On February 21, 2003 (68 FR 8445), the NRC published in the Federal Register a direct final rule amending its regulations in 10 CFR part 72 to include Amendment No. 3 to Certificate of Compliance Number 1026. Amendment No. 3 modifies the present cask system design to change the W-21 canister Technical Specifications and bases to provide an alternative to returning the canister to the spent fuel building by returning it to the transfer cask. Specifically, Technical Specifications 3.3.2 and 3.3.3 have been modified to allow the W-21 canister to be returned to the transfer cask while restoring normal storage conditions. The amendment also includes several editorial changes to Technical Specifications 3.1.1, 3.3.2, and 3.3.3.

In the direct final rule, NRC stated that if no significant adverse comments were received, the direct final rule would become final on the date noted above. The NRC did not receive any comments that warranted withdrawal of the direct final rule. Therefore, this rule will become effective as scheduled.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to all McDonnell Douglas Model DC-9-10, -20, -30, -40, and -50 series airplanes; and DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and MD-88 airplanes; was published in the Federal Register on November 18, 2002 (67 FR 69494). That action proposed to require a check of the slant pressure panels of the wheel wells of the left and right main landing gear (MLG) for water leakage, and repair of any leak found.

Since the issuance of the proposed AD, the FAA has reviewed and approved Boeing Alert Service Bulletin DC9-53A295, Revision 02, including Appendix and Evaluation Form, dated January 6, 2003. (The proposed AD refers to Boeing Alert Service Bulletin DC9-53A295, Revision 01, dated February 28, 2002, as an acceptable source of service information for accomplishment of the proposed actions.) Revision 02 of the service bulletin adds no new procedures, though it adds two airplanes to the effectivity listing. This change does not affect the applicability of this AD because, as proposed, this AD applies to all McDonnell Douglas Model DC-9-10, -20, -30, -40, and -50 series airplanes; and DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and MD-88 airplanes. Therefore, we have revised paragraph (a) of this final rule to refer to Revision 02 of the service bulletin as the appropriate source of service information for the actions in that paragraph. Also, we have revised paragraph (c) of this final rule (which was included as paragraph (b) in the proposed AD) to give credit for accomplishing the required actions before the effective date of this AD per the original issue or Revision 01 of the service bulletin.

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received.

One commenter requests that the FAA revise certain leak check procedures. Specifically, the commenter asks that we allow leak checks to be performed at 4 pound-per-square-inch gage (psig) (rather than 1 and 3 psig), allow operators to apply sealant around the entire seal before accomplishing the leak check, and allow operators to trim migrated seals within certain limits. The commenter states that the leak check at 1 psig is impractical because it is difficult to maintain differential pressure of 1 psig, and it is unreasonable to expect an operator to do this check consistently and repeatedly. The commenter states that the slant pressure panel is a “plug”-type opening that seals with increasing pressure, and most plug-type openings, such as doors, leak at 1 psig but are sealed at 3.5 to 4 psig. The commenter also states that the seals migrate over time due to flexing of the structure, and it has not noted any appreciable effect on the sealing capabilities of the slant pressure panel due to such seal migration. The commenter suggests that the referenced service bulletin be revised to incorporate the requested changes.

We partially concur with the commenter's request. We do not concur to raise the pressure threshold for the leak checks to 4 psig. We disagree that the slant pressure panel is a plug-type opening similar to a door; the slant pressure panel is intended to be pressure-tight at all times. This AD addresses an unsafe condition, the accumulation of water in the wheel wells of the MLG, that occurs due to leakage of water into the MLG wheel well when the slant pressure panel is not pressure-tight. We have determined that a leak check at 1 psig (and repairing any leak found during that check) is necessary to ensure safety and will ensure that leaks will not occur when the airplane is in service. No change to the final rule is needed in this regard.

We concur with the commenter's request to allow operators the option of applying PR-1422 sealant to the fillet seal prior to doing the leak check or trimming migrated seals within certain limits. If these actions are accomplished, they must be accomplished per a method approved by the FAA. We have added a new paragraph (b) to this final rule (and reidentified subsequent paragraphs accordingly) to include these provisions. We have also added Note 2 to this final rule (and reidentified subsequent notes accordingly) to state that application of sealant within the limits and per the procedures specified in Boeing Service Drawing 5956065 is an approved means of complying with the sealant application specified in paragraph (b) of this AD.

One commenter, an operator, states that, on several of its airplanes, it has had cases of water accumulation in the wheel wells of the left and right MLG due to pressurization leaks from the slant pressure panels. Repairs of such leaks were successful on a limited and temporary basis only. Based on its experience with such leaks, the commenter developed a program to refurbish slant pressure panels that involves replacing the left and right slant pressure panels, gaskets, and covers, and resealing the area. The commenter states that it will pursue an alternative method of compliance (AMOC) with the proposed AD.

The commenter makes no specific request for a change to the proposed AD. We infer that the commenter is requesting approval of an AMOC for the requirements of this AD. The commenter provides no technical data to support its request. As provided by paragraph (d) of this AD, we may approve a request for an AMOC if data are submitted to justify that the commenter's refurbishment process would provide an acceptable level of safety. No change to the final rule is needed in this regard.

Paragraph (a) of the proposed AD specifies a compliance threshold of “Prior to the accumulation of 40,000 flight hours since date of manufacture.” We find that it is necessary to clarify this compliance threshold in this final rule. This decision is based on our determination that “date of manufacture” may be interpreted differently by different operators. Therefore, we have revised the compliance threshold for paragraph (a) of this final rule to “Prior to the accumulation of 40,000 flight hours since the date of issuance of the original Airworthiness Certificate or the date of issuance of the Export Certificate of Airworthiness, whichever occurs first.” We find that this terminology is generally understood within the industry and records will always exist that establish these dates with certainty. As a result of these changes, we have moved the compliance threshold and grace period for the actions required by paragraph (a) to subparagraphs (a)(1) and (a)(2) of this final rule.

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

Also, the service bulletin citation throughout the proposed AD states “including Appendix A.” First, we note that the citation should have referred to “Appendix,” not “Appendix A,” and we have revised all citations in this final rule accordingly. Second, the appendix of the service bulletin contains a form for reporting leak check results. As we explained in the preamble of the proposed AD, this AD does not require such reporting. Therefore, we have changed the service bulletin citation throughout this final rule to exclude the appendix.

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

There are approximately 1,919 airplanes of the affected design in the worldwide fleet. The FAA estimates that 1,159 airplanes of U.S. registry will be affected by this AD, that it will take approximately 4 work hours per airplane to accomplish the required leak check, and that the average labor rate is $60 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $278,160, or $240 per airplane.

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

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

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

What events have caused this AD? Reports of chafing and/or arcing of the fuel boost pump wiring inside the fuel pump reservoir that supplies fuel to each engine on Cessna Model 441 airplanes caused us to issue AD 2002-09-13, Amendment 39-12746 (67 FR 31117, May 9, 2002). AD 2002-09-13 requires you to: (1) do a one-time inspection of the electrical wiring going to the fuel boost pump reservoir and the boost pump wiring inside the reservoir for chafing or damage, and (2) repair or replace the wiring as necessary.

These actions are required in accordance with Cessna Conquest Service Bulletin No.: CQB02-1R1, Revision 1, dated April 22, 2002.

What has happened since AD 2002-09-13 to initiate this action? Further analysis of this situation reveals that:

Has FAA taken any action to this point? We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to certain Cessna Models 441 and F406 airplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on October 21, 2002 (67 FR 64568). The NPRM proposed to supersede AD 2002-09-13 with a new AD that would require repetitive inspections of the Models 441 and F406 airplanes fuel boost pump wiring inside and outside the boost pump reservoir for chafing or damage and replacement of the wiring and fuel boost pump, as necessary, and require eventual installation of an improved design wire harness and fuel boost pump as terminating action for the repetitive inspections.

How will this action relate to the FAA's aging commuter-class aircraft policy? The FAA's aging commuter aircraft policy briefly states that when a modification exists that could eliminate or reduce the number of required critical inspections, the modification should be incorporated. This policy is based on the FAA's determination that reliance on critical repetitive inspections on airplanes utilized in commuter service carries an unnecessary safety risk when a design change exists that could eliminate or, in certain instances, reduce the number of those critical inspections. In determining what inspections are critical, the FAA considers (1) the safety consequences of the airplane if the known problem is not detected by the inspection; (2) the reliability of the inspection.

What is the potential impact if FAA took no action? This condition, if not detected and corrected, could result in arcing within the wing fuel storage system. Such a condition could lead to ignition of explosive vapor within the fuel storage system.

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

What is the commenter's concern? The commenter, for clarity and completeness, requests that the AD call out removing the warning placards after compliance with Cessna Conquest Service Bulletin No.: CQB02-1, Revision 2, dated October 7, 2002.

What is FAA's response to the concern? We concur with the commenter and for clarity and completeness will change the final rule AD action to incorporate this change.

What is the commenter's concern? The commenter states that the 200-hour TIS recurrent inspection is not necessary because the commenter's specific aircraft is 24 years old and has more than 7,900 hours TIS and inspection finds only minor chafing of one wire. Further, the commenter states that the 200-hour TIS recurrent inspection increases the likelihood of creating fuel leaks because of the constant reopening and resealing of the fuel boost pump panels. The commenter disagrees with the 200-hour TIS recurrent inspection requirement. Because the commenter did not request an alternative time, we infer that the commenter wants the repetitive inspection deleted from the AD.

What is FAA's response to the concern? We do not concur. Initial investigation revealed harnesses and fuel boost pump leads with virtually no chafing, some with minor chafing, and several with excessive chafing that appeared to have been arcing. Additionally, all of the above conditions were found on aircraft with relatively low TIS to high TIS. The 200-hour TIS recurrent inspection is necessary to assure continued airworthiness of repaired wire harnesses.

We are not changing the final rule AD action as a result of this comment.

What is the commenter's concern? The commenter states that the wire harness is submerged in fuel when 80 pounds or 12 gallons of fuel remain in each wing tank. The commenter requests that the proposed AD allow the aircraft to be flown with greater than 80 pounds or 12 gallons of fuel remaining in either wing tank instead of replacing the wire harnesses and fuel boost pumps that exhibit chafing of the wire harness.

What is FAA's response to the concern? We do not concur. There are two wire harnesses in each wing tank, each with the potential for chafing and subsequent arcing if not corrected. The potential for arcing within the fuel tank continues to exist until replacing or repairing both sources of possible arcing. The request to allow operation with 80 pounds of fuel remaining in either tank only assures the fuel boost pump lead wires to remain covered with fuel. Engineering evaluation has determined that safe operation without repaired or replaced wire harnesses requires approximately 300 pounds to assure both wire harnesses are submerged in fuel.

We are not changing the final rule AD action as a result of this comment.

What is the commenter's concern? The commenter states that the fuel boost pump wire harness is the reason for the AD action and the fuel boost pumps remain in an acceptable operating condition. The commenter disagrees with replacing the fuel boost pumps. The commenter states that the problem is with the fuel boost pump wire harnesses and replacement of the fuel pumps is an undue and unnecessary burden on the operators.

What is FAA's response to the concern? We do not concur. Chafing has been found to occur on both the fuel boost pump lead wires and the wire harness extending from the fuel boost pump housing to wing structure on several aircraft with varying times-in-service.

We are not changing the final rule AD action as a result of this comment.

What is the commenter's concern? The commenter disagrees with the estimated cost of replacing the wire harnesses and fuel boost pumps. The commenter justifies disagreement with cost data from one service center.

What is FAA's response to the concern? We do not concur. The cost estimate associated with the cost impact with the proposed AD has been coordinated with Cessna, and found to be valid.

We are not changing the final rule AD action as a result of this comment.

What is the commenter's concern? The commenter requests that, once the wire harnesses have been replaced and the fuel boost pumps have been replaced or repaired, the inspection criteria on the 1,200-hour TIS Phase 11 inspection include specific instructions to inspect the wire harnesses and fuel boost pump leads for chafing and security. The commenter further states that including specific instructions to inspect the wire harnesses and fuel boost pump leads would assure continued airworthiness of the harnesses and boost pump leads.

What is FAA's response to the concern? We do not concur. The Model 441 Maintenance Manual was revised on July 1, 2002, with specific instructions to visually inspect all wire bundles/electrical components in the fuel storage area. Cessna and FAA agreed that inspection of these areas would occur every 600 hours TIS or 24 calendar months, whichever occurs first, to coincide with the general electrical wiring and component inspection interval. The FAA will monitor the service history and take further rulemaking action if it shows that normal maintenance practices are not eliminating the problem.

We are not changing the final rule AD action as a result of this comment.

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

How many airplanes does this AD impact? We estimate that this AD affects 370 airplanes in the U.S. registry.

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

For Model 441 airplanes, we estimate the following costs to accomplish the replacements:

For Model F406 airplanes, we estimate the following costs to accomplish the replacements:

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

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

This amendment adopts a new AD for Schweizer Model 269D helicopters. This action requires inspecting each aluminum endplate and the attach angles for cracks, fretting, and endplate bending before further flight, and thereafter at each 100-hour inspection. Installing an inspection hole in the horizontal stabilizer and inspecting the internal structure is required before further flight if fretting is found, as indicated by a powder residue adjacent to a rivet head. If no powder residue is found, then installing an inspection hole is required at the next 100-hour inspection. Replacing unairworthy parts is required before further flight. Schweizer Basic Handbook of Maintenance Instructions (HMI), dated December 9, 2002, pertains to the subject of this AD. Section 11 of the HMI describes the inspection and replacement procedures. Reporting any cracked or bent endplate, any cracked attach angles, or fretting to the FAA is required within one day of the inspection. The report must include the helicopter model, configuration, and serial number; description of the damage; the TIS of the damaged part; and the TIS since the last 100-hour TIS inspection. This amendment is prompted by reports of loose endplates, and one report of an endplate separating from the helicopter during flight. There are two types of endplates currently in service: an aluminum honeycomb endplate, part number (P/N) 269D3413-11, and a fiberglass honeycomb endplate, P/N 269D3413-13. The reports of difficulties have been limited to the aluminum endplates. The actions specified in this AD are intended to prevent loss of an endplate during flight, which could strike the tail rotor and result in loss of control of the helicopter.

The FAA has reviewed Schweizer Service Bulletin No. DB-011.1, dated March 20, 2003, which describes procedures for inspecting the horizontal stabilizer, endplate, and attach angles, and installing an inspection hole in the horizontal stabilizer.

This unsafe condition is likely to exist or develop on other helicopters of the same type design. Therefore, this AD is being issued to prevent loss of an endplate during flight, which could strike the tail rotor and result in loss of control of the helicopter. This AD requires inspecting each aluminum endplate for a crack or bending, and inspecting each attach angle for cracks or fretting. If fretting is found, as indicated by a powder residue adjacent to a rivet head, installing an inspection hole in the horizontal stabilizer and inspecting the internal structure is required. Replacing unairworthy parts is required before further flight. Finally, reporting any cracked or bent endplate, any cracked attach angles, or fretting to the FAA is required within one day of the inspection. The report must include the helicopter model, configuration, and serial number; the TIS of the damaged part; and the TIS since the last 100-hour TIS inspection. The actions must be accomplished in accordance with the service bulletin described previously. The short compliance time involved is required because the previously described critical unsafe condition can adversely affect the controllability and structural integrity of the helicopter. Therefore, inspecting the horizontal stabilizer, endplate and attach angles and replacing parts, if necessary, is required before further flight and this AD must be issued immediately.

