This regulation is issued under authority of section 15 of the PACA (7 U.S.C. 499o).

The Perishable Agricultural Commodities Act (PACA or Act) establishes a code of fair trade practices covering the marketing of fresh and frozen fruits and vegetables in interstate and foreign commerce. The PACA protects growers, shippers, distributors, and retailers dealing in those commodities by prohibiting unfair and fraudulent trade practices. In this way, the law fosters an efficient nationwide distribution system for fresh and frozen fruits and vegetables, benefiting the whole marketing chain from farmer to consumer. USDA's Agricultural Marketing Service (AMS) administers and enforces the PACA.

The PACA also imposes a statutory trust for the benefit of unpaid sellers or suppliers on all perishable agricultural commodities received by a commission merchant, dealer, or broker and all inventories of food or other products derived from the sale of such commodities or products. Sellers who preserve their trust rights are entitled to payment ahead of other creditors, from trust assets, of money owed on past due accounts.

In January 2000, a large food service distributor in the United States with annual net sales of approximately $8.9 million filed for Chapter 11 bankruptcy protection. The company, which listed over $30 million in produce debt, settled all PACA trust claims except five that involved over $11 million in coated and battered potato products. The firm contended that the coated and battered potatoes were not covered under the PACA trust provisions [7 U.S.C. 499e(c)]. As a result of the disputed bankruptcy claims, the Frozen Potato Products Institute (FPPI), a national trade association whose members are frozen potato processors accounting for 95 percent of all frozen potato products in the United States, in June 2000, asked AMS for a written advisory opinion to clarify whether or not coated or battered potato products are covered under the PACA.

The majority of FPPI's members coat or batter their potato products to preserve their color and crispness while under heat lamps after cooking. The operation involves dipping potato strips into a mixture of water and natural vegetable starch ( e.g. , potato or rice). Subsequently, a crisping agent such as dextrin and/or a chemical leavening agent are added to the product. The product is then air blown to remove all but a thin layer of coating, oil-blanched, and then finally frozen.

Coated or battered products are in great demand by fast food restaurants and consumers because the operation preserves the color and crispness of potatoes held under heat lamps, a common practice in fast food restaurants, although it does not alter the taste or texture of the product. Frozen potato processors have seen dramatic growth in the market for coated potatoes since the technology was first introduced in the early 1990's, and FPPI states that it expects that trend to continue. The food service distributor that filed for bankruptcy protection supplied approximately 36,000 restaurants throughout the United States.

According to FPPI, 8.2 billion pounds of frozen potato products were produced in the United States from April 1999 to April 2000. Out of that total, approximately 26 percent were coated or battered, accounting for 2.1 billion pounds of potato products with a market value exceeding $800 million.

In its response to FPPI, dated August 16, 2000, AMS concluded that coating or battering does not alter the essential character of the potato products because the operation leaves them virtually indistinguishable in appearance and texture from those that have not been coated or battered. The operation, AMS stated, is directly analogous to those described in 7 CFR 46.2(u) that may be performed on a perishable agricultural commodity without changing the commodity into a food of a different kind or character. In addition, the use of starches in the operation likely has less of an impact on the texture or essential character of the potato than other processes already expressly accepted in 7 CFR 46.2(u), such as chopping, oil blanching, and adding sugar or other sweetening agents.

Although the PACA regulations previously did not specify that coated and battered perishable agricultural commodities were covered under the PACA, it has always been AMS' policy to recognize that the PACA covered such commodities since the coating or battering operation had no impact on the texture or essential character of the end product. The regulatory amendment herein codifies USDA's policy by amending the current PACA regulations' definition of “fresh fruits and fresh vegetables” [7 CFR 42(u)] to expressly extend PACA coverage to perishable agricultural commodities that have been coated or battered.

A proposed rule to amend the PACA regulations was published in the Federal Register on December 16, 2002 (67 FR 77002). The proposal sought to amend Title 7, part 46, to expressly extend PACA coverage to perishable agricultural commodities that have been coated or battered. Before the comment period ended on January 15, 2003, we received timely comments from Curt Maberry of Curt Maberry Farm, Inc., Lynden, Washington; and Frozen Potato Products Institute (FPPI), McLean, Virginia.

Mr. Maberry and FPPI strongly support AMS' proposal to extend the coverage of the PACA to include fresh and frozen fruits and vegetables that are coated or battered.

In his favorable comment, Mr. Maberry stated that he unequivocally recommends expanding the coverage of the PACA given that markets are ever-evolving, and AMS' proposal to allow fresh and frozen fruits to be coated or battered and still remain covered under the PACA is the correct and proper thing to do. Mr. Maberry applauded AMS for progressively taking care of the farmer.

FPPI fully supports the proposed changes, which grants the request made by FPPI in its petition seeking precisely that AMS codify its existing agency policy that the coating or battering of fruits and vegetables are not processes that are considered to change a perishable agricultural commodity into a food of a different kind or character. In its comment, FPPI requested that AMS include in the preamble to the final rule a statement that it is amending the list of processes in the regulations to codify AMS' historical opinion that coated or battered frozen potato products are perishable agricultural commodities.

AMS received no comments opposing the proposed regulation, and therefore is making no changes to the final rule.

This final rule, issued under the Perishable Agricultural Commodities Act (7 U.S.C. 499 et seq. ), has been determined to be not significant for the purposes of Executive Order 12866, and therefore, has not been reviewed by the Office of Management and Budget (OMB).

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform, and is not intended to have retroactive effect. This final rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), AMS has considered the economic impact of this final rule on small entities. The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Small agricultural service firms have been defined by the Small Business Administration (SBA) (13 CFR 121.601) as those whose annual receipts are less than $5,000,000. There are approximately 15,700 firms licensed under the PACA, many of which could be classified as small entities.

AMS recognizes that frozen potato products represent the largest single frozen commodity in the United States. PACA coverage of such commodities will affect countless growers, shippers, processors, and distributors who deal in the commodities, most of which are small businesses. To exclude over 26 percent of frozen potato products from coverage of the PACA, however, is inconsistent with the intent of Congress in enacting the PACA to protect producers and dealers of fresh and frozen fruits and vegetables.

This final rule is being issued in response to the frozen food industry's request that AMS codify its opinion that the coating or battering of fruits and vegetables is an operation that does not change a perishable agricultural commodity into a food of a different kind or character. Producers and distributors of coated and battered produce will benefit since they will have the same rights as those afforded other processors and suppliers whose products may be indistinguishable in appearance or texture, but not coated or battered. AMS believes that this final rule will help reduce litigation time and expenses for small produce businesses that seek to enforce their trust rights in federal district courts.

Given the preceding discussion, AMS has determined that the provisions of this final rule will not have a significant economic impact on a substantial number of small entities.

In compliance with Office of Management and Budget (OMB) regulations (5 CFR part 1320) which implement the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the information collection and recordkeeping requirements that are covered by this final rule were approved under OMB number 0581-0031 on September 30, 2001, and expire on September 30, 2004.

This rule is issued under Marketing Agreement No. 148 and Order No. 932, both as amended (7 CFR part 932), regulating the handling of olives grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, California olive handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate fixed herein will be applicable to all assessable olives beginning on January 1, 2003, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule increases the assessment rate established for the committee for the 2003 and subsequent fiscal years from $10.09 per ton to $13.89 per ton of olives.

The California olive marketing order provides authority for the committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the committee are producers and handlers of California olives. They are familiar with the committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2002 and subsequent fiscal years, the committee recommended, and USDA approved, an assessment rate that would continue in effect from fiscal year to fiscal year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other information available to USDA.

The committee met on December 11, 2002, and unanimously recommended fiscal year 2003 expenditures of $1,230,590 and an assessment rate of $13.89 per ton of olives. In comparison, last year's budgeted expenditures were $1,428,585. The assessment rate of $13.89 is $3.80 higher than the $10.09 rate currently in effect.

Expenditures recommended by the committee for the 2003 fiscal year include $633,500 for marketing development, $347,090 for administration, and $250,000 for research. Budgeted expenses for these items in 2002 were $811,935 for marketing development, $339,650 for administration, and $250,000 for research.

The assessment rate recommended by the committee was derived by considering anticipated expenses, actual olive tonnage received by handlers, and additional pertinent factors. The California Agricultural Statistics Service (CASS) reported olive receipts for the 2002-03 crop year at 89,006 tons, which compares to 123,439 for the 2001-02 crop year. The reduction in the crop size for the 2002-03 crop year, due in large part to the alternate-bearing characteristics of olives, made it necessary for the committee to recommend an increase in the assessment rate from the current $10.09 per assessable ton to $13.89 per assessable ton, an increase of $3.80 per ton. Income derived from handler assessments, interest, and utilization of reserve funds will be adequate to cover budgeted expenses. Funds in the reserve will be kept within the maximum permitted by the order of approximately one fiscal year's expenses (§ 932.40).

The assessable tonnage for the 2003 fiscal year is expected to be less than the receipts of 89,006 tons reported by CASS, because some olives may be diverted by handlers to uses that are exempt from marketing order requirements. The quantity of olives that is expected to be diverted cannot be published in this document. The olive industry consists of only three handlers, two of which are much larger than the third, and the confidentiality of this handler information must be maintained to protect the proprietary business positions of each of the handlers.

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other available information.

Although this assessment rate will be in effect for an indefinite period, the committee will continue to meet prior to or during each fiscal year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of committee meetings are available from the committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The committee's 2003 budget and those for subsequent fiscal years will be reviewed and, as appropriate, approved by USDA.

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

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

There are approximately 1,200 producers of olives in the production area and 3 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.601) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.

Based upon information from the committee, the majority of olive producers may be classified as small entities. One of the handlers may be classified as a small entity, but the majority of the handlers may be classified as large entities.

This rule increases the assessment rate established for the committee and collected from handlers for the 2003 and subsequent fiscal years from $10.09 per ton to $13.89 per ton of olives. The committee unanimously recommended 2003 expenditures of $1,230,590 and an assessment rate of $13.89 per ton. The assessment rate of $13.89 per ton is $3.80 per ton higher than the 2002 rate. The quantity of olive receipts for the 2002-03 crop year was reported by CASS to be 89,006 tons, but the actual assessable tonnage for the 2003 fiscal year is expected to be lower. This is because some of the receipts are expected to be diverted by handlers to exempt outlets on which assessments are not paid. The amount of assessable tonnage cannot be reported in this document. The amount of the exempt tonnage must be kept confidential so the business position of each of the three olive handlers is not revealed. The $13.89 per ton assessment rate should be adequate to meet this year's expenses when combined with funds from the authorized reserve and interest income. Funds in the reserve will be kept within the maximum permitted by the order of about one fiscal year's expenses (§ 932.40).

Expenditures recommended by the committee for the 2003 fiscal year include $633,500 for marketing development, $347,090 for administration, and $250,000 for research. Budgeted expenses for these items in 2002 were $811,935 for marketing development, $339,650 for administration, and $250,000 for research.

Last year's olive receipts totaled 123,439 tons compared to this year's tonnage of 89,006. Although the committee decreased 2003 expenses, the significant decrease in olive production makes the higher assessment rate necessary.

The research expenditures will fund studies to develop chemical and scientific defenses to counteract a threat from the olive fruit fly in the California production area. Market development expenditures are lower because the committee's marketing program for 2003 is limited to consumer and nutritionist activities. The committee reviewed and unanimously recommended 2003 expenditures of $1,230,590, which reflects decreases in the research, market development, and administrative budgets.

Prior to arriving at this budget, the committee considered information from various sources, such as the committee's Executive Subcommittee and the Market Development Subcommittee. Alternate spending levels were discussed by these groups, based upon the relative value of various research and marketing projects to the olive industry and the anticipated olive production. The assessment rate of $13.89 per ton of assessable olives was derived by considering anticipated expenses, the volume of assessable olives, and additional pertinent factors.

A review of historical and preliminary information pertaining to the upcoming fiscal year indicates that the grower price for the 2002-03 crop year is estimated to be approximately $672 per ton for canning fruit and $306 per ton for limited-use size fruit. Approximately 85 percent of a ton of olives are canning fruit sizes and 10 percent are limited-use sizes, leaving the balance as unusable cull fruit. Total grower revenue on 89,006 tons would then be $53,563,811 given the percentage of canning and limited-use sizes and current grower prices for those sizes. An assessment rate of $13.89 will generate estimated assessment revenue of approximately 2.3 percent of total grower revenue.

This action increases the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs are offset by the benefits derived by the operation of the marketing order. In addition, the committee's meeting was widely publicized throughout the California olive industry and all interested persons were invited to attend the meeting and participate in committee deliberations on all issues. Like all committee meetings, the December 11, 2002, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

This rule imposes no additional reporting or recordkeeping requirements on California olive handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A proposed rule concerning this action was published in the Federal Register on March 10, 2003 (68 FR 11340). Copies of the proposed rule were also mailed or sent via facsimile to all olive handlers. Finally, the proposal was made available through the Internet by the Office of the Federal Register and USDA. A 30-day comment period ending April 9, 2003, was provided for interested persons to respond to the proposal. No comments were received.

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

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

Pursuant to 5 U.S.C. 553, it is also found and determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because the marketing order requires that the rate of assessment for each fiscal year apply to all assessable olives handled during such period. The 2003 fiscal year began on January 1, 2003, and the committee needs sufficient funds to pay its authorized expenses, which are incurred on a continuous basis. Further, handlers are aware of this rule which was unanimously recommended at a public meeting. Also, a 30-day comment period was provided for in the proposed rule and no comments were received.

On September 19, 2002, the NCUA Board (the Board) approved the publication of a proposal to update and streamline Part 740, NCUA's regulation requiring accuracy and honesty in insured credit union (CU) advertising and governing a CU's use of the official sign and official advertising statement to inform members of federal share insurance coverage. 67 FR 60604 (September 26, 2002).

The Official Sign: The regulation requires CUs to display the official sign, which sets out in large type “NCUA” and in smaller type states, “Your savings federally insured to $100,000,” at each teller station or window where insured account funds or deposits are normally received. The purpose of the rule is to ensure that, at the time they deposit funds or transact business with an insured CU, members are informed of the fact that federal share insurance applies to their accounts.

The Official Advertising Statement: The regulation, although containing various exemptions, also requires a CU to include the official advertising statement in any advertising including marketing materials in print, radio or television. The official advertising statement must state in substance, “This credit union is federally insured by the National Credit Union Administration.” Alternatively, the CU may use the short form advertising statement, “Federally insured by NCUA” with a reproduction of the official sign described above.

