsewhere specified in the EAR, a license or review by BIS is required for encryption items with symmetric key length exceeding 64 bits. In multiple sections, the EAR is amended to clarify when a review or notification is (or is not) required.

a. Clarification of when no review or notification is required. i. U.S. companies and subsidiaries . Items controlled under Category 5—part II of the Commerce Control List (ECCNs 5A002, 5B002, 5D002, 5E002, 5A992, 5D992 and 5E992) may be exported and reexported, without review or notification, to U.S. companies and their subsidiaries for internal use, including the development of new products inside and outside the United States by their employees, contractors and interns. Existing restrictions on exports and reexports of encryption items to the countries and foreign nationals of Cuba, Iran, Iraq, Libya, North Korea, Syria or Sudan continue to apply. Refer to §§ 740.17(b)(1) and 742.15(b)(3)(i) of the EAR. Exports and reexports to foreign companies with subsidiary locations in the United States, and to foreign strategic partners of U.S. companies, will continue to be favorably considered under a license or an Encryption Licensing Arrangement (ELA). Refer to § 742.15(a) of the EAR.

ii. Certain short-range wireless items. No review or notification is required for short-range wireless products (e.g. with an operating range typically not exceeding 100 meters) that qualify as “mass market” and are only controlled under Category 5—part II of the CCL because they incorporate parts or components with encryption functionality specified and limited to short-range wireless functions based on such commercial standards as Bluetooth, Home Radio Frequency (HomeRF) and IEEE 802.11b (“WiFi”). This provision for mass market products is found in § 742.15(b)(3)(ii). A similar existing provision for “retail” short-range wireless products continues under License Exception ENC. See § 740.17(b)(3)(iii)(H).

iii. Certain items with limited use of cryptography. This rule clarifies that no review or notification is required for information security items which employ limited forms of cryptography, but which do not perform encryption functions (including key management) controlled for “EI” reasons under ECCNs 5A002, 5D002 or 5E002. These items are controlled under ECCNs 5A992, 5D992 and 5E992, regardless of bit length or whether they are “mass market”. See § 742.15(b)(3)(iii). Such items include items with cryptographic functions limited to authentication (including secure hash functions and message authentication codes) or digital signature, execution of copy protected software, commercial civil cellular telephones not capable of end-to-end encryption, and “finance specific” items specially designed and limited for banking use or money transactions (e.g. highly field-formatted with validation procedures and not easily diverted to other end-uses). Refer to the Related Controls and Technical Notes under ECCN 5A002 in the CCL (part 774 of the EAR) for a complete list of commodities.

b. Clarification of when a review is required. i. Review under License Exception ENC. Encryption items controlled under ECCNs 5A002, 5D002 and 5E002, and equipment controlled under ECCN 5B002, require review by BIS prior to export and reexport under the updated provisions of License Exception ENC (§ 740.17 of the EAR). Once BIS receives the information required for review (as described in Supplement No. 6 to part 742 of the EAR), you may export and reexport all such items (except cryptanalytic items to government end-users) to organizations and companies located or headquartered in the European Union plus eight additional countries. See § 740.17(a). Thirty days after BIS registers your review request, you may export and reexport any encryption item, except those which provide an open cryptographic interface (OCI), to any non-government end-user except those in Cuba, Iran, Iraq, Libya, North Korea, Syria or Sudan. In addition, commodities and software that do not qualify as “mass market” but which qualify as “retail” may be exported and reexported to government end-users, once so authorized by BIS. See § 740.17(b)(3) of the EAR for the treatment of “retail” encryption commodities and software, and § 740.17(b)(2) for commodities and software and that are not eligible as retail. Products not eligible as retail require a license to government end-users, except as authorized under § 740.17(a). Encryption technology controlled under ECCN 5E002 and items which provide an OCI are not authorized for export or reexport under § 740.17(b)(2) or (b)(3) and require a license to any end-user outside the countries listed in Supplement No. 3 to part 740. Exports and reexports of products reviewed by BIS under License Exception ENC may require reporting, as described in § 740.17(e). License Exception ENC is amended with new paragraph headers and updated text, for clarity.

ii. Review for mass market encryption products exceeding 64 bits. Encryption commodities and software that qualify for “mass market” treatment under the Cryptography Note (Note 3) to part II of Category 5 of the CCL, and which implement encryption with symmetric key length exceeding 64-bits, require review by BIS prior to export and reexport. These No License Required (NLR) products are removed from “EI” and “NS” controls, are controlled under ECCNs 5A992 and 5D992, and remain subject to the EAR. Similar to encryption items under License Exception ENC, you may immediately export and reexport >64 bit mass market encryption products to organizations and companies located or headquartered in the European Union plus eight additional countries. Thirty days after BIS receives your review request, you may export and reexport your mass market encryption product to any end-user (except embargoed or designated terrorist supporting countries and sanctioned persons), without post-export reporting or additional national security review for de minimis eligibility. All existing restrictions and licensing requirements to embargoed or designated terrorist supporting countries (Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria) and sanctioned persons are continued by this amendment. Posting of mass market encryption software on the Internet (e.g., FTP or World Wide Web site) where it may be downloaded by anyone would not establish “knowledge” of a prohibited export or reexport. In addition, such posting would not trigger “red flags” necessitating the affirmative duty to inquire under the “Know Your Customer” guidance provided in Supplement No. 3 to part 732 of the EAR. See § 742.15(b)(2) and Supplement No. 6 to part 742 of the EAR for requirements, procedures and instructions for requesting review. See §§ 734.2, 734.3, 734.7, 734.8, 734.9, 740.13, 740.13(d) and 742.15(b) for other revisions to the EAR which reflect these changes in ECCN and reasons for control for >64 bit mass market encryption commodities and software.

c. Clarification of when a notification is required. i. Encryption source code that would be considered publicly available, and corresponding object code. This rule simplifies U.S. export treatment of encryption source code that would be considered publicly available, by allowing all such source code (and corresponding object code) to be exported and reexported under License Exception TSU once notification (or a copy of the source code) is provided to BIS, regardless of whether a fee or royalty is charged for the commercial production or sale of products developed using this software. Refer to § 740.13(e). This rule further clarifies that these license exception provisions do not extend to any encryption software that has not been made publicly available, including such encryption software that incorporates or is specially designed to use publicly available encryption software components (ref: § 740.13(e) (3)). Such encryption software may instead be exported and reexported under License Exception ENC, subject to the terms and conditions set forth in § 740.17 of the EAR. See §§ 740.17(b)(2)(ii) and (iii) for specific provisions relating to such encryption source code and general purpose toolkits. Previous references to commercial encryption source code under License Exception ENC (i.e., § 740.17(b)(4) prior to this amendment) are subsumed by these streamlined and clarified provisions of the EAR.

ii. 56 bit encryption items (including 512-bit asymmetric and 112-bit elliptic curve algorithms), and mass market encryption products not exceeding 64 bits. This rule clarifies that, in addition to mass market encryption commodities and software with key lengths not exceeding 64 bits for the symmetric algorithm, other encryption items with key lengths not exceeding 56 bits for symmetric algorithms, 512 bits for asymmetric key exchange algorithms, and 112 bits for elliptic curve algorithms may be immediately exported and reexported No License Required (except to embargoed or designated terrorist supporting countries and sanctioned persons), upon notification to BIS. See § 742.15(b)(1).

The EAR is further amended by the following revisions:

3. Clarification of beta test software requirements in License Exception TMP. In § 740.9 (Temporary imports, exports and reexports (TMP)), existing provisions for beta test encryption software are restructured for clarity, and new paragraph headings are added.

4. Clarification of License Exception ENC requirements. In § 740.17 (Encryption Commodities and Software (ENC)), existing provisions are restructured for clarity, and new paragraph headings are added. Subject to the terms and conditions set forth therein, License Exception ENC applies to encryption items that do not qualify for “mass market” treatment.

a. § 740.17(a) (Exports and reexports to countries listed in Supplement 3 to part 740) is revised to allow the export and reexport of equipment controlled under ECCN 5B002 to the European Union plus eight additional countries, under License Exception ENC. Now, all items controlled under ECCNs 5A002, 5B002, 5D002 and 5E002, except cryptanalytic items to government end-users, are eligible under this provision of the EAR. This includes items that provide an open cryptographic interface (OCI).

b. § 740.17(b)(1) (Encryption items for U.S. subsidiaries) is revised to allow equipment controlled under ECCN 5B002 to U.S. companies and their subsidiaries under License Exception ENC. All items controlled under ECCNs 5A002, 5B002, 5D002 and 5E002, including those which provide an OCI, are eligible under this provision without review or notification.

c. § 740.17(b)(2) (Encryption commodities and software to non-government end-users) is revised for clarity. All items controlled under ECCNs 5A002, 5B002 and 5D002, except items that provide an OCI, may be exported to non-government end-users 30 days after BIS receives a completed review request. This includes network infrastructure products, encryption source code (immediately eligible once the review request, including a copy of the source code, is submitted), general purpose toolkits, cryptanalytic items, and other items that do not qualify for “mass market” or “retail” treatment. This amendment also clarifies that the EAR imposes no additional restrictions on Internet and telecommunications service providers. Exports and reexports of network infrastructure commodities, software and technology to government end-users outside the countries listed in Supplement No. 3 to part 740 continue to require a license.

d. § 740.17(b)(3) (Retail encryption commodities, software and components to government and non-government end-users) is revised and restructured for clarity. New paragraph headers are added, and existing provisions are consolidated. This paragraph clarifies that the following are among the examples of encryption products eligible for retail treatment under License Exception ENC:

i. Encryption commodities and software (including key management products) with key lengths not exceeding 64 bits for symmetric algorithms, 1024 bits for asymmetric algorithms, and 160 bits for elliptic curve algorithms (see § 740.17(b)(3)(ii)(A));

ii. Encryption commodities and software which are limited to allowing foreign-developed encryption products to operate with U.S. products, or which activate encryption functions in other retail products (when the encryption would otherwise remain inoperable, “dormant” or disabled) (see §§ 740.17(b)(3)(ii)(C)-(D));

iii. Low-end virtual private networking (VPN) equipment (e.g. with encrypted throughput not exceeding 10 Mbps, or supporting no more than 100 concurrent encrypted tunnels) (see § 740.17(b)(3)(iii)(C));

iv. Applets and web portal software implementing Secure Socket Layer (SSL) encryption (see § 740.17(b)(3)(iii)(F));

v. Network and security management products designed for, bundled with, or pre-loaded on single CPU computers, low-end servers or retail networking products (see § 740.17(b)(3)(iii)(G)); and

vi. Short-range wireless components and software (e.g. with an operating range typically not exceeding 100 meters) based on commercial standards as Bluetooth, Home Radio Frequency (HomeRF) and IEEE 802.11b (“WiFi”) (see § 740.17(b)(3)(iii)(H));

e. In § 740.17(b)(4), previous provisions regarding commercial encryption source code are now subsumed by updated provisions for:

i. Encryption source code (and corresponding object code) which would be considered publicly available (refer to § 740.13(e) of the EAR); and

ii. Encryption source code which would not be considered publicly available (i.e., “company proprietary” encryption source code). See § 740.17(b)(2)(ii).