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

The FAA estimates that 22 helicopters will be affected by this AD, that it will take approximately: 0.5 work hour to inspect the exterior of the horizontal stabilizer and endplate; 0.5 work hour to inspect the interior of the horizontal stabilizer; 1.5 work hours to cut an inspection hole and make a cover plate; and 4.5 work hours to replace a rib, two angles, a doubler, and an endplate. The average labor rate is $60 per work hour. Required parts will cost approximately $20 for the access cover and $1,380 per side for the rib, two angles, doubler, endplate, and fasteners, per helicopter. Based on these figures, and assuming 7 helicopters (approximately one-third of the inspected helicopters) will require one endplate replacement on one side, the total cost impact of the AD on U.S. operators is estimated to be $15,290.

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 2002-SW-57-AD.” The postcard will be date stamped and returned to the commenter.

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

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

The purpose of the claimant identification pilots is to test and gather information in the use of photographic identification to address the issue of complicit impersonation in the disability claims process. Complicit impersonation is accomplished when an individual, posing as the intended claimant, and with the consent of the claimant, responds to a consultative examination appointment in order to misrepresent the claimant's true medical condition or provides false or misleading information that affects eligibility during interviews with SSA field office employees. SSA and the Office of the Inspector General (OIG) have noticed an upward trend in the number of such instances. It has become apparent that we need to strengthen our procedures for identity verification. We believe that the technology for the photographic identification process is currently available and could be implemented over a short time frame. The photographic identification process should give SSA an economical yet effective means of providing improved identity documents to CE physicians. We anticipate that it will be readily accepted by the public. We will evaluate the results of the pilot and expand or modify the procedures accordingly.

We propose to conduct the pilots in the following designated geographic areas:

(1) All SSA field offices in the State of South Carolina.

(2) The Augusta, Georgia SSA field office.

(3) All SSA field offices in the State of Kansas.

(4) Selected SSA field offices located in New York City.

Individuals filing for title II and/or title XVI disability or blindness benefits at a Social Security office in the designated areas noted above will be required to participate in the claimant identification pilots. Individuals filing via the Internet or by telephone will also be included. We will be monitoring any possible impact that the pilot procedures might have on SSA's initiative to encourage the filing of applications online via the Internet.

While not part of the regulatory requirement, each individual will be asked to provide some form of photographic identification. This identification will be photocopied and the copy made a part of the SSA claims folder. SSA personnel will continue to follow regular identification procedures by asking the individuals questions based on information in the SSA database to ensure that the individuals are who they hold themselves out to be. SSA personnel will obtain additional identifying information if there is a doubt about the identity of the individual. If the individual does not have photographic identification available or does not wish to provide it to us, SSA personnel will not require it but will still follow regular identification procedures as before the pilots went into effect.

Also as part of the claimant identification pilots, each individual filing for disability or blindness benefits at a location participating in the pilot program will be required to have a photograph taken by SSA personnel, regardless of whether the individual provides the photographic identification discussed above. A copy will be made of this image and placed in the SSA claims folder. Images will also be stored electronically and accessed by authorized SSA and Disability Determination Service (DDS) personnel.

If DDS personnel request a consultative examination for the individual, a hard copy image of the photograph will be made available to the person conducting the CE. This will help to determine whether the individual presenting himself or herself for examination is the same individual who presented himself or herself as the individual filing for disability or blindness benefits. We will ask the CE physician to copy the individual's own photographic identification when the physician was not provided with a photo or a copy of a photographic identification previously taken by SSA personnel.

This same procedure will be used to verify the identity of pilot participants in the following situations:

• If the claim is allowed, subsequent interviews for payment purposes.

• Continuing Disability Reviews.

• SSI redeterminations.

• If the claim is denied, appeals and any associated CE.

Section 404.617 Pilot program for photographic identification of disability benefit applicants in designated geographic areas. In this new section, individuals filing for title II disability benefits will be required to have their photograph taken by the Social Security Administration. We will permit an exception to the photograph requirement when an individual has a sincere religious objection.

Section 416.327 Pilot program for photographic identification of disability benefit applicants in designated geographic areas. In this new section, individuals filing for title XVI disability or blindness benefits will be required to have their photograph taken by the Social Security Administration. We will permit an exception to the photograph requirement when an individual has a sincere religious objection.

On November 15, 2002, we published a Notice of Proposed Rulemaking (NPRM) in the Federal Register (67 FR 69161—69164) that led to these final rules. We have made one minor change from what we published. We have added the words “and blindness” in § 416.327 to clarify that we intended to include all such cases in the pilot.

During the comment period that began on November 15, 2002, and ended on January 14, 2003, we received seven comments on the proposed rules. All of them were generally supportive of the proposed rules and six of the comments included suggestions. They came from interested persons, a State agency, and professional associations. We carefully considered all of the comments relevant to the Claimant Identification Pilot Projects and provide our responses to those comments below. While we have condensed, summarized or paraphrased the comments, we have tried to present all views adequately and to respond to all the relevant issues raised by the commenters.

Comment: Two commenters believed that the rules should not allow for any exception to the photograph requirement, even on religious grounds.

Response: We are providing for an exception in order to accommodate those persons who have a sincere religious objection to having their picture taken. We note that the Supreme Court upheld a decision by a court of appeals that a person with a sincere religious objection against having her picture taken could not be denied a driver's license. See Quaring v. Peterson, 728 F.2d 1121 (8th Cir. 1984), aff'd by an equally divided Court sub nom. Jensen v. Quaring, 472 U.S. 478 (1985). An objection based on personal beliefs that are as sincere as a religious objection also may be accommodated, as the government may not distinguish among religions or between those who hold traditional religious beliefs and those who have sincere beliefs not based on a traditional religion. The Supreme Court has recognized as a valid objection to a government requirement those beliefs that occupy the same place in a person's life as belief in a traditional deity, noting that there is a vast diversity of religious beliefs in our country. See United States v. Seeger, 380 U.S. 163 (1965), cited in Quaring v. Peterson. As part of the pilot study, we will learn how many people might object for this reason to our taking their picture and how our accommodating their objection may affect our program.

Comment: Three commenters thought the exception to the photograph requirement should be broadened to include other “good cause” exceptions, such as individuals who would have difficulty traveling to an office to have a picture taken and individuals with medical conditions or behavioral problems that might be affected by having to visit an office and have a photograph taken. More specifically, one commenter believed that the need to bring individuals into an office for the photograph could present a problem if they were under the care of government agencies, public or private institutions, or other types of organizations. It could possibly disrupt the ongoing treatment and/or routine of individuals with certain types of impairments.

Response: We believe that in order for the photograph requirement to be a deterrent for complicit impersonation, the provision must be as inclusive as possible. It is also important to strike a balance between the degree of burden imposed and the overall effectiveness of the process. While we acknowledge that government agencies and other organizations might experience additional responsibilities because of the photographs, we believe that it is a prudent requirement. Since the number of individuals filing and/or receiving disability benefits increases substantially every year, it becomes even more essential for SSA to be cautious and vigilant in the verification of claimants' identities. It is important to note that the pilot regulations will be in effect for only a six month period of time in a limited geographic area. We will be gathering information on the acceptability of the photograph requirement and exploring possible changes that might be needed to the exceptions if the procedures are later implemented on a nationwide basis.

Comment: Two commenters believed that the procedures should not result in adverse actions against individuals who cannot produce photographic identification. They point out that many individuals will not have acceptable photographic identification readily available.

Response: The pilot regulations state that providing some form of photographic identification for SSA to copy is not a mandatory requirement. No adverse actions will result if an individual does not provide a photographic identification. The purpose of including this request as part of the pilot is to gather information on the general availability and usability of photographic identifications among the individuals we serve.

Comment: Two commenters stated that SSA should state that the photographs taken by SSA during the pilot will be subject to the provisions of the Privacy Act.

Response: We are preparing a Federal Register notice amend the Claims Folders System that is maintained by SSA in order to permit the storage of photographs of individuals taken during the pilot. This will explain that the photographs are covered by the Privacy Act. We will also provide each claimant with a Private Act notice handout.

Comment: One commenter suggested that the photographs taken by SSA should be used for evidence of disability for the individuals that file applications.

Response: The intent of the pilot regulations is to address the problem of complicit impersonation and to improve our ability to detect and prevent identity fraud in SSA applications and programs. We want to limit the use of photographs to the purpose stated in the pilot at this time.

A formal notice that will modify the Privacy Act system of records for the Claims Folder Systemf will be published in the Federal Register to reflect the new information to be collected during the pilot projects.

The Office of Management and Budget (OMB) has reviewed these final rules in accordance with Executive Order 12866, as amended by Executive Order 13258. Because of the pilot's short time duration and limited geographic coverage, we expect any costs or savings to be negligible ( i.e. , less than $2.5 million).

We certify that these final rules will not have a significant economic impact on a substantial number of small entities because they affect only individuals. Thus, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required.

As part of the claimant identification pilot project SSA is requesting clearance of two associated public use forms that will collect pilot performance and tracking data. Listed below is the title and summary of the 2 proposed forms:

The claimant ID Pilot Flag will be used by SSA to track and identify case disposition of disability claims filed at the pilot offices. Respondents are Disability Determination Service (DDS) personnel.

The Consultative Examination Evaluation Form is designed to elicit feedback data about the photographic identification process from physicians that conduct consultative examinations within the designated pilot areas. Respondents to the collection are consultative examination providers participating in the pilot.

Both the Claimant ID Pilot Flag and the Consultative Examination Evaluation Form will be used by SSA to provide evaluation data and measure the effectiveness of the pilots. Burden information concerning the use of these forms is shown in the following table.

An Information Collection Request has been submitted to OMB for clearance. We are soliciting comments on the burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility and clarity; and on ways to minimize the burden on respondents, including the use of automated collection techniques or other forms of information technology. Comments can be mailed or faxed to the Office of Management and Budget and the Social Security Administration at the following addresses/fax numbers:

Comments can be received up to 30 days after publication of this notice.

This final rule addresses the List I chemicals ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine as they occur in chemical mixtures. The rule establishes a concentration limit for each of these six listed chemicals. If the concentration of the listed chemical is at or below the limit, in a chemical mixture, then the mixture will be automatically exempted from the registration, reporting, recordkeeping and security requirements of the Controlled Substances Act. All chemical mixtures containing any of these six List I chemicals above the established concentration levels are subject to the requirements of the CSA. This final rule primarily addresses these chemicals as encountered in dietary and nutritional supplements. Actions taken in this final rule will not adversely impact the public's access to these products.

DEA originally proposed a concentration level of two percent for chemical mixtures containing ephedrine and/or pseudoephedrine. However, based on the comments received from the NPRM (63 FR 49506, Sept. 16, 1998), DEA has determined that a two percent concentration level would create significant regulatory burdens for the affected industry. Therefore, based on comments received, DEA has determined that a five percent concentration level will permit access to these products, while ensuring that these products are unlikely to be subject to diversion for the illegal manufacture of methamphetamine.

This final rule also establishes an exemption for the category of products consisting of unaltered harvested plant material, which DEA believes are not subject to diversion regardless of the concentration of the List I chemical in the product. Finally, this rule provides for a process whereby a manufacturer of a product which would otherwise be subject to regulation may request an exemption for that specific product. This process will allow chemical mixtures not automatically exempt by the concentration limit to be considered for exempt status under the CSA.

The Chemical Diversion and Trafficking Act of 1988 (Pub. L. 100-690)(CDTA) was passed by Congress to curtail the diversion of specific chemicals used in the illicit manufacture of controlled substances. The CDTA established recordkeeping and reporting requirements necessary for DEA to identify and track chemical diversion. While the CDTA achieved initial success in curtailing the diversion of chemicals, traffickers soon found and took advantage of certain shortcomings in the law. In the United States (U.S.), traffickers were able to obtain needed supplies by purchasing products that were exempted from regulation under the CDTA. Such products include chemical mixtures.

The Chemical Diversion and Trafficking Act of 1988 (CDTA) created a definition of “chemical mixture” (21 U.S.C. 802(40)), and exempted chemical mixtures from regulatory coverage. The Domestic Chemical Diversion Control Act of 1993 (DCDCA), enacted in April of 1994, created a provision dealing with the exemption of chemical mixtures. Chemical mixtures are defined as “a combination of two or more chemical substances, at least one of which is not a list I chemical or a list II chemical, except that such term does not include any combination of a list I chemical or a list II chemical with another chemical that is present solely as an impurity.”

Ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine are List I chemicals. The only chemical mixtures containing these List I chemicals, of which DEA is aware, are dietary and nutritional supplements. Dietary and nutritional supplements are readily available, being commonly sold to the public in drug and grocery stores, health and nutrition stores, and through direct marketing campaigns. These dietary and nutritional supplements contain material from the ephedra plant, or extract from the ephedra plant. If these dietary and nutritional supplements meet certain criteria under the Federal Food, Drug, and Cosmetic Act (FDCA), they are not recognized as drugs under the FDCA, but are nonetheless considered to be chemical mixtures governed by DEA law and regulations. In contrast, over-the-counter (OTC) and prescription drug products containing these listed chemicals are not considered chemical mixtures and instead are specifically addressed in 21 U.S.C. 802(39)(A)(iv). Also see 21 CFR 1300.02(b)(28)(i). Therefore, this final rulemaking has no impact upon OTC and prescription drug products lawfully marketed under the FDCA.

Prior to the enactment of the DCDCA, the term “regulated transaction” was defined to exclude “any transaction in a chemical mixture'' (21 U.S.C. 802(39)(A)(v)). Therefore, transactions involving all chemical mixtures (including dietary supplements) were exempt from recordkeeping, registration and other chemical regulatory control requirements of the CSA.

With passage of the DCDCA, all chemical mixtures became subject to regulatory requirements for listed chemicals under the law, unless specifically exempted by DEA. These requirements included registration for certain handlers of List I chemicals, recordkeeping, reporting, and security. Thus, all dietary and nutritional supplements containing listed chemicals became subject to DEA regulation. However, pending promulgation of final regulations governing exemption, dietary supplements containing ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine remained exempt from the requirements of the CSA.

The DCDCA amended the CSA (21 U.S.C. 802(39)(A)(v)) to limit the application of the above stated exemption and provided the Attorney General with the authority to exempt a chemical mixture containing a listed chemical if it is “formulated in such a way that it cannot be easily used in the illicit production of a controlled substance” and “the listed chemical or chemicals contained in the mixture cannot be readily recovered.” Until regulations which delineate criteria and procedures for exempting specific chemical mixtures are finalized, DEA has treated all chemical mixtures as being exempt from the chemical regulatory requirements of the CSA. (Note that OTC and prescription drug products are not considered chemical mixtures and are addressed separately under 21 U.S.C. 802(39)(A)(iv)).

Some chemical mixtures can be and have been used by traffickers in the illicit manufacture of controlled substances. This exemption provided traffickers with an unregulated source for obtaining these chemicals. To address these problems, the DCDCA amended the exemption to provide that only those chemical mixtures specified by regulation would be exempt from the definition of “regulated transaction'.

