This rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, it has been reviewed by the Office of Management and Budget (OMB).

A Cost-Benefit Analysis has been completed and is available to interested persons at the Kansas City address listed above. In summary, the analysis finds the effect of proposed changes on crop insurance payments is expected to be small. The greatest impacts are expected from: (1) Increasing the amount of replant payments for wheat and providing replant payments for crops that have not had them in the past; and (2) changes to the winter coverage endorsement.

Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by OMB under control number 0563-0053 through February 28, 2005.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This regulation will not have a significant impact on a substantial number of small entities. New provisions included in this rule will not impact small entities to a greater extent than large entities. The amount of work required of the insurance companies delivering and servicing these policies will not increase significantly from the amount of work currently required. Therefore, this action is determined to be exempt from the provisions of the Regulatory Flexibility Act (5 U.S.C. 605), and no Regulatory Flexibility Analysis was prepared.

This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.

This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.

This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. The administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought.

This action is not expected to have a significant impact on the quality of the human environment, health, and safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

On April 20, 2000, FCIC published a notice of proposed rulemaking in the Federal Register at 65 FR 21144-21151 to revise 7 CFR 457.101 Small Grains Crop Insurance and section 457.102 Wheat Crop Insurance Winter Coverage Endorsement. Following publication of the proposed rule the public was afforded 60 days to submit written comments and opinions. A total of 82 comments were received from reinsured companies, and grower and trade associations. The comments received and responses are as follows:

Comment. Two reinsured companies stated these revised provisions are being proposed for the 2002 crop year rather than the 2001 crop year as referenced in the proposed rule. It is also understood some provisions of the Agricultural Risk Protection Act of 2000 (ARPA) will impact the proposed policy, and these legislated items are not reflected in the proposed rule.

Response. The new provisions will be effective beginning with the 2004 crop year, provided this final rule is made effective prior to the applicable contract change date. The provisions of ARPA affect most crops. Therefore, most policy provisions affected by ARPA are contained in the Basic Provisions of the Common Crop Insurance Policy (§ 457.8). However, ARPA provisions regarding insurance for more than one crop grown on the same acreage in the same crop year do require clarification as they pertain to the winter coverage endorsement. Accordingly, section 10 has been added to the Wheat Winter Coverage Endorsement.

Comment. Two reinsured companies were concerned the definition of “Prevented planting” seems to be in conflict with section 7(a)(2)(iii), which allows a winter wheat insured to elect to destroy all winter wheat acreage damaged to the extent that replanting is necessary and receive 15 percent of the winter wheat guarantee, rather than replanting to spring wheat. The commenters contend that the grower who was originally prevented from planting winter wheat should be allowed the same option, such as 15 percent of the winter wheat guarantee. The commenters ask that if the insured elects to destroy the acreage in return for 15 percent of the winter wheat guarantee, whether that acreage can be planted to spring wheat and insured. Two reinsured companies recommended that section 9(f) be removed from these provisions because it provides a disincentive to add optional coverage provided by the winter coverage endorsement. They state that if the producer wants the type of coverage offered by the endorsement, they should purchase such coverage. They also state that the proposed coverage gives the producer an incentive to “buy down.” The companies argue that this provision also adds unnecessary complexity, increases company expense and in some cases will result in an unhappy insured if the payment is nil or negligible. They state that the insured should be required to replant as specified in the current provisions and, if they do not replant, no premium is owed and no loss is payable. A grower association was also concerned with section 9(f) because full premium would be charged for only 15 percent coverage. Another reinsured company stated they had received different degrees of opposition to the proposed provisions in this section. The company stated that in the past this acreage would be deleted from the acreage report and no premium would be due. They further stated this concept would detract from sales of Options A or B, at least in South Dakota, and they were not sure there is an advantage in the proposed change.

Response. The proposed provisions were not in conflict. To qualify for a prevented planting payment, planting must be prevented until the spring final planting date. Similarly, the “15 percent benefit” in section 9(f) for winter wheat would not be provided if the insured planted spring wheat following a failed winter wheat crop. When acreage is replanted to spring wheat, a replant payment may be provided and insurance would continue based on the guarantee, premium, and price election applicable to the winter type. Although the proposed provisions are not in conflict, FCIC does agree that the proposed provisions would have: (1) Provided a disincentive to purchase full protection of winter wheat offered under the Wheat or Barley Winter Coverage Endorsement; (2) provided only a small benefit in exchange for full premium; and (3) increased program complexity. Therefore, the proposed provisions in section 9(f) have not been included in this final rule.

Comment. A growers association and four producers recommended hull-less barley be insurable under the Small Grains Crop Provisions. A growers association also questioned if hull-less oats were included or excluded from coverage.

Response. FCIC agrees that hull-less barley should be insurable. The Federal Grain Inspection Service (FGIS) has issued a directive providing instructions for determining quality factors for hull-less barley. This provides the means to adjust production to count when there is a loss due to low quality. FCIC and insurance providers have also received requests to insure hull-less oats, and a FGIS directive similar to that prepared for hull-less barley has been completed for hull-less oats. Therefore, the definition of “small grains” and section 11(d)(2) has been revised to include provisions for both hull-less barley and hull-less oats.

Comment. A reinsured company recommended that since the issue of grazing has been a hot topic in the past year, the definition of “harvest” be changed to include producers who harvest their small grain by grazing the acreage.

Response. In some areas it is common to allow animals to graze wheat acreage in the fall through the early spring and then to remove the animals to allow the wheat to mature and produce a grain crop. In these cases, it would be confusing to include “grazing” in the definition of “harvest” since the actual grain harvest would occur much later than the time the acreage was grazed. However, FCIC agrees wheat that is grazed instead of being harvested for grain should be considered “harvested” for the purpose of determining insurable acreage under the provisions of section 9(a)(1) of the Basic Provisions. That provision will be amended accordingly.

Comment. A reinsured company accepts the addition of Khorasan (a variety of wheat) and buckwheat to these provisions as long as FCIC provides detailed, well researched handbook procedures for adjusting these crops. Also, appraisal procedures must be accurate and based on university tested methods.

Response. FCIC will not issue actuarial materials for Khorasan or buckwheat unless appropriate loss adjustment procedures can be issued in a timely manner. Insurance programs for these crops will become available only after county actuarial materials are released.

Comment. A reinsured company asked if buckwheat would be considered a pilot crop program. The commenter also asked what studies have been undertaken (including draft loss procedures) that are generally done for a new (pilot) crop.

Response. The insurance program for buckwheat is not considered to be a pilot program since the regulatory process is being used to implement it. A report on the feasibility of insuring buckwheat was completed by the Economic Research Service (ERS). The report provides significant detail regarding uses, varieties, supply, demand, prices, environmental requirements, cultural practices, risks, etc. Loss procedures have not yet been developed. As stated above, insurance will not be made available for buckwheat until the loss procedure has been developed and provided to the reinsured companies. However, the feasibility report suggests procedures used for buckwheat will be very similar to those currently in use for other small grains.

Comment. A reinsured company is concerned with including “buckwheat” in the Small Grains provisions. The term “small grains” usually refers to annual cool season grass species grown for grain that is milled into flour, used for cattle feed or used for production of malt. Flax has been included in this group even though it is a broadleaf crop because it is similar to the other small grains that are grown. Generally, buckwheat does not follow the same growth habit or management system as other small grains. Buckwheat is a warm season broadleaf crop with recommended planting dates of late May and June. Buckwheat is very frost sensitive in all stages of development. Fertilization of buckwheat is basically the same as for other small grains except the level of nitrogen is usually kept low because of crop lodging. Buckwheat is indeterminate in flowering habit; it will start flowering approximately four to five weeks after emergence and continue until frost. Buckwheat is so sensitive to many stress factors it is hard to predict a yield. Currently there are no herbicides approved for buckwheat production. Buckwheat is sensitive to herbicide residues from dinitroanalines (triflurilin, ethafluralin), atrazine, and sulfonylureas (Glean, Ally). The major use of buckwheat is for making flour for soba noodles or as a pancake mix.

Response. The determination of which policy to add a crop to is based on which policy contains the terms that best cover the risk. Buckwheat is being added to the Small Grains policy because most provisions applicable to wheat, barley and other small grains can also be applied to buckwheat. Buckwheat is also generally produced by growers who already have a Small Grains Crop Insurance Policy in force. Therefore, it will be possible to use one policy document for these growers instead of two. Combining the crops into one policy document when possible reduces paperwork, administrative costs, etc. The difference in the growth and management systems will be reflected in the good farming practices for the crop and, therefore, covered under the policy.

Comment. The president of Kamut International, Ltd., requested references to “Kamut” be replaced with the name “Khorasan,” which is the common name for Triticum Turanicum. “Kamut” is not a variety of wheat but rather a registered trademark owned by Kamut International, Ltd. Also, plant classification specialists have recently shown that Khorasan should be classified as T. Turanicum rather than T. polonicum.

Response. FCIC agrees with the suggestions and has revised the provisions accordingly.

Comment. A grower association was concerned with the language in the definition of “Prevented planting.” The definition does not allow a prevented planting payment for winter wheat if a producer is able to plant spring wheat. Given the yield superiority of winter vs. spring varieties, this provision adversely affects producers who are prevented from planting winter wheat. A possible solution to the problem would be to insure spring wheat and winter wheat separately.

Response. The Wheat Winter Coverage Endorsement does provide separate insurance for spring wheat when it is planted to replace damaged winter wheat and separate insurance units are allowed for initially planted spring and winter wheat in certain counties. In the future it may be possible to add provisions to the endorsement to provide separate prevented planting coverage for winter wheat. However, a change like this, which would impact a large number of producers and acreage, cannot be made without being published in a proposed rule for public comment.

Comment. A reinsured company recommended changing the definition of “Local market price” to the Commodity Credit Corporation (CCC) price established by the Farm Service Agency (FSA) county office, and removing the reference to “local market price” for a loss standard.

Response. FCIC believes the comment recommends changing quality adjustment procedures by using the “posted county price” that is available in FSA county offices rather than the “local market price.” The posted county price has been used in the past. However, damaged grain can have reductions in value in the local market greater than the posted county price. This resulted in zero production to count even though the production still had value and was sold. FCIC stopped using the posted county price because of this program vulnerability. FCIC has not discovered a means to eliminate this program vulnerability if it again uses the posted county price. Therefore, no change has been made.

Comment. Two reinsured companies asked if premium rates will be adjusted to address the increased risk by allowing separate optional units for durum and club wheat.

Response. FCIC will review the adequacy of premium rates for all changes made by this rule, including optional units for durum and club wheat and ensure that all risks are covered by the premium.

Comment. A grower association commented that while durum wheat coverage is available as an optional unit, there are no specific provisions for durum wheat. The market price for durum is different than the predominant white wheat market, and the same terms for durum wheat in other areas of the country should be available for the northwest. The association recommends these provisions should allow a specific durum price election, coverage level, and national availability in counties where durum is produced or is being introduced. Furthermore, separate price elections and coverage levels should be established for hard red spring wheat, hard white wheat, and club wheat.

Response. Language has been added to the Small Grains Crop Provisions to provide for separate units and price elections for durum and club wheat if these wheat types and prices are designated in Special Provisions. Expansion of the durum type and establishing separate price elections and coverage levels for certain types of wheat will be considered by FCIC in the future based on availability of data, program interest, and underwriting issues. FCIC lacks the information at this time so no change can be made in this rule. FCIC has added language to clarify that fall planted durum wheat may be a separate unit from spring planted durum wheat and that fall planted club wheat may be a separate unit from spring planted club wheat provided the Special Provisions specify both fall and spring types of the applicable wheat type.

Comment. A reinsured company recommended allowing optional units for durum wheat when it is listed as a separate insurable type. This would simplify administration of the actual production history (APH), since durum wheat producers raise, store, and market durum wheat separate from spring wheat.

Response. The proposed rule and this final rule allow optional units for durum wheat when it is designated as a separate type in the Special Provisions. Therefore, no change needs to be made.

Comment. A reinsured company agreed optional units for durum and club wheat will be an improvement but that quality factors for durum (milling) should be addressed.

Response. FCIC understands certain quality requirements for durum wheat are not covered by the current Small Grains Crop Insurance Policy. A method of providing insurance coverage for these quality requirements has not yet been developed. Section 508(m) of the Federal Crop Insurance Act requires FCIC to contract with a qualified person to review quality loss adjustment procedures to determine if they accurately reflect local quality discounts. FCIC has executed the contract and after the results have been analyzed, FCIC will determine if coverage for these quality requirements is feasible. If feasible, FCIC will review the policy at that time. However, no change will be made in this rule.

Comment. FCIC requires all wheat in a given county to be insured under the contract. A grower association advises as a result of this requirement many producers do not purchase wheat insurance. The association recommends allowing selection of different coverage levels and price elections by FSA farm serial number, by irrigated and non-irrigated practice, and by type and class of wheat. Other grower associations recommended allowing different price election percentages or coverage levels for summer-fallow, continuous cropping, and direct seeded acreage.

Response. These recommendations would constitute significant changes to the proposed rule and would be a departure from insurance provisions used in other crop insurance policies. Therefore, the suggested changes cannot be made in this rule. Additionally, sufficient data has not been established or provided to effectively support separate insurance coverage by FSA farm serial number, practice, or wheat type or class. However, these changes would appear to add significant program vulnerabilities due to shifting of production and other manipulation of yields.

Comment. A reinsured company asked whether durum wheat, which has a separate type code and price election in the county actuarial documents, can be insured as regular spring wheat or must it be separately insured at the higher durum price. The commenter also asks if everything is reported as spring wheat and it is discovered at loss time that some of the wheat is durum, whether the policy has to be revised to reflect the higher durum price and if liability would be increased at that point in time. The commenter also asked about being able to duplicate the APH records for durum wheat at that time. The commenter suggested that section 3(a) be clarified to address how these situations are to be handled.

Response. The provision has been revised to clarify that if a durum wheat price election is provided, it must be used to insure durum wheat. When a durum wheat type is misreported as spring wheat, the provisions contained in section 6 of the Basic Provisions regarding misreporting will apply. The APH for durum wheat must be based on production records for durum wheat or a T-Yield for durum wheat.

Comment. A reinsured company is concerned with the language in section 3(b) which allows the insured to change coverage levels or price elections by the spring sales closing date “only if they do not have any fall-planted acreage of the insured crop.” The company asked whether this applies if there is any fall-planted acreage, or only if there is insured fall-planted acreage (for example, the insured has some fall-planted acreage but it is an uninsured practice/type or not intended for harvest as grain.)

Response. The provision is intended to prevent changes in coverage levels or price elections in the spring only if there is insured fall planted acreage. Section 3(b) has been clarified accordingly.

Comment. A growers association was concerned with the insurability of acreage on which Conservation Reserve Program (CRP) contracts are expiring. In some cases, only a summer fallow practice is insurable and the acreage cannot be insured the first year unless the producer takes an early out with a reduction in the final payment from CRP, or summer fallows the ground the first year out of CRP. The growers association requests FCIC and FSA work together to resolve this dilemma so producers in these counties can have insurance. This could be accomplished by permitting producers in these counties to obtain an early release from the CRP contract in order to meet the criteria to classify this ground as summer fallow.

Response. FCIC cannot comment on possible CRP program changes since FSA administers that program and would be required to make any modifications or exceptions to it. However, FCIC is willing to work with interested parties to help coordinate program benefits. Although a premium rate is not published for continuous cropped acreage in some counties, insurance may still be obtained for the practice if the producer requests a written agreement through the producer's insurance provider. If approved, the written agreement would provide a premium rate for continuous cropped acreage.

Comment. A growers association recommended FSA and FCIC allow the regional office the ability to change final planting dates when agronomic conditions are such that many farmers cannot complete planting by the final planting date of the policy.

Response. The final planting date is a part of the crop insurance contract and changing the final planting date after the contract change date would violate the terms of the crop insurance policy and the agreement FCIC has with insurance providers. Regional Offices can recommend changes to final planting dates if program integrity would not be adversely impacted but must do so prior to the applicable contract change date for it to be considered for that crop year. A late planting period is provided for most crops so producers who plant late may still have insurance coverage.

Comment. A grower association stated that wheat producers insured under the multiple peril crop insurance policy (MPCI), the Income Protection (IP) policy or the Crop Revenue Coverage (CRC) policy have a final planting date of December 31 to February 15, which is seldom applicable and diminishes the value of the replant provision of the policy. The association recommends all final planting dates be established on a county-by-county basis at the earliest practical date for the Pacific Northwest.

Response. The replant provision referred to in the comment has recently been amended in the Income Protection policy provisions to address this concern. The provisions in section 9(a)(5) also address this issue by providing that damage must occur after the fall final planting date for acreage covered under the winter coverage endorsement (the “earlier” or first fall final planting date in counties with two fall final planting dates). Changes made to the MPCI Small Grains Crop Insurance Policy will also be made to the CRC wheat policy.

Comment. A growers association recommended RMA provide winter damage protection for fall planted barley. Having no winter coverage and the mandatory replant provisions are a disincentive to plant winter barley.

Response. RMA agrees that winter coverage for barley should be provided and has modified the winter coverage endorsement to include barley. This optional coverage will be available only if the county actuarial table provides an additional premium rate factor for it.

Comment. Two reinsured companies recommended changing the section reference in section 7(a)(2)(iii) from 9(e) to 9(f).

Response. As stated above, section 9(f), and the reference to it, has been removed in this final rule.

Comment. A grower association is concerned with section 7(a)(2)(iii) which requires producers to replant fall-planted barley or wheat that is damaged prior to the spring final planting date with a winter type of the crop if practical. Mandatory replanting requirements reduce flexibility for producers who may want to destroy the crop and replant a spring type of the crop. This section also provides that damaged wheat acreage can be put to another use and an indemnity will be paid, but does not describe what alternative uses are permitted.

Response. Producers are free to plant a spring type of the crop after the fall type has failed if they choose. The requirement to replant the fall type if practical only applies if the producer wants to maintain the fall planted crop production guarantee. So, if it is not practical to replant to a fall type and the producer replants a spring type, insurance will remain in force based on the production guarantee for the fall type. If a producer does not replant a fall type when it is practical to do so and plants a spring type on the acreage, insurance will still be provided based on a spring type production guarantee. Section 7(a)(2)(iii) has been clarified to distinguish when the producer will have insurance based on spring or fall types in replant situations. Since section 9(f) has been removed from this rule for the reasons stated above, the provisions regarding a benefit when damaged acreage is put to another use have also been removed in this final rule.

Comment. Two reinsured companies recommended that section 7(a)(2)(v) be clarified to indicate that fall barley or fall wheat that has an adequate stand in the spring will be insurable as spring barley or spring wheat.

Response. FCIC agrees and has revised the provisions accordingly.

Comment. A growers association recommended allowing the winter wheat guarantee to apply to initially planted spring wheat when cropland has been summer fallowed for one year and agronomic conditions are such that the winter wheat crop cannot be seeded.

Response. Current provisions do not allow the winter wheat guarantee to apply on acreage that is initially planted to spring wheat under any circumstance. This is because there are different yields and premiums associated with spring and winter wheat. To allow spring planted wheat to be insured as fall planted wheat would adversely affect program integrity. Allowing spring planted wheat to be insured as fall planted wheat when it has been replanted after a failed winter wheat crop is permitted because insurance has already attached to the winter wheat crop and replanting to the spring crop is a means to mitigate the damages associated with the failed winter wheat crop. Therefore, no change has been made.

Comment. A reinsured company recommended Virginia be included with the states that have a July 31 end of insurance date. The commenter stated that FCIC should consider using the same date for states such as Oklahoma, Missouri and Kansas. Another reinsured company recommended that the end of insurance date for small grains in Kansas should be reviewed because October 15 is not an appropriate date for the end of insurance since harvest is generally completed by August 1.

Response. Since a proposal to change the end of the insurance period for Virginia was not included in the proposed rule, and the public was not given the opportunity to comment, the recommended change cannot be adopted in this final rule.

Comment. Two reinsured companies are concerned that replant payments for barley, oats, flax and buckwheat will add additional loss adjustment expenses for reinsured companies. Another reinsured company commented that allowing companies to pay the amount of replant payment specified in the policy without requiring calculation of actual expenses will save time in working replant claims and will be more suitable for self-certification procedures. Another reinsured company commented that allowing replant payments for all small grains will provide consistency in the Small Grains provisions, should not have a large impact on the loss payments and will benefit producers who need to replant. An insurance association also supported the proposed change.

Response. FCIC agrees reinsured companies may incur some additional expenses. However, FCIC has taken steps to reduce loss adjustment expenses for small grains by no longer requiring insurance providers to calculate the actual cost of replanting. This means that there is not expected to be any significant net increase in costs to the reinsured companies. Therefore, no change has been made.

Comment. A reinsured company asked whether or not fall planted wheat accepted for insurance in a county with only a spring planted practice would qualify for a replant payment.

Response. Fall planted wheat in a county with only a spring final planting date would not qualify for a replant payment. Section 9(a)(4) states that “the acreage must have been initially planted to a spring type of the insured crop in those counties with only a spring final planting date.”

Comment. A reinsured company recommended increasing the policy replant payment limits to four bushels for wheat since three bushels or $9.45 hardly covers labor costs. The company also advised that the five bushel replant payment limit on oats does not seem worthwhile for the producer.

Response. Provisions in both the proposed and final rules use four bushels when calculating the amount of a replant payment for wheat. Replant payments are not intended to cover all the costs associated with replanting. They are intended to defray a portion of the costs and are set at a level which will provide assistance but not significantly increase the premium. Therefore, no changes have been made.

Comment. Two reinsured companies were concerned with the provisions in section 9(a)(6) which allow a replanting payment when less seed is replanted than the original planting, as long as the resulting stand will produce the guarantee. The companies asked if this will require additional inspections and more expense to the company. A growers association also did not agree with the revision to allow a replanting payment when the amount of seed used is less than the amount normally used for the initial seeding.

Response. The replanted crop must be seeded at a rate sufficient to produce the approved APH yield not just the guarantee. Therefore, for crops that have totally failed, the amount of seed that was originally planted to produce the APH yield must be used. It is only when some of the crop still exists that reduced seeding rates can be used. Providing replant payments under these circumstances will provide a greater incentive to improve poor crop stands, thereby improving production levels and reducing claims. There are also agronomic benefits associated with improving a crop stand in this manner. Plants with established root systems are allowed to remain in place and can provide protection to newly seeded plants. Insurance providers may have to perform additional inspections and may incur some additional expenses. However, the benefits associated with reduced claims should outweigh the costs. Therefore, no change has been made.

Comment. Two reinsured companies asked whether a specific number of bushels is used to determine the maximum replant payment for rye and Khorasan or will 20 percent of the guarantee be used.

Response. Insurance for rye is available only in counties with “fall only” final planting dates. Therefore, in accordance with section 9(b), replant payments are not available for rye. As stated in section 1, Khorasan is considered to be a spring wheat for the purposes of this policy. Therefore, the replant payment is based on four bushels—the amount applicable to all types of wheat.

Comment. Two reinsured companies recommended allowing disinterested grain handling facilities to determine test weight and moisture of the grain.

Response. The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill) specifies qualifications for persons allowed to determine grain quality for crop insurance purposes. Section 11(d)(3) of the Crop Provisions has been amended in accordance with the provisions of the 2002 Farm Bill. Therefore, no change has been made.

Comment. Two reinsured companies recommended, for quality adjustment purposes, that the test weight for oats be changed to 32 pounds per bushel in the Special Provisions to be more in line with current market requirements.

