On November 22, 2002, the SBA issued a rule in the Federal Register (67 FR 70330) proposing to establish a $30 million size standard for Job Corps Center activities classified within the “Other Technical and Trade Schools” industry (NAICS code 611519). The SBA received requests to review the size standard applicable to Job Corps Centers from the U.S. Department of Labor (DOL) and three other organizations. Job Corps Center contracts account for more than $900 million annually and represent about 60 percent of the DOL's procurement expenditures.

The requestors sought the SBA's review of the size standard after the SBA's Office of Hearings and Appeals (OHA) rendered a decision that a Job Corps Center contract was improperly classified under the Base Maintenance sub-category of Facilities Support Services. (See NAICS Appeal of Global Solutions Network, Inc., SBA No. NAICS-4478, dated March 5, 2002.) In that decision, OHA determined that the proper classification for an activity that trains individuals in life skills and readies them for the job market through academic studies and/or technical training is “Other Technical and Trade Schools,” NAICS code 611519. The effect of this decision was to change the size standard for Job Corps Center contracts from $20 million to $5 million. (On February 22, 2002, an inflation adjustment increased the $5 million size standard for NAICS 611519 to $6 million and the $20 million size standard for Base Maintenance to $23 million. See 67 FR 3041, dated January 23, 2002.)

The SBA reviewed the reasons presented by the requesters to increase the $6 million size standard and data on Job Corps Center contracts and bidders. Based on an analysis of that information, as described in the November 22, 2002, rule, it proposed a $30 million size standard specifically for Job Corps Center contracts. The SBA received eight comments on the proposed size standard. After giving careful consideration to the comments, the SBA has decided to adopt its proposed $30 million size standard.

The SBA received eight comments on the proposed size standard from seven business concerns and one Federal agency. In summary, seven commenters supported changing the $6 million size standard. Six of these commenters supported the proposed size standard of $30 million and one commenter recommended a size standard between $12 million and $15 million. One commenter opposed the SBA's proposal to establish a size standard above $6 million. Below is a summary of the major issues raised by the comments on the proposed rule and the SBA's position.

Six commenters supported the proposed $30 million size standard for Job Corps Centers. Two of these commenters pointed out that many successful small business Job Corps Center contractors would exceed the size standard because of the average dollar value of these contracts, “and therefore either would not be eligible to compete for the center they have been running or the contract would no longer be able to be let as a small business set-aside.” In turn, the government would be faced with “remarkable turnover * * * that will actually cost the government more in dollars and performance in the long run.” In addition, these commenters pointed out that this turnover has the potential for the DOL to eliminate small business set-asides, and thus, decrease its contracting dollars to small businesses.

Four commenters stated that the proposed increased size standard will improve the competitiveness of Job Corps Center small businesses. They claimed that this change will allow small businesses in this activity to grow and achieve stability, to develop economies of scale in their operations, to operate more than one center, and to remain in the Job Corps Center program. They also contend that a larger base of small businesses will encourage more solicitation competition and lower prices. Two other commenters supported the SBA's proposal by stating that the SBA's analysis captured the industry's characteristics and reflected the current status of businesses competing to operate Job Corps Centers.

The SBA agrees with these commenters. As discussed in the proposed rule, the average yearly funding for Job Corps Centers is $8.8 million, with the funding ranging from $5 million to $44 million. This fact substantiates the commenters' claim that after being awarded one contract, almost all Job Corps Center small business contractors would no longer qualify for the follow-on contract or any Job Corps Center requirement that would be set-aside for small businesses. In addition, if the size standard remained at $6 million, the DOL would be reluctant to set aside any Job Corps Center contract because of the continual turnover of small business contractors. The SBA is concerned that a viable size standard for Job Corps Centers must address a situation in which a small business obtaining a single contract quickly outgrows the size standard without being sufficiently ready to compete with larger businesses. The size standard needs to be at a level that enables a small business to grow to a size to be competitive with other businesses in the industry. Most of the comments supported the position that a $30 million size standard achieves this result.

One commenter agreed that the $6 million size standard warranted a change, but believed that increasing the size standard to $30 million was unrealistic. The commenter proposed that the size standard be increased to a level between $12 million and $15 million. The commenter believed the DOL will not seriously consider the commenter's business in competition with companies whose financial earnings are far closer to $30 million. The commenter argued that once a small business has obtained and operated a Job Corps Center for 3 or more years, it should be well situated to compete with other operators in procuring additional Job Corps Center contracts. The commenter also stated that a $30 million size standard would allow larger businesses to “grab” business intended for new and developing companies. The commenter believed a size standard between $12 million and $15 million is sufficient to allow small businesses to develop economies of scale in their operations that improve efficiencies in internal operations as well as decrease the costs associated with managing a contract. This size standard range would also help small businesses contend with the financing requirements set by the DOL because “as the small business increases in size its ability to secure financing—for larger amounts and at lower rates—increases.”

The SBA does not agree with this comment. The SBA agrees with the position of many of the other commenters that the proposed $30 million size standard will make businesses more competitive by enabling them to achieve economies of scale associated with operating two to three Job Corps Centers. The DOL's experience with the $20 million size standard that it used before the OHA decision mentioned earlier, resulted in only a limited number of small business Job Corps Center contractors, none of which operate more than one center. The SBA believes that a size standard that is less than the previously used $20 million sized standard is inadequate for developing small businesses in the Job Corps Center sub-industry.

The SBA does not agree that the proposed size standard will substantially impact other small businesses ability to compete for Job Corps Center contracts. As discussed in the proposed rule, 87 percent of Job Corp Center contract dollars go to businesses over $30 million, with only two to four businesses falling within the range between $15 million and $30 million. The increased competition from a relatively few number of businesses between $15 million and $30 million is unlikely to diminish opportunities from other small businesses. Moreover, as other commenters have noted, businesses with less than $30 million in size have competitive disadvantages in terms of economics of scale and financial requirements set by the DOL.

One commenter opposed any change to the current size standard on the ground that having one center run by one contractor constituted contract bundling. This commenter claimed that “the DOL for 30 years has preferred to operate each of its contract-operated Job Corps Centers under one umbrella bundled contract.” According to the commenter, by adopting the proposed size standard the SBA and the DOL are denying small businesses in the areas of facilities support, office administration, security guard services, janitorial services, landscaping services, medical and dental care, and food services from participating as Job Corps Center prime contractors.

The SBA does not agree with this commenter. Bundling is the consolidation of two or more contracts into a single procurement that will likely preclude small business participation. Here, the nature of the Job Corps Center contracts do not constitute contract bundling because they were not previously performed under separate smaller contracts and small businesses are not precluded from competing on these contracts. Bundling would occur for example, if the DOL issued one nationwide contract to manage the Job Corps Centers. A contract of that nature and scope would render small business participation unlikely. Additionally, issues concerning contract bundling relate to the structuring of individual procurements and therefore are separate from the SBA's determination of the appropriate small business size standard for a particular industry. For more information about the SBA's efforts to address the impact of contract bundling on small businesses, see its recently proposed rule on this issue (68 FR 5134, dated January 31, 2003.)

The Office of Management and Budget (OMB) has determined that the proposed rule is not a significant regulatory action for purposes of Executive Order 12866. Size standards determine which businesses are eligible for Federal small business programs. This rule also is not a major rule under the Congressional Review Act, 5 U.S.C. 800. For the purpose of the Paperwork Reduction Act, 44 U.S.C. Ch. 35, the SBA has determined that this rule would not impose new reporting or record keeping requirements. For purposes of Executive Order 12988, the SBA has determined that this rule is drafted, to the extent practicable, in accordance with the standards set forth in that order. For purposes of Executive Order 13132, the SBA has determined that this rule does not have any federalism implications warranting the preparation of a Federalism Assessment. Our Regulatory Impact Analysis follows.

The SBA is chartered to aid and assist small businesses through a variety of financial, procurement, business development, and advocacy programs. To effectively assist intended beneficiaries of these programs, the SBA must establish distinct definitions of which businesses are deemed small businesses. The Small Business Act (15 U.S.C. 632(a)) delegates to the SBA Administrator the responsibility for establishing small business definitions. It also requires that small business definitions vary to reflect industry differences. The preamble of the proposed rule explained the approach the SBA follows when analyzing a size standard for a particular industry (67 FR 70330, dated November 22, 2002). Based on that analysis, the SBA believes that a $30 million size standard for Job Corps Centers is needed to better define small businesses engaged in these activities.

The most significant benefit to businesses obtaining small business status as a result of this rule is eligibility for Federal small business assistance programs. Under this rule, approximately 10 additional businesses will obtain small business status and become eligible for these programs. These include Federal procurement preference programs for small businesses, 8(a) firms, small disadvantaged businesses (SDB), and small businesses located in Historically Underutilized Business Zones (HUBZone). The 10 additional businesses may also become eligible for the SBA's financial assistance programs. Through the assistance of these programs, small businesses may benefit by becoming more knowledgeable, stable, and competitive businesses.

Other Federal agencies also use the SBA's size standards for their programs for a variety of regulatory and program purposes. The SBA does not have information on each of these uses sufficient to evaluate the impact of the size standard change. If an agency believes that a different size standard is appropriate for its programs, it must contact the SBA. If an agency is seeking to change size standards in a general rulemaking context, then the agency should contact the SBA's Office of Size Standards (13 CFR 121.901-904). If the agency is seeking to change size standards for the purposes of a regulatory flexibility analysis, then the SBA's Office of Advocacy should be contacted pursuant to section 601(3) of the Regulatory Flexibility Act (RFA). Section 601(3) of the RFA requires the agency to consult with the Office of Advocacy and provide an opportunity for public comment when using a different size standard for the RFA analysis.

The benefits of a size standard increase to a more appropriate level would accrue to three groups: (1) Businesses that benefit by gaining small business status from the adopted size standard and use small business assistance programs; (2) growing small businesses that may exceed the current size standards in the near future and who will retain small business status from the adopted size standard; and (3) Federal agencies that award contracts under procurement programs that require small business status.

Newly defined small businesses may benefit from the SBA's financial programs, in particular its 7(a) Guaranteed Loan Program. Under this program, the SBA estimates that $700,000 in new Federal loan guarantees could be made to the newly defined small businesses. Because of the size of the loan guarantees, most loans are made to small businesses well below the size standard. Thus, increasing the size standard to include 10 additional businesses may result in only one or two small business guaranteed loans to businesses in this industry. As a guaranteed loan for larger businesses averages $350,000 for businesses in the Other Technical and Trade Schools industry and the Facilities Support Services industry, if two of the 10 business applied for a loan, the SBA could expect to guarantee an additional $700,000 in loans. However, most businesses involved in Job Corps Centers are in other industries; thus, their eligibility for SBA loan assistance may be under their primary NAICS industry. The newly defined small businesses would also benefit from the SBA's Economic Injury Disaster Loan program. Since this program is contingent upon the occurrence and severity of a disaster, no meaningful estimate of benefits can be projected.

The SBA estimates that businesses gaining small business status could potentially obtain Federal contracts worth $53 million per year under the small business set-aside program, the 8(a) and HUBZone programs, or unrestricted contracts. Federal agencies may benefit from the higher size standards if the newly defined and expanding small businesses compete for more set-aside procurements. The larger base of small businesses would likely increase competition and lower the prices on set-aside procurements. A larger base of small businesses may create an incentive for Federal agencies to set aside more procurements, thus creating greater opportunities for all small businesses. Federal contractors with small business subcontracting goals may also benefit from a larger pool of small businesses by enabling them to better achieve their subcontracting goals at lower prices. No estimate of cost savings from these contracting decisions can be made since data are not available to directly measure price or competitive trends on Federal contracts.

To the extent that approximately 10 additional businesses could become active in Government programs, this may entail some additional administrative costs to the Federal Government associated with additional bidders for Federal small business procurement programs, additional businesses seeking assistance of the SBA's guaranteed lending programs, and additional businesses eligible for enrollment in the SBA's PRO-Net small business database. Among businesses in this group seeking the SBA's assistance, there will be some additional costs associated with compliance and verification of small business status and protests of small business status. These costs are likely to generate minimal incremental costs since mechanisms are currently in place to handle these administrative requirements.

The costs to the Federal Government may be higher on some Federal contracts as a result of this rule. With greater numbers of businesses defined as small, Federal agencies may choose to set aside more contracts for competition among small businesses rather than using full and open competition. The movement from unrestricted to set-aside is likely to result in competition among fewer bidders for a contract. Also, higher costs may result if additional full and open contracts are awarded to HUBZone and SDB businesses as a result of a price evaluation preference. However, the additional costs associated with fewer bidders are likely to be minor since, as a matter of policy, procurements may be set aside for small businesses or under the 8(a), and HUBZone programs only if awards are expected to be made at fair and reasonable prices. In addition, the use of small business set-asides may encourage more competitors since small businesses would not have to compete against the major businesses in the industry.

The new size standard may have distributional effects among large and small businesses. Although the actual outcome of the gains and losses among small and large businesses cannot be estimated with certainty, several trends are likely to emerge. First, a transfer of some Federal contracts to small businesses from large businesses. Large businesses may have fewer Federal contract opportunities as Federal agencies decide to set aside more Federal procurements for small businesses. Also, some Federal contracts may be awarded to SDB or HUBZone businesses instead of large businesses since those two categories of small businesses are eligible for price evaluation preferences for contracts competed on a full and open basis. Similarly, currently defined small businesses may obtain fewer Federal contacts due to the increased competition from more businesses defined as small. As currently there is only one small business that has a contract for a Job Corps Center, this transfer will be offset by initiating a number of Federal procurements than can now be set aside for all small businesses. The potential transfer of contracts away from large and currently defined small businesses would be limited by the number of newly defined and expanding small businesses that were willing and able to sell to the Federal Government. The potential distributional impacts of these transfers could result in up to $53 million, or 5.8 percent of total contract dollars of $909 million, being transferred from large businesses to small businesses. The SBA based this estimate on the per year funding of the businesses that currently have Job Corps Center contracts, which would gain small business status as a result of this rule.

The revision to the current size standard for Job Corps Centers is consistent with the SBA's statutory mandate to assist small businesses. This regulatory action promotes the Administrator's objectives. One of the SBA's goals in support of the Administrator's objectives is to help individual small businesses succeed through fair and equitable access to capital and credit, Government contracts, and management and technical assistance. Reviewing and modifying size standards when appropriate ensures that intended beneficiaries have access to small business programs designed to assist them. Size standards do not interfere with State, local, and tribal governments in the exercise of their government functions. In a few cases, State and local governments have voluntarily adopted the SBA's size standards for their programs to eliminate the need to establish an administrative mechanism for developing their own size standards.

Under the RFA, this rule may have a significant impact on a substantial number of small entities engaged in Job Corps Center activities. Immediately below, the SBA sets forth a Final Regulatory Flexibility Analysis (FRFA) of this rule addressing the following: (1) The reasons and objective of the rule; (2) a description and estimate of small entities to which the rule will apply; (3) the projected reporting, record keeping, and other compliance requirements of the rule; (4) the relevant Federal rules which may duplicate, overlap or conflict with the rule; and (5) alternatives to the final rule considered by the SBA that minimize the impact on small businesses.

The size standard may also affect small businesses participating in programs of other agencies that use the SBA size standards. As a practical matter, however, the SBA cannot estimate the impact of a size standard change on each and every Federal program that uses its size standards. However, this rule is limited to a specific type of contract only issued by the DOL. In cases where an SBA size standard is not appropriate, the Small Business Act and the SBA's regulations allow Federal agencies to develop different size standards with the approval of the SBA Administrator (13 CFR 121.902). For purposes of a regulatory flexibility analysis, agencies must consult with the SBA's Office of Advocacy when developing different size standards for their programs. (13 CFR 121.902(b)(4)).

The objective of this rule is to establish an appropriate small business definition of businesses operating Job Corps Centers, and therefore, eligible for Federal small business assistance programs. An increase to the current $6 million size standard is needed to provide contracting opportunities to the small business segment of businesses engaged in or competing for Job Corps Center contracts. Currently, there are five businesses in the Job Corps Centers activity that have revenues below the current $6 million size standard; however, only one of these businesses has a contract to operate a Job Corps Center. This business is likely to outgrow the current size standard within the next year as its current contract is for $5.8 million per year. This will leave only four businesses below the size standard, all having revenues below $1 million. None of these businesses have been successful in winning a Job Corps Center contract. This, along with the fact that the average yearly contract funding is $8.8 million and the minimal funding for a Job Corps Center is $5 million, indicates that the size standard for Job Corps Centers needs to be greater than the current $6 million.

The SBA received no comments in response to the IRFA of the proposed rule.

The SBA estimates that 35 organizations are engaged in the Job Corps Center activity, of which approximately 14 percent are small businesses currently at or just below the $6 million in size. With this rule, 10 additional businesses will gain small business status. These businesses will be eligible to seek available SBA assistance provided that they meet other program requirements.

Based on the relative size of these businesses and the amount of Job Corps Center contracting, the SBA estimates that small business coverage will increase by $53 million, or 5.8 percent of total contracting in this activity. The SBA based this estimate on the per year funding of the businesses that currently have Job Corps Center contracts and that will gain small business status with this rule.

A new size standard does not impose any additional reporting, record keeping or other compliance requirements on small entities for the SBA's programs. A change in a size standard would not create additional costs on a business to determine whether or not it qualifies as a small business. A business needs to only examine existing information to determine its size, such as Federal tax returns, payroll records, and accounting records. Size standards determine “voluntary” access to the SBA and other Federal programs that assist small businesses, but do not impose a regulatory burden as they neither regulate nor control business behavior. In addition, this rule does not impose any new information collecting requirements from the SBA which requires approval by OMB under the Paperwork Reduction Act of 1980, 44 U.S.C. 3501-3520.

Most of the economic impact on small businesses will be positive. The most significant benefits to businesses that will obtain small business status as a result of this final rule are (1) eligibility for the Federal Government's procurement preference programs for small businesses, 8(a) firms, small disadvantaged businesses, and businesses located in a HUBZone; and (2) eligibility for the SBA's financial assistance programs such as 7(a), 504 business loans, and Economic Injury Disaster Loan assistance. The SBA estimates that businesses gaining small business status could potentially obtain Federal contracts worth $53 million per year under the small business set-aside program, the 8(a) program, the HUBZone program, or unrestricted contracts. This represents approximately 5.8 percent of the $909 million in total Federal expenditures for Job Corps Centers.