The proposal clarified the rule's application to Internet advertisements and member transactions on CU Web sites. It also incorporated legal interpretations permitting CUs to use trade or other names in advertisements and made other minor changes, including rewording it in a plain English style and placing the provisions regarding advertising excess insurance in a separate subsection.

NCUA received fourteen comments from the public. Seven commenters expressed their support for the amendment permitting the use of trade names in advertising. The proposal stated that, while CUs may use trade or other names in advertising, they must use their official charter name in all official or legal documents. The proposal did not include share certificates among the official or legal documents in which CUs must identify themselves with their official charter name. This was an inadvertent omission that has been corrected in the final rule. The purpose in excluding the use of trade names in official or legal documents is to ensure that members do not misinterpret the level of share insurance available to them. The Board agrees with a commenter who suggested that if a CU used the full charter name the first time it appears in a legal document and an acronym later in the same document members would be sufficiently informed about the identity of the CU and the availability of share insurance.

Thirteen commenters supported the requirement to use the official sign and official advertising statement on Internet Web sites, with five stating that the revised rule offered CUs flexibility and would not impose a significant burden. One commenter emphasized that the benefit to consumers would far outweigh any cost incurred by the credit union. Two state leagues stated that most of their credit unions were already in compliance.

Six commenters, while supportive of the proposal, suggested that NCUA permit CUs to alter the official sign's color and font sizes to ensure it is legible and visually prominent on an Internet screen. Although the proposed rule did not suggest any changes to the color or font size of the official sign, the Board agrees that the official sign must be legible to fulfill the purpose of the rule. The Board believes that additional flexibility may be helpful given the size constraints of an Internet screen and the rule's requirement that the sign appear on the same page where other information will also appear. For that reason, the Board is including in the final rule a provision that CUs may vary the font size of the text within the official sign to ensure the text is legible. The Board also recognizes that CUs may find the requirement in the current rule that the official sign appear in blue with white lettering to be unduly restrictive. Many CUs devote significant resources to the design and aesthetics of their Web sites, with a focus on attracting both new and existing members to view the information and transact business. Some commenters were concerned that the traditional colors might be less visible or contrast with CU Web site designs. The Board is most concerned that the message of the official sign is conveyed clearly. The Board also does not want CUs to be unnecessarily restricted in the color or design of their Web sites by the need to display the official sign in only the traditional colors of blue and white. In the past, NCUA has been asked to consider similar flexibility in the color of the official signs CUs display at teller windows or stations at “brick and mortar” locations. The Board sees no reason why CUs should not use the colors of their choosing on the official signs they display both on CU Web sites and in their lobbies. For these reasons, the Board has eliminated from the final rule the requirement that the official sign , have a blue background with white lettering. NCUA will continue to supply CUs with official signs, but will produce them only in the traditional blue and white.

Six commenters also stated that it is unnecessary to require the official sign or advertising statement on Internet pages other than the credit union main page. As an alternative two commenters suggest that the rule only require the official sign on the main page and the log-on screen where members identify themselves in order to conduct transactions on-line, or a membership application page or pages advertising deposit-related products. The Board agrees with these suggestions. All CU Internet sites that permit members to conduct transactions require members to identify themselves on a log-on screen. Displaying the official sign there will provide adequate notice of federal share insurance to the member. Further, displaying the official sign or advertising statement on the page where a viewer can apply for membership or see an advertisement for an insured deposit or share-related product will ensure that the message about federal share insurance is available when it is most relevant.

One commenter suggested that CUs that currently do not display an official sign or advertising statement on their Web sites may need additional time to comply with the proposed changes. The Board wishes to permit CUs ample opportunity to incorporate the official sign and advertising statement into their Web sites, so it is adopting an effective date 60 days following publication of the final rule.

The final rule is identical to the proposed rule with the exception of minor editorial changes, the addition of share certificates among the official or legal documents in which CUs must identify themselves with their official charter name, the provision permitting CUs to use alternative font sizes in the official sign displayed on their Internet Web sites and the elimination of the color requirement for the official sign.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact any proposed regulation may have on a substantial number of small entities (those under $1 million in assets). The final amendments will not have a significant economic impact on a substantial number of small credit unions and, therefore, a regulatory flexibility analysis is not required.

NCUA has determined that the final regulation does not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The executive order states that: “National action limiting the policymaking discretion of the states shall be taken only where there is constitutional and statutory authority for the action and the national activity is appropriate in light of the presence of a problem of national significance.” This rule will apply to both federal and state credit unions. It does not significantly change the current regulatory framework. It will not have a substantial direct effect on states, the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that the rule does not constitute a policy that has federalism implications for purposes of this executive order.

The NCUA has determined that this rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

NCUA's goal is to promulgate clear and understandable regulations that impose minimal regulatory burden. The regulatory change is understandable and imposes minimal regulatory burden.

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act. 5 U.S.C. 551. The Office of Management and Budget has found that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 97-08-51, amendment 39-10012 (62 FR 24015, May 2, 1997), which is applicable to all Boeing Model 767 series airplanes, was published in the Federal Register on September 30, 2002 (67 FR 61301). The action proposed to continue to require an inspection to ensure that all bolts of the support beam of the hinge fitting assembly on both the left- and right-hand outboard trailing edge flaps are the correct length and type, and correction of any discrepancy found. The action also proposed to reduce the applicability of the existing AD, add inspections, and mandate terminating action.

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 the compliance time stated in paragraph (a)(2)(ii) of the proposed AD from “Within 30 days after May 7, 1997,” to “Within 30 days after the effective date of this AD.” The commenter notes that some airplanes will accumulate 10,000 total flight cycles or 25,000 total flight hours after June 7, 1997, and before the effective date of the new AD. These airplanes would be out of compliance with the proposed AD as of the effective date of the AD.

The FAA does not agree to revise the compliance time specified in paragraph (a)(2)(ii) of this final rule. Paragraph (a) of this final rule is a restatement of paragraph (a) of AD 97-08-51, which this AD supersedes. June 7, 1997, is the effective date of AD 97-08-51. Our intent is that airplanes that are subject to AD 97-08-51 comply with the original requirements of that AD, at the original compliance times. If the airplane is in compliance with AD 97-08-51 as of the effective date of this new AD, then it will not be out of compliance with this AD as of the effective date of this AD.

Relevant to this comment, we agree that we need to clarify the old and new requirements of this AD. The headings that would normally be used in a superseding AD to clearly identify the restated requirements of the existing AD ( e.g. , “Requirements of AD 97-08-51”) and the new requirements ( e.g. , “New Requirements of This AD”) were omitted from the proposed AD. We have included these headings in this final rule. For further clarification, we have made the following changes to this final rule:

• We have reidentified paragraphs (c) and (d) of the proposed AD as paragraphs (b) and (c) of this final rule, respectively. (Thus, the existing requirements of AD 97-08-51 are identified with the same paragraph lettering that they have in AD 97-08-51 and are grouped under the heading “Requirements of AD 97-08-51” in this AD.)

• We have reidentified paragraph (b) of the proposed AD (the “Repeat Inspection for Certain Airplanes”) as paragraph (d) of this final rule, to group it with the other new requirements of this AD.

• We have added a new sentence to paragraph (d) of this final rule (paragraph (b) of the proposed AD) to clarify that any necessary corrective actions must be accomplished in accordance with paragraphs (b) and (c) of this AD.

• We have revised paragraph references in paragraphs (e) and (h) of this final rule according to the changes described previously. Paragraph references in paragraph (j)(2) of this final rule (which was included as paragraph (i)(2) of the proposed AD) do not need to be revised in this final rule because the paragraph references in that paragraph of the proposed AD were incorrect, but are correct following the other changes to this final rule.

One commenter requests that the FAA give credit for accomplishment of the repeat inspection specified in paragraph (b) of the proposed AD (paragraph (d) of this final rule) in accordance with Boeing Alert Service Bulletin 767-27A0155, Revision 2, dated July 8, 1999. The commenter notes that it has been accomplishing inspections in accordance with that service bulletin since accomplishing the initial inspection required by paragraph (a) of the existing AD.

We concur with the commenter's request. Our intent is that accomplishment of the inspection required by paragraph (f) of this AD or the modification required by paragraph (g) of this AD eliminates the need to accomplish the inspection in paragraph (a) or (d) of this AD, provided that the requirements of paragraph (f) or (g) of this AD are accomplished within the compliance time specified in paragraph (a) or (d) of this AD, as applicable. We have added a new paragraph (h) to this final rule (and redesignated subsequent paragraphs accordingly) to state that airplanes on which paragraph (f) or (g) of this AD is accomplished within the compliance time specified in paragraph (a) or (d) of this AD, as applicable, do not need to be inspected in accordance with paragraph (a) or (d) of this AD.

Two commenters request that we extend the compliance time for the terminating action in paragraph (g) of the proposed AD. Paragraph (g) of the proposed AD specified a compliance threshold of 6 years, 25,000 flight hours, or 12,000 flight cycles after accomplishment of paragraph (a) of the proposed AD, whichever is first; and a grace period (for airplanes close to or over the threshold) of 90 days after the effective date of the AD. Both commenters note that most of the airplanes in their fleets will be subject to the 90-day grace period because they have passed the applicable threshold. One of the commenters requests that we extend the compliance time to 18 months after the effective date of the AD, so that the majority of airplanes can be modified during a regularly scheduled “C''-check. The second commenter is concerned about the availability of parts needed to accomplish the terminating action and requests that we extend the compliance time to 5 years after the effective date of the AD.

We agree that the grace period segment of the compliance time for the terminating action in paragraph (g) of this AD may be extended from 90 days to 18 months after the effective date of this AD. In developing an appropriate compliance time for the terminating action, the FAA considered not only the urgency of addressing the subject unsafe condition and the maintenance schedules of affected operators, but also the availability of required parts. The FAA finds that 18 months represents an appropriate interval of time allowable for affected airplanes to continue to operate without compromising safety and wherein an ample number of required parts will be available for modification of the U.S. fleet. (No data were presented to justify that a compliance time longer than 18 months would adequately ensure safety.) Paragraph (g) has been revised accordingly. Also, for clarification, we have revised paragraph (g) of this final rule to move the compliance times from that paragraph into new subparagraphs (g)(1) and (g)(2) of this final rule.

One commenter notes a typographical error in paragraph (g) of the proposed AD. The word “filters” should be “fillers.” Also, that commenter and a second commenter note that Boeing Alert Service Bulletin 767-27A0155 is misidentified in paragraph (h) of the proposed AD (included as paragraph (i) of this final rule) as Boeing Alert Service Bulletin 767-29A0155. We concur and have corrected these typographical errors in paragraphs (g) and (i) of this final rule.

We have revised the applicability statement of this AD to clarify that Boeing Model 767-400ER series airplanes are not affected by this AD. The airplanes with line numbers 1 through 710 inclusive are Model 767-200, -300, and “300F series airplanes.

For clarification, we have revised paragraph (f) of this final rule to move the compliance times from that paragraph into new subparagraphs (f)(1) and (f)(2) of this AD.

The Summary section of the proposed AD states that the proposed AD would “mandate terminating action for certain airplanes.” However, this AD mandates terminating action for all airplanes subject to this AD. We have corrected this error in this final rule.

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 700 Model 767 series airplanes of the affected design in the worldwide fleet. The FAA estimates that 287 airplanes of U.S. registry will be affected by this AD.

The actions that are currently required by AD 97-08-51 take approximately 7 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the currently required actions on U.S. operators is estimated to be $120,540, or $420 per airplane.

The torque check that is required by this AD action will take approximately 2 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Based on these figures, the cost impact of the torque check required by this AD on U.S. operators is estimated to be $34,440, or $120 per airplane, per check.

The terminating action that is required by this AD action will take approximately 3 work hours per airplane to accomplish, at an average labor rate of $60 per work hour. Required parts will cost approximately $3,058 per airplane. Based on these figures, the cost impact of the terminating action required by this AD on U.S. operators is estimated to be $929,306, or $3,238 per airplane.

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

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

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

What events have caused this AD ? The Federal Office for Civil Aviation (FOCA), which is the airworthiness authority for Switzerland, recently notified FAA that an unsafe condition may exist on certain Pilatus Models PC-12 and PC-12/45 airplanes. The FOCA reports that, during manufacture of certain aft facing aircraft passenger seats (vendor part numbers (VPN) 403008-1 and 403008-2), the forward pedestal legs were installed in reverse order. One instance was found during the seat manufacturer's final quality control inspection. Pilatus found another instance.

What is the potential impact if FAA took no action ? This condition, if not corrected, could result in failure of the aircraft seat pedestal leg assembly. Such failure could result in passenger injury in an emergency situation.

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 Pilatus Models PC-12 and PC-12/45 airplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on February 19, 2003 (68 FR 7947). The NPRM proposed to require you to inspect the pedestal leg assembly on aft facing passenger seats for correct configuration. If incorrectly configured, the NPRM proposed to require you to modify to the correct configuration.

Was the public invited to comment ? The FAA encouraged interested persons to participate in the making of this amendment. We did not receive any comments on the proposed rule or on our determination of the cost to the public.

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

What are the differences between this AD, the service information, and the FOCA AD ? The FOCA AD and the service information require an inspection of the identification tag on certain passenger seats to determine if the Pilatus part number correctly corresponds to the ERDA vendor part number. The identification tag may incorrectly identify the Pilatus part number; although the ERDA vendor part number is correct. If the corresponding part numbers are incorrect, the FOCA AD and the service information require affixing a new identification tag with the correct corresponding Pilatus part number. The procedures for accomplishing this inspection and modification are contained in Decrane Aircraft, ERDA, Inc., Service Bulletin SB02011, Revision A, June 3, 2002.

Because the ERDA part number is correct, we are not including this as part of the unsafe condition. However, we will include a note in this AD recommending that you verify that the corresponding Pilatus part number is correct.

How does the revision to 14 CFR part 39 affect this AD? On July 10, 2002, FAA published a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs FAA's AD system. This regulation now includes material that relates to special flight permits, alternative methods of compliance, and altered products. This material previously was included in each individual AD. Since this material is included in 14 CFR part 39, we will not include it in future AD actions.

How many airplanes does this AD impact? We estimate that this AD affects 280 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:

We estimate the following costs to accomplish the modification:

What is the compliance time of this AD? The compliance time of this AD is “within the next 90 days after the effective date of this AD.”