This paragraph (b)(4) now cross-references the de minimis provisions of § 734.4 for encryption items controlled under ECCNs 5A002 and 5D002.

f. Previous references to cryptographic interfaces in former § 740.17(b)(5) are now incorporated into the general provisions of License Exception ENC. See § 740.17(a) for cryptographic interface items to the European Union plus eight additional countries, and refer to § 740.17(b)(1) for U.S. subsidiaries. Products which are used to establish a closed cryptographic interface (e.g. signing) continue to be treated as “retail” (see § 740.17(b)(3)(ii)(C)).

g. In § 740.17(c) (Reexports and transfers), this rule clarifies that foreign-developed products which are designed to operate with U.S. products through a cryptographic interface are subject to the EAR, but do not require review by BIS.

h. In § 740.17(d) (Review requirement), instructions and procedures for submitting review requests for encryption items under License Exception ENC are updated and clarified.

i. In §§ 740.17(d)(2) and (3)(i), existing grandfathering and key length increase provisions are revised, for clarity and consistency with §§ 740.17(a), (b)(2) and (b)(3).

j. § 740.17(e) (Reporting requirements) is restructured for clarity. This rule clarifies that the requirements to report foreign products developed from U.S. source code and toolkits apply only if you know when the foreign product is made available for commercial sale. See § 740.17(e)(3). The previous reporting exemption for “finance-specific products” is removed from this section, to clarify that these products may be exported and reexported (except to embargoed or designated terrorist supporting countries and sanctioned persons) under ECCNs 5A992 and 5D992, without review by BIS. Refer to § 742.15(b)(3)(iii). This clarification is made for consistency with the Wassenaar Arrangement list of dual-use items. Reporting exemptions previously listed in under § 740.17(e)(1) are now listed under § 740.17(e)(4).

5. Clarification of licensing requirements and policies for encryption items. In § 742.15(a) (Licensing requirements and policy), existing U.S. licensing requirements and licensing policy provisions, including those pertaining to encryption items under Encryption Licensing Arrangements, are consolidated into clarified provisions § 742.15(a)(1)(i) (Licensing requirements) and § 742.15(a)(1)(ii) (Licensing policy).

6. Clarification of notification and review requirements for encryption items controlled under ECCN 5A992, 5D992, or 5E992. § 742.15(b) (Notification and review requirements for encryption items controlled under ECCNs 5A992, 5D992 and 5E992) clarifies when notification or review is required for encryption items not controlled for “EI” and “NS” reasons under ECCNs 5A002, 5D002 or 5E002.

i. In § 742.15(b)(1), notification requirements for certain encryption items with restricted bit lengths are clarified.

ii. In § 742.15(b)(2), review requirements for >64 bit mass market encryption products are established.

iii. In § 742.15(b)(3), transactions and items which do not require review or notification are described.

iv. § 742.15(b)(4) clarifies that commodities, software and components which activate encryption functions in 56-bit or mass-market products (when the encryption would otherwise remain inoperable, “dormant” or disabled), are also controlled under ECCNs 5A992 and 5D992. Commodities and software that “activate” dormant 56-bit encryption require notification under § 742.15(b)(1), while commodities and software that “enable” mass market products to perform encryption exceeding 64 bits for the symmetric algorithm require review under § 742.15(b)(2).

v. In § 742.15(b)(5), an illustrative, but by no means exhaustive, list of mass market encryption products is provided.

7. Clarification of documentation requirements for submitting review requests for encryption items. In Supplement No. 6 to part 742 (Guidelines for Submitting Support Documentation Required for Review Requests for Encryption Items), instructions to exporters are updated and clarified. Exporters are instructed to insert the appropriate phrase “Mass market encryption” or “License Exception ENC” in Block 9 (“Special Purpose”) of the review request. (For compatibility with current application processing systems, exporters should continue to place an “X” in the box marked “Classification Request” in Block 5: “Type of Application'.) Support documentation described in this Supplement is required for the review of encryption items.

8. Clarification to distinguish encryption review requests from classification requests. In § 748.3 (Classification Requests, Review Requests and Advisory Opinions), existing paragraph (b)(3) is removed and replaced with a new paragraph (d) (“Review requests for encryption items”), to clarify that the process for reviewing encryption items by BIS, in conjunction with the ENC Encryption Request Coordinator, obviates the need for separate classification by BIS.

9. Definition of “cryptanalytic items” clarified. In § 772.1 (Definition of Terms), the definition of “cryptanalytic items” is updated to incorporate the previous EAR definition of “cryptanalytic functions”. A technical note is also added to clarify that “cryptanalytic items” does not include software designed and limited to protect against malicious computer damage or unauthorized system intrusion (e.g., viruses, worms and trojan horses). Such software is controlled under ECCN 5D992.c.

10. Revisions to the Cryptography Note and to the explanatory notes in ECCN 5D002. In Supplement No. 1 to part 774 (the Commerce Control List), the previous 64 bit restriction to the Cryptography Note (Note 3) to Category 5—part II is removed, consistent with the Wassenaar Arrangement list of dual-use items. Explanatory notes to ECCN 5D002 “Information Security—Software” are updated, for consistency with the other revised sections of this amendment.

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

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid OMB Control Number. This rule involves collections of information subject to the requirements of the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq. ). These collections have been approved by the Office of Management and Budget under Control Numbers 0694-0088, “Multi-Purpose Application,” and 0694-0104, “Commercial Encryption Items Transferred from the Department of State to the Department of Commerce.” Collection 0694-0088 carries a burden hour estimate of 45 minutes per manual submission and 40 minutes per electronic submission. Miscellaneous and recordkeeping activities account for 12 minutes per submission. For collection 0694-0104, it is estimated that companies will take 5 minutes to complete notifications for source code under License Exception TSU. It will take companies 15 minutes to complete upgrade notifications. For reporting under License Exception ENC and licenses for encryption items, it will take companies 8 hours to complete semi-annual reporting requirements. Send comments regarding these burden estimates or any other aspect of these collections of information, including suggestions for reducing the burden, to OMB Desk Officer, New Executive Office Building, Washington, DC 20503; and to the Regulatory Policy Division, Bureau of Industry and Security, Department of Commerce, P.O. Box 273, Washington, DC 20044.

3. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.

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

Therefore, this regulation is issued in interim final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Willard Fisher, Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2705, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230.

The Commission has previously delegated the authority to process applications for registration of intermediaries and floor traders under the Commodity Exchange Act (the “Act”) 1 to the National Futures Association (“NFA”). 2 NFA submitted to the Commission, for its approval, pursuant to section 17(j) of the Act, amendments to NFA registration rules that would require applicants seeking registration under the Act as futures commission merchants (“FCMs”), introducing brokers (“IBs”), commodity pool operators (“CPOs”), commodity trading advisors (“CTAs”), leverage transaction merchants (“LTMs”), associated persons (“APs”), floor brokers (“FBs”), and floor traders (“FT”) to file applications electronically through an online registration system. 3 On May 30, 2002, the Commission approved these proposed amendments to the NFA registration rules.

Technological advancements have resulted in fundamental changes in the futures industry, as is the case in almost every other industry. The Commission has encouraged and attempted to facilitate the use of electronic technology in the futures industry. 4 The Commission also believes that it must constantly look at ways that technology can better assist the Commission in fulfilling its regulatory mission. 5

NFA's new online registration system should streamline the registration process and result in a system that is easier to use for applicants, registrants, and regulators. The new system should make it quicker and easier for persons to provide NFA with the required information and enable NFA to process more efficiently this information in determining whether to grant an application for registration, while maintaining most of the features of the current system. Additionally, information on registrants should be more readily accessible by the public, NFA, and the Commission.

On April 12, 2002, in order to facilitate the change to an online registration system, the Commission proposed the rule amendments being adopted herein. 6 The Commission did not receive any comment letters on the proposed amendments.

As part of the new online registration system, applicants that have a current active status, either as a registrant or as a listed principal, and who seek to add an additional registration category will be required to file a “short path” version of the form required for a new applicant. 7 This “short path” form will require the applicant to supply only necessary information that is not already in the registration database. For example, if an entity registered as an IB applies to become registered also as a CTA, the entity will complete the “short path” Form 7-R, which requires the applicant to select the appropriate categories for which it would be registered and to indicate the category in which it intends to vote on NFA membership matters. Likewise, natural persons currently registered as APs, FBs, FTs, or listed as branch managers or principals that seek to add an additional category will complete a “short path” Form 8-R.

The Form 7-R will no longer require an applicant to list principals that are natural persons because when a Form 8-R is filed indicating a principal category, the system will require the appropriate information, including information regarding the sponsor firm. Currently, under Commission Rule 3.10(a)(2)(i), 8 each Form 7-R must be accompanied with a Form 8-R and fingerprints for each natural person who is a principal of the applicant. The rule does not apply to a principal that has a current Form 8-R on file. However, because the necessary information about the firm for whom a natural person is a principal is gathered through the Form 8-R, if a natural person with a current active status seeks to add a principal category or to become a principal of another firm, then it will be necessary for a “short path” Form 8-R to be filed. 9 Accordingly, the Commission is amending Rule 3.10(a)(2)(i) to reflect this change.

Currently, a person who is unconditionally registered as an AP may become associated as an AP with another sponsor if the new sponsor files a Form 3-R with NFA. The Form 3-R must contain a certification signed by each sponsor acknowledging that each sponsor, in addition to being responsible for supervising the AP, is jointly and severally liable for the conduct of the AP. As noted above, under the new online registration system, APs with a current status seeking to add another sponsor will file a “short path” Form 8-R, which, similar to the current paper Form 3-R, will require the submission of only that information not already in the database required for adding the applicable sponsor. Accordingly, the Commission is amending Rule 3.12 to reflect the fact that the sponsor must file a Form 8-R instead of the Form 3-R.