As stated in the Small Business Act, 15 U.S.C. 632 and 13 CFR part 121, the SBA establishes size standards based on industry characteristics and for non- manufacturing concerns on the basis of gross receipts of a business concern over a period of 3 years. The facts that the average yearly funding for a Job Corps Center is $8.8 million, with funding ranging from $5 million to $44 million, and that there are only five businesses in this activity with revenues under the current size standard support establishing a separate size standard of $30 million.

One commenter recommended a size standard between $12 million and $15 million size standard. He believed that once a business obtained and operated a Job Corps Center for 3 or more years, it should be well situated to compete with other Job Corps Centers operators. A $12 million to $15 million size standard will allow small businesses to develop economies of scale in their operations that improve efficiencies in internal operations as well as decrease the costs associated with managing a contract.

The SBA does not consider this a viable alternative. This recommendation is less than the $20 million used by the DOL prior to the OHA decision mentioned above. The receipts distribution shows that 87 percent of the Job Corps Center contract dollars go to businesses with over $30 million in revenues. If a $15 million size standard were adopted, a business that won a second Job Corps Center contract would probably exceed the size standard within a year of work on that contract.

By establishing the size standard at $30 million, the SBA will create opportunities for the small businesses in an industry where only five businesses are below the size standard. Of these five businesses, four have revenues below $1 million, with only one of these businesses having a Job Corps Center contract. If the SBA retains the current $6 million size standard, it will not accurately reflect the smaller segment of businesses that participate in operating and maintaining Job Corps Centers.

This amendment to 14 CFR 71 modifies the Class E airspace area extending upward from 700 feet above the surface of the earth at Emmetsburg, IA. An examination of controlled airspace for Emmetsburg, IA revealed discrepancies in the Emmetsburg Municipal Airport, IA airport reference point used in the legal descriptions for this airspace area. This amendment incorporates the revised Emmetsburg Municipal Airport, IA airport reference point and brings the legal description of the Emmetsburg, IA Class E airspace area into compliance with FAA Order 7400.2E, Procedures for Handling Airspace Matters. This area will be depicted on appropriate aeronautical charts. Class E airspace areas extending upward from 700 feet or more above the surface of the earth are published in paragraph 6005 of FAA Order 7400.9K, dated August 30, 2002, and effective September 16, 2002, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

The FAA anticipates that this regulation will not result in adverse or negative comment and, therefore, is issuing it as a direct final rule. Previous actions of this nature have not been controversial and have not resulted in adverse comments or objections. Unless a written adverse or negative comment, or a written notice of intent to submit an adverse or negative comment is received within the comment period, the regulation will become effective on the date specified above. After the close of the comment period, the FAA will publish a document in the Federal Register indicating that no adverse or negative comments were received and confirming the date on which the final rule will become effective. If the FAA does receive, within the comment period, an adverse or negative comment, or written notice of intent to submit such a comment, a document withdrawing the direct final rule will be published in the Federal Register , and a notice of proposed rulemaking may be published with a new comment period.

Interested parties are invited to participate in this 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 triplicate to the address listed above. Commenters 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-2003-14595/Airspace Docket No. 03-ACE-18.” The postcard will be date/time stamped and returned to the commenter.

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

The FAA has determined that this regulation is noncontroversial and unlikely to result in adverse or negative comments. For the reasons discussed in the preamble, I certify that this regulation (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) if promulgated, will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

1. The Federal Energy Regulatory Commission (Commission) is amending § 284.12 of its open access regulations governing standards for conducting business practices and electronic communications with interstate natural gas pipelines. The Commission is adopting the most recent version, Version 1.6, of the consensus standards promulgated by the Wholesale Gas Quadrant (WGQ) of the North American Energy Standards Board (NAESB), and the WGQ standards governing partial day recalls. This rule will benefit the public by adopting the most recent and up-to-date standards governing business practices and electronic communication and by providing shippers with enhanced flexibility to recall released capacity.

2. Since 1996, in the Order No. 587 series, 1 the Commission has adopted regulations to standardize the business practices and communication methodologies of interstate pipelines in order to create a more integrated and efficient pipeline grid. In this series of orders, the Commission incorporated by reference consensus standards developed by the WGQ (formerly the Gas Industry Standards Board or GISB), a private consensus standards developer composed of members from all segments of the natural gas industry. The WGQ is an accredited standards organization under the auspices of the American National Standards Institute (ANSI).

3. On October 7, 2002, the WGQ filed with the Commission a report informing the Commission that it had adopted a new version of its standards, Version 1.6. The WGQ reports that while Version 1.5 contained many of the standards designed to support Order No. 637, 2 Version 1.6 includes additional standards that support Order No. 637. It states: “development of standards to support FERC Order No. 637 was given the highest priority by all NAESB subcommittees and task forces.” The WGQ further reports that the surety assessment performed by the Sandia National Laboratories on the GISB EDM (Electronic Delivery Mechanism) standards was accepted by GISB and forwarded to the EDM Subcommittee for review and development of standards in October 2000. It states that some of the Sandia recommendations were implemented in Version 1.5, and the remainder were implemented in Version 1.6. Finally, the WGQ reports that work continues on requests for both new and revised business practices, information requirements, code value assignments, technical implementation and mapping or interpretations.

4. In Order No. 587-N, 3 the Commission adopted a regulation requiring that pipelines permit releasing shippers to recall released capacity and renominate that recalled capacity at any of the nomination opportunities provided by the pipelines. The Commission established a two-phased implementation for this regulation. In the first phase, the Commission established an interim schedule under which releasing shippers could recall capacity, as long as the recall did not involve a partial or flowing day recall (a recall of scheduled gas after the gas begins to flow). Pipelines implemented the first phase as of July 1, 2002. In the second phase, the Commission asked the WGQ within six months to develop standards dealing with the operational details of permitting partial or flowing day recalls, in particular the method by which capacity would be allocated between releasing and replacement shippers. The Commission established October 1, 2002, as the date by which the WGQ and other industry members should submit a report and further provided for reply comments to be filed by October 15, 2002.

5. On October 2, 2002, the WGQ filed a report stating that its Executive Committee had adopted standards governing partial or flowing day recalls in Recommendations R02002 and R02002-2. The WGQ membership ratified these standards on October 31, 2002.

6. On November 29, 2002, the Commission issued a Notice of Proposed Rulemaking (NOPR)  4 that proposed to adopt Version 1.6 of the WGQ standards and the partial or flowing day recall standards. Five comments  5 and one reply comment  6 were filed. The comments generally support adoption of the standards, although some comments raise questions about the timing of implementation.

7. The Commission is incorporating by reference Version 1.6 of the WGQ's consensus standards and the standards adopted for partial day recalls. 7 Pipelines will be required to file tariff sheets to reflect the changed standards by May 1, 2003, with an effective date of July 1, 2003, which is the first day of the month following 90 days after the issuance of this rule.

8. The adoption of Version 1.6 of the WGQ standards  8 will help continue the process of implementing Order No. 637 and will update and improve the current standards. 9 Adoption of the partial day recall standards  10 will provide shippers with enhanced flexibility to recall capacity, while ensuring that replacement shippers receive notice sufficient to allow them to reschedule their capacity. The partial day recall standards also address the method for determining how capacity will be allocated among releasing and replacement shippers when capacity is recalled during the gas day. Among the most notable of these standards are: A revision to the capacity release timeline to permit prearranged non-biddable releases on non-Business as well as Business days (Standard 5.3.2); a revision to the Commission's interim timeline for recall transactions to permit recalls at any of the four nomination opportunities, while still providing sufficient notice to replacement shippers to enable them to reschedule their capacity (Standard 5.3.z1); the adoption of procedures governing notice to replacement shippers (Standards 5.3.z2 through 5.3.z4); and the use of elapsed prorata capacity as the allocation method for flowing day recalls, unless a different method is necessary to reflect the nature of the pipeline's tariff, services, or operational characteristics (Standard 5.3.z13). 11

9. The WGQ approved the standards under its consensus procedures. 12 As the Commission found in Order No. 587, adoption of consensus standards is appropriate because the consensus process helps ensure the reasonableness of the standards by requiring that the standards draw support from a broad spectrum of all segments of the industry. Moreover, since the industry itself has to conduct business under these standards, the Commission's regulations should reflect those standards that have the widest possible support. In § 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTT&AA), Congress affirmatively requires federal agencies to use technical standards developed by voluntary consensus standards organizations, like the WGQ, as means to carry out policy objectives or activities. 13

10. The comments addressing various aspects of the standards will be addressed below.

11. The Commission had proposed that pipelines implement the new standards three months after issuance of a final rule. INGAA, Duke, Dominion, and Williston maintain that the Commission should establish the implementation date on the first day of the month, 90 days after the issuance of the rule. First-of-the-month implementation, they maintain, will provide for a more efficient transition for accounting and nomination systems and avoids middle-of-the-month billing period changes. The Commission agrees, and is requiring implementation on the first of the month, following 90 days after issuance of this final rule.

12. INGAA, Duke, and Williston argue that the Commission should delay implementation of the partial day recall standards until these standards are formally adopted in Version 1.7 of the WGQ standards. INGAA, Duke, and Williston all maintain that the standards already adopted are not complete, citing to certain examples of using elapsed prorated capacity that have not yet been approved by the NAESB membership. They argue that the Commission should not adopt these standards until they are complete. These three commenters also raise procedural issues with respect to adoption of the standards. INGAA maintains that the partial day recall standards are not numbered and could confuse pipeline customers who rely on the NAESB standards numbering system and implementation guide. Duke and Williston argue that without officially assigned numbers, pipelines will not be able to incorporate the standards by reference in their tariffs. Williston maintains that since the partial day recall standards are not published, parties who are not members of NAESB will not be able to obtain copies.

13. KeySpan opposes any delay in implementing the partial day recall standards. It argues procedural problems, such as the absence of officially assigned numbers, should not deprive shippers of the benefits of using partial day recalls. It further argues that all NAESB standards evolve over time, and that is not a justification for delaying implementation of these standards.

14. The Commission will not delay implementation of the partial day recall standards. NAESB developed these standards as a result of the Commission's March 12, 2002, determination in Order No. 587-N that permitting such recalls is necessary to improve the capacity release marketplace by providing releasing shippers with the flexibility to structure capacity release transactions that best fit their business needs, by providing greater incentives for releasing shippers to release capacity, and by fostering greater competition for pipeline capacity by creating parity between scheduling of capacity release transactions and pipeline interruptible service. 14 The standards already adopted by the WGQ constitute an integrated, consistent, and reasonably complete set of standards governing partial day recalls. Like other standards, these standards too may be improved over time, but the potential for such improvement need not delay implementation and deprive shippers of the immediate benefits of using these standards. Waiting to approve these standards until the Commission incorporates Version 1.7 of the standards could result in unnecessarily deferring the benefits of these standards for upwards of a year. Moreover, if the WGQ's membership does approve the examples of elapsed prorated capacity, pipelines can rely on these examples in administering the standards.

15. The Commission also finds no procedural reason to delay adoption of the standards. The set of adopted standards are readily identified by their Recommendation numbers (R02002 and R02002-2), are available from NAESB, and are posted on the Final Actions portion of NAESB's Web site. 15 Each of the new standards is also identified by a discrete number using a “z” as a placeholder, such as 3.3.z2. Pipelines can therefore incorporate these standards by reference by identifying the number of the standard and indicating that it was adopted by Recommendation R02002 or R02002-2, as appropriate.

16. Standard 5.3.2 establishes the timeline applicable to capacity release transactions. In Version 1.6 of the standards, Standard 5.3.2 would provide that all capacity release transactions take place on a “Business Day.” However, in the partial day recall standards (R02002), the WGQ revised this standard so that pre-arranged capacity release transactions could take place on any day; only biddable transactions would be limited to Business Days.

17. Dominion (supported by KeySpan) contends that, despite this change, Standard 5.3.2 is overly restrictive because biddable releases (those of more than 31 days or at discounts) still cannot be conducted on weekends or holidays. It argues that shippers that need capacity on those days will be forced to buy from the pipeline. It further argues that pipelines have the resources to process capacity release transactions on weekends and holidays.

18. The industry segments have reached consensus agreement on the timeline for conducting capacity release transactions, and the Commission will not modify this agreement based on the comments of two parties. What the Commission said in Order No. 587 regarding the need for unanimity on standards is equally applicable here:

Moreover, there is a reasonable basis for the industry to conclude that bidding should take place on Business Days, and not on weekends and holidays. This requirement limits the need for additional pipeline personnel to process released transactions on a weekend. But, more importantly, the WGQ could reasonably find that requiring bidding during the business week would better ensure that all members of the industry have a reasonable opportunity to bid on capacity release postings. Posting long-term pre-arranged releases for bidding on a weekend, for instance, could limit the scrutiny of such releases and the ability of other shippers to offer competitive bids.

19. While Dominion recognizes that shippers are able to enter into short-term pre-arranged releases (not subject to bidding) on weekends and holidays, it maintains that shippers seeking longer-term releases subject to bidding (more than 31 days, but less than one year, at less than maximum rates) will not be able to obtain released capacity on weekends and holidays, but will be forced to rely on capacity from the pipeline for those days.

20. The standards do not preclude shippers from acquiring released capacity on weekends or holidays. Under the standards, shippers needing capacity on weekends or holidays can acquire released capacity by entering into pre-arranged, short-term capacity release transactions on a weekend. 17 If the releasing shipper and replacement shipper seek a longer term transaction that is subject to bidding (as Dominion posits), they can enter into a pre-arranged releases to cover the weekend or holiday and then post the longer-term release on the next business day, so other shippers have an opportunity to bid for that capacity. The standards therefore do not make shippers dependent on obtaining pipeline capacity for weekends and holidays, while at the same time they ensure that long-term biddable transactions will be posted on business days when all shippers will have an opportunity to bid for the capacity.

21. Standard 5.3.z13 (R02002) states:

In the NOPR, the Commission also proposed that the determination of reservation charges and credits and the potential liability for contract overruns should follow the allocation of capacity. The Commission stated that “it sees no reason in this instance for pipelines to propose individual allocation methodologies.”  18

22. Duke seeks clarification that the Commission's statement that it saw is no reason for pipelines to propose individual allocation methodologies will not preclude pipelines from following standard 5.3.z13 and proposing variations to the use of Elapsed Prorata Capacity when necessary to reflect the nature of the pipeline's tariff, services, and/or operational characteristics. Duke claims that the Elapsed Prorata Capacity does not fully address the needs of its pipelines.

23. As permitted by Standard 5.3.z13, pipelines may propose variations to the use of Elapsed Prorata Capacity to allocate capacity among releasing and replacement shippers after a recall if they can provide justification that such deviations are necessary to reflect specific services or operational characteristics on their systems and do not unduly limit the rights of shippers. 19 However, as the Commission stated in the NOPR, once such an allocation methodology is approved for each pipeline, the determination of reservation charges and credits and the potential liability for contract overruns should follow the allocation of capacity.

24. Standard 5.3.z1 (R02002) requires a releasing shipper recalling capacity to provide notice of recall to the pipeline and the first replacement shipper. 20 Dominion contends that for biddable transactions, 21 the releasing shipper will not have the information necessary to notify the first replacement shipper, and requests that the pipeline provide such contact information on the pipeline's Internet Web site.

25. While the current standards require pipelines to post the winning bidder's name and company code when they post capacity awards (Standard 5.4.3), it does not require the posting of contact information. The Commission agrees that for biddable deals subject to recall, pipelines need to make available to the releasing shipper information sufficient to enable it to contact the replacement shipper in the event of a capacity recall.

26. In comments on the WGQ's October 1, 2002, report on partial day recalls, Process Gas Consumers Group claimed that two standards (not included in this proceeding) on which the WGQ was working involved the allocation of penalties between releasing and replacement shippers as a result of partial day recalls, and requested that the Commission find that all penalty standards are beyond the scope of the WGQ. In the NOPR, the Commission stated that it would not rule the development of penalty standards beyond the scope of the WGQ, although the Commission explained that it “is not asking the WGQ specifically to develop standards for penalties.”  22 The Commission stated that the development of standards related to penalties can help reduce barriers to multi-pipeline shipments and improve the overall efficiency of the pipeline grid, and it encouraged the WGQ to examine seriously “any such proposals that hold out the prospect of improving the efficiency of the pipeline grid.”  23

27. A number of comments contend that the WGQ should not standardize penalties. AGA, INGAA, Duke, and Dominion generally assert that penalties are rate matters that should not be standardized, and that penalties and terms relating to penalties may need to vary by pipeline to reflect differences between the pipeline's needs and markets. AGA, however, asserts that some standards relating to penalties are within the scope of the WGQ, such as standards governing the allocation of penalties between releasing and replacement shippers.

28. The Commission reiterates that it is not requesting the WGQ to consider or develop standards relating to penalties. But, the Commission also will not categorically determine that any proposal for a standard that relates to penalties is beyond the scope of the WGQ. In the first place, deciding whether a standard is beyond the WGQ's scope is a decision for the WGQ, not the Commission. As AGA notes, the WGQ is already considering standards that arguably relate to penalties, and the Commission sees no reason for it to interfere with the WGQ's determination of what proposals are within its scope. Moreover, the WGQ passed a series of standards that created a more uniform and systematic method for pipelines to receive reimbursement for fuel use, 24 even though such standards bear on the rates charged for fuel. The Commission finds no reason here to prohibit the WGQ from considering similar standards with respect to penalties that will create a more uniform and efficient system for assessing penalties.

29. Dominion takes issue with the Commission's incorporation by reference of the WGQ standards. Dominion asserts that the standards are not reasonably available as required by the Federal Register , because they are only available from NAESB after payment of significant fees. It further argues that neither the Commission nor the WGQ have clearly indicated where changes in standards have been made, so that the incorporation by reference does not make clear the conditions on which an entity will be bound. It requests (along with KeySpan) that the Commission direct NAESB to refile Version 1.6, and any future filings, with a redline comparison showing all changes from previous standards.