Why is the compliance time presented in calendar time instead of hours time-in-service (TIS) ? The compliance of this AD is presented in calendar time instead of hours TIS because the unsafe condition is a result of an improper installation. The unsafe condition has the same chance of occurring on an airplane with 50 hours TIS as it is for an airplane with 1,000 hours TIS. Therefore, we believe that a compliance time of 90 days will:

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 .

The Metro North Bridge has a vertical clearance in the closed position of 20 feet at mean high water and 27 feet at mean low water. The existing drawbridge operation regulations are listed at 33 CFR 117.209.

The bridge owner, Metro North Commuter Railroad, requested a temporary deviation from the drawbridge operation regulations to facilitate necessary maintenance, the replacement of damaged miter rails and timbers, at the bridge. The bridge must remain in the closed position to perform these repairs.

The Coast Guard coordinated this closure with the mariners who normally use this waterway to help facilitate this necessary bridge repair and to minimize any disruption to the marine transportation system.

Under this temporary deviation for the Metro North Bridge, a three-hour advance notice will be required for bridge openings from April 25, 2003 through May 26, 2003.

The bridge owner did not provide the required thirty-day notice to the Coast Guard for this deviation; however, this deviation was approved because the repairs are necessary repairs that must be performed without delay in order to assure the continued safe reliable operation of the bridge.

This deviation from the operating regulations is authorized under 33 CFR 117.35, and will be performed with all due speed in order to return the bridge to normal operation as soon as possible.

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking [CGD13-03-012], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this temporary final rule in view of them.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for not publishing an NPRM and for making this rule effective less than 30 days after publication in the Federal Register . Publishing a NPRM would be contrary to public interest since immediate action is necessary to safeguard large passenger vessels from sabotage, other subversive acts, or accidents. If normal notice and comment procedures were followed, this rule would not become effective soon enough to provide immediate protection to large passenger vessels from the threats posed by hostile entities and would compromise the vital national interest in protecting maritime transportation and commerce. The security and safety zone in this regulation has been carefully designed to minimally impact the public while providing a reasonable level of protection for large passenger vessels. For these reasons, following normal rulemaking procedures in this case would be impracticable, unnecessary, and contrary to the public interest.

Recent events highlight the fact that there are hostile entities operating with the intent to harm U.S. National Security. The President has continued the national emergencies he declared following the September 11, 2001 terrorist attacks (67 FR 58317 (Sept. 13, 2002) (continuing national emergency with respect to terrorist attacks)), 67 FR 59447 (Sept. 20, 2002) (continuing national emergency with respect to persons who commit, threaten to commit or support terrorism)). The President also has found pursuant to law, including the Act of June 15, 1917, as amended August 9, 1950, by the Magnuson Act (50 U.S.C. 191 et. seq. ), that the security of the United States is and continues to be endangered following the attacks (E.O. 13,273, 67 FR 56215 (Sept. 3, 2002) (security endangered by disturbances in international relations of U.S. and such disturbances continue to endanger such relations)).

The Coast Guard, through this action, intends to assist large passenger vessels by establishing a security and safety zone to exclude persons and vessels from the immediate vicinity of all large passenger vessels. Entry into this zone will be prohibited unless authorized by the Captain of the Port or his designee. The Captain of the Port may be assisted by other federal, state, or local agencies.

This rule, for safety and security concerns, controls vessel movement in a regulated area surrounding large passenger vessels. For the purpose of this regulation, a large passenger vessel means any vessel over 100 feet in length (33 meters) carrying passengers for hire including, but not limited to, cruise ships, auto ferries, passenger ferries, and excursion vessels. All vessels within 500 yards of large passenger vessels shall operate at the minimum speed necessary to maintain a safe course, and shall proceed as directed by the official patrol. No vessel, except a public vessel (defined below), is allowed within 100 yards of a large passenger vessel, unless authorized by the on-scene official patrol or large passenger vessel master. Vessels requesting to pass within 100 yards of a large passenger vessel shall contact the on-scene official patrol or large passenger vessel master on VHF-FM channel 16 or 13. The on-scene official patrol or large passenger vessel master may permit vessels that can only operate safely in a navigable channel to pass within 100 yards of a large passenger vessel in order to ensure a safe passage in accordance with the Navigation Rules. Similarly, commercial vessels anchored in a designated anchorage area may be permitted to remain at anchor within 100 yards of passing large passenger vessels. Public vessels for the purpose of this Temporary Final Rule are vessels owned, chartered, or operated by the United States, or by a State or political subdivision thereof.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DHS is unnecessary.

Although this regulation restricts access to the regulated area, the effect of this regulation will not be significant because: (i) Individual large passenger vessel security and safety zones are limited in size; (ii) the on-scene official patrol or large passenger vessel master may authorize access to the large passenger vessel security and safety zone; (iii) the large passenger vessel security and safety zone for any given transiting large passenger vessel will effect a given geographical location for a limited time; and (iv) the Coast Guard will make notifications via maritime advisories so mariners can adjust their plans accordingly.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” includes small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule may affect the following entities, some of which may be small entities: the owners or operators of vessels intending to operate near or anchor in the vicinity of large passenger vessels in the navigable waters of the United States to which this rule applies.

This temporary regulation will not have a significant economic impact on a substantial number of small entities for the following reasons: (i) Individual large passenger vessel security and safety zones are limited in size; (ii) the on-scene official patrol or large passenger vessel master may authorize access to the large passenger vessel security and safety zone; (iii) the passenger vessel security and safety zone for any given transiting large passenger vessel will affect a given geographic location for a limited time; and (iv) the Coast Guard will make notifications via maritime advisories so mariners can adjust their plans accordingly.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact one of the points of contact listed under FOR FURTHER INFORMATION CONTACT .

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

The Coast Guard recognizes the rights of Native American Tribes under the Stevens Treaties. Moreover, the Coast Guard is committed to working with Tribal Governments to implement local policies to mitigate tribal concerns. Given the flexibility of the Temporary Final Rule to accommodate the special needs of mariners in the vicinity of large passenger vessels and the Coast Guard's commitment to working with the Tribes, we have determined that passenger vessel security and fishing rights protection need not be incompatible and therefore have determined that this Temporary Final Rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it 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. Nevertheless, Indian Tribes that have questions concerning the provisions of this Temporary Final Rule or options for compliance are encouraged to contact the point of contact listed under FOR FURTHER INFORMATION CONTACT .

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The Coast Guard's preliminary review indicates this temporary rule is categorically excluded from further environmental documentation under figure 2-1, paragraph 34(g) of Commandant Instruction M16475.lD. As an emergency action, the Environmental Analysis, requisite regulatory consultations, and Categorical Exclusion Determination will be prepared and submitted after establishment of this temporary passenger vessel security zone, and will be available in the docket. This temporary rule ensures the safety and security of large passenger vessels. All standard environmental measures remain in effect. The Categorical Exclusion Determination will be made available in the docket for inspection or copying where indicated under ADDRESSES.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing a NPRM, and under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The Maritime Administration (MARAD) recently issued MARAD Advisory 03-03 (182100Z MAR 03) informing operators of maritime interests of increased threat possibilities to vessels and facilities and a higher risk of terrorist attacks to the transportation community in the United States. Further, national security and intelligence officials warn that future terrorist attacks against United States interests are likely. The measures contemplated by the rule are intended to prevent waterborne acts of sabotage or terrorism, which terrorists have demonstrated a capability to carry out. Any delay in making this regulation effective would be contrary to the public interest because immediate action is necessary to protect U.S. maritime transportation interests against the possible loss of life, injury, or damage to property.

We encourage you to participate in this rulemaking by submitting comments and related material. We encourage comments on whether a Regulated Navigation Area is the appropriate tool for a long-term solution to the security risk at issue. If you do so, please include your name and address, identify the docket number for this rulemaking [CGD08-03-014], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 81/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Commander, Eighth Coast Guard District (m) at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

Terrorist attacks on September 11, 2001 inflicted catastrophic human casualties and property damage. These attacks highlighted the terrorists' ability and desire to utilize multiple means in different geographic areas to increase their opportunities to successfully carry out their mission, thereby maximizing destruction using multiple terrorist acts.

Since the September 11, 2001 terrorist attacks on the World Trade Center in New York, the Pentagon in Arlington, Virginia and Flight 93, the Federal Bureau of Investigation (FBI) has issued several warnings concerning the potential for additional terrorist attacks within the United States. The threat of maritime attacks is real as evidenced by the October 2002 attack on a tank vessel off the coast of Yemen and the prior attack on the USS COLE. These attacks manifest a continuing threat to U.S. assets as described in the President's finding in Executive Order 13273 of August 21, 2002 (67 FR 56215, September 3, 2002) that the security of the U.S. is endangered by the September 11, 2001 attacks and that such disturbances continue to endanger the international relations of the United States. See also Continuation of the National Emergency with Respect to Certain Terrorist Attacks, (67 FR 58317, September 13, 2002); Continuation of the National Emergency With Respect To Persons Who Commit, Threaten To Commit, Or Support Terrorism, (67 FR 59447, September 20, 2002). The U.S. Maritime Administration (MARAD) in Advisory 02-07 advised U.S. shipping interests to maintain a heightened state of alert against possible terrorist attacks. MARAD more recently issued Advisory 03-03 informing operators of maritime interests of increased threat possibilities to vessels and facilities and a higher risk of terrorist attacks to the transportation community in the United States. The ongoing hostilities in Afghanistan and Iraq have made it prudent for U.S. ports and waterways to be on a higher state of alert because the Al Qaeda organization and other similar organizations have declared an ongoing intention to conduct armed attacks on U.S. interests worldwide.

Therefore, the Coast Guard is establishing an RNA within the inland rivers of the Eighth Coast Guard District in order to safeguard vessels, ports and waterfront facilities from sabotage or terrorist acts. This RNA applies to barges loaded with CDCs operating on the Mississippi River above mile 235.0, Above Head of Passes, including all its tributaries; the Atchafalaya River above mile 55.0 including the Red River; the Ohio River and all its tributaries; and the Tennessee River from its confluence with the Ohio River to mile zero on the Mobile River and all other tributaries between these two rivers. This RNA affects vessels that transport CDCs that if used as a weapon of terrorism could result in substantial loss of life, property and environmental damage, and grave economic consequences. This rulemaking requires operators, as defined in this rule, of barges loading or loaded with CDCs within the RNA to periodically report their position and other specified information to the Inland River Vessel Movement Center (IRVMC) for protection against sabotage and terrorist acts.

If additional information warrants modifying or amending this rule, we will revise the rule and publish the revision in the Federal Register .

This rule applies to operators of a barge loaded with or loading CDCs, within the regulated area. This rule does not apply to operators of “empty” barges within the RNA. The terms barge, certain dangerous cargoes (CDCs), downbound, CDC barge, Eighth Coast Guard District, empty, final destination, gas free, loaded, operator, and upbound are defined in the regulatory section of this rule. The operator, of a CDC barge(s) loaded with or being loaded with CDCs must report to the IRVMC specific information under the following conditions: 4 hours prior to loading a barge(s) with CDCs; 4 hours prior to dropping off a CDC barge(s) in a fleeting area; 4 hours prior to picking up a CDC barge(s) from a fleeting area; 4 hours prior to getting underway with a CDC barge(s); upon point of entry into the RNA with a CDC barge(s); at designated reporting points in Table 165.T08-019(f); when the estimated time of arrival (ETA) to a reporting point varies by 6 hours from the previously reported ETA; any significant deviation from previously reported information; upon arrival at the “final” destination with a CDC barge(s), if within the RNA; upon departing the RNA with a CDC barge(s); and when directed by the IRVMC.

Each report to the IRVMC must contain all the information items specified in Table 165.T08-019(g). Reports must be made to the IRVMC, either by telephone toll free to (866) 442-6089, by fax toll free to (866) 442-6107, or by e-mail to irvmc@cgstl.uscg.mil .

Deviation from this rule is prohibited unless specifically authorized by the Commander, Eighth Coast Guard District or designated representatives. In addition to 33 U.S.C. 1231 and 50 U.S.C. 191, the authority for this section includes 33 U.S.C. 1226.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security. The operational reporting requirements of the RNA are minimal, transitory and necessary to provide immediate, improved security for the public, vessels, and U.S. ports and waterways. The requirements do not alter normal barge cargo loading operations or transits. Additionally, this RNA is temporary in nature and the Coast Guard may issue a NPRM as it considers whether to make this rule permanent. The minimal hardships that may be experienced by persons or vessels, as a result of this rule, are necessary to the national interest in protecting the public, vessels, and vessel crews from the devastating consequences of acts of terrorism, and from sabotage or other subversive acts, accidents, or other causes of a similar nature.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: the operators of barges intending to load CDCs and transit on inland waterways with CDC barge(s) within the Eighth Coast Guard District. This RNA will not have a significant economic impact on a substantial number of small entities because this rule does not require any alteration of barge operations or transits. The operational communications required by this RNA are transitory in nature and do not require operators to obtain new equipment.

If you are a small business entity and are significantly affected by the regulation please contact LT Karrie C. Trebbe, Project Manager for Eighth Coast Guard District Commander, Hale Boggs Federal Bldg., 501 Magazine Street, New Orleans LA 70130, telephone (504) 589-6271.

Under subsection 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 [Pub. L. 104-121], we offered to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comments on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule calls for new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. The title and description of the information collection, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.

Title: Regulated Navigation Areas; Reporting Requirements for Barges Loaded with Certain Dangerous Cargoes, Inland Rivers, Eighth and Ninth Coast Guard Districts.

OMB Control Number: 1625-0105.

Summary of the Collection of Information: The Coast Guard requires position and intended movement reporting, and cargo transfer and fleeting operations reporting, from barges carrying CDCs in the inland rivers within the Eighth and Ninth Coast Guard Districts. This rule will amend 33 CFR part 165 to temporarily require:

Owners and operators of covered barges must report the following information via toll free telephone, toll free fax, or email:

a. Name of barge and towboat;

b. Name of loading, fleeting, and terminal facility;

c. Estimated time of arrival (ETA) at loading, fleeting and terminal facility;

d. Planned route, including estimated time of departure (ETD) from loading, fleeting, and terminal facility;

e. 4 hours prior to loading covered dangerous cargoes;

f. 4 hours prior to dropping off a covered barge in a fleeting area;

g. 4 hours prior to picking up a covered barge from a fleeting area;

h. 4 hours prior to getting underway with a covered barge;

i. At entry into the covered geographical area;

j. ETA at approximately 148 designated reporting points within the covered geographical area;

k. At any time ETA to a reporting point varies by 6 hours from the previously reported ETA;

l. any significant deviation from previously reported information;

m. Upon arrival at the “final” destination with a covered barge, if within the covered geographical area;

n. Upon departing the covered geographical area; and

o. When directed by the Coast Guard.