Maintaining the requirement that all of the sponsors of the AP sign and file the acknowledgment mandated under the current rule in an electronic environment would require sending the filing via traditional delivery or via a complicated and costly electronic signature system, both resulting in a delay in adding the sponsor. Additionally, the Commission believes it is unnecessary to require the signed acknowledgment where the rule makes clear that a sponsor is responsible for supervising its APs and is liable for their conduct. 10 Accordingly, the Commission is removing the requirement that a signed certification be submitted to add an additional sponsor. Instead, the NFA, upon receipt of the Form 8-R for an AP seeking to add a sponsor, shall notify the existing sponsors of the AP of the application. The amended rule will continue to hold each sponsor responsible for the supervision of the AP and make each sponsor jointly and severally liable for the conduct of the AP with respect to customers common to that sponsor and another sponsor. 11 Requiring a signed acknowledgement of this fact would present an added burden for registrants that the Commission does not believe is necessary.

NFA's amended Registration Rule 207(a) will permit a person whose application for registration as an AP is pending, or who is temporarily licensed as an AP, to apply to become registered as an AP of another sponsor. Pursuant to amended Registration Rule 207(b), the AP will become registered as an AP of the new sponsor only if he or she is already registered as an AP with another sponsor. The Commission believes that NFA's amended Registration Rule 207 is consistent with Commission Rule 3.12(f) as amended herein.

Pursuant to Commission Rule 3.31, any applicant or registrant must promptly correct any inaccuracy in its Form 7-R or Form 8-R. Accordingly, registrants are under an ongoing duty to ensure that their registration filings are accurate. Currently, pursuant to Rule 3.10(d), a firm is required to file annually with NFA a Form 7-R. For this purpose, NFA sends to each firm a pre-printed paper copy of the firm's Form 7-R that the firm must then update and file with NFA. Similarly, pursuant to Rule 3.11(d), every three years the NFA provides each registered FB and FT with a paper printout of the information contained in NFA's registration database concerning the registrant. If the information in the printout is inaccurate, the registrant must correct the information and return the printout to NFA. Otherwise, the registrant is not required to return the printout and is deemed to have recertified the registration information contained in the printout.

As noted above, these persons are already under an ongoing obligation to update the applicable registration information when necessary. The continuation of the annual and triennial update process is redundant and results in unnecessary costs to both NFA and the registrant. Accordingly, the Commission is amending the rules to delete these requirements.

Pursuant to Rule 3.31, a change in the form of organization of a registrant requires that the registrant correct its Form 7-R. Currently, when a firm files a Form 3-R to report a change in the form of the organization, it must be accompanied by a certification “signed in a manner sufficient to be binding under local law” that the registrant will be liable for all obligations of the pre-existing organization. Similar to the acknowledgment currently required when an AP adds a sponsor, the Commission believes it is an unnecessary burden on registrants to require a signed certification by the registrant acknowledging its liability for the obligations of the pre-existing organization when Commission rules, and NFA rules, can make clear the registrants' responsibilities. Accordingly, the Commission is amending Rule 3.31 to make clear that, when a registrant reports a change in the form of its organization by filing a Form 3-R under Rule 3.31, it remains liable for all obligations of the pre-existing organization.

Notwithstanding the above, under the amendments being adopted herein, where a registrant is ceasing to be or is becoming a sole proprietorship, the registrant will have to file a Form 7-W, withdrawing the registration of the pre-existing organization, and file a Form 7-R regarding the new organization. A change to or from a sole proprietorship to another form of business entity, such as a corporation, is not a mere change in the form of organization. There is a fundamental difference between a natural person and a corporation. A corporation undertaking business that was being conducted by a sole proprietor is not a continuation of an existing organization, but is the creation of a completely new and separate legal entity, thus requiring the filing of a Form 7-W regarding the pre-existing organization and a Form 7-R on behalf of the new organization.

Pursuant to Commission Rule 3.40, an applicant for registration as an AP, FB, or FT, may be granted a temporary license upon the filing of a completed Form 8-R, the applicant's fingerprints, and, (a) if the applicant is applying for registration as an AP, the required sponsor's certification, or (b) if the applicant is applying for registration as an FB or FT, the required proof of having been granted trading privileges by a contract market. Under the online registration system, there will be a delay between the filing of the Form 8-R, which will occur instantaneously via the Internet, and the filing of the applicant's fingerprints, which must still be physically provided on a fingerprint card. Accordingly, the Commission is amending Rule 3.40 to provide that NFA may grant a temporary license to an applicant for registration as an AP upon filing of the completed Form 8-R and the sponsor's certification, but before the applicant's fingerprints are filed. The fingerprints must be filed with NFA within 20 days. This will not result in any change of the policies that NFA uses in determining to grant a temporary license to an AP.

FBs and FTs will have to continue to file the current documents required under the rule, including fingerprints, to receive a temporary license. Temporary licenses for FBs and FTs will not be granted online because, to be eligible for a temporary license, FB and FT applicants must have been granted trading privileges on a contract market or DTF. It has been the experience of the Commission and NFA that FB and FT applicants, especially new applicants, almost never receive trading privileges before applying for registration. In fact, the applicant's fingerprint cards and registration fees are almost always received before an exchange grants them trading privileges. Moreover, if NFA were to grant an FB or FT applicant a temporary license and later withdraw it, such action could have larger financial implications for the individual than would be the case for an AP applicant. For example, an FB or FT applicant must make sizeable investments to obtain trading privileges on the floor of an exchange.

Currently, an applicant for registration as an FB who is granted a temporary license, and has not been registered as an FB during the preceding 60 days, is only permitted to act as an FT. The Commission does not believe that this difference is required. The fitness standards for becoming registered as an FB or an FT are the same. Likewise, the fitness standards for becoming temporarily licensed as an FB or an FT should be the same. When the Commission adopted rules that limited FBs granted temporary licenses to acting as FTs, it noted that, after gaining further experience in the area, it might revisit the issue. 12 In the nine years since applicants for registration as FBs have been permitted to receive a temporary license, the Commission and NFA have found that it is very rare that a temporary license granted to an applicant for registration as an FB has had to be terminated as a result of the ensuing fitness check. This is attributable to the fact that, in order to be granted a temporary license as an FB, an applicant must have been granted trading privileges by a contract market and a contract market conducts its own fitness check before granting a person trading privileges. Generally, information that would prevent an applicant from becoming registered with the Commission as an FB would also prevent the person from obtaining trading privileges on a contract market. Accordingly, the Commission is amending its rules to permit an applicant for registration as an FB who has been granted a temporary license to act in the capacity of an FB for the duration of the temporary license.

Currently, pursuant to Commission Rule 3.11(c)(1), an FB or FT, whose registration has terminated within the preceding sixty days, and who has been granted trading privileges at a new contract market that has filed with NFA the certification required under Rule 3.40(c), regarding the applicant, will be granted a temporary license to act as an FB or FT upon mailing a Form 8-R, a fingerprint card, and if applicable, a supplemental sponsor certification. These are the same submissions necessary to be granted a temporary license under Commission Rule 3.40. However, pursuant to Rule 3.11(c)(1), once the applicant has mailed the Form 8-R and the fingerprint card to NFA the applicant's temporary license will be granted, as opposed to the requirement under Rule 3.40 that the documents be filed with NFA. However, the applicant must have been granted trading privileges by a new contract market and the contract market must have made the required certification before the applicant could be granted the temporary license. The Commission does not believe that it is necessary to maintain both rules for granting temporary licenses to FBs and FTs when the practical result under either rule is the same. Accordingly, the Commission is removing Rule 3.11(c)(1). All temporary licenses for FBs and FTs will be granted pursuant to Rule 3.40.

The Commission is also removing Rule 3.11(c)(2). Currently, pursuant to Commission Rule 3.11(c)(2), any FB or FT who continuously maintains trading privileges at a contract market may change their registration category from an FB to an FT or vice versa upon mailing to NFA a completed Form 3-R indicating an intention to change categories. As noted above, under NFA's online registration system, applicants for adding additional registration categories will file a “short path” Form 8-R. Additionally, under Commission Rule 3.11(a), an applicant for registration as an FB or FT is not required to file a fingerprint card if the applicant has a current Form 8-R on file with NFA. 13 Accordingly, removing Rule 3.11(c)(2) should not negatively affect those already registered as FBs or FTs seeking to switch registration categories.

Similar to the granting of a temporary license as a new applicant for AP registration, as discussed above, the Commission is also amending Rule 3.12(d) to permit the granting of a special temporary license to an AP whose registration terminated within the preceding 60 days upon the filing of a completed Form 8-R, but prior to the applicant's fingerprints being filed with NFA. The fingerprints must be filed with NFA within 20 days.

Currently, pursuant to Commission Rule 3.33(c)(1), when an FCM or an independent IB is requesting withdrawal from registration because it has ceased engaging in activities that require registration, their request for withdrawal must be accompanied by Form 1-FR-FCM or 1-FR-IB  14 completed within a month of the date of the request for withdrawal. Pursuant to NFA Financial Requirement section 1(b), each FCM for which NFA is the designated self-regulatory organization must file a Form 1-FR-FCM for each month end. Accordingly, for such FCMs, a Form 1-FR-FCM for the previous month will have already been filed. Additionally, an IB is not permitted to hold customer funds. Therefore, requiring an IB seeking withdrawal to file Form 1-FR-IB in every instance is unnecessary. Moreover, if there was a reason for the Commission to be concerned about the financial state of a particular IB requesting withdrawal, the Commission may, pursuant to Rule 3.33(f)(4), require that the IB provide the appropriate financial statements, including a Form 1-FR-IB, before it is permitted to withdraw its registration. Accordingly, the Commission is removing Rule 3.33(c)(1).

Commission Rules 3.12(c)(1), 3.12(d)(3) (sponsor certifications regarding an applicant for AP registration), 3.33(b) (Form 7-W for a firm's withdrawal of registration), 3.44(a)(4) (FCM certification regarding a temporary license for an IB) require that only certain persons may sign the pertinent documents on behalf of the registrant. 15 Under the online registration system, where the pertinent documents will be filed electronically, it would be difficult, if not impossible, to ensure that only one of the enumerated persons was actually submitting the document.

NFA, in its amended Registration Rule 802, provides that the electronic filing of required documents constitutes, among other things, the applicant's, registrant's, or sponsor's certification that the person who electronically files the document is authorized by the entity to make the required certifications, representations, requests, acknowledgements, authorizations, and agreements contained therein. Moreover, amended NFA Registration Rule 801(b) provides that any registration filing made on behalf of a registrant or applicant by a person authorized by the applicant or registrant shall be deemed to be a filing of such registrant or applicant. 16

Therefore, the entity filing the pertinent certification or form under Commission Rules 3.12(c)(1), 3.33(b), 3.44(a)(4) will be held accountable for any representations in the applicable document. Accordingly, the Commission is amending these rules to make clear that a person duly authorized by the registrant or sponsor must file the relevant certification or form.

The Commission is also making certain technical amendments. For example, the Commission is amending Rules 3.11 and 3.31 so as to reference both contract markets and derivatives transaction execution facilities. Additionally, the Commission is removing references in part 3 to part 180, which has been removed and reserved.