Response. Section 508(m) of the Act requires FCIC to contract with a qualified person to review quality loss adjustment procedures to determine if such procedures accurately reflect local quality discounts. Based on recommendations, FCIC may revise quality adjustment provisions for oats and other grain crops. Until recommendations are analyzed, FCIC does not have sufficient information to make the requested change. Therefore, no change has been made.

Comment. A grower group commented RMA is proposing changes to the Settlement of Claim section to allow adjustment for excess moisture before any adjustment for quality deficiencies. They asked if production would also be adjusted in the case of a drought.

Response. The provisions of section 11(d) apply when any insured production is damaged due to any insured cause of loss, including drought. The proposed changes just set the order in which such adjustment will occur, with moisture adjustment, if applicable, occurring before any other adjustments.

Comment. Two reinsured companies do not agree with the quality adjustment procedures which allow a local elevator to determine the salvage price for low quality grain. This process will result in indemnity differences for similar grain from area to area and may increase loss adjustment expenses as adjusters canvas local elevators for the highest salvage bid price.

Response. FCIC has not found reliable data on which discount factors for extremely low quality grain can be based. Therefore, quality adjustment methods based on the value of the damaged grain will continue to be used when grain is of such low quality that discount factors for it are not contained in the Special Provisions. No changes have been made.

Comment. A grower association asked whether the definition of “heat damaged kernels” is the same as used by the Grain Inspection, Packer and Stockyards Administration (GIPSA), for consistency and lack of confusion, or whether RMA has a different definition. The provisions in section 11(d)(2)(i)(A-E) specify that “heat damaged kernels” will not be considered to be damaged.

Response. The definition of “heat damage” is the same as that used in the Official United States Standards for Grain. Section 11(d)(2)(i) has been clarified to reflect this.

Comment. A grower association recommended that FCIC continue to review quality loss adjustment factors for barley. Market losses from weather-related quality degradation generally far exceed those permitted under current quality loss adjustment provisions.

Response. As stated above, FCIC has contracted to conduct a review of the quality loss adjustment procedures. Once the review is completed and fully analyzed, FCIC will make appropriate changes to the quality loss adjustment factors.

Comment. A reinsured company asked if the provisions in section 11(d)(2)(iii) mean that the test weight for durum wheat will start at 54.0 pounds when the test weight normally starts at 50.9 pounds for durum wheat?

Response. Under the existing quality provisions, durum wheat quality adjustment for test weight begins when the test weight falls below 54.0 pounds. Therefore, this rule is not a change from the previous provisions. The language in this rule simply provides that the same quality adjustment threshold applies to Khorasan. Provisions have been added to clarify that quality adjustment discount factors for U.S. grades specified in the Special Provisions will also apply to Khorasan at the same levels applicable to durum wheat. The same clarification has been made for hull-less barley and hull-less oats.

Comment. A reinsured company recommended that quality adjustment factors for durum wheat (milling) should be addressed. Low quality on durum has a more adverse effect on marketing than on regular wheat.

Response. FCIC understands discounts for low quality durum wheat are significant. As stated above, FCIC has contracted for a review of the quality loss adjustment procedures. Once the review and FCIC's analysis is completed, FCIC will revise that procedure as appropriate. However, no change is being made to this rule.

Comment. A reinsured company asked if the proposed provisions in section 11(d)(4) replace all of the current provisions in section 11(d)(4)(i)-(iii) or just the sentence in (4).

Response. The proposed revision will replace sections 11(d)(4)(i), (ii) and (iii).

Comment. A reinsured company agreed late planting provisions should apply to winter wheat. However, the company is concerned with how the time period for late planting will be determined and what the reduction percentage will be. The company recommends the reduction be not less than the prevented planting reduction percentage. In addition, two companies stated that in previous policies, winter wheat in counties with only a fall final planting date did not have a late planting period or replanting payments as the final planting dates were so late. The companies asked whether under the current proposed changes, the final planting dates will be revised to earlier dates and what will be the length of the late planting period for winter wheat.

Response. The late planting period reduction is already provided in section 16 of the Basic Provisions of the Common Crop Insurance Policy. This rule simply makes it applicable to certain winter wheat. The length of the late planting period or the final planting date for certain winter wheat will be adjusted in the Special Provisions where necessary. Therefore, no change has been made.

Comment. A grower's association recommended prevented planting payments be based on winter wheat guarantees when producers are prevented from planting in the fall and also cannot plant in the spring.

Response. Since a proposal to change the basis of prevented planting payments was not included in the proposed rule, and the public was not given the opportunity to comment, the recommended change cannot be adopted in this final rule.

Comment. Two reinsured companies asked if companies would have an opportunity to review and comment on any significant changes to the Special Provisions.

Response. FCIC does not anticipate significant changes to the Special Provisions as a result of this rule. Special provisions vary from county to county due to differing rotation requirements, planting dates, etc. This results in large numbers of documents being generated each year, sometimes within short time frames. Due to these time restrictions and the large number of documents involved, it is not practical to provide a comment period for the Special Provisions.

Comment. A growers association recommended products that represent significant product revisions should be in place and available to agents and growers 90 days prior to sales closing dates. The sales closing date for fall planted wheat in the Pacific Northwest is September 30. Program prices are futures based and are not established until mid-September leaving farmers with little time to evaluate policy options. For this reason, two grower associations recommended a later sales closing date than September 30 be established for winter wheat in the Pacific Northwest. Seeding starts in September and ends in October. One association recommended an October 31 sales closing date but would accept an October 15 sales closing date. Another recommended the sales closing date be changed to 30 days after price release or October 31.

Response. All policy changes must be made by the contract change date, which is at least 90 days prior to the sales closing date. All price elections are also released prior to the sales closing date. Moving the sales closing date 30 days later, when planting is almost complete, would result in adverse selection as producers would have additional knowledge of growing conditions at that point. Therefore, no change has been made.

Comment. A growers association recommended making the increased premium subsidy permanent after the 2000 crop year.

Response. Section 508(e) of the Act provides for increased subsidies that are applicable each year unless Congress acts to reduce them. Therefore, no change has been made.

Comment. A growers association recommended keeping Option A and Option B at the current percentages rather than the proposed percentages. A reinsured company also disagreed with the changes to Option A and Option B as these changes will not be popular with the insureds. The company does not know of any change to Option A that would make insureds select this option. It states that reducing the coverage for Option B is a mistake since companies, Congress and special interest groups have worked hard to improve coverage for farmers, not decrease coverage. The company also stated that, in the past, Option B with the MPCI policy has worked well for insureds and the insureds believe they have a positive coverage. Another reinsured company supported the change of Option B coverage from 100 percent to 70 percent because it believed the coverage provided by the option was too lucrative and that it was abused. This company also stated that by reducing Option B and increasing Option A the coverage becomes similar and that it might reduce confusion by offering a single option.

Response. FCIC agrees it is confusing to have two options and that option A has not been popular with producers. Therefore Option A has been removed from the final rule. FCIC also agrees with the comments that recommend retaining 100 percent coverage under Option B (now the only option) and has revised the proposed provisions accordingly. One hundred percent coverage is being retained to keep a more meaningful level of coverage in place, particularly when the indemnity for the first crop, winter wheat, may be reduced if a second crop is planted.

Comment. Two reinsured companies recommended that the coverage under Option A and B be provided when 20 percent of the insured planted acreage in the unit is damaged rather than the current requirement of 20 acres or 20 percent of the acreage in the unit. They state that this change will be consistent with language in the replanting payment section of the Basic Provisions.

Response. FCIC agrees that the replant provision in the Basic Provisions of the Common Crop Insurance Policy refers to at least the lesser of 20 acres or 20 percent of the insured planted acreage in the unit. The provision has been revised to be consistent with this requirement.

Comment. Two reinsured companies recommended the sentence “You may use such acreage for any purpose, including planting and separately insuring any other crop.” in both Option A and B, be clarified. If an insured plants back to barley, and barley was not on the policy, and it is past the sales closing date, it could not be insured. Likewise if barley was on the policy already, such acreage would have to be insured per the terms of the policy.

Response. FCIC agrees and has clarified the language accordingly.

Comment. A grower association commented that under the proposed winter coverage endorsement all winter wheat acreage must be insured, which reduces flexibility of producers who may wish to have the endorsement for one tract of land but not for another. The association recommended additional endorsements be made available at the option of the producer for additional premium.

Response. This change would allow insureds to select insurance on acreage with a higher likelihood of loss. This adverse selection could reduce program integrity and adversely impact premium rates for all producers. Therefore, no change has been made.

Comment. A grower association recommended since Option A provides for a coverage increase and an increase in premium, then with coverage being reduced under Option B, the premium should also be reduced.

Response. The coverage level under Option B (now the only option) has not changed. However, FCIC does review all premium rates periodically, and may revise those applicable to the winter coverage endorsement based on those reviews. Option A of the endorsement has been removed for the reasons stated above.

Comment. A reinsured company recommended making the Wheat Crop Insurance Winter Coverage Endorsement a part of the Small Grains Crop Provisions to be elected on the application or policy change form as with other crop options or endorsements.

Response. The Wheat Crop Insurance Winter Coverage Endorsement is used only in counties for which the Special Provisions designate both fall and spring final planting dates. Making the Wheat Crop Insurance Winter Coverage Endorsement a part of the Small Grains Crop Provisions would increase the amount of paper sent to all producers who have the Small Grains Crop Provisions and might result in confusion for those in counties in which the endorsement is not available. Therefore, no change has been made.

Comment. A reinsured company asked that if an insured has selected Option B and elects to destroy the winter wheat and then replant to spring wheat, whether will it be mandatory for the insured to insure the spring wheat. Another reinsured company agrees with the change that requires spring wheat to be insured after winter wheat has been destroyed rather than having an option to do so.

Response. The proposed provisions did require the spring wheat to be insured. However, due to the provisions of the Act that reduce indemnities for a first crop when a second crop is planted and has a loss on the same acreage in the same crop year, FCIC has elected to return to previous provisions that allowed producers to elect whether or not they wanted insurance for the spring wheat. Section 11(c) has been amended accordingly.

In addition to the changes described above, FCIC has made the following changes:

1. Revised the definition of “local market price” to specify quality levels for Khorasan, hull-less barley, hull-less oats and buckwheat, and to specify the applicable subclasses for durum and hard red spring wheat.

2. Changed the cancellation date for wheat from October 31 to September 30 in Del Norte, Humboldt, Lassen, Modoc, Plumas, Shasta, Siskiyou, and Trinity Counties, California. This change makes program dates consistent between these Northern California counties and Oregon, which has similar agronomic conditions.

3. Changed the October 31 cancellation date and November 30 termination date for barley to March 15 in Del Norte, Humboldt, Lassen, Modoc, Plumas, Shasta, Siskiyou, and Trinity Counties, California. This change makes program dates consistent between these Northern California counties and Oregon, which has similar agronomic conditions.

4. Revised section 11(d)(2)(ii) to base the level at which buckwheat production can be quality adjusted on a certain grade rather than specific quality factors. This change is made to allow quality adjustment at levels appropriate for the crop type (large or small seed) and to avoid the need for revision if grading standards should change.

Good cause is shown to make this rule effective upon filing for public inspection at the Office of the Federal Register. Good cause to make the rule effective upon filing at the Office of the Federal Register exists when the 30 day delay in the effective date is impracticable, unnecessary, or contrary to the public interest.

With respect to the provisions of this rule, it would be contrary to the public interest to delay implementation of improved insurance benefits until the 2005 crop year. The public interest is served by improving the insurance product as follows: (1) Providing insurance for producers of hull-less barley, hull-less oats, and Khorasan. Insurance coverage for these crop types is not available under the current Small Grains Crop Provisions; (2) increasing insurance flexibility by providing for separate insurance units for durum and club wheat; (3) moving the contract change date earlier to provide a greater amount of time between the contract change date and the sales closing date to allow producers more time to make insurance decisions; (4) changing program dates to provide coverage for winter wheat in certain counties where coverage for winter wheat is not currently provided; (5) adding replanting payment benefits for barley, oats and flax and increasing the replanting payment amount for wheat. Replanting payments help defray costs incurred by producers who have to replant their crops under the terms of these provisions; (6) allowing winter protection for fall planted barley which is not provided for under current provisions; and (7) improving clarity of the insurance policy.

If FCIC is required to delay the implementation of this rule 30 days after the date it is published, the provisions of this rule could not be implemented until the 2005 crop year. This would mean the affected producers would be without the benefits described above for an additional year.

For the reasons stated above, good cause exists to make these policy changes effective upon filing with the Office of the Federal Register.

In the Federal Register of March 3, 2003 (68 FR 9873), FDA published a direct final rule that amends the bottled water quality standards regulations (21 CFR part 165) by establishing an allowable level for uranium. Interested persons were given until May 2, 2003, to comment on the direct final rule. FDA stated that the effective date of the direct final rule would be December 8, 2003, and, if the agency received no significant adverse comments, it would publish a notice of confirmation of the effective date no later than June 11, 2003. FDA received no significant adverse comments within the comment period. Therefore, FDA is confirming that the effective date of the direct final rule is December 8, 2003. As noted in the direct final rule, FDA is publishing this confirmation document 180 days before the effective date to permit affected firms adequate time to take appropriate steps to bring their bottled water products into compliance with the quality standard imposed by the new rule.

In the Federal Register of October 10, 1978 (43 FR 46694), FDA published an advance notice of proposed rulemaking to establish a monograph for OTC antiperspirant drug products, together with the recommendations of the Advisory Review Panel on OTC Antiperspirant Drug Products (the Panel), which evaluated the data on these products. The agency's proposed regulation (TFM) for OTC antiperspirant drug products was published in the Federal Register of August 20, 1982 (47 FR 36492).

In the Federal Register of November 7, 1990 (55 FR 46914), the agency issued a final rule establishing that certain active ingredients in OTC drug products are not generally recognized as safe and effective and are misbranded. These ingredients included seven antiperspirant ingredients, which are included in § 310.545(a)(4) (21 CFR 310.545(a)(4)). In this rulemaking, the agency is adding one additional ingredient to this section. (See section III.1 of this document.)

In the Federal Register of March 23, 1993 (58 FR 15452), the agency requested public comment on two citizen petitions, and a response to one of the petitions, related to the safety of aluminum compounds in OTC antiperspirant drug products. This final monograph completes the TFM and provides the substantive response to the citizen petitions.

Twenty-four months after the date of publication in the Federal Register , for products with annual sales less than $25,000, and 18 months after the date of publication in the Federal Register , for all other products, no OTC drug product that is subject to this final rule and that contains a nonmonograph condition may be initially introduced or initially delivered for introduction into interstate commerce unless it is the subject of an approved new drug application (NDA) or abbreviated new drug application. Further, any OTC drug product subject to this final monograph that is repackaged or relabeled after the compliance dates of the final rule must be in compliance with the monograph regardless of the date the product was initially introduced or initially delivered for introduction into interstate commerce. Manufacturers are encouraged to comply voluntarily as soon as possible.

In response to the TFM on OTC antiperspirant drug products and the request for comment on the citizen petitions, the agency received 20 comments. One manufacturer requested an oral hearing before the Commissioner of Food and Drugs on six different issues. Copies of the information considered by the Panel, the comments, and the hearing request are on public display in the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. “OTC Volumes” cited in this document refer to information on public display.

The agency received some “feedback” communications under the OTC drug review procedures (see the Federal Registers of September 29, 1981 (46 FR 47740) and April 1, 1983 (48 FR 14050)). The agency has included these communications in the administrative record and addressed them in this document.

The safety issues raised by the citizen petitions are discussed in section II.F of this document. The agency believes it has adequately responded to the six issues related to the hearing request; therefore, a hearing is not necessary.

(Comment 1) One comment requested that FDA reconsider its position that OTC drug monographs are substantive, as opposed to interpretive, regulations.

The agency addressed this issue and reaffirms its conclusions as stated in paragraphs 85 through 91 of the preamble to the procedures for classification of OTC drug products (May 11, 1972, 37 FR 9464 at 9471 to 9472) and in paragraph 1 of the preamble to the TFM in the present proceeding (47 FR 36492 at 36493).

(Comment 2) Three comments disagreed with the agency's proposed definition of an antiperspirant: “A drug product that, when applied topically to the underarm, will reduce the production of perspiration (sweat) at that site,” (47 FR 36492 at 36503). One comment contended it was unduly restrictive and unnecessary to limit use only in the underarm area because it is not the only area of the body upon which these products could potentially be applied. The comment asked the agency to modify the definition to parallel the pharmacologic activity of the active ingredients and suggested: “A drug product that, when applied topically, will reduce the production of perspiration (sweat) at that site.”

A second comment stated that the definition limiting use to the underarm only would adversely affect its products labeled for use on the hands and for use with orthotic and prosthetic appliances (to keep appliance-skin contact areas dry). Noting that the agency and the Panel recognized the similarities and differences between axillary and foot perspiration, a third comment stated that ingredients effective in the underarm area are probably effective to control foot perspiration.

The agency agrees with the first comment that it is not necessary to specify the area of use on the body in the definition of an antiperspirant because that information is included in the product's labeling. Accordingly, the agency is deleting the phrase “to the underarm” from the definition of an antiperspirant in § 350.3 (21 CFR 350.3) of this final monograph to read: “ Antiperspirant . A drug product applied topically that reduces the production of perspiration (sweat) at that site.” The use of an antiperspirant on other areas of the body, as mentioned by the second and third comments, is discussed in section II.A, comment no. 4 and section II.C, comment 14 of this document.

(Comment 3) One comment stated that the TFM for OTC antiperspirant drug products was substantively and procedurally defective because it failed to address adequately the Panel's Category III recommendations concerning “enhanced duration of effect” and “problem perspiration” and failed to state what testing was required to substantiate these claims. The comment requested that FDA issue a new or amended TFM to address these issues.

The agency has determined that there is no need to withdraw, amend, or initiate a new TFM. Since the Panel's report was published in 1978, the procedural regulations for the OTC drug review were revised to comply with the Court ruling in Cutler v. Kennedy , 475 F. Supp. 838 (D.D.C. 1979). The revised regulations (46 FR 47730, September 29, 1981) provide that TFMs and final monographs will no longer contain recommended testing guidelines. The agency is not required by statute or regulation to include testing guidelines as part of OTC panel reports or TFMs. The agency stated in proposed § 350.60 of the TFM (47 FR 36492 at 36504) and states in § 350.60 of this final monograph (21 CFR 350.60) that “To assure the effectiveness of an antiperspirant, the Food and Drug Administration is providing guidelines that manufacturers may (emphasis added) use in testing for effectiveness.”

The “enhanced duration of effect” and the “problem perspiration” issues are discussed in section II.C, comments 10 and 12 of this document. Extended duration of effect claims have been placed in Category I based on data submitted by other comments (see also comment 12). The agency has determined that claims for problem perspiration are outside the scope of this monograph because no data were submitted to support such claims (see also comment 10).

(Comment 4) One comment contended that the proposed monograph would have a disastrous economic effect on its company, which markets an antiperspirant product first formulated in 1902 and labeled for excessive perspiration, including keeping the hands free of perspiration (labeled for use on the hands for tennis, racquetball, bowling, football, and other sporting uses), and marketed for prosthesis and orthotic use (for amputees to keep their appliance contact areas dry).

To qualify for exemption from the “new drug” definition under the 1938 grandfather clause of the act, the drug product must have been subject to the Food and Drug Act of 1906, prior to June 25, 1938, and at such time its labeling must have contained the same representations concerning the conditions of its use (21 U.S.C. 321(p)(1)). Under the 1962 grandfather clause of the act, a drug product which on October 9, 1962 was: (1) Commercially used or sold in the United States; (2) not a “new drug” as defined in the 1938 act; and (3) not covered by an effective NDA under the 1938 act, would not be subject to the added requirement of effectiveness “when intended solely for use under conditions prescribed, recommended, or suggested in labeling with respect to such drug on that day.” (Public Law 87-781, section 107(c)(4), 76 Stat. 788, note following 21 U.S.C. 321).

The person seeking to show that a drug comes within a grandfather exemption must prove every essential fact necessary for invocation of the exemption. See United States v. An Article of Drug * * * “ Bentex Ulcerine ,” 469 F.2d 875, 878 (5th Cir. 1972), cert. denied , 412 U.S. 938 (1973). Furthermore, the grandfather clause will be strictly construed against one who invokes it. See id .; United States v. Allan Drug Corp ., 357 F.2d 713, 718 (10th Cir.), cert. denied , 385 U.S. 899 (1966). A change in composition or labeling precludes the applicability of the grandfather exemption. See USV Pharmaceutical Corp. v. Weinberger , 412 U.S. 655, 663 (1973).

Although the comment stated that its drug products have been marketed since 1902 with hand perspiration labeling claims, no evidence was submitted to show that the labeling and composition of the products have remained unchanged since either 1938 or 1962, so that they qualify as grandfathered products. The agency requested product labeling from these years on several occasions (Refs. 1, 2, and 3), but none was ever provided. Without such evidence, the products do not qualify for either grandfather exemption. The burden of proof with respect to the grandfather exemption is not on FDA, but on the person seeking the exemption. See An Article of Drug * * * “ Bentex Ulcerine ,” supra .

The 1938 and 1962 grandfather clauses apply only to the new drug provisions of the act (see 21 CFR 314.200(e)) and not to the adulteration and misbranding provisions. The OTC drug review was designed to implement both the misbranding and the new drug provisions of the act. (See § 330.10 (21 CFR 330.10), 37 FR 9464 at 9466.) The grandfather clauses do not preclude the agency from reviewing any currently marketed OTC drug product, regardless of whether it has grandfather protection from the new drug provisions, in order to ensure that it is not misbranded.

Although the comment claimed this final rule would have a disastrous economic effect on its company if antiperspirants can be labeled only for underarm use, it provided no documentation about this impact. The agency notes that while the company's products would need to be relabeled to bear different indications, as long as the monograph conditions are met, the products could remain in the marketplace after relabeling occurred. The economic impact of this final rule is discussed in section VI of this document.

(Comment 5) Several comments contended that FDA should not incorporate the “exclusivity policy” in the final monograph by prescribing specific labeling terminology to the exclusion of other truthful nonmisleading language.

After these comments were submitted, in the Federal Registers of May 1, 1986 (51 FR 16258) and March 17, 1999 (64 FR 13254), the agency published final rules changing its labeling policy for stating the indications for use of OTC drug products. Under § 330.1(c)(2) (21 CFR 330.1(c)(2)), the agency provides options for labeling OTC drug products. The final monograph in this document is subject to the labeling provisions in § 330.1(c)(2). In addition, the monograph labeling follows the format and content requirements of § 201.66 (21 CFR 201.66).

(Comment 6) One comment objected to limiting the terms proposed in § 350.50(b)(1), (b)(2), and (b)(3) to “reduces,” “decreases,” “diminishes,” and “lessens.” The comment stated that “lower” and “mitigate” are synonyms for “reduce” and other words and phrases state, truthfully and accurately, the effect of antiperspirants.