The temporary changes will be in effect though October 31, 2003.

Need for Information: To ensure port safety and security and to ensure the uninterrupted flow of commerce, the Coast Guard must temporarily issue regulations requiring position and intended movement reporting, and cargo transfer and fleeting operations reporting, from barges carrying CDCs in the inland rivers within the Eighth and Ninth Coast Guard Districts.

Proposed use of Information: This information is required to enhance maritime security, control vessel traffic, develop contingency plans, and enforce regulations.

Description of the Respondents: The respondents are owners, agents, masters, operators, or persons in charge of barges loaded with certain dangerous cargoes operating on the inland rivers located within the Eighth and Ninth Coast Guard Districts.

Number of Respondents: The existing OMB-approved collection number of respondents is zero(0). This temporary rule will increase the number of respondents by 3,505 to a total of 3,505.

Frequency of Response: The existing OMB-approved collection annual number of responses is zero(0). This temporary rule will increase the number of responses by 7,711 to a total of 7,711.

Burden of Response: The existing OMB-approved collection burden of response is zero (0). This temporary rule will increase the burden of response by 15 minutes (0.250 hours) to a total of 15 minutes (0.250 hours).

Estimate of Total Annual Burden: The existing OMB-approved collection total annual burden is zero (0). This temporary rule will increase the total annual burden by 1,928 hours to a total of 1,928 hours.

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we submitted a copy of this rule to the Office of Management and Budget (OMB) for its review of the collection of information. Due to the circumstances surrounding this temporary rule, we asked for “emergency processing” of our request. We received OMB approval for the collection of information on April 15, 2003. It is valid through October 31, 2003.

We ask for public comment on the collection of information to help us determine how useful the information is; whether it can help us perform our functions better; whether it is readily available elsewhere; how accurate our estimate of the burden of collection is; how valid our methods for determining burden are; how we can improve the quality, usefulness, and clarity of the information; and how we can minimize the burden of collection.

If you submit comments on the collection of information, submit them both to OMB and to the Docket Management Facility where indicated under ADDRESSES , by the date under DATES .

You need not respond to a collection of information unless it displays a currently valid control number from OMB. We received OMB approval for the collection of information on April 15, 2003. It is valid through October 31, 2003.

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it 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.

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We have analyzed this rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1 paragraph (34)(g), of the instruction, from further environmental documentation because this rule is not expected to result in any significant environmental impact as described in NEPA. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available where indicated under ADDRESSES.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing an NPRM, and under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The Maritime Administration (MARAD) recently issued MARAD Advisory 03-03 (182100Z MAR 03) informing operators of maritime interests of increased threat possibilities to vessels and facilities and a higher risk of terrorist attacks to the transportation community in the United States.

Further, national security and intelligence officials warn that future terrorist attacks against the United States interests are likely. The measures contemplated by this rule are intended to prevent waterborne acts of sabotage or terrorism, which terrorists have demonstrated a capability to carry out. Any delay in making this regulation effective would be contrary to the public interest because immediate action is necessary to protect U.S. maritime transportation interests against the possible loss of life, injury, or damage to property.

We encourage you to participate in this rulemaking by submitting comments and related material. We encourage comments on whether a Regulated Navigation Area is the appropriate tool for a long-term solution to the security risk at issue. If you do so, please include your name and address, identify the docket number for this rulemaking [CGD09-03-209], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this temporary final rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Commander (m), Ninth Coast Guard District at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

Terrorist attacks on September 11, 2001, inflicted catastrophic human casualties and property damage. These attacks highlighted terrorists' ability and desire to utilize numerous methods to increase their opportunities to successfully carry out their mission. This includes airborne, waterborne, and land-based threats. This approach maximizes the destructive possibility of their acts.

Since the September 11, 2001 terrorist attacks on the World Trade Center in New York, the Pentagon in Arlington, Virginia and Flight 93, the Federal Bureau of Investigation (FBI) has issued several warnings concerning the potential for additional terrorist attacks within the United States. The threat of maritime attacks is real as evidenced by the October 2002 attack on a tank vessel off the coast of Yemen and the prior attack on the USS COLE. These attacks manifest a continuing threat to U.S. assets as described in the President's finding in Executive Order 13273 of August 21, 2002 (67 FR 56215, September 3, 2002) that the security of the United States is still endangered by terrorist related disturbances in the international relations of the United States that have existed since the terrorist attacks on the United States of September 11, 2001. See also Continuation of the National Emergency with Respect to Certain Terrorist Attacks, (67 FR 58317, September 13, 2002); Continuation of the National Emergency With Respect To Persons Who Commit, Threaten To Commit, Or Support Terrorism, (67 FR 59447, September 20, 2002).

The U.S. Maritime Administration (MARAD) issued Advisory 02-07, which recommends that U.S. shipping interests maintain a heightened state of alert against possible terrorist attacks. MARAD more recently issued Advisory 03-03 informing operators of maritime interests of increased threat possibilities to vessels and facilities and a higher risk of terrorist attacks to the transportation community in the United States. The ongoing hostilities in Afghanistan and the war with Iraq underscore the prudence of U.S. ports and waterways being on a higher state of alert. The heightened state of alert is further supported by declarations and the ongoing intent of the Al Qaeda organization and other similar organizations to conduct armed attacks on U.S. interests worldwide.

This RNA complements a parallel rule issued by the Eighth Coast Guard District on April 16, 2003. The purpose of these complementary rules is to create a consistent and seamless reporting system for the Western Rivers Inland Waterway System within the Eighth and Ninth Coast Guard Districts.

This RNA applies to barges loaded with CDCs operating on the Illinois Waterway System above mile 187.2 to the Chicago Lock on the Chicago River at mile 326.7 and to the confluence of the Calumet River and Lake Michigan at mile 333.5 of the Calumet River. The vessels affected by this RNA transport CDCs that, if used as a weapon of terrorism, could result in substantial loss of life, property and environmental damage, as well as grave economic consequences. This RNA requires operators, as defined in this rule, of barges loading or loaded with CDCs to periodically report their position and other specified information to the Inland River Vessel Movement Center (IRVMC).

If additional information warrants modifying or amending this rule, we will revise the rule and publish the revision in the Federal Register . We will also issue Broadcast Notices to Mariners regarding any such revision. This RNA is issued under authority contained in 33 U.S.C. 1226 and 50 U.S.C. 191.

This rule applies to operators of a barge loaded with or loading CDCs, within the regulated area. This rule does not apply to operators of “empty” barges within the RNA. The terms barge, certain dangerous cargoes (CDCs), downbound, CDC barge, Ninth Coast Guard District, empty, final destination, gas free, loaded, operator, and upbound are defined in the regulatory section of this rule. The operator of a barge(s) loaded with or being loaded with CDCs must report to the IRVMC specific information under the following conditions: 4 hours prior to loading a barge(s) with CDCs; 4 hours prior to dropping off a CDC barge(s) in a fleeting area; 4 hours prior to picking up a CDC barge(s) from a fleeting area; 4 hours prior to getting underway with a CDC barge(s); upon point of entry into the RNA with a CDC barge(s); at designated reporting points in Table 165.T09-209(f); when the estimated time of arrival (ETA) to a reporting point varies by 6 hours from the previously reported ETA; any significant deviation from previously reported information; upon arrival at the “final” destination with a CDC barge(s); upon departing the RNA with a CDC barge(s); and when directed by the IRVMC.

Each report to the IRVMC must contain all the information items specified in Table 165.T09-209(g). Reports must be made to the IRVMC, either by telephone toll free to (866) 442-6089, by fax to (866) 442-6107, or by e-mail to irvmc@cgstl.uscg.mil.

Deviation from this rule is prohibited unless specifically authorized by the Commander, Ninth Coast Guard District or his designated representative.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security. The operational reporting requirements of the RNA are minimal, transitory and necessary to provide immediate, improved security for the public, vessels, and U.S. ports and waterways. The requirements do not alter normal barge cargo loading operations or transits. Additionally, this rule is temporary in nature and the Coast Guard may issue a NPRM as it considers whether to make this rule permanent. Any hardships experienced by persons or vessels are necessary to the national interest in protecting the public, vessels, and vessel crews from the devastating consequences of acts of terrorism, and from sabotage or other subversive acts, accidents, or other causes of a similar nature.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: The operators of barges intending to load CDCs and transit on inland waterways with CDC barge(s) within that portion of the Illinois Waterway System located within the Ninth Coast Guard District. This RNA will not have a significant economic impact on a substantial number of small entities because this rule does not require any alteration of barge operations or transits. The operational communications required by this RNA are transitory in nature and do not require operators to obtain new equipment.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment ( see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under subsection 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule calls for new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other, similar actions. The title and description of the information collection, a description of those who must collect the information, and an estimate of the total annual burden follow. The estimate covers the time for reviewing instructions, searching existing sources of data, gathering and maintaining the data needed, and completing and reviewing the collection.

Title: Regulated Navigation Areas; Reporting Requirements for Barges Loaded with Certain Dangerous Cargoes, Inland Rivers, Eighth and Ninth Coast Guard Districts.

OMB Control Number: 1625-0105.

Summary of the Collection of Information: The Coast Guard requires position and intended movement reporting, and cargo transfer and fleeting operations reporting, from barges carrying CDCs in the inland rivers within the Eighth and Ninth Coast Guard Districts. This rule will amend 33 CFR part 165 to temporarily require:

Owners and operators of covered barges must report the following information via toll free telephone, toll free fax, or email:

a. Name of barge and towboat;

b. Name of loading, fleeting, and terminal facility;

c. Estimated time of arrival (ETA) at loading, fleeting and terminal facility;

d. Planned route, including estimated time of departure (ETD) from loading, fleeting, and terminal facility;

e. 4 hours prior to loading covered dangerous cargoes;

f. 4 hours prior to dropping off a covered barge in a fleeting area;

g. 4 hours prior to picking up a covered barge from a fleeting area;

h. 4 hours prior to getting underway with a covered barge;

i. At entry into the covered geographical area;

j. ETA at approximately 148 designated reporting points within the covered geographical area;

k. At any time ETA to a reporting point varies by 6 hours from the previously reported ETA;

l. Any significant deviation from previously reported information;

m. Upon arrival at the “final” destination with a covered barge, if within the covered geographical area;

n. Upon departing the covered geographical area; and

o. When directed by the Coast Guard.

The temporary changes will be in effect through October 31, 2003.

Need for Information: To ensure port safety and security and to ensure the uninterrupted flow of commerce, the Coast Guard must temporarily issue regulations requiring position and intended movement reporting, and cargo transfer and fleeting operations reporting, from barges carrying CDCs in the inland rivers within the Eighth and Ninth Coast Guard Districts.

Proposed use of Information: This information is required to enhance maritime security, control vessel traffic, develop contingency plans, and enforce regulations.

Description of the Respondents: The respondents are owners, agents, masters, operators, or persons in charge of barges loaded with certain dangerous cargoes operating on the inland rivers located within the Eighth and Ninth Coast Guard Districts.

Number of Respondents: The existing OMB-approved collection number of respondents is zero (0). This temporary rule will increase the number of respondents by 3,505 to a total of 3,505.

Frequency of Response: The existing OMB-approved collection annual number of responses is zero (0). This temporary rule will increase the number of responses by 7,711 to a total of 7,711.

Burden of Response: The existing OMB-approved collection burden of response is zero (0). This temporary rule will increase the burden of response by 15 minutes (0.250 hours) to a total of 15 minutes (0.250 hours).

Estimate of Total Annual Burden: The existing OMB-approved collection total annual burden is zero (0). This temporary rule will increase the total annual burden by 1,928 hours to a total of 1,928 hours.

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), we submitted a copy of this rule to the Office of Management and Budget (OMB) for its review of the collection of information. Due to the circumstances surrounding this temporary rule, we asked for “emergency processing” of our request. We received OMB approval for the collection of information on April 16, 2003. It is valid through October 31, 2003.

We ask for public comment on the collection of information to help us determine how useful the information is; whether it can help us perform our functions better; whether it is readily available elsewhere; how accurate our estimate of the burden of collection is; how valid our methods for determining burden are; how we can improve the quality, usefulness, and clarity of the information; and how we can minimize the burden of collection.

If you submit comments on the collection of information, submit them both to OMB and to the Docket Management Facility where indicated under ADDRESSES, by the date under DATES.

You need not respond to a collection of information unless it displays a currently valid control number from OMB. We received OMB approval for the collection of information on April 16, 2003. It is valid through October 31, 2003.

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it 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.

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We have analyzed this rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1 paragraph (34)(g), of the instruction, from further environmental documentation because this rule is not expected to result in any significant environmental impact as described in NEPA. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES.

Pursuant to sections 182(b)(2) and 182(f) of the CAA, the Commonwealth of Pennsylvania (the Commonwealth or Pennsylvania) is required to establish and implement RACT for all major VOC and NO X sources. The major source size is determined by its location, the classification of that area, and whether it is located in the ozone transport region (OTR). Under section 184 of the CAA, RACT, as specified in sections 182(b)(2) and 182(f) applies throughout the OTR. The entire Commonwealth is located within the OTR. Therefore, RACT is applicable statewide in Pennsylvania.

On December 21, 2001, PADEP submitted formal revisions to its SIP to establish and impose case-by-case RACT for several major sources of VOC and NO X . This rulemaking pertains to three of those sources. The other sources are subject to separate rulemaking actions. The RACT determinations and requirements are included in plan approvals (PA) or operating permits (OP) issued by PADEP.

The following identifies the individual plan approval or operating permit that EPA is approving for each source.

