This final rule was determined to be economically significant and was reviewed by the Office of Management and Budget (OMB) in conformance with Executive Order 12866.

The Food Stamp Program is listed in the Catalog of Federal Domestic Assistance under No. 10.551. For the reasons set forth in the final rule in 7 CFR part 3105, subpart V and related Notice (48 FR 29115, June 24, 1983), this Program is excluded from the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is intended to have preemptive effect with respect to any State or local laws, regulations, or policies that conflict with its provisions or that would otherwise impede its full implementation. This rule is not intended to have retroactive effect unless so specified in the “Effective Date” paragraph of this final rule. Prior to any judicial challenge to the provisions of this rule or the application of its provisions, all applicable administrative procedures must be exhausted.

This rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Eric M. Bost, Under Secretary for Food, Nutrition, and Consumer Services, has certified that this rule will not have a significant economic impact on a substantial number of small entities. The changes will affect food stamp applicants and recipients who are subject to FSP work requirements. The rulemaking also affects State and local welfare agencies that administer the FSP, to the extent that they must implement the provisions described in this action.

Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of UMRA, the Department generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective or least burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) that impose costs on State, local, or tribal governments or to the private sector of $100 million or more in any one year. Thus this rule is not subject to the requirements of section 202 and 205 of UMRA.

Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have “federalism implications,” agencies are directed to provide a statement for inclusion in the preamble to the regulation describing the agency's considerations in terms of the three categories called for under section (6)(b)(2)(B) of Executive Order 13132.

Prior to drafting the rule, we received input from State and local agencies at various times. Since the FSP is a State administered, Federally funded program, our regional offices have formal and informal discussions with State and local officials on an ongoing basis regarding program implementation and policy issues. This arrangement allows State and local agencies to provide feedback that forms the basis for many discretionary decisions in this and other FSP rules. In addition, we presented our ideas and received feedback on program policy at various State, regional, national, and professional conferences. Lastly, the comments from State and local officials on both the interim Balanced Budget Act rule and the proposed PRWORA rule were carefully considered in drafting this final rule.

State agencies generally want greater flexibility in their implementation of FSP work requirements and in the operation of the E&T Program. State agencies have indicated that providing them this flexibility would greatly enhance their ability to more efficiently administer the FSP. They also want current rules streamlined to allow them to conform to the rules of other means tested Federal programs.

FNS has considered the impact on State and local agencies. This rule deals mainly with changes required by law and made effective in 1996 and 1997. The effects on State agencies are moderate. While some of the changes result in modest increases in administrative requirements, the overall effect is to lessen the administrative burden by providing increased State agency flexibility in program operation and by allowing State agencies to streamline their program requirements. PRWORA and the Balanced Budget Act required most of the changes made in this rule and the changes were effective upon enactment of these statutes. FNS is not aware of any case where the discretionary provisions of the rule would preempt State law. In addition, we are willing to approve a waiver of any discretionary provision in this rule where: (1) A State agency can demonstrate that its own procedures would be more effective and efficient; (2) providing such a waiver would not result in a material impairment of any statutory or regulatory rights of participants or potential participants; and (3) it would otherwise be consistent with the waiver authority set out at 7 CFR 272.3(c).

There are no new effects of implementing the work-related provisions of PRWORA on food stamp recipients. The Regulatory impact analysis associated with the proposed PRWORA rule, published December 23, 1999 (64 FR 72201-72202), contains the expected impact of those provisions. State agencies have already implemented those changes and no further impact is expected following publication of this final rule. Other than the effects of eliminating the maximum slot reimbursement rates, there are no new effects of implementing the work-related provisions of the Balanced Budget Act. The Regulatory Impact Analysis associated with the interim final Balanced Budget Act rule, published September 3, 1999 (64 FR 48252-48254), contained the expected impact of the provisions, which State agencies have already implemented. The provision to eliminate the maximum slot reimbursement rate is expected to increase Food Stamp Program expenditures by a range of $25.3 million to $62.0 million, depending on State agency actions, over the period FY 2002-FY 2012.

We believe that the regulatory effect of removing the maximum slot rates will have very little effect on State agencies' overall E&T spending patterns, which currently fall into four categories: (1) The 12 alternative reimbursement State agencies currently not bound by reimbursement rates as long as they provide work slots to all ABAWDs willing to comply with the work requirements. Data from the FNS-583 report indicate that if they had been subject to the rates, they would have overspent the maximum slot rates by some 47 percent in FY 2000. (2) Another 12 State agencies that reported spending over their maximum slot rates in FY 2000 and were reimbursed for 50 percent of the amount they overspent from Federal funds. The FY 2000 FNS-583 reports indicate that these State agencies overspent the maximum slot rates by 17 percent that year. (3) Another seven State agencies spending at maximum slot rates. (4) The 22 State agencies that spent under the slot rates in FY 2000.

We assume that both the alternative reimbursement State agencies and the State agencies that have spent under their slot rates will not change their spending patterns. Because alternative reimbursement State agencies' spending was not limited by the maximum slot rates, their spending is not expected to change with the elimination of those rates. Likewise, removing the slot rates will have no impact those State agencies spending under their maximum slot rates.

Removing the slot rates could affect the remaining 19 State agencies that either spent over or exactly at their slot rates in a number of ways. The Federal government reimbursed State agencies that had already spent over their slot rates for 50 percent of the cost, which was some $1.4 million in 2000. If slot rates are removed, and these State agencies do not change their spending patterns, all of the cost would be covered by 100 percent Federal funds. The increase in costs to the Federal government could be an additional $1.5 million. If these State agencies were to increase their spending from 17 percent reported by States that overspent the maximum slot rates to the 47 percent that the alternative reimbursement State agencies spent in 2000, the additional Federal cost could be as much as $3.6 million.

If slot rates are removed, we assume that State agencies that currently spend at 100 percent of their slot rates might increase their spending in one of two ways: either by the 17 percent level of the other State agencies that overspent, or by the 47 percent over the maximum slot rates that the alternative reimbursement State agencies spent. If they were to do the former, the additional Federal cost could be slightly over one-half million dollars; if they were to do the latter, that cost increases to $1.5 million.

The total cost in FY 2003 ranges from $2.3 million if State agencies increase their spending to 117 percent of the maximum to $5.6 million if they increase their spending to 147 percent of the maximum. Allowing for inflation, the 10-year cost ranges from $25.3 to $62 million.

This action is needed to implement the work provisions of Pub. L. 104-193, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). These provisions: (1) Establish new disqualification penalties for noncompliance with FSP work requirements; (2) permit certain State agencies to lower the age at which a child exempts a parent or caretaker from food stamp work rules; (3) revise and streamline the E&T Program; (4) provide State agencies the option of using a household's food stamp benefits to subsidize a job for a household member participating in a work supplementation or support program; and (5) permit qualifying States to provide certain households with cash in lieu of food stamps.

State agencies will benefit from the provisions of this rule because they streamline FSP work requirements, simplify the disqualification requirements for failure to comply with work rules, and provide greater flexibility for State agencies to operate their employment and training programs. Removing the maximum slot rates will benefit States by enhancing administrative simplification and increasing program access to greater numbers of recipients.

This final rule contains information collections which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (Pub. L. 104-13) (44 U.S.C. 3507).

The reporting and recordkeeping burdens associated with the 15 percent exemption and the increased funding for State E&T programs authorized by the Balanced Budget Act and addressed in this rule necessitated a revision to a previously approved information collection activity, the Employment and Training Program Report (FNS-583), approved under OMB No. 0584-0339. Because the Balanced Budget Act mandated implementation of the food stamp provisions addressed in this rule effective October 1, 1997, without regard to whether regulations were promulgated to implement them, FNS submitted an emergency request to OMB on February 17, 1998, to revise the information collection for the FNS-583 form to reflect the requirements of the statute. FNS estimated the total annual burden hours associated with the revised FNS-583 to be 195,363 hours—182,643 hours for the work registration process, 2,762 hours for the 15 percent ABAWD exemption, and 9,958 hours for the E&T funding requirements. OMB approved the burden estimate for the revised form for six months, with an expiration date of August 31, 1998.

On April 27, 1998, FNS issued a notice in the Federal Register (63 FR 20567) describing in detail the revised collection of information and requesting comments. FNS received no comments from the general public or other public agencies about the information collection.

On September 23, 1998, FNS received an extension of OMB's approval of the revised burden estimate for the FNS-583 through September 30, 2001.

On June 8, 2001, FNS issued a notice in the Federal Register (66 FR 30877) inviting the general public and other public agencies to comment on the proposed extension of the information collection previously approved. FNS received one comment, which suggested that FNS provide State agencies the means to electronically submit their FNS-583 reports, and that FNS create an online help system with detailed instructions for completing the form. No action was necessary because State agencies already have the ability to submit their FNS-583 reports electronically via the Food Stamp Program Integrated Information System (FSPIIS). Additionally, FSPIIS contains a through help system, recently revised, which provides detailed instructions for completing each area of the FNS-583.

On September 12, 2001, FNS submitted to OMB a request to approve a revised total annual burden of 190,541 hours associated with the FNS-583: (1) 84,657 hours for household members participating in the work registration process; (2) 42,328 hours maintaining data on work registration; (3) 708 hours tracking the numbers of ABAWDs exempted under the 15 percent exemption allowance; (4) 60,800 hours recording ABAWD E&T activities; and (5) 2,048 hours compiling and recording data on the FNS-583.

On December 21, 2001, OMB approved an extension of OMB No. 0584-0339 through December 31, 2004.

Sections 272.2 and 273.7 contain information collection requirements. The Food and Nutrition Service submitted a copy of this section to OMB for its review.

The regulations at 7 CFR 272.2 require that State agencies plan and budget program operations and establish objectives for each year. Section 273.7 contains requirements for the State Employment and Training Plan, one of the required planning documents. In the interest of State flexibility, the PRWORA provisions addressed in this rule deleted State E&T planning requirements for describing the intensity of E&T services, conciliation procedures, and Statewide limits for dependent care reimbursements, while adding the requirement that State agencies provide a description of their mandatory disqualification procedures and periods for noncompliance with FSP work requirements.

The respondents are 53 State agencies and they are required to respond once a year. It is estimated that the total annual reporting burden is 3,768 hours.

The PRWORA provisions addressed in this rule deleted reporting burdens in the interest of State flexibility, while adding a new burden associated with each State agency's mandatory disqualification procedures. Thus, the overall reporting and recordkeeping burden for this proposed information collection is unchanged.

PRWORA provided State agencies the option of implementing work supplementation or support programs. In these programs the cash value of public assistance benefits, plus food stamps, is provided to an employer as a wage subsidy to be used for hiring and employing public assistance recipients. This rule proposes to add the work supplementation or support plan, as required at § 273.7(l)(1), to the planning requirements at 7 CFR 272.2.

The potential respondents are any of the 53 State agencies that may opt to initiate a work supplementation or support program. The one-time burden associated with a State agency creating a plan for a work supplementation or support program is estimated to be 100 hours. However, since no State agency has opted to initiate a work supplementation or support program since the enactment of PRWORA, it is anticipated that this provision will not change the burden associated with this information collection.

In the proposed rule dated December 23, 1999 (64FR72196) at page 72209, FNS solicited comments from organizations and individuals on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and the information to be collected; (c) ways to enhance the quality, usefulness, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments were directed to the Office of Information and Regulatory Affairs, OMB, Room 10235, New Executive Office Building, Washington, DC 20503; Attention Desk Officer for the Food and Nutrition Service.

The comment period closed February 22, 2000. OMB did not receive any comments concerning the proposed information collection requirement.

The information collection requirements contained in this rule are currently approved under OMB control number 0584-0339. FNS is in the process of revising these requirements with the intent of reducing administrative burden and accommodating the elimination of the maximum slot reimbursement rate. FNS plans to request OMB approval of these revisions after soliciting public comment via a Federal Register notice.

In August 1996, President Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, or PRWORA (Pub. L. 104-193). PRWORA—popularly known as “welfare reform”—contained several FSP work-related provisions that strengthen work requirements, promote personal responsibility, streamline E&T requirements, and greatly increase State flexibility.

Section 815 of PRWORA dealt with disqualification for noncompliance with FSP work requirements. It added to the list of ineligible individuals at section 6(d)(1) of the Food Stamp Act those who: (1) Refuse without good cause to provide sufficient information to allow a determination of their employment status or job availability; (2) voluntarily and without good cause quit their job (previously limited to heads of households); (3) voluntarily and without good cause reduce their work effort and, after the reduction, work less than 30 hours a week; and (4) fail to comply with the workfare rules in section 20 of the Food Stamp Act (7 U.S.C. 2029). Section 815 removed the requirement that the entire food stamp household be disqualified if the head of the household is disqualified. Instead, it provided States the option to disqualify the entire household if the head of the household is disqualified. Section 815 established new mandatory minimum disqualification periods for individuals who fail to comply with work requirements. It required the Secretary of Agriculture (the Secretary) to determine the meanings of good cause, voluntary quit, and reduction of work effort. It required States to determine: (1) The meaning of other terms related to FSP work requirements; (2) the procedures for determining compliance with work requirements; and (3) whether an individual is actually complying with work requirements. Lastly, Section 815 specified that States may not use meanings, procedures, or determinations that are less restrictive on food stamp recipients than comparable meanings, procedures, or determinations are on recipients of assistance under State programs funded under title IV-A of the Social Security Act (title IV-A) (42 U.S.C. 601 et seq).

Section 817 of PRWORA streamlined E&T administrative requirements for States by: (1) Requiring E&T components to be delivered through a statewide workforce development system, if available; (2) expanding the existing State option to apply E&T requirements to applicants (previously limited to job search); (3) eliminating the requirement that job search components be comparable with those operated under title IV-A; (4) removing requirements for work experience components that mandated they serve a useful public service and that they use a participant's prior training, experience, and skills; (5) removing specific Federal rules as to States' authority to exempt categories of individuals and individuals from E&T requirements, as well as removing the requirement that such exemptions be evaluated no less often than at each certification or recertification of the affected food stamp case; (6) deleting outdated language concerning applications by States to provide priority service to volunteer E&T participants; (7) removing the requirement that States permit, to the greatest practicable extent, work registrants exempted from E&T, as well as E&T participants who comply with or are in the process of complying with program requirements, to participate in E&T, while maintaining the States' option to permit voluntary participation; (8) removing the requirement for conciliation procedures to resolve disputes involving participation in E&T; (9) removing the requirement that States' limits for payments or reimbursements of dependent care expenses to E&T participants must be at least as high as the FSP dependent care deduction cap; (10) removing the requirements for E&T performance standards; (11) adding the provision that the amount of funds States use to provide E&T services to participants receiving benefits under a State program funded under title IV-A cannot exceed the amount of funds, if any, States used in fiscal year (FY) 1995 to provide E&T services to participants who were receiving benefits under title IV-A; and (12) removing the Secretary's authority to withhold funds from States for failure to comply without good cause with E&T requirements.