30. As the Commission has pointed out on several occasions, incorporation by reference is the appropriate, and indeed the required, method for adopting copyrighted standards material. 25 The Freedom of Information Act, and implementing regulations, establish that the proper method of adopting copyright material is to incorporate such material by reference upon approval by the Director of the Federal Register. 26 In fact, § 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTT&AA) instructs federal agencies to use technical standards developed by voluntary consensus standards organizations, like the WGQ, 27 and such standards are to be incorporated by reference. 28 According to the Federal Register regulations, material is eligible for incorporation by reference if such material “is * * * standards, specifications, * * * substantially reduces the volume of material published in the Federal Register, * * * and is reasonably available to and usable by the class of persons affected by the publication. 29

31. The WGQ standards comply with these requirements: they are standards and specifications, their incorporation by reference is necessary since the standards cannot be reproduced and such incorporation would substantially limit the volume of material in the Federal Register , the standards are reasonably available from NAESB, and the standards can be readily used since the standard versions and all the standards are numbered. The Office of the Federal Register approved the incorporation by reference pursuant to these guidelines.

32. Dominion argues that the WGQ standards should not be found reasonably available, because they are available only to non-members paying “required, significant fees” (emphasis added). Neither the Freedom of Information Act, nor the regulations, require that standards be available at no charge. In fact, standards incorporated by reference are exempt from the requirement that any agency provide copies of documents according to its fee schedule. 30 Moreover, Dominion's use of the adjective “significant” is inappropriate hyperbole. NAESB charges non-members an everyday low price of only $25 to obtain the booklet including all the business practice standards. 31 Computer afficionados can obtain the booklet containing the datasets for an additional $25, and true computerphiles can obtain the SINGLE-CD ROM collection of the entire set of standards, including the Electronic Data Interchange requirements, at the new substantially reduced price of $100. 32 If Dominion truly considers these prices “significant,”  33 it can view copies of the standards at the Commission at no charge. Thus, by any stretch of language, the WGQ standards are “reasonably available to the class of persons affected by the publication.”  34

33. Dominion further contends that the WGQ standards do not meet the requirement that the language incorporating the standards be as precise and complete as possible and that each incorporation by reference shall include an identification and subject description of the matter incorporated, in terms as precise and useful as practicable within the limits of reasonable brevity. 35 Dominion maintains that the incorporation by reference does not meet these criteria because the Commission has not sufficiently identified which standards have changed when the WGQ publishes a new edition of the standards. Dominion asserts, for example, that in Version 1.5 of the standards, the WGQ added the term “Business Day” to the capacity release standards, but that this significant change was not highlighted by the Commission. Dominion further asserts that the Natural Gas Act requirements go beyond those of the Federal Register because they require the Commission to provide notice of the filing of new rate schedules. Dominion contends that the Commission should not adopt Version 1.6 of the standards until NAESB refiles the standards with “redlined” sheets showing all changes from the previous version.

34. The Federal Register regulations do not require the provision of notice of revised or modified standards, only that the incorporation by reference indicate the material to be incorporated with specificity. The regulations provide only that “the language incorporating a publication by reference shall be as precise and complete as possible;” and states “language incorporating a publication by reference is precise and complete if it * * * uses the words “incorporated by reference;” * * * states the title, date, edition, author, publisher, and identification number of the publication; * * * informs the user that the incorporated publication is a requirement; * * * makes an official showing that the publication is in fact available by stating where and how copies may be examined and readily obtained with maximum convenience to the user; and * * * refers to 5 U.S.C. 552(a). 36 The Commission regulations comply with these requirements.

35. Further, although not required by the regulations, the Commission endeavors in each NOPR to provide a listing of all the standards that have been revised, added, and deleted. 37 The WGQ too includes in each Standards publication a Version Cross-Reference listing for each standard, the Version in which it was adopted, revised, and interpreted. In the WGQ's filings with the Commission, the WGQ also includes a List of New Standards, Standards Modifications, and Interpretations for the new Version. 38 In fact, with respect to the change to Business Day in Standard 5.3.2 of Version 1.5 about which Dominion complains, the Commission not only included Standard 5.3.2 among the list of standards revised, 39 but specifically referenced the change to “Business Day” twice in the text of the Preamble. 40 Thus, Dominion and all other users of the standards have sufficient notice of revisions of changes to the standards.

36. Dominion further argues the Commission's incorporation by reference is at odds with the requirement of the Natural Gas Act to provide notice of filings by natural gas companies. The Commission has the ability to act through notice and comment rulemaking proceedings that comply with the Administrative Procedure Act. 41 Here, the Commission complied with the requirements of the Administrative Procedure Act, the Freedom of Information Act, and the National Technology Transfer and Advancement Act in incorporating the WGQ standards by reference. The listing of added, revised, and deleted standards in the Preamble to the NOPR was sufficient to alert parties to substance of the proposed rule and the subjects and issues involved. 42

37. The requirement for providing notice of a filing in section 4 of the NGA applies only to filings by natural gas companies, and since NAESB is not a natural gas company, the Commission cannot compel it to file its standards with the Commission or provide a specific form of public notice. However, even if the notice requirement did apply, the statute requires only notice of the filing of new rate schedules, not detailed descriptions of all changes to prior rate schedules or the redlined comparisons requested by Dominion. 43 The Commission's disclosure of the added, modified, or deleted standards is sufficient notice for parties to review the standards. Although the Commission, in addition, often tries to highlight what it thinks are important changes to the standards, the Commission cannot, and is not responsible for trying to, anticipate the changes Dominion or other parties may find of particular interest. As the Commission has stated, “the purpose of the Notice of Filing is to apprise the public of the fact that a filing has been made * * * after that, the burden is upon interested parties to inform themselves of the filing's precise contents.”  44

38. Office of Management and Budget Circular A-119 (§ 11) (February 10, 1998) provides that when a federal agency issues or revises a regulation containing a standard, the agency should publish a statement in the final rule stating whether the adopted standard is a voluntary consensus standard or a government-unique standard. In this rulemaking, the Commission is incorporating by reference voluntary consensus standards developed by the WGQ.

39. The Office of Management and Budget's (OMB) regulations in 5 CFR 1320.11 require that it approve certain reporting and recordkeeping requirements (collections of information) imposed by an agency. Upon approval of a collection of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of this rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number.

40. The final rule will affect the following existing data collection: FERC-549C “Standards for Business Practices of Interstate Natural Gas Pipelines” (OMB Control No. 1902-174). The following burden estimates are related only to this rule and include the costs of complying with Version 1.6 of the WGQ's consensus standards and the standards adopted by the WGQ for partial day recalls. The burden estimates for the FERC-549C data collection are related to implementing the latest version of the business practice standards and related data sets. The costs for this data collection are primarily related to start-up and will not be on-going costs.

The total annual hours for collection is 209.064 hours.

The cost per respondent is $126,494 (rounded off).

41. The Commission sought comments to comply with these requirements. Comments were received from six entities. No comments addressed the reporting burden imposed by these requirements. The substantive issues raised by the commenters are addressed in this preamble.

42. The Commission's regulations adopted in this rule are necessary to further the process begun in Order No. 587 of creating a more efficient and integrated pipeline grid by standardizing the business practices and electronic communication of interstate pipelines. Adoption of these regulations will update the Commission's regulations relating to business practices and communication protocols to conform to the latest version, Version 1.6, of the WGQ's consensus standards and to include the standards adopted by the WGQ for partial day recalls.

43. The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements. The information required in this final rule will help the Commission carry out its responsibilities under the Natural Gas Act and conforms to the Commission's plan for efficient information collection, communication, and management within the natural gas industry.

44. Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426 (Attention: Michael Miller, Office of the Chief Information Officer, CI-1, (202) 502-8415, or michael.miller@ferc.gov ) or the Office of Management and Budget, Office of Information and Regulatory Affairs, Attention: Desk Officer for the Federal Energy Regulatory Commission, 725 17th Street, NW., Washington, DC 20503. The Desk Officer can also be reached at (202) 395-7856, or fax: (202) 395-7285.

45. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment. 45 The Commission has categorically excluded certain actions from these requirements as not having a significant effect on the human environment. 46 The actions adopted here fall within categorical exclusions in the Commission's regulations for rules that are clarifying, corrective, or procedural, for information gathering, analysis, and dissemination, and for sales, exchange, and transportation of natural gas that requires no construction of facilities. 47 Therefore, an environmental assessment is unnecessary and has not been prepared.

46. The Regulatory Flexibility Act of 1980 (RFA)  48 generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. The regulations adopted here impose requirements only on interstate pipelines, which are not small businesses, and, these requirements are, in fact, designed to benefit all customers, including small businesses. Accordingly, pursuant to 605(b) of the RFA, the Commission hereby certifies that the regulations adopted herein will not have a significant adverse impact on a substantial number of small entities.

47. In addition to publishing the full text of this document in the Federal Register , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's home page ( http://www.ferc.gov ) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.

48. From FERC's home page on the Internet, this information is available in the Federal Energy Regulatory Records Information System (FERRIS). The full text of this document is available on FERRIS in PDF and WordPerfect format for viewing, printing, and/or downloading. To access this document in FERRIS, type the docket number excluding the last three digits of this document in the docket number field.

49. User assistance is available for FERRIS and the FERC's Web site during normal business hours from FERC Online Support at FERCOnlineSupport@ferc.gov or toll-free at (866) 208-3676, or for TTY, contact (202) 502-8659.

50. Pipelines are required to file tariff sheets to reflect the changed standards by May 1, 2003, with an effective date of July 1, 2003. Pipelines incorporating the Version 1.6 standards into their tariffs must include the standard number and Version 1.6. Pipelines incorporating by reference the partial day recall standards must refer to the standard number ( e.g., 3.3.z2) and the Recommendation number (R02002 and R02002-2) in which the standard is adopted.

51. These regulations are effective April 21, 2003. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.

The Federal Civil Penalties Inflation Adjustment Act of 1990 (hereinafter, the Act), which is codified at 28 U.S.C. 2461 note, and which was amended in 1996 by the Debt Collection Improvement Act (Pub. L. 104-134, section 31001(s); 110 Stat. 1321-373), provides that each Federal agency must adjust for inflation any civil monetary penalties covered by the Act that are assessed in connection with violations that are incurred under those statutes that the agency administers. To this end, pursuant to the Act, as amended by the Debt Collection Improvement Act, the responsible Federal agency was required, by October 23, 1996, to make an initial inflationary adjustment to any civil monetary penalty covered by the Act; and each agency was then required to make these necessary inflationary adjustments at least once every 4 years thereafter.

The Act expressly exempts from its coverage any penalties that Customs may assess for violations that are incurred under any provision of the Tariff Act of 1930, as amended (19 U.S.C. 1202 et seq. ). However, Customs does administer two statutes that are subject to the Act; and the penalties that Customs may assess for violations of these statutes have not previously been adjusted for inflation as required by the Act.

Specifically, the two statutes administered by Customs that are subject to the Act are 46 U.S.C. App. 289 and 46 U.S.C. App. 316(a). Section 289 prohibits foreign vessels from transporting passengers between ports or places in the United States; the penalty assessed under 46 U.S.C. App. 289 is $200 for every passenger transported in violation of the statute (§ 4.80(b)(2), Customs Regulations (19 CFR 4.80(b)(2))). Section 316(a) prohibits certain vessels from towing any vessel, other than a vessel in distress, between ports or places in the United States embraced within the coastwise laws; the penalties assessed for violations of 46 U.S.C. App. 316(a) are a minimum of $250 to a maximum of $1,000 per violation, plus $50 per ton on the measurement of every vessel towed in violation of the statute (§ 4.92, Customs Regulations (19 CFR 4.92)).

Section 5 of the Act (28 U.S.C. 2461 note, section 5) provides that civil monetary penalties must be adjusted based upon the cost of living, either by increasing the maximum civil monetary penalty or by increasing the range of minimum and maximum penalties for each civil monetary penalty, as appropriate. Any increase determined under section 5 of the Act is to be rounded to the nearest multiple of $10 in the case of penalties less than or equal to $100, and multiples of $100 in the case of penalties greater than $100 or less than or equal to $1,000.

In calculating the specific amount of the adjustment to any civil monetary penalty covered by the Act, section 5 required that the first such adjustment, which was to be made by October 23, 1996, could not exceed 10 percent of the penalty. Thereafter, in determining the proper adjustment to any civil monetary penalty covered by the Act, section 5 provides for a cost-of-living adjustment that would be determined based on the percentage by which the Consumer Price Index (CPI) for the month of June of the calendar year preceding the adjustment exceeds the CPI for the month of June of the calendar year in which the amount of such civil monetary penalty was last set or adjusted pursuant to law.

Hence, consistent with the provisions of Section 5 of the Act, as described, the civil penalty for violating 46 U.S.C. App. 289 is adjusted to $300 for every passenger transported in violation of the statute; and the civil penalties for violating 46 U.S.C. App. 316(a) are adjusted to a minimum of $350 and a maximum of $1,100, plus $60 per ton on the measurement of every vessel towed in violation of the statute.

Accordingly, this document amends §§ 4.80 and 4.92 of the Customs Regulations (19 CFR 4.80 and 4.92) in order to make the necessary inflation-induced adjustments to the penalties assessed for violations that are incurred under 46 U.S.C. App. 289 and 46 U.S.C. App. 316(a), as mandated by the Act. Furthermore, the specific authority citations for §§ 4.80 and 4.92 are revised to add a reference to the codification of the Act at 28 U.S.C. 2461 note.

This final rule merely brings the Customs Regulations into conformance with the requirements of the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. As such, pursuant to 5 U.S.C. 553(b)(B) of the Administrative Procedure Act (APA), prior notice and public procedure are unnecessary in this case, and, pursuant to 5 U.S.C. 553(d)(3) of the APA, a delayed effective date is not required. Since this document is not subject to the notice and public procedure requirements of 5 U.S.C. 553, it is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Nor do these amendments meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

The African Growth and Opportunity Act (the AGOA, Title I of Public Law 106-200, 114 Stat. 251) authorizes the President to extend certain trade benefits to designated countries in sub-Saharan Africa. Section 112 of the AGOA, codified at 19 U.S.C. 3721, provides for the preferential treatment of certain textile and apparel articles from designated beneficiary countries. The provisions of section 112 of the AGOA are reflected for tariff purposes in Subchapter XIX, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS).

Sections 10.211 through 10.217 of the Customs Regulations (19 CFR 10.211 through 10.217) set forth the legal requirements and procedures that apply for purposes of obtaining preferential treatment on textile and apparel articles pursuant to section 112 of the AGOA. Those regulations were adopted on an interim basis in T.D. 00-67, published in the Federal Register (65 FR 59668) on October 5, 2000, and took effect on October 1, 2000. Action to adopt those interim regulations as a final rule was withheld pending anticipated action on the part of Congress to amend the underlying statutory provisions.

On August 6, 2002, the President signed into law the Trade Act of 2002 (the “Act”), Public Law 107-210, 116 Stat. 933. Sections 3108(a) and (b) of the Act amended section 112(b) of the AGOA (19 U.S.C. 3721(b)) which specifies the textile and apparel articles to which preferential treatment applies under the AGOA. The amendments made by section 3108(a) of the Act to section 112(b) of the AGOA were as follows:

1. The article description in the introductory text of paragraph (b)(1) was amended to refer to apparel articles “sewn or otherwise” assembled and to include a reference to articles assembled “from components knit-to-shape.” The amended statutory text reads as follows:

2. The article description in paragraph (b)(2) was reorganized in order to accommodate the addition of references to apparel articles “sewn or otherwise” assembled and to apparel articles assembled “from components knit-to-shape in the United States from yarns wholly formed in the United States.” The amended statutory text reads as follows:

3. The article description in the introductory text of paragraph (b)(3) was amended by removing the words “and cut” after “wholly formed” within the parenthetical phrase, by adding a reference to articles assembled “from components knit-to-shape in one or more beneficiary sub-Saharan African countries from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries,” and by adding a reference to “apparel articles wholly formed on seamless knitting machines in a beneficiary sub-Saharan African country from yarns originating either in the United States or one or more beneficiary sub-Saharan African countries.” The amended statutory text reads as follows:

4. The article description in paragraph (b)(3)(B)(i), which sets forth a special rule for lesser developed beneficiary sub-Saharan African countries, was amended to refer to preferential treatment “under this paragraph,” to refer to apparel articles wholly assembled “or knit-to-shape and wholly assembled, or both,” and to refer to preferential treatment regardless of the country of origin of the fabric “or the yarn.” The amended statutory text reads as follows:

5. The definition of “lesser developed beneficiary sub-Saharan African country” in paragraph (b)(3)(B)(ii) was amended by replacing the reference to the World Bank with a reference to the International Bank for Reconstruction and Development and by the addition of separate subparagraph references to Botswana and Namibia. The latter amendment in effect removes those two countries from the maximum per capita gross national product standard that applies to other countries covered by the definition. Neither of these changes affects the AGOA implementing regulations.

6. In paragraph (b)(4)(B), the reference to wool measuring “18.5” microns in diameter or finer was amended to read “21.5” microns in diameter or finer.

7. Finally, a new paragraph (b)(7) was added to cover hybrid operations, that is, combinations of various production scenarios described in other paragraphs under section 112(b). This new provision reads as follows:

Section 3108(b) of the Act amended section 112(b) of the AGOA by increasing the applicable percentage used for determining the quantitative limits that apply to apparel articles entitled to preferential treatment under paragraph (b)(3). This change does not affect the AGOA implementing regulations.

On November 13, 2002, the President signed Proclamation 7626 (published in the Federal Register at 67 FR 69459 on November 18, 2002) which, among other things, in Annex II sets forth modifications to the HTSUS to implement the changes to section 112(b) of the AGOA made by section 3108 of the Act. The Proclamation provides that the HTSUS modifications that implement the changes made by section 3108(a) of the Act are effective with respect to eligible articles entered, or withdrawn from warehouse for consumption, on or after August 6, 2002. The Proclamation further provides that the HTSUS modifications that implement the change to the applicable quantitative limit percentage made by section 3108(b) of the Act are effective with respect to eligible articles entered, or withdrawn from warehouse for consumption, on or after October 1, 2002.

The interim regulatory amendments set forth in this document that are in response to the statutory changes made to section 112(b) of the AGOA by section 3108 of the Act are as follows:

1. In § 10.212, a new definition covering knit-to-shape components is added to reflect the inclusion of references to “components knit-to-shape” in paragraphs (b)(1), (b)(2), (b)(3), and (b)(7) of the statute. Also, as a consequence of the addition of this new definition, the interim definition of “knit-to-shape” is recast as a definition covering knit-to-shape articles but without any other change to the wording of the definition.

2. In § 10.212, a new definition of “wholly formed on seamless knitting machines” is added to clarify the meaning of this expression as used in the amended text of paragraph (b)(3) of the statute (§ 10.213(a)(4) of the regulatory texts).

3. In § 10.213, paragraphs (a)(1) and (a)(2) are revised to conform to the amendment of the product description in the introductory text of paragraph (b)(1) of the statute.

4. In § 10.213, paragraph (a)(3) is revised to conform to the amendment of the product description in paragraph (b)(2) of the statute.

5. In § 10.213, paragraph (a)(4) is revised to conform to the amendment of the product description in the introductory text of paragraph (b)(3) of the statute.

6. In § 10.213, paragraph (a)(5) is revised to conform to the amendment of the product description that applies to lesser developed beneficiary countries in paragraph (b)(3)(B)(i) of the statute.

7. In § 10.213, the reference to “18.5” microns in paragraph (a)(7) is changed to read “21.5” microns to reflect the amendment made to paragraph (b)(4)(B) of the statute.

8. In § 10.213, a new paragraph (a)(11) is added to cover the hybrid operations described in new paragraph (b)(7) of the statute.

9. Finally, the preference group descriptions on the Certificate of Origin set forth under paragraph (b) of § 10.214 are revised to reflect the amended product descriptions in the statute and to include a reference to articles covered by new paragraph (b)(7) of the statute and paragraph (a)(11) of § 10.213.

In addition to the regulatory amendments described above that result from the changes made to section 112(b) of the AGOA by section 3108 of the Act, Customs has included in this document a number of other changes to the interim regulations published in T.D. 00-67. These additional changes, which are intended to clarify or otherwise improve the interim regulatory texts, are as follows:

1. In the definition of “wholly formed” as it relates to yarn in the interim regulations, Customs failed to provide for textile strip of headings 5404 and 5405, HTSUS. Textile strip of headings 5404 and 5405, HTSUS, may be formed by extrusion, similar to the formation of filaments, or may be formed by slitting plastic film or sheet. With regard to what may be considered to be a yarn, Customs notes that “yarn” is defined in the Dictionary of Fiber & Textile Technology (KoSa, 1999), at 222, as follows: “A generic term for a continuous strand of textile fibers, filaments, or material in a form suitable for knitting, weaving, or otherwise intertwining to form a textile fabric. Yarn occurs in the following forms: (1) A number of fibers twisted together (spun yarn), (2) a number of filaments laid together without twist (a zero-twist yarn), (3) a number of filaments laid together with a degree of twist, (4) a single filament with or without twist (a monofilament), or (5) a narrow strip of material, such as paper, plastic film, or metal foil, with or without twist, intended for use in a textile construction.” The identical definition is found in Dictionary of Fiber & Textile Technology (Hoechst Celanese, 1990) at 181. There is nothing to indicate that Congress intended textile strip to be excluded from use in the AGOA, and Customs believes the term “yarn” may be understood to include that type of material. Accordingly, this document revises the § 10.212 definition of “wholly formed” as it relates to yarn to include a reference to textile strip. In addition, this document divides that definition of “wholly formed” into two definitions, one with reference to wholly formed fabrics and the other with reference to wholly formed yarns (and the latter definition is further corrected by removing the words “and thread” to reflect the fact that the statute and regulations do not use the word “wholly” in the context of thread formation); Customs believes that this approach will better clarify that there are distinct contexts in which “wholly formed” is used in the statute and regulations, which now also include the new seamless knitting machine context referred to above. Finally, at the end of the “wholly formed fabrics” definition, the words “in a single country” are replaced by “in the United States or in one or more beneficiary countries” in order to reflect the fact that fabric may be wholly formed in more than one beneficiary country in the case of articles covered by section 112(b)(3) of the AGOA and § 10.213(a)(4) of the regulatory texts.

2. As noted above, quantitative limits apply for preferential treatment purposes in the case of articles covered by section 112(b)(3) of the AGOA which is reflected in § 10.213(a)(4) and (5) of the regulatory texts. Those quantitative limit provisions are set forth in U.S. Note 2 to Subchapter XIX of Chapter 98, HTSUS, which requires the Committee for the Implementation of Textile Agreements to publish in the Federal Register the applicable aggregate quantity of imports allowed for each 12-month period. Customs believes that it would be helpful for a reader of the regulatory texts to know that those quantitative limits apply to the subject products. Accordingly, revised paragraphs (a)(4) and (a)(5) of § 10.213 as set forth in this document also include appropriate references to the quantitative limit provisions of U.S. Note 2 to Subchapter XIX of Chapter 98, HTSUS.

3. Section 112(b)(5)(A) of the AGOA, which is reflected in § 10.213(a)(8) of the regulatory texts, covers apparel articles that are constructed of either fabrics or yarns that are considered to be in “short supply” for purposes of Annex 401 of the NAFTA (that is, the fabrics or yarns are not required to be originating within the meaning of the NAFTA, if those fabrics or yarns undergo the specified tariff shift for that article and that article meets all other applicable requirements for an originating good). For example, sweaters of wool classified under subheading 6110.11.00 of the HTSUS that are knit to shape in a NAFTA country from 40 percent non-originating silk yarn and 60 percent originating wool yarn may qualify as originating goods because a tariff shift from silk yarn is allowed by the applicable tariff shift rule, but sweaters knit to shape from 40 percent originating silk yarn and 60 percent non-originating wool yarn will not qualify as originating goods because the non-originating wool yarn is classified under a heading (5106) from which a tariff shift is not allowed. Customs notes that the corresponding HTSUS provision (subheading 9819.11.21) contains a more explanatory description of the Annex 401 short supply rule; the regulatory text is revised in this document to conform to the approach used in the HTSUS provision. Customs further notes that the same short supply language appears within the textile provisions of the United States-Caribbean Basin Trade Partnership Act (the CBTPA) and the Andean Trade Promotion and Drug Eradication Act (the ATPDEA), and in those contexts the short supply provision can only be interpreted to not apply to brassieres classifiable under subheading 6212.10 of the HTSUS because applying it would render meaningless the extensive provisions on brassieres in those Acts. Consequently, Customs has decided that the short supply provision does not apply to brassieres under the CBTPA and ATPDEA and that the same interpretation must apply for purposes of the AGOA. Customs notes in this regard that the NAFTA Annex 401 rule for articles classified in subheading 6212.10 of the HTSUS requires only the performance of certain specified production processes (that is, “both cut (or knit to shape) and sewn or otherwise assembled in the territory of one or more of the NAFTA parties”) and includes no requirements regarding the source of the fabrics or yarns. There is little logic in applying the short supply provision to a product where the NAFTA rule makes no mention of excluded materials. Thus, Customs believes that brassieres of subheading 6212.10, HTSUS, are not covered by section 112(b)(5)(A) of the AGOA and § 10.213(a)(8) of the regulations. The revised text of § 10.213(a)(8) set forth in this document therefore also includes appropriate exclusionary language to reflect this interpretation.

4. With reference to the findings, trimmings and interlinings provisions under § 10.213(b)(1), Customs believes that it would be useful to specify in the regulatory texts an appropriate basis for determining the “cost” of the components and the “value” of the findings and trimmings and interlinings. Customs further believes that the standard should be based on the regulations that apply to components and materials under subheading 9802.00.80, HTSUS (in particular, 19 CFR 10.17), and under the GSP (in particular, 19 CFR 10.177(c)). Accordingly, this document adds a new subparagraph (2) to § 10.213(b) to address this point and redesignates former subparagraph (2) of the interim regulatory texts as subparagraph (3).

5. In addition to the modification of the preference group descriptions on the Textile Certificate of Origin set forth under § 10.214(b) as discussed above, the format of the Certificate is modified and some of the blocks are moved and renumbered, solely for purposes of clarity. The instructions for completion of the Certificate in paragraph (c) of § 10.214 are also revised to reflect the changes made to the Certificate and to provide additional clarification regarding its completion, including provision for signature by an exporter's authorized agent having knowledge of the relevant facts.

6. In the case of articles described in § 10.213(a)(1), interim § 10.215(a) provided for the inclusion of the symbol “D” as a prefix to the applicable Chapter 98, HTSUS, subheading (that is subheading 9802.00.80) as the means for making the required written declaration on the entry documentation. This procedure was adopted because, contrary to the case of the other articles described in § 10.213(a), no unique HTSUS subheading had been identified for the articles covered by § 10.213(a)(1) when the interim regulations were published. A unique HTSUS subheading now exists for those articles (that is, subheading 9802.00.8042). Accordingly, § 10.215(a) is revised in this document to prescribe the same entry documentation declaration procedure for all articles described in § 10.213, that is, inclusion of the HTSUS Chapter 98 subheading under which the article is classified.

7. In § 10.216(b)(4)(ii), the cross-reference to “§ 10.214(c)(14)” is changed to read “§ 10.214(c)(15)” to reflect the addition of the provision regarding signature by the exporter or the exporter's authorized agent.

8. Finally, in § 10.217(a)(2) and (a)(3), the words “in a beneficiary country” are removed in recognition of the fact that verification of documentation and other information regarding country of origin and verification of evidence regarding the use of U.S. materials might take place outside a beneficiary country, for example, within the United States.

Before adopting these interim regulations as a final rule, consideration will be given to any written comments timely submitted to Customs, including comments on the clarity of this interim rule and how it may be made easier to understand. Comments submitted will be available for public inspection in accordance with the Freedom of Information Act (5 U.S.C. 552), § 1.5 of the Treasury Department Regulations (31 CFR 1.5), and § 103.11(b) of the Customs Regulations (19 CFR 103.11(b)), on regular business days between the hours of 9 a.m. and 4:30 p.m. at the Office of Regulations and Rulings, U.S. Customs Service, 799 9th Street, NW., Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Mr. Joseph Clark at (202) 572-8768.

Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has determined that prior public notice and comment procedures on these regulations are unnecessary and contrary to the public interest. The regulatory changes provide trade benefits to the importing public, in some cases implement direct statutory mandates, and are necessary to carry out the preferential treatment and United States tariff changes proclaimed by the President under the African Growth and Opportunity Act. For the same reasons, pursuant to the provisions of 5 U.S.C. 553(d)(1) and (3), Customs finds that there is good cause for dispensing with a delayed effective date. Because no notice of proposed rulemaking is required for interim regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply.

This document does not meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

The collection of information contained in this interim rule has previously been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) under OMB control number 1515-0224.

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

The principal author of this document was Francis W. Foote, Office of Regulations and Rulings, U.S. Customs Service. However, personnel from other offices participated in its development.

For the reasons set forth in the preamble, part 10 of the Customs Regulations (19 CFR part 10) is amended as set forth below.

Background Textile and Apparel Articles Under the Caribbean Basin Economic Recovery Act

The Caribbean Basin Economic Recovery Act (the CBERA, also referred to as the Caribbean Basin Initiative, or CBI, statute, codified at 19 U.S.C. 2701-2707) instituted a duty preference program that applies to exports of goods from those Caribbean Basin countries that have been designated by the President as program beneficiaries. On May 18, 2000, the President signed into law the Trade and Development Act of 2000, Public Law 106-200, 114 Stat. 251, which included as Title II the United States-Caribbean Basin Trade Partnership Act, or CBTPA. The CBTPA provisions included section 211 which amended section 213(b) of the CBERA (19 U.S.C. 2703(b)) in order to, among other things, provide in new paragraph (2) for the preferential treatment of certain textile and apparel articles, specified in subparagraph (A), that had previously been excluded from the CBI duty-free program. The preferential treatment for those textile and apparel articles under paragraph (2)(A) of section 213(b) involves not only duty-free treatment but also entry in the United States free of quantitative restrictions, limitations, or consultation levels.

Sections 10.221 through 10.227 of the Customs Regulations (19 CFR 10.221 through 10.227) set forth the legal requirements and procedures that apply for purposes of obtaining preferential treatment of textile and apparel articles pursuant to the provisions added to section 213(b) by the CBTPA. Those regulations were adopted on an interim basis in T.D. 00-68, published in the Federal Register (65 FR 59650) on October 5, 2000, and took effect on October 1, 2000. Action to adopt those interim regulations as a final rule was withheld pending anticipated action on the part of Congress to amend the underlying statutory provisions.

On August 6, 2002, the President signed into law the Trade Act of 2002 (the “Act”), Pub. L. 107-210, 116 Stat. 933. Section 3107(a) of the Act made a number of changes to the textile and apparel provisions of paragraph (2)(A) of section 213(b) of the CBERA. The amendments made by section 3107(a) of the Act were as follows:

1. The article description in the introductory text of paragraph (2)(A)(i) was amended to refer to apparel articles “sewn or otherwise” assembled and to include a reference to articles assembled “from components knit-to-shape.” The amended statutory text reads as follows:

2. At the end of paragraph (2)(A)(i), two new sentences were added to provide that apparel articles entered on or after September 1, 2002, will qualify for preferential treatment under paragraph (2)(A)(i) only if, in the case of knit fabrics and woven fabrics, all dyeing, printing, and finishing of the fabrics from which the articles are assembled is carried out in the United States. This dyeing, printing, and finishing provision, which applies equally to the articles covered by paragraph (2)(A)(i)(I) and to the articles covered by paragraph (2)(A)(i)(II), reads as follows:

3. The article description in paragraph (2)(A)(ii) was reorganized in order to accommodate the addition of references to apparel articles “sewn or otherwise” assembled and to apparel articles assembled “from components knit-to-shape in the United States from yarns wholly formed in the United States.” In addition, the same dyeing, printing, and finishing language described above was added at the end of this paragraph. The amended paragraph (2)(A)(ii) text reads as follows:

4. The quantitative limitation provisions for knit apparel set forth in paragraphs (2)(A)(iii)(II) and (2)(A)(iii)(IV) were revised. These statutory changes do not affect the regulatory provisions and therefore are not dealt with in this document.

5. In paragraph (2)(A)(iv) which covers brassieres, subclause (I) was amended by the addition of exception language regarding articles covered by certain other clauses under paragraph (2)(A). In addition, subclauses (II) and (III), which set forth 75 and 85 percent U.S. fabric content requirements that apply to articles described in subclause (I) beginning on October 1, 2001, were amended by replacing each reference to “fabric components” with “fabrics,” by adding exclusion language regarding findings and trimmings after each reference to fabric(s), and by adding various references to articles that are “entered” and that are “eligible” under clause (iv). Since the subclause (II) and (III) provisions were not dealt with in T.D. 00-68 but rather were the subject of a separate interim rule document ( see T.D. 01-74 published in the Federal Register at 66 FR 50534 on October 4, 2001), the changes which section 3107(a) of the Act made to those provisions similarly will be dealt with in a separate rulemaking procedure. Accordingly, this document addresses only that portion of paragraph (2)(A)(iv) text that was dealt with in T.D. 00-68, that is, subclause (I) which, as amended by section 3107(a) of the Act, reads as follows:

6. In paragraph (2)(A)(vii) which consists of multiple subclauses setting forth special rules regarding the treatment of certain fibers, yarns, materials or components for purposes of preferential treatment, a new subclause (V) was added to clarify the status of dyed, printed, or finished thread. This new provision reads as follows:

7. Finally, a new clause (ix) was added to paragraph (2)(A) to cover hybrid operations, that is, combinations of various production scenarios described in other clauses under paragraph (2)(A). This new provision, which also incorporates the new dyeing, printing, and finishing language, reads as follows:

On November 13, 2002, the President signed Proclamation 7626 (published in the Federal Register at 67 FR 69459 on November 18, 2002) which, among other things, in Annex I sets forth modifications to the HTSUS to implement the changes to section 213(b)(2)(A) of the CBERA made by section 3107(a) of the Act. The Proclamation provides that the HTSUS modifications that implement the changes made by section 3107(a) of the Act are effective with respect to eligible articles entered, or withdrawn from warehouse for consumption, on or after August 6, 2002, except that (1) the provisions of Annex I relating to the dyeing, printing, and finishing of fabrics are effective with respect to eligible articles entered, or withdrawn from warehouse for consumption, on or after September 1, 2002, and (2) the provisions of Annex I relating to the new quantitative limits for certain knit apparel and relating to the CBTPA brassieres provision are effective with respect to goods entered, or withdrawn from warehouse for consumption, on or after October 1, 2002.

On December 31, 2002, the Office of the United States Trade Representative (USTR) published a notice in the Federal Register (67 FR 79954) setting forth technical corrections to the HTSUS to address several inadvertent errors and omissions in various Presidential Proclamations. With regard to Proclamation 7626, this notice made the following two changes to the article description in subheading 9820.11.18, HTSUS: (1) removal of the parenthetical exception reference regarding non-underwear t-shirts, effective on or after October 2, 2000; and (2) insertion of the words “, or from components knit-to-shape in the United States from yarns wholly formed in the United States, or both” after the phrase “from yarns wholly formed in the United States,” effective on or after August 6, 2002.

As a consequence of the statutory changes described above and as a result of the modifications to the HTSUS made by Proclamation 7626 and by the December 31, 2002, USTR notice, the interim CBTPA implementing regulations published in T.D. 00-68 no longer fully reflect the current state of the law. In addition, following publication of those interim regulations, a number of other issues came to the attention of Customs that warrant clarification in the CBTPA implementing regulations. Accordingly, this document sets forth interim amendments to the CBTPA implementing regulations, with provision for public comment on those changes, to reflect the amendments to the statute mentioned above and to clarify or otherwise improve those previously published regulations. It is the intention of Customs, after the close of the public comment period prescribed in this document, to publish one document that (1) addresses both the comments submitted on the interim regulations published in T.D. 00-68 and the comments submitted on the interim regulations set forth in this document and (2) adopts, as a final rule, the CBTPA implementing regulations contained in the two interim rule documents with any additional changes as may be appropriate based on issues raised in the submitted public comments. The interim regulatory changes contained in this document are discussed below.

The interim regulatory amendments set forth in this document that are in response to the statutory changes made to section 213(b) of the CBERA by section 3107(a) of the Act are as follows:

1. In § 10.223, paragraphs (a)(1) and (a)(2) are revised to conform to the amendment of the product description in the introductory text of paragraph (2)(A)(i) of the statute. The amended regulatory text in each case includes a cross-reference to new paragraph (b), discussed below, which addresses, among other things, the new statutory provision regarding dyeing, printing, and finishing of fabrics.

2. In § 10.223, paragraph (a)(3) is revised to conform to the amendment of the product description in paragraph (2)(A)(ii) of the statute. The amended regulatory text also includes a cross-reference to new paragraph (b), discussed below, which addresses the new statutory provision regarding dyeing, printing, and finishing of fabrics.

3. In § 10.223, paragraph (a)(6) is revised to conform to the amendment of the description of brassieres contained in subclause (I) of paragraph (2)(A)(iv) of the statute.

4. In § 10.223, paragraph (a)(12), which corresponds to subheading 9820.11.18, HTSUS, is revised in order to (1) reflect the HTSUS changes made in the December 31, 2002, USTR notice discussed above and (2) include a cross-reference to new paragraph (b), discussed below, which addresses the new statutory provision regarding dyeing, printing, and finishing of fabrics.

5. In § 10.223, a new paragraph (a)(13) is added to cover the hybrid operations described in new clause (ix) of paragraph (2)(A) of the statute. This new provision also includes a cross-reference to new paragraph (b) which addresses the new statutory provision regarding dyeing, printing, and finishing of fabrics.

6. In § 10.223, paragraphs (b) and (c) are redesignated as paragraphs (c) and (d) and a new paragraph (b) is added primarily to address the issue of dyeing, printing, and finishing of fabrics. The following points are noted regarding this new paragraph (b) text:

a. Customs believes that it is preferable to set forth the basic statutory dyeing, printing, and finishing rule in one place in the regulations rather than repeat it in each of the article description contexts to which the rule relates. Customs notes that this is similar to the approach taken for HTSUS purposes in Annex I to Proclamation 7626 referred to above.

b. As regards the structure of paragraph (b), it is divided into two parts. Paragraph (b)(1) covers dyeing, printing, and finishing operations and consists of a general statement followed by two specific limitations, the first one of which addresses the statutory rule adopted in the Trade Act of 2002. Paragraph (b)(2) covers post-assembly and other operations (for example, embroidering, stone-washing, perma-pressing, garment-dyeing) and consists of a general statement followed by one specific limitation.

c. The general statements regarding dyeing, printing, and finishing operations in paragraph (b)(1) and regarding other operations in paragraph (b)(2) are specifically intended to clarify the status of those operations under the CBTPA program when applied to yarns, fabrics, components and articles in those contexts that are not directly addressed in the statutory texts. The general statement in each case provides that the operations in question may be performed on any yarn or fabric or component, or on any article, without affecting the eligibility of an article for preferential treatment, provided that the dyeing, printing, finishing, or other operation is performed only in the United States or in a CBTPA beneficiary country. Customs believes that limiting those processes to the United States and CBTPA beneficiary countries is consistent with the overall objective of the CBTPA program. Customs notes in this regard that the Conference Report relating to the CBTPA legislation (House Report 106-606, 106th Congress, 2d Session) states the conferees' intent to foster increased opportunities for U.S. textile and apparel companies to expand co-production arrangements with CBTPA beneficiary countries. Moreover, the findings of Congress in section 202 of the Trade and Development Act of 2000 specifically referred to the offering of benefits to Caribbean Basin countries to “promote the growth of free enterprise and economic opportunity in those neighboring countries.” Those findings also stated that “increased trade and economic activity between the United States and countries in the Western Hemisphere will create new jobs in the United States as a result of expanding export opportunities.”

d. The dyeing, printing, and finishing provision of paragraph (b)(1)(i) corresponds to the statutory provision and therefore refers specifically to articles described in paragraphs (a)(1), (a)(2), (a)(3), (a)(12), and (a)(13) of § 10.223. However, the regulatory text refers to knitted “or crocheted” fabrics, in order to reflect the terminology employed in Annex I to Proclamation 7626. In addition, this regulatory text includes a reference to a fabric component “produced from fabric” in order to (1) reflect the fact that apparel articles are most often assembled from apparel components rather than from fabrics and (2) clarify the Customs position that knitting to shape does not create a fabric but rather results in the creation of a component that is ready for assembly without having gone through a fabric stage.

e. The second provision under the general rule regarding dyeing, printing, and finishing operations, set forth in paragraph (b)(1)(ii), reflects the principle that in the case of assembled articles described in paragraph (a)(1), and in the case of assembled luggage described in paragraph (a)(10), an operation that is incidental to the assembly process may be performed in a CBTPA beneficiary country. This provision reflects the terms of subheading 9802.00.80, HTSUS, and the regulations under that HTSUS provision which include, in 19 CFR 10.16(c), a list of operations not considered incidental to assembly.

f. The statement in the last sentence of paragraph (b)(2) regarding other operations is included for the same reason stated at point e. above in connection with paragraph (b)(1) concerning operations incidental to assembly under subheading 9802.00.80, HTSUS.

7. In § 10.223, a new subparagraph (3) is added at the end of redesignated paragraph (c) to cover the new statutory provision regarding dyed, printed, or finished thread.

8. Finally, the preference group descriptions on the Certificate of Origin set forth under paragraph (b) of § 10.224 are revised to reflect the amended product descriptions in the statute and to include a reference to articles covered by new clause (ix) of paragraph (2)(A) of the statute and paragraph (a)(13) of § 10.223.

In addition to the regulatory amendments described above that result from the changes made to section 213(b) of the CBERA by section 3107(a) of the Act, Customs has included in this document a number of other changes to the interim regulations published in T.D. 00-68. These additional changes, which are intended to clarify or otherwise improve the interim regulatory texts, are as follows:

1. In § 10.222, in the text of the definition of “assembled in one or more CBTPA beneficiary countries,” the word “CBTPA” is added before the words “beneficiary countries.”

2. Customs believes that it would be useful to include a definition of “luggage” in the regulatory texts in order to clarify the scope of paragraphs (a)(10) and (a)(11) of § 10.223. Customs further believes that the meaning of this term should be consistent with trade practice to the greatest extent practicable. While no definition of luggage appears in the HTSUS, it is noted that this term was defined with specificity in the Subpart D headnotes to Schedule 7 of the predecessor Tariff Schedules of the United States (TSUS). Customs believes that the TSUS definition is consistent with what the industry would consider “luggage” to have been then and to be now. Accordingly, § 10.222 is amended by the inclusion of a new definition of “luggage” that is based on the definition that appeared in the TSUS.

3. Customs has found two errors in the § 10.222 definition of “wholly formed” as it relates to yarns or thread. First, the reference to “thread” in this context is inappropriate because the CBTPA texts do not use the expression “wholly formed” with reference to thread (thread needs only to be “formed” in the United States). Second, Customs failed to provide for textile strip classified in headings 5404 and 5405 of the HTSUS.

Regarding the second point, it is noted that textile strip may be formed by extrusion, similar to the formation of filaments, or may be formed by slitting plastic film or sheet. With regard to what may be considered to be a yarn, Customs notes that “yarn” is defined in the Dictionary of Fiber & Textile Technology (KoSa, 1999), at 222, as follows: “A generic term for a continuous strand of textile fibers, filaments, or material in a form suitable for knitting, weaving, or otherwise intertwining to form a textile fabric. Yarn occurs in the following forms: (1) A number of fibers twisted together (spun yarn), (2) a number of filaments laid together without twist (a zero-twist yarn), (3) a number of filaments laid together with a degree of twist, (4) a single filament with or without twist (a monofilament), or (5) a narrow strip of material, such as paper, plastic film, or metal foil, with or without twist, intended for use in a textile construction.” The identical definition is found in Dictionary of Fiber & Textile Technology (Hoechst Celanese, 1990) at 181. There is nothing to indicate that Congress intended textile strip to be excluded from use in the CBTPA, and Customs believes the term “yarn” may be understood to include that type of material.

Accordingly, the definition of “wholly formed” as it relates to yarns is amended in this document by removing the words “or thread” and by adding language regarding textile strip.

4. In § 10.223(a)(4), in the second parentheses, the words “classifiable under subheadings 6109.10.00 and 6109.90.10 of the HTSUS and described in paragraph (a)(5) of this section” are added in order to align the text more closely on the corresponding wording in HTSUS subheading 9820.11.09.

5. With reference to the findings, trimmings and interlinings provisions under redesignated § 10.223(c)(1), Customs believes that it would be useful to specify in the regulatory texts an appropriate basis for determining the “cost” of the components and the “value” of the findings and trimmings and interlinings. Customs further believes that the standard should be based on the regulations that apply to components and materials under subheading 9802.00.80, HTSUS (in particular, 19 CFR 10.17), and under the GSP (in particular, 19 CFR 10.177(c)). Accordingly, this document adds a new subparagraph (ii) to § 10.223(c)(1), with former subparagraph (ii) consequently redesignated as (iii), to address this point.

6. In addition to the modification of the preference group descriptions on the Textile Certificate of Origin set forth under § 10.224(b) as discussed above, the format of the Certificate is modified and some of the blocks are reworded solely for purposes of clarity. The instructions for completion of the Certificate in paragraph (c) of § 10.224 are also revised to reflect the changes made to the Certificate and to provide additional clarification regarding its completion, including provision for signature by an exporter's authorized agent having knowledge of the relevant facts.

7. In the case of articles described in §§ 10.223(a)(1) and (a)(10), § 10.225(a) as published in T.D. 00-68 provided for the inclusion of the symbol “R” as a prefix to the applicable Chapter 98, HTSUS, subheading (that is subheading 9802.00.80) as the means for making the required written declaration on the entry documentation. This procedure was adopted because, contrary to the case of the other articles described in § 10.223(a), no unique HTSUS subheading had been identified for these two groups of articles when T.D. 00-68 was published. Unique HTSUS subheadings now exist for these two groups of articles (that is, subheading 9802.00.8044 in the case of § 10.223(a)(1) articles and subheading 9802.00.8046 in the case of § 10.223(a)(10) articles). Accordingly, § 10.225(a) has been modified to prescribe the same entry documentation declaration procedure for all articles described in § 10.223, that is, inclusion of the HTSUS Chapter 98 subheading under which the article is classified.

8. In § 10.227(a)(2) and (3), the words “in a CBTPA beneficiary country” have been removed in recognition of the fact that verification of documentation and other information regarding country of origin and verification of evidence regarding the use of U.S. materials might take place outside a beneficiary country, for example within the United States.

9. Finally, in addition to those conforming changes already noted above, some paragraph or other references within regulatory text in §§ 10.223, 226 and 10.227 have been changed to conform to changes to the regulatory texts discussed above.

Before adopting these interim regulations as a final rule, consideration will be given to any written comments timely submitted to Customs, including comments on the clarity of this interim rule and how it may be made easier to understand. Comments submitted will be available for public inspection in accordance with the Freedom of Information Act (5 U.S.C. 552), § 1.5 of the Treasury Department Regulations (31 CFR 1.5), and § 103.11(b) of the Customs Regulations (19 CFR 103.11(b)), on regular business days between the hours of 9 a.m. and 4:30 p.m. at the Office of Regulations and Rulings, U.S. Customs Service, 799 9th Street, NW., Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Mr. Joseph Clark at (202) 572-8768.

Pursuant to the provisions of 5 U.S.C. 553(b)(B), Customs has determined that prior public notice and comment procedures on these regulations are unnecessary and contrary to the public interest. The regulatory changes provide trade benefits to the importing public, in some cases implement direct statutory mandates, and are necessary to carry out the preferential treatment and United States tariff changes proclaimed by the President under the Caribbean Basin Economic Recovery Act. For the same reasons, pursuant to the provisions of 5 U.S.C. 553(d)(1) and (3), Customs finds that there is good cause for dispensing with a delayed effective date. Because no notice of proposed rulemaking is required for interim regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply.

This document does not meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

The collection of information contained in this interim rule has previously been reviewed and approved by the Office of Management and Budget (OMB) in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) under OMB control number 1515-0226.

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

The principal author of this document was Francis W. Foote, Office of Regulations and Rulings, U.S. Customs Service. However, personnel from other offices participated in its development.

On March 5, 2002, President Bush signed Proclamation 7529 “To Facilitate Positive Adjustment to Competition From Imports of Certain Steel Products,” which was published in the Federal Register (67 FR 10553) on March 7, 2002. The Proclamation was issued under section 203 of the Trade Act of 1974, as amended (19 U.S.C. 2253), and was in response to determinations by the U.S. International Trade Commission (ITC) under section 202 of the Trade Act of 1974, as amended (19 U.S.C. 2252), that certain steel products were being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat of serious injury, to the domestic industries producing like or directly competitive articles. The action taken by the President in the Proclamation consisted of the implementation of certain “safeguard measures,” specifically, the imposition of a tariff-rate quota on imports of specified steel slabs and an increase in duties on other specified steel products. The Proclamation included an Annex setting forth appropriate modifications to the Harmonized Tariff Schedule of the United States (HTSUS) to effectuate the President's action. The modifications to the HTSUS, which involved Subchapter III of Chapter 99 and included the addition of a new U.S. Note 11 and the addition of numerous new subheadings to cover the affected steel products, were made effective with respect to goods entered, or withdrawn from warehouse for consumption, on or after March 20, 2002.

On March 5, 2002, the President issued a Memorandum to the Secretary of the Treasury, the Secretary of Commerce, and the United States Trade Representative entitled “Action Under Section 203 of the Trade Act of 1974 Concerning Certain Steel Products,” which also was published in the Federal Register (67 FR 10593) on March 7, 2002. The Memorandum included an instruction to the Secretary of the Treasury and the Secretary of Commerce to establish a system of import licensing to facilitate the monitoring of imports of certain steel products. In addition, the Memorandum instructed the Secretary of Commerce, within 120 days of the effective date of the safeguard measures established by Proclamation 7529, to publish regulations in the Federal Register establishing the system of import licensing.

On July 18, 2002, the International Trade Administration of the Department of Commerce published in the Federal Register (67 FR 47338) a proposed rule to establish a steel licensing and surge monitoring system as instructed by the President in the March 5, 2002, Memorandum. Under the Commerce proposal, all importers of steel products covered by the President's section 203 action, including those products subject to country exemptions or product exclusions, would be required to obtain a steel import license and to provide the license information (that is, the license number) to Customs except in the case of merchandise which is eligible for informal entry under § 143.21 of the Customs Regulations (19 CFR 143.21). Commerce proposed to institute a registration system for steel importers, and steel import licenses would be issued to registered importers, customs brokers or their agents through an automatic steel import licensing system. Once registered, an importer or broker would submit the required license application information electronically to Commerce, and the system would then automatically issue a steel import license number for inclusion on the entry summary documentation filed with Customs.

Although the Presidential Memorandum of March 5, 2002, vested primary responsibility for the steel product import licensing and monitoring procedures in the Secretary of Commerce, the Secretary of the Treasury, through the U.S. Customs Service, is primarily responsible for the promulgation and administration of regulations regarding the importation and entry of merchandise in the United States. Accordingly, on August 9, 2002, Customs published in the Federal Register (67 FR 51800) a notice of proposed rulemaking to amend the Customs Regulations to provide an appropriate regulatory basis for the collection of the steel import license number on the entry summary documentation in accordance with the proposed regulatory standards promulgated by the Department of Commerce. The proposed amendment involved the addition of a new § 12.145 (19 CFR 12.145) to require the inclusion of a steel import license number on the entry summary in any case in which a steel import license number is required to be obtained under regulations promulgated by the Department of Commerce.

The August 9, 2002, notice included in the preamble a discussion of the potential consequences under the importer's bond for a failure to provide the required steel import license number to Customs on a timely basis and included a statement that, after new § 12.145 has been adopted as a final rule, Customs would publish appropriate guidelines which could outline circumstances in which liquidated damage claims in these cases may be reduced to $50 for a late filing of the required information or to $100 in the case of a complete failure to file the information. The August 9, 2002, notice also invited the public to submit written comments on the proposed regulatory amendment for consideration by Customs prior to taking final action of the proposal.

On December 31, 2002, the International Trade Administration of the Department of Commerce published in the Federal Register (67 FR 79845) a final rule document to add new regulations implementing the Steel Import Licensing and Surge Monitoring program. Those regulations, set forth at 19 CFR part 360, consist of eight sections (§§ 360.101-360.108) and reflect, with some changes, the proposals outlined in the proposed rule published by the Department of Commerce on July 31, 2002. Those changes reflected in the final regulatory texts adopted by Commerce that have a substantive impact on the text of § 12.145 as proposed by Customs are identified in the discussion of comments on the Customs proposal set forth below.

Three commenters responded to the solicitation of comments in the August 9, 2002, notice of proposed rulemaking. Those comments are summarized and responded to below.

Comment: One commenter asserted that foreign-trade zone (FTZ) activities are part of the U.S. economic territory (even though they are legally defined as outside the customs territory of the United States) and that FTZ-stored steel constitutes part of U.S. steel inventories. This commenter therefore argued that FTZ activities must be included in the steel import licensing system and, further, that this FTZ license requirement should be imposed once, that is, at the time of admission of the steel into the FTZ.

Customs response: Customs notes that the issue raised by this commenter concerns the scope of the steel import licensing program which is a matter for which the Department of Commerce, rather than Customs, is responsible; therefore, Customs has no authority to impose the standard suggested by this commenter. However, Customs also notes in this regard that whereas under the July 18, 2002, Department of Commerce proposals a license would have been required for steel products twice, that is, as they entered and as they left an FTZ, the Commerce regulations adopted in the December 31, 2002, final rule document have addressed the concern raised by this commenter. Section 360.101(c) of those regulations specifically provides that all shipments of covered steel products into FTZs will require an import license prior to the filing of FTZ admission documents, that the license number(s) must be reported on the application for FTZ admission and/or status designation (Customs Form 214) at the time of filing, and that a further steel license will not be required for shipments from FTZs into the commerce of the United States.

In order to reflect the standard regarding FTZ transactions set forth in the Commerce regulation referred to above, Customs in this final rule document has redrafted proposed § 12.145 to accommodate a reference to inclusion of the appropriate license number on Customs Form 214 at the time of filing with Customs. Thus, under the revised text, the import license number must be provided to Customs in two basic circumstances: (1) on Customs Form 7501 (or an electronic equivalent) in the case of entered merchandise; and (2) on Customs Form 214 in the case of merchandise admitted into an FTZ. In addition, the opening exception clause regarding informal entry that was included in the proposed text has not been retained in the revised § 12.145 text because it is covered in the license issuance standards promulgated by Commerce and thus does not have to be repeated here.

Comment: A commenter stated that in administrative message 02-0910 dated July 19, 2002, Customs presented a proposed methodology for enforcing compliance with the proposed licensing system subject to the August 9, 2002, Customs notice of proposed rulemaking. Under this methodology, foreign steel subject to licensing may enter a Customs bonded warehouse or be covered by a temporary importation bond (TIB) without a license; the license would be optional for both the warehouse and TIB entries. Stating that this optional treatment is inconsistent with the purpose of the licensing system, this commenter argued that all foreign steel subject to the licensing requirements should be treated identically, regardless of whether the steel is placed in a bonded facility, covered by a TIB, or admitted into an FTZ, and that this identical treatment should require the steel to be licensed and counted when it is admitted into an FTZ, entered into a bonded warehouse, or entered on a TIB.

Customs response: As regards the administrative message referred to by this commenter, Customs notes that it was intended only to advise the trade on the system requirements for filing the steel license information (number) when entry filing is effected electronically in the Automated Commercial System (ACS) through the automated broker interface (ABI). The administrative message was issued in recognition of the considerable lead time that is necessary in order to reprogram ABI user software and reflected the best information available at that time from the Department of Commerce regarding the steel import licensing program requirements, that is, the proposals published by Commerce on July 18, 2002.

As indicated in the preceding comment discussion regarding FTZs, the primary responsibility for the steel import licensing program rests with the Department of Commerce and, accordingly, Customs has no authority to impose standards that are at variance with the program requirements properly established by Commerce. Customs further notes that, in the final regulations published by Commerce on December 31, 2002, § 360.101(e) provides that import licenses are not required in the case of TIB entries, transportation and exportation (T&E) entries, and entries into a bonded warehouse, and that a license is required at the time of entry summary in the case of a covered steel product that is withdrawn from a bonded warehouse. In view of this regulatory standard, Customs cannot adopt the “identical” treatment principle suggested by this commenter, and the text of § 12.145 set forth in this final rule document has been modified to refer specifically to merchandise “entered, or withdrawn from warehouse for consumption, in the customs territory of the United States” in order to exclude from coverage TIB, T&E, and warehouse entry transactions.

Comment: A commenter referred to a statement that “[a]ll imports of steel products * * * will be required to obtain a steel import license and provide the license number to U.S. Customs on the entry summary.” This commenter raised the issue regarding the point at which a material is considered to be “imported” and suggested that, in the case of warehouse entries, that point should be when the material is withdrawn from the warehouse and a consumption entry is filed and not when the material is off-loaded under a warehouse entry and maintained in the bonded warehouse.

Customs response: The statement referred to by this commenter appeared in the proposed rule document published by the Department of Commerce on July 18, 2002, rather than in the notice of proposed rulemaking published by Customs on August 9, 2002. The statement was not set forth in that document as proposed regulatory text and therefore appears to have been directed to the general thrust of the steel import licensing program. Customs further notes that under the program as developed by Commerce, the mere fact of importation is not controlling as regards the licensing and license number reporting requirements. Rather, as already indicated in this comment discussion, the Department of Commerce proposals and final regulatory texts, as well as the text of § 12.145 as proposed and as set forth in this final rule document, make it clear that those requirements do not arise at the time of entry into a bonded warehouse but rather only upon withdrawal from the warehouse when Customs Form 7501 will be filed.

Comment: A commenter recommended that the Customs entry number not be a requirement at the time of applying for a license unless it is available at the time of filing. This commenter referred to two situations in which it would not be possible to provide the proper entry number when applying for the license. One situation involves Customs bonded warehouses, where the entry number assigned at the time of arrival in the United States is not the same as the entry number that applies when duty is eventually paid. The other situation involves split shipment situations where a portion of the cargo covered by one invoice or bill of lading is discharged and moved overland separately from the rest of the cargo, with the result that multiple entries will be filed for the merchandise covered by the one invoice or bill of lading.

Customs response: Customs first notes that the observations made by this commenter relate to the license issuance process which is controlled by the Department of Commerce regulations and not by the regulations promulgated by Customs. Moreover, Customs notes that, in the final regulations published by Commerce on December 31, 2002, § 360.103(b) provides that license filers are not required to report a Customs entry number to obtain an import license but are encouraged to do so if the entry number is known at the time of filing for the license. Accordingly, the concern expressed by this commenter has been addressed in the Commerce final regulations.

Comment: A commenter referred to a statement that “[t]he applicable license number(s) must cover the total quantity of steel entered and should match the information provided on the Customs entry summary.” This commenter argued that it would be difficult to meet this requirement in some cases involving warehouse entries. For example, where goods are withdrawn for export to Canada, the inclusion of those quantities on an application for a license at the time of “entry” into the port would have an impact on the validity of the data collected. This commenter also noted the possibility that a warehouse entry could be open for an extended period of time, requiring the government to monitor the open license for months or even years.

Customs response: The statement referred to by this commenter appeared in the proposed rule document published by the Department of Commerce on July 18, 2002, rather than in the notice of proposed rulemaking published by Customs on August 9, 2002, and this statement was not set forth in that document as proposed regulatory text. A similar statement does appear as regulatory text in the final rule document published by Commerce on December 31, 2002: The last sentence of § 360.101(a)(2) reads “[t]he applicable license(s) must cover the total quantity of steel entered and should cover the same information provided on the Customs entry summary.” This sentence appears in the context of a discussion of when a single license may cover multiple products and when separate licenses for steel entered under a single entry are required, and it immediately follows the statement that “[a]s a result, a single Customs entry may require more than one steel import license.” The regulatory text in question thus relates to the scope of the licensing procedure and therefore falls directly under the authority of Commerce rather than that of Customs.

Customs would also suggest that the potential problem outlined by the commenter regarding goods withdrawn from warehouse for shipment to Canada could be avoided by controlling the point at which application for the license is made. In other words, even though under 19 CFR 181.53 goods withdrawn from a U.S. duty-deferral program (such as a Customs bonded warehouse) for exportation to Canada must be treated as entered or withdrawn for consumption, and thus a Customs Form 7501 must be filed as a consequence of that exportation, the potential problem outlined by this commenter could be avoided simply if the importer did not apply for the license when the steel is entered in the warehouse but rather only when it, or any part of it, is withdrawn for shipment to Canada. This approach would also address the “open license” issue raised by this commenter.

Comment: One commenter raised an issue regarding the impact of the proposal on quota monitoring. The commenter specifically asked whether the licenses will play a role in tracking the quota for products excluded from the safeguard action that include a quota mechanism. This commenter suggested that the answer to this question would greatly impact both the timing for filing the license application and what information might need to be included on the application.

Customs response: Customs is simply responsible for collecting the license number and any related quota or other data required at the time of entry and for providing that data to the Department of Commerce. Responsibility for all other tracking aspects of the data collected lies with the Commerce and therefore is outside the regulatory authority exercised by Customs.

Comment: A commenter stated that the sole enforcement authority that Customs has regarding the proposed rule is the liquidated damages provision under 19 CFR 113.62. This commenter further argued that since Customs can mitigate liquidated damage claims, Customs must design its mitigation guidelines with respect to steel import licenses to ensure that importers will have a strong incentive to comply with the regulatory requirements. The commenter also referred to the preamble discussion in the August 9, 2002, notice of proposed rulemaking regarding future mitigation guidelines that would include a reduction of liquidated damage claims to $50 for a late filing of the required information or $100 in the case of a complete failure to file the information. Arguing that these amounts are negligible, the commenter stated that Customs should adopt guidelines similar to those which governed the entry of products from Canada under the 1996 Softwood Lumber Agreement, that is, mitigation to between 25 and 50 percent of the claim, but not less than $500 and not more than $3,000 per entry, and no mitigation if the importer completely failed to provide the required information.

Customs response: Customs does not agree that the mitigation standards applied to cases involving softwood lumber from Canada are appropriate in the present context. Subject to any changes that may be reflected in any published mitigation guidelines regarding the steel import license program, Customs remains of the opinion that the mitigated amounts reflected in the August 9, 2002, notice of proposed rulemaking are generally appropriate in this context.

Based on the final regulations adopted by the Department of Commerce and the analysis of the comments received as set forth above, Customs believes that proposed § 12.145 should be adopted as a final regulation with the changes to the text as discussed above.

This document does not meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

Pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ), it is certified that this amendment will not have a significant economic impact on a substantial number of small entities. Customs believes that the amendment, which involves the addition of only one data element to each of two existing required Customs forms, will have a negligible impact on importer operations. Accordingly, the amendment is not subject to the regulatory analysis or other requirements of 5 U.S.C. 603 and 604.

The collections of information in the current regulations have already been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) and assigned OMB control number 1515-0065 (Entry summary and continuation sheet) and OMB control number 1515-0086 (Application for foreign-trade zone admission and/or status designation). This rule does not involve any material change to the existing approved information collections.

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

The principal author of this document was Francis W. Foote, Office of Regulations and Rulings, U.S. Customs Service. However, personnel from other offices participated in its development.

Alpharma, Inc., One Executive Dr., P.O. Box 1399, Fort Lee, NJ 07024, filed NADA 141-201 for use of CATTLYST (laidlomycin propionate potassium) and AUREOMYCIN (chlortetracycline) Type A medicated articles to formulate two-way combination drug Type C medicated feeds for cattle fed in confinement for slaughter. The NADA is approved as of December 18, 2002, and the regulations are amended in 21 CFR 558.128 and 558.305 to reflect the approval and a current format. The basis of approval is discussed in the freedom of information summary.

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

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

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

In 1990, Congress amended the Clean Air Act to address, among other things, continued nonattainment of the PM-10 NAAQS. 1 Public Law 549, 104 Stat. 2399, codified at 42 U.S.C. 7401-7671q (1991). On the date of enactment of the 1990 Clean Air Act Amendments, PM-10 areas including the San Joaquin Valley planning area, meeting the qualifications of section 107(d)(4)(B) of the amended Act, were designated nonattainment by operation of law. See 56 FR 11101 (March 15, 1991). EPA codified the boundaries of the San Joaquin Valley PM-10 nonattainment area at 40 CFR 81.305. 2

Once an area is designated nonattainment for PM-10, section 188 of the CAA outlines the process for classifying the area and establishes the area's attainment deadline. In accordance with section 188(a), at the time of designation, all PM-10 nonattainment areas, including San Joaquin Valley, were initially classified as moderate.

Section 188(b)(1) of the Act provides that moderate areas can subsequently be reclassified as serious before the applicable moderate area attainment date if at any time EPA determines that the area cannot “practicably” attain the PM-10 NAAQS by the moderate area attainment deadline, December 31, 1994. On January 8, 1993 (58 FR 3337), EPA made such a determination and reclassified the San Joaquin Valley planning area as serious.

The attainment deadline for the San Joaquin Valley is December 31, 2001. Section 189(b)(2) of the Act required the submission of SIP revisions addressing CAA sections 189(b) and (c) by August 8, 1994 and February 8, 1997. California made these required serious area submittals for the San Joaquin Valley and withdrew them on February 26, 2002. EPA then made a finding of failure to submit (67 FR 11925).

On July 23, 2002, EPA finalized a finding of failure to attain the annual and 24-hour PM-10 standards for the Valley by December 31, 2001 (67 FR 48039). For serious areas failing to meet their applicable attainment deadlines, section 189(d) of the CAA requires states to “submit within 12 months after the applicable attainment date, plan revisions which provide for attainment of the PM-10 air quality standards and, from the date of such submission until attainment, for an annual reduction of PM-10 or PM-10 precursor emissions within the area of not less than 5 percent of the amount of such emissions as reported in the most recent inventory prepared for the area.” The 5% PM-10 attainment plan for the San Joaquin Valley was due on December 31, 2002. EPA has not yet received such a submittal from the State.

If California does not submit the required plan revisions within 18 months of the effective date of today's rulemaking, pursuant to CAA section 179(a) and 40 CFR 52.31, the offset sanction identified in CAA section 179(b) will be applied in the affected area. If the State has still not made a complete submittal 6 months after the offset sanction is imposed, then the highway funding sanction will apply in the affected area, in accordance with 40 CFR 52.31. 3 The 18-month clock will stop and the sanctions will not take effect if, within 18 months after the date of the finding, EPA finds that the State has made a complete submittal addressing the 5% attainment requirements for the San Joaquin Valley. In addition, CAA section 110(c)(1) provides that EPA must promulgate a federal implementation plan (FIP) no later than 2 years after a finding under section 179(a) unless EPA takes final action to approve the submittal within 2 years of EPA's finding.

This final action is effective on March 7, 2003. Under the Administrative Procedures Act (APA), 5 U.S.C. 553(d)(3), an agency rulemaking may take effect before 30 days after the date of publication in the Federal Register if an agency has good cause to mandate an earlier effective date. Today's action concerns SIP revisions that are already overdue and the State has been aware of applicable provisions of the CAA relating to overdue SIPs. In addition, today's action simply starts a “clock” that will not result in sanctions for 18 months, and that the State may “turn off” through the submission of a complete SIP submittal. These reasons support an effective date prior to 30 days after the date of publication.

This final agency action is not subject to the notice-and-comment requirements of the APA, 5 U.S.C. 533(b). EPA believes that because of the limited time provided to make findings of failure to submit regarding SIP submissions, Congress did not intend such findings to be subject to notice-and-comment rulemaking. However, to the extent such findings are subject to notice-and-comment rulemaking, EPA invokes the good cause exception pursuant to the APA, 5 U.S.C. 553(d)(3). Notice and comment are unnecessary because no EPA judgment is involved in making a nonsubstantive finding of failure to submit SIPs required by the CAA. Furthermore, providing notice and comment would be impracticable because of the limited time provided under the statute for making such determinations. Finally, notice and comment would be contrary to the public interest because it would divert Agency resources from the critical substantive review of submitted SIPs. See 58 FR 51270, 51272, note 17 (October 1, 1993); 59 FR 39832, 39853 (August 4, 1994).

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

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

Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This rule is not subject to Executive Order 13045 because it does not involve decisions intended to mitigate environmental health or safety risks.

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

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

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.”

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

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

This final rule will not have a significant impact on a substantial number of small entities because findings of failure to submit required SIP revisions do not by themselves create any new requirements. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities.

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

EPA has determined that today's action does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. The CAA provision discussed in this notice requires states to submit SIPs. This notice merely provides a finding that California has not met that requirement. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical. EPA believes that VCS are inapplicable to today's action because it does not require the public to perform activities conducive to the use of VCS.

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by May 20, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

Throughout this document, “we,” “us” and “our” refer to EPA.

Table 1 lists the rules we are approving with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board (CARB).

On December 27, 1993 (MCAQMD), October 6, 2000 (ICAPCD), and February 8, 2001 (MBUAPCD), these rule submittals were found to meet the completeness criteria in 40 CFR part 51 Appendix V, which must be met before formal EPA review.

We approved versions of these rules into the SIP on the dates listed: ICAPCD rule 115, February 3, 1989; MCAQMD rule 400(b), November 7, 1978; and MBUAPCD rule 209, July 13, 1987.

Imperial rule 115 has been reformatted for consistency with the district's rule book and represents an improvement to the SIP.

Mendocino rule 400(b) has been revised to clarify that no one may emit air contaminants except in such fashion that compliance can be determined.

Monterey rule 209 is being rescinded because requirements have previously been incorporated into district rule 207. The TSDs have more information about these rules.

These rules describe administrative provisions and definitions that support emission controls found in other local agency requirements. In combination with the other requirements, these rules must be enforceable ( see section 110(a) of the Act) and must not relax existing requirements ( see sections 110(l) and 193). EPA policy that we used to help evaluate enforceability requirements consistently includes the Bluebook (“Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988) and the Little Bluebook (“Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001).

We believe these rules are consistent with the relevant policy and guidance regarding enforceability and SIP relaxations. The TSDs have more information on our evaluation.

As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules and rule recission because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the proposed rules section of this Federal Register , we are simultaneously proposing approval of the same submitted rules and recission. If we receive adverse comments by April 21, 2003, we will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on May 20, 2003. This will incorporate these rules into the Federally enforceable SIP.

Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Section 110(a) of the CAA requires states to submit regulations that control volatile organic compounds, oxides of nitrogen, particulate matter, and other air pollutants which harm human health and the environment. These rules were developed as part of the local agency's program to control these pollutants. Table 2 lists some of the national milestones leading to the submittal of these rules.

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by May 20, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

You may be affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:

• Crop production (NAICS 111)

• Animal production (NAICS 112)

• Food manufacturing (NAICS 311)

• Pesticide manufacturing (NAICS 32532)

• Antimicrobial pesticides (NAICS 32561)

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

1. Docket . EPA has established official public dockets for this action under docket identification (ID) number OPP-2003-0032. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.

2. Electronic access . You may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cfr180_00.html, a beta site currently under development. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B.1. Once in the system, select “search,” then key in the appropriate docket ID number.

In the Federal Register of December 6, 2002 (67 FR 72678) (FRL-7283-3) and the Federal Register of January 3, 2003 (68 FR 370) (FRL-7283-4), EPA issued notices pursuant to section 408 of FFDCA, 21 U.S.C. 346a, as amended by FQPA (Public Law 104-170), announcing the filing of pesticide petitions (PP 6F4746 and PP 1E6286, respectively) by BASF. The notices included a summary of the petitions prepared by BASF, the registrant. There were no comments received in response to the notices of filing.

Petition 6F4746 requested that 40 CFR 180.447 be amended by establishing a tolerance for combined residues of the herbicide imazethapyr, 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-ethyl-3-pyridine carboxylic acid as its ammonium salt, and its metabolite 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-(1-hydroxyethyl)-3-pyridine carboxylic acid both free and conjugated, in or on non-grass animal feed crops, forage, hay, and seed at 3.0 parts per million (ppm). Petition 1E6286 requested that 40 CFR 180.447 be amended to establish a tolerance for the sum of the residues of the herbicide imazethapyr 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-ethyl-3-pyridinecarboxylic acid as its free acid or its ammonium salt (calculated as the acid), and its metabolite 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-(1- hydroxyethyl)-3-pyridinecarboxylic acid on canola seed at 0.1 ppm.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe”. Section 408(b)(2)(A)(ii) of the FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of the FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997) (FRL-5754-7).

After analysis of the submitted residue chemistry data, EPA determined that appropriate tolerances for nongrass animal feed differ from those proposed by the registrant. EPA determined that available field trial data support the following tolerances for the combined residues of the herbicide imazethapyr, 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-ethyl-3-pyridine carboxylic acid, and its metabolites 2-[4,5-dihydro-4-methyl-4-(1-methylethyl-5-oxo-1H-imidazol-2-yl]-5-(1-hydroxyethyl)-3-pyridine carboxylic acid and 5-[1-(beta-D-glucopyranosyloxy)ethyl]-2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-3-pyridinecarboxylic acid, applied as its free acid or ammonium salt, in or on the following raw agricultural commodities: Animal feed, nongrass, group, forage - 3.0 ppm; animal feed, nongrass, group, hay - 5.5 ppm; alfalfa, seed - 0.15 ppm; and alfalfa, seed screenings - 0.15 ppm. The currently established alfalfa forage and alfalfa hay tolerances will be removed since they will be covered by the new nongrass animal feed forage and hay group tolerances. The tolerance for canola seed will be established for residues of the parent compound, imazethapyr, only. Finally, EPA determined that tolerances of 0.10 ppm for imazethapyr and the metabolite 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-(1-hydroxyethyl)-3-pyridine carboxylic acid need to be established for meat byproducts of cattle, goat, hog, horse, and sheep; the registrant did not propose tolerances for these commodities. EPA determined that tolerances are not needed for eggs; milk; meat and fat of cattle, goat, hog, horse, and sheep; and poultry commodities because there is no reasonable expectation of finite residues based on the calculated maximum total dietary burdens and the results of the poultry metabolism study.

The data for nongrass animal feeds and canola were used in the aggregate risk assessment that was calculated to support establishing tolerances for rice commodities, and the risk discussion in the following Unit III. will frequently refer back to that final rule (FR notice dated August 29, 2002, 67 FR 55323) (FRL-7193-4).

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA, for tolerances residues of imazethapyr in/on canola seed at 0.10 ppm, and for combined residues of imazethapyr on nongrass animal feed at 3 ppm for forage, 5.5 ppm for hay, and additional tolerances of 0.15 ppm for alfalfa seed and alfalfa seed screenings. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by imazethapyr are discussed in Unit III. A. of the final rule that established imazethapyr tolerances in or on rice, crayfish, and meat byproducts of certain cattle (FR notice dated August 29, 2002, 67 FR 55323).

The toxicological endpoints for imazethapyr are discussed in Unit III. B. of the final rule that established imazethapyr tolerances in or on rice, crayfish, and meat byproducts of certain cattle (FR notice dated August 29, 2002, 67 FR 55323).

The exposure assessment for imazethapyr are discussed in Unit III. C. of the final rule that established imazethapyr tolerances in or on rice, crayfish, and meat byproducts of certain cattle (FR notice dated August 29, 2002, 67 FR 55323).

The safety factors for infants and children for imazethapyr are discussed in Unit III. D. of the final rule that established imazethapyr tolerances in or on rice, crayfish, and meat byproducts of certain cattle (FR notice dated August 29, 2002, 67 FR 55323).

The aggregate risks and determination of safety for imazethapyr are discussed in Unit III. E. of the final rule that established imazethapyr tolerances in or on rice, crayfish, and meat byproducts of certain cattle (FR notice dated August 29, 2002, 67 FR 55323). Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, and to infants and children from aggregate exposure to imazethapyr residues.

Proposed enforcement methodologies have been submitted to enforce the tolerance expressions. Method M-2261 using a Capillary Electrophoresis (CE) buffer system has been validated and is suitable for enforcement purposes on the nongrass animal feeds. Method M-3319, using CE Chromatography with ultraviolet (UV) detection at 240 nanometers (nm) has been proposed as the enforcement method. This proposed method has been validated by an independent laboratory for determination of imazethapyr in/on canola seed. Method M-2261 may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov.

There are no Codex maximum residue levels established or proposed for residues of imazethapyr on nongrass animal feeds or canola.

The following will be imposed as conditions of registration for application of imazethapyr to nongrass animal feed crop group: submission of clover residue data from Region 2 (n=1), Region 7 (n=1), and Region 8 (n=1), successful radiovalidation of the livestock enforcement method, and submission of an acceptable ruminant feeding study.

The following will be imposed as conditions of registration for application of imazethapyr to canola seed: Submission of supplementary information for the canola field trial samples collected as part of report RES 95-112 (MRID 45409201; errors in sample tracking table, missing information pertaining to application/harvest, interval from harvest to frozen storage, and/or conditions/mode of transport).

Therefore, tolerances are established for the combined residues of imazethapyr, 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-ethyl-3-pyridine carboxylic acid, and its metabolites 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-(1-hydroxyethyl)-3-pyridine carboxylic acid and 5-[1-(beta-D-glucopyranosyloxy)ethyl]-2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-3-pyridinecarboxylic acid, applied as its free acid or ammonium salt, in or on nongrass animal feed forage group at 3.0 ppm and in/on nongrass animal feed hay group at 5.5 ppm, and additional tolerances of 0.15 ppm for alfalfa seed and alfalfa seed screenings.

Additionally, a tolerance is established for residues of the herbicide imazethapyr, 2-[4,5-dihydro-4-methyl-4-(1-methylethyl)-5-oxo-1H-imidazol-2-yl]-5-ethyl-3-pyridine carboxylic acid, applied as its free acid or ammonium salt, in or on canola seed at 0.10 ppm.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) of the FFDCA provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d) of FFDCA, as was provided in the old sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2003-0032 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before May 20, 2003.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900C), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Rm.104, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (703) 603-0061.

2. Tolerance fee payment . If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.”

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

3. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.1. Mail your copies, identified by docket ID number OPP-2003-0032, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.1. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes a tolerance under section 408(d) of the FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of the FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

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

By this Order, the Federal Communications Commission (Commission) amends parts 0 and 68 of its rules to reflect the Commission's Report and Order, 66 FR 7579, January 24, 2001 that privatized and streamlined the standards development and approval processes for terminal equipment regulated under part 68, and the Commission's Order, 67 FR 13216, March 21, 2002 that transferred enforcement of part 68 rules to the Enforcement Bureau. Specifically, the Commission eliminates § 0.303 to reflect the transfer of authority for part 68 terminal equipment certification to private industry. In addition, the Commission amends § 0.91 to acknowledge the changed role of the Commission in the equipment certification process. Finally, the Commission amends certain additional rules to reflect the Commission's recent transfer of responsibility for enforcement regarding terminal equipment to the Enforcement Bureau.

In the part 68 Report and Order, the Commission eliminated significant portions of the rules governing the connection of customer premises equipment (or terminal equipment) to the public switched telephone network (PSTN). The part 68 Report and Order privatized the certification of terminal equipment and the development of technical criteria with which terminal equipment must comply to be connected with the PSTN. By these actions, the Commission minimized or eliminated the role of the federal government in these processes. Therefore, it is no longer necessary to delegate authority to the Wireline Competition Bureau to act upon applications for certification of terminal equipment, and the Commission eliminates § 0.303 accordingly. The Commission modifies § 0.91, however, to reflect that the Wireline Competition Bureau retains authority to consider appeals resulting from any failure of private industry to resolve issues pertaining to technical criteria for part 68 terminal equipment.

In light of recent transfer of part 68 enforcement responsibility to the Enforcement Bureau, the Commission also eliminates the specific part 68 complaint rules. Formal complaints against carriers for violations of part 68 will now be handled pursuant to the general rules regarding formal complaints against common carriers. This action will bring adjudication of such complaints into conformity with the Commission's other rules regarding complaints against common carriers. These rules will also apply to formal complaints against common carriers regarding hearing aid compatibility and volume control requirements. The Commission also amends § 68.211 of the rules to reflect that revocation of part 68 certification will now be handled by the Enforcement Bureau.

The modifications to parts 0 and 68 undertaken by this Order are rules that pertain to agency organization, procedure and practice. Consequently, the notice and comment provisions of the Administrative Procedure Act are inapplicable.

Accordingly, it is ordered that, pursuant to section 5 of the Communications Act of 1934, as amended, 47 U.S.C. 155, parts 0 and 68 of the Commission's rules are amended effective March 21, 2003.

This document is a summary of the Commission's First Order on Reconsideration and Second Report and Order (“ Order ” and “ 2nd R&O ”); CS 95-184, MM 92-260, FCC 03-9, adopted January 21, 2003 and released January 29, 2003. This document revises rules which the Commission adopted in the Report and Order and Second Further Notice of Proposed Rulemaking; 62 FR 61016, November 14, 1997, (“ R&O ” and “ 2nd FNPRM ”); concerning cable home run wiring. The rules adopted by the Commission established specific procedural mechanisms requiring the sale, removal or abandonment of home run wiring in multiple dwelling unit buildings. This document addresses the eight petitions for reconsideration and ten oppositions or responses to the petitions for reconsideration received by the Commission in response to the Report and Order. This document also resolves issues raised by the Commission in the 2nd FNPRM relating to (1) exclusive and perpetual contracts; (2) the application of cable home wiring and subscriber termination rights to non-cable and cable MVPDs; (3) the exemption of small MVPDs from the annual signal leakage requirements; and (4) a proposal to establish a virtual demarcation point from which alternative providers could share cable wiring. The full text of this decision is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554, and may be purchased from the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-2898, or via e-mail qualexint@aol.com or may be viewed via Internet at http://www.fcc.gov/mb/ .

Paperwork Reduction Act: This Order contains new or modified information collection(s). The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public to comment on the information collection(s) contained in this Order and required by the Paperwork Reduction Act of 1995, Pub. L. 104-13. Public and agency comments are due May 20, 2003.

1. Several petitioners questioned the Commission's authority to regulate the disposition of cable home run wiring in the first instance. We considered these arguments at length previously in the R&O and concluded that the Commission has authority under section 4(i) and 303(r) of the Communications Act of 1934 (“Communications Act”), in conjunction with the pervasive regulatory authority committed to the Commission under Title VI, and particularly section 623, to establish procedures for the disposition of MDU home run wiring upon termination of service.

2. The R&O adopted procedures for two categories of home run wiring disposition: building-by-building and unit-by-unit. A multiple dwelling unit (“MDU”) owner may invoke the building-by-building disposition procedures when the incumbent multichannel video programming distributors (“MVPD”) owns the home run wiring, but no longer has a legally enforceable right to remain in the building and the MDU owner wants to use that wiring for service from another provider. A MDU owner may invoke the unit-by-unit disposition procedures when the incumbent MVPD owns the home run wiring, but no longer has a legally enforceable right to maintain its home run wiring dedicated to a particular unit or units, and the MDU owner wants to permit multiple service providers to compete to serve individual units in the building and to use the existing wiring.

3. At least one petitioner suggested that the Commission's home run wiring disposition procedures should only apply where an MDU owner agrees to allow unit-by-unit competition and not where the owner seeks to contract with a new MVPD to serve the entire building. As we concluded in the R&O , this proposal wrongly assumes that any MVPD that serves the entire building has the ability to act like an entrenched monopolist, without regard to the quality and quantity of the video service provided. We observed in the R&O that MVPDs competing for the right to serve the building will have to offer the mix of video service, quality, quantity and price that will best help the MDU owner compete in the marketplace.

4. Both the building-by-building and unit-by-unit home run wiring disposition procedures allow the MDU owner, rather than individual subscribers, the option to acquire the home run wiring of a departing MVPD. In the R&O the Commission addressed comments from at least six other parties contending that MDU owners do not act in the best interest of residents and therefore should not have the authority to choose among service providers. The Commission concluded in the R&O that many MDU owners are tenant-based condominium associations and cooperative boards that cannot be presumed to be non-representative of their tenant's interests. The Commission also concluded that the property owner should have the ability to control the wiring because the property owner is responsible for the common areas of a building. The Commission noted that property owners have safety and security responsibilities, maintain compliance with building and electrical codes, maintain the aesthetics of the building, and balance the concerns of the residents. The Commission concludes in the Order that considerations of fairness and efficiency persuade it to leave the rules addressing control of home run wiring rules intact.

5. Several petitioners asked the Commission either to eliminate entirely an incumbent operator's option to remove its home run wiring or to qualify that option by requiring the incumbent to first offer to sell the wiring to the MDU owner or an alternative MVPD at replacement cost or salvage value. The Commission concludes in the R&O that the record in this proceeding reveals almost no concrete examples of incumbents removing their wiring rather than abandoning or selling it. The Commission is not inclined to make a decision to qualify or eliminate an incumbent's right to remove its property without a compelling record of the need to do so. Also, because the record contains no concrete examples of incumbent operators engaging in pricing activities that the negotiation and arbitration process cannot accommodate, the Commission declined to require an incumbent that elects to sell its home run wiring to do so at replacement cost or salvage value.

6. A petitioner asked the Commission to require MDU owners to agree to purchase the home run wiring at a price set through binding arbitration as a precondition to entering into negotiations with the incumbent regarding the sale price of the wiring. The record provides no evidence that MDUs have not or would not bargain in good faith under the current rules. We question whether a commitment by the parties to engage in binding arbitration prior to the onset of negotiations will improve the chances for successful negotiations. Instead such a requirement could act as a disincentive for MDU owners to invoke the inside wiring rules. We will not adopt the petitioner's proposal to impose upon the MDU owner an obligation to purchase home run wiring once an incumbent has elected to sell it.

7. Several petitioners argue that MDU owner decisions are improperly influenced by the level of consideration offered by an MVPD to the MDU owner, rather than by which MVPD offers the widest array of programming, most attractive prices, or best customer service. These petitioners contend that the Commission's home run wiring disposition rules should not apply in any situation where the owner has received any form of excess. As we determined in the R&O, the petitioners have not suggested definitions or guidelines as to what they consider “excessive” and have produced no evidence that such payments have resulted in competitive harm. We are unable to conclude that such payments are anti-competitive and warrant exclusion of MDU owners who accept them from the protection of the inside wiring rules.

8. In the R&O the Commission recognized that MDU owners may permit service providers to compete head-to-head in a building for the right to use the individual home run wires dedicated to each unit in an MDU. Our unit-by-unit disposition procedures apply when the incumbent service provider does not have (or will not have at the conclusion of the notice period) the right to maintain its home run wiring dedicated to a particular unit in an MDU. If the MDU owner wishes to permit alternative MVPDs to compete for the right to use the individual home run wires dedicated to each unit, the MDU owner must give the incumbent 60 days written notice that it intends to invoke the home run wiring procedures. The incumbent will then have, with respect to all of the incumbent's home run wiring in the MDU, 30 days to elect to remove, abandon or sell the wiring dedicated to individual subscribers who may subsequently choose the alternative MVPD's service. Several petitioners argued that the 60-day notice period is inordinately long. They suggest that the notice period will discourage vigorous unit-by-unit competition by allowing incumbents time to develop a competitive counterattack in response to the arrival of an alternative MVPD, to reprice or restructure their service offerings and to lock individual subscribers into long-term service contracts.

9. On reconsideration, we are not convinced that a notice period for unit-by-unit transitions of less than 60 days would allow enough time to facilitate a smooth and timely transition when an alternative provider enters a building. The procedures adopted in the R&O are intended to provide all parties sufficient notice and certainty regarding how existing home run wiring will be made available to the alternative MVPD so that a change in service can be made efficiently. While a 60 day notice period may provide an opportunity for the incumbent to organize a competitive response to the alternative provider's service offering, we have no reason to believe the incumbent will necessarily have a market advantage over the alternative provider. The incumbent has an existing relationship with its subscribers, but that relationship may not be a positive one. Where subscribers are eager to obtain the services of an alternative provider, due in part to the failings of the incumbent, the existing relationship may hurt rather than help the incumbent. Where subscribers are more than satisfied with the service provided by the incumbent, that existing relationship should help the incumbent in its efforts to retain subscribers to retain subscribers in the face of an alternative provider's competitive efforts. Beyond the fact of an existing relationship, an alternative provider possesses many of the same competitive tools available to the incumbent, such as pricing and designing service offering attractively and attempting to induce subscribers to enter into long term contracts. We decline to shorten the notice period.

10. A petitioner suggests that in cases where the incumbent has elected to sell or abandon its home run wire, our rules should be modified to eliminate an existing ambiguity with respect to when the incumbent provider will make the home run wiring accessible to the alternative provider. The current rule provides that such access will be provided to the alternative provider “within 24 hours of actual service termination.”

11. We agree that the requirement as it is presently written is ambiguous. Accordingly, we will amend § 76.804 of our rules to provide that where the MDU owner or the alternative provider chooses to purchase the home run wiring, the incumbent must provide access during the 24-hour period prior to actual service termination to enable the new provider to avoid a break in service.

12. A petitioner urges the Commission to amend its home run wiring rules to include an express prohibition against unauthorized customer transfers. Another petitioner contends that such rule modifications are not necessary because MVPD service does not present the same opportunities for “slamming” or the unauthorized transfer of customers, as telephone service transfers. The Commission is not aware of any unauthorized transfer complaints filed within the more than four years that the home run wiring disposition rules have been in effect. Absent such complaints, we find no basis for modifying our rules.

13. Mandatory access laws generally provide franchised cable operators with a legal right to install and maintain cable wiring in MDU buildings, even over MDU owners' objections. Mandatory access statutes were generally enacted to ensure that MDU tenants would have cable programming service and to prevent MDU owners from denying access based on aesthetic or other considerations.

14. We continue to believe that mandatory access laws may impede competition in the MDU marketplace and that they tend to preclude alternative (non-cable) MVPDs from executing MDU contracts. This is due to the fact that most mandatory access laws give the franchised cable operator a legal right to wire and remain in an MDU. The predictable result is that competitive providers are less likely to take the financial risk of entering, or to secure the necessary financial backing to enter the MDU marketplace in a mandatory access state. While we recognize the negative impact that mandatory access statues can have, we cannot ignore the possibility that, but for the existence of mandatory access statutes, some MDU owners would refuse to allow their buildings to be wired for cable programming. Federal preemption of mandatory access laws could, conceivably, leave some MDU tenants without access to non-broadcast video programming altogether. We will retain our conclusion in the R&O that we can not support federal preemption of state mandatory access rules at this time.

15. In the R&O, the Commission adopted a rule extending the signal leakage requirements to MVPD providers other than cable systems, including telephone companies and other telecommunications service providers that deliver video service. The Commission granted a five-year exemption from these requirements, however, for non-cable MVPDS that were “substantially built” as of January 1, 1998, in order to allow those MVPDs sufficient time to bring themselves into compliance. “Substantially built” was defined as having 75% of the distribution plant completed.

16. A petitioner suggested that we adopt a rule providing that a wireless cable system is “substantially built,” for purposes of the five year exemption form our signal leakage testing and reporting requirements, when its headend/transmitter facilities are constructed and operational. We reject this proposal. We note that the headend and transmitter of a wireless cable plant do not constitute distribution plant. The receiver and down-converter and associated cable strand, amplifiers, etc., constitute distribution plant subject to signal leakage. It is the deployment of such equipment that is relevant for purposes of the exemption.

17. In the R&O, the Commission adopted a rule permitting an alternative MVPD to install its wiring within an incumbent cable operator's existing molding, even over the incumbent's objection, where the MDU owner agrees that there is adequate space in the molding and the MDU owner gives its affirmative consent.

18. A petitioner argues that our rule effects an unconstitutional taking of private property where an incumbent provider owns the molding or has contracted with the MDU owner for the exclusive right to occupy the moldings or conduits. The Commission's rule does not apply where the incumbent has an exclusive contractual right to occupy the molding or where the incumbent has contracted for the right to maintain its molding on the MDU property without alteration by the MDU owner. Accordingly, our rule does not interfere with the incumbent's property rights and does not constitute a taking, and, therefore, no compensation need be paid.

19. Our rules prohibit an incumbent MVPD from interfering with a competitor's access to existing MDU wiring at the demarcation point. The demarcation point for MDU installations is defined as “a point at (or about) twelve inches outside of where the cable wire enters the subscriber's dwelling unit, or where the wire is physically inaccessible at such point, the closest practicable point thereto that does not require access to the individual subscriber's dwelling unit. A location is “physically inaccessible” when accessing the wire at that point “would require significant modification of, or significant damage to, preexisting structural elements, and would add significantly to the physical difficulty and/or cost of accessing the subscriber's home wiring. The rule provides examples of wiring that is “physically inaccessible,” such as “wiring embedded in brick, metal conduit or cinder blocks with limited or without access openings.”

20. In the R&O, the Commission considered and rejected various proposals to relocate the demarcation point. Location of the demarcation point is significant because, under our rules, the demarcation point is the place where competing providers may access existing home wiring in an MDU building. A demarcation point that allows relatively unimpeded access to existing wire is likely to foster competitive entry into the MDU marketplace.

21. We conclude that cable wiring behind sheet rock is “physically inaccessible” as that term is used in 47 CFR 76.5(mm)(4) of the Commission's rules. As stated, our rule defines “physically inaccessible” as “require[ing] significant modification of, or significant damage to, preexisting structural elements.” We believe that the term “structural elements” encompasses sheet rock, otherwise known as wallboard. The “Note” appended to § 76.5(mm)(4), which helps define “inaccessibility,” states that “wiring embedded in brick, metal conduit or under cinder blocks with limited or without access openings would likely be physically inaccessible; wiring within hallway molding would not.” Sheet rock and other similar materials are not identified specifically. In our view, sheet rock is more like “brick or cinder block,” materials also commonly used to form ceilings and hallways, than molding, which is not.

22. The definition of “physically inaccessible” also requires that accessing the wiring at that point would “add significantly to the physical difficulty and/or cost” of connecting. While we acknowledge that cutting a hole through and repairing sheet rock is neither as physically difficult nor as costly as boring through brick, metal or cinder block, we are satisfied that it adds significantly to the physical difficulty and cost of wiring an MDU. For this reason we conclude that wiring that is hidden behind the sheet rock in an MDU wall or ceiling is “physically inaccessible” as the term is used in the Commission's rule. We will amend the “Note” appended to § 76.5(mm)(4) to include sheet rock.

23. In the 1996 Act, Congress recognized the open video system (OVS) as a means by which a local exchange carrier may provide cable service to subscribers within its telephone service area. Although subject to streamlined regulation as compared to their cable counterparts, OVS operators have clearly defined obligations and responsibilities, such as offering up to two-thirds of their channel capacity to unaffiliated programmers on a non-discriminatory basis.

24. A petitioner argues that OVS operators should not be able to avail themselves of the home run wiring rules because OVS operators have no basis to claim a right to use pre-existing MDU home run wiring. The petitioner submits that OVS operators are legally required to construct end-to-end facilities all the way to end user MDU residents. OVS operators, the petitioner concludes, have an obligation to construct end-to-end facilities to the demarcation point of each subscriber residence and MDU unit within its service area. Yet the statute prohibits an OVS operator provider from consuming all capacity with affiliated programming, and whether the OVS operator acquires existing home run wiring in an MDU or installs the wiring itself is irrelevant to the question of statutory compliance.

25. It is not clear how an OVS operator's obligation to carry affiliated and nonaffiliated programming on a non-discriminatory basis would interfere with the operator's eligibility to avail itself of the home run wiring rules. The petitioner assumes an OVS provider will consume all capacity with affiliated programming, and that, in some way, a requirement that OVS operators must install new home wiring in MDUs will prevent that from happening. Yet the statute prohibits an OVS provider from consuming all capacity with affiliated programming, and whether the OVS operator acquires existing home run wiring in an MDU or installs the wiring itself is irrelevant to the question of statutory compliance.

1. In the R&O, the Commission amended its cable television inside wiring rules for the purpose of facilitating competition in video distribution markets. The new rules were intended to foster opportunities for multichannel video programming distributors (“MVPDs”) to provide service in multiple dwelling units (“MDU”) by establishing procedures regarding how and under what circumstances the existing cable home run wiring would be made available to alternative service providers.

2. In the 2nd R&O ; the Commission declined to restrict exclusive contracts for the provision of video services in multiple dwelling unit buildings (“MDU”). The Commission also declined to ban perpetual contracts for the provision of video services in MDUs or subject such contracts to a fresh look window. The Commission concluded that the cable home wiring and cable home run wiring rules should apply to all multichannel video programming distributors (“MVPDs”) in the same manner that they currently apply to cable operators. The Commission adopted a limited exemption for small non-cable MVPDs from its signal leakage reporting requirements but declined to allow MDU owners to require sharing of incumbent-owned cable wiring.

3. Exclusive and perpetual contracts between MDU owners and MVPDs grant incumbent MVPDs the legal right to remain on MDU properties and thus limit application of the Commission's inside wiring rules. Exclusive contracts generally refer to those contracts that specify that, for a designated term, only a particular MVPD and no other provider may provide video programming and related services to residents of an MDU. Perpetual contracts generally refer to those contracts that grant the incumbent provider the right to maintain its wiring and provide service to the MDU for indefinite or very long periods of time, or for the duration of the cable franchise term, and any extensions thereof.

4. Commenters noted that most long-term exclusive and perpetual MDU contracts were executed at a time when local competition for the provision of multi-channel video programming was scarce or non-existent. As the Commission has observed, recent advancements in video and communications technology have contributed toward a more dynamic, evolving marketplace with cable and new alternative providers competing for MDU subscribers. It appears that some property owners who might now prefer to choose other providers' services may be bound by exclusive or perpetual contracts.

5. In the 2nd FNPRM, the Commission recognized that exclusive contracts for video services in MDUs may have competitive consequences. Exclusive contracts could bar alternative MVPDs access to, and thus inhibit competition for MDUs. The Commission also noted arguments that exclusive contracts enable alternative providers to recoup the investment required to enter MDUs and thus to become or remain viable. The Commission asked commenters to address whether it would be appropriate to cap exclusive contracts to open up MDUs to potential competition on a building-wide or unit-to-unit basis, and if so, what would represent a reasonable cap.

6. Commenters identified with real estate interests, private cable operators and some telecommunications entities tend to support exclusive contracts for video programming services as enabling alternative MVPDs to gain a foothold in the MDU market. These commenters generally advocated long-term or no caps on exclusive contracts. Other commenters were critical of exclusive contracts and proposed, if they were to be permitted at all, very short caps of three to five years.

7. We find that the record does not support a prohibition on exclusive contracts for video services in MDUs, nor a time limit, in the nature of a cap, for such contracts. The parties have identified both pro-competitive and anti-competitive aspects of exclusive contracts. We cannot state, based on the record that exclusive contracts are predominantly anti-competitive. With respect to capping such contracts, there appears to be little agreement over the length of the term. Again, based on the record, we cannot discern the “correct” length. We note that competition in MDU market is improving, even with the existence of exclusive contracts.

8. The 2nd FNPRM also sought comment regarding whether it would be appropriate to restrict perpetual contracts between MDU owners and MVPDs. Although several commenters question the Commission's authority to act in this area, most commenters addressing the issue assert that perpetual contracts effectively bar alternative and/or new MVPDs entry into the MDU market and are inherently anti-competitive. Nonetheless, the record does not demonstrate the existence of widespread perpetual contracts nor support the need for government interference at this time.

9. The majority of commenters that urged the Commission to restrict perpetual MDU contracts offered only conclusory statements regarding the prevalence of such contracts in the marketplace. One commenter submitted the results of a survey in which it solicited responses from a cross section of MDU owners on issues relating to perpetual contracts. The survey suggests that only a small percentage of MDUs are currently subject to perpetual contracts for video programming services.

10. Given the results of the survey and the lack of other data reflecting the prevalence of perpetual contracts, we cannot conclude that such contracts represent a barrier to competition in the MDU market. Accordingly, we do not find that the current record provides a basis for restricting perpetual contracts.

11. In the 2nd FNPRM, the Commission proposed to modify its rules governing home wiring for single-unit installations and subscribers' pre-termination rights, so that they would apply to non-cable MVPDs, in addition to cable MVPDs. The Commission suggested that such modifications “would promote competitive parity and facilitate the ability of a subscriber whose premises was initially wired by a non-cable MVPD to change providers.” The Commission opined that the modifications would “promote the same consumer benefits as in the cable context: Increased competition and consumer choice, lower prices and greater technological innovation. The Commission sought comment on the proposal to extend its rules to all MVPDs and on its authority to do so.

12. The trend in recent years has been increased competition in the MVPD market. The Commission anticipates this trend to continue with alternative MVPDs increasingly gaining market share, such that the entity responsible for the initial installation in a home could be a cable or a non-cable provider. We find it necessary to broaden our rules to ensure that a subscriber's ability to terminate existing service and accept alternative service is not contingent on whether the wiring was installed by a cable, as opposed to a non-cable provider. We further find that the proposed rule modifications will promote regulatory parity and enhance competition among MVPDs. We will modify our rules governing the disposition of home wiring and subscriber pre-termination rights to apply uniformly to all MVPDs.

13. In the R&O, we extended the application of our signal leakage rules, which had applied only to traditional cable operators, to non-cable MVPDs such as satellite master antenna service (“SMATV”), MMDS, and open video system (“OVS”) operators. A transition period for compliance was established for certain non-cable MVPDs. In particular, all non-cable MVPDs were directed to comply with the reporting requirement set forth in CFR 76.1804(g) by January 1, 2003. In the 2nd FNPRM, we sought comment on whether we should exempt small MVPDs, including small cable operators, from these requirements. Section 76.1804(g) of the Commission's rules requires cable operators to file annually with the Commission certain information relating to their use of the aeronautical radio frequency bands. We sought comments in an effort to determine whether the annual reporting requirement may impose undue burdens on small service providers, including small cable operators.

14. Supporters of a reporting exemption for small MVPDs argue that an exemption would be consistent with congressional directives to reduce regulatory burdens on small MVPDs where feasible. They argue that there is no evidence that a small MVPD exemption will result in abuses of the signal leakage rules or otherwise prompt small MVPDs to be less attentive to their signal leakage obligations. Opponents of an exemption argue that the proposal does not relieve MVPDs of the obligation to conduct tests and that the filing of signal leakage test results is a simple task once the testing is complete. They state that the signal leakage rules represent a Commission effort to protect life and property, and, if reporting is helpful in the oversight of signal leakage, then all MVPDs should report.

15. We will adopt a very limited exemption to the annual reporting requirement of CFR 76.1804(g) of our rules. This exemption will apply to non-cable MVPDs with less than 1000 subscribers or serving less than 1000 units. Such an exemption furthers congressional directives to reduce the regulatory burden on small entities where feasible. We have no reason to believe that such an exemption will affect enforcement of the Commission's signal leakage rules. We are not exempting MVPDs subject to existing reporting requirements. The annual reporting requirement is scheduled to become effective for all non-cable MVPDs on January 1, 2003. With this exemption, that requirement will not become effective for the smallest non-cable MVPDs. Relief from the annual reporting requirement will allow small non-cable MVPDs to focus on the prevention of leaks by devoting their scarce resources primarily to maintenance, leakage detection, and repair. The exempted systems will continue to perform all signal leakage tests required by our rules and must make the results of those tests available to Commission agents upon request. We believe it is sensible to treat small cable and non-cable MVPDs differently in this regard because of the different environments in which each is likely to operate. Small cable systems have wiring that connects individual residences, is strung on utility poles, and is subject to all of the stresses associated with the outside environment, including temperature fluctuations, wind loading, rain and ice. Small non-cable MVPDs predominately serve MDUs and thus have their wiring and associated electronics protected from exposure to the weather and the risk of damage that could result in signal leakage.

16. Testing will remain an important part of our enforcement program. It is only the future obligation to report results by the smallest non-cable MVPDs which are changing here. Our signal leakage monitoring and enforcement program, conducted pursuant to CFR 76.613, which includes a vigorous program of field inspections and the impositions of forfeitures, remains unaffected. The Commission's field operations staff conducts routine monitoring for signal leakage and, of course, will continue to respond to aeronautical complaints to ensure the safe operation of aeronautical frequencies.

In the Second Further Notice, we solicited comments on whether we should adopt a proposal from DirecTV to give MDU owners the right to require that incumbent MVPDs allow competitors to share their home run wiring. Most of the comments we received on this issue agree that there are significant unresolved technical problems with the proposal, notwithstanding its merits from a public policy perspective. Most of the technical objections to the DirecTV proposal relate to the possibility of interference when amplified signals are transmitted on a single wire and the possible lack of bandwidth capacity in existing cable plant. We are unable to resolve this issue based on the record before us. Accordingly we decline to adopt DirecTV's line sharing proposal at this time

26. Pursuant to the authority granted in sections 1, 4(i), 201-205, 214-215, 220, 303, 623, 624 and 632 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 201-205, 220, 303, 544 and 552, the petitions for reconsideration filed in response to the R&O are granted in part and denied in part, as provided herein.

27. Pursuant to the authority granted in sections 1, 4(i), 201-205, 214-215, 220, 303, 623, 624, and 632 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 201-205, 214-215, 220, 303, 543, 544 and 552, the modifications to the Commission's rules are hereby adopted. These modifications shall become effective May 20, 2003.

On June 12, 2002 (67 FR 40232), NMFS published a final rule in the Federal Register that implements the reasonable and prudent alternative of the March 29, 2001, Biological Opinion issued by NMFS under the Endangered Species Act. Section 660.22(ss) contains an incorrect reference.

In the rule FR Doc. 02-14749, in the issue of Wednesday, June 12, 2002(67 FR 40232), on page 40236, under (ss) on the eighth line of the first column, change “§ 660.33(h)” to “§ 660.33(i)”.

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

NMFS closed the B season directed fishery for pollock in Statistical Area 610 of the GOA under § 679.20(d)(1)(iii) on March 11, 2003 (68 FR 11994, March 13, 2003).

NMFS has determined that, approximately 1,500 mt of pollock remain in the B season directed fishing allowance. Therefore, in accordance with § 679.25(a)(2)(i)(C) and (a)(2)(iii)(D), and to fully utilize the B season allowance of pollock TAC specified for Statistical Area 610, NMFS is terminating the previous closure and is reopening directed fishing for pollock in Statistical Area 610 of the GOA. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance will be reached after 24 hours. Consequently, NMFS is prohibiting directed fishing for pollock in Statistical Area 610 of the GOA effective 1200 hrs, A.l.t., March 19, 2003.

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

NMFS issued a prohibition to directed fishing for pollock effective March 10, 2003, for Statistical Area 630, in accordance with § 679.20(d)(1)(iii) (68 FR 11994, March 13, 2003).

As of March 11, 2003, 857 metric tons (mt) of pollock remain in the B season allowance of the pollock TAC in Statistical Area 630 of the GOA. Regulations at § 679.23(b) specify that the time of all openings and closures of fishing seasons other than the beginning and end of the calendar fishing year is 1200 hrs, A.l.t. Current information shows the catching capacity of vessels catching pollock for processing by the inshore component in Statistical Area 630 of the GOA is about 1,500 mt per day. The Administrator, Alaska Region, NMFS, has determined that the B season allowance of the pollock TAC could be exceeded if a 24-hour fishery were allowed to occur. NMFS is not allowing a 24-hour directed fishery in order that the seasonal allowance not be exceeded. NMFS, in accordance with § 679.25(a)(1)(i) and § 679.25(a)(2)(i), is adjusting the B fishing season for pollock in Statistical Area 630 of the GOA by opening the fishery at 1200 hrs, A.l.t., March 20, 2003 and closing the fishery at 2400 hrs, A.l.t., March 20, 2003, at which time directed fishing for pollock will be prohibited. This action has the effect of opening the fishery for 12 hours.

NMFS is taking this action to allow a controlled fishery to occur, thereby preventing the overharvest of the B season allowance of the pollock TAC designated in accordance with the final 2003 harvest specifications for groundfish in the GOA (68 FR 9924, March 3, 2003) and § 679.20(a)(5)(iii). In accordance with § 679.25(a)(2)(iii), NMFS has determined that prohibiting directed fishing at 2400 hrs, A.l.t., March 20, 2003, after a 12- hour opening is the least restrictive management adjustment to achieve the B season allowance of the pollock TAC. Pursuant to § 679.25(b)(2), NMFS has considered data regarding catch per unit of effort and rate of harvest in making this adjustment.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is contrary to the public interest. This requirement is contrary to the public interest as it would delay the opening of the fishery, not allow the full utilization of the pollock TAC, and therefore reduce the public's ability to use the fishery resource.

The Assistant Administrator for Fisheries, NOAA, also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

Without this inseason adjustment, NMFS could not allow the B season allowance of the pollock TAC in Statistical Area 630 of the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to see ADDRESSES until April 2, 2003.

This action is required by § § 679.20 and 679.25 and is exempt from review under Executive Order 12866.