Bethlehem Structural Products Corporation (BSPC) is a coke and coal chemical production facility located in Northampton County, Pennsylvania and is considered a major VOC and NO X emitting facility. In this instance, RACT has been established and imposed by PADEP in an operating permit. On December 21, 2001, PADEP submitted operating permit No. OP-48-0013 to EPA as a SIP revision. This permit requires BSPC sources and any associated air cleaning devices to be operated and maintained in a manner consistent with good operating and maintenance practices. This permit contains the following NO X emission limits: (a) Battery “A” combustion stack—0.71 lb./MMBTU heat input for a 30-day rolling average; (b) Battery “2A” combustion stack—0.24 lb./MMBTU heat input for a 30-day rolling average; (c) Desulfurizer—4.25 tons per year; (d) Coke bleeders (operations)—0.85 tons per day; and (e) Coke Plant Boilerhouse—Boiler Nos. 1, 2, 3 and 4—0.25 lb./MMBTU heat input (daily average). This permit also contains VOC emission limits for the coke side from Battery “A” that shall not exceed 438 tons per year.

This permit contains testing requirements for the following: (a) Source tests for NO X for the boiler house, Battery “A” combustion stack and for Battery “2A” (each of under fire stacks 2 and 3) shall be conducted in accordance with 25 Pa. Code Chapter 139 as per PADEP's source testing procedures described in the latest Source Testing Manual or source testing procedure approved by PADEP prior to testing. Compliance shall be based on average of these consecutive source tests and the source tests are to be conducted on an annual basis; (b) At least 60 days prior to the tests, pre-test protocol shall be submitted to PADEP for approval; and (c) Within 60 days of completion of the tests, two copies of the complete test reports, including all operating conditions shall be submitted to PADEP for approval.

The permit also contains requirements for the coke and chemical production sources:

(1) Battery “A” and “2A” Under fire—The NO X RACT shall be the operation and maintenance of low excess air technology, by minimizing fuel use and maintaining the best air-to-fuel ratio that satisfies the process. The company shall maintain records in accordance with the record keeping requirements of 25 Pa. Code section 129.95 and shall include as a minimum, data which clearly demonstrate that the NO X emission limits are met. All records shall be maintained for at least two years and made available to PADEP upon request.

(2) Desulfurizer—NO X and VOC RACT for the desulfurizer operation, specifically the tail-gas incinerator of the desulfurizer, shall be the operation and maintenance of the source according to the manufacturers specifications. The facility shall not be less than 22,000,000 SCFD of the minimum daily amount of coke oven gas entering the oven gas desulfurizer unit and shall not exceed 70,000,000 SCFD of the maximum daily amount of coke oven gas entering the coke oven gas desulfurizer unit. The facility shall record the daily amount of coke oven gas produced by the coke oven batteries and those records be maintained for a period of two years and made available to PADEP upon request. Within 14 days of the completion of the annual desulfurizer plant outage for the boiler inspection and plant maintenance, the facility shall submit a written notification to PADEP giving the details of the maintenance work performed on the plant, and the dates of the outage. The facility shall maintain records in accordance with the recordkeeping requirements of 25 Pa. Code section 129.95 and shall include as a minimum, data which clearly demonstrate that the NO X emission limits are met. All records shall be maintained for a period of at least two years and made available to PADEP upon request.

(3) Coke Bleeders—The NO X RACT for the Coke Bleeders shall be the operation and maintenance of the sources according to the current operating practice. The facility shall maintain records in accordance with the recordkeeping requirements of 25 Pa. Code section 129.95 and shall include as a minimum, data which clearly demonstrate that the NO X emission limits are met. All records shall be maintained for a period of at least two years and made available to PADEP upon request.

(4) Coke Plant Boiler house—Boiler Nos. 1, 2 and 3 can be fired by a combination of tar derivatives, used oil, and No. 6 fuel oil; a combination of tar and grease derived fuel oil; and a combination of desulfurized coke oven gas and natural gas. Boiler No. 4 can be fired by a combination of No. 6 fuel oil, tar derivatives and used oil or a combination of desulfurized coke oven gas and natural gas. NO X RACT shall be the operation and maintenance of the boilers according to manufacturers specifications. In addition, an annual tune-up of each boiler's combustion process shall be performed. The facility shall maintain records in accordance with the recordkeeping requirements of 25 Pa. Code section 129.95 and shall include as a minimum, data which clearly demonstrate that the NO X emission limits are met. All records shall be maintained for a period of at least two years and made available to PADEP upon request.

(5) Coal Chemical Process—VOC RACT of the coal chemical process shall be the operation and maintenance of the sources according to the manufacturer's specifications. Sources shall also be operated and maintained in accordance with good air pollution control practices. The coal chemical process consists of sources and associated gas blanketing systems identified in the permit. The facility shall maintain records in accordance with the recordkeeping requirements of 25 Pa. Code section 129.95. All records shall be maintained for at least two years and made available to PADEP upon request.

(6) Coke Oven Batteries “A” and “2A”—VOC RACT for the Coke Oven Batteries “A” and “2A”, push and coke sides, shall be the operation and maintenance of the sources according to the manufacturer's specifications. Sources shall also be operated and maintained in accordance with good air pollution control practices. The facility shall maintain records in accordance with the recordkeeping requirements of 25 Pa. Code section 129.95 and shall include as a minimum, data which clearly demonstrate that the VOC emission limit is met. All records shall be maintained for a period of at least two years and made available to PADEP upon request.

(7) VOC RACT for in-plant painting and the compressed air system shall be the operation and maintenance of the sources according to manufacturers' specifications.

International Paper Company, Erie Mill, operates an integrated pulp and paper manufacturing facility located in Lancaster County, Pennsylvania and is considered a major VOC and NO X emitting facility. Boilers 18, 19, 21, and 23 provide power for the facility. In this instance, RACT has been established and imposed by PADEP in a plan approval. On December 21, 2001, PADEP submitted plan approval No. PA-25-028 to EPA as a SIP revision. The plan approval is for the installation of Low NO X Burners on Boilers 18 and 19. Stack testing shall be done in accordance with 25 Pa. Code Chapter 139 for determining the amount of NO X emissions. The facility shall conduct annual stack testing on Boilers 18 and 19 within 10 weeks after the installation of Low NO X Burners. Stack testing shall be performed on Boiler 23 on or before the stack testing date set for Boilers 18 and 19. A pre-test procedure shall be submitted at least 30 days prior to actual testing. PADEP shall be notified at least two weeks in advance of the date and time of stack testing. Two copies of the complete test reports shall be submitted within 60 days after the source test.

The plan approval requires the facility to comply with 25 Pa. Code section 129.95 for recordkeeping requirements.

The plan approval contains emission limits of NO X for Boiler No. 21 and the Recovery Boiler based on a 30-day rolling average of 0.54 lbs./MMBTU and 0.20 lbs./MMBTU, respectively. Both Boiler No. 21 and the Recovery Boiler are equipped with a NO X continuous emission monitoring (CEM) system, which will be used to show compliance with the NO X RACT limit.

VOC emissions from the pulp production area, paper mill, and recausticizing areas shall be maintained at the lowest possible level. International Paper shall maintain a program of continual evaluation of available chemical formulations for replacement where possible with chemical formulations containing a lower level of VOC. International Paper shall maintain records of usage of VOC containing materials in accordance with 25 Pa. Code section 129.95, and shall inform PADEP upon changes in currently used VOC containing chemical formulations.

The National Fuel Gas Supply Corporation, Heath Compressor Station, is located in Jefferson County, Pennsylvania and is considered a major NO X emitting facility. This facility consists of seven natural gas compressors and a standby generator. All seven compressors are reciprocating internal combustion engines fueled by pipeline quality natural gas. The standby generator is driven by a 35 HP internal combustion engine fueled by natural gas. In this instance, RACT has been established and imposed by PADEP in an operating permit for one of the compressors, the Waukesha Unit #9. On December 21, 2001, PADEP submitted operating permit No. PA-33-144A to EPA as a SIP revision. The RACT plan approval is for the installation of an air fuel ratio controller and catalytic converter on the Waukesha Unit #9. Emission limits for the Waukesha Unit #9 will be reduced 80 percent to a low NO X emission rate of 7.7 lb./hr. The NO X RACT emission limits will be waived for one hour period following the sources start up or shutdown. Stack testing to determine the emission rates shall be performed within 60 days of startup of the unit and every five years thereafter. The facility shall perform semi-annual stack tests using a portable analyzer on the Waukesha Unit. The protocol shall be approved by PADEP and may require annual tests in accordance with EPA reference methods pending the submission of the semi-annual stack tests. At least 30 days prior to the scheduled stack test, a test procedure and a sketch with dimensions indicating the location of sampling ports and other data to ensure the collection of representative samples shall be submitted to PADEP for approval. Also, at least two weeks prior to the test, PADEP shall be informed of the date and time of the test. Two copies of the stack test results shall be submitted to PADEP for review within 60 days of completion of the testing. The facility shall submit to PADEP all recordkeeping reports for all sources subject to RACT requirements within 30 days of the end of each calendar year. The facility shall also comply with 25 Pa. Code section 129.95 for recordkeeping requirements. For the standby generator, this source shall be installed, maintained, and operated in accordance with the manufacturer's specification, be operating less than 500 hours in a consecutive 12 month period, and also be operated and maintained in accordance with good air pollution control practices. For Snow units 1, 2, 3, 4, 6, and 8; and the other sources listed in Table 2 of the RACT plan approval, these sources shall be installed, maintained and operated in accordance with the manufacturer's specifications, and also be operated and maintained in accordance with good air pollution control practices.

EPA is approving these SIP submittals because the Commonwealth established and imposed requirements in accordance with the criteria set forth in SIP-approved regulations for imposing RACT or for limiting a source's potential to emit. The Commonwealth has also imposed record-keeping, monitoring, and testing requirements on these sources sufficient to determine compliance with these requirements.

EPA is approving revisions to the Commonwealth of Pennsylvania's SIP which establish and require RACT for these three major sources of VOC and NO X : (1) Bethlehem Structural Products Corporation in Northampton County; (2) International Paper Company in Erie County; and (3) National Fuel Gas Supply in Jefferson County. EPA is publishing this rule without prior proposal because we view this as a noncontroversial amendment and anticipate 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 direct final rule will be effective on July 1, 2003, without further notice unless we receive 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. Section 804 exempts from section 801 the following types of rules: (1) Rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding today's action under section 801 because this is a rule of particular applicability establishing source-specific requirements for three named sources.

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 July 1, 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 approving the Commonwealth's source-specific RACT requirements to control VOC and NO X from three individual sources may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

Because EPA received written comments that opposed this authorization, EPA is withdrawing the immediate final rule for Virginia: Final Authorization of State Hazardous Waste Management Program Revision published on March 13, 2003, at 68 FR 11981, which would have authorized changes to Virginia's hazardous waste rules. EPA stated in the immediate final rule that if EPA received written comments that opposed this authorization during the comment period, EPA would publish a timely notice of withdrawal in the Federal Register . Since EPA received comments that opposed this action, today EPA is withdrawing the immediate final rule. EPA will address the comments received during the comment period in a subsequent final action based on the proposed rule also published on March 13, 2003. EPA will not provide for additional public comment during the final action.

The NFIP enables property owners to purchase flood insurance which is generally not otherwise available. In return, communities agree to adopt and administer local floodplain management aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits flood insurance coverage as authorized under the National Flood Insurance Program, 42 U.S.C. 4001 et seq. ; unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59 et seq. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. However, some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue their eligibility for the sale of insurance. A notice withdrawing the suspension of the communities will be published in the Federal Register .

In addition, the Federal Emergency Management Agency has identified the special flood hazard areas in these communities by publishing a Flood Insurance Rate Map (FIRM). The date of the FIRM if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may legally be provided for construction or acquisition of buildings in the identified special flood hazard area of communities not participating in the NFIP and identified for more than a year, on the Federal Emergency Management Agency's initial flood insurance map of the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment under 5 U.S.C. 553(b) are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives a 6-month, 90-day, and 30-day notification addressed to the Chief Executive Officer that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications have been made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Considerations. No environmental impact assessment has been prepared.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless they take remedial action.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Executive Order 12612, Federalism. This rule involves no policies that have federalism implications under Executive Order 12612, Federalism, October 26, 1987, 3 CFR, 1987 Comp.; p. 252.

Executive Order 12778, Civil Justice Reform. This rule meets the applicable standards of section 2(b)(2) of Executive Order 12778, October 25, 1991, 56 FR 55195, 3 CFR, 1991 Comp.; p. 309.

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

Section 2745(b) of the Public Health Service Act (PHS Act), as added by section 201(b) of the Trade Adjustment Assistance Reform Act of 2002, authorizes the Secretary to make grants to States for up to 50 percent of the losses they incur in the operation of qualified high risk pools , and appropriates the necessary funds. In order to qualify for a grant, a State's risk pool must meet the definition of a qualified risk pool, as described in section II of this preamble, as well as other applicable eligibility requirements described in that section.

The total amount appropriated for these grants is $80 million ($40 million each in Federal fiscal years (FY) 2003 and 2004). We have two years to obligate funding for each fiscal year. As directed by the statute, we will allocate funds in accordance with a formula based upon the number of uninsured individuals in each eligible State. This formula, described in section II of this preamble and in § 148.312(b) of the final rule, was developed using the most accurate and current statistics available on the uninsured in each State. Eligible States may apply for grants for amounts up to 50 percent of losses they incur in connection with the operation of a qualified high risk pool. A State must have a qualified high risk pool that has incurred a loss in order to be eligible for a grant.

We are adding a new subpart E to 45 CFR 148, to provide for grants to States that incur losses in connection with operating qualified high risk pools. This subpart implements section 2745 of the PHS Act. Its purpose is to provide grants to States that have qualified high risk pools that meet the specific requirements described in § 148.310. It also provides specific instructions on how to apply for the grants and outlines the grant review and grant award processes.

We are adding § 148.306, which describes the statutory basis and scope of the regulation. We are also adding § 148.308, “Definitions.” CMS stands for Centers for Medicare & Medicaid Services. For the purposes of subpart E, a “qualified high risk pool” is a high risk pool that meets the conditions described in § 148.128(a)(2)(ii): (1) It provides to all eligible individuals, as defined in § 148.103, health insurance coverage (or comparable coverage) that does not impose any preexisting condition exclusion or affiliation periods for coverage of an eligible individual; and (2) provides for premium rates and covered benefits for the coverage consistent with the standards included in the National Association of Insurance Commissioners (NAIC) Model Health Plan for Uninsurable Individuals Act (as in effect as of August 21, 1996) but only if the model has been revised in State regulations to meet all of the requirements of this part and title 27 of the PHS Act.