Several comments disagreed with the agency that words such as “stop,” “check,” “halt,” “end,” “eliminate,” and “protect” should not be used in the labeling of antiperspirant drug products, even if preceded by the word “helps,” because these words imply the ability to stop underarm perspiration totally and would therefore mislead the consumer about the effectiveness of antiperspirant drug products. The comments mentioned the minority Panel position that “The Panel did not see scientific data to indicate that a consumer can differentiate between such words as ‘halts,’ ‘checks,’ ‘stops,’ and ‘ends,’ as disallowable words versus ‘diminishes’ and ‘reduces’ as allowable words,” (43 FR 46694 at 46725). One comment agreed with the minority because a review of the entire record of this proceeding found no studies or data to support a decision to disallow “protects,” “halts,” “checks,” and “stops.” Another comment requested a hearing on this issue.

One comment disagreed with the Panel's Category II status for the following labeling claims (43 FR 46694 at 46724): “Dry,” “dry formula,” “super dry,” “helps stop wetness,” “completely guards your family,” “helps stop embarrassing perspiration wetness,” “complete protection,” “really helps keep you dry,” and “gentle enough for sensitive areas of the body.” The comment asked the agency to allow these claims in the final monograph.

The agency has re-evaluated these claims in light of the comments’ arguments and its current policy to provide consumer friendly OTC drug product labeling. The agency is deleting one previously proposed word (“diminishes”) and adding some more consumer-friendly words (“sweat” and “sweating”) to antiperspirant product labeling.

The agency proposed the word “diminishes” in § 350.50(b) as one of the optional terms that could be used as the first word of the indications statement. While the word “diminish” means to “reduce,” the agency does not consider it as consumer-friendly as the other optional words “reduces,” “decreases,” or “lessens.” Therefore, the agency is not including “diminishes” in § 350.50(b) of this final monograph as an FDA-approved term. The agency rejected the words “mitigate” and “lower” in the TFM (comment 14, 47 FR 36492 at 36496 to 36497). The agency's position has not changed. While the terms “mitigate,” “lower,” and “diminishes” are not in the monograph and the agency does not favor their use, manufacturers may use these terms, or other words or phrases that truthfully and accurately express a similar meaning, under the flexible labeling policy in § 330.1(c)(2).

The agency is not changing its position on the use of the word “helps” in conjunction with the words “stop,” “halt,” “check,” “end,” and “eliminate.” In the TFM (comment 14), the agency stated that these words imply the ability to stop underarm perspiration totally and would therefore mislead consumers about antiperspirant effectiveness. Although neither the Panel nor the agency had any consumer comprehension studies to support a decision to disallow this information, the comments also did not provide any data to support these terms. The agency would consider these terms if data are provided to show that consumers would not be misled about the effect of antiperspirant drug products. The agency is not including “helps protect” before “underarm dampness,” “underarm perspiration,” or “underarm wetness,” because the language is not clear and could confuse consumers.

The agency is not including any “dry” or similar claims (“dry,” “dry formula,” “super dry,” “really helps keep you dry”) in this final monograph because no criteria have been established to define “dry.” Thus, what may be “dry” for one manufacturer's product may not be “dry” for another manufacturer's product. The agency would consider including “dry” claims in the monograph if appropriate criteria for such claims are developed.

The agency is not including claims such as “complete protection” or “completely guards your family” in the monograph because there is no evidence that antiperspirant drug products provide “complete” protection. The agency is not including the claim “gentle enough for sensitive areas of the body” because the words “sensitive areas” may imply that the product can be used on other body areas in addition to the underarm. The agency is not including the claim “helps stop embarrassing perspiration wetness” because what is “embarrassing” or “problem” perspiration for one individual may not be “embarrassing” or a “problem” for others. (See section II.C, comment 10 of this document.)

The agency is not including both “perspiration” and “wetness” in the same claim because it considers the duplicative wording unnecessary. The currently allowed claims are “* * * underarm wetness” or “* * * underarm perspiration.” The agency would have no objection to “* * * underarm perspiration wetness,” but such would have to be done under the flexible labeling provisions of § 330.1(c)(2). The agency is adding the words “sweat” and “sweating” in § 350.50(b) as other ways to describe “wetness” and “perspiration,” because consumers regularly use these terms to describe perspiration. Based on the previous discussion, the agency concludes that a hearing is not warranted on these issues.

(Comment 7) Three comments requested that OTC antiperspirant drug products be exempted from the keep out of reach of children and accidental ingestion warnings in § 330.1(g) because these products are not toxic by oral ingestion. One comment noted only one reported ingestion in 30 years of marketing antiperspirant products. Another comment stated that aerosols, in particular, should be exempt from the ingestion warning due to the characteristics of the delivery system and the warnings already required for aerosols pressurized by gaseous propellants under § 369.21 (21 CFR 369.21).

Although the comments did not submit any data to show that antiperspirant drug products are safe if ingested, the agency believes these products should not be toxic by oral ingestion for most individuals. However, individuals with renal dysfunction or immature renal function (i.e., infants) are at a higher risk from any exposure to aluminum. Further, ingestion of the various inactive ingredients present in these products may make young children ill or cause other undesirable consequences. Without adequate proof of safety if accidental ingestion were to occur, the agency has no basis to exempt OTC antiperspirant drug products from the accidental ingestion warning.

Although aerosol antiperspirant drug products are unlikely to be accidentally ingested by most consumers, the agency notes that the product containers are similar to those used for some food products. Spraying an aerosol into the mouth and ingesting it could be more hazardous than ingesting other dosage forms of the product because of the aerosol propellants. The warnings required under § 369.21, for those drugs in dispensers pressurized by gaseous propellants, are not related to ingestion, but state the following: “Avoid spraying in the eyes. Do not puncture or incinerate. Do not store at temperatures above 120 °F. Keep out of reach of children.” The agency does not consider these warnings a basis to exempt aerosol antiperspirants from the accidental ingestion warning required by § 330.1(g) for topical drug products. The last statement of the warning required by § 369.21 and the first warning required by § 330.1(g) (i.e., “Keep out of reach of children.”) are identical as of March 17, 1999 (64 FR 13254 at 13294). Section 350.50(c)(4)(ii)) of the final monograph requires aerosol antiperspirant drug products to bear the language in § 369.21. These products do not have to repeat the first general warning required by § 330.1(g) but need to have the accidental ingestion warning required by § 330.1(g).

(Comment 8) Two comments objected to the proposed warning in § 350.50(c) for aerosol antiperspirants, which states: “Avoid excessive inhalation.” The comments argued that the warning duplicates and gives less information than the current warning required for aerosol drug products under § 369.21.

Section 369.21 requires the following warning statement for a drug packaged in a self-pressurized container in which the propellant consists in whole or in part of a halocarbon or hydrocarbon: “Use only as directed. Intentional misuse by deliberately concentrating and inhaling the contents can be harmful or fatal.” The agency does not consider this warning (which addresses deliberate misuse) as being the same as a general statement warning people to avoid excessive inhalation. There are many people who would not deliberately misuse the product who should be alerted to keep away from their face and mouth and to avoid excessive inhalation. The warning appears in the final monograph in more consumer friendly language and in the new labeling format as follows: “When using this product [bullet] keep away from face and mouth to avoid breathing it.” (See § 201.66(b)(4) for description of a “bullet.”)

(Comment 9) Several comments objected to user perception testing to substantiate Category III effectiveness claims. (See comment 24, 47 FR 36492 at 36499.) The comments contended that the user perception test is not reliably indicative of product effectiveness and offers at best a crude index of activity that is difficult to employ for precise qualitative and quantitative evaluations. The comments considered objective gravimetric sweat collection procedures more reliable than user perception testing to assess antiperspirant activity levels and requested that user perception testing be deleted. Three comments submitted data on user perception testing of Category III claims, including extra effective, 24-hour duration, emotional sweating, and foot perspiration (see section II.C, comments 11 through 14 of this document).

The agency has determined that user-perception test data support emotional sweating, 24-hour protection, and extra effective claims. Accordingly, the agency concludes that there are sufficient data on user perception tests (including both user and independent observer perception tests) for use of antiperspirants for the underarm. No further user perception tests are necessary if an underarm antiperspirant shows at least 20 percent sweat reduction by gravimetric tests for emotional sweating and 24-hour protection claims or 30 percent sweat reduction for extra effective claims. Adequate user perception tests have not been conducted for parts of the body other than the underarms, such as the hands or feet. The agency will still require user perception and other effectiveness data to support use of antiperspirants on the hands and feet (see section II.A, comment 4 and section II.C, comment 14 of this document).

(Comment 10) Several comments objected to the Category III status of the claims “problem perspiration” and “especially troublesome perspiration.” One comment contended these claims are not inherently misleading or untruthful and many people who do not perspire heavily may, at times, consider themselves to have “problem” or “troublesome” perspiration.

Other comments objected to the agency's definition of problem perspiration as affecting the upper 5 percent of perspirerers, contending that a more realistic approach would be to let consumers define the meaning of these words by running efficacy studies on people who identify themselves as having problem or especially troublesome perspiration. One comment objected to the economic consequences of testing the top 5 percent of the population to establish a “problem perspiration” claim, because this could raise the price for one efficacy evaluation from the current $5,000 to $10,000 up to $200,000. The comment requested a hearing on this issue if FDA did not revise its approach.

No data were submitted to the agency to show that any OTC antiperspirant drug product is effective in reducing “problem” or “especially troublesome” perspiration. The agency is not aware of any products that currently qualify as effective for those conditions. If products are found to be effective in the future, the agency will include a definition and labeling for “problem” or “especially troublesome” perspiration in the monograph. The agency proposed in the tentative final monograph that a 30 percent reduction in sweat production in the upper 5 percent of perspirerers is necessary for a “problem perspiration claim” (47 FR 36492 at 36500). As discussed in section II.C, comment 9 of this document, gravimetric testing is sufficient to prove these claims. The agency would find acceptable an antiperspirant effectiveness study on a population of individuals who perceive themselves to have “problem perspiration,” as one comment suggested. Based on changes in the testing to support these claims, the agency concludes that a hearing is not needed.

(Comment 11) Several comments objected to the agency's proposed Category II classification of the claims “extra strength,” “extra effective,” or any other comparative effectiveness claims (see comment 19, 47 FR 36492 at 36498). The comments argued that if manufacturers can demonstrate by appropriate testing and methods of statistical analysis that one product is more effective than another, they should be permitted to so inform consumers. The comments noted that the agency had approved an NDA for an acetaminophen “extra strength” product and allowed sunscreen products to label their degree of effectiveness. One comment requested a hearing on this subject.

To prove the validity of comparative claims, two comments submitted both gravimetric and perceptual data (Refs. 4 and 5). Another comment submitted gravimetric data only (Refs. 6 and 7) and stated that one study showed that a 10 percent difference in antiperspirant effectiveness can be measured with currently marketed antiperspirant products. This comment stated that adequate data (Ref. 8) had been submitted to the Panel (43 FR 46694 at 46715) to show that as differences in antiperspirant performance levels increase, larger numbers of consumers perceive the difference. These data included a chart plotting differences in sweat reduction against the percentage of subjects who noted variations in axillary wetness. The chart shows that at 20 percent sweat reduction, approximately 45 to 50 percent of the subjects noticed a difference; at 35 percent sweat reduction, approximately 60 percent noticed a difference; and at 50 percent sweat reduction, approximately 75 percent noticed a difference. The comment contended that this study confirmed the Panel's determination that the user can perceive a shift of at least 10 percent in antiperspirant effectiveness and that a product providing a 30 percent or greater sweat reduction is perceived as more effective than a standard antiperspirant. The comments requested monograph status for “extra strength” and “extra effective” claims, as qualified by gravimetric studies.

The agency has determined that some of the studies (Ref. 4) meet the Panel's “guidelines for user perception test to be done for claims of ‘extra-effective’ to be classified as Category I” (43 FR 46694 at 46730). In these studies, two solid stick antiperspirant products (containing either 10 percent or 25 percent aluminum chlorohydrate) were compared by both a gravimetric and a user perception test. In the gravimetric test, 91 female subjects used the 10-percent product, and 88 used the 25-percent product. A 17-day conditioning period with no antiperspirant use was followed by four daily applications of one of the products to a randomly selected axilla (armpit or underarm). The opposite axilla received no treatment and served as the control. Baseline sweat production was determined the first day of the test. On days two and three, the antiperspirant was applied and 1 hour later a sweat production sample was collected. On day five, 24 hours after the fourth application, a sweat production sample was collected. Both the 10- and 25-percent products were more effective than the no treatment control for all time periods according to the statistical methods (Wilcoxon signed rank test) in the agency's guidelines for effectiveness testing of OTC antiperspirant drug products (Ref. 9). Evaluation of the Z values for the two 1-hour test days and the 24-hour test day showed that both products were statistically (Wilcoxon test) at least 20 percent better than the control axilla for all time periods (p < 0.001 for all three cases). Thus, both products met the requirements for standard effectiveness, i.e., a minimum of 20-percent reduction in underarm perspiration. Applying the same statistical methods to a 30-percent reduction in underarm perspiration on the last 24-hour data showed that the 25-percent product was more effective than no treatment (p < 0.001) and, thus, met one of the extra effective criteria.

The same study design was used in the user perception test except that the subjects applied the 10-percent product under one axilla and the 25-percent product under the other axilla. On day five, 24 hours after the fourth application, the 100 female subjects were asked “Under which arm do you feel drier?” All subjects had a preference: 33 favored the 10-percent product and 67 favored the 25-percent product. A statistically significant number of the subjects were able to perceive that the 25-percent product was more effective than the 10-percent product (p = 0.0005 one-sided). This result exceeded the Panel's requirement that 58 out of 100 subjects have a preference for the test antiperspirant (43 FR 46694 at 46731). Thus, these studies showed that the 25-percent aluminum chlorohydrate met the Panel's criteria (gravimetric measurements and user perception) for an extra effective claim.

The agency has determined that the studies indicate that gravimetric testing shows an adequate difference between a standard antiperspirant (with a 20-percent reduction in sweat) and an antiperspirant with at least a 30-percent reduction in sweat, as required by the Panel, to support an “extra effective” claim. The agency stated in the tentative final monograph (47 FR 36492 at 36499) that once the level of activity that is perceivable by users has been established using the Panel's recommended guidelines, it will not be necessary to perform user perception testing on individual products. Accordingly, the agency concludes that no further user perception testing is necessary for an “extra effective” claim, which is being included in the monograph for those antiperspirant products that reduce underarm perspiration by 30 percent or more using the guidelines for effectiveness testing of antiperspirant drug products referred to in § 350.60.

The Panel placed “extra-strength” claims in Category II because it concluded that “the presence of more active ingredient in an antiperspirant product cannot be used as a basis for a claim of added effectiveness because additional amounts of antiperspirant active ingredient do not necessarily result in improved product effectiveness” (43 FR 46694 at 46724). The Panel also stated that “the term ‘extra-strength’ normally refers to increased concentration of the active ingredient which would normally mean added effectiveness.” Several comments agreed that more active ingredient may not yield more effectiveness. Thus, a product containing 20 percent of an active ingredient (compared to 15 percent) that did not provide 30 percent or more sweat reduction could not claim “extra strength” or “extra effective.”

The agency does not believe that for antiperspirants the claim “extra strength” is as informative to consumers as the claim “extra effective.” The agency considers “extra effective” to be the key information that consumers want to know to select an appropriate antiperspirant product. The agency is including this new labeling claim in § 350.50(b)(4) of this final monograph. Based on this discussion, the agency concludes that a hearing is not needed on this subject.

(Comment 12) Several comments objected to the Panel's Category III classification of claims for enhanced duration of effect, such as “24-hour protection,” “one spray keeps you comfortably dry all day,” “prolonged protection,” etc. (43 FR 46694 at 46728). One comment stated that if an antiperspirant product can be shown to provide the required 20-percent reduction in perspiration under hotroom conditions for 24, 48, etc. hours after application, then duration claims have been substantiated.

Three manufacturers submitted gravimetric studies (Refs. 4, 7, 10, and 11) that used a hotroom to induce sweating and measured sweat collected in cotton pads twice over a 24-hour period. The tested ingredients showed a 20-percent or more reduction in sweat production for both collection times, which the comments contended satisfied enhanced duration claims such as “24 hour protection” and “all day protection.” One comment added that its data (Ref. 11) support a variety of product forms (cream, roll-on, solid stick) and, thus, the enhanced duration effect is not limited to product form.

The agency has determined that the data support a claim of enhanced duration for 24 hours according to the Panel's criteria. The protocols in seven of the studies (Refs. 7 and 10) varied only slightly from the Panel's recommended protocol. Subjects in one study abstained from antiperspirant use for 2 weeks prior to the study. Subjects in the other six studies stopped using antiperspirants 4 weeks prior to the studies. The subjects were pretreated with an antiperspirant for the 5 days prior to beginning sweat collection procedures. Sweat was collected 4 and 24 hours following the last antiperspirant application. Five studies included untreated axilla controls, and two studies included placebo controls. One product was tested in two different studies (one with a placebo and one without), and the results were virtually identical. The tests supported enhanced duration efficacy of 20 percent sweat reduction over the 24-hour period for aluminum zirconium tetrachloride (15.5 percent roll-on and 18.2 percent stick), zirconium tetrachloride (20 percent roll-on), aluminum chlorohydrate (6.8 percent aerosol), and aluminum chloride (20 percent solution).

Other data (Ref. 4) also supported enhanced duration of effectiveness for antiperspirant solid sticks containing 10 and 25 percent aluminum chlorohydrate. Subjects, who abstained from antiperspirant use for 17 days prior to the study, were pretreated with an antiperspirant for the 3 days prior to sweat collection, 1 and 24 hours after the last antiperspirant application. Standard hotroom and sweat collection procedures were used. Over the 24-hour period, both 10 percent and 25 percent aluminum chlorohydrate sticks reduced sweat production in the treated axilla by 20 percent compared to the untreated axilla. The 25-percent aluminum chlorohydrate product also showed a 30-percent reduction in sweat production.

Six other studies (Ref. 11) support enhanced duration claims. Most products showed a 20-percent reduction in sweat production compared to an untreated axilla for both the 4- and 24-hour evaluation periods, with several products showing a 30-percent sweat reduction. However, the studies did not identify the antiperspirant active ingredients.

The agency is including the following enhanced duration claims in § 350.50(b)(3) of this final monograph: “all day protection,” “lasts all day,” “lasts 24 hours,” or “24 hour protection.” In order to make such a claim, an antiperspirant product must reduce sweat production by at least 20 percent over a 24-hour period after application using the guidelines for effectiveness testing referred to in § 350.60. Antiperspirant products that meet the extra effective criteria (see section II.C, comment 11 of this document) over a 24-hour period can be labeled with both extra effective and enhanced duration claims (e.g., “24 hour extra effective protection,” “all day extra effective protection,” “extra effective protection lasts all day,” etc.). Claims of enhanced duration for more than 24 hours are nonmonograph because the agency has not received any data to demonstrate antiperspirant effectiveness for more than 24 hours according to the Panel's criteria.

(Comment 13) Several comments objected to the Panel's Category III classification of claims for control of emotional sweating, e.g., induced by tension or stress (43 FR 46694 at 46728). The comments contended that a product's antiperspirant activity is the same whether the sweat is due to thermal conditions or emotional factors. Some comments disagreed with the need for additional testing, especially consumer perception testing, to establish these claims. One comment requested a hearing.

One comment submitted clinical data (Refs. 7 and 12) which it contended showed: (1) There is a valid scientific protocol that combines a gravimetric sweat test with a word-quiz stress test to measure reduction in emotionally-induced sweat; (2) an antiperspirant is not washed from the axillae during controlled emotional stressing, and excessive sweat does not diminish antiperspirant effectiveness; (3) an antiperspirant effective in reducing thermally-induced sweat is effective in reducing emotionally-induced sweat also; and (4) an antiperspirant that reduces emotionally-induced sweat by 20 percent or more meets the standard for antiperspirant effectiveness for which user perception and benefit has already been accepted and, thus, there is no need for additional user perception testing. The studies included aerosol, roll-on, and stick products containing aluminum chlorohydrate or aluminum zirconium tetrachlorohydrate, the major antiperspirant active ingredients.

The agency has determined that gravimetric sweat tests combined with mental stress tests support an emotionally-induced sweating claim. The data included 12 studies with the same design of 5 days each on panels of approximately 25 female subjects: Pretest-abstention from all antiperspirants for at least 4 weeks prior to the study; day one—pretreatment control sweat collection under no stress; day two—pretreatment control sweat collection under emotional stressing; days two through five—apply test product; and days four and five—posttreatment sweat collection under emotional stressing. Subjects applied the antiperspirant test formulation to one axilla and used either a comparative formulation, a control placebo formulation, or no treatment on the opposite axilla. A control emotional challenge test, which lasted for about 60 minutes, was done on day two and an emotional challenge test was done on days four and five of the study.

Emotional sweating was induced by having subjects do a word definition test conducted by a moderator experienced at insuring optimum stress. The subjects received monetary rewards for a correct definition, but forfeited some of their rewards for incorrect or untimely definitions. Subjects had a 5-second time limit to begin a response and a 15-second maximum time to give the actual word definition. After 60 minutes, sweat was measured gravimetrically from the preweighed absorbent pads. Standard sweat collection and statistical evaluation procedures were used. The median sweat output for the 12 studies was 1,257 milligrams (mg) for the pretreatment control under emotional stressing compared to 415 mg for the pretreatment control under no stress. This word definition test effectively elicited a sweat response.

In the 12 studies using the word definition test, there was at least a 20-percent reduction of sweat production. The top 10 percent of heavy sweaters from each study (25 subjects) having the highest sweating rates on the untreated axilla had a 36.8 percent average sweat reduction compared to 38.2 percent reduction in the remaining 90 percent of each population (196 subjects), showing no significant difference in effectiveness in the two groups. Majors and Wild (Ref. 13) obtained similar results when comparing individual percent reduction in thermal sweating in the antiperspirant-treated axilla to rate of sweating from the untreated axilla in 89 subjects. They found that heavy sweating did not affect the rate of reduction.

The products tested under the emotional sweat protocol were also evaluated under a standard thermal sweat protocol at 100 °F with 30 percent relative humidity. The average percent sweat reduction for aerosols was 37.0 percent for emotional sweating and 34.0 percent for thermal sweating, for sticks it was 46.0 percent for emotional sweating and 41.4 percent for thermal sweating, and for roll-ons it was 51.3 percent for emotional sweating and 53.3 percent for thermal sweating. These data show that the same products have similar average percent sweat reduction for both emotional and thermal sweating.

The agency concludes that gravimetric sweat tests combined with mental stress tests are sufficient to show effectiveness for control of emotionally-induced sweating; the data show antiperspirant drug products that are effective for thermal sweating are also effective for emotional sweating. The agency has determined that no additional testing (e.g., user perception tests) is required for an emotionally-induced sweating claim for products containing monograph ingredients that meet the guidelines for effectiveness testing of antiperspirant drug products referred to in § 350.60.

The agency is including the following emotionally-induced sweating claim in § 350.50(b)(2) of this final monograph: “also [select one of the following: ‘decreases,’ ‘lessens,’ or ‘reduces’] underarm [select one of the following: ‘dampness,’ ‘perspiration,‘ ‘sweat,’ ‘sweating,’ or ‘wetness’] due to stress”. Based on the previous discussion, the agency concludes that a hearing is not needed on this subject.