Three other PRWORA provisions added new language to the Food Stamp Act. Section 816 permitted certain States to lower the age at which a child exempts a parent/caretaker from food stamp work rules. Section 849 provided States the option of using a household's food stamp benefits to subsidize a job for a household member participating in a work supplementation program. Section 852 permitted qualifying States to provide certain households with cash in lieu of food stamps.

Additionally, PRWORA made significant changes to the workfare provisions at section 20 of the Food Stamp Act. It removed the States' ability to comply with section 20 by operating a workfare program under title IV-A. It removed the provision that permitted States to combine the value of a household's food stamp allotment with the value of assistance received by the household from a program under title IV-A in order to determine the number of monthly hours of participation required of those households in a title IV-A community work experience program. Lastly, it eliminated disqualification provisions specific to the optional workfare program and incorporated noncompliance with workfare into the disqualification provisions governing noncompliance with FSP work requirements.

PRWORA also contained major changes in the requirements for Federal financial participation in the E&T program. Subsequently, the Balanced Budget Act further amended those requirements.

On August 5, 1997, the President signed into law the Balanced Budget Act. The Balanced Budget Act included two provisions addressed in this final rule. The first provision provided State agencies the authority to exempt up to 15 percent of a State agency's caseload that is subject to the food stamp time limit at section 6(o)(2) of the Food Stamp Act of 1977. The second provision provided additional funding for administration of the E&T Program.

The Department received a combined total of 234 comments from eleven commenters on the interim Balanced Budget Act rule and 24 commenters on the proposed PRWORA rule. The Department is grateful to each commenter for taking the time and effort to respond.

We carefully reviewed and considered each comment while preparing this final rule for publication. We have addressed significant comments received in response to the regulatory changes proposed in the interim and proposed rulemakings. We will not address comments that were not germane to the amendments to the Food Stamp Act contained in PRWORA and the Balanced Budget Act or to resulting changes to the Federal regulations contained in the proposed rule. A number of comments supported our proposed changes. However, we will not discuss those in great detail.

Provisions of the interim and proposed rulemakings that received no comment are not addressed in this rule. Those provisions are adopted as final without change. For an explanation of those provisions, please refer to the interim and proposed rulemakings.

Current regulations at 7 CFR 273.7 require that all physically and mentally fit food stamp recipients over the age of 15 and under the age of 60 who are not otherwise exempted be registered for work by the State agency at the time of application and once every 12 months thereafter. Work registrants are required to participate in an E&T program if assigned by the State agency, provide information regarding employment status and availability for work, report to an employer if referred, and accept a bona fide offer of suitable employment at a wage no less than the applicable State or Federal minimum wage, whichever is highest.

Failure to meet these requirements without good cause results in a 2-month disqualification. If the noncompliant individual is the head of the household, the entire household is disqualified for two months. Otherwise, only the individual is disqualified.

Additionally, if the head of the household voluntarily quits a job of 20 or more hours a week, without good cause, 60 days or less prior to applying for food stamps, or at any time thereafter, the entire household is disqualified for 90 days.

Eligibility may be reestablished by the household during a disqualification period if the head of the household becomes exempt from the work registration requirement, is no longer a member of the household, or complies with the requirement in question. Disqualified individuals may reestablish eligibility by becoming exempt from the work registration requirement or by complying with the requirement in question.

Certain food stamp recipients are exempt from work registration requirements. Among these exempt individuals are those currently subject to and complying with a work registration requirement under title IV-A or the Federal-State unemployment compensation system. If these individuals fail to comply with any work requirement to which they are subject that is comparable to a FSP work requirement, they are subject to disqualification.

In accordance with section 815 of PRWORA, which contains amendments to section 6(d)(1) of the Food Stamp Act, the rulemaking proposed several changes to current regulations. In this rule we are addressing only those proposed changes that received comment. Provisions of the proposed rulemaking that received no comment are adopted as final without change.

The current regulation at 7 CFR 273.7(a) contains the work registration requirement for nonexempt food stamp household members.

Current regulations at 7 CFR 273.7(e) list the responsibilities and requirements for work registrants.

Current regulations at 7 CFR 273.22 contain FSP workfare participation requirements for households. 7 CFR 273.22(f)(6) provides for penalties for failure to comply with workfare requirements.

Section 815 of PRWORA aligned workfare penalties with other work penalties. It amended section 20 of the Food Stamp Act by removing workfare disqualification provisions, and further amended section 6(d)(1) by including refusal without good cause to comply with section 20 of the Food Stamp Act as a reason for disqualification.

The Department proposed to amend 7 CFR 273.22(f) by removing paragraph (6), Failure to Comply, and to amend 7 CFR 273.7(e) by adding as a work registrant requirement participation in a workfare program if assigned.

The Department further proposed to incorporate the work registrant requirements listed in 7 CFR 273.7(e) into 7 CFR 273.7(a), redesignate it 7 CFR 273.7(a)(1) and rename it work requirements.

The Department also proposed to incorporate the participation requirements for strikers listed in 7 CFR 273.7(j); the requirements for registration of certain PA, GA, and refugee households listed in 7 CFR 273.7(k); and the provisions for applicants applying for SSI and food stamps under § 273.2(k)(1)(i), listed in 7 CFR 273.7(l), into 7 CFR 273.7(a), and redesignate them 7 CFR 273.7(a)(4), (a)(5), and (a)(6) respectively.

Lastly, the Department proposed to make the following changes to 7 CFR 273.7: (1) Redesignate the current provisions at 7 CFR 273.7(f), (g), (h), (i), (m), and (n) as 7 CFR 273.7(e), (f), (g), (h), (i), and (j) respectively; (2) delete the current provisions at 7 CFR 273.7(o) and (p) and add new provisions, designated 7 CFR 273.7(k) and (l); (3) redesignate the provisions for the optional workfare program at 273.22 as 7 CFR 273.7(m); and (4) remove 7 CFR 273.22.

Three commenters questioned the language in sections 273.7(a)(1)(ii) and 273.7(a)(1)(iii) that requires each household member not exempt from Program work requirements to participate in an E&T program or in an optional workfare program if assigned by the State agency, to the extent required by the State agency. The commenters believe the language further empowers State agencies to create definitions related to work requirements.

Section 815 of PRWORA added the phrase “to the extent required by the State agency” to the E&T participation requirement contained in section 6(d)(1)(A)(ii) of the Food Stamp Act. Its purpose is to emphasize State agency flexibility in setting participation requirements for E&T program components, within the limits specified in the Food Stamp Act. The Department has no discretion to remove this phrase from the E&T participation requirement. However, we agree that adding such language to the workfare program participation requirement at 273.7(a)(1)(iii) could result in a State agency inadvertently assigning food stamp household members to participate in workfare beyond the maximum legal limit of the number of hours resulting from dividing the value of the household's monthly food stamp allotment by the higher of the Federal or applicable State minimum wage. In this final rulemaking we are, therefore, removing the phrase “to the extent required by the State agency” from section 273.7(a)(1)(iii).

No further comments germane to the proposed changes were received. With the change noted above, the Department is adopting in this final rulemaking the revisions as proposed.

Current regulations at 7 CFR 273.7(m) assign to State agencies the responsibility for determining the existence of good cause in instances when an individual fails or refuses to comply with FSP work requirements. 7 CFR 273.7(n) assigns to State agencies the responsibility for determining whether or not a voluntary quit occurred.

Section 815 of PRWORA amended the Food Stamp Act by adding a new provision, section 6(d)(1)(D), Administration. Section 6(d)(1)(D) assigned to the Secretary responsibility for determining the meanings of “good cause,” “voluntary quit,” and “reduction of work effort,” and assigned to State agencies the responsibility for determining: (1) The meaning of all other terms relating to work requirements; (2) the procedures for determining whether an individual is in compliance with work requirements; and (3) whether an individual is actually in compliance with work requirements.

However, section 6(d)(1)(D) prohibits State agencies from assigning a meaning, procedure, or determination that is less restrictive on food stamp recipients than a comparable meaning, procedure, or determination under a State program funded under title IV-A.

The Department proposed to amend 7 CFR 273.7(a) by assigning to FNS the responsibility for determining the meaning of “good cause,” “voluntary quit,” and “reduction of work effort” in regard to FSP work requirements. The Department further proposed to amend 7 CFR 273.7(a) by assigning to the State agency responsibility for determining the meaning of all terms related to FSP work requirements; for establishing the procedures for determining whether an individual is in compliance with work requirements; and for determining whether an individual is in actual compliance with work requirements. The State agency may not use a meaning, procedure, or determination that is less restrictive on food stamp recipients than a comparable meaning, procedure, or determination is on recipients of a State program funded under title IV-A. The Department proposed to incorporate these provisions in new paragraphs, 7 CFR 273.7(a)(2) and 7 CFR 273.7(a)(3) respectively.

Three commenters recommended that, for clarity, we cross-reference the subparagraphs of 273.7 that contain the good cause, voluntary quit, and reduction of work effort provisions. The Department has added the cross-references to the final rule. Otherwise, the Department is adopting in this final rulemaking the revisions as proposed.

Current regulations at 7 CFR 273.7(g)(1) require that an individual, other than the head of household, who fails or refuses without good cause to comply with FSP work requirements be disqualified from participation. However, if the head of household fails or refuses without good cause to comply, the entire household must be disqualified.

Section 815 of PRWORA amended section 6(d)(1) of the Food Stamp Act by removing the requirement that the entire household be disqualified if the head of the household fails or refuses without good cause to comply. Instead, section 815 provided State agencies the option to disqualify the entire household if the head of household fails or refuses without good cause to comply with work requirements. It limited the length of such an optional household disqualification to the duration of the disqualification period applied to the individual or 180 days, whichever is shorter.

The Department proposed to amend redesignated 7 CFR 273.7(f) by eliminating the requirement in paragraph (1) that the entire household be disqualified if the head of the household fails to comply. The Department further proposed to add a new paragraph (4), Household Ineligibility, to provide that a State agency has the option to disqualify the entire household if the head of the household becomes ineligible to participate in the FSP for failure to comply with work requirements. If the State agency chooses this option, it may disqualify the household for the duration of ineligibility of the head of the household, or for 180 days, whichever is less.

One commenter recommended that the State keep the current requirement that the entire household be disqualified if the head of household is disqualified. The State agency option to disqualify the entire household if the head of the household is disqualified is a statutorily mandated provision. The Department has no discretion to make such an action mandatory.

Another commenter suggested that the final rule clarify that, when the entire household is disqualified when the head of household is disqualified, the household's disqualification must end if the head of the household becomes exempt from food stamp work requirements and his or her disqualification ends. The Department agrees that this clarification would be helpful. The final rule is amended to include language to that effect at 273.7(f)(5)(iii)(C).

No further comments on this proposed amendment were received. With the changes noted above, the Department is adopting in this final rulemaking the revisions as proposed.

Current regulations at 7 CFR 273.7(g)(1) establish a 2 month disqualification period to be imposed for failure or refusal without good cause to comply with FSP work requirements.

Section 815 of PRWORA amended sections 6(d)(1)(a) and (b) of the Food Stamp Act to establish mandatory disqualification periods—based on the frequency of the violation—for individuals who fail to comply with FSP work requirements. For the first violation, the individual is disqualified until the later of the date the individual complies with FSP work requirements, 1 month, or, at State agency option, up to 3 months. For the second violation, the individual is disqualified until the later of the date the individual complies with FSP work requirements, 2 months, or a period—determined by the State agency—not to exceed 6 months. For the third or subsequent violation, the individual is disqualified until the later of the date the individual complies with FSP work requirements; 6 months; a date determined by the State agency; or, at the option of the State agency, permanently.

The Department proposed to amend redesignated 7 CFR 273.7(f) by deleting reference to a 2 month disqualification period and by inserting a new paragraph, 7 CFR 273.7(f)(2), Disqualification Periods . The new paragraph (2) provides for minimum mandatory disqualification periods for individuals who fail or refuse without good cause to comply with work requirements. State agencies are free to elect which disqualification period they institute for each level of noncompliance. However, each State agency must apply its disqualification policy uniformly, statewide.

We further proposed to add a new paragraph (d)(xiii) under 7 CFR 272.2, Plan of operation. Paragraph (d)(xiii) contains the requirement for each State agency's disqualification policies.

One commenter suggested that, because food stamp regulations require State agencies to retain program records for only 3 years, the final rule should permit State agencies to disregard events that took place more than 3 years previously when determining the length of the disqualification to be imposed under section 273.7(f)(2). We disagree. The Food Act makes it very clear that 3 years is a minimum period. Section 11(a) of the Food Stamp Act specifies that State agencies must keep “such records as may be necessary to ascertain whether the program is being conducted in compliance with the provisions of this Act and the regulations issued pursuant to this Act. Such records shall be available for inspection and audit at any reasonable time and shall be preserved for such a period of time, not less than three years, as may be specified in the regulations issued pursuant to this Act.” PRWORA requires State agencies to establish successively longer disqualification periods for each additional violation of FSP work requirements (up to the third violation). The Department has no authority to permit State agencies to disregard earlier violations when determining the disqualification period for a subsequent violation.

With this change, the proposed redesignated 7 CFR 273.7(f) is adopted in the final rule.

The current regulations at 7 CFR 273.7(m) assign to State agencies responsibility for determining good cause when an individual fails to comply with FSP work registration, E&T, and voluntary quit requirements. The regulations include as good cause circumstances beyond the individual's control. One example cited is the lack of adequate childcare for children ages 6 to 12.

The current regulations at 7 CFR 273.7(n)(3) contain the good cause requirements specifically concerning voluntary quit, as well as the procedures for verifying questionable information concerning voluntary quit.

Section 815 of PRWORA amended section 6(d)(1) of the Food Stamp Act by deleting language that included the lack of adequate child care for children between 6 and 12 as good cause for refusing to accept an offer of employment, and by assigning to the Secretary specific authority to define the meaning of good cause. We believe that Congress did not intend to eliminate lack of adequate child care as a valid good cause reason, thereby forcing parents to choose between the well-being of their children and the demands of FSP work requirements. Instead, by deleting this reference to a very specific, single instance of noncompliance, we believe Congress intended to eliminate any confusion about applying good cause criteria equitably across-the-board to all FSP work requirements. Therefore, lack of adequate childcare remains as a good cause reason for noncompliance.

Although current good cause regulations remain basically unchanged, the Department proposed to take the opportunity to amend redesignated 7 CFR 273.7(i) and redesignated 7 CFR 273.7(j) by combining the provisions under the specific heading “Good Cause” at redesignated 7 CFR 273.7(i). We also proposed to add language to redesignated 7 CFR 273.7(i) reminding State agencies that it is not possible for the Department to enumerate each individual circumstance that should or should not be considered good cause. State agencies must consider all facts and circumstances in each individual case concerning the determination of good cause.