A “loss” means the difference between expenses incurred by a qualified high risk pool, including payment of claims and administrative expenses, and premiums collected by the pool. A “standard risk rate” means a rate developed by a State using reasonable actuarial techniques and taking into account the premium rates charged by the other insurers offering health insurance coverage to individuals in the same geographical service area to which the rate applies. The standard rate may be adjusted based upon age, sex, and geographical location.

We are adding § 148.310, which describes eligibility requirements for a grant. A State must meet all of the following requirements to be eligible for a grant:

(a) The State has a qualified high risk pool as defined in § 148.308.

(b) The pool restricts premiums charged under the pool to no more than 150 percent of the premium for applicable standard risk rates for the State.

(c) The pool offers a choice of two or more coverage options through the pool.

(d) The pool has in effect a mechanism reasonably designed to ensure continued funding of losses incurred by the State after the end of fiscal year 2004 in connection with the operation of the pool.

(e) The pool has incurred a loss in a period described in § 148.314.

We are adding § 148.312, which describes the amount of a grant payment. Paragraph (a) provides that an eligible State may receive a grant to fund up to 50 percent of the losses incurred in the operation of its qualified high risk pool during the period for which it is applying. Paragraph (b) provides that we will allocate funds to each eligible State in accordance with the following formula:

(1) The number of uninsured individuals is calculated for each eligible State by taking a 3-year average of the number of uninsured individuals in that State in the Current Population Survey (CPS) of the Census Bureau. For grants based upon State fiscal years 2002 and 2003, a 3-year average will be calculated using numbers available as of May 1, 2003. For grants based upon State fiscal year 2004, a 3-year average will be calculated using numbers available as of March 1, 2005. Calculation of the State 3-year average will be done by the Census Bureau and provided to CMS.

(2) Based upon the CPS numbers, the State's percentage of the total uninsured population of eligible States is calculated and then multiplied by $40 million to determine the State's maximum allotment for the fiscal year in question. For example, if the most current 3-year average of uninsured individuals in State A is one million, and the 3-year average of uninsured individuals for all eligible States was 10 million, State A would have 10 percent of the uninsured population of the eligible States. Accordingly, State A's allotment would be 10 percent of $40 million, or $4 million, for the fiscal year in question.

Paragraph (c) states that the amount awarded to each eligible State will be the lesser of the 50 percent of losses incurred by its qualified risk pool for the fiscal year in question or its allotment under the formula.

We are adding § 148.314, which describes the periods for which eligible States may apply for grants; application deadlines; and allocation methodology. Under paragraph (a), an eligible State may apply for a grant to fund losses incurred in the operation of its qualified risk pool during the State's fiscal year 2002, 2003, or 2004. A State may apply for losses incurred in a partial fiscal year if a partial year audit is done. Under paragraph (b), an eligible State may only be awarded a maximum of two grants, with one grant per fiscal year. A grant for a partial fiscal year counts as a full grant. We also explain how we determine which grants will be funded out of which Federal fiscal year funds. This will depend in part on when the State submits its initial application.

In paragraph (c), we indicate that the deadlines for submitting grant applications are stated in § 148.316(d).

In paragraph (d), we explain how Federal funds will be distributed to States that may qualify at different points in time. The first group of States are those that submit applications for their fiscal year 2002 losses. (We will refer to those States as “02 States.”) These States, that meet all the eligibility requirements and incur losses in connection with a qualified high risk pool in State fiscal year 2002, may submit a grant request, which must be received by September 30, 2003. The first year grant for these States will be funded with Federal fiscal year 2003 funds. The 02 States may be eligible for a second grant to fund their fiscal year 2003 losses. The deadline for those grant requests will be June 30, 2004. As explained below, these grants will be funded with Federal fiscal year 2004 funds. (If a State does not receive a grant for State fiscal year 2003, however, it still might qualify for its fiscal year 2004, as discussed below.)

The second group of States are those that do not submit applications for their 2002 fiscal years (or do submit applications but do not qualify) and that first qualify with respect to losses incurred in their fiscal year 2003. (We will refer to these States as “03 States.”) These States may submit a grant request, which must be received by June 30, 2004. The first year grant for these States will be funded with Federal fiscal year 2003 funds. The 03 States (or any 02 States that did not apply or receive approval for losses incurred during State fiscal year 2003) may be eligible for a second grant to fund their fiscal year 2004 losses. The deadline for those grant requests will be June 30, 2005. Those grants will be funded with Federal fiscal year 2004 funds. The third group of States are those that first qualify with respect to losses incurred in their fiscal year 2004. (We will refer to these States as “04 States”). These States may submit a grant request, which must be received by June 30, 2005. The first year grant for these States will be funded with Federal fiscal year 2004 funds. The 04 States will not be eligible for a second grant because the availability of Federal funds will have expired.

In paragraph (e), we explain how excess funds will be redistributed. The initial grants to the 02 States and the 03 States will come from the Federal fiscal year 2003 funds. After the deadline for 02 grants, we will determine how many States have submitted applications for grants. We will estimate, based upon contacts with other States, how many requests are likely to be received from 03 States. We will make an initial allotment for 02 States based upon these estimates. In other words, we will reserve some of the Federal fiscal year 2003 funds after the 02 States grant requests have been received in anticipation of requests being made by 03 States. Based upon expressions of interest we have received from States, we believe we have a reasonable estimate of the States that are likely to first qualify in their fiscal year 2003. We will hold in reserve our best estimate of the maximum amount of funds needed to provide full allotments to these States. If there are excess reserves (that is, the Department withholds more money than was necessary to provide grants to the 03 States), the excess funds will be proportionally redistributed to the 02 States and the 03 States, but not to exceed 50 percent of losses incurred by the States. In other words, the size of the first year grants will be increased retroactively for these States. In the unlikely event that the Department should underestimate the reserve needed to fund grants to all eligible 03 States, money will be taken from the Federal fiscal year 2004 funds to assure that all eligible 03 States receive grants on an equivalent basis. We do not expect it to have a major impact on funding of the additional grants from the Federal fiscal year 2004 funds. Similarly, the Department will reserve some of the Federal fiscal year 2004 money to fund the second year grants for 02 and 03 States and the first year grants for the 04 States.

We believe that this method of distribution of the Federal funds is the fairest because it allows for States that qualified for a grant in their fiscal year 2002 to immediately apply for funding and it also allows for the States who may not immediately qualify to enact the changes needed in order to qualify and apply for funding in either their fiscal year 2003 or fiscal year 2004. In other words, this method is set up to accommodate as many States as possible.

We are adding § 148.316, which describes the application package that the individual State must submit to document that it has met the requirements for a grant. At a minimum, the package must include a completed standard form application kit (see paragraph (b) of this section) along with the following information:

(1) History and description of the qualified high risk pool. Provide a detailed description of the qualified high risk pool that includes the following:

(i) Brief history, including date of inception.

(ii) Enrollment criteria (including provisions for the admission of eligible individuals, as defined in § 148.103) and number of enrollees.

(iii) Description of how coverage is provided administratively in the qualified high risk pool (that is, self-insured, through a private carrier, etc.).

(iv) Benefits options and packages offered in the qualified high risk pool to both eligible individual (as defined in § 148.103) and other applicants.

(v) Outline of plan benefits and coverage offered in the pool and the plan benefits and coverage of the two most popular policies in the State's private individual market.

(vi) Premiums charged (in terms of dollars and in percentage of standard risk rate) and other cost-sharing mechanisms, such as co-pays and deductibles, imposed on enrollees (both eligible individuals (as defined in § 148.103) and non-eligible individuals if a distinction is made).

(vii) How the standard risk rate for the State is calculated and when it was last calculated.

(viii) Revenue sources for the qualified high risk pool, including current funding mechanisms and, if different, future funding mechanisms. Provide current projections of future income.

(ix) Copies of all governing authorities of the pool, including statutes, regulations, and plan of operation.

(2) Accounting of risk pool losses. Provide a detailed accounting of claims paid, administrative expenses, and premiums collected for the fiscal year for which the grant is being requested. Indicate the timing of the fiscal year upon which the accounting is based. Provide the methodology of projecting losses and expenses, and include current projections of future operating losses (this information is needed to judge compliance with the requirement in § 148.310(d) of this final rule).

(3) Contact person. Identify the name, position title, address, e-mail address, and telephone number of the person to contact for further information and questions.

In paragraph (b)(1) of § 148.316, the following standard forms must be completed with an original signature and enclosed as part of the proposal:

These forms can be downloaded from the following Web site: http://www.cms.hhs.gov/researchers/priorities/grants.asp.

Paragraph (b)(2) specifies that all other narrative in the application must be submitted on 8 1/2 x 11″ white paper.

In paragraph (c), we describe what applicants are required to submit. Applicants are required to submit an original and two copies of the application. Submissions by facsimile (fax) transmissions will not be accepted.

Applications mailed through the U.S. Postal Service or a commercial delivery service will be considered “on time” if received by the close of business on the closing date, or postmarked (first class mail) by the date specified in the DATES section of this final rule. If express, certified, or registered mail is used, the applicant should obtain a legible dated mailing receipt from the U.S. Postal Service. Private metered postmarks are not acceptable as proof of timely mailings.

In paragraph (d), we describe the deadlines States must meet for submitting an application for losses they incur in a specified fiscal year.

(1) Deadline for States to submit an application for losses incurred in their fiscal year 2002. States must submit an application to us by no later than September 30, 2003.

(2) Deadline for States to submit an application for losses incurred in their fiscal year 2003. States must submit an application to us by no later than June 30, 2004.

(3) Deadline for States to submit an application for losses incurred in their fiscal year 2004. States must submit an application to us by no later than June 30, 2005.

In paragraph (e), we indicate where to submit an application. All initial applications and supplemental applications must be submitted to:

Centers for Medicare & Medicaid Services, Acquisition and Grants Group, Mail Stop C2-21-15, 7500 Security Boulevard, Baltimore, MD 21244-1850, Attn: Nicole Nicholson.

We added § 148.318, which describes how we will review grant applications. Paragraph (a) indicates that this grant program is not listed by the Secretary under 45 CFR 100.3, and therefore the grant program is not subject to review by States under 45 CFR part 100, which implements Executive Order 12372, “Intergovernmental Review of Federal Programs.”

Paragraph (b) states that a team consisting of staff from CMS and the Department of Health and Human Services will review all applications. The team will meet as necessary on an ongoing basis as applications are received.

Paragraph (c) describes the eligibility criteria. To be eligible for a grant, a State must submit sufficient documentation to demonstrate that its high risk pool meets the eligibility requirements described in § 148.310. A State must include sufficient documentation of the losses incurred in the operation of the qualified high risk pool in the period for when it is applying. Paragraph (d) indicates that if the review team determines that a State meets the eligibility requirements described in § 148.310, the review team will use the following additional criteria in reviewing the applications:

(1) Documentation of expenses incurred during operation of the qualified high risk pool. The losses and expenses incurred in the operation of a State's pool are sufficiently documented.

(2) Funding mechanism. The State has outlined funding sources, such as assessments and State general revenues, which can cover the projected costs and are reasonably designed to ensure continued funding of losses a State incurs in connection with the operation of the qualified high risk pool after fiscal year 2004.

We added § 148.320, which describes our grant award process. Paragraph (a) provides that we will notify each State applicant in writing of CMS' decision on its application. If we award a grant to the State applicant, the award letter will contain the following terms and conditions:

(i) All funds awarded to the grantee under this program must be used exclusively for the operation of a qualified high risk pool that meets the eligibility requirements for this program.

(ii) The grantee must keep sufficient records of the grant expenditures for audit purposes (see 45 CFR part 92).

(iii) The grantee may be required to submit quarterly progress and financial reports under 45 CFR 92.

Paragraph (b) specifies that an applicant that receives a grant award must submit a letter of acceptance to CMS' Acquisition and Grants Group within 30 days of the date of the award agreeing to the terms and conditions of the award letter.

We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule. The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed, and the terms and substance of the proposed rule or a description of the subjects and issues involved. This procedure can be waived, however, if an agency finds good cause that a notice-and-comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued. In this instance, we find that notice-and-comment is contrary to the public interest because it is beneficial to the eligible States and to the uninsured population in the eligible States that funding for qualified high risk pool is available as quickly as possible. The sooner the funds become available for States to fund losses incurred in the operation of the qualified high risk pools, the sooner that the pools can expand their eligibility to provide coverage to more uninsured individuals.

Therefore, we find good cause to waive the notice of proposed rulemaking and to issue this final rule on an interim basis. We are providing a 60-day public comment period.

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

Under the Paperwork Reduction Act (PRA) of 1995, we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the PRA requires that we solicit comment on the following issues:

• The need for the information collection and its usefulness in carrying out the proper functions of our agency.

• The accuracy of our estimate of the information collection burden.

• The quality, utility, and clarity of the information to be collected.

• Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

We are soliciting public comment on each of these issues for the section that contains information collection requirements.

This section requires an applicant to submit the application in writing and states what it must contain.

Paragraph (b) of this section requires an applicant that is granted an award to send CMS a letter of acceptance.

These two information collection requirements together have been estimated to take 40 hours per applicant/grantee to fulfill, for a total of 800 hours per year, based on a maximum of 20 applicants. This burden has been approved by the Office of Management and Budget under approval number 0938-0887 through June 2003.

Paragraph (a)(2)(iii) of this section states that the grantee may be required to submit quarterly progress and financial reports under pursuant to part 92 of this title.

The burden associated with requirement is the time it will take the grantee to complete the reports, if requested. At a maximum, a grantee would have to complete 8 reports; however, we anticipate that the grantees will need to file only semi-annually, thus completing only four reports. We estimate that a progress report will take 30 minutes to complete and a financial report 30 minutes as well. This would total 2 hours per grantee per year, or 40 hours per year (2 hrs. × 20 grantees).

If you comment on these information collection and record keeping requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic Operations and Regulatory Affairs, DRDI, DRD-B, Attn: Julie Brown, Room C5-16-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.

Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: Brenda Aguilar, CMS Desk Officer.

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

Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). Since the amount of appropriations under this rule will not total more than $40 million per fiscal year, it is not a major rule.

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6 million to $29 million in any 1 year. Individuals and States are not included in the definition of a small entity. Since this rule is implementing a grant program for the States, this rule will not have a significant impact on small businesses.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. Again, since this rule is implementing a grant program for the States, it will not have a significant impact on small hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local, or tribal governments, in the aggregate, or by the private sector, of $110 million. Since this rule is strictly an appropriation, there are no unfunded mandates included in the rule.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this rule is strictly an appropriation of $80 million to the States to fund losses incurred in the operation of qualified high risk pools, it will have a beneficial impact on State governments since the funds will be used to provide health insurance coverage to uninsured individuals and will not impose any direct requirement costs on State and local governments.

