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

It has been determined that the Regulatory Flexibility Act is not applicable to this final rule because FSA is not required by 5 U.S.C. 553 or any other provisions of the law to publish a notice of final rule making regarding the subject matter of this rule.

It has been determined by an environmental evaluation that this action will have no significant impact on the quality of the human environment. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

This rule has been reviewed in accordance with Executive Order 12988. The provisions of this final rule preempt State laws to the extent such laws are inconsistent with the provisions of this rule.

This activity is not subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June 24, 1983).

This rule contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

This rule does not contain any new information collection requirements.

It has been determined that this rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have a substantial direct effect on States or their political subdivisions, or on the distribution of power and responsibilities among the various levels of Government.

For purposes of the operation of several programs, including the Non-Insured Crop Disaster Assistance Program (NAP), operated under rules set out at 7 CFR part 1437, it is necessary and important to determine how much of a field can be considered planted to a particular crop, and that determination can raise issues of how densely the field must be planted in order for the full acreage to be considered planted. Such determinations for NAP and other programs administered by FSA and the Commodity Credit Corporation are made using standards that are set out in regulations found at 7 CFR part 718. In particular, 7 CFR 718.107 addresses this issue. For example, persons filing for NAP benefits will indicate that they had a loss on a certain number of acres. That loss, in numbers of acres, will be multiplied by a yield per acre to arrive at a gross estimate of the amount of loss. This means, accordingly, that the number of acres considered committed to the crop can be critical in determining the amount of payments that the farmers can receive. In recent years, several situations have arisen in which farmers have reported unusual planting patterns that raise a question of whether the pattern reflected a desire to increase benefits rather than simply a desire to farm in the most productive manner possible for the market for the crop. These situations have prompted a review of the rule. That review has indicated that an overhaul of the measurement regulation is in order. Such an overhaul is undertaken in this rule, which provides that acreage planted to a crop will only be considered to be the rows of the crop itself and a set amount (as defined in the rule) on either side of the actual planted rows (including those rows which might be the last rows before a row is skipped and the first row after the skip). In the past, under the terms of the pre-existing regulation, it could occur that the full area of the skip might be considered to be planted even though the space was far greater than that which would normally occur between rows. It is believed that this revised rule will be fairer and will give a more accurate measure of the amount of the field that should be considered planted to a crop, assuming an intended full production of the crop.

The rules in 7 CFR part 718 were revised in response to the Agricultural Market Transition Act of 1996, Pub. L. No. 104-127, which, among other things, in section 196, re-instituted NAP within the CCC as it is now constituted. Originally, NAP was administered by the Federal Crop Insurance Program and the Risk Management Agency. After the 1996 Act, new rules were finalized for NAP (61 FR 69005, December 31, 1996) and also for the generic regulations in 7 CFR part 718 (61 FR 37552, July 18, 1996), which cover a number of issues common to a number of programs, including NAP. Section 161 of the 1996 Act provides for an exemption from the normal provisions of rule-making for implementing decisions made pursuant to that Act, and this exemption applies in this instance as well because this rule is part of the overall implementation of the 1996 Act and the administration of NAP. The rule has been designed to accommodate normal planting practices and to be flexible where needed to handle the special needs of special crops or special conditions in special areas.

Also, to provide for a transition from the old rules that would not occur in the middle of a crop year, the amended regulation in § 718.107 provides that the new provisions will apply only to the 2003 and subsequent crops.

This rule is issued under Marketing Agreement No. 84 and Marketing Order No. 905, both as amended (7 CFR part 905), regulating the handling of oranges, grapefruit, tangerines, and tangelos grown in Florida, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule continues in effect an increase in the minimum maturity requirements for fresh Florida grapefruit. This action continues to increase the minimum maturity from a 7.5 percent soluble solids (sugars) and a 7.0 to 1 solids to acid ratio with a sliding scale minimum ratio of 6.0 to 1, to an 8.0 percent soluble solids (sugars) and a 7.5 to 1 solids to acid ratio with a sliding scale minimum ratio of 7.2 to 1. This change results in a sweeter grapefruit taste and should increase consumer demand for fresh grapefruit. This action was recommended by the Committee at its meeting on May 22, 2002, during which thirteen Committee members voted in favor of this change, and three voted against the change.

Section 905.52 of the order provides authority for the establishment of grade and size requirements for Florida citrus. One element of grade is maturity. Section 905.306 of the order specifies, in part, the minimum grade requirements for grapefruit. The current grade requirement for Florida grapefruit is a U.S. No. 1. The specifics of this grade requirement are listed under the U.S. Standards for Grades of Florida Grapefruit (7 CFR 2851.750-2851.784).

The U.S. Standards for Grades of Florida Grapefruit (Standards) specify minimum and/or maximum allowances for discoloration, firmness, color, texture, form/shape, varietal characteristics, and maturity. The Standards define maturity by referencing the 1995 Florida Department of Citrus (FDOC) Florida Citrus Code, Chapter 601 and the FDOC Official Rules Affecting the Florida Citrus Industry, Part 1, Chapter 20-13. The 1995 Florida Citrus Code specifies a minimum maturity of 7.5 percent soluble solids (sugars) and a 7.0 to 1 ratio of solids to acid. The FDOC also employs a Citrus Fruit Maturity Chart as a sliding scale to determine equivalent soluble solids and ratio maturity combinations. The sliding scale allows for a range of soluble solids and ratio combinations that are comparable to the required minimum maturity level rather than just a fixed minimum requirement. With the sliding scale, a higher level of soluble solids (sugars) allows for a lower solids to acid ratio. In other words, grapefruit with higher soluble solids can have a lower solids to acid ratio and meet the minimum maturity requirements.

This rule continues to increase the minimum maturity requirements for fresh Florida grapefruit. At its meeting on May 22, 2002, the Committee recommended increasing the minimum maturity level for fresh grapefruit from a 7.5 percent soluble solids (sugars) and a 7.0 to 1 solids to acid ratio with a sliding scale minimum ratio of 6.0 to 1 as specified in the Standards, to an 8.0 percent soluble solids (sugars) and a 7.5 to 1 solids to acid ratio with a sliding scale minimum of 7.2 to 1.

The Committee had formed a subcommittee to examine the maturity issue, the Subcommittee on Grapefruit Maturity Standards (subcommittee). The subcommittee determined that the minimum maturity requirements for fresh grapefruit should be increased and forwarded this idea to the full Committee at the May meeting. The subcommittee's presentation to the full Committee focused on declining fresh grapefruit sales, which it attributed to consumer dissatisfaction with taste. Furthermore, it discussed the potential to increase consumer demand through increasing the sweetness of grapefruit, particularly early in the season.

The subcommittee found that consumers would be more likely to make repeat purchases if their initial taste experience with early season grapefruit was positive. By increasing the minimum maturity requirements, the industry could meet consumer demand for a sweeter tasting fruit. The subcommittee based its recommendation to increase the minimum maturity standard on recent market research studies and cited industry requests and support for a higher maturity standard.

The research studies referenced by the subcommittee were undertaken by the FDOC, or at their request, and were designed to determine those factors causing sales of fresh grapefruit to decline and those that cause demand to increase. Much of the decline in sales was attributed to consumer dissatisfaction with bitter tasting grapefruit early in the harvest season which, in turn, resulted in consumer reluctance to make repeat purchases. The studies indicate that consumer demand for grapefruit would increase if the initial taste experience of consumers was positive. In other words, repeat purchases are linked to consumer satisfaction with taste (Florida Department of Citrus, Consumer Research, February 20, 2002, conducted by a market research group; Grapefruit Sensory Evaluation Study, February 19, 1997, conducted by the FDOC; FDOC Grapefruit Strategy Working Session, February 20, 2002, conducted by a market research group).

The subcommittee stated there was also substantial industry support for an increase in the minimum maturity requirements, and referenced memos received by the Committee in support of such an increase. The memos received were from several industry groups representing nearly 80 percent of fresh grapefruit shipments. The memos specified the need to increase sales and identified an increased maturity standard as a means to improve consumer demand, particularly through repeat purchases.

The Committee, in its deliberations following the subcommittee's presentation, discussed the state of the fresh grapefruit market. Discussion centered around declining market demand and the need to improve consumer purchasing patterns, particularly for early season and repeat purchases. The Committee drew from information provided by the subcommittee, market studies, and from Committee members, and determined that providing the consumer with a sweeter, more mature grapefruit will likely result in improved fresh fruit sales.

The purpose of this action is to help stabilize the market for Florida grapefruit and improve producer returns by strengthening demand and increasing the number of repeat purchases of grapefruit. Market research indicates that this rule provides the consumer with a grapefruit that is closer to consumer expectations in terms of sweetness, thereby resulting in an increased demand for fresh grapefruit.

According to the FDOC Florida Citrus Outlook 2001-2002 report, domestic consumption of fresh Florida grapefruit has been declining in recent years, dropping from 7-pounds per capita consumption in the early 1980's to 6-pounds per capita consumption in the late 1990's. The Economic Research Service, USDA, listed per capita domestic consumption of grapefruit as 5.19 pounds in 2000.

This reduced consumption is reflected in shipping data for fresh grapefruit. The Committee's 2000-2001 Annual Statistical Report indicates that shipments of Florida fresh grapefruit have declined 28 percent over the past five seasons, dropping from 22.1 million boxes (1 3/5 bushels) in 1996-1997, to 15.9 million boxes in 2000-2001. For the same period, FDOC reports show that domestic consumption of fresh grapefruit has declined nearly 38 percent, from 18.6 million cartons ( 4/5 bushel) during the 1996-1997 season to 11.6 million cartons for the 2000-2001 season.

The FDOC also notes that Florida's share of the U.S. fresh grapefruit market has declined from 71.7 percent in 1990-1991, to 44.0 percent in 2001-02. Much of this lost market share has gone to Texas. Texas shipped an estimated 273 million pounds of fresh grapefruit to the domestic and Canadian markets in 2000-2001 compared to 184.3 million pounds in 1995-96, and accounted for over 31 percent of those market shipments in 2000-2001, up from 17 percent in 1995-96. Texas had a 32 percent increase in shipments to those markets over the 1995-96 season. During the same period, to the same markets, Florida fresh grapefruit shipments decreased by 32 percent.

The Committee raised the question as to the minimum maturity requirements for fresh Texas grapefruit. One reason for the increasing demand for Texas grapefruit may be its sweeter taste. Texas currently has a higher minimum maturity requirement than Florida. Minimum maturity requirements for fresh Texas grapefruit include a 9.0 percent soluble solids (sugars) and a 7.2 to 1 solids to acid ratio.

The Committee recognizes that Florida grapefruit production has been declining along with demand. However, the lower market supply has not stabilized market prices. Florida accounts for nearly 80 percent of total domestic grapefruit production. Production for the 2000-2001 season was approximately 46 million boxes. This compares to production of approximately 47.1 million boxes for the 1998-99 season, and is substantially less than the 55.8 million boxes produced in 1996-97. While this represents nearly an 18 percent decrease in Florida grapefruit production, lower supply did not result in higher producer returns as demand for fresh Florida grapefruit also declined during this period.

The weakening demand for Florida fresh grapefruit has contributed to declining on-tree prices and has led to economic abandonment of fruit. According to the National Agricultural Statistical Service, on-tree prices for fresh Florida grapefruit, fell from an average of $6.52 per box in 1999-2000 to an average of $4.80 per box in 2000-2001. Due to low economic returns the past several years, some producers have resorted to leaving portions of their crops unharvested. Economic abandonment has impacted the Florida grapefruit industry for four of the past six seasons, reaching an apex of 12 percent of total production in the 1997-1998 season. Abandoned fruit accounted for 4 percent of production in the 2000-2001 and the 2001-02 seasons.

The Committee believes that the over shipment of smaller-sized red seedless grapefruit contributes to poor returns and lower prices. To address this situation the Committee has recommended weekly percentage of size regulation under § 905.153 for the last five seasons. This regulation limits the volume of small sizes entering the market during the regulated period. Under weekly percentage of size regulation, f.o.b. prices and on-tree returns increased and movement stabilized as compared to years with no percentage of size regulation. Weekly percentage of size regulation has helped improved the situation, but it has not solved all the problems. Consequently, the Committee believes it is important to also address the demand side of the market.

The Committee's recommendation to increase the minimum maturity requirements recognizes that due to the loss of market demand, decreasing production and limiting shipments alone cannot adequately stabilize weakening prices. In its efforts to achieve market stabilization, the Committee has turned its focus to increasing consumer demand. The Committee's recommendation to increase the minimum maturity requirement seeks to increase demand by meeting consumer preferences with a sweeter tasting grapefruit.

The Committee's recommendation is supported by several recent market studies. FDOC research on consumer purchasing attitudes towards grapefruit demonstrates the need for increasing sweetness in grapefruit taste. Research results indicate that taste is a crucial factor in consumer grapefruit purchasing patterns, particularly repeat purchases (Grapefruit Sensory Evaluation Study, February 19, 2002, conducted by the FDOC).

One study, compiled in April of 2002 by the FDOC, Blue Ribbon Committee on Grapefruit, links the 30-percent decline in fresh grapefruit sales in less than 10 years to customer attrition and consumer perceptions of inconsistent taste. Another study conducted by the Opinion Dynamics Corporation, a market research group (February 20, 2002), states that taste is by far the most important consideration in consumer purchases of fruit.

A “Grapefruit Sensory Evaluation Study” conducted by the FDOC in 1997, concluded that the major determinant of repeat purchases of fresh grapefruit was the flavor of the consumer's first grapefruit purchase of the season. The results of this study indicate a strong correlation between sweetness of flavor and consumer's willingness to make additional purchases. The more bitter the consumer's initial grapefruit experience, the less likely the consumer was to make an immediate repeat purchase. Conversely, increased sweetness resulted in increased repeat purchases of fresh grapefruit.

An additional study prepared by the Compendium Group, a market research group, for the FDOC Grapefruit Strategy Working Session, February 2002, also stressed the importance of consumer perceptions and expectations in purchasing decisions. According to this study, consumers associate sweetness of grapefruit flavor to the overall quality of the fruit. The study states “consumers want consistent fruit that tastes the way they want it.”

In addition to the above-mentioned market research, there is strong industry support for an increase in the minimum maturity requirements. Industry support for an increase in the minimum maturity requirements was indicated through memos representing nearly 80 percent of Florida grapefruit production. Indian River Citrus League requested, in a memo to the Committee, a raise in the minimum maturity to 8.0 percent soluble solids and a 7.2 to 1 solids to acid ratio, a ratio slightly lower than ultimately recommended by the Committee. Florida Citrus Packers and the Peace River Citrus Growers Association supported an even larger increase in the minimum maturity standard. Several Committee members also expressed strong support for an increase.

The Committee's recommendation to raise the minimum maturity standard incorporates its belief that a sweeter fresh grapefruit is more attractive to consumers, and that consumer satisfaction with taste will lead to an increase in repeat purchases. In turn, greater demand for fresh grapefruit benefits the industry as a whole, as increased demand will likely help stabilize market prices.

While the recommendation to increase the minimum maturity standard was accepted by a majority of Committee members, some raised concerns about the impact of the higher standards on the different grapefruit producing regions and on early market sales. These concerns provided the basis for the three Committee members who opposed the Committee's recommendation.

One concern was that grapefruit production in areas lying to the north of the dominant, central grapefruit growing region could be disadvantaged due to differences in growing conditions. One member indicated there were some areas in the northern production region that may not be able to reach the higher maturity standard regardless of the use of a sliding scale, and, therefore, be excluded from the market. Variety of rootstock and geographic differences in soil and climate were listed as possible reasons for some production not being able to meet the higher standard.

Although some fruit may not meet the higher maturity standard, it is expected that it represents a very small percentage of the overall crop. The Committee's recommendation represents only a slight increase in the minimum maturity and includes a sliding scale. The sliding scale provides producers additional flexibility in meeting the higher standard. Also, the sliding scale helps producers in differing regions of the production area to meet the higher maturity requirements without compromising the desired outcome of a sweeter grapefruit taste.

Florida citrus maturity samples also indicate that the majority of Florida grapefruit will meet the higher maturity level, albeit later in the season. Therefore, while some fruit may require longer maturing periods before harvest, the majority of Florida citrus is expected to meet the higher standard at some point during the season. It is estimated that less than 2 percent of the Florida grapefruit crop will not make the higher maturity in a typical growing season.

Committee members also countered that, although a small percentage of Florida grapefruit production may not be able to meet the higher maturity standard, this percentage pales in comparison to the amount of grapefruit production currently left unharvested due to low economic returns. Several million boxes of grapefruit were left on the tree four of the past six seasons.

Another concern raised was that the higher maturity standard requires some fruit to be left on the tree longer than current industry practice, and that some producers will then forfeit the more lucrative early-season sales. A concern over a potential loss of competitive advantage was also voiced by the Gulf Citrus Growers Association (GCGA), which indicated in a memo to the Committee its opposition to an increase in the maturity standard. The southern production region has historically benefited from early-season sales as climate conditions allow their grapefruit production to mature sooner than the rest of the production area.

The FDOC maturity sampling results indicate that while soluble solids (sugars) levels are on average well over 8.0 from the onset of the grapefruit harvest season, average grapefruit ratio solids to acid levels in Florida grapefruit generally do not increase over 7.0 to 1 until the month of October, nearly one month after the traditional harvest season begins. Hence, a portion of Florida grapefruit crop will not meet the higher maturity requirements until slightly later in the season. However, maturity samples also indicate that meeting the increased maturity requirements later in the season is practicable for the majority of the Florida grapefruit industry as average soluble solids and solids to acid ratio levels are consistently above the recommended minimum threshold.

While the increase in minimum maturity could cause a delay in some fruit being released into the higher priced, early-season market, the Committee pressed the importance of meeting consumer expectations of flavor in order to secure repeat purchases. There is a push to get fruit into the market early to take advantage of high prices available at the beginning of the season. However, early fruit tends to be less mature. The availability of this early, less mature fruit can negatively impact repeat purchases and reduce demand in the long term. In addition, the higher maturity requirements apply to all Florida fresh grapefruit. This change impacts the entire industry, not just individual regions. Any harvesting delays resulting from this increase in maturity will impact all regions of the production area.

Committee members stated that while an increase in the minimum maturity standard could delay the release of some grapefruit onto the market, the potential opportunity costs of losing early-season sales will be more than compensated for by consumers buying grapefruit more frequently due to its sweeter, more appealing taste. Furthermore, the Committee estimated that only a small percentage of total Florida fresh grapefruit shipments will be affected by this change in the minimum maturity standard. In addition, the whole industry benefits from a stronger market demand and increased consumer satisfaction.

Taking into consideration the above concerns, the Committee believes increasing the maturity standard will benefit the industry. The Committee believes the higher maturity requirements will result in a sweeter grapefruit taste and improve producer returns through increased consumer purchases of fresh grapefruit by addressing consumer preferences for a more appealing taste. Moreover, as maturity naturally increases throughout the season, the overall impact on industry shipments will be equal to or less than 2 percent of the total grapefruit crop. Also, the sliding scale allows some flexibility for handlers to meet the higher maturity requirements without compromising the desired sweeter grapefruit taste.

This rule continues to raise the minimum maturity requirements from a 7.5 percent soluble solids (sugars) and a 7.0 to 1 solids to acid ratio with a sliding scale minimum ratio of 6.0 to 1, to an 8.0 percent soluble solids (sugars) and a 7.5 to 1 solids to acid ratio with a sliding scale minimum of 7.2 to 1. The sliding scale is based on the FDOC Citrus Fruit Maturity Chart, and is as follows:

Section 8e of the Act provides that when certain domestically produced commodities, including grapefruit, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, size, quality, and maturity requirements. Since this rule increases the minimum maturity requirements under the domestic handling regulations, a corresponding change to the import regulations must also be accomplished. A rule making a similar change to the maturity requirements under the import regulations will be issued as a separate action.

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

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued there under, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 75 grapefruit handlers subject to regulation under the order and approximately 11,000 producers of citrus in the regulated area. Small agricultural service firms, which include handlers, are defined by the Small Business Administration (SBA) as those having annual receipts of less than $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

Based on industry and Committee data, the average annual f.o.b. price for fresh Florida grapefruit during the 2001-02 season was approximately $6.98 per 4/5 -bushel carton, and total fresh shipments for the 2001-2002 season were estimated at 31.68 million cartons. Approximately 33 percent of all handlers handled 72 percent of Florida grapefruit shipments. Using the average f.o.b. price, at least 66 percent of grapefruit handlers could be considered small businesses under SBA's definition. Therefore, the majority of Florida grapefruit handlers may be classified as small entities. The majority of Florida grapefruit producers may also be classified as small entities.

There has been a significant decline in consumer purchases of fresh Florida grapefruit. The Committee believes that taste is one of the prime factors effecting demand and repeat purchases. This rule continues in effect an increase in the minimum maturity requirements from a 7.5 percent soluble solids and a 7.0 to 1 solids to acid ratio with a sliding scale minimum ratio of 6.0 to 1, to an 8.0 percent soluble solids (sugars) and a 7.5 to 1 solids to acid ratio with a sliding scale minimum ratio of 7.2 to 1. The increase in maturity results in a sweeter tasting fruit, particularly during the early months of the harvest season, and should increase consumer demand for fresh grapefruit. The Committee made its recommendation at its May 22, 2002, meeting, in a vote of thirteen in favor of this change, with three opposed. This rule continues in effect the modifications made to the grade provisions of § 905.306. Authority for this action is provided in § 905.52 of the order.