(Comment 14) One comment requested monograph status for 25 percent aluminum chlorohydrate to control foot perspiration based on gravimetric and perceptual data from four randomized, double-blind, bilateral, paired-comparison trials, each having 12 female subjects (Ref. 14). Treatment was randomly assigned; aluminum chlorohydrate was used on one foot and placebo on the other foot. A 25 percent aluminum chlorohydrate solution in 50 percent ethanol:50 percent water and a placebo control consisting of 50 percent ethanol:50 percent water were used in the first study. The same solutions in aerosol form were used in the other three studies. The procedure in the agency's “Guidelines for Effectiveness Testing of OTC Antiperspirant Drug Products” (Ref. 9) was modified for foot testing: (1) A 3-day pre-treatment period during which subjects were not to use any foot care products, with each subject receiving four daily product applications prior to final hotroom posttreatment testing collection; (2) sweat collection media were cotton socks rather than absorbent pads; (3) a required 5-minute period of mild exercise (walking around the hotroom at the beginning of each collection period); and (4) a modified method to calculate effectiveness due to the erratic rate of sweat collections for both treated and control feet.

The comment stated that the calculation technique included in the agency's guidelines could not be used for the following several reasons: (1) The increased number and higher concentration of sweat glands in the foot area, (2) the occlusive nature of the foot area, and (3) the erratic rate of sweat collections for both treated and control feet. The comment contended that by considering the baseline, the posttreatment sweat collections, and the preferential subject perception data, statistically significant differences could be shown between sweat collection values for the treated foot compared to baseline values.

The comment stated that based on at least a 5-percent difference between the measured sweat output of each foot, sweat reduction was achieved for the treated foot in 25 of 48 subjects (52 percent) compared to only 10 of 48 subjects (21 percent) for the control foot. The comment added that, based on the user perception questionnaire, 75 percent of the subjects (29 out of 39 subjects who were able to discriminate) were able to perceive after the hotroom exposure that the treated foot was drier compared to only 21 percent of the subjects (10 out of 48) who perceived the control foot to be drier.

A second comment submitted a proposed clinical protocol (Ref. 15), but never submitted any clinical data.

The agency has found the data are insufficient to support a foot antiperspirant claim. In axillary sweating tests submitted to the Panel, the range of effectiveness (average percent sweat reduction) of antiperspirants was 20 to 40 percent in most tests, with aerosols having a reduction range of 20 to 33 percent (43 FR 46694 at 46713). In the comment's studies on aluminum chlorohydrate for foot antiperspirancy (Ref. 14), the average percent sweat reduction was below 10 percent, which is considerably below the 20 percent minimum level of sweat reduction recommended by the Panel for efficacy testing of OTC antiperspirant drug products on the foot (43 FR 46728). In addition, the agency has a number of concerns about the comment's data treatment methods: (1) The particular sweat collections selected for analysis were not chosen consistently across studies but were based on arbitrarily chosen final sweat measurements that varied with the different studies, (2) the choice of a 5-percent difference between the measured sweat output of each foot as “clinically significant” seems arbitrary and was not prespecified in the protocol, (3) the efficacy criterion used (greater than 15 percent reduction from baseline) was apparently defined after the data were collected and the results are therefore potentially biased, and (4) comparison with baseline is not an adequate basis upon which to conclude product efficacy because it ignores placebo and time effects that are accounted for in between product comparisons. The agency's analysis of “across study” data (using the average of the two sweat collections on day four, or average of the four collections on day four and five as the baseline, and the average of the two final collections as a measure of the final sweat product) did not show a statistically significant mean (or mean percent) sweat reduction from baseline in treated or control feet.

The agency does not agree with the comment's evaluation of its user perception data, but considers the product as ineffective both in subjects who preferred placebo and in subjects with no preference. It appears that the comment chose to ignore tied preferences. However, when subjects with no preference were included in the analysis, 22 out of 48 subjects (45.8 percent) and 29 out of 48 subjects (60.4 percent) preferred the treated foot, before entering and after leaving the hotroom, respectively. Both proportions are not significantly different from 1/2 (two-tailed, p = 0.28 and 0.15, respectively). Furthermore, the subjects apparently could not perceive which foot, treated or untreated, was drier. More subjects failed to choose the drier foot, than chose it correctly, both at baseline and posttreatment. Thus, the wetness perception study failed to show that subjects are able to tell marginal differences in sweating of the feet.

The agency has concluded that no statistically significant treatment effect was found in sweat reduction or in subject's perception of sweat (Ref. 16). Thus, 25 percent aluminum chlorohydrate has not been shown to be an effective foot antiperspirant. The agency provided the second comment suggestions on its protocol; a revised protocol was acceptable (Ref. 17), but no test data were ever submitted. The agency is not including foot antiperspirancy claims in the final monograph.

(Comment 15) Several comments requested that the background section of the effectiveness testing guidelines include the following: “FDA recognizes that alternative methodologies may be appropriate to qualify an antiperspirant drug product as effective. These guidelines do not preclude the use of alternative methodologies that provide scientifically valid results.”

The agency is adding this statement (but changing the words “alternative methodologies” to “alternate methods”) and adding “subject to FDA approval” to provide for alternate methods and statistical evaluations of effectiveness test data.

(Comment 16) Several comments requested that the relative humidity of 35 to 40 percent in the effectiveness testing guidelines be lowered to 30 percent, the hotroom condition widely used by industry. One comment submitted the results of effectiveness studies (Refs. 7, 10, and 18) that used a hotroom operated at 30 + 3 percent relative humidity. The comment stated that 30 percent relative humidity accurately measures antiperspirant effectiveness without causing excessive discomfort to test subjects. Two other comments submitted effectiveness test data where the relative humidity in the hotroom was “about 35 percent” (Refs. 19 and 20) or “35 percent ± 5 percent” (Ref. 21).

Based on these data, the agency is revising the relative humidity range for hotroom conditions in the antiperspirant effectiveness testing guidelines from 35 to 40 percent to a range of 30 to 40 percent. Seven studies (Ref. 10) that showed an enhanced duration of effectiveness of 20 percent sweat reduction over a 24-hour period for several antiperspirant products (see also section II.C, comment 12 of this document) used a protocol (Ref. 18) in which the subjects were placed in a controlled environment with the temperature held at 100 ± 2 °F and the relative humidity held at 30 ± 3 percent. Because the subjects were able to generate at least 150 mg of sweat per axilla per 20 minute period, the agency considers the results of the gravimetric tests valid. In other studies (Refs. 20 and 21), sweating was induced by having the subjects sit in a hotroom maintained at a temperature of 100 ± 2 °F and at a relative humidity of about 35 percent or 35 ± 5 percent. These studies support claims of extra effectiveness and enhanced duration (24-hour claims). See section II.C, comments 11 and 12 of this document. To assure that test subjects sweat adequately during the hotroom test, the agency is adding the following baseline perspiration rate condition: “ Baseline perspiration rate . Test subjects must produce at least 100 milligrams of sweat from the untreated or placebo control axilla in a 20-minute collection in the controlled environment.”

(Comment 17) Two comments requested revision of the part of the antiperspirant effectiveness testing guidelines that involves application of a control formulation to the alternate axilla during testing. Noting that the guidelines state that the control formulation is to be “devoid of any antiperspirant activity * * * determined in a test compared to no treatment,” a comment contended that it should be appropriate to compare antiperspirant activity directly against an untreated axilla and, thereby, reduce the time, complexity, and cost of the testing, especially the cost of developing a control formulation “devoid” of antiperspirant activity. The comment requested that the testing guidelines be revised to provide for the application of a control formulation or no treatment to the other axilla of each test subject. The other comment submitted data from two studies (Refs. 22 and 23) where one antiperspirant formulation was tested against both a placebo control and an untreated axilla control with virtually identical results; therefore, a placebo control was unnecessary to evaluate product effectiveness.

The data (Refs. 22 and 23) involved an aerosol spray containing 6.8 percent aluminum chlorohydrate tested by two gravimetric sweat tests under hotroom conditions to substantiate the claim that the product provides “all day wetness protection.” Both studies had the same design: Day one—pretreatment control collection; days two, three, and four—application of antiperspirant; and days four and five—posttreatment sweat collection 4 and 24 hours after application. The data were evaluated using one of the statistical methods recommended in the antiperspirant testing guidelines. In one study (Ref. 22), the product was tested against a placebo aerosol in 44 subjects. The placebo was identical to the test formulation and supposedly devoid of antiperspirant activity; the formula difference was adjusted with aerosol propellant. The results were statistically significant and showed that the aluminum chlorohydrate aerosol effectively reduced sweat production by at least 20 percent more than the placebo aerosol at 4 and 24 hours after application. However, the placebo showed some antiperspirant activity. In the second study (Ref. 23), the same product was tested against an untreated axilla control in 49 subjects with statistically significant results. The aluminum chlorohydrate aerosol effectively reduced sweat production by at least 20 percent more on the treated axilla than the untreated control axilla at 4 and 24 hours after application.

The agency is unable to conclude from these data that an untreated comparator is equivalent to use of a placebo. The observed effect of a treatment (e.g., antiperspirant) may represent the sum of the pharmacological effects of the test drug and other effects associated with the intervention effort, which may include psychological effects and the effects of the excipients used in a product formulation. Although studies have been conducted in the past using no treatment for one axilla, the use of a placebo control for that axilla allows for assessment of the net treatment effects of the test article. Therefore, the agency is retaining the requirement for a placebo/vehicle control in the antiperspirant effectiveness testing guidelines.

The proposed guidelines stated that the control formulation is as similar as possible to the test formulation and devoid of any antiperspirant activity. As the placebo used in one study (Ref. 22) was not completely devoid of antiperspirant activity, the agency is revising the guidelines to state:

The agency concludes that this revised testing procedure will reduce the time, complexity, and cost of testing because it eliminates the cost of developing a control formulation “devoid” of antiperspirant activity.

(Comment 18) Several comments noted a discrepancy in a heading in an active ingredient table in the Panel's report (43 FR 46694 at 46697), where “Metal:Halide” is used, and in proposed § 350.10 (47 FR 36492 at 36504), where “Al:Cl” is used. Two comments suggested that “Al:Cl” in the table heading and in § 350.10 should be changed to “Metal:Cl,” because the ratio range in the table is for the ratio of the “Cl” to either aluminum (“Al”) or aluminum plus zirconium (“Al+Zr”).

The agency notes that the ratio range designated as “A1:Cl” in the TFM should have been “Metal:Halide,” as it was in the Panel's report. The agency is not including the ratio range table in § 350.10 of this final monograph because this information is now included in the U.S. Pharmacopeia- National Formulary (USP-NF) monographs for each active ingredient included in § 350.10, where applicable. The agency is changing the introductory text of § 350.10 to state: “Where applicable, the ingredient must meet the aluminum to chloride, aluminum to zirconium, and aluminum plus zirconium to chloride atomic ratios described in the United States Pharmacopeia-National Formulary.”

(Comment 19) Two comments agreed with the agency that buffer components present in the compound, such as glycine or glycol, should be omitted when calculating the maximum allowable concentration of active ingredients in an antiperspirant product (47 FR 36492 at 36495). One comment noted a potential source of confusion because the active ingredients table in proposed § 350.10 included the buffer names along with the active ingredient names. To minimize confusion and to be consistent with the agency's policy regarding buffers, the comment requested the agency to remove the buffer names from the “active ingredient” column in § 350.10. The comment proposed a number of changes in the active ingredient section.

When the Panel first discussed terminology for aluminum chloride and aluminum chlorohydrate antiperspirant active ingredients, the buffer additives were not included (Ref. 24). Subsequently, the Cosmetic, Toiletry, and Fragrance Association (CTFA) Antiperspirant Task Force developed definitions for aluminum chlorohydrex complexes with propylene glycol or polyethylene glycol, and for aluminum zirconium chlorohydrex complexes with glycine (Ref. 25). The Panel adopted these definitions, including those for ingredients with buffered additives, in its report (43 FR 46694 at 46696 and 46697), and the agency proposed this nomenclature in the TFM (47 FR 36492). Since the comment was submitted, the USP-NF developed names for these antiperspirant active ingredients that include the names of the buffers, where applicable, and active ingredient names in this final monograph include the buffer, where applicable.

The agency considers calculation of the concentration of an antiperspirant ingredient present in a product based on the amount of anhydrous ingredient to be appropriate. Buffered antiperspirant ingredients contain the same active chemical moiety as the corresponding nonbuffered ingredients, and the antiperspirant activity of both ingredients is similar.

(Comment 20) One comment requested the agency allow concentrations of antiperspirant active ingredients above those proposed in the monograph as long as the amount of ingredient applied to the skin is not greater than the amount judged safe by the Panel. The comment noted that, in the TFM (comment no. 12, 47 FR 36492 at 36495 to 36496), the agency had disagreed with earlier comments on this issue and stated that “the comments included no new data to show that a higher concentration of antiperspirant active ingredient marketed in a particular container would deliver no more than the amount of active ingredient judged safe by the Panel.”

The comment submitted new data from eight usage studies (Ref. 26) to support a higher (up to 35 percent) active ingredient concentration for powder roll-on antiperspirant drug products. Fifty male and female subjects, between the ages of 18 and 55, participated in each study. Subjects were given a preweighed product and instructed to use only that product, to keep a record of how many times they used it, and not to allow anyone else in the household to use the product. An average of 43 subjects completed the 1-week studies and returned their product to the laboratory where it was reweighed.

The amount of product applied with each use was calculated. The four powder roll-ons, which contained 33 percent aluminum zirconium tetrachlorohydrate, were found to deliver between 23 and 44 mg of antiperspirant ingredient per axilla per use. The other product forms (solid stick, cream, or liquid roll-on), containing 18 to 19 percent of either aluminum chlorohydrate or aluminum zirconium tetrachlorohydrate, were found to deliver between 54 and 98 mg of antiperspirant ingredient per axilla per use. The comment contended these data show that higher concentrations of active antiperspirant ingredients, as used in powder roll-on systems, deposit no more and, in fact, deposit less active ingredient than is deposited in a liquid roll-on, solid stick, or cream product containing proposed monograph concentrations of active ingredients. Thus, the comment argued that concentrations up to 35 percent of Category I active ingredients should be allowed in powder roll-on antiperspirants.

This issue was specifically brought before the Panel, which did not agree to change the maximum concentration (Ref. 27). The Panel noted that aluminum antiperspirants can be irritating, expressed concern that a small amount of a concentrated formulation may be more irritating than a large amount of a more dilute formulation, and concluded that antiperspirant products with a higher concentration would need an NDA with additional safety studies. The agency notes that increasing the concentration of aluminum antiperspirant ingredients increases the acidity of the material and irritation of the skin (Refs. 28, 29, and 30). The agency concludes that safety data are needed to show that powder roll-on dosage forms containing up to 35 percent aluminum chlorhydrates or aluminum zirconium chlorhydrates are not irritating.

Since the TFM was published, several citizen petitions have raised concerns about the amount of aluminum absorbed from topical antiperspirant drug products. (See section II.F, comment 23 of this document.) The agency has no data showing that products containing up to 35 percent aluminum chlorhydrates or aluminum zirconium chlorhydrates increase aluminum absorption and is not revising the monograph to provide for powder roll-on dosage forms containing up to 35 percent antiperspirant active ingredient, without additional safety data being provided.

(Comment 21) One comment requested monograph status for aluminum sesquichlorohydrate prepared by neutralizing aluminum chloride with magnesium hydroxide even though the aluminum to chloride (Al:Cl) ratio of the ingredient prepared in this manner does not fall within the range specified for aluminum sesquichlorohydrate in the TFM. The comment stated that during the course of the rulemaking all aluminum chlorhydrates placed in Category I were prepared by conventional techniques: Either by neutralization of aluminum chloride with aluminum monochlorohydrate or by a controlled reaction of aluminum metal with hydrochloric acid. Thus, the comment argued that it was both appropriate and convenient to characterize the various aluminum chlorhydrates in terms of their Al:Cl ratios.

The comment stated that its data showed that the reaction of aluminum chloride with magnesium hydroxide yields aluminum sesquichlorohydrate equivalent to that listed in the TFM and the neutralizer magnesium hydroxide does not contribute either aluminum or chloride ions to the neutralization process; thus, the Al:Cl ratio of aluminum sesquichlorohydrate prepared this way will always remain 0.33, the same as aluminum chloride alone. The comment was concerned because this Al:Cl ratio of 0.33 does not fall within the ratio range of 1.9 down to but not including 1.25:1 proposed for aluminum sesquichlorohydrate in the tentative final monograph (47 FR 36492 at 36504). The comment contended that if the final product is regarded as a mixture of aluminum sesquichlorohydrate and magnesium chloride, and if the amount of chloride that serves as counter ions for the magnesium ions were subtracted from the total chloride, then the Al:Cl ratio of the aluminum sesquichlorohydrate component of the mixture would have the Al:Cl ratio specified in the TFM. The comment submitted data (Ref. 31) using gel permeation chromatography and elemental analysis of the eluates (the substance separated out by washing) to show that aluminum sesquichlorohydrate prepared by this neutralization method is chromatographically indistinguishable from that prepared by conventional methods. The comment suggested designating the ingredient prepared by the neutralization method as “aluminum sesquichlorohydrate MAG.”

The agency does not find these analytical data sufficient to support the comment's claim that the ingredient prepared by this neutralization method is chemically equivalent in composition to aluminum sesquichlorohydrate. The chromatographic indistinguishability from aluminum sesquichlorohydrate prepared by conventional methods only demonstrates that the chromatographic method in this study is insufficient to support the claim. This result perhaps is to be expected because the gel permeation chromatographic method used in this study is based primarily on a size exclusion principle; however, the agency doubts that any chromatographic method will provide such support.

USP 23-NF 18 Fifth Supplement (Ref. 32) added a monograph for aluminum sesquichlorohydrate and described it as consisting of complex basic aluminum chloride that is polymeric and loosely hydrated and encompasses a range of aluminum-to-chloride atomic ratios between 1.26:1 and 1.90:1. Its chemical formula is stated as: Al y (OH) 3y-z Cl z . n H 2 O.

According to the method described in the comment, when aluminum sesquichlorohydrate is prepared by the reaction of aluminum chloride with magnesium hydroxide, the product must be a mixture of aluminum sesquichlorohydrate and magnesium chloride. The agency does not consider it suitable from a technical point of view to simply designate this material as aluminum sesquichlorohydrate. Information provided by the comment shows that the alternate process material is not “equivalent in composition” because the aluminum to chloride ratio of 0.33 is outside the specified range for aluminum sesquichlorohydrate and because the material contains measurable amounts of magnesium. Also, as discussed in section II.E, comment 18 of this document, because the atomic ratio range should be metal to halide, magnesium should be counted as a metal in the atomic ratio range of the comment's material. Using the name aluminum sesquichlorohydrate for an ingredient prepared by neutralization of aluminum chloride with magnesium hydroxide would be misleading because this would imply that the drug is the same identifiable ingredient as aluminum sesquichlorohydrate prepared by neutralization of aluminum chloride with aluminum chlorohydrate. The agency believes the material described in the comment should be classified as a new ingredient, perhaps an aluminum magnesium chlorohydrate, rather than aluminum sesquichlorohydrate.

The agency concludes that additional information on the chemical characterization of the proposed material, particularly its ionic structure, is needed to permit a more scientific review. The submitted information does not provide a technical basis for allowing the substitution of aluminum sesquichlorohydrate manufactured by neutralization with magnesium chloride for that neutralized with aluminum monochlorohydrate. The USP-NF monograph (Ref. 32) does not contain information to characterize or identify an aluminum sesquichlorohydrate containing magnesium (e.g., no identification or content test, and no assay involving magnesium calculations).

Further, the agency notes that no clinical efficacy data were provided to show that the material proposed in the comment would be equally effective as aluminum sesquichlorohydrate prepared in the conventional manner. Even minor variations in formulation, such as the addition of emollients or buffers, can alter the effectiveness of an antiperspirant ingredient. (See comment no. 8 in the TFM (47 FR 36492 at 36494).) The new mixture may be just as effective. However, whether such a finding would apply to equal amounts, or whether an equivalent effect could be achieved with a greater or lesser amount of aluminum sesquichlorohydrate prepared with magnesium hydroxide, should be determined by effectiveness testing that follows the guidelines referred to in § 350.60 of the final monograph. The agency needs appropriate effectiveness data and an appropriate USP-NF monograph amendment (see 21 CFR 330.14(i)) before the ingredient prepared by the new method can be generally recognized as safe and effective and included in the final monograph.

(Comment 22) One comment objected to the agency's rejection of its earlier request (discussed in comment no. 9 of the TFM, 47 FR 36492 at 36495) that combinations of two or more Category I antiperspirant ingredients should be Category I. The comment stated that the combination policy in § 330.10(a)(4)(iv) allows combinations of two or more safe and effective active ingredients; thus, the Panel should be reversed.

In the TFM (47 FR 36495), the agency concurred with the Panel (43 FR 46694 at 46718) that both combinations of antiperspirant active ingredients and combinations of antiperspirant active ingredients with other types of active ingredients (except for a deferred antiperspirant/antifungal combination) are Category II because of no information on the existence of any such combinations or any data to support their safe and effective use.

The agency classified antiperspirant/antifungal combination drug products in Category III in the TFM for OTC antifungal drug products (December 12, 1989, 54 FR 51136 at 51148 and 51149). No additional data were submitted to support this combination, and in the final monograph for OTC antifungal drug products (September 23, 1993, 58 FR 49890 at 49891), the agency classified all antifungal combination drug products as nonmonograph.

The comment did not provide any supporting data or specific examples of Category I antiperspirant ingredients that would be suitable for use in combination with other antiperspirant or nonantiperspirant Category I ingredients. Thus, the combination policy does not apply. These combinations remain nonmonograph. However, new clinical data may be submitted to support safety and effectiveness.

(Comment 23) The information and arguments presented by the citizen petitions that questioned the safety of aluminum-containing ingredients in OTC antiperspirant drug products and the comment that disagreed with one of the citizen petitions were discussed in detail in the Federal Register of March 23, 1993 (58 FR 15452 at 15453 and 15454). One petition was concerned that aluminum can be absorbed and get into the blood and that some of the aluminum in the blood enters the brain, where it remains and accumulates. The petition cited a study by Perl and Good (Ref. 33) that suggested that inhaled aluminum compounds could have a direct nasal-olfactory pathway to the brain. The other petition contended that two inhalation studies (Refs. 34 and 35) provided by industry showed aluminum absorption in the peribronchial lymph nodes, brain, and adrenal glands of the animals after 12 and 24 months. Both petitions expressed concern about the potential neurotoxicity of aluminum upon chronic use, especially a possible link to Alzheimer's disease.

The comment that disagreed with one petition contended that the majority of the petitioner's references described findings from in vitro studies that did not consider the blood-brain barrier, which is the brain's main defense against potentially toxic substances such as aluminum. The comment contended that extraordinarily high concentrations of aluminum were used in these studies, and that aluminum from antiperspirants would never reach a biologically significant level to be of concern. The comment stated that the majority of researchers investigating the etiology of Alzheimer's disease would consider current evidence insufficient to link aluminum to Alzheimer's disease. The comment concluded that current scientific information does not support the need to reclassify the safety of aluminum-containing antiperspirants.

The agency does not find the current evidence sufficient to conclude that aluminum from antiperspirant use results in Alzheimer's disease. Both petitions mention the widely quoted study by Perl and Good (Ref. 33) as showing that inhaled aluminum compounds may get directly into the brain by a nasal-olfactory pathway. The agency does not consider this animal study (published as a one-page Letter to the Editor in Lancet ) as adequate to establish a direct nasal-olfactory pathway for aluminum. This study was only a small pilot animal study, about which the agency has a number of concerns.