This rule will have a positive impact on approximately 22 States that currently operate qualified high risk pools in that it will make funds available to those States to fund losses incurred in the operation of their high risk pools. Additionally, in order to be eligible for funding, the high risk pools will have to lower or maintain their premium cap at no higher than 150 percent of the standard rate in the private market. These grants, therefore, will serve as an incentive for States to keep their risk pool premiums at a level that will be affordable and accessible to more uninsured individuals. It will not significantly impact upon other entities, including providers, nor will it have any significant impact on the Medicare and Medicaid programs.

The Trade Adjustment Assistance Reform Act of 2002 was very prescriptive in its criteria for eligibility for operation grants to high risk pools. It also provided a specific definition of a high risk pool and outlined the allocation formula for the grants. In addition to following the statute, we had to comply with the Department grant award procedure requirements. Because of these requirements, and because we wanted to make the money available as quickly as possible, we did not consider other major alternatives on how to award the grants.

For the reasons indicated elsewhere in this section, we are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined, and we certify, that this rule will not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.

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

This is a summary of the Federal Communications Commission's Second Report and Order (2nd R&O), FCC 03-51, adopted March 7, 2003, and released March 14, 2003. The full text of the 2nd R&O is available for public inspection during regular business hours at the FCC Reference Information Center, 445 12th St., SW., Room CY-A257, Washington, DC 20554. The complete text may be purchased from the Commission's duplicating contractor: Qualex International, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail at qualexint@aol.com.

1. In June 2000, the Commission adopted bidding credits for use by winning bidders who pledge to deploy facilities and provide service to federally recognized tribal areas that have a telephone service penetration rate at or below 70 percent. In setting out the bidding credit, the Commission noted that communities on tribal lands have had less access to telecommunications services than any other segment of the U.S. population. See Extending Wireless Telecommunications Services to Tribal Lands, WT Docket No. 99-266, Report and Order, 65 FR 47349 (August 2, 2000) ( R&O ), and Further Notice of Proposed Rulemaking, 65 FR 47366 (August 2, 2000) ( FNPRM ).

2. The R&O provided that, in order to obtain a bidding credit in a particular market, a winning bidder must indicate on its long-form application (FCC Form 601) that it intends to serve tribal lands in that market. Following the long-form application filing deadline, the applicant has 90 calendar days to amend its application to identify the tribal lands to be served, and provide certification from the tribal government(s) that: (1) It will allow the bidder to site facilities and provide service on its tribal land(s), in accordance with the Commission's rules; (2) it has not and will not enter into an exclusive contract with the applicant precluding entry by other carriers, and will not unreasonably discriminate against any carrier; and (3) its tribal land is a qualifying tribal land as defined in the Commission's rules, i.e., an area that has a telephone penetration rate at or below 70 percent. In addition, at the conclusion of the 90-day period, the applicant must amend its long-form application to file a certification that it will comply with the bidding credit build-out requirement, and that it will consult with the tribal government regarding the siting of facilities and deployment of service on the tribal land. Upon receipt by the Commission of the certifications, the bidding credit is awarded and the applicant makes payment of the final net adjusted bid amount. If the required certifications are not provided at the conclusion of the 90-day period, the bidding credit is not awarded and the applicant is required to pay the balance on the original gross bid amount in order to be awarded the licenses.

3. In order to ensure that applicants awarded bidding credits actually deploy facilities and provide service to tribal lands, the Commission imposed performance requirements as a condition of obtaining the bidding credit. The Commission required that a licensee construct and operate its system to cover 75 percent of the population of the qualifying tribal land within three years of the grant of the license. While this 75 percent benchmark is higher than the construction benchmarks applicable to auctioned wireless licenses generally, the Commission determined that it would ensure that only carriers that are committed to serving tribal lands will receive bidding credits, and that wireless telecommunications services will be deployed rapidly to underserved tribal areas. In the R&O, the Commission required that, at the conclusion of the three-year period, licensees file a notification of construction indicating that they have met the 75 percent construction requirement on the tribal lands for which the credit was awarded. If the licensee fails to comply with any condition, it is required to repay the bidding credit plus interest thirty days after the conclusion of the construction period. In the event the licensee fails to repay the amount, the license automatically cancels.

4. In limiting the scope of the bidding credit to federally recognized tribal areas with telephone penetration rates equal to or less than 70 percent, the Commission concluded that the credits would target the tribal communities with the greatest need for access to telecommunications service. Although the Commission acknowledged that there are some non-tribal areas with penetration rates lower than the national average, it was determined that almost all non-tribal areas have penetration rates greater than 70 percent and that non-tribal areas have penetration rates significantly greater than most tribal areas. Accordingly, the Commission found it appropriate to limit the program to tribal lands with a 70 percent or less penetration rate. The Commission did not, however, foreclose the possibility of extending the credit both to non-tribal areas and to areas with higher penetration rates.

5. In the FNPRM, the Commission solicited comment on ways the bidding credit could be extended to encourage further deployment of wireless telecommunications services. The Commission specifically sought comment on whether it should award bidding credits to carriers who commit to serve non-tribal areas with a 70 percent or less penetration rate, or tribal and/or non-tribal areas with penetration levels above 70 percent but significantly below the national average. Further, comment was requested regarding whether the Commission should expand the program to give transferable bidding credits to be used in future auctions to existing licensees in already-established wireless services who deploy and provide service to unserved tribal communities. The Commission also asked whether it should make credits available to licensees that enter into partitioning agreements with tribal authorities that allow the tribal government to provide service, either directly or through negotiation with a third-party carrier.

6. Certification Procedure. When the Commission adopted the tribal lands bidding credit in the R&O, it established the method by which a bidding credit would be calculated, as well as the application process involved in obtaining a bidding credit. Since the inception of the tribal lands bidding credit, there have been 10 auctions, with 375 winning bidders purchasing 10,479 licenses. However, only 27 winning bidders to date have initially indicated on their long-form applications that they would be seeking the tribal lands bidding credit, and of those applicants, only five submitted the required 90-day certifications. Upon review of this proceeding, the Commission finds that the small number of applications seeking the credit is due, at least in part, to the administrative process established by the Commission. Specifically, the Commission finds that the 90-day deadline for obtaining the certifications from the applicable tribal government(s) makes it extremely difficult to qualify for the credit. The 90-day deadline and certifications were established: (1) To ensure prompt issuance of licenses to winning bidders; (2) to provide a time frame for making contact with tribal governments and obtaining requisite certifications; and (3) to ensure that the wireless carrier intends to provide service to the tribal land. Because ninety days may not be a sufficient amount of time for licensees and tribal authorities to complete the certification process, the Commission extends the tribal lands certification period to 180 days. Accordingly, a winning bidder claiming a tribal lands bidding credit will now have 180 days to amend its long-form application to identify the tribal lands to be served, and provide the required certification from the tribal government. Further, the winning bidder will have 180 days to file a certification that it will comply with the tribal lands build-out requirements, and consult with the tribal government regarding the siting of facilities and deployment of service on the tribal land. If the winning bidder fails to submit the required certifications within the 180-day period, the bidding credit will not be awarded, and the winning bidder will be required to pay the balance on the original gross bid amount in order to obtain the license.

7. Full or partial assignments of licenses involving tribal lands bidding credits. An issue that was inadvertently omitted in the R&O is the impact of license assignments on licenses with tribal lands bidding credit construction/repayment obligations. The Commission therefore clarifies that if the license is assigned to another entity, the construction/repayment obligations associated with the credit are transferred as well. Because all obligations of the license automatically transfer to the assignee, the Commission will not require the assignee to seek re-certification where the original licensee received certifications from the appropriate tribal authorities. It is important to note that an assignee contracting with a licensee to transfer a license for which a tribal lands bidding credit was received bears the risk that the tribal government may not allow the assignee to deploy facilities on its land. The Commission expects that parties interested in obtaining wireless licenses will exercise due diligence in identifying whether or not a tribal lands bidding credit construction obligation is associated with the license, and, therefore, take into account the heightened construction obligation, the dependence of the credit on obtaining the consent of the tribal government, and the potential for a repayment penalty in case the construction requirement is not met within the original three-year time frame. It is up to the assignee to verify that the tribe will consent to allowing the assignee access to its lands.

8. Also, the Commission clarifies that in partial license transfers involving geographic partitioning, the tribal land must be wholly contained within either the assignor's or assignee's proposed license area after the partition. The Commission will not permit, for example, a tribal area for which a credit was awarded to be “split” between partitioned areas because this would be inconsistent with the original purpose of issuing the credit, i.e., to ensure that at least 75 percent of the tribal land is served. Where a partition occurs, the construction/repayment obligation will attach to the license for the partitioned area that encompasses the tribal land for which the credit was awarded. However, in partial license transfers involving spectrum disaggregation (but not partitioning), the construction/repayment obligation will be presumed to remain with the original licensee whose stated intention was to serve the tribal land unless the parties to the transaction inform us otherwise. As is the case with partitioning, spectrum covering the tribal land must be disaggregated in its entirety ( i.e. a disaggregation involving only a portion of a tribal area subject to a bidding credit will not be permitted).

9. Notification of Construction. In the R&O, the Commission did not clearly set out the notification of construction procedures applicable to licensees that are granted tribal lands bidding credits. Pursuant to the goals of section 309(j)(4)(B) of the Act, the Commission has set out performance requirements for the various services, with alternative construction obligations for those licensees using tribal land bidding credits. As noted, the Commission imposed more stringent construction requirements for those licensees that choose to utilize the tribal lands bidding credit in order to ensure that only those most committed to building out their facilities will receive bidding credits and that service is deployed as quickly as possible. In order to verify compliance with the tribal lands construction requirement, any licensee employing a bidding credit must file a notification of construction (FCC Form 601, Schedule K) electronically at the conclusion of the three-year construction period along with an attachment stating affirmatively that it is providing coverage to 75 percent of the population of the tribal area for which the credit was awarded. In its notification of construction, the licensee must provide the total population of the tribal area covered by its license as well as the number of persons it is serving in the tribal area. If the licensee fails to make an adequate showing that it has met the 75 percent benchmark, it will be required to repay the bidding credit, plus interest, thirty days after the conclusion of the construction period. 47 CFR 1.2110(f)(3)(vii). Failure to repay this amount will result in automatic termination of the license. 47 CFR 1.946(c).

10. Penalty for failure to construct and failure to timely repay bidding credit. The Commission also takes this opportunity to correct an omission in the rules implemented in connection with the R&O, in which the Commission stated that a licensee's failure to comply with build-out requirements, and subsequent failure to repay the bidding credit, plus interest, thirty days after the conclusion of the construction period, would result in automatic termination of the licensee's license, i.e., termination without any further notification being sent to the licensee, opportunity for a hearing, or other Commission action. This penalty will now be expressly codified in Part 1 of the Commission's rules.

11. In the FNPRM, the Commission sought comment on whether it should apply the bidding credit to non-tribal areas on the same terms and conditions as for tribal areas, or alternatively, whether it should extend the bidding credit to areas (tribal and non-tribal) with penetration levels greater than 70 percent, but below the national average of 94 percent. As noted, very few commenters submitted responses to the FNPRM. Those who filed comments generally support extending bidding credits to entities seeking to provide service to non-tribal areas with telephone penetration rates below the national average.

12. The Commission concludes that it is premature to expand the program to non-tribal areas or to areas with penetration rates of greater than 70 percent at this time. Because this program is still in its early stages and few entities have taken advantage of the bidding credit thus far, the Commission cannot yet determine whether it would be constructive to expand the use of the bidding credit to non-tribal areas generally. Moreover, the Commission is concerned about the paucity of comment regarding this issue. It is necessary to have a more substantial record as to whether the use of bidding credits is appropriate to encourage deployment of services into non-tribal areas, particularly from those most familiar with dealing with rural and high-cost service issues. Similarly, the Commission believes the record is insufficient at this time to support expanding the use of the bidding credit to areas having telephone penetration rates of greater than 70 percent. However, in an effort to develop a more complete and up-to-date record on possible adjustment of the penetration rate threshold, the Commission seeks comment in its Second Further Notice of Proposed Rulemaking on information from the 2000 Census regarding increases in tribal penetration rates that has recently been released by the Census Bureau. See Extending Wireless Telecommunications Services to Tribal Lands, WT Docket No. 99-266, Second Further Notice of Proposed Rulemaking, FCC 03-51, adopted March 7, 2003, and released March 14, 2003.

13. The Commission noted in the R&O that the current tribal lands bidding credit can be applied only in the auction in which it is obtained. Accordingly, the bidding credit is not available to carriers with existing licenses that were acquired in prior auctions or through transfer or assignment. The Commission therefore asked in the FNPRM whether a more flexible form of credit should be made available to existing licensees who have constructed facilities, using currently-licensed spectrum to provide service to qualifying tribal lands. Under this approach, carriers who use their existing spectrum to provide service to such areas could receive bidding credits that could be used in future auctions. Further, the Commission sought comment on whether such a credit should be transferable to third parties for use in future auctions. The Commission also sought comment on its legal authority under section 309(j) of the Communications Act to adopt the flexible bidding credit.

14. Although the Commission continues to believe that the tribal lands bidding credit is a valuable means to encourage greater deployment of telecommunications services into underserved tribal areas, the Commission concludes that in light of its still-limited experience with the bidding credit program, it should not extend the program to already-licensed carriers or make the credit transferable at this juncture. The Commission believes that before taking such a step, additional time is needed to determine the effectiveness of the program as currently structured in meeting its intended goals. The Commission also finds that the limited comment it has received in this proceeding does not provide sufficient support or guidance for such an expansion of the program. Accordingly, the Commission declines to extend the program to already-licensed carriers or make the credit transferable at this time.

15. In the FNPRM , the Commission solicited comment on whether bidding credits should be made available to carriers that enter into partitioning agreements with tribal governments to facilitate deployment of service to tribal lands. The Commission proposed that a credit would be awarded to a geographic area licensee that partitioned portions of its license area covering tribal lands to the appropriate tribal government. Again, the Commission received limited comment regarding this issue, and therefore it concludes that the record does not at this time support expanding the bidding credit program as proposed.