Three commenters recommended that Section 273.7(i)(3)(vii) be amended. This provision states that acceptance of a bona fide offer of employment of more than 20 hours a week (or employment paying at least the Federal minimum wage equivalent of 20 hours a week) that, because of circumstances beyond the individual's control, subsequently either does not materialize or results in employment of less than 20 hours a week (or earnings of less than the Federal minimum wage equivalent of 20 hours a week) constitutes good cause for leaving employment. The commenters suggested that changing the number of hours to 30 a week would conform the good cause provision to the level of work effort necessary to exempt an individual from FSP work requirements and to the voluntary quit and reduction of work effort thresholds. The Department agrees. The final rule is amended accordingly.

Current regulations at 7 CFR 273.7(n) contain the procedures for disqualifying a household whose head voluntarily quits a job without good cause 60 days or less before applying for food stamps, or at any time thereafter. For purposes of establishing voluntary quit, a “job” is considered employment of 20 or more hours per week, or employment that provides weekly earnings at least equivalent to the Federal minimum wage multiplied by 20 hours. A Federal, State, or local government employee dismissed from employment because of participation in a strike is considered to have voluntarily quit without good cause.

In the case of applicant households, if the State agency determines that a voluntary quit by the head of household was without good cause, the household's application for benefits will be denied and it will not be eligible for benefits for 90 days, starting with the date of the quit.

In the case of participating households, if the State agency determines that a head of household voluntarily quit a job while participating in the FSP, or discovers that a quit occurred within 60 days prior to application or between application and certification, the household will be disqualified from participation for 90 days, beginning with the first of the month after all normal adverse action procedures are completed.

Following the end of a voluntary quit disqualification, a household may reapply and, if otherwise eligible, begin participation in the FSP. Eligibility may be reestablished during a disqualification period and the household may, if otherwise eligible, resume participation if the head of household secures new employment comparable to the job that was quit, or leaves the household. Eligibility may also be reestablished if the head of household becomes exempt from work registration. If the disqualified household splits, the disqualification follows the head of household. If that individual becomes head of a new household, that household must serve out the balance of the disqualification period.

If a disqualified household applies for participation in the third month of its disqualification, it does not have to reapply in the next month. The State agency must use the same application to deny benefits in the remaining month of disqualification and to certify the household for any subsequent month(s) if it is otherwise eligible.

Section 815 of PRWORA amended section 6(d)(1) of the Food Stamp Act by removing the requirement that only the head of household is subject to voluntary quit. As with all the other sanctionable actions listed in section 6(d)(1)(A), each individual household member was made subject to disqualification for a voluntary quit. The State agency was afforded the option of disqualifying the entire household if the quitter is the head of household.

Section 6(d)(1) was further amended by eliminating the 90-day disqualification period for voluntary quit. Penalties for voluntary quit are based on the minimum mandatory disqualification provisions contained in PRWORA.

Lastly, section 815 of PRWORA amended section 6(d)(1) by adding the provision that an individual who voluntarily and without good cause reduces work effort and, after the reduction, works less than 30 hours per week, must be disqualified.

The Department proposed to retain the 60-day pre-application period for establishing voluntary quit and to apply the same standard when determining reduction of work effort for applicants. The voluntary quit and reduction in work effort provisions aim to deter individuals with reasonable income from intentionally ending or reducing that income to qualify for food stamps or to increase coupon allotments. We felt that 60 days is a reasonable time span to use to gauge intent.

One commenter suggested that the 60-day period for establishing voluntary quit or reduction in work effort is too long a time for caseworkers to obtain and evaluate as reliable verifications of potential good cause reasons for job quit or reduction in work effort.

The Department agrees. Because of fluctuating work hours, personnel turnover, and other variables, the 60-day period may pose verification problems for State agencies. Reducing the period to 30 days will make it much easier for a caseworker to obtain reliable good cause information, without degrading the seriousness or the impact of good cause and reduction in work effort determinations. However, since some State agencies are committed to the 60-day “look-back” period for establishing voluntary quit and reduction of work effort, the Department believes it should afford each State agency the option to determine which period best suits its particular needs. The final rule is therefore amended to provide State agencies the option of establishing a period between 30 and 60 days for determining voluntary quit and reduction in work effort.

We also proposed to increase the 20-hour/equivalent Federal minimum wage figure used in defining voluntary quit to 30 hours. Increasing the number of hours to 30 provides a logical connection between voluntary quit and the reduction of work effort threshold mandated by Congress. The 30-hour figure also conforms to the number of hours of work required to exempt an employed recipient from FSP work requirements. The Department welcomed comments on this issue. None were received.

Congress clearly stated that any reduction in hours of employment to less than 30 hours a week without good cause must be penalized. We do not believe Congress intended that a minimum wage equivalent of 30 hours be considered when establishing voluntary reduction in work hours. The Department proposed to make this clear in the rule. We also proposed to incorporate good cause for reduction of work effort into the good cause provision at redesignated 7 CFR 273.7(i). There were no germane comments concerning the reduction in work effort provision.

One commenter questioned the current regulatory requirement that a claim be established in certain instances of voluntary quit or reduction in work effort. If a voluntary quit or reduction in work effort occurs in the last month of a certification period, or the State agency establishes voluntary quit or reduction in work effort in the last 30 days of the certification period, and the individual does not apply for food stamp benefits by the end of the certification period, the State agency must establish a claim for the benefits received by the individual for the number of months equal to the mandatory disqualification period. The commenter believes this requirement is confusing, places an undue claims burden on State agencies, and is inconsistent with penalties for noncompliance with all other FSP work requirements. We agree. We are taking this opportunity to revise the voluntary quit language by eliminating the requirement to establish claims in such situations. This final rule will clarify that the appropriate mandatory disqualification period is to be imposed after timely and adequate notice of adverse action is taken, regardless of whether the individual reapplies for food stamps.

No further comments on the voluntary quit provision were received. With the revisions discussed above, this final rulemaking adopts these provisions.

Current regulations at 7 CFR 273.7(b)(iv), pursuant to section 6(d)(2)(B) of the Food Stamp Act, exempt from FSP work requirements a parent or other household member who is responsible for the care of a dependent child under six. Prior to the enactment of PRWORA, eight State agencies had submitted requests to waive this regulation to require caretakers of children less than six years old to participate in their proposed welfare reform demonstration projects. The purpose of these waivers was to conform FSP and title IV-A work requirements in order to provide the State agencies maximum flexibility in the operation of their demonstrations. The Department believed that the States' requests violated section 17(b) of the Food Stamp Act, which prohibited the approval of a waiver that would lower or further restrict the benefit levels of food stamp recipients. The Department concluded that the approval of these waivers would subject food stamp recipients to work requirements and possible sanctions that they would not be subject to under regular program rules. Therefore, the waivers were denied.

Section 816 of PRWORA amended section 6(d)(2) of the Food Stamp Act by adding an option to allow State agencies that previously requested a waiver to lower the age of the qualifying dependent child to less than six. Under this option, State agencies that had requested such a waiver, but were denied before August 1, 1996, could lower the age of a qualifying dependent child to between one and six years. This option could be exercised for a period of not more than three years.

The Department proposed to amend 7 CFR 273.7(b)(iv) to include a provision offering this option to the State agencies of Alabama, Kansas, Maryland, Michigan, North Dakota, Virginia, Wisconsin, and Wyoming. According to FNS records, these were the State agencies that were denied the exemption waivers before August 1, 1996. The Department proposed to allow these State agencies, upon submission of written notification to the Department, to lower the age of a dependent child that qualifies a parent or other household member for an exemption to between one and six, for a maximum of 3 years. The State agencies of Alabama, North Dakota, and Virginia never implemented the option. The remaining eligible State agencies implemented the option on the following dates: Kansas—March 3, 1997; Maryland—November 11, 1996; Michigan—November 1, 1996; Wisconsin—January 1, 1997; and Wyoming—January 1, 1997.

Commenters pointed out that, like all other PRWORA provisions for which a specific effective date was not specified, the caretaker option should have been made effective upon enactment of the law on August 22, 1996. Therefore, they believe the 3 years have passed and the provision is obsolete. They recommend that it be omitted from the final rule.

The Department agrees that the effective date for the caretaker option should have been established as August 22, 1996. Therefore, the 3-year implementation period has expired and the provision is obsolete. In this final rulemaking, the Department is deleting the proposed caretaker exemption at 273.7(b)(iv)(B), and is redesignating 273.7(b)(iv)(A) as 273.7(b)(iv).

Section 817 of PRWORA amended section 6(d)(4) of the Food Stamp Act. Section 6(d)(4) contains provisions for the E&T Program. In the December 23, 1999, PRWORA rulemaking the Department proposed several changes to current E&T regulations. In this rule we are addressing only those proposed changes that received comment. Provisions of the proposed rulemaking that received no comment are adopted as final without change.

Current regulations at 7 CFR 273.7(f)(1)(i) authorize a State agency to offer a job search component comparable to that required of a program under title IV-A. Aside from the initial applicant job search period, discussed above, the work registrant can be required to conduct a job search of up to eight weeks (or an equivalent period) in any consecutive 12-month period. The first such 12-month period begins at any time following the close of the initial period.

Section 817 of PRWORA amended section 6(d)(4)(B) of the Food Stamp Act by deleting the title IV-A comparability requirement for job search.

The Department proposed to amend redesignated 7 CFR 273.7(e)(1)(i) by deleting the requirement that a State agency's E&T job search component must be comparable to its title IV-A job search component.

In keeping with the State agency flexibility offered under PRWORA, the Department further proposed to amend redesignated 7 CFR 273.7(e)(1)(i) by removing the annual 8-week job search limitation. Each State agency will be free to conform its E&T job search to that of its title IV-A work program, or to establish job search requirements that, in the State agency's estimation, will provide participants a reasonable opportunity to find suitable employment. However, the Department agrees with one commenter who believes that if a reasonable period of job search does not result in employment, placing the individual in a training or education component to improve job skills will likely be more productive. The final rule includes a statement to that effect.

Lastly, the Department proposed to amend redesignated 7 CFR 273.7(e)(1)(i) by adding that, in accordance with section 6(o)(1)(A) of the Food Stamp Act and 7 CFR 273.24 of the regulations, a job search program operated as a component of a State's E&T program does not meet the definition of work program relating to the participation requirements necessary to maintain eligibility for able-bodied adults without dependents (ABAWDs) subject to the 3-month food stamp time limit. The Department proposed to add this same notice at redesignated 7 CFR 273.7(e)(1)(ii), which describes job search training programs. These additions also specify that the prohibitions against E&T job search and job search training do not apply to such programs operated under title I of the Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq. ) (the WIA), or under section 236 of the Trade Act of 1974 (19 U.S.C. 2296) (the Trade Act). Further, we proposed to amend redesignated 7 CFR 273.7(e)(1) to add that job search or job search training activities, when offered as part of other E&T program components, are acceptable as long as those activities comprise less than half the required time spent in the other components.

Section 273.7(e)(1)(ii) explains that a reasonable job search training and support activity includes job skills assessments, job finding clubs, training in techniques for employability, job placement services, or other direct training or support activities, including educational programs determined by the State agency to expand the job search abilities or employability of those subject to the program. A commenter urged the Department to provide a basis for evaluating whether or not a local district's job search requirements are, in fact, reasonable under the circumstances, and whether or not they are designed to effectively assist individuals in obtaining employment. They believe the final rule should clarify that when a local district's program requirements are unreasonable, individuals may not be disqualified because they do not participate. The Department disagrees. The State agency is in the best position to evaluate reasonableness for its clientele and local labor markets. Each State agency must be permitted to establish what it believes is a reasonable and effective program for its circumstances. However, in cases where the Department determines that a State agency's requirements are unreasonable, it will, in accordance with the authority granted it under section 6(d) of the Food Stamp Act, require the State agency to amend its practices.

No other comments were received concerning the proposed amendments. The Department is adopting in this final rulemaking the revisions as proposed.

Current regulations at 7 CFR 273.7(f)(1)(iii) authorize assignment to workfare components operated in accordance with section 20 of the Food Stamp Act and 7 CFR 273.22.

As part of a workfare program, the Food Stamp Act permits operating agencies to establish a job search period of up to 30 days following certification prior to making a workfare assignment. During this period, the participant is expected to look for a job. The job search period may only be conducted at certification, not at recertification. This job search activity is part of the workfare assignment and not a job search “program.” Therefore, participants are to be considered as participating in and complying with the requirements of workfare, thereby satisfying the ABAWD work requirement.

The Department proposed to amend redesignated 7 CFR 273.7(e)(1)(iii) to include a statement that makes it clear that the job search period authorized by State agencies for workfare components is not a job search “program” and that participants are considered to be participating in and complying with the requirements of workfare.

A commenter recommended that the reference to certification in this section, as the permissible starting point for the 30-day job search phase of workfare, be removed in order to authorize assignment of applicants to workfare job search. Section 20(e) of the Food Stamp Act allows the operating agency to permit a job search period, prior to making workfare assignments, following a determination of eligibility. The language of the Food Stamp Act is very specific as to the time frame in which workfare job search is permitted. The Department has no discretion to make the recommended change. However, as discussed above, under section 6(d)(4)(B) of the Food Stamp Act, the State agency may impose a job search requirement on a program applicant at the time of application, for a period adequate to meet program goals.

No other comments were received concerning the proposed amendments. The Department is adopting in this final rulemaking the revisions as proposed.

Section 817 of PRWORA amended section 6(d)(4) of the Food Stamp Act by adding a provision that limits the amount of money State agencies may spend to provide E&T program services to food stamp recipients who also receive benefits under a State program funded under title IV-A. The limit is the amount of Federal E&T funds the State agency spent on E&T services for the same category of recipients in FY 1995. The Department proposed, therefore, to add, at 7 CFR 273.7(d)(1)(i)(F), the provision that, notwithstanding any other provision of the paragraph, the amount of E&T funds, including participant and dependent care reimbursements, a State agency uses to serve participants who are receiving benefits under a State program funded under title IV-A may not exceed the amount of funds the State agency used in FY 1995 to serve participants who were receiving benefits under a State program funded under title IV-A.

Based on information provided by each State agency, the Department established claimed Federal E&T expenditures on this category of recipients in FY 1995 for the State agencies of Colorado ($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin ($10,999,773). These State agencies may spend a like amount each fiscal year to serve food stamp recipients who also receive title IV-A assistance, if they choose. Other State agencies are prohibited from expending any Federal E&T funds on title IV-A recipients.

Two commenters recommended that the final rule clearly identify the group to which the funding prohibition applies (title IV-A cash recipients or title IV-A supportive services recipients). This final rulemaking makes clear that the funding prohibition applies to individuals receiving cash assistance under title IV-A of the Social Security Act. The Department is amending the language at 7 CFR 273.7(d)(1)(i)(F) in this final rule to change the word “benefit” to “cash assistance.”