The Regulatory Flexibility Act (“RFA”) 17 requires that agencies, in proposing rules, consider the impact of those rules on small businesses. The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its rules on such entities in accordance with the RFA. 18 The Commission has previously determined that FCMs, registered CPOs, and LTMs are not small entities for the purpose of the RFA. 19 Therefore, the requirements of the RFA do not apply to those entities. With respect to the remaining entities, the rule amendments will not place any additional burdens upon such parties since all registrants are already subject to the registration filing requirements of the Act and part 3 of the Commission's regulations. To the contrary, the amendments will help to streamline and simplify the current registration procedures. The Commission notes that no comments were received from the public on the RFA and its relation to the rule amendments.

The Paperwork Reduction Act of 1995 (“PRA”)  20 imposes certain requirements on federal agencies (including the Commission) in connection with their conducting or sponsoring any collection of information as defined by the PRA. The rule amendments do not require a new collection of information on the part of any entities subject to the proposed rule amendments. Accordingly, for purposes of the PRA, the Commission certifies that these rule amendments will not impose any new reporting or recordkeeping requirements. The Commission did not receive any comments on any potential paperwork burden associated with these amendments. The Commission has submitted hard copies of how the screens will appear in the electronic registration system to the Office of Management and Budget.

Section 15(a) of the Act requires the Commission to consider the costs and benefits of its action before issuing a new regulation under the Act. By its terms, section 15(a) does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the proposed regulation outweigh its costs. Rather, section 15(a) simply requires the Commission to “consider the costs and benefits” of its action.

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

These amendments are intended to facilitate a streamlined registration process that would result in less redundancy and quicker processing of applications. The Commission is considering the costs and benefits of these rules in light of the specific provisions of section 15(a) of the Act:

1. Protection of market participants and the public. While the amendments are expected to lessen the burden imposed upon applicants in the registration process, they do not reduce the fitness standards for becoming registered with the Commission. Accordingly, they should have no effect on the Commission's ability to protect market participants and the public.

2. Efficiency and competition. The amendments are expected to benefit efficiency and competition by more quickly facilitating entry into the industry and by enabling information to be collected and made available in a more timely manner.

3. Financial integrity of futures markets and price discovery. The amendments should have no effect, from the standpoint of imposing costs or creating benefits, on the financial integrity or price discovery function of the futures and options markets.

4. Sound risk management practices. The amendments being adopted herein should have no effect on the risk management practices of the futures and options industry.

5. Other public interest considerations. The amendments, in facilitating the change to an online registration system, are expected to result in a registration system that is easier to use and more efficient in its processing of registration applications. Additionally, the system should permit more information about registrants to be readily accessible by the public more quickly.

After considering these factors, the Commission has determined to adopt the amendments discussed above. The Commission invited public comment on its application of the cost-benefit provision. The Commission did not receive any comments regarding the application of the cost-benefit provision.

The Administrative Procedure Act provides that the required publication of a substantive rule shall be made not less than 30 days before its effective date, but provides an exception “for good cause found and published with the rule.”  21 On June 3, 2002, NFA will bring its new registration system online. As part of this changeover, NFA has shut down its old mainframe-based registration database, and is currently not capable of accepting hardcopies of registration filings and entering the information into its registration database system. Moreover, the Commission notes that NFA has spent much of the last few months making the futures industry aware of the change to an online registration system, through its Web site as well as seminars and training workshops held in New York, New Jersey, and Chicago. Accordingly, the Commission has determined to make the rule amendments being adopted herein effective immediately.

Pursuant to the provisions of the 1970 UNESCO Convention, codified into U. S. law as the Convention on Cultural Property Implementation Act (Pub. L. 97-446, 19 U.S.C. 2601 et seq. ) (the Act), the United States entered into a bilateral agreement with the Republic of Peru on June 9, 1997, concerning the imposition of import restrictions on certain pre-Columbian archaeological materials of Peru dating to the Colonial period and certain Colonial ethnological material from Peru. The U.S. Customs Service issued T.D. 97-50 (62 FR 31713, June 11, 1997) amending § 12.104g(a) of the Customs Regulations (19 CFR 12.104g(a)) to reflect the imposition of these restrictions for a period of five years.

Prior to the issuance of T.D. 97-50, Customs issued T.D. 90-37 (55 FR 19029, May 7, 1990) imposing emergency import restrictions on certain archaeological materials of Peru from the Sipan Archaeological Region forming part of the remains of the Moche culture. Under T.D. 90-37, § 12.104g(b) (19 CFR 12.104g(b)) of the regulations pertaining to emergency restrictions was amended accordingly. This emergency protection was extended in T.D. 94-54 (59 FR 32902, June 27, 1994). Subsequently, the archaeological materials covered by T.D. 90-37 were subsumed in T.D. 97-50 when it was published in 1997, at which time the emergency restrictions of T.D. 90-37 (as extended by T.D. 94-54) were removed from § 12.104g(b).

On March 5, 2002, the Assistant Secretary of Educational and Cultural Affairs, Department of State, after considering the findings and recommendations of the Cultural Property Advisory Committee and concluding that the cultural heritage of Peru continues to be in jeopardy from pillage of the archaeological and ethnological materials subject of the import restrictions of T.D. 97-50, made the necessary determinations to extend the import restrictions for an additional five years (in the Determination to Extend the Memorandum of Understanding Between the United States of America and the Government of Peru Concerning the Imposition of Import Restrictions on Archaeological Material from the Prehispanic Cultures and Certain Ethnological Material from the Colonial Period of Peru, Signed on June 9, 1997). Accordingly, Customs is amending § 12.104g(a) to reflect the extension of the import restrictions.

The Designated List of Archaeological and Ethnological Materials from Peru describing the materials covered by these import restrictions is set forth in T.D. 97-50. The list and accompanying image database may also be found at the following internet Web site address: http://e.usia.gov/education/culprop.

It is noted that the materials identified in T.D. 97-50 as “certain pre-Columbian archaeological materials of Peru dating to the Colonial period and certain Colonial ethnological material from Peru” are referred to in the Determination to Extend as “Archaeological Material from the Prehispanic Cultures and Certain Ethnological Material from the Colonial Period of Peru.” The materials identified in T.D. 97-50 and those identified in the Determination to Extend are one and the same materials.

The restrictions on the importation of these archaeological and ethnological materials from Peru are to continue in effect for five years from June 9, 2002. Importation of these materials continues to be restricted unless the conditions set forth in 19 U.S.C. 2606 and 19 CFR 12.104c are met. For example, these materials may be permitted entry if accompanied by appropriate export certification issued by the Government of Peru, or documentation showing that exportation from Peru occurred on or before June 11, 1997, or, with respect to materials from the Sipan archaeological region, on or before May 7, 1990. See 19 U.S.C. 2606(b)(1) and (2)(B); 19 CFR 12.104c(a) and (c).

Because the amendment to the Customs Regulations contained in this document extends import restrictions already imposed on the above-listed cultural property of Peru by the terms of a bilateral agreement entered into in furtherance of a foreign affairs function of the United States, pursuant to the Administrative Procedure Act (5 U.S.C. 553(a)(1)), no notice of proposed rulemaking or public procedure is necessary and a delayed effective date is not required.

Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply. Accordingly, this final rule is not subject to the regulatory analysis or other requirements of 5 U.S.C 603 and 604.

This amendment does not meet the criteria of a “significant regulatory action” as described in Executive Order 12866.

The principal author of this document was Bill Conrad, Regulations Branch, Office of Regulations and Rulings, U.S. Customs Service.

A. Organization and Format

B. General Comments

C. Notification

D. Postmarket Surveillance Plan

E. FDA Review and Action

F. Records and Reports

G. Economic Impact

H. Paperwork Reduction Act

A. Introduction

B. Objective of the Regulation

C. Risk Assessment/Baseline Conditions

D. Costs of Postmarket Surveillance

E. Benefits of the Regulation

F. Annual Costs and Benefits of the Regulation

G. Small Business Analysis/Regulatory Flexibility Analysis

H. Conclusions

In the Federal Register of August 29, 2000 (65 FR 52376), we (FDA) published a proposed rule implementing the PS provisions in section 522 (21 U.S.C. 360l) of the act, as amended by FDAMA. We provided a period of 90 days for comments from interested parties. We received comments from four entities. We summarize and discuss these comments below, and we have revised the final rule appropriately.

(Comment 1) We received several comments commending the use of plain English, logical formatting, and the question and answer style.

We appreciate the positive comments and will continue to use the plain English concepts.

(Comment 2) One comment suggested that § 822.1 be revised to include the statutory criteria for imposing PS. This would make the scope of the regulation clearer.

We agree, and have modified § 822.1 accordingly.

(Comment 3) Several comments expressed concern that the proposed rule would impose substantial, unnecessary burdens on device manufacturers, and proposed a number of changes that would reduce the burden. Individual changes are addressed in the appropriate regulation sections. One comment stated that existing systems, such as medical device reports (MDRs), are adequate to provide safety and effectiveness information.

We do not agree. If Congress thought that existing mechanisms were sufficient, it would not have provided for PS. We recognize the potential for PS to be burdensome, but do not agree that any burden imposed by PS would be unnecessary. We intend to impose PS only when necessary to address a postmarket public health question. We also intend to work with the affected manufacturer(s) to identify the least burdensome approach that will adequately address the surveillance question.

(Comment 4) Two comments stated that FDA does not have the authority to require clinical studies, citing the legislative history of FDAMA and the changes in language in the act from “protocol” to “plan” and “investigator” to “designated person.”

We disagree. As originally enacted in the Safe Medical Devices Act of 1990 (SMDA), PS under section 522 of the act was automatically required for certain devices, and the statutory language allowed little flexibility in designing a PS study. In FDAMA, Congress eliminated this automatic PS, giving FDA discretion to require PS when appropriate, and also gave FDA greater discretion in crafting the form of the surveillance. This broader discretion means that we can accept PS plans that are less rigorous (and less burdensome) than clinical studies, such as literature reviews and analyses of complaint information. The agency expects that it would rarely if ever demand an adequate and well-controlled double-blind clinical trial as the only means of collecting clinical data to satisfy a PS requirement. On the other hand, collection of clinical data may take many forms, and the agency continues to believe that prospective clinical data will be necessary in about 10 percent of all instances of PS. Congress addressed its concern that FDA not require burdensome longitudinal studies not by prohibiting clinical studies altogether but by limiting the duration of any PS study to 3 years unless manufacturers agree to a longer period. If no agreement can be reached, the dispute resolution process described in section 562 of the act (21 U.S.C. 360 bbb-1) will be used to resolve issues related to duration. This time limit on PS is incorporated into our regulations. Thus while FDAMA gave FDA power to eliminate unnecessary burden from PS, it does not prohibit us from requiring clinical studies where necessary to protect the public health and where conducted within applicable time limits.