First, the method of introducing the aluminum to these animals was not physiologically relevant. Two strips of Gelfoam (absorbable gelatin sponge, USP) saturated with high concentrations of aluminum salts (15 percent aluminum lactate or 5 percent aluminum chloride) were inserted into rabbits' left nasal recess through a hole drilled into the frontal bone. While the authors attempted to demonstrate the accessibility of aluminum from the nasal recess to the brain, the agency questions whether the normal use of antiperspirant aerosols would ever produce a high aluminum concentration in this relatively distant anatomic site. Second, the size of this study was very small (only three rabbits in each group). The agency is concerned that any error in this complicated surgical procedure to introduce the aluminum salts or in preparing the specimens for analysis could have caused a major difference in the final results. Third, the results were not consistent. Of the three animals exposed to aluminum lactate, besides the involvement of the left olfactory bulb and the cerebral cortex, only one rabbit had a lesion in the hippocampus while the other two rabbits had granulomas found in the pyriform cortex. In the group exposed to aluminum chloride, only one rabbit had a granuloma in the olfactory bulb while the other two rabbits were free of lesions. The distribution of lesions in this study was fairly random. If a nasal-olfactory pathway exists for neuronal aluminum transport, the agency believes that the distribution of these lesions should follow a more persistent anatomical pattern. In addition, the authors were unable to explain why two of the six rabbits were free of lesions. Finally, although some of the rabbits had granulomas, these lesions did not resemble the plaques or neurofibrillary tangles found in Alzheimer's disease, and none of the rabbits had any symptomatic neurologic deficit. While this study implied that access to the brain via the nasal recess may be possible under nonphysiological conditions, a direct nasal-olfactory pathway and any relationship to Alzheimer’s disease cannot be established. Several other studies, which were not done with aluminum, are of no value in establishing a direct nasal-central nervous system pathway for aluminum antiperspirants.

Aluminum lactate, one aluminum salt used in this study (Ref. 33), is not included in this final monograph. Sodium aluminum lactate has been used as a buffer for aluminum sulfate in a nonaerosol dosage form, but that product is nonmonograph.

In one of the inhalation studies (Ref. 34), the life-span of the male hamsters exposed to the aluminum chlorhydrate aerosol was shorter (583 days) than that of the controls (661 days). The female hamsters exposed to aluminum chlorhydrate had a slightly longer life-span (489 days) than the controls (481 days). Male hamsters exposed to aluminum chlorhydrate coated with a high concentration of isopropyl myristate, an emollient frequently used to increase the retention on the skin of the aluminum salts used in antiperspirant products, had a life-span (646 days) comparable to the controls (661 days). Overall, these numbers do not follow a consistent pattern and could be affected by other experimental conditions.

The same petition criticized the other inhalation study (Ref. 35), contending that the results showed that the animals had suffered significant weight loss and increased terminal brain-to-body weight ratios, results it considered consistent with clinical aluminum toxicity, and that the increase in brain weight was possibly due to cerebral edema. The petition claimed that because aluminum was found to be deposited in the animals' brains, peribronchial lymph nodes, and adrenal glands, this proved that systemic absorption of aluminum had occurred and that aluminum had been transported to the brain. Other comments disagreed with the petition's argument that the rats in this study were found to have detectable aluminum levels in their brains after 12 months, contending that this finding may only be artificial considering the analytical methods used. The comments added that if aluminum did accumulate in the rats' brains, those rats should have had symptoms of neurotoxicity, which they did not have. The comments concluded that the artificial finding should be ignored.

The agency does not concur with the petition's extrapolations. The weight loss occurred only in rats and not in guinea pigs that were similarly treated. The increase in terminal brain-to-body weight ratio occurred only in the female rats at 12 months in the low- and high-dose groups. The female rats in the middle-dose group and all the males were not affected. At 24 months, this same ratio was found to increase only in the high-dose groups of both sexes; however, the increase in the female high-dose group was not statistically significant. The agency notes that all of these findings did not follow any predictable pattern or a pattern that would be expected from a dose-related or cumulative toxin exposure.

The pattern of deposition was not consistent. In the guinea pigs, aluminum was found in the peribronchial lymph nodes, but not in the adrenal glands and brains (as occurred in the rats). The agency finds it possible that aluminum absorption and deposition may be animal dependent. If this were the case, then even if the rat data were evidence of a problem, the same situation may not apply to humans. The agency is not aware of other investigators having similar results.

The petitions and the comment had different views on a study by Rollin, Theodorou, and Kilroe-Smith (Ref. 36) in which rabbits were exposed to aluminum oxide dust for 8 hours a day, 5 days a week, for 5 months. The authors of the study found that the brains of these rabbits had a significant increase in aluminum at the end of the study. The first petition contended that this study showed that the inhalation of aluminum antiperspirants poses a special risk because this route of delivery bypasses the blood-brain barrier. The comment calculated that this study would be equivalent to a person using spray antiperspirants for approximately 10 seconds daily for 789 years to experience the same toxicity. The second petition contended that this 10-seconds-exposure assumption was incorrect because the aluminum particles in an antiperspirant aerosol remain suspended in the air for a long period of time, and the exposure will be more than the comment calculated.

The agency finds this study has a number of limitations: (1) The extraordinary high concentrations of aluminum oxide exposure in the animals, (2) the small sample size (eight animals in each group), and (3) an overlap in the standard deviations of the results obtained decreases the power and generalizability of the study. While the study shows an accumulation of aluminum in the rabbits' body tissues under certain exposure conditions, the agency does not consider the study as providing evidence of a direct nasal-olfactory pathway or that normal use of aluminum-containing antiperspirants would provide comparable results. Further, the second petition's position includes a number of assumptions, which might not occur: (1) That the place where the product is used is a confined, poor-ventilated airspace, and (2) that the user remains in the vicinity of the dispersed aerosol for a period of time during which significant inhalation would occur.

One petition claimed that an epidemiology study by Graves et al. (Ref. 37) has shown that Alzheimer's disease was associated with the use of aluminum antiperspirants and that a high incidence of amyotrophic lateral sclerosis (ALS) and Parkinson's disease in Chamorro natives of Guam, as reported by Garruto (Ref. 38), may be related to high environmental aluminum. The agency has looked closely at the Graves et al. study (Ref. 37) because it explored the association between exposure to aluminum through the lifetime use of antiperspirants and antacids and Alzheimer's disease. This was a case-control study of 130 matched pairs, where the controls were friends or nonblood relatives of the case. Subjects (cases and controls) were matched by age, sex, and the relationship between the case/control and his or her surrogate (spouse or child).

The authors mentioned that, in general, antiperspirants contain aluminum and deodorants do not, except for some deodorants marketed for women. The authors reported that there was no association between the use of “any” antiperspirant/deodorant and Alzheimer's disease. However, when the data were stratified by aluminum-containing antiperspirants the overall odds ratio showed a modest increase in risk and a statistically significant trend emerged between increasing lifetime use of aluminum-containing antiperspirants and the estimated relative risk of Alzheimer's disease.

The authors commented that, to their knowledge, this was the first epidemiological study of this association between antiperspirants and Alzheimer's disease, and there were several methodologic limitations that made interpretation of their results difficult. First, there were missing data because the case surrogate and the control surrogate could only recall all variables (frequency and duration of use, and product brand name) in about one-half of the matched pairs. Second, there might have been some misclassification because the analyses were based on the most common brand provided, while some subjects may have used multiple brands. Third, the authors considered the validity of the data, resulting from difficulty in learning the subjects' exposure using telephone interview methods, to be a critical limitation. Despite these limitations, the authors considered an association between aluminum-containing antiperspirants and Alzheimer's disease as biologically plausible, but concluded that their findings are provocative and, due to methodologic problems, should be considered preliminary.

Garruto (Ref. 38) described efforts to establish models of chronic motor neuron degeneration in a long-term effort to understand the cellular and molecular mechanisms of aluminum neurotoxicity. He studied foci of dementia (ALS and Parkinson's disease) in western Pacific populations. He mentioned experimental models in rabbits and cell culture as demonstrating that chronic, rather than acute, toxicity is the cause of human neurodegenerative disorders with a long latency and slow progression. However, Garruto stated that he and his colleagues had been most deficient in the design and implementation of good epidemiological studies, particularly of Alzheimer's disease and the epidemiology of aluminum intoxication per se, and described what he felt was needed for future well-designed studies.

The petitions/comment also discussed environmental exposure to aluminum, percutaneous absorption after topical use, inhaled absorption after aerosol use, aluminum neurotoxicity (and a possible relationship to Alzheimer's disease), and possible mechanisms of action. Numerous references were provided. The agency has reviewed these references and other literature published on aluminum since the petitions were submitted. Many early references were simply hypotheses and different theories that have not been adequately substantiated in humans or any animal models. A number of studies were pilot projects in a few animals, and the agency is unable to draw any definite conclusions based on the small sample sizes.

The agency notes Priest's (Ref. 39) statement that most investigators now agree that aluminum is unlikely to be implicated in causing Alzheimer's disease, whereas Rowan (Ref. 40) contended it would be considerably more correct to state that the issue is controversial. More recently, Savory et al. (Ref. 41) stated that the question whether aluminum presents a health hazard to humans as a contributing factor to Alzheimer's disease is still subject to debate.

The agency finds the literature shows the issue of aluminum toxicity and Alzheimer's disease remains controversial and is not resolved. Scott et al. (Ref. 42) reported that aluminum has been detected in Alzheimer neurofibrillary tangles, but the significance of its presence is unknown. Kasa, Szerdahelyi, and Wisniewski (Ref. 43) reported that histochemical staining showed that aluminum was present in brain samples from Alzheimer's disease victims, but the structural localization indicated that it is not primarily involved in the etiology of the disease. Candy et al. (Ref. 44) reported that data from post mortem brain examinations of patients with chronic renal failure who did not have dialysis encephalopathy suggest that it is unlikely that aluminum plays any major role in neurofibrillary tangle formation and that its role in senile plaque formation is likely to be only part of a complex cascade of changes. Savory et al. (Ref. 41) stated that the lack of agreement on the question whether the brain content of aluminum is increased in Alzheimer's disease attests to the complexity of the issue.

Savory et al. (Ref. 41) indicated that most of the data linking aluminum exposure to Alzheimer's disease have been derived from several epidemiological studies of aluminum in drinking water, which represents only a small percentage of the total exposure. They concluded that quantification of the risk of Alzheimer's disease from other sources of aluminum (such as food additives, cosmetics, deodorants, antiperspirants, pharmaceuticals, and respiratory dusts) is needed before the total risk from all environmental sources of aluminum can be fully evaluated.

Despite Graves et al.'s acknowledgment of the limitations of their study (Ref. 37), other authors, e.g., Anane et al. (Ref. 45), report that Graves et al. found an increased risk of Alzheimer's disease with lifetime use of aluminum-containing antiperspirants after an epidemiological study. Anane et al. applied low aqueous concentrations (0.025 to 0.1 micrograms (μg)/square centimeter) of aluminum chloride (AlCl 3 .6H 2 O) to healthy shaved Swiss mouse skin for 130 days. They reported that this led to a significant increase in urine, serum, and whole brain aluminum, especially in the hippocampus area, compared to control animals. They mentioned that this percutaneous uptake and accumulation of aluminum in the brain was greater than that caused by dietary exposure to 2.3 μg per day in feed and water.

Anane et al. conducted in vitro and in vivo mouse skin studies and showed for the first time that aluminum is absorbed through mouse skin and this contributes to a greater body burden than does oral uptake. They also mentioned that several antiperspirant preparations containing AlCl 3 .6H 2 O are applied to sensitive regions of the skin, which may increase penetration and could be an important source of body aluminum burden. Anane et al. recommended that an epidemiological study be conducted to ascertain whether use of AlCl 3 .6H 2 O-containing antiperspirants correlates with neurodegenerative disease, because such cannot be excluded based on the results of their study.

Forbes and Agwani (Ref. 46) stated that there is uncertainty about how aluminum-containing substances enter the body, but current information suggests that the skin and/or the lung are important. They mentioned that Priest (Ref. 39) noted that at least some antiperspirant sprays contain aluminum compounds of a particle size of about 1 micrometer (micron) (μ), which is ideally sized for deposition in the deep lung, and that such deposition may also be relevant for skin.

Salib and Hillier (Ref. 47) examined clinically diagnosed Alzheimer's disease patients and controls (other dementias and nondementias) and collected information to examine the association between Alzheimer's disease and aluminum occupation. They reported that manual work, such as welding, expected to be in direct contact with aluminum dust and fumes does not appear to be significantly associated with the risk of Alzheimer's disease. The authors concluded that no significant association was shown between developing Alzheimer's disease later in life and previous occupational history for all of the occupations in the study. This included both manual workers, who would be expected to have had a higher exposure opportunity to aluminum dust and fumes, and other workers at an aluminum factory. The authors concluded that neither Alzheimer's disease nor dementia in general were shown to be associated with previous aluminum occupation.

Salib and Hillier (Ref. 47), in 1996, repeated Doll's (Ref. 48) conclusions from 1993 that it is generally accepted that the delayed effects of chronic aluminum exposure have not been adequately assessed in man. Factors that govern the bioavailability, neurotoxicity, and the effect of chronic low dose exposure to aluminum compounds remain unclear. Flaten et al. (Ref. 49) stated that the lack of a readily available radioactive isotope of aluminum has been a major obstacle toward elucidating the mechanisms of absorption, distribution, and excretion of the metal.

Both Doll (Ref. 48) and Salib and Hillier (Ref. 47) stated that the possibility of a causal link between aluminum and Alzheimer's disease must be kept open until uncertainty about neuropathological evidence is resolved and the prognosis of humans exposed to aluminum by inhalation is known. Flaten et al. (Ref. 49) stated that multidisciplinary collaborative research efforts, involving scientists from many different specialities, are needed, with emphasis placed on: (1) Increasing knowledge of the chemistry of aluminum in biologic systems and determining the cellular and molecular mechanisms of aluminum toxicity, and (2) variations in neuropathology from long-term, low-level exposure to aluminum.

In summary, the literature shows that at high doses and long-term industrial exposures, aluminum can be associated with recognizable, specific neurologic effects. However, to date, the agency considers the evidence insufficient to link aluminum to Alzheimer's disease, Parkinson's disease, or ALS. Although aluminum uptake and transport by a “nasal-olfactory pathway” has been suggested in a nonphysiologic study in an animal model (Ref. 36), the agency is not aware of any evidence in humans that supports an olfactory-neuronal transport of aluminum to the brain.

One petition suggested that the agency require that 90 percent of the particles of an aerosol aluminum antiperspirant be greater than 50 μ (currently the requirement is between 10 and 50 μ) to reduce exposure to the upper respiratory tract. The agency notes that both Priest (Ref. 39) and Forbes and Agwani (Ref. 46) discussed a particle size of 1 μ for deposition in the deep lung. Based on current knowledge (no proof in humans of an olfactory neuronal transport of aluminum to the brain) and the lack of information on a minimum particle size to affect the respiratory tract, the agency finds no basis to impose a greater than 50μ requirement at this time. Flaten et al. (Ref. 49) stated that the possible human toxicity of aluminum has been a matter of controversy for well over 100 years. Despite many investigators looking at this issue, the agency does not find data from topical and inhalation chronic exposure animal and human studies submitted to date sufficient to change the monograph status of aluminum containing antiperspirants. The agency will continue to monitor the scientific literature on aluminum and, if new information appears, will reassess the status of aluminum-containing antiperspirants at such time.

The agency acknowledges that small amounts of aluminum can be absorbed from the gastrointestinal tract and through the skin. Assuming a person has normal renal function, accumulation of aluminum resulting from usual exposures to antiperspirant drug products (application to the underarms once or twice daily) and subsequent absorption is considered minimal. However, people with renal dysfunction have an impairment in normal renal excretion of aluminum.

Flaten et al. (Ref. 49) noted that the first human conditions generally accepted to be causally related to aluminum exposure did not occur until the 1970's, shortly after the introduction of routine dialysis therapy in persons with chronic renal failure. Dialysis encephalopathy was perhaps the first disease recognized in this population (1972, 1976). Later, fracturing osteomalacia (1977, 1978) and a microcytic hypochromic anemia (1980) were related to aluminum exposure in dialysis patients. Flaten et al. indicated that aluminum can cause encephalopathy, bone disease, and anemia in dialysis patients resulting from the introduction of aluminum directly into the blood stream via high-aluminum dialysate or the consumption of large oral doses of aluminum-containing phosphate binders. Reduced urine production (the major route for aluminum excretion) contributes to this problem. The authors noted that, in the early 1980's, reports began to appear describing aluminum neurotoxicity and osteotoxicity in children with renal failure who were not on dialysis treatment.

The agency is concerned that people with renal dysfunction may not be aware that the daily use of antiperspirant drug products containing aluminum may put them at a higher risk because of exposure to aluminum in the product. The agency considers it prudent to alert these people to consult a doctor before using or continuing to use these products on a regular basis and is including a warning in the final monograph: “Ask a doctor before use if you have kidney disease.“

Flaten et al. (Ref. 49) mentioned several reports of aluminum accumulation and toxicity in individuals without chronic renal failure, especially preterm infants (primarily fed intravenously), and stated that preterm infants are at risk for aluminum loading because of their immature kidney function. Term infants with normal renal function may also be at risk because of their rapidly growing and immature brain and skeleton, and an immature blood-brain barrier. Until they are 1 to 2 years old, infants have lower glomerular filtration rates than adults, which affects their kidney function. The agency is concerned that young children and children with immature renal function are at a higher risk resulting from any exposure to aluminum. Accordingly, the agency is requiring both general warnings in § 330.1(g) on all aluminum-containing antiperspirant drug products to inform parents and others to keep these products away from children, and to seek professional assistance if accidental ingestion occurs. (See also section II.B, comment 7 of this document.)

(Comment 24) One comment submitted a research paper (Ref. 50) containing the author's theories concerning how antiperspirants and aluminum in these products may be associated with breast cancer: The secretions of the apocrine sweat glands contain androgens, which are blocked by the antiperspirant and thus caused to spread internally. These androgens may be converted in the surrounding adipose tissues to estrogens, and excess estrogens have been associated with an increase in breast cancer. Alternatively, these excess androgens may interfere with the normal functioning of the hypothalamic-pituitary axis, thereby causing an imbalance of estrogen in the body. About 50 percent of breast cancers occur in the upper outer quadrant of the breast, and axillary sweat glands are anatomically very close to this site. A protein marker called GCDFP-15 (Gross Cystic Disease Fluid Protein), which is normally found only in the sweat glands, was found in the fluids of many breast cysts. The author postulated that the blocked axillary sweat glands would cause GCDFP-15 and other markers to migrate to the breast due to its proximity and gravity, and because the fetal precursors for apocrine sweat glands and mammary glands are the same, these migrated protein markers may stimulate the breast and play a role in the carcinogenic process.

The author also postulated that aluminum may play a role in the development of breast cancer because calcification of breast tissues (commonly seen in breast cancer) may be caused by a local electrolyte imbalance induced by the absorbed aluminum. The author noted that breast cancer in Japan was more than five times lower than in the United States and postulated this has occurred because Japanese women, especially the older population, do not use antiperspirants. The author noted that the breast cancer rate is currently on the rise in Japan, especially among young premenopausal women, and postulated that this is occurring because the young Japanese generation has adopted the western habit of using antiperspirants.

The agency finds these theories lack sufficient evidence. The agency notes that the amount of androgens produced by the sweat glands is relatively insignificant compared to normal physiologic amounts produced by the adrenals and the gonads. The agency is not aware of any studies that have shown an “internal spread” of androgens or that establish that GCDFP-15 or other protein markers are carcinogenic in humans.

The agency considers the author's views about a local electrolyte imbalance by absorbed aluminum causing breast tissue calcification inconsistent with knowledge about the calcification process. In addition, there are many benign calcifications. Finally, many proposals (e.g., diet, lifestyle changes) have been made as to why there is an increased incidence of breast cancer among Japanese women. However, there is no evidence to associate this increase with an increased use of antiperspirants. Thus, the agency concludes that there is insufficient evidence to support these theories.

(Comment 25) The agency previously assessed the carcinogenic potential of aerosolized aluminum chlorhydrate antiperspirants in comment 22 of the TFM (47 FR 36492 at 36498 and 36499). Primary lung tumors, granulomatous lesions, and macrophagic activity were evaluated in animal studies. No increase in lung tumors was seen in the low- and mid-dose rats given doses at least 100 times greater than the expected human exposure via aerosolized antiperspirants. Normal macrophage response and pulmonary fibrosis were observed at higher doses with chronic exposure. No increase in tumors was noted in guinea pigs or hamsters at any dose levels in the studies. While the agency removed aerosol antiperspirant products containing zirconium from the market because of granuloma formation (August 16, 1977, 42 FR 41374), the agency is not aware of data that indicate aluminum antiperspirants cause foreign body granulomas or pulmonary tumors.

1. It has been agency policy since April 3, 1989 (54 FR 13480 at 13486), that before any ingredient is included in a final OTC drug monograph, it must have a compendial (USP-NF) monograph. Compendial monographs include an ingredient's official name, chemical formula, and analytical chemical tests to confirm the quality and purity of the ingredient. These monographs establish public standards for the strength, quality, purity, and packaging of ingredients and drug products available in the United States. Eighteen of the 19 antiperspirant active ingredients that the agency proposed in § 350.10 of the antiperspirant TFM (47 FR 36492 at 36504) currently have compendial monographs. Nine of the official compendial names are the same as those proposed in § 350.10, while 10 of the names have changed slightly. (See Table 1 of this document for the previous and current ingredient names.)

Fort Dodge Animal Health, Division of American Cyanamid Co., P.O. Box 1339, Fort Dodge, IA 50501, has informed FDA of a change of name to Fort Dodge Animal Health, Division of Wyeth Holdings Corp. Accordingly, the agency is amending the regulations in 21 CFR 510.600(c) to reflect the change.

In addition, when the name of Fort Dodge Animal Health, Division of American Home Products Corp. was changed to Fort Dodge Animal Health, Division of Wyeth (67 FR 67520, November 6, 2002), an inaccurate correction to the address was made. At this time, it is being changed to the original and correct address.

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

Background

This document contains amendments to 26 CFR part 1 under section 755 of the Internal Revenue Code (Code). On April 5, 2000, a notice of proposed rulemaking (REG-107872-99, 2000-1 C.B. 911) under section 755 was published in the Federal Register (65 FR 17829). Only one commentator submitted written comments in response to the notice of proposed rulemaking, and no public hearing was requested or held. After consideration of the comment, the proposed regulations are adopted as revised by this Treasury decision.

Section 743(b) provides for an optional adjustment to the basis of partnership property following certain transfers of partnership interests. The amount of the basis adjustment is the difference between the transferee's basis in the partnership interest and the transferee's share of the partnership's basis in the partnership's assets. Once the amount of the basis adjustment is determined, it is allocated among the partnership's individual assets pursuant to section 755.

On December 14, 1999, final regulations (TD 8847; 1999-2 C.B. 701) were published in the Federal Register under section 755 (64 FR 69903). Under these regulations, basis adjustments under section 743(b) are allocated among a partnership's assets as follows. First, the adjustment is allocated between the two classes of property described in section 755(b). These classes of property consist of capital assets and section 1231(b) property (capital gain property), and any other property of the partnership (ordinary income property). The amount of a basis adjustment under section 743(b) that is allocated to the class of ordinary income property is equal to the total amount of income, gain, or loss that would be allocated to the transferee from the sale of all ordinary income property. The amount of the basis adjustment under section 743(b) that is allocated to capital gain property is the total amount of the basis adjustment under section 743(b) less the amount of the basis adjustment allocated to ordinary income property. The basis adjustment is then allocated to individual assets within each class.