Prior to enactment of the Balanced Budget Act, FSP regulations at section 273.7(d) required FNS to allocate an annual 100 percent Federally funded E&T grant to State agencies based on the number of work registrants in each State compared to the number of work registrants nationwide. The grant requires no State match. Each State agency must receive at least $50,000 in 100 percent Federal funds. State agencies are required to use their E&T grants to fund the administrative costs of planning, implementing and operating E&T programs. FNS pays 50 percent of all other administrative costs above those covered by the 100 percent Federal grant that State agencies incur in operating their E&T programs.

Section 1002 of the Balanced Budget Act authorized an additional $599 million over five years in 100 percent Federal funding for the operation of the E&T programs. The Agricultural Research, Extension, and Education Reform Act of 1998 (Pub. L. 105-185) reduced authorized levels by $100 million in FY 1998 and $45 million in FY 1999. Additionally, the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 2001, signed into law on October 28, 2000, reduced the authorized level for FY 2001 by $25 million. The purpose of the additional E&T funding is to enable State agencies to create additional education, training, and workfare opportunities that permit ABAWDs subject to the 3-month time limit to remain eligible. By providing State agencies with the resources to create more opportunities, the additional Balanced Budget Act funding will help insure that it is only those individuals who deliberately choose not to satisfy the program's work requirements who lose their eligibility and not those who are willing to work but cannot find opportunities to do so.

In the September 3, 1999, interim rulemaking, the Department amended Food Stamp Program regulations at § 273.7 to implement the requirements of the Balanced Budget Act. In this final rule we are addressing only those amendments that received comment. Provisions of the interim rulemaking that received no comment are adopted as final without change.

Prior to the enactment of the Balanced Budget Act, the regulation at 7 CFR 273.7(d)(1)(i)(A) required that nonperformance based 100 percent Federal E&T funding be allocated among State agencies based on the number of work registrants in each State relative to the total number of work registrants nationwide. To target Federal E&T funding toward serving ABAWDs subject to the 3-month time limit, the Balanced Budget Act amended section 16(h)(1) of the Food Stamp Act to require that, in FY 1999 through FY 2002, E&T funding be allocated to State agencies based on (1) changes in each State's food stamp caseload; and (2) each State's portion of food stamp recipients who are not eligible for an exception to the time limit under section 6(o)(3) of the Food Stamp Act and who do not reside in an area of the State granted a waiver of the ABAWD work requirement under section 6(o)(4) of the Food Stamp Act, or who do reside in an area of the State granted a waiver of the ABAWD work requirement under section 6(o)(4) of the Food Stamp Act if the State agency provides E&T services in the area to food stamp recipients who are subject to the work requirement. The interim rulemaking amended the regulations at 7 CFR 273.7(d)(1)(i)(C) to describe the new procedures for allocating 100 percent Federal E&T funding.

Prior to the Balanced Budget Act, the regulation at 7 CFR 273.7(d)(1)(i)(A) required that FNS, using work registrant data from the most recent fiscal year, allocate nonperformance based 100 percent Federal E&T funding on the basis of work registrants in each State as a percentage of work registrants nationwide. Section 1002 of the Balanced Budget Act amended section 16(h) of the Food Stamp Act to require that, for purposes of determining each State agency's allocation of 100 percent Federal E&T funds in a fiscal year, FNS estimate the portion of food stamp recipients residing in each State who are not eligible for an exception under section 6(o)(3) of the Food Stamp Act using the 1996 Quality Control survey data. The interim rulemaking amended the regulation at 7 CFR 273.7(d)(1)(i)(D) to incorporate this requirement.

Prior to enactment of the Balanced Budget Act, the regulation at 7 CFR 273.7(d)(1)(i)(B) required that each State agency receive a minimum of $50,000 in 100 percent Federal E&T funding each fiscal year. The Balanced Budget Act left this requirement unchanged. However, the interim rulemaking amended the regulation at 7 CFR 273.7(d)(1)(i)(E) to revise the manner in which the minimum allocation is to be calculated.

Prior to enactment of the Balanced Budget Act, the regulation at 7 CFR 273.7(d)(1)(i)(D) authorized FNS, with the concurrence of the State agencies involved, to adjust the level of E&T grants during a fiscal year to move funds unlikely to be used by State agencies and reallocate them to State agencies that could use the funds more productively. The Balanced Budget Act contains the same authority, but it amended section 16(h)(1)(C) of the Food Stamp Act to authorize FNS to reallocate unexpended funds in the fiscal year in which they were allocated or in the subsequent fiscal year. The interim rule amended the regulation at 7 CFR 273.7(d)(1)(i)(F) to incorporate this authorization.

One commenter suggested that waivers exempting ABAWDs from the work requirement should be approved or denied before the allocation of funding for the E&T program. The Department does not agree with this suggestion. We act promptly on all ABAWD waivers. They are generally approved within 60 days of being submitted, and they are extended for no more than 1 year. The waiver cycle began after passage of PRWORA in August 1996. From the date on which the State agency submitted its request, the waiver would expire in approximately 1 year and 60 days. The waiver process is not associated with the E&T allocation. State agencies can monitor the employment situation in their States and if they think it is warranted, they can ask for waivers outside of their existing cycle. However, FNS will ensure that all waivers granted in a reasonable time before the E&T allocations are computed will be considered in the computation.

The Balanced Budget Act amended section 16(h) of the Food Stamp Act to require that not less than 80 percent of a State agency's 100 percent Federal E&T allocation each fiscal year—both the base and additional Balanced Budget Act allocations—be used during the fiscal year to serve food stamp recipients not eligible for an exception under section 6(o)(3) of the Food Stamp Act who are placed in and comply with a program described in subparagraph (B) or (C) of section 6(o)(2) of the Food Stamp Act. The interim rule added a new section, designated 7 CFR 273.7(d)(1)(ii) to the regulations. The new section, titled “Use of Funds,” contains the requirements for State agency use of 100 percent Federal E&T funding established by the Balanced Budget Act.

Section 7 CFR 273.7(d)(1)(ii) requires that not less than 80 percent of the 100 percent Federal funds a State agency receives in a fiscal year be used to serve ABAWDs subject to the 3-month time limit who are placed in and comply with a qualifying work program for at least 20 hours a week or a workfare program as described in 7 CFR 273.7(m) or a comparable program. “Work program” is defined as an education or training activity operated under title I of the WIA (which replaces the Job Training Partnership Act (JTPA) effective July 1, 2000); section 236 of the Trade Act; or an E&T program operated or supervised by a State or a political subdivision of a State that meets standards approved by the Governor of the State, including the Food Stamp E&T Program, other than a job search or job search training program.

Section 7 CFR 273.7(d)(1)(ii) provides that the remaining 20 percent of a State agency's 100 percent Federal E&T grant may be used to provide work activities for food stamp recipients who meet one of the criteria for exception in section 6(o)(3) of the Food Stamp Act, or on work activities that do not qualify either as work or workfare programs, such as job search or job search training programs for any food stamp recipient.

Section 7 CFR 273.7(d)(1)(ii) also provides that, if a State agency spends more than 20 percent of the 100 percent Federal E&T funds it receives in a fiscal year to provide work activities for food stamp recipients who are eligible for an exception under section 6(o)(3) of the Food Stamp Act, or on activities that do not qualify either as work or workfare programs under sections 6(o)(2)(B) and (C) of the Food Stamp Act, the allowable costs incurred that are in excess of the 20 percent threshold will be reimbursed at the normal administrative 50-50 match rate.

Several commenters maintained that the final regulation should make clear that, under some circumstances, job search or job search training can be qualifying activities for ABAWDs. The Department agrees. Language has been added to 7 CFR 273.7(d)(1)(ii) in this final rulemaking to clarify that: (1) Job search and job search training programs operated under title I of the WIA or under section 236 of the Trade Act do meet the definition of work program; (2) job search or job search training activities, when offered as part of other E&T program components, are acceptable as long as those activities comprise less than half the required time spent in the other components; and (3) a job search period of up to 30 days following initial certification prior to making a workfare assignment is part of the workfare assignment, and not a job search “program.”

One commenter pointed out that section 7(j) of the Food Stamp Act authorizes State agencies to offer State purchase programs to provide benefits for legal immigrants denied eligibility under sections 402 or 403 of PRWORA and ABAWDs who are no longer eligible to participate in the FSP because their 3-month time limit was reached. The commenter believes that the regulations should make clear that States may use 100 percent Federal E&T funds to fund work activities for legal immigrants receiving food stamps through such a State purchase program. The Department disagrees. State purchase program participants receive food stamp benefits that are paid for with State money and are not considered Federal food stamp recipients. As provided in section 7(j)(6) of the Food Stamp Act, administrative and other costs incurred in issuing a benefit under the State purchase program are not eligible for Federal funding.

Except for the addition of the clarification noted above, the Department is publishing this provision in the final rulemaking as it was issued in the interim rule.

The Department is taking the opportunity in this final rule to eliminate the reimbursement rate structure currently in effect. The rate structure, which represented the maximum amount that FNS would reimburse State agencies for the costs of creating qualifying opportunities for ABAWDs to remain eligible, was initiated in the interim rule.

Section 1002 of the Balanced Budget Act amended section 16(h)(1) of the Food Stamp Act to require FNS to monitor State agency expenditures of 100 percent Federal E&T funding, including the costs of individual components of State E&T programs. The Balanced Budget Act also provided FNS the discretion to set reimbursable costs for individual components of State E&T programs, making sure that the amount spent or planned to be spent on the components reflect the reasonable cost of efficiently and economically providing components appropriate to recipients' employment and training needs.

The interim rulemaking amended food stamp regulations to add a new section that contained requirements regarding E&T components costs. The new section was designated section 273.7(d)(1)(iv) and titled “Component Costs.”

FNS determined that setting reimbursement rates for E&T activities was necessary to promote the intent of the increased E&T funding, which was to create a sufficient number of work opportunities, or “slots,” so that as many ABAWDs that wished to work could be given the opportunity to do so before losing eligibility for the program. FNS believed that use of the reimbursement rates would help ensure that the maximum number of slots was created with the available funds, thus potentially keeping as many ABAWDs as possible eligible for the program.

The reimbursement rates—$30 for an offered work slot and $175 for a filled work slot—represented FNS's estimate of the reasonable cost of efficiently and economically providing work slots. The rates applied to all 100 percent Federal E&T funds that a State spent to provide qualifying activities that met the work requirement for ABAWDs, including those who reside in areas of a State granted a waiver under section 6(o)(4) of the Food Stamp Act and those granted an exemption from the requirement under section 6(o)(6) of the Food Stamp Act.

To provide State agencies greater flexibility to meet the intent of the increased funding provided under the Balanced Budget Act, FNS offered State agencies the opportunity to test an alternative to the reimbursement rates. Under the alternative, a participating State agency was permitted to spend its 100 percent Federal E&T allocation without regard to the slot rates if the State agency guaranteed to offer a qualifying education, training, or workfare opportunity to every ABAWD applicant and recipient who exhausted the 3-month food stamp time limit, who did not reside in an area of the State in which the ABAWD work requirement was waived, and who was not exempt from the ABAWD work requirement under each State agency's 15 percent exemption allowance in accordance with section 6(o)(6) of the Food Stamp Act. By fiscal year 2001 13 State agencies were operating under the alternative.

Numerous commenters stated their belief that the reimbursement rates established by FNS are too low and actually discourage—rather than encourage—State agencies from spending 100 percent Federal E&T money. They stated that the reimbursement rates make it impossible to effectively operate an E&T program. Unless the State can provide up front funding, no public or private non-profit agency can operate a program with the restricting $175 cost per participating client.

Now that FNS has had the opportunity for further consideration of this issue, we believe that the reimbursement rate structure has constrains State agencies' ability to serve ABAWDs effectively in State E&T programs and should be eliminated. This will allow State agencies to fully utilize the funds available to them to create opportunities for ABAWDs that meet PRWORA work requirements or that go beyond the requirements in PRWORA but help ABAWDs become and stay employed. Such opportunities could include expanded vocational training activities that are more expensive than normal, and post secondary education in subject areas directly related to employment. Because the law requires that 80 percent of all E&T funds either be earmarked for ABAWDs or returned to FNS for reallocation, the intent of the Act—efficiently and economically providing ABAWDs the opportunity to remain eligible-would continue to be met, and adequate funding would remain available for use by State agencies.

However, FNS will closely monitor State agency spending of 100 percent Federal E&T funds. We will pay particular attention to State agency estimates of component costs, as detailed in State E&T plans. We will compare those estimates with prior expenditures, keeping in mind variations among State agencies and the characteristics of the individuals to be served, as well as the components offered. In addition, we will utilize expenditure and program data reported by State agencies to track component costs throughout the fiscal year. In this manner, FNS will ensure that planned and actual expenditures continue to reflect reasonable costs of providing services.

The Department is amending in this final rulemaking the language of 7 CFR 273.7(d)(1)(iv) as published in the September 3, 1999 interim rule to eliminate the requirement for a reimbursement rate structure.

Section 849 of PRWORA amended section 16(b) of the Food Stamp Act (7 U.S.C. 2025(b)) to give State agencies the option to implement work supplementation (or support) programs. In these programs the cash value of public assistance benefits, plus FSP benefits, is provided to an employer as a wage subsidy to be used for hiring and employing public assistance recipients. The goal of work supplementation is to promote self-sufficiency by providing public assistance recipients with work experience to help them move into non-subsidized jobs.

The Department proposed to add, at 7 CFR 273.7, a new paragraph (l), containing requirements for the work supplementation or support program.

We further proposed to add a new paragraph (d)(xiv) under 7 CFR 272.2, Plan of operation, that contains the requirement for a planning document from each State agency that operates a work supplementation program.

The Department also solicited comments in the following areas that were not mandated by PRWORA but are necessary to comply with other laws or for accounting and reporting purposes.

• States must ensure that work supplemented or supported employees are treated the same as other non-subsidized employees and that all subsidized positions comply with the Fair Labor Standards Act.

• States must outline State agency, employer and recipient obligations and responsibilities in the proposed work supplementation program. They must also describe procedures for providing wage subsidies to participating employers and for monitoring the use of the funds.

• At the same time the plan is submitted for approval, the State must also submit an operating budget for the proposed program. Additionally, before the plan is approved, the State must agree to comply with certain reporting and monitoring requirements. State agencies operating work supplementation and support programs are required to comply with all FNS reporting requirements, including reporting the amount of benefits contributed to all employers as a wage subsidy on the FNS 388. State Issuance and Participation Estimates; FNS-388A, Participation and Issuance Project Area; FNS-46. Issuance Reconciliation Report; and SF-269, Addendum Financial Status Report. State agencies are also required to report administrative costs associated with work supplementation programs on the FNS-366A, Budget Projection and SF-269, Financial Status Report. Special codes for work supplementation programs will be assigned for reporting purposes.