(Comment 5) Two comments expressed concern that we intend to increase the amount of data required to support a new indication for use by imposing PS.

We do not intend to impose PS for every new indication for use, nor do we expect imposition of PS to increase the data requirements for a new indication for use. Instead, we expect PS to be used in some instances to shift some data collection from pre- to postmarket, allowing a device to reach the market sooner. For example, this mechanism could be used for a device that is going from clinical use to home use.

(Comment 6) Two comments stated that PS orders should contain the justification for selecting PS over other, less burdensome alternatives.

We agree that PS should not be imposed without considering less burdensome alternatives. Our guidance document entitled “Criteria and Approaches for Postmarket Surveillance” ( www.fda.gov/cdrh/modact/critappr.pdf ) discusses our present thinking on this and other criteria that we will use to determine whether to impose PS. We consider this justification part of the “reason that we are requiring postmarket surveillance” that will be contained in a PS order, so there is no need to modify § 822.5.

(Comment 7) One comment objected to the application of PS to in vitro diagnostic (IVD) biologics, stating that these devices are already under PS, including lot release, reporting changes, and reporting errors.

We acknowledge that there are other PS requirements for IVD biologics, and it is not intended that PS duplicate or supersede any existing requirements. We would take these existing requirements into consideration when evaluating whether and what form of PS is the appropriate mechanism for addressing the PS question.

(Comment 8) Several comments stated that FDA should be required to meet with manufacturers prior to issuing a PS order, to discuss whether PS is necessary or whether our concerns could be addressed by other, less burdensome mechanisms.

As noted in the preamble to the proposed rule, we anticipate meeting with the affected manufacturer(s) prior to issuing a surveillance order for a particular device for the first time. A requirement that we meet with affected manufacturers prior to issuing subsequent orders for the same device would be burdensome for manufacturers as well as for FDA. We are, therefore, retaining the flexibility to issue PS orders without first meeting with the affected manufacturer(s).

(Comment 9) Several comments urged FDA to modify the rule or issue guidance to advise manufacturers as to what sort of devices may be subject to PS. Knowledge of PS requirements would be an important consideration for a manufacturer contemplating entering a specific market. It was also suggested that we maintain an Internet Web page that lists devices for which PS has been ordered.

We acknowledge that the possibility that PS may be required for a particular device may influence a manufacturer's decision to enter a particular market. There are, currently, few devices subject to PS. We cannot predict which specific devices may be subject to PS in the future. A PS order is issued to address a specific PS question, which may surface at any time in the device's life cycle. The guidance document entitled “Criteria and Approaches for Postmarket Surveillance” discusses the criteria we will use to determine whether to impose PS. We will publish a list of devices subject to PS and make it available through the Internet and Facts-on-Demand.

(Comment 10) We received several comments that questioned whether domestic manufacturers of devices for export only should be subject to PS. These devices cannot be marketed in the United States and it is illogical to impose PS on these products.

We agree. Devices manufactured for export only, in compliance with section 801(e) of the act (21 U.S.C. 381(e)), are subject to the requirements of the importing country and will not be subject to PS under this rule.

(Comment 11) We received two comments that we should modify the rule to utilize a “two-tier” system for PS. The first tier would involve the manufacturer collecting information regarding significant complications, using selected centers and clinical report forms. If the first tier resulted in identification of a specific question, i.e., unexpected serious illness, the second tier would involve a more in-depth information collection. If no specific question were identified, PS would be considered complete.

We do not agree that a “two-tier” approach is more likely to generate useful information. The “two-tier” approach assumes no information is available regarding significant complications. We do not intend to impose PS unless we have identified a need for information or data. This need may be identified during the review of a marketing application or after the device has been marketed. For devices already on the market, PS may be ordered to collect information about an unanticipated adverse event. We believe that the “two-tiered” approach suggested by the comments would actually be more burdensome for manufacturers, since it would require data collection in the absence of a clearly defined need. We do agree that the results of a PS plan may, in some cases, raise new questions that may need to be addressed by a second PS plan. The rule, as written, allows for, but does not require, a two-tiered approach.

(Comment 12) We received two comments about the applicability of regulations concerning informed consent (part 50 (21 CFR part 50)) and institutional review boards (IRBs) (part 56 (21 CFR part 56)). They noted that PS is not within the scope of part 50 or part 56, and that only a very limited consent involving confidentiality of patient records is appropriate.

These comments agree with our statements in the preamble to the proposed rule. We agree that informed consent under part 50 and IRB review under part 56 are not applicable to many PS plans. However, there are surveillance plan designs, e.g., a prospective, clinically-based data collection, under which some or all of the provisions of parts 50 and 56 would be appropriate. Other designs, e.g., a registry maintained by a manufacturer, may require modification to the patient consent form to indicate that data may be provided to FDA. We do not require, nor do we generally expect, PS to result in the collection of personal identifiers. In any PS plan, we expect the manufacturer to ensure that the surveillance approach used incorporates whatever measures are necessary to protect patient privacy. We will ensure that the appropriate patient protection measures are in place through the review and approval of each PS plan.

(Comment 13) One comment requested clarification of our requirement (§ 822.9(a)(8)) that the PS plan include the indications for use and claims for the device. The comment asked if we intended for the manufacturer to submit copies of all labeling and promotional materials for the device.

We do not expect copies of all labeling and promotional material to be included in the submission. This information may be incorporated by reference to another submission, including a marketing application. In general, you may submit a statement of any claims that are relevant to the performance of the device, rather than copies of promotional materials.

(Comment 14) One comment stated that the incorporation of guidance as substance in § 822.12 violated notice and comment requirements.

We do not agree that § 822.12 incorporates guidance as substance. This section of the proposed rule referred the reader to two current guidance documents in response to the question, “Do you have any information that will help me prepare my submission or design my postmarket surveillance plan?” Guidance documents represent the agency's current interpretation of, or policy on, a regulatory issue. They do not establish legally enforceable rights or responsibilities and do not legally bind the public or FDA. You may choose to use an approach other than the one set forth in a guidance document, as long as your alternative approach complies with the relevant statutes and regulations.

Nonetheless, to avoid confusion and to ensure that the regulations do not become outdated should the agency revise its guidance documents, we have revised § 822.12 and other references to guidance documents in the regulations to alert the reader to the availability of guidance generally, and have clarified the role of guidance documents in relation to specific regulatory and statutory requirements.

(Comment 15) Two comments asked that we identify the criteria we will use for evaluating PS plans and define the term “scientific soundness.”

The regulation states that, among other things, we will evaluate whether the PS plan is likely to provide useful information that will address the PS question. Specific criteria will depend on the surveillance question and the approach used. We intend to provide the affected manufacturer(s) with as much guidance as possible and we expect the review of a PS plan to be interactive. “Scientific soundness” indicates that a plan was developed using scientific principles. We expect a clearly defined hypothesis and a plan that can reasonably be expected to develop data that will address the hypothesis.

(Comment 16) Two comments objected to the requirement that any changes to an approved PS plan be submitted to and approved by us prior to making the change. The comments suggested that we should only require prior submission and approval of “significant” changes, i.e., those that would affect the nature of data collected in accordance with the plan.

We agree. We have modified § 822.21 to indicate that only changes that will affect the nature or validity of data collected in accordance with the plan require prior approval. Such changes are those for which a revised surveillance plan will be needed, and we have modified the section to clarify this, as well as to emphasize that in preparing the revised plan, you may reference information submitted in your approved surveillance plan or other submissions, in accordance with § 822.14. Changes that will not affect the nature or validity of data collected in accordance with the plan must be reported in the next interim report required by your approval order. No revised surveillance plan is needed for such changes.

We have altered § 822.21 to clarify the number of copies of a change request that should be submitted, and the address to which they should be sent.

(Comment 17) One comment suggested that the language concerning confidentiality in § 822.23 was not clear and that it should be revised to indicate that we will not disclose the contents of a submission before the plan is approved and that we will not disclose confidential information.

We agree and have revised § 822.23 accordingly.

(Comment 18) Two comments objected to the disclosure of PS plans, amendments, supplements, and reports under the Freedom of Information Act (FOIA) once the PS plan is approved. Both comments stated that the contents of the submissions should be confidential until the manufacturer's final report is submitted. Early disclosure could provide competitors with commercially sensitive information.

Under FOIA, we have no basis for continuing to hold a PS plan confidential in its entirety once it has been approved. As noted in the rule, the submission will remain confidential until the plan is approved, and we will continue to protect the confidentiality of trade secret or confidential commercial information, or information identifying patients.

(Comment 19) Two comments suggested that PS program inspections be subject to FDA's “Preannounced Inspection Policy.”

Policies and procedures concerning the planning and conduct of inspections are not within the scope of this regulation. We believe that PS program inspections should be conducted in accordance with policies and procedures in place at the time of the inspection.

(Comment 20) One comment stated that the reporting requirements are not authorized by the PS provisions in the act and that they are unduly burdensome, in contravention of section 519(a)(4) of the act (21 U.S.C. 360i(a)(4)).

We do not agree. We have ample authority to establish these requirements. These PS regulations are authorized under section 701(a) of the act (21 U.S.C. 371(a)) because they establish recordkeeping and reporting requirements that are necessary for FDA to verify that devices comply with PS orders issued under section 522 of the act. As explained in the preamble to our proposed regulation, these regulations are also authorized by section 519 of the act, which permits FDA to establish by regulation reporting requirements necessary to assure that a device is not misbranded, because a device that does not comply with a section 522 of the act PS plan is misbranded under section 502(t) of the act (21 U.S.C. 352(t)). In light of the public health benefits achieved by compliance with PS orders, these recordkeeping and reporting requirements are not unduly burdensome. Our analyses under the Paperwork Reduction Act of 1995 (the PRA) and of the economic impact address the annual recordkeeping and reporting burdens imposed by these regulations in detail and demonstrate that they are not unduly burdensome.

(Comment 21) One comment objected to the idea that manufacturers would conduct PS plans involving 30,000 subjects, stating that our concept of PS is unrealistic.

A current regulation, at 22 CFR 41.107(c), lists the two classes of aliens who are exempt from the payment of nonimmigrant visa fees. This rule adds foreign employees of the U.S. Government who will travel to the United States on official business to that list.

With respect to immigrant visas, 22 CFR 42.71(b) currently identifies two levels of activity for which fees are assessed. The first is for the processing of an application for an immigrant visa and the second is for the issuance of such a visa. It also sets forth different time frames for the collection of such individual fees. As the Department is combining these fees into a single fee covering all processing functions, editorial changes to 42.71 have become necessary. The timing of the payment of these fees and the basis for the refund of the single fee have been appropriately modified to accord with having one fee rather than separate fees for separate services.