16. The actions taken in the 2nd R&O have been analyzed with respect to the Paperwork Reduction Act of 1995 (PRA), Pub. L. No. 104-13, and found to impose new or modified reporting and recordkeeping requirements or burdens on the public. Implementation of these new or modified reporting and recordkeeping requirements will be subject to approval by the Office of Management and Budget (OMB) as prescribed by the PRA, and will go into effect upon announcement in the Federal Register of OMB approval.

17. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the FNPRM . The Commission sought written public comment on the proposals in the FNPRM , including comment on the IRFA. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

18. In the 2nd R&O , the Commission clarifies rules previously adopted in the R&O and FNPRM in WT Docket 99-266 to provide incentives for wireless telecommunications carriers to serve individuals living on tribal lands. In that R&O , the Commission authorized the grant of bidding credits to winning bidders who deploy facilities and provide service to federally-recognized tribal areas that have a telephone service penetration rate below 70 percent. In the present item, the Commission clarifies, on its own motion, administrative matters involved in implementing the bidding credit, such as the process by which carriers obtain certifications permitting them to deploy facilities on tribal lands. This 2nd R&O also addresses issues raised in the FNPRM . In the FNPRM , the Commission requested comment on whether it should expand the use of bidding credits. Specifically, the Commission sought comment as to whether to: (1) Apply bidding credits to entities who undertake to serve non-tribal areas and/or tribal areas with telephone penetration levels above 70 percent, but significantly below the national penetration average; (2) award bidding credits for use in future auctions to existing geographic area licensees who deploy facilities in unserved tribal communities; and, (3) grant bidding credits to licensees who enter into partitioning agreements with tribal governments that enable tribal entities to provide service, either directly or by way of a third-party carrier. It is the Commission's goal to ensure that all Americans have access to telecommunications service.

19. While the Commission continues to believe that the tribal lands bidding credit is a useful device in improving telephone penetration rates on tribal lands, it concludes that the specific measures proposed in the Commission's FNPRM to encourage greater deployment should not be adopted at this time. Given the nascent state of the tribal lands bidding credit program, as well as the lack of a comprehensive record supporting the proposed extensions of the bidding credit, the Commission believes that it is premature to expand the use of bidding credits as proposed.

20. No comments were filed that specifically addressed the rules and policies proposed in the IRFA.

21. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. 5 U.S.C. 604(a)(3). The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 601(6). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 5 U.S.C. 601(3) (incorporating by reference the definition of “small business concern” in the Small Business Act, 15 U.S.C. 632). A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). 15 U.S.C. 632.

22. Cellular Licensees. The SBA has developed a small business size standard for small businesses in the category “Cellular and Other Wireless Telecommunications.” 13 CFR 121.201, North American Industry Classification System (NAICS) code 513322. Under that SBA category, a business is small if it has 1,500 or fewer employees. According to the Bureau of the Census, only twelve firms from a total of 1238 cellular and other wireless telecommunications firms operating during 1997 had 1,000 or more employees. Therefore, even if all twelve of these firms were cellular telephone companies, nearly all cellular carriers were small businesses under the SBA's definition. In addition, the Commission notes that there are 1807 cellular licenses; however, a cellular licensee may own several licenses. According to the most recent Trends in Telephone Service data, 858 carriers reported that they were engaged in the provision of either cellular service, Personal Communications Service (PCS), or Specialized Mobile Radio telephony services, which are placed together in that data. See Trends in Telephone Service , Industry Analysis Division, Wireline Competition Bureau , Table 5.3—Number of Telecommunications Service Providers that are Small Businesses (May 2002). The Commission has estimated that 291 of these are small under the SBA small business size standard. Accordingly, based on this data, the Commission estimates that not more than 291 cellular service providers will be affected by these revised rules.

23. 220 MHz Radio Service—Phase I Licensees. The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a definition of small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, the Commission applies the definition under the SBA rules applicable to “Cellular and Other Wireless Telecommunication” companies. This category provides that a small business is a wireless company employing no more than 1,500 persons. According to the Bureau of the Census, only twelve firms from a total of 1238 cellular and other wireless telecommunications firms operating during 1997 had 1,000 or more employees. If this general ratio continues in 2002 in the context of Phase I 220 MHz licensees, the Commission estimates that nearly all such licensees are small businesses under the SBA's small business standard.

24. 220 MHz Radio Service—Phase II Licensees. The Phase II 220 MHz service is a new service, and is subject to spectrum auctions. In the 220 MHz Third Report and Order , the Commission adopted a small business size standard for defining “small” and “very small” businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. See Amendment of Part 90 of the Commission's Rules to Provide for the Use of the 220-222 MHz Band by the Private Land Mobile Radio Service, PR Docket No. 89-552, Third Report and Order , 62 FR 16004 (April 3, 1997). This small business standard indicates that a “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years. The SBA has approved these small size standards. Auctions of Phase II licenses commenced on September 15, 1998, and closed on October 22, 1998. In the first auction, 908 licenses were auctioned in three different sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 683 were sold. Thirty-nine small businesses won licenses in the first 220 MHz auction. The second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses.

25. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order , the Commission adopted a small business size standard for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. See Service Rules for the 746-764 MHz Bands, and Revisions to Part 27 of the Commission's Rules, WT Docket No. 99-168, Second Report and Order , 65 FR 17594 (April 4, 2000). A small business is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. Additionally, a “very small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. An auction of 52 Major Economic Area (MEA) licenses commenced on September 6, 2000, and closed on September 21, 2000. Of the 104 licenses auctioned, 96 licenses were sold to 9 bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses commenced on February 13, 2001 and closed on February 21, 2001. All eight of the licenses auctioned were sold to three bidders. One of these bidders was a small business that won a total of two licenses.

26. Lower 700 MHz Band Licenses. The Commission adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits. See Reallocation and Service Rules for the 698-746 MHz Spectrum Band (Television Channels 52-59), GN Docket No. 01-74, Report and Order , 67 FR 5491 (February 6, 2002). The Commission defined a small business as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. A very small business is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. Additionally, the lower 700 MHz Service has a third category of small business status that may be claimed for Metropolitan/Rural Service Area (MSA/RSA) licenses. The third category is entrepreneur, which is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. An auction of 704 licenses (one license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings [EAGs]) commenced on August 27, 2002, and closed on September 18, 2002. Of the 740 licenses available for auction, 484 licenses were sold to 102 winning bidders. Seventy-two of the winning bidders claimed small business, very small business or entrepreneur status and won a total of 329 licenses.

27. Private and Common Carrier Paging. In the Paging Second Report and Order , the Commission adopted a small size standard for “small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. Revision of Part 22 and Part 90 of the Commission's Rules to Facilitate Future Development of Paging Systems, WT Docket No. 96-18, Second Report and Order , 62 FR 11616 (March 12, 1997). A small business is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. The SBA has approved this definition. An auction of Metropolitan Economic Area (MEA) licenses commenced on February 24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned, 440 were sold. Fifty-seven companies claiming small business status won. At present, there are approximately 24,000 Private Paging site-specific licenses and 74,000 Common Carrier Paging licenses. According to the most recent Trends in Telephone Service , 608 carriers reported that they were engaged in the provision of either paging or “other mobile” services. Of these, the Commission estimates that 589 are small, under the SBA-approved small business size standard. The Commission estimates that the majority of private and common carrier paging providers would qualify as small entities under the SBA definition.

28. Broadband Personal Communications Service (PCS). The broadband PCS spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission has created a small business size standard for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. See Amendment of Parts 20 and 24 of the Commission's Rules—Broadband PCS Competitive Bidding and the Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 96-59, Report and Order , 61 FR 33859 (1996); see also 47 CFR 24.720(b). For Block F, an additional small business size standard for “very small business” was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These small business size standards, in the context of broadband PCS auctions, have been approved by the SBA. No small businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that qualified as small entities in the Block C auctions. A total of 93 “small” and “very small” business bidders won approximately 40 percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 1999, the Commission reauctioned 347 C, D, E, and F Block licenses; there were 48 small business winning bidders. Based on this information, the Commission concludes that the number of small broadband PCS licensees will include the 90 winning C Block bidders and the 93 qualifying bidders in the D, E, and F blocks plus the 48 winning bidders in the re-auction, for a total of 231 small entity PCS providers as defined by the SBA small business standards and the Commission's auction rules. On January 26, 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in this auction, 29 qualified as “small” or “very small” businesses.

29. Narrowband PCS. The Commission has auctioned nationwide and regional licenses for narrowband PCS. There are 11 nationwide and 30 regional licensees for narrowband PCS. The Commission does not have sufficient information to determine whether any of these licensees are small businesses within the SBA-approved definition for radiotelephone companies. In March 2002, 106 MTA and BTA narrowband PCS licenses were granted to 4 licensees. Each of the licensees are small or very small businesses.

30. Specialized Mobile Radio (SMR). Pursuant to 47 CFR 90.814(b)(1), the Commission has established a small business size standard for purposes of auctioning 900 MHz SMR licenses, 800 MHz SMR licenses for the upper 200 channels, and 800 MHz SMR licenses for the lower 230 channels on the 800 MHz band as a firm that has had average annual gross revenues of $15 million or less in the three preceding calendar years. 47 CFR 90.814(b)(1). The SBA has approved this small business size standard for the 800 MHz and 900 MHz auctions. Sixty winning bidders for geographic area licenses in the 900 MHz SMR band qualified as small businesses under the $15 million size standard. The auction of the 525 800 MHz SMR geographic area licenses for the upper 200 channels began on October 28, 1997, and was completed on December 8, 1997. Ten (10) winning bidders for geographic area licenses for the upper 200 channels in the 800 MHz SMR band qualified as small businesses under the $15 million size standard.

31. The auction of the 1,050 800 MHz SMR geographic area licenses for the General Category channels began on August 16, 2000, and was completed on September 1, 2000. Eleven (11) winning bidders for geographic area licenses for the General Category channels in the 800 MHz SMR band qualified as small businesses under the $15 million size standard. In an auction completed on December 5, 2000, a total of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were sold. Of the 22 winning bidders, 19 claimed “small business” status. Thus, 40 winning bidders for geographic licenses in the 800 MHz SMR band qualified as small business. In addition, there are numerous incumbent site-by-site SMR licensees on the 800 and 900 MHz band. The Commission awards bidding credits in auctions for geographic area 800 MHz and 900 MHz SMR licenses to firms that had revenues of no more than $15 million in each of the three previous calendar years. This analysis applies to SMR providers in the 800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained extended implementation authorizations. The Commission does not know how many firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. The Commission assumes, for purposes of this analysis, that all of the remaining existing extended implementation authorizations are held by small entities, as that small business size standard is established by SBA.

32. The 2nd R&O modifies the certification process that wireless carriers must follow in order to obtain a tribal lands bidding credit. The Commission extends the time period during which winning bidders can negotiate to obtain the certification needed to obtain the credit, however, the Commission declines to expand the credit beyond its current scope.

33. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in developing its approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small Entities. 5 U.S.C. 603(c).

34. A certification period of 90 days was previously identified in the final regulatory flexibility analysis in the R&O . In the 2nd R&O , the Commission extends the time period in which an applicant must obtain a certification from tribal governments regarding the siting of facilities and deployment of service on tribal lands. The 2nd R&O extends the certification period from 90 days to 180 days in order to allow applicants more time to conduct necessary research and negotiate with tribal governments. The change the Commission is adopting in the certification process is minor, and will not have additional significant economic impact on tribal governments or carriers seeking to serve tribal lands. The extension of the certification period from 90 to 180 days benefits all carriers, particularly small entities.

35. Further, the 2nd R&O clarifies partitioning and disaggregation rules specific to licensees electing to use the tribal lands bidding credit. In clarifying these rules, the Commission considered whether or not to apply its existing partitioning and disaggregation rules to situations in which a tribal lands bidding credit is utilized. While the partitioning and disaggregation rules are slightly more restrictive in situations in which tribal lands bidding credits are involved, the Commission believes these rules further its original goal of promoting service to tribal lands by helping to ensure that those using bidding credits fulfill their construction obligations.

36. Report to Congress: The Commission will send a copy of the 2nd R&O , including the FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. See 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the 2nd R&O , including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the 2nd R&O and FRFA (or summaries thereof) will also be published in the Federal Register .

37. Pursuant to the authority of sections 1, 4(i), 303(r), and 309(j) of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 303(r), and 309(j), the rule changes specified below are adopted.

38. The rule changes set forth below will become effective July 1, 2003.

On November 14, 2002, the Assistant Administrator for Procurement approved a deviation to NFS section 1802.101 to designate the Deputy Associate Administrator for the International Space Station (ISS) and Space Shuttle Programs in the Office of Space Flight as the head of the contracting activity (HCA) in lieu of the Center Director(s) for all contracts that directly support the ISS or Space Shuttle Program. This deviation was approved in support of the realignment of program management responsibilities between NASA Headquarters and the field centers. This final rule implements this deviation.

This final rule does not constitute a significant revision within the meaning of FAR 1.501 and Public Law 98-577, and publication for public comment is not required. However, NASA will consider comments from small entities concerning the affected NFS Parts 1802, 1806, 1815, 1816, and 1843 in accordance with 5 U.S.C. 610.

The Paperwork Reduction Act does not apply because the changes do not impose recordkeeping or information collection requirements which require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

NASA must account for and report assets in accordance with 31 U.S.C. 3515, Federal Accounting Standards, and Office of Management and Budget (OMB) Bulletin No. 01-09, Form and Content of Agency Financial Statements. Since contractors maintain NASA's official records NASA-owned assets in contractors' possession, NASA must obtain annual data from those records to facilitate proper accounting and control over the assets. NASA published an interim rule in the Federal Register (67 FR 68533) on November 12, 2002, specifying policies and procedures for proper reporting of heritage assets by providing a definition and directing that these assets be reported within appropriate property classifications as part of contractor annual reports of NASA property in its custody. No public comments were received. The interim rule is converted to a final rule without change.

This is not a significant regulatory action, and therefore, was not subject to review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993.

This final rule is not a major rule under 5 U.S.C.804.

NASA certifies that this final rule will not have a significant economic impact on a substantial number of small businesses within the meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) because it clarifies existing property reporting policies and procedures contractors must follow when accounting for reporting assets.

The Paperwork Reduction Act does not apply because the changes to the NFS do not impose new recordkeeping or information collection requirements, or collections of information from offerors, contractors, or members of the public which require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.