The Mexican fruit fly ( Anastrepha ludens ) is a destructive pest of citrus and many other types of fruit. The short life cycle of the Mexican fruit fly allows rapid development of serious outbreaks that can cause severe economic losses in commercial citrus-producing areas.

The Mexican fruit fly regulations, contained in 7 CFR 301.64 through 301.64-10 (referred to below as the regulations), were established to prevent the spread of the Mexican fruit fly to noninfested areas of the United States. The regulations impose restrictions on the interstate movement of regulated articles from the regulated areas. Prior to the effective date of this rule, the only areas regulated for the Mexican fruit fly were portions of Texas.

Section 301.64-3 provides that the Deputy Administrator for Plant Protection and Quarantine (PPQ), Animal and Plant Health Inspection Service (APHIS), shall list as a regulated area each quarantined State, or each portion of a quarantined State, in which the Mexican fruit fly has been found by an inspector, in which the Deputy Administrator has reason to believe the Mexican fruit fly is present, or that the Deputy Administrator considers necessary to regulate because of its proximity to the Mexican fruit fly or its inseparability for quarantine enforcement purposes from localities in which the Mexican fruit fly occurs.

Less than an entire quarantined State is designated as a regulated area only if the Deputy Administrator determines that the State has adopted and is enforcing a quarantine or regulation that imposes restrictions on the intrastate movement of the regulated articles that are substantially the same as those that are imposed with respect to the interstate movement of the articles and the designation of less than the entire State as a regulated area will otherwise be adequate to prevent the artificial interstate spread of the Mexican fruit fly.

Recent trapping surveys by inspectors of California State and county agencies and by APHIS inspectors reveal that a portion of Los Angeles County, CA, is infested with the Mexican fruit fly.

Accordingly, to prevent the spread of the Mexican fruit fly to noninfested areas of the United States, we are amending the regulations in § 301.64-10 by designating that portion of Los Angeles County, CA, as a regulated area for the Mexican fruit fly. The regulated area is described in detail in the rule portion of this document. The Deputy Administrator has determined that it is not necessary to designate the entire State of California as a regulated area.

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

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

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

This rule restricts the interstate movement of regulated articles from an area in Los Angeles County, CA. Within the regulated area there are approximately 389 small entities that may be affected by this rule. These include 351 fruit sellers, 3 growers, 33 nurseries, 1 certified farmers' market, and 1 swapmeet. These 389 entities comprise less than 1 percent of the total number of similar entities operating in the State of California. Additionally, these small entities sell regulated articles primarily for local intrastate, not interstate movement, so the effect, if any, of this regulation on these entities appears to be minimal.

The effect on those few entities that do move regulated articles interstate will be minimized by the availability of various treatments that, in most cases, will allow these small entities to move regulated articles interstate with very little additional cost.

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

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

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

An environmental assessment and finding of no significant impact have been prepared for this interim rule. The site-specific environmental assessment provides a basis for the conclusion that the implementation of integrated pest management to eradicate the Mexican fruit fly will not have a significant impact on human health and the natural environment. Based on the finding of no significant impact, the Administrator of the Animal and Plant Health Inspection Service has determined that an environmental impact statement need not be prepared.

The environmental assessment and finding of no significant impact were prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et seq. ), (2) regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) APHIS' NEPA Implementing Procedures (7 CFR part 372).

Copies of the environmental assessment and finding of no significant impact are available for public inspection in our reading room (information on the location and hours of the reading room is provided under the heading ADDRESSES at the beginning of this document). In addition, copies may be obtained from the individual listed under FOR FURTHER INFORMATION CONTACT.

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

This rule has been determined to be non-significant and was reviewed by the Office of Management and Budget under Executive Order 12866.

The Catalog of Federal Domestic Assistance number for the program impacted by this action is 10.768, Business and Industry Loans.

There are no reporting and recordkeeping requirements associated with this rule.

The Business and Industry loan programs are subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with state and local officials. RBS will conduct intergovernmental consultation in the manner delineated in RD Instruction 1940-J, “Intergovernmental Review of Rural Development Programs and Activities,” and in 7 CFR part 3015, subpart V.

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the undersigned has determined and certified by signature of this document that this rule will not have a significant economic impact on a substantial number of small entities. New provisions included in this rule will not impact a substantial number of small entities to a greater extent than large entities. Therefore, a regulatory flexibility analysis was not performed.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. In accordance with this Executive Order: (1) All State and local laws and regulations that are in conflict with this rule will be preempted, (2) no retroactive effect will be given to this rule, and (3) administrative proceedings in accordance with the regulations of the Agency at 7 CFR part 11 must be exhausted before bringing litigation challenging action taken under this rule unless those regulations specifically allow bringing suit at an earlier time.

This document has been reviewed in accordance with 7 CFR part 1940, subpart G, “Environmental Program.” RBS has determined that this action does not constitute a major Federal action significantly affecting the quality of the human environment and, in accordance with the National Environmental Policy Act of 1969, 42 U.S.C. 4321 et seq , an Environmental Impact Statement is not required.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, RBS must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any 1 year. When such a statement is needed for a rule, section 205 of UMRA generally requires RBS to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective, or least burdensome alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) 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 the UMRA.

It has been determined under Executive Order 13132, Federalism, 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.

Section 6020 of the Farm Security and Rural Investment Act of 2002, Public Law 107-424, amended section 343(a) of the Consolidated Farm and Rural Development Act (Con Act) to change the definition of rural area for several programs under that Act, including the RBS Business and Industry loan programs. Section 343(a)(13) of the Con Act provides, in part, as follows:

(13) Rural and Rural Area.

(A) In General. Except as otherwise provided in this paragraph, the terms ‘rural’ and ‘rural area’ mean any area other than

(i) A city or town that has a population of greater than 50,000 inhabitants; and

(ii) The urbanized area contiguous and adjacent to such a city or town.

The revised definition in section 343(a)(13) of the Con Act supercedes the current definition for rural area used for the Business and Industry loan program. The current definition includes all territory of a State that is not within the outer boundary of any city having a population of 50,000 or more and its immediately adjacent urbanized and urbanizing area with a population density of more than 100 persons per square mile, as determined by the Secretary of Agriculture according to the latest decennial census of the United States. The new definition in section 343(a)(13) expands eligibility to include urbanizing areas; adds “town” to an area which can have a population of 50,000 or more; and deletes the requirement that the urbanized area be “immediately” adjacent to the city requiring only that it be “contiguous and adjacent” to the city or town. Cities or towns with populations greater than 50,000 inhabitants and the urbanized areas which are contiguous and adjacent to such cities and towns are ineligible for Business and Industry program loans.

This regulation is being published as a final rule without a Notice of Prior Rulemaking because the change being made is mandated by section 6020 which provides no administrative discretion in choosing the language to be used. Therefore, public comment is unnecessary and impracticable and contrary to the public interest. For this same reason, this final rule will be effective immediately upon publication.

The Commission is amending its MC&A requirements to reduce unnecessary regulatory burden and to provide additional flexibility to licensees required to submit Material Balance Reports and Inventory Composition Reports (also called Physical Inventory Listing Reports). The current regulations require these reports to be compiled as of March 31 and September 30 of each year and submitted within 30 days after the end of the period covered by the report. These twice yearly reports are typically based on book values as opposed to physical inventory results because the dates do not always coincide with the time frame for a facility's physical inventory. Physical inventories for Category III facilities are conducted on an annual basis, semiannually for Category I facilities, and every 2 to 6 months for Category II facilities. The term “Material Status Reports” refers to both the Material Balance Report and the Inventory Composition Report and is used in part 75.

A Category I licensee is one that is licensed to possess and use formula quantities of strategic special nuclear material (SSNM) ( e.g. , 5 kilograms of uranium enriched to 20 percent or more in the uranium-235 isotope). SSNM means uranium-235 (contained in uranium enriched to 20 percent or more in the uranium-235 isotope), uranium-233, or plutonium. There are currently two licensed Category I facilities. A Category II licensee is one that is licensed to possess and use special nuclear material (SNM) of moderate strategic significance ( e.g. , 10 kilograms of uranium enriched to 10 percent or more but less than 20 percent in the uranium-235 isotope, with limited quantities at higher enrichments). Currently, there is only one licensed Category II facility, General Atomics, and it has a possession-only license and is undergoing decommissioning. General Atomics will not be required to make changes to meet the new requirements. A Category III licensee is one that is licensed to possess and use quantities of SNM of low strategic significance ( e.g. , uranium enriched to less than 10 percent in the uranium-235 isotope, with limited quantities at higher enrichments). See Table 1 for more specific information on limits for Category I, II, and III licensees.

In 1982, the NRC initiated an effort to move the MC&A requirements from 10 CFR part 70, “Domestic Licensing of Special Nuclear Material,” to 10 CFR part 74, “Material Control and Accounting of Special Nuclear Material.” The initiative also included efforts to make the requirements more performance oriented. In 1985, the MC&A requirements for Category III facilities were made more performance oriented and moved to part 74 (50 FR 7575; February 25, 1985). The requirements for Category I facilities were similarly moved in 1987 (52 FR 10033; March 30, 1987). The MC&A requirements for Category II facilities and the general MC&A requirements are still interspersed among the safety and general licensing requirements of part 70. The requirements regarding Category II material are also overly prescriptive.

In addition, part 74 includes several typographical errors, old implementation dates, and some terminology that are being updated to reflect current practice.

Finally, the currently effective categorical exclusion for approval of safeguards plans does not clearly include the approval of an amendment to a safeguards plan.

The NRC published the proposed rule, “Material Control and Accounting Amendments” in the Federal Register on May 30, 2001 (66 FR 29251). The NRC received four comment letters on the proposed rule. These comments and the responses are discussed in the “Summary of Public Comments on the Proposed Rule” section.

The NRC staff has considered whether this rulemaking should proceed at this time or be placed on hold until completion of the NRC staff's reevaluation of the safeguards and physical security programs. The NRC staff has concluded that this rulemaking should go forward. This rulemaking clarifies the MC&A requirements by removing the inconsistencies between Category I, II, and III requirements. The rulemaking also results in a single location for all the MC&A requirements which will help both the NRC and stakeholders to locate those requirements that apply to a given facility.

A licensee authorized to possess SNM at any one time or location in a quantity totaling more than 350 grams of contained uranium-235, uranium-233, or plutonium, or any combination thereof, must complete and submit in a computer-readable format a Material Balance Report concerning SNM received, produced, possessed, transferred, consumed, disposed of, or lost. A Material Balance Report is a summary of nuclear material changes from one inventory period to the next. Currently, this report must be compiled as of March 31 and September 30 of each year and filed within 30 days after the end of the period. Under §§ 76.113, 76.115, and 76.117, the gaseous diffusion plants (certificate holders) are also required to submit the report twice yearly on the same schedule. (Note that the term “licensee”, as it is used within this statement of considerations, includes the gaseous diffusion plants unless otherwise stated.) Each licensee is also required to file a statement of the composition of the ending inventory with the Material Balance Report. An Inventory Composition Report is a report of the actual inventory listed by specified forms of material ( e.g. , irradiated versus unirradiated fuel at power reactors). However, a licensee required to submit a Material Status Report under § 75.35 is directed to submit this report only in accordance with the provisions of that section ( i.e. , at the time of a physical inventory). Section 75.35 applies only to those facilities that have been selected to report under the Agreement Between the United States and the International Atomic Energy Agency (IAEA) for the Application of Safeguards in the United States. For those facilities reporting under part 75, the frequency of reporting is dependent on the frequency of the physical inventory, which is dependent on the Category of facility ( i.e. , Category I, II, or III). The report would be required either once (Category III) or twice (Category I and II) per year.

The principal purpose of the Material Status Report is the periodic reconciliation of licensee records with the records in the Nuclear Materials Management and Safeguards System (NMMSS). The NMMSS is the national database for tracking source and SNM. The database is maintained under a Department of Energy contract. The data from the NMMSS are then used to satisfy the requirement of the US/IAEA Safeguards Agreement to provide the annual Material Balance Report for facilities selected under the Agreement or associated Protocol.

The proposed rule would have modified the regulations to require the Material Balance Report and the Physical Inventory Listing Report at the time of a physical inventory as is currently stated in § 75.35 for all licensees. The proposed rule would have required the reports to be completed within 60 days of the beginning of the physical inventory for independent spent fuel storage installations, reactors, and Category I, II, and III facilities. The modifications in the final rule do not affect licensees reporting under part 75. Because most facilities are only required to conduct a physical inventory once a year, the reporting frequency would be reduced from twice a year to once a year. For most licensees, reconciliation once a year instead of twice a year does not appear to be a problem because the number of transactions is such that reconciliation is manageable. For the gaseous diffusion plants that have a significantly larger number of transactions, reconciliation could be more difficult if performed once a year. However, the gaseous diffusion plants, by practice, currently reconcile their records with the NMMSS on a bimonthly basis and can continue this practice under the revised regulation.

Based on public comments, the final rule has been modified from the proposed rule. The reporting requirements for Category I facilities will remain unchanged from the current requirements. Category I licensees will still be required to compile the reports as of March 31 and September 30 of each year and submit the Material Balance Reports and the Physical Inventory Listing Reports within 30 days after the end of the period covered by the report. The requirements for all other facilities will be revised as outlined in the proposed rule.

As indicated, a licensee is required to submit the semiannual Material Balance Report and Inventory Composition Report within 30 days of March 31 and September 30 of each year. The preestablished timing of the submittal has two drawbacks. Specifically, the reports rarely coincide with a physical inventory, and all the reports for a given period are provided to the NMMSS at the same time. The data from a physical inventory are significantly more meaningful than the book values reported during the interim periods. Staggering the submittals would benefit the NMMSS contractor because not all licensees conduct inventories at the same time. Requirements for the NMMSS contractor would likely be spread more evenly throughout the year. Modifying the requirement to stipulate that the Material Balance Report and the Inventory Composition Report be submitted at the time of the physical inventory could alleviate these problems, provide more meaningful data, and be more efficient and effective.

Another consideration is whether there would be an adverse impact on meeting IAEA safeguards requirements. Only one Material Status Report is required per year under the terms of the US/IAEA Safeguards Agreement and § 75.35. Consequently, there would be no adverse impact on meeting IAEA safeguards requirements.

The final rule revises the timing to complete the Material Balance Report and Physical Inventory Listing Report to coincide with a facility's physical inventory, except for Category I licensees. The final rule also provides additional time to complete the paperwork, except for Category I licensees and those licensees reporting under part 75. Identification of an actual loss or theft of material would still be reported within one hour per the current regulations.

These changes provide most licensees with additional flexibility and reduce the regulatory burden. The final rule uses Physical Inventory Listing Report instead of Inventory Composition Reports to be consistent with the name of the actual form (DOE/NRC Form 742C).

The categorical exclusion (§ 51.22(c)(12)) covers the issuance of an amendment to a license under 10 CFR parts 50, 60, 61, 70, 72, or 75 relating to safeguards matters or approval of a safeguards plan. It does not address amendments to safeguards plans. As written, the categorical exclusion can be used for approval of a safeguards plan. However, an environmental assessment (EA) may be necessary for approval of an amendment to the safeguards plan. Initial approval is covered by the categorical exclusion, but amendments do not appear to be covered. This inconsistency appears to be inadvertent in that the Statement of Considerations for the rulemaking that included this categorical exclusion stated that this categorical exclusion was needed to implement new safeguards regulations through incorporation of provisions into licenses, as well as to “permit modifications to licensees' safeguards programs established under existing requirements.” See 49 FR 9352, at 9373 (March 12, 1984). The final rule adds language covering revisions to safeguards plans to rectify this omission. Safeguards plans include physical protection related plans and material control and accounting related plans. In addition, the categorical exclusion currently lists several parts to which it applies, however, part 76 is not included in the listing and should be included. Providing a generic reference to any part of 10 CFR chapter I corrects the current listing and avoids the need for revising the categorical exclusion when new parts need to be added to the listing.

The NRC staff consulted with the Council on Environmental Quality (CEQ) concerning this amendment to the categorical exclusion in 10 CFR 52.22(c)(12). CEQ determined that this amendment addresses the requirements of the CEQ regulations for agency procedures.

In 1982, the NRC began an effort to move the MC&A requirements from part 70 to part 74 and make the requirements more performance oriented. Subsequent rulemakings on February 25, 1985 (50 FR 7575) and March 30, 1987 (52 FR 10033), moved the requirements for Category I and III facilities. The MC&A requirements for Category II facilities and the general MC&A requirements are currently interspersed among the safety and general licensing requirements of part 70. The requirements regarding Category II material are also overly prescriptive as they include some requirements that are more stringent than the requirements for Category I facilities. This rule moves the remaining general MC&A requirements and the requirements for Category II facilities from part 70 to part 74. The rule also makes the MC&A requirements for the Category II facilities more risk-informed. The risk-informed approach for the Category II facilities is consistent with the current MC&A regulations that apply to Category I and III facilities. In addition, the rule makes needed modifications that were missed in earlier updates of the MC&A regulations, corrects typographical errors, deletes old implementation dates, clarifies some definitions, and includes several new definitions.