The increased minimum maturity requirements result in a sweeter grapefruit being released into the marketplace, particularly during the early months of the season. Lower maturity, which often translates into a more tart or bitter grapefruit taste, is typical of early season fresh-picked grapefruit. Market research indicates that a sweeter grapefruit taste is more desirable to consumers and could contribute to more repeat purchases of fresh grapefruit.

A “Grapefruit Sensory Evaluation Study” conducted by the FDOC in 1997, concluded that the major determinant of repeat purchases of fresh grapefruit was the flavor of the consumer's first grapefruit purchase of the season. The results of this study indicate a strong correlation between sweetness of flavor and consumer's willingness to make additional purchases. The more-bitter the consumer's initial grapefruit experience, the less likely the consumer was to make an immediate repeat purchase. Conversely, increased sweetness resulted in increased repeat purchases of fresh grapefruit.

The Committee discussed the potential costs associated with this action. It was mentioned that some producers could be disadvantaged by increased costs. Such costs may include, for example, the need for additional maturity checks and fruit that does not meet the higher maturity requirements.

The changes in this rule may require some producers to run additional maturity checks prior to harvest and shipping to ensure maturity. While additional maturity checks could be required for some, such checks are considered a standard practice within the industry and are not expected to result in significant increased costs to producers. Additional maturity tests could be avoided by simply delaying the harvest of the groves in question. Also, the overall impact of this change on shipments is expected to be minimal. Because grapefruit continues to mature throughout the season, the overall impact on industry shipments should be small, with only a small part of the grapefruit crop, equal to or less than 2 percent of overall production, possibly not meeting the increased maturity. The sliding scale also provides some additional flexibility to help producers meet the higher maturity requirements.

This rule may necessitate a delay in the onset of the fresh grapefruit harvest for some producers. This may mean selling fruit later in the season, and possibly missing the higher prices typically available in the early-season. However, the higher maturity requirements apply to all Florida fresh grapefruit. This change will impact the entire industry, not just individual regions. Any harvesting delays resulting from this increase in maturity will impact all regions of the production area.

In addition, it is anticipated that this change will result in higher consumer satisfaction and more repeat purchases, which should strengthen demand and stabilize prices. Therefore, the Committee believes the benefits gained from increased sales as a result of more frequent consumer purchases outweigh any losses associated with slightly lower prices received for shipments delayed due to increased maturity requirements. Any additional harvesting costs should also be compensated for through increased sales and stability in on-tree prices.

The purpose of this rule is to help stabilize the market and improve producer returns by increasing the number of repeat purchases of grapefruit, particularly earlier in the season. Based on the information given above, market research indicates this rule provides the consumer with a product that is closer to consumer expectations in terms of sweetness of flavor, therefore resulting in an increased demand for fresh grapefruit. The opportunities and benefits of this rule are expected to be available to all grapefruit handlers and producers regardless of their size of operation.

The Committee considered alternatives to taking this action. One alternative considered was a fixed maturity rate near the level identified in the market research studies of 8.5 percent soluble solids and an 8.0 to 1 solids to acid ratio or higher. Committee members believed this option would be too drastic of a change to effectuate in one season. While market research demonstrates that consumer tastes prefer a higher soluble solids (sugars) and ratio combination and sweeter taste, many producers would not be able to achieve that level until much later into the season. Therefore, this option was rejected.

Another alternative considered was a fixed maturity rate of 8.0 percent soluble solids and a 7.5 to 1 solids to acid ratio without the addition of an equivalent soluble solids and solids to acid ratio sliding scale. However, due to geographical and climactic differences between varying regions in the production area, some Committee members believed that some producers would have more difficulty in achieving the fixed rate, therefore disproportionately foregoing the more lucrative early season sales. Therefore, this alternative was also rejected.

The Committee also discussed leaving the regulations as previously issued. However, the majority of Committee members agreed that some change to minimum maturity was necessary to improve consumer demand for fresh grapefruit and to help them compete in the present market. Consequently, this alternative was also rejected.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large Florida grapefruit handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule. However, as previously stated, grapefruit have to meet certain requirements set forth in the standards issued under the Agricultural Marketing Act of 1946 (7 CFR 1621 et seq. ). Standards issued under the Agricultural Marketing Act of 1946 are otherwise voluntary.

The Committee's meeting was widely publicized throughout the citrus industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 22, 2002, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue.

An interim final rule concerning this action was published in the Federal Register on August 28, 2002. Copies of the rule were mailed by the Committee's staff to all Committee members and grapefruit handlers. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. That rule provided for a 60-day comment period, which ended October 28, 2002.

One comment was received during the comment period. The comment favored the regulation as published. The commenter believes that this is a positive move for the industry. According to the commenter, if the marketing season is delayed until better tasting grapefruit is available, consumers will not be as hesitant to make repeat purchases and may purchase more often. Accordingly, no changes are made to the rule based on the comment received.

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

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that finalizing this interim final rule, without change, as published in the Federal Register (67 FR 55101; August 28, 2002) will tend to effectuate the declared policy of the Act.

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

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction in equity to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule continues to decrease the desirable carryout used to compute the yearly trade demand for raisins regulated under the order. Trade demand is computed based on a formula specified in the order, and is used to determine volume regulation percentages for each crop year, if necessary. Desirable carryout, one factor in this formula, is the amount of tonnage from the prior crop year needed during the first part of the next crop year to meet market needs, before new crop raisins are available. This action continues to decrease the desirable carryout for Natural (sun-dried) Seedless (NS) raisins from a rolling average of 3 to 2 months of prior year's shipments over the past 5 years, dropping the high and low figures, and dividing the remaining sum by three, or 60,000 natural condition tons, whichever is higher. This action also continues to decrease the desirable carryout for all other varietal types of raisins covered under the order from a rolling average of 3 to 2 1/2 months of prior year's shipments over the past 5 years, dropping the high and low figures, and dividing the remaining sum by three. These actions were recommended by the Committee at meetings held on June 27 and July 24, 2002.

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

Section 989.54 of the order prescribes procedures to be followed in establishing volume regulation and includes methodology used to calculate volume regulation percentages. Trade demand is based on a computed formula specified in this section, and is also part of the formula used to determine volume regulation percentages. Trade demand is equal to 90 percent of the prior year's shipments, adjusted by the carryin and desirable carryout inventories.

At one time, § 989.54(a) also specified actual tonnages for desirable carryout for each varietal type regulated. However, in 1989, these tonnages were suspended from the order, and flexibility was added so that the Committee could adopt a formula for desirable carryout in the order's rules and regulations. The formula has allowed the Committee to periodically adjust the desirable carryout to better reflect changes in each season's marketing conditions.

The formula for desirable carryout has been specified since 1989 in § 989.154. Initially, the formula was established so that desirable carryout was based on shipments for the first 3 months of the prior crop year—August, September, and October (the crop year runs from August 1 through July 31). This amount was gradually reduced to 2 1/2 months in 1991-92, 2 1/4 months in 1995-96, and to 2 months in 1996-97. The Committee reduced the desirable carryout between 1991-1997 because it believed that an excessive supply of raisins was available early in a new crop year creating unstable market conditions.

In 1998, the Committee determined that, because of the reduced desirable carryout, not enough raisins were being made available for growth. Thus, the desirable carryout was increased to 2 1/2 months of prior year's shipments to allow for a higher trade demand figure and, thus, a higher free tonnage percentage, making more raisins available to handlers, especially for immediate use early in the season when supplies are often tight. This action also allowed desirable carryout to move towards what handlers actually hold in inventory at the end of a crop year, or about 100,000 tons. The Committee continued this practice and, in 2000, desirable carryout was changed to equal a rolling average of 3 months of prior year's shipments (August, September, and October) over the past 5 years, dropping the high and low figures.

At a meeting on June 27, 2002, the Committee reviewed the desirable carryout level. Most Committee members believe that the supply of free tonnage raisins on the market has once again become excessive and is contributing to unstable market conditions. The following table illustrates how handler inventories for NS raisins have been building in recent years:

To moderate the oversupply of marketable tonnage early in the crop year, the Committee recommended reducing the desirable carryout level for all varietal types of raisins from a rolling average of 3 months (August, September, and October) to 2 1/2 months (August, September, and one-half of October) of prior year's shipments over the past 5 years, dropping the high and low figures. Committee staff estimated that this change to the desirable carryout level would reduce the 2002 trade demand for NS raisins by 15,000 tons. Decreasing the trade demand will reduce the free tonnage percentage, thus, making less free tonnage available to handlers for immediate use.

The Committee's vote on this action was 41 in favor and 5 opposed. Two of the members voting no commented that the large carryout at the end of the current crop year was due mainly to an extra 32,000 tons of reserve raisins that were purchased by handlers in September 2001. They believe that the carryout problem will correct itself next season. Other members commented that this action would create a hardship on producers by reducing the free tonnage percentage, thereby reducing producer payments. After much deliberation, the majority of Committee members supported reducing the desirable carryout from a rolling average of 3 to 2 1/2 months of shipments over the past 5 years, dropping the high and low figures.

Most of the discussion at the Committee's meeting concerned the desirable carryout level for NS raisins. NS raisins are the major commercial varietal type of raisin produced in California. With the exception of the 1998-99 crop year, volume regulation has been implemented for NS raisins for the past several seasons. However, the Committee also believes that the decrease in desirable carryout should apply to the other varietal types of raisins covered under the order.

The raisin industry continued to explore other avenues to reduce the oversupply of California raisins, including implementing a “surplus pool and non-harvest” program for the 2002 crop year. However, rulemaking would be required as appropriate.

The Committee met on July 24, 2002, and revisited its oversupply situation and the desirable carryout issue. As a result, the Committee voted to further reduce the NS supply by decreasing the NS desirable carryout to a rolling average of 2 months (August and September) of prior year's shipments over the past 5 years, dropping the high and low figures, or 60,000 natural condition tons, whichever is higher. Committee staff estimated that this would reduce the 2002 trade demand for NS raisins by another 15,000 tons, or a total of 30,000 tons. The desirable carryout for all other varietal types would remain at the 2 1/2 month level recommended in June 2002.

The Committee's vote on this action was 32 in favor, 10 opposed, and 2 abstentions. The members voting no were primarily concerned that this action would reduce the free tonnage percentage and producer payments.

Although this action tightens the supply of raisins available early in the season, handlers will still be provided an opportunity to increase their inventories, if necessary, by purchasing raisins from the reserve pool under order-mandated 10 plus 10 offers and other releases of reserve raisins available under the order. The 10 plus 10 offers are two offers of reserve pool raisins, which are made available to handlers each season. For each such offer, a quantity of raisins equal to 10 percent of the prior year's shipments is made available for free use. Although this rule tends to tighten the supply of raisins early in the season, handlers will still have the opportunity to obtain additional raisins from the 10 plus 10 offers. Thus, paragraph (a) in § 989.154 is modified accordingly.

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

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 20 handlers of California raisins who are subject to regulation under the order and approximately 4,500 raisin producers in the regulated area. Small agricultural service firms are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. Thirteen of the 20 handlers subject to regulation have annual sales estimated to be at least $5,000,000, and the remaining 7 handlers have sales less than $5,000,000. No more than 7 handlers, and a majority of producers, of California raisins may be classified as small entities.

This rule continues to reduce the desirable carryout used to compute the yearly trade demand for raisins regulated under the order. Trade demand is computed based on a formula specified under § 989.54(a) of the order. It is also part of another formula used to determine volume regulation percentages for each crop year, if necessary. Desirable carryout, one factor in this formula, is the amount of tonnage from the prior crop year needed during the first part of the next crop year to meet market needs, before new crop raisins are available. This rule continues to reduce the desirable carryout specified in paragraph (a) of § 989.154 for NS raisins from a rolling average of 3 months (August, September, and October) to 2 months (August and September) of prior year's shipments for the past 5 years, dropping the high and low figures, and dividing the remaining sum by three, or 60,000 natural condition tons, whichever is higher. This rule also continues to reduce the desirable carryout for all other varietal types covered under the order from 3 months (August, September, and October) to 2 1/2 months (August, September, and one-half of October) of prior year's shipments for the past 5 years, dropping the high and low figures, and dividing the remaining sum by three.

The desirable carryout level applies uniformly to all handlers in the industry, whether small or large, and there are no known additional costs incurred by small handlers. As previously mentioned, reducing the desirable carryout will reduce the trade demand and free tonnage percentage, thus making less raisins available to handlers early in the season. This action is expected to help reduce the burdensome supply of California raisins, thereby improving market conditions. Handlers will be provided opportunities throughout the crop year to purchase raisins from the reserve pool to increase their inventories.

The Committee considered a number of alternative levels of desirable carryout. The Committee has an appointed subcommittee, which periodically holds public meetings to discuss changes to the order and other issues. The subcommittee met on June 26, 2002, and discussed desirable carryout. Some industry members supported maintaining the status quo. Others supported an incremental reduction to the desirable carryout, reducing the level to a rolling average of 2 3/4 months in 2002, and to a rolling average of 2 1/2 months in 2003. The subcommittee ultimately recommended to the full Committee in June that the desirable carryout be reduced for all varietal types to a rolling average of 2 1/2 months of prior year's shipments for the past 5 years, dropping the high and low figures, and dividing the remaining sum by three. The full Committee adopted the subcommittee's June recommendation.

As mentioned earlier, the raisin industry continued to explore other avenues to reduce the oversupply of California raisins, including implementing a “surplus pool and non-harvest” program for the 2002 crop year. However, rulemaking would be required as appropriate.

The Committee revisited the desirable carryout issue on July 24, 2002. At that meeting, the Committee reviewed an alternative proposal that would revise the trade demand formula by eliminating the adjustment for carryin and carryout inventory. The Committee also reviewed the merits of reducing the desirable carryout for NS raisins to a rolling average of 2 months of prior year's shipments over the past 5 years, dropping the high and low figures, and dividing the remaining sum by three, or 60,000 natural condition tons, whichever is higher. After much discussion, the majority of Committee members supported further reducing the desirable carryout for NS raisins to this level. Committee staff estimated that this would reduce the 2002 trade demand for NS raisins by another 15,000 tons, or a total of 30,000 tons. The desirable carryout for all other varietal types would remain at the 2 1/2 month level recommended in June 2002.

This rule imposes no additional reporting or recordkeeping requirements on either small or large raisin handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

In addition, the Committee's subcommittee meeting on June 26, 2002, and the Committee's meetings on June 27 and July 24, 2002, where this action was deliberated, were public meetings widely publicized throughout the raisin industry. All interested persons were invited to attend the meetings and participate in the industry's deliberations. Finally, all interested persons were invited to submit information on the regulatory and informational impacts of this action on small businesses.

Comments were received addressing the interim final rule including its initial regulatory flexibility analysis. These comments are addressed in the following discussion of comments received.

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

An interim final rule concerning this action was published in the Federal Register on August 12, 2002 (67 FR 52390). Copies of the rule were mailed by Committee staff to all Committee members and alternates, the Raisin Bargaining Association, handlers and dehydrators. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. That rule provided for a 10-day comment period that ended on August 22, 2002. Two comments were received. One favored the action. The other opposed the action.

The comment in favor stated that reducing the amount of NS raisins available to processors in terms of trade demand will not short the availability of raisins to the handler community because reserve raisins for free use can be made available to handlers under the marketing order. According to this commenter, producers need handlers to purchase their raisins and handlers need a marketing environment to sell those raisins in the most productive and efficient manner possible, and the reduction in desirable carryover appears to address both these needs.

The commenter opposed to the action stated that the reduction in desirable carryout is designed solely to protect the existing unsold inventory of weaker handlers. This action, however, is intended to decrease the amount of tonnage available early in the season and to help the industry reduce an oversupply of California raisins.

The commenter alleges that the decrease in desirable carryout, and eventually trade demand, first to 2.5 months and then to 2 months for NS raisins is entirely arbitrary and capricious. The commenter states that neither the Committee nor USDA have supplied price, revenue, or grower income responses to the formula change. Previous adjustments in desirable carryover were similarly lacking such analysis, according to the commenter.

The commenter states that the admitted effect of reducing carryout is to reduce trade demand by 30,000 tons, and, therefore, the total amount of free tonnage. The commenter contends that this would have a disproportionate impact on both growers and handlers based upon their relative sizes. According to the commenter, since one of the main effects of the proposal is price protection for existing inventory, those handlers with greater unsold inventories will experience more net gain compared to those handlers who hold less remaining inventory, thus creating a wealth transfer (from both growers and more efficient handlers) to those handlers less capable of effective marketing. The commenter further contends that the regulatory flexibility analysis is inadequate and defective and fails to take account of the net adverse effect on all growers and handlers of the lost revenue from reducing trade demand by 30,000 tons, and its addition to the unprofitable reserve.

The commenter further contends that the Committee and USDA have increasingly mismanaged the volume control program under the marketing order to produce a dynamically unstable condition of simultaneous oversupply and under-marketing. The commenter also contends that the volume control and various disposition programs for reserve raisins implemented under the order have prevented a normal and orderly supply response to changes in domestic and world demand and have contributed to unreasonable fluctuations in supplies and prices contrary to the Act.

The commenter states that the volume control program is careening out of control in terms of regulatory complexity, misallocation of resources, and distortions of supply, demand, and price signals. The Committee is losing consensus, has no strategic plan for the long-run future of the industry, and volume control should be stopped immediately. Only then, the commenter states, will supply, demand, and price balance be restored to long-term equilibrium. According to the commenter, wasting half the crop is simply absurd, and the raisin order was never intended as a prorate program or as an excuse to accumulate increasingly large price depressing surpluses. The commenter states that domestic price and supply manipulation is unwise, if not impossible, in an increasingly competitive world market.

The intent of volume control under the marketing order is to help stabilize raisin supplies and prices, strengthen market conditions, and improve producer returns. The marketing order has been quite successful in achieving these goals over the years. From the mid-1980's to the late 1990's producer prices were strong, demand in export was growing, and demand domestically was holding steady, due in part to the volume control programs implemented under the marketing order.

It is true that the industry has been experiencing an oversupply of raisins and weak marketing conditions since 1999. However, an immediate stop to volume regulation could result in an even worse situation and more than one-half of the expected 2002-03 crop probably would have to be disposed of in low return outlets.

The raisin industry has more raisins than it can sell, is faced with low prices, and weak domestic and export demand. It needs some means to help improve the situation. Most of the raisins produced are made from the Thompson Seedless grape, and the predominant raisin varietal is Natural (sun-dried) Seedless, comprising about 90 percent of the California crop. In previous seasons, producers earned as much as $1,425 a ton on raisins. Last season, the price dropped to about $880 per ton. This year's price has yet to be set, but is expected to be about the same or lower. Producers are having difficulty covering their production costs at such prices. Further, possible foreclosures on grower loans could add to the existing difficult situation.

Handlers are carrying in an aggregate of about 150,000 tons of 2001 NS crop inventory (about 45,000 tons higher than usual). With the large carryin, additional NS raisins available through a raisin-back export program (about 18,000 tons) and the 2002 diversion program (about 51,000 tons), and a 2002-03 bumper NS crop of about 400,000 tons, the available supply of NS raisins could exceed 600,000 tons. The industry ships about 310,000 tons of raisins annually. Thus, with no volume regulation the industry could have an excess of over 300,000 tons of raisins. This has made it difficult for handlers and producers to agree on a field price, and handlers are continuing to have difficulty selling their raisins at competitive prices. Without a mechanism in place to withhold the excess from the market, much of the crop might be wasted, and weak marketing conditions would continue for both producers and handlers. This would be disastrous for both producers and handlers. On October 8, 2002, preliminary volume regulation percentages were computed and announced for 2002-03 by the Committee. For NS, Oleate Seedless, Zante Currant, and Other Seedless raisins, a percentage of the crop will be held in reserve, which is expected to help balance supply with demand, and help alleviate the economic pressures caused by oversupply, low prices, and weak demand.

USDA disagrees with the commenter's views concerning this rulemaking and the operation of the marketing order program. This action is intended to help the raisin industry alleviate the oversupply problem it is facing and as the commenter in favor of the action states, it should meet the marketing needs of both growers and handlers. This action is consistent with the Agricultural Marketing Agreement Act of 1937 and the marketing order as well as other applicable law.

The current volume regulation procedures are intended to fully supply the domestic and export markets, provide for market expansion, and help prevent oversupplies in the domestic market, and have been used in previous years to help the industry. These procedures have been used carefully in an attempt to help the industry consistent with the Act.

Before the 1975-76 crop year, more than 50 percent of the raisins were packed and sold directly to consumers. Now, over 60 percent of raisins are sold in bulk. This means that raisins are now sold to consumers mostly as an ingredient in another product such as cereal and baked goods. In addition, for a few years in the early 1970's, over 50 percent of the raisin grapes were sold to the wine market for crushing. Since then, the percent of raisin-variety grapes sold to the wine industry has decreased.

California's grapes are classified into three groups—table grapes, wine grapes, and raisin-variety grapes. Raisin-variety grapes are the most versatile of the three types. They can be marketed as fresh grapes, crushed for juice in the production of wine or juice concentrate, or dried into raisins. Annual fluctuations in the fresh grape, wine, and concentrate markets, as well as weather-related factors, cause fluctuations in raisin supply. This type of situation introduces a certain amount of variability into the raisin market. Although the size of the crop for raisin-variety grapes may be known, the amount dried for raisins depends on the demand for crushing. This makes the marketing of raisins a more difficult task. These supply fluctuations can result in producer price instability and disorderly market conditions.