The final regulations issued on December 14, 1999, worked in conjunction with § 1.755-2T. In the case of a basis adjustment under section 743(b) or section 732(d), the fair market values of all assets other than goodwill or going concern value were determined on the basis of all the facts and circumstances, and the fair market value of goodwill and going concern value was determined using the residual method. As described more fully in the notice of proposed rulemaking, § 1.755-2T was published prior to the enactment of section 1060(d), which (as amended in 1993) requires the residual method to be applied for purposes of determining the values of section 197 intangibles for purposes of applying section 755. These final regulations implement section 1060(d) and replace § 1.755-2T.

These final regulations differ from § 1.755-2T by using the residual method to value all section 197 intangibles (not just goodwill and going concern value). In addition, these final regulations also apply to basis adjustments under section 734(b) and contain special rules for certain substituted basis transactions. Finally, for convenience, the provisions of the regulations have been relocated to the beginning of § 1.755-1.

Under these final regulations, a partnership is required to assign values to its assets as follows. First, the partnership must determine the values of each of its assets other than section 197 intangibles under all the facts and circumstances, taking into account section 7701(g) (treating the fair market value of a property as not less than the amount of any nonrecourse indebtedness to which the property is subject). The partnership then must determine the gross value of all partnership assets (partnership gross value). Last, the partnership is required to use the residual method to assign values to the partnership's section 197 intangibles. For purposes of these regulations, the term section 197 intangibles includes all section 197 intangibles (as defined in section 197), as well as any goodwill or going concern value that would not qualify as a section 197 intangible under section 197.

If the aggregate value of partnership property other than section 197 intangibles is equal to or greater than partnership gross value, then all section 197 intangibles are deemed to have a value of zero. In all other cases, the aggregate value of the partnership's section 197 intangibles (the residual section 197 intangibles value) is deemed to equal the excess of partnership gross value over the aggregate value of partnership property other than section 197 intangibles. The residual section 197 intangibles value must be allocated, first, among section 197 intangibles other than goodwill and going concern value. Any remaining value is assigned to goodwill and going concern value.

The proposed regulations used the residual method to assign values to all partnership assets, rather than limiting the scope of the residual method to section 197 intangibles. Treasury and the IRS have concluded that these rules were unduly complex, especially when they applied to partnerships whose partnership agreements contained special allocations of partnership income or loss. Accordingly, the final regulations utilize the residual method only to value section 197 intangibles.

Because the proposed regulations used the residual method to value all partnership assets (and not just section 197 intangibles), it was desirable for all partnerships to value their assets using the same method. Accordingly, under the authority of sections 1060(d) and 755, the proposed regulations applied to all partnerships, whether or not their assets constituted a trade or business. In contrast, the final regulations apply the residual method only for the purpose of valuing section 197 intangibles, which are usually held by partnerships whose assets constitute a trade or business. Thus, the final regulations apply the residual method only to partnerships whose assets constitute a trade or business (as described in § 1.1060-1(b)(2)).

The proposed regulations specifically applied to basis adjustments under section 732(d). Some references to section 732(d) have been removed in the final regulations to enhance readability. Nevertheless, the final regulations continue to apply to basis adjustments under section 732(d).

If a partnership interest is transferred in a taxable transaction, the transferee's basis in its partnership interest provides a frame of reference for determining partnership gross value. In these transactions, both the proposed and the final regulations generally provide that partnership gross value is the amount that, if assigned to all partnership property, would result in a liquidating distribution to the transferee partner equal to that partner's basis (reduced by the amount, if any, of such basis that is attributable to partnership liabilities) in the transferred partnership interest immediately following the relevant transfer.

In certain circumstances involving basis adjustments under section 743(b), such as where income or loss with respect to particular section 197 intangibles is allocated differently among partners, partnership gross value may vary depending on the fair market values of particular section 197 intangibles held by the partnership. In these situations, the final regulations require the partnership to use a reasonable method, consistent with the purposes of the final regulations, to determine partnership gross value.

In the preamble to the proposed regulations, the IRS and the Treasury Department requested comments regarding how the residual method applies in the context of a basis adjustment that results from an exchange of a partnership interest in which the transferee's basis in the interest is determined in whole or in part by reference to the transferor's basis in the interest (a transferred basis exchange). Determining partnership gross value in such an exchange is problematic, because the transferee's basis in the partnership interest does not necessarily have any connection to the fair market values of partnership assets. No comments were received regarding the specific method to be adopted by the final regulations.

The IRS and the Treasury Department also requested comments regarding how the residual method applies in the context of basis adjustments under section 734(b). One commentator suggested that the final regulations should require one method for valuing partnership assets in the case of a pro rata distribution, and another method for valuing partnership assets in the case of a non-pro rata distribution. The IRS and the Treasury Department believe that this approach would be unnecessarily complex.

The final regulations adopt a single method for determining partnership gross value that applies to all section 734(b) basis adjustments and to section 743(b) basis adjustments resulting from transferred basis exchanges. In these circumstances, partnership gross value is the value of the entire partnership as a going concern, increased by the amount of partnership liabilities. In the case of a basis adjustment under section 734(b), the value of the entire partnership as a going concern is determined immediately after the distribution causing the adjustment.

A commentator has suggested that the same method for determining partnership gross value should apply to exchanged basis transactions, such as the distribution of a partnership interest by a partnership. The final regulations adopt this comment by replacing all references to transferred basis exchanges with references to substituted basis transactions. Conforming adjustments are also made to the special rules contained in § 1.755-1(b)(5) for allocating basis adjustments under section 743(b) among a partnership's assets in these exchanges.

In the preamble to the proposed regulations, comments were requested as to whether the residual method should be used to determine the fair market values of partnership assets for purposes of applying section 1(h)(6)(B) (collectibles gain or loss), section 1(h)(7) (section 1250 capital gain), and section 751(a) (ordinary income) to the sale or other disposition of a partnership interest. No comments were received on this issue. Treasury and the IRS have determined that the potential benefits of a rule allowing transferors to use the residual method do not justify the increased complexity that the rule would have created.

The final regulations add two clarifying rules for allocating basis adjustments under section 743(b) among a partnership's assets in the case of a transaction that is not a substituted basis transaction. The first rule provides that assets with respect to which the transferee partner has no interest in income, gain, losses, or deductions are not taken into account in allocating basis adjustments to capital assets. The second rule provides that in no event may the amount of any decrease in basis allocated to an item of capital gain property exceed the partnership's adjusted basis in that item. If the amount of a decrease in basis otherwise allocable to a particular capital asset exceeds the partnership's adjusted basis in that asset, the transferee's negative basis adjustment in that asset is limited to the partnership's adjusted basis in that asset, and the excess must be applied to reduce the remaining basis, if any, of other capital gain assets pro rata in proportion to the partnership's adjusted bases in such assets.

These regulations apply to transfers of partnership interests and distributions of property from partnerships that occur on or after June 9, 2003.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.

The principal author of these regulations is Craig Gerson of the Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, personnel from other offices of the IRS and the Treasury Department participated in their development.

(c) * * *

(5) * * *

The Bureau published a proposed rule amending its regulations on release gratuities, transportation, and clothing (28 CFR 571, subpart C) on October 4, 1999 (64 FR 53872). The previous regulations on this subject were published in the Federal Register on May 21, 1991 (56 FR 23480) and were amended on September 10, 1996 (61 FR 47795).

Previous provisions on release gratuities in section 571.21(e) specified that with the exception of aliens serving 60 days or less in contract facilities, each alien released to immigration authorities is to have $10 cash.

Under this final rule, aliens released for the purpose of deportation, exclusion, or removal will not receive a $10 gratuity. Because these inmates are to become the responsibility of the Bureau of Citizenship and Immigration Services (BCIS), it is not appropriate for the Bureau to provide a $10 gratuity.

We estimate that approximately 8.5% of the total inmate population of the Federal Bureau of Prisons will be affected by this rule.

We received five comments on the proposed rule. One commenter supported the rule, indicating that it would reduce cost to the Bureau.

Two commenters expressed concern that when aliens are released to the Immigration and Naturalization Service (INS, now the Bureau of Citizenship and Immigration Services [BCIS]), they may not necessarily be released for the purposes of exclusion, deportation or removal, and therefore still need a $10 gratuity. One commenter was concerned that aliens may be “wrongly classified” by the Bureau as being excludable, deportable, or removable, a decision which, the commenter said, cannot be made without “a hearing before an Immigration judge.”

The Bureau's policies regarding release of aliens to the INS (BCIS) for exclusion, deportation, or removal can be found in the Bureau's Program Statement on the Institution Hearing Program (PS 5111.01), accessible on the internet at www.bop.gov or through the Freedom of Information Act process. This describes the process for identifying aliens for release to the INS (BCIS) for purposes of exclusion, deportation or removal. The Bureau, INS (BCIS) and the Executive Office for Immigration Review (EOIR) jointly developed the Institution Hearing Program (IHP) to ensure that deportation proceedings begin as quickly as possible after an alien inmate's conviction and finish before the alien inmate's release date.

IHP hearing sites are specific institutions where alien inmates participate in immigration hearings conducted by the INS (BCIS) and EOIR. After INS (BCIS) and EOIR make a decision to exclude, deport or remove an alien, the alien is transferred to an IHP release site close to deportation locations, where alien inmates remain until their sentences expire. The INS (BCIS) and EOIR, not the Bureau, make the decision regarding an alien's status. Therefore, there is no way that the Bureau can “wrongly classify” an alien, as the commenter feared.

One commenter cited the preamble to the original rule, published in 1979 (44 FR 38236), which stated that the purpose of the gratuity is to ensure that the alien has money to care for him-/herself in the community until he/she receives an income. The commenter suggested that eliminating this gratuity would be contrary to the purpose of providing the funds—for transportation and communicating with family or legal counsel.

Since aliens who had received the $10 gratuity were not released to the community, but instead to INS (BCIS), they would have no need of support pending their ability to earn an income. Instead, they are released into the custody of INS (BCIS), who is responsible for transporting them, and they can access INS (BCIS) provisions for communicating with family members and legal counsel.

One commenter expressed concern that this rule would not actually reduce cost to the Bureau. According to our recent statistics, in December of 1999, we released approximately 958 INS (BCIS) detainees. Therefore, extrapolating this statistic, we estimate that approximately 11,500 aliens receive this gratuity annually. Therefore, this rule would save the Bureau approximately $115,000 every year. We consider this a significant cost savings for the Bureau.

Finally, we received a letter which we construed to be a comment on the proposed rule, as it raised the subject of release gratuities. However, we found that the commenter, an inmate, did not address the issues raised by the proposed rule, but instead questioned the Bureau's application of 18 U.S.C. 4281, instead of 18 U.S.C. 3624(d), to his situation. Although this comment is not relevant to this final rule, we will briefly address it here.

18 U.S.C. 4281, which was repealed in 1984 ( see Pub.L. 98-473, Title II, § 218(a)(7), October 12, 1984, 98 Stat. 2027), allowed only a $100 gratuity to prisoners upon release. Its replacement, 18 U.S.C. 3624(d), allows “an amount of money, not more than $500” in the Director's discretion. The inmate commented that, on his release, he should receive the $500 described in the latter statute instead of the $100 described in the former statute.

Section 235 of Public Law 98-473 stated that 18 U.S.C. 3624 and other provisions created by that Public Law would “take effect on the first day of the first calendar month beginning 36 months after the date of enactment [October 12, 1984] and [would] apply only to offenses committed after the taking effect of this chapter.” The effective date of 18 U.S.C. 3624 is, therefore, November 1, 1987. Because this commenter's offense occurred before November 1, 1987, 18 U.S.C. 3624(d) does not entitle him to a $500 gratuity upon release.

We publish the proposed rule, without change, as a final rule. You may send further comments on this rule by writing to the address noted above. Although we will not formally respond to further comments by publication in the Federal Register , we will consider them.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review”, section 1(b), Principles of Regulation. The Director of the Bureau of Prisons has determined that this rule is not a “significant regulatory action” under Executive Order 12866, section 3(f), and accordingly this rule has not been reviewed by the Office of Management and Budget.

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

The Director of the Bureau of Prisons, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and by approving it certifies that this regulation will not have a significant economic impact upon a substantial number of small entities for the following reasons: This rule pertains to the correctional management of offenders committed to the custody of the Attorney General or the Director of the Bureau of Prisons, and its economic impact is limited to the Bureau's appropriated funds.

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

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

What Change Are We Making?

28 CFR 571.22, the current rule on release gratuities, states in paragraph (c) that “[t]ransportation will be provided to an inmate's place of conviction, his legal residence within the United States, or to other such place as authorized and approved.”

However, 18 U.S.C. 3624(d)(3) allows only for “transportation to the place of the prisoner's conviction, to the prisoner's bona fide residence within the United States, or to such other place within the United States as may be authorized by the Director.”

This clarification will revise the rule only to the extent that our rule appears to conflict with the Bureau's statutory authority, and to correct any misunderstanding that we may transport inmates outside the United States upon their release.

The new rule text of 28 CFR 571.22(c) correctly states that “[t]ransportation will be provided to an inmate's place of conviction or legal residence within the United States or its territories.”

The Administrative Procedure Act (5 U.S.C. 553) allows exceptions to notice-and-comment rulemaking for “(A) interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) when the agency for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”

This rulemaking is exempt from normal notice-and-comment procedures because it is a minor clarification of currently existing Bureau policy. We are modifying our rule to directly mirror the language of the statute authorizing us to transport inmates, upon their release, only to areas within the United States.

Because this change is interpretive in nature, reflects current Bureau policy, and is a minor clarification of current agency procedure and practice, we find that normal notice-and-comment rulemaking is unnecessary. We are, however, allowing the public to comment on this rule change by publishing it as an interim final rule.

The Bureau notes that it published a notice of proposed rulemaking to amend its regulations on release gratuities with respect to deportable aliens (28 CFR 571, subpart C) on October 4, 1999 (64 FR 53872) (BOP 1097).

Although this interim rule (BOP 1108I) amends regulations in the same part of the Code of Federal Regulations as were proposed to be amended by BOP 1097, it makes no changes to what was proposed by BOP 1097.

You can send written comments on this rule to the Rules Unit, Office of General Counsel, Bureau of Prisons, 320 First Street, NW., Washington, DC 20534.

We will consider comments received during the comment period before taking final action. We will try to consider comments received after the end of the comment period. In light of comments received, we may change the rule.

We do not plan to have oral hearings on this rule. All the comments received remain on file for public inspection at the above address.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review”, section 1(b), Principles of Regulation. The Director of the Bureau of Prisons has determined that this rule is not a “significant regulatory action” under Executive Order 12866, section 3(f), and accordingly this rule has not been reviewed by the Office of Management and Budget.

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, under Executive Order 13132, we determine that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

The Director of the Bureau of Prisons, under the Regulatory Flexibility Act (5 U.S.C. 605(b)), reviewed this regulation and by approving it certifies that it will not have a significant economic impact upon a substantial number of small entities for the following reasons: This rule pertains to the correctional management of offenders committed to the custody of the Attorney General or the Director of the Bureau of Prisons, and its economic impact is limited to the Bureau's appropriated funds.

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

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

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds good cause exists for not publishing an NPRM. Public comment is not necessary since the proposed change reduces the burden to the public and is being made at the request of the drawbridge owner, the only party that could reasonably object to the change.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds good cause exists for making this rule effective less than 30 days after publication in the Federal Register for the same reasons stated in the preceding paragraph.

The Alabama & Gulf Coast Railway, the owners of the bridge, have requested a modification in the drawbridge operation of the swing bridge across the Alabama River, mile 105.3, at Coy. Presently, the draw of the bridge opens on signal if at least 48-hours notice is given in accordance with 33 CFR 117.101(a). The owner of the bridge has requested a change to allow for the bridge to be opened on signal if at least 24 hours notice is given to lessen the burden on the mariner while still allowing the owner to make reasonable preparations to open the bridge.

The regulation at 33 CFR 117.101(a) currently refers to the bridge as the “Burlington Northern Santa Fe railroad bridge.” Due to a change in ownership, the bridge is now called the “Alabama & Gulf Coast Railway Drawbridge.” This final rule reflects that name change.

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.

This rule improves service to waterways users and will not have a negative impact on them.

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 have no negative impact on any small entities because the modification to the regulation improves service to the waterway users.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this 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 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 the preamble.

This rule will not affect 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 cause 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. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We have considered the environmental impact of this rule and concluded that, under figure 2-1, paragraph 32(e), of Commandant Instruction M16475.lD, this rule is categorically excluded from further environmental documentation. This final rule only affects the timing of the advance notice required for operation of an existing drawbridge and will not have any impact on the environment. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

Coast Guard District Commanders and Captains of the Port (COTP) must be immediately responsive to the safety and security needs of the waters within their jurisdiction; therefore, District Commanders and COTPs have been delegated the authority to issue certain local regulations. Safety zones may be established for safety or environmental purposes. A safety zone may be stationary and described by fixed limits or it may be described as a zone around a vessel in motion. Security zones limit access to prevent injury or damage to vessels, ports, or waterfront facilities. Drawbridge operation regulations authorize changes to drawbridge schedules to accommodate bridge repairs, seasonal vessel traffic, and local public events. Timely publication of these rules in the Federal Register is often precluded when a rule responds to an emergency, or when an event occurs without sufficient advance notice. The affected public is, however, informed of these rules through Local Notices to Mariners, press releases, and other means. Moreover, actual notification is provided by Coast Guard patrol vessels enforcing the restrictions imposed by the rule. Because Federal Register publication was not possible before the beginning of the effective period, mariners were personally notified of the contents of these drawbridge operation regulations, security zones, or safety zones by Coast Guard officials on-scene prior to any enforcement action. However, the Coast Guard, by law, must publish in the Federal Register notice of substantive rules adopted. To meet this obligation without imposing undue expense on the public, the Coast Guard periodically publishes a list of these temporary special local regulations, drawbridge operation regulations, security zones, and safety zones. Permanent rules are not included in this list because they are published in their entirety in the Federal Register . Temporary rules may also be published in their entirety if sufficient time is available to do so before they are placed in effect or terminated. The safety zones, drawbridge operation regulations, and security zones listed in this notice have been exempted from review under Executive Order 12866, Regulatory Planning and Review, because of their emergency nature, or limited scope and temporary effectiveness.

The following rules were placed in effect temporarily during the period from January 1, 2003, through March 31, 2003, unless otherwise indicated.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(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 not making this rule effective less than 30 days after publication in the Federal Register . Publishing an NPRM and delaying the effective date would be contrary to public interest since immediate action is needed to provide for the safety of participating vessels and mariners.

The Captain of the Port Huntington is establishing a safety zone from miles 171.5 to 172.5 on the Ohio River extending the entire width of the river. This safety zone is necessary to ensure the safety of participating vessels and mariners during the Marietta River Roar tunnel boat races. Participating vessels are vessels registered with event officials to race or work in the Marietta River Roar, and include race boats, rescue boats, tow boats and picket boats associated with the race. With the exception of participating vessels of the Marietta River Roar, all other vessels and persons are prohibited from transiting within this safety zone between 10 a.m. and 7 p.m. each day unless authorized by the Captain of the Port Huntington or a 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 (DHS).

This regulation will only be in effect for a short period of time and notifications to the marine community will be made through broadcast notice to mariners. The impacts on routine navigation are expected to be minimal.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we 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 owners or operators of vessels intending to transit portions of the Ohio River from miles 171.5 to 172.5, from 10 a.m. on July 4 until 7 p.m. on July 5, 2003, and will only be enforced from 10 a.m. to 7 p.m. each day. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons. This regulation will be enforced for only a short period of time, and there will be breaks provided every three hours during the races. During those breaks the waterway will be cleared and traffic will be allowed to pass through the zone. Notification of the safety zone and the break periods will be made to the marine community by broadcast notice to mariners and event sponsors.

If you are a small business entity and are significantly affected by this regulation please contact PO William Reeves, Marine Safety Office Huntington, Marine Event Coordinator at (304) 529-5524.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offered to assist small entities in understanding the rule so that they could 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 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.

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.lD, 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 a 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.

Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

Regulatory Information

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(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 . Information was made available to the Coast Guard in insufficient time to publish an NPRM or for publication in the Federal Register 30 days prior to the event. Publishing an NPRM and delaying its effective date would be contrary to public interest since immediate action is needed to provide for the safety of participating vessels and mariners.

The Captain of the Port Huntington is establishing a safety zone from miles 355.5 to 356.5 on the Ohio River, extending the entire width of the river. This safety zone is necessary to ensure the safety of participating vessels and mariners during the Portsmouth Power Boat Races. Participating vessels are vessels registered with event officials to race or work in the Portsmouth Power Boat Races, and include race boats, rescue boats, tow boats and picket boats associated with the race. With the exception of participating vessels of the Portsmouth Power Boat Races, all other vessels are prohibited from transiting within this safety zone between 10 a.m. and 7 p.m. each day unless authorized by the Captain of the Port Huntington or a 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 (DHS).

This regulation will only be in effect for a short period of time and notifications to the marine community will be made through broadcast notice to mariners. The impacts on routine navigation are expected to be minimal.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we 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 owners or operators of vessels intending to transit portions of the Ohio River from miles 355.5 to 356.5, from 10 a.m. on July 19 until 7 p.m. on July 20, 2003, and will only be enforced from 10 a.m. to 7 p.m. each day. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons. This regulation will be enforced for only a short period of time, and there will be breaks provided every three hours during the races. During those breaks the waterway will be cleared and traffic will be allowed to pass through the zone. Notification of the safety zone and the break periods will be made to the marine community by broadcast notice to mariners and event sponsors.

If you are a small business entity and are significantly affected by this regulation please contact PO William Reeves, Marine Safety Office Huntington, Marine Event Coordinator at (304) 529-5524.

Under section 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 could 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 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.

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.lD, 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 a 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.

Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

Through the Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill), which amended the Cooperative Forestry Assistance Act (16 U.S.C. 2101, et seq. ), Congress established the Forest Land Enhancement Program (hereafter, FLEP). In establishing this program, Congress recognized the public benefits of sustainable forest management to enhance the productivity of timber, fish and wildlife habitat, soil and water quality, wetlands, recreational resources, and aesthetic values; and the need to establish a coordinated and cooperative Federal, State, and local sustainable forestry program for the establishment, management, maintenance, enhancement, and restoration of forests on nonindustrial private forest land. To accomplish this purpose, Congress has authorized the use of $100 million dollars of Commodity Credit Corporation funds to implement FLEP through September 30, 2007. These FLEP funds are available for use by all 50 United States, Puerto Rico, Guam, the United States Virgin Islands, the Commonwealth of the Northern Mariana Islands (CNMI), and American Samoa.

The Stewardship Incentive Program (SIP), managed by the USDA Forest Service (Forest Service), and the Forestry Incentives Program (FIP), managed by the Natural Resource Conservation Service, were repealed in the 2002 Farm Bill. SIP was initiated in the 1990 Farm Bill and allowed for cost-sharing a wide range of multiple resource management practices. FIP was initiated in 1975 and allowed for cost-sharing timber stand improvement, site preparation for natural regeneration and tree planting practices. The regulation for SIP at 36 CFR part 230, subpart A, will be removed at a later date but is currently needed for administration of SIP until the remaining funds have been expended.