Specifically, the rule clarifies the definitions for “Category IA material” and “inventory differences” and makes them consistent with the current practice. The terms “beginning inventory,” “plant,” “removals from inventory,” and “removals from process,” are newly defined. The definition for “removals” is deleted. There has been some confusion by licensees over the term “removals.” The term “removals” is replaced by the terms “removals from process” and “removals from inventory.” The definitions are consistent with the current practice. In addition, both the terms “beginning inventory” and “plant” are used in the current rule language, but were never defined in the rule. The definitions are consistent with the definitions contained in the current regulatory guides. The changes to the Category II requirements are discussed under the Category II heading.

The current general MC&A requirements in part 70 require a licensee to keep records showing the receipt, inventory, disposal, and transfer of all SNM. The requirements also specify the retention period for those records. These recordkeeping requirements are not being changed, just relocated. The general requirements currently in §§ 70.51(b)(1) through (b)(5) are captured in new §§ 74.19 (a)(1) through (a)(4). Furthermore, the reporting requirements currently in § 70.52 requiring a licensee to report loss or theft of SNM remain unchanged and are included in § 74.11. The requirements for a Nuclear Material Transfer Report in § 70.54 remain unchanged and are captured by § 74.15. The existing requirement in § 70.51(d) for all licensees authorized to possess more than 350 grams of contained SNM to conduct an annual physical inventory of all SNM is retained and is moved to new § 74.19(c). The requirement currently in § 70.51(c) for all licensees authorized to possess SNM in a quantity exceeding one effective kilogram of SNM to establish, maintain, and follow written MC&A procedures that are sufficient to enable the licensee to account for the SNM, is moved to new § 74.19(b). The requirements in § 70.53 are moved to §§ 74.13 and 74.17.

Current domestic MC&A regulations in part 70 for licensees who possess greater than one effective kilogram of strategic special nuclear material in irradiated fuel reprocessing operations or moderate strategic special nuclear material have been interspersed among the safety and general licensing requirements in part 70. These MC&A requirements are being moved to part 74 to avoid confusion with the safety requirements in part 70, to allow the requirements to be presented in a more orderly manner, and to make them more risk-informed. Emphasis has been given to performance requirements rather than prescriptive requirements to allow licensees to select the most cost-effective way to satisfy NRC requirements.

The basic MC&A requirements for Category II facilities are being retained in part 74 but are presented in a more organized manner. The performance objectives for Category II facilities are: (1) Confirmation of the presence and location of SNM; (2) prompt investigation and resolution of any anomalies indicating a possible loss of SNM; (3) rapid determination of whether an actual loss of a significant quantity of SNM has occurred; and (4) timely generation of information to aid in the investigation and recovery of missing SNM in the event of an actual loss. Implementation of these objectives is commensurate with the amount and type of material. The principal differences between the MC&A requirements in this final rule and those in the previous regulations are:

(1) The revised regulations reduce the required frequencies of Category II physical inventories from the current frequency of every 2 months for SSNM and every 6 months for everything else to every 9 months. From a safeguards risk and graded approach perspective, this is consistent with the annual frequency for Category III facilities and semiannual frequency for Category I facilities;

(2) The concept of Inventory Difference (ID) and Standard Error of the Inventory Difference (SEID) is used to replace the Material Unaccounted For (MUF) concept in the statistical program. This is consistent with the statistical terms and methods used in part 74 for Category I and III facilities and with NRC guidance and reference documents;

(3) The significance testing of ID with a three SEID limit is less restrictive than the test level of two SEID specified in previous § 70.51(e)(5). This is consistent with Category I facilities that use a three-SEID limit with a constraint on SEID of 0.10 percent of active inventory. The measurement quality constraint for Category II remains at 0.125 percent of active inventory for SEID. This change results in a reduction of unwarranted, disruptive, and costly investigations, reports, or responses to ID threshold actions;

(4) An item control program for Category II facilities that is consistent with Category III facilities is added. Category II item control requirements are less costly than the more stringent Category I item monitoring. The item control requirements mainly consist of providing current knowledge of location, identity, and quantity of plant-wide items existing for at least 14 days. The performance-based program allows a licensee to propose its item control method and frequency;

(5) The combined standard error concept and a de minimus quantity for plutonium and uranium in the evaluation of shipper-receiver differences is used. This is consistent with the requirements for Category I and III facilities in part 74; and

(6) The required frequency for the independent review and assessment of the facility's MC&A program is changed from annual to a minimum of 18 months. From a safeguards risk and graded approach perspective, this compares to the annual requirement for Category I and the every 2-year requirement for Category III.

The consolidation of regulations is a significant step toward NRC's regulatory reform goal of providing a graded approach to MC&A regulation. It also reduces the regulatory burden by making it easier for a licensee to find the MC&A requirements that apply to its facility.

The NRC has made changes to the final rule based on public comments (see the “Summary of Public Comments on the Proposed Rule” section). In summary the changes to the final rule include (1) retaining the current material status reporting requirements for Category I licensees; (2) retaining the current allowance for alarm resolution calls (§ 74.57(c)) to be made on the next scheduled workday when falling on a holiday or weekend; and (3) clarifying that the Category II requirements continue to apply to irradiated fuel reprocessing facilities as is in the current regulations.

This analysis presents a summary of the comments received on the proposed rule, the NRC's response to the comments, and changes made to the final rule as a result of these comments.

The NRC received four comment letters on the proposed rule. Three were from industry (including NEI) and one from a consulting firm.

In general, two commenters were opposed to specific aspects of the proposed rule (the change in material balance reporting and the change to the alarm resolution notification), both of these commenters are Category I facilities. NEI and the consulting firm generally supported the rulemaking, although the consulting firm was opposed to the change requiring alarm resolution notifications made to the NRC Operations Center. The consulting firm also provided specific recommendations to improve the final rule. The comments on the proposed rule are generally contained within four categories. The first category contains general comments, followed by comments on the material balance reporting, comments on the Category II requirements, and other comments.

Comment: Two of the commenters provided specific comments in support of the proposed rule. NEI indicated that the decreased frequency of SNM inventory reporting for Category II and III facilities will reduce the regulatory burden on licensees and that the partial harmonization of the inventory reporting requirements of 10 CFR parts 74 and 75 was commendable. Overall NEI indicated support of the proposed amendments and believes that they will reduce resource demands placed on both the NRC and individual licensees. The consulting firm indicated that without the proposed changes, the MC&A requirements for SNM in amounts of moderate strategic significance (Category II) would remain prescriptive and irrationally more restrictive than those for formula quantities of strategic significance (Category I).

Response: The NRC is not making any changes in the final rule that the NRC believes would negate the industry's general support for this rulemaking.

Comment: One commenter expressed concern that the MC&A requirements for irradiated fuel reprocessing plants that are located in 10 CFR 70.51(e) were eliminated. The commenter noted that if this was the intent then it should have been highlighted in the Statement of Considerations. The commenter believes that it was prudent to keep in place these key regulations, which may not be easily replaced if a need were to arise. The commenter offered specific suggestions to move the reprocessing requirements to § 74.41, clarify the performance objectives, and rename subpart D to include SNM in Irradiated Fuel Reprocessing Operations.

Response: It was not the NRC's intent to eliminate the requirements for irradiated fuel reprocessing plants. MC&A requirements for reprocessing plants were originally considered in the proposed rule for MC&A requirements for facilities that use formula quantities of strategic SNM (49 FR 4091; February 2, 1984). These requirements were dropped from the final rule because of unresolved questions on whether an irradiated fuel reprocessing facility could comply with all regulatory requirements and the negative outlook for domestic reprocessing (52 FR 10033; March 30, 1987). Although a reprocessing facility would likely be considered a Category I facility based on possession limits for plutonium, language was inserted in § 70.51(e) to cover reprocessing facilities. The requirements for an irradiated fuel reprocessing facility were the same as for a facility possessing SNM of moderate significance (Category II), no changes specific to reprocessing were introduced. In this final rule, the language in § 74.41 has been clarified to identify the applicability to irradiated fuel reprocessing facilities. However, it is important to note that if reprocessing in this country were to become viable, the NRC would likely develop MC&A requirements specific for reprocessing.

Comment: One commenter stated that Table 1 was incorrect for this rulemaking. The commenter stated the table contained authorized possession and use limits rather than specific information on possession limits for Category I, II, and III licensees. The commenter noted that it is incorrect to state that all such SNM is unirradiated as this would only be true for physical protection requirements.

Response: The table was intended to simplify the complexities of the possession thresholds for Category I, II, and III facilities. The commenter is correct that the term unirradiated should be removed and the table has been revised. The table originated from appendix M of 10 CFR part 110.

Comment: Two commenters (both Category I facilities) were opposed to changing the reporting dates for the Material Balance Reports and the Physical Inventory Listing Report. The commenters preferred that the set dates of March 31 and September 30 be retained. One commenter stated that tying the reporting dates to the physical inventory would place a burden on the licensee during the time period in which licensee efforts are placed on inventory reconciliation and that the new time could have an adverse impact on the quality of the inventory difference. The other commenter indicated that because they also have similar DOE reporting requirements for DOE material at their site, the proposed change would have the effect of forcing them to make quarterly reports. The commenter was concerned that different DOE and NRC reporting requirements would cause confusion and inconsistencies. The commenter also stated that the proposed 45 day limit for high enriched uranium would result in licensees having to complete three different reports simultaneously.

Response: The proposed changes to the material balance reporting requirements were intended to provide more flexibility to licensees, while reducing the burden and providing better data to the NMMSS. This is accomplished for the majority of licensees impacted by the proposed rule change. Because Category I facilities are required to conduct a physical inventory semiannually, these facilities do not receive the major benefit of the change ( i.e. less frequent reporting). Both Category I facilities requested that these changes not be adopted by NRC because it would increase their burden for making these reports. Imposing an increased burden on Category I facilities was not intended, therefore, the current requirements for Category I facilities will be retained. Category I facilities will continue to compile the Material Balance Reports and Inventory Composition Reports as of March 31 and September 30 of each year and submit the reports within 30 days after the end of the period covered by the report. The final rule reflects the retention of the current Category I requirements. The change will be retained for all other facilities. The final rule requires the reports to be completed within 60 days of the beginning of the physical inventory for all other facilities

Comment: One commenter stated that § 74.41(a) should be reworded to bring it into line with the current § 70.51(e), which excluded SNM used in sealed form. The commenter stated that emphasis for exception should be more on the use of sealed sources rather than possession. The commenter further stated that strategic SNM (plutonium, uranium-233, and uranium highly enriched in uranium-235) should not be part of this exclusion and that only Category II low-enriched uranium quantities possessed and used as sealed sources is appropriate.

Response: The proposed rule did include an exclusion for sealed sources when determining if a licensee fell under the comprehensive requirements for a Category II facility. This exclusion is consistent with the current requirements. The NRC disagrees with the remainder of the comment. A distinction cannot be made between possession and use of sealed sources. The NRC may not have knowledge if a specific sealed source was actually used by any given licensee versus merely possessed by the licensee. Trying to make this distinction would impose unnecessary burden on both the licensee and the NRC. Most licenses authorize possession and use of sealed sources. Although the sealed sources may not count towards the threshold for a Category II facility, the sealed sources are included in a facility's physical inventory. The current regulations include strategic SNM sealed sources in the exclusion and the commenter has not provided sufficient justification to support the change.

Comment: NEI noted that as the NRC's Electronic Information Exchange system is not yet functional for parts 70 and 76 licensees and that both licensees and the NRC could possibly incur significant resources implementing electronic data submission protocols. NEI indicated that if the electronic data submission formats closely resemble those of DOE/NRC forms 742 and 742C, no change in licensee resources should be expected.

Response: Licensees have been required to submit DOE/NRC forms 742 and 742C in electronic form since 1994. Approximately 72 percent of licensees submitted the information electronically in 2000. Implementation of the Electronic Information Exchange should not impact the electronic submission of forms 742 and 742C.

Comment: One commenter noted that no provision had been made to update NRC guidance documents ( e.g. NUREG/BR-007) with the new amendments.

Response: NRC agrees that a minor revision to NUREG/BR-007 will be necessary to implement the rule changes. The NUREG currently states that “Reports are to be made as of March 31 and September 30 of each year, or alternate dates if authorized by the NRC and filed within thirty (30) days after the end of the period covered by the report.” Although the rule changes result in an authorized alternate date for submission of the reports, the NUREG will be modified to reflect that the reports are to be filed within 60 days for facilities handling less than a Category I quantity, but at least 350 grams of fissile material. Because this is considered a minor change, the NRC staff does not plan to solicit public comment on this change to the NUREG. An errata sheet containing the change will be issued at the time the rule becomes effective.

Comment: One commenter recommended that the NRC evaluate the data library that is created through the NMMSS system to assure that it can be readily accessed and the data retrieved in various combinations.

Response: All of the subject data submitted by a licensee is available and accessible to the licensee. The licensee can resolve technical concerns or questions about reading or accessing the licensee's data by directing their questions to the NMMSS operator who warehouses the data for the NRC. The NMMSS operator can provide licensees their data in electronic format that would allow the licensee to sort and combine the data as necessary.

Comment: Two commenters (both Category I facilities) objected to the elimination of the notification exception for holidays and weekends in § 74.57(c). Currently, notification would occur on the next scheduled workday. The reason provided by one of the commenters is that the facility has a 5-day work week. Two commenters objected to providing the alarm resolution notifications in §§ 74.57(c) and 74.57(f)(2) to the Operations Center. One commenter believes that notification should be made to the Safety and Safeguards Support Branch, NMSS or to the NRC Resident Inspector due to the staff's knowledge of the complexity of the process and the variability associated with certain process monitoring units. The other commenter stated that notification to the Operations Center of unresolved alarms would be an unnecessary added burden to both licensees and the NRC. The commenter stated that it would not be risk-informed nor performance-based. The commenter stated that the Operations Center would not have on duty, staff with the performance capability necessary to take meaningful action, except to notify NMSS licensing staff. These notifications should continue to be reported directly to NRC licensing staff who already would be aware of the initiation of the licensee's investigative procedures and following progress with the assistance of NRC inspectors for appropriate response. The rule should name the Director of NMSS, but in practice, the specific NMSS licensing unit—with regular and emergency telephone numbers—could be listed as the contact and updated in each licensee's NRC-approved fundamental nuclear material control plan. The commenter stated that this graded, working-level approach has proven suitable over 30 years without overaction or a compelling need for change.

Response: The NRC agrees to reinsert the notification exception for weekends and holidays in § 74.57(c). A short delay in notification on weekends and holidays is acceptable. Any discovery of an actual loss or theft of SNM requires the licensee to report within 1 hour of discovery under § 74.11. The final rule reflects the retention of the exception for weekends and holidays. Notification would occur on the next scheduled workday.

The NRC does not agree with the commenters' request to change the notification from the NRC Operations Center to either the licensing unit or the Resident Inspector. NRC staff members are not always available to take calls from licensees due to leave, training, travel, etc. The call could easily be routed to voice mail or to an individual not familiar with the facility. While the licensee may have technically notified the NRC by leaving a voice mail message for a staff member, the NRC may not have actual knowledge until the staff person returns to the office. Notification to the Operations Center provides a record of the call and ensures that the appropriate NRC staff will be notified so that the necessary follow-up actions can occur. The Operations Center is manned 24-hours-a-day, 7-days-a-week, so that the licensee can be sure that someone is available to take the call. The NRC does not believe that calling the Operations Center instead of a staff member is an unnecessary burden. Either way, the licensee makes a phone call and provides pertinent information. In both cases, NRC staff would contact the licensee for follow-up information. as appropriate. When the Operations Center receives a notification from a licensee, they will notify the appropriate staff in NMSS. The NMSS or regional staff will conduct any follow-up activities. According to the NMSS licensing staff, the NRC receives approximately one of these notifications per year.

Comment: One commenter stated that the threshold for SNM of low strategic significance would result in an overlapping in coverage between Category III SNM and that proposed for moderate strategic significance or Category II. The example provided by the commenter is that the comprehensive Category III measures would not be triggered until authorized possession and use levels reach 1001 grams of plutonium, uranium-233, or high enriched uranium (or some combination) which is far beyond the 501-gram point where Category II would begin. The commenter pointed out that the beginning point for Category III facility implementation should not be set above the floor for Category II. There should be no gaps or overlapping between the scopes of Category I, II, and III MC&A programs to have a meaningful graded safeguards program in terms of risk and expected performance. The commenter stated that the proposed § 74.41 threshold is more appropriate, and that the threshold used in current § 70.51(e) of a quantity exceeding one effective kilogram of strategic special nuclear material is inappropriate for Category II because it would take a formula quantity of uranium enriched to 20 percent (5 kilograms uranium-235), which would be a Category I amount, to reach one effective kilogram. The commenter indicated that the NRC should fully understand the ramifications from using the concept of greater than one effective kilogram when grading across Categories I, II, and III.