The changes in this interim rule are necessary, as stated above, because the Schedule of Consular Services Fees was recently amended in a final rule published May 16, 2002 (Public Notice 4016; 67 FR 34831).

A cost study underlies the changes in the proposed new Schedule of Consular Fees, which includes some modest increases in some visa fees. The considerations taken into account are set forth fully in the rule pertaining to the new Schedule. Any questions regarding the changes in the fee schedule should be directed to Susan Abeyta, Office of the Executive Director, Bureau of Consular Affairs, telefax: (202) 663-2499; e-mail: fees@state.gov as noted in that proposed rule.

The Congress in a public law enacted one of the current waivers of fees and another results from international comity. The latest addition to the list, made in this rule, is for non-citizen employees of the United States Government, who are employed abroad but coming to the United States on official business in connection with that employment. We believe such travel to be primarily in the interest of the U.S. Government, so that the issuance of the visa is not primarily a benefit to the traveler for which a fee would be charged.

Yes. We are making editorial amendments in the several places where references to “application and issuance fees” appear in other sections of part 42, to conform with the language changes discussed above. We are also deleting a subsection of 22 CFR 42.72 relating to immigrants from Hong Kong because the underlying statute expired on January 1, 2002.

The Department is publishing this rule as a proposed rule, with a 30-day provision for public comments, to accord with the proposed rule it is complementing.

Pursuant to § 605 of the Regulatory Flexibility Act, the Department has assessed the potential impact of this rule, and the Assistant Secretary for Consular Affairs hereby certifies that it is not expected to have a significant economic impact on a substantial number of small entities.

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

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

The Department of State does not consider this rule to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. In addition, the Department is exempt from Executive Order 12866 except to the extent that it is promulgating regulations in conjunction with a domestic agency that are significant regulatory actions. The Department has nevertheless reviewed the regulation to ensure its consistency with the regulatory philosophy and principles set forth in that Executive Order.

This regulation 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. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement.

This rule does not impose any new reporting or record-keeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

On April 5, 2001, EPA's revised I/M program requirements rule was published in the Federal Register (Amendments to Vehicle Inspection and Maintenance Program Requirements Incorporating the Onboard Diagnostics Check; Final Rule (66 FR 18156)). The revised I/M requirements rule requires that electronic checks of the on-board diagnostics system of applicable 1996-and-newer motor vehicles (OBD) be conducted as part of states' motor vehicle I/M programs. This revised I/M requirements rule applies only to those areas required to implement an I/M program under the Clean Air Act of 1990. This rule establishes a deadline of January 1, 2002 for states to begin performing OBD checks on 1996-and-newer model OBD-equipped vehicles, and to require repairs to be performed on those vehicles with malfunctions identified by the OBD check. However, the revised I/M rule also provides several options to states to delay implementation of OBD testing, under certain circumstances, beyond the prescribed January 1, 2002 deadline. One such option provides for a one-time, 12-month extension of the deadline for states to begin conducting mandatory OBD checks (to as late as January 1, 2003) provided the state making the request can show just cause to EPA for a delay and that the revised implementation date represents “the best the state can reasonably do”.

EPA's final rule identifies factors that may serve as a possible justification for states considering making a request to EPA to delay implementation of OBD I/M program checks beyond the January 2002 deadline. Potential factors justifying such a delay request that are listed in EPA's rule include: contractual impediments, hardware or software deficiencies, data management software deficiencies, the need for additional training for the testing and repair industries, and the need for public education or outreach.

Pennsylvania has submitted a SIP revision to formally request an extension of the OBD I/M test deadline, per EPA's I/M requirement rule. Pennsylvania's SIP revision lists many of the same factors that are listed in EPA's I/M rule in order to justify the Commonwealth's request for extension of the OBD testing deadline in Pennsylvania.

On December 14, 2001, Pennsylvania submitted a formal revision to its State Implementation Plan (SIP), which constitutes a request to delay the addition of on-board diagnostic system checks of 1996-and-newer vehicles to the Commonwealth's adopted and SIP-approved I/M program.

Pennsylvania's SIP revision to request a delay in adding OBD testing to its I/M program lists several factors that effect the Commonwealth's ability to conduct OBD testing at this time. The Commonwealth's justification for its request of a one-year delay includes the following factors:

(1) Hardware and software deficiencies associated with the OBD testing equipment and its ability to communicate with Pennsylvania's Vehicle Inspection Information Database (VIID), as well as the commercial availability of equipment meeting the Commonwealth's specifications and requirements,

(2) Software deficiencies related to Pennsylvania's VIID, pertaining to communications between testing stations and the program oversight contractor and the VIID,

(3) The need for additional and updated training of Pennsylvania's sizable I/M testing and vehicle repair communities,

(4) The need for additional public outreach and public education in order to increase public acceptance of OBD testing,

(5) The Commonwealth's desire to conduct a small-scale, pilot OBD test program prior to the widespread launch of mandatory OBD testing as an element of the broader I/M program,

(6) The time frame associated with the completion of the regulatory adoption process in Pennsylvania necessary to add OBD checks to the I/M program regulations,

(7) The time frame associated with public notice/public participation related to the Commonwealth's regulatory process, and

(8) The time frame for submitting an OBD I/M SIP to EPA upon adoption of such Pennsylvania OBD I/M regulations.

The Commonwealth's request lists several activities that Pennsylvania has performed (prior to the date of this request for a testing deadline extension) to facilitate the addition of OBD testing to the Pennsylvania I/M program. The preparation activities listed in the Commonwealth's SIP include:

(1) The formation of the Pennsylvania Enhanced Emissions Inspection Policy Review Group to consider, among other things, the inclusion of OBD checks as part of Pennsylvania's I/M program. This group recommended that the Commonwealth petition EPA for a one-year extension of the January 1, 2002 OBD testing deadline.

(2) The continuation of meetings of the Pennsylvania Department of Transportation's I/M Working Group to consider issues related to OBD-based I/M testing and repair.

EPA is granting the Commonwealth's request for a one-year extension of the OBD testing deadline, per the guidelines established by EPA in its amended Vehicle Inspection and Maintenance Program Requirements Rule, published in the April 5, 2001 edition of the Federal Register (66 FR 18156). The Commonwealth has adequately justified a one-year extension of the January 1, 2002 Federal OBD I/M testing deadline. EPA therefore proposes to grant a one-year extension of the deadline to commence OBD testing as part of the Pennsylvania I/M program to January 1, 2003. EPA has determined that this delayed implementation schedule represents the timeliest implementation schedule that the Commonwealth can perform, and is “the best the state can reasonably do”.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial request and anticipates no adverse comment as EPA's I/M program requirements regulations allow the Administrator to grant such an extension request if a state provides a justification that meets the factors set forth in EPA's I/M regulations (66 FR 18156). However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the Commonwealth's SIP revision in the event that adverse comments are filed with EPA. This rule will be effective on August 5, 2002, without further notice unless EPA receives adverse comment by July 8, 2002. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action to extend the deadline for incorporation of on-board diagnostics checks to the Pennsylvania I/M program by one year must be filed in the United States Court of Appeals for the appropriate circuit by August 5, 2002. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

The purposes of this interim rule are to update and clarify FPMR part 101-9, Federal Mail Management, and move it into the Federal Management Regulation (FMR). This interim rule is written in a plain language, question and answer format. This style uses the active voice, shorter sentences, and pronouns. A question and its answer combine to establish a rule; that is, Federal agencies and Federal employees must follow the language contained in both the question and its answer.

Section 2 of Public Law 94-575, the Federal Records Management Amendments of 1976, as amended, directs the Administrator of General Services to provide guidance and assistance to Federal agencies on records management, including the processing of mail by Federal agencies, and this interim rule implements that direction. In doing so, this interim rule establishes four requirements for all agencies and four additional requirements for agencies that mail over $1 million annually. These requirements are described in sections 102-192.50 and 102-192.55 respectively.

In response to the proposed rule, we received comments from nineteen agencies, two boards and one from the private sector. All comments were considered in the formulation of this interim rule.

Several comments concerned the proper definition of “user level”. The concept here is that Federal mailers, or users, will better manage their mailing expenses if they are charged for the actual cost of their mailings. The definition of “user level” was deliberately vague to allow agencies to define users in a way that best fit their organizations. For instance, an agency could define “user” as an organizational entity, program, or location. To make the concept clearer, we have changed the term to “program level”.

Many respondents were also unclear how we defined “system” in the proposed regulation. We have added a definition in section 102-192.35 to explain the term.

To reduce the confusion over agency requirements, we have reorganized the interim rule to separate required actions from recommended actions.

The most frequent comment was that providing GSA with volumetric and cost data from users at all levels within the agency would be prohibitively expensive, would adversely impact mail delivery, and would not provide a benefit to the agencies or GSA. This interim rule alters the requirement by allowing agencies to gather the needed data by any method they deem appropriate. When more agencies have availed themselves of automated tools for gathering data on mail operations, this requirement will be revisited.

The proposed regulation required that agencies' financial accountability systems capture costs associated with mailing. So that we may address agencies' security concerns quickly, we are temporarily foregoing the financial accountability component of the proposed regulation. We plan to implement this requirement when mailing and financial systems can more easily track costs. We will continue to work with the agencies' mail management plans and promote best practices towards this goal.

Many comments were received about the Official Mail Accounting System (OMAS)—see definition in section 102-192.35. In most agencies, OMAS does not account for mail below the Chief Financial Officer level and its use creates no incentive to save money on mail; the people who decide whether something should be mailed, what shape it should take, what postage should be applied, and how many copies should go out, are not the people who pay for the postage. Most Federal mailers, therefore, have little incentive to limit mailing costs.

The General Services Administration has discussed this situation with Federal financial experts, mail industry consultants, the Office of Management and Budget, and many Federal mail managers. Every private-sector expert that GSA has reached agrees that giving the program managers information about, and responsibility for, the money they spend on mail is critical to improved management and cost control. We have also studied the experience of the five Federal agencies (most notably the Department of Defense) that have converted all or part of their postage to commercial payment processes. On the basis of this discussion and consideration, the General Services Administration has decided to direct the Federal agencies that fall within its authority to stop using OMAS to account for postage and to pay for postage using commercial payment processes. The effective date for this direction is October 1, 2003.

When Federal line managers pay for postage the same way that private sector organizations do, and account for postage costs through their standard accounting and budget processes, they are able to:

Track postage costs in real time;

Measure performance;

Identify opportunities to save money before they spend it;

Identify instances of potential fraud;

Streamline operations and improve productivity;

Eliminate the extra administrative burden of a cumbersome system; and

Increase their ability to react quickly to problems.