FLEP will continue with the work that has been completed by SIP and FIP and include the options of providing technical and educational assistance. FLEP encompasses all of the cost-share practices authorized under both SIP and FIP. Since 1975, through FIP there has been almost 4 million acres of trees planted, about 1.5 million acres of improving a stand of forest trees, and about 51,000 acres of site preparation for natural regeneration. Since 1990, through SIP there has been almost 4.5 million acres of a variety of practices completed by more than 45,000 participants. These practices include cost-share for the development of forest stewardship plans on more than 2 million acres for almost 11,000 participants. The primary practices undertaken with SIP funds other than plan development, in order of acres completed are: Forest improvement; reforestation and afforestation; wildlife habitat enhancement; soil and water protection and improvement; agroforestry establishment, maintenance or renovation; riparian and wetland protection and improvement; forest recreation enhancement; and fisheries habitat enhancement.

FLEP is intended to promote sustainable forest management on nonindustrial private forest land and to complement other sustainable forestry programs in the States. FLEP establishes or supplements existing nonindustrial private forest land programs to provide technical, educational, and financial assistance to landowners. The implementation of this new program demonstrates the commitment of the Secretary of Agriculture to sustainable forest management.

FLEP will be administered by the Chief of the Forest Service through the Responsible Officials, in partnership with State forestry agencies. The State Foresters will develop and carry out FLEP in collaboration with their State Forest Stewardship Coordinating Committees, based on the authorizing legislation, this interim final rule, and the State's priority plan.

For reasons of simplicity and efficiency, the distribution of funds from the Chief is based on factors and criteria applied to three geographic areas of the United States: Northeast, South, and West. The Northeast distribution area includes the Forest Service State and Private Forestry Northeastern Area, which comprises the 20 States in Region 9. The Southern distribution area includes the 13 States in Forest Service Region 8, and the International Institute for Tropical Forestry in Puerto Rico, and the U.S. Virgin Islands. The Western distribution area includes the 17 States in Forest Service Regions 1, 2, 3, 4, 5, 6, and 10; and the Territories of Guam, CNMI, and American Samoa. In accordance with section 230.32 of this interim final rule, the Responsible Officials in the three geographic fund distribution areas will use the criteria set out in the Forest Service Directives Manual Chapter 3310 to make the final allocation to each State. The State will be responsible for reimbursing individuals and third parties. A general description of the criteria is provided in the section-by-section explanation for section 230.32.

The Forest Service has received input from several Federal and State agencies, numerous conservation organizations, institutions of higher learning, and individuals relative to the development of program policy, activities, elements, and procedures for FLEP. These include Forest Service field units, the Cooperative State Research Education and Extension Service, the Farm Service Agency, and the Natural Resources Conservation Service within the U.S. Department of Agriculture; State forestry agencies; the International Association of Fish and Wildlife agencies; Indian Tribes; and others.

Section 230.30—Purpose and scope. Paragraphs (a) and (b) of this section discuss the purpose and scope of FLEP which is to provide a coordinated and cooperative Federal, State, and local sustainable forestry program for the establishment, management, maintenance, enhancement, and restoration of forests on nonindustrial private forest land. Paragraph (b) explains that the components of FLEP complement existing Federal or State programs, along with programs offered by institutions of higher learning.

Paragraph (c) explains that participation in FLEP is voluntary. However, in order to participate, each State must have nonindustrial private forest lands, a State Forester or equivalent, and a State Forest Stewardship Coordinating Committee.

Section 230.31—Definitions. This section sets out definitions for the following terms as they are used in FLEP: Capital investment or improvement, Catastrophic natural event, Chief, Committee, Concurrence, Cost-Share, Financial assistance, Fiscal year, Landowner, Management plan, Nonindustrial private forest land, Practice, Practice plan, Responsible Official, Service representative, State, State Forester, and State priority plan. The following definitions have not been used in previous programs: Capital investment or improvement, Catastrophic natural event, Concurrence, Cost-share, Financial assistance, Management plan, Practice plan, Responsible Official, Service representative and State priority plan. These definitions are a result of some of the differences between FLEP and previous program.

Section 230.32—National program administration. This section outlines how FLEP is administered at the National level and how FLEP funds will be distributed from the National level to the State level. The Chief will implement FLEP in partnership with State forestry agencies and in consultation with a wide range of Federal, State, and local natural resource agencies, and institutions of higher learning and with a broad range of private sector interests. The Chief, working with the State Foresters, will develop and oversee FLEP policy and monitor implementation over the life of the program.

The Chief will distribute the funds to each of the three geographic funding areas. This shall be based on the national allocation factors, which are set out in the Forest Service Manual Chapter 3310. A notice of issuance of an interim directive has been published elsewhere in this part of today's Federal Register. Forest Service Directives are available electronically at http://www.fs.fed.us/im/directives. The Responsible Official determines the allocation amount for each State.

Allocation factors to the three geographic areas are determined in consultation with the State Foresters who serve on the Forest Resource Management Committee. The Forest Resource Management Committee is a standing committee of the National Association of State Foresters, comprised of nine State Foresters, three from each of the three geographic funding areas. Current criteria used at the National level for determining funds distribution to the three geographic areas for FY 2003 are:

(1) Acres of NIPF lands,

(2) Number of NIPF landowners that own 1 acre or more,

(3) 10% of the acres of highly erodable lands,

(4) Number of owners of those highly erodable lands, and

(5) Acres of land with a growing capacity greater than 20 cubic feet per year.

The data for these factors are currently available for all States. The Forest Service is gathering data on factors that relate to the priorities for NIPF lands to use in the allocation of funds to the three geographic regions in FY 2004. The additional factors planned for FY 2004 are: areas at risk from forest health concerns for insect and disease; areas at risk from wildfire; loss and fragmentation of the forest land base; and miles of impaired streams, rivers and coastal shoreline along with acres of impaired lake, estuary and wetland areas.

The Responsible Officials in each of the three geographic funding areas shall coordinate with their respective State Foresters to determine the final allocation to each State based on the: National priorities, National allocation factors, regional and State-wide priorities, ability of the State to deliver FLEP as shown in past progress reporting for other Cooperative Forestry programs, and agency direction in the Forest Service Manual Chapter 3310. The national priorities will change with changes in public demand for the uses of forestlands and with the increase in scientific knowledge. As these national priorities change, the Forest Service Manual Chapter 3310 will be changed. For substantive changes, a notice may be published in the Federal Register. Changes in the national priorities will also be available on the Forest Service Web site provided in the ADDRESSES section of this preamble.

Section 230.33—Responsible Official program administration. This section outlines how FLEP is administered at the Forest Service Responsible Official level.

Section 230.34—State program administration. This section outlines how FLEP is administered at the State level.

Section 230.35—FLEP elements. There are three major elements of FLEP: education, technical assistance, and financial assistance. States may use a portion of the funds received through FLEP for administrative costs. There are no limits on what portion of FLEP funds may be used for administration. States are not required to participate in all elements of FLEP.

Section 230.36—State priority plan—purpose and scope. State priority plans are a new requirement for FLEP. States should use all existing data and plans, such as the State Forest Stewardship plan, to help create this plan. There are no transitional issues expected from the development of the State priority plan.

Section 230.37—State priority plan—educational assistance. This section addresses the educational assistance component of FLEP in a State priority plan.

Section 230.38—State priority plan—technical assistance. This section addresses the technical assistance component of FLEP in a State priority plan. If a State determines that all or some of its funds will be used for technical assistance, the State priority plan must describe who will provide the assistance, outreach efforts directed at specific groups or categories of landowners, expected long- and short-term outcomes, and method(s) for documenting accomplishments.

Section 230.39—State priority plan—financial assistance. This section addresses the administration of FLEP cost-share financial assistance in the State priority plan.

Section 230.40—Eligible practices for cost-share assistance. Paragraphs (a)(1) through (11) of this section authorize 11 activities and practices for which cost-share funds may be made available to landowners, including: management plan development; afforestation and reforestation; forest stand improvement; agroforestry implementation; water quality improvement and watershed protection; fish and wildlife habitat improvement; forest health and protection; invasive species control; wildfire and catastrophic risk reduction; wildfire and catastrophic event rehabilitation; and special practices (establishment, maintenance, and restoration practices addressing other conservation concerns as proposed by the State Forester and the committee and must have concurrence by the Responsible Official). States may develop policy handbooks to provide further direction regarding these practices and to provide specifications for practice implementation. A practice may consist of one or more components.

Section 230.41—Eligibility requirements for cost-share assistance. All owners of nonindustrial private forest land as defined in section 230.31 of this subpart are eligible to apply directly to the State for cost-share assistance. FLEP funds may be used for the treatment of up to 1,000 acres annually per landowner, and up to 5,000 acres with a waiver by the State Forester and concurrence by the Responsible Official. Although the average size of forest holdings differs considerably among the geographic regions for the country, the majority of nonindustrial private forest landowners own less that 100 acres. The maximum acreage limitation of 1,000 acres therefore adequately allows for broad program participation. The State Forester and Responsible Official will base the approval of treatment of between 1,000 and 5,000 acres on the assessment of significant public benefit. States can use their FLEP funds for treatment of more than 1,000 acres, up to 5,000 acres. The agreement for all FLEP activities is between the State and the landowner.

To be eligible for FLEP, landowners must meet the minimum acreage requirement determined by the State and set out in the State priority plan, which may not exceed 25 acres. The 25-acre maximum limitation ensures that landowners of small properties will be eligible for participation in FLEP. Management plan requirements must be explained in the State priority plan, including minimum requirements. These minimum requirements should include elements such as a map of the property, soils information, and analysis of the current situation of the land and its resources and recommendations for future activities. States will have to determine if existing landowner management plans such as Tree Farm management plans, Forest Stewardship plans, or similar plans meet their current minimum criteria for a management plan.

Section 230.42—Cost-share assistance application and payment procedures. This section describes the cost-share assistance and payment procedures for FLEP. Some of the key points about this process are as follows. Cost-share funds must be available before landowners may make an application for payment. The approval of an application constitutes an agreement between the landowner and the State. The landowner is obligated to complete the practice(s) on a reimbursable basis. When the service representative verifies that the practice has been completed, the landowner shall be reimbursed for the agreed to cost-share amount. Every cost-share practice must have a practice plan approved by the service representative. The requirements of the practice plan may be contained in the management plan and serve as the basis for determining acceptable performance.

Landowners shall be notified in writing upon approval of a FLEP application. The landowner is responsible for obtaining all authorities, rights, easements, or other approvals necessary to the performance and maintenance of the practices in keeping with applicable laws and regulations.

Practices must be completed within 24 months of approval. If a longer period of time is needed, the State Forester may grant an extension, not to exceed 12 months, if this is specified in the State priority plan. The cost-share payment shall be calculated and disbursed to the landowner upon certification of the practice. Landowners must provide access for practice inspection to the service representative.

The maximum aggregate amount of cost-share payment under FLEP shall not exceed $100,000 through 2007, with the exception of Alaska Indian Tribes. The Alaska State Forester, in consultation with the State Forest Stewardship Coordinating Committee and the Responsible Official, determines their limit.

Cost-share payments may not exceed 75 percent of the total cost incurred by the participating landowner. Landowners may utilize non-federal programs or any donated assistance to supplement FLEP funds but the total of all funds shall not exceed 100 percent of the cost of implementing the practice. If the practice results in the immediate sale of forest products, the Federal share of the total cost shall be reduced by the gross revenue.

States may use the cost-share rates as a means to define priorities practices or priority areas. State priorities for cost share shall reflect the national priorities as listed in the Forest Service Manual Chapter 3310. The State Forester may develop other priorities in consultation with the State Forest Stewardship Coordinating Committee.

When a practice fails to meet the minimum specifications due to factors beyond the landowner's control, the State Forester may approve cost-share payments under the following conditions. (1) The landowner repeats the application or establishes additional eligible practices. (2) The landowner establishes a reasonable effort to meet the minimum requirements and the practice as performed adequately meets the objectives of the practice plan. In the case of death or incompetence of any landowner, the State Forester shall approve cost-share payment to the successor in title or other persons or entities in control of the property, if they agree to maintain the practice for the duration of the required maintenance period.

Nothing in this section shall be construed to authorize suit against the United States, the Department of Agriculture, the Forest Service, any State or any disbursing agent acting on behalf of the State. Claims of agencies of the United States Government are the only ones allowed against any payments to any landowner.

A landowner must have a management plan prior to receiving approval to implement any FLEP practice, except for management plan development. A service representative must approve the plan.

Section 230.43—Cost-share assistance—prohibited practices. This section identifies the cost-share activities that are prohibited in FLEP. These activities include items such as costs incurred before an application is approved and repeated practices. The State Forester has the authority to pre-approve costs incurred prior to an approved application. The State priority plan can describe materials and items that may be purchased before an application is approved. Repeating practices implemented with other Federal, State, or local government programs are prohibited, except where such practices are repeated due to failure of a prior practice without fault of the landowner. Recurring practices as noted in this subpart may be repeated.

Practices that are prohibited include capital investments or capital improvements that are not related to a FLEP practice, such as purchase of land or any interest in land, or any interest in an endowment as provided in 230.32. Also prohibited is the development of or improvement to landowner nursery operations, development of or improvement to nut and fruit orchards or Christmas tree plantings or maintenance, or any practice that is not related to the long-term sustainability of nonindustrial private forest lands or agroforestry practices.

Section 230.44—Cost-share assistance—reporting requirement. There are 11 categories for reporting FLEP cost-share practices. They will be reported annually through the Forest Service automated data system. Most categories will be reported in acres treated. FLEP1 will include number of plans developed as well as acres planned. States will only report those categories for which they provide cost-share. Each State shall report these practices to the Responsible Official who will collect a report for their States and provide this information to the Forest Service Washington Office Cooperative Forestry Staff.

Section 230.45—Recapture of cost-share assistance. This section authorizes the recapture of payments to landowners under a range of circumstances including: the use of this program to procure unjust benefits; the action or failure to take action by the landowner or successor that results in the deliberate destruction or impairment of a practice; or the landowners sale, conveyance, or other loss of control of land before the required practice maintenance period has ended and the new landowner does not agree to maintain the practice for the duration of the practice maintenance period.

Section 230.46—Information collection requirements. This section provides the Office of Management and Budget control number assigned to the information collection requirements governing the preparation of a State priority plan, a management plan, practice plan, reporting requirements, and the application requirements of this subpart, as required by the Paperwork Reduction Act of 1995. Notice of this new information collection was published in the Federal Register with a request for comment on September 20, 2002 (67 FR 59246). No comments were received. This has been assigned Office of Management and Budget (OMB) control number 0596-0168.

By adoption of this interim final rule, FLEP will be implemented in accordance with the Farm Security and Rural Investment Act of 2002 (the 2002 Farm Bill). This interim final rule ensures consistent and proper use of funds by the agency as well as the State forestry agencies and associated third parties. This rule is being published as an interim final rule to allow for prompt implementation of FLEP. Agency directives providing further guidance on administration of FLEP are issued in Forest Service Directive Manual Chapter 3310. The 2002 Farm Bill repealed the two existing programs, Stewardship Incentive Program (SIP) and Forestry Incentive Program (FIP), which provided assistance to nonindustrial forest land owners. Administration of SIP and FIP will continue on a limited basis only until remaining funds from these programs have been expended. Prompt implementation of FLEP is important to ensure there is no gap in financial assistance to qualified landowners due to the repeal of SIP and FIP. The comments received on this interim final rule during the 60-day comment period following publication in the Federal Register , along with experience from the first year of FLEP implementation, will be used to develop a final rule. This interim final rule has also received review by a wide variety of partners and interested parties.

This interim final rule has been reviewed under USDA procedures and Executive Order 12866 on Regulatory Planning and Review. An analysis has been conducted addressing the costs and benefits associated with promulgating this interim final rule to implement the FLEP authorized by 16 U. S. C. 2101 et seq. , as amended (Pub. L. 107-171).

The Forestry Incentives Program (FIP) and the Stewardship Incentives Program (SIP) were both repealed in the 2002 Farm Bill. These programs assisted private forest landowners in managing forestland for multiple benefits. In FY 2002, these two programs were allocated $10 million. Between 1996 and 2002, FIP funding averaged $6.3 million. SIP was allocated $4.5 million in 1997 and 1998, and no Federal funds in 1999, 2000, and 2001. FLEP is authorized to receive up to $100 million through FY 2007.

The primary economic effects of the interim final regulations are an increase in forest health and sustainability due to better management practices on NIPF land, as well as non-monetized benefits such as improved water quality, wildlife habitat, fishing opportunities, carbon sequestration, and enhanced recreation. The costs of the interim final regulation to the Federal treasury will be $100 million over 5 years, as specified in the legislation, or, more than $87 million when discounted at 7% discount rate. The discounted increase in Federal expenditures is estimated at $43 million. The States will administer the program using a portion of these funds. Costs to individual landowners are voluntary, and consist of at least 25% of the portion of the funds spent on cost sharing. In this analysis, we estimate these costs will increase $6.4 million above the baseline.

Benefits of the interim final regulation above the baseline include cost sharing to improve forest management on more than 382,000 acres. Technical assistance on sustainable forest practices will be provided to more than 2.9 million acres of forestland to improve landowner awareness and understanding of sustainable forestry principles and practices. Qualitative benefits include additional carbon sequestration, improved wildlife habitat, improved soil and water quality, and sustainable forest conditions.

It has been determined that FLEP will not have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, jobs, the environment, public health or safety, or State or local communities. A maximum total of $100 million will be provided to State Forestry agencies between 2003 and 2007, as directed in the Farm Security and Rural Investment Act of 2002, (Pub. L. 107-171; 16 U.S.C. 2101 et seq. ). These funds will be used to pay for the technical, education, and financial assistance to nonindustrial private forest landowners to improve the sustainability of these lands and the forest resources. FLEP will complement other Federal, State, and local programs that provide assistance to landowners by making greater resources available to participants.

Finally, as a new program, FLEP would not materially alter the budgetary impact of entitlements, user fees, loan programs, or the rights and obligations of their recipients. The program is completely voluntary for each State and is voluntary for any landowner. Those States that choose to implement FLEP must follow requirements in this interim final rule, as would landowners participating in the program.

The Office of Management and Budget (OMB) has designated this interim final rule as significant due to the potential that it may raise novel legal or policy issues. Therefore, this interim final rule is subject to OMB review under Executive Order 12866.

The Office of Management and Budget has reviewed the final information collection package for this rulemaking according to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) and implementing regulations at 5 CFR part 1320. The information requirements in this rule have been assigned OMB control number 0596-0168 for use through May 31, 2006. The requirements governing the preparation of a State priority plan, management plan, practice plan, the reporting requirements, and the application requirements of this subpart constitute the minimum information requirements needed to administer FLEP.

The Forest Service is committed to compliance with the Government Paper Work Elimination Act, which requires Government agencies to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

A Civil Rights Impact Analysis has been completed and reviewed by USDA. The analysis is available for viewing on the Forest Service FLEP Web site: http://www.fs.fed.us/spf/coop/flep.htm.

This interim final rule has been reviewed under Executive Order 12988, Civil Justice Reform. The Department has not identified any State or local laws or regulations that are in conflict with this regulation or that would impede full implementation of this interim final rule. Nevertheless, in the event that such a conflict was to be identified, the interim final rule would preempt the State or local laws or regulations found to be in conflict. However, in that case, (1) no retroactive effect would be given to this interim final rule; and (2) the Department would not require the use of administrative proceedings before parties could file suit in court challenging its provisions.

This interim final rule has been reviewed under Executive Order 13211 of May 18, 2001, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. It has been determined that this interim final rule does not constitute a significant energy action as defined in the Executive order. Procedural in nature, this interim final rule guides the development of practices to be applied on nonindustrial private forest lands including practices for energy conservation.

This interim final rule deals with the implementation of the FLEP, and as such, has no direct effect on Forest Service decisions for land management activities. Section 31.1b of Forest Service Handbook 1909.15 (57 FR 43168; September 18, 1992) excludes from documentation in an environmental assessment or impact statement rules, regulations, or policies to establish Service-wide administrative procedures, program processes, or instruction. The Department's assessment is that this rule falls within this category of actions and that no extraordinary circumstances exist which would require preparation of an environmental assessment or an environmental impact statement.

This interim final rule has been analyzed in accordance with the principles and criteria contained in Executive Order 12630, and it has been determined that the rule does not pose the risk of a taking of Constitutionally protected private property. This interim final rule is limited to establishment of an administrative program within the Forest Service to assist nonindustrial private landowners in the management and conservation of timber and non-timber resources. This interim final rule and the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171), which authorizes FLEP, do not permit any takings of private property or provide any funds for such purpose.

This interim final rule does not have tribal implications as defined in Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, and, therefore, advance consultation with tribes is not required. However, a draft of the interim final rule was shared with tribes to collect their input for the development of this interim final rule.

The Department has considered this interim final rule under the requirements of Executive Order 13132, Federalism, and Executive Order 12875, Government Partnerships. The Department has made a preliminary assessment that the interim final rule conforms with the federalism principles set out in these Executive Orders; would not impose any compliance costs on the States; and would 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. Moreover, there is no requirement on States to match funds in order to participate in FLEP. Based on comments received on this interim final rule, the Department will consider if any additional consultation will be needed with State and local governments prior to adopting a final rule.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531 through 1538), which the President signed into law on March 22, 1995, the Department has assessed the effects of this interim final rule on State, local, and tribal governments and the private sector. This rule does not compel the expenditure of $100 million or more by any State, local, or tribal governments or anyone in the private sector. Therefore, a statement under section 202 of the act is not required.

This interim final rule has been considered in light of Executive Order 13272 regarding proper consideration of small entities and the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), which amended the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). An initial assessment on small entities' flexibility has been prepared as part of the cost-benefit analysis and it has been determined that this action will not have a significant economic impact on a substantial number of small entities as defined by SBREFA. This interim final rule imposes no additional requirements on the affected public. The principal small businesses expected to be impacted are consultant foresters who may assist State forestry agencies in different phases of FLEP delivery, including technical, educational, and cost-share elements for which they will be fully compensated. The minimum requirements on small entities imposed by this interim final rule are necessary to protect the public interest, are not administratively burdensome or costly to meet, and are well within the capability of small entities to perform.

Under the formula mandated by 38 U.S.C. 3015 (as in effect on October 1, 2001) for Fiscal Year 2002, the rates of basic educational assistance under the Montgomery GI Bill—Active Duty (MGIB) payable to students pursuing a program of education full time were increased effective October 1, 2001, by 3.4%, which is the percentage by which the total of the monthly Consumer Price Index-W (CPI-W) for July 1, 2000, through June 30, 2001, exceeds the total of the monthly CPI-W for July 1, 1999, through June 30, 2000.

In addition, the Veterans Education and Benefits Expansion Act of 2001 (Pub. L. 107-103) increased the monthly rate of MGIB benefits in three steps. The effective date of step one is January 1, 2002. Step two is effective October 1, 2002, for Fiscal Year 2003 and step three is effective October 1, 2003, for Fiscal Year 2004. During Fiscal Years 2003 and 2004, the MGIB rates are not adjusted by the CPI-W, since this statute removes the authority to adjust by the CPI-W for those two years. CPI-W adjustments will resume October 1, 2004, with the beginning of Fiscal Year 2005. We are changing the regulations governing rates payable under the MGIB to reflect the increase effective October 1, 2001, attributable to the CPI-W and the step increases provided for in Pub. L. 107-103.

It should be noted that these MGIB increases do not affect all educational assistance payable under the MGIB. The increases don't apply to additional amounts payable by the Secretary of Defense to individuals with skills or a specialty in which there is a critical shortage of personnel (so-called “kickers”). They don't apply to amounts payable for dependents. Veterans who previously had eligibility under the Veterans' Educational Assistance program (Vietnam Era GI Bill) receive monthly payments that are in part based upon basic educational assistance and in part based upon the rates payable under the Vietnam Era GI Bill. Only that portion attributable to basic educational assistance is increased.

38 U.S.C. 3015(a) and (b) require that the Department of Veterans Affairs (VA) pay part-time students at appropriately reduced rates. Since the first student became eligible for assistance under the MGIB in 1985, VA has paid three-quarter-time students and one-half-time students at 75% and 50% of the full-time institutional rate, respectively. Students pursuing a program of education at less than one-half but more than one-quarter time have had their payments limited to 50% or less of the full-time institutional rate. Similarly, students pursuing a program of education at one-quarter time or less have had their payments limited to 25% or less of the full-time institutional rate. Changes are made consistent with the authority and formula described in this paragraph.

In addition, 38 U.S.C. 3032(c) requires that monthly rates payable to veterans in apprenticeship or other on-the-job training must be set at a given percentage of the full-time rate. Hence, we are changing those regulations to reflect increases effective October 1, 2001, January 1, 2002, October 1, 2002, and October 1, 2003, in accordance with the increase attributable to the CPI-W and the applicable provisions of Pub. L. 107-103.

By statute, the monthly rates of basic educational assistance payable under the Survivors' and Dependents' Educational Assistance (DEA) program must be adjusted each fiscal year. In accordance with the statutory formula, the regulations governing rates of educational assistance payable under the DEA program for Fiscal Year 2002 (October 1, 2001, through September 30, 2002) are changed to show a 3.4% increase in these rates. The 3.4% increase is based on the percentage by which the total of the monthly CPI-W for July 1, 2000, through June 30, 2001, exceeds the total of the monthly CPI-W for July 1, 1999, through June 30, 2000.

Pub. L. 107-103 further increased the DEA program rates for the months during Fiscal Year 2002 that follow December 2001. That Act provides that beginning on January 1, 2002, the rates of basic educational assistance under the DEA program must be increased beyond the increase that went into effect on October 1, 2001. Changes are made to the regulations governing rates payable under the DEA program to reflect both rate increases.

Nonsubstantive changes also are made for the purpose of clarity.

The changes set forth in this final rule are effective from the date of publication, but the changes in the rates are applied in accordance with the applicable statutory provisions discussed above.

Substantive changes made by this final rule merely reflect statutory requirements and adjustments made based on previously established formulas. Accordingly, there is a basis for dispensing with prior notice and comment and delayed effective date provisions of 5 U.S.C. 552 and 553.

This document has been reviewed by the Office of Management and Budget under Executive Order 12866.

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

The initial and final regulatory flexibility analyses requirements of sections 603 and 604 of the Regulatory Flexibility Act, 5 U.S.C. 601-612, are not applicable to this rule, because the agency is not required to publish a notice of proposed rulemaking for this rule. Even so, the Secretary of Veterans Affairs hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act. This final rule directly affects only individuals and does not directly affect small entities. Therefore, this final rule is also exempt pursuant to 5 U.S.C. 605(b) from the initial and final regulatory flexibility analyses requirements of sections 603 and 604.

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

The Catalog of Federal Domestic Assistance numbers for the programs affected by this final rule are 64.117 and 64.124.

This document amends the regulations in 38 CFR Part 21 governing various aspects of the education programs the Department of Veterans Affairs (VA) administers in order to implement some provisions of the Veterans Benefits and Health Care Improvement Act of 2000 (Pub. L. 106-419) and the Veterans' Survivor Benefits Improvements Act of 2001 (Pub. L. 107-14) that affect those programs. This document includes changes affecting the following educational assistance programs: Montgomery GI Bill—Active Duty, Montgomery GI Bill—Selective Reserve, Survivors' and Dependents' Educational Assistance, and the Post-Vietnam Era Veterans' Educational Assistance Program.

One of the criteria an individual has to meet in order to establish eligibility for the Montgomery GI Bill—Active Duty (MGIB) is receiving a high school diploma or its equivalent. Before the enactment of Public Law 106-419 on November 1, 2000, the time limit for earning that diploma (or its equivalent) varied according to the various ways for servicemembers to establish MGIB eligibility. Some had to earn the diploma before completion of their first obligated period of active duty. Others had to earn it before their release from active duty. Public Law 106-419 provided instead for all individuals the requirement that they must earn a high school diploma (or its equivalent) before applying to VA for educational assistance. For individuals who are enabled by that change to establish eligibility but who on October 31, 2000, would have been unable to establish eligibility due to the time limits for obtaining a high school diploma (or its equivalent), Public Law 106-419 created a new ten-year period starting November 1, 2000, for commencing use of benefits. We are amending various paragraphs to make them conform to these statutory provisions. Our amendments reflect our interpretation that under the statute a veteran who unsuccessfully applies for educational assistance before meeting this requirement would be able to meet this requirement by applying again after obtaining a high school diploma or its equivalent.

Since the inception of the MGIB, servicemembers have had to serve all or a major part of their initial obligated period of active duty in order to establish eligibility for the MGIB. Thus, an individual who failed to meet the length of service requirements for the initial period and subsequently re-enlisted could serve many years in the Armed Forces and have no education benefits. Public Law 106-419 and Public Law 107-14 contain provisions that allow an individual to meet the length of service requirements for eligibility by using any period of active duty of sufficient length. For individuals who are enabled by that change to establish eligibility but who on October 31, 2000, would have been unable to establish eligibility based on their initial obligated period of service, Public Law 106-419 created a new ten-year period starting November 1, 2000, for commencing use of benefits. We are amending various paragraphs to make them conform to these statutory provisions.

Public Law 106-419 also gave some present and former participants in the Post-Vietnam Era Veterans' Educational Assistance Program (VEAP) the opportunity to establish eligibility for MGIB. Under that statute, these individuals must have elected MGIB before November 1, 2001, and must contribute $2,700 within the 18-month period beginning on the date the individual made the election. We are amending the rules for establishing MGIB eligibility to conform to these provisions of law.

MGIB, Montgomery GI Bill—Selective Reserve (MGIB—SR), Survivors' and Dependents' Educational Assistance (DEA), and VEAP benefits may be paid to individuals during some intervals between terms. The requirements for deciding whether an individual qualifies for such an interval payment are found in statute. Public Law 106-419 revised those requirements to state that payments may be made for intervals between terms when those intervals are no longer than eight weeks and the terms before and after the interval are not shorter than the interval. We are amending the provisions of 38 CFR 21.4138(f) to make them conform to the statute.

Moreover, VA has long had rules governing payment for short terms that occur during intervals. The rules were designed to insure that veterans were not discouraged by the interval pay provisions from enrolling in those terms. In our view, it was not Congress' intent that the new interval payment provisions discourage attendance during short terms. We are amending accordingly the regulations in § 21.4138(f) governing payment for these short terms and the intervals that precede and follow them.

This document's changes in provisions in § 21.4138(f) concerning payment for intervals and for short terms that occur during intervals are applicable to MGIB, DEA, VEAP, and MGIB—SR benefits under applicability provisions in current regulations for each program, respectively. (The amended provisions in § 21.4138(f) apply to MGIB benefits under § 21.7140(c), to DEA benefits under § 21.3133(a), to VEAP benefits under § 21.5130(c), and to MGIB—SR benefits under § 21.7640(b)(1).)

Public Law 106-419 (as amended by Public Law 107-14) contains provisions that allow some servicemembers who are eligible for the MGIB to increase their monthly rate of educational assistance by contributing $600 while on active duty. The statute prescribes that for every $20 contributed, the monthly rate payable to a full-time student will increase by $5. However, the statute does not state what the increase payable to a part-time student will be. Instead, it requires VA to prescribe regulations detailing an appropriate reduced amount to be paid to these students.

Since the first student became eligible for assistance under the MGIB in 1985, VA has paid three-quarter-time students and one-half-time students at 75% and 50% of the full-time institutional rate, respectively. Students pursuing a program of education at less than one-half but more than one-quarter-time have had their payments limited to 50% or less of the full-time institutional rate. Similarly, students pursuing a program of education at one-quarter-time or less have had their payments limited to 25% or less of the full-time institutional rate. In the absence of a convincing reason to do otherwise, VA has decided to follow this long-standing policy in establishing rates for individuals who increase their monthly rates by contributing additional amounts. Accordingly, changes are made consistent with the authority and formula described in this and the preceding paragraph.

In addition, 38 U.S.C. 3032(c) requires that monthly rates payable to veterans in apprenticeship or other on-the-job training must be set at a given percentage of the full-time rate. Hence, we are amending the regulations to reflect the additional amounts payable for these increased contributions according to the percentages described in 38 U.S.C. 3032(c).

We are also making nonsubstantive changes for the purpose of clarity and to remove provisions that are obsolete because they concern provisions in the regulations that no longer exist.

Changes made by this final rule merely reflect revised statutory requirements or VA's interpretation of statutory provisions, or are nonsubstantive. Accordingly, there is a basis for dispensing with prior notice and comment and delayed effective date provisions of 5 U.S.C. 552 and 553.

This final rule has been reviewed by the Office of Management and Budget under Executive Order 12866.

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

The initial and final regulatory flexibility analyses requirements of sections 603 and 604 of the Regulatory Flexibility Act, 5 U.S.C. 601-612, are not applicable to this rule, because the agency is not required to publish a notice of proposed rulemaking for this rule. Even so, the Secretary of Veterans Affairs hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act. This final rule directly affects only individuals and does not directly affect small entities. Therefore, this final rule is also exempt pursuant to 5 U.S.C. 605(b) from the initial and final regulatory flexibility analyses requirements of sections 603 and 604.

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

In rule FR Doc. 03-6329, published on March 19, 2003 (68 FR 13590), make the following corrections:

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

On March 11, 2003 (68 FR 11484), EPA proposed to approve the California State Plan for implementing the emissions guidelines applicable to existing large municipal waste combustor (MWC) units. We proposed to approve this State Plan because we determined that it complied with the relevant Clean Air Act (CAA) requirements. Our proposed action contains more information on the State Plan and our evaluation.

EPA's proposed action provided a 30-day public comment period. During this period, we did not receive any comments.

No comments were received that change our assessment that the submitted State Plan complies with the relevant requirements regarding approval of CAA section 111(d)/129 State plans. Therefore, EPA is fully approving the State of California section 111(d)/129 plan for the control of emissions from existing large MWC units. Upon approval, the requirements of the State Plan become federally enforceable.

As discussed in the proposed action and the technical support document, the underlying conditions in the Emission Guidelines (40 CFR part 60, subpart Cb) and the Federal Plan (40 CFR part 62, subpart FFF) will continue to apply in the case of waivers. EPA cannot delegate to districts the ability to approve waivers of load and temperature limits that are not in accordance with the purposes specified in 60.53b (b) and (c). Waivers of operator training course requirements must be approved by EPA. Additionally, approval of the State Plan will not extend the compliance dates contained in the Federal Plan for the Stanislaus facility. Annual performance tests should be conducted at the Stanislaus facility in accordance with 60.58b. As provided by 40 CFR 60.28 (c), any revisions to the California State Plan will not be considered part of the applicable plan until submitted by CARB in accordance with 40 CFR 60.28 (a) or (b), as applicable, and until approved by EPA in accordance with 40 CFR part 60, subpart B.

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 State plan 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 State plan submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a State plan submission, to use VCS in place of a State plan submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq .).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 8, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

Because EPA received written comments that oppose this authorization, EPA is withdrawing the immediate final rule for Nebraska: Final Authorization of State Hazardous Waste Management Program Revision published on April 10, 2003, at 68 FR 17553, which authorized changes to Nebraska's hazardous waste rules. EPA stated in the immediate final rule that if EPA received written comments that oppose this authorization during the comment period, EPA would publish a timely notice of withdrawal in the Federal Register . Since EPA received comments that oppose 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 April 10, 2003. EPA will not provide for additional public comment during the final action.

States which have received Final authorization from EPA under RCRA section 3006(b), 42 U.S.C. 6926(b), must maintain a hazardous waste program that is equivalent to, consistent with, and no less stringent than the Federal program. As the Federal program changes, States must change their programs and ask EPA to authorize the changes. Changes to State programs may be necessary when Federal or State statutory or regulatory authority is modified or when certain other changes occur. Most commonly, States must change their programs because of changes to EPA's regulations in 40 Code of Federal Regulations (CFR) parts 124, 260 through 266, 268, 270, 273 and 279.

Nebraska initially received Final authorization on January 24, 1985, effective February 7, 1985 (50 FR 3345), to implement the RCRA hazardous waste management program. We granted authorization for changes to its program on October 4, 1985, effective December 3, 1988 (53 FR 38950), June 25, 1996, effective August 26, 1996 (61 FR 32699), and June 4, 2002, effective April 22, 2002 (67 FR 38418).

On July 23, 2002, Nebraska submitted a final complete program revision application, seeking authorization of its changes in accordance with 40 CFR 271.21. On April 10, 2003, EPA published both an Immediate Final Rule (68 FR 17553) granting Nebraska Final authorization for these revisions to its Federally-authorized hazardous waste program, along with a companion Proposed Rule announcing EPA's proposal to grant such a Final authorization (68 FR 17576). EPA announced in both documents that the Immediate Final Rule and the Proposed Rule were subject to a thirty-day public comment period. The public comment period ended on May 12, 2003. EPA received written comments from one commenter during the public comment period. Today's action responds to the comments EPA received and publishes EPA's Final determination granting Nebraska Final authorization of its program revisions. Further background on EPA's Immediate Final Rule and its tentative determination to grant authorization to Nebraska for its program revisions appears in the aforementioned Federal Register notices. The issues raised by the commenter are summarized and responded to as follows.

The commenter argued that Region VII's process for authorizing revisions to Nebraska's program should require a public hearing, which, the commenter believed, is required by 40 CFR 271.20. EPA disagrees. 40 CFR 271.21 applies only to initial program authorization, and not, as in the instant matter, to program revisions. For this program revision, EPA has proceeded in accordance with 40 CFR 271.21, pursuant to which public hearings are not required. On March 4, 1986, at 51 FR 07540, EPA promulgated amendments to 40 CFR 271.21 that eliminated public hearing requirements for program revisions. In this March 4, 1986 Federal Register , EPA stated: “As discussed in the proposal, the new procedures do not require public hearings to be held in conjunction with EPA's authorization decisions. Since there is no legal requirement to provide for hearings on revision decisions and little public interest has been shown to date in attending hearings on initial authorization of State programs, we think the opportunity to provide written comments is adequate. Only one comment was received on the elimination of routine public hearings, and that comment favored the rule change. However, while the regulatory requirement is deleted, a Regional Administrator, in his discretion, could decide to hold a hearing.” (51 FR 07541).

Consequently, EPA Region VII believes it adhered to the governing regulations regarding opportunities for public hearings during the EPA approval process for State program revisions. EPA Region VII also believes that due to the nature and limited number of comments received, the opportunity to provide for written comments, in lieu of a public hearing, was an adequate process to obtain public comment.

The commenter expressed a concern about Nebraska's adoption of the provisions of 40 CFR part 266, subpart C. EPA understands this comment to state concerns about the provisions of the Nebraska regulations (which incorporate the Federal rules by reference) that allow, under certain conditions, “hazardous wastes,” like lime-based slag, to be used as a “fertilizer.” This comment addresses an issue which is not part of the referenced revision application. Specifically, with regard to the provisions of 40 CFR part 266, subpart C, in the context of fertilizer applications, these provisions in Nebraska's program were authorized by EPA as part of Nebraska's first program revision, which took effect on December 3, 1989—over thirteen years ago. Nebraska's current revision application, for which EPA recently published its tentative approval, with an opportunity for public comment, does not include any regulatory revisions to 40 CFR part 266, subpart C. Since the comment EPA has received on “use constituting disposal” is not part of Nebraska's most recent program revision application, EPA believes the public comments on “use constituting disposal” are not within the scope of this Agency action. The commenter expressed further concern regarding “EPA's failure to require the Nebraska Attorney General to review Nebraska's statutes based on rule-by-rule authority as required under 40 CFR 271.7.” The commenter asserts that “checklists do not provide for as comprehensive a review.” EPA uses checklists to review State rules in detail. 40 CFR 271.7 requires the State Attorney General to submit a statement that the laws of the State provide adequate authority to carry out the program described under 40 CFR 271.6. This statement should include citations to the specific statutes, administrative regulations and, where appropriate, judicial decisions which demonstrate adequate authority. The State of Nebraska has done this. 40 CFR 271.7 further requires that the State statutes and regulations cited by the State Attorney General shall be in the form of lawfully adopted State statutes and regulations at the time the statement is signed and shall be fully effective by the time the program is approved. Nebraska's Attorney General has submitted a statement which satisfies this requirement.

Based on EPA's response to public comments, the Agency has determined that approval of Nebraska's RCRA program revisions should proceed. EPA has made a final determination that Nebraska's application to revise its authorized program meets all of the statutory and regulatory requirements established by RCRA. Therefore, we grant Nebraska Final authorization to operate its hazardous waste program with the changes described in its application for program revisions. Nebraska has responsibility for carrying out the aspects of the RCRA program described in its approved program applications, subject to the limitations of the Hazardous and Solid Waste Amendments of 1984 (HSWA). New Federal requirements and prohibitions imposed by Federal regulations that EPA promulgates under the authority of HSWA take effect in authorized States before they are authorized for the requirements. Thus, EPA will implement any such HSWA requirements and prohibitions in Nebraska, including issuing HSWA permits, until the State is granted authorization to do so. For further background on the scope and effect of today's action to approve Nebraska's RCRA program revisions, please refer to the preambles of EPA's April 10, 2003, Proposed and Immediate Final Rules at 68 FR 17576 and 68 FR 17553, respectively.

The Office of Management and Budget has exempted this action from the requirements of Executive Order 12866 (58 FR 51735, October 4, 1993), and therefore this action is not subject to review by OMB. This action authorizes State requirements for the purpose of RCRA 3006 and imposes no additional requirements beyond those imposed by State law. Accordingly, I certify that this action 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 action authorizes 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). For the same reason, this action also does not significantly or uniquely affect the communities of Tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely authorizes State requirements as part of the State RCRA hazardous waste program without altering the relationship or the distribution of power and responsibilities established by RCRA. This action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks. This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866.

Under RCRA 3006(b), EPA grants a State's application for authorization as long as the State meets the criteria required by RCRA. It would thus be inconsistent with applicable law for EPA, when it reviews a State authorization application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this document and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This action will be effective August 8, 2003.

This is a summary of the Commission's Second Memorandum Opinion and Order , ET Docket No. 98-206, FCC 03-25, adopted February 3, 2003, and released February 11, 2003. The full text of this Commission decision is available on the Commission's Internet site at http://www.fcc.gov . It is available for inspection and copying during normal business hours in the FCC Reference Information Center, Room CY-A257, 445 12th Street, SW., Washington, DC 20554. The complete text of this document also may be purchased from the Commission's copy contractor, Qualex International, 445 12th Street, SW., Room, CY-B402, Washington, DC 20554. The full text may also be downloaded at: http://www.fcc.gov . Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365.

1. In the Second Memorandum Opinion and Order , the Commission granted Skybridge's request and amended our rules to allow, under certain conditions, NGSO FSS Earth-to-space (“uplink”) operations in the 13.15-13.2125 GHz portion of the 12.75-13.25 GHz band. In making the change the Commission concludes that NGSO FSS can implement measures to protect incumbent broadcast auxiliary service (“BAS”) and cable television relay service (“CARS”) mobile pickup operations from harmful interference.

2. The Commission grants Skybridge's request and states that power flux density (“PFD”) limits for NGSO FSS in the 10.7-11.7 GHz band are sufficient to protect services in the band without the need for individual coordination. This ensures incumbent services are protected against harmful interference without creating an unnecessary burden on NGSO FSS licensees.

3. The Commission granted Skybridge's request and amended the rules to clarify the definition of NGSO FSS earth station gateways to limit use only for NGSO FSS backbone support.

4. The Commission granted Skybridge's request and adopted the Telecommunications Union's (“ITU”) effective isotropically radiated power (“EIRP”) limit on federal radiolocation operations in the 13.75-14.0 GHz band, and permits NGSO FSS operations to claim protection from these radiolocation operations.

5. The Commission denied Skybridge's request, maintains the EIRP density limit to protect against interference to the National Aeronautics and Space Administration (“NASA”) tracking data and relay satellite system (“TDRSS”) operations across the 10 megahertz of the 13.77-13.78 GHz band, and denies the request to restrict this protection to only 6 megahertz.

6. The Commission denied Skybridge's request to require NGSO FSS licensees and radio astronomy service (“RAS”) entities to use the protection levels and calculation methods in the ITU's Article 29. The Commission maintained the requirement in footnote US355 that NGSO FSS licensees in the 10.7-11.7 GHz band coordinate with RAS entities to reach “mutually acceptable agreements.” This flexible approach will allow the use of Article 29 procedures or any other procedure deemed appropriate by the interested parties.

7. The Commission denied Hughes's Petition to revisit language in the First Report and Order , 16 FCC Rcd 4096, December 8, 2000, 66 FR 7607, January 24, 2001, recommending professional installation of two-way NGSO FSS antennas. The Commission continues to find that the language is neither overly broad nor unnecessary, and is harmonious with the language of other NGSO FSS decisions.

8. The Regulatory Flexibility Act (RFA)  1 requires an agency to describe any significant 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 and reporting requirements under the rule for such 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 such small entities.

9. The Commission has adopted technical rules to facilitate spectrum sharing between new NGSO FSS systems in the Ku band and existing services in this spectrum. Wherein we grant in part Skybridge's requests for reconsideration, we modify these rules to further these goals. We acknowledge that as the radio spectrum is increasingly used, it becomes more difficult to accommodate all requests for access to the radio spectrum, however, this action applies existing frequency coordination procedures to NGSO FSS systems sharing spectrum with fixed services. However, frequency coordination should ensure that new operations of either service will protect existing operations and have access to spectrum if it is technically possible.

10. In considering the Skybridge's request for NGSO FSS access to the 13.15-13.2125 GHz band, the Commission considered the impact on terrestrial operations granting such a request might have. Further, the Commission adopted rules that carefully weigh the complexity of sharing with mobile BAS/CARS operations could impose against the need for minimal measures to accommodate sharing in bands increasingly congested by co-primary satellite and terrestrial use.

11. Regarding sharing between NGSO FSS systems and broadcast auxiliary (“BAS”) operations, the Report and Order stated that the Commission will adopt some form of geographic protection areas for terrestrial operations in those bands used by NGSO FSS gateway earth stations. These protection areas will be further defined in a future proceeding, but are intended to facilitate the growth of terrestrial operations, while not unnecessarily hindering the deployment of NGSO FSS systems. Further, to ensure BAS operations in all areas can continue to operate unencumbered by new NGSO FSS systems, this Second Memorandum Opinion and Order reinforces efforts to minimize impacts on BAS/CARS entities by retaining the four channels at 13.15-13.2125 GHz for exclusive co-primary BAS/CARS use in 50 km areas around major TV markets and by requiring NGSO FSS operations observe power limits to ensure continued operations outside those select areas.