Regulations regarding the exemption of chemical mixtures were initially proposed by DEA on October 13, 1994 (59 FR 51888). In response to industry concerns, the proposed regulations were withdrawn on December 9, 1994 (59 FR 63738). After consulting with the private sector and carefully considering industry and other concerns, new regulations regarding chemical mixtures were proposed on September 16, 1998 (63 FR 49506). The comment period, which was twice extended, closed on April 16, 1999.

There are thousands of chemical mixtures in legitimate commerce, the majority of which are not useful to the illicit laboratory operator. The NPRM proposed criteria for the determination of whether a chemical mixture would be automatically exempt from CSA regulatory controls. Additionally, the NPRM defined an application process by which manufacturers may apply for an exemption for chemical mixtures that do not qualify for automatic exemption.

The DEA proposed that each chemical be assigned a concentration limit that, if found at or below the limit, will cause the mixture to be treated as a nonregulated chemical. This quantitative approach to identifying regulated mixtures is considered necessary due to the complexity of chemical-based commodities and the huge variety of products. These criteria are expected to exempt the vast majority of chemical mixtures containing listed chemicals. The NPRM included the proposed creation of a “Table of Concentration Limits,” in 21 CFR 1310.12. This table lists the concentration limits for each listed chemical.

While the concentration limits will be sufficient for many chemical mixtures, there are certain categories of mixtures that fall outside the limits provided, but are not considered to be likely sources of diversion. Therefore the DEA also proposed the exemption of three categories of chemical mixtures. The NPRM proposed that (1) waste materials regulated by the Environmental Protection Agency (EPA); (2) completely formulated paints and coatings; and (3) harvested plant material containing listed chemicals, shall remain exempt regardless of concentration.

In recognition that not all mixtures that qualify for exemption can be identified by concentration or category, the DEA also proposed an application process to exempt additional mixtures which are not likely to be diverted for use in the illicit production of controlled substances.

As noted previously, the only products affected by this rulemaking include dietary and nutritional supplements. These products are readily available to the general public through a variety of commercial outlets, including grocery and health stores, and direct marketing campaigns. These products are available to the public without a prescription.

To permit access to these products, while their diversion for the illicit manufacture of controlled substances is limited, DEA worked with members of the dietary and nutritional supplements manufacturing industry to determine an appropriate concentration level for each of these listed chemicals. DEA was assured by members of the affected industry, through discussions between the Administration and manufacturers, that the concentration levels discussed in this rulemaking would allow manufacturers to continue their manufacturing processes without harm to the product. Indeed, as discussed below, DEA received and incorporated comments from the affected industry suggesting these concentration levels rather than those originally proposed by DEA. At the same time, these levels are sufficient to prevent the diversion of these products for the illicit manufacture of controlled substances. This rulemaking will not affect the public's access to these products, nor, according to members of the industry, will these concentration levels have an adverse impact on the manufacturers of dietary and nutritional supplements.

No, this regulation does not attempt to address the issue of safety or human consumption of any products containing these listed chemicals. This regulation only deals with the issue of the potential illicit use of dietary supplements (and other chemical mixtures) containing ephedrine/ pseudoephedrine as precursor material for the production of methamphetamine.

On February 28, 2003 the U.S. Department of Health and Human Services (HHS) and Food and Drug Administration (FDA) announced a series of actions designed to protect the public from potentially serious risks from the use of dietary supplement products containing ephedra. The announcement cites new evidence in the medical literature and in adverse event reports, of heightened concerns that dietary supplements containing ephedra may represent a “significant and unreasonable risk of illness and injury.” DEA recognizes that determinations regarding the safety of such dietary supplement products are the purview of HHS/FDA. This rule does not address the issue of safety or human consumption of such products.

DEA has met with HHS/FDA staff on numerous occasions to discuss DEA's chemical mixture rule. HHS/FDA staff have been extremely supportive of DEA efforts to implement regulations which will subject materials containing greater than 5 percent ephedrine/ pseudoephedrine to CSA regulatory controls in order to prevent their use in the illicit production of methamphetamine. Any future action directed at dietary supplements by HHS/FDA will be separate from (and in addition to) the regulatory requirements implemented in this final rule.

While the September 16, 1998 Notice of Proposed Rulemaking “Exemption of Chemical Mixtures” (63 FR 49506) pertained to the regulation of chemical mixtures which contained any of 34 listed chemicals, this rulemaking finalizes only those portions of the NPRM pertaining to six specific chemicals: ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine. These chemicals are precursors to methamphetamine and related substances.

This final rule establishes a concentration limit for each of these six listed chemicals. If the concentration of the listed chemical is at or below the limit, then the mixture will be automatically exempted and therefore treated as a nonregulated chemical mixture. These concentration limits are provided in the “Table of Concentration Limits,” in 21 CFR 1310.12. The weight of the free base will be used to determine the concentration of a listed chemical if it is a salt. A mixture is exempt if the concentration of the listed chemical or chemicals is less than or equal to the percentages and other conditions described in the “Table of Concentration Limits.”

Therefore (1) a chemical mixture having a total concentration of ephedrine and/or pseudoephedrine of less than or equal to five percent by weight will be automatically exempt; (2) a chemical mixture having a total concentration of N-methylephedrine and/or N-methylpseudoephedrine of less than or equal to 0.1 percent by weight will be automatically exempt; and (3) a chemical mixture having a total concentration of phenylpropanolamine and/or norpseudoephedrine of less than or equal to 0.6 percent by weight, will be automatically exempt.

This final rulemaking also establishes an exemption for a category of chemical mixtures which contain ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and/or pseudoephedrine. While these mixtures may have higher concentration limits than provided above, the DEA believes they are not a likely source of diversion due to their inherent composition. Therefore, this rule also establishes an exemption for the category of products consisting of harvested plant material.

Harvested plant material that contains ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and/or pseudoephedrine, while meeting the definition of chemical mixture, will be exempt provided the plant material is unaltered from its natural state. Changes in the physical state that preserve the natural composition of the material, such as grinding, chopping, mulching or cutting, do not affect the exemption status. However, changes that alter the natural composition of the material, such as that resulting from chemical or physical extraction, concentrating, enhancement or by chemical reaction, or any other treatment will disqualify the mixture from exemption.

In recognition that not all mixtures that warrant exemption can be identified solely by concentration or category criteria, this Final Rule also sets forth an application process to exempt additional mixtures. Mixtures that are not automatically exempted by virtue of their concentration or category may still qualify for exemption based upon a review of the mixture composition by DEA. However, DEA will only grant an exemption to those chemical mixtures (1) formulated in such a way that they cannot be easily used in the illicit production of a controlled substance; and (2) from which the listed chemical or chemicals contained in the chemical mixture cannot be readily recovered.

An application process is set forth in 21 CFR 1310.13 to allow possible exemption of chemical mixtures based on the formulation, even if the listed chemical exceeds the concentration limit.

Because this Final Rule pertains to only six listed chemicals, applications will only be accepted for chemical mixtures containing ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and/or pseudoephedrine. Final regulations for all remaining listed chemicals will be published under separate rulemaking upon completion of a thorough review of applicable comments. Until publication of such a rulemaking, DEA will treat all transactions involving chemical mixtures containing these other listed chemicals as exempt from the definition of regulated transaction under the CSA.

Methamphetamine is the most prevalent controlled substance illicitly synthesized in the United States. The clandestine manufacture, distribution and abuse of methamphetamine are serious public health problems. Nationally, the Drug Abuse Warning Network (DAWN) has documented approximately 2,900 methamphetamine/speed related deaths in the United States between January 1992 and December 1996. The number of DAWN reported methamphetamine associated deaths for 1997 was 825 and 641 for 1998. For the years 1998 and 1999, the number of emergency room events associated with methamphetamine/speed were 11,490 and 10,447, respectively.

During calendar years 1994 through 1997, DEA was involved in the domestic seizure of 2,900 clandestine methamphetamine laboratories. Despite considerable efforts by Federal, state and local law enforcement, the illicit production, distribution and abuse of methamphetamine continue. Recent DEA seizure statistics indicate that the number of methamphetamine laboratory seizures has increased dramatically from 1996 through 2000. During 1998, DEA participated in the seizure of 1,623 methamphetamine laboratories. In 1999, the number rose to 2,127. These numbers do not include the thousands of laboratory seizures conducted independently by state and local law enforcement agencies. The chemicals ephedrine and/or pseudoephedrine were utilized as the precursor material at the vast majority of these laboratories.

At most of these laboratories, the precursor material was obtained via the diversion of over-the-counter (OTC) products marketed in tablet and capsule form, not through the diversion of bulk powder. While the vast majority of products seized at illicit methamphetamine laboratories were OTC drug products, ephedra and ma huang extracts containing ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine, and dietary supplement products (containing ephedra and ma huang extracts) have been seized at clandestine methamphetamine laboratories. At this time, the frequency with which these dietary supplement products and extracts are encountered is small. However, DEA studies confirm that the ephedrine contained in such extracts and some dietary supplement products can be readily recovered and can be easily used in the production of methamphetamine. Ephedra (in the form of dietary supplements or bulk ephedra extract), therefore, can and is being used as the source of precursor material for the illicit production of methamphetamine.

Recently, DEA has noted large increases in the number of ephedra dietary supplements being introduced into the marketplace. These products have a high level of ephedrine and are distributed by some companies whose OTC products have previously been identified at clandestine methamphetamine manufacturing laboratories. Several companies' advertisements tout that these new products are considered chemical mixtures and therefore are not subject to CSA regulatory controls. The introduction of some of these products may be creating an unregulated source of ephedrine (and related List I chemicals) for illicit use.

Therefore, due to (1) the growing methamphetamine clandestine laboratory problem; (2) the illicit use of extracts and dietary supplements (containing ephedrine and related List I chemicals) as precursor material for the clandestine production of methamphetamine and (3) the growth of new product introductions of dietary supplement products containing these chemicals, DEA has decided to finalize these provisions for the chemicals ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine.

Prior to publication of the notice of proposed rulemaking “Exemption of Chemical Mixtures” (63 FR 49506) on September 16, 1998, the DEA attempted to learn as much as possible about the affected industry. The DEA first established contact with industry shortly after withdrawal of the regulations regarding the exemption of chemical mixtures proposed by DEA on October 13, 1994 (59 FR 51888). That portion of the proposal was withdrawn on December 9, 1994 (59 FR 63738) in response to industry concerns. DEA met with representatives from associations (and affiliated members) representing chemical manufacturers, the paints and coating industry, flavor and fragrance manufacturers, chemical distributors, the dietary supplements industry and others. These different groups expressed unique concerns that the DEA attempted to address within the notice of proposed rulemaking (63 FR 49506).

List I chemicals comprise 24 of the 35 chemicals regulated by DEA, but only a few have been identified to be routinely used in chemical mixtures. This contrasts with the situation for List II chemicals which exist in a multitude of chemical mixtures used in a vast variety of industries.

The few list I chemicals that are used in chemical mixtures are utilized by a small number of industries. The dietary supplement industry is the primary industry having chemical mixtures containing these six listed chemicals. Natural ephedrine is obtained from the ephedra plant. The ephedrine is extracted and sold as bulk ephedra extract and used to formulate dietary supplements.

Prior to proposing the concentration limit for ephedrine, DEA gathered information from representatives of several dietary supplement manufacturers and distributors within the nutritional supplement industry. Information from industry, law enforcement and other sources indicated that a two percent concentration limit for ephedrine/pseudoephedrine would be adequate to prevent diversion and not unduly burden industry. The NPRM therefore proposed a two percent concentration limit.

In the NPRM, the DEA specifically solicited information from the dietary supplement and other industries regarding this matter and subsequently obtained new information suggesting that a higher concentration limit may be warranted.

This Rulemaking will affect only persons who manufacture, distribute, import, or export chemical formulations containing the List I chemicals ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and/or pseudoephedrine. End users, including those who manufacture a regulated mixture and convert it to a nonregulated form in an on-site manufacturing process, are not affected. Of those persons whose mixtures are regulated, only those distributions above the established threshold quantity for the listed chemical(s) are regarded as regulated transactions (as specified in 21 CFR 1310.04). Since no threshold has been established for ephedrine, all transactions in regulated chemical mixtures containing ephedrine will be regulated transactions. The threshold for regulated chemical mixtures containing N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine are found in 21 CFR 1310.04(f)(1). This Final Rule will not affect the regulatory status for chemical mixtures containing the remaining listed chemicals.

This is an appropriate decision at this time, for most dietary supplements are not formulated in such a way to be easily used in the illicit manufacture of a controlled substance and are therefore not likely to be diverted. This will exempt the majority of these chemical mixtures from regulatory controls. Taking this information into account, DEA is implementing a concentration limit of five percent (total ephedrine/pseudoephedrine). This should exempt those dietary supplements which are not likely to be sources of precursor material for clandestine laboratories. By taking this action, DEA is endeavoring to permit public access to these chemical mixtures while ensuring that they are not subject to diversion. Based on the comments DEA received, as well as discussions with members of the affected industry, DEA believes that dietary and nutritional supplements will not be adversely affected by this rulemaking, and that the public will continue to have full access to these products.

DEA proposed new regulations regarding the exemption of chemical mixtures by publishing an NPRM on September 16, 1998, entitled “Exemption of Chemical Mixtures” (63 FR 49506). The comment period, which was twice extended, closed on April 16, 1999. Comments discussed in this Final Rule will be limited to those related to the listed chemicals being addressed in this Final Rule. Two comments addressed ephedrine and pseudoephedrine only in relation to dietary supplement products. There were no comments on N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, or phenylpropanolamine.

Three comments addressed the application process as being limited and suggested a means to exempt a group or family of mixtures and allow for variation, without having to reapply for exemption. Two comments requested that once a mixture is granted exemption it should apply to all manufacturers of the same mixture. Three persons suggested a 21-day time limit to determine if a mixture is exempt by the application process. One person suggested a five-day period for approval of an application. Below is a discussion on the specific comments.

One comment requested that DEA automatically exempt multiple ingredient dietary supplement products containing ephedrine alkaloids or, alternatively, increase the concentration limit for ephedrine from two to five percent. The comment also requested that the capsule weight be considered in determining automatic exemption.

DEA attempted to obtain information on pertinent formulations and was provided, by the interested parties requesting a five percent concentration limit, formulations representing the dietary supplements in question. Labeling information for six products containing ephedra extract were provided to DEA. Five of the six labels provided sufficient information to determine that they contain more than two percent but less than five percent ephedrine alkaloids.

The total weight was not included in the label information for one of the examples. Therefore, the exact concentration could not be calculated. DEA estimates that the concentration of ephedrine alkaloids for this product is also less than five percent from available label information. This label stated that the ephedra was standardized to supply 24 mg of ephedrine alkaloids. This quantity of ephedrine is approximately that found in over-the-counter (OTC) drug products.

Some formulators add additional ephedrine to standardize a product. This practice is used to assure uniformity between batches of raw material obtained from natural sources. However, this method may also be used to formulate supplements that have an unnaturally high level of ephedrine or other alkaloid. This is sometimes referred to as “spiking.” Both standardization and spiking imply that the product is not “all natural” and contains pharmaceutical grade ephedrine, or ephedrine hydrochloride. Ephedrine hydrochloride is the most common form of ephedrine used by clandestine laboratory operators to make methamphetamine.