We recognize that the transition to commercial payment for postage will be more complicated for some agencies than for others, but we have determined that it will benefit all Federal agencies and the taxpayers in the long run. We estimate savings resulting from Federal agencies' withdrawal from OMAS will be approximately $70 million annually across the government.

GSA has determined that this interim rule is not a significant rule for the purposes of Executive Order 12866 of September 30, 1993.

This interim rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.

The Paperwork Reduction Act does not apply because this interim rule does not impose recordkeeping or information collection requirements, or the collection of information from offerors, contractors, or members of the public which require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq.

This interim rule is exempt from Congressional review prescribed under 5 U.S.C. 801 since it relates solely to agency management and personnel.

This is a summary of the Commission's Memorandum Opinion and Order, ET Docket No. 95-177, FCC 02-135, adopted May 2, 2002, and released May 13, 2002. The full text of this document is available for inspection and copying during regular business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW, Washington, DC 20554. The complete text of this document also may be purchased from the Commission's copy contractor, Qualex International, 445 12th Street, SW., Room, CY-B402, Washington, DC 20554. The full text may also be downloaded at: www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365.

1. In October 1997, the Commission adopted a Report and Order (R&O) that increased the maximum permitted signal strength for medical telemetry transmitters operating in the broadcast television bands under Part 15 of the rules. The R&O also permitted these devices to operate on TV channels 14-46 in addition to TV channels 7-13 where they already were permitted to operate. To prevent interference to TV broadcast signals, minimum required separation distances were established between medical telemetry transmitters and the Grade B contours of co-channel analog TV stations. No separation distances were proposed or established between medical telemetry transmitters and the noise limited service contours of digital TV stations, but medical telemetry transmitters must operate on a non-interference basis to digital TV and to all other authorized services.

2. Two parties filed petitions for reconsideration of the rules adopted in the R&O. The Cellular Phone Taskforce (CPT) claims that the transmission levels permitted in the rules are too high and are therefore discriminatory because they will adversely affect persons who are extremely sensitive to electromagnetic fields. The National Association of Broadcasters (NAB) claims that the rules do not provide adequate protection to analog TV broadcast signals from interference caused by medical telemetry transmitters. NAB states that we used a desired-to-undesired (D/U) signal ratio that was too low in calculating the minimum required separation distances between medical telemetry transmitters and the Grade B contours of co-channel TV stations. NAB's petition did not address the issue of protecting digital TV signals from interference by medical telemetry equipment.

3. Prior to the adoption of the Report and Order in this proceeding, the Commission addressed in another proceeding CPT's arguments that stringent standards for RF emissions should be established to protect persons who are adversely affected by exposure to low-level electromagnetic fields. More specifically, in 1996, CPT filed a petition for reconsideration in ET Docket 93-62, which adopted new guidelines and methods for evaluating the environmental effects of radio frequency (RF) radiation from FCC-regulated transmitters. CPT's petition in that proceeding argued that stricter RF emission limits were necessary to protect persons who are “electrosensitive.” The Commission denied CPT's petition on August 25, 1997, stating that the RF safety rules adopted in that proceeding were based on the recommendations of expert organizations and federal agencies with responsibilities for health and safety, and that it was not practicable for the Commission to independently evaluate studies of biological effects, especially concerning controversial issues such as whether some persons are “electrosensitive.” CPT appealed the Commission's decision in ET Docket 93-62 at the same time it petitioned for reconsideration of the Commission's decision in this proceeding. The Court affirmed the Commission's decision to rely on standards formulated by expert organizations and agencies. In denying a rehearing, the Court specifically concluded, in response to CPT's claims of discrimination against handicapped persons, that the American with Disabilities Act (42 U.S.C. 12101 et seq. ) did not apply to the Commission's decision and that arguments made under the Rehabilitation Act (29 U.S.C. 701 et seq. ) were without merit. Because the essence of CPT's arguments here have already been addressed by the Commission in ET Docket 93-62 and the Commission's decision in that proceeding has been affirmed on appeal, we are dismissing CPT's petition for reconsideration in this proceeding.

4. We find that the 45 dB D/U signal ratio we selected to determine the required separation distances between medical telemetry transmitters and TV grade B contours is appropriate. This ratio was originally adopted by the Commission in 1952 to protect TV stations from interference from co-channel TV stations at the Grade B contour. It is specified in Part 74 of the Commission rules to protect analog TV signals from co-channel interference from low power TV, TV translator or TV booster stations. This ratio provides greater protection than the 34 dB ratio specified in Part 73 to protect analog TV signals from interference from digital TV signals. We find that the D/U ratios recommended by National Association of Broadcasters are overly protective and thus affirm our decision to base the separation rules on a 45 dB D/U ratio.

5. While we find that the rules we adopted are adequate to prevent interference, we also note that recent Commission actions will serve to reduce the number of medical telemetry users in the TV bands. Subsequent to this proceeding, the Commission allocated three new frequency bands where medical telemetry can operate on a primary basis. In allocating these bands, our goal was not only to provide spectrum where medical telemetry can operate without interference, but also to encourage medical telemetry users to migrate out of the current bands. To accomplish this transition, the Commission will cease approving medical telemetry equipment that can operate in the TV bands starting October 16, 2002. While there is no cutoff on the marketing and use of medical telemetry equipment approved prior to that date, we expect that the use of medical telemetry equipment in the TV bands will gradually cease as equipment that operates in the newly allocated bands is deployed to replace older equipment.

6. Pursuant to the authority contained in sections 4(i), 301, 302, 303(e), 303(f), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 301, 302, 303(e), 303(f), and 303(r), the Petition for Reconsideration filed by the Cellular Phone Taskforce is dismissed.

7. Pursuant to the authority contained in sections 4(i), 301, 302, 303(e), 303(f), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 301, 302, 303(e), 303(f), and 303(r), the Petition for Partial Reconsideration filed by the National Association of Broadcasters is denied.

Currently for commercial acquisitions, FAR provision 52.212-3, Offeror Representations and Certifications—Commercial Items, provides a consolidated set of representations and certifications. No equivalent provision exists for non-commercial items. This final rule provides an equivalent provision for use with NASA's non-commercial acquisitions within the simplified acquisition threshold (SAT). This new consolidated provision will ensure that all appropriate representations and certifications are consistently used and will simplify the incorporation of representation and certification into solicitations. Additionally, this final rule provides an evaluation provision to be used in non-commercial acquisitions within the SAT when selection is based on other than technically acceptable low offer. This evaluation provision will provide a consistent notice to offerors of how evaluations will be conducted.

NASA published a proposed rule in the Federal Register on January 25, 2002 (67 FR 3669-3673). Two respondents submitted comments on the proposed rule. One respondent was generally supportive of the proposed rule. The other respondent's comments indicated a lack of understanding that this change is merely a consolidation of existing requirements and not an imposition of additional requirements. The comments received were considered in formulation of this final rule. While no changes are being made as a result of comments received, changes are being made for consistency with existing FAR provisions. Changes made include removal of the Trade Agreements Certificate since it does not apply to acquisitions within the SAT; removal of the definition of “woman-owned business” since 52.219-1 no longer has this category; replacing “place of ownership” with “office” under the HUBZone certification as a result of changes made to 52.219-1 in FAC 01-06; and editorial changes at 1813.302-570(a)(2) for consistency of formatting and at 1852.213-70(c)(6)(i) and 1852.217-70(c)(6)(ii) for clarity.

NASA certifies that this final rule will not have a significant economic impact on a substantial number of small business entities within the meaning of the Regulatory Flexibility Act (5 USC 601, et seq. ), because this rule merely consolidates within one provision existing FAR representations and certifications for use in non-commercial simplified acquisitions.

The Paperwork Reduction Act does not apply because these changes to the NFS do not impose any new recordkeeping or information collection requirements, or collection of information from offerors, contractors, or members of the public that require the approval of the Office of Management and Budget under 44 USC 3501, et seq.

Effective March 31, 2002, the General Services Administration (GSA) is retiring the use of Optional Form 1103, U.S. Government Bill of Lading (GBL) and Optional Form 1203, U.S. Government Bill of Lading—Privately Owned Personal Property (PPGBL) for domestic shipments. This interim rule amends the NFS to comply with Federal Management Regulation (FMR) Part 102-117 (41 CFR 102-117), Transportation Management, published in the Federal Register on October 6, 2000 (65 FR 60060), and FMR Part 102-118 (41 CFR 102-118), Transportation Payment and Audit, published in the Federal Register on April 26, 2000 (65 FR 24568). NASA clause 1852.247-73 is revised to change the title to “Bills of Lading,” and indicate that GBLs may only be used to ship international and domestic overseas items deliverable under contracts, and all other domestic shipments shall be made via Commercial Bills of Lading (CBL).

This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This interim rule is not a major rule under 5 U.S.C. 804.

NASA certifies that this interim rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) because the change only affects contracts where the point of delivery for domestic shipments of items deliverable under a contract is f.o.b. origin.

The Paperwork Reduction Act, 44 U.S.C. 3501 et seq. , does not apply because the changes to the NFS do not impose recordkeeping or information collection requirements, or collections of information for offerors, contractors, or members of the public which require the approval of the Office of Management and Budget.

A determination has been made under the authority of the Administrator of the National Aeronautics and Space Administration (NASA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary to amend shipping instructions that are now obsolete as a result of changes to the Federal Management Regulation (FMR) Part 102-117 (41 CFR 102-117), Transportation Management, published in the Federal Register on October 6, 2000 (65 FR 60060), and FMR Part 102-118 (41 CFR 102-118), Transportation Payment and Audit, published in the Federal Register on April 26, 2000 (65 FR 24568).

Regulations governing the black sea bass fishery are found at 50 CFR part 648. The regulations require annual specification of a commercial quota that is allocated into four quota periods, based upon percentages of the annual quota. The Quarter 2 (April through June) commercial quota is distributed to the coastal states from Maine through North Carolina. The process to set the annual commercial quota is described in § 648.140.

The total commercial quota for black sea bass for the 2002 calendar year was initially set at 3,332,000 lb (1,511,370 kg) and then adjusted downward to 3,294,758 lb (1,494,477 kg) for research quota set-asides (66 FR 66351; December 26, 2001). The Quarter 2 period quota, which is equal to 29.26 percent of the annual commercial quota, is 964,046 lb (437,284 kg). The quota allocation was adjusted downward to compensate for 2001 Quarter 2 landings in excess of the 2001 Quarter 2 quota, consistent with the procedures in § 648.140. The final adjusted 2002 Quarter 2 quota is 856,208 lb (388,369 kg).