Volume regulation is helpful to the raisin industry because it lessens the impact of such fluctuations and contributes to orderly marketing. For example, producer prices for NS raisins have remained fairly steady between the 1992-93 through the 1997-98 seasons, although production has varied. As shown in the table below, during those years, production varied from a low of 272,063 tons in 1996-97 to a high of 387,007 tons in 1993-94, or about 42 percent. According to Committee data, the total producer return per ton during those years, which includes proceeds from both free tonnage plus reserve pool raisins, has varied from a low of $901 in 1992-93 to a high of $1,049 in 1996-97, or 16 percent. Total producer prices for the 1998-99 and 1999-2000 season increased significantly due to back-to-back short crops during those years.

There are essentially two broad markets for raisins—domestic and export. In recent years, both export and domestic shipments have been decreasing. Domestic shipments decreased from a high of 204,805 packed tons during the 1990-91 crop year to a low of 156,325 packed tons in 1999-2000. In addition, exports decreased from 114,576 packed tons in 1991-92 to 91,600 packed tons in the 1999-2000 crop year.

In addition, the per capita consumption of raisins has declined from 2.07 pounds in 1988 to 1.55 pounds in 2000. This decrease is consistent with the decrease in the per capita consumption of dried fruits in general, which is due to the increasing availability of most types of fresh fruit throughout the year.

While the overall demand for raisins has been decreasing (as reflected in decline in commercial shipments), production has been increasing. The production of dried raisins reached an all-time high of an estimated 432,616 tons in the 2000-01 crop year. This large crop was preceded by two short crop years; production was 240,469 tons in 1998-99 and 299,910 tons in 1999-2000. Production for the 2000-01 crop year soared to a record level because of increased bearing acreage and yields. Estimated production is more moderate at 372,499 tons in 2001-02. However, with 2001-02 carryin inventory totaling 116,131 tons, total available supply is quite large.

The order permits the industry to exercise supply control provisions, which allow for the establishment of free and reserve percentages, and establishment of a reserve pool. One of the primary purposes of establishing free and reserve percentages is to equilibrate supply and demand. If raisin markets are over-supplied with product, grower prices will decline.

Raisins are generally marketed at relatively lower price levels in the more elastic export market than in the more inelastic domestic market. This results in a larger volume of raisins being marketed and enhances grower returns. In addition, this system allows the U.S. raisin industry to be more competitive in export markets. crop year.

There are no known additional costs incurred by small handlers that are not incurred by large handlers. While the level of benefits of this rulemaking are difficult to quantify, the stabilizing effects of the volume regulations impact small and large handlers positively by helping them maintain and expand markets even though raisin supplies fluctuate widely from season to season. Likewise, price stability positively impacts small and large producers by allowing them to better anticipate the revenues their raisins will generate.

After consideration of all relevant material presented, including the information and recommendation submitted by the Committee, the comments received, and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

The FAA has received reports of spanwise stress corrosion cracking of the upper chord of the rear spar of the wing between Wing Butt Line (WBL) 70.5 and the wing tip. Investigation revealed that some cracks were up to 14 inches long. Further, one of the cracks was almost long enough to jeopardize the residual strength capability of the upper chord of the rear spar. Such cracking of the upper chord of the rear spar of the wing, if not corrected, could result in structural failure of the wing and fuel leaks in the airplane.

The FAA has reviewed and approved Boeing Alert Service Bulletin (ASB) 727-57A0145, revision 2, dated October 24, 2002. That ASB describes procedures for performing repetitive external detailed inspections on airplanes specified as “Group 1” to detect cracking and corrosion of the upper chord of the rear spar of the wing, and repair, if necessary. The ASB also describes procedures for detecting and permanently repairing any cracking that was previously repaired by stop-drilling. Additionally, the ASB describes procedures to perform high-frequency eddy current inspections (HFEC) on “Group 1” airplanes to detect cracking and corrosion of the upper chord of the rear spar and corrective action. Further, the ASB describes procedures to perform external detailed inspections and HFEC inspections on “Group 1” airplanes to detect cracking and corrosion of other areas such as the lower chord of the rear spar and the upper and lower chords of the front spar. In addition, the ASB describes procedures for certain other airplanes specified as “Group 2” airplanes that include external detailed inspections and HFEC inspections of various areas to detect cracking and corrosion; and repair, if necessary. The ASB also describes repair procedures for minor surface defects, corrosion, and cracking.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design, this AD is being issued to prevent failure of the wing and fuel leaks in the airplane due to stress corrosion cracking of the upper chord of the rear spar. This AD requires the following actions for airplanes designated as “Group 1” in Boeing Alert Service Bulletin 727-57A0145, revision 2, dated October 24, 2002:

• Repetitive external detailed inspections to detect cracking and corrosion of the upper chord of the rear spar of the wing,

• Repair of cracking and corrosion,

• External detailed inspections to detect any cracking that has been previously repaired by stop-drilling, and

• Permanent repair of any previously stop-drilled cracking.

Operators should note that, although the alert service bulletin specifies that the manufacturer may be contacted for disposition of certain repair conditions, this AD requires that those conditions be accomplished per a method approved by the FAA, or per data meeting the type certification basis of the airplane approved by a Boeing Company Designated Engineering Representative who has been authorized by the FAA to make such findings.

The actions required by this AD are considered to be interim action. The FAA is currently considering requiring additional actions specified in the alert service bulletin. However, the planned compliance time for the implementation of those actions is sufficiently long so that notice and opportunity for prior public comment will be practicable.

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

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

Submit comments using the following format:

• Organize comments issue-by-issue. For example, discuss a request to change the compliance time and a request to change the service bulletin reference as two separate issues.

• For each issue, state what specific change to the AD is being requested.

• Include justification ( e.g. , reasons or data) for each request.

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2002-NM-271-AD.” The postcard will be date stamped and returned to the commenter.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Boeing Model 757-200 series airplanes was published in the Federal Register on July 12, 2002 (67 FR 46132). That action proposed to require repetitive inspections for fatigue cracking of certain areas of the forward and aft frames of the cargo doorways, and repair, if necessary.

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received. One commenter states that the proposed AD does not apply to its fleet.

One commenter states that the terminology throughout the proposed AD which reads, “cargo door frame(s)” should be changed to “cargo doorway frames.” The commenter notes that the structures requiring the inspections are the cutout fuselage frames of the cargo door and not the cargo door frames. The commenter adds that the term “cargo doorway,” as specified in Boeing Alert Service Bulletin 757-53A0080, dated February 3, 2000 (referenced in the proposed AD as the appropriate source of service information for accomplishment of the actions), is a better description.

We agree with the commenter in that the description of the frames of the cargo door should be clarified. We have changed the description throughout this final rule to read, “cargo doorway.”

We have changed the service bulletin citation throughout this final rule to exclude the Evaluation Form. (The form is intended to be completed by operators and submitted to the manufacturer to provide input on the quality of the service bulletin; however, this AD does not include such a requirement.)

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

This is considered to be interim action. The manufacturer has advised that it currently is developing a modification that will address the unsafe condition identified in this AD. Once this modification is developed, approved, and available, the FAA may consider further rulemaking.

There are approximately 57 airplanes of the affected design in the worldwide fleet. The FAA estimates that 28 airplanes of U.S. registry will be affected by this AD.

For all airplanes: It will take approximately 3 work hours per airplane to do the high frequency eddy current and detailed inspections, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the inspections required by this AD on U.S. operators is estimated to be $5,040, or $180 per airplane, per inspection cycle.

For Group 3 airplanes: It will take approximately 1 work hour per airplane to do the additional detailed inspection, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of this required inspection on U.S. operators is estimated to be $60 per airplane, per inspection cycle.

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

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Boeing Model 747 series airplanes powered by General Electric CF6-80C2 series engines was published in the Federal Register on August 30, 2002 (67 FR 55739). That action proposed to require repetitive inspections and torque checks to find discrepancies of the fasteners that attach the diagonal brace fittings of the lower spar to the inboard engine struts, and modification of the fasteners if discrepancies are found. That action also proposed to require eventual modification of all the fasteners, which would end the repetitive inspections and checks.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.

The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

We have changed the service bulletin citation throughout this final rule to exclude the Evaluation Form. (The form is intended to be completed by operators and submitted to the manufacturer to provide input on the quality of the service bulletin; however, this AD does not include such a requirement.)

There are approximately 237 airplanes of the affected design in the worldwide fleet. We estimate that 14 airplanes of U.S. registry will be affected by this AD.

It will take approximately 5 work hours per airplane to accomplish the inspection and torque check at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the required actions on U.S. operators is estimated to be $4,200, or $300 per airplane, per inspection/check cycle.

It will take approximately 76 work hours per airplane to accomplish the terminating action at an average labor rate of $60 per work hour. Required parts will cost approximately $4,268 per airplane. Based on these figures, the cost impact of this required action on U.S. operators is estimated to be $123,592, or $8,828 per airplane.

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

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

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

The Luftfahrt-Bundesamt (LBA), which is the airworthiness authority for Germany, recently notified the FAA that an unsafe condition may exist on RRD Model Tay 620-15 and 650-15 turbofan engines. The LBA advises that there has been a dual-engine flameout on a Fokker 100 airplane that resulted in a forced landing and destruction of the airplane. The LBA has determined that a leak from the LP fuel tube, which connects the LP fuel flowmeter to the high pressure (HP) fuel pump, resulted in complete fuel exhaustion and subsequent dual engine flameout.

RRD has issued Service Bulletin (SB) TAY-73-1540, Revision 1, dated September 13, 2002, that specifies procedures for inspecting the LP fuel tube for fretting. The LBA classified this service bulletin as mandatory and issued AD No. 2002-331, dated September 13, 2002, in order to assure the airworthiness of these RRD Model Tay 620-15 and 650-15 turbofan engines in Germany.

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

Since an unsafe condition has been identified that is likely to exist or develop on other RRD Model Tay 620-15 and 650-15 turbofan engines of the same type design, this AD is being issued to prevent a dual-engine flameout due to fuel exhaustion, which could lead to forced landing and possible damage to the airplane. This AD requires an initial inspection of the LP fuel tube for fretting within 300 hours or one month after the effective date of this AD, whichever occurs first, and thereafter, repetitive inspections for fretting within 2,000 hours time-in-service after the last inspection. The actions must be done in accordance with the service bulletin described previously. The inspections required by this AD are considered interim action, and further rulemaking actions may be taken.

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

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2002-NE-37-AD.” The postcard will be date stamped and returned to the commenter.

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

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

On August 29, 2001, the FAA proposed to amend Title 14 Code of Federal Regulations, part 71 (14 CFR part 71) by revising Class E airspace at Holyoke, CO, to reflect a change in the ARP at the Holyoke Airport, Holyoke, CO (66 FR 45659). This action creates Class E5 airspace at Holyoke, CO, to meet current airspace requirements for IFR flight in Holyoke, Colorado. Interested parties were invited to participate in the rulemaking proceeding by submitting written comments on the proposal. No comments were received.

This amendment to Title 14 Code of Federal Regulations, part 71 (14 CFR part 71) revises the description of Class E5 airspace at Holyoke, CO, to reflect the change to the ARP coordinates in the legal description of Holyoke Airport. Class E5 controlled airspace is required to contain aircraft executing IFR procedures at Holyoke Airport. The FAA establishes Class E airspace where necessary to contain aircraft transitioning between the terminal and en route environments. This rule is designed to provide for the safe and efficient use of the navigable airspace and to promote safe flight operations under IFR at the Holyoke Airport and between the terminal and en route transition stages.

The area will be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. Class E5 airspace areas extending upward from 700-feet or more above the surface of the earth, are published in Paragraph 6005, of FAA Order 7400.9K dated August 30, 2002, and effective September 16, 2002, which is incorporated by reference in 14 CFR 71.1. The Class E5 airspace designation listed in this document will be published subsequently in the Order.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs). The complete regulatory description of each SIAP is contained in official FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Federal Aviation Regulations (FAR). The applicable FAA Forms are identified as FAA Forms 8260-3, 8260-4, and 8260-5. Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR (and FAR) sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to part 97 is effective upon publication of each separate SIAP as contained in the transmittal. Some SIAP amendments may have been previously issued by the FAA in a National Flight Data Center (NFDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP amendments may require making them effective in less than 30 days. For the remaining SIAPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, part 97 of the Federal Aviation Regulations (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows:

FDA has found that § 520.1263c (21 CFR 520.1263c) does not reflect the approved preslaughter withdrawal time for three lincomycin soluble powder products used to make medicated drinking water for swine. The 6-day withdrawal time was inadvertently removed for a generic product approved under ANADA 200-189 at the time it was being removed for the pioneer product approved under NADA 111-636 (64 FR 13341, March 18, 1999). The conditions of use for two other products approved February 4, 1999, under ANADA 200-241 (64 FR 13508, March 19, 1999) and September 22, 1999, under ANADA 200-233 (64 FR 66382, November 26, 1999) were subsequently codified without a withdrawal period. At this time, the regulations are being amended in § 520.1263c to correct these errors.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Virbac AH, Inc., 3200 Meacham Blvd., Ft. Worth, TX 76137, filed ANADA 200-320 for EQUELL (ivermectin) Paste. The application provides for oral use of 1.87 percent ivermectin paste in horses for the treatment and control of various species of internal parasites or parasitic conditions. Virbac's EQUELL Paste is approved as a generic copy of Merial Limited's EQUALEN Paste, approved under NADA 134-314. ANADA 200-320 is approved as of August 9, 2002, and 21 CFR 520.1192 is amended to reflect the approval. The basis of approval is discussed in the freedom of information summary.

In accordance with the freedom of information provisions of 21 CFR part 20 and 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

Elanco Animal Health, A Division of Eli Lilly & Co., Lilly Corporate Center, Indianapolis, IN 46285, filed a supplement to NADA 141-172 that provides for use of PAYLEAN (9 or 45 grams per pound (g/lb) ractopamine hydrochloride) and TYLAN (10, 40, or 100 g/lb tylosin phosphate) Type A medicated articles to make combination drug Type C medicated feeds used for increased rate of weight gain, improved feed efficiency, and increased carcass leanness; and for the prevention of swine dysentery in finishing swine. The supplemental NADA is approved as of June 19, 2002, and the regulations are amended in § 558.500 (21 CFR 558.500) to reflect the approval. The basis of approval is discussed in the freedom of information summary.

In addition, § 558.500 is being revised to reflect a current format. The entire text of this section is being provided for the convenience of the reader.

In accordance with the freedom of information provisions of 21 CFR part 20 and 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

The agency has determined under 21 CFR 25.33(a)(2) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Boehringer Ingelheim Vetmedica, Inc., 2621 North Belt Hwy., St. Joseph, MO 64506-2002, has informed FDA that it has transferred ownership of, and all rights and interest in, NADA 128-550 for ANCHOR Zinc Bacitracin Type A medicated article to Pennfield Oil Co., 14040 Industrial Rd., Omaha, NE 68137. Accordingly, the agency is amending the regulations in 21 CFR 558.78 to reflect the transfer of ownership.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 72 of the Internal Revenue Code of 1986 (Code). Section 72(p) was added by section 236 of the Tax Equity and Fiscal Responsibility Act of 1982 (96 Stat. 324), and amended by the Technical Corrections Act of 1982 (96 Stat. 2365), the Deficit Reduction Act of 1984 (98 Stat. 494), the Tax Reform Act of 1986 (100 Stat. 2085), and the Technical and Miscellaneous Revenue Act of 1988 (102 Stat. 3342).

On July 31, 2000, final regulations were published in the Federal Register in TD 8894 (65 FR 46588) with respect to issues arising under section 72(p)(2). On the same date, a notice of proposed rulemaking (REG-116495-99) was published in the Federal Register (65 FR 46677) with respect to issues arising under section 72(p)(2) that were not addressed in the 2000 final regulations. The proposed regulations addressed the suspension of loan repayments during a leave of absence for military service in accordance with section 414(u)(4), the effect of a new loan following a deemed distribution of a prior loan, and the effect of refinancings and multiple loans. The preamble to the proposed regulations also requested comments on the application of the Electronic Signature in Global and National Commerce Act (114 Stat. 464) (ESIGN), which had been enacted shortly before publication of the proposed regulations. Following publication of the proposed regulations, comments were received and a public hearing was held on January 17, 2001. After consideration of the comments received the proposed regulations are adopted as revised by this Treasury decision.

Section 72(p)(1)(A) provides that a loan from a qualified employer plan (including a contract purchased under a qualified employer plan) to a participant or beneficiary is treated as received as a distribution from the plan for purposes of section 72 (a deemed distribution). Section 72(p)(1)(B) provides that an assignment or pledge of (or an agreement to assign or pledge) any portion of a participant's or beneficiary's interest in a qualified employer plan is treated as a loan from the plan.

Section 72(p)(2) provides that section 72(p)(1) does not apply to the extent certain conditions are satisfied. Specifically, under section 72(p)(2), a loan from a qualified employer plan to a participant or beneficiary is not treated as a distribution from the plan if the loan satisfies requirements relating to the term of the loan, the repayment schedule, and the amount loaned. For example, except in the case of certain home loans, the exception in section 72(p)(2) only applies to a loan that by its terms is to be repaid over not more than five years in substantially level installments. Such a loan is not a deemed distribution to the extent it does not exceed the lesser of (i) an amount equal to $50,000, reduced to the extent that the participant's or beneficiary's highest balance for plan loans outstanding during the preceding 12 months exceeds the current balance for plan loans, or (ii) 50 percent of the participant's or beneficiary's nonforfeitable benefit. Under section 72(p)(2)(D), these limitations apply by treating the loans from all plans of the employer's controlled group as one loan.

For purposes of section 72, a qualified employer plan includes a plan that qualifies under section 401 (relating to qualified trusts), 403(a) (relating to qualified annuities) or 403(b) (relating to tax sheltered annuities), as well as a plan (whether or not qualified) maintained by the United States, a State or a political subdivision thereof, or an agency or instrumentality thereof. A qualified employer plan also includes a plan which was (or was determined to be) a qualified employer plan or a government plan.

These final regulations retain the general structure and much of the substance of the proposed regulations, including a variety of examples illustrating the provisions. Some changes have been made in connection with specific recommendations for modifications and clarifications. The comments received in response to the proposed regulations are generally summarized below.

The proposed regulations stated that, under section 414(u)(4), a plan that permits suspension of loan repayment during a leave of absence for military service (as defined in 38 U.S.C. chapter 43) will not cause the loan to be deemed distributed, even if the leave exceeds a year. The rule was conditioned on loan repayments resuming upon the completion of the military service, the amount remaining due on the loan being repaid in substantially level installments, and the loan being fully repaid by the end of the original term of the loan plus the period of the military service. One commentator was concerned that because the requirement that interest accruing during military service be paid within the extended term would result in larger loan payments following military service than payments preceding military service, the rule could work a hardship on some participants. The commentator suggested that the regulations be modified to allow extension of the loan term in these cases to the period necessary to repay the loan with payments in the same amount as before the military service leave. Another commentator requested that the same extension of loan repayments be permitted for other bona fide leaves of absence.

Section 414(u)(4) accommodates military service personnel by permitting postponement of loan repayments while performing military service, but does not alter the accrual of interest or any conditions in section 72(p)(2). Under the proposed regulations, upon resuming repayment, a lender may permit a participant to choose to increase the amount of the payments or to make payments at the previous rate with a balloon payment due at the end of the required time. The IRS and Treasury believe that the amendments suggested by these comments would not satisfy the conditions in section 72(p)(2) that are unaffected by section 414(u)(4). Therefore, the final regulations adopt the regulation as proposed. However, an example in the final regulations has been modified to reflect the application of a maximum 6 percent interest rate during the military leave in accordance with the Soldiers' and Sailors' Civil Relief Act Amendments of 1942. A modification has also been made to clarify that loan repayments can be revised at the end of a military leave to extend the repayment schedule in the event the loan originally had a term of fewer than five years, as discussed below at the end of section C.

The proposed regulations provided that if a loan is deemed distributed to a participant or beneficiary and has not been repaid, then, unless certain conditions are satisfied, any payment made to the participant or beneficiary thereafter will not be treated as a loan for purposes of section 72(p)(2). Specifically, the proposed regulations provided that to avoid this result, the plan must enter into an agreement under which either repayments are made by payroll withholding or adequate security for the additional loan (in addition to the participant's accrued benefit) is obtained. Some commentators stated that because individuals often hold section 403(b) annuity contracts with more than one issuer, it may be difficult for an issuer to determine whether an individual has defaulted on a plan loan with another issuer. A concern was expressed that if upon a deemed distribution a form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc. , is not issued reflecting taxable income, a subsequent loan to a defaulting participant could subject the loan issuer to penalties.

However, in order to satisfy the limitations on the maximum amount that may be loaned from plans of the employer imposed by section 72(p)(2)(A), the issuer of any loan under section 72(p)(2) must inquire about other loans made from the plan or any other plan of the employer before extending a loan. As part of this process, the issuer can condition a new loan on a participant's disclosure of such prior loans and, for this purpose, can rely on an employee's certification concerning the status of prior loans, assuming the issuer has no reason to doubt the employee's certification. Accordingly, the final regulations adopt the provision as proposed.