Response: The NRC understands the commenter's concern. The NRC did not propose a change to the threshold limits for Category I or III in the proposed rule, only for Category II. The comment concerning the threshold value for Category III is beyond the scope of this rulemaking. The commenter is correct that the comprehensive Category III measures would not be triggered until a licensee was authorized to possess and use one effective kilogram of SNM of low strategic significance. If a licensee were to possess 1001 grams of plutonium or uranium-233, the licensee would have exceeded the upper threshold for a Category III license and would actually be a Category II facility. The definition for SNM of low strategic significance very clearly states that the upper threshold is less than the amount of SNM of moderate strategic significance. Quantities over 1000 grams of high enriched uranium or over 500 grams of plutonium or uranium-233 would cause a facility to become a Category I or II facility. The effective kilogram of SNM of low strategic significance does not include only high enriched uranium, plutonium, and uranium-233, but also includes uranium at lower enrichments. A licensee can not possess an effective kilogram of only high enriched uranium, plutonium, and uranium-233 and still be considered a Category III facility. The beginning point for the comprehensive Category III measures is not set above the floor for Category II as stated by the commenter. Although the use of one effective kilogram is confusing, the definition of SNM of low strategic significance prevents the overlap. The one effective kilogram has been retained for irradiated fuel reprocessing facilities, it does not apply to the moderate strategic significance material. If reprocessing ever becomes viable in this country, the NRC would likely develop requirements specifically for a reprocessing facility.

This final rule makes several changes to parts 51, 61, 70, 72, 73, 74, 75, 76, and 150, which are characterized as follows: The timing and frequency for submitting Material Balance Reports and Inventory Composition Reports in parts 72 and 74 are amended. The remaining MC&A requirements in part 70 are moved to part 74. The MC&A requirements for Category II facilities are made more risk-informed. Part 51 is amended to clarify that the categorical exclusion for safeguards plans also applies to amendments to the safeguards plan. Conforming changes are made to parts 61, 70, 73, 75, 76, and 150 to reflect the relocation of the MC&A requirements.

This section is revised to clarify that the categorical exclusion used for issuance of an approval of a safeguards plan can also be used for issuance of an approval for an amendment to the safeguards plan. Additionally, the listing of parts 50, 60, 61, 70, 72, and 75 is changed to a more generic reference to 10 CFR chapter I. This change avoids an incomplete listing ( e.g. , part 76 was inadvertently left out).

This section is revised to delete the reference to §§ 70.53 and 70.54, and add the new reference to §§ 74.13 and 74.15.

This section is revised to change the OMB information collection requirements to reflect the sections being deleted from part 70.

This section is revised to delete the reference to §§ 70.51 and 70.52, and add the new reference to §§ 74.11 and 74.19.

This section is revised to include a reference to § 74.11.

This section is revised to delete the reference to § 70.58 and add the new reference to § 74.41.

This section is revised to correct a reference from a nonexistent section to the correct section.

This section is revised to reflect the transfer of the MC&A requirements from part 70 to part 74, to correct an error in wording, and to clarify that changes to a licensee's MC&A program that represent a decrease in effectiveness must be made via an amendment application pursuant to § 70.34, consistent with current licensing policy.

This section is revised to rename the section and delete the MC&A requirements because they would be replaced by the requirements in part 74. Paragraphs (b)(6), (b)(7), (i)(1), and (i)(2) would be redesignated as paragraphs (a), (b), (c)(1), and (c)(2) respectively.

This section is renamed to reflect the relocation of the reporting of theft or loss of SNM. The section is revised to delete paragraphs (b) and (d) because they would be covered by the requirements found in § 74.11. The remaining paragraphs are redesignated. Paragraph (a) and new paragraph (b) are revised to remove the loss of SNM.

This section is deleted in its entirety, the requirements in this section are covered by the requirements found in §§ 74.13 and 74.17.

This section is deleted in its entirety. The requirements in this section are covered by the requirements found in § 74.15.

This section is deleted in its entirety. The requirements in this section are replaced by the requirements found in part 74, subpart D.

This section is deleted in its entirety. The requirements in this section are replaced by the requirements found in part 74, subpart D.

This section is revised to change the timing of the submittal of the Material Status Reports from every March 31 and September 30 to within 60 calendar days of the beginning of the physical inventory. The language is revised to reflect the wording in § 74.13 to avoid any confusion over the term “Material Status Reports.” The language clearly states that both the Material Balance Report and the Physical Inventory Listing Report are to be submitted.

This section is revised to delete the reference to § 70.54 and add a new reference to § 74.15.

This section is revised to reflect the addition to part 74 of the general MC&A requirements and the requirements for SNM of moderate strategic significance. The reference to §§ 70.51, 70.57, and 70.58 is deleted.

This section is revised to reflect the relocation of the general reporting and recordkeeping requirements, and exempt part 72 licensees from the general reporting and recordkeeping requirements, as they are currently covered under the part 72 requirements.

This section is revised to clarify the definitions for “Category IA material” and “inventory differences.” The terms “beginning inventory,” “plant,” “removals from inventory,” and “removals from process” are newly defined. The definition for “removals” is deleted. There has been some confusion by licensees over the term “removals.” The term “removals” is replaced by the terms “removals from process” and “removals from inventory.” The definitions are consistent with the current practice. In addition, both the terms “beginning inventory” and “plant” are used in the current rule language, but were never defined in the regulations. The definitions are consistent with the definitions contained in the current regulatory guides.

This section is revised to change the OMB collection requirements to reflect the relocation of provisions from part 70.

This section is revised to delete paragraph (b), and redesignate paragraphs (a)(1) and (a)(2) as (a) and (b), respectively. The new paragraph (a) is revised to require a Material Balance Report and Physical Inventory Listing Report to be submitted: (1) Within 60 calendar days of the beginning of physical inventory as required in §§ 74.19(c), 74.31(c)(5), 74.33(c)(4), or 74.43(c)(6); or (2) for licensees subject to the requirements of § 74.51 to compile a report as of March 31 and September 30 of each year and file it within 30 days after the end of the period covered by the report. The original paragraph (b) is deleted because the requirements would be replaced by the new subpart D.

This section is revised to reflect the relocation of the MC&A requirements and to change the address for reporting physical inventory results in paragraph (c). The reports are to be submitted to the Director, Office of Nuclear Material Safety and Safeguards, instead of the regions to be consistent with paragraphs (a) and (b).

A new section is added to address the general recordkeeping requirements for MC&A that were previously included in § 70.51. These requirements originate from §§ 70.51(b)(1) through (b)(5), 70.51(c), and 70.51(d).

This section is revised to delete implementation dates that are no longer applicable. This section is also revised to change 9 kilograms to 9000 grams because the use of 9 kg implied that the NRC will accept a rounding to the nearest kg, when in fact the NRC requires rounding to the nearest gram.

A new section is added to provide the general performance objectives, implementation schedule and system capabilities and requirements for special nuclear material of moderate strategic significance.

A new section is added to provide the requirements for internal controls, inventory, and recordkeeping for special nuclear material of moderate strategic significance.

A new section is added to provide the requirements for measurements and measurement control for special nuclear material of moderate strategic significance.

This section is revised to delete paragraphs (c)(1) and (c)(2) to eliminate implementation dates that are no longer relevant. Paragraph (c) is revised to reflect that new Fundamental Nuclear Material Control plans would be implemented upon issuance of a license or amendment, or by the date specified in a license condition. Paragraph (d)(1) is deleted because it is no longer necessary to provide an 18-month exemption for implementation. Paragraph (d)(2) is redesignated as paragraph (d).

This section is revised to reflect an NRC organizational change: the “Domestic Safeguards and Regional Oversight Branch” and the “Division of Safeguards and Transportation” are no longer used as names of organizational units. Also, the stated phone number is no longer applicable. Notifications would be made to the NRC Operations Center.

This section is revised to provide proper identification of acronyms, correct the accidental omission of the phrase “contained in high enriched uranium,” provide improved punctuation, correct typographical errors, and require that reports be submitted to the Director, Office of Nuclear Material Safety and Safeguards.

This section is revised to delete the reference to § 70.51 and add the new reference to § 74.15.

This section is revised to delete the reference to § 70.51 and replace it with the new reference to § 74.19.

This section is revised to delete the reference to §§ 70.51, 70.52, 70.53, 70.54, 70.57, and 70.58 and add the new reference to §§ 74.19, 74.41, 74.43, and 74.45.

This section is revised to delete the reference to § 70.51 and add the new reference to § 74.19.

This section is revised to delete the reference to §§ 70.51, 70.53, and 70.54 and add the new reference to §§ 74.11, 74.15, and 74.19.

For the purpose of section 223 of the Atomic Energy Act (AEA), the Commission is issuing the final rule to amend 10 CFR parts 70, 72, and 74 under one or more of sections 161b, 161i, or 161o of the AEA. Willful violations of the rule are subject to criminal enforcement.

Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, and published in the Federal Register on September 3, 1997 (62 FR 46517), most of this final rule is classified as compatibility Category “NRC.” However, certain parts of the final rule are a matter of consistency among States and Federal safety requirements. The revisions to part 61 and §§ 70.19(c), 70.51(a), 70.51(b), 150.20(b), and new § 74.19(a) would be classified as Category C. A conforming change to § 70.8(b) would be classified as Category D. Although these sections are subject to various degrees of compatibility regarding the Agreement States, the amendments are not expected to impact existing Agreement States regulations. The actual requirements are not changing, they are only being moved to a new location. Therefore, it is not expected that Agreement States will need to make conforming changes to their regulations.

Category C means the provisions affect a program element, the essential objectives of which should be adopted by the State to avoid conflicts, duplications, or gaps in the national program. The manner in which the ssential objectives are addressed need not be the same as NRC, provided the essential objectives are met. Category D means the program element does not need to be adopted by the States for purposes of compatibility. Compatibility is not required for Category “NRC” regulations. The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act of 1954, as amended (AEA), or the provisions of 10 CFR chapter I. Although an Agreement State may not adopt program elements reserved to NRC, it may wish to inform its licensees of certain requirements via a mechanism that is consistent with the particular State's administrative procedure laws, but does not confer regulatory authority on the State.

The National Technology Transfer Act of 1995 (Pub. L. 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this final rule, the NRC would revise the MC&A regulations. This action does not constitute the establishment of a standard that establishes generally applicable requirements.

The NRC has determined that the changes to part 51, the changes to the reporting requirements, and the movement of the MC&A requirements to part 74 are the types of actions described in categorical exclusion 10 CFR 51.22(c)(2) and (3). Therefore neither an environmental impact statement nor an environmental assessment has been prepared for these portions of the final rule. An environmental assessment has been prepared for the remainder of the final rule.

The Commission has determined under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in subpart A of 10 CFR part 51, not to prepare an environmental impact statement for this final rule because the Commission has concluded based on an EA that this final rule would not be a major Federal action significantly affecting the quality of the human environment. The EA prepared to support this rulemaking covers the changes to the Category II requirements.

The determination of this EA is that there will be no significant impact to the public from this action. The NRC requested public comments on the environmental assessment and on any environmental justice considerations that may be related to this rule. No comments were received.

The NRC requested the views of the States on the environmental assessment for this rule. No comments were received.

This final rule amends information collection requirements that are subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). These requirements were approved by the Office of Management and Budget, approval number 3150-0004, -0009, -0058, and -0123.

Because the rule will reduce existing information collection requirements, the public burden for this information collection is expected to be decreased by approximately 7 hours per licensee for licensees reporting annually, instead of semiannually, on NRC forms 742 and 742C. This reduction includes the time required for reviewing instructions, searching existing data sources, gathering and maintaining the data needed and completing and reviewing the information collection. There is essentially no change in overall burden for the requirements in 10 CFR part 70 that are being moved to 10 CFR part 74. Send comments on any aspect of these information collections, including suggestions for further reducing the burden, to the Records Management Branch (T-6 E6), U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, or by Internet electronic mail at INFOCOLLECTS@NRC.GOV ; and to the Desk Officer, Office of Information and Regulatory Affairs, NEOB-10202, (3150-0004, -0009, -0058, and -0123), Office of Management and Budget, Washington, DC 20503.

The NRC may not conduct or sponsor, and a person is not required to respond to, a request for an information collection requirement unless the requesting document displays a currently valid OMB control number.

The Commission is amending an aspect of the MC&A requirements to reduce the regulatory burden and provide additional flexibility to licensees required to submit Material Balance Reports and Inventory Composition Reports. The current regulations require a licensee authorized to possess, at any one time or location, SNM in a quantity totaling more than 350 grams of contained uranium-235, uranium-233, or plutonium, or any combination thereof, to complete and submit in a computer-readable format Material Balance Reports concerning SNM received, produced, possessed, transferred, consumed, disposed of, or lost. These reports are to be compiled as of March 31 and September 30 of each year and filed within 30 days after the end of the period. Each licensee is also required to file a statement of the composition of the ending inventory (also called the Physical Inventory Listing Report) along with the Material Balance Report. These twice yearly reports are typically based on book values as opposed to physical inventory results because the dates do not always coincide with the timeframe for a facility's physical inventory. Physical inventories for Category III facilities are conducted on an annual basis, semiannually for Category I facilities, and every 2 to 6 months for Category II facilities. By revising the timeframe to complete their Material Balance Reports and Physical Inventory Listing reports to coincide with the physical inventory and providing additional time to complete the paperwork, the regulatory burden on most licensees will be reduced. At this time, the NRC is not changing the reporting period for Category I facilities.

The categorical exclusion (§ 51.22(c)(12)) covers the issuance of an amendment to a license under 10 CFR parts 50, 60, 61, 70, 72, or 75, relating to safeguards matters or approval of a safeguards plan. However, an EA would be necessary for approval of an amendment to the safeguards plan. This inadvertent omission of a categorical exclusion for amendments is rectified in the final rule by adding language covering revisions to safeguards plans. In addition, the categorical exclusion currently lists several parts. Part 76 is not included in the listing but should be included. Providing a generic reference to any part of 10 CFR chapter I corrects the current listing and avoids the need for changes due to new parts being added. These changes will enhance the NRC's efficiency and reduce potential burden on its staff.

In 1982, the NRC initiated an effort to move the MC&A requirements from 10 CFR part 70, “Domestic Licensing of Special Nuclear Material,” to 10 CFR part 74, “Material Control and Accounting of Special Nuclear Material.” The initiative also included efforts to make the requirements more performance oriented. In 1985, the MC&A requirements for Category III facilities were made more performance oriented and moved to part 74 (50 FR 7575; February 25, 1985). The requirements for Category I facilities were similarly moved in 1987 (52 FR 10033; March 30, 1987). The MC&A requirements for Category II facilities and some of the general MC&A requirements are still interspersed among the safety and general licensing requirements of part 70. The requirements regarding Category II material are also overly prescriptive, in some cases having more stringent requirements than those for a Category l facility. Although there are no current operating Category II licensed facilities (the only Category II facility has a possession only license and is undergoing decommissioning), it is still beneficial to move the requirements and make them less prescriptive. These modifications will enhance the regulatory process by providing any future Category II licensee with a better understanding of the procedures and requirements for MC&A, and will complete consolidation of the MC&A requirements in part 74. Conforming changes are also being made to parts 61, 73, 75, 76, and 150 to reflect the relocations of the MC&A requirements.

In addition, the final rule corrects several typos, old implementation dates, and some terminology that is being updated to reflect current practice and for consistency with the regulatory guides.

The final rule will revise the timing to complete the Material Balance Reports and Physical Inventory Listing Reports to coincide with a facility's physical inventory, except for Category I licensees. The final rule will also provide additional time to complete the reports, except for a licensee who is reporting under part 75. These changes will provide most licensees with additional flexibility and reduce the regulatory burden. The final rule will require that the Material Balance Reports and Physical Inventory Listing Reports be filed within 60 days of the beginning of the physical inventory. The majority of licensees are only required to conduct an annual physical inventory (the exceptions being Category I and II facilities) and will, therefore, file the reports once a year instead of twice a year. This will reduce the burden on industry in preparing the reports by about half. Category I licensees will continue to submit reports within 30 days of the end of the reporting period (March 31 and September 30 of each year).

This final rule will also revise the categorical exclusion covering approval of safeguards plans, move the MC&A requirements to part 74, and make the Category II requirements more risk-informed. The final rule represents the final stage of an effort that started in 1982, and will result in the movement of the remaining general MC&A requirements and the requirements for Category II facilities. The risk-informed approach is consistent with the existing MC&A regulations that apply to Category I and III facilities. In addition, the final rule will make modifications that were missed in earlier updates of the MC&A regulations, correct typographical errors, delete outdated implementation dates, clarify some definitions, and include several new definitions.

One alternative to amending the regulations is to maintain the current regulations without change. The advantages of the no action alternative is that the resources expended on the rulemaking would be conserved. Further, there is no urgency to make the changes to the Category II requirements because there are currently no active Category II licensees. The current system has worked reasonably well, and the changes to consolidate the MC&A requirements in part 74 may be desirable, but not necessary. The disadvantages of the no action alternative is that the identified regulatory problems would not be addressed. The regulatory burden reductions to be gained for most licensees by changing the timing and frequency for submittal of the Material Balance Reports and the Physical Inventory Listing Reports would not be achieved. In addition, the location of the MC&A requirements in both part 70 and part 74 can cause confusion, particularly for a licensee who refers to the general requirements in part 70. Consolidation of domestic MC&A requirements would not occur. The requirements for Category II facilities would remain more stringent than the requirements for Category I facilities.

The principal purpose of the Material Balance Report and the Physical Inventory Listing Report is the periodic reconciliation of licensee records with the records in the NMMSS. A secondary purpose is the use of these records to satisfy the requirement of the US/IAEA Safeguards Agreement to provide an annual Material Balance Report for facilities selected under the Agreement or associated Protocol.

The final rule modifies the regulations to require the Material Balance Report and the Physical Inventory Listing Report at the time of a physical inventory, except for Category I licensees. The final rule will require the reports to be completed within 60 days of the beginning of the physical inventory for independent spent fuel storage installations, reactors, and Category II and III facilities. This modification does not affect licensees reporting under part 75. Because most licensees conduct annual inventories, the reporting burden will be reduced. Reconciliation once a year instead of twice a year does not appear to be a problem for most licensees because the number of transactions is such that reconciliation of records would be manageable. In the case of the gaseous diffusion plants (GDPs) and their large number of transactions, reconciliation could be more difficult. This change does not preclude the GDPs from continuing to request monthly summaries from the NMMSS and reconciling its records with the NMMSS on a bimonthly basis, which is the current practice. One Material Balance Report and Physical Inventory Listing Report per year at the time of the physical inventory still provides for adequate safeguards for Category III facilities. In addition to reducing the regulatory burden on a licensee, the change will enhance the efficiency of the NMMSS.

Licensees are currently required to submit the semiannual Material Balance Reports and Physical Inventory Listing Reports within 30 days of March 31 and September 30 of each year. The preestablished timing of the submittals has two drawbacks. Specifically, the reports rarely coincide with a physical inventory, and the NMMSS contractor receives all of the reports for a given period simultaneously. The data from a physical inventory is significantly more meaningful than the book values reported during the interim periods. Staggering the submittals should benefit the NMMSS contractor, as not all licensees conduct inventories at the same time. Requirements for the NMMSS contractor would likely be spread more evenly throughout the year. By modifying the requirement to stipulate that the Material Balance Report and Physical Inventory Listing Report shall be submitted at the time of the physical inventory, these problems could be alleviated, and the data from the reports would be more meaningful.

Another consideration is whether there would be an adverse impact on meeting IAEA safeguards requirements. Under the terms of the US/IAEA Safeguards Agreement and § 75.35, only one Material Balance Report and Physical Inventory Listing Report is required per year. Consequently, there would be no adverse impact.

As the final rule will tie submittal of the reports to the physical inventory, the majority of licensees will only need to submit the reports once a year instead of twice a year. This will result in reducing the industry burden for preparing and filing the Material Balance Report and the Physical Inventory Listing Reports by about half. The Material Balance Reports are filed using DOE/NRC form 742. The burden for preparation and submission of each DOE/NRC form 742 is estimated to be 45 minutes. There are currently about 200 licensees who submit two forms per year. With the submittal of only one report per year for 198 licensees, the burden is reduced by about 149 hours. The Physical Inventory Listing Reports are filed on DOE/NRC form 742C. The burden for preparing this form is 6 hours. With about 178 licensees submitting the form annually, the total burden reduction is 1068 hours per year. Because some licensees are also required to submit DOE/NRC form 742 to cover foreign origin source material, the number of licensees required to submit NRC form 742 is higher than the number submitting DOE/NRC form 742C.

The burden on the NRC staff will also be reduced because there will be fewer reports to review. NRC review time is approximately 5 minutes per report. With a reduction of 376 reports per year, NRC staff would save about 31 hours per year. In addition, the NRC staff receives five to eight requests per year from licensees who are asking for more time to file the reports. With the additional time being provided for filing the reports, the NRC staff does not expect to receive any requests in the future. The applicant will save the effort necessary in preparing the request, and the staff will save time in reviewing and approving the request.

The rulemaking will also result in the consolidation of the MC&A requirements in part 74 and adoption of more risk-informed regulations for Category ll facilities. These modifications will enhance the regulatory process by providing any future Category II licensees a better understanding of the procedures and requirements for MC&A. The principal cost for this action would be the modest expenditure of NRC staff resources to issue this rulemaking. However, there are no currently active Category II licensees that would benefit from the revised regulations for Category II facilities. Another advantage is that domestic MC&A requirements would be consolidated and would provide a graded, risk-informed approach to MC&A regulation. In addition, the existing typographical errors, outdated terminology, and old implementation dates would be corrected.

The recommended action is to adopt the first option because it will reduce the burden on licensees in preparing and filing their Material Balance Reports and Physical Inventory Listing Reports. The process will become more efficient, and the industry burden of producing the reports will be reduced by approximately 1,217 staff-hours. In addition to reducing unnecessary regulatory burden on licensees, the changes will enhance the operational efficiency of the NMMSS contractor by spreading the report submittals evenly throughout the year. This change will not preclude the gaseous diffusion plants with their large number of transactions from continuing to request monthly summaries from the NMMSS to reconcile their records. The final rule will also consolidate the MC&A requirements in part 74 and adopt more risk-informed regulations for Category II facilities. These modifications should enhance the regulatory process by providing any future Category II licensee a better understanding of the procedures and requirements for MC&A. The principal cost for this action would be the modest expenditure of NRC staff resources to issue this rulemaking. The total cost of this rulemaking to the NRC is estimated at 1.2 FTE. The total savings to the industry is about 1,217 hours per year. The action is considered to be cost beneficial to licensees and will improve the operational efficiency of the NMMSS contractor. Adequate safeguards would be maintained. Consequently, the Commission believes public confidence would not be adversely affected by this rulemaking.

Based on the discussion of the benefits and impacts of the alternatives, the NRC concludes that the requirements of the final rule are commensurate with the NRC's responsibilities for public health and safety and the common defense and security. This rulemaking will save both NRC staff and licensee resources. No other available alternative is believed to be as satisfactory. Thus, this action is recommended.

In accordance with the Regulatory Flexibility Act of 1980, (5 U.S.C. 605(b)), the Commission certifies that this rule does not have a significant economic impact on a substantial number of small entities. The majority of companies that own these plants do not fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act or the size standards adopted by the NRC (10 CFR 2.810).

The NRC has determined that the backfit rule (§§ 50.109, 70.76, 72.62, or 76.76) does not apply to this final rule because these amendments do not involve any provisions that would impose backfits as defined in the backfit rule. Therefore, a backfit analysis is not required.

In accordance with the Small Business Regulatory Enforcement Fairness Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs of OMB.

OTS is amending its regulations to incorporate a number of technical and conforming amendments.

Consistent with section 722 of the Gramm-Leach-Bliley Act, OTS is making changes designed to make its regulations easier to understand. OTS has revised parts 541 and 561 to clearly state that the definitions in these parts apply throughout chapter V, unless another definition is specifically provided.

OTS is also making the following miscellaneous changes:

• Part 502—Assessments and Fees. The final rule corrects a typographical error in § 502.5.

• Part 505—Freedom of Information Act (FOIA). The final rule revises §§ 505.2 to 505.4, which describe the availability of materials under FOIA and the procedures for requests for records and administrative appeals. The final rule indicates that materials are available through the FOIA Office and the Public Reading Room. The final rule also provides that requests for records and administrative appeals of initial determinations to deny records must be submitted to the FOIA Office.

• Part 506—Information Collection Requirements under the Paperwork Reduction Act (PRA). The final rule updates the table displaying the OMB control numbers assigned to various OTS regulations under the PRA by inserting additional references to the control numbers. See 12 CFR 506.1(b).

• Part 516—Application Processing Guidelines and Procedures. The final rule updates § 516.40 to include current addresses for OTS Regional Offices.

• Part 545—Federal Savings Associations—Operations. The final rule corrects a typographical error in § 545.74(b)(2).

• Part 557—Deposits. The final rule corrects a typographical error in § 557.11(b).

• Part 559—Subordinate Organizations. The final rule corrects a citation in § 559.3(e)(2)(ii).

• Part 563—Savings Associations—Operations. The final rule corrects a typographical error in § 563.146.

• Part 563e—Community Reinvestment. The final rule corrects a citation in Appendix A to part 563e—Ratings.

• Parts 563g—Securities Offerings and Part 575—Mutual Holding Companies. The final rule updates citations in §§ 563g.19 and 575.7(c)(1) and (c)(2).

OTS finds that there is good cause to dispense with prior notice and comment on this final rule and with the 30-day delay of effective date mandated by the Administrative Procedure Act. 1 OTS believes that these procedures are unnecessary and contrary to public interest because the rule merely corrects and clarifies existing provisions. Because the amendments in the rule are not substantive, these changes will not detrimentally affect savings associations.

Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 provides that regulations that impose additional reporting, disclosure, or other new requirements may not take effect before the first day of the quarter following publication. 2 This section does not apply because this final rule imposes no additional requirements and makes only technical changes to existing regulations.

Pursuant to section 605(b) of the Regulatory Flexibility Act, 3 the OTS Director certifies that this technical corrections regulation will not have a significant economic impact on a substantial number of small entities.

OTS has determined that this rule is not a “significant regulatory action” for purposes of Executive Order 12866.

OTS has determined that the requirements of this final rule will not result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Reform Act of 1995.

A proposal to amend 14 CFR part 39 by superseding AD 99-13-12, Amendment 39-11207 (64 FR 33747, June 24, 1999) for BHTCL Model 206L, L-1, L-3, and L-4 helicopters was published in the Federal Register on April 19, 2000 (65 FR 20927). That action proposed inspecting the tailboom skins for a crack, replacing a cracked tailboom with a modified tailboom before further flight, and implementing recurring inspections of the modified tailboom.

A supplemental NPRM (SNPRM) was published in the Federal Register on August 22, 2002 (67 FR 54381) based on comments from the manufacturer and an operator stating that the proposed compliance time for modifying the tailboom should be increased. Also, the manufacturer revised the ASB and changed the suggested compliance time. The FAA reevaluated the proposed compliance time to modify the tailboom in light of the comments received and determined that an increase from 300 hours time-in-service (TIS) to 600 hours TIS is sufficient to meet the safety objectives. Also, after publishing the original proposal, a redesigned tailboom, part number (P/N) 206-033-004-181, was approved and manufactured with the required skin doubler hot-bonded in place. Therefore, installing an airworthy, redesigned tailboom, P/N 206-033-004-181, was proposed terminating action for the requirements of this AD. Since the changes expanded the scope of the original proposal, we reopened the comment period.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the SNPRM 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 in the SNPRM with one exception. We have changed the AD to reflect the manufacturer's official name, which is Bell Helicopter Textron Canada Limited. That change will neither increase the economic burden nor increase the scope of the AD.

The FAA estimates that this AD will affect 1546 helicopters of U.S. registry, that it will take approximately 52 work hours per helicopter to accomplish the required actions, and that the average labor rate is $60 per work hour. Required parts will cost approximately $22,954. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be $40,310,404, assuming all the tailbooms are replaced.

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 .

What events have caused this AD? The FAA has received accident reports on Air Tractor Models AT-301 and AT-401 airplanes. The reports indicate that the aircraft skids tail first after an overturn, the windshield and curved overturn tube act as a scoop, foreign material enters the cockpit if the top of the canopy is damaged, and this foreign material then enters into the cabin area and possibly contributes to pilot deaths.

Has FAA taken any action to this point? We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to certain Air Tractor Models AT-250, AT-300, AT-301, AT-302, AT-400, AT-400A, AT-401, AT-401A, AT-402, AT-402A, AT-501, AT-502, and AT-502A airplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on August 29, 2002 (67 FR 55360). The NPRM proposed to require you to install an overturn skid plate in the cockpit area. The actions specified by this proposed AD are intended to minimize the possibility of dirt or mud penetrating the cockpit in case of an aircraft overturn.

What is the potential impact if FAA took no action? Such mud and dirt penetration into the cockpit could lead to pilot asphyxia or injury.

Was the public invited to comment? The FAA encouraged interested persons to participate in the making of this amendment. The following presents the comments received on the proposal and FAA's response to each comment:

What is the commenter's concern? The commenter states that the Air Tractor Model AT-502A airplanes did not start production until after serial numbers applicable to the AD. Furthermore, the commenter states skid plates were installed on all Model AT-502A airplanes during factory production. The commenter wants Air Tractor Model AT-502A airplanes removed from the applicability section of the final rule AD action.

What is FAA's response to the concern? We do not concur. Air Tractor confirms that there is the possibility of one Model AT-502A airplane (converted from an early production AT-503, and with one of the affected serial numbers) in operation that did not receive the skid plate installation.

We are not changing the final rule AD action based on this comment.

What is the commenter's concern? The commenter states that the following sentence in the NPRM Summary and proposed AD paragraph 2(c) is misleading: “The proposed AD is the result of reports of foreign material entering the cabin area and contributing to accidents of the affected airplanes.” The commenter states that the sentence is misleading in that it implies that entering foreign material has caused an accident and does not indicate that an accident (an overturn of the aircraft) has already occurred. The commenter wants the sentence corrected to indicate the possibility of foreign material entering the cockpit after an accident where the aircraft has overturned.

What is FAA's response to the concern? We agree with the commenter. The final rule AD Summary and AD paragraph 2(c) will be changed to indicate the possibility of foreign material entering the cockpit after an accident where the aircraft has overturned.

We will change the final rule AD action to incorporate these changes.

What is FAA's final determination on this issue? We carefully reviewed all available information related to the subject presented above and determined that air safety and the public interest require the adoption of the rule as proposed except for the changes discussed above and minor editorial questions. We have determined that these changes and minor corrections:

How many airplanes does this AD impact? We estimate that this AD affects 845 airplanes in the U.S. registry.

What is the cost impact of this AD on owners/operators of the affected airplanes? We estimate the following costs to accomplish the modification:

Does this AD impact various entities? 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.

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

In the Federal Register of September 9, 1976 (41 FR 38312), FDA published, under § 330.10(a)(6) (21 CFR 330.10(a)(6)), an advance notice of proposed rulemaking to establish a monograph for OTC cold, cough, allergy, bronchodilator, and antiasthmatic drug products, together with the recommendations of the Advisory Review Panel on OTC Cold, Cough, Allergy, Bronchodilator, and Antiasthmatic Drug Products (the Panel), which was the advisory review panel that evaluated these products. The agency's proposed regulation for OTC cough-cold combination drug products was published in the Federal Register of August 12, 1988 (53 FR 30522).

Final rules for these OTC drug products were published in segments: Anticholinergic (50 FR 46582, November 8, 1985), bronchodilator (51 FR 35326, October 2, 1986), antitussive (52 FR 30042, August 12, 1987), expectorant (54 FR 8494, February 28, 1989), antihistamine (57 FR 58356, December 9, 1992), and nasal decongestant (59 FR 43386, August 23, 1994). This document on combination drug products, general issues, and miscellaneous ingredients is the final segment. In response to the proposed rule for OTC cough-cold combination drug products, the agency received 21 comments, which are on public display in the Dockets Management Branch, Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. This final monograph addresses all comments and objections, except as discussed below.

In the Federal Register of July 27, 1995 (60 FR 38636), FDA published a final rule establishing that cough-cold combination drug products containing theophylline are not generally recognized as safe and effective and are misbranded for OTC use. In the Federal Register of September 27, 2001 (66 FR 49276), FDA published a partial final rule for cough-cold combination drug products containing a bronchodilator, stating that combinations containing any oral bronchodilator and any analgesic(s) or analgesic-antipyretic(s), anticholinergic, antihistamine, oral antitussive, or stimulant active ingredient are not generally recognized as safe and effective and are misbranded for OTC use. The combinations in these two final rules are listed in § 310.545(a)(6)(iv)(B) and (a)(6)(iv)(D), respectively (21 CFR 310.545(a)(6)(iv)(B) and (a)(6)(iv)(D)).

This final rule does not address the combination of an oral bronchodilator and an expectorant or the combination of an oral bronchodilator and an oral nasal decongestant, which had not been previously classified. These two combination products will be addressed in a future issue of the Federal Register .

In the tentative final monograph for OTC cough-cold combination drug products, the agency proposed that combinations containing promethazine hydrochloride be switched from prescription to OTC status for short-term use (7 days) for relief of symptoms of the common cold (53 FR 30522 at 30559). In response, the agency received a citizen petition from a consumer's group and comments from several physicians objecting to OTC status for promethazine-containing drug products. The major concern raised was that use of promethazine in children under 2 years may be associated with the occurrence of sudden infant death syndrome, and that OTC availability could “dramatically increase” its “overuse” in children this age. The petition also raised concerns about possible adverse neurological reactions with promethazine. Following discussion at a Pulmonary-Allergy Drugs Advisory Committee meeting on July 31, 1989, the agency announced that cough-cold drug products containing promethazine hydrochloride could not be marketed OTC under the monograph (54 FR 36762, September 5, 1989). Subsequently, the agency received additional data to support OTC status for promethazine combinations for relief of symptoms of the common cold (Refs. 1, 2, and 3). The agency has not completed its review of these data nor made a final decision at this time on OTC use of promethazine combinations for relief of symptoms of the common cold and will issue a final decision in a future issue of the Federal Register .

In the Federal Register of April 9, 1996 (61 FR 15700), the agency published a final rule/enforcement policy establishing § 341.70 (21 CFR 341.70) for the use of diphenhydramine citrate and diphenhydramine hydrochloride as an antihistamine and an antitussive for treating concurrent symptoms in either a single-ingredient or combination drug product. That final rule permitted OTC marketing of such products pending completion of the current final rule.

Some of the combinations in this final rule include cough-cold ingredients in combination with either systemic analgesic-antipyretic or topical oral anesthetic/analgesic and demulcent ingredients. The monographs for these OTC drug products have not been finalized to date. Topical oral analgesic-antipyretic active ingredients were proposed in part 343 (21 CFR part 343) in the tentative final monograph for OTC internal analgesic, antipyretic, and antirheumatic drug products (53 FR 46204, November 16, 1988). Anesthetic/analgesic and demulcent active ingredients were proposed in part 356 (21 CFR part 356) in the tentative final monograph for OTC oral health care drug products (53 FR 2436, January 27, 1988, and amended at 56 FR 48302, September 24, 1991). The citations to parts 343 and 356 in this final rule refer to the proposed sections that appear in the tentative final monographs. When the final monographs are issued for those two classes of OTC drugs, crossreferences to applicable sections will be included in part 341 (21 CFR part 341). If any changes occur in the monograph conditions in those tentative final monographs, they will be stated in the final monographs and any appropriate revisions that may need to be made in part 341 will also be stated in those final rules.

The agency advises that on or after December 23, 2004, no OTC drug product that is subject to this monograph and that contains a nonmonograph condition may be initially introduced or initially delivered for introduction into interstate commerce unless it is the subject of an approved application or abbreviated application. Further, any OTC drug product subject to this monograph that is repackaged or relabeled after the effective date of the monograph must be in compliance with the monograph regardless of the date the product was initially introduced or initially delivered for introduction into interstate commerce. Manufacturers are encouraged to comply voluntarily as soon as possible.

(Comment 1) One comment noted a possible conflict between the use of the terms “should” in proposed § 341.85(b)(1) and (b)(2) (which state: “The following indication for analgesic-antipyretic ingredients should be used”) and “must” in proposed § 341.85(b)(3) (which states: “Both indications in § 341.85(b)(1) and (2) must be used.”). The comment requested clarification of the agency's intention and the impact on the “flexibility” policy in § 330.1(c)(2) (21 CFR 330.1(c)(2)).

The agency notes that the word “should” was used in proposed § 341.85(b)(1) and (b)(2) to reflect the flexibility policy set forth in § 330.1(c)(2) that is mentioned in the introductory paragraph under § 341.85(b). The word “must” in proposed § 341.85(b)(3) indicated that both of the indications specified in § 341.85(b)(1) and (b)(2) are required when a manufacturer elects to make both claims for its product. Although the words “should” and “must” are not used in this final rule, when both claims appear in labeling, the exact wording in § 341.85(b)(1) and (b)(2) need not be used because alternate wording in accord with § 330.1(c)(2) may be used.

(Comment 2) One comment submitted published literature (Ref. 4) to support the effectiveness of ascorbic acid (vitamin C), which was classified in category III in the tentative final monograph (53 FR 30522 at 30529), to reduce the duration and symptoms of the common cold. The comment contended that, although ascorbic acid may not prevent the common cold, there is considerable evidence indicating it is beneficial in reducing the duration and unpleasant symptoms of the common cold. The comment also submitted an unpublished study (Ref. 5) on the preventive effects of 500 milligrams (mg) ascorbic acid taken four times a day against naturally transmitted rhinovirus 16 in college students under strictly controlled conditions. The comment contended that preliminary results from this study show significant beneficial effects for several cold symptoms, such as cough.

The agency has determined that the submitted studies do not contain sufficient detail to assess their value in establishing the effectiveness of ascorbic acid in reducing the duration or symptoms of the common cold. In 1990, the agency asked the author of the comment to provide additional information (Ref. 6): (1) A detailed critical appraisal of these studies in accordance with the content and format described in § 314.50(d)(5) and (d)(6) (21 CFR 314.50(d)(5) and (d)(6)) (for clinical data and statistical analysis); and (2) a full report, including the protocol, complete patient data, and statistical analysis, of the rhinovirus study. This information was never provided. Thus, the agency is not including ascorbic acid in this final monograph.

In the Federal Register of January 17, 2002 (67 FR 2384), FDA proposed a rule amending its regulations regarding carcinogenic compounds used in food-producing animals. Specifically, the agency proposed to delete the operational definition of the term “no residue” and proposed to make conforming amendments to other parts of these regulations. FDA proposed these amendments in response to a 1995 legal opinion issued by the DOJ, Office of Legal Counsel, which concluded that the operational definition of “no residue” is not legally supportable. We provided 90 days for comment on the proposed rule.

FDA proposed the original regulations regarding carcinogenic compounds used in food-producing animals in the Federal Register of October 31, 1985 (50 FR 45530), in order to implement the diethylstilbestrol (DES) proviso of the Delaney Clause in sections 409, 512, and 721 of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 348, 360b, and 379e). The DES proviso provides that FDA can approve an animal feed additive or a new animal drug that induces cancer if we find that “no residue” of such additive or drug “* * * will be found (by methods of examination prescribed or approved by the Secretary by regulations * * *), in any edible portion of such animals after slaughter * * *” ( see , e.g. , excerpts from 21 U.S.C. 360b(d)(1)(I)). We issued final regulations based on this proposal in the Federal Register of December 31, 1987 (52 FR 49572).

The final rule, which was codified in part 500 (21 CFR part 500) at §§ 500.80 through 500.92, included an operational definition of “no residue” (§ 500.84). That definition provides FDA will consider that “no residue” of a carcinogenic compound remains in the edible tissue of treated animals when the “* * * concentration of the residue of carcinogenic concern in the total diet of people will not exceed S o * * *.” Section 500.82 defines S o as “the concentration of the test compound in the total diet of test animals that corresponds to a maximum lifetime risk of cancer in the test animals of 1 in 1 million * * *.” Section 500.82 further provides that FDA will assume that this “S o will correspond to the concentration of residue of carcinogenic concern in the total human diet that represents no significant increase in the risk of cancer to people.” Therefore, under these regulations, it is possible for a residue detected by the method approved by FDA to be considered “no residue,” if the detectable residue is below the level that corresponds to a maximum lifetime risk of cancer in the test animals of 1 in 1 million (“insignificant risk” or “no significant risk” level).

In the final rule of December 31, 1987, we explained the rationale for this operational definition of “no residue.” The preamble to the final rule stated:

On October 13, 1995, the DOJ, Office of Legal Counsel, responding to questions posed by the Environmental Protection Agency and FDA, issued a legal opinion entitled “The Food and Drug Administration's Discretion to Approve Methods of Detection and to Define the Term “No Residue” Pursuant to the Federal Food, Drug, and Cosmetic Act” (DOJ Opinion on FDA Implementation of the DES Proviso) (Ref. 1). One of the questions addressed by the opinion asked whether FDA has the discretion to determine that an edible tissue contains “no residue” when a method of detection reveals the presence of residues of carcinogenic concern that is below the “no significant risk” level.

In considering that question, the DOJ reasoned that “[g]iving `no residue' its ordinary meaning, the detected presence of any residue by an approved method would be incompatible with a finding of `no residue,' and thus would preclude a finding that the [DES] proviso applies.” Furthermore, the opinion stated that “[t]here is nothing * * * to suggest that a finding of `no residue' could be based upon the detected presence of residue, however insignificant * * *.”

This conclusion that “FDA may not accept a finding that residue is present, but below the `no significant risk' level, as satisfying the statutory requirement of `no residue,' ” contradicts FDA's present operational definition of “no residue” issued in § 500.84. This final rule amends the regulations to make them consistent with the DOJ legal opinion.

Specifically, the agency is revising the regulations to delete the operational definition of “no residue.” Therefore, for a substance to be approved under the DES proviso, no residue can be detectable by the approved regulatory method; that is, any residue in the target tissue must be nondetectable or below the limit of detection (LOD) of the approved regulatory method. Inasmuch as: (1) The regulatory method currently is defined in § 500.82 as the aggregate of all experimental procedures for measuring and confirming the presence of the marker residue in the target tissue and (2) FDA must, for regulatory and scientific reasons, be capable of identifying the detected residue with a high degree of certainty, FDA is defining the LOD, for the purposes of this rule, as the lowest concentration of analyte that can be confirmed by the approved regulatory method.

Thus, the sponsor of a carcinogenic compound must satisfy the following conditions with respect to the sponsor's proposed regulatory method. First, the sponsor must provide a method that is at least capable of reliably quantitating residues at and above the R m (the concentration of marker residue that the regulatory method must be capable of measuring in the target tissue), which we will continue to calculate in the manner provided in the current regulations in §§ 500.80 through 500.92. Therefore, FDA will use the “no significant risk” level determined through appropriate toxicological testing as a benchmark for assessing the acceptability of a regulatory method. Second, under the final regulations, a sponsor must provide sufficient data to permit us to estimate the LOD of the method as defined previously and in proposed § 500.82. Given the first requirement, the LOD will likely be below the R m , and consequently, the LOD will replace the R m as the “no residue” determinant.

Under the final regulations, we have defined the LOD as the lowest concentration of analyte that can be confirmed by the approved regulatory method. Believing that there are several valid procedures to estimate the LOD, we have chosen not to specify in this final rule any one specific procedure or protocol as a standard requirement for establishing the LOD. Thus, under the final rule, we will consider and evaluate any reasonable, generally recognized procedure that is consistent with the aims and requirements of regulatory exposure estimation and risk assessment practices of FDA.

The agency received no comments on the proposed rule.

The agency has carefully considered the potential environmental impacts of this final rule. The agency has determined under 21 CFR 25.30(h) 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.

FDA has examined the impacts of the final rule under Executive Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501 et seq .). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Regulatory Flexibility Act requires agencies to examine regulatory alternatives for small entities, if the rule may have a significant impact on a substantial number of small entities. Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement of anticipated costs and benefits before requiring any expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million in any one year (adjusted annually for inflation).

We conclude that this final rule is consistent with the principles set forth in the Executive order and in these two statutes. We expect only very slight, if any, compliance costs to result from the final rule. As a result, the final rule is not a significant regulatory action as defined by the Executive order and so is not subject to review under the Executive order. Further, we certify that the final rule would not have a significant economic impact on a substantial number of small entities. The Unfunded Mandates Reform Act does not require FDA to prepare a statement of costs and benefits for the final rule, because the final rule is not expected to result in any 1-year expenditure that would exceed $100 million adjusted for inflation. The current inflation-adjusted statutory threshold is about $110 million.

We are amending the regulations regarding the carcinogenic compounds used in food-producing animals by deleting the operational definition of “no residue.” Under the final rule, for a carcinogenic compound to be approved, no residue of the compound can be detectable using an approved regulatory method. Any residue in the target tissue would have to be nondetectable or below the LOD.

As stated previously, we are making this change in response to a DOJ opinion that the current operational definition of “no residue” is not legally supportable. The benefit of this change would be an increase in the clarity of the current regulations concerning carcinogenic compounds used in food-producing animals.

The deletion of the definition is not expected to impose any measurable compliance costs on the sponsors of compounds that are submitted to us for approval as new animal drugs or feed additives. The submission of data to meet the requirements of the final rule will be in place of, and nearly identical to, data that were submitted to meet the operational definition of “no residue.” We do not expect a noticeable increase in the level of effort expended in preparing a submission. To the extent that incremental compliance costs exist, we believe them to be inconsequential. In theory, another result of this final rule might be the possible increase in the withdrawal period for some number of compounds submitted for approval, which would represent some loss of value to the sponsor. We do not have the data to estimate this value, but believe it to be very small.

These regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collection of information contained in these regulations has been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545-1617. Responses to this collection of information are mandatory.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

For further information concerning this collection of information, and where to submit comments on the collection of information and the accuracy of the estimated burden, and suggestions for reducing this burden, please refer to the preamble to the cross-referencing notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register .

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

In 1997, Congress amended section 6038 to require information reporting by certain United States persons with direct and indirect interests in controlled foreign partnerships (CFPs). Treas. Reg. § 1.6038-3 was published in 1999 (TD 8850, 64 FR 72545 (1999)) (the “1999 Final Regulations”) and provides guidance regarding the reporting requirements under section 6038 with respect to CFPs. A United States person required to report under section 6038 with respect to a CFP must file Form 8865, Return of U.S. Persons With Respect To Certain Foreign Partnerships. In addition to the reporting obligation imposed on certain partners in foreign partnerships under section 6038, section 6031 requires certain foreign partnerships to file Form 1065, U.S. Return of Partnership Income or Form 1065-B, U.S. Return for Electing Large Partnerships.

Treas. Reg. § 1.6038-3(j)(1) provides that if a foreign partnership completes and files Form 1065 and a United States partner is required to file Form 8865 with respect to that partnership, the United States partner must attach to its Form 8865 copies of the Form 1065 schedules filed by the partnership instead of completing the Form 8865 schedules that are equivalent to Form 1065 schedules. This rule was added to the 1999 Final Regulations to reduce the burden imposed by those regulations where there is an overlap between section 6038 and section 6031. However, this rule does not directly address the filing requirements for Form 8865, when a United States partner files electronically its income tax return (including any attachments such as Form 8865).

To facilitate revisions to the filing requirements for Form 8865 (such as electronic filing of Form 8865), the temporary regulation amends Treas. Reg. § 1.6038-3 to provide that a United States partner must follow the filing requirements that are specified in the instructions for Form 8865 when the United States partner must file Form 8865 and the partnership completes and files Form 1065 or Form 1065-B. As a transitional matter, for the next filing season it is anticipated that the instructions for Form 8865 will continue to provide for the existing filing procedure pursuant to which a United States partner attaches certain schedules from Form 1065 or Form 1065-B to its Form 8865 as well as provide for an alternative electronic filing procedure for Form 8865.

The final regulation also makes two revisions to the 1999 Final Regulations. If a U.S. person is required to file Form 8865, Treas. Reg. § 1.6038-3(g)(1) provides that a U.S. person must submit any information that Form 8865 or its accompanying instructions require to be submitted. The final regulation clarifies the requirement under Treas. Reg. § 1.6038-3, as reflected in the Form 8865 instructions, that the United States partner must include the foreign partnership's name, address and taxpayer identification number on Form 8865. The final regulation also corrects a cross reference in Treas. Reg. § 1.6038-3(b)(9) (Example 1).

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 this regulation. For the applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6) refer to the Special Analyses section of the preamble to the cross-reference notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register . Pursuant to section 7805(f) of the Internal Revenue Code, this temporary regulation will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.

The principal author of this regulation is Tasheaya Warren, Office of the Associate Chief Counsel (International). However, other personnel from the IRS and Treasury Department participated in its development.

On December 20, 2002, the Copyright Office published a proposed regulation governing the form, content, and manner of service of notices of termination to terminate transfers or licenses of copyright that were granted in or after 1978. Such notices of termination are permitted pursuant to 17 U.S.C. 203, and may be served, for the first time, commencing January 1, 2003.

Because the comment period for the proposed regulations will extend into 2003, and because it is necessary to have in place a regulation governing the form, content, and manner of service of these notices of termination on January 1, 2003, so that persons entitled to serve such notices will know the requirements for the notices, the Office is announcing this interim regulation. The regulation will be in effect only until the Office has had the opportunity to consider the comments received in response to the notice of proposed rulemaking, and to publish a final regulation.

The interim regulation is identical to the proposed regulation with one exception. The proposed regulation amends § 201.10(b)(1)(i) of the Copyright Office regulations to require that a notice of termination pursuant to section 17 U.S.C. 304 must identify whether the termination is made under section 304(c) or section 304(d). Because this proposed amendment would change established practice with respect to terminations under section 304(c), and because we do not believe it would be prudent to change the requirements for section 304 notices of termination on such short notice, that proposed amendment is not included in the interim regulation.

Because it is necessary to have such a regulation in place by January 1, 2003, the Register of Copyrights finds that notice and public procedure are impracticable and contrary to public interest and that good cause exists for publication of this interim regulation less than 30 days before its effective date and without first seeking public comment.

The entire text of § 201.10, as amended, may be found on the Copyright Office Web site at http://www.copyright.gov/docs/203.html.

On October 15, 2002, the Postal Service published for public comment in the Federal Register a proposed rule (67 FR 63582-63583) to update the administrative charges for processing refunds for unused meter stamps and returned business reply mail (BRM) with postage affixed. The Postal Service also invited comments on the proposed rule from interested parties and accepted comments until November 14, 2002. No comments were received during the comment period. This final rule contains the DMM standards adopted by the Postal Service after the comment period ended.

The Domestic Mail Manual is revised as follows. The changes are incorporated by reference in the Code of Federal Regulations. See CFR part 111.

We will also publish an appropriate amendment to 39 CFR 111.3 to reflect these changes.

On October 15, 2002 (67 FR 63583), EPA published a Notice of Proposed Rulemaking (NPR) for the Commonwealth of Massachusetts, and received comments that are summarized and responded to below. EPA is now approving a SIP revision submitted by the Commonwealth of Massachusetts on August 9, 2002 and August 26, 2002 which amends the Massachusetts LEV I Program that is currently contained in the federally-approved SIP by replacing it with a revised version of the LEV program. As discussed in the NPR for this action, EPA is not taking action on Massachusetts ZEV program at this time.

Under section 177 of the CAA, States adopting California's motor vehicle emission standards must adopt standards that are identical to California standards. The ZEV program, which California has intended to work in conjunction with the California LEV program, has undergone several modifications through the years in California. In response, Massachusetts has made several changes to their ZEV program in attempts to ensure their program is consistent with California. In fact, the Commonwealth has made changes regarding ZEV requirements since the time it adopted the rule that is currently before EPA. Nevertheless, the Massachusetts revised LEV program is designed to be a comprehensive program which will secure those emission reductions that are necessary for Massachusetts' attainment demonstration for the one-hour ozone NAAQS. For that reason, and since the emission reductions from the California program are controlled by the fleet average hydrocarbon curve and other similar measures, and can be achieved without any specific ZEV sales requirements, we are approving the Massachusetts LEV rules adopted on December 24, 1999 without taking action on or approving the Massachusetts ZEV program at this time. In the case of sections 310 CMR 7.40(2)(a)6, 310 CMR 7.40(2)(c)3, 310 CMR 7.40(10), and 310 CMR 7.40(12), EPA was not requested to take action. For section 310 CMR 7.40(2)(a)5, which establishes ZEV requirements beginning in model year 2003, EPA is not taking any action at this time but intends to do so in the future through the appropriate rulemaking process as the manufacturers' requirements for ZEVs in California, and Massachusetts, become clarified. EPA will conduct full notice and comment rulemaking on the ZEV portion of the Massachusetts program when those requirements become clarified since those provisions have not been acted on in this rulemaking, or in the October 15, 2002 proposed rulemaking. Other details of EPA's proposed rulemaking were outlined in the Federal Register and will not be restated here.

As stated above, EPA sought public comment on this action and five parties submitted comments. First, two members of the general public submitted comments by which they expressed support for EPA's action to approve the Massachusetts low emission vehicle program as a means to get cleaner air. Next, the Appalachian Mountain Club (AMC), which comprises some 93,000 members, and the Massachusetts Public Interest Research Group (MASSPIRG) provided comments and were supportive of the Massachusetts LEV program. Both organizations also expressed support for Massachusetts intentions to require ZEVs as a way to advance zero emission vehicle technology. AMC explicitly recognized that EPA was not acting on ZEV provisions in this rulemaking. Lastly, the Alliance of Automobile Manufacturers (“the Alliance”) expressed some concerns and sought clarification of the action, particularly as it relates to the ZEV requirements of the Massachusetts program.

The Alliance expressed concern that this action appeared to conflict with another EPA proposed action which was published on October 15, 2002 (67 FR 63586) and that included a reference to approving the California LEV II program that might suggest inclusion of the ZEV program. To be clear, as stated in the NPR for this action, EPA is approving the Massachusetts LEV program adopted on December 24, 1999, with the exception of the ZEV program. The emission reductions associated with the Massachusetts LEV program that EPA is approving are assumed in the Massachusetts demonstration of attainment, and are necessary for attainment. These emission reduction estimates are determined by the MOBILE6 model for mobile source emission inventory estimations, which was peer and publicly reviewed, and represents our best estimate of the emission reductions from the program. At this time, for reasons outlined in the notice of proposed rulemaking for this action, EPA is not taking any action on the Massachusetts ZEV program. All portions of the previously federally- approved Massachusetts LEV I program, including those related to ZEVs, are being replaced by this action.

Although several parties discussed the ZEV program in their comments, EPA was clear that no action was being considered for the ZEV portions of the Massachusetts LEV program at this time. EPA will take action on the ZEV portions of the Massachusetts program in the future when Massachusetts adopts and submits to EPA a ZEV program consistent with the California ZEV program. Any action in the future on the ZEV portion of the Massachusetts program will be through full notice and comment rulemaking.

The Alliance went on to comment that it did not agree with Massachusetts', nor presumably California's, plans to mandate advanced technology vehicles. Again, EPA is not acting on the ZEV portion of the Massachusetts rule, but believes that Massachusetts does have the right under section 177, to adopt all portions of a California program which is adopted in accordance with the provisions of section 209 of the Clean Air Act.

EPA is approving a SIP revision at the request of the Massachusetts DEP which was adopted on December 24, 1999. It was submitted to EPA for approval on August 9, 2002. That submittal was later clarified by Massachusetts on August 26, 2002 to exclude certain sections of their ZEV program from consideration. In addition, for the reasons outlined above, at this time we are not taking action on section 310 CMR 7.40(2)(a)5 which includes ZEV requirements beginning in model year 2003. As such, we are approving all of 310 CMR 7.40, the “Low Emission Vehicle Program” except for 310 CMR 7.40(2)(a)5, 310 CMR 7.40(2)(a)6, 310 CMR 7.40(2)(c)3, 310 CMR 7.40(10), and 310 CMR 7.40(12). The regulations adopted by Massachusetts now include the California LEV II motor vehicle emission standards effective in model year 2004, the California LEV I medium-duty standards effective in model year 2003, and the smog index label specification effective model year 2002. This approval will secure all of the emission reductions of the current California LEV standards for light and medium duty vehicles. EPA is approving Massachusetts' low emission vehicle program requirements into the SIP because EPA has found that the requirements are necessary for Massachusetts to achieve the NAAQS for ozone and to reduce emissions of VOC and NO X from new vehicles in accordance with the requirements of the CAA.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

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

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. 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).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 21, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

On September 10, 2002 EPA published a notice of proposed rulemaking (NPR) for approval of the Utah County PM 10 SIP revision (67 FR 57357). In this final rule action, EPA summarizes all comments and EPA's responses and approves the Governor's July 3, 2002, final SIP revision. Throughout this document, wherever “we”, “us”, or “our” are used, we mean the Environmental Protection Agency (EPA).

We are approving the Governor of Utah's submittal of July 3, 2002 that requests our approval of the Utah County PM 10 SIP revision that Utah adopted on June 5, 2002 and July 3, 2002 and that became State effective on September 5, 2002. With this SIP revision, Utah has revised Section IX (Section 9 under our current approved version of the Utah SIP), “Control Measures for Area and Point Sources,” Part A, “Fine Particulate Matter” and Part H, “Emission Limits” of the SIP. In addition, Utah revised its regulation R307-110-10 (R307-2-10 under our current approved version of the Utah SIP) to incorporate by reference its July 3, 2002 revision of the Utah County portion of the Utah SIP, Section IX, Part A. In addition, Utah revised its regulation R307-110-117 (R307-2-17 under our current approved version of the Utah SIP) to incorporate by reference its June 5, 2002 revision of the Utah County portion of the Utah SIP, Section IX, Part H. We are approving this request and its accompanying regulation revisions because the SIP revision meets the applicable requirements of the Act. For additional information on the Utah County PM 10 SIP revision, please refer to our notice of proposed rulemaking (67 FR 57357).

This SIP revision establishes motor vehicle emission budgets and includes an analysis of those budgets. Under EPA's regulations at 40 CFR part 93, the Metropolitan Planning Organization (MPO) is required to determine conformity of transportation plans and projects to the motor vehicle emission budgets as approved in the PM 10 SIP. The MPO in Utah County is the Mountainland Association of Governments (MAG).

Utah County has been in a conformity lapse since August 2000 because transportation plans for the area could not meet the PM 10 and NO X motor vehicle emission budgets that were derived from the emissions inventory in the approved PM 10 SIP. 1 Utah County could not meet the established motor vehicle emission budgets because the budgets were based on an outdated mobile source emissions model (Mobile4)  2 and the area exceeded its growth projections.

This SIP revision establishes new motor vehicle emission budgets for PM 10 and NO X which are based on the latest planning assumptions, including the latest growth projections, and the latest emissions model (Mobile6), released on January 29, 2002 (67 FR 4254). The new motor vehicle emission budgets are established for years 2003, 2010, and 2020 and take into account growth in all other source categories. Please refer to Table 1: Transportation Conformity Motor Vehicle Emission Budgets.

The values for 2003 reflect the inventory values for motor vehicles that were used in the CMB modeling. The CMB modeling, based on these inventory values, and inventory values for other source categories, demonstrates attainment in 2003. For 2010 and 2020, inventory values for all source categories were projected forward. The 2010 and 2020 motor vehicle emissions budgets reflect the motor vehicle inventory values in 2010 and 2020, except that “road dust” and “brake wear” portions of the 2020 motor vehicle inventory for PM 10 were expanded by 7 percent to take advantage of part of the available safety margin in that year. Per 40 CFR 93.101, the safety margin is the amount by which the total projected emissions from all sources of a given pollutant are less than the total emissions that would satisfy the applicable requirement for reasonable further progress, attainment or maintenance. The applicable standard for PM 10 is 150 μg/m 3 ; even using the expanded 2020 motor vehicle emissions budget for PM 10 reflected in the table above, the CMB projections for 2020 show a maximum concentration of 146.4 μg/m 3 , still below the 150 μg/m 3 standard.

The emissions budgets must be used for conformity determinations per 40 CFR 93.118. Specifically, the 2003 budgets will apply for years 2003 through 2009, the 2010 budgets will apply for years 2010 through 2019, and the 2020 budgets will apply for years 2020 and beyond. In addition, upon the effective date of this final approval of the motor vehicle emission budgets and upon the Federal Highway Administration's approval of a positive conformity determination, the present conformity lapse in Utah County will end.

On March 2, 1999, the United States Court of Appeals for the District of Columbia Circuit issued a decision in Environmental Defense Fund vs. The Environmental Protection Agency, No. 97-1637, that we must make an affirmative determination that the submitted motor vehicle emission budgets contained in SIPs are adequate before they are used to determine the conformity of Transportation Improvement Programs or Long Range Transportation Plans. In response to the court decision, we are making most submitted SIP revisions containing a control strategy plan available for public comment and responding to these comments before announcing our adequacy determination. (We do not perform adequacy determinations for SIP revisions that only create new emission budgets for years in which an EPA-approved SIP already establishes a budget, because these new budgets cannot be used for conformity until they are approved by EPA.) We make the motor vehicle emission budgets in SIP revisions available for comment by posting notification of their availability on our Web site (currently, these notifications are posted at www.epa.gov/oms/transp/conform/adequacy.htm). The adequacy process is discussed in greater detail in a May 14, 1999 memorandum from Gay MacGregor entitled “Conformity Guidance on Implementation on March 2, 1999 Conformity Court Decision,” also available on our Web site at: www.epa.gov/oms/transp/traqconf.htm.

Because they extend beyond the time-frame of the previously approved Utah County PM 10 SIP, we reviewed the 2010 and 2020 motor vehicle emission budgets in this plan for adequacy using the criteria located at 40 CFR 93.118(e). The 2003 motor vehicle emission budgets replace the previously approved 2003 budgets in the Utah County PM7 10 SIP revision and can't be used for purposes of demonstrating conformity until the effective date approving this Utah County PM 10 SIP revision. The 2010 and 2020 motor vehicle emission budgets were posted to our Web site at: http://www.epa.gov/oms/transp/conform/adequacy.htm and were made available for public comment from August 1, 2002 through August 30, 2002. No comments were received. The 2010 and 2020 motor vehicle emission budgets were found to be adequate, effective October 16, 2002. The Utah Department of Transportation and the Federal Highway Administration must use these budgets in future conformity analyses.

The emissions inventory for the Utah County PM 10 nonattainment area covers emissions from all sources of both primary and secondary PM 10 inside Provo and Orem. The SIP revision uses a 1988 and 1989 base year emissions inventory, as well as a 2003 projected emissions inventory for all sources in the inventory domain. The 1988/89 base year inventory was updated for purposes of this SIP revision to create a 24-hour inventory in order to be protective of the 24-hour PM 10 National Ambient Air Quality Standards (NAAQS). The 1994 approved version of the PM 10 SIP includes an emissions inventory based on monthly and annual PM 10 values. The 2003 projected emissions inventory, which also contains 24-hour values, has been updated to reflect stationary source shut-downs and other changes affecting PM 10 , NO X , and SO 2 emissions that have occurred since the development of the original PM 10 SIP. The mobile source portion of both the base year and projected inventories were updated to include the use of the new Mobile6 emissions model.

Utah updated the existing attainment demonstration from the original PM 10 SIP to again create an analysis based on 24-hour averages instead of annual values. Utah used the existing chemical mass balance (CMB) methodology for the 24-hour attainment demonstration. The CMB analysis was also updated to account for changes that have occurred since the development of the original PM 10 SIP. One such change to the attainment demonstration is that Utah increased the wood burning control strategy effectiveness to 90%, meaning that additional reductions in woodburning emissions are calculated into the attainment demonstration. In addition, since the development of the original PM 10 SIP, some sources in the Utah County nonattainment area have banked emissions. Although these emissions are banked, the potential exists for the purchase and use of part or all of such banked emissions. Because of this, Utah has accounted for these banked emissions in the attainment demonstration by assessing the emissions to the source from which they came.

Utah's revised attainment demonstration for Utah County projects attainment for 2002 and 2003 for SIP purposes, and for 2010 and 2020 for conformity purposes only. In this revised SIP, the CMB analysis is based on 1988 and 1989 recorded monitoring data, which is the same data used in the original SIP. Table II below shows the results of the CMB analysis on the projected attainment years using only the highest concentration site for each year. Please refer to the Utah County SIP revision and technical support document (TSD) for more detailed information. Utah used three monitoring sites to demonstrate attainment on numerous high concentration days, although a demonstration of attainment is only required for the design day. In the table below, we only present results from the established design day (this is the same design day as in the original SIP revision).

In the original SIP as well as in this SIP revision, Utah uses three monitoring sites to demonstrate attainment: Lindon, North Provo and West Orem. The West Orem monitoring site has been shut down since December 31, 1997.

The original Utah County PM 10 SIP includes the entire permit (circa 1988—1991) for most of the stationary sources in Provo and Orem. We only require that the major stationary sources of PM 10 and its precursors have specific limits in SIPs. For these majors sources, it is important to include their appropriate emission limits and the enforceable provisions for those limits, but it's usually not essential to include their entire permit. Because Utah County is designated nonattainment for the 24-hour PM 10 NAAQS, the SIP limits must include short-term limits with an averaging time of 24 hours or less. To determine which sources should be treated as major sources for purposes of the PM 10 SIP, threshold limits were chosen of 100 tons per year of primary PM 10 emissions, 200 tons per year of NO X emissions, and 250 tons per year of SO 2 emissions. UDAQ's and EPA's analysis of the sources in Provo and Orem showed that sources above these levels account for a high percentage of stationary source emissions in the area. The five sources with explicit emission limits in the Utah County PM 10 SIP revision are, Geneva Steel, Geneva Nitrogen, Inc., Provo City Power, Springville City Corporation and Geneva Rock Product's Asphalt Plant Baghouse Stack. Table III below shows the emission limits established through this SIP revision for the major sources, except Geneva Steel.

Table IV below provides the 24-hour emission limits for the major emitting units at Geneva Steel for September through May, and Table V below provides the 24-hour emission limits for the major emitting units at Geneva Steel for June through August. Table VI below provides the annual emission limits for Geneva Steel's major emitting units.

It is important to note here that Geneva Steel is in the process of banking or has banked a significant amount of its emissions from the coke plant, sinter plant, Q-and sources in the “Geneva Other” category. This is due to the shutting down or reduction in emissions for the coke plant (some fugitive emissions remain from the coke piles), sinter plant, foundry and rolling mill scarfer facility. Emissions reductions are also due to fuel switching. Table VII below shows the banked emissions per process in tons per year of PM 10 , NO X , and SO 2 . Where Tables IV, V and VI reflect that all process emissions have been banked, no emissions from such process will occur under the SIP revision.

The original EPA-approved PM 10 SIPs for Utah County and Salt Lake County contain provisions that some would argue allow the Executive Secretary of the State of Utah to make changes effective to the SIP without first obtaining EPA approval. We believe these “director's discretion” provisions are contrary to the CAA and should not have been approved into the SIP. At the very least, these provisions have led to uncertainty regarding the content of the federally enforceable SIP. In order to address these concerns, Utah has inserted the following language into the SIP: “Notwithstanding any other provision in the Utah SIP, no change to this SIP revision shall be effective to change the federal enforceability of the emission limits or other requirements of the Utah County PM 10 SIP without EPA approval of such change as a SIP revision.” This language makes clear that Utah may not unilaterally change the limits and requirements of the federally enforceable SIP, and thatUtah's changes to elements of the SIP will not be federally effective without EPA's approval. As explained further below, Utah has also committed to work with us in order to permanently resolve the director's discretion issues in the Salt Lake County and Utah County PM 10 SIPs.

Section 110(k) of the CAA addresses our actions on submissions of revisions to a SIP. The CAA requires States to observe certain procedural requirements in developing SIP revisions for submittal to us. Section 110(a)(2) of the CAA requires that each SIP revision be adopted after reasonable notice and public hearing. This public process must occur prior to the State submitting its final revision to us.

At the March 13, 2002 Utah Air Quality Board (UAQB) meeting, the UAQB proposed for public comment revisions to R307-110-10, SIP Section IX.A, R307-110-17, and SIP Section IX.H.1. The UAQB proposed the SIP revision for a 30-day State public comment period that began on April 1, 2002. However, due to problems with copies of the amendment to the Utah County PM 10 Plan, the State made revised copies available beginning April 4, 2002 and extended the public comment period to May 4, 2002. The State conducted public hearings on April 23 and 24, 2002. Final action and approval was taken by the UAQB on June 5, 2002 and July 3, 2002 and rule R307-110-10 incorporating revised Section IX.A, and rule R307-110-17 incorporating revised Section IX.H.1, into Utah's SIP became State effective on September 5, 2002.

On July 3, 2002, the Governor submitted final rule R307-110-10, SIP Section IX.A, R307-110-17, and SIP Section IX.H.1 to us for approval into the Utah SIP. In a letter dated August 15, 2002, from Robert E. Roberts, EPA Region Administrator for Region VIII, to Governor Leavitt of Utah, we determined that the Governor's July 3, 2002, SIP submittal met the completeness criteria in 40 CFR part 51, Appendix V, and therefore the submittal was considered administratively and technically complete.

With an April 18, 2002 letter from Richard Sprott, Director of Utah's Division of Air Quality to Richard Long, Director of the Air and Radiation Program in EPA Region 8, UDAQ committed to work with us to address remaining issues with the PM 10 SIPs for both the Utah and Salt Lake County nonattainment areas and with the Utah SIP generally. Utah will address these ongoing issues in a SIP revision (which may be in the form of a maintenance plan) that will be submitted by March 1, 2004. Utah has committed to address the following issues with the existing SIP:

(1) State authority as it relates to the discretion granted to the Executive Secretary of the Utah Air Quality Board (EPA uses the term “director's discretion” for these provisions);

(2) Variance provisions as provided in Utah law, Air Quality regulations and the SIP;

(3) UAM-AERO based modeling and analysis to address pollutants of concern in the SIP or maintenance plan;

(4) Stationary source modeling for major sources and appropriate non-major sources to determine predicted impacts of emission limits established in the SIP or maintenance plan;

(5) Enforceable emission limits for sources in the SIP or maintenance plan, including enforceable 24-hour emission limits for major sources in both Salt Lake and Utah Counties and emission limits (or surrogates for emission limits) for refinery process flaring and SRU maintenance downtime;

(6) Emissions inventory and modeling analysis for the nonattainment areas in Salt Lake and Utah Counties;

(7) New source review, emissions banking, and interpollutant trading (EPA's issues with these programs were explained in a May 10, 2001 letter from Region 8 to UDAQ);

(8) Unavoidable breakdown rules and consistency with the EPA September 20, 1999 policy regarding such breakdowns;

(9) Inclusion of annual growth rates in the SIP or maintenance plans;

(10) Justification for credits and growth rates for wood and coal burning in Utah County;

(11) Backhalf emissions measuring for PM 10 emissions limit stack testing;

(12) General language clean up in the PM 10 SIP to assure SIP is consistent and reads appropriately;

(13) Diesel I/M revision or program withdrawal;

(14) Emission budgets for PM 10 and NO X in Salt Lake portion of PM 10 SIP;

(15) Emission inventory and modeling analysis for automobile emission inspection and maintenance program changes, if any such changes are made in the SIP or maintenance plan.

The above issues aren't addressed in this SIP revision for Utah County and therefore, these issues will continue after our final approval of this SIP revision.

A number of the comments we received are more properly directed to the State of Utah. For instance, several comments complained that the State adopted additional controls for stationary sources in this SIP revision. Others complained that the State should've changed parts of the existing SIP that we have previously approved. We note that EPA's role in reviewing and acting on SIP revisions is limited. We take SIP revisions as they are submitted to us by a state. We must approve a SIP revision if it meets the applicable requirements of the Clean Air Act; we must disapprove it if it does not meet these requirements. We may not change the provisions that a state has adopted. As we describe in greater detail below, we do not view the negative comments we received as a basis to disapprove the SIP revision. We believe the SIP revision meets the applicable requirements of the CAA, and we are approving it.

(1) Comment: One commenter suggests that the correct way to address a conformity problem is through mobile source control measures rather than revision to the entire SIP. Another commenter states that throughout the SIP revision process, not enough effort was made to control mobile source emissions which are the real source of the conformity problem.

Response: The commenters' policy concerns are more properly directed to the State. The State has exercised its discretion in adopting changes to the SIP and allocating any burden of those changes among various source categories. Our role is limited; we must either approve or disapprove the changes the State has submitted depending on whether those changes meet the applicable requirements of the Clean Air Act. We are not authorized to disapprove the SIP based on the State's decision to allocate some or all of the control burden to stationary sources. We have evaluated the State's SIP revision; because it meets applicable requirements of the CAA, including the requirement to demonstrate attainment, we are approving it.

(2) Comment: One commenter states that EPA encouraged a revision to the entire SIP rather than focus on mobile source emissions because EPA suggested it would not approve the conformity demonstration/SIP revision without satisfactory changes to stationary source portions of the SIP. The commenter suggests we took this “indirect approach” because the CAA clearly does not authorize the agency to make a SIP call under the circumstances.

Response: This commenter's concerns do not present a basis for us to disapprove the SIP revision. Please see our response to the previous comment. As a point of clarification, we note that the State chose to revise the SIP to address the conformity lapse in Utah County. While the State was developing the SIP revision, we identified a number of concerns with the existing Utah County PM 10 SIP, some of which related to stationary source provisions. Consistent with our obligations under the Clean Air Act, we advised the State of changes we thought necessary to ensure that the SIP revision would meet applicable Clean Air Act requirements. Whether we had authority to issue a SIP call is not a question that is before us today. We'd also like to clarify that EPA does not approve conformity demonstrations; instead, the Department of Transportation has the authority for such decisions.

(3) Comment: One commenter, despite reservations, asks that EPA approve the SIP revision as soon as possible.

Response: We acknowledge the supportive comment. We disagree with the commenter's suggestion that the revision is not legally or technically justified; even if the commenter is correct that the SIP revision is more stringent than minimally necessary to meet the Clean Air Act's requirements, this would not form a basis for us to disapprove the SIP. If a SIP revision meets the minimum requirements of the Clean Air Act, we are bound to approve it, even if it exceeds the minimum requirements. See Union Electric Co. v. Environmental Protection Agency, 427 U.S. 246, 263-264 (1976).

(4) Comment: One commenter believes the Utah Division of Air Quality (DAQ) and Mountainland Association of Governments (MAG) have demonstrated conformity with the PM 10 SIP and that EPA should approve the SIP revision as soon as possible so as not to stand in the way of Utah County receiving its federal highway funds.

Response: We are approving the SIP, including the new budgets. Upon the effective date of this action, the new budgets will apply for purposes of determining conformity. It will then be up to the metropolitan planning organization (MAG) and the Department of Transportation to determine conformity with the new budgets.

(5) Comment: One commenter believes that when the problem being addressed is growing mobile source emissions, it is bad policy to do anything other than address mobile source emissions exclusively. According to the commenter, EPA and DAQ should not use a conformity lapse situation as justification for demanding changes to the stationary source portion of the SIP. This sets a bad precedent.

Response: The commenter's policy concerns are more properly directed to the State. The State has considerable latitude to determine the best way to address a conformity lapse. In revising the SIP to remedy such a lapse, the State has discretion to choose which sources to regulate and to what degree, so long as the SIP demonstrates attainment and meets other requirements of the CAA. Put another way, it is not our place to dictate where the State should find emissions reductions if emissions reductions are needed. Instead, our concern is that any SIP revision submitted by the State meet the requirements of the CAA and our regulations; to the extent we offered input to the State during the State's development of the Utah County PM 10 SIP revision, our input was intended to help the State adopt a SIP that would meet these criteria. Also, our conformity regulation at 40 CFR 93.118(e)(4)(iv) indicates that emissions from all source categories must be considered when we determine whether motor vehicle budgets are consistent with attainment of the NAAQS. In determining adequacy or approvability of motor vehicle emissions budgets we cannot look at mobile sources in isolation.

(6) Comment: One commenter asserts that the Utah PM 10 SIP should be further revised during the maintenance plan process to allow for plant modifications without requiring SIP revisions. The commenter expresses his opinions regarding the way in which the permit and SIP process should interact to allow source flexibility.

Response: The issues raised by the commenter are not relevant to the submission made by the State and thus do not affect our approval of it.

(7) Comment: One commenter suggests that any commitments or comments contained in an April 18, 2002 letter from DAQ to EPA regarding future SIP revisions are independent from this SIP revision and should not affect its approval.

Response: While we noted the April 18, 2002 letter in our notice of proposed rulemaking, we proposed to approve the Utah County SIP revision. We are approving the SIP revision with this rulemaking and the budgets contained in the SIP revision must be used for conformity determinations once our rulemaking is effective. We will address the commitments contained in the April 18, 2002, letter in future rulemaking.

(8) Comment: We received numerous comments asking that we approve the SIP revision.

Response: We acknowledge the supportive comments.

(9) Comment: One commenter submitted a copy of the comments it submitted to the State during its hearing process. The commenter indicates that the comments raise some “fundamental policy issues concerning the approach taken both by EPA and DAQ with regard to proposed SIP revisions,” and asks that EPA consider the comments during its deliberations on the Utah County PM 10 SIP revisions.

Response: The commenter has not specified whether it is seeking EPA disapproval of the Utah County SIP revisions. However, for purposes of responding, we will assume that the commenter believes the SIP revisions should be disapproved. The following are summaries of comments submitted by this commenter and our responses.

(10) Comment: The commenter complains that State changes to the proposed SIP revision were made without ample opportunity for comment by affected businesses. The commenter asks that all future changes allow stationary sources to provide input to the decision making process.

Response: The commenter does not specify the changes that the State made to the proposed SIP revision; thus, we lack sufficient information to evaluate the commenter's complaint. We are not aware of changes the State made to the proposed SIP revision that would require a restart of the public participation process. Information submitted by the State indicates that the State conducted public hearings on the SIP revisions on April 23 and 24, 2002 and provided published notice of the hearings on March 23 and April 9, 2002. The State also provided a 30-day period for public comment and met with various stakeholders, including industrial sources, during the development of the SIP revisions. Section 110(a)(2) of the CAA requires states to adopt SIPs after reasonable notice and public hearing. We believe the State met these requirements.

(11) Comment: The commenter seems to be asserting that we are holding or have held approval of the Utah County SIP revisions hostage until the State addresses our concerns. The commenter cites a case titled Snowbird Corporation v. U.S. Department of Agriculture for the proposition that such behavior is illegal.

Response: We provided input to the State while the State developed revisions to the Utah County SIP revision and identified issues we felt the State would need to address in order for us to approve a revision to the SIP. The issues we raised were based on our interpretation of requirements of the Clean Air Act, and we believe our actions were completely within our authority under the Clean Air Act. If the State disagreed with our interpretations, it was free to disregard our input, submit a SIP revision, and exercise its legal rights under the Clean Air Act in the event we disapproved the submitted revision. There is no entitlement to approval of a SIP revision under the Clean Air Act unless the revision meets the requirements of the CAA and EPA regulations. Since receiving the SIP submittal from the State, we have acted expeditiously to propose it for approval and approve it. We have not held the SIP revision “hostage.”

(12) Comment: The commenter indicates that increases in mobile source emissions should not be used to justify reductions in allowable emission limits currently applicable to stationary sources. The commenter wants reasonably stringent budgets for mobile sources and wants mobile sources to stay within budget. The commenter wants any reductions in the inventory from use of MOBILE 6 modeling to be allocated to stationary sources.

Response: These decisions are within the State's discretion in the first instance, and EPA may not consider these comments in determining whether the SIP revision meets the requirements of the CAA. See our response to previous comments. Also, see Union Electric Co. v. Environmental Protection Agency, 427 U.S. 246, 266 (1976), in which the Supreme Court held that a state “may select whatever mix of control devices it desires” as long as the NAAQS are met.

(13) Comment: The commenter argues that the SIP revision contains emissions caps that will preclude plant production increases and growth. The commenter was concerned that these emissions caps may only be changed through an EPA-approved SIP revision. According to the commenter, such an approach is unrealistic and unworkable because the revision and approval process can take as long as 5 to 10 years. The commenter expressed concern that this will result in functionally prohibiting industrial and business expansion. The commenter suggests a countywide cap be implemented that allows emissions trading under the cap.

Response: The commenter's concerns are more properly directed to the State because they raise issues with the State's chosen approach, not matters that are within the scope of EPA's approval or disapproval of this action. EPA's decision to approve the revision is limited to whether it complies with the applicable requirements of the CAA. We believe that the emissions limits meet the requirements of the Clean Air Act because they are practically enforceable and will ensure attainment of the NAAQS. The fact that the limits may only be changed through a SIP revision is not a basis for us to disapprove the SIP revision. In addition, we believe the commenter's assumptions are unfounded in certain respects. First, it is our understanding that many of the allowable limits in the SIP allow for considerable growth in emissions. (Whether such increases would trigger new source review requirements is a separate question.) Second, we have a responsibility under the Clean Air Act to ensure that emissions limits that form the basis for an attainment demonstration are enforceable and permanent. Permanent in this instance means that they may not be changed without EPA's approval through a SIP revision. See section 110(i) of the Act and 40 CFR 51.105. Third, this approach has proven workable throughout Region 8. Industrial and business expansion has continued, despite firm emissions limits in SIPs.

(14) Comment: The commenter is concerned that language in the Utah SIP that relates to New Source Review negates one of the stated goals of the SIP revision—to remove smaller sources from the SIP and thus allow those smaller sources to change their Approval Orders without EPA review. The commenter mentions language stating that diffusion modeling will be performed to predict the source's effect on air quality in the area, and requiring issuance of an Approval Order. The commenter is concerned that this language could be interpreted to require EPA approval of changes to Approval Orders as SIP revisions.

Response: The commenter's concerns are more properly directed to the State, rather than to EPA. The State did not adopt the changes the commenter requested and has not submitted changes to Section 2 of the Utah SIP. The absence of such changes does not render the Utah County PM 10 SIP revision inadequate, and we are approving the SIP revision as submitted. However, we believe the commenter's fears are unfounded. Requirements for New Source Review are intended to complement the SIP; see our response to comment 18, below. But, there is no requirement in the State's regulations or in our regulations that the State seek or gain prior EPA approval of changes to Approval Orders. This does not mean a state is free to ignore state or federal regulatory requirements in implementing its New Source Review requirements; if a state fails to implement those requirements, we may take a variety of actions under the Clean Air Act to correct the state's failure.

(15) Comment: The commenter questions the addition of Geneva Rock asphalt plant to the SIP “when it is not in the same category as the large stationary sources.” The commenter also wonders why Geneva Rock has no annual emission limitations like other sources in the SIP.

Response: We asked the State to include Geneva Rock in the SIP because Geneva Rock's allowables ( i.e. , permitted levels) for PM 10 exceed 100 tons per year. This is the threshold for PM 10 that the State and EPA settled on to define which sources to include in the SIP. We note that the inclusion in the SIP of emission limits for Geneva Rock is not a basis for us to disapprove the SIP revision. We don't know why the State did not include annual emission limits in the SIP for Geneva Rock. However, given Geneva Rock's size and the daily limits that apply November through February, we don't believe the lack of annual emission limits for this one source threatens the annual PM 10 NAAQS.

(16) Comment: The commenter suggests that other states, such as California and Texas, allow changes in equipment and/or facility modifications that do not require a SIP revision and asks the State to evaluate these approaches.

Response: The commenter directed this comment to the State, but the State did not elect to adopt the suggested approach. Because the State has not submitted such mechanisms as part of this SIP revision, the comment is not relevant to our approval. The absence of such mechanisms does not form a basis for us to disapprove the SIP revision.

(17) Comment: The commenter says that the provision in the SIP that requires offsets for emissions increases greater than 25 tons has never been adequately justified or considered and that it should be removed from the SIP.

Response: The commenter directed this comment to the State, but the State did not elect to modify this provision of the SIP. The continued presence of this offset provision in the SIP does not render the submitted SIP revision inadequate or form a basis for us to disapprove the SIP revision.

(18) Comment: The commenter indicates that for many companies regulated under the pre-existing Utah County PM 10 SIP, details such as hours of operation and specific emission limitations have been added to their Approval Orders solely for the purpose of having the Approval Orders be consistent with the SIP. Now that the revised SIP no longer contains such limitations for many sources, the commenter argues that the Approval Orders for those sources should be revised to eliminate such limitations as well.

Response: This comment does not pertain to the validity of the SIP revision itself. However, we do not believe it would be appropriate for the State to engage in wholesale changes to existing Approval Orders. The idea behind taking specific emissions limitations out of the SIP for some sources was to provide the type of flexibility the commenter is seeking—namely to make source changes without the need for a SIP revision. However, removal of these specific SIP provisions does not mean that such sources would be exempt from emissions limitations entirely, or that changes to their Approval Orders would be made without complying with the permitting requirements in the Utah SIP. Those permitting requirements, which EPA has approved and which are intended to meet the requirements of 40 CFR 51.160 through 51.166, are designed to ensure that permit changes are carefully evaluated for possible impacts on the relevant SIPs and on attainment and maintenance of the NAAQS. Neither the State nor sources can assume that removal of emissions limitations and other requirements from the Utah County SIP justifies their removal from Approval Orders.

(19) Comment: The commenter suggests that EPA Method 5 should be added as an alternative to Method 201a for compliance testing, at a source's option. According to the commenter, the Executive Secretary should have the discretion to change other details specified in Section 1.a.A without having to go through a full SIP revision, because this is a relatively minor aspect of the SIP.

Response: The commenter's concern is directed at the State. We note that the SIP permits the use of EPA Method 5 under certain circumstances, depending on the characteristics of the gas stream in the stack. Beyond that, it is not within our authority to change the SIP that has been submitted to us. The lack of source or Executive Secretary discretion to change the test method is not a basis for disapproval of the submitted SIP. The inclusion of the discretion requested by the commenter would be a basis for disapproval. We note that the State has committed to address some issues we have with compliance testing in a future SIP revision, but these issues do not relate to the commenter's comment.

(20) Comment: The commenter wonders whether incorporating the definitions of R307-101-2 into section 1.a.E of the SIP will limit DAQ's ability to modify its definitions without EPA approval of a SIP revision.

Response: The requirement for EPA approval of changes to an element of the SIP is not a flaw in the submitted SIP, and we are approving the SIP as submitted. Our approval means that State changes to the SIP revision, including incorporated definitions, will not be federally effective until we approve them. This is because the Clean Air Act and our regulations provide that no changes to an applicable implementation plan are effective unless and until they are approved by us as a SIP revision. See section 110(i) of the CAA and 40 CFR 51.105.

(21) Comment: The commenter indicates that the opacity measurement requirement of section 1.a.G of the SIP is more stringent than the federal Method 9 and that Method 9 opacity observations without modification should be used instead.

Response: This comment was addressed to the State. The State did not adopt the change the commenter suggested. The State's adoption of a standard that is more stringent than applicable federal requirements is not a basis for disapproval.

(22) Comment: The commenter states that section 1.a.H of the SIP should state that facilities with a required site-specific fugitive dust control plan are exempted from the requirements of this section.

Response: The State did not adopt the change the commenter suggested. We believe the provision is adequate as written and are approving this provision of the SIP.

In this action EPA is finalizing approval of the State of Utah's revision to the Utah State Implementation Plan (SIP) that was submitted by the Governor on July 3, 2002, revising the SIP for the Utah County nonattainment area for particulates of 10 microns in size or smaller (PM 10 ). The Governor's submittal contains rule R307-110-10 which incorporates revisions to portions of Utah's SIP Section IX, Part A and rule R307-110-17 which incorporates revisions to portions of Utah's SIP Section IX, Part H. The Governor's submittal, among other things, revises the existing attainment demonstration in the approved PM 10 SIP based on a short-term emissions inventory, establishes 24-hour emission limits for the major stationary sources in the Utah County PM 10 nonattainment area and establishes motor vehicle emission budgets based on EPA's most recent mobile source emissions model, Mobile6.

We note that Section IX, Part H of the SIP revision indicates that definitions contained in rule R307-101-2 apply to Section IX, Part H. Rule R307-101-2 is a recodification of rule R307-1-1. We have approved R307-1-1 into the SIP but not R307-101-2. For purposes of this action only, we have reviewed R307-101-2. We find that the definitions in R307-101-2 are generally the same as those contained in R307-1-1 and that they are acceptable as they apply to Section IX, Part H of the SIP revision. Therefore, we are listing under the additional materials section of this rulemaking (section C(54)(ii)(E) below) rule R307-101-2 as in effect at the time Utah adopted the revisions to Section IX, Part H of the SIP and are placing a copy of the rule in the docket for this action. We will evaluate rule R307-101-2 as it applies to the Utah SIP generally in a future rulemaking action.

This final action will become effective on January 22, 2003.

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

(b) Executive Order 13045

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

This rule is not subject to Executive Order 13045 because it is not economically significant and EPA does not have the discretion to engage in a risk assessment or alternatives analysis in acting on SIP revisions.

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

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

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.”

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

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

This final approval will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements, but simply approve requirements that the State is already imposing. Therefore, because the SIP final approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities. Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co. , v. U.S. EPA , 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2). Therefore, because the final rule does not create any new requirements, I certify that the final rule will not have a significant economic impact on a substantial number of small entities.

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

EPA has determined that this final approval action does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action approves pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

The Congressional Review Act, 5 U.S.C. section 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. section 804(2). This rule will be effective January 22, 2003.

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by February 21, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2) of the Clean Air Act.)

This is a synopsis of the Commission's Report and Order, MB Docket No. 02-273, adopted December 12, 2002, and released December 19, 2002. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

This is a synopsis of the Commission's Report and Order, MB Docket No. 02-271, adopted December 12, 2002, and released December 19, 2002. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

The use of channel 17 at Blanco, Texas, includes the following condition: Univision must agree to (1) accept interference from current and future 488-494 MHz land mobile facilities operating from base stations located within 50 miles of the Houston reference point and mobile units operating within 30 miles of their associated base stations; and (2) not radiate a signal in the Houston area where land mobile operation is permitted with a field strength greater than that permitted by a full-power TV station that meets the co-channel distance separation criteria (341.1 km). This is a synopsis of the Commission's Report and Order, MB Docket No. 02-280, adopted December 12, 2002, and released December 19, 2002. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC, 20554. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC, 20554, telephone (202) 863-2893, facsimile (202) 863-2898, or via-e-mail qualexint@aol.com.

This is a synopsis of the Commission's Report and Order, MB Docket No. 02-95, adopted December 6, 2002, and released December 13, 2002. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

This is a synopsis of the Commission's Report and Order, MB Docket No. 02-220, adopted December 6, 2002, and released December 13, 2002. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC, 20554, telephone (202) 863-2893, facsimile (202) 863-2898, or via e-mail qualexint@aol.com.

This is a summary of the Commission's First Report and Order in MM. Docket No. 99-325, adopted October 10, 2002, and released October 11, 2002. The complete text of this First Report and Order is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., Washington, DC, and may also be purchased from the Commission's copy contractor, Qualex International, (202) 863-2893, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. The complete text is also available on the Internet at http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-02-286A1.pdf.

The Commission initiated this proceeding in November 1999 to advance the development of digital audio broadcasting (DAB) in the terrestrial radio service. The Notice of Proposed Rulemaking (NPRM; 64 FR 61054, November 9, 1999) sought comment on alternatives for introducing DAB to the American public. The NPRM cited the promising preliminary results of several IBOC systems under development at the time. IBOC systems, designed to allow the simultaneous transmission of analog and digital signals within the existing AM and FM bands, had the potential to offer a seamless transition to digital technology without the need for allocation of additional spectrum. The NPRM noted, however, that IBOC technology was still unproven at the time. Therefore, the NPRM also sought comment on the use of other DAB technologies designed to operate in new spectrum.

IBOC developers made significant progress in the years following the NPRM. Two IBOC developers, Lucent Digital Radio, Inc. and USA Digital Radio, Inc., merged to form iBiquity Digital Corporation—the only remaining IBOC proponent. iBiquity has continued to develop its IBOC technology and to cooperate in an extensive independent testing program. In contrast, out-of-band DAB options do not appear viable in the near term. No new spectrum is available for an out-of-band technology, and comments in this proceeding show no broadcast industry proponent for an approach other than IBOC.

The NPRM solicited the assistance of the private sector in evaluating candidate DAB systems. The National Radio Systems Committee (NRSC) responded with a comprehensive DAB test program. The only DAB systems submitted to the NRSC for evaluation were the iBiquity AM and FM “hybrid” IBOC systems. The term “hybrid” describes an IBOC system designed to transmit both analog and digital signals within the spectral emission mask of a single AM or FM channel. After an exhaustive testing and evaluation process, the NRSC strongly endorsed iBiquity's AM and FM IBOC systems, with AM IBOC initially limited to daytime use subject to additional testing under nighttime propagation conditions.

The NRSC judged the audio quality of the iBiquity hybrid FM IBOC system as superior to that of analog FM. Furthermore, the NRSC reports that the hybrid digital signal is more robust than analog FM in the face of impairments such as multipath interference, co- and adjacent channel interference, and noise. Test reports cited a small increase in potential interference to the reception of first-adjacent analog signals, mainly outside normally protected FM coverage contours. The Commission agreed with the NRSC and the majority of commenters that the small increase in potential interference is an acceptable tradeoff in view of the benefits inherent in digital technology.

The NRSC's test program included an assessment of the effects of IBOC on FM subcarriers, secondary services normally used for GPS data, utility load management, foreign language programming, and radio reading services. The NRSC's report concluded that the most common digital subcarrier services, such as the Radio Broadcast Data System, would not be affected by IBOC. The NRSC recommended further testing of the effect of IBOC on analog subcarrier services such as reading for the blind. Additional tests showed that, in some circumstances, analog subcarrier receivers may receive significant new interference from IBOC operations on the second adjacent FM channel. The Commission acknowledges the importance of services such as reading for the blind, and directs broadcasters who implement IBOC to work closely with the providers of these services to resolve complaints of interference. The First Report and Order cautions broadcasters that interim IBOC authority may be rescinded if legitimate interference complaints cannot be resolved.

The iBiquity AM IBOC system offers a dramatic improvement in audio quality compared with analog AM, which is limited by its inherently poor fidelity and susceptibility to noise. This improvement comes at the cost of a bandwidth reduction for the analog portion of a hybrid IBOC AM signal, and of possible new interference from the digital AM IBOC system. The NRSC tests show that introduction of the digital IBOC signal will decrease the signal-to-noise performance of receivers tuned to the host analog signal. The change would not be objectionable to most listeners, according to subjective tests. The addition of the digital IBOC signal may cause interference to the reception of first-adjacent signals; in some cases, first-adjacent interference may occur within the AM station's protected contour. The potential for first-adjacent interference prompted some commenters to suggest reducing the power of the digital sidebands by 6 dB. Other commenters strongly opposed the digital power reduction, citing the necessity of maximizing digital coverage. The Commission declined to require a digital AM power reduction, opting instead to accept the NRSC's recommendation to implement the iBiqiuity AM IBOC system as tested. In situations where interference is more likely, AM broadcasters may choose to reduce digital carrier power. Furthermore, the Commission may order such a power reduction to resolve interference complaints when the parties cannot do so. The NRSC did not test the AM IBOC system under nighttime propagation conditions, which are vastly different than daytime conditions in the AM band. Consequently, the NRSC recommended and the Commission agreed that AM IBOC should be limited to daytime use pending further testing.

The NPRM listed the following ten criteria the Commission would use to evaluate a candidate digital audio broadcasting system: enhanced audio fidelity; robustness to interference and other signal impairments; compatibility with existing analog service; spectrum efficiency; flexibility; auxiliary capability; extensibility; accommodation for existing broadcasters; coverage; and affordability. The record in this proceeding demonstrates that the iBiquity IBOC systems, evaluated according to the foregoing criteria, offer the best way to advance the Commission's policy goals for digital transition. The iBiquity systems enjoy strong support from the broadcast industry, and are the only systems that could be implemented in the near future. Accordingly, the First Report and Order selects IBOC as the sole digital transmission technology for terrestrial broadcasters. The First Report and Order agrees with the majority of commenters that designation of a single IBOC standard would facilitate the efficient and orderly transition to digital radio. The Commission therefore solicits the assistance of the public in a formal standard-setting process, and notes that the NRSC has already formed an IBOC standards development working group.

To encourage rapid consumer acceptance of the new IBOC technology, the Commission permits AM and FM broadcasters to begin interim IBOC operations immediately using the iBiquity technology. Upon approval by the Office of Management and Budget, broadcasters who initiate IBOC operation shall notify the Commission by letter. The notification letter shall include certifications that the effective radiated power of the analog signal remains as authorized, and that the station remains in compliance with the Commission's rules governing human exposure to radiofrequency radiation.

The Regulatory Flexibility Act of 1980, as amended (RFA; see 5 U.S.C. 601-602), requires that a regulatory flexibility analysis be prepared for notice and comment rule making proceedings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” 5 U.S.C. 601(b). The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 601(6). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 5 U.S.C. 601(3). A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 15 U.S.C. 632.

As required by the RFA, an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the NPRM in MM Docket No. 99-325. The Commission sought written public comments on the proposals in the NPRM including comments on the IRFA. The Office of Advocacy, U.S. Small Business Administration filed comments asserting that the Commission, in the IRFA, failed to adequately consider the potential impact of digital transition on small business and did not discuss alternatives designed to minimize regulatory burdens on small entities. Specifically, SBA states that “[B]efore concluding that analog systems must sunset, the Commission should provide data on the cost of transition and should ensure that DAB will not burden small business.” SBA further states that the Commission should make the results of the IBOC tests public to determine viability and compatibility including any interference concerns. It suggests that “* * * a better course of action might be to permit stations to install digital systems but only if they do not cause interference to analog systems. In this scenario, digital and analog systems would operate concurrently.” According to SBA, the Commission “* * * should issue additional notices of proposed rulemaking as it gleans additional information regarding the feasibility and desirability of DAB transition.” Finally, SBA states that the Commission failed to discuss alternatives that would minimize the regulatory burden on small entities.

Although, in this First Report and Order the Commission takes two actions, neither of which will have a significant impact on small entities, our approach to digital implementation is consistent with that advocated by SBA. First, the Commission endorses IBOC technology for use by AM and FM digital audio broadcasting operations. Second, the Commission authorizes interim, voluntary digital broadcasting operations for both AM and FM licensees. Only those broadcasters wishing to take advantage of this opportunity to begin digital broadcasting need comply with any notification or technical requirements. Those broadcasters choosing not to initiate such digital operations will not be materially affected. The Commission will issue a Further NPRM proposing final rules for digital audio broadcasting and will consider the impact of any final rules on small entities in connection with that further proceeding. We therefore certify that the requirements of this First Report and Order will not have a significant economic impact on a substantial number of small entities.

In adopting this approach, we carefully analyzed the results of the IBOC tests and we conclude that any minimal interference that might be caused is outweighed by the benefits of digital service. Such benefits will accrue to small entities as well as large businesses should they choose to implement digital operation. In addition, we adopt procedures for these voluntary operations to assure that any interference complaints are resolved quickly. Under this plan, analog and digital systems will operate concurrently, a result advocated by SBA. With respect to the potential cost of implementation, preliminary estimates indicate that that IBOC costs are not unreasonable and that use of IBOC is inherently less costly than other systems. Again, we emphasize that the interim operations adopted here are strictly voluntary and thus no broadcaster will be compelled to incur any costs. Finally, as SBA suggests, we will issue a Further NPRM to solicit comment on any final digital transition rules.

The Commission will send a copy of the First Report and Order , including a copy of this Final Regulatory Flexibility Certification, in a report to Congress pursuant to the Congressional Review Act. 5 U.S.C. 801(a)(1)(A). In addition, the First Report and Order and this final certification will be sent to the Chief Counsel for Advocacy of the SBA. 5 U.S.C. 605(b).

This document is available in alternative formats (computer diskette, large print, audio record, and Braille). Persons with disabilities who need documents in these formats may contact Brian Millin at (202) 418-7426 (voice), (202) 418-7365 (TTY), or via e-mail at bmillin@fcc.gov.