• The proposed rule asked States to include in their plan amendments whether food stamp allotments and public assistance grants will be frozen at the time a recipient begins a subsidized job. The Department was particularly interested in public comments on the desirability of a Federal standard for issuing supplemental allotments when earnings unexpectedly fall and, secondly, whether there should be a time limit on freezing benefit levels (i.e., not counting any unsubsidized wages from the employer).

• Once the work supplementation program plan is approved, the State agency must incorporate it into the State Plan of Operation and include its operating budget in the State agency budget. After approval, the Department will pay the cash value of a recipient's food stamp benefits to the State agency so they may be paid directly to an employer as a wage subsidy. The State agency will also be reimbursed for administrative costs related to the operation of the work supplementation program as provided by Section 16 of the Food Stamp Act.

• For Quality Control purposes, cases in which a household member is participating in a work supplementation program will be coded as not subject to review.

Section 273.7(l)(i)(H) provides that wages paid under a wage supplementation or support program must meet the requirements of the Fair Labor Standards Act. One commenter pointed out that a wide range of other employment laws beyond the Fair Labor Standards Act will also apply. The Department agrees and has amended this provision to indicate that wages paid under a wage supplementation or support program must meet the requirements of the Fair Labor Standards Act and other applicable employment laws.

No other germane comments concerning the proposed work supplementation or support program provision were received. Aside from the clarification noted above, the Department is adopting in this final rulemaking the revisions as proposed.

Since 1982 the Department has afforded State agencies and political subdivisions the option to establish a workfare program. In workfare, nonexempt food stamp household members are required to accept public service job offers and work in return for the household's food stamp allotment. The number of hours of work required of a household member is calculated by dividing the household's monthly benefit by the higher of the applicable Federal or State minimum wage.

Under current rules, household members subject to the work registration requirements of 7 CFR 273.7(a) may also be subject to workfare. Additionally, recipients of benefits under title IV-A may be subject to workfare if they are currently involved less than 20 hours a week in title IV-A work activities and are not otherwise exempt. Applicants for, or recipients of, unemployment compensation may also be subject to workfare.

Workfare is a household responsibility. Legislative history (Conference Report No. 97-290 on the Agriculture and Food Act of 1981, December 10, 1981, page 226) established Congressional intent that the household's workfare responsibility be shared by all nonexempt members: “Upon a household member's failure to comply with workfare requirements, the household would be ineligible for food stamps * * *, unless someone in the household satisfies all outstanding workfare obligations. * * *” Failure of a household to comply with workfare requirements without good cause results in the disqualification of the entire household until the workfare obligation is met, or for two months, whichever is less.

The workfare provisions of section 20 (7 U.S.C. § 2029) of the Food Stamp Act entitle a political subdivision operating a workfare program to share in the benefit reductions that occur when a workfare participant begins employment while engaged in workfare for the first time, or within 30 days of ending the first participation in workfare. This provision is available only for workfare programs operated under section 20.

Workfare may also be offered as a component of a State agency's E&T program. However, workfare savings are not available for E&T workfare components.

State agencies and political subdivisions may also operate workfare programs in which participation by food stamp recipients is voluntary. In a voluntary program, disqualification for failure to comply does not apply. The number of hours of work will be negotiated between the volunteer household and the agency operating the workfare program.

Section 815 of PRWORA amended section 20 of the Food Stamp Act to: (1) eliminate the requirement for conformance with workfare programs under title IV-A; (2) eliminate the provision for combining the food stamp and title IV-A assistance grants to determine the number of hours a title IV-A food stamp household can be required to participate in a community work experience program established under section 409 of the Social Security Act; and (3) conform disqualification penalties for failure to comply with workfare requirements with those under section 6(d)(1) of the Food Stamp Act. Thus, while still a household responsibility, State agencies have the option of disqualifying the individual or, if the individual is a head of household, the entire household.

The Department proposed to amend 7 CFR 273.22 to incorporate PRWORA changes as well as making other technical corrections.

Lastly, in keeping with the Department's ongoing regulation streamlining and reform initiative, and to create a more logical union of food stamp work requirements and the optional workfare program, we proposed to move the amended 7 CFR 273.22 to 7 CFR 273.7, Work provisions, and to designate it paragraph (m), Optional workfare program.

One commenter asked for a clarification of the language in 273.7(m)(2)(i): Do the rules under section (m) apply to workfare programs operated as a component of a State agency's E&T program and those operated independently, or only those operated independently? A food stamp workfare program may be operated as a component of a State agency's E&T program. However, certain rules governing optional workfare programs operated under section 20 of the Food Stamp Act do not apply. For instance, the sharing of workfare savings authorized under section 20(g) of the Food Stamp Act are not available for E&T workfare components. Likewise, State agencies may not use any portion of their annual 100 percent Federal E&T grants to fund the administration of optional workfare programs under section 20 of the Food Stamp Act. They can, however, use their grants to fund the operation of workfare components in their E&T programs.

To ensure clarity in the final rulemaking, the Department is redesignating section 273.7(e)(1)(iii) as 273.7(e)(1)(iii)(A) and adding a new subparagraph, 273.7(e)(1)(iii)(B), to read: “The sharing of workfare savings authorized under section 20(g) of the Food Stamp Act and detailed at paragraph (m)(7)(iv) of this section are not available for E&T workfare components.”

Further, the Department is adding the following statement to the end of 273.7(m)(7)(i): “State agencies must not use any portion of their annual 100 percent Federal E&T allocations to fund the administration of optional workfare programs under section 20 of the Food Stamp Act and this subparagraph (m).”

Section 1001 of the Balanced Budget Act amended section 6(o) of the Food Stamp Act to allow State agencies to provide an exemption from the 3-month ABAWD food stamp time limit to cover up to 15 percent of their ABAWDs who would otherwise be ineligible because of the limit. These “covered individuals,” as defined in section 6(o)(6)(ii) of the Food Stamp Act, are food stamp recipients, or applicants denied food stamps because they have exhausted their 3 months of eligibility, who: (1) Are not eligible for an exception to the ABAWD work requirement; (2) are not covered by a waiver of the ABAWD work requirement; (3) are not already complying with the ABAWD work requirement; (4) are not receiving food stamps during their 3 months of eligibility authorized under the time limit; or (5) are not receiving food stamps during a subsequent period after reestablishing eligibility by complying with the requirements of section 6(o)(5) of the Food Stamp Act.

Section 1001 of the Balanced Budget Act authorizes the Secretary to estimate the number of covered individuals in a State based on FY 1996 Quality Control data and other factors appropriate due to the timing and the limitations of the data. The Secretary is also authorized to: (1) Adjust the number of exemptions each fiscal year to reflect changes in the State's caseload and changes in the proportion of the State's food stamp caseload covered by the ABAWD-related waivers; (2) adjust the number of exemptions estimated for a State during a fiscal year if the number of food stamp recipients in the State varies from the State's caseload by more than 10 percent; (3) adjust the number of exemptions assigned for a current fiscal year based on the actual number of exemptions granted by the State agency in the preceding fiscal year; and (4) require whatever State agency reports determined necessary to ensure compliance with the 15 percent exemption provisions. The Department has no discretion in implementing this provision.

Because of the many requirements of PRWORA and the Balanced Budget Act that apply only to ABAWDs and the 3-month time limit, the Department created, in the interim rule, a new regulatory section, section 273.24, in which it incorporated the Balanced Budget Act provisions regarding the 15 percent exemptions.

In the interim rule the Department did not prescribe how State agencies must use the exemption authority. State agencies have maximum flexibility to apply the exemptions as they deem appropriate. However, in the preamble to the interim rule, the Department did remind State agencies that, along with the flexibility they are afforded in terms of determining the exemption criteria, they have the responsibility for developing exemption policies that comport with their number of exemptions.

In the interim rule, the Department clarified that it is up to the State agency to decide whether or not to require an ABAWD to exhaust the 3-month time limit (either the initial 3 months or the subsequent 3 months) in order to qualify for an exemption under this provision. For example, if a State agency has a sufficient number of 15 percent exemptions available, it may choose to exempt all ABAWDs residing in an area not already waived under 6(o)(4) regardless of whether they have exhausted their first or second 3 months. Conversely, a State agency may determine that the best way to manage its finite number of 15 percent exemptions is to require individuals to exhaust their 3 months of eligibility before being exempted under this provision.

The interim rule provided that a State agency may exempt up to 15 percent of their covered individuals. The number of exemptions allotted each State will reflect changes in the State's caseload and the proportion of ABAWDs covered by waivers granted under paragraph 6(o)(4) of the Food Stamp Act.

The interim rule further provided that FNS will adjust the estimated number of covered individuals estimated for a State during a fiscal year if the number of actual food stamp recipients in the State varies by more than 10 percent, as determined by the FNS.

Lastly, the interim rule authorized FNS to adjust the number of exemptions allocated to a State agency for a fiscal year based on the difference between the average monthly number of exemptions in effect in the State for the preceding fiscal year and the average monthly number of exemptions estimated for the State agency for the preceding fiscal year. If more exemptions are used than authorized in a fiscal year, the State's allocation for the next year will be reduced. If the State agency does not use all of its exemptions by the end of the fiscal year, FNS will increase by the remaining balance the estimated number of exemptions allocated to the State agency for the subsequent fiscal year.

The interim rule required State agencies to track and report the number of cases exempt under the 15 percent criteria used each month to their respective FNS regional offices on a quarterly basis.

All commenters agreed with allowing maximum flexibility in using the exemption.

One commenter stated that in calculating the number of people living in areas where there is no ABAWD waiver due to insufficient jobs or high unemployment, the Department should take special care to avoid overestimating the number of people in waived parts of counties that contain only some waived communities. They believe the Department should develop and release a clear, reliable methodology for calculating the fraction of a county's recipients that are covered by an ABAWD waiver.

The Department is currently exploring ways to improve the estimates of the proportions of an area that have received waivers. For example, we have been working to modify the QC file to enable it to both identify cases in the file that should be classified as ABAWDs, and to determine whether those cases either live in a waived area, or are subject to other exemptions. The effort is ongoing, and we will continue to welcome technical contributions in this area.

One commenter suggested that the Department should make technical assistance available to help States identify simple, easily administered options for using the exemptions, such as extending the number of months of benefits a household may receive within a 36-month period, reducing the number of months (from 36) required for a household's “clock” to recharge, or exempting readily identifiable demographic groups (such as those over age 40 or 45). The Department has provided guidance to the State agencies regarding use of exemptions in the form of policy memoranda. At the same time, regional offices are working very closely with State agencies to identify the best way to use the exemptions and to share information on what other State agencies are doing.

Another commenter suggested that the Department should allow States to rely upon estimates of the effects of its 15 percent exemption policy as an alternative to counting the actual number of exemptions provided each month. The Department will not make a change to this provision. Because of the statutory 15 percent limit on exemptions the Department must require an accurate accounting of how many exemptions State agencies use. Likewise, States agencies need to accurately record the numbers of individuals exempt under this provision in order to comply with the statute.

Publication of an associated final rulemaking added to and revised § 273.24. Additionally, corrections have made to the language of the original interim rule. Thus, the Department is taking this opportunity to publish the 15 percent ABAWD exemption provision in its final form.

On January 30, 2002, the OCC requested comment on an interim rule amending part 28. 67 FR 4325. The interim rule revised certain requirements regarding CED deposit arrangements to increase flexibility and reduce burden by permitting the OCC to impose deposit requirements based on the same supervision by risk approach that it uses in its supervision of national banks. The interim rule revised 12 CFR 28.15(d) to clarify that the OCC may vary the terms of a CED Agreement (Agreement) based on the circumstances and supervisory risks present at a particular branch or agency. For example, an Agreement may permit a foreign bank to withdraw assets from its CED account, thereby reducing the net value of the assets held in the account without OCC approval, as long as the withdrawal does not reduce the value below the minimum CED level required for that institution. Moreover, it may not be necessary in all cases for a foreign bank to pledge its CED assets to the OCC or for the depository bank to be a signatory to the Agreement unless required by the OCC. The OCC stated that it will make these determinations on a case-by-case basis, consistent with its supervisory assessment of the risks presented by the particular institution.

The interim rule became effective immediately, but the OCC invited public comment on any aspect of the interim rule.

The OCC received two comments. One comment strongly supported the revisions reflected in the interim rule. The commenter stated that the interim rule should alleviate the administrative burden associated with calculating, monitoring, and managing the CED requirement. The commenter also supported the incorporation of the risk-based approaches to regulation and supervision of international banking institutions into the CED requirement.

The second commenter stated that to some readers the rule could raise a question of whether the rule means that some foreign institutions would not be required to maintain a CED in the statutory minimum amount of five percent of liabilities. The proposed rule stated that the CED “[m]ay not be reduced in value below the minimum required for that branch or agency without the prior approval of the OCC.” The final rule clarifies that in no event could the OCC approve a reduction that is less than the statutory minimum for the particular Federal branch or agency.

For these reasons, the OCC is adopting the interim rule in final form without change, except for this clarification.

Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), the OCC certifies that the rule will not have a significant economic impact on a substantial number of small entities. The rule will affect few small entities. The principal effect of the rule is to remove several requirements with respect to deposit arrangements for the CED and reduce burden on qualifying foreign banks with Federal branches and agencies.

Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4 (Unfunded Mandates Act) requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. The OCC has determined that the rule will not result in expenditures by State, local, or 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 OCC has determined that this rule does not constitute a “significant regulatory action” for the purposes of Executive Order 12866.

The final rule is effective immediately. Pursuant to 5 U.S.C. 553, agencies may issue a rule without public notice and comment when the agency, for good cause, finds that such notice and public comment are impracticable, unnecessary, or contrary to the public interest. Section 553 also permits agencies to issue a rule without delaying its effectiveness if the agency finds good cause for the immediate effective date.

The OCC finds good cause to issue this rule without a delayed effective date. Like the interim rule, the final rule will enable the OCC to make determinations on a case-by-case basis, consistent with its supervisory assessment of the risks presented by a particular institution. These determinations will relate to whether a foreign bank should continue to be required to pledge its CED assets to the OCC or to obtain the OCC's approval to reduce the aggregate value of the CED assets by withdrawal. These requirements may not be necessary for safety and soundness reasons for most highly rated foreign banks, and they, therefore, may impose unnecessary cost and burden. Elimination of needless resulting cost and burden warrants making this rule effective immediately so that qualifying foreign banks that do not pose safety or soundness issues may take advantage of its benefits immediately.

Subject to certain exceptions, 12 U.S.C. 4802(b)(1) provides that new regulations and amendments to regulations prescribed by a Federal banking agency that impose additional reporting, disclosure, or other new requirements on an insured depository institution must take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. Like the interim rule, the final rule imposes no additional reporting, disclosure, or other new requirements on insured depository institutions. Instead it removes restrictions for qualifying foreign banks with Federal branches and agencies. For this reason, section 4802(b)(1) does not apply to this rulemaking.

The OCC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The information collection requirements contained in 12 CFR part 28 have been approved under OMB control number 1557-0102.