The proposed regulations provided that, while a loan may be refinanced, the refinancing arrangement must satisfy the requirements of section 72(p)(2)(B) and (C) that loans be repaid in substantially level installments, not less often than quarterly and over a period not in excess of five years (longer for certain home loans). Under the proposed regulations, a refinancing is treated as a continuation of the prior loan, plus a new loan to the extent of any increase in the loan balance. Thus, while a refinancing loan can be repaid over a five-year period from the date of the refinancing to the extent the refinancing loan exceeds the prior loan amount, the prior outstanding loan must continue to be repaid in substantially level installments over a period not longer than the original term remaining on the prior loan in order for the refinancing not to result in a deemed distribution. A refinancing can also satisfy the repayment requirements of section 72(p)(2)(B) and (C) if the refinanced loan is repaid within the original term remaining on the prior loan. If any portion of the refinancing loan has a later repayment date than the original term remaining on the prior loan, then both the prior loan and the refinancing loan are treated as outstanding at the time of the refinancing for purposes of the limitations on the maximum amount that may be loaned from plans of the employer under section 72(p)(2) (which is generally the lesser of a $50,000 amount described above or 50 percent of the employee's nonforfeitable benefit). These standards were illustrated in examples.

Commentators requested that the regulations be modified so that the rules for refinancings accommodate a prior loan with a term of less than five years that is refinanced to a date that is five years from the date of the prior loan.

The final regulations generally adopt the provision on loan refinancings as proposed. However, the refinancing rules have been modified to conform with the recommendation made by commentators on the extension of a prior loan with an original term of less than five years to a term of five years from the date of the prior loan. A similar modification has also been made for repayments made following a military leave.

Section 72(p)(2) does not prohibit a participant from borrowing from a plan more than once a year. However, in order to address the risk that additional loans could be taken out in order to avoid repayment of prior loans, the proposed regulations provided that a deemed distribution occurs if a participant obtains more than two loans a year.

Several commentators stated that obtaining loans simply to repay previous loans is an abuse that should not be permitted, and commentators and others also provided information indicating that the vast majority of defined contribution plans already include limitations under which a participant is not permitted to have more than two loans outstanding at any time. However, commentators generally requested the flexibility of being allowed to make more than two loans per year to a participant and provided various examples of situations (such as a parent with several children in college) in which a participant might have a legitimate need for multiple borrowings during a year. They also noted that there is no direct statutory foundation for limiting the number of loans under section 72(p) and that the special 12-month rule with respect to the calculation of the $50,000 limitation under section 72(p)(2)(A)(i) inherently limits the number of loans that can be made for larger borrowings. In recognition of these comments, the final regulations do not include any limitation on the number of loans that can be made under section 72(p)(2). Treasury and the IRS recognize that the absence of any limitation on the number of loans that may be made to a participant will allow certain practices that could not otherwise occur without generating taxable income through a deemed distribution under section 72(p). For example, as pointed out by certain commentators, the use of a participant's account balance under a qualified employer plan to secure a credit card is a practice that would not be permissible if the regulations were to limit the number of loans that could be made to a participant from a plan. Thus, Treasury and the IRS recognize that, because the final regulations do not include any limitation on the number of loans that can be made, there will be no section 72(p) barrier to credit card loans that otherwise meet the requirements of that section.

The 2000 final regulations require that the terms of a plan loan be set forth in an enforceable agreement and provide that the agreement may be set forth in an electronic medium that satisfies standards that are based on the standards for an electronic consent to a distribution contained in § 1.411(a)-11(f)(2). As noted in the preamble to the proposed regulations under § 1.417(a)(3)-1 published in the Federal Register on October 7, 2002 (67 FR 62417) (relating to disclosure of relative values of optional forms of benefit), the IRS and the Treasury Department are considering the extent to which notices under the various Code requirements relating to qualified retirement plans can be provided electronically, taking into account the effect of ESIGN. As further noted in that preamble, the IRS and the Treasury Department anticipate issuing proposed regulations regarding these issues, and invite comments on these issues. The requirements applicable to electronic plan loan agreements may be considered in connection with those upcoming proposed regulations as well. 1

Commentators requested that the regulations be modified to clarify that eligible governmental plans under section 457(b) are permitted to offer loans to employees in a manner consistent with section 72(p). Proposed regulations under section 457 (REG-105885-99) that were published in the Federal Register on May 8, 2002 (67 FR 30826), clarify the conditions under which loans can be made to participants in such plans (at proposed § 1.457-6(f)) and that section 72(p) applies to any such loan (at proposed § 1.457-7(b)(3)).

The proposed regulations would have been effective on the first January 1 that is at least 6 months after they are published as final regulations. These final regulations apply to assignments, pledges, and loans made on or after January 1, 2004, but do not apply to loans made under an insurance contract that is in effect on December 31, 2003, if the insurance carrier is required to offer loans to contractholders that are not secured (other than by the participant's or beneficiary's benefit under the contract).

It has 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. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and, because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is Vernon S. Carter, Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and Treasury Department participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

I. Background on the Mississippi Program II. Submission of the Amendment III. OSM's Findings IV. Summary and Disposition of Comments V. OSM's Decision VI. Procedural Determinations I. Background on the Mississippi Program

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 approved the Mississippi program on September 4, 1980. You can find background information on the Mississippi program, including the Secretary's findings and the disposition of comments, in the September 4, 1980, Federal Register (45 FR 58520). You can find later actions on the Mississippi program at 30 CFR 924.10, 924.15, 924.16, and 924.17.

By letter dated September 28, 2001 (Administrative Record No. MS-0388), Mississippi sent us an amendment to its program under SMCRA and the Federal regulations at 30 CFR 732.17(b). Mississippi sent the amendment in response to our letters dated August 17, 2000, and August 23, 2000 (Administrative Record Nos. MS-0382 and MS-0381, respectively), that we sent to Mississippi in accordance with 30 CFR 732.17(c). Mississippi also sent the amendment in response to required program amendments at 30 CFR 924.16(i) and (l). Finally, the amendment included changes made at Mississippi's own initiative.

We announced receipt of the proposed amendment in the November 2, 2001, Federal Register (66 FR 55611). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on the adequacy of the amendment. The public comment period closed on December 3, 2001. Because no one requested a public hearing or meeting, we did not hold one. We received comments from one State agency.

During our review of the amendment, we identified concerns relating to the definition of “immediate mining area” and provisions concerning limited use vehicular pathways. We notified Mississippi of these concerns by letter dated January 23, 2002 (Administrative Record No. MS-0390). By letter dated July 22, 2002, Mississippi sent us a revised amendment (Administrative Record No. MS-0394). Based upon Mississippi's revisions to its amendment, we reopened the public comment period in the September 6, 2002, Federal Register (67 FR 56967). The public comment period closed on September 23, 2002. We did not receive any comments.

Also during our review, we identified editorial concerns relating to Mississippi's revegetation success standards. We notified Mississippi of these concerns by telephone on September 10, 2002 (Administrative Record No. MS-0398). By letter dated September 12, 2002, Mississippi sent us revisions to its amendment (Administrative Record No. MS-0397). Because the revisions merely clarified certain provisions of Mississippi's amendment, we did not reopen the public comment period.

Following, under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17, are our findings concerning the amendment to the Mississippi program. Any revisions that we do not discuss below are minor wording changes, or revised cross-references and paragraph notations to reflect organizational changes resulting from this amendment.

The State rules listed in the table contain language that is the same as or similar to the corresponding sections of the Federal regulations. Differences between the State rules and the Federal regulations are minor.

Because the above State rules are substantively the same as the corresponding Federal regulations, we find that they are no less effective than the Federal regulations.

Mississippi revised its definition of “valid existing rights” to closely follow the Federal definition at 30 CFR 761.5. However, Mississippi's definition of “valid existing rights” includes language in paragraph (a) specifying that valid existing rights must have been in existence on August 3, 1977, unless, subsequent to the adoption of the definition, section 53-9-71(4) of the Mississippi Surface Coal Mining and Reclamation Law is amended to delete that requirement. Mississippi's definition further provides that if section 53-9-71 of the Mississippi Surface Coal Mining and Reclamation Law is amended to delete the requirement that a right exist as of August 3, 1977, then the right must have been in existence at the time the land came under the protection of 30 CFR 761.11, 30 U.S.C. 1272(e), Miss. Code Ann. 53-9-71, or section 1105 of the Mississippi regulations. In a letter dated September 28, 2001 (Administrative Record No. MS-0388), Mississippi explained that section 53-9-71(4) of Mississippi's Surface Coal Mining and Reclamation Law provides that valid existing rights must have existed on or before August 3, 1977. Mississippi further explained that it may suggest a statutory change to the Mississippi Legislature to bring the state law in line with the Federal statute and regulations.

Mississippi's definition of “valid existing rights” provides that a person claiming valid existing rights must demonstrate valid existing rights in the same manner required by the Federal definition at 30 CFR 761.5, except that those rights must have existed on August 3, 1977. The Federal regulations require that valid existing rights must have existed on the date that the land came under the protection of 30 CFR 761.11 or 30 U.S.C 1272(e)—a date that could occur on or after August 3, 1977. Because rights that exist under the Mississippi rules would also exist under the Federal regulations, we find that Mississippi's proposed definition is no less effective than the Federal definition at 30 CFR 761.5. Therefore, we are approving it.

Mississippi revised the language in this section by adding the phrase, “a valid existing rights determination made by OSM” after the reference to “30 U.S.C. 1272(e).” Mississippi also replaced the phrase, “this Chapter” with the phrase, “these regulations.”

As revised, section 1103 reads as follows:

The Federal regulations at 30 CFR 761.3 authorizes a State regulatory authority to prohibit or limit surface coal mining operations on or near certain private, Federal, and other public lands, subject to valid existing rights and except for those operations which existed on August 3, 1977. Therefore, we find that Mississippi's revisions to section 1103 are not inconsistent with 30 CFR 761.3, and we are approving it.

a. At paragraph (a), Mississippi added language to require the Permit Board to determine whether proposed surface coal mining operations are limited or prohibited under section 1105 prior to the submission of a complete application, if the applicant requests the Permit Board to do so under section 1106. We find that the revision of this section is not inconsistent with the Federal provisions at 30 CFR 761.16, which allow an applicant to request that the regulatory authority make a valid existing rights determination prior to preparing and submitting an application for a permit or boundary revision. Therefore, we are approving it.

b. Mississippi revised the first sentence of paragraph (b) to provide that where a proposed operation would be located on any lands listed in section 1105, the Permit Board must deny the permit if the applicant has no valid existing rights for the area. We find that Mississippi's revisions are no less effective than the Federal provisions at 30 CFR 773.15(c)(ii), which provides that no permit application can be approved unless the application affirmatively demonstrates and the regulatory authority finds in writing that the proposed permit area is not within an area subject to the prohibitions of 30 CFR 761.11. Therefore, we are approving it.

c. Mississippi revised paragraph (f) to provide that the Permit Board will follow the procedures required by section 3114(d) of Mississippi's rules when it determines that a proposed surface coal mining operation will adversely affect any publicly owned park or any place included in the National Register of Historic Places. Section 3114(d) of Mississippi's rules is substantively the same as the Federal provisions at 30 CFR 761.17(d), which describe the procedures for joint approval of surface coal mining operations that will adversely affect publicly owned parks or historic places. Because Mississippi's revision merely directs the reader to the procedures found in 3114(d), we find that Mississippi's revision at section 1107(f) is no less effective than the Federal provisions at 30 CFR 761.17(d), and we are approving it.

d. Finally, Mississippi removed paragraph (h), which provided that determinations made by the Permit Board concerning whether a person has valid existing rights are subject to administrative and judicial review under Miss. Code Ann. 53-9-77. Paragraph (h) also provided that determinations made by the Permit Board concerning whether surface coal mining operations existed on the date of enactment are subject to administrative and judicial review under Miss. Code Ann. 53-9-77.

Section 1106(g) of Mississippi's revised rules provides that a determination that valid existing rights do or do not exist is subject to administrative and judicial review under section 53-9-77 of the Mississippi Surface Coal Mining and Reclamation Law. Therefore, we find that the removal of the portion of section 1107(h) concerning administrative and judicial review of valid existing rights determinations does not render the Mississippi rules less effective than the Federal regulations, and we are approving it.

On December 17, 1999, we removed the portion of former 30 CFR 761.12(h) that provided for administrative appeals of existing operations determinations. In the preamble, we explained that because the exception for existing operations in 30 CFR 761.12 does not require any affirmative action or decision on the part of the permittee or the regulatory authority, no action or decision exists to appeal (64 FR 70804). Therefore, Mississippi's removal of the portion of section 1107(h) concerning administrative and judicial review of existing operations determinations is consistent with the removal of our counterpart provision at former 30 CFR 761.12(h), and we are approving it.

Mississippi added a definition for “immediate mining area” to read as follows:

No Federal counterpart to this definition exists. However, in the preamble to our November 8, 1988, Federal Register (53 FR 44356) concerning roads, we discussed what the phrase meant. In that discussion, we incorporated two concepts into the interpretation of “immediate mining area”—frequent changes and drainage control. Several commenters suggested that the term be interpreted consistent with drainage control since the necessary environmental protection would be provided and it would provide an exact meaning of the term. We stated that our view is in part consistent with the commenters concerning the exclusion of roads within the permit area for which drainage control is otherwise provided. We went on to explain that because all of the other standards of section 515 of SMCRA would also necessarily apply to temporary routes not considered roads, the protection required by section 515(b)(17) of SMCRA would still be achieved. However, we retained the concept of frequent changes in order to ensure that all roads are adequately reclaimed. We stated that all routes subject to frequent changes would be obliterated during the mining process, but routes no longer changing need to be included in the definition of road to ensure that they are adequately designed, constructed, maintained, and reclaimed. No further guidance in interpretation of the phrase “frequent changes” was provided.

Routes of travel in large mines over relatively flat terrain, such as the mine in Mississippi, move as operations move, and are therefore subject to frequent change. We believe that, considering the nature of mining operations in Mississippi, it would not be unreasonable or an abuse of discretion for the State to consider the immediate mining area as matching the area where drainage control has been established through construction of siltation structures so long as mechanisms are in place to ensure that when travel routes are no longer changing, they are either (1) Reclaimed with vegetation established or (2) approved as roads as mining and reclamation operations are completed, such as by the time of phase II bond release. We believe that these mechanisms would ensure full and contemporaneous reclamation, and ensure that travel routes not reclaimed as part of the general reclamation of an area would be included in the definition of a road.

By letter dated January 23, 2002 (Administrative Record No. MS-0390), we notified Mississippi that its definition lacked the mechanisms to ensure that all travel routes are either reclaimed or approved as roads as mining and reclamation operations are completed. By letter dated July 22, 2002 (Administrative Record No. MS-0394), Mississippi sent a revision to its definition to add a provision requiring routes of travel within the immediate mining area to be (1) Consumed by mining; (2) reclaimed; or (3) have design plans submitted for approval as permanent postmine features prior to phase II bond release. Because Mississippi's definition of “immediate mining area” provides mechanisms to ensure that all travel routes are either (1) reclaimed with vegetation established or (2) approved as roads prior to phase II bond release, we find that it is not inconsistent with the requirements of the Federal program, and we are approving it.

Mississippi added new paragraphs (a)(4) and (5) to read as follows:

No Federal counterpart to these provisions exists. However, we recognize that in flat agricultural areas such as those that occur in the mining areas of Mississippi, occasional overland travel that occurs repeatedly in the same place will create tracks that can be called pathways, trails, lanes, etc., even though there has been no improved roadbed. We further recognize that such pathways will need occasional repair or maintenance to remain passable, and that such maintenance does not necessarily make the pathway a road. We do not believe it would be unreasonable or an abuse of discretion for the State to exempt such pathways from regulation as a “road” so long as the State does not allow the pathways to have any characteristics of ancillary or primary roads.

By letter dated January 23, 2002 (Administrative Record No. MS-0390), we notified Mississippi that its provisions at 53111(a)(4) and (5) could allow limited use vehicular pathways to have some characteristics of ancillary roads. By letter dated July 22, 2002 (Administrative Record No. MS-0394), Mississippi revised its provisions at section 53111(a)(4) and (5) by removing language that would have allowed limited use vehicular pathways to have culverts, be located in and/or cross or ford channels of intermittent or perennial streams, and include water bars across the pathway and drainage ways incidental to the area. Because Mississippi's provisions at 53111(a)(4) and (5) do not allow limited use vehicular pathways to have any characteristics of ancillary or primary roads, we find that it is not inconsistent with the requirements of the Federal regulations, and we are approving it.

Mississippi revised the first sentence of paragraph (c) to allow any party to a proceeding that is the result of the issuance of a notice of violation or cessation order to apply to the Commission for temporary relief from the notice or cessation order.

Mississippi's revision at section 6511(c) is substantively the same as the Federal regulation at 30 CFR 4.1261. Further, the revision satisfies the requirements placed on the Mississippi program at 30 CFR 924.16(l). Therefore, we are approving Mississippi's revision and removing the required program amendment at 30 CFR 924.16(l).

Mississippi redesignated paragraph (a)(1) as paragraph (b)(1); paragraph (b)(1) as paragraph (b)(2); paragraph (b)(2) in its entirety as paragraph (b)(3); and paragraph (b)(3) as new paragraph (b)(4). Mississippi also revised paragraph (a) to incorporate by reference a revegetation success guidance document titled “Appendix A, Revegetation Success Standards.” Finally, Mississippi added language in paragraph (a) to provide that if a postmining land use is selected and approved by the Permit Board for which standards are not specified in Appendix A, or if Appendix A does not specify a more specific standard of success for a postmining land use, the general standards of success found at redesignated paragraph (b) will apply.

The Federal regulations at 30 CFR 816.116(a)(1) require that each regulatory authority select revegetation success standards and statistically valid sampling techniques for measuring revegetation success and include them in its approved regulatory program. We find that Mississippi's incorporation by reference of Appendix A into its rules at 53103(a) meets the requirements of 30 CFR 816.116(a)(1), and we are approving it. Further, we find that Mississippi's Appendix A provides success standards for the most probable types of postmining land use that an operator might choose. It would be highly unlikely that an operator would select a postmining land use that was not covered by Appendix A. If an operator did choose a postmining land use that was not covered under Appendix A, Mississippi would need to develop success standards for that land use and submit them to us for approval. Therefore, we are approving Mississippi's provision at section 53103(a).

Mississippi added Appendix A to describe the standards for revegetation success on commercial forest lands, croplands, industrial or commercial lands, pasture and previously mined areas, prime farmlands, recreation lands, residential lands, and wildlife habitats.

The Federal regulations at 30 CFR 816.116(a)(1) require that each regulatory authority select revegetation success standards and statistically valid sampling techniques for measuring revegetation success and include them in its approved regulatory program. Mississippi developed its revegetation success guidelines to satisfy this requirement. The guidelines include revegetation success standards and statistically valid sampling techniques for measuring revegetation success of reclaimed commercial forest lands, croplands, industrial or commercial lands, pasture and previously mined areas, recreation lands, residential lands, and wildlife habitats in accordance with Mississippi's counterparts to the Federal regulations at 30 CFR 816.116. The guidelines also include revegetation success standards and statistically valid sampling techniques for restoring soil productivity of prime farmland soils in accordance with Mississippi's counterparts to the Federal regulations at 30 CFR 823.15. Mississippi's standards, criteria, and parameters for revegetation success reflect the extent of cover, species composition, and soil stabilization required in the Federal regulations at 30 CFR 816.111. As required by the Federal regulations at 30 CFR 816.116(a)(2) and (b) and 823.15, Mississippi's revegetation success standards include criteria representative of unmined lands in the area being reclaimed to evaluate the appropriate vegetation parameters of ground cover, production, or stocking suitable to the approved postmining land uses. Mississippi's guidelines specify the procedures and techniques to be used for sampling, measuring, and analyzing vegetation parameters. Ground cover, production, and stocking suitable to the approved postmining land uses, except prime farmland, are considered equal to the approved success standard when they are not less than 90 percent of the success standard. The average production of crops for prime farmland soils must equal or exceed the average production of the same crops for the same or similar unmined prime farmland soils. Sampling techniques for measuring success use a 90-percent statistical confidence interval for all land uses. We found that use of these procedures and techniques will ensure consistent, objective collection of vegetation data.

For the above reasons, we find that the revegetation success standards and statistically valid sampling techniques for measuring revegetation success contained in Mississippi's revegetation success guidelines satisfy the requirements of 30 CFR 816.116(a)(1) and 823.15. The guidelines also satisfy the requirement placed on the Mississippi program at 30 CFR 924.16(i), and we are removing it.

We asked for public comments on the amendment, but did not receive any.

On October 11, 2001, and July 30, 2002, 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 Mississippi program (Administrative Record Nos. MS-0395 and MS-0396, respectively). We did not receive any comments.

Under 30 CFR 732.17(h)(11)(ii), we are required to get a written concurrence of the 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. ). None of the revisions that Mississippi proposed to make in this amendment pertain to air or water quality standards. Therefore, we did not ask the EPA for its concurrence.

On October 11, 2001, and July 30, 2002, under 30 CFR 732.17(h)(11)(i), we requested comments on the amendment from the EPA (Administrative Record Nos. MS-0395 and MS-0396, respectively). The EPA did not respond to our request.

Under 30 CFR 732.17(h)(4), we are required to request comments from the SHPO and ACHP on amendments that may have an effect on historic properties. On October 11, 2001, and July 30, 2002, we requested comments on Mississippi's amendment (Administrative Record Nos. MS-0395 and MS-0396, respectively). The SHPO responded on November 20, 2001 (Administrative Record No. MS-0389). The SHPO stated that sections 1105(c), 1106(e)(2)(ii), 1107(f), and 3114(d)(1) of Mississippi's rules should be modified to include any place that is eligible for the National Register of Historic Places as well as those that have already been included in the Register. Also, the SHPO stated that at section 2103(b)(8), Mississippi should add another item to require applications for exploration permits to contain a statement from the SHPO that assesses the need for a cultural resources survey.

On September 24, 2002 (Administrative Record No. MS-0399), we sent a letter to the SHPO informing them that Mississippi's rules are consistent with Section 522(e)(3) of SMCRA and Part 761 of the Federal regulations. We also explained that even though SMCRA and the Federal regulations do not require consideration of properties eligible for listing on the National Register of Historic Places when making a determination of whether a person has valid existing rights to mine in areas where surface coal mining operations are normally prohibited or limited, the permit application requirements of the Federal regulations do require this consideration for these areas. Finally, we informed the SHPO that Mississippi did not propose changes to section 2103(b)(8), and that we've previously found that Mississippi's provisions at section 2103(b)(8) are substantively identical, and no less effective than, the Federal regulations at 30 CFR 772.12(b)(8).

Based on the above findings, we approve the amendment Mississippi sent to us on September 28, 2001, and as revised on July 22, 2002, and September 12, 2002. We approve the rules that Mississippi proposed with the provision that the rules be published in identical form to the rules sent to and reviewed by OSM and the public.

To implement this decision, we are amending the Federal regulations at 30 CFR Part 924, which codify decisions concerning the Mississippi 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 a State's program demonstrate that the State has the capability of carrying out the provisions of the Act and meeting its purposes. Making this rule effective immediately will expedite that process. SMCRA requires consistency of State and Federal standards.

In this rule, the State is adopting valid existing rights standards that are similar to the standards in the Federal definition at 30 CFR 761.5. Therefore, this rule has the same takings implications as the Federal valid existing rights rule. The takings implications assessment for the Federal valid existing rights rule appears in Part XXIX.E. of the preamble to that rule. See 64 FR 70766, 70822-27, December 17, 1999. The other provisions in the rule based on counterpart Federal regulations do not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulations. The revisions made at the initiative of the State have also been reviewed and a determination made that they do not have takings implications. This determination is based on the fact that the provisions will have no substantive effect on the regulated industry.

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 (42 U.S.C. 4332(2)(C)).

This rule does not contain information collection requirements that require approval by 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.

I. Background on the West Virginia Program II. Submission of the Amendment III. OSM's Findings IV. Summary and Disposition of Comments V. OSM's Decision VI. Procedural Determinations I. Background on the West Virginia Program

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 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 West Virginia program on January 21, 1981. You can find background information on the West Virginia program, including the Secretary's findings, the disposition of comments, and conditions of approval of the West Virginia program in the January 21, 1981, Federal Register (46 FR 5915). You can also find later actions concerning West Virginia's program and program amendments at 30 CFR 948.10, 948.12, 948.13, 948.15, and 948.16.

By letter dated April 9, 2002 (Administrative Record Number WV-1296), the West Virginia Department of Environmental Protection (WVDEP) sent us a proposed amendment to its program under SMCRA (30 U.S.C. 1201 et seq. ). The proposed amendment consists of several changes to the Code of State Regulations (CSR) at 38-2, and the addition of new CSR 38-4, the Coal Related Dam Safety Rules, as contained in House Bill 4163.

We announced receipt and provided an opportunity to comment on the amendment in the June 6, 2002, Federal Register (67 FR 38919) (Administrative Record Number WV-1311). The comment period closed on July 8, 2002. We received comments from the U.S. Department of Labor, Mine Safety and Health Administration.

By letter and electronic mail dated June 19, 2002, WVDEP sent us additional amendments to its program that are contained in Senate Bill 2002 concerning changes to CSR 38-2 (Administrative Record Number WV-1316). Senate Bill 2002 was signed by the Governor on June 21, 2002. Senate Bill 2002 authorized the WVDEP to promulgate revisions to its Surface Mining and Reclamation Regulations.

We announced receipt of the proposed amendments in the August 16, 2002, Federal Register (67 FR 53542) (Administrative Record Number WV-1322). In that notice, we also identified proposed amendments that we inadvertently omitted identifying in the June 6, 2002, Federal Register notice, including the new Coal Related Dam Safety Rules at CSR 38-4. The comment period closed on September 16, 2002. We received comments from the U.S. Department of Labor, Mine Safety and Health Administration, the U.S. Fish and Wildlife Service, and the Environmental Protection Agency.

Revisions to the State's contemporaneous reclamation requirements are contained in the two amendment submittals discussed above. In order to expedite our review of the State's amendments to its contemporaneous reclamation provisions, we have separated those amendments from the two amendment submittals discussed above. In this notice, we are presenting our findings only on the proposed amendments to the State's contemporaneous reclamation requirements at CSR 38-2-14.15. We will present our findings on the remainder of the amendments submitted by the State on April 9 and June 19, 2002, in a separate Federal Register notice at a later date.

For the reasons discussed below, we are approving, with one exception, the proposed amendments to the State's contemporaneous reclamation standards at CSR 38-2-14.15. Any revisions that we do not specifically discuss below concern nonsubstantive wording or editorial changes that do not require specific approval.

This provision concerns backfilling and grading of spoil that is returned to the mined out area. The first sentence in this provision has been amended by adding the phrase “unless a waiver is granted pursuant to W. Va. Code [Code of West Virginia] 22-3-13(c)(2)” between the words “approximate original contour” and the words “with all highwalls eliminated.” As amended, the first sentence is as follows:

This amended provision authorizes an exception to the requirement to return land to approximate original contour (AOC) pursuant to a waiver granted pursuant to W. Va. Code 22-3-13(c)(2) concerning mountaintop removal mining operations. SMCRA contains such a variance from the requirements to return land to AOC for mountaintop removal mining operations at section 515(c)(2). Therefore, we find that this amendment does not render the West Virginia program less stringent than SMCRA and can be approved.

This provision, which was transferred from former Subdivision 14.15.b.6.B.1. and slightly modified, provides as follows:

In effect, this modified provision provides that the required mining and reclamation operations plan submitted with each permit application, include a detailed site-specific description of the timing, sequence, and areal extent of each progressive phase of proposed mining and reclamation operations. Such detailed site-specific description should provide a clear indication of how the mining and reclamation operations will be coordinated by the permittee. The required information should enable the WVDEP to assess the potential effectiveness of the proposed mining and reclamation operations plan in complying with the contemporaneous reclamation requirements at CSR 38-2-14.15. We find that this proposed provision is consistent with and no less effective than the Federal mining and reclamation plan requirements at 30 CFR 780.11 and 780.18, and consistent with the Federal contemporaneous reclamation requirements at 30 CFR 816.100 and can be approved.

This provision is amended by adding a sentence to the end of the existing provision that provides as follows:

Regardless of the allowable limits contained in this section, any disturbed area other than those specified in subdivision 14.15.c. of this rule must complete backfilling and rough grading within 180 days of final mineral removal.

As amended, CSR 38-2-14.15.b.5. provides as follows:

In effect, this provision sets the standard for completion of rough backfilling and grading of multiple seam mining operations where the coal seams are only partially removed at 180 days, except for those areas classified as “reclaimed” and exempted under subdivision 14.15.c.2., as discussed below. The Federal time and distance standards for backfilling and grading at 30 CFR 816.101 have been indefinitely suspended (57 FR 33875, July 31, 1992). However, we find that this provision is not inconsistent with the Federal requirements at 30 CFR 816/817.100 concerning contemporaneous reclamation and can be approved.

This provision concerns disturbed and unreclaimed acreage limitations for mountaintop mining operations or combination mountaintop mining operations with incidental contour mining. The provision was amended by adding the following language after the second sentence:

As amended, CSR 38-2-14.15.b.6.A. provides as follows:

Under the proposed rule, mountaintop mining operations with incidental contour mining, which may include auger or highwall mining, will have to complete backfilling and grading of the incidental contour pit within 180 days of mineral removal. In addition, proposed mountaintop mining operations with complete coal removal, and mountaintop mining operations with contour mining with partial coal removal are required to complete backfilling and rough grading of any disturbed areas within 180 days of final mineral removal. However, mountaintop mining operations subject to the recently developed AOC guidelines (also known as AOC+ guidelines) or with specific postmining land uses must be backfilled and graded within 270 days of final mineral removal, unless a waiver is granted by the Secretary.

The AOC+ guidelines referred to above are dated January 27, 2000, and took effect on March 24, 2000. The AOC+ guidelines are to be used in determining when AOC has been achieved by surface coal mining operations in steep slope areas of the State. They are also used in determining when placement of excess spoil in fills has been optimized by applicants both seeking or not seeking an AOC variance. The AOC+ guidelines do not apply to contour mining operations. Those operations are subject to the AOC/Excess Spoil Guidance document that was issued on March 16, 1999. OSM and other Federal agencies have concurred with the State's AOC+ guidelines, because they have been found to be useful in providing guidance on AOC demonstrations within the context of the approved State regulatory program (Administrative Record Numbers WV-1150, WV-1153, and WV-1154).

As proposed, mountaintop mining operations without exceptions to AOC that are subject to the AOC+ guidelines or mountaintop removal mining operations with the approvable postmining land uses at subsection 22-3-13(c)(3) of the West Virginia Surface Coal Mining and Reclamation Act would be required to complete backfilling and rough grading within 270 days of final coal removal, unless a waiver is granted by the State. To date, only a few mountaintop mining operations have been approved by the State pursuant to the AOC+ guidelines and are required to complete backfilling and grading within 270 days of final coal removal. All contour and mountaintop mining operations that were approved prior to March 24, 2000, must complete backfilling and grading within 180 days of final coal removal. Therefore, all contour mining operations and most mountaintop mining operations that have been approved by the State to date would have to complete backfilling and grading within 180 days of final coal removal.

We note that, as required by proposed CSR 38-2-14.15.a.2, the operator through the proposed mining and reclamation operations plan, which will contain detailed site-specific information concerning the timing, sequence, and areal extent of each progressive phase of the mining and reclamation operations, must minimize the amount of disturbed area throughout the life of the mining operation. This information will be supplemented with progress maps that the operator will have to submit to ensure compliance with the mining and reclamation plan. We anticipate that the permit application will specify the need for any waiver of these requirements, and provide the regulatory authority with sufficient information it needs in granting such waivers.

The Federal time and distance standards for backfilling and grading at 30 CFR 816.101 have been indefinitely suspended (57 FR 33875, July 31, 1992). However, the remaining Federal regulations at 30 CFR 816/817.100 require that reclamation efforts, including backfilling and grading, occur as contemporaneously as practicable with the mining operations. We find that the proposed provisions are reasonable and further limit the amount of disturbed area that can go unreclaimed at any time under the State's contemporaneous reclamation requirements by imposing time and distance limitations on backfilling and grading. Because the proposed revisions are not inconsistent with the Federal regulations at 30 CFR 816/817.100, they can be approved.

This provision concerns mountaintop removal mining operations or combination mountaintop removal and contour mining operations that use draglines with a bucket capacity of greater than 45 cubic yards. This provision is amended by deleting existing paragraphs 14.15.b.6.B.1. and B.2, and replacing these provisions with new paragraph 14.15.b.6.B.1. As amended, CSR 38-2-14.15.b.6.B. provides as follows:

Under the proposed rule, mountaintop removal or combination mountaintop removal and contour mining operations that use draglines with a bucket capacity of greater than 45 cubic yards cannot allow pre-stripping activities of more than 400 acres and such activities cannot precede the dragline operation by more than 24 months, unless approved by the Secretary. These criteria represent the maximum amount of acreage disturbance and time that pre-stripping or benching operations can precede the dragline operation. Currently, there are about five draglines operating in West Virginia. Pre-stripping or benching operations include that disturbance which is necessary to prepare an area for the dragline to operate safely and effectively. These operations may involve the mining of one or more coal seams in advance of the dragline in order to prepare for additional coal removal. Under the previous rules, the area of disturbance preceding the dragline could not exceed 400 acres. Under the proposed revision, the State will also impose a time limitation of 24 months on pre-stripping or benching operations, unless otherwise approved by the regulatory authority. In addition, all fill construction is to occur during this phase of the operation.

We must note that, except for pre-stripping or benching operations, the existing requirements at subdivision 14.15.b.6.B. do not impose a limit on the total amount of permitted acreage that can be disturbed at any given time. However, those same provisions do require that backfilling and grading of the area disturbed by the dragline must be completed within 180 days following coal removal and with no more than four spoil ridges behind the pit being worked.

We also note that under subdivision 14.15.a.2, as discussed above, the mining and reclamation operations plan for these kinds of operations will contain detailed, site-specific information concerning the timing, sequence, and areal extent of both the proposed pre-stripping and dragline operations and reflect how the mining and reclamation operations will be coordinated throughout the life of the mining operation. This detailed information, together with the progress maps, should provide the regulatory authority sufficient information to assess the proposed ratio of disturbed versus reclaimed area, and to ensure compliance with the contemporaneous reclamation rules at CSR 38-2-14.15.

The Federal time and distance standards for backfilling and grading at 30 CFR 816.101 have been indefinitely suspended (57 FR 33875, July 31, 1992). However, the remaining Federal regulations at 30 CFR 816/817.100 require that reclamation efforts, including backfilling and grading, occur as contemporaneously as practicable with the mining operations. For the reasons discussed above, we find that the proposed provision is not inconsistent with the Federal regulations at 30 CFR 816/817.100 and can be approved.

This provision is amended by adding the words “and meets Phase I standards” at the end of the first sentence. As amended, this provision provides as follows:

The addition of the phrase “and meets Phase I standards” appears to clarify the meaning of reclaimed area as previously approved at CSR 38-2-14.15.c. In addition to being fully regraded and stabilized in accordance with the reclamation plan, the proposed revision will require that reclaimed acreage must also meet the Phase I bond release requirements at CSR 38-2-12.2.c.1. We find that the amendment to this provision does not render the West Virginia rule less effective than the Federal regulations concerning contemporaneous reclamation at 30 CFR 816.100 and can be approved.

This provision concerns the identification of those areas that shall not be included in the calculation of disturbed area. This provision is amended by adding a new proviso at the end of the existing provision that limits, with exceptions, the total acreage of semi-permanent ancillary facilities that shall not be included in the calculation of disturbed area to a total of 10 percent of the permitted acreage. As amended, CSR 38-2-14.15.c.1. provides as follows:

The existing rules exempt all semi-permanent ancillary facilities and cleared areas from the contemporaneous reclamation requirements, regardless of size. The revised language limits the size of certain semi-permanent ancillary facilities to no more than 10 percent of the total permitted acreage. Otherwise, the area will have to be considered disturbed area for contemporaneous reclamation purposes. We find that the provision, as amended, is reasonable in that it limits the exemption from the State's contemporaneous reclamation requirements for certain semi-permanent ancillary facilities to not more than 10 percent of the permitted acreage. Because the proposed revision is more restrictive and not inconsistent with the Federal regulations concerning contemporaneous reclamation at 30 CFR 816/817.100, it can be approved.

This provision concerns the identification of cleared and grubbed acreage that shall not be included in the calculation of disturbed area. This provision is amended by adding the following language to the end of the existing provision:

As amended, this provision provides as follows:

The purpose of the amendment is to enable the Secretary of WVDEP to allow coal operators to clear (i.e., cut only, not grub) trees on areas larger than 30 acres. The State is trying to protect the Indiana bat and other endangered plant and animal species by minimizing habitat loss at certain times of the year, notably mating season. By allowing larger areas to be timbered and still have the reclamation be considered contemporaneous, the WVDEP hopes to discourage clear cutting operations prior to getting permits, when the practices are not subject to SMCRA's environmental protections and may affect wildlife at critical times. Once permits are issued, operators cannot timber at certain times of the year when certain endangered or threatened species are breeding.

Under SMCRA, the issuance of a SMCRA permit by the State is not considered an action under NEPA. Appendix 8 of the U.S. Department of the Interior Manual provides that “[p]ermit applications under approved State programs are excluded from NEPA compliance.” January 19, 1981; 46 FR 2316. In addition, individual States have no authority to require compliance with NEPA and, therefore, the State's proposed reference to NEPA has no effect on the West Virginia program. We find that because the proposed reference to NEPA is a nullity and has no practicable effect on the West Virginia program, we are not rendering a decision on the proposed language. Because we are not rendering a decision on the proposed language, this requirement is not part of the approved West Virginia program. To avoid confusion in the future, we recommend that this language be removed from these rules.

This provision has been deleted in its entirety in the revised rule authorized with the passage of Senate Bill 2002. Prior to being deleted, this provision provided that the following area would not be included in the calculation of disturbed area:

We find that the deletion of this provision, which provides an exemption for areas that have been cleared and grubbed from the contemporaneous reclamation requirements, does not render the West Virginia program less effective than the Federal regulations at 30 CFR 816/817.100 concerning contemporaneous reclamation and can be approved.

CSR 38-2-14.15.d., concerning Applicability, has been deleted, relocated to subdivision 14.15.e., and revised (see below). New subdivision 14.15.d. concerns excess spoil disposal fills, and provides as follows:

At subdivision 14.15.d, the proposed provision adds a requirement that all excess spoil disposal fills must be constructed contemporaneously and contiguously with that portion of the operation that contains the material that is to be placed in the fill. This provision is to ensure that the construction of excess spoil disposal fills will be done simultaneously with the mining operation. We note that under proposed subdivision 14.15.a.2, discussed above, the mining and reclamation operations plans submitted with each permit application must include a detailed site-specific description of the timing, sequence, and areal extent of each progressive phase of proposed mining and reclamation operations. This information and these requirements should enable the regulatory authority to ensure more timely construction and reclamation of excess spoil fills.

Subsection 14.15.d.1 provides that both the conventional and end-dump fills must be planned for continuous material placement until design capacity is reached and cannot have a period of inactivity exceeding 180 days. We interpret the latter provision to mean that inactivity during fill construction cannot exceed 180 continuous days. This subdivision also provides for permit-specific waiver of the 180-day criterion, on a permit specific basis, to accommodate AOC+, postmining land use, or special material handling situations. Prior to this proposed provision, there was no time limit on the construction and reclamation of fills. While the proposal does allow for a waiver to the 180-day criterion, it may only be granted on a permit-specific basis.

Subsection 14.15.d.2 provides that the areas where contour mining is proposed within the confines of the fill are not eligible for the exemption contained in subsection 14.15.c.2. Subsection 14.15.c.2 provides that fills that are constructed using conventional methods (constructed in lifts from the toe up) shall not be included in the calculation of disturbed area. Therefore, under subsection 14.15.d.2, areas where contour mining is proposed within the confines of the fill are not eligible to be excluded from the calculation of disturbed area, and are not exempt from the State's contemporaneous reclamation requirements.

Subsection 14.15.d.3 provides that bonds for areas with single lift, top down constructed fills are to be set at the maximum amount per acre ($5 thousand per acre). These fills are often referred to as end-dump fills. Increasing the bond on such fills to the maximum amount will protect the State's special reclamation fund should an operator forfeit the bond and fail to complete reclamation of end-dump fill areas. We note that there is a typographical error in this provision. The site-specific bond amount per acre is specified at W. Va. Code 22-3-12(b)(1), not 12(c)(1) as specified in this provision.

The Federal time and distance standards for backfilling and grading at 30 CFR 816.101 have been indefinitely suspended (57 FR 33875, July 31, 1992). The remaining Federal regulations at 30 CFR 816/817.100 require that reclamation efforts, including backfilling and grading, occur as contemporaneously as practicable with the mining operations. We find that because the proposed excess spoil fill provisions at CSR 38-2-14.15.d., d.1, d.2 and d.3 enhance the State's contemporaneous reclamation standards and are not inconsistent with the Federal regulations at 30 CFR 816/817.100, they can be approved.

This subdivision, which concerns applicability, has been relocated from subdivision 14.15.d., and has been revised. As amended, subdivision 14.15.e. provides as follows:

The Federal time and distance standards for backfilling and grading at 30 CFR 816.101 have been indefinitely suspended (57 FR 33875, July 31, 1992). However, these provisions provide reasonable time limits for compliance with these revised contemporaneous reclamation regulations. Therefore, we find that the provisions at CSR 38-2-14.15.e. are not inconsistent with and do not render the West Virginia program less effective than the Federal regulations at 30 CFR 700.11 can be approved.

This provision, concerning variance, was formerly subdivision 14.15.f. and has been recodified and amended by two deletions, and by adding a requirement to comply with the requirements of subsection 3.32 concerning permit issuance findings, to provide as follows:

We find that the recodification and amendment of this provision does not render the provision less effective than the Federal regulations at 30 CFR 816/817.100 and can be approved, except as follows.

The State deleted from preexisting subdivision 14.15.f. a provision that required that the amount of bond for an operation that requests a variance to one or more of the standards set forth in subsection 14.15 concerning contemporaneous reclamation shall be based on the maximum amount per acre specified in W. Va. Code 22-3-12(c)(1). We initially announced the approval of the State contemporaneous reclamation requirements in the Federal Register on February 21, 1996 (61 FR 6525). Since then, the State statute has been amended and the site-specific bonding amounts are now set forth at W. Va. Code 22-3-12(b)(1), not 12(c)(1).