The Regional Administrator, Northeast Region, NMFS (Regional Administrator) monitors the commercial black sea bass quota for each quota period by means of dealer reports, state data, and other available information to determine when the commercial quota has been harvested. NMFS is required to publish a notification in the Federal Register advising and notifying commercial vessels and dealer permit holders that, effective upon a specific date, the black sea bass commercial quota has been harvested and no commercial quota is available for landing black sea bass for the remainder of the Quarter 2 period, north of 35°15.3′ N. lat. The Regional Administrator has determined, based upon dealer reports and other available information, that the black sea bass commercial quota for the 2002 Quarter 2 period has been harvested.

The regulations at § 648.4(b) provide that Federal black sea bass moratorium permit holders agree, as a condition of the permit, not to land black sea bass in any state after NMFS has published a notification in the Federal Register stating that the commercial quota for the period has been harvested and that no commercial quota for black sea bass is available. The Regional Administrator has determined that the Quarter 2 period for black sea bass no longer has commercial quota available. Therefore, effective 0001 hrs local time, June 7, 2002, further landings of black sea bass in coastal states from Maine through North Carolina, north of 35°15.3′ N. lat., by vessels holding commercial Federal fisheries permits are prohibited through June 30, 2002. The 2002 Quarter 3 period for commercial black sea bass harvest will open on July 1, 2002. Effective June 7, 2002, federally permitted dealers are also advised that they may not purchase black sea bass from federally permitted black sea bass moratorium permit holders who land in coastal states from Maine through North Carolina, north of 35°15.3′ N. lat., for the remainder of the Quarter 2 period (through June 30, 2002).

The regulations at § 648.4(b) also provide that, if the commercial black sea bass quota for a period is harvested and the coast is closed to the possession of black sea bass north of 35°15.3′ N. lat., any vessel owners who hold valid commercial permits for both the black sea bass and the NMFS Southeast Region snapper-grouper fisheries may surrender their black sea bass moratorium permit by certified mail addressed to the Regional Administrator (see table 1 at § 600.502) and fish pursuant to their snapper-grouper permit, as long as fishing is conducted exclusively in waters, and landings are made, south of 35°15.3′ N. lat. A moratorium permit for the black sea bass fishery that is voluntarily relinquished or surrendered will be reissued upon the receipt of the vessel owner's written request after a minimum period of 6 months from the date of cancellation.

This action is required by 50 CFR part 648 and is exempt from review under E.O. 12866.

Regulations implementing the Bluefish Fishery Management Plan (FMP) prepared by the Mid-Atlantic Fishery Management Council (Council) appear at 50 CFR part 648, subparts A and J. Regulations requiring annual specifications are found at § 648.160. The FMP requires that the Council recommend, on an annual basis, Total Allowable Landings (TAL), which is composed of a commercial quota and recreational harvest limit. A proposed rule to implement the 2002 bluefish specifications was published in the Federal Register on March 13, 2002 (67 FR 11276) with a comment period ending March 28, 2002.

For the 2002 fishery, the stock rebuilding program in the FMP would restrict F to 0.41. However, the 2000 fishery produced an F of only 0.326. So, in accordance with the FMP, the TAL proposed for 2002 is set to achieve F=0.326. The resulting Total Allowable Catch (TAC) is 29.1 million lb (13.2 million kg). The TAL is calculated by deducting discards, estimated at 2.2 million lb (0.99 million kg) for 2002, from the TAC. Therefore, the TAL for 2002 is 26.866 million lb (12.19 million kg).

If the TAL for the 2002 fishery were allocated based on the percentages specified in the FMP, the commercial quota would be 4.567 million lb (2.07 million kg)(17 percent) with a recreational harvest limit of 22.299 million lb (10.12 million kg)(83 percent). However, recreational landings from the last several years were much lower than the recreational allocation for 2002, ranging between 8.30 and 14.3 million lb (3.76 and 6.49 million kg). Since the recreational fishery is not projected to land a 22.299 million-lb (10.12 million-kg) harvest limit in 2002, this allows the specification of a commercial quota of up to 10.5 million lb (4.76 million kg). NMFS is transferring 5.933 million lb (2.677 million kg) from the initial 2002 recreational allocation of 22.299 million lb (10.12 million kg), resulting in 16.365 million lb (7.42 million kg) allocated for the 2002 recreational harvest limit and a commercial quota of 10.5 million lb (4.76 million kg). The 2002 commercial quota is an increase from the 2001 quota (9.58 million lb (4.35 million kg)) implemented by NMFS and the states under the Atlantic States Marine Fisheries Commission's Interstate Fishery Management Plan for Atlantic Bluefish. The recreational possession limit of 15 fish per person is unchanged from 2001. The proposed specifications included a 2-percent TAL set aside. A Request for Proposals was published to solicit proposals for 2002, based on research priorities identified by the Council (66 FR 38636, July 25, 2001, and 66 FR 45668, August 29, 2001). No proposals were approved that would utilize the bluefish research TAL. Therefore, for the 2002 fishery, the research TAL is restored to the overall TAL. The 2002 state commercial quotas are listed in the table below.

Ten sets of public comments were received on the proposed rule: nine from recreational fishermen and one from a recreational fishing association.

Comment 1: Several commentors stated that recreational fishermen have participated in a catch-and-release program to reduce pressure on the bluefish stock. They are of the opinion that it is not fair to transfer poundage from the recreational harvest limit to the commercial quota because doing so means that catch-and-release efforts result in an increased commercial quota.

Response 1: The poundage transfer provision was included in Amendment 1 to the FMP (Amendment 1) to ensure that commercial landings would not be unnecessarily reduced if the recreational fishery is not expected to attain its harvest limit. The 83 percent/17 percent (recreational/commercial) allocation adopted by the Council in Amendment 1 is based on average catch composition for the 1981-1989 fisheries. However, the average catch composition for the 1990-1996 fisheries was 64 percent/36 percent with an average of 10.5 million lb (4.76 million kg) per year in commercial landings over that period. Therefore, a 10.5 million-lb (4.76 million-kg) maximum allowable commercial allocation does not represent a substantial increase from landings in the recent commercial fishery. The relatively high percentage of commercial landings to recreational landings in the 1990-96 fishery was a result of decreased recreational landings over that period. Information is not available to determine if the decrease in recreational landings from 1990-1996 is a result of catch-and-release programs, a change in targeted species, such as striped bass, or other factors.

Comment 2: Several commentors stated that, even if the recreational harvest limit has not been met, there is no reason to transfer quota from the recreational harvest limit to the commercial quota. The commenters believe this rewards commercial fishermen for overfishing.

Response 2: NMFS does not view “the transfer of quota” as a reward for overfishing. The Council and NMFS in this instance are concerned about meeting the FMP's objectives of preventing overfishing and maintaining landings of bluefish at an amount that complies with the rebuilding schedule for this fish stock. Both of those objectives are met with an F that would equal 0.326 in 2002. The TAL for 2002 is 26.866 million lb (12.19 million kg) and is consistent with an F of 0.326 which prevents overfishing and is actually less than the maximum level of F of 0.410, specified in the FMP as the rebuilding target for 2002. Therefore, a commercial harvest of 10.5 million lb (4.76 million kg) plus recreational landings of 16.36 million lb (7.43 million kg) would not result in overfishing. This allocation of the bluefish TAL (compared with smaller amount allocated to the commercial sector) also better ensures achievement of optimum yield and fair allocation among sectors which are goals of the Magnuson-Stevens Act.

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

NMFS prepared an FRFA for this action, which includes the IRFA, the comments and responses contained herein, and a summary of the analyses done in support of this final rule. A copy of the FRFA is available from NMFS (see ADDRESSES ). The preamble to the proposed rule included a detailed summary of the analyses contained in the IRFA and that discussion is not repeated in its entirety here. A summary of the FRFA follows:

The reasons for the agency's consideration of this action and its objectives are explained in the preambles to the proposed rule and this final rule and are not repeated here. This action does not contain reporting and recordkeeping requirements. It will not duplicate, overlap, or conflict with any other Federal rules. This action is taken under authority of the Magnuson-Stevens Fishery Conservation and Management Act and regulations at 50 CFR part 648.

Ten sets of comments were received on the proposed rule and are responded to in the final rule. None of the comments directly or indirectly addressed the results of the IRFA.

An active participant in the commercial sector is defined as any vessel that reported having landed 1 or more pounds of bluefish in the dealer data during calendar year 2000. These data cover activity by unique vessels. Of the active vessels reported in 2000, 829 vessels landed bluefish from Maine to North Carolina. The dealer data do not provide information about vessel activity in the states from South Carolina to Florida. The dealer data indicate that 126 federally permitted vessels landed bluefish in North Carolina in 2000. State trip Ticket Reports indicate that 1,088 vessels landed bluefish in North Carolina in 2000. Some of these vessels may be included in the 126 vessels identified in the Federal dealer data. As such, double counting is possible. In addition, the most recent data available indicate that 136 vessels landed bluefish on Florida's east coast in 1999. Bluefish landings in South Carolina and Georgia are negligible; therefore, it was assumed there was no vessel activity for those two states. In addition, it was estimated that, in recent years, approximately 2,063 party/charter vessels may have caught bluefish.

The FMP includes a provision to minimize economic impacts on commercial vessels in states that face closure by allowing states to transfer surplus commercial quota within the coastwide allocation. However, under certain circumstances where state surplus quotas are not available for transfer, there are no other means to mitigate significant economic impact. The commercial quota of 10.50 million lb (4.76 million kg) would result in allocations of 1.09 million lb (0.49 million kg) of bluefish to New York and 3.37 million lb (1.53 million kg) to North Carolina. Actual 2001 landings amounted to 1.19 million lb (0.54 million kg) for New York and 3.58 million lb (1.63 million kg) for North Carolina. All other states landed less bluefish in 2001 than their proposed 2002 allocations, and, therefore, will likely not be negatively impacted by the 2002 allocations. Under the assumption that 2002 allocations for New York and North Carolina represent harvest constraints to those fisheries, and bluefish abundance and harvesting capacity would allow those states to harvest an amount equal to their 2001 landings, there could be an 8-percent reduction in bluefish revenues in New York and a 6—percent reduction in bluefish revenues in North Carolina when compared to 2001 landings. Based on 2001 state landings, the 2002 state quotas are not expected to be reached in all states. Consequently, transfers could take place to offset overages in some states.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that for each rule or group of related rules for which an agency is required to prepare an FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a small entity compliance guide was prepared. The guide will be sent to all holders of permits issued for the Atlantic bluefish fishery. In addition, copies of this final rule and guide (i.e., permit holder letter) are available from the Regional Administrator (see ADDRESSES ) and are also available at the following web site: