Section 2 of the Federal Employees Health Care Protection Act of 1998 (Pub. L. 105-266), enacted a comprehensive set of administrative sanctions authorities for OPM to use in combating health care provider fraud within the FEHBP. These authorities fall into two broad categories—exclusion, comprising suspension and debarment from participation in FEHBP, and financial sanctions, comprising civil monetary penalties and financial assessments.

On December 12, 2001, OPM published proposed regulations at 66 FR 64160 to implement the exclusion-based authorities. The current issuance contains proposed regulations for the financial sanctions authorities. When issued as final rules, the two regulatory packages shall fully implement all of the administrative sanctions enacted by Pub. L. 105-266.

Administrative sanctions enable an agency to protect its financial and program interests against individuals or entities that have committed certain types of actionable violations specified by statute. In addition, health care provider sanctions also protect the health care interests of persons covered through the FEHBP. Both of these interests are specifically recognized by the proposed regulations as principal objectives of sanctions activities.

Exclusion-related sanctions recognize past misconduct and protect against future violations by removing the subject of the sanction from further participation in FEHBP. (In the context of the FEHBP sanctions statute, “participation” means receiving funds. Thus, an excluded provider may treat FEHBP covered persons, but may not be paid FEHBP funds for any items or services provided after the effective date of the exclusion.)

Financial sanctions have similar “look back” and “look forward” purposes. Pub. L. 105-266 established two categories of financial sanctions—assessments and civil monetary penalties. As stated in § 890.1060(b) of the proposed rule, assessments are intended to recognize all of the losses, costs, and damages OPM incurred as the result of a provider's wrongful conduct, although the amount assessed is not limited by the dollar value of those items. Civil monetary penalties are lump-sum amounts that, while computed by reference to improper claims, are intended principally to deter future violations.

Section 890.1060(e) states that financial sanctions may be imposed in addition to all other criminal, civil, and administrative remedies that any state or Federal agency may apply to the same conduct by a provider.

Pub. L. 105-266 sets forth three bases for imposing financial sanctions. All relate in some degree either to claims actually filed with FEHBP carriers or to conduct associated with claims, even if no claim was filed. In contrast to exclusion-based sanctions, where the underlying violations need not have affected FEHBP, financial sanctions may be imposed only for violations that directly involve FEHBP enrollees, carriers, or funds.

As outlined in § 890.1061 of the proposed rule, the bases for financial sanctions are (1) fraudulent or improper claims; (2) false or misleading statements in or about claims; and (3) failure to provide claims-related information that is required by law to be disclosed.

While some exclusion-based sanctions are mandatory (i.e., OPM must debar a provider who commits certain types of violations), imposition of any financial sanction is always permissive with the debarring official. Sections 890.1062(b) through (d) identify the factors that the debarring official must consider in deciding whether to impose financial sanctions in a given case. Most of these factors are identified specifically by Pub. L. 105-266. We have added § 890.1062(d) to reflect the particular importance OPM attaches to protecting FEHBP covered persons from untrustworthy providers.

Section 890.1063 reflects the statutory limits on amounts of financial sanctions. Assessments may not exceed twice the amount claimed for each item or service “involved” in the claims on which the assessment is based. Civil monetary penalties may not exceed $10,000 for each “involved” item or service. As the statute makes clear, penalties and assessments may be imposed concurrently for the same violations.

Federal courts have regularly upheld the use of financial sanctions authority in health care claims cases to produce a total of assessments and penalties that substantially exceeds the amount of Federal funds that had been paid improperly. Thus, the debarring official has authority to set sanctions amounts across very wide permissible limits, and decisions regarding the amounts may carry significant financial consequences for providers. Section 890.1064 is intended to provide the guidance necessary for the debarring official to exercise this authority in an equitable and consistent manner. Section 890.1064(b) sets the overall policy context for determining amounts of financial sanctions, including recovery of all damages, losses, and costs incurred by OPM as a result of sanctionable violations, and imposition of an additional penalty amount to deter future violations. Section 890.1064(c) emphasizes that “damages, losses, and costs” are to be given the broadest possible interpretation. Section 890.1064(d) summarizes the factors that the debarring official must consider in determining the amount of financial sanctions. These consist of (1) the factors identified in § 890.1062 as material to determining whether to impose financial sanctions; (2) the level of aggravation or mitigation reflected in the circumstances of the case; (3) the need to deter future misconduct; and (4) the provider's financial situation. This latter factor is not referred to in Pub. L. 105-266, but the concept appears in several other agencies' financial sanctions regulations, including the Department of Health and Human Services' Medicare provider sanctions authorities. Section 890.1064(e) addresses aggravating and mitigating factors as a series of benchmarks, describing the types of violations that would warrant assessments and penalties at the higher and lower ends of the statutory range.

The procedures for proposing and imposing financial sanctions generally mirror those used for permissive debarments. OPM initiates a financial sanction action by sending written notice of the proposed sanction. As is the case with exclusion-based sanctions, there is a 6-year limitation period for proposed financial sanctions. Section 890.1066 explains the limitation period and specifies the contents and methods of delivery of the notice. Section 890.1067 sets out the options available to providers upon receiving a notice of proposed sanctions. In brief, the provider may either formally contest the sanctions or seek to settle or compromise them through negotiation with the debarring official. As indicated in § 890.1068, if the subject of the proposed sanction takes no action during the 30-day notice period, OPM may immediately finalize the sanction, without further right of appeal or recourse by the provider.

Sections 890.1069 through 1071 address contests of proposed financial sanctions. They incorporate by reference most of the provisions of §§ 890.1022 through 1029, regarding contests of proposed permissive debarments.

As indicated by § 890.1069, the subject of the proposed sanction may contest it simply by submitting documents to the debarring official, or, at the provider's option, may also make a personal appearance, with or without counsel, to present testimony and oral arguments.

Section 890.1070(a) states that (as is the case in contests of proposed debarments), facts previously adjudicated in due process proceedings (e.g., criminal or civil proceedings, administrative hearings, or actions that constitute waiver of the right to a due process proceeding) are binding on the debarring official in deciding the contest.

Section 890.1070(b) sets “preponderance of the evidence” as the standard of proof for decisions on contests.

Section 890.1070(c) states that the amounts of penalties and assessments proposed in OPM's notice to the provider effectively establish a ceiling on the size of financial sanctions that may ultimately be imposed. The debarring official cannot increase the proposed amount under any circumstances, and has the discretion to impose a lower amount if evidence in the administrative record so warrants.

Section 890.1071 applies to contests of financial sanctions the same decisionmaking methodologies established for contests of proposed debarments in §§ 890.1026 through 1029. The debarring official shall decide the contest without a further proceeding if there are no disputed material facts. If material facts are in dispute, the debarring official must refer them to a hearing officer who has had no prior involvement in the case, to conduct a due process hearing. The hearing process under § 890.1071(c) tracks that used to resolve disputed material facts in contests of proposed debarments. The hearing officer reports the facts found to the debarring official, who must accept and apply these findings in reaching a final decision on the contest.

Section 890.1072 states the right of judicial appeal provided in the FEHBP sanctions statute. Any provider on whom a final decision of the debarring official imposes any financial sanction may appeal to the appropriate U.S. district court, unless the provider's ability to appeal has been foreclosed by their failure to administratively contest a proposed sanction in a timely manner.

Section 890.1073 outlines the methods OPM shall use to collect financial sanctions. These include a mutually agreed payment schedule and other administrative debt collection procedures, including offset against monies owed by other Federal agencies. If administrative efforts do not resolve the debt, 5 U.S.C. 8902a(i) authorizes the Department of Justice to file a civil lawsuit in the appropriate U.S. district court to enforce payment. As stated in 890.1073(e), the statute further specifies that monies collected in respect of financial sanctions are to be paid to the Employees Health Benefits Fund.

I certify that this proposed regulation will not have a significant economic impact on a substantial number of small entities, because the financial sanctions are limited to the portion of health care providers' activities involving transactions with the Federal Employees Health Benefits Program.

This rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

Accordingly, OPM proposes to amend part 890 of title 5, Code of Federal Regulations as follows:

Background

The noxious weed regulations were promulgated under the authority of the Federal Noxious Weed Act (FNWA) of 1974, as amended (7 U.S.C. 2801 et seq.), and are set out in 7 CFR part 360 (referred to below as the regulations). The Animal and Plant Health Inspection Service (APHIS) is authorized under the Plant Protection Act (the Act) to regulate the movement of noxious weeds into or through the United States or interstate in order to prevent the artificial spread of noxious weeds into noninfested areas of the United States (7 U.S.C. 7712). Under Executive Order 13112, Invasive Species (February 2, 1999), we are required, among other things, “to prevent the introduction of invasive species * * * and to minimize the economic, ecological, and human health impacts. * * *” The Executive Order defines “invasive species” as “an alien species whose introduction does or is likely to cause economic or environmental harm or harm to human health.”

We list noxious weeds in § 360.200 of the regulations. In this section, weeds are divided into three categories: Aquatic weeds, parasitic weeds, and terrestrial weeds. In order for a weed to be listed, it must meet the definition contained in the Plant Protection Act for “noxious weed.” The Plant Protection Act defines a “noxious weed” as

“* * * any plant or plant product that can directly or indirectly injure or cause damage to crops (including nursery stock or plant products), livestock, poultry or other interests of agriculture, irrigation, navigation, the natural resources of the United States, the public health, or the environment.”

Kikuyu grass (Pennisetum clandestinum) has been listed as a noxious weed since 1983. As stated in our regulations at 7 CFR 360.200, footnote 1, each scientific name in our lists of noxious weeds is intended to include all plants within the genus or species represented by the scientific name. In other words, if the scientific name of a species is listed as a noxious weed, all cultivars are included in the listing. Under our regulations, kikuyu grass, like any other listed noxious weed, is subject to certain restrictions in order to prevent its artificial spread into noninfested areas of the United States. Listed noxious weeds are eligible to be moved into and through the United States, or interstate, only under a permit granted by APHIS. Persons who move noxious weeds under permit must follow all conditions contained in the permit with regard to storage, shipment, cultivation, and propagation. Kikuyu grass is not permitted to be moved interstate other than to Arizona, California, and Hawaii. Those States have agreed to accept shipments of kikuyu grass. California has listed kikuyu grass (Pennisetum clandestinum) as a noxious weed; Arizona and Hawaii have not.

We have received a recent request to remove two cultivars of kikuyu grass—Whittet and AZ-1—from the list of Federal noxious weeds. Based on all information available to us, we believe Whittet and AZ-1 are the only existing cultivars of kikuyu grass that are being moved interstate to Arizona, California, and Hawaii. As explained above, all cultivars of kikuyu grass are included in the list of Federal noxious weeds under the listing for Pennisetum clandestinum (kikuyu grass). The requesting individual is not requesting that we remove wild kikuyu grass from the list of Federal noxious weeds, only that we remove the kikuyu grass cultivars Whittet and AZ-1. The requesting individual maintains that our assessment of these cultivars is erroneous and that Whittet and AZ-1 do not qualify for inclusion on the noxious weed list.

Within the past several years, two scientific panels have reviewed pertinent scientific information regarding the invasiveness of Whittet. One independent panel of scientists representing the disciplines of genetics, ecology, weed science, ecosystems management, and cultivar development and evaluation considered all information published on Whittet as of the end of 1998. The panel documented one source published in early 1999. The other review was conducted by the Agricultural Research Service of the United States Department of Agriculture (USDA). The USDA panel considered all available information regarding Whittet, including the independent panel's report and information presented personally by the individual who is now requesting that we delist kikuyu grass cultivars Whittet and AZ-1. Both panels concluded that there is not enough scientific evidence to support removing Whittet from the list of noxious weeds.

Based on the findings of these panels, we continue to include all varieties and cultivars of kikuyu grass on the list of Federal noxious weeds. Both panels' reports and a list of other sources of information regarding kikuyu grass are available for review on the Internet at http://comments.aphis.usda.gov.

If we remove Whittet and AZ-1 from the list of noxious weeds, that would potentially remove all noxious weed-related interstate and import restrictions that now apply to these cultivars of kikuyu grass. Any change to the noxious weed status of Whittet and AZ-1 would not, however, affect the possible regulation of Whittet and AZ-1 under other applicable regulations contained in 7 CFR, chapter III.

We are soliciting comments on the request we have received to remove Whittet and AZ-1, cultivars of kikuyu grass, from the list of noxious weeds in § 360.200. We welcome any comments regarding this request, including those documenting personal experiences with Whittet and AZ-1. However, we need research data in order to make a scientifically-sound decision regarding delisting Whittet and AZ-1 as noxious weeds. We believe we are aware of all research on kikuyu grass cultivars published prior to and during 1998; therefore, unpublished research conducted prior to or during 1998 and published or unpublished research conducted after that year would be especially helpful. In particular, we are soliciting information on the following issues:

1. At this time, we are aware of the existence of kikuyu grass cultivars Whittet and AZ-1. Are there any other cultivars of kikuyu grass that we need to consider for delisting? If so, please identify these cultivars.

2. What is the invasive potential in the United States of Whittet and AZ-1? What is the invasive potential in the United States of other cultivars of kikuyu grass that should be considered for delisting? Would Whittet and AZ-1, and other cultivars of kikuyu grass, be considered “invasive species” within the meaning of Executive Order 13112? Please explain and provide specific data supporting your conclusions.

3. Were any unpublished research or studies conducted on Whittet or AZ-1 during or prior to 1998? Has any research on Whittet or AZ-1 been conducted, published or unpublished, since 1998? If so, please identify the research or studies and provide results, especially data concerning invasiveness and potential noxious weediness.

4. If Whittet and AZ-1 have invasive potential in the United States, can they be controlled? If so, specify the conditions and control techniques and to which cultivar they should be applied. Include detailed supporting data.

5. Are there natural mechanisms that would tend to render control procedures ineffectual for Whittet and AZ-1 and that might contribute to the spread of these cultivars outside of agricultural settings?

We urge all commenters to include all relevant data supporting their positions.

Discussion of Program

The Farm Security and Rural Investment Act of 2002 (the 2002 Act) (Pub. L. 107-171, May 13, 2002) re-authorized and amended the Environmental Quality Incentives Program, which had been added to the Food Security Act of 1985 (the 1985 Act) (16 U.S.C. 3801 et seq.) by the Federal Agriculture Improvement and Reform Act of 1996 (the 1996 Act) (Pub. L. 104-127). The 2002 Act also amended the Environmental Conservation Acreage Reserve Program by changing the section name to the Comprehensive Conservation Enhancement Program and removing the authority for the Secretary of Agriculture to designate areas as conservation priority areas.

As provided by section 1241 of the 1985 Act (16 U.S.C. 3841), as amended by the 2002 Act, the funds, facilities, and authorities of the Commodity Credit Corporation (CCC) are available to NRCS for carrying out EQIP. (The Chief of the NRCS is a vice-president of the CCC.) Accordingly, where NRCS is mentioned in this rule, it also refers to the CCC's funds, facilities, and authorities where applicable.

Through EQIP, NRCS provides assistance to farmers and ranchers who face threats to soil, water, air, and related natural resources on their land. These include grazing lands, wetlands, private non-industrial forest land, and wildlife habitat. Participation in the program is voluntary. Under EQIP, NRCS will provide assistance in a manner that will promote agricultural production and environmental quality as compatible goals, optimize environmental benefits, and help farmers and ranchers meet Federal, State, and local environmental requirements. NRCS will offer the program throughout the Nation using the services of NRCS and technical service providers. NRCS will implement a consolidated and simplified process to reduce any administrative burdens that would otherwise be placed on producers.

In this rule, NRCS proposes to incorporate changes in the EQIP regulations, 7 CFR 1466, resulting from the passage of the 2002 Act. Several important changes were made in the 2002 Act that require changes to the regulation. These include:

(1) Changing the maximum payment limitation from $50,000 per person per contract to $450,000 per individual or entity for all contracts entered into in fiscal years 2002 through 2007;

(2) Revising the purpose from “maximize environmental benefits per dollar expended” to “optimize environmental benefits”;

(3) Eliminating the competitive bidding by applicants;

(4) Allowing payments to be made in the first year of the contract;

(5) Removing language authorizing targeting of funds to Conservation Priority Areas;

(6) Removing the provision prohibiting a producer from receiving cost-shares for an animal waste facility on an animal operation with more than 1,000 animal units;

(7) Allowing cost-share rates of up to 90 percent for limited resource farmers or ranchers and beginning farmers or ranchers;

(8) Reducing the minimum length of a contract from five years to one year after installation of the last practice;

(9) Increasing funding from $200 million per year to $400 million in FY 2002 and increasing to $1.3 billion per year in FY 2007; and,

(10) Imposing an average adjusted gross income (AGI) limitation.

In an effort to make the program more effective and efficient, the Department has initiated several streamlining changes, including:

(1) Eliminating the program's dual administration by changing Farm Service Agency (FSA) participation from concurrence to consultation;

(2) Reducing the planning requirements needed to develop the contract; and

(3) Allowing producers to have more than one contract per tract at any given time.

The fundamental philosophy of the program, assisting agricultural producers install conservation practices to provide environmental benefits, has not changed. The statutory and Departmental changes respond to limitations and restrictions identified by agency staff and participants. Agricultural producers who are interested in participating in the program will apply as they have in the past and should experience a quicker turn around on their application. Producers also have some expanded financial opportunities with higher contract limits and the ability to receive payments earlier in the contract period.

While the fundamental philosophy of the program has not changed, the revision to purpose of the program combined with removal of provisions related to Conservation Priority areas and the elimination of competitive bidding by applicants has required NRCS to propose an approach that will meet the new purpose of EQIP—the optimization of environmental benefits. NRCS is proposing to optimize environmental benefits through an approach that integrates consideration of National Priorities in four key program components: (1) The allocation of financial resources to States; (2) the allocation of financial resources within states; (3) the selection of conservation practices and the establishment of cost-share and incentive payment levels; and (4) the application ranking process.

With the advice of Federal agencies, NRCS will establish National Priorities that reflect our most pressing natural resource needs and emphasize off-site benefits to the environment. NRCS has identified the following National priorities:

• Reductions of nonpoint source pollutants; such as nutrients, sediment, or pesticides and excess salinity; in impaired watersheds consistent with Total Maximum Daily Loads (TMDL's) where available, as well as the reduction of groundwater contamination, and the conservation of ground and surface water resources;

• Reduction of emissions, such as particulate matter, NOX, volatile organic compounds, and ozone precursors and depleters that contribute to air quality impairment violations of National Ambient Air Quality Standards;

• Reduction in soil erosion and sedimentation from unacceptably high rates on highly erodible land; and

• Promotion of at-risk species habitat recovery.

In establishing a National priority of at-risk species habitat recovery, NRCS recognizes unique local situations have the potential to add to Federally listed and candidate species. NRCS supports activities that will reduce the need for additional regulation but will monitor implementation of this aspect of the program to assure that primary focus is listed and candidate species.

NRCS has also identified National measures that can help EQIP achieve its National priorities and statutory requirements more efficiently. These proposed measures include identifying and implementing conservation practices that:

• Increase overall environmental benefits, for example by addressing multiple resource concerns, ensuring more durable environmental benefits and limiting adverse ancillary impacts;

• Encourage innovation;

• Support the statutory mandate to apply nationally 60 percent of available financial assistance to livestock-related conservation practices;

• Employ appropriate tools to more comprehensively serve EQIP purposes, such as Comprehensive Nutrient Management Plans and Integrated Pest Management Plans.

In the NRCS allocation of financial resources to states, NRCS is proposing that the National priorities and measures be used as guidance in determining the amount of funds received by states. NRCS is also proposing to retain a portion of EQIP funding to reward states that demonstrate a higher level of performance and address National priorities. Within states, NRCS is proposing that State Conservationists consider National priorities and measures as they allocate funds and determine priority resource concerns within their state. Similarly, NRCS is proposing that the State Conservationist, or the Designated Conservations, develop an application ranking that reflects both priority resource concerns within states and the National priorities and measures. Further detail about the specific changes in each of these key components is included in the Summary of Provisions.

While this proposal explicitly recognizes National priorities and measures, NRCS will continue to rely on “locally led conservation” as an important cornerstone of EQIP. Using a locally led process ensures consideration of the wide variability between and within states regarding resource issues, solutions, and limitations. Resource issues and concerns change as a result of shifts in population, climatic, or consumer habits; and Federal, state and local laws. Likewise, technical solutions evolve with the advent of new technology and the availability of new data on the effectiveness of practices. As a result, EQIP implementation may vary across jurisdictional boundaries. For example, some states may use state-level based program delivery while others will use county or parish based or regional (multi-county) based delivery.

Efficient and effective implementation of EQIP will be accomplished by building upon the existing NRCS delivery system that uses a line and staff organizational structure to provide both technical 1 and policy guidance from the National level to the local District Conservationist level. This delivery system will empower the state and local levels to adapt National Priorities and measures to site-specific conditions. State and local NRCS Conservationists will continue to supplement the EQIP Manual by specifying which practices qualify for EQIP payments and establishing maximum cost share rates, incentive payment levels, and the application ranking processes.

The 2002 Act also added a provision to EQIP which specifically addresses ground and surface water conservation with dedicated funding. Section 1240I of the 1985 Act provides the Secretary authority to promote ground and surface water conservation by providing cost-share payments, incentive payments, and loans to producers to carry out eligible water conservation activities including improvement to irrigation systems; enhancement of irrigation efficiencies; conversion to the production of less water-intensive agricultural commodities or dryland farming; improvement of the storage of water through measures such as water banking and ground water recharge; or mitigation of the effects of drought. NRCS seeks comments regarding how to administer a loan program in accordance with this section.

The Secretary may provide EQIP assistance for ground and surface water conservation to a producer only if the assistance will facilitate a conservation measure that results in a net savings in ground water or surface water resources in the agricultural operation of the producer. NRCS seeks comments regarding what criteria NRCS should use to determine what should constitute an agricultural operation. Should NRCS consider all the land operated by the producer, the contiguous parcel that includes the field where the practices are being implemented, or just the field in which the practices are being implemented?

Section 1204I(c)(2) of the 2002 Act dedicates an additional $50 million for ground and surface water conservation activities in the Klamath Basin located on the Californian/Oregon border. Pursuant to the 2002 Act, NRCS intends to use EQIP to implement this provision in accordance with the statutory requirements for ground and surface water conservation, such as improved irrigation systems, enhanced irrigation efficiencies, and improved water storage, with a goal of an overall “net savings” for agricultural operations. However, due to the complexity of resource issues in the Klamath Basin, a reduction of water usage may not always be the only appropriate solution available. Improving the quality of Klamath Basin water resources makes more “usable” water available, thus resulting in a net savings related to agricultural uses. Water conservation activities in the basin can therefore include water quality improvements as well as a reduction in water usage by agricultural operations.

The two Klamath Basin State Conservationists will lead a basin planning effort to identify water conservation activities to address the basin's resource issues. This plan may require additional funding from sources other than the $50 million in EQIP funding identified for the basin. NRCS seeks comments regarding how the Klamath Basin water conservation provisions should be implemented.

NRCS recognizes that long-term environmental benefits can also be achieved utilizing innovative alternative approaches to provide incentives for a producer to implement conservation practices. One example is the use of trading mechanisms for water quality credits, under which a producer could sell credits derived from the implementation of conservation practices to other dischargers, who would use these credits for regulatory compliance. In order to assure net reductions in pollutant discharges, credits would need to be derived from conservation practices that go beyond any existing responsibilities of the producer. Pilot trading programs have already demonstrated substantial environmental progress at reduce cost.

NRCS would like to support the institutionalization of water quality credit trading. Accordingly, NRCS is considering the possibility of waiving any and all interests in credits the producers generate using EQIP funds. While producers would be normally be compensated for the costs incurred in generating credits through their sale in private markets, NRCS recognizes that in the absence of established markets, there is considerable uncertainty for producers, particularly if they wish to implement conservation practices before a buyer has been identified. For this reason, NRCS believes it may be appropriate to support development of trading program, for a limited time until functioning markets are established, by allowing producers to generate credits using EQIP funds that could potentially be sold in a trading market. At the same time, NRCS recognizes that there may be concern about allowing credits generated with taxpayer money to be sold for private gain. Any such waiver would likely have limitations; for example restricted to only those credits associated with the EQIP program and only for the duration of the 2002 Farm Bill, FY 2002 through FY2007. NRCS might also try such a waiver program on a pilot basis, to determine if it was effective in helping to establish self sustaining credit markets. NRCS seeks comments on adopting a limited waiver program, as well as on innovative mechanisms more generally that NRCS could consider to institutionalize alternatives for encouraging conservation implementation.

The rule is organized into three subparts: Subpart A—General Provisions; Subpart B—Contracts; and, Subpart C—General Administration. The basic structure of the rule has not changed. However, NRCS is proposing to eliminate, add, or change several sections in Subparts A and B to make the rule consistent with the requirements of the 2002 Act and Departmental streamlining, to explicitly incorporate National priorities and measures, and to increase the overall transparency of the program. We provide a summary of each section below for Subparts A and B and identify proposed changes. We do not provide a detailed summary of Subpart C. This subpart describes administrative aspects of EQIP including appeal rights and exceptions thereto, the responsibilities of the participant to obtaining necessary easements and complying with other laws and regulations and provide USDA representatives with access to land, and provisions for relief if a participant relies on advice or action of a NRCS representative. Only minor changes were made in this subpart to reflect the determination that NRCS will administer EQIP.

Section 1466.1 sets forth the purpose, scope, and objectives of EQIP. The use of EQIP for educational assistance is removed from this section to reflect section 1240(B) of the 1985 Act, as amended by the 2002 Act. Air has also been added to the list of natural resource concerns addressed by this program.

Section 1466.2 describes the roles of NRCS, FSA, other agencies, the State Technical Committees, and Local Work Groups. This section has been changed to reflect the Department's streamlining initiative. Specifically, with the delegation of EQIP to NRCS, § 1466.2(a)-(d) of the current rule, which described FSA's roles and responsibilities, has been eliminated. In § 1466.2(b), NRCS and FSA will consult at the national level on program and policy decisions and FSA may continue to have an advisory capacity in the administration of EQIP by participating on the State Technical Committees and Local Work Groups.

NRCS is clarifying the roles and responsibilities of State Technical Committees and Local Work Groups in § 1466.2 (c). While EQIP is administered by NRCS and all program decisions are made by NRCS, some decisions, such as determination of eligible practices and cost-shares rates and development of the ranking process, may be delegated to the State Conservationist. The State Conservationist will use advice of the State Technical Committee to make these decisions. The State Conservationist can, in turn, make a final decision or delegate the authority to a Designated Conservationist at the regional or local level. The Designated Conservationist will use advice from a Local Work Group to make decisions delegated to their level. Additional information regarding NRCS policy for State Technical Committees and Local Work Groups can be found at http://policy.nrcs.usda.gov/scripts/lpsiis.dll/M/M_440_501.htm.

Section 1466.3 sets forth definitions for terms used throughout the part. Several new definitions, including comprehensive nutrient management plan, limited resource farmer or rancher, beginning farmer or rancher, priority natural resource concerns, National priorities, National measures, Conservation Innovation Grants, EQIP plan of operations, and technical service providers are proposed to address statutory changes and administrative changes resulting from the Department's streamlining initiative. Other terms, such as agricultural operation, conservation district, and wildlife have been proposed to provide greater clarity. Because the administration of EQIP has been delegated to NRCS, definitions related to FSA, such as Administrator and Farm Service County Committee have been removed from this section. We are also proposing to eliminate definitions for Conservation Management System, Conservation Plan, Livestock related Natural Resource Concerns, National Conservation Priority Area, Priority Area, and Private Agribusiness Sector, Resource management system, unit of concern, and vegetative practice because these terms are no longer used in the proposed regulatory language.

A definition for the comprehensive nutrient management plan (CNMP) is included because it is specifically authorized by the 2002 Act. The definition is included to provide the technical base and is the same that NRCS uses in its Comprehensive Nutrient Management Planning Technical Guidance which is part of the NRCS National Planning Procedure Handbook.

Section 1240B of the 1985 Act, as amended by the 2002 Act, gives the Secretary the authority to increase the cost-share rate up to 90 percent for Limited Resource Farmers and Ranchers and beginning farmers or ranchers. NRCS proposes to use two criteria to define a limited resource producer or rancher. Specifically, a Limited Resource Producer or Rancher is a person with direct or indirect gross farm sales not more than $100,000 (to be increased starting in FY 2004 to adjust for inflation) and a total household income at or below the national poverty level for a family of four, or less than 50 percent of county median household income (to be determined annually), in each of the previous two years.

NRCS will use a definition for Beginning Farmer or Rancher that is consistent with the USDA definition of that term under section 343(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)) as found at 7 CFR 1941.4. NRCS is proposing to define a Beginning Farmer or Rancher as an individual or entity who has not operated a farm or ranch, or who has operated a farm or ranch for not more than 10 years and will materially and substantially participate in the operation of the farm or ranch. In the case of a contract with an individual, individually or with the immediate family, material and substantial participation requires that the individual provide substantial day-to-day labor and management of the farm or ranch, consistent with the practices in the county or State where the farm is located. In the case of a contract made with an entity, all members must materially and substantially participate in the operation of the farm or ranch. Material and substantial participation requires that the members provide some amount of the management, or labor and management necessary for day-to-day activities, such that if the members did not provide these inputs, operation of the farm or ranch would be seriously impaired. For an entity to be defined as a Beginning Farmer or Rancher, all members of the entity must qualify. This regulation interprets the maximum length of farming experience allowable for Beginning Farmer or Rancher to be 10 consecutive years.

In order to assure consistency of program implementation, new definitions have been included for National priorities, National measures and priority natural resource concerns.

A definition of Conservation Innovative Grants is defined in this section because it is specifically authorized by the 2002 Act. This definition is included to provide guidance as to what these grants will be used for.

The 2002 Act authorizes NRCS to use certified Technical Service Providers for providing technical assistance, a definition of who qualifies as a TSP is included. A definition of the EQIP plan of operations is included to clarify to producers what is required to be eligible for EQIP assistance. A discussion of the EQIP plan of operations is included in § 1466.9.

Section 1466.4 is a new section that lists and describes how National priorities will be used to implement EQIP. Regulatory language related to Program Requirements found in § 1466.4 of the current EQIP rule has been moved to § 1466.7 in this proposal.

NRCS has established National priorities and measures to guide the allocation of EQIP funds and assist in the prioritization of EQIP applications. The National priorities are listed in § 1466.4(a) and § 1466.4(b) describes how NRCS will use the National priorities to implement the program at the state and local level. The Chief intends to review these National priorities and measures annually, utilizing input from the public and affected stakeholders and Federal agencies, and make revision as required to address emerging resource issues. Information and updates about the National priorities and measures will be provided to the State Conservationists through revisions to the EQIP manual.

Section 1466.5 is a new section that describes program management including National funding allocation. In § 1466.5 of the current rule priority areas and significant statewide natural resource concerns have been deleted from the regulatory language of this proposal.

This section describes the first key component in “optimizing environmental benefits”, the allocation of EQIP funds from the Chief to the State Conservationists. It also includes provisions for program management such as an incentive awards holdback, progress monitoring, periodic evaluation of program delivery and public disclosure of program results.

NRCS is proposing that the Chief of NRCS, with advice of other Federal agencies and in consultation with FSA, will make National funding allocation decisions that reflect the most pressing national resource needs.

Specifically, NRCS will determine the allocation of EQIP funds to NRCS State Conservationists based on National priorities and measures. NRCS will also include other considerations in their allocation decision, such as:

• The significance of the environmental and natural resource concern and the opportunity for environmental enhancement;

• The conservation needs of farmers and ranchers in complying with the highly erodible land and wetland conservation provisions of 7 CFR part 12;

• The ways the program can best assist producers in complying with Federal, State, local, and Tribal environmental laws, quantified where possible;

• The amount of agricultural land in different land use categories, such as grazing land, specialty crops, and others; and

• Other relevant information to meet the purposes of the program.

NRCS will evaluate the existing allocation formula and will consider additional factors to address air quality concerns such as air quality non-attainment areas and acres of cropland with excessive wind erosion. When updating the national allocation formula, NRCS intends to solicit input from an interagency Task Force of Federal agencies, which have knowledge and expertise in the areas of soil, water, air, wildlife and other related natural resources. NRCS seeks comments regarding what process should be used and factors should be considered when evaluating the National funding allocation formula.

NRCS is also proposing to retain a portion of the initial EQIP funding each fiscal year to reward states that demonstrate a higher level of performance in the implementation of EQIP and in addressing the National priorities in the previous year. When allocating the incentive holdback funds to those states demonstrating higher levels of performance, the Chief of NRCS will analyze the management decisions of the State Conservationist and State EQIP implementation performance considering factors such as:

• The degree to which states strategically prioritize and address priority resource concerns, such as through statewide conservation plans, fund allocation, and application ranking;

• The use of contracts with long lived practices;

• The use of contracts with cost-effective practices;

• The use of contracts that benefit multiple resources;

• The efficiency and cost-effectiveness of program delivery;

• The degree to which program implementation addresses National priorities;

• The extent to which Technical Service Providers are engaged to help deliver the program;

• The degree to which Limited Resource Producers are participating; and

• The degree to which states encourage innovation and the leveraging of EQIP funds.

NRCS is formulating the incentive award process and anticipates that the financial bonus will be distributed to a limited number of states assuring that the concept of a bonus is maintained. NRCS is soliciting comments regarding what approaches NRCS can use to efficiently and effectively implement this award incentive.

NRCS will set aside a portion of the available EQIP funding for purposes of complying with the “regional equity” provision of section 1241(c) of the 1985 Act as amended by section 2701 of the 2002 Act. The “regional equity” provision requires the Secretary to give, before April 1, a priority for certain conservation program funding to applications in states that have not received an aggregate of $12 million from those programs.

In order to manage EQIP in a manner that continues to optimize environmental benefits, NRCS will undertake periodic reviews of the effects of program delivery at the state and local level. State Conservationists will prepare annual reports explaining how EQIP was implemented within the state and the accomplishments that were achieved and the Chief will assure that information regarding EQIP implementation will be made available to the public using technology such as the Internet on the NRCS World Wide Web site at http://www.nrcs.usda.gov/EQIP/. NRCS seeks comments on how best to evaluate the performance of the EQIP program. For example, how should environmental changes be measured, and what methodologies would best identify environmental effects due to contract activities? What kind of output measures and data collection strategies should NRCS consider? What approaches could NRCS use to evaluate cost-effectiveness?

Section 1466.6 is a new section that describes the responsibilities of State Conservationists in the allocation of funds and implementation of the EQIP program. Much of the language found in § 1466.6 of the current rule, Conservation plan, has been used in § 1466.9 of the proposed rule, EQIP Plan of Operations.

The allocation of funds within States is the second key component in “optimizing environmental benefits.” NRCS proposes that the State Conservationists will be responsible for identifying State priority natural resource concerns that incorporate National priorities and measures, for identifying which of the available conservation practices should be encouraged with recommended funding levels, for establishing local level EQIP performance goals and treatment objectives, and for monitoring program performance of the NRCS field offices to ensure that National priorities and measures are being achieved. As part of this process, the State Conservationist will consider the advice of the State Technical Committee and National guidance, in the form of notices and manuals, state priorities and state based resource inventories.

NRCS also proposes that the State Conservationist may delegate implementation of EQIP to Designated Conservationists. Designated Conservationists will use the advice of Local Work Groups to implement EQIP within their area. This delegation by the State Conservationist allows for greater management flexibility at the State level and, perhaps more importantly, explicitly provides for locally led conservation. The State Conservationist will also provide specific guidance to the offices reviewing and ranking applications regarding what factors should be considered in the ranking process. The State Conservationists will provide periodic reports to the public and the Chief regarding implementation of EQIP.

NRCS is also proposing to require that State Conservationists use the following in decisions related to the management of the program and the allocation of funds:

• The nature and extent of natural resource concerns at the state and local level;

• The availability of existing programs to assist with the activities related to the priority natural resource concerns;

• The existence of multi-county and/or multi-state collaborative efforts to address natural resource concerns;

• Ways and means to measure performance and success; and

• The degree of difficulty that producers face in complying with environmental laws.

As part of these considerations, NRCS expects that State Conservationists will quantify, when and where possible the goals, objectives, and solutions for natural resource concerns in order to optimize environmental benefits that would be delivered by Federal dollars. NRCS also expects that State Conservationists will use science-based background data, quantified when and where possible, on the environmental status and needs, soils information, demographic information, and other available technical data that illustrate the nature and extent of natural resource concerns.

Section 1466.7 is a new section that describes how NRCS will establish special program outreach activities at the National, State, and local levels in order to ensure that producers whose land has environmental problems know that they are eligible to apply for program assistance. NRCS will target its outreach efforts to limited resource farmers, Tribes, beginning farmers and ranchers, and others with historically low participation rates in the programs of NRCS, NRCS, and other USDA agencies. NRCS is exploring new possibilities to increase its outreach to these communities and Tribes.

Section 1466.7 of the current EQIP rule, Conservation Practices, has been moved to Section 1466.10 of the proposed rule.

Section 1466.8 sets forth program requirements such as land and applicant eligibility and the amount of EQIP financial assistance to be used for livestock practices. With the following exceptions, NRCS is retaining the language of Section 1466.4 in the current EQIP rule:

• Section 1466.4(b) of the current rule has been removed. Much of this language appears in proposed Section 1466.5;

• Section 1466.4(d)(iii) has been eliminated;

• Proposed Section 1466.8(b)(3) adds submission of an acceptable EQIP plan of operations as an eligibility requirement; and

• Proposed Section 1466.8(d) increases the amount directed to be used for livestock practices from 50 to 60 percent, pursuant to section 1240B(g) of the 1985 Act, as amended by the 2002 Act.

Section 1466.9 describes the requirements of the EQIP plan of operations which is the basis of EQIP contracts. Producers will be required to develop and apply an EQIP plan that addresses identified priority natural resource concerns. The producer develops the plan of operations with the assistance of NRCS or other public or private technical service providers. With the following notable exceptions, NRCS is retaining the language of Section 1466.6 in the current EQIP rule:

• Section 1466.6(a) in the current rule has been deleted. It contained requirements for maximizing environmental benefits per dollar.

• Section 1466.6(b) and (c) have been removed from this section. Proposed Section 1466.11 addresses technical assistance.

• Section 1466.6(e)(1), (2), have been deleted. This information is contained in the producer's conservation plan and would be a duplication of effort.

• Section 1466.6(f) has been deleted. The single plan that was referenced is available to producers through the NRCS Conservation Operations program and is not required as a part of an EQIP contract.

• Proposed Section 1466.9(c) requires that an EQIP plan of operations include an animal waste storage or treatment facility to include a comprehensive management nutrient plan. Section 1240E(a)(3) of the 1985 Act, as amended by the 2002 Act, requires, in the case of a confined livestock feeding operation for the producer to submit an EQIP plan of operations that provides for the development and implementation of a comprehensive nutrient management plan.

• Proposed Section 1466.9(e) allows participant to receive assistance to implement an EQIP plan of operations for water conservation with funds authorizes by section 1240I of the 1985 Act only if the assistance will facilitate a net savings in ground or surface water resources in the agricultural operation of the producer.

Section 1466.10 describes how eligible practices will be determined by NRCS. NRCS State Conservationists will determine which conservation practices will be eligible and the maximum payment levels in the State. The State Conservationist may also request that the Designated Conservationist determine which conservation practices will be eligible in localities within the limits established by the State Conservationist.

The proposed language in Section 1466.10 does not include any of the language related to confined livestock operations found in Section 1466.7(b) of the current EQIP rule. The 2002 Act removed the restriction that a producer who owns or operates a large confined livestock operation cannot be eligible for cost-share payments through EQIP to construct an animal waste management facility. Financial assistance is available to all livestock producers regardless of size.

NRCS is also proposing to add paragraph (f) to Section 1466.10. It would permit NRCS to approve interim conservation practice standards and financial assistance for pilot testing new technologies or innovations. NRCS will involve other entities, including extension and research agencies and institutions, conservation districts, universities, private industry, and others, in pilot testing to evaluate and assess the practices. This portion of the regulation remains unchanged.

Section 1466.11 is a new section that addresses the sources of technical assistance to carry out EQIP. NRCS will provide technical assistance and will encourage producers to use the services of certified personnel of cooperating Federal, State, or local agencies, or private entities who can provide technical assistance. As determined by the State Conservationist, NRCS may contract with private enterprises or enter cooperative agreements with other Federal, State, or local entities for services related to EQIP implementation. NRCS retains the responsibility for ensuring that technical program standards are met. This section of the regulation remains unchanged, as proposed, but may be modified in the final rule to conform with the final rule for Technical Service Provider Assistance, 7 CFR 652 (see 72 FR 70119, Nov. 21, 2002).

Section 1466.20 addresses applications for contracts and selection of offers from producers. The revisions to this section are pursuant to both statutory changes regarding section 1240C, which provides that contract selection will give higher priorities to applications that encourage cost-effective conservation and address National priorities, and USDA's streamlining initiative. The evaluation of applications using a ranking process is the fourth contributing factor to “optimizing environmental benefits”.

NRCS will accept applications for EQIP throughout the year, but will rank the applications and select the participants periodically as determined at the local and/or State level. NRCS will announce, in advance, the date on which NRCS will begin evaluating and ranking applications.

Before evaluating individual applications, the State Conservationist or designee, with advice from the State Technical Committee, and Local Work Groups, will develop ranking criteria to prioritize producer applications. The ranking process will evaluate applications according to the magnitude of the environmental benefits resulting from the treatment of the priority natural resource concerns. The ranking will determine which applications will be awarded contracts. The ranking process will be designed to award higher scores for offers from producers that address National and State priorities in conjunction with local resource concerns. The ranking process will score the producer's offer of conservation practices according to the following criteria as well as other locally defined pertinent factors:

• Use of cost-effective conservation practices;

• Treatment of Multiple Resource Concerns;

• Use of conservation practices that provide environmental enhancements for a longer periods of time; and

• Compliance with Federal, state, or local regulatory requirements concerning soil, water, and air quality; wildlife habitat; and ground and surface water conservation.

NRCS proposes that state and local lists of eligible practices, cost-share rates and incentive payment levels, and the ranking process will be posted on the NRCS EQIP website before final ranking of applications. NRCS will also make the appropriate ranking process or processes available at each local NRCS office.

NRCS is proposing to delete the ranking and selection criteria currently in § 1466.20(f)(1) and (g). The first criterion refers to consideration of the environmental benefits per dollar. As this purpose has been eliminated from the authorizing statute, this criterion is no longer necessary. Consistent with 2002 Act, NRCS is proposing that cost considerations alone will not be the only factor when comparing two applications that are expected to provide similar environmental benefits.

NRCS will give additional consideration to contracts that will help the producers comply and exceed requirements of environmental laws, such as EPA's Concentrated Animal Feeding Operations (CAFO) regulatory requirements, the Clean Water Act and Endangered Species Act.

In development of the ranking process, NRCS will recognize that EQIP can play an important role in assisting producers with conservation, restoration, and enhancement of fish and wildlife habitat on working lands. By identifying sound habitat practices targeted at priority species that are at risk from long term declines, EQIP can help producers aid those species while avoiding complications arising out of listings. Many at risk species are benefited by existing soil and water conservation practices. With minor additional effort they can be aided by additional practices that will benefit all resources simultaneously in a manner compatible with working operations. NRCS, state technical committees and local working groups will continue to collaborate with United States Fish and Wildlife Service, National Marine Fisheries Service, and state fish and wildlife agencies to capitalize on opportunities to proactively address at risk fish and wildlife species in conjunction with other resource concerns.

NRCS is also proposing that the approving authority for EQIP contracts will be the State Conservationist or designee except that:

(1) The approving authority for any contract that contains a structural practice with a cost-share rate exceeding 50 percent is the State Conservationist, and

(2) The approving authority of all contracts with payments greater than $100,000 is the NRCS Regional Conservationist.

Section 1466.21 addresses the requirements for EQIP contracts. Only land that meets the purpose and goals of the program and is to be treated under EQIP will be included in the contract. NRCS is including the following changes to the current EQIP language:

• In Section 1466.21(a) that both cost share payments and incentive payments may be included in the EQIP contract.

• Pursuant to section 1240B(b)(2) of the 1985 Act, as amended by the 2002 Act, Section 1466.21(b) the minimum contract length is revised from five years to one year after installation of the last practice. This part was also revised to allow more than one contract on a tract as a result of the Department's streamlining efforts.

• In Section 1466.21(b) NRCS proposes in paragraph (3)(iv) to require the implementation of a comprehensive nutrient management plan when the EQIP contract includes a waste storage or waste treatment facility.

Section 1466.22 addresses the participant's responsibility for conservation practice operation and maintenance. This part remains unchanged.

Section 1466.23 addresses cost-share rates, incentive payment levels, grants, and payment eligibility and limitations. In conjunction with Section 1466.10, this is the third key component in “optimizing environmental benefits.”

Subject to the National direct funding caps, State Conservationists with advice of Local Work Groups and the State Technical Committee can set cost-share rates and incentive payment limits as determined appropriate to encourage a producer to perform the land management practice that would not otherwise be initiated without such assistance.

The number and type of eligible practices and the cost-share rates and incentive payment levels determined by the State Conservationist or designee influence the extent to which the program will optimize environmental benefits and what resource concerns will be addressed. The State Conservationist or designee, with advice from State Technical Committees and Local Work Groups will determine which conservation practices are eligible for EQIP funding in each state. The State Conservationist or designee will consider the level of environmental benefits of the eligible conservation practices and will use that information to determine cost-share rates and incentive payment levels. In general, cost share rates will be determined for structural practices, while incentive payments will be determined for land management practices. No incentive payments will be made available for land management practices that are currently generally accepted and practiced in the agricultural community. The State Conservationist or designee will set cost share rates and incentive payments that reflect:

(1) The cost effectiveness of conservation practices;

(2) The number of resource concerns a practice will address (e.g. a waste treatment facility that reduces ammonia emissions benefiting both air and water quality should have a higher cost-share rate than a waste storage lagoon.);

(3) The degree of treatment of priority natural resource concerns;

(4) The longevity of the beneficial environmental effect derived from the practice; and

(5) The energy savings demonstrated by the practice.

NRCS intends to fund most structural practices at no more than 50 percent cost-share. NRCS will make payments to the producer when NRCS determines that the conservation practices specified in the contract are satisfactorily established. NRCS intends to monitor and evaluate the program to ensure that financial assistance is used in an appropriate manner to optimize the environmental benefits.

The EQIP contract specifies the cost-share or incentive payments the producer will receive from NRCS in return for applying the needed conservation practices and land-use adjustments according to a specified schedule. NRCS, with the advice of the State Technical Committee and/or Local Work Group and subject to funding caps, will determine the appropriate cost-share rates for structural practices and incentive payments for land management practices. In determining the amount and rate of incentive payments the State Conservationist should accord a greater significance to practices that address priority natural resource concerns.

NRCS, with the advice of the State Technical Committee or Local Work Groups, will also determine the appropriate incentive payments for development of a comprehensive nutrient management plan (CNMP). NRCS seeks comments regarding how incentive payments to develop a CNMP should be implemented.

The National direct funding cap for structural practices is 75 percent of the actual cost or 90 percent for limited resource producer and beginning farmer (Section 1240B(d)(2) of the 1985 Act as amended by the 2002 Act).

Section 1466.24 is concerned with payment eligibility and payment limitations. Pursuant to section 1240G of the 1985 Act, as amended by the 2002 Act, this part is revised to increase the contract total from $50,000 per person to a total of $450,000 maximum per individual or entity for all FY 2002-FY 2007 contracts and deletes the $10,000 per year limitation. It is also revised pursuant to section 1001D of the 1985 Act, as amended by Section 1604 of the 2002 Act, to limit payment eligibility for participants who have an average adjusted gross income of more than $2.5 million for the previous three years as determined under 7 CFR part 1400, subpart G.

For the definition of “individual” and “entity”, NRCS proposes to continue to use the provisions in 7 CFR Part 1400 related to the definition of “person” and the limitation of payments will be used, except that:

(a) States, political subdivisions, and entities thereof will not be persons eligible for financial assistance.

(b) Payments in excess of the limitation may be made to a Tribal venture if an official of the Bureau of Indian Affairs or a Tribal official certifies that no one Tribal member will receive, directly or indirectly, more than the limitation. Annually, the certifying official must provide to NRCS a list of members, by Social Security Number, and the benefit each member has received.

Further, the following provisions in 7 CFR 1400 will not be used because they are not consistent with the intent and language of the EQIP statute: Subpart C for determining whether persons are actively engaged in farming, Subpart E for limiting payments to certain cash rent tenants, and Subpart F for determining whether foreign persons are eligible for payment.

Section 1240G of the 1985 Act, as amended by the 2002 Act, establishes a $450,000 EQIP payment limit to any individual or entity for all FY2002 through FY2007 contracts they enter either as an individual or as a beneficiary of an entity. In order to ensure that no individual will receive more than the $450,000, NRCS will track all EQIP funds paid to any and all individuals by the social security number. In order to be eligible to participate in EQIP, the application of an individual, entity (e.g., corporation, limited liability partnership, irrevocable trust, or any other organization listed as an entity in FSA's rule 7 CFR 1400), or any other application in which there is more than one individual listed as a beneficiary must provide a list of all members or beneficiaries, their social security numbers and the percentage interest of each member or beneficiary.

Section 1001D of the 1985 Act, as amended by section 1604 of the 2002 Act, provides that an individual or entity shall not be eligible to receive payments from several programs, including EQIP, during a crop year if the average adjusted gross income of the individual or entity exceeds $2,500,000, unless not less than 75 percent of the average adjusted gross income of the individual or entity is derived from farming, ranching, or forestry operations. This provision of the 1985 Act will be implemented in accordance with 7 CFR 1400, Subpart G—average adjusted gross income limitation. However, since NRCS will be making a commitment for payments under an EQIP contract for a period of time into the future, NRCS will make a one-time eligibility determination in accordance with Subpart G, 7 CFR 1400 at the time of contract approval.

Section 1466.25 addresses contract modifications and transfers of land. This section is revised to remove a requirement that Conservation District will approve modifications to both the EQIP plan of operations and EQIP contract to assure there will be no conflict of interest where the Conservation District is also a Technical Service Provider.

Section 1466.26 addresses the procedures to be followed for contract violations and terminations. Changes reflect the determination that NRCS will administer EQIP.

Section 1466.27 is reserved for future regulations that address implementation of Conservation Innovation Grants.

Section 1240H of the 1985 Act, as added by the 2002 Act, gives the Secretary the authority to use EQIP funds to pay up to 50 percent of the cost of competitive grants that are intended to stimulate innovative approaches to leveraging Federal investment in environmental enhancement and protection, in conjunction with agricultural production. USDA will issue a future public notice to solicit comments on how the Conservation Innovation Grants provision should be implemented.

Pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993), it has been determined that this proposed rule is an economically significant regulatory action because it may result in an annual effect on the economy of $100 million or more. The administrative record is available for public inspection in Room 5241 South Building, USDA, 14th and Independence Avenue SW., Washington, DC. Pursuant to Executive Order 12866, NRCS conducted an economic analysis of the potential impacts associated with this program, and included the analysis as part of a Regulatory Impact Analysis document prepared for this rule. A summary of the Economic Analysis can be found at the end of this preamble and a copy of the analysis is available upon request from Mark W. Berkland, Conservation Operations Division, Natural Resources Conservation Service, Room 5241, Washington, DC 20250-2890 or electronically at http://www.nrcs.usda.gov/programs/eqip/index.html under “Additional Information”.

The Regulatory Flexibility Act is not applicable to this rule because NRCS is not required by 5 U.S.C. 533 or any other provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.

A draft Environmental Assessment (EA) has been prepared to assist in determining whether this proposed rule, if implemented, would have a significant impact on the quality of the human environment. Based on the results of the draft EA, NRCS proposes issuing a finding of no significant impact (FONSI) before a final rule is published. Copies of the draft EA and draft FONSI may be obtained from Mark W. Berkland, Conservation Operations Division, Conservation Operations Division, Natural Resources Conservation Service, Room 5241-S, Washington, DC 20250-2890 and electronically at http://www.nrcs.usda.gov/programs/ eqip/index.html under “Additional Information”. Mail comments on the draft EA and draft FONSI by March 12, 2003, to Mark W. Berkland, Conservation Operations Division, Natural Resources Conservation Service, Room 5241, Washington, DC 20250-2890, or submit them via the Internet to farmbillrules@usda.gov.

NRCS has determined through a Civil Rights Impact Analysis that the issuance of this proposed rule will not have a significant effect on minorities, women and persons with disabilities. Copies of the Civil Rights Impact Analysis and Finding of No Significant Impact may be obtained from Mark W. Berkland, Conservation Operations Division, Natural Resources Conservation Service, PO Box 2890, Washington, DC 20013-2890, and electronically at http://www.nrcs.usda.gov/programs/ eqip/index.html under “Additional Information'.

Section 2702(b)(1)(A) of the 2002 Act provides that the promulgation of regulations and the administration of Title II of the Act shall be made without regard to chapter 35 of Title 44 of the United State Code, the Paperwork Reduction Act. Accordingly, these regulations and the forms, and other information collection activities needed to administer the program authorized by these regulations, are not subject to provisions of the Paperwork Reduction Act, including review by the Office of Management and Budget.

NRCS is committed to compliance with the Government Paperwork Elimination Act (GPEA) and with the Freedom to E-File Act, which require Government agencies in general and NRCS in particular to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The forms and other information collection activities required for participation in the program proposed under this rule are not yet fully developed for the public to conduct business with NRCS electronically. However, the application form will be available electronically through the USDA eForms Web site at http://www.sc.egov.usda.gov for downloading. Applications may be submitted at the local USDA service centers, by mail or by FAX. Currently, electronic submission is not available because signatures from multiple producers with shares in agricultural operations are required.

This proposed rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. The provisions of this proposed rule are not retroactive. The provisions of this proposed rule preempt State and local laws to the extent such laws are inconsistent with this proposed rule. Before an action may be brought in a Federal court of competent jurisdiction, the administrative appeal rights afforded persons at 7 CFR parts 614, 780, and 11 must be exhausted.

Pursuant to section 304 of the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354), USDA classified this proposed rule as major and NRCS conducted a risk analysis. The risk analysis establishes that the EQIP proposed rule will produce benefits and reduce risks to human health, human safety, and the environment in a cost-effective manner. A copy of the risk analysis is available upon request from Mark W. Berkland, Conservation Operations Division, Natural Resources Conservation Service, PO Box 2890, Washington, DC 20013-2890, and electronically at http://www.nrcs.usda.gov/programs/eqip/index.html under “Additional Information'.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), NRCS assessed the effects of this rulemaking action on State, local, and Tribal government, and the public. This action does not compel the expenditure of $100 million or more by any State, local, or Tribal governments, or anyone in the private sector; therefore, a statement under section 202 of the Unfunded Mandates Reform Act of 1995 is not required.

Pursuant to Executive Order 12866, Regulatory Planning and Review, the Natural Resources Conservation Service has conducted a benefit cost analysis of the Environmental Quality Incentives Program as formulated for the proposed rule. The Department of Agriculture Reorganization Act of 1994 and the Unfunded Mandates Reform Act of 1995 also require analysis of costs, benefits and risks associated with major regulation. These requirements provide decision makers with the opportunity to develop and implement a program that is beneficial, cost effective and that minimize negative impacts to health, human safety and the environment.

The analysis estimates EQIP will have a beneficial impact on the adoption of conservation practices and, when installed or applied to technical standards, will increase net farm income. In addition, benefits would accrue to society for long-term productivity maintenance of the resource base, reductions in non-point source pollution damage, and wildlife enhancements. As a voluntary program, EQIP will not impose any obligation or burden upon agricultural producers that choose not to participate. The program was authorized at $6.16 billion over the six-year period of FY 2002 through FY 2007, with annual amounts for the base program and the ground and surface water conservation provisions increasing to $1.36 billion in FY 2007 after the initial authorization in FY 2002 year of $425 million. In addition, the 2002 Act authorizes a total of $50 million for the Klamath Basin in California and Oregon.

Prior to the promulgation of the Environmental Protection Agency's “National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitation Guidelines and Standards for Concentrated Animal Feeding Operations” (EPA CAFO) final rule which was published on December 15, 2002, NRCS estimated that 63 million acres of agricultural land will be treated over the six years of the program, including 44 million acres of cropland, 10 million acres of grazing land (pasture and rangeland), and 9 million acres for wildlife. The total evaluated on and off-site environmental benefits were projected to be $6.8 billion including $3.6 billion from animal waste treatment and $3.2 billion from land treatment. Some of the off-site environmental benefits are attributable to improvements made to enhance freshwater and marine water quality and fish habitat, improved aquatic recreation opportunities, reduced sedimentation of reservoirs, streams, and drainage channels, and reduced flood damages. Additional benefits are from reduced pollution of surface and ground water from agrochemical, improvements in air quality by reducing wind erosion, and enhancements to wildlife habitat.

This analysis was conducted prior to the promulgation of the EPA CAFO final rule. The CAFO rule was published on December 15, 2002 and it underwent changes up to the time of promulgation. As a result, this analysis could not accurately separate the benefits and costs associated with the CAFO rule and those associated with the EQIP proposed rule. There is still some flexibility in the EPA CAFO rule relative to which facilities will be required to have an National Pollutant Discharge Elimination System (NPDES) permit. However, it is known that the CAFO rule will apply to all facilities with more than 1,000 animal units (AUs). Since the CAFO rule claims the environmental benefits for controlling pollution on these facilities, the EQIP rule cannot make the same claim. EQIP will be a primary vehicle for funding compliance with the CAFO rule transferring some of the funding obligations from producers to EQIP so the costs associated with implementing the required pollution control measures apply to EQIP.

This analysis will be revised to take into account comments received during the Proposed Rule comment period. During this revision, a full review of the overlap of the costs and benefits associated with the CAFO and EQIP rules will be undertaken. Meanwhile, it is estimated that approximately $1.7 billion in annual benefits that were identified in the EQIP economic analysis can be attributed to the EPA CAFO regulation. Consequently, total EQIP benefits are $5.1 billion and net benefits relative to EQIP funds are $620 million and net benefits relative to total costs of −$1.5 billion.

In developing the benefit cost analysis for EQIP, it was necessary to identify a baseline for comparison. Since EQIP was created in 1996, the regulation and policy guidance for implementing that version was considered a baseline. In addition, changes to EQIP as outlined in the 2002 Farm Bill have been implemented via a Notice of Fund Availability (NOFA) issued in fiscal year 2002. This version of the program was also used as a basis for comparison, hence a two-tiered approach to the cost-benefit analysis. In order to estimate potential program impacts, several alternatives or variations of EQIP as outlined in the NOFA have been evaluated. Costs and benefits have been quantified where possible. Costs and benefits that could not be adequately or accurately quantified are discussed qualitatively.

Public costs quantified in this analysis are the total technical and financial assistance outlined in Congressional Budget Office scoring of the 2002 Farm Bill. Private costs are out of pocket costs paid by producers based on average cost share rates of EQIP. The quantifiable benefits are a subset of the environmental benefits that accrue to the types of practices implemented with EQIP. Available data and literature were found which support benefit in the following categories:

• Reduction in sheet and rill reduction as predicted by the Universal Soil Loss Equation (USLE).

• Improved forage production on grazing lands.

• Reduced wind erosion resulting in both improved air quality and reduced soil loss.

• Increased irrigation water use efficiency.

• Benefits of wildlife viewing and hunting resulting from improved wildlife habitat management.

• Reduced fertilizer expense resulting from nutrient management practices not associated with animal waste.

• Animal waste benefits.

• Savings resulting from decreased fertilizer purchases.

• Increased recreational activity resulting from improved water quality.

• Improved commercial shell fishing.

• Reduced incidence of fish kills.

• Reduced contamination of private wells.

In order to conduct the analysis, it was necessary to make certain assumptions based on the available data.

• Practice mix for the old and new EQIP is the same.

• Quantifiable benefits and per unit benefits are constant, and all benefits are based on national averages.

• Technical assistance costs are based on the full workload and costs associated with implementing the EQIP program, and are based on a projected average contract size.

• Average annual and net present value calculations use an OMB-recommended discount factor of 7 percent.

The baseline for comparison is the historical EQIP as established in the 1996 Federal Agricultural Improvement and Reform Act. The baseline reflects historical funding levels projected forward along with existing policy. Alternative one consists of EQIP as defined in the 2002 NOFA. The NOFA alternative reflects increased funding levels, no buy-down provision,2 the elimination of priority areas, and maximum payment limitation of $450,000, with a payment cap of 50 percent cost-share for any practices with an actual cost exceeding $100,000, and the inclusion of large confined animal feeding operations (CAFOs). These are the most significant changes in the program legislation in terms of economic costs and benefits.

For the second tier of the cost-benefit analysis, the baseline (EQIP 2002 Farm Bill as outlined in the NOFA) is compared to three alternatives. Comparison of these alternatives represents sensitivity analyses of potential policy impacts of EQIP implementation. Following is a brief description.

The first alternative is an analysis of various methods of allocating funds to animal feeding operations (AFO) and confined animal feeding operations (CAFO) based on the size of the operation. The specific scenarios evaluated were allocating funds equally to each size class, allocating funds according to the necessary treatment costs, allocating funds based on the total number of animal units, allocating funds based on the number of operations, and allocating funds only to middle or smaller size operations.

Although legislation allows a maximum payment of $450,000 per participant, the analysis considered potential benefits if different payment limitations were allowed based on local market, cultural or economic conditions. Alternative two analyzes the effects of payment limitations ranging from $50,000, up to the legislated maximum of $450,000.

The third alternative analyzes the effects of different fund allocation methods which target natural resource issues and concerns. The methods are:

• Homogenous evaluation process (NOFA)—A standardized allocation formula is applied to every application in every location.

• Spatial evaluation process—More points are given based on proximity to an identified natural resource (i.e. an impaired stream, underground aquifer, etc.), but no participants are excluded.

• Allocation and evaluation by natural resource concern—More points are given based on an identified natural resource concern, ie. water quality, soil erosion, or wildlife habitat development.

• Variable cost share rates—Rates vary by practice based on effectiveness or other criteria.

• Allocation formula—Established criteria are evaluated based on a weighted formula.

• Holdback option—Funds are set aside to be allocated at a later point to locations that achieved higher levels of program efficiency based on measures which have yet to be determined.

The EQIP Benefit Cost Analysis compares the EQIP program created in 1996 (“old program”) with those changes associated with the 2002 program implemented through the NOFA. Additionally, several alternatives associated with the proposed rule were then compared with the NOFA.

Based upon this analysis, if EQIP is implemented as described in the NOFA, it is estimated that 63 million acres of agricultural land will be treated, categorized by 44 million acres of cropland, 10 million acres of grazing land, and 9 million acres for wildlife habitat improvement if the proposed program is implemented. This results in $6.8 billion in total benefits, including $3.6 billion due to animal waste treatment and $3.2 billion due to non-animal waste land treatments.

The treatment level is expected to increase when compared to the old EQIP. An additional 0.9 million acres for sheet and rill water erosion (USLE) reduction, 2.3 million acres for wind erosion, 8.5 million acres for non-waste nutrient management, 9.6 million acres for net irrigation water reduction, 3.1 million acres for grazing productivity, and 4.1 million acres for wildlife habitat could be expected to occur on the landscape. In addition, 4.8 million animal units, and 2,755 animal feeding operations could be treated and total soil loss from agricultural land decreased by 7.5 million tons/year.

Under the assumption of the old program continuing at level funding and not accounting for the effects of the EPA CAFO rule, the net present value of benefits over the period of 2002-07 was estimated to be $2.2 billion with $0.3 billion coming from waste treatment and $1.9 billion from land treatment. Net benefits were $1.2 billion above EQIP funds and −$0.2 billion if total costs were accounted for.

Net benefits under the new program were $2.3 billion above EQIP funds and $0.2 billion if total costs were accounted for.

The difference between the net benefits estimates of the two scenarios is due to three factors:

• Scale effect associated with increased funding;

• Practice mix effect as a larger share of funds are allocated to livestock waste treatment and efficiencies; and

• Cost effect, since with cost share buy down eliminated, the government cost per treated unit is most likely increased.

Analysis suggests that implementation of EQIP outlined in the NOFA would provide substantial benefits and would help achieve program objectives of solving identified natural resource concerns while optimizing environmental benefits.

The option to include large AFOs, elimination of priority areas and discussion of increased payment limitation are discussed in detail in Tier Two of the benefit-cost analysis. Other proposed changes in EQIP are not quantified in this analysis due to lack of available data necessary to accurately evaluate effects. These include potentially shorter average contract lengths due to the fact that single practices will be allowed and contracts may terminate one year after completion of the last practice, allowing multiple contracts per tract of land, and providing higher cost share rates for limited resource producers or beginning farmers.

This analysis was generated before EPA has promulgated the CAFO rule, which regulates all large AFOs above 1,000 AUs. With the promulgation of this rule, EQIP can no longer claim environmental benefits from treatment of large producers, since they must comply with CAFO regulations. Use of EQIP resources would therefore be most efficiently used in treating the next largest non-regulated class of producers.

Allocating funds based on share of total animal units (AUs) results in 42 percent of the funding going to the largest size class (>1,000 AUs), and achieves the greatest net benefits of $2.03 billion and $1.02 billion for EQIP funds and total costs. Conversely, the allocation based on share in numbers of operations, the largest size class would only receive 4 percent of the funding and would achieve net benefits of $378 million and −$315 million for EQIP funds and total costs, respectively. Clearly, some efficiencies are lost due to the fact that it costs more per animal unit to treat the smaller size class AFOs than the large farms.

The strategy generating the highest net benefits (of the six alternatives evaluated) is to allocate the funds across the size classes according to their proportionate share in total number of AUs. That strategy would result in treatment of 15.8 million AUs, compared to as low as 9.4 million AUs for the strategy with the lowest net benefits (allocation divided evenly to the 3 smallest size classes and excluding funding to CAFOs.) The more that funds are shifted towards the (non regulated) larger AFOs, the larger the number of AUs treated, the lower the TA cost, and the greater the estimated benefits.

By comparison, if farms with greater than 1,000 animal units remained excluded from EQIP funding for animal waste practices, a total of 11,400 farms, with a total of 23 million animal units, and an overall need of $500 million in CNMP costs would remain ineligible for EQIP funding. In the scenario of not funding large CAFOs, this analysis shows that although net benefits would exceed the net EQIP costs, net benefits would be the lowest of all scenarios, with $314 million for EQIP funds and $−421 million for total costs.

Under the NOFA scenario, this analysis assumed that the 50 percent of EQIP funding designated for animal waste treatment would be divided equally across the four AFO size classes. However, from the total EQIP benefits, the benefits accruing from treatment of the largest class of AFOs, greater than 1,000 AUs, are excluded. This exclusion is appropriate now that the Environmental Protection Agency has formally published its revised CAFO rule and the benefits from treatment of those large AFOs are credited to the CAFO rule rather than the EQIP program. The definition of AFOs governed by the new CAFO rule has a broader reach than the simple “greater than 1,000” class defined in this analysis. At this time, the extent to which the CAFO regulation covers small and medium sized AFOs is unclear. It is assumed that the coverage is not significant.

Although actual payment depends on the specific conservation system applied and the cost share rate, an assumed or artificial limit on payments can be used to analyze comparative environmental benefit. Data in the benefit-cost analysis suggests that while the various payment limitations do not have great bearing on the total number of farms that would be affected by the caps, a significant number of animal units could be eligible for funding without payment limitations at the higher cap levels.

At the $450,000 payment limitation level, only one percent of the remaining livestock farms would still be capped in the costs of implementing animal waste-related conservation practices. However, those large farms control 27 percent of the animal units. These represent the biggest farms with the highest total costs, but lowest cost per animal unit.

Although there are relatively few additional farms that would be funded as payment limitations increase, these farms have a large number of animal units. Increasing the payment limitation from $50,000 to $100,000 would allow an additional 9 million animal units to be eligible for funding under the payment limitation. Increasing the payment limitation from $300,000 to $450,000 would only increase the number of animal units by fewer than 3 million.

At $50,000, only 33 percent of the livestock farms' animal units would be eligible for funding without reaching the cap. At $100,000, half of the nation's animal units would qualify for EQIP funding without reaching the cap, and at the $450,000, almost three quarters of the nation's animal units would qualify for EQIP funding without reaching the payment limitation cap.

Although legislation allows a maximum payment of $450,000 per participant, it is assumed that the Agency and states may set lower limitations if necessary based on local market, cultural or economic conditions. The economic analysis indicates, there is no economic gain associated with imposing lower payment limitations. Since the larger farms represent those with the highest number of animal units and greatest cost efficiencies per animal unit, the program benefits by allowing full participation up to the payment maximum.

Under the previous program, 65 percent of funds were allocated to specially targeted, geographically defined areas. The NOFA/Proposed Rule eliminates the process of designating funds to conservation priority areas. There is concern that this will have a negative impact on the potential environmental benefits due to the fact that funds may not be targeted to specific geographic areas, and the environmental effects of practice implementation will be diluted by scattering cost share assistance over a much broader area.

Six options for environmentally targeting EQIP funds were compared in this alternative. Results of these comparisons indicate that if technical assistance costs are constant, then adopting some form of spatial evaluation, varying cost share by practice effectiveness, or allocating funds with a formula based on priority resource concerns could all have positive effects on total benefits.

In the case of varying fund allocation to emphasize a particular resource concern, the share of total funds allocated in the NOFA was increased by 5 percent for one category and decreased by 1 percent for the other benefit categories identified in this analysis, with the exception of animal waste. The results of these changes indicate that targeting non-animal waste related nutrient management concerns would yield the greatest net benefits above total costs ($673 M), compared to net benefits of $180 Million for the NOFA. When compared to the NOFA, net benefits would increase respectively for each category that was emphasized using the set percentages. When compared to the NOFA, total net benefits would decrease if grazing land productivity or wind erosion categories were to receive an increased share of funds. Although targeting by resource concern can have overall positive effects on benefits, emphasizing one particular resource concern may overlook the relationships between natural resource effects, and fail to capitalize on them.

In the case of varying cost share levels by practice, the National priorities are emphasized by reducing the cost share rates for practices that have primary impacts in the other benefit categories. For the purposes of this analysis, it is assumed that the average cost share for EQIP is 75 percent in the NOFA. This rate is decreased to 60 percent (mild) and to 50 percent (aggressive) for erosion reduction, grazing productivity, and wildlife habitat improvement. The results indicate that pursuing National priorities with a cost share mechanism can increase total benefits by 5 percent in the “mild” scenario, and by 8 percent for the more aggressive scenario. This rule allows flexibility at the state level to provide higher cost-share rates for practices that impact local resource concerns while reducing cost-share rates for practices that do not optimize benefits at the local level.

In addition to these methods, a holdback of funds for distribution based upon an objective comparison of states using performance criteria can be a useful tool that could increase net benefits and increase program efficiency. Data suggests that in spite of the removal of the requirement for geographically based priority areas, other approaches to targeting of EQIP funds to the most critical natural resource concerns are feasible and will have positive effects on total program benefits. This will ensure that environmental benefits are optimized and program objectives are met, but without excluding participation by persons outside of a designated boundary.

NRCS will revise and enhance this analysis for the final rule. Future analysis will seek to evaluate alternative allocations of program dollars across different conservation practices and quantify and estimate their impacts.

To better implement the program to optimize environmental benefits, as required by the 2002 Act, NRCS seeks public comment, data, or references that can quantitatively or qualitatively enhance its analytical efforts. NRCS especially welcomes comments or data on levels or trends in conservation technology adoption, the on-site and off-site environmental benefits and economic returns to various conservation practices, and other literature about incentive schemes for technology adoption.

For the reasons stated in the preamble, the Commodity Credit Corporation proposes to revise Part 1466 of Title 7 of the Code of Federal Regulations to read as follows:

Background

The regulations in 9 CFR part 94 (referred to below as the regulations) prohibit or restrict the importation of certain animals and animal products into the United States to prevent the introduction of various animal diseases, including rinderpest, foot-and-mouth disease (FMD), African swine fever, hog cholera, and swine vesicular disease. These are dangerous and destructive communicable diseases of ruminants and swine. Section 94.1 of the regulations lists regions of the world that are considered free of rinderpest or free of both rinderpest and FMD. The Animal and Plant Health Inspection Service (APHIS) considers rinderpest or FMD to exist in all regions of the world not listed.

On November 1, 1995, we published in the Federal Register a final rule (60 FR 55440-55443, Docket No. 95-050-2) adding Uruguay to the list in § 94.1 of regions considered to be free of rinderpest and FMD and to the list in § 94.11 of regions that, although free of rinderpest and FMD, are subject to certain restrictions on importation of meat and other animal products. On October 26, 2000, Uruguay's Ministry of Livestock, Agriculture and Fisheries notified us of an FMD outbreak in the northern Uruguayan department of Artigas and immediately prohibited the movement of all animals and animal products throughout the department. On November 20, 2000, Uruguay sent a team of veterinary officials to the United States to provide us with detailed information on the outbreak history, measures taken to eradicate the disease, movement controls, monitoring and surveillance, and other relevant activities. In an interim rule published in the Federal Register on December 13, 2000 (65 FR 77771-77773, Docket No. 00-111-1), and effective retroactively to October 1, 2000, we removed the Uruguayan department of Artigas from the list of regions considered to be free of rinderpest and FMD.

On April 24, 2001, FMD was clinically confirmed in the Uruguayan department of Soriano, near Uruguay's border with Argentina. The disease subsequently spread to additional departments. Uruguay's Ministry of Livestock, Agriculture and Fisheries notified the United States Department of Agriculture and the Office International des Epizooties that, as of August 21, 2001, there had been 2,057 confirmed cases of FMD in 18 departments of Uruguay, including Artigas and Soriano. In response to the outbreak, the Ministry of Livestock, Agriculture and Fisheries began a stamping out campaign on April 24, 2001, that continued until it was suspended on April 30, 2001. The government of Uruguay also issued a ban on the movement of all animals susceptible to FMD; began an emergency ring vaccination campaign on April 26, 2001; established a containment zone with strategic vaccination; applied strict sanitary measures within the outbreak areas; placed fixed control and disinfection posts on the main access routes to the affected areas; and suspended all export health certificates for ruminants and swine.

On July 13, 2001, we published in the Federal Register an interim rule (66 FR 36695-36697, Docket No. 00-111-2), effective retroactively to April 2, 2001, that amended the regulations by removing Uruguay from the list of regions considered free of rinderpest and FMD and from the list of regions that, although rinderpest and FMD-free, are subject to certain restrictions on the importation of meat and other animal products. That action was necessary because FMD had been confirmed in 18 departments of Uruguay. The effect of the interim rule was to prohibit or restrict the importation of any ruminants or swine and any fresh (chilled or frozen) meat and other products of ruminants or swine into the United States from Uruguay.

Although we removed Uruguay from the list of regions considered to be free of rinderpest and FMD, we recognized in the interim rule that Uruguay's Ministry of Livestock, Agriculture, and Fisheries responded immediately to the detection of the disease by imposing restrictions on the movement of ruminants, swine, and ruminant and swine products from the affected areas and by initiating measures to control and eradicate the disease. We also stated that we intended to reassess the situation to determine whether it was necessary to continue to prohibit or restrict the importation of ruminants or swine and any fresh (chilled or frozen) meat and other products of ruminants or swine from Uruguay.

Under the current regulations, the importation of fresh (chilled or frozen) beef from Uruguay is prohibited. Because Uruguay took immediate, effective measures to control and eradicate FMD after the initial outbreak; continues to employ control measures, including a vaccination program, movement controls (especially control of movement to slaughter), maturation, de-boning, ante- and post-mortem inspections, pH testing, and national and international border controls; and has not had a confirmed case of FMD in over a year, the government of Uruguay requested that APHIS consider allowing the export of fresh (chilled or frozen) beef to the United States.

In response to this request, APHIS prepared a risk assessment, which can be viewed on the Internet at http://www.aphis.usda.gov/vs/ncie/reg-request.html. To view the document, follow the link entitled, “Information previously submitted by Regions requesting export approval and their supporting documentation.” At the next screen, click on the triangle beside “Uruguay/Animals and Animal Products/Foot-and-Mouth Disease,” then on the triangle beside “Response by APHIS.” A link will then appear for “Risk Assessment—Importation of Fresh (chilled or frozen) Beef from Uruguay (November 2002).” Following that link will allow you to view the assessment. You may also request paper copies of this document by calling or writing the person listed under FOR FURTHER INFORMATION CONTACT. Please refer to Docket No. 02-109-1 when requesting copies. The risk assessment is also available in our reading room. (Information on the location and hours of the reading room may be found at the beginning of this document under ADDRESSES.) The risk assessment process also included a site visit in July 2002 during which a team of APHIS representatives reviewed Uruguay's animal health infrastructure, vaccination program, movement controls, slaughter procedures, and national and international border controls. (The site visit report is available along with the risk assessment as discussed above). Under the Animal Health Protection Act (7 U.S.C. 8301 et seq.), the Secretary of Agriculture may prohibit the importation of any animal or article if the Secretary determines that the prohibition is necessary to prevent the introduction into or dissemination within the United States of any pest or disease of livestock. Based on the risk assessment, the site visit, and information provided by the government of Uruguay, we have determined that it is not necessary to prohibit the importation of fresh (chilled or frozen) beef from Uruguay, provided certain stringent requirements are met.

On May 5, 2001, the government of Uruguay initiated the first round of a vaccination program. Four rounds have been completed to date, and one round of calf vaccinations for calves born between 2000 and 2001 was completed in November of 2001. The vaccination program will continue until May 2003, at which time the government of Uruguay plans to evaluate its vaccination policy. Although there has not been a confirmed case of FMD in Uruguay since August 21, 2001, this ongoing vaccination program makes additional mitigating measures necessary in order to ensure protection against the introduction of FMD into the United States from the importation of fresh (chilled or frozen) beef from Uruguay. When animals are vaccinated for FMD, it can be difficult to distinguish between serological responses that are caused by the FMD virus and responses that are caused by the vaccinations. Further, if the disease is present in a region, symptoms in a vaccinated animal can be suppressed and may not manifest themselves at a clinical level. To mitigate these additional risk factors, we are proposing to require the mitigating measures discussed below, which we have determined will protect against the introduction of FMD into the United States from the importation of fresh (chilled or frozen) beef from Uruguay.

The proposed changes to the regulations include several additional conditions that would have to be met before importation of fresh (chilled or frozen) beef from Uruguay into the United States would be allowed. An authorized veterinary official of the government of Uruguay would have to certify that the following conditions have been met:

• The meat is beef from bovines that have been born, raised, and slaughtered in Uruguay;

• FMD has not been diagnosed in Uruguay within the previous 12 months;

• The beef came from bovines that originated from premises where FMD has not been present during the lifetime of any bovines slaughtered for the export of meat to the United States;

• The beef came from bovines that were moved directly from the premises of origin to the slaughtering establishment without any contact with other animals;

• The beef came from bovines that received ante- and post-mortem veterinary inspections, paying particular attention to the head and feet, at the slaughtering establishment, with no evidence found of vesicular disease;

• The beef consists only of bovine parts that are, by standard practice, part of the animal's carcass that is placed in a chiller for maturation after slaughter. Bovine parts that may not be imported include all parts of bovine heads, feet, hump, hooves, and internal organs;

• All bone and visually identifiable blood clots and lymphoid tissue have been removed from the beef;

• The beef has not been in contact with meat from regions other than those listed in § 94.1(a)(2); and

• The beef came from bovine carcasses that have been allowed to maturate at 40 to 50 °F (4 to 10 °C) for a minimum of 36 hours after slaughter and have reached a pH of 5.8 or less in the loin muscle at the end of the maturation period. Any carcass in which the pH does not reach 5.8 or less may be allowed to maturate an additional 24 hours and be retested, and, if the carcass still has not reached a pH of 5.8 or less after 60 hours, the meat from the carcass may not be exported to the United States.

In addition to these proposed requirements, § 94.21(l) of this proposed rule would also require the establishment in which the bovines are slaughtered to allow periodic on-site evaluation and subsequent inspection of its facilities, records, and operations by an APHIS representative.

Among the proposed additional requirements that would have to be met for the importation of fresh (chilled or frozen) beef from Uruguay is the proposed requirement in § 94.21(e) of this proposed rule that the beef come from bovines that received ante-mortem and post-mortem veterinary inspections, paying particular attention to the head and feet, at the slaughtering establishment. Because FMD has a short incubation period, if animals were infected with FMD at a premises of origin, it is likely that lesions would be visible in at least a few of those animals at the slaughtering establishment prior to slaughter. Similarly, post-mortem inspection of carcasses would be likely to identify any lesions and vesicles in animals infected with FMD. Since the lesions associated with FMD occur primarily on the feet and in the mouth, particular attention must be paid to the head and feet during these inspections. Because ante- and post-mortem inspections are important in reducing disease risk, we are proposing explicit requirements for ante- and post-mortem inspections for bovines slaughtered for the export of fresh (chilled or frozen) beef from Uruguay to the United States.

In this proposed rule, § 94.21(f) would provide that certain bovine parts would continue to be prohibited importation into the United States. Specifically, no part of the animal's head, feet, hump, hooves, or internal organs would be allowed entry into the United States. While portions of a bovine's head, feet, hump, hooves, and internal organs may reach the necessary pH level during the required maturation process (see “Maturation Process”), these items can contain lymph tissue, depot fat, and blood clots that may potentially harbor FMD virus that is not inactivated. When we refer to fresh (chilled or frozen) beef in proposed § 94.21, we mean only the traditional cuts of meat obtained from a bovine's carcass.

The proposed requirement in § 94.21(g) of this proposed rule states that all bone, blood clots, and lymphoid tissue must be removed from the beef that is to be exported from Uruguay to the United States. The removal of these parts is necessary because any FMD virus these parts might potentially harbor may not be inactivated by the maturation process described in the following paragraph. Although we consider the removal of these parts necessary, we recognize that meat may contain small portions of blood clots or lymphoid tissue that are not visually identifiable as such. Because such small parts are unlikely to harbor any FMD virus that is not inactivated by the maturation process, and because we recognize that it would be difficult, if not impossible, to remove parts of blood clots or lymphoid tissue that are not recognizable as such, we have specified in the proposed requirement that all bone and “visually identifiable” blood clots and lymphoid tissue be removed.

Paragraph (i) of proposed § 94.21 provides that the beef must come from bovine carcasses that have been allowed to maturate at 40 to 50 °F (4 to 10 °C) for a minimum of 36 hours after slaughter and that have reached a pH of 5.8 or less in the loin muscle at the end of the maturation period. Any carcass in which the pH does not reach 5.8 or less may be allowed to maturate an additional 24 hours and be retested. This proposed provision goes on to state that if the meat does not meet this pH level after 60 hours, it may not be exported to the United States. This proposed requirement is based on the fact that the FMD virus in meat is inactivated by acidification, which occurs naturally during maturation. An acid environment of a pH of 5.8 or less destroys the virus quickly.

Although the proposed conditions in § 94.21 include a provision in paragraph (j) that an authorized veterinary official of the government of Uruguay certify that the required conditions for importation have been met, we are proposing an additional condition in paragraph (k) that would require establishments in which bovines are slaughtered to allow periodic APHIS inspection of their facilities, records, and operations. We continue to believe that, in the great majority of cases, certification by an authorized veterinary official of Uruguay will be sufficient verification. However, because of the possibility of occasional differing interpretations of the regulations, we consider it advisable to enable APHIS representatives to have access to slaughtering establishments for periodic inspections of the establishments and their records and operations.

Based on our assessment, and considering the effective control measures employed by the government of Uruguay after the initial outbreak and their ongoing control measures, we have determined that it is not necessary to prohibit the importation of fresh (chilled or frozen) beef from Uruguay, as long as the beef meets certain stringent conditions.

This rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 1286 and, therefore, has not been reviewed by the Office of Management and Budget.

This proposed rule would amend the regulations governing the importation of certain animals, meat, and other animal products by allowing, under certain conditions, the importation of fresh (chilled or frozen) beef from Uruguay. Based on the evidence documented in our recent risk assessment, we believe that fresh (chilled or frozen) beef can be safely imported from Uruguay provided certain conditions are met. This action would provide for the importation of beef from Uruguay into the United States while continuing to protect the United States against the introduction of FMD.

This proposed rule would reopen the U.S. market to Uruguayan beef producers. Beef producers and importers in the United States should not experience any notable economic effects as a result of these proposed changes because the United States has imported only a small amount of beef from Uruguay in the past (Table 1).

Uruguay's share in the value of U.S. imports of fresh (chilled or frozen) beef has been very small. From 1997 to 2000, Uruguayan exports accounted for only 1.8 to 2.7 percent of total U.S. imports of fresh (chilled or frozen) beef. During the same period, imports from Uruguay accounted for 0.2 percent or less of the value of the U.S. supply (domestic production plus imports minus exports) of fresh (chilled or frozen) beef.

According to the Small Business Administration's (SBA) size classification, beef cattle ranches and farms having $750,000 or less in annual revenues, and cattle feedlots having $1,500,000 or less in annual revenues are considered small entities. The number of farms and ranches with beef herds in the United States in 1997 was reported to be 766,991, and 99.8 percent of these beef farms could be categorized as small according to the SBA's criteria.1

It is impossible to determine from published data how many U.S. cattle feedlots could be categorized as small according to the SBA's criteria. Industry analysts suggest that feedlots with a capacity of roughly 1,000 head of cattle would have annual revenues of approximately $1,500,000. In 2000, roughly 18 percent (2,508) of cattle feedlots in the United States would have been considered small by SBA standards.2

Although this proposed rule could potentially affect a large number of small beef farms and a relatively small number of small feedlots by allowing Uruguayan beef into the U.S. market, it is not expected to have a significant economic effect on these entities because the import volumes involved are low.

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

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

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

Accordingly, we are proposing to amend 9 CFR part 94 as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in tiplicate to the address listed above. Comments wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: Comments to Docket No. FAA-2003-14348/Airspace Docket No. 03-ACE-5.'' The postcard will be date/time stamped and returned to the commenter.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's Web page at http://www.faa.gov or the Superintendent of Document's Web page at http://www.access.gpo.gov/nara.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591, or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to part 71 of the Federal Aviation Regulations (14 CFR Part 71) by establishing Class E airspace designated as a surface area for an airport at Topkea, Forbes Field, KS. Controlled airspace extending upward from the surface of the earth is needed to contain aircraft executing instruments approach procedures. This airspace would be in effect during those times when the ATCT is closed. Weather observations would be provided by an Automated Surface Observing System (ASOS) and communications would be through the Wichita Automated Flight Service Station. The area would be depicted on appropriate aeronautical charts. The FAA is also considering modifying Class D airspace at Topeka, Forbes Field, KS. An examination of the Class D airspace for Topeka, Forbes Field, KS has revealed a discrepancy in the airport reference point used for the Class D airspace legal description. This proposal would correct that discrepancy by incorporating the current airport reference point in the Class D airspace for Topeka, Forbes Field, KS.

Class E airspace areas designed as surface areas are published in Paragraph 6002 of FAA Order 7400.9K, dated August 30, 2002, and effective September 16, 2002, which is incorporated by reference in 14 CFR 71.1 Class D airspace areas are published in Paragraph 5000 of the same FAA Order.

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

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The Copyright Office of the Library of Congress is currently conducting proceedings mandated by the Digital Millennium Copyright Act, which provides that the Librarian of Congress may exempt certain classes of works from the prohibition against circumvention of technological measures that control access to copyrighted works. See 17 U.S.C. 1201(a)(1)(C). The purpose of this rulemaking proceeding is to determine whether there are particular classes of works as to which users are, or are likely to be, adversely affected in their ability to make noninfringing uses due to the prohibition on circumvention. If there are, the Librarian may exempt such classes from the statutory prohibition.

Comments proposing classes of works to be exempted were due December 18, 2002. However, in order to provide flexibility in this rulemaking proceeding and to take into account unforeseen developments that might significantly affect the recommendation of the Register of Copyrights, the Office's October 15, 2002 Notice of Inquiry provided an opportunity to petition the Register for consideration of new information that could not reasonably have been known prior to the December 18 deadline. See Exemption to Prohibition on Circumvention of Copyright Protection Systems for Access Control Technologies, 67 FR 63578, 63582 (October 15, 2002). The Notice of Inquiry states that a petition to consider new classes of works proposed for exemption must be in writing and must set forth the reasons why the information could not have been made available earlier and why it should be considered by the Register after the deadline. A petition must also set forth the proposed class or classes of works to be exempted, a summary of the argument, the factual basis for such an exemption and the legal argument supporting such an exemption. The Register's determination whether to accept such a petition is based on the stage of the rulemaking process at which the request is made and the merits of the petition.

Static Control Components, Inc. (“Static Control”) has petitioned for consideration of the following classes of works:

1. Computer programs embedded in computer printers and toner cartridges and that control the interoperation and functions of the printer and toner cartridge;

2. Computer programs embedded in a machine or product and which cannot be copied during the ordinary operation or use of the machine or product; and

3. Computer programs embedded in a machine or product and that control the operation of a machine or product connected thereto, but that do not otherwise control the performance, display or reproduction of copyrighted works that have an independent economic significance.

The Register of Copyrights has determined that Static Control has adequately explained why the information set forth in its petition could not have been made available earlier, and that Static Control has set forth sufficiently serious arguments on the merits to warrant consideration of its proposal after the initial deadline. Accordingly, the “Petition of Static Control Components, Inc. for Consideration of New Information” has been accepted as a comment proposing three classes of works to be exempted from the prohibition on circumvention, and interested parties are invited to submit reply comments responsive to this comment, either in support of or opposition to the Static Control proposal. Static Control's comment is available on the Copyright Office Web site at http://www.copyright.gov/1201/2003/petitions/.

Reply comments responsive to this new comment will be accepted from February 24, 2003 until March 10, 2003, at 5 pm Eastern Standard Time. Commenters are encouraged to file their comments electronically. See ADDRESSES, above. Please review the initial Notice of Inquiry for format requirements for comments. See 67 FR at 63582 (October 15, 2002).

Section 1112(b) of title 38, United States Code, designates 15 diseases considered to have been incurred in or aggravated during active duty service by former POWs detained or interned for at least 30 days, even though there is no record of such diseases during the period of service. Each listed disease must have become manifest to a degree of 10 percent or more after active duty service. VA implemented the provisions of 38 U.S.C. 1112(b) at 38 CFR 3.309(c). Former POWs are entitled to service connection for any of the 15 listed diseases, even though there is no record of the disease during service, if it becomes manifest to a degree of 10 percent or more any time after discharge from active military, naval, or air service.

Presumptions of service connection under § 3.309 (c) are rebuttable under the provisions of § 3.307(d), which states that the presumption of service connection for a disease under § 3.309 may be rebutted by competent evidence. The presumption of service connection may be rebutted with affirmative evidence that the disease was not incurred in service based on sound medical reasoning and consideration of all evidence of record.

In October 2000, the Institute of Medicine (IOM) published results of a study that found a significantly higher risk of cirrhosis among former World War II POWs compared with control groups. POWs held in the Pacific and European theaters had roughly 1.5 times the risk of death due to cirrhosis compared to non-POW controls. (Page WF, Miller R: Cirrhosis Mortality among Former American Prisoners of War of World War II and the Korean Conflict: Results of a 50-year Follow-up. Military Medicine 2000; 165: 781-785.) Cirrhosis mortality was not found to be associated with any differences in levels of alcohol consumption among World War II and Korean POWs and Korean controls, which were similar to those among U.S. males. Therefore, it appears that alcohol consumption does not provide an explanation for the higher mortality rates identified in POWs.

IOM initially conducted a 30-year follow-up of American POWs of World War II and the Korean Conflict. (Nefzger MD: Follow-up of World War II and Korean prisoners. I. Study plan and mortality findings. Am J Epidemiology 1970; 91: 123-38.) Sampling began in the early 1950s of three groups of POWs (WWII Pacific theater prisoners, WWII European theater prisoners, and Korean conflict prisoners) along with sampling of non-POW military veteran controls. In the 30-year study, IOM found evidence of increased mortality from cirrhosis in American former POWs compared to the U.S. general population.

In the 2000 IOM study, the authors used federal records, primarily from VA and the Social Security Administration, to extend the follow-up to 50 years with similar results. Cirrhosis Mortality, 165 Military Medicine at 781. By crosschecking federal records, they estimate that their mortality statistics are 99.6 percent complete. Id. Furthermore, the design of their study not only allowed them to compare World War II and Korean POW mortality with that of the U.S. general population, but also permitted a direct comparison of POW mortality with that of non-POW military veteran controls. Id. at 782. The purpose was to avoid biases inherent in a general population comparison attributable to the general fitness of military veterans. Id.

The results of the 2000 IOM study are consistent with earlier studies. In 1999, a mortality follow-up of POWs held in the Far East found that British POWs had a higher mortality rate from diseases of the liver, including chronic liver disease and cirrhosis, than the general population. (Gale CR, Braidwood EA, Winter PD, Martyn CN: Mortality from Parkinson's disease and other causes in men who were prisoners of war in the Far East. Lancet 1999; 354: 2116-8.) Also, a 1968 mortality study of Australian World War II POWs taken prisoner after the fall of Singapore revealed twice as many deaths from cirrhosis as those expected during the period from 1951 to 1963. (Freed G, Stringer PB: Comparative Mortality Experience 1946-1963 among Australian prisoners of war of the Japanese. Aust Repat Med Dept Bull 1968; 150: 378-382.)

The Secretary believes that the research cited above constitutes sound scientific evidence supporting the conclusion that an association exists between cirrhosis and POW status. The 2000 IOM study indicates a “significantly higher risk of cirrhosis” for World War II POWs only; however, World War II POWs comprise 93 percent of the estimated 46,417 living POWs from the last five conflicts in which the United States was involved. The Secretary has therefore determined that it is appropriate to add cirrhosis of the liver to the list of diseases in § 3.309(c) for which VA presumes service connection in all former POWs interned or detained for at least 30 days.

The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure by State, local, or tribal governments, in the aggregate, or by the private sector of $100 million or more in any given year. This rule would have no consequential effect on State, local, or tribal governments.

This document contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

This regulatory amendment has been reviewed by the Office of Management and Budget under the provisions of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993.

The Secretary hereby certifies that this regulatory amendment will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612. The reason for this certification is that this amendment would not directly affect any small entities. Only VA beneficiaries could be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance number is 64.109.

For the reasons set forth in the preamble, VA proposes to amend 38 CFR part 3 as follows:

For further information, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this Federal Register publication.

See the information provided in the Direct Final action of the same title which is found in the Rules section of this Federal Register.

See the information provided in the Direct Final action of the same title which is found in the Rules section of this Federal Register.

Inspection of Public Comments: Comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone (410) 786-7195 or (410) 786-7201. We must be contacted at least 72 hours in advance.

Copies: To order copies of the Federal Register containing this document, send your request to: New Orders, Superintendent of Documents, PO Box 371954, Pittsburgh, PA 15250-7954. Specify the date of the issue requested and enclose a check or money order payable to the Superintendent of Documents, or enclose your Visa or Master Card number and expiration date. Credit card orders can also be placed by calling the order desk at (202) 512-1800 (or toll-free at 1-888-293-6498) or by faxing to (202) 512-2250. The cost for each copy is $10. As an alternative, you can view and photocopy the Federal Register document at most libraries designated as Federal Depository Libraries and at many other public and academic libraries throughout the country that receive the Federal Register.

This Federal Register document is also available from the Federal Register online database through GPO Access, a service of the U.S. Government Printing Office. The Web site address is: http://www.access.gpo.gov/nara/index.html.

In 1966, the Health Insurance Benefits Advisory Committee (HIBAC) (authorized by section 1867 of the Social Security Act, repealed 1984) recommended that Medicare cover the unpaid deductible and coinsurance amounts that arose in connection with the provision of covered services to beneficiaries (herein referred to as Medicare bad debt). This recommendation was meant to avoid cross-subsidization that might occur if hospitals or other entities tried to recoup Medicare bad debt from other payers. The HIBAC believed that under the statute, the Congress had intended to avoid cross-subsidization by meeting the cost of the bad debts that accrued to a provider where these amounts were otherwise uncollectible. The reasoning behind this view flowed from section 1861(v)(1)(A)(i) of the Act, which states that the costs for individuals covered by the Medicare program must not be borne by individuals not covered by the program, and the costs for individuals not covered by the program must not be borne by Medicare. We refer to this statutory provision as the prohibition on cross-subsidization. The Secretary agreed with the HIBAC recommendation and the bad debt policy was adopted in 1966. This anti-cross subsidization principle is now part of the definition of “reasonable cost” as defined in section 1861(v) of the Act.

Under section 2145 of the Omnibus Budget Reconciliation Act (OBRA) of 1981 (Pub. L. 97-35), the Congress mandated a prospective payment system (PPS) for paying providers of various services covered by Medicare. Hospitals became the first provider-type to receive Medicare reimbursement under this law with the establishment of a PPS for inpatient hospital services in 1983. PPS replaced the retrospective cost-based reimbursement methodology previously in effect. Under this reimbursement system, Medicare payment for Part A inpatient operating costs is made on the basis of a prospectively determined rate per type of discharge, as determined by the classification of each patient case into a diagnosis-related group (DRG).

Shortly after implementation of PPS, in a Priority Audit Memorandum dated July 9, 1985, the Office of Inspector General (OIG) recommended that, in light of this new payment system, we should discontinue the reimbursement of inpatient hospital bad debts. After a thorough evaluation, we rejected the OIG's recommendation to discontinue paying bad debt for hospitals, concluding that the payments continued to be appropriate for the reasons discussed below. We also evaluated and rejected a second option suggested by the OIG to include a bad debt component in the DRG rates. We decided that this proposal would limit a hospital's incentive to collect the deductible and coinsurance amounts from the beneficiary and would address only the inpatient side. We also felt that because every facility incurred varying amounts of bad debt, the inclusion of bad debt in the DRG rates would be inequitable.

Therefore, in accordance with our regulations, we have continued to recognize bad debt for entities receiving payment under a PPS, such as for inpatient hospital services (42 CFR 412.115(a)), where Medicare payment policy, before PPS, recognized payment of those bad debts and where the prospective payments were derived from costs that did not reflect base period Medicare bad debts. That is, the prospective rates used to reimburse entities for services furnished to Medicare patients have basis in cost and are calculated using cost data reported by the entities on a base year cost report. They are then updated for inflation to the year in which payments are to be made. However, the bad debts incurred during that base period were not included in the calculation of the prospective rates. The bad debts for these entities are claimed at the end of each fiscal year, and allowable amounts are reimbursed separately.

Entities currently eligible to receive bad debt payments include hospitals, skilled nursing facilities (SNFs), critical access hospitals, rural health clinics, end-stage renal disease (ESRD) facilities, federally qualified health clinics, community mental health clinics, health maintenance organizations (HMOs) reimbursed on a cost basis, competitive medical plans (CMPs) and health care pre-payment plans.

The general bad debt policy is set forth in regulations at § 413.80 and the Provider Reimbursement Manual (PRM) (CMS Pub. 1501), Part 1, Chapter 3). Bad debt policy for ESRD Facilities is set forth in a separate regulation at § 413.178 and is further discussed below.

The concept of Medicare bad debt payments applies only to services reimbursed on the basis of reasonable cost. Medicare has never made payments to account for bad debts for services paid under a fee schedule or reasonable charge methodology, such as services of physicians or suppliers. Under a fee schedule or reasonable charge methodology, Medicare reimbursement is not based on costs and, therefore, the concept of unrecovered costs is not relevant. Fee schedules, which are either charge-based or resource-based, relate payments to the price the entity charges. Historically, these prices have reflected the entities cost of doing business, including expenses such as bad debt.

Medicare pays ESRD facilities a prospectively determined composite rate. Under the payment rules authorized by sections 1881(b)(2) and (b)(7) of the Act as amended by OBRA of 1981, we pay 80 percent of a prospectively set rate for outpatient dialysis services. The Medicare beneficiary is responsible for the remaining 20 percent as a copayment, as well as any applicable deductible amounts set forth in § 413.176. If the ESRD facility makes reasonable collection efforts, as described in the PRM (CMS, pub. 15-1) Part I, (Section 310) but is unable to collect the coinsurance or deductible, we consider the uncollected amount to be a “bad debt” as described in §§ 413.178(b) and 413.80(b)(1) and (e).

At the end of the year, Medicare recognizes a facility's Medicare bad debts. However, under our current regulations, bad debt payments are capped so that total Medicare reimbursement (composite rate plus bad debt payments) does not exceed the total cost to serve Medicare patients.

Although section 1881 of the Act does not require Medicare to pay for an ESRD facility's Medicare bad debt, Medicare for many years (before the composite payment rate system) paid hospital-based ESRD facilities for their Medicare bad debts, as it has long paid Medicare bad debts of other types of providers or entities that were paid on a reasonable-cost basis. By contrast, “free-standing” or independent ESRD facilities were paid on a reasonable charge basis and were expected to absorb any Medicare bad debt as part of that charge. When we developed the composite payment rate system, which is used to pay both hospital-based and free-standing ESRD facilities, we based payment on the results of audits of ESRD facilities' reported costs, exclusive of Medicare bad debts. For this reason, we decided it was appropriate to separately recognize these bad debts at the end of the facility's fiscal year. Under the authority granted us in section 1881(b)(7) of the Act, we considered two options for paying these bad debts. One option was to include the bad debt allowance in the calculation of the composite rate. The other option was to reimburse an ESRD facility's bad debts in a special payment at the end of the facility's cost accounting period. We decided that this latter option was preferable because it would allow us to pay each facility the exact amount of its allowable bad debts. We concluded that, under the statute, we could pay an ESRD facility for its bad debts incurred from providing services to Medicare beneficiaries, and thereby avoid indirectly passing on these bad debts to individuals not covered by Medicare. Similarly, we determined that it would be appropriate to cap the total bad debt payment at a facility's unrecovered costs. In this way, the combination of the composite rate payments and our payment, if any, for Medicare bad debts would not exceed the facility's total allowable cost of providing services to Medicare beneficiaries.

In 1994, a group of providers of outpatient renal dialysis services challenged our regulation at § 413.178(a), which caps reimbursement for an ESRD facility's bad debt at costs. The plaintiffs argued, among other things, that we had provided inadequate justification for the reimbursement cap and were unable to demonstrate that the cap was consistent with the statute, as required by the Administrative Procedure Act (APA) (5 U.S.C., 706(2)(A)). The U.S. District Court for the District of Columbia upheld our regulation as an acceptable exercise of our discretion under the APA. On appeal, however, the D.C. Circuit Court overturned the District Court's ruling and found that our explanation, relying on the statutory provisions relating to cross-subsidization discussed above, was inadequate justification for the rule and inconsistent with a prospective rate scheme (Kidney Center of Hollywood et al. v. Shalala, 133 F.3d 78,88 (D.C. Circuit 1998)). The Circuit Court ordered that the final rule be vacated and remanded the case to us with the instruction that we either more adequately justify the rule or jettison it altogether.

In 1987, the Congress enacted section 4008(c) of the OBRA of 1987 and later amended it in sections 8402 of the Technical and Miscellaneous Revenue Act of 1988 and section 6023 of OBRA of 1989. The provision, as amended, prohibits us from making “any change in the policy in effect on August 1, 1987, regarding reimbursement to hospitals for Medicare bad debts.” This legislation is collectively referred to as the moratorium on changes to the Medicare bad debt policy for hospitals. Since its enactment, the moratorium has precluded us from making any changes to bad debt policy for hospitals, although the Congress has authorized subsequent changes through legislation. The moratorium does not apply to entities other than hospitals. Since the inception of the Medicare program, bad debt reimbursement for entities other than hospitals has been and continues to be at our discretion. According to Kidney Center of Hollywood, et al. v. Shalala, the Secretary's discretion on this matter is broad as long as it is authorized by statute and is rationally justified. Therefore, we believe any changes made to bad debt policy for these other entities can be implemented by regulation.

From 1989 to 1996, provider and entity cost report data showed an alarming growth in bad debt payments in the Medicare program. For hospitals alone, from 1990 to 1994, total Medicare bad debt payments grew 165 percent, from $415 million to $1.1 billion. During this period, the inpatient bad debts grew 140 percent, from $270 to $650 million, and Part B (primarily outpatient) bad debts tripled, from $140 to $430 million. In 1997, with increasing concern over the rapidly expanding payout for bad debts under Medicare, the Congress responded with section 4451 of the Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33). Section 4451 of the BBA amended section 1861(v)(1) of the Act by adding section 1861(v)(1)(T). The legislation required that, in determining reasonable costs for hospitals, the amount of bad debts otherwise treated as allowable costs (attributable to deductibles and coinsurance amounts) should be reduced by 25 percent for fiscal year (FY) 1998, by 40 percent for FY 1999, and by 45 percent for subsequent years.

As a response to concerns from Medicare hospitals that the fiscal impact of this provision of the BBA was too harsh, the Congress enacted section 541 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554) (BIPA). This eased the reduction in hospital bad debt reimbursement from 45 percent to 30 percent. Although the Congress decreased the reduction of bad debt reimbursement for hospitals, the BIPA did not address the issue for other providers.

The introduction of the PPS has changed the context for Medicare's bad debt policy. The PPS for inpatient hospital services was introduced in 1983 out of a notion that cost reimbursement systems provided an incentive for providers to incur costs. The costs were passed along to Medicare automatically and provided no incentive for prudent and efficient management of hospital resources. This methodology provided no opportunity for hospitals to earn profit through efficiency. The DRG payments were intended to provide a context in which the hospitals that achieved savings through efficiency and innovative practices could profit from their efforts. In fact, the result of this change in payment system was that hospital Medicare margins (a rough measure of the extent to which payments exceeded actual costs) rose immediately and have continued to exceed pre-PPS levels.

In this context, making separate payments for uncollected Medicare deductible and coinsurance amounts is no longer an appropriate expression of Medicare's responsibility for reimbursement, especially in a marketplace where commercial insurers do not make similar adjustments in their payments. In fact, the availability of additional payment when debts are not collected provides an incentive to the provider to forego effective collection efforts in return for the certainty of Medicare payments. If Medicare did not recognize these payments, there would be a greater incentive for the hospitals to attempt to collect from the beneficiary. We believe that the percentage reduction in bad debt reimbursement would be a step toward fostering this incentive for nonhospital entities.

Fiscal responsibility to the Medicare program is an important factor in implementing this rule. We believe that reducing the amount of Medicare bad debt reimbursement by 30 percent will encourage accountability and foster an incentive to be more efficient in bad debt collection efforts. We also believe strongly that Medicare bad debt policy should be applied consistently and fairly among all providers eligible to receive bad debt reimbursement. Currently, hospitals are the only entities experiencing a reduction in bad debt reimbursement. Furthermore, ESRD facilities are the only entities whose bad debt claims are capped at the facilities costs.

After considering the action of the Congress in setting the reduction in bad debt reimbursement at 30 percent for hospitals, we decided that the number used by the Congress in this action was an equitable and reasonable policy choice with respect to entities other than hospitals. Subsequently, we decided to draft a regulation that would advance a consistent bad debt reimbursement policy for all Medicare entities. To implement this rule, we propose to remove the cap on allowable bad debt for ESRD facilities and apply the 30 percent reduction in bad debt reimbursement that was legislated for hospitals to all Medicare providers or entities eligible to receive payments in recognition of Medicare bad debts. We propose to implement the reduction in bad debt incrementally (as the Congress chose to do to implement the BBA reduction for hospitals) over a 3-year period to mitigate the impact on entities. Again, as discussed above, we believe that the percentage reduction in bad debt reimbursement would be a step toward fostering an incentive for nonhospital entities to make conscientious, effective collection efforts on their unpaid Medicare patient accounts.

In accordance with the DC Circuit Court ruling discussed above and in order to be consistent with other entities as mandated in the President's 2003 budget, the cap on ESRD bad debt reimbursement should be removed.

This proposed rule would, therefore, remove the cap on ESRD bad debts and allow ESRD facilities to claim bad debts at an amount exceeding unrecovered costs.

As discussed above, we propose to reduce the amount of allowable bad debt for entities other than hospitals by 10 percent for cost reporting periods beginning October 1, 2003, by 20 percent for cost reporting periods beginning October 1, 2004, and by 30 percent for cost reporting periods beginning October 1, 2005 and thereafter. The entities currently included in this proposal are SNFs, ESRD facilities, rural health clinics, critical access hospitals, community mental health clinics, and federally qualified health clinics. Cost HMOs/CMPs and health care pre-payment plans are excluded from the proposed 30 percent reduction as the bad debt reimbursement for these entities is already limited according to § 417.536. The unpaid deductible and coinsurance amounts for services rendered by these entities is limited to no more than 3 months of the premium (portion related to deductible and coinsurance) for any one individual. To be reimbursable, the deductible and coinsurance must relate to what is covered under Medicare and under our contract with the HMO/CMP. As discussed above, the incremental reduction over a 3-year period is intended to mitigate the impact on entities.

This proposed rule would amend language in the existing bad debt regulations to clarify that bad debts are not recognized or reimbursed for any services paid under a reasonable charge-based methodology or a fee schedule. This clarification is not a change in policy.

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C.A. section 3506(c)(2)(A)).

Because of the large number of items of correspondence we normally receive on Federal Register documents published for comment, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the “DATES” section of this preamble, and, if we proceed with a subsequent document, we will respond to the major comments in the preamble to that document.

We have examined the impacts of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96-354), section 1102(b) of the Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132. We believe that this regulation would qualify as a major rule.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). We believe that this regulation would qualify as a major rule and that the impact would be economically significant.

Most ESRD facilities would benefit from this proposed rule, as they would be allowed to claim and receive reimbursement for more of their Medicare bad debts, allowing them to claim bad debts over their unrecovered costs.

Some entities, such as SNFs and rural health clinics, may experience a reduction in their bad debt reimbursement as a result of this rule. Data from SNF cost reports show bad debt totals of $8,244,192 for FYE 1996, $13,070,786 for FYE 1997 and $12,501,755 for 1998 (only settled cost report data was used and fewer cost reports were settled for 1998). Bad debt data for independent rural health clinics, federally qualified health centers and community mental health clinics is not captured because the independent facilities, which make up the majority of these entities, do not file electronic cost reports. The reduction in reimbursement would also affect critical access hospitals, which are defined under section 1820 of the Act and were not subject to the reduction in bad debt reimbursement imposed by the BBA on hospitals defined in section 1861(v)(1). Cost report data for critical access hospitals was badly skewed because of systems problems after November 1, 1997. Lab and outpatient services (which one Intermediary reports accounts for 30 to 40 percent of the revenue for critical access hospitals) for some of these entities were reimbursed on a cost basis with applicable coinsurance and deductible amounts, while some of these entities were paid under a fee schedule with no reimbursement for bad debts. As of November 29, 1999, coinsurance and deductibles were eliminated from lab services for critical access hospitals. We expect that this action will significantly reduce the amount of bad debt incurred by these facilities.

The following is the individual estimate of the economic impact of this rule between provider types (in $millions):

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis (RIA) if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. Although this rule would impact some small rural hospitals, including critical access hospitals, most hospitals have already been subject to the 30 percent reduction implemented by statute. We believe this rule would not have a significant impact on the operations of a substantial number of small rural hospitals and the impact would be mitigated by implementing the rule gradually over a 3-year period.

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and governmental agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million annually. Intermediaries and carriers are not considered to be small entities.

Small rural hospitals of fewer than 100 beds, rural health clinics, community mental health centers, free-standing ESRD facilities, and hospital-based ESRD facilities would be affected by this rule. There are approximately 352 critical access hospitals, and all of these facilities would be small rural hospitals. To the extent that they incur bad debts, they would be affected. It is very difficult to assess the impact on these facilities because the impact, if any, on a facility would be influenced by the amount of bad debts the facility incurs. However, the elimination of coinsurance and deductible amounts for lab services rendered by critical access hospitals should substantially reduce the amount of bad debt that these small hospitals incur. Any Medicare participants that are currently receiving full (that is, uncapped) reimbursement for their bad debts would see a reduction in payment.

Based on current data, there are approximately 3,528 freestanding and 787 hospital-based ESRD facilities. Although we are not certain how many of these facilities are small rural hospital-based, most ESRD facilities would benefit from this rule as they would be allowed to claim and receive reimbursement for more of their Medicare bad debts, allowing them to claim bad debts over their unrecovered costs. Costs are difficult to estimate because, as discussed above, not all uncapped ESRD bad debts were reported. We welcome all comments that would assist us in determining the possible impact of this rule on any of the above-mentioned entities.

Specific provisions of this proposed rule have already been applied in part to those ESRD facilities affected by the above-mentioned Kidney Center court settlement. These provisions, whether implemented as a result of the court settlement or the rule, were achieved through modifications made to the bad debt settlement portion of the cost report.

We do not believe that the changes made in a final rule will affect beneficiary access to care, as affected providers will continue to be reimbursed for services provided to Medicare beneficiaries, including, where allowable, for Medicare bad debt. By reducing the amount of bad debt reimbursement from 100 percent to 70 percent, this rule will fairly compensate providers, while providing an incentive for them to make reasonable efforts to collect unpaid deductibles and coinsurance.

The analysis indicates that some small, rural providers may experience an additional burden in the form of reduced payments for bad debts. However, our analysis points out that a number of factors will mitigate the impact on small rural hospitals and that payments to ESRD facilities will increase because of the removal of the cap on allowable bad debts claimed. It is impossible to determine the significance of the impact or the number of entities that may be adversely affected. We invite comments on our analysis.

The Unfunded Mandates Reform Act of 1995 also requires (in section 202) that agencies perform an assessment of anticipated costs and benefits before proposing any rule that may result in an annual expenditure in any 1 year by State, local, or Tribal governments, in the aggregate, or by the private sector, of $110 million. This rule does not impose any mandates on State, local or Tribal governments, or on the private sector, as defined by section 202. Entities such as hospitals, SNFs and ESRD facilities will continue to receive Medicare reimbursement for services provided to beneficiaries, including, where allowable, bad debt reimbursement.

For purpose of analysis, we considered two alternatives to this policy, (1) maintaining the existing Medicare bad debt policy, or (2) eliminating bad debt reimbursement, where we had authority to do so. However, we believe that the Medicare bad debt policy proposed in this rule is equitable across provider types and ensures that providers have the incentive to make reasonable efforts to collect bad debts without affecting beneficiary access to care. In addition, the removal of the cap on bad debt reimbursement for ESRD facilities is also in accordance with the ruling in The Kidney Center of Hollywood, et al. v. Shalala.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This rule would not have a substantial effect on State or local governments.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

For the reasons set forth in the preamble, CMS proposes to amend 42 CFR chapter IV part 413 as set forth below:

This is a summary of the Commission's Public Notice, DA 03-19, released on January 3, 2003. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, Qualex International, 445 12th Street, SW., Room CY-B402, Washington, DC. 20554. The full text may also be downloaded at: www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365 or at bmillin@fcc.gov.

On December 24, 2002, a group of sixteen parties filed “Supplemental Comments of the Consensus Parties” in WT Docket 02-55, Improving Public Safety Communications in the 800 MHz Band—Consolidating the 900 MHz Industrial/Land Transportation and Business Pool Channels (67 FR 16351, April 5 2002). 2 In these comments, the parties provide additional details concerning the “Consensus Plan” for addressing interference issues in the 800 MHz band. In order to develop a full and complete record, the Wireless Telecommunications Bureau issues this public notice seeking comment on the Supplemental Comments of the Consensus Parties (Supplemental Comments). The Commission will accept comments on the Supplemental Comments on or before February 3, 2003; and reply comments on or before February 18, 2003.

The Supplemental Comments primarily address four issues: (1) Funding for the Consensus Plan; (2) procedures and processes for relocating 800 MHz incumbents; (3) post-realignment interference protection standards; and (4) border area realignment plans.

Interested parties may view the “Supplemental Comments of the Consensus Parties” on the Commission's Electronic Comment Filing System (ECFS) using the following steps: (1) Access ECFS at http://www.fcc.gov/e-file/ecfs.html. (2) In the introductory screen, click on “Search for Filed Comments.” (3) In the “Proceeding” box, enter “02-55.” (4) In the “Filed on Behalf of” box, enter “Consensus Parties.” (5) In the “Date Submitted” box, enter “12/24/2002.” In addition, the Supplemental Comments of the Consensus Parties will be available for inspection and duplication during regular business hours in the FCC Reference Information Center (RIC) of the Consumer and Governmental Affairs Bureau, Federal Communications Commission, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. Copies of the Supplemental Comments of the Consensus Parties also may be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, (202) 863-2893, facsimile (202) 863-2898, or via e-mail qualexint@aol.com. For further information regarding the public reference file for this Public Notice, contact Maria Ringold, Chief, Wireless Branch, RIC, (202) 418-1355, with reference to the DA number of this Public Notice.

Comments may be filed using the ECFS or by filing paper copies. See Electronic Filing of Documents in Rule Making Proceedings, 63 Fed. Reg. 24121 (1988). Comments filed through the ECFS can be sent as an electronic file via the Internet to http://www.fcc.gov/e-file/ecfs.html. In completing the transmittal screen, commenters should include their full name, U.S. Postal Service mailing address, and the docket number “02-55.”

Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and should include the following words in the body of the message: “get form <your e-mail address>.” A sample form and directions will be sent in reply. Parties who choose to file by paper must file an original and four copies of each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. The Commission's contractor, Vistronix, Inc., will receive hand-delivered or messenger-delivered paper filings for the Commission's Secretary at 236 Massachusetts Ave., NE., Suite 110, Washington, DC 20002. The filing hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of before entering the building. Commercial overnight mail (other than U.S. Postal Service Express Mail or Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class mail, Express Mail, and Priority Mail should be addressed to 445 12th Street, SW., Washington, DC 20554. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

This is a summary of the Commission's Order Extending Time for Filing of Comments, DA 03-163, adopted on January 16, 2003, and released on January 16, 2003. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, Qualex International, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. The full text may also be downloaded at: www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365 or at bmillin@fcc.gov.

On December 24, 2002, the “Consensus Parties” filed supplemental comments further explaining the particulars of their proposal addressing interference experienced by 800 MHz public safety systems. On January 3, 2003, the Wireless Telecommunications Bureau sought comment on the Consensus Parties supplemental comments. On January 13, 2002, the Cellular Telecommunications & Internet Association (CTIA) filed a Request for Extension of Time (Request) in the captioned proceeding, asking that the current date set for the filing of comments, February 3, 2003, and the date set for filing of reply comments, February 18, 2003, be extended by four weeks; i.e. that the date for submitting comments be changed to March 3, 2003, and the date for submitting reply comments be changed to March 18, 2003. We also note that Cinergy Corporation, Entergy Corporation and Entergy Services, Inc., Consumers Energy Company and Southern Communications Company each submitted pleadings supporting CTIA's request.

It is the policy of the Commission that extensions of time are not routinely granted. Here, CTIA requests additional time to thoroughly review the plan presented in the supplemental comments thereby to provide a more complete record in this docket. CTIA also asserts that it needs additional time to permit consultation with its members and expert personnel. It submits that time is not of the essence in this proceeding because the proposed band reconfiguration would take several years to implement. We disagree. On March 15, 2002, the Commission released the Notice of Proposed Rule Making (NPRM), [67 FR 16351, April 5, 2002], associated with this docket. In the NPRM, the Commission stated that it intended to move swiftly to achieve its objective—improving the spectrum environment for public safety operations in the 800 MHz Band. However, finding some merit in the arguments advanced by CTIA and in the supporting pleadings, we believe that a modest extension of time “ one week “ may serve to compile a more complete record. Therefore, we hereby extend the comment date to February 10, 2003 and extend the reply comment date to February 25, 2003.

Accordingly, it is Ordered that CTIA's Motion for Extension of Time is Granted to the extent expressed herein and is Denied in all other respects, and that the time for filing comments in the captioned proceeding is Extended until February 10, 2003 and the time for filing reply comments in the captioned proceeding is Extended until February 25, 2003.

1. On October 11, 2002, the Commission released a Notice of Proposed Rulemaking (NPRM) seeking comment from the public regarding possible reform of its International Settlements Policy, International Simple Resale and benchmarks policies, and the issue of foreign mobile termination rates. (See 67 FR 65527, October 25, 2002.)

2. On January 14, 2003, the Commission received comments from twenty parties on the issues under consideration in the NPRM. A substantial number of initial commenters are either foreign carriers or associations based in foreign countries. Therefore, recognizing the potential need of some of these commenters for additional time to ensure proper translations as well as the need for timely access to the initial comments through the Commission's Electronic Comment Filing System (ECFS), we extend the comment due date for replies regarding the NPRM, FCC 02-285, IB Docket Nos. 02-324 & 96-261, by 12 days to February 18, 2003 in order to afford all members of the public a full opportunity to comment on the issues raised in the initial comments. We find that the public interest will be served by this brief extension of the reply dates to allow for a more complete record in this proceeding.

3. Accordingly, pursuant to § 1.1 of the Commission's rules, 47 CFR 1.1, the new reply comment due date is February 18, 2003. Instructions for filing pleadings in this proceeding are set forth in the NPRM, available on the Commission's Web site at http://www.fcc.gov.

I. Background

The Hazardous Materials Regulations (HMR; 49 CFR Parts 171-180), at § 173.33(e), prohibit the retention of certain liquid hazardous materials in the external product piping of a DOT specification cargo tank, unless the cargo tank motor vehicle is equipped with bottom damage protection devices. The bottom damage protection devices must meet the requirements of § 178.337-10 for the MC 331 specification; § 178.345-8(b) for DOT 400-series specifications; or the accident damage protection requirements of the specification under which any other cargo tank motor vehicle was manufactured. The current prohibition applies to liquid hazardous materials in Divisions 6.1 (toxic), 5.1 (oxidizer), 5.2 (organic peroxide), and Class 8 (corrosive to skin only). The prohibition does not apply to a residue that remains after the product piping is drained to the extent possible or to the retention of flammable liquids in product piping.

The Research and Special Programs Administration (RSPA; we) adopted the current requirements in final rules published under Docket No. HM-183, on June 12, 1989 (54 FR 24982) and September 7, 1990 (55 FR 37028). In the June 12, 1989 final rule, we amended the regulations to require accident damage protection devices on product piping containing liquid hazardous materials in Divisions 6.1 (toxic), 5.1 (oxidizer), 5.2 (organic peroxide), Classes 8 (corrosive to skin only), and 3 (flammable liquids), except for flammable liquid fuels transported in cargo tank motor vehicles equipped with meters for fuel tax purposes. These latter tanks were excluded because of the potential costs to modify the cargo tank motor vehicles and the apparent unavailability of a practical system to empty wetlines after bottom-loading. We also imposed limitations for the inside diameter and aggregate volume of all unprotected product piping on a cargo tank motor vehicle as a means to limit the quantity of lading retained in wetlines (54 FR 24987).

In the preamble of the June 12, 1989 final rule, we stated that bottom loading and unloading outlets on a cargo tank motor vehicle present an inherent risk that, if the outlets are damaged, the entire contents of the cargo tank may be released. To counteract this risk, we required product piping attached to the outlet valve to have a sacrificial device designed to break under accident loads. We also stated that during the 1980's, the petroleum industry chose to equip their cargo tanks with top vapor recovery systems and to bottom load as a means of complying with state implementation plans promulgated under the Clean Air Act. In implementing this system, the industry did not provide for draining or purging product from the cargo tank piping after it was bottom-loaded.

After publication of the June 12, 1989 final rule, we received hundreds of petitions for reconsideration. Several petitioners requested that we broaden the exception for flammable liquid fuels metered for fuel tax purposes to include all flammable liquids and certain other hazardous materials and to remove the quantity limitations for product retention in wetlines. Many of the concerns raised in these petitions, about the difficulties of removing product from loading lines or compliance with the accident damage protection requirements, had not been brought to our attention during the comment period for the NPRM or during any of the subsequent hearings or public meetings.

In the September 7, 1990 final rule that responded to the petitions for reconsideration, we amended the June 12, 1989 final rule to remove all of the adopted restrictions on transporting flammable liquids in wetlines. We realized that the petroleum industry needed additional time to implement design and operational changes before a prohibition against unprotected product piping could be adopted. We recognized the inherent difficulties in draining or purging product from the loading lines while maintaining an accurate metering system. However, we stated:

We reiterated that the prohibition of lading in product piping was applicable only to DOT specification cargo tanks used to transport liquid hazardous materials. We also clarified that the prohibition in § 173.33(e) does not apply to cargo tank motor vehicles used to transport hazardous materials having relatively low hazards, such as combustible liquids, where the use of a specification cargo tank is not required. See 55 FR 37030.

On October 9, 1997, in Yonkers, New York a westbound MC 306 cargo tank motor vehicle containing 8,800 gallons of gasoline was struck broadside in the area of the piping manifold by a southbound passenger vehicle. The initial impact fractured the cargo tank's product piping and released approximately 28 gallons of gasoline. After surviving the initial impact, the 62-year-old operator of the passenger vehicle died from burns sustained in the fire that ignited immediately following the collision. Once ignited, the fire eventually spread and consumed the entire contents of the cargo tank, destroying both vehicles and a New York State Thruway overpass.

As part of the accident investigation, investigators from the National Transportation Safety Board (NTSB) reviewed data related to MC 306 cargo tank motor vehicles in the Hazardous Materials Information System (HMIS) for the period January 1990 through August 1997. NTSB identified 501 cargo tank motor vehicle accidents reported during this period; 47 involved external product piping incidents due to outside forces. Of those 47 incidents, 27 involved collisions with other motor vehicles, 16 involved trucks hitting stationary objects, and four involved overturned cargo tank motor vehicles. Fires occurred in five of the 47 product piping incidents, resulting in two deaths, three major injuries, and reported damage estimates of over $800,000.

NTSB issued its accident summary report on May 5, 1998. The NTSB report (H 98-27) is available in this docket and by visiting the NTSB Internet Web site. In its report, NTSB stated that the immediate result of the Yonkers collision was a fire inside and below the car and that the fuel for the initial fire was the gasoline released from the cargo tank's loading lines during impact. The fire was then fed by gasoline from the cargo tank's compartments. NTSB concluded that had the loading lines been empty, the fire likely would not have occurred. Based on its investigation, the NTSB identified as a safety issue the danger of operating a truck when its cargo tank's unprotected loading lines are carrying hazardous materials. In its report, NTSB expressed particular concern about the severity of the Yonkers accident. As a result of its investigation, NTSB recommended (NTSB Recommendation H-98-27) that the Secretary of Transportation prohibit the carrying of hazardous materials in external product piping, such as loading lines, that may be vulnerable to damage in an accident.

On July 22, 1999, RSPA met with industry and trade representatives, at their request, to discuss the NTSB recommendation. Attendees included representatives from the American Petroleum Institute (API), Truck Trailer Manufacturers Association (TTMA), Petroleum Marketers Association of America (PMAA), National Tank Truck Carriers, Inc. (NTTC), Sigma, Sunoco, BP Amoco, and Marathon Ashland. Discussions focused on the cargo tank industry's development of alternative solutions for unprotected product piping. We indicated that we were aware of a purging system under development and invited industry to provide cost data or information on any other potential solutions.

On December 4, 2000, the Office of the Secretary of Transportation, General Counsel, on behalf of RSPA, submitted a significant NPRM to the Office of Management and Budget (OMB) for consideration. In the NPRM, we proposed to adopt a performance standard for substantially eliminating product from unprotected piping that could be met with current technology or by other innovative systems developed by industry.

The proposal required that all affected cargo tanks conform to the performance standard within seven years, allowing for two years of research and development, and, dependent upon the cargo tank's pressure test date, a maximum of five years for retrofits to achieve compliance.

The proposed rule provided an exception for truck-mounted tanks, based on inherent safety features, significantly reducing compliance costs to small businesses. The Petroleum Marketers Association of America (PMAA), a federation of 42 state and regional trade associations, represents 7,850 small, independent petroleum marketers that sell nearly half the gasoline consumed in this country. In a May 23, 2000 letter, PMAA suggested that straight trucks should not be included in any proposed rulemaking because it was unaware of any wet-lines-related fatalities involving straight trucks. The PMAA supported its suggestion by noting that the general design and construction of straight trucks is such that the placement of external product piping is afforded protection by the frame of the truck, the meter box and tool boxes. (The PMAA letter is in the docket for this rulemaking.)

On January 22, 2001, the NPRM was withdrawn for review by the current administration in accordance with a White House Chief of Staff directive. After review by the Secretary of Transportation, the NPRM was resubmitted to OMB for consideration.

On August 10, 2001, OMB returned the NPRM to the Department for reconsideration. In its return letter, OMB expressed concern with the methodology used to determine benefits and the true costs required to achieve them. First, regarding the retrofit of existing cargo tank motor vehicles, OMB was concerned that RSPA was engaging in a “risk-risk” tradeoff, that is, the increase in risk to install (i.e., welding) a system to eliminate wetlines outweighed the benefits realized in lives saved on public highways. Second, OMB questioned whether some or all of the reported fatalities in the NPRM were the result of causes unrelated to wetlines (e.g., blunt force trauma). Third, OMB questioned why RSPA would extrapolate the number of fatalities and injuries multiplied by a factor of 1.5 due to suspected under-reporting of incidents involving wetlines. OMB cited RSPA's “Preliminary Assessment of Risk/Benefit-Cost,” dated January 25, 1999, as stating that this increase in benefits might overstate the risks but was necessary when considering any rulemaking action. (This document is available for review at the RSPA Hazardous Materials Safety Web site, http://hazmat.dot.gov/risk_analyses.htm, and the DOT Docket Management System Web site, http://dms.dot.gov.) Finally, OMB did, however, indicate support for the prohibition of wetlines on newly constructed cargo tank motor vehicles based on the proposal's greater net benefits to society. (The August 16, 2001 OMB letter is in the docket for this rulemaking.)

It is because of these and other uncertainties with regard to cost vs. benefit and new construction vs. retrofit that we have chosen to issue an advance notice of proposed rulemaking. It is our intent to take a “fresh look” at this issue by soliciting comments on the narrative discussion and answers to the questions posed in Section V of this notice.

The unprotected product piping on a five-compartment cargo tank motor vehicle carrying gasoline typically contains 30-50 gallons of gasoline. If a passenger vehicle strikes the side of a cargo tank motor vehicle, the impact likely will fracture the wetlines. In such collisions, the passenger vehicle is often wedged under the cargo tank motor vehicle. With the automobile driver and passenger(s) trapped in the vehicle under the cargo tank and the fractured product piping releasing 30-50 gallons of gasoline, the gasoline spills onto, underneath, or into the passenger vehicle. If ignited, fire rapidly engulfs the driver and passenger(s) inside their vehicle. When ignited, a gasoline spill of 50 gallons will be fatal to persons within a zone of approximately 41 feet, dooming those trapped in a vehicle at the site of the release and fire. If the fire is not extinguished immediately, it may spread from the gasoline originally contained in the product piping to the gasoline contained in the cargo tank motor vehicle. In this instance, the safety threat to the surrounding community is significant.

Since 1992, there have been seven reported accidents, resulting in eight fatalities, where wetlines were damaged and gasoline released. These fatal accidents primarily involve collisions with passenger vehicles. Our experience with the HMIS indicates that there is a degree of under-reporting of hazardous materials transportation accidents of all types. In addition, prior to October 1, 1998, certain intrastate highway carriers were not required to report hazardous materials releases to RSPA. Therefore, the HMIS data probably do not include all accidents involving damage to wetlines on cargo tank motor vehicles.

In this section, we describe a sampling of five fatal wetlines accidents. These descriptions provide an indication of the nature of the safety problem and its possible consequences. In these five accidents, six fatalities appear to have resulted from fires that ignited after passenger vehicles struck wetlines that then released gasoline.

Long Beach, CA (one fatality). On November 22, 1992, in Long Beach, California, a passenger vehicle struck a cargo tank motor vehicle on the right side and ruptured the unprotected product piping. Approximately 26 gallons of gasoline and diesel fuel were released and ignited immediately. The driver of the passenger vehicle died in the accident.

Houston, TX (one fatality). On October 1, 1994, in Houston, Texas, the driver of a passenger vehicle died after his westbound vehicle struck a northbound cargo tank motor vehicle broadside and the product piping sheared off the cargo tank and released 38 gallons of gasoline. A fire broke out. The driver was trapped inside the vehicle wedged under the cargo tank and died in the automobile.

Yonkers, NY (one fatality). On October 9, 1997, in Yonkers, New York, a passenger vehicle struck a cargo tank motor vehicle in the area of the external loading and unloading lines, fracturing the cargo tank's product piping and releasing approximately 28 gallons of gasoline. After surviving the initial impact of the collision, the 62-year old driver of the passenger vehicle died from burns and smoke inhalation from the fire that ignited immediately.

Hammond, IN (two fatalities). On November 12, 1999, in Hammond, Indiana, the 21-year old driver of a passenger vehicle and a four-year old passenger died from burns sustained in a fire that ignited immediately following the collision of their vehicle with a cargo tank motor vehicle. The passenger vehicle struck the cargo tank in the area of the piping manifold releasing the gasoline contained in the product piping. Both vehicles were destroyed by the fire that subsequently spread from the product piping and consumed the entire contents of the cargo tank.

Detroit, MI (one fatality). On July 11, 2001, near Detroit, Michigan, an out of control automobile crashed into a highway barrier and then collided with the underside of a cargo tank motor vehicle. The trapped automobile driver died as a result of the ignition of approximately 50 gallons of gasoline.

In 1994, the American Petroleum Institute (API) initiated a two-phased study to assess the risks posed by petroleum products in unprotected product piping. Phase I of the study, titled Alternative Means of Loading Cargo Tank Motor Vehicles, analyzed the risks posed by the existing industry practice. This phase was completed in February 1994 and concluded:

Phase II of the study was to identify engineering designs that would have the potential for eliminating wetlines or provide collision protection to reduce or eliminate the risk. Because Phase I of the study concluded that the probability of a fatality being directly attributed to wetlines is “quite low,” the second phase of the study was not considered. In its Executive Summary API stated, “Based on the information gathered, the fatality rate from wetline spills is one for every 1.8 × 1010 miles traveled, or one fatality every eleven years.” It also noted that additional information indicated the fatality rate could be considerably higher. In fact, this information indicated that “the fatality rate for these conditions is one for every 1.1 × 109 miles” traveled, or 0.7 fatalities per year.

We are aware of two systems that have been demonstrated to reduce risks from wetlines. The first is an onboard system that evacuates the wetlines by forcing the lading out of the product piping and into the cargo tank body. After loading is complete and the main cargo compartment valves are closed, the system introduces compressed air from an auxiliary tank into the product piping under low pressure and at a low flow rate. Lading in the product piping flows through separate purging lines into the cargo tank body. This purging process is controlled automatically and lasts approximately six minutes. The system is also capable of detecting and automatically purging any leakage of product through the cargo tank's internal shutoff valve into the product piping, thereby eliminating a potential wetline condition during transportation. For an average cargo tank motor vehicle, the weight increase for a manual purging system is approximately 48 pounds.

The second system involves adding a set of short lines for loading that are independent of the unloading lines. These short loading lines, placed on the lower part of the cargo tank, are accessible and are not exposed to damage in case of rollover. Each short four-inch inside diameter pipe extends from the cargo tank wall and contains approximately one gallon of hazardous material; depending on the number of compartments on the cargo tank motor vehicle, the short line piping system on the vehicle could contain 4-5 gallons of hazardous material rather than the 30 to 50 gallons contained in a typical product piping system. For an average cargo tank motor vehicle, the weight increase for the short external product piping option is approximately 50 pounds.

For a system using separate loading lines, it may be feasible to recess the loading connections into the interior cargo tank body so that the surface of the loading inlet is flush with the cargo tank wall. This option may be preferred by cargo tank manufacturers and owners because it eliminates the need to ensure that external product piping is designed and positioned so as to protect the integrity of the cargo tank wall in the event of an accident. Recessing of loading inlets within the cargo tank wall would be expected to eliminate the risks posed by external product piping and could be designed to meet the appropriate accident damage protection requirements. At the present time, however, this option may be unrealistic because substantial modifications to existing loading racks would be necessary or loading times would increase due to the cargo tank being moved to reach loading arms. In addition, there are questions about the effectiveness of such a design and whether it might adversely impact the structural integrity of the cargo tank.

We understand that one major oil company, representing less than one percent of the potentially affected cargo tank population, has chosen to outfit its fleet with a system that purges product from unprotected external piping. Two additional carriers installed the same purging system on a small portion of their fleets as part of a successful field evaluation and expressed interest in equipping their entire fleets. However, these carriers have chosen to defer installation pending possible RSPA rulemaking.

There may also be other ways to reduce wetlines risk. For example, many of the incidents of which we are aware appear to be caused because automobile drivers do not see the cargo tank motor vehicle. Perhaps marking or other systems that increase vehicle conspicuity could be effective in reducing collisions between cargo tank motor vehicles and automobiles.

Further, we are aware that at least one cargo tank operator has installed under-ride protection on its cargo tank motor vehicles. Although this protection may not meet the bottom damage protection requirements under § 178.345-8(b), we invite comments on whether this may or may not substantially reduce the risks posed by unprotected product piping.

It is our understanding that the useful life of a cargo tank motor vehicle is at least 20 years. However, we are aware that many cargo tank motor vehicles may remain in service for up to 30 years. Based on information in the U.S. Census Bureau's 1997 Vehicle Inventory and Use Survey (VIUS), it appears that the average annual population of cargo tank motor vehicles that would be affected by any rulemaking action is approximately 63,000. This number includes bottom-loaded single-unit trucks, straight trucks pulling trailers, and truck-tractors pulling trailers in flammable liquid service. Cargo tank motor vehicles average four compartments each, with piping that contains an aggregate total of approximately 40 gallons of product.

As previously discussed, we are aware of two systems that may reduce risk from wetlines. A manual onboard purging system can be installed on a newly constructed cargo tank motor vehicle for about $2,100 (welded) or $2,250 (non-welded) (2002 dollars). Equipment and installation costs are the same for the retrofit of existing cargo tank motor vehicles; however, additional costs in the form of lost profit or installation risk may be incurred. The independent short loading line system can be installed for $1,540 per cargo tank motor vehicle (2002 dollars). Because of the complexity of such a design, however, it may not be appropriate for the retrofit of existing cargo tank motor vehicles. We invite comments on the feasibility of retrofits of existing vehicles to reduce or eliminate product in wetlines and on costs that may be associated with such a retrofit.

We believe there may be other cost-effective solutions that could significantly reduce or eliminate the current level of risk. We encourage commenters to identify other possible approaches to reducing or eliminating the risks posed by the transportation of flammable liquids in wetlines.

Quantified and monetized benefits realized from action to reduce the transportation risks associated with wetlines would be in the form of reductions in fatalities, major and minor injuries, product losses, carrier damages, public and private property damages, risks to emergency responders, decontamination and cleanup costs, and evacuation costs. Through the HMIS database and information provided by the NTSB, we identified 194 reported incident cases involving wetlines during the period of 1990-2001. As previously discussed, we are aware of at least six fatalities as a result of five of those incidents where piping was damaged and gasoline released.

In addition to quantified/monetized benefits, measures to reduce wetlines risks would reduce losses by the private sector (in terms of time and productivity), by government (in terms of allocation of scarce resources, including emergency responders, their support vehicles and equipment), and by the general public (in terms of time and inconvenience). Some elements of actual and potential losses are: (1) The closure of transportation arteries; (2) the evacuation of homes, businesses and other facilities that are in harm's way; and (3) productivity losses in terms of facility and/or personnel down time attributed to traffic delays and/or facility evacuations.

In general, we seek comments to determine whether regulatory changes are needed and can be made in a cost-effective manner. In particular, we invite commenters to respond to the following questions:

1. Are the statistics and data (e.g., cargo tank population, useful life of a cargo tank, accident frequency and consequences), costs (e.g., purging system, short-loading lines, new construction, retrofit), and potential benefits (e.g., fatalities, injuries, and property damages prevented) provided in this ANPRM accurate?

2. What is the useful life of a cargo tank motor vehicle utilized for the transportation of flammable liquids?

3. What percentage of cargo tank motor vehicles are operated at maximum weight limits such that any additional weight of a system to eliminate wetlines would impose a weight penalty?

4. For cargo tank motor vehicles in flammable liquid service, what is the average distance per trip?

5. In addition to the potential benefits described in this ANPRM, are there additional benefits, measurable or otherwise, that would result from implementation of measures to reduce wetlines risks?

6. Should a benefit-cost analysis include the reduction of risks associated with low-frequency, high-consequence events?

7. Would requirements for systems to reduce the risk posed by wetlines for all newly constructed cargo tank motor vehicles result in significant reductions in per unit cost because of economies of scale?

1. What safety practices, other than those described in this ANPRM, are motor carriers currently utilizing to reduce the risks associated with the transportation of flammable liquids in wetlines?

2. How effective are these safety practices in reducing the risks associated with wetlines on cargo tanks?

3. What are the costs of these safety practices currently utilized?

4. Would an industry or industry/government sponsored research initiative to explore new methods to eliminate wetlines be of value?

5. If so, what would be the value of such a partnership?

1. Concerning the short and recessed loading lines systems described in this ANPRM, what modifications to loading arms or hoses at existing loading racks would be necessary to accommodate short, including recessed within the cargo tank wall, loading lines?

2. What would be the cost of these modifications?

3. Can loading rack fuel tax accounting systems be modified to allow for product reversal once the cargo tank is full and the internal valves are closed, thus draining the loading lines?

4. Is this option viable?

5. What would such a modification cost?

1. Are the short and recessed loading lines options practicable for installation on new cargo tank motor vehicles?

2. Are either of these options practicable for installation on existing cargo tank motor vehicles (i.e., retrofit)?

3. Are there any motor carriers actively operating or contemplating operating cargo tank motor vehicles with such a design?

4. If so, what configuration was utilized and what was the cost to modify the cargo tank?

5. Would maintaining a vehicle with such a design (i.e., independent loading lines) result in higher or lower costs than currently utilized designs?

1. How effective is a purging system in reducing the risks posed by wetlines?

2. Is a purging system practicable for installation on new cargo tank motor vehicles?

3. Is a purging system practicable for installation on existing cargo tank motor vehicles (i.e., retrofit)?

4. Are there any motor carriers actively operating or contemplating operating cargo tank motor vehicles with a purging system?

5. If so, what configuration is utilized (automatic, manual, other) and what was the cost to modify the cargo tank?

6. What are the costs to maintain a cargo tank motor vehicle with a purging system installed?

1. Would improved conspicuity for cargo tank motor vehicles generally, or wetlines in particular, reduce wetlines risks?

2. How effective would improved conspicuity be?

3. Are there marking or lighting systems currently available that could improve the visibility of cargo tank motor vehicles or components of those vehicles to other drivers?

1. Are there cost-effective designs for accident damage or under-ride protection (e.g., guards), specification or otherwise, that would reduce the risks posed by unprotected product piping?

2. What would these designs cost?

3. What level of protection (i.e., impact forces sustained) would be both cost-effective and provide a significant reduction in risks associated with wetlines?

Would a non-regulatory approach, such as an awareness campaign to alert the public as to the hazards posed by wetlines, be successful in helping to reduce the risks posed by wetlines?

1. In addition to the purging and short-line systems described in this ANPRM, are there other systems currently being marketed or in development that can evacuate wetlines after loading or prevent wetlines from retaining liquid during loading operations?

2. What are the costs or projected costs of such systems?

3. How effective are they?

4. How close to implementation are systems currently in the development phase?

5. Are there other concepts, either related to vehicles or facilities, that might have application in reducing the risks posed by wetlines?

There are a number of additional issues that we must address in determining whether to proceed with any rulemaking action. These include the analyses required under the following statutes and Executive Orders:

This rulemaking is considered a significant regulatory action under section 3(f) of Executive Order 12866 and the Regulatory Policies and Procedures of the Department of Transportation (44 FR 11032). This ANPRM was reviewed by the Office of Management and Budget.