The comment requested that if the five percent limit is unacceptable to DEA then multiple component dietary supplements should be exempt as a category. DEA agrees that the multiple ingredient dietary supplements, represented by the labels submitted by this commentor, would not be likely sources for diversion due to the added difficulty in extracting the listed chemicals. However, DEA realizes that these formulations do not represent all possibilities for dietary supplements containing ephedrine/pseudoephedrine. Without a concentration limit, formulations could be sold that have a high percentage of ephedrine.

DEA had been informed that persons represented in this comment sell only products with a maximum amount of 25 mg of ephedrine alkaloids per dosage unit. That amount is common in OTC drug products containing ephedrine. Ephedrine products containing 25 mg are commonly seized at clandestine laboratories. Therefore, DEA concludes that a maximum amount of ephedrine that is based on weight is not a deterrent for using a product as a source of precursor material.

DEA carefully considered exempting these dietary supplements by category but decided against this for the following reasons. Manufacturers can formulate multiple component dietary supplements rich in ephedrine that are legally marketed as dietary supplements. DEA has experienced multiple component OTC products being diverted upon control of single entity ephedrine OTC products. Further, the manufacturer may include innocuous substances within an ephedrine-rich formulation. The overall result is a legitimately marketed dietary supplement useful to traffickers. Permitting unlimited trade in such chemical mixtures would defeat previous efforts by Congress and DEA to curtail the illicit production of methamphetamine.

As stated on one of the labels provided to DEA, the ephedra supplement may be standardized to obtain an amount of ephedrine at least equal to that found in OTC drug products. As noted above, standardization is achieved by using a synthetic form of ephedrine, ephedrine hydrochloride, which may be useful to traffickers. That form is more easily separated from other ingredients due to its affinity for water. DEA determined that exempting dietary supplements or “multiple ingredient” dietary supplements would create a loophole for the diversion of methamphetamine precursor. A supplement can be “standardized” to contain up to 25 mg of ephedrine with minimal additional ingredients that results in a high weight ratio of ephedrine and be legally marketed as a dietary supplement. Therefore, DEA has decided not to exempt dietary supplements as a category.

One commentor stated that methamphetamine cannot be produced from their dietary supplement products. The commentor sponsored an experiment to prove this assertion. The dietary supplement used in the experiment was calculated to contain one percent ephedrine by laboratory analysis. The laboratory report refers to a common “street method” for manufacturing methamphetamine. However, the sponsored experiment using this supplement was not successful in producing methamphetamine.

The comment concludes that the products described are representative of the formulations marketed by the dietary supplement industry, each containing less than five percent (by weight) ephedrine/pseudoephedrine. DEA agrees that those products containing less than five percent ephedrine, as represented by the label information provided to DEA, are not likely to be used in illicit laboratory operations. Therefore DEA has decided to raise the concentration limit for ephedrine/pseudoephedrine to five percent. For encapsulated products, the weight of the capsule is included in making this calculation.

One commentor requested that the concentration limit be raised to six percent for ephedrine, so that most of the existing ephedrine containing dietary supplement products would be exempt. Additionally the commentor recommended that DEA automatically exempt ephedra dietary supplements that contain multiple ingredients.

The commentor acknowledged that significant problems existed with some manufacturers “spiking” products with synthetically produced ephedrine. Although the commentor states that they believe this practice has been mostly corrected, DEA must consider the likelihood of such practices. Voluntary compliance with standards of an organization or any special interest group can not prevent unscrupulous persons from distributing mixtures desired by traffickers. Without a concentration limit, products can be marketed as dietary supplements that are “spiked” to contain high levels of ephedrine with minimal additional ingredients. These formulations can be legally marketed as dietary supplements and be desirable to traffickers.

In another comment, a request was made to set the concentration limit to five percent. That comment states that multiple component dietary supplements containing ephedra alkaloids should be exempt at the five percent concentration limit for ephedrine and pseudoephedrine.

DEA is aware that bulk ephedra extract contains from six to eight percent ephedrine alkaloids. Raising the concentration limit to six percent for ephedrine would cause only those bulk mixtures that contain ephedrine alkaloids above six percent to be regulated.

DEA is aware that methamphetamine can be produced from ephedrine/pseudoephedrine when extracted directly from the raw plant material. A concentrate of this material would act as a more practical source for methamphetamine precursor. Therefore, DEA decided to regulate chemical mixtures consisting of bulk ephedra extract as a listed chemical. The ephedra extract typically has a concentration of ephedrine alkaloids of 6 percent or more. Therefore, DEA will exempt up to five percent ephedrine/pseudoephedrine contained in mixtures. That concentration limit is expected to exempt the vast majority of dietary supplements containing ephedrine/pseudoephedrine while allowing bulk ephedra extract to be treated as a regulated chemical.

Three persons commented on the application process as being limited because it requires a separate application for each mixture. They suggest that the application process should account for a group or family of mixtures and allow for variation, sometimes necessary to meet customer needs, without having to reapply for exemption.

DEA intended to allow group exemption by application. A group is defined as those formulations having identical function and containing the same listed chemical(s). The Notice of Proposed Rulemaking states (63 FR 49511) “The application may be submitted for a single mixture or a group of mixtures containing the same listed chemical at equal concentration with variations in the concentration of the other non-listed chemicals in the mixture. Consideration will also be given to applications for mixtures in which the concentration of the listed chemical varies without regard to the specific concentrations of the other non-listed chemicals in the mixture. In either group, variation of the concentration of any chemical within the mixture that will result in a change in the function of the mixture will disqualify the mixture from the group.”

DEA will address below the shortcoming in the proposed § 1310.13 that does not clearly establish group exemption. In addition, DEA shall establish that a single formulation may be granted an exemption while allowing variation in the formulation without the need to reapply. This is in anticipation that reformulation may be necessary to meet a customer's needs. Variation may be for listed and non-listed chemicals.

A group of mixtures may be exempted within a single application. However, not all formulations are required to have the same non-listed chemicals to be included in a group. A group application may be submitted to include several formulations being marketed simultaneously or for a single product that is reformulated within specified concentration ranges. The latter may be for a custom application that requires adjusting the properties for optimum performance. Therefore, reapplication will not be necessary for new formulations that fall within a stated concentration range. The Administrator may determine that a specific mixture does not qualify as part of a group, and that one or more mixtures submitted as part of a group does not qualify for exemption.

The usefulness of a mixture in clandestine operations depends on the number, type and concentrations of chemicals in the mixture. Therefore, an application for group exemption will identify both listed and non-listed components as well as their concentrations. A new application will not be necessary if a formulation is added to the group that contains the listed and non-listed chemicals within the concentration range specified in the original application. DEA must be notified in writing if the manufacturer adds a new mixture to the group.

DEA must be informed if a qualitative change, not indicated on the original application, removes non-listed chemical(s) from a formulation exempt under a group. This is necessary to prevent mixtures being altered from an unusable state, as evaluated in the application, to a mixture that can be used by traffickers. If such a change ( i.e. , removal of non-listed chemical(s) from the formulation) renders the mixture valuable to traffickers, DEA can remove the exemption for that member of the group. DEA must be informed of such a change; however, a new application will not be necessary. DEA will either add the new formulation to the group or deny exempt status for that particular formulation. Section 1310.13 will be modified to reflect this and other conditions mentioned above.

Two comments requested that once a mixture is granted an exemption it should apply to all manufacturers of the same mixture. DEA proposed that all manufacturers apply separately. This requirement was proposed for several different reasons.

DEA requires that a manufacturer submit the exact formulation when applying for an exemption. That is necessary to properly evaluate the mixture. Manufacturers of a similar product could not know if their formulation is the same as an exempted mixture unless the formulation is made public. Since some formulations are assumed to be trade secrets, DEA cannot reveal those formulations.

Exempt chemical mixtures will be made public by publication in the Federal Register . Exempt formulations will be maintained in a Table in the Code of Federal Regulations. DEA, however, will only publish those formulations that the manufacturer allows to be made public. Due to the complexity of multiple ingredient formulations, such a Table may become unreasonably large.

DEA will therefore require that each manufacturer apply for exemption by the application process. However, manufacturers may submit a joint application where each manufacturer listed in the application formulates the same mixture. All manufacturers listed in the application will obtain a decision from DEA regarding the regulatory status of the mixture. Also, a manufacturer that suspects that they formulate a mixture similar to one granted exemption status may inform DEA that a similar formulation has already been evaluated by DEA.

Once a mixture is exempted, all downstream distributions for that formulation are exempt from regulation. Persons will not be regulated if they repackage and distribute a mixture exempted by the application process.

Three commentors suggested that a 21-day deadline be established to determine whether a mixture is exempt by the application process. One person suggested that a 5-day deadline be imposed for approval of the application. A time frame was requested so manufacturers could establish internal compliance procedures before shipments are made.

While DEA will attempt to expedite the review of each application, it is not practical to establish a time limit for determining whether a mixture or a mixture group is exempt. The time to determine the status of an individual application is dependent on several variables that can not be controlled. Factors include the number of applications received, the number of mixtures contained in an application, the possible need to obtain additional technical information from the applicant, the possible need to obtain additional internal technical information on chemicals in the mixture and to analyze all factors. These and other factors make a time limit impractical.

A chemical mixture (other than the category of products consisting of unaltered harvested plant material) that contains ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, or pseudoephedrine above the concentration limit as defined in the “Table of Concentration Limits” will be treated as a List I chemical. Transactions that meet or exceed the cumulative monthly threshold for the listed chemical shall be regulated transactions. Persons interested in handling a regulated mixture must comply with the following:

Registration. Any person who distributes, imports or exports a regulated mixture, or proposes to engage in such activities, or is a broker or trader in an international transaction (as defined in 21 U.S.C. 802(42)), with respect to a regulated mixture containing a List I chemical, shall obtain a registration pursuant to the CSA (21 U.S.C. 822). Regulations describing registration for list I handlers are set forth in 21 CFR part 1309.

Separate registration is required for retail distribution, non-retail distribution, importing, and exporting. A separate registration is required for each principal place of business at one general physical location where list I chemicals are distributed, imported, or exported by a person (21 CFR 1309.23). Effective June 30, 2003, any person distributing, importing, exporting or serving as a broker or trader in an international transaction involving any amount of a regulated mixture will become subject to the registration requirement under the CSA. DEA recognizes, however, that it is not possible for persons who are subject to the registration requirement to immediately complete and submit an application for registration and for DEA to immediately issue registrations for those activities. Therefore, in order to allow continued legitimate commerce in regulated mixtures, DEA is establishing in 21 CFR 1310.09 a temporary exemption from the registration requirement for persons desiring to engage in activities with regulated mixtures that are subject to registration requirements, provided that DEA receives a properly completed application for registration on or before June 30, 2003. The temporary exemption for such persons will remain in effect until DEA takes final action on their application for registration.

Any person whose application for exemption is subsequently denied by DEA must obtain a registration with DEA. A temporary exemption from the registration requirement will also be provided for these persons, provided that DEA receives a properly completed application for registration on or before 30 days following the date of official DEA notification that the application for exemption has not been approved. The temporary exemption for such persons will remain in effect until DEA takes final action on their registration application.

The temporary exemption applies solely to the registration requirement; all other chemical control requirements, including recordkeeping and reporting, are effective on June 2, 2003. Therefore, all transactions of the chemical mixture will be regulated, if at or above threshold, while an application for registration or exemption is pending. This is necessary because not regulating these transactions could result in increased diversion of chemicals desirable to drug traffickers.

Additionally, the temporary exemption does not suspend applicable federal criminal laws relating to the regulated mixture, nor does it supersede state or local laws or regulations. All handlers of a regulated mixture must comply with applicable state and local requirements in addition to the CSA regulatory controls.

Records and Reports. The CSA (21 U.S.C. 830) requires certain records to be kept and reports to be made involving listed chemicals. Regulations describing recordkeeping and reporting requirements are set forth in 21 CFR part 1310. A record must be made and maintained for two years after the date of a regulated transaction involving a list I chemical. Only a distribution, receipt, sale, importation, exportation, brokerage or trade of a regulated mixture above the established threshold is a regulated transaction (21 CFR 1300.02(b)(28)).

Each regulated bulk manufacturer of a regulated mixture shall submit manufacturing, inventory and use data on an annual basis (21 CFR 1310.05(d)). Bulk manufacturers producing the mixture solely for internal consumption, e.g. formulating a nonregulated mixture, are not required to submit this information. Existing standard industry reports containing the required information are acceptable, provided the information is readily retrievable from the report.

21 CFR 1310.05 requires that each regulated person shall report to DEA any regulated transaction involving an extraordinary quantity, an uncommon method of payment or delivery, or any other circumstance that causes the regulated person to believe that the listed chemical will be used in violation of the CSA.

Imports/Exports. All import/exports and brokered transactions of regulated mixtures shall comply with the CSA (21 U.S.C. 957 and 971). Regulations for importation and exportation of list I chemicals are described in 21 CFR part 1313. Separate registration is necessary for each activity (21 CFR part 1309.22).

Administrative Inspection. Places, including factories, warehouses, or other establishments and conveyances, where regulated persons may lawfully hold, manufacture, or distribute, dispense, administer, or otherwise dispose of a regulated mixture or where records relating to those activities are maintained, are controlled premises as defined in 21 CFR 1316.02(c). The CSA (21 U.S.C. 880) allows for administrative inspections of these controlled premises as provided in 21 CFR part 1316 subpart A.

DEA, pursuant to 21 U.S.C. 802(39)(A)(v), is defining criteria for the exemption of chemical mixtures containing one or more of the List I chemicals ephedrine, N-methylephedrine, N-methylpseudoephedrine, norpseudoephedrine, phenylpropanolamine, and pseudoephedrine from regulatory control. To implement an exemption, a concentration limit is placed on each chemical, or combination of chemicals, which defines its regulatory status. In addition, an application process is established to exempt chemical mixtures, not automatically exempt by these provisions, from the regulatory process.

DEA has determined that dietary supplements, including bulk material used to formulate these supplements, are the principle chemical mixtures that utilize ephedrine and pseudoephedrine. While DEA is aware that some dietary supplements are sources for methamphetamine precursors, DEA is also aware that most of these supplements are not viable sources for diversion of precursor chemicals.

DEA sought information from the affected industry prior to publishing the Proposed Rule to exempt chemical mixtures. Information gathered prior to drafting a proposed rule indicated that the majority of chemical mixtures most likely to be affected contain not more than 1.2 percent ephedrine. To ensure that most legitimately marketed dietary supplements are not regulated, DEA proposed a two percent concentration limit on ephedrine/pseudoephedrine. This amount was greater than the highest concentration of ephedrine/pseudoephedrine in the final product, as related to DEA by the industry.

However, a comment received in response to the NPRM suggested that the percent concentration of ephedrine and pseudoephedrine be raised from two percent to five percent. The commentor states that it represents individual member companies with hundreds of thousands of independent distributors. One member company alone is said to have over 100,000 distributors. The commentor suspects that its members will be regulated if a two percent concentration limit is finalized. Registration costs for this number of new registrants would result in a significant regulatory action.