The information collection requirements contained in this rule are contained in section 28.15(d). Under this section as amended, capital equivalency deposits may not be reduced in value below the minimum required for that branch or agency without prior OCC approval, and Federal branches and agencies are required to maintain records.

Estimated number of respondents: 35.

Estimated number of responses: 35.

Estimated burden hours per response: 1 hour.

Estimated number of recordkeepers: 35.

Estimated number of recordkeeping burden hours: 35.

Estimated total burden hours: 35.

Under section 6103(j)(5) of the Internal Revenue Code (Code), upon written request from the Secretary of Agriculture, the Secretary of the Treasury shall furnish such returns or return information as prescribed by Treasury regulation to officers and employees of the Department whose official duties require access to such returns or return information for the purpose of, but only to the extent necessary in, structuring, preparing, and conducting the Census of Agriculture pursuant to the Census of Agriculture Act of 1997. Currently, § 301.6103(j)(5)-1 provides an itemized description of the return information authorized to be disclosed for this purpose. By letter dated May 8, 2001, the Secretary of Agriculture requested that the Treasury Regulations be amended to authorize the disclosure of an additional item of return information, the taxpayer's telephone number contained on Form 1040/Schedule F.

This document adopts a final regulation that authorizes IRS personnel to disclose the additional item of return information that has been requested by the Secretary of Agriculture.

This final regulation will permit the IRS to disclose to the Department, for its use in structuring, preparing, and conducting the Census of Agriculture, an additional item of return information, the taxpayer's telephone number provided on the Form 1040/Schedule F. According to the Department, the disclosure of this additional item of return information will improve the efficiency of the Department's list-building operations by reducing the potential for duplication in the Census of Agriculture. After receiving information from the IRS, the Department attempts to link such information to other records held by or available to the Department, doing so where possible on the basis of names, social security numbers or employer identification numbers, and addresses. The Department intends to use taxpayer telephone numbers to match records that cannot be matched otherwise or to determine that questionable links between records, such as those based merely on name and address information, constitute or do not constitute definite matches. By means of the matching process, the Department avoids duplicate contacts and furthers its classification of farms for Census of Agriculture purposes. The IRS will provide taxpayer telephone numbers to the Department under this final regulation with the understanding that the Department will only use them for such purpose, and that it will not use the information to telephone taxpayers.

Section 553 of the Administrative Procedure Act (5 U.S.C. chapter 5) requires that a notice of proposed rulemaking be published in the Federal Register and, after such notice, that the Federal agency that issued the notice give interested persons an opportunity to participate in the rulemaking through submission of written comments, with or without opportunity for oral presentation. These requirements are subject to certain exceptions, including when the agency for good cause finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. Because the final regulation merely amends a preexisting regulation (§ 301.6103(j)(5)-(1) to add a single item of information to a list of such items, it is determined that the notice and public-comment procedure required by 5 U.S.C. 553 is unnecessary in this case pursuant to the exception in 5 U.S.C. 553(b)(3)(B). For the same reason, a delayed effective date is not required pursuant to 5 U.S.C. 553(d)(3).

It has also been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment 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. Pursuant to section 7805(f) of the Code, this regulation was submitted to the Chief Counsel of the Small Business Administration for comment on its impact on small business.

The principal author of this temporary regulation is Joseph Conley, Office of Associate Chief Counsel (Procedure & Administration), Disclosure and Privacy Law Division.

Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its State program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act * * * ; and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7).

On the basis of these criteria, the Secretary of the Interior conditionally approved the Kentucky program on May 18, 1982. You can find background information on the Kentucky program, including the Secretary's findings, the disposition of comments, and the conditions of approval in the May 18, 1982, Federal Register (47 FR 21404). You can also find later actions concerning the Kentucky program and previous amendments at 30 CFR 917.11, 917.12, 917.13, 917.15, 917.16, and 917.17.

By letter dated January 28, 2000, Kentucky sent us an amendment to its program (KY-222-FOR, Administrative Record No. KY-1469) under SMCRA (30 U.S.C. 1201 et seq. ). Kentucky sent the amendment in response to the required program amendment at 30 CFR 917.16(d)(5). The proposed amendment establishes special performance standards and limited variance procedures for operations conducted on steep slopes by revising 405 KAR 20.060—Section 3(3)(b) and (c). The amendment is intended to revise the Kentucky program to be no less effective than the Federal regulations.

We announced receipt of the proposed amendment in the February 18, 2000, Federal Register (65 FR 8327). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on the amendment's adequacy. We did not hold a public hearing or meeting because no one requested one. The public comment period ended on March 20, 2000. We did not receive any public comments.

By letter dated May 25, 2000 (Administrative Record No. KY-1476), Kentucky submitted the promulgated version of the regulation. No substantive changes were made from the original submission. Therefore, we did not reopen the comment period.

We received comments from two Federal agencies.

Following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. As discussed below, we are approving the amendment.

Any revisions that we do not specifically discuss below concern nonsubstantive wording or editorial changes.

Kentucky's amendment is responding to the required program amendment codified at 30 CFR 917.16(d)(5). 30 CFR 917.16(d)(5) provides that Kentucky must amend its program to:

Kentucky has amended its program by establishing special performance standards and limited variance procedures for operations conducted on steep slopes by revising 405 KAR 20.060—Section 3(3)(b) and (c). Kentucky is requiring that the total volume of flow from the proposed permit area, during every season of the year, not vary in a way that adversely affects the ecology of any surface water or any existing or planned use of surface or ground water. Kentucky is also requiring that the Natural Resources and Environmental Protection Cabinet (Cabinet) consider any agency comments under subsection (2) of this section regarding watershed improvement.

Kentucky is revising this paragraph by adding the words “water or any existing or planned use of surface.” As amended, paragraph (b) at section 3(3) provides that the total volume of flow from the proposed permit area, during every season of the year, will not vary in a way that adversely affects the ecology of any surface water or any existing or planned use of surface or ground water. We find that as amended, the Kentucky provision is identical to and, therefore, no less effective than the counterpart Federal regulations at 30 CFR 785.16(a)(3)(ii) and can be approved. This amendment satisfies part of the required regulatory program amendment codified in the Federal regulations at 30 CFR 917.16(d)(5).

Kentucky is adding this new paragraph to provide that the Cabinet must have considered any agency comments under subsection (2) of 405 KAR 20:060 section 3, regarding watershed improvement. Subsection (2), which is part of the existing Kentucky program, offers Federal, State and local government agencies with an interest in the proposed land use an opportunity to review and comment on the proposed use. While there is no Federal counterpart to the Kentucky proposal, the amendment is consistent with the general permitting requirements at 30 CFR 773.6, which provides certain Federal, State and local governmental entities with notice and opportunity to comment on permit applications. Thus, the amendment is hereby approved.

Kentucky has also submitted an accompanying document entitled “Federal Mandate Analysis Comparison” (Administrative Record No. KY-1469). In that document, Kentucky acknowledges that its regulation does not include the requirement, contained in 30 CFR 785.16(a)(3)(iii), that “the appropriate State environmental agency approves the [watershed improvement] plan,” but contends that the “Federal language is indefinite regarding the identity of the agency and regarding what ‘plan’ must be approved * * *” Furthermore, Kentucky contends that this language is unnecessary for its program, because the Cabinet, which approves mining permits, is also the agency charged with approving watershed improvement plans. Therefore, the State argues, approval of any such plans, where necessary, will be “accomplished by the Cabinet” as part of the permit decision-making process. We believe that Kentucky's explanation of its watershed improvement plan approval procedure is sufficient to satisfy the remaining portion of the required regulatory program amendment codified in the Federal regulations at 30 CFR 917.16(d)(5). As such, the required amendment will be removed.

We asked for public comments on the amendment (Administrative Record No. KY-1475), but did not receive any.

Under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, we requested comments on the amendment from various Federal agencies with an actual or potential interest in the Kentucky program (Administrative Record No. KY-1492). The request for comments was made on February 18, 2000.

Two comments were received. The Mine Safety and Health Administration concurred without comment. The Fish and Wildlife Service commented that the proposed amendment: (1) Disregards the Federal mandate to develop and implement a plan to improve watershed conditions; (2) is based on an apparent misinterpretation of the Federal mandate for the appropriate State environmental agency to review and approve the watershed improvement plan; and (3) disregards the Federal mandate to require reduced pollution or reduced flood hazards during peak discharges.

In response, we disagree with the commenter's contention that the amendment is inconsistent with the intent of 30 CFR 785.16(a)(3) because it omits the specific requirement to develop and implement a comprehensive watershed plan where steep slope variances are permitted. To the contrary, we believe the existing State program requirements are consistent with the Federal regulations. While subdivision 30 CFR 785.16(a)(3)(iii) refers to approval of a “plan,” the Federal regulations are otherwise silent as to what should be contained in the plan. Moreover, the current Kentucky program at 405 KAR 20:060 Section 3(3) requires the permit applicant to demonstrate that the watershed of lands within the proposed permit and adjacent areas will be improved by the operations. Because this demonstration, which is identical to the one required in the Federal regulations at 30 CFR 785.16(a)(3), must be contained in the permit application, it is tantamount to a “plan” for watershed improvement. Therefore, in this respect, the State program remains consistent with the corresponding Federal regulations.

The commenter next stated that the intent of 30 CFR 785.16 is for the State agency with the responsibility for general protection of aquatic systems to approve the watershed improvement plan. According to the commenter, the “appropriate State environmental agency” is required to approve the watershed improvement plan in order to maintain checks and balances within the permit review process. The commenter stated that the appropriate agency in Kentucky to approve watershed improvement plans is the Kentucky Division of Water (DOW), since that is the agency with responsibility for general protection of aquatic systems. The commenter believes that because the proposed amendment fails to specifically designate the DOW, as opposed to the Department for Surface Mining Reclamation and Enforcement (DSMRE), as the “appropriate State environmental agency,” the amendment “appears to be based upon a misrepresentation of the Federal mandate for the ‘appropriate State environmental agency’ to approve the watershed improvement plan. We disagree with this comment for the reasons discussed below.

The preamble to the September 1, 1983, Federal Register notice announcing our approval of 30 CFR 785.16 states, in part, that “[i]t is not possible on a national basis to specify precisely which environmental agencies must approve the planned improvement of the watershed. Within particular states, the regulatory authority should have little difficulty in discerning the particular agencies with expertise and /or responsibility for the watershed.” 48 FR 39892, 39896. As noted above in the finding for 405 KAR 20:060 Section 3(3)(c), Kentucky has explained that the Cabinet is the agency with statewide environmental responsibilities. Three departments are under jurisdiction of the Cabinet, one of which is the DSMRE. The DOW is under the Department for Environmental Protection, a department also under the jurisdiction of the Cabinet. The Cabinet considers any comments from Federal, State, or local agencies that address the issue of watershed improvement.

The DSMRE has responsibility for implementing SMCRA. If a plan for watershed improvement is part of a SMCRA permit, DSMRE is responsible for its review. The proposed program amendment includes a request for comments by other agencies to ensure that the SMCRA plan demonstrates watershed improvement. In Kentucky, the DOW is given the opportunity to review and comment on all SMCRA permits. This would include watershed improvement plans. Therefore, we believe that the revised regulation at 405 KAR 20:060 Section 3(3)(c) is no less effective than 30 CFR 785.16(a)(3)(iii).

The commenter stated that the proposed amendment disregards the Federal regulations to require reduced pollution or reduced flood hazards during peak discharges. According to the commenter, “[t]he amended State regulations would circumvent this requirement by allowing its substitution with increased streamflow during low flow periods.” The language claimed by the commenter to be inconsistent with the Federal regulations is contained in the phrase “* * * or there will be an increase in streamflow during times of the year when streams within the watershed are normally at low flow or dry and the increase in streamflow is determined by the cabinet to be beneficial to public or private users or to the ecology of the streams.”

In response, we note that the quoted language is not newly proposed, as the commenter has asserted, but rather is already contained in the approved State program. Thus, comments on the language are not germane to this rulemaking.

Under 30 CFR 732.17(h)(11)(i) and (ii), we are required to get a written concurrence from EPA for those provisions of the program amendment that relate to air or water quality standards issued under the authority of the Clean Water Act (33 U.S.C. 1251 et seq. ) or the Clean Air Act (42 U.S.C. 7401 et seq. ). This amendment does not contain provisions that relate to air or water quality standards. Therefore, we did not ask EPA to concur on the amendment.

On March 1, 2000, we requested comments from EPA on the amendment (administrative record no. KY-1492). EPA did not respond to our request.

Under 30 CFR 732.17(h)(4), we are required to request comments from SHPO and ACHP on amendments that may have an effect on historic properties. This amendment does not contain provisions that relate to historic properties. Therefore, we did not ask SHPO or ACHP to comment on this amendment.

Based on the above findings, we approve the amendment Kentucky sent us on January 28, 2000. In addition, we are removing the required program amendment codified at 30 CFR 917.16(d)(5).

To implement this decision, we are amending the Federal regulations at 30 CFR Part 917, which codify decisions concerning the Kentucky program. We find that good cause exists under 5 U.S.C. 553(d)(3) to make this final rule effective immediately. Section 503(a) of SMCRA requires that the Kentucky program demonstrate that Kentucky has the capability of carrying out the provisions of the Act and meeting its purpose. Making this regulation effective immediately will expedite that process. SMCRA requires consistency of Kentucky and Federal standards.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.

This rule is exempted from review by the Office of Management and Budget under Executive Order 12866.

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR parts 730, 731, and 732 have been met.

This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

This rule does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (NEPA) (42 U.S.C. 4332(2)(C)).

This rule does not contain information collection requirements that require approval by the OMB under the Paperwork Reduction Act (44 U.S.C. 3507 et seq. ).

The Department of the Interior 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. ). The State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule: (a) Does not have an annual effect on the economy of $100 million; (b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.

This rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate.

Regulatory Information

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Due to the terrorist attacks on September 11, 2001 and the warnings given by national security and intelligence officials, there is an increased risk that further subversive or terrorist activity may be launched against the United States. A heightened level of security has been established around all liquefied hazardous gas (LHG) tank vessels near the ports of Los Angeles and Long Beach. These security zones are needed to protect the United States and more specifically the people, waterways, and properties near San Pedro Bay. The original TFR was urgently required to prevent possible terrorist strikes against the United States and more specifically the people, waterways, and properties in the ports of Los Angeles-Long Beach. It was anticipated that we would assess the security environment at the end of the effective period to determine whether continuing security precautions were required and, if so, propose regulations responsive to existing conditions. We have determined the need for continued security regulations exists.

The Coast Guard will utilize the effective period of this TFR to engage in notice and comment rulemaking to develop permanent regulations tailored to the present and foreseeable security environment with the Captain of the Port (COTP) Los Angeles-Long Beach. Therefore, the public will still have the opportunity to comment on this rule. The measures contemplated by the rule were intended to facilitate ongoing response efforts and prevent future terrorist attack. In this case, doing a NPRM will be repetitious in nature and since delay is inherent in the NPRM process, any delay in the effective date of this rule, is contrary to the public interest insofar as it may render individuals and facilities within and adjacent to LHG tank vessels vulnerable to subversive activity, sabotage or terrorist attack. Immediate action is required to accomplish these objectives and necessary to continue safeguarding these vessels and the surrounding area. Any delay in the effective date of this rule is impractical and contrary to the public interest.

The Coast Guard will be publishing a NPRM to establish permanent security zones that are temporarily effective under this rule. This revision preserves the status quo within the Port while permanent rules are developed.

For the reasons stated in the paragraphs above under 5 U.S.C. 553(d)(3), the Coast Guard also finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

On September 11, 2001, terrorists launched attacks on commercial and public structures—the World Trade Center in New York and the Pentagon in Arlington, Virginia—killing large numbers of people and damaging properties of national significance. There is an increased risk that further subversive or terrorist activity may be launched against the United States based on warnings given by national security and intelligence officials. The Federal Bureau of Investigation (FBI) has issued warnings on October 11, 2001 and February 11, 2002 concerning the potential for additional terrorist attacks within the United States. In addition, the ongoing hostilities in Afghanistan have made it prudent for important facilities and vessels to be on a higher state of alert because Osama Bin Ladin and his Al Qaeda organization, and other similar organizations, have publicly declared an ongoing intention to conduct armed attacks on U.S. interests worldwide.

These heightened security concerns, together with the catastrophic impact that a terrorist attack against a LHG tank vessel would have to the public interest, makes these security zones prudent on the navigable waterways of the United States. To mitigate the risk of terrorist actions, the Coast Guard has increased safety and security measures on the navigable waterways of San Pedro Bay by establishing larger security zones around LHG tank vessels. Vessels operating near LHG tank vessels present possible platforms from which individuals may gain unauthorized access to these vessels or launch terrorist attacks upon these vessels or adjacent population centers. As a result, the Coast Guard is taking additional measures to prevent vessels or persons from accessing the navigable waters close to LHG tank vessels on San Pedro Bay.

On January 28, 2002, we published a temporary final rule for LHG tank vessels entitled “Security Zones; San Pedro Bay, California” in the Federal Register (67 FR 3814) under § 165.T11-062. It has been in effect since January 14, 2002 and is set to expire 11:59 p.m. PDT on June 15, 2002. As of today, the need for security zones around LHG tank vessels still exist. This new temporary final rule will begin 11:59 p.m. PDT on June 15, 2002 the exact time the previous LHG tank vessel security zone was in effect, and is set to expire 11:59 p.m. December 21, 2002. This will allow the Coast Guard time to publish a notice of proposed rulemaking (NPRM) in the Federal Register , which will include a public comment period, and for a final rule to be put into effect without there being an interruption in the protection provided by LHG tank vessel security zones.

In our previous rulemaking on LHG tank vessels, we temporarily suspended 33 CFR § 165.1151 and temporarily added the security zones provided for thereunder as § 165.T11-062. Title 33 CFR § 165.1151 provides for safety zones for LHG tank vessels while at anchor in designated anchorages in San Pedro Bay, while transiting San Pedro Bay, and while LHG tank vessels are moored at any berth within the Los Angeles or Long Beach port area. However, in light of the current terrorist threats to national security, these safety zones are insufficient to protect LHG tank vessels in San Pedro Bay. We continue to temporarily suspend § 165.1151 and temporarily add the security zones provided for hereunder as § 165.T11-066.

This regulation establishes a security zone in the waters of San Pedro Bay around all LHG tank vessels that are anchored, moored, or underway within the Los Angeles or Long Beach port area. These security zones will take effect upon entry of any LHG tank vessel into the waters within three nautical miles outside the Federal breakwaters encompassing San Pedro Bay and will remain in effect until that vessel departs the three nautical mile limit. Vessels covered by a security zone can be additionally identified by an on scene escorting law enforcement vessel with a blue flashing light. The following areas are security zones:

(1) The waters within a 500 yard radius around a LHG tank vessel that is anchored at a designated anchorage either inside the Federal breakwaters bounding San Pedro Bay or outside at designated anchorages within three nautical miles of the breakwater;

(2) The waters within a 500 yard radius around a LHG tank vessel that is moored at any berth within the Los Angeles or Long Beach port area; and

(3) The waters within 1,000 yards ahead and 500 yards on all other sides of a LHG tank vessel that is underway on the waters either inside the Federal breakwaters bounding San Pedro Bay or on the waters within three nautical miles of the breakwater.

These security zones are needed for national security reasons to protect LHG tank vessels, the public, transiting vessels, adjacent waterfront facilities and the ports from potential subversive acts, accidents, or other events of a similar nature. Entry into these moving or fixed security zones is prohibited unless authorized by the Captain of the Port. Vessels already moored or anchored when these security zones take effect will not be required to get underway to avoid either the moving or fixed zones unless specifically ordered to do so by the Captain of the Port or his designated representative.

As part of the Diplomatic Security and Antiterrorism Act of 1986 (Pub. L. 99-399), Congress amended the Ports and Waterways Safety Act (PWSA) to allow the Coast Guard to take actions, including the establishment of security and safety zones, to prevent or respond to acts of terrorism against individuals, vessels, or public or commercial structures. This authority, under section 7 of the PWSA (33 U.S.C. 1226), supplements the Coast Guard's authority to issue security zones under The Magnuson Act regulations promulgated by the President under 50 U.S.C. 191, including Subparts 6.01 and 6.04 of Part 6 of Title 33 of the Code of Federal Regulations.

Vessels or persons violating this section will be subject to the penalties set forth in 33 U.S.C. 1232 and 50 U.S.C. 192. Pursuant to 33 U.S.C. 1232, any violation of the security zone described herein, is punishable by civil penalties (not to exceed $27,500 per violation, where each day of a continuing violation is a separate violation), criminal penalties (imprisonment up to 6 years and a maximum fine of $250,000), and in rem liability against the offending vessel. Any person who violates this section, using a dangerous weapon, or who engages in conduct that causes bodily injury or fear of imminent bodily injury to any officer authorized to enforce this regulation, also faces imprisonment up to 12 years. Vessels or persons violating this section are also subject to the penalties set forth in 50 U.S.C. 192: seizure and forfeiture of the vessel to the United States, a maximum criminal fine of $10,000, and imprisonment up to 10 years.

The Captain of the Port will enforce these zones and may enlist the aid and cooperation of any Federal, State, county, municipal, and private agency to assist in the enforcement of the regulation. This regulation is proposed under the authority of 33 U.S.C. 1226 in addition to the authority contained in 50 U.S.C. 191 and 33 U.S.C. 1231.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040, February 26, 1979) because these zones will encompass a small portion of the waterway for a limited period of time. Delays, if any, are expected to be less than thirty minutes in duration. Vessels and persons may be allowed to enter these zones on a case-by-case basis with permission of the Captain of the Port.

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

For the same reasons stated in the Regulatory Evaluation section above, the Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

We expect this rule will affect the following entities, some of which may be small entities: The owners and operators of private and commercial vessels intending to transit or anchor in a small portion of the ports of Los Angeles or Long Beach near a LHG tank vessel that are covered by these security zones. The impact to these entities would not, however, be significant since these security zones will encompass a small portion of the waterway for a limited period of time. Delays, if any, are expected to be less than thirty minutes in duration.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. If this rule will affect your small business, organization, or government jurisdiction and you have questions concerning its provision or operations for compliance, please contact the person listed under FOR FURTHER INFORMATION CONTACT for assistance in understanding this rule.

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

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

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

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

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

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

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

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

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

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

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

This action is directed to the public in general. This action may, however, be of interest to agricultural producers, food manufacters, or pesticide manufacturers. Potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities who may be affected by these objections. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not these objections might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http://www.epa.gov/. To access this document, on the Home Page select “Laws and Regulations,” “Regulations and Proposed Rules,” and then look up the entry for this document under the Federal Register —Environmental Documents. You can also go directly to the Federal Register listings at http://www.epa.gov/fedrgstr/.

2. In person . The Agency has established an official record for this action under docket ID number OPP-2002-0057. The official record consists of the documents specifically referenced in this action, any public comments received during an applicable comment period, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period, is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

You may submit comments through the mail, in person, or electronically. To ensure proper receipt by EPA, it is imperative that you identify docket ID number OPP-2002-0057 in the subject line on the first page of your response.

1. By mail . Submit your comments to: Public Information and Records Integrity Branch (PIRIB), Information Resources and Services Division (7502C), Office of Pesticide Programs (OPP), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

2. In person or by courier . Deliver your comments to: Public Information and Records Integrity Branch (PIRIB), Information Resources and Services Division (7502C), Office of Pesticide Programs (OPP), Environmental Protection Agency, Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. The PIRIB is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

3. Electronically . You may submit your comments electronically by e-mail to: opp-docket@epa.gov, or you can submit a computer disk as described above. Do not submit any information electronically that you consider to be CBI. Avoid the use of special characters and any form of encryption. Electronic submissions will be accepted in WordPerfect 6.1/8.0 or ASCII file format. All comments in electronic form must be identified by docket ID number OPP-2002-0057. Electronic comments may also be filed online at many Federal Depository Libraries.

Do not submit any information electronically that you consider to be CBI. You may claim information that you submit to EPA in response to this document as CBI by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public version of the official record. Information not marked confidential will be included in the public version of the official record without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person listed under FOR FURTHER INFORMATION CONTACT .

You may find the following suggestions helpful for preparing your comments:

1. Explain your views as clearly as possible.

2. Describe any assumptions that you used.

3. Provide copies of any technical information and/or data you used that support your views.

4. If you estimate potential burden or costs, explain how you arrived at the estimate that you provide.

5. Provide specific examples to illustrate your concerns.

6. Offer alternative ways to improve the notice or collection activity.

7. Make sure to submit your comments by the deadline in this final rule.

8. To ensure proper receipt by EPA, be sure to identify the docket ID number assigned to this action in the subject line on the first page of your response. You may also provide the name, date, and Federal Register citation.

EPA is publishing for comment objections received from NRDC concerning final rules establishing tolerances under FFDCA, 21 U.S.C. 346a, for five pesticide chemicals: Imidacloprid (blueberries), 67 FR 2580 (January 18, 2002) (FRL-6817-6); mepiquat (cottonseed; cotton, gin byproducts; meat byproducts of cattle, goats, hogs, horses, and sheep), 67 FR 3113 (January 23, 2002) (FRL-6818-7); bifenazate (apple, wet pomace; cotton, undelinted seed; cotton, gin byproducts, pome fruit group; grapes; grapes, raisins; hops, dried cones; nectarines; peaches; plums; strawberries; and milk, fat, meat, and meat byproducts of cattle, goats, horses, hogs, and sheep), 67 FR 4913 (February 1, 2002) (FRL-6818-3); zeta-cypermethrin (succulent, shelled peas and beans; dried, shelled peas and beans, except soybeans; soybean, seed; fruiting vegtables, except cucurbits; sorghum, grain, forage, stover; wheat, grain, forage, hay, straw; aspirated grain fractions; meat of cattle, goats, hogs, horses, sheep), 67 FR 6422 (February 12, 2002) (FRL-6818-8); diflubenzuron (pears), 67 FR 7085 (February 15, 2002) (FRL-6821-7). These objections were filed with the Agency on March 19, 2002. On February 25, 2002, NRDC had filed similar objections with EPA concerning final rules establishing tolerances for two pesticide chemicals: Halosulfuron methyl (melons, asparagus), 66 FR 66333 (December 26, 2001) (FRL-6816-8); 66 FR 66778 (December 27, 2001) (FRL-6816-1); and pymetrozine (cotton, undelinted seed; cotton gin byproducts; fruiting vegetables; head and stem Brassica vegetables; cucurbit vegetables; leafy vegetables; leafy Brassica and turnip greens; hops, dried; and pecans), 66 FR 66786 (December 27, 2001) (FRL-6804- 1). On May 7, 2002, NRDC filed objections with EPA concerning final rules establishing tolerances for the pesticide 2,4-D (soybeans), 67 FR 10622 (March 8, 2002) (FRL-6827-1). EPA is also requesting comment on these objections. The text of all sets of objections will be available on EPA's website at http://www.epa.gov/pesticides/tolerance/.

NRDC's objections raise a host of issues under FFDCA section 408, including:

1. Whether EPA correctly applied the provision addressing an additional 10X safety factor for the protection of children;

2. Whether farm children are a major identifiable population subgroup;

3. Whether EPA should consider occupational exposure in evaluating the safety of tolerances;

4. Whether EPA has included all residential exposures in calculating aggregate exposure to pesticide chemical residues;

5. Whether safety findings under section 408 can be made on the basis of a lowest-observed-adverse-effect-level (LOAEL) rather than a no-observed-adverse-affect-level (NOAEL);

6. Whether safety findings under section 408 can be made when risk is assessed using exposure estimates based on population percentiles lower than 99.9%; and

7. Whether EPA has adequately considered exposure levels in foods purchased at farm stands. The objections also raise various pesticide-specific issues as to some of the tolerances.

Because several of the issues raised by NRDC concern matters of great interest not just to NRDC but to growers, food distributors and processors, and pesticide manufacturers as well as members of the public, EPA believes it decision-making will be enhanced by obtaining the views of all affected parties. For that reason, EPA has established a 60-day comment period.

Although NRDC has filed three separate sets of objections, EPA is only publishing the second set of those objections in the Federal Register . EPA, however, is seeking comment on all three sets of objections. The first and third sets of objections are not being published in the Federal Register simply because much of them duplicate arguments made more fully in the second set of objections. All three sets of objections are available on EPA's website at http://www.epa.gov/pesticides/tolerance/. Additional tolerance objections received will also be posted.

Under section 408(g)(2)(A) of the FFDCA, any person may file objections with EPA within 60 days of issuance of a final tolerance regulation. 21 U.S.C. 346a(g)(2). Such person may also request a public evidentiary hearing on the objections; however, NRDC has not requested such a hearing. Under EPA regulations, EPA must publish an order setting forth its determination on each of NRDC's objections. 40 CFR 178.37(a). Such order must contain EPA's reasons for its determination. 40 CFR 178.37(b). If based on the objections EPA determines that the tolerance regulation should be modified or revoked, EPA will publish by order any revisions to the regulation. 21 U.S.C. 346a(g)(2)(C); 40 CFR 178.35.

The text of this objection is published with minor editorial changes.

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This amendment is being adopted without prior notice and prior public comment. The Regulatory Policies and Procedures of the Department of Transportation (DOT) (44 FR 1134; Feb. 26, 1979), however, provides that to the maximum extent possible, operating administrations for the DOT should provide an opportunity for public comment on regulations issued without prior notice. Accordingly, interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments. Comments must include the regulatory docket or amendment number and must be submitted in duplicate to the address above. All comments received, as well as a report summarizing each substantive public contact with TSA personnel on this rulemaking, will be filed in the public docket. The docket is available for public inspection before and after the comment closing date.

See ADDRESSES above for information on how to submit comments.

You can get an electronic copy using the Internet by taking the following steps:

(1) Go to search function of the Department of Transportation's electronic Docket Management System (DMS) Web page ( http://dms.dot.gov/search ).

(2) On the search page type in the last digits of the docket number shown at the beginning of this notice. Click on “search.”

(3) On the next page, which contains the docket summary information for the docket you selected, click on the final rule.

You can also get an electronic copy using the Internet through the Government Printing Office's web page at http://www.access.gpo.gov/su_docs/aces/aces140html.

In addition, copies are available by writing or calling the Transportation Security Administration's Air Carrier Division, 800 Independence Avenue, SW., Washington, DC 20591; telephone 202-267-3413.

The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires TSA to comply with small entity requests for information advice about compliance with statutes and regulations within TSA's jurisdiction. Any small entity that has a question regarding this document may contact the person listed in FOR FURTHER INFORMATION CONTACT for information. You can get further information regarding SBREFA on the Small Business Administration's web page at http://www.sba.gov/advo/laws/law_lib.html.

ATSA—Aviation and Transportation Security Act.

SIDA—Security identification display areas.

TSA—Transportation Security Administration.

The September 11, 2001, terrorist attacks involving four U.S. commercial aircraft that resulted in the tragic loss of life at the World Trade Center, the Pentagon, and southwest Pennsylvania, demonstrate the need for increased air transportation security measures. The terrorists responsible for the attacks retain the capability and willingness to conduct airline bombings, hijackings, and suicide attacks against American targets. The attempted bombing of a U.S. carrier on a flight from Paris on December 22, 2001, confirms the ongoing threat to Americans and American assets.

The events of September 11 led Congress to enact the Aviation and Transportation Security Act (ATSA), Public Law 107-71, November 19, 2001. ATSA required TSA to assume the aviation security responsibilities that the Federal Aviation Administration (FAA) maintained prior to September 11. On February 22, 2002, TSA published a final rule transferring the bulk of FAA's aviation security regulations to TSA and adding new standards required by ATSA. 67 FR 8340. Regulations concerning aircraft operator security, formally codified at 14 CFR part 108, are now codified at 49 CFR part 1544. Also on February 22, 2002, TSA published a rule that, in part, amended the requirement for private charter operators. It requires private charters that enplane from or deplane into a sterile area to conduct fingerprint-based criminal history record checks on their flightcrew members. 67 FR 8205. (The term ‘flightcrew member’ means a pilot, flight engineer, or flight navigator assigned to duty in an aircraft during flight time. See , 49 CFR 1540.5)

Subpart B of part 1544 sets forth the requirements operators must meet concerning the form, content and implementation of a security program. Operator security programs address screening individuals and property, qualifications and training for screeners, aircraft security, and a variety of other significant security-related measures. Section 1544.101 establishes requirements for the adoption and implementation of a security plan, and provides for different plan components depending on the type of aviation operation, volume of passengers, departure and arrival location, and type of aircraft.

Public charter is defined as any charter that is not a private charter. There are two types of private charters. (1) Private charters include any flight in which the charterer engages the total passenger capacity of the aircraft for carrying passengers, the passengers are invited by the charterer, the cost of the flight is borne entirely by the charterer, and the flight is not advertised to the public in any way, to solicit passengers. (2) Private charters include any flight for which the total passenger capacity of the aircraft is used for the purpose of civilian or military air movement, conducted under contract with the U.S. government or a foreign government.

Since 1978, operators of public charters have been subject to the same security requirements as operators of aircraft in scheduled service. Private charters have operated under different requirements, however. With respect to private charters, the passengers choose to travel together. They may be related to one another in some way, such as being employed by the same company or on the same sports team, and so the risk that one passenger would endanger the others appeared to be low. However, in the current threat environment we must reevaluate whether such relationships among the passengers can be relied on to provide the level of security needed. As was plainly illustrated in the September 11 incidents, terrorists not only have the ability to blend into their environment and interact with others easily, they persistently seek out vulnerabilities in the system, and will travel in groups in order to accomplish their goals more efficiently. Moreover, in the wake of the September 11 terrorist acts, air travel was prohibited initially and resumed incrementally over time. As a result, flights to some locations became more difficult to find on a regular or frequent basis. More travelers began using the charter industry to reach their destinations.

Therefore, TSA has determined that it is necessary to take additional measures to ensure that the passengers on the larger private charter aircraft do not have weapons, explosives, or incendiaries that would enable them to take over the aircraft and use it to do harm. The aircraft subject to this rule—those with a maximum certificated takeoff weight of 95,000 or more—are a size, and have a quantity of fuel, that could enable them to do great damage to targets on the ground. TSA believes the private charter operators should ensure that individuals and their accessible property are screened to reduce the risk that any individual could have a weapon, explosive, or incendiary device that would enable them to commandeer the aircraft and use it to destroy a target on the ground.

Many of the aircraft subject to this rule are used in scheduled passenger service one day and as a private charter the next. While in scheduled passenger service, the operator and crew conduct business in accordance with a full security program that requires screening individuals and their accessible property. TSA believes it is necessary to require these operators to ensure that all individuals on board and their accessible property are screened, regardless of whether they are in private charter, public charter, or scheduled service. Therefore, the amendment adds language to § 1544.101(f) to require operators of aircraft with a maximum certificated takeoff weight of 95,000 pounds or more to ensure that the individuals on board and their accessible property are screened prior to boarding.

This amendment does not apply to government charters because they can and do carry out procedures on a regular basis to address the security concerns at issue. The U.S. Department of Defense (DoD) and federal agencies use private charter operations to transport persons and property in furtherance of their government missions. The government agencies are responsible for ensuring the security of their personnel and the public on a daily basis, and have developed security measures unique to their needs. TSA sees no reason to apply the screening regime developed for commercial and civilian charter operations to the government. However, under the current rule, government charters must screen passengers when the charter deplanes or enplanes in sterile areas. This will minimize the risk that any weapon or other prohibited item the government personnel may be carrying could inadvertently or purposefully be used to taint the sterile area.

Paragraph (f) establishes the required security program components for private charter operations. Pursuant to the existing language in § 1544.101(f), private charter operations that enplane or deplane into a sterile area must establish a program that includes acceptance and screening of individuals and accessible property (§§ 1544.201, 1544.207), use of metal detection devices (§ 1544.209), use of X-ray systems (§ 1544.211), security coordinators (§ 1544.215), law enforcement personnel (§ 1544.217), accessible weapons (§ 1544.219), criminal history records checks (§§ 1544.229, 1544.230), training for security coordinators and crewmembers (§ 1544.233), training for individuals with security-related duties (§ 1544.235), bomb or air piracy threats (§ 1544.303), security directives (§ 1544.305), and all of subpart E concerning screener qualifications when the aircraft operator performs screening. This rule amends § 1544.101(f) by now requiring private charter operators (other than government charters) using aircraft with a maximum certificated takeoff weight of 95,000 or more, regardless of whether they enplane or deplane in a sterile area, to comply with all of these sections.

This rule also adds to paragraph (f) the requirement that private charter operators that are subject to part 1544 must comply with § 1544.225, regarding the security of aircraft and facilities. For screening of individuals and accessible property to be effective, it is necessary for operators to ensure that the aircraft is free of weapons, explosives, and incendiaries before the individuals board. Private charter operators must have security measures in place to ensure the integrity of the aircraft.

This rule also requires individuals on private charter flights to submit to screening. For most screening of passengers under part 1544, the passenger is screened before entering a sterile area. The gate at which the passenger boards the aircraft is within the sterile area. Part 1540, which governs general rules for individuals and other persons, also establishes rules for screening. Subpart B contains rules that apply to many persons, including airport operators, airport tenants, aircraft operators, foreign air carriers, indirect carriers, employees of these entities, passengers, individuals at airports, and other individuals.

In order to make clear which individuals in an airport must comply with screening procedures, § 1540.107 requires all individuals who enter sterile areas to submit to screening. For private charter screening under this amendment, however, there may be no sterile area. The passengers may be screened immediately before they board the aircraft. Accordingly, we are amending § 1540.107 to make clear that individuals on charter must submit to screening before boarding an aircraft. This amendment will also apply to other screening conducted just before individuals board, such as gate screening within sterile areas.

Similar changes are made to § 1540.111(a)(1), which provides that an individual may not have a weapon, explosive, or incendiary, on or about the individual's person or accessible property when screening has begun.

This action is necessary to prevent a possible imminent hazard to aircraft, persons, and property within the United States. The events of September 11 illustrate the fact that terrorists have the will and ability to use large aircraft to destroy landmarks and kill thousands of people. The threat of more violence is apparent. Because the use of private charters has increased since September 11, the opportunity to commit a terrorist act with a large aircraft has increased and more people and ground targets may be at risk. The time needed to complete notice and comment procedures prior to issuing an enforceable standard lengthens the time this situation remains in place and expands the circle of risk. TSA has asked for comment with publication of this rule, and will consider all comments received shortly thereafter. If changes to the rule are necessary to address aviation security more effectively, or in a less burdensome but equally effective manner, TSA will not hesitate to make such changes. The Under Secretary of Transportation for Security believes that the circumstances described herein warrant immediate action, and finds that notice and public comment under 5 U.S.C. 553(b) are impracticable and contrary to the public interest.

This rule contains information collection activities subject to the Paperwork Reduction Act (44 U.S.C. 3507(d)). In accordance with the Paperwork Reduction Act, the paperwork burden associated with the rule will be submitted to the Office of Management and Budget (OMB) for review. As protection provided by the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control number for this information collection will be published in the Federal Register after it has been approved by the Office of Management and Budget.

Need: This rule requires operators using aircraft in private charter operations with a maximum certificated takeoff weight of 95,000 pounds or more to ensure that individuals and their accessible property are screened prior to boarding.

Description of Respondents: All new and existing operators using aircraft in private charter operations with a maximum certificated takeoff weight of 95,000 pounds or more.

Burden: TSA does not currently have concise data on which aircraft operators have aircraft in private charter operations with a certificated takeoff weight of 95,000 pounds or more. TSA estimates that there are approximately 25 operators currently operating under 14 CFR part 121 (Domestic, Flag, and Supplemental Operations) that currently have no program in place and so will have a new paperwork burden under this rule. In addition, TSA estimates that there are approximately 45 operators operating under 14 CFR part 121 with some portion of a security program with existing paperwork procedures in place now. Also, there are airlines using aircraft with a certificated takeoff weight of 95,000 pounds or more in charter service and in traditional commercial passenger service. These operators must currently do screening for commercial service, but will have an additional paperwork burden by now completing those screening activities for private charters. It is very difficult for TSA to determine what this new paperwork burden will be for these operators. Accordingly, TSA will calculate the paperwork burden using estimates assuming that 70 aircraft operators will be subject to this rule. Thus, these assumptions will overestimate the overall burden. In addition, TSA assumes no change in the number of aircraft operators over the next 10 years. Without this simplifying assumption, it would be impossible to estimate the total effects of these changes over the ten-year period.

Each air carrier subject to this rule will need to establish a program that provides for: screening individuals and accessible property; training all employees with security-related duties; training all security coordinators and crewmembers; acknowledging receipt of, and distributing Security Directives and Information Circulars; and preparing, maintaining, and accommodating modifications to a security program. The total ten-year paperwork burden is approximately 6,820 hours at a cost of $165,900. The annual burden totals approximately 560 hours at a cost of $11,200.

TSA anticipates that the regulated entities will have to purchase no additional equipment.

This rulemaking has been reviewed by the Office of Management and Budget. It is significant within the meaning of the Executive Order and DOT's policies and procedures. No regulatory analysis or evaluation accompanies this rule. TSA has not assessed whether this rule will have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act of 1980, as amended. When a rulemaking action does not include publication of a notice of proposed rulemaking, as is the case in this proceeding, economic assessments are not required for the final rule. TSA recognizes that this rule may impose costs on some affected operators. These costs will stem from developing and implementing screening procedures and other security measures. However, given the current security threat, TSA believes it is necessary to require these enhanced security measures. TSA will assess the costs and benefits of the rule as soon as possible and include the analysis in the docket of this matter.

TSA has examined this rule under the principles and criteria of Executive Order 13132, Federalism. TSA has determined that this action will not have a substantial direct effect on the States, or the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Therefore, this final rule does not have federalism implications.

The Trade Agreement Act of 1979 prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety and security, are not considered unnecessary obstacles. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The TSA has assessed the potential effect of this amendment and has determined that it will impose the same costs on domestic and international entities and thus has a neutral trade impact.

The Unfunded Mandates Reform Act of 1995 (the Act), enacted as Public Law 104-4 on March 22, 1995 is intended to curb the practice of imposing unfunded Federal mandates on State, local, and tribal governments. Title II of the Act requires each Federal agency to prepare a written statement that assesses the effect of any Federal mandate found in a rulemaking action that may result in an expenditure of $100 million or more (adjusted annually for inflation) in any one year by State, local and tribal governments, in the aggregate, or by the private sector. Such a mandate is identified as a “significant regulatory action.”

The Act does not apply to a regulatory action in which no notice of proposed rulemaking is published, as is the case in this proceeding. Accordingly, TSA has not prepared a statement under the Act.

TSA has reviewed this action for purposes of the National Environmental Review Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) and has determined that this action will not have a significant effect on the human environment.

The energy impact of this rule has been assessed in accordance with the Energy Policy and Conservation Act (EPCA), Public Law 94-163, as amended (42 U.S.C. 6362) and FAA Order 1053.1. It has been determined that this rule is not a major regulatory action under the provisions of the EPCA.

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

The third seasonal apportionment of the 2002 halibut bycatch allowance specified for the BSAI trawl yellowfin sole fishery category, which is defined at § 679.21(e)(3)(iv)(B)(1), is 49 metric tons (67 FR 956, January 8, 2002).

In accordance with § 679.21(e)(7)(v), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the third seasonal apportionment of the 2002 halibut bycatch allowance specified for the yellowfin sole fishery in the BSAI has been caught. Consequently, the Regional Administrator is closing directed fishing for yellowfin sole by vessels using trawl gear in the BSAI.

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

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, finds that the need to immediately implement this action to avoid exceeding the third seasonal apportionment of the halibut bycatch allowance for yellowfin sole fishery category in the BSAI constitutes good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B). These procedures are unnecessary and contrary to the public interest because the need to implement these measures in a timely fashion to avoid exceeding the third seasonal apportionment of the halibut bycatch allowance for yellowfin sole fishery category in the BSAI constitutes good cause to find that the effective date of this action cannot be delayed for 30 days. Accordingly, under 5 U.S.C. 553(d)(3), a delay in the effective date is hereby waived.

This action is required by 50 CFR 679.21 and is exempt from review under Executive Order 12866.