On August 18, 2000, OSM approved in the Federal Register the revision to subdivision 14.15.f. which requires the maximum amount of bond for operations that request variances to the State's contemporaneous reclamation standards (65 FR 50409, 50424). In approving the requirement, we noted that the proposed change is to ensure that the bond amount will be sufficient to complete the reclamation plan of a revoked permit with a contemporaneous reclamation variance in the event of bond forfeiture. The effect of eliminating the requirement for the maximum bond amount on operations requesting variances will increase the risk of liability on the State's alternative bonding system (ABS) in the event of bond forfeiture. The State's ABS is funded by a special reclamation tax on each ton of coal mined, plus a site-specific bond that can range from $1,000 to $5,000 per acre.

On May 29, 2002, OSM concluded that recently approved changes to the West Virginia program (66 FR 67446; December 28, 2001) had satisfied a required program amendment concerning the State's ABS (67 FR 37610). The required amendment, codified at 30 CFR 948.16(lll), required that the West Virginia program be amended to eliminate the deficit in the State's ABS and to ensure that sufficient money will be available to complete reclamation, including the treatment of polluted water, at all existing and future bond forfeiture sites. The State's amendments that we approved on December 28, 2001, included an increase in the special reclamation tax from 3 cents per ton of clean coal mined to 7 cents per ton, plus an additional 7 cents per ton would be levied for up to 39 months. In addition, the State created the Special Reclamation Fund Advisory Council (Advisory Council) to monitor the special reclamation fund and bond forfeiture obligations to ensure “the effective, efficient and financially stable operation of the special reclamation fund.” One of the main tasks of the Advisory Council is the elimination of the ABS deficit. It must also ensure that the special reclamation fund remains solvent once the deficit is eliminated. It appears to us that the proposed deletion of the requirement to require maximum bond per acre for operations seeking a variance from one or more of the contemporaneous reclamation requirements at subsection 14.15 inappropriately increases the risk of liability to the ABS in the event of bond forfeiture.

As we discussed in the May 29, 2002, Federal Register notice, with respect to future reclamation obligations, the Advisory Council has an obligation under State Law to monitor the special reclamation fund, address funding-related issues, and recommend measures to ensure the long-term solvency of the special reclamation fund. We find that the proposed deletion is an example of an action that could adversely affect the ABS and that should be reviewed by the Advisory Council to determine its potential effect on the solvency of the ABS. Therefore, we are deferring decision on the proposed deletion of the requirement to impose the maximum bond amount of $5,000 per acre on operations seeking a variance from one or more of the provisions of subsection 14.15. We will reconsider this proposed deletion after such time as the Advisory Council has assessed the potential impact of the proposed deletion and rendered its opinion to the State Legislature and Governor.

Paragraph 14.15.g lacks the transition sentence contained in former paragraph 14.15.f, which stated that “[t]he variance request shall be in writing and must contain the following elements.” Without such a transition sentence, paragraphs 14.15.g.1 through g.5. do not flow logically from the introductory paragraph and do not require that the variance request be in writing. We assume that deletion of the last sentence of former paragraph 14.15.f. was inadvertent. We recommend that the State add the quoted sentence at the end of CSR 38-2-14.15.g. or otherwise amend subsection 14.15.g to improve its clarity and to ensure that the variance request be in writing. The addition of the deleted language will also ensure consistency with subdivision 14.15.h.

This provision identifies part of the required elements for a variance requested under subdivision 14.15.g. This provision was amended by adding the phrase “including a discussion and feasibility analysis of alternatives that were considered” at the end of this provision. As amended, subdivision 14.15.g.2 provides as follows:

The additional requirement of a discussion and feasibility analysis of alternatives that were considered by the operator in evaluating the contemporaneous reclamation standards should provide the regulatory authority with additional information necessary to help determine whether a variance is justified. We find that the provision does not render the West Virginia program less effective than the Federal regulations at 30 CFR 816/817.100 and can be approved.

This provision was added by House Bill 4163 and then deleted in its entirety in the revised rule authorized with the passage of Senate Bill 2002. Prior to being deleted, the provision provided the following:

The State has provided no justification for the deletion of this provision. Nevertheless, because the deleted provision was never approved by OSM, it was never part of the approved West Virginia program and our approval of its deletion is not necessary.

This provision is new and provides as follows:

In essence, the provision would require that, prior to an operator changing the method of mining that would substantially affect the contemporaneous reclamation standards, the mining and reclamation plan would have to be revised and approved by the regulatory authority. We find that this provision, which requires a permit revision for a change in mining methods that would substantially affect the State's contemporaneous reclamation standards is consistent with the Federal requirements concerning permit revisions at SMCRA section 511(a)(2) and at 30 CFR 774.13, and can be approved. We are approving this provision to the extent that any significant changes to the mining and reclamation plan would be done as a significant revision to the permit and subject to the public notice requirements as required by CSR 38-2-3.28.b.

No public comments were received in response to our request for comments from the public on the proposed amendment (see Section II of this preamble).

Under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, on June 14, 2002, and August 7, 2002, we requested comments on these amendments from various Federal agencies with an actual or potential interest in the West Virginia program (Administrative Record Numbers WV-1314 and WV-1321, respectively). By letters dated July 11, 2002, and September 20, 2002, the U.S. Department of Labor, Mine Safety and Health Administration (MSHA) responded (Administrative Record Numbers WV-1320 and WV-1331). In addition, the U.S. Department of the Interior, Fish and Wildlife Service (USFWS) responded to our request for comments on September 10, 2002 (Administrative Record Number WV-1329).

MSHA stated that it finds no changes or issues that impact upon coal miner's health and safety and that there is no conflict with MSHA regulations.

USFWS provided comments pursuant to the Fish and Wildlife Coordination Act and the Endangered Species Act. USFWS stated that the proposed exemptions at subsection CSR 38-2-14.15.c appear to be contrary to the Federal regulations at 30 CFR 701.5 concerning the definition of “disturbed area.” In response, the proposed exemption at subsection CSR 38-2-14.15.c that certain areas will not be included in the calculation of disturbed area applies only to the contemporaneous reclamation standards at CSR 38-2-14.15, and not to all of the State's surface mining reclamation requirements. Furthermore, the State has a definition of disturbed area at W. Va. Code section 22-3-3(j) that has been determined to be no less effective than the Federal definition. For these reasons, we disagree that the proposed exemptions at subsection CSR 38-2-14.15.c appear to be contrary to the Federal regulations at 30 CFR 701.5 concerning the definition of “disturbed area.”

USFWS stated that the meaning of language at subdivision 14.15.c.3 which states that “[t]he Secretary may consider larger acreage for clearing operations where it can be demonstrated that it is necessary to comply with applicable National Environmental Policy Act requirements' is unclear. This implies, USFWS stated, that NEPA documentation would have to be prepared which is required prior to Federal action. USFWS stated that the sentence should be stricken. USFWS stated that using impacts to fish and wildlife resources as a basis for gauging disturbance, these proposed exemptions from inclusion as disturbed areas are particularly untenable. USFWS recommended that the proposed exemption not be approved.

In response, and for the reasons discussed above in Finding 8, we determined that the State's proposed reference to NEPA has no practicable effect on the West Virginia program. Therefore, we did not render a decision on the proposed language. However, the State will not be allowed to implement this provision as part of its approved program.

USFWS commented on language at CSR 38-2-14.15.g that allows the Secretary of the WVDEP to grant a variance of one or more of the standards set forth at CSR 38-2-14.15. Specifically, USFWS stated that removing the requirement to provide a detailed economic analysis removes the applicant's responsibility to justify a variance based on economic considerations. USFWS stated that under this amendment, conceivably, an applicant could be exempt from all contemporaneous reclamation requirements for any type of mining by merely claiming economic infeasibility. USFWS recommended that the provision requiring economic analysis be retained in the regulations.

In response, the USFWS comment relates to a portion of the proposed rules at CSR 38-2-14.15.g.5, that was never approved by OSM. As discussed above in Finding 14, because the proposed revision has been deleted by the State, our approval of the deletion is not necessary.

Under 30 CFR 732.17(h)(11)(i) and (ii), we are required to obtain 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. ). On June 14, 2002, we requested concurrence and comments from EPA on House Bill 4163 (Administrative Record Numbers WV-1313). On August 7, 2002, we requested comments from EPA on Senate Bill 2002 (Administrative Record Number WV-1321).

EPA responded by letter dated October 28, 2002 (Administrative Record Number WV-1340), concurred on the proposed amendments and provided the following comments. EPA stated that CSR 38-2-14.15.d includes a requirement that fills be constructed adjacent to the excavated area where the spoil material originates. EPA stated that it is concerned that this requirement could result in unnecessary construction of fills in waters of the United States where the excavated areas are adjacent to such waters. EPA recommended that fill optimization and minimization efforts be provided to avoid construction of fills in waters of the United States where feasible. In response, we note that this provision is only intended to encourage contemporaneous reclamation of fills. All applicable requirements of the Clean Water Act will continue to apply.

EPA also noted that mining-related discharges into waters of the United States, including excess spoil, are subject to permit requirements under the Clean Water Act. Before conducting such activities, EPA stated, the Corps of Engineers and the West Virginia Department of Environmental protection should be contacted regarding necessary permits. In response, we note that the proposed amendments do not supersede any Clean Water Act requirements. All the existing requirements of the West Virginia program continue to apply.

Based on the above findings, we are approving the amendments to CSR 38-2-14.15 as submitted to us on April 9, 2002 and June 19, 2002, except as indicated below.

At CSR 38-2-14.15.c.3, we are not rendering a finding on the sentence, “the Secretary may consider larger acreage for clearing operations where it can be demonstrated that it is necessary to comply with applicable National Environmental Policy Act requirements.”

At CSR 38-2-14.15.g., concerning variance-permit applications, we are deferring our decision on the proposed deletion of the following sentence, “Furthermore, the amount of bond for the operation shall be based on the maximum amount per acre specified in WV Code section 22-3-12(c)(1).”

We are not rendering a decision concerning CSR 38-2-14.15.g.5 because the deleted provision was never approved by OSM, and therefore never a part of the approved West Virginia program, and our approval of its deletion is not necessary.

CSR 38-2-14.15.i., is approved to the extent that any significant changes to the mining and reclamation plan would be done as a significant permit revision and subject to the public notice requirements as required by CSR 38-2-3.28.b.

To implement this decision, we are amending the Federal regulations at 30 CFR Part 948, which codify decisions concerning the West Virginia program. Our regulations at 30 CFR 732.17(h)(12) specify that all decisions approving or disapproving amendments will be published in the Federal Register and that they will be effective upon publication, unless the notice specifies a different date. We are making this final rule effective immediately to expedite the State program amendment process and to assist the State in making its program conform with the Federal standards as required by the Act.

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

This rule is exempt 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 (42 U.S.C. 4332(2)(C)).

This rule does not contain information collection requirements that require approval by 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 analysis performed under various laws and executive orders for the counterpart Federal regulations.

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 analysis performed under various laws and executive orders for the counterpart Federal regulations.

For the reasons set out in the preamble, 30 CFR part 948 is amended as set forth below:

Coast Guard District Commanders and Captains of the Port (COTP) must be immediately responsive to the safety and security needs of the waters within their jurisdiction; therefore, District Commanders and COTPs have been delegated the authority to issue certain local regulations. Safety zones may be established for safety or environmental purposes. A safety zone may be stationary and described by fixed limits or it may be described as a zone around a vessel in motion. Security zones limit access to prevent injury or damage to vessels, ports, or waterfront facilities. Drawbridge operation regulations authorize changes to drawbridge schedules to accommodate bridge repairs, seasonal vessel traffic, and local public events. Special local regulations are issued to enhance the safety to participants and spectators at regattas and other marine events.

Timely publication of these rules in the Federal Register is often precluded when a rule responds to an emergency, or when an event occurs without sufficient advance notice. The affected public is, however, informed of these rules through Local Notices to Mariners, press releases, and other means. Moreover, actual notification is provided by Coast Guard patrol vessels enforcing the restrictions imposed by the rule. Because Federal Register publication was not possible before the beginning of the effective period, mariners were personally notified of the contents of these special local regulations, drawbridge operation regulations, security zones, or safety zones by Coast Guard officials on-scene prior to any enforcement action. However, the Coast Guard, by law, must publish in the Federal Register notice of all substantive rules adopted. To meet this obligation without imposing undue expense on the public, the Coast Guard periodically publishes a list of these temporary special local regulations, drawbridge operation regulations, security zones, and safety zones.

Permanent rules are not included in this list because they are published in their entirety in the Federal Register . Temporary rules may also be published in their entirety if sufficient time is available to do so before they are placed in effect or terminated. The safety zones, special local regulations, drawbridge operation regulations, and security zones listed in this notice have been exempted from review under Executive Order 12866, Regulatory Planning and Review, because of their emergency nature, or limited scope and temporary effectiveness.

The following rules were placed in effect temporarily during the period from July 1, 2002, and through September 30, 2002, unless otherwise indicated. This notice also includes rules that were not received in time to be included on the quarterly notice for the first and second quarters of 2002.

In the final rule published in the Federal Register of November 18, 2002 (67 FR 69478-69479), two paragraphs in section 501.2 were designated incorrectly.

No one is regulated by this rule. This rule merely withdraws certain Federal water quality criteria applicable in these States.

In 1992, EPA promulgated a final rule (known as the “National Toxics Rule”, or “NTR”) to establish numeric water quality criteria for 14 States that had not complied fully with section 303(c)(2)(B) of the Clean Water Act (“CWA”) (57 FR 60848). The criteria, codified at 40 CFR 131.36, became the applicable water quality standards in those 14 States for all purposes and programs under the CWA effective February 5, 1993.

When a State adopts and EPA approves water quality criteria that meet the requirements of the CWA, EPA will issue a rule amending the NTR to withdraw its criteria. If the State's criteria are no less stringent than the promulgated Federal criteria, EPA will withdraw its criteria without notice and comment rulemaking because additional comment on the criteria is unnecessary. However, if a State adopts criteria that are less stringent than the Federally promulgated criteria, but that in the Agency's judgment fully meet the requirements of the Act, EPA will withdraw the Federally promulgated criteria after notice and opportunity for public comment. (see 57 FR 60860)

In today's action, EPA is amending the Federal regulations to withdraw certain human health and aquatic life criteria applicable to these States. In addition, this action makes certain nonsubstantive revisions to the regulatory language at 40 CFR 131.36 to reflect format changes in water quality standards that have occurred in the corresponding State regulations cited at 40 CFR 131.36.

On July 12, 1994, Vermont adopted revisions to its surface water quality standards (Appendix C, Vermont Water Quality Standards, effective August 1, 1994). EPA Region 1 approved the State's adoption of criteria for all toxics contained in the NTR on December 5, 1996, because they are consistent with the CWA and EPA's implementing regulations at 40 CFR 131.11. EPA Region 1 requested that the Agency withdraw the Federal criteria applicable to Vermont for which the State now has numeric criteria.

In an earlier action, EPA withdrew Vermont from the NTR for certain human health and aquatic life criteria where the State adopted criteria that are no less stringent than the Federal criteria (see 65 FR 19659, April 12, 2000). Today's action addresses an arsenic criterion Vermont adopted that is less stringent than the corresponding Federal criteria in the NTR, but that nonetheless meets the requirements of the CWA and EPA's implementing regulations at 40 CFR 131.11. In reviewing Vermont's submission, EPA Region 1 concluded that the State's calculation of the arsenic human health criterion for the consumption of fish (organisms only) of 1.5 μg/L was scientifically defensible. EPA published a proposed rule to remove this criterion in the Federal Register on March 26, 2001 (66 FR 1643) and provided an opportunity for public comment, because the State's adopted criterion was less stringent than the promulgated Federal criterion. No changes were made to the proposed rulemaking, and EPA is finalizing the proposed withdrawal as to Vermont. For a copy of the comments received and EPA's responses, please see the “Response to Comments” document in the administrative record for this rulemaking. Today's rule removes the arsenic human health criterion for the consumption of fish (organisms only) applicable to Vermont. Today's rule leaves in place the Federal continuous concentration criterion of 0.08 μg/L for gamma-BHC (Lindane). The current adopted State criterion for this pollutant is apparently the result of a transcription error resulting in a criterion 10 times higher than the promulgated Federal criterion. EPA will initiate action to withdraw the Federally promulgated criterion for this pollutant when the State corrects the error in its standards.

On March 4, 1994, the District of Columbia adopted revisions to its surface water quality standards [amended Chapter 11 of Title 21 DCMR pursuant to the authority set forth in Section 5 of the Water Pollution Control Act of 1984, D.C. Law 5-188, effective March 16, 1985, D.C. Code Section 6-924 (1988) and Mayor's Order 85-152], adopting human health criteria to protect from effects related to fish consumption and removing the emergency public water supply use designation previously identified for a segment of the Potomac River. EPA Region 3 approved these revisions on November 4, 1996 and April 18, 2000, because the revisions were consistent with the CWA and EPA's implementing regulations at 40 CFR Part 131.11.

For those waters that did not have the previously-designated emergency public water supply use designation, EPA has already acted. That is, EPA withdrew the District of Columbia from the NTR for human health criteria for the consumption of fish (organism only) because the District adopted criteria that are no less stringent than the Federal criteria (see 65 FR 19659, April 12, 2000). For those waters that did have the previously-designated emergency supply use, EPA Region 3 requested that the Agency withdraw the Federal human health criteria applicable to the District.

Today's action withdraws the District from the NTR for human health criteria corresponding to the previously designated emergency public water supply use. The District removed this use and therefore has no need for human health criteria for water and organisms. EPA published a proposed rule to remove these criteria in the Federal Register on March 26, 2001 (66 FR 1643) and provided an opportunity for public comment, because the removed Federal criteria were not replaced by District criteria. No changes were made to the proposed rulemaking, and EPA is finalizing the proposed withdrawal as to the District of Columbia. For a copy of the comments received and EPA's responses, please see the “Response to Comments” document in the administrative record for this rulemaking.

On June 28, 1994, Kansas adopted revisions to its water quality standards (K.A.R. 28-16-28) regarding both human health and aquatic life criteria, and submitted them to EPA Region 7 for review and approval on October 31, 1994. On February 19, 1998, EPA Region 7 approved certain new or revised water quality criteria for the protection of human health and aquatic life because they are consistent with the CWA and EPA's implementing regulations at 40 CFR 131.11. EPA Region 7 requested that the Agency withdraw the Federal criteria applicable to Kansas for which the State now has numeric criteria. Also, on June 29, 1999, Kansas adopted new and revised ambient water quality criteria for additional pollutants. They were submitted to EPA for review and approval on August 10, 1999. On January 19, 2000, EPA Region 7 approved these additional criteria because they are also consistent with the CWA and EPA's implementing regulations at 40 CFR 131.11. EPA Region 7 requested that the Agency withdraw the Federal criteria applicable to Kansas for which the State now has numeric criteria.

In an earlier action, EPA withdrew Kansas from the NTR for certain human health and aquatic life criteria where the State adopted criteria that are no less stringent than the Federal criteria. (See 65 FR 19659, April 12, 2000) Today's action addresses arsenic and cadmium criteria Kansas adopted that are less stringent than the corresponding criteria in the NTR, but that nonetheless meet the requirements of the CWA and EPA's implementing regulation at 40 CFR 131.11. In reviewing Kansas's submission, EPA Region 7 concluded that the State's calculation of an arsenic human health criteria for the consumption of fish (organisms only) of 20.5 μg/L was scientifically defensible; that the State's calculation of a cadmium freshwater aquatic life criteria (Criteria Maximum Concentration) of 4.5 μg/l was scientifically defensible; that the State's calculation of a cadmium freshwater aquatic life criteria (Criteria Continuous Concentration) of 2.5 μg/L was scientifically defensible, and that these criteria meet the requirements of the CWA and EPA's implementing regulations at 40 CFR 131.11. EPA published a proposed rule to remove these criteria in the Federal Register on March 26, 2001 (66 FR 1643) and provided an opportunity for public comment, because the States' adopted criteria were less stringent than the promulgated Federal criteria. No changes were made to the proposed rulemaking, and EPA is finalizing the proposed withdrawal as to Kansas. For a copy of the comments received and EPA's responses, please see the “Response to Comments” document in the administrative record for this rulemaking. Today's rule removes the Federal human health criteria for the consumption of fish (organisms only) for arsenic and the Federal freshwater acute and chronic cadmium criteria for Kansas.

On August 4, 1994, New Jersey submitted to EPA Region 2 revisions to its surface water quality standards (New Jersey Administrative Code 7:9B), including aquatic life and human health criteria. New Jersey adopted aquatic life and human health criteria for many of the toxic pollutants contained in the NTR and reorganized certain designated use classifications and requirements pertaining to the Delaware River and Bay. EPA Region 2 approved the State's criteria (with the exception of the State's PCB human health criteria) on March 17, 2000, because New Jersey's numeric criteria for the protection of aquatic life and human health were consistent with the CWA and EPA's implementing regulations at 40 CFR 131.11. EPA Region 2 requested that the Agency withdraw the Federal criteria applicable to New Jersey for which the State now has numeric criteria.

For certain pollutants, New Jersey adopted water quality criteria for aquatic life and human health that are less stringent than the promulgated Federal criteria, but that nonetheless meet the requirements of the CWA and EPA's implementing regulations at 40 CFR 131.11. EPA published a proposed rule to remove these criteria in the Federal Register on March 26, 2001 (66 FR 1643) and provided an opportunity for public comment because the State's adopted criteria were less stringent than the promulgated Federal criteria. No changes were made to the proposed rulemaking, and EPA is finalizing the proposed withdrawal as to New Jersey. For a copy of the comments received and EPA's responses, please see the “Response to Comments” document in the administrative record for this rulemaking. Today's rule removes the Federal criteria for these pollutants in New Jersey.

In addition, EPA is removing the Federal criteria for a number of pollutants for which New Jersey has adopted water quality criteria for aquatic life and human health that are no less stringent than the promulgated Federal criteria. EPA has determined that New Jersey's criteria are no less stringent than the promulgated Federal criteria either because they are identical, identical when rounded using conventional rounding techniques, or more stringent than the promulgated Federal criteria. Today's rule removes the promulgated Federal criteria for these pollutants without notice and comment rulemaking because additional comment on the criteria is unnecessary (see 57 FR 60860). Section 553 of the Administrative Procedure Act, U.S.C. 553(b)(B) provides that, when an agency for good cause finds that notice and public procedures are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and opportunity for public comment. EPA has determined that there is good cause for removing the Federal criteria for these pollutants without prior proposal and opportunity for public comment because EPA has determined that if a State's adopted and approved criteria are no less stringent than the promulgated Federal criteria, additional comment on the criteria is unnecessary. EPA finds that this constitutes good cause for issuing a final rule removing the Federal criteria for these pollutants without notice and comment. A list of the Federal criteria which had been promulgated for New Jersey by the NTR and are being removed by today's action is included in the Docket for this rulemaking.

In 1994, New Jersey reorganized certain use classification requirements pertaining to the Delaware River and Bay, including a definition of the appropriate points of application for criteria in these waters. EPA is making corresponding revisions to 40 CFR 131.36(d)(3) to be consistent with the State regulations that the Federal regulations are intended to augment. In addition, on November 9, 1999, EPA amended the NTR criteria for PCBs-human health (columns D1 and D2 of the table at 40 CFR 131.36) to provide for a total criteria for this pollutant, in lieu of criteria for individual isomers (see 64 FR 61181). EPA is making corresponding revisions to 40 CFR 131.36(d)(3) to be consistent with this change. These changes do not result in any substantive changes to the Federal criteria applicable to New Jersey. These revisions clarify the existing Federal regulations.

This action withdraws Federal requirements applicable to Vermont, the District of Columbia, Kansas and New Jersey and imposes no regulatory requirements or costs on any person or entity, does not interfere with the action or planned action of another agency, and does not have any budgetary impacts or raise novel legal or policy issues. Thus, it has been determined that this rule is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to OMB review.

This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 because it is administratively withdrawing Federal requirements that no longer need to apply to Vermont, the District of Columbia, Kansas and New Jersey.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, generally requires an agency to prepare a regulatory flexibility analysis of a rule that is subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have significant economic impact on a substantial number of small entities. This rule imposes no regulatory requirements or costs on any small entity. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Title III of the Unfunded Mandates Reform Act (UMRA) (Pub. L. 104-4) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, Tribal, and local governments and the private sector. Today's rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, Tribal, or local governments or the private sector because it imposes no enforceable duty on any of these entities. Thus, today's rule is not subject to the requirements of UMRA sections 202 and 205 for a written statement and small government agency plan. Similarly, EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments and is therefore not subject to UMRA section 203.

Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure State and local government officials have an opportunity to provide input in the development of regulatory policies that have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of governments. This rule imposes no regulatory requirements or costs on any State or local governments, therefore, it does not have federalism implications under Executive Order 13132.

Again, this rule imposes no regulatory requirements or costs on any Tribal government. It does not have substantial direct effects on Tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000).

This rule is not subject to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant and EPA has no reason to believe the environmental health or safety risks addressed by this action present a disproportionate risk to children.

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

The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply because this rule does not involve technical standards.

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2) and will be effective on January 2, 2003.

You may be potentially affected by this action if you are a food manufacturer, or antimicrobial pesticide manufacturer. 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 likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Docket . EPA has established an official public docket for this action under docket identification (ID) number OPP-2002-0278. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.

2. Electronic access . You may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cfr180_00.html, a beta site currently under development.

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Once in the system, select “search,” then key in the appropriate docket ID number.

Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. To the extent feasible, publicly available docket materials will be made available in EPA's electronic public docket. When a document is selected from the index list in EPA Dockets, the system will identify whether the document is available for viewing in EPA's electronic public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B.1. EPA intends to work towards providing electronic access to all of the publicly available docket materials through EPA's electronic public docket.

For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.

Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.

You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket ID number in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments. If you wish to submit CBI or information that is otherwise protected by statute, please follow the instructions in Unit I.D. Do not use EPA Dockets or e-mail to submit CBI or information protected by statute.

1. Electronically . If you submit an electronic comment as prescribed in this unit, EPA recommends that you include your name, mailing address, and an e-mail address or other contact information in the body of your comment. Also include this contact information on the outside of any disk or CD ROM you submit, and in any cover letter accompanying the disk or CD ROM. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. EPA's policy is that EPA will not edit your comment, and any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.

i. EPA Dockets . Your use of EPA's electronic public docket to submit comments to EPA electronically is EPA's preferred method for receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket, and follow the online instructions for submitting comments. Once in the system, select “search,” and then key in docket ID number OPP-2002-0278. The system is an “anonymous access” system, which means EPA will not know your identity, e-mail address, or other contact information unless you provide it in the body of your comment.

ii. E-mail . Comments may be sent by e-mail to opp-docket@epa.gov, Attention: Docket ID Number OPP-2002-0278. In contrast to EPA's electronic public docket, EPA's e-mail system is not an “anonymous access” system. If you send an e-mail comment directly to the docket without going through EPA's electronic public docket, EPA's e-mail system automatically captures your e-mail address. E-mail addresses that are automatically captured by EPA's e-mail system are included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket.

iii. Disk or CD ROM . You may submit comments on a disk or CD ROM that you mail to the mailing address identified in Unit I.C.2. These electronic submissions will be accepted in WordPerfect or ASCII file format. Avoid the use of special characters and any form of encryption.

2. By mail . Send your comments to: Public Information and Records Integrity Branch (PIRIB) (7502C), Office of Pesticide Programs (OPP), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001, Attention: Docket ID Number OPP-2002-0278.

3. By hand delivery or courier . Deliver your comments to: Public Information and Records Integrity Branch (PIRIB), Office of Pesticide Programs (OPP), Environmental Protection Agency, Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, Attention: Docket ID Number OPP-2002-0278. Such deliveries are only accepted during the docket's normal hours of operation as identified in Unit I.B.1.

Do not submit information that you consider to be CBI electronically through EPA's electronic public docket or by e-mail. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI (if you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is 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 docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket 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 rule or collection activity.

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

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.

This direct final rule is issued under FFDCA section 408, 21 U.S.C. 346a, as amended by FQPA (Public Law 104-170), and ARTCA (Public Law 105-324).

Section 408 of FFDCA authorizes the establishment of tolerances, exemptions from the requirement of a tolerance, modifications in tolerances, and revocation of tolerances for residues of pesticide chemicals in or on raw agricultural commodities and processed foods. Section 408(j)(2) of FFDCA provides that all regulations issued by FDA under FFDCA section 409 that stated conditions for safe use of substances that are now, post-FQPA, considered pesticide chemical residues in or on processed food or that otherwise stated the conditions under which such pesticide chemicals could be safely used, shall be deemed to be regulations issued under FFDCA section 408.

Due to the FQPA and ARTCA amedments to FFDCA, those chemical substances originally regulated by FDA under FFDCA section 409 as food-contact surface sanitizing solutions are now the responsibility of EPA. These pesticide chemicals are now subject to modification or revocation at EPA's initiative under FFDCA section 408(e). This direct final rule duplicates those chemical substances found in 21 CFR 178.1010 which are now pesticide tolerance exemptions to 40 CFR 180.940.

EPA's rulemaking activity will have no effect on any of the FDA regulated FFDCA section 409 food additive regulations in 21 CFR 178.1010.

EPA is issuing this action as a direct final rule without prior proposal because the Agency believes that this action is not controversial and is not likely to result in any adverse comments, inasmuch as this action simply implements amendments to the statutory authority and reflects the statutory transfer of jurisdiction from FDA to EPA. Its primary effect is to substitute EPA's regulatory procedures for those of FDA in approving food-contact surface sanitizing solutions under FFDCA. The chemical substances were subject to FDA review under FFDCA section 409 and have food additive clearances codified at 21 CFR 178.1010. This direct final rule duplicates the conditions for use of certain pesticide chemical residues that are currently listed in 21 CFR 178.1010 to 40 CFR 180.940. In addition, this direct final rule changes the process by which pesticide registrants obtain approval of food-contact surface sanitizing solutions as well as how those approvals are expressed in the CFR. However, it does not alter the quantity or nature of residues of these food-contact surface sanitizing solutions that might lawfully be present in food. The Agency believes that it is important to make this action effective as soon as possible, in order to clarify the jurisdiction between EPA and FDA over these chemical substances.

This direct final rule is effective on April 2, 2003 without further notice, unless EPA receives a relevant adverse comment by February 3, 2003. If, however, EPA receives a relevant adverse comment during the comment period, then EPA will publish a timely withdrawal in the Federal Register informing the public that the direct final rule will not take effect. We will also publish a notice of proposed rulemaking in a future issue of the Federal Register . We will address the comments on the direct final rule as part of that notice of proposed rulemaking.

Since EPA was created in 1970, EPA and FDA have shared authority under FFDCA over pesticide chemical residues in food. Enactment of FQPA in 1996 amended FFDCA, and shifted to EPA regulatory authority over certain pesticide residues which were previously subject to FDA authority. Prior to 1996, products used to sanitize or disinfect permanent or semi-permanent food-contact surfaces were regulated by FDA as indirect food additives under FFDCA section 409. Under the FQPA and ARTCA amendments to FFDCA, antimicrobial formulations used on permanent or semi-permanent food-contact surfaces other than food packaging are now considered “pesticide chemicals” and are regulated by EPA under FFDCA section 408.

FQPA added a provision to FFDCA to assure an orderly transition to the new regulatory system. Section 408(j)(2) of FFDCA provides that all food additive regulations issued under FFDCA section 409 prior to the enactment of FQPA for antimicrobial uses that became pesticide chemical uses subsequent to FQPA and that were not affected by ARTCA shall be deemed to be regulations issued under FFDCA section 408. Thus, FQPA converted existing food additive regulations issued by FDA under FFDCA section 409, for chemical substances that post-FQPA became pesticide chemicals, into FFDCA section 408 pesticide chemical tolerances or tolerance exemptions. This “grandfather” provision of FFDCA section 408(j) assures that pesticide chemical residues conforming to regulations issued under the authority of FFDCA section 409 will not render food adulterated as a result of the jurisdictional shift from FDA to EPA.

In 1998, ARTCA amended the definition of “pesticide chemical” in FFDCA section 201(q) so as to exclude certain antimicrobial pesticide residues from the authority of FFDCA section 408. Consistent with FFDCA section 408(j)(4), these residues now fall within the authority of FFDCA section 409. As a result, certain uses of food-contact surface sanitizing solutions identified in FDA's regulations at 21 CFR 178.1010 remain subject to FFDCA section 409 regulations just as they did pre-FQPA, while other uses are now subject to EPA's jurisdiction under FFDCA section 408.

Under FFDCA section 408(q), EPA is required to reassess all tolerance exemptions that were in effect on the day before the enactment of the FQPA. The tolerance exemptions for inert ingredients as well as those active ingredients not yet completed will be reassessed in accordance with EPA's schedule for tolerance reassessment published in the Federal Register of August 4, 1997 (62 FR 42019) (FRL-5734-6).

The tolerance exemptions in this direct final rule codified in 40 CFR 180.940 already exist as valid FFDCA section 408 regulations. FDA promulgated the food additive regulations in 21 CFR 178.1010 under the authority of FFDCA section 409 prior to the enactment of FQPA. By operation of FFDCA section 408(j)(2), those portions of 21 CFR 178.1010 that pertain to chemical substances that are pesticide chemicals post-FQPA and remain as such post-ARTCA were converted to FFDCA section 408 tolerance exemptions. EPA's duplication of these tolerance exemptions is not “establishing, modifying, or revoking a tolerance” under FFDCA section 408(b). EPA is, therefore, not required to conduct a full reassessment of these tolerance exemptions at this time.

The Agency is duplicating in 40 CFR 180.940 only those portions of the regulations in 21 CFR 178.1010 that pertain to pesticide chemicals. This duplication will have no effect on any of FDA's regulated FFDCA section 409 food additive regulations in 21 CFR 178.1010.

In establishing food additive regulations for food-contact surface sanitizing solutions in 21 CFR 178.1010, FDA used a formulation-specific approach. Consistent with its authority under FFDCA section 409, FDA issued regulations prescribing the conditions under which food-contact surface sanitizing solutions might be safely used. FDA approved the use of each food-contact surface sanitizing solution formulation as a whole, rather than regulating each component chemical substance individually. In addition, FDA included a generic exemption for any chemical substance considered to be GRAS, and in some cases, issued letters not objecting to certain additional chemical substances in the formulations.

By contrast, FFDCA section 408 authorizes EPA to issue regulations establishing tolerances or exemptions from the requirement of a tolerance. EPA's practice has been to issue these regulations on a chemical-specific basis, whereby each ingredient in the product is the subject of a separate tolerance or exemption regulation. Food-contact surface sanitizing solutions meet the requirements of FFDCA if each ingredient has an appropriate clearance under FFDCA, either a tolerance or an exemption from the requirement of a tolerance, and any conditions on the clearance are observed.

Translating the regulatory decisions made by FDA into a comparable EPA scheme requires considerably greater work on EPA's part than merely copying those portions of the existing regulations in 21 CFR 178.1010 that pertain to pesticide chemicals directly into 40 CFR 180.940. EPA must disaggregate the formulations in 21 CFR 178.1010 that pertain to pesticide chemicals into their component ingredients. EPA must also provide a mechanism to address those ingredients not identified by name in 21 CFR 178.1010 but that were, for example, permitted by prior sanction or approval, not objected to, or generally recognized as safe. This, in fact, places a higher initial demand on EPA resources than would be required to simply copy FDA's approach. However, EPA is convinced that the long-term administrative convenience of using a consistent regulatory scheme for all pesticide chemicals subject to FFDCA section 408 outweighs the initial burdens.

FDA's formulation-specific approach is different from EPA's chemical-specific approach. Under EPA's approach, a tolerance exemption would be approved once for each particular pesticide chemical, and would not need to be repeated as new products containing that chemical substance enter the market. EPA's approval process is not complex, will allow for a wide variety of potential products, and fosters innovative formulation approaches. In addition, by listing in one place (40 CFR 180.940) all chemical substances exempted from the requirement of a tolerance when used in food-contact surface sanitizing solutions, EPA's approach will increase the transparency of its regulatory process.

This duplication will not allow any residues beyond those already permitted by 21 CFR 178.1010. EPA believes that the chemical-specific approach and FDA's formulation-specific approach are equivalent from a risk management perspective, inasmuch as each would result in the same levels of residues from these chemical substances.

As part of the duplication, EPA changed the naming conventions (chemical nomenclature), as well as combining, as appropriate, chemical substances that appear in 21 CFR 178.1010 under two or more names under a single name. The Agency has attempted to identify each of the listed chemical substances using the Chemical Abstracts Service Registry Number (CAS No.). The CAS No. provides one of the most distinct and universally accepted means of identifying chemical substances. Generally, there will be only one CAS No. per listed chemical substance; however, it is possible that more than one CAS No. may be appropriate for some chemical substances. The lack of a CAS No. will not preclude EPA from including chemical substances in 40 CFR 180.940.

The lower-concentration limits specified in 21 CFR 178.1010 are not included in 40 CFR 180.940 because of the differences between FDA's approach and EPA's approach. Although EPA establishes tolerance exemptions for use in food-contact surface sanitizing solutions under FFDCA, all pesticide products must also meet the criteria for registration under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) before being offered for sale. EPA relies on conditions imposed through the FIFRA registration process to address safety and for antimicrobial-formulated products efficacy. Accordingly, the lower limits on concentrations of pesticide chemicals, that appear in 21 CFR 178.1010 will not appear in 40 CFR 180.940.

Three types of food-contact surface sanitizing solutions are described in 21 CFR 178.1010:

•Those used on food-contact surfaces in public eating places.

•Those used on dairy-processing equipment.

•Those used on food-processing equipment and utensils.

21 CFR 178.1010 allows the use of GRAS chemical substances and chemical substances “permitted by prior sanction or approval,” that are not expressly identified. These chemical substances were subject to the sanitizer formulation approval under FDA's regulation before these uses became FFDCA section 408 tolerance exemptions under FFDCA section 408(j)(2). Accordingly, many food-contact sanitizing solutions that presently are authorized for use under 21 CFR 178.1010 contain ingredients which are not identified in this direct final rule. As discussed in this unit, EPA is asking registrants to identify these other ingredients that they believe should be included in 40 CFR 180.940. EPA intends to publish a revision to 40 CFR 180.940 adding these chemical substances. In the interim, to preserve the use of food-contact surface sanitizing solutions that were cleared for use before FQPA's enactment and that contain chemical substances that are not specifically identified in 21 CFR 178.1010, EPA has decided to honor those approvals under 21 CFR 178.1010 until EPA has received and reviewed registrant's claims with respect to unspecified pesticide chemicals, as discussed in this unit.

FDA's regulations (21 CFR 178.1010(b)) allowed the addition to food-contact surface sanitizing solutions of GRAS components, and components permitted by prior sanction or approval or subject to a letter of no objection. Much of this information should be in EPA's files. The Agency will access this information. However, EPA may not have ready access to all information on all chemicals in existing food-contact surface sanitizing solution formulations which could meet these criteria. Submission of this information to EPA would also reduce the possibility of an existing food-contact surface sanitizing solution having a component that lacks a tolerance exemption under 40 CFR 180.940. Therefore, registrants who believe that components of their food-contact surface sanitizing solutions are exempted under 21 CFR 178.1010(b) should advise EPA in writing that these chemical substances (along with the CAS No.) should be included in 40 CFR 180.940. The submission of this information facilitates EPA's process for adding these chemical substances cleared under 21 CFR 178.1010(b), but not specifically listed by name, to 40 CFR 180.940. The EPA will also need any available information documenting the claim that the component is GRAS, prior sanctioned or approved, or subject to a letter of no objection.

Claims and supporting documentation should be sent directly to the person listed under FOR FURTHER INFORMATION CONTACT . Claims are not comments on this direct final rule and should be identified on the subject line as “Submission of Non-designated Prior Approved Chemical Substance.” If you have any questions about the many types of information that could be submitted please consult the person listed under FOR FURTHER INFORMATION CONTACT . The Agency does not anticipate that registrants will be required to submit an excessive amount of information, and, in fact, believes that most registrants will be able to submit the necessary information with minimal effort.

EPA will review and evaluate the information provided. Chemical substances identified in claims received not later than June 2, 2003 may be eligible for inclusion in § 180.940 under FFDCA section 408(j)(2). EPA anticipates publishing a notice of proposed rulemaking identifying those chemical substances shortly after that date.

EPA is taking direct final action to add a new § 180.940 to 40 CFR part 180, subpart D which lists the pesticide chemicals that are exempt from the requirement of a tolerance when used in food-contact surface sanitizing solutions. The initial list duplicates pesticide chemicals in 40 CFR 180.940 that are active and inert ingredients listed in 21 CFR 178.1010. Since this direct final rule does not impose any new requirements, it is not subject to review by the Office of Management and Budget (OMB) under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993), Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), or Executive Order 13211, entitled Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001).

This direct final rule directly regulates food processors, food handlers, and food retailers, but does not affect States, local, or Tribal governments directly. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). This action does not have substantial direct effects on State or tribal governments, on the relationship between the Federal government and States or Indian tribes, or on the distribution of power and responsibilities between the Federal government and States or Indian tribes. As a result, this action does not require any action under Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), or under Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Nor does it impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4).

Nor does it require special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or Executive Order 12630, entitled Governmental Actions and Interference with Constitutionally Protected Property Rights (53 FR 8859, March 15, 1988).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards under to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

Under section 605(b) of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq .), the Agency hereby certifies that the creation of a new § 180.940 does not have significant negative economic impact on a substantial number of small entities. The rationale supporting this conclusion is as follows. This direct final rule does not impose any requirements, it establishes exemptions from the requirement for a tolerance. The Agency is, however, also commencing a process whereby EPA will require certain persons to identify chemical substances considered to be GRAS (which could include self-affirmed GRAS chemicals), or permitted by prior sanction or approval in existing food-contact surface sanitizing solutions. The information available to the Agency indicates that fewer than 500 companies have approximately 1,300 products that could fall under this category. EPA anticipates the economic burden on small entities to be minor, since the Agency is only asking for confirmation that the chemical substances considered to be GRAS or permitted by prior sanction or approval in existing food-contact surface sanitizing solutions are in fact part of an existing formulation, and information as to why the chemical is considered to be GRAS, or a copy of an FDA letter not objecting to the use of a chemical substance. By contrast, this direct final rule is beneficial to the regulated community by increasing the number of inert ingredients for use in antimicrobial formulations and by reducing the regulatory burden on persons seeking to market new combinations of ingredients for certain hard surface sanitizing solutions. Additionally, this direct final rule provides a more transparent listing of pesticide chemicals used in food-contact surface sanitizing solutions to the public.