E.O. 12866 requires agencies to regulate in the “most cost-effective manner,” to make a “reasoned determination that the benefits of the intended regulation justify its costs,” and to develop regulations that “impose the least burden on society.” We therefore request comments, including specific data if possible, concerning the costs and benefits that may be associated with regulatory measures to reduce the safety risks associated with transportation of flammable liquids in wetlines. We would also be interested in comments on the several issues relating to the measurement of costs and benefits and the treatment of newly constructed as opposed to retrofitted cargo tank motor vehicles raised in the OMB Return Letter (discussed in Section I of this notice). To the extent feasible systems may be available to achieve compliance with a proposal to reduce wetlines risks, we invite commenters to discuss the effectiveness of such systems and to provide estimates of the unit cost of new construction and the unit cost to retrofit a cargo tank motor vehicle in the existing fleet. Alternatively, if there are feasible means to comply with a proposal by modifying equipment or procedures at the loading facility, interested parties are invited to provide comments on their cost and effectiveness.

E.O. 13132 requires agencies to assure meaningful and timely input by state and local officials in the development of regulatory policies that may 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. We invite State and local governments with an interest in this rulemaking to comment on the effect that regulatory measures to reduce wetlines risks may have on State or local safety or environmental protection programs.

E.O. 13175 requires agencies to assure meaningful and timely input from Indian tribal government representatives in the development of rules that “significantly or uniquely affect” Indian communities and that impose “substantial and direct compliance costs” on such communities. We invite Indian tribal governments to provide comments as to the effect that regulatory measures to reduce wetlines risks may have on Indian communities.

The Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq.) requires each agency to review regulations and assess their impact on small entities unless the agency determines that a rule is not expected to have a significant impact on a substantial number of small entities. “Small entities” include small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations under 50,000. Interested parties are invited to comment on estimates of the costs and benefits of rulemaking scenarios that would reduce wetlines risks, including any impact on small businesses.

The National Environmental Policy Act of 1969 (NEPA) requires that Federal agencies consider the consequences of major Federal actions and that they prepare a detailed statement on actions significantly affecting the quality of the human environment. Interested parties are invited to review the Environmental Assessment available in the docket at http://dms.dot.gov, and to comment on what environmental impact, if any, a regulatory proposal to reduce wetlines risks would have.

The Department of Transportation assigns a regulation identifier number (RIN) to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN number contained in the heading of this document may be used to cross-reference this action with the Unified Agenda.

Acquisition by a rail carrier of trackage rights over a railroad line owned or operated by another rail carrier may be carried out only with the approval and authorization of the Board. See 49 U.S.C. 11323(a)(6). Under 49 U.S.C. 11324(d), the Board is required to approve trackage rights applications unless we find that (1) as a result of a transaction, there is likely to be substantial lessening of competition, creation of a monopoly, or restraint of trade in freight surface transportation in any region of the United States, and (2) the anticompetitive effects of the transaction outweigh the public interest in meeting significant transportation needs.

The Staggers Rail Act of 1980 substantially broadened the authority of our predecessor, the Interstate Commerce Commission (ICC), and hence our authority, to exempt transactions from regulation. Under 49 U.S.C. 10502, we are directed to exempt a person, class of persons, or a transaction or service from our regulation whenever we find that (1) regulation is not necessary to carry out the RTP, and (2) either the transaction or service is of limited scope or regulation is not needed to protect shippers from an abuse of market power. We may exempt not only a single transaction, but an entire class of transactions, as the ICC did when adopting the existing class exemption at 49 CFR 1180.2(d)(7). A class exemption does not mean that a particular transaction is beyond our reach. Rather, it is a means by which a carrier may obtain an authorization without going through a full regulatory process, in the types of cases to which the class exemption applies.

In Railroad Consolidation Procedures, 1 I.C.C.2d 270 (1985), the ICC adopted a class exemption for trackage rights based on written agreements and not sought in responsive applications in rail consolidation proceedings. See 49 CFR 1180.2(d)(7).1 In adopting those procedures, the ICC found that exempting trackage rights proposals as a class would promote the RTP and competition generally because trackage rights facilitate operating efficiencies. The ICC also found that the exemption was limited in scope because the class of exempted transactions was limited and, typically, trackage rights transactions either involved modifications in operations that promoted efficiency for the operator and maintained the status quo, or involved the addition of a competing carrier to a line through trackage rights that increased the number of carriers on the line and increased competition for traffic. For these reasons, the ICC also found that regulation of this class of trackage rights is not necessary to protect shippers from an abuse of market power.

Our reason for instituting this proceeding is that authorization of trackage rights approved under the current class exemption remains in effect indefinitely, regardless of any durational contract provision. However, in recent years parties have sought authorization for temporary trackage rights that were to expire on a certain date. On a number of occasions, those requests have involved carriers that were about to perform extensive maintenance over portions of their heavily used track. Other requests for temporary trackage rights have involved the need to accommodate the short-term storage of rail cars or the need to make provision for local service, line relocation and rehabilitation projects, as well as a variety of freight, intercity passenger and commuter operations.

Generally, a carrier seeking such a time-limited authorization has first filed a notice of exemption under 1180.2(d)(7), thereby acquiring authority to exercise trackage rights indefinitely over a particular line. Subsequently, it has filed a request that we allow the authorization to expire on a certain date. In the past, we have analyzed these subsequent filings on a case-by-case basis under 49 U.S.C. 10502, and have routinely granted the requested petition to allow the authorization to expire on a specific date.2 In those individual cases, having found the time-limited authorization to be consistent with the statutory limited scope criterion, we have not found it necessary to examine whether full regulation of a temporary trackage rights arrangement is necessary to protect shippers from an abuse of market power.

Given our experience in those cases, we believe that both rail carriers and the public would benefit from a rule that expressly provides a class exemption from 49 U.S.C. 11323 to permit authorization, for a limited period of time, of trackage rights that by their terms expire on a date certain. We further believe that this proposal is consistent with the exemption criteria at 49 U.S.C. 10502, as next discussed.

Individual approval of trackage rights transactions for which the carriers seek authorization for a limited period of time does not appear to be necessary to carry out the goals of the RTP. Rather, exempting such proposals as a class would promote the RTP by eliminating the need to file a second pleading seeking discontinuance when the agreement expires, thereby minimizing regulation of the rail system (49 U.S.C. 10101(2)), promoting the continuation of a sound rail system by facilitating the process of line repair and maintenance (49 U.S.C. 10101(4)), and promoting coordination between rail carriers (49 U.S.C. 10101(5)). The proposed class exemption would also reduce the regulatory uncertainty of the parties, facilitate the parties' ability to reach agreement on temporary trackage rights, reduce the filing fees required of carriers seeking such rights, and encourage more use of trackage rights in general and temporary trackage rights in particular. 49 U.S.C. 10101 (7), (15).

The proposed exemption also appears to be of limited scope because we are limiting the class of exempted transactions. And the authorization for trackage rights will be limited in duration.

In addition, it appears that regulation of this class of temporary trackage rights is not necessary to protect shippers from an abuse of market power. Providing temporary trackage rights authorization would not reduce competition, and temporary trackage rights authorizations that add no service on the line (e.g., overhead, or bridge, traffic) merely maintain the status quo among carriers and shippers on the line. Public comments are invited on all of these conclusions, as well as on possible negative consequences, if any, that could result from such a class exemption.

If the proposed class exemption is adopted, an eighth category of exempt transactions would be added to our rail consolidation regulations. We would amend 49 CFR part 1180 by adding new sections 1180.2(d)(8), and 1180.4(g)(2) (iii) and (iv). Consistent with the regulations in part 1180, carriers seeking to use the proposed exemption would be required to submit the information required by 49 CFR 1180.4(g)(1)(i). This includes the names of the applicants, a summary of the nature of the proposed transaction, a contact person, the proposed time schedule for consummation, the purpose to be accomplished, any other supporting statements deemed material by applicants, the level of labor protection to be imposed, a list of the states in which any part of the property of each applicant carrier is located, and a map showing the involved lines. In addition, the caption summary required in connection with this proposed class exemption must specify the date the authorization will expire. 49 CFR 1180.4(g)(2)(iii). An executed copy of the written trackage rights agreement must also be submitted.

As noted, section 1180.4(g)(1)(i) requires that the exemption notice filed with the Board indicate the level of employee protection to be imposed.3 As with other grants of trackage rights, approval of temporary trackage rights agreements under 49 U.S.C. 11323 must include the employee protective conditions set forth in Norfolk and Western Ry. Co.-Trackage Rights-BN, 354 I.C.C. 605 (1978), as modified by Mendocino Coast Ry., Inc.-Lease and Operate, 360 I.C.C. 653 (1980), aff'd sub nom. Railway Labor Executives' Association v. ICC, 675 F.2d 1248 (D.C. Cir. 1982). Accordingly, all temporary trackage rights exemptions would be so conditioned.

As previously discussed, under 49 U.S.C. 10903, after a carrier begins trackage rights operations, even when conducted under an exemption, discontinuance of the service may not occur absent a certificate of discontinuance, or exemption therefrom, issued by the Board. This requirement would continue to apply to carriers utilizing the current trackage rights class exemption, 49 CFR 1180.2(d)(7). Although we normally require that a carrier seeking to terminate trackage rights operations file a separate request for discontinuance authority, this requirement of a separate filing would be unnecessary under the proposed new 49 CFR 1180.2(d)(8) class exemption. In these cases, the authority to exercise trackage rights temporarily, only until a particular date, would implicitly include the authority to discontinue service on that date. Therefore, we would not require separate discontinuance authority to terminate temporary trackage rights operations authorized under the proposed class exemption. Finally, we note that the proposed class exemption would be limited to temporary trackage rights transactions and would not operate to exempt any other regulated activities conducted on that track or exempt any associated transactions of the involved carriers.

We propose under 49 U.S.C. 10502 to add a new category to the specific categories of exempt transactions listed at 49 CFR 1180.2(d). This new category, to be set forth, if adopted, at 49 CFR 1180.2(d)(8), would be for temporary trackage rights proposals under 49 U.S.C. 11323 that are: (1) Based on written agreements, (2) not filed or sought in responsive applications in rail consolidation proceedings, and (3) scheduled to expire on a specific date. We also propose to add new subsections (iii) and (iv) to 49 CFR 1180.4(g)(2), regarding the caption summary to be provided by applicant and published in the Federal Register. The exemption as proposed would embrace temporary trackage rights sought for any purpose. Public comments on this specific proposal, its scope, and its limits are invited.

Standard labor protective conditions would be imposed on any carrier using this class exemption. Carriers using this class exemption could discontinue service without the need to obtain a certificate or exemption from the Board. Comments on these proposals are also invited.

The Director of the Office of Proceedings has certified, by decision served concurrently with this notice and to be published in the Federal Register, that the proposed exemption will not have a significant impact on a substantial number of small entities. Exemption should not affect small shipper or carrier entities because the result of the temporary trackage rights proposed for exemption would not affect rail operations except to increase efficiency. No shipper would lose service and other shippers might receive more efficient service under the proposal. No carrier's operations would be significantly affected by the temporary trackage rights proposed for exemption.

This action will not significantly affect either the quality of the human environment or the conservation of energy resources.

For the reasons set forth in the preamble, the Surface Transportation Board proposes to amend part 1180 of title 49, chapter X, of the Code of Federal Regulations as follows:

In 1916, the United States and Great Britain (on behalf of Canada) signed the Convention for the Protection of Migratory Birds in Canada and the United States (Canada Treaty). The treaty prohibited commercial hunting for, and specified a closed season on the taking of, migratory game birds between March 10 and September 1 of each year. In 1936, the United States and Mexico signed the Convention for the Protection of Migratory Birds and Game Mammals (Mexico Treaty). The Mexico treaty prohibited the taking of wild ducks between March 10 and September 1. Neither treaty took into account and allowed adequately for the traditional harvest of migratory birds by northern peoples during the spring and summer months. This harvest, which had occurred for centuries, was necessary to the subsistence way of life in the north and thus continued despite the closed season.

The Canada treaty and the Mexico treaty, as well as migratory bird treaties with Japan (1972) and Russia (1976), have been implemented in the United States through the Migratory Bird Treaty Act (MBTA). The courts have ruled that the MBTA prohibits the Federal Government from permitting any harvest of migratory birds that is inconsistent with the terms of any of the migratory bird treaties. The more restrictive terms of the Canada and Mexico treaties thus prevented the Federal Government from permitting the traditional subsistence harvest of migratory birds during spring and summer in Alaska. To remedy this situation, the United States negotiated Protocols amending both the Canada and Mexico treaties to allow for spring/summer subsistence harvest of migratory birds by indigenous inhabitants of identified subsistence harvest areas in Alaska. The U.S. Senate approved the amendments to both treaties in 1997.

The major goals of the amended treaty with Canada are to allow for traditional subsistence harvest and to improve conservation of migratory birds by allowing effective regulation of this harvest. The amended treaty with Canada allows permanent residents of villages within subsistence harvest areas, regardless of race, to continue harvesting migratory birds between March 10 and September 1 as they have done for thousands of years. The Letter of Submittal of May 20, 1996 from the Department of State to the White House which officially accompanied the treaty protocol, explains that lands north and west of the Alaska Range and within the Alaska Peninsula, Kodiak Archipelago, and the Aleutian Islands generally qualify as subsistence harvest areas. Treaty language provides for further refinement of this determination by management bodies.

The amendments are not intended to cause significant increases in the take of migratory birds relative to their continental population sizes. Therefore, the Letter of Submittal places limitations on who is eligible to harvest and where they can harvest migratory birds. Anchorage, the Matanuska-Susitna and Fairbanks North Star Boroughs, the Kenai Peninsula roaded area, the Gulf of Alaska roaded area, and Southeast Alaska generally do not qualify as subsistence harvest areas. Limited exceptions may be made so that some individual communities within these excluded areas may qualify for designation as subsistence harvest areas for specific purposes. For example, future regulations could allow some villages in Southeast Alaska to collect gull eggs.

The amended treaty with Canada calls for creation of management bodies to ensure an effective and meaningful role for Alaska's indigenous inhabitants in the conservation of migratory birds. According to the Letter of Submittal, management bodies are to include Alaska Native, Federal, and State of Alaska representatives as equals. Together they will develop recommendations for, among other things: seasons and bag limits, methods and means of take, law enforcement policies, population and harvest monitoring, education programs, research and use of traditional knowledge, and habitat protection. The management bodies will involve village councils to the maximum extent possible in all aspects of management.

The management bodies will submit relevant recommendations to the Service and to the Flyway Councils. Restrictions in harvest levels for the purpose of conservation will be shared equitably by users in Alaska and users in other States, taking into account nutritional needs of subsistence users in Alaska. The treaty amendments are not intended to create a preference in favor of any group of users in the United States or to modify any preference that may exist, nor do they create any private rights of action under U.S. law.

In 1998, we began a public involvement process to determine how to structure management bodies in order to provide the most effective and efficient involvement for subsistence users. We began by publishing a notice in the Federal Register stating that we intended to establish management bodies to implement the spring and summer subsistence harvest (63 FR 49707, September 17, 1998). The Service, the Alaska Department of Fish and Game, and the Native Migratory Bird Working Group held public forums to provide information regarding the amended treaties and to listen to the needs of subsistence users. The Native Migratory Bird Working Group was a consortium of Alaska Natives formed by the Rural Alaska Community Action Program to represent Alaska Native subsistence hunters of migratory birds during the treaty negotiations. We held forums in Nome, Kotzebue, Fort Yukon, Allakaket, Naknek, Bethel, Dillingham, Barrow, and Copper Center. We led additional briefings and discussions at the annual meeting of the Association of Village Council Presidents in Hooper Bay and for the Central Council of Tlingit & Haida Indian Tribes in Juneau. Staff members from National Wildlife Refuges in Alaska also conducted public meetings in the villages within their refuge areas and discussed the amended treaties at those meetings.

On July 1, 1999, we published in the Federal Register (64 FR 35674) a notice of availability of an options document, entitled “Forming management bodies to implement legal spring and summer migratory bird subsistence hunting in Alaska.” This document described four possible models for establishing management bodies and was released to the public for review and comment. We mailed copies of the document to approximately 1,350 individuals and organizations, including all tribal councils and municipal governments in Alaska, Native regional corporations and their associated nonprofit organizations, the Alaska Department of Fish and Game, Federal land management agencies, representatives of the four Flyway Councils, conservation and other affected organizations, and interested businesses and individuals. We distributed an additional 600 copies at public meetings held in Alaska to discuss the four models. We also made the document available on the U.S. Fish and Wildlife Service Web page.

During the public comment period, we received 60 written comments addressing the formation of management bodies. Of those 60 comments, 26 were from tribal governments, 20 from individuals, 10 from nongovernmental organizations, 2 from the Federal Government, 1 from the State of Alaska, and 1 from the Native Migratory Bird Working Group. In addition to the 60 written comments, 9 of the 10 Federal Subsistence Regional Advisory Councils passed resolutions regarding the four models presented.

On March 28, 2000, we published in the Federal Register (65 FR 16405) the Notice of Decision, “Establishment of Management Bodies in Alaska To Develop Recommendations Related to the Spring/Summer Subsistence Harvest of Migratory Birds.” This notice described the establishment and organization of management bodies.

Based on the wide range of views expressed on the options document, the decision incorporated key aspects of two of the models. The decision established one statewide management body consisting of 1 Federal member, 1 State member, and 7-12 Alaska Native members, with each component serving as equals. Decisions and recommendations of this management body will be by consensus wherever possible; however, if a vote becomes necessary, each component, Federal, State, and Native, will have one vote. This body will set a framework for annual regulations for spring and summer subsistence harvest of migratory birds.

The Alaska Regional Director of the Service divided Alaska into 12 geographic regions based on common subsistence resource use patterns and the 12 Alaska Native Regional Corporation boundaries under the Alaska Native Claims Settlement Act. Despite using the Alaska Native Regional Corporation boundaries, we are not working directly with the Regional Corporations in this program, and are instead working with the Alaska Native non-profit groups and local governments in those corresponding regions. Eleven regional bodies have elected to participate in the statewide management body at this time. Out of all of the regions represented in the statewide management body, only eight regions actually represent included areas (50 CFR part 92.5). These eight eligible regions submitted proposals to open harvest in 2003.

In April 2000, we met with the Alaska Department of Fish and Game and the Native Migratory Bird Working Group to discuss bylaws for the statewide management body. At that meeting, participants decided to name the statewide management body the “Alaska Migratory Bird Co-management Council.” On October 30, 2000, the Co-management Council convened for the first time to establish organizational guidelines and to begin preparation for the development of recommendations for regulations. On December 17, 2001, the Co-management Council met to refine organizational procedures and to discuss Alaska Frameworks/Guidelines for development of regulations for the first harvest season.

Over the winter of 2001/2002, the regional management bodies submitted recommendations for regulating the harvest within their regions. Recommendations were received only from the eight regions with communities included in the 2003 proposed harvest. The other four regions did not send in recommendations. On May 14, 2002, the Co-management Council met to make final recommendations on harvest dates and methods and means of harvest for the 2003 season as necessary to protect the migratory bird resource. The Co-management Council recommendations were sent to the four Flyway Councils for comments, and presentations were made at July 2002 meetings of the Pacific and Central Flyway Councils. The Co-management Council's harvest recommendations were initially presented to the Service Regulations Committee (SRC) on August 31, 2002, with final SRC action on October 24, 2002.

On April 8, 2002, we published in the Federal Register (67 FR 16709) a proposed rule to establish procedures for implementing a spring/summer migratory bird subsistence harvest in Alaska. The proposed rule provided for a public comment period of 46 days. We mailed copies of the proposed rule to more than 1,200 individuals and organizations that were on the project mailing list. We conducted two public meetings in Anchorage where people could ask questions or provide formal comment.

By the close of the public comment period on May 24, 2002, we had received written responses from 11 entities. Four of the responses were from individuals, five from organizations, one from the Alaska Legislature, and one from the Alaska Department of Fish and Game. On August 16, 2002, we published in the Federal Register (67 FR 53511) a final rule, which established procedures for incorporating subsistence management into the continental migratory bird management program. These procedural regulations establish an annual procedure to develop harvest guidelines for implementation of a spring/summer migratory bird subsistence harvest.

This is the first year that we will prescribe annual frameworks, or outer limits, for dates when subsistence harvest of birds may occur, the list of species that may be taken, methods and means excluded from use, etc. The proposed frameworks are not intended to be a complete, all-inclusive set of regulations, but are intended to provide an initial framework to legalize customary and traditional subsistence uses of migratory birds in Alaska during the spring and summer. The proposed rulemaking is necessary because the regulations governing the subsistence harvest of migratory birds in Alaska are subject to annual establishment and public review, i.e., the season is closed unless opened. This proposed rule introduces regulations for reorganization of the regional areas, harvest seasons, methods, and means related to taking of migratory birds for subsistence uses in Alaska during the spring/summer of 2003. The creation of part 92 also necessitates the need for nonsubstantive changes to parts 20 and 21, and we have proposed these changes in the rule portion of this document.

The Service's authority arises from the four international treaties implemented by the Migratory Bird Treaty Act. Formerly, the 1916 Convention between the United States and Great Britain on behalf of Canada and the 1936 treaty with the United Mexican States contained language that precluded most spring/summer subsistence harvest of migratory birds in Alaska. Both of these treaties have now been amended to allow the U.S. government to implement subsistence harvests during the closed season by indigenous inhabitants of identified subsistence harvest areas in Alaska. Specifically, the Protocol with Canada, Article II of the Treaty was revised to allow migratory birds and their eggs to be harvested by the indigenous inhabitants of the State of Alaska, regardless of the closed season provisions in Article II.

Although the Protocol with the United Mexican States was amended to allow for the taking of wild ducks by indigenous inhabitants of Alaska, the hunting season limitation specified in Article II Part C was not altered. Therefore, the length of the Alaskan spring/summer subsistence harvest of migratory birds cannot exceed the period specified within the Mexican convention, which is 4 months. Historically, we have interpreted this restriction as 124 days. Therefore, to be consistent with the Mexican Treaty, subsistence harvest between March 11 and September 1 must be limited to 124 days. The above interpretation of season length came late in this initial regulatory process. The Co-management Council had developed season recommendations without being aware of a 124-day season limitation; therefore, the Service has elected to open the season on April 2, 2003, and allow the “Closed Season Policy” (53 FR 16877, May 12, 1988) to remain in effect through April 1. Under the “Closed Season Policy,” the closed season is selectively enforced to protect those species for which there is greatest conservation concern. Following April 1, 2003, the “Closed Season Policy” will no longer be in effect. The regulations in 50 CFR part 20 will apply to all migratory bird harvests by all people in Alaska from September 1, 2003 to March 11, 2004.

The 1974 Migratory Bird Treaty with Japan provides for “taking of migratory birds by Eskimos, Indians, and Indigenous peoples of the Trust Territory of the Pacific Islands for their own food and clothing.” The Japan Treaty further stipulates that “Open seasons for harvesting migratory birds may be decided by each Contracting Party respectively. Such harvesting seasons shall be set so as to avoid their principal nesting seasons and to maintain their populations in optimum numbers.” In conformance with this provision, the Service developed a provision that would allow the traditional subsistence harvesting of eggs while also providing protection during the most critical part of the production period. Using ducks and geese as the initial model (with applications later considered for seabirds), a 30-day closed period targets the last two weeks of the incubation period and the first two weeks of the brood rearing period. This concept still permits an opportunity for traditional egg harvesting during the early period after egg laying, but protects the later developing eggs and newly hatched young. To determine the best protective closure periods for their harvest regions based on mean nest initiation and egg laying dates, regional management bodies within the Co-management Council worked with the Service's Division of Migratory Bird Management in Anchorage, Alaska. Closures in some regions were geographically subdivided to provide the best protection, while other regions were provided separate closures for waterfowl and seabirds (primarily murres).