This industry is comprised mainly of small businesses, as defined by U.S. Small Business Administration (SBA) regulations (13 CFR 121.201). However, DEA is finalizing the concentration limit at a level suggested by the commentor, which will not require registration by these hundreds of thousands of businesses and distributors. In addition, other industry representatives have informed DEA that the alkaloid concentration of most dietary supplements is less than two percent. Therefore, DEA concludes that the majority of dietary supplements will be exempt from regulatory provisions of the CSA if a five percent concentration limit for ephedrine/pseudoephedrine is established.

The commentor informed DEA that there are approximately 12 importers and approximately six manufacturers of bulk ephedra. A bulk manufacturing process may involve taking the natural ephedra extract and spiking it with ephedrine hydrochloride. Therefore, DEA will assume that all six manufacturers will need to register, although some may qualify as end-users and not need to register.

DEA is also finalizing in this Rulemaking a process by which manufacturers may request exemption from DEA for specific products. This process will allow chemical mixtures not automatically exempt by the concentration limit to be considered for exempt status under the CSA. This will ensure that certain chemical mixtures, including dietary supplements having formulations useless to traffickers, but not automatically exempt by provision, can be granted exempt status.

Therefore, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Acting Administrator has reviewed this Final Rule and by approving it certifies that this regulation will not have a significant economic impact upon a substantial number of small entities.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, section 1(b), Principles of Regulation. DEA has determined that this rule is a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review, and accordingly this rule has been reviewed by the Office of Management and Budget.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

This rulemaking does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by Section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

(28) * * *

(i) * * *

(E) Any transaction in a chemical mixture designated in § 1310.12 and § 1310.13 that the Administrator has exempted from regulation.

I. Background

On November 6, 2002, the Maryland Department of the Environment (MDE) submitted a formal revision to its State Implementation Plan (SIP). The SIP revision (#02-06) consists of administrative and clarifying amendments to regulation 26.11.09 for Control of Fuel-Burning Equipment, Stationary Internal Combustion Engines, and Certain Fuel-Burning Installations, and includes the establishment of an alternative NO X emission standard for a specific subcategory of sources subject to this regulation.

Code of Maryland Administrative Regulation (COMAR) 26.11.09 establishes emission standards for fuel burning equipment, including standards for visible emissions, particulate matter emissions and NO X emissions. The amendments to COMAR 26.11.09 effect the following changes to the regulation:

1. Visible emissions requirements in Regulations .05 were revised to remove references to the Ringlemann Smoke Chart, and in lieu of the Ringlemann number, the percent opacity corresponding to that number is now required, resulting in no change to the standard.

2. Particulate matter standards in Regulation .06 and .09 were revised to remove emission limit applicability for fuel burning equipment which burn only gas or distillate fuel. The definitions in Regulation .01 were revised to clarify the definition for gas fuels. The particulate matter standards will now apply only to residual fuel-fired equipment as defined in Regulation .01. Since the uncontrolled emissions from gas or distillate fuel-fired equipment do not exceed the particulate matter emission standards in the regulation, this revision is approvable.

3. The requirement for observation of visible emissions by a Bacharach Smoke Test in Regulation .09 was removed. Visible emissions observations in accordance with EPA-approved methods are addressed by and required under a separate regulation under COMAR.

4. Regulation .08 was amended to revise the emission standard for coal-fired units having a capacity between 100 MMBtu and 250 MMBtu. Low NO X burners were installed on three coal-fired boilers to meet requirements for Reasonably Available Control Technology for NO X ( NO X RACT). NO X RACT was completed at considerable cost, however, the emission standard of 0.5 pounds NO X per MMBtu per hour could not be achieved under normal operating conditions. Continuous emissions monitoring (CEM) data showed that NO X RACT achieves the emission standard only when operating at maximum capacity, and that during normal operations NO X is reduced to 0.65 pounds per MMBTU. Installation of additional controls would result in NO X RACT which would be well above reasonable cost effectiveness. This revision will not negatively impact Maryland's Rate of Progress plan nor its attainment demonstration for the ozone national ambient air quality standards previously submitted by the state of Maryland, and is thus approvable.

EPA is approving Maryland's SIP Revision to its regulation under COMAR 26.11.09 as submitted. EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on June 30, 2003 without further notice unless EPA receives adverse comment by June 2, 2003. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. 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.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). 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. 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 . 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 June 30, 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 to revise the provisions to COMAR 26.11.09 may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

Florida Administrative Code (F.A.C.) rule 62-212.600(2)(c), requires any new or modified sulfur storage and handling facility, with a throughput of elemental sulfur in all forms (solid or molten) equal to or greater than 5,000 tons per year, to conduct postconstruction air quality and deposition monitoring of sulfur particulate matter for two years from the date of issuance of the initial air operation permit for the facility, and, through the permitting process, to establish the period of time, if any, such monitoring must be continued after the initial two year period. The purpose of the postconstruction monitoring requirement in rule 62-212.600(2)(c), F.A.C., is to determine the impact of the facility on sulfur handling and storage operations.

Under section 120.542, of the Florida Statutes, the department may grant a variance when the person subject to a rule demonstrates that purpose of the underlying statute will be or has been achieved by other means, or when application of a rule would create a substantial hardship or violate principles of fairness.

On August 14, 2002, Martin Gas Sales Inc., submitted a petition for variance from the requirements of rule 62-12.600(2)(c), F.A.C., for a proposed expansion of its sulfur storage and handling facility in Tampa, Florida. The petitioner estimated the potential sulfur particulate emissions from the facility to be only 1.7 tons per year. Further, the company estimated the cost of compliance with the postconstruction monitoring requirement to be between $3,000 and $10,000 per year. Given the low estimated annual emissions and the high cost of complying with rule 62-212.600(2)(c), F.A.C., the department has determined that postconstruction air quality and deposition monitoring of sulfur particulate emissions would not be cost effective in this case and that the purpose of the underlying statute would be met without it. Therefore, the department has issued an Order Granting Variance to Martin Gas Sales, Inc., relieving the company from the requirements of rule 62-212.600(2)(c), F.A.C. Since this rule has previously been approved into Florida's State Implementation Plan (SIP), the department is requesting approval of this variance as a revision to the SIP.

On January 17, 2003, the State of Florida Department of Environmental Protection submitted revisions to the Florida SIP. This SIP revision (DEP number 2003-01) consists of a department order granting a variance from Rule 62-212.600(2)(c), F.A.C., to Martin Gas Sales, Inc., in Hillsborough County, Florida.

EPA is approving the aforementioned changes to the State of Florida SIP because it is consistent with the Clean Air Act and Environmental Protection Agency's policy. The EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should adverse comments be filed. This rule will be effective June 30, 2003, without further notice unless the Agency receives adverse comments by June 2, 2003.

If the EPA receives such comments, then EPA will publish a document withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period. Parties interested in commenting should do so at this time. If no such comments are received, the public is advised that this rule will be effective on June 30, 2003, and no further action will be taken on the proposed rule. Please note that if we receive adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of an adverse comment.

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

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). 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. 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 June 30, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

On March 29, 2000, the State of Maine submitted a formal revision to its 111(d) plan to control emissions of total reduced sulfur (TRS) from existing kraft paper mills. The revision consists of changes to Maine's regulations at Chapter 124, entitled “Total Reduced Sulfur Control from Kraft Pulp Mills” (Chapter 124). New mills are not covered under Chapter 124 because they are subject to New Source Performance Standards (NSPS) in 40 CFR part 60, subpart BB. 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.

The term “total reduced sulfur” (TRS) refers to a mixture of four compounds: hydrogen sulfide, methyl mercaptan, dimethyl sulfide, and dimethyl disulfide. These compounds usually represent the total reduced sulfur released by a pulp and paper mill which uses the kraft process. TRS compounds are released when wood chips are dissolved during the papermaking process at certain mills. They have not been proven to cause serious human health problems in the concentrations normally found around paper mills, but they can cause some discomfort. TRS compounds have a strong, unpleasant odor.

These changes to Chapter 124 will only affect existing paper mills that use the kraft process. The kraft process involves using sulfur compounds to dissolve wood chips, allowing the fiber to be made into paper. TRS compounds are formed during this process and, if not controlled, can be released into the atmosphere. Maine's 111(d) plan for TRS emissions applies to six kraft pulp mills in Maine.

This rule does not apply to new paper mills.

New mills will be covered by federal New Source Performance Standards (40 CFR part 60, subpart BB).

Maine DEP originally submitted Chapter 124 to EPA on February 15, 1990. On September 19, 1990, EPA approved this rule under section 111(d) of the CAA (55 FR 38545). Section 111(d) allows us to approve state plans to regulate emissions from existing sources of pollutants not otherwise covered in the CAA.

On April 27, 1994, Maine DEP submitted a request to revise Chapter 124. EPA approved the state's revisions on October 4, 1994 (59 FR 50506). The changes to Chapter 124 extended the compliance date for brownstock washer systems from January 1, 1994 to September 30, 1998. Brownstock washer systems rinse the pulp after sulfur bearing chemicals are added. If emissions from these systems are not controlled, they can release TRS into the atmosphere. Maine changed the compliance date to give mills more time to comply with the federal Maximum Available Control Technology (MACT) standard for hazardous air pollutants (HAPs) from the pulp and paper industry, which was in preparation at the time. This MACT standard became effective in 1998.

EPA published the MACT standard for the pulp and paper industry on April 15, 1998 (63 FR 18617). Maine then revised Chapter 124 to apply certain control provisions of that MACT standard to TRS compounds. Some of Maine's new requirements are even more stringent than the MACT standard for HAPs. For example, the compliance date for existing brownstock washer systems is April 17, 2005, which is one year earlier than the compliance date in EPA's MACT standard. Maine's revised regulations also add requirements independent of the MACT standard for HAPs. For example, the regulations call for inventories of TRS sources which emit more than 0.5 lbs/hr, limit unintentional releases (venting) from Low Volume High Concentration (LVHC) and some High Volume Low Concentration (HVLC) sources, and require detailed reports that explain TRS ventings from LVHC sources which exceed 0.5% of quarterly operating time.

Chapter 124 allows ME DEP and EPA to consider alternative compliance methods for monitoring TRS emissions. It is EPA's understanding that the state will implement these regulations to require that both agencies approve any such alternative compliance methods.

Maine certified that a public hearing on the revisions to Chapter 124 was held in Augusta, ME on May 26, 1999 in accordance with the requirements of 40 CFR 60.23(d)

EPA is approving the revised 111(d) plan controlling TRS emissions from existing kraft pulp mills as submitted by ME DEP on March 29, 2000. The revised plan, which consists of the revised regulation entitled “Chapter 124: Total Reduced Sulfur from Kraft Pulp Mills,” affects six existing kraft pulp mills in the State of Maine.

EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the 111(d) plan revision should relevant adverse comments be filed. This rule will be effective June 30, 2003 without further notice unless the Agency receives relevant adverse comments by June 2, 2003.

If the EPA receives such comments, then EPA will publish a notice withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on the proposed rule. Only parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on June 30, 2003 and no further action will be taken on the proposed rule.

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 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), nor will it have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely approves a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing 111(d) plan revisions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. 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 revision for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a revision, to use VCS in place of a revision that otherwise satisfies the provisions of the CAA. 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. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. )

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

The area to be deleted from the NPL is a portion of the South Indian Bend Wash Superfund Site, in Tempe, Arizona. The exact area being deleted was defined in the Notice of Intent for Partial Deletion of a portion of the South Indian Bend Wash Site from the National Priorities List published in the Federal Register on February 28, 2003 (67 FR 51528).

The closing date for comments on the Notice of Intent to Delete was March 31, 2003. One comment was received in support of the partial deletion; this comment also requested consideration for deletion of another parcel at the Site. EPA will respond separately to this request and has not prepared a Responsiveness Summary. EPA identifies sites that appear to present a significant risk to public health, welfare, or the environment, and it maintains the NPL as the list of those sites. Section 300.425(e)(3) of the NCP states that Fund-financed actions may be taken at sites deleted from the NPL in the unlikely event that conditions at these sites warrant such actions. Deletion of a site from the NPL does not affect responsible party liability or impede EPA's efforts to recover costs associated with response efforts.

Head Start is authorized under the Head Start Act (42 U.S.C. 9801 et seq. ). It is a national program providing comprehensive developmental services to low-income preschool children, primarily age three to the age of compulsory school attendance, and their families. To help enrolled children achieve their full potential, Head Start programs provide comprehensive health, nutritional, educational, social and other services. In addition, section 645A of the Head Start Act provides authority to fund programs serving infants and toddlers. Programs receiving funds under the authority of this section are referred to as Early Head Start programs.

Head Start programs are required to provide for the direct participation of the parents of enrolled children in the development, conduct, and direction of local programs. Parents also receive training and education to foster their understanding of and involvement in the development of their children. In fiscal year 2001, Head Start served 905,235 children through a network of over 2,000 grantees and delegate agencies.

While Head Start is intended to serve primarily children whose families have income at or below the poverty line, or who receive public assistance, Head Start policy permits up to 10 percent of the children in local programs to be from families who do not meet these low-income criteria. Tribal grantees can exceed this limit under certain conditions. The Act also requires that a minimum of 10 percent of the enrollment opportunities in each program be made available to children with disabilities. Such children are expected to participate in the full range of Head Start services and activities with their non-disabled peers and to receive needed special education and related services.

The Administration for Children and Families is establishing a final rule governing construction and renovation of Head Start facilities. The purpose of the Rule is to implement the statutory authority to permit Head Start grantees (including Early Head Start grantees) to use grant funds to construct or undertake major renovations of Head Start facilities. The authority for this Rule is section 644 (c), (f), and (g) and 645A (b)(9) of the Head Start Act (42 U.S.C. 9801 et seq. ). Paragraph (g) of section 644 was added by Pub. L. 103-252, Title I of the Human Services Amendments of 1994. Section 644(g)(1) requires that the Secretary establish uniform procedures for Head Start programs to request approval for payments of capital expenditures related to the construction and major renovations of facilities.

• Defines major renovation to mean “a structural change to the foundation, roof, floor, or exterior or load-bearing walls of a facility, or extension of an existing facility to increase its floor area. Major renovation also means extensive alteration of an existing facility, such as to significantly change its function and purpose, even if such renovation does not include any structural change to the facility. Major renovation also includes a renovation of any kind which has a cost exceeding the lesser of $200,000, adjusted annually to reflect the percentage change in the Consumer Price Index for All Urban Consumers (issued by the Bureau of Labor Statistics) beginning one year after the effective date of the amendments to these regulations, or 25 percent of the total annual direct costs approved for the grantee by ACF for the budget period in which the application is made.”

• Defines construction to mean new building, excludes renovations, alterations, additions or work of any kind to existing buildings.

• Specifies what information the grantee must provide to establish eligibility to be awarded grant funds for the construction or major renovation of a Head Start facility.

• Specifies the provisions of subordination of interest agreements between the Department and lenders.

• Requires that all construction and major renovation contracts be on a lump sum fixed-price basis.

On December 1, 1994, the Department published a Notice of Proposed Rulemaking (NPRM) in the Federal Register (59 FR 61575) proposing to establish a Rule to implement the statutory provision authorizing the use of Head Start grant funds to purchase facilities. The Final Rule on Purchase of Head Start Facilities was published on February 8, 1999 and became effective on March 10, 1999, with certain provisions involving information collection becoming effective when approved by the Office of Management and Budget. The Final Rule on purchase does not address construction or major renovation since the statutory change concerning construction and major renovation occurred too close to publication of the NPRM published in connection with the purchase of Head Start facilities. We recognized, however, that procedures covering the purchase, construction and major renovation of facilities using Head Start funds should be consistent with procedures for the purchase of facilities and both should be brought together in one Rule. Therefore the Department issued a NPRM on February 9, 1999, which proposed to amend the Final Rule for Purchase of Head Start Facilities by incorporating the provisions governing construction and renovation of facilities.

Seven parties submitted twenty-one comments. Only those sections on which comments were made, or to which changes were made are discussed below. The discussion of the sections follows the order of the table of contents of the Final Rule for the purchase of Head Start facilities and a notation is made wherever the section designations have been changed or deleted in the Final Rule.

This provision is being changed to make it clear that Early Head Start grantees are eligible to apply for facility funding, that the regulation implements the authority in section 644 (f) and (g), and to add the appropriate statutory citations covering the Early Head Start program. Early Head Start grantees are included as eligible for purchase funding under the definition of “grantee” under the existing regulations.

The title and wording of this provision are being changed to make it clear that Early Head Start grantees may apply for funding to pay facility purchase costs for facilities purchased after December 31, 1986. This provision is also being changed to emphasize that applications are for the future use of funds for the continuing process of purchasing the facility rather than for approval of an earlier decision by the grantee to purchase the facility. The change is necessary to make the provision applicable to Early Head Start grantees which entered the program after 1994 and to clearly describe the activity for which funds are available. As with the current regulation, the amended regulation authorizes funds to pay facility purchase costs incurred after the responsible HHS official has approved the use of funds. The Head Start program wishes to emphasize that grant funds are available under this provision of the regulations for use in paying off existing purchase mortgages or new mortgages which are being sought to refinance the existing debt incurred to purchase the facility. Funds are not available for payment of a new mortgage on a facility when the grantee had previously completed the purchase of the facility. The changes to this provision are being made without opportunity for public comment as permitted by 5 U.S.C. 553(b), when such opportunity is unnecessary. In this case, public comment is unnecessary because the individual changes either do not alter the substance of the provision, or are required to ensure the application of section 644(f)(1), authorizing the use of funds for continuing purchases of facilities, to Early Head Start grantees, along with the other provisions of section 644(f) and (g).

We received one comment suggesting that a more precise definition of construction be established in this section. As defined in the NPRM, construction means, “new building and excludes alterations, renovations, additions, or work of any kind to an existing building.” The respondent noted that by this definition, projects which include attaching substantial additions to insignificant structures are classified as renovation projects. The respondent stated that these projects should more reasonably be defined as construction activities. The respondent also noted that projects which include the finishing of partly constructed buildings could reasonably be defined as construction projects rather than as renovation projects.

The Head Start Act at section 644(g)(2) authorizes the Secretary, once a determination has been made that suitable facilities are not otherwise available, to authorize the use of financial assistance for “construction of facilities that are not in existence on the date of that determination.” We believe that the proposed definition of “construction” as “new building” is consistent with the statute and sufficiently clear to allow a responsible HHS official charged with making a determination about the funding of a project to make a common sense determination about the appropriate classification of a proposed project as either construction or major renovation. We are hesitant to adopt a more detailed definition because any such definition may create more uncertainty than the proposed definition. Accordingly, we have decided not to modify the definition of “construction” in the final regulations.

The definition of Grantee is being revised to specifically state that the definition includes agencies receiving funding to conduct Early Head Start programs.

We received a comment about the distinctions provided in the proposed definitions between “incidental alteration and renovations” and “major renovations.” Incidental alterations are defined in the proposed Rule as alterations costing the lesser of $150,000 or 25 percent of total direct costs approved for a budget period. The respondent stated that from time to time the costs of incidental alterations can exceed this dollar limit but still not meet the conditions as defined for major renovations in this section, making it difficult to classify the activity. The respondent suggests that the definition be modified to state that renovations are considered incidental if they do not meet the definition of major renovations as defined in the proposal Rule.

By classifying incidental alterations and renovations we meant to differentiate these activities from major renovations so that grantees could move easily and with speed to improve the quality and safety of Head Start child care facilities. Further, our intention was to differentiate incidental renovations from major renovation activities which would ordinarily require greater technical consultation and would require more time and funding to accomplish.

We agree with the respondent that some incidental alteration and renovation projects could exceed the $150,000 limit presently established in the definition. The $150,000 limit on costs has been established in grants policy for approximately 10 years. During this time there has been a steady growth of Head Start enrollment, and a corresponding increase in the number and size of centers operated by grantees. We recognize that the costs for carrying out center improvements have increased. We are therefore amending the definition of “incidental alterations and renovations” to read “improvements to a facility which do not meet the definition of major renovation.” In order to help clarify the difference between incidental alteration and major renovations and to reflect the increase in the costs of incidental alteration and renovations we are amending the definition of “major renovation.” This definition is amended to read “Major renovations means a structural change to the foundation, roof, floor, or exterior or load-bearing walls of a facility, or extension of an existing facility to increase its floor area. Major renovation also means extensive alteration of an existing facility, such as to significantly change its function and purpose, even if such renovation does not include any structural change to the facility. Major renovation also includes a renovation of any kind which has a cost exceeding the lesser of $200,000, adjusted annually to reflect the percentage change in the Consumer Price Index for All Urban Consumers (issued by the Bureau of Labor Statistics) beginning one year after the effective date of the amendments to these regulations, or 25 percent of the total annual direct costs approved for the grantee by ACF for the budget period in which the application is made.”

A “suitable facility” as defined in the NPRM is one that “is owned by a grantee or available for lease or purchase, which is usable as a Head Start facility and is not more expensive to purchase, own or lease than other comparable facilities in the grantee's service area.” One respondent commented that the meaning of “suitable” could reasonably be conformed with what is later defined in the NPRM as a “useable” facility.

We agree with the respondent and are revising the definition of a “suitable facility” to mean “a facility which is large enough to meet the foreseeable needs of the Head Start program and which complies with local licensing and code requirements, the access requirements of the Americans with Disabilities Act (ADA), if applicable, and section 504 of the Rehabilitation Act of 1973.”

The definition of this term is being changed to make it consistent with the revised wording of section 1309.2.

This definition will be deleted from the Final Rule and the word “suitable” will be substituted.

This section describes how a grantee establishes eligibility for funding of the construction of Head Start facilities.

We are making a change in this paragraph to make it more consistent with the wording of the statute. The proposed Rule at section 1309.49 would have required that a grantee establish eligibility to construct a facility by demonstrating that no facility is available for purchase in the grantee's service area. We are amending paragraph (b) to read “There is a lack of suitable facilities (including public school facilities) in the grantee's service area which will inhibit the operation of the program, as demonstrated by a statement that neither the grantee's current facility nor any facility available for lease in the service area is suitable for use by a Head Start program. This statement must explain the factors considered, how it was determined that there is a lack of suitable facilities and be supported whenever possible by a written statement from a licensed real estate professional in the grantee's service area.”

This section describes the information that an applicant must provide when requesting funding for the purchase, construction and major renovation of facilities.

Paragraph (b) requires that applicants provide a certification from a licensed engineer or architect as to the cost and technical appropriateness of the proposed renovation. One respondent stated that this requirement is vague because it does not specify which costs should be considered. This respondent stated further that the section does not indicate the form in which certification should be submitted. The respondent also stated that a technical review by an architect or engineer of the proposed project is required later at section 1309.51 of the rule and this requirement should not be duplicated in this paragraph.

The respondent is correct in saying that section 1309.51 requires that applicants submit working drawings and specifications which have been reviewed by an architect or engineer as to the technical appropriateness of the proposed construction or renovation project. We agree that the requirement for a technical review should be deleted from this paragraph.

Our intention when including a requirement for a certification of the project cost by an architect or engineer was to ensure that applicants had a sound basis for requesting funds for all costs associated with a renovation project and that sufficient funding could be made available upon approval of the working drawings and specifications. We realize that these costs are estimates. It is sufficient for the applicant to have a written estimate of all costs associated with the project prepared by an architect or engineer. We are making a change to this paragraph to include a cost estimate for proposed construction projects as well. Paragraph (b) has been revised to read, “In the case of a proposed major renovation or construction project, the applicant must submit a written estimate of all costs associated with the project. An architect or engineer must prepare the written estimate.”

We have dropped the requirement in section 1309.10(d) that facilities for which funding is provided must be used principally for Head Start purposes, as it would apply to new purchases, construction and major renovations of facilities. Applying this requirement to such projects would frustrate the intent of Congress expressed in section 644(g) that Head Start facilities be collocated with other programs serving low-income families whenever possible. In the case of continuing purchases of facilities, the grantee will still be required to demonstrate that the facility will be used principally as a Head Start center or a direct support facility for a Head Start program, as required by section 644(f)(2)(D) of the Head Start Act. Whenever funds are provided to purchase, construct, or make major renovation to a facility to be used in part for Head Start purposes, the proportion of the cost of the facility project will be limited to its proportional benefit to the Head Start program.

We have decided to include in the final regulations at 45 CFR 1309.10(l) a requirement that a grantee applying for funding to make major renovations to a facility it does not own must include with its application the written permission from the owner of the building for the grantee to make the planned renovation and a copy of the lease or proposed lease on the facility. The requirement for written permission is necessary to ensure that the landlord has given permission for the grantee to make the proposed major renovations and to avoid any question of the landlord's rights having been violated by the grantee's performing the major renovation. It is necessary for the responsible HHS official to see the lease to ensure that it includes the provisions required by 45 CFR 1309.21(d)(4) and any other terms the official considers necessary. Under 45 CFR 1309.21(d), the lease on a facility to receive major renovations must be long enough to permit the Head Start program to receive the full value of the grant-supported improvements.

We are changing 45 CFR 1309.10(l) to address situations where grantees propose using grant funds to acquire a facility that is or will be sited on land not owned by the grantee. A grantee proposing to acquire a facility without also purchasing the land on which the facility is or will be situated must include in its application a copy of the existing or proposed land lease or other document ensuring the grantee's right to occupy the facility. The lease or other document, which protects the Federal interest in the facility, must ensure undisturbed use and possession of the facility by the grantee for the purpose of operating a Head Start program or other program designated by ACF. We are also adding language to 45 CFR 1309.10(l) to ensure that the term of the land lease or other similar interest in the underlying land, which is owned by a party other than the grantee and upon which the facility to be acquired or renovated is located, is long enough to allow the Head Start program to receive the full value of that improvement.

We have also included in § 1309.10(l) a requirement that a grantee seeking funding for acquisition or major renovation of a facility sited on land not owned by the grantee must establish that there is no feasible alternative to the proposed project. A feasible alternative may exist whenever there is an opportunity for the grantee to purchase or construct an appropriate facility on land available for purchase in the grantee's service area. (A grantee applying for major renovation funding for a leased facility will be providing information on facilities available for purchase in its service area under §§ 1309.4 and 1309.11.) Where such an alternative site exists, the responsible HHS official should have the grantee provide information on the cost of purchasing or constructing a facility at the alternative site as part of the cost comparison under § 1309.11. Where the cost of the alternative project is less than the proposed project and will result in the purchase or construction of a suitable facility appropriate to the needs of the grantee, the alternative project will be considered feasible.

The intent of the new wording is that the responsible HHS official shall not approve funding for acquisition of a facility which will be sited on property not owned by a grantee unless the land lease or other document ensures the Federal interest in the facility and the undisturbed use and possession of the facility by the grantee for ACF approved purposes. This goal can be accomplished, depending on the circumstances, by including appropriate terms in the lease or other document. The necessary terms will vary from one situation to another. The term of the lease or other arrangement should in most cases be for a period of years that is at least equal to the estimated useful life of the facility. The responsible HHS official should also consider whether it is necessary for the lease or other document to provide for the lessor's compensation of the grantee for any residual value of the facility at the time the grantee ceases to occupy the facility. Such a provision would be appropriate where the lease or other document provides that the grantee's occupancy would end before the term of the facility's projected useful life. In most cases, ACF should also have the right to intervene within a period of sixty days after default under the lease to have the grantee or some other organization cure the default and prevent termination of the lease. The Head Start program will be providing responsible HHS officials with additional guidance on the terms that should be considered for inclusion in the lease or other document in order to fully protect the Federal interest and the grantee's use and occupancy of the facility. It is also the intent of HHS to ensure that the purchase, construction, and major renovation of facilities sited on land not owned by the grantee only be undertaken when there is no feasible alternative available for providing a suitable facility for conduct of the program.

We have decided to change the wording of paragraph (m) of 45 CFR 1309.10 to indicate that all requests for funding to acquire or make major renovation to a facility must be accompanied by an assessment of the environmental impact of the proposed project. The current regulation makes this requirement applicable to certain facilities proposed for purchase. The change is necessary to ensure that all projects, which may result in significant environmental impacts, are identified in the application process. The responsible HHS official already has the authority to make requests for additional information about proposed facility purchases. The existing regulations at 45 CFR 1309.10(r) (and the amended regulations at 45 CFR 1309.10(q)) require the grantee applying for facility funding to provide “[s]uch additional information as the responsible HHS official may require.” This provision authorizes the official to request the grantee to provide any additional information on the proposed facility purchase including information regarding environmental impacts of the facility proposed for purchase. In most cases, we expect that the assessment requirement can be met through completion of a questionnaire on the project.

Paragraph (f) and (i) of § 1309.10 have been revised to refer to continuing purchases rather than previous purchases to make them consistent with the revised wording of § 1309.2.

We are adding wording to § 1309.11(a) to make it clear that the responsible HHS official has authority to require a grantee to provide additional cost information, such as when the grantee is proposing to acquire or make major renovations to a facility sited on land not owned by the grantee.

We have changed the wording in § 1309.11(c)(2) to require that the grantee compare the costs of the proposed construction project to the costs of purchasing a suitable alternate facility or owning, purchasing or leasing an alternate facility which can be made suitable for use through incidental alterations and renovations or major renovations. The change is being made to make the regulations consistent with the requirements of section 644(g)(1) regarding cost comparisons for construction projects.

We have also changed the wording in § 1309.11(c)(3). That provision will read in the final regulations “A grantee proposing to undertake a major renovation of a facility must compare the cost of the proposed renovation (including the cost of purchasing the facility to be renovated if the grantee is proposing to purchase the facility) to the cost of constructing a facility of comparable size. In place of the cost comparison required in the preceding sentence, a grantee proposing to make renovations to a leased facility must show that the monthly or annual occupancy costs for the term of the lease, including the cost of the renovation, is less than, or comparable to, the cost of purchasing or leasing any other facility in the grantee's service area which can be made suitable through major renovations, if such a facility is available.”

The new wording of § 1309.11(c)(3) does not require that Head Start grantees seeking funding to make major renovation to a leased facility compare the cost of constructing a facility of comparable size. We have decided to adopt this approach because it seems likely that a grantee for which construction is the cheaper alternative will apply for construction funding rather than for funding to make major renovations to a leased facility. However, a responsible HHS official will have the authority to require comparison with the costs of constructing an equivalent facility under 45 CFR 1309.10(q) when the official questions whether the proposed project is the lowest cost alternative for providing the Head Start program with a suitable facility. Section 1309.21(d)(2) is being revised to make it consistent with the revised wording of section 1309.2.

We are revising paragraph (d) of 45 CFR 1309.21 to protect the federal interest in facilities not owned by the grantee that will be undergoing major renovations paid for with Head Start funds and facilities acquired by grantees that are or will be sited on land not owned by the grantee, and to address the issue of when the Notice of Federal Interest must be filed under various circumstances. Our decision to include these provisions in the final regulations is based on the experience of the Head Start program in funding facility projects. The new wording in paragraph (d)(1) makes it clear that all facilities not owned by the grantee receiving a major renovation paid for with Head Start funds must be leased by the grantee. The lease must protect the right of the grantee, or some other organization designated by ACF in the event of the grantee's termination or withdrawal from the Head Start program, to occupy the facility for the term of the lease. The new wording of paragraph (d)(1) also imposes these requirements on projects involving the acquisition of a facility on land not owned by the grantee. We are also adding language to the same provision to ensure that the term of the land lease or other similar interest in the underlying land, which is owned by a party other than the grantee, and upon which the facility to be acquired or renovated is located, is long enough to allow the Head Start program to receive the full value of the grant supported improvements.

The final wording of paragraph (d)(2) now provides new requirements concerning when the Notice of Federal Interest is filed. The changes are being made to cover the different circumstances under which a facility or land on which a facility is to be constructed is purchased with grants funds. The revised wording of paragraph (d)(2) also provides that in the case of a leased facility undergoing major renovations, the Notice of Federal Interest shall be a copy of the executed lease and all amendments or an affidavit describing the terms of the lease. The revised paragraph (d)(2) also establishes new requirements for facilities now sited or to be constructed on land not owned by a grantee. In such cases, the Notice of Federal Interest shall be the land lease or other document protecting the Federal interest and ensuring the right of the grantee to have undisturbed use and possession of the facility. New wording in paragraph (d)(4) establishes requirements for the contents of leases, affidavits, and other documents serving as the Notice of Federal Interest for leased facilities undergoing major renovations and facilities sited on property not owned by the grantee.

In addition to including the provision on required terms of the lease in the final regulations, we will be issuing guidance to responsible HHS officials on additional terms which are desirable to include in leases of facilities receiving major renovations and facilities sited on land not owned by the grantee.

This section describes actions, which may be taken by ACF and lenders in the event a grantee defaults on the mortgage, or is terminated or withdraws from the Head Start program.

Some states use an instrument called a trust deed, which is a form of mortgage. A lender commented that the words “trust deeds” should be included along with the words “mortgage” and “chattel mortgages” in this section to make it clear that this is an acceptable instrument in states where it is used.

In using the word “mortgage” ACF intends to mean also “trust deed” if that term is recognized by the state in question as a substitute for the word “mortgage.” The wording of this provision is also being changed to encompass 45 CFR 1309.2, Approval of the Use of Head Start Funds to Continue Purchase of Facilities.

We are making a change in each of these provisions to make their wording consistent with the changes in the wording of 45 CFR 1309.2.

This provision is being amended by the final regulation to establish that a responsible HHS official may also direct the grantee to obtain an independent analysis of its cost comparison for a construction or major renovation project and that the cost of such analysis will be an allowable expense. The responsible HHS official will have the authority to require an independent analysis under the amended regulations. The extension of coverage of this provision to construction and major renovation projects makes explicit the responsible HHS official's authority under the amended § 1309.10(q), to require such information as part of the application process for construction and major renovation projects.

These sections in the proposed regulations contained conditions grantees must meet in order to be eligible to receive funding to construct or conduct major renovations of a facility.

One respondent commented that the rules should be better organized. The respondent suggested that since an applicant must first establish that it is eligible to receive funding for construction or renovation of a facility, the criteria to establish eligibility for funding of these activities would logically precede all other provision of the Rule.

We agree with this suggestion and § 1309.49 is re-designated as § 1309.4 and § 1309.50 is re-designated as § 1309.5.

This paragraph states that when a grantee requests funds to conduct major renovations of a leased facility the lease must provide a term of occupancy of at least five years.

We received two comments in which the respondents stated that a minimum lease term of five years was not sufficient to protect the Federal interest in the case of high cost major renovations and that this provision should be more stringent. We agree that, depending on the cost of the renovation, it would be a prudent business practice to require that grantees negotiate lease terms in excess of five years. As provided in the policies of the Department of Health and Human Services, the responsible HHS official will only agree to expenditure of Head Start funds for major renovation of a leased facility when the lease is long enough for the full value of the grant-supported improvements to benefit the grant activity. We have shifted the statement on the requirement for the length of the lease to § 1309.21(d)(1).

This paragraph requires that grantees submit final working drawings and specifications to the responsible HHS official for approval before advertising for bids and contracting for construction or major renovation work.

One respondent commented that requiring HHS approval of final drawings would add a delay in the construction or renovation process. The respondent added that since technical drawings had to be approved by local officials it should not be necessary for HHS to also approve final drawings. The respondent suggested that the Rule be written to state that HHS should require a written statement by an architect or engineer that final drawings meet all Head Start and local licensing requirements.

By reserving the right to approve final construction and renovation working drawings, HHS is reserving the right to determine that the final plans remain within the scope and costs of the project for which funding has been or will be made available. In order to make our intention clear on this point we have revised the wording of § 1309.51 to read:

(a) The grantee may not advertise for bids or award a contract for any part of the construction or major renovation funded by grant funds until the grantee has submitted to the responsible HHS official final working drawings and written specifications for the project, a written certification by a licensed engineer or architect as to the technical appropriateness of the proposed construction or renovation and the conformity of the project as shown in the final working drawings and specifications with Head Start programmatic requirements, and a written estimate of the costs of the project by a licensed architect or engineer.

(b) The responsible HHS official may authorize the grantee to advertise bids or award a contract after receiving the information provided under paragraph (a) and determining that sufficient funding is, or will be, available to cover the costs of the project as estimated by the architect or engineer, and that the scope of the project as described in the drawings and specifications is appropriate to the needs of the grantee.

The revised wording of the regulation clarifies what the grantee must provide before the responsible HHS official can authorize the issuance of bids or the signing of a contract. Paragraph (b) clarifies the role of the responsible HHS official as being concerned with whether the scope of the project is appropriate to the grantee's needs and whether Head Start funding is available to meet the estimated costs of the project.

This paragraph requires that the HHS official approve contracts for construction and renovation of acquired facilities.

In reviewing this requirement a respondent stated that this provision did not require the approval of contracts for all construction and major renovation including those in leased facilities or facilities not owned or acquired by the grantee.

It was our intention to require written approval by the HHS official for any use of Head Start funds for renovation and construction activities whether or not the Head Start grantee owns the property to be improved. We are making a change in this provision and paragraph (b) is being amended to read “All contracts for construction or major renovation of a facility to be paid for in whole or in part with Head Start funds require the prior, written approval of the responsible HHS official and shall be on a lump-sum fixed-price basis.”

This paragraph requires grantees to obtain written approval for unsolicited modifications that would materially alter the costs of a project or increase the amount of grant funds needed to complete a project.

We received one comment from a respondent who stated that this paragraph was not clear. The respondent was concerned that the Rule implies that routine “change orders” which are normally encountered when conducting renovation and construction projects would need to be approved which would cause delays in the implementation of projects.

Our intention in this provision is to ensure that funds would be available to complete projects and that the responsible HHS officials would be notified of significant changes which could result in project cost increases. It is not our intention to require grantees to submit routine change orders to the responsible HHS official for prior approval. In order to make this intention clear we are rewording section (c) to state that “Prior written approval of the responsible HHS official is required for modifications that would change the scope or objective of the project or would materially alter the costs of the project by increasing the amount of grant funds needed to complete the project.”

This section conforms with the statute in requiring that all laborers and mechanics employed by contractors and subcontractors in the construction or renovation of Head Start facilities be paid wages as determined by the Secretary of Labor in accordance with 40 U.S.C. 276a ( et seq. ), commonly referred to as the Davis-Bacon Act.

We received two comments from two respondents suggesting that wages paid for incidental alterations and renovations should be excluded from the requirements of the Davis-Bacon Act.

We cannot adopt this recommendation because the statute provides no authority for exempting from the Davis-Bacon Act any class of construction or renovation activities.

Executive Order 12866 requires that regulations be drafted to ensure that they are consistent with the priorities and principles set forth in the Executive Order. The Department has determined that this Rule is consistent with these priorities and principles. This Rule implements the statutory authority for Head Start grantees to apply to use grant funds to construct or make major renovations to facilities.

This Rule was determined to be significant and was reviewed by the Office of Management and Budget.

Executive Order 13132 on Federalism applies to policies that have federalism implications, defined as “regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on the States, on the relationship between the national government and the States, on the distribution of power and responsibilities among the various levels of government.” This rule does not have federalism implications as defined in the Executive Order.

As required by section 654 of the Treasury and General Government Appropriations Act of 1999, we have assessed the impact of this final Rule on family well being. By allowing Head Start grantees to purchase, renovate or construct facilities our assessment is that this Rule will have a positive impact on child and family well being by improving the quality and availability of Head Start child care facilities in low income communities.

Pursuant to regulations of the Council on Environmental Quality (40 CFR 1500-1508), ACF published an environmental assessment of these regulations, and placed a Notice in the Federal Register on November 9, 2000 (65 FR 67377) which invited public comment on the assessment. ACF received no comments and published a Preliminary Finding of No Significant Impact on January 25, 2001 (66 FR 7768). After receiving no comments on this preliminary finding, ACF published a Final Finding of No Significant Impact on March 26, 2001 (66 FR 16478). ACF found that these rules will not have a significant impact on the quality of the human environment and that the preparation of an Environmental Impact Statement would not be necessary.

The Regulatory Flexibility Act (5 U.S.C. Chapter 6) requires the Federal government to anticipate and reduce the impact of rules and paperwork requirements on small businesses. For each rule with a “significant economic impact on a substantial number of small entities” an analysis must be prepared describing the rule's impact on small entities. Small entities are defined by the Act to include small businesses, small non-profit organizations and small governmental entities. While these regulations would affect small entities, they would not affect a substantial number. Furthermore, the cost of the application process and other activities undertaken as a result of these regulations will not have a significant economic impact because the Head Start program covers 80 percent of the allowable costs of grantees under the program. The remaining costs associated with compliance are part of the share of cost grantees agree to meet from their own resources when they enter the Head Start program. For these reasons, the Secretary certifies that this rule will not have a significant impact on substantial numbers of small entities.

The Unfunded Mandates Reform Act (Pub. L. 104-4) requires agencies to prepare an assessment of anticipated costs and benefits before proposing any rule that may result in an annual expenditure by State, local, or Tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation). This rule does not impose any mandates on State, local, or tribal governments, or the private sector that will result in an annual expenditure of $100,000,000 or more.

This rule is not a major rule as defined in 5 U.S.C., Chapter 8.

Under the Paperwork Reduction Act of 1995 (Pub. L. 104-13), all Departments are required to submit to the Office of Management and Budget (OMB) for review and approval any reporting or record-keeping requirement inherent in a proposed or final rule. This Rule contains information collection and record-keeping requirements in section 1309.10 (Application), 1309.4 as re-designated (Eligibility—construction), and 1309.5 as re-designated, (Eligibility—major renovation) which will be submitted to OMB for review and approval in accordance with the Paperwork Reduction Act.

The respondents to the information collection requirements in the Rule are Head Start grantees. Forty percent of these grantees include local non-profit or for profit agencies, thirty-three percent are Community Action Agencies and sixteen percent are school districts. The balance represents Tribes and municipal entities. The Department needs to require this collection of information in order to assure that grantees that apply for approval to construct or make major renovations to a facility with Head Start funds have followed certain necessary legal and administrative procedures. Also, the requirement for this collection of information is necessary for monitoring purposes.

The grantees who will be affected by these requirements will be those who request approval and are approved to construct or make major renovations to a facility for the purpose of operating a Head Start program. More than half of grantee agencies (sixty-one percent) enroll less than 300 children and are relatively small entities. Less than twenty-five percent of all programs enroll more than 500 children and would be expected to engage in relatively large scale facility development projects if they qualified for funding of such projects. In total, the estimated annual number of grantees that will be affected is 200, based on the average number of grantees who requested approval from the Department since the statutory authority became effective.

The actual submittal of an application under section 1309.10 from a grantee to construct or make a major renovation to a facility is a one-time activity, which is preceded by a number of preparatory activities. We estimate the time it will take to prepare the application in accordance with the requirements of this Rule is 40 hours per grantee, calculated over a period of time. On an annual basis, the total estimate for the preparation of applications by grantees is 8,000 hours. Based upon the Head Start program manager's average annual salary, we estimate the cost of the preparation of an application to be approximately $960.00. Eighty percent of these costs are borne directly through the provision of federal funds. In addition, all other costs related to the development of projects affected by this Rule are provided directly by grant funds or through required non-federal match as provided for by this Rule. No impacts are expected on either employees or clients of the Head Start program or its operation.

The Administration for Children and Families (ACF) will consider comments by the public on these proposed collections of information in:

• Evaluating whether the proposed collections are necessary for proper performance of the functions of ACF, including whether the information will have practical utility;

• Evaluating the accuracy of ACF's estimate of the burden of the proposed collections of information;

• Enhancing the quality, usefulness, and clarity of the information to be collected; and

• Minimizing the burden of the collection of information on those who are to respond.

OMB is required to make a decision concerning the collection of information contained in this Final Rule between 30 and 60 days after publication of this document in the Federal Register . Therefore, a comment is best assured of having all its full effect if OMB receives it within 30 days of publication. Written comments to OMB for the proposed information collection should be sent to: Office of Management and Budget, Paperwork Reduction Project, 725 17th Street, NW., Washington, DC 20503, Attn: Brenda Aguilar.

Antarctic fisheries are managed under the authority of the Antarctic Marine Living Resources Convention Act of 1984 (Act) codified at 16 U.S.C. 2431 et seq. NMFS implements conservation measures developed by CCAMLR and adopted by the United States, through regulations at 50 CFR part 300, subparts A and G. Background information about the need for revisions to the Antarctic fisheries regulations was provided in the preamble to the proposed rule (67 FR 64853, October 22, 2002) and is not repeated here.

Fees will be charged for reviewing and processing preapproval DCDs. A system of calculating fees and billing for fees was discussed in the proposed rule. NMFS will use a much simpler procedure already in use by an unrelated permitting system by specifying the application fee in the instructions accompanying each application form for DCD preapproval. The methodology for calculating the fee is in accordance with procedures specified in the NOAA Finance Handbook for determining administrative costs of special products and services. “Instructions for Completing the NOAA Product/Service Cost Computation Form” from Chapter 9, Section 10 of the NOAA Finance Handbook, may be obtained by contacting NMFS (see ADDRESSES ). This action will simplify the DCD application process for applicants and DCD program personnel without affecting the amount of the fee.

NMFS received written comments during the 30-day comment period on the proposed rule. When drafting the final regulations and the final EA and RIR/FRFA, NMFS considered all comments received. Comments were received on the proposed rule from several importers of toothfish or their representatives and several environmental organizations. All commenters supported the need for the proposed regulations in general. Some had specific concerns.

Comment 1: One commenter said that the proposed change regarding registered agents was unnecessary because any foreign-based importer of record must, under Customs Service regulations, appoint a registered agent in the United States authorized to accept service of process.

Response: NMFS disagrees that requiring a registered agent is unnecessary. The registered agent required in Customs Service regulations is not necessarily authorized to facilitate the implementation of NMFS regulations. However, it would be acceptable to NMFS for any foreign-based importer of record to appoint the same registered agent to NMFS and to the Customs Service.

Comment 2: One commenter strongly supported the proposal to prohibit the importation of Dissostichus ssp. identified as being harvested from Food and Agriculture Organization (FAO) Statistical Areas 51 and 57. Other commenters opposed the proposal, believing that NMFS lacks sufficient evidence that these areas cannot sustain a healthy fishery. One of these latter commenters argued that: the proposed action is based on speculation and inconsistent data; that action should not be taken until a stock assessment is completed; that NMFS does not have information that the DCDs from these areas are fraudulent; and that NMFS and CCAMLR should examine other alternatives.

Response: As the preamble to the proposed rule states, in October 2001, the Chair of the Scientific Committee advised CCAMLR that the catches reported in Area 51 were not credible. This same advice was ardently concurred in by the Scientific Committee in October 2002. In 2002, CCAMLR noted the following advice from the Scientific Committee:

-The catches attributed by catch documentation scheme (CDS) reports outside the Convention Area in Areas 51 and 57 were unlikely to have come from those areas (as explained in the preamble to the proposed rule) and most likely came from within the Indian Ocean sector of the Convention Area;

-Illegal, unregulated, and unreported (IUU) catches within the Indian Ocean sector of the Convention Area were most likely to be underestimated;

-The current levels of IUU fishing reported from Areas 51 and 57 would have seriously depleted whatever stocks might have been present in those areas;

-Current levels of IUU fishing have depleted stocks in Division 58.4.4, and Subareas 58.6 and 58.7, while the catch rates in Division 58.5.1 have declined substantially.

CCAMLR noted with great concern that the information presented by the Scientific Committee indicated continued high levels of IUU fishing in the Convention Area. The majority of Members of CCAMLR agreed that catches reported from Areas 51 and 57 were not credible. They also expressed concern that the information reported in catch documents did not match available knowledge of toothfish distribution and potential biomass for waters in these two adjacent areas, outside the Convention Area.

After extensive discussion at CCAMLR XXI concerning the use of VMS to confirm areas of harvest for vessels fishing outside the Convention Area and specifically on the high seas, it was concluded that most flag states whose vessels had reported large catches from high seas areas had not, in fact, implemented the required VMS in accordance with the applicable CCAMLR conservation measure. Although some states reported compliance with this requirement, it came to light during the discussions that there were serious flaws in the types of systems being used including, but not limited to, the use of manual systems that could be easily manipulated, systems that could simply be turned on and off at will, systems not inspected at port for proper operation, and even the complete absence of any operational VMS on some vessels. Therefore, verification of catch dates and locations of harvest on the high seas by landing or importing states via VMS reports is not a viable option. The view of the United States, in light of these shortcomings and without the reliability of verification procedures, is that there is no alternative to the implementation of a ban on all imports whose catch is reported as having been harvested from FAO Areas 51 and 57.

CCAMLR requested all Members fishing for toothfish on the high seas outside the Convention Area to again submit verifiable documentation next year on VMS and other catch verification procedures. In particular, the reports should include verification procedures, specifications of the VMS equipment installed on board each fishing vessel, and details of software used to monitor the position and movement of vessels. Australia tabled a proposal for a centralized VMS, or a dual reporting VMS system that would provide CCAMLR with real-time VMS information on all fishing vessels. Although most Members supported the idea that CCAMLR should receive VMS data, some took the view that this information should be provided to CCAMLR from the fishing monitoring center of the vessel's flag state. The United States, along with Australia, viewed this support as progress but believes that it does not provide the level of integrity to the VMS data that would give importing states a well-documented instrument to supply solid verification of catch.

The combination of the lack of confidence that catches are being reported accurately from vessels claiming to fish on the high seas, specifically FAO Areas 51 and 57, and the failure of CCAMLR Members to either adopt a centralized VMS system or to fully comply with the current VMS requirements convinces NMFS that a ban on the importation of toothfish originating in Areas 51 or 57 is the only solution.

Comment 3: One commenter strongly supported the proposal to require VMS transponders on all U.S. fishing vessels authorized to fish for AMLRs.

Response: NMFS agrees.

Comment 4: One commenter supported the proposal to prohibit the importation of toothfish harvested in violation of CCAMLR's conservation measures even if accompanied by a SVDCD.

Response: NMFS agrees.

Comment 5: One commenter did not want seized AMLRs to be allowed to re-enter trade, but also did not want them destroyed.

Response: NMFS has not resolved all issues associated with the disposition of AMLRs denied entry and has decided to continue to reserve § 300.116(d), “Disposition of resources denied entry” as a place-holder for future regulations governing this issue.

Comment 6: One commenter supports requiring preapproval as proposed for § 300.113.

Response: NMFS agrees.

Section 300.107(c)(1)(iii) was clarified to say that fish taken from either Statistical Area 51 or Statistical Area 57 would not be issued a preapproval.

Section 300.107(c)(7) and the reference to it in § 300.107(c)(1)(ii) have been removed because they created a 60-day exception to a requirement for a DCD which expired in 2000.

The paragraphs in § 300.113 have been redesignated to include a new paragraph (c) regarding the simplified means to be used for collecting fees for DCDs, and to reflect that the final two paragraphs under § 300.113 (i.e., (j) and (k)) are not subsets of the “Exception” paragraph as set forth in the proposed rule.

Section 300.113(a) was revised to make it clear that dealers intending to import or re-export AMLR must obtain an AMLR dealer permit and that preapproval is required for each shipment of Dissostichus species.

Provisions governing changes to applications under § 300.113(g)(1) have been modified to make the extension period for applications discretionary with NMFS. This modification has been made to give NMFS the flexibility to avoid frivolous extensions.

Section 300.113(i)(2) was modified to make it easier for a foreign-based importer of record to identify its resident agent to NMFS.

Section 300.118 has been eliminated to reduce the complexity of collecting fees for DCDs.

This final rule is published under the authority of the Antarctic Marine Living Resources Convention Act of 1984, codified at 16 U.S.C. 2431 et seq. This final rule has been determined to be not significant for purposes of Executive Order 12866.

Pursuant to the Regulatory Flexibility Act (RFA), NMFS prepared an “Initial Regulatory Flexibility Analysis for the Proposed Rule to Institute Various Measures Pertaining to United States Obligations Regarding Antarctica and Antarctic Living Marine Resources, Including Implementation of Preapproval Procedure for Dissostichus spp. Catch Documentation Scheme.” No comments from the public were received on this document. That analysis has been finalized and incorporated with the Environmental Assessment and Regulatory Impact Review as the EA and RIR/FRFA. It describes the effects of the various measures in this final rule, as well as alternatives where appropriate, as follows:

1. The measure to lengthen the duration of the permit required to enter a CEMP site from 1 year to up to 5 years would apply to parties currently holding, or who obtain in the future, a CEMP permit. To date, the only entity to hold a CEMP permit has been the NMFS Antarctic Research Group, which is not a small entity. The effect of this action would be to ease a restriction by allowing permits to last for a longer period of time. As such, there is no significant economic impact that NMFS must consider minimizing.

2. The measure to define the CCAMLR fishing season as December 1 —November 30 would apply to U.S. vessels that fish for AMLR. There are currently three U.S. vessels permitted to fish for AMLR (1 for crab and 2 for krill) all of which NMFS believes to be small entities. The establishment of the fishing season is intended to improve administration of CCAMLR's annual conservation measures. It would not affect the amount of quota available for fishermen, nor would it affect when fishing could occur. Therefore, the measure would not result in any significant economic impacts that NMFS must consider minimizing. It is an administrative change that would not be expected to affect the practices of the fishermen.

3. The measure to require the use of an automated satellite-linked VMS for all U.S. vessels harvesting AMLR in the area of the Convention would apply to the three vessels permitted to participate in such fisheries (the 1 crab vessel and the 2 krill vessels), all of which NMFS believes to be small entities. Currently, the vessel permitted for crab does not participate in the fisheries. NMFS estimates the cost of purchasing and installing the VMS units at about $3,250 per unit. The cost of operating the unit while in Convention waters is estimated to be no more than $1,000 per year.

NMFS considered the alternative of excluding vessels fishing exclusively for krill from the requirement. CCAMLR did not explicitly require Parties to implement a VMS program in the krill fishery. However, for reasons articulated in the preamble to the proposed rule, NMFS believes that applying the VMS requirement to the krill fishery will further its compliance with its obligations with respect to the Antarctic and AMLR. Therefore, this alternative is not the preferred alternative.

4. The measure to require foreign entities to designate and maintain a registered agent within the United States would not apply to any “small entities” as defined pursuant to the RFA. This measure would not apply to any small government jurisdictions or small organizations. While it would apply to businesses, some of which may be considered small, the Small Business Administration has defined “small business concern” to apply only to businesses operating primarily within the United States (13 CFR 121.105). NMFS is not aware of an alternative approach that would accomplish its objectives with regard to this provision.

5. The measure to define SVDCD currently has no regulatory requirements attached to it. It is informational only and as such has no effect on any small entities. No alternatives have been identified.

6. The measure to institute a preapproval system for U.S. receivers and importers of Patagonian toothfish and Antarctic toothfish would apply to dealers, importers, and, as applicable, re-exporters. It is estimated that about 60 dealers/importers are involved in the permitted trade and that 80 firms would apply for dealer permits and preapproval. The estimated costs to importers of toothfish are approximately $4,134 per firm per year, and $330,750 industry-wide per year. These costs include the burden-hour costs of submitting an annual permit, per-shipment preapproval permits, catch documentation, and NMFS's fees. It is estimated that there are about 50 re-exporters. The estimated costs to re-exporters of toothfish are about $11 per firm per year and $550 industry-wide per year. These costs include the burden hours associated with annual permit applications and catch documentation requirements, and NMFS's fees.

U.S. imports of toothfish in 2001 had an estimated value of $97 million. Compliance costs (industry and agency) would likely not exceed $600,000 per year during the next 3 years. Currently, no U.S. fishing entity participates in the harvesting of toothfish. It is not possible to determine the number of firms that would qualify as small entities. The final rule would impose annual burden costs of $330,750 and $550 on importing and re-exporting firms, respectively.

NMFS considered two alternatives to the final preapproval system: maintaining the status quo, and implementing a total ban on imports of toothfish. Maintaining the current system may not have a short-term economic or social impact on importers or other dealers of toothfish in trade networks, but could have harmful long-term economic implications if further steps are not taken to discourage and prevent IUU fishing of toothfish.

Overfishing, which eventually leads to reduced supply, and the associated price increases will, in all likelihood, dampen this trade. Price increases would likely result in some substitution by consumers. Toothfish products may also be diverted to alternate markets in East Asia where consumers are willing to pay higher prices for species deemed to be luxury items. As a consequence, toothfish could become increasingly rare in the U.S. marketplace.

Similarly, the “status quo” alternative would have little short-term economic or social impacts on the U.S. consumer, but, in the long-term, would jeopardize the availability of toothfish to consumers at prices they are willing to pay or, in the extreme, at any price.

Alternatively, the total ban measure would address concerns over the overharvesting of toothfish by denying the U.S. market (estimated at 15-20 percent of the world market) to IUU harvested toothfish. (Note: in this document, non-IUU harvested toothfish means toothfish harvested in the CCAMLR Convention Area in conformity with CCAMLR rules, toothfish harvested in high seas areas outside of the CCAMLR Convention Area, or toothfish harvested in areas of national jurisdiction in conformity with the rules applicable in those national jurisdictions. Harvesting in high seas areas where no regional fishery management organization's rules apply is often unreported and unregulated, and thus may pose an obstacle to achieving a sustainable fishery. In the case of such toothfish fisheries, this assumption is almost certainly correct.) However, it would also prohibit importation of toothfish legally harvested within the CCAMLR Convention Area or in exclusive economic zones and impose an unreasonable and unfair burden on U.S. importers and consumers. Given the U.S. portion of the global market, there is a very real possibility that the market would simply shift to other locations, thereby contributing nothing toward bringing IUU fishing for toothfish under control. This alternative also could be incompatible with U.S. obligations under international trade law and pending obligations under the CCAMLR Convention. As a result, this alternative is not preferred.

7. The measure to prohibit imports of toothfish identified as being harvested in FAO Areas 51 or 57 would apply to the U.S. dealers and importers described above (up to 60 of unknown size). The economic impacts of this prohibition are difficult to quantify. Because the rule is intended to address fraudulent trade in toothfish, the availability of toothfish on the world market could be reduced. This could result in the price of toothfish rising. However, to the extent that the permitted entities experience an increase in the cost of purchasing toothfish, they would most likely pass that cost on to consumers. On the other hand, it is likely that illegally harvested toothfish can be harvested and marketed more cheaply than toothfish harvested pursuant to the applicable CCAMLR conservation rules. To the extent that this rule would remove the market for illegally harvested toothfish, the rule might make it easier for dealers in legitimately harvested toothfish to make a profit (in that they would no longer have to compete with unregulated fishermen).

As an alternative to the ban on imports identified as having been harvested in Areas 51 or 57, NMFS considered allowing importers to provide independent VMS data to support claims of catches from these two areas. For the reasons explained in the preamble to the proposed rule, current problems with reliability and lack of international protocol, NMFS believes that this alternative is impracticable.

The reporting, recordkeeping, and compliance requirements associated with this final rule are described in the Paperwork Reduction Act(PRA) discussion in this preamble, which follows below. In summary, this final rule modifies existing reporting requirements pertaining to the import of toothfish. The new burdens associated with these requirements would apply to the approximately 60 dealers who import. In addition, the requirement to install and operate VMS units would apply to the 3 U.S. vessels permitted to participate in the AMLR fisheries for crab/krill. The associated burden is estimated as no more than $1,000 per year per vessel.

NMFS is not aware of any other Federal rules that would duplicate, overlap with, or conflict with the final rule.

This final rule contains collection-of-information requirements subject to the Paperwork Reduction Act (PRA) and which have been approved by OMB under control number 0648-0194. The requirements and their estimated response times are: 3 minutes for a DCD, 60 minutes for a CCAMLR Ecosystem Monitoring Program permit, 30 minutes for a CCAMLR Ecosystem Monitoring Program report, 15 minutes for a dealer permit application, 4 hours to install a VMS unit, 2 hours for annual maintenance of a VMS unit, 0.033 seconds every 4 hours for an automated position report from a VMS, and 15 minutes for a preapproval application.

The response estimates above include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS, Office of Sustainable Fisheries, and OMB (see ADDRESSES ).

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.

The effective date for revisions to §§ 300.107 and 300.113 is 45 days instead of 30 days for the remaining sections in order to accommodate toothfish shipments in transit.

Fisheries, Fishing, Fishing vessels, Foreign relations, Reporting and recordkeeping requirements, Statistics, Treaties.