According to the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq ., an Agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under the PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations, after initial display in the preamble of the final rule and in addition to its display on any related collection instrument, are listed in 40 CFR part 9.

This direct final rule does not impose any new information collection requirements that would require separate approval by OMB under the PRA. Under 5 CFR 1320.3(h), the request for information discussed in Unit VII. is not subject to approval under the PRA, and the information collection activities related to the Agency's tolerance exemption process have already been approved by OMB under OMB control numbers 2070-0024 (EPA ICR No. 597). The annual “respondent” (petitioner) burden for the pesticide tolerance petitions program is estimated to average 1,726 hours per petition. According to the PRA, “burden” means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. For this collection, it is the time reading the regulations; planning the necessary data collection activities; conducting tests; analyzing data; generating reports and completing other required paperwork; and storing, filing, and maintaining the data. Send comments regarding this burden estimate or any other aspect of the collection activity, including suggestions for reducing the burden to: Director, Collection Strategies Division, Environmental Protection Agency (2822), 1200 Pennsylvania Ave., NW., Washington, DC 20460. Include the OMB control number 2070-0024 in any correspondence about this collection activity, but do not submit the requested information or forms to this address.

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

This is a summary of the Commission's Fifth Order on Reconsideration and Order on Remand (Order) in CC Docket No. 96-128, adopted on October 17, 2002, and released on October 23, 2002. The complete text of this Order is available for public inspection Monday through Thursday from 8 a.m. to 4:30 p.m. and Friday from 8 a.m. to 11:30 a.m. in the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC 20554. The complete text is available also on the Commission's Internet site at www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365. The complete text of the Order may be purchased from the Commission's duplicating contractor, Qualex International, Room CY-B402, 445 Twelfth Street, SW., Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or e-mail at qualexint@aol.com.

1. Instead of revising its approach to estimating monthly call volumes at the average payphone, the Commission retained the estimate of 148 monthly compensable calls as determined in the Fourth Reconsideration Order, 67 FR 9610, March 4, 2002. In this regard, the Commission explicitly rejected the reconsideration arguments of: (1) Sprint and WorldCom that per-payphone compensation should be based on the 131 monthly compensable calls estimated by the Commission in 1996, (2) Sprint that the underlying call volumes were unreliable, (3) WorldCom that the Commission should reduce the monthly estimate by a set factor each year after the Interim Period, and (4) Sprint that the Commission should use a weighted averaged, instead of a straight average as used in the Fourth Reconsideration Order.

2. The Commission's calculation of a per-call compensation rate in the Third Report and Order, 64 FR 13701, March 22, 1999, included a component of $0.009 to reflect an assumed average delay in the rendering of payphone compensation according to the quarterly system established by industry consensus and endorsed by the Commission in the First Report and Order, 61 FR 52307, October 7, 1996. APCC requested that the Commission reconsider its deduction in the Fourth Reconsideration Order of this $0.009 from the per-call compensation rate. The Commission in this Order granted APCC's request and reinstated this $0.009 component for the purpose of calculating per-payphone compensation. Granting APCC's reconsideration petition on this issue effectively mooted Sprint's request for clarification that the 22.9 cent rate adopted in the Fourth Reconsideration Order be applied to all true-ups for the Intermediate Period, whether a carrier paid on a per-payphone or per-call basis. It also mooted WorldCom's request to clarify that the rate of 22.9 cents applies to payments for payphones that do not transmit payphone-specific coding digits, even if the carrier has compensated on a per-call, rather than per-payphone basis, for those payphones. The same 23.8 cent rate that applied to per-call compensation during the Intermediate Period applies to determine per-payphone compensation.

3. The Colorado Payphone Association (CPA) asked the Commission to reconsider the 24-cent compensation rate established in the Third Report and Order arguing that the Commission inappropriately used a “stripped down” coinless phone model for the purpose of calculating payphone capital costs, inappropriately used 11.25% as the interest rate, and incorrectly calculated maintenance costs. The Commission denied CPA's reconsideration petition with respect to each of these factors.

4. The Commission denied the RBOC Coalition's reconsideration petition request to add some amount of additional compensation to the per-payphone compensation required in this Order as compensation for 1+ calls originated during the Interim Period for which the payphone service providers (PSPs) were not otherwise compensated. The definition provided of a 1+ call was an interLATA toll call originating at a payphone and carried by an interexchange carrier (IXC), where the IXC's operator or its automated rating system directs that calling party to deposit coins for the call.

5. After considering reconsideration requests regarding the per-payphone compensation calculation, the Commission recalculated a per-payphone compensation amount based on a per-call rate of $0.238 cents. The per-call rate of $0.238 multiplied by the call estimate of 148 calls per month equals a compensation amount of $35.224 per payphone per month for the Interim Period (November 7, 1996, through October 6, 1997) and the Intermediate Period (October 7, 1997, through April 20, 1999). The compensation obligations as shown at Appendices A, B and C are calculated using this increased amount.

6. After determining the amount of compensation to be paid per payphone per month, the Commission next allocated this monthly payphone compensation obligation among the payors of per-payphone compensation, to implement the remand by the U.S. Court of Appeals for the District of Columbia Circuit in Illinois Pub. Telecomm. Ass'n v. FCC, 117 F.3d 555 (D.C. Cir. 1997), clarified on reh'g, 123 F.3d 693 (D.C. Cir. 1997), cert. denied sub nom. Virginia State Corp. Comm'n v. FCC, 523 U.S. 1046 (1998) (hereinafter Illinois ). See Remand Public Notice, 62 FR 43686, August 15, 1997. During the first four months of 2002, the four Regional Bell Operating Companies (RBOCs) provided the Wireline Competition Bureau with aggregate call data listing the next destination past the RBOC switch of payphone calls placed during 1997, 1998, and October 1, 2000, through September 30, 2001. From that data set, the Commission aggregated the numbers to determine the total number of payphone calls received by each carrier in each of the three time periods, as well as the total number of calls placed in the time period. From there, each carrier's share of the total was calculated, and thus the proportion of the monthly $35.224 per-payphone compensation that each identified carrier should rightfully bear.

7. Once the basic aggregation was completed, the Commission adjusted the data in various ways in order to obtain a reasonable allocation. For example, the Commission excluded unusable data from the final data set, such as, calls routed to destinations not identified in the RBOC data. Another exclusion concerned some RBOC data submitted for payphone calls routed to destinations that were not IXCs or other carriers, including entities with dedicated private line service assigned a carrier identification code (CIC), a four digit number that uniquely identifies the destination of the call, even though they are not “communications carriers.” The Commission also excused governmental entities, such as, the Internal Revenue Service, and various state governments, that were in the RBOC data. Because such non-carrier entities had no notice that they could be responsible for payphone compensation, the Commission decided not to hold them liable and removed those calls from the data set. The non-carrier CIC holders eliminated from consideration are: AmVox, Arco Paypoint, Arthur Anderson & Co., Buypass Corp., California State Lottery, Cam-Net, Card Establishment, Compuserve, Contact America, Dean Witter, Department of Treasury (IRS), Discover & Co., EDS, Envoy Corporation, ETSC, First USA, Full Service Computing, Harmonic Systems, HUB Distributing, Idaho State Government, JC Penney Business Services, Landmark Communications, Legal Aid Society of Orange County, MAG Card, MasterCard International, MCSC Access in Canada, Merchant Link, Mobile Oil Credit Corp., Morgan Stanley, National Data Corp., Nexus Communications, Paradise Communications, PaymentTech, Professional Fusion Enterprises, PSA, Inc., Public Service Company of New Mexico and Gas Company of New Mexico, Resource Technology, Southeast Switch, State of California, Stone & Co., Telemoney Services, Transaction Network Services, United Refining, Vacation Villages of America, Visa USA, Vital Processing Services, VoiceCom Systems, VTA, Inc., and Weeks Communications.

8. The Commission may not have identified all of them; thus, some entities in the Tables of Allocations in Appendices A, B, or C may not in fact be carriers. The Commission made the following provision for entities that are not “communications carriers” and thus not responsible for per-payphone compensation. Any entity named in the Commission's allocation in this Order that then receives a request for per-payphone compensation from a PSP or other entity may, within 90 days of receiving such a request, file a waiver request with the Wireline Competition Bureau for exclusion from the per-payphone allocation, with a demonstration that the entity provides no communications service to others.

9. In the First Report and Order, the Commission decided that local exchange carriers (LECs) must pay payphone compensation to the extent that they carry compensable payphone calls. The Commission in this Order allocated to both RBOC and non-RBOC incumbent LECs 2.19% of the calls originating from payphones within their own service territories because it reflects the fact that an incumbent LEC does receive and carry compensable payphone calls originated within its territory. This percentage and the appropriate compensation amount were listed in Appendices A, B and C. Rather than making each incumbent LEC remit payment to each PSP in the nation the Commission required each incumbent LEC to remit the 2.19% payment to PSPs for each payphone located in its service territory, even if the PSP had/has its payphones connected to a competitive LEC.

10. After an examination of the RBOC data showed that the RBOCs themselves sometimes behaved as IXCs, the Commission concluded that incumbent LECs owe compensation for calls where the incumbent LEC performed the function of an IXC. This compensation obligation was allocated in a manner consistent with other payors of per-payphone compensation. The Allocation Tables reflect compensable payphone calls routed to identified incumbent LECs acting in an IXC capacity, and specify the amount of per-payphone compensation to be paid by that incumbent LEC to all PSPs nationwide.

11. In Appendices A, B and C, the Commission identified payors obligated to pay per-payphone compensation by the names of payors and CICs provided by the RBOCs in the payphone call data. The Commission explained in this Order that given consolidation and change in the telecommunications industry over the last several years, the payor names may fail to accurately identify current per-payphone obligations imposed by this Order. Any failure on the Commission's part in the name identification in Appendices A, B and C does not excuse full payment by any entity of its compensation obligation. According to the Commission, the per-payphone obligation must be paid by each listed entity, or by its successors in interest, assigns, transferees or their entity legally responsible for the listed entity's obligations under this Order.

12. The Commission noted, moreover, that this name identification was provided for the convenience of carriers and PSPs alike, and was not intended to impose a modification to otherwise appropriate intracorporate relationships. If an entity listed in Appendices A, B or C has provided for payment of its payphone compensation allocations through separate subsidiaries or otherwise, it may, absent some other resolution agreeable to the PSPs to which it owes payment, ask for clarification from the Wireline Competition Bureau, which will promptly provide the appropriate attribution of allocation amounts among subsidiaries or other entities, or otherwise provide clarification of the per-payphone compensation obligation required by this Order. An entity listed in Appendices A, B, or C may not, however, avoid its obligation to pay per-payphone compensation by requesting such clarification.

13. KTNT Communications is an exception in the Commission's listing of entities in Appendices A, B, and C according to the RBOC data. The Commission identified KTNT Communications as the company obligated to pay the per-payphone compensation required by this Order for 39 operator service providers. In explaining this decision, the Commission noted that KTNT Communications filed a notice with the Public Utility Commission of Texas on April 18, 1997 that it was the management company responsible for these other operator service providers. In addition, KTNT Communications and each of the 38 other operator service providers submitted “concurring carrier” documentation to qualify to use KTNT Communications tariff submissions. The 38 other operator service providers with payphone call data aggregated with data for KTNT Communications are: Bay TNT Network, Who Ever, U Speak Long Distance, It Doesn't Matter, Zimmer Way, I Don't Care, I Don't Know, Riverbend Communications, Minh Long Distance, Viva Tel L.D., Bryant Service, Rea Long Distance, Signature Network Service, Brown Service Co., Exco Long Distance, Mustang Operators, Far Point, Knox Service Group, Sandell Operator Service, Christine LD Service, Vera Long Distance, Old Laredo Service, Old Home Operator, Andril Service Group, Any One Is Okay, MCV, Brahms Communications, Forest Pine Telcom, Amadeus, Dvorak, KBTN, Callum Long Distance, Sunrise Operator, Wisteria LD Service, World Window, Hickory Grover Group, Alert Operators, and Friendly Voice Network. While KTNT Communications must pay all of the per-payphone compensation required in this Order for itself and each of the 38 entities listed in this paragraph, KTNT Communications has a right of recovery from these listed 38 entities if such recovery does not lead to double recovery by KTNT Communications.

14. In this Order, the Commission granted Sprint's petition for reconsideration regarding the obligation of resellers to pay per-payphone compensation to the following extent. The RBOC call data listed carriers receiving calls by name and by CIC. Because many resellers have their own CICs, numerous resellers are included on these lists, and hence included in the allocation delineated at Appendices A, B and C. Accordingly, the Commission addressed at least part of Sprint's concern by including resellers as well as “first switch” carriers, without regard to the label borne by the carrier. Further, the Commission explicitly held that allocating compensation obligations among carriers through the use of this methodology replaces the more general statements made in the Fourth Reconsideration Order about requiring first facilities-based carriers to bear the entire burden of per-payphone compensation. Moreover, the Commission reconsidered its decision to use Carrier Locator Reports to distinguish IXCs from resellers and instead made the allocation without regard to whether a company considers itself to be an IXC, a reseller, or some other type of provider of telecommunications services.

15. In contrast, the Commission recognized in this Order that calls routed to facilities-based carriers' CICs may in fact have been ultimately routed to resellers. Given the inclusion of a significant number of resellers in the allocation methodology, the Commission decided that the ultimate impact on the compensation paid by other carriers will most likely not be significant. Sprint's proposed alternative method for allocating per-payphone compensation proposal effectively would have excluded all resellers from compensation and the Commission did not consider it to be fair compensation to PSPs. The Commission stipulated explicitly that, if a carrier has data that payphone calls allocated to them ( i.e. , routed to its CIC) were actually carried by resellers, nothing in this Order prevents carriers from seeking reimbursement of the cost of these calls from resellers. The Commission added that carriers may in no way delay payment of compensation to PSPs on account of seeking such reimbursement.

16. In adopting its allocation methodology, the Commission explicitly denied reconsideration petitions asking the Commission to establish alternative ways of calculating compensation for the Interim and Intermediate Periods. The Commission also rejected ITC‸DeltaCom's reconsideration petition request to exempt from Interim Period compensation obligations those carriers with revenues below $100 million. In addition, APCC, Sprint Corporation, MCI and Frontier Corporation filed petitions for reconsideration or review of a Bureau-level decision and a Division-level decision, each related to per-payphone compensation for the Intermediate Period. See Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, CC Docket No. 96-128, Memorandum Opinion & Order, 63 FR 26497, May 13, 1998; Order, 63 FR 26495, May 13, 1998. These petitions attack various aspects of the waiver process by which per-payphone compensation was paid during the Intermediate Period. After establishing in the Fourth Reconsideration Order and this Order the methodology for calculating and apportioning per-payphone compensation for the Interim and Intermediate Periods, and allocating the responsibility for per-payphone compensation to as large a group of carriers as possible, the Commission dismissed these petitions as moot.

17. In its reconsideration petition, Sprint Corporation asserted that it did not believe the obligation created in the Fourth Reconsideration Order regarding per-payphone compensation for the Intermediate Period was intended to force carriers that previously paid on a per-call basis to now conduct true ups on a per-payphone basis for the Intermediate Period. The Commission declared in this Order that if carriers have already paid per-call compensation on payphones for which they received coding digits in the Interim, Intermediate or any other period, nothing in the Fourth Reconsideration Order or this Order requires carriers to now go back and apply per-payphone compensation to these payphones.

18. CPA requested reconsideration of the decision that PSPs must pay refunds for the Intermediate Period. In this Order, the Commission affirmed its decision in the Third Report and Order that PSPs must refund the difference between payments they received at the 28.4 cent rate established in the Second Report and Order, 62 FR 58659, October 30, 1997, and payments recalculated at a 23.8 cent rate.

19. The Commission affirmed in this Order the decisions in the Third Report and Order and the Fourth Reconsideration Order that obligations for payment of outstanding compensation for the Interim and Intermediate Periods, and payment of refunds and any adjustments, shall run from specific carriers to specific PSPs. The Commission declined to adopt APCC's reconsideration petition to the extent it asked for the establishment of a carrier-to-carrier mechanism for resolving payments and refunds. The Commission, however, reiterated its conclusion in the Fourth Reconsideration Order that alternative arrangements between or among carriers, with the agreement of the PSP, are not prohibited.

20. The Commission explained how carriers and PSPs should handle the compensation and refund process by providing the following guidelines to clarify the requirements of the Third Report and Order. After the effective date of this Order, PSPs and carriers may render bills to one another or otherwise arrange for payment of outstanding Interim and Intermediate Period compensation obligations or refunds. They may use whatever commercially reasonable payment or dispute resolution processes to handle this process they may currently use in their dealings with one another or to which they may otherwise mutually agree, including clearinghouse processes. In accordance with the Third Report and Order determination that “IXCs may recover their overpayments to the PSPs at the same time as the PSPs receive payment from the IXCs for the Interim Period,” the Commission clarified in this Order that this means IXCs (or other carriers rendering payment) shall initially claim an offset for refunds of overpayments only against amounts claimed by the PSP for Interim and Intermediate Period compensation. Only after the carrier and the PSP have resolved the offset against this amount may the IXC “deduct the remaining overpayment from future payments to PSPs” as stipulated in the Third Report and Order. The Commission clarified that IXCs (or other carriers claiming refunds) may only withhold undisputed amounts from future payments. Thus, any carrier wishing to deduct a refund out of future payments to PSPs may only do so after providing that specific PSP notice of the refund claimed, and allowing the PSP adequate time to dispute the claim. To the extent a PSP disputes any portion of the refund claimed, the carrier may not deduct that portion from any future payment until it resolves the dispute with the PSP. Again, carriers and PSPs may use existing commercially reasonable processes to handle these disputes and arrange for payment. The only requirement the Commission placed on these processes is that if a carrier is able to apply undisputed amounts against future payments, the carriers must allow PSPs to make payments of refunds over a reasonable number of future payments, subject to ongoing accrual of interest, if reasonably requested by the PSP.

21. The Commission in this Order rejected reconsideration requests and affirmed its decision in the Fourth Reconsideration Order to apply the IRS-prescribed interest rate to payments of Interim and Intermediate Period compensation, as well as to refunds owed by PSPs to carriers. The Commission specified, however, that because it had reinstated the $0.009 interest rate component as described above, the IRS-prescribed interest rate will only begin to accrue after the date payment normally would have been rendered under the quarterly payment system applicable to payphone compensation. Consistent with the Commission's assumptions under prior orders in this proceeding, the IRS-prescribed interest rate for payments that should have been made for the first quarter of the year will begin accruing on July 2 of that same year, for the second quarter of the year on October 2 of that same year, for the third quarter on January 2 of the next year, and for the fourth quarter on April 2 of the next year.

22. WorldCom asked the Commission to clarify that, with the exception of Interim Period inmate calls not otherwise compensated, PSPs may not now submit any new claims for any other type of coinless payphone call after the one year deadline for submitting calls for compensation. The Commission decided it was not necessary to further clarify its holding and rejected WorldCom's clarification request.

23. In this Order, the Commission denied CPA's reconsideration petition asking the Commission to require carriers to implement targeted call blocking, the technological ability of an IXC to not accept (or “block”) a dial-around access code call from one payphone while accepting calls from another payphone.

24. The Commission decided in this Order that it is constrained by the court's holding in Illinois to allow LECs to use net book value when valuing payphone assets transferred to a separate affiliate or operating division. The Commission noted that the court's holding, however, was enunciated in the specific context of the transfers at issue in Illinois. Thus, to avoid confusion as to the reach of the Commission's implementation of the court's decision, the Commission provided in this Order clarification as follows. If a LEC chooses to retain payphone assets, reclassification of these assets from regulated to nonregulated status must be consistent with § 32.32 and the Commission's part 64 cost allocation rules. If a LEC chooses to make a one-time transfer of payphone assets to a nonregulated affiliate or operating division, then such a transfer would be recorded at net book value. The Commission expressly limited this treatment to only such transfers as may be made pursuant to Commission implementation of section 276(b)(1)(B), as it is only these types of transfers that could reasonably be considered the kind of one-time industry reform contemplated by the court in Illinois. The Commission also explained that, to the extent a transfer of payphone assets does not meet these requirements, the Commission's affiliate transaction rules would apply. In this event, carriers were reminded that they must include in fair market valuations of payphone assets the going concern value associated with location contracts supporting the payphone assets.

25. The Commission also clarified that the effective date of the Fourth Reconsideration Order and this Order shall be 30 days after the date that this Order is published in the Federal Register . The Commission specifically declined, however, to require compensation payment to be made within thirty days after release of this Order, as the RBOC Coalition requested. According to the Commission, once any PSP or carrier has performed the tasks necessary to render bills for compensation or refunds in accordance with this Order, the PSP or carrier may render such bills as soon as practicable after this Order's effective date, provided that they observe the offset resolution guidelines described in the Order.

26. The Commission delineated the results of its allocations, showing each carrier's pro rata share of the per-payphone payment, in Tables of Allocation located in Appendices A, B and C. In Appendix A, the Commission identified the payors and designated the monthly per-payphone compensation amounts for the Interim Period, beginning November 7, 1996 through October 6, 1997.

27. In Appendix B, the Commission identified the payors and designated the monthly per-payphone compensation amounts for the Intermediate Period, beginning October 7, 1997, through April 20, 1999.