In this proposed rule, the Yukon-Kuskokwim Delta region requested flexibility to set and announce the annual mid-season principal nesting closure period, based on local information, such as timing of snow melt and initiation of nesting. Thus, the closure period in the Yukon-Kuskokwim Delta region will be announced by the Alaska Regional Director or his or her designee, after consultation with biologists in the field, local subsistence users, and the region's Waterfowl Conservation Committee. A press release announcing the actual closure dates will be forwarded to regional newspapers and radio and television stations and posted in village post offices and stores.

The Preamble of the Protocol amending the Canada Treaty states one of its goals is to allow a traditional subsistence hunt while also improving conservation of migratory birds through effective regulation of this hunt. In addition, the Preamble notes that, by sanctioning a traditional subsistence hunt, the Parties do not intend to cause significant increases in the take of migratory birds, relative to their continental population sizes, compared to the take that is presently occurring. Any such increase in take as a result of the types of hunting provided for in the Protocol would be inconsistent with the Convention.

Eligibility to harvest under these new regulations is limited to permanent residents, regardless of race, in villages located within the Alaska Peninsula, Kodiak Archipelago, the Aleutian Islands, or in areas north and west of the Alaska Range (50 CFR part 92.5). These geographical restrictions open the initial spring/summer subsistence migratory bird harvest to only about 13% of Alaska residents. High-population areas such as Anchorage, the Matanuska-Susitna and Fairbanks North Star boroughs; the Kenai Peninsula roaded area; the Gulf of Alaska roaded area; and Southeast Alaska are currently excluded from the eligible subsistence harvest areas. The eligible subsistence harvest areas were determined by a history of customary and traditional use of migratory birds during the spring and summer as provided in the Protocol amending the Canada Treaty. Adoption of annual harvest regulations will legalize the spring/summer subsistence harvest, but is not intended to initiate or somehow increase it, since subsistence harvest has a long history of prior use in these regions. In addition, some regions, such as Bristol Bay and the Northwest Arctic, indicated that local interest in harvesting birds was declining due to increased commercial availability of alternative foods.

Alaska Natives have long-standing conservation ethics and traditions that are passed from generation to generation through the teachings of elders. These customary and traditional teachings have provided for the perpetuation of migratory birds prior to the ratification of the Canada and Mexico treaty amendments and will continue to do so following the opening of the legal subsistence season. Ultimately it is these components of Native Alaskan culture, rather than regulations, that will provide the more restrictive limits on the harvest of migratory birds.

We have long recognized that a legal and equitable harvest opportunity should be provided during traditional harvesting periods within a regulated framework that ensures conservation of the resource. Without regulating this ongoing activity, populations of the most heavily harvested species, principally waterfowl, could experience declines, and the recovery of depressed populations would be more difficult. Legalizing the subsistence harvest could make any documentation of the take easier and any reporting more accurate. In addition, the regulations will become part of the comprehensive, continental system of migratory bird management, thus integrating subsistence uses with other uses for the first time. Further, the Alaska subsistence migratory bird harvest is presently thought to constitute only approximately 2-3% of the aggregate national migratory bird harvest.

Under the prior “Closed Season Policy” (53 FR 16877, May 12, 1988), it was the position of the Service to emphasize enforcement of restrictions on species of greatest conservation concern. Since its implementation, information on the “Closed Season Policy” has been broadly distributed in Alaska. We believe it is reasonable to assume that most subsistence users were aware of the policy and continued their traditional harvest of non-protected migratory bird species, so few new subsistence users should be attracted by legalizing their customary and traditional harvests. Indications are that subsistence harvests of migratory birds have, in the past, been generally under reported due to fear of prosecution. Legalization of the harvest could make people more comfortable about reporting take. This could lead to more accurate reporting and ultimately help in regulation setting and bird conservation.

Subsistence harvest has been monitored for the past 14 years through the use of annual household surveys in the most heavily used subsistence harvest areas (e.g., Yukon-Kuskokwim Delta). Continuation of this monitoring would enable tracking of any significant changes or trends in levels of harvest and user participation after legalization of the harvest. The harvest survey forms that we used to collect information were not approved by the Office of Management and Budget (OMB). We are initiating the process to request OMB approval of these forms, and we will publish a notice in the Federal Register in the near future requesting public comment on this information collection. We will not conduct or sponsor these surveys until we obtain OMB approval of this information collection. If OMB approves the forms, we intend to begin a Statewide program to gather information that would provide a more comprehensive view of the overall subsistence harvest and more species-specific harvest data, especially on shore birds.

The Co-Management Council in general adopted the existing methods and means prohibitions that occur in the Federal (50 CFR part 20) and Alaska (AS 16.05.940(17)) migratory bird hunting regulations. Some exceptions were made to allow the continuation of customary and traditional spring harvest methods. For example, an exception was made to allow use of live birds as decoys for the harvest of auklets on Diomede Island.

The concept of harvest or bag limits is difficult to apply to the traditional subsistence harvest. A subsistence harvest involves opportunistic use of resources when they are available or abundant, usually for short periods such as bird migration stopovers. Also, subsistence hunting traditionally is often not for individual purposes, meaning hunters are taking birds to be shared within the community, among several families. Historically, local survival depended on sharing which is a cultural value broadly taught and practiced both within and between communities. Often these designated village hunters are proficient in the techniques necessary to take specific species, for example, hunting murres from breeding areas along seacliff ledges. A restrictive daily limit for individual subsistence hunters would significantly constrain customary and traditional practices and limit opportunistic seasonal harvest opportunities within the Alaska subsistence communities.

The Co-management Council does recognize that setting harvest limits may become necessary, especially within local areas and individual species. However, these initial 2003 harvest regulations were not designed to be a complete, all-inclusive set of regulations, but intended to provide an initial framework to formally recognize and provide opportunities for the customary and traditional subsistence uses of migratory birds in Alaska. Within these initial frameworks, the first step in limiting the overall subsistence harvest was to establish a closed species list, that included regional restrictions. Establishing a 30-day closed period during the breeding season also limited the harvest impacts. The eventual need to further adjust levels of harvest take, either regionally or overall, is recognized and will be dealt with by the Co-management Council based on recommendations by their Technical Committee on an individual species basis. These decisions will likely be based on bird population status and past subsistence harvest data. Concepts such as community harvest limits and/or designated hunters may be considered to accommodate customary and traditional subsistence harvest methods.

The Service believed that it was necessary to develop a list of bird species that would be open to subsistence harvest during the spring/summer season. The original list was compiled from subsistence harvest data, with several species added based on their presence in Alaska without written records of subsistence take. The original intent was for the list to be reviewed by the regional management bodies as a check list. The list was adopted by the Co-management Council as part of the guidelines for the 2003 season. Most of the regions adopted the list as written; however, two regions created their own lists. One regional representative explained that it would take much more time than was available for his region to reduce the list and that, once a bird was removed, it would be more difficult to add it later. Going with the original list was viewed as protecting hunters from prosecution for the rare take of an unlisted bird. To understand this rationale, one must be aware that subsistence hunting is generally opportunistic and does not usually target individual species. Native language names for birds often group closely related species, with no separate names for species within these groups. Also, preferences for individual species differ greatly between villages and individual hunters. As a result, regions are hesitant to remove birds from the list until they are certain they are not taken. The list therefore contains some species that are taken infrequently and opportunistically, but this is still part of the subsistence tradition. The Co-Management Council initially decided to call this list “potentially harvested birds” versus “traditionally harvested birds” because a detailed written documentation of the customary and traditional use patterns for the 106 species listed had not yet been conducted. However, this terminology was leading to some confusion so the Service renamed the list “subsistence birds” to cover the birds open to harvest in 2003.

The “customary and traditional use” of a wildlife species has been defined in Federal regulations (50 CFR part 100.4) as a long-established, consistent pattern of use, incorporating beliefs and customs that have been transmitted from generation to generation. Much of the customary and traditional use information has not been documented in written form, but exists in the form of oral histories from elders, traditional stories, harvest methods taught to children, and traditional knowledge of the birds' natural history shared within a village or region. The only available empirical evidence of customary and traditional use of the harvested bird species comes from Alaska subsistence migratory bird harvest surveys, conducted by Service personnel and contractors and transferred to a computerized database. Due to difficulties in bird species identification, shorebird harvest information has been lumped into “large shorebird” and “small shorebird” categories. In reality, Alaska subsistence harvests are also conducted in this manner, generally with no targeting or even recognition of individual shorebird species in most cases. In addition, red-faced cormorants, trumpeter swans, Aleutian terns, whiskered auklets, short-eared owls and others have not been targeted in subsistence harvest questionnaires, so little or no numerical harvest data exists. Available summaries of subsistence harvest data include: Page and Wolf 1997; Trost and Drut 2001, 2002; Wentworth 1998; Wentworth and Wong 2001; and Wong and Wentworth 2001.

Birds of Conservation Concern (BCC) 2002 (FWS 2002) is the latest document in a continuing effort by the Service to assess and prioritize bird species for conservation purposes (FWS 1982, 1987, 1995; and U.S. Department of the Interior 1990). It identifies bird species at risk due to inherently small populations or restricted ranges, severe population declines, or imminent threats, and thus in need of increased conservation attention to maintain or stabilize populations. The legal authority for this effort is the Fish and Wildlife Conservation Act (FWCA) of 1980, as amended. The 1988 amendment (Pub. L. 100-653, Title VIII) to the FWCA requires the Secretary of the Interior (16 U.S.C. 2901-2912), through the Service, to “identify species, subspecies, and populations of all migratory nongame birds that, without additional conservation actions, are likely to become candidates for listing under the Endangered Species Act (ESA) of 1973, as amended (16 U.S.C. 1531-1543).”

In actuality, and fortunately, few of the species on the BCC lists are in such a precarious state that they will have to be considered for listing as endangered or threatened in the near future. Our goal is to implement preventive management measures that will serve to keep these species off the endangered species list. Proactive conservation clearly is more cost-effective than the extensive recovery efforts required once a species is federally listed under the ESA. The BCC lists are intended to stimulate coordinated and collaborative proactive conservation actions (including research, monitoring, and management) among Federal, State, and private partners. By focusing attention on these highest priority species, the Service hopes to promote greater study and protection of the habitats and ecological communities upon which these species depend, thereby ensuring the future of healthy avian populations and communities (For more detailed information on the exact criteria used to select species for consideration and inclusion on the BCC lists, see FWS 2002).

Of the 106 species for which the Service proposes to establish regulations allowing subsistence hunting in Alaska, 22 are on BCC lists at one or more scales (e.g., National, FWS Regions, or Bird Conservation Regions—Alaska). The Service considers one additional species (Trumpeter Swan) to be “sensitive” because of its small population size and limited breeding distribution in Alaska. Of the 22 species on BCC lists, 14 are technically considered “gamebirds” (as defined by bilateral migratory bird conventions with Canada and Mexico), although frameworks allowing sport hunting seasons have never been established for any of them in the 85-year history of the Migratory Bird Treaty Act. These species are included on the list of birds that could be hunted for subsistence at the request of the Co-management Council based on a continuing history of customary and traditional use, and the fact that they will continue to be taken for subsistence in the future. Although designation of these species by the Service as “birds of conservation concern” or “sensitive” does not automatically exclude them from consideration for subsistence hunting, we believe that it is incumbent upon the Service to make sure that appropriate conditions are in place to ensure that a limited subsistence harvest of these species will not worsen their conservation status.

The following 23 species are birds of conservation concern or considered sensitive for other reasons. We request public comments as to whether or not these bird species should be removed from the list of birds open for the spring/summer subsistence harvest in Alaska.

In addition to whether or not these birds should be open for subsistence hunting, we specifically request information and comments from the public on the following four questions regarding the above list of bird species. Responses may reflect personal knowledge or opinion, or be based on a review of historical or contemporary documents and published literature.

1. What measurable impacts do you think a limited subsistence harvest would have on populations of these species?

2. Which bird species are more important in terms of food value and/or customary and traditional uses?

3. Apart from their designation as “birds of conservation concern,” are there particular reasons why subsistence harvest should be restricted or closed for any of these species?

4. In the event that subsistence hunting were allowed for some or all of these species, do you believe that certain conditions should be imposed to ensure that the population status of these species is maintained or improved? If so, what would you recommend?

Paige, A., and R. Wolfe. 1997. The subsistence harvest of migratory birds in Alaska—compendium and 1995 update. Tech. Paper Series, ADF&G, Div. of Subsistence, Juneau, AK.;

Trost, R.E. and M.S. Drut, Compilers. 2002. 2002 Pacific Flyway data book—Waterfowl harvests and status, hunter participation and success, and certain hunting regulations in the Pacific Flyway and United States. Unpubl. Rpt., U.S. Fish Wildl. Serv., Portland, OR. 145 pp.;

Trost, R.E. and M.S. Drut, Compilers. 2001. 2001 Pacific Flyway data book—Waterfowl harvests and status, hunter participation and success, and certain hunting regulations in the Pacific Flyway and United States. Unpubl. Rpt., U.S. Fish Wildl. Serv., Portland, OR. 127 pp.;

U.S. Department of the Interior. 1990. Report of the Secretary of the Interior to the Congress of the United States on the Federal conservation of migratory nongame birds pursuant to Section 13 of Public Law 96-366, the Fish and Wildlife Conservation Act of 1980, as revised. U.S. Fish Wildl. Serv., Wash., DC. 61 pp.

U.S. Fish and Wildlife Service. 1982. Nongame migratory bird species with unstable or decreasing population trends in the United States. Office of Migratory Bird Mgt., Wash., DC. 24 pp.

U.S. Fish and Wildlife Service. 1987. Migratory nongame birds of management concern in the United States: the 1987 list. Office of Migratory Bird Mgt, Wash., DC. 25 pp.

U.S. Fish and Wildlife Service. 1995. Migratory nongame birds of management concern in the United States: the 1995 List. Office of Migratory Bird Mgt., U.S. Fish Wildl. Serv., Arlington, VA. 22 pp.

U.S. Fish and Wildlife Service. 2002. Birds of conservation concern 2002. Division of Migratory Bird Mgt., Arlington, VA. 102 pp.

Wentworth, C. 1998. Subsistence waterfowl harvest survey,. Yukon-Kuskokwium Delta, 1987-1997. U.S. Fish Wildl. Serv., Migratory Bird Mgt. Div., and Yukon Delta NWR, Anchorage, AK.

Wentworth, C. and D. Wong. 2001. Subsistence waterfowl harvest survey -Yukon-Kuskokwim Delta, 1995-1999. U.S. Fish Wildl. Serv. and Yukon Delta NWR, Anchorage, AK.

Wong, D. and C. Wentworth. 2001. Subsistence migratory bird harvest survey, Bristol Bay, 1995-1999. U.S. Fish Wildl. Serv., Migratory Bird Mgt. Div., Alaska Peninsula NWR, Togiak NWR., and Bristol Bay Native Assoc., Anchorage, AK.

The Department of the Interior's policy is, whenever practicable, to afford the public an opportunity to participate in the rulemaking process. If you wish to comment, you may submit your comments by any one of several methods. You may mail or fax comments to the address indicated under the caption ADDRESSES. You may hand-deliver comments to the address indicated under the caption ADDRESSES. Our practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours. Individual respondents may request that we withhold their home address from the rulemaking record, which we will honor to the extent allowable by law. In some circumstances, we would also withhold from the rulemaking record a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

You may inspect comments received on the proposed regulations during normal business hours at the Service's office in Anchorage, Alaska. We will consider, but possibly may not respond in detail to, each comment. We will summarize all comments received during the comment period and respond to them after the closing date in any final rules.

Because we conducted an extensive public involvement process prior to formulating these regulations, we are soliciting comments on this proposed rule for only 30 days. We need to finalize these regulations as soon as possible to open the first legal subsistence harvest in April 2003.

We derive our authority to issue these proposed regulations from the four migratory bird treaties with Canada, Mexico, Japan, and Russia, and from the Migratory Bird Treaty Act of 1918 (16 U.S.C. 703 et seq.), which implements the 1916 Convention, as amended, between the United States and Great Britain (for Canada) and other treaties for the protection of migratory birds. Specifically, these regulations are issued pursuant to 16 U.S.C. 712 (1), which authorizes the Secretary of the Interior to “issue such regulations as may be necessary to assure that the taking of migratory birds and the collection of their eggs, by the indigenous inhabitants of the State of Alaska, shall be permitted for their own nutritional and other essential needs, as determined by the Secretary of the Interior, during seasons established so as to provide for the preservation and maintenance of stocks of migratory birds.”

The E.O. 12866 requires each agency to write regulations that are easy to understand. We invite your comments on how to make this rule easier to understand, including answers to questions such as the following:

(1) Are the requirements in the rule clearly stated?

(2) Does the rule contain technical language or jargon that interferes with its clarity?

(3) Does the format of the rule (grouping and order of sections, use of headings, paragraphing, etc.,) aid or reduce its clarity?

(4) Would the rule be easier to understand if it were divided into more (but shorter) sections?

(5) Is the description of the rule in the “Supplementary Information” section of the preamble helpful in understanding the rule?

(6) What else could we do to make the rule easier to understand?

Send a copy of any comments that concern how we could make this rule easier to understand to: Office of Regulatory Affairs, Department of the Interior, Room 7229, 1849 C Street NW., Washington, DC 20240. You may also e-mail the comments to this address: Exsec@ios.doi.gov.

The Office of Management and Budget (OMB) has determined that this document is not a significant rule subject to OMB review under E.O. 12866.

a. This rule will not have an annual economic effect of $100 million or adversely affect an economic sector, productivity, jobs, the environment, or other units of government. A cost-benefit and economic analysis is not required. This rule is administrative, technical, and procedural in nature, establishing the procedures for implementing spring and summer harvest of migratory birds as provided for in the amended Canada Treaty. The rule does not provide for new or additional hunting opportunities and therefore will have minimal economic or environmental impact.

This rule benefits those participants who engage in the subsistence harvest of migratory birds in Alaska in two identifiable ways: first, participants receive the consumptive value of the birds harvested and second, participants get the cultural benefit associated with the maintenance of a subsistence economy and way of life. The U.S. Fish and Wildlife Service can estimate the consumptive value for birds harvested under this rule but does not have a dollar value for the cultural benefit of maintaining a subsistence economy and way of life.

The economic value derived from the consumption of the harvested migratory birds has been estimated using the results of a paper by Robert J. Wolfe titled “Subsistence Food Harvests in Rural Alaska, and Food Safety Issues,” August 13, 1996.” Using data from Wolfe's paper and applying it to the areas that will be included in this process, a maximum economic value of $6 million is determined. This is the estimated economic benefit of the consumptive part of this rule for participants in subsistence hunting. The cultural benefits of maintaining a subsistence economy and way of life can be of considerable value to the participants, and these benefits are not included in this figure.

b. This rule will not create inconsistencies with other agencies' actions. We are the Federal agency responsible for the management of migratory birds, coordinating with the State of Alaska's Department of Fish and Game on management programs within Alaska. The State of Alaska is a member of the Alaska Migratory Bird Co-management Council.

c. This rule will not materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients. The rule does not affect entitlement programs.

d. This rule will not raise novel legal or policy issues. The subsistence harvest regulations will go through the same National regulatory process as the existing migratory bird hunting regulations in 50 CFR part 20.

The Department of the Interior certifies that this rule will not have a significant economic effect on a substantial number of small entities as defined under the Regulatory Flexibility Act (5 U.S.C. 601 et. seq.). An initial regulatory flexibility analysis is not required. Accordingly, a Small Entity Compliance Guide is not required. The rule legalizes a pre-existing subsistence activity, and the resources harvested will be consumed by the harvesters or persons within their local community.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act, as discussed in the E.O. 12866 section above.

a. This rule does not have an annual effect on the economy of $100 million or more. It will legalize and regulate a traditional subsistence activity. It will not result in a substantial increase in subsistence harvest or a significant change in harvesting patterns.

The commodities being regulated under this rule are migratory birds. This rule deals with legalizing the subsistence harvest of migratory birds and, as such, does not involve commodities traded in the marketplace. A small economic benefit from this rule derives from the sale of equipment and ammunition to carry out subsistence hunting. Most, if not all, businesses that sell hunting equipment in rural Alaska would qualify as small businesses. The U.S. Fish and Wildlife Service has no reason to believe that this rule will lead to a disproportionate distribution of benefits.

b. This rule will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. This rule does not deal with traded commodities and, therefore, does not have an impact on prices for consumers.

c. This rule does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This rule deals with the harvesting of wildlife for personal consumption. It does not regulate the marketplace in any way to generate effects on the economy or the ability of businesses to compete.

We have determined and certify pursuant to the Unfunded Mandates Reform Act (2 U.S.C. 1501 et. seq.) that this rule will not impose a cost of $100 million or more in any given year on local, State, or tribal governments or private entities. A statement containing the information required by this Act is therefore not necessary.

Participation on regional management bodies and the Co-management Council will require travel expenses for some Alaska Native organizations and local governments. In addition they will assume some expenses related to coordinating involvement of village councils in the regulatory process. Total coordination and travel expenses for all Alaska Native organizations are estimated to be less than $300,000 per year. In the Notice of Decision, 65 FR 16405, March 28, 2000, we identified 12 partner organizations to be responsible for administering the regional programs. When possible, we will make annual grant agreements available to the partner organizations to help offset their expenses. The Alaska Department of Fish and Game will incur expenses for travel to the Co-management Council meetings and to meetings of the regional management bodies. In addition, the State of Alaska will be required to provide technical staff support to each of the regional management bodies and to the Co-management Council. Expenses for the State's involvement may exceed $100,000 per year, but should not exceed $150,000 per year.

This rule has been examined under the Paperwork Reduction Act of 1995 and has been found to contain no information collection requirements. We are, however, beginning the process to request OMB approval of associated voluntary annual household surveys used to determine levels of subsistence take. We will publish a notice in the Federal Register in the near future requesting public comment on that information collection. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

As discussed in the E.O. 12866 and Unfunded Mandates Reform Act sections above, this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment under Executive Order 13132. We are working with the State of Alaska on development of these regulations.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that the rule does not unduly burden the judicial system and that it meets the requirements of section 3 of the Order.

This rule is not specific to particular land ownership, but applies to the harvesting of migratory bird resources throughout Alaska. Therefore, in accordance with Executive Order 12630, this rule does not have significant takings implications.

In accordance with the President's memorandum of April 29, 1994, “Government-to-Government Relations With Native American Tribal Governments” (59 FR 22951), and Executive Order 13175, 65 FR 67249 (November 6, 2000), concerning consultation and coordination with Indian Tribal Governments, we have consulted with Alaska tribes, evaluated the rule for possible effects on tribes or trust resources and have determined that there are no significant effects. This rule establishes procedures by which the individual tribes in Alaska will be able to become significantly involved in the annual regulatory process for spring and summer subsistence harvesting of migratory birds and their eggs. The rule will legalize the subsistence harvest for tribal members, as well as for other indigenous inhabitants.

Prior to issuance of annual spring and summer subsistence regulations, we will consider provisions of the Endangered Species Act of 1973, as amended, (16 U.S.C. 1531-1543; hereinafter the Act) to ensure that harvesting is not likely to jeopardize the continued existence of any species designated as endangered or threatened or modify or destroy their critical habitats, and that it is consistent with conservation programs for those species. Consultations under section 7 of this Act conducted in connection with the environmental assessment for the annual subsistence take regulations may cause us to change these regulations.

We previously determined that establishing the procedures for future development of subsistence harvest regulations does not require an environmental assessment because the impacts to the environment are negligible. We therefore filed a categorical exclusion dated April 30, 1999. Copies of the categorical exclusion are available at the address shown in the section of this document entitled ADDRESSES. An environmental assessment was prepared in September 2002 for the 2003 subsistence harvest regulations.

On May 18, 2001, the President issued Executive Order 13211 on regulations that significantly affect energy supply, distribution, and use. Executive Order 13211 requires agencies to prepare Statements of Energy Effects when undertaking certain actions. Because this rule only allows for traditional subsistence harvest and improves conservation of migratory birds by allowing effective regulation of this harvest, it is not a significant regulatory action under Executive Order 12866. Consequently it is not expected to significantly affect energy supplies, distribution, and use. Therefore, this action is a not significant energy action under Executive Order 13211 and no Statement of Energy Effects is required.

For the reasons set out in the preamble, we propose to amend title 50, chapter I, subchapters B and F, of the Code of Federal Regulations as follows: