This rule amends § 734.4(b) to clarify the de minimis eligibility of encryption items controlled for National Security (“NS”) or Anti-Terrorism (“AT”) reasons under the Export Administration Regulations (EAR), subject to the applicable notification or review requirements described in § 740.13(e) and § 742.15(b). As with other encryption items no longer subject to “EI” controls (such as items classified under Export Control Classification Numbers (ECCNs) 5A992, 5D992 or 5E992), this rule clarifies that ECCN 5D002 encryption source code that would be considered publicly available under § 734.3(b)(3) of the EAR (and the corresponding object code) is eligible for de minimis treatment once exporters have complied with the applicable notification requirement that releases such ECCN 5D002 software from “EI” controls.

This rule also updates License Exception BAG and the Related Control notes to ECCN 5A002 relative to the Wassenaar Arrangement List of dual-use items, and in several sections of the EAR clarifies existing instructions related to encryption commodities and software pre-loaded onto laptops, handheld devices, computers or other equipment. This rule also adds a “checklist” on encryption and other “information security” functions to Supplement 5 to part 742 of the EAR, to help exporters more fully consider and identify controlled encryption and “information security” components within their products, when making classification decisions and assessing whether an encryption review by BIS is required.

Consistent with the standing export control agreement among Wassenaar Arrangement member nations, this rule also adds a nota bene (“NB”) immediately following Note 1 in Category 5 part II that clarifies that commodities and software specially designed for medical end-use that incorporate encryption items listed in Category 5 part II are not controlled by Category 5, part II of the Commerce Control List. This rule thus clarifies that a commodity or software product that is specially designed for medical end-use is classified as EAR99, even if the medical product incorporates another product, part or component that would otherwise be classified as 5A002, 5D002, 5A992 or 5D992.

This rule expands the scope of License Exception BAG by allowing U.S. citizens or permanent resident aliens of the United States to export encryption commodities and software for their personal use to any destination except Country Group E:1. Persons other than U.S. citizens or permanent resident aliens of the United States (except nationals of countries listed in Country Group E:1 of Supplement No. 1 to part 740 who are not U.S. citizens or permanent resident aliens of the United States) may also take such commodities and software as accompanying baggage for their personal use to any destination except Country Group E:1. This rule updates the provisions in 740.14(d) for “unaccompanied baggage” by permitting shipments of personal use encryption commodities and software subject to “EI” controls to the same destinations that are permitted for CB, MT, NS and NP controlled items.

In the Related Control notes to ECCN 5A002, the previous restriction to “one-time” copy control of copyright protected audio/video data has been removed. Likewise, as is now the case for such playback audio/video data, software that is subject to the EAR but not specified on the Commerce Control List ( i.e. , items that are classified as EAR99) remains classified EAR99 when copy protected. Lastly, Related Control note (a) is amended and divided into two sub-paragraphs.

Although the Export Administration Act expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (66 FR 44025, August 22, 2001), as extended by the notice of August 14, 2002 (67 FR 53721, August 16, 2002), continues the Regulations in effect under the International Emergency Economic Powers Act.

1. This final rule has been determined to be not significant for purposes of E.O. 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply, with a collection of information subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid Office of Management and Budget Control Number. This rule involves a collection of information subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq. ). This collection has been approved by the Office of Management and Budget under control number 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 45 minutes for a manual submission and 40 minutes for an electronic submission.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this interim rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation and on proposals to further update the encryption provisions of the EAR are welcome on a continuing basis. Comments should be submitted to Sharron Cook, Office of Exporter Services, Bureau of Industry and Security, Department of Commerce, PO Box 273, Washington, DC 20044.

The Commission is adopting amendments to Rules 161, 230, 360, 450, and 900 of its Rules of Practice [17 CFR 201.161, 201.230, 201.360, 201.450, and 201.900].

The Commission adopted, after notice and comment (Release No. 33-8190 (February 12, 2003) 68 FR 8137 (February 19, 2003), comprehensive revisions to its Rules of Practice that became effective on July 24, 1995. These revisions were the result of an approximately two-and-a-half year study by the Commission's Task Force on Administrative Proceedings that culminated in a comprehensive report. The Task Force found that the fundamental structure of the Commission's administrative process was sound and successfully protected the essential interests of respondents, investors, and the public, but that some changes were necessary. The Task Force recommended changes to the Rules of Practice in an effort to set forth applicable procedural requirements more completely, in a format easier to use, and to streamline procedures that had become burdensome.

Promoting the timely adjudication and disposition of administrative proceedings was one of the principal goals of this project. While many of the rule amendments were designed to improve efficiency and timeliness, the Commission as part of this project did not impose firm deadlines for completion of the proceedings. Instead it included, as Rule 900, a series of non-binding goals for the completion of each step in the administrative process. Rule 900 included a ten-month guideline for completion of the hearing and issuance of the initial decision by the administrative law judge and it contained an eleven-month target for completion of deliberations by the Commission when it reviews appeals of administrative law judges' initial decisions and appeals of determinations of the securities self-regulatory organizations. In the seven years since the adoption of these non-binding targets, the Commission and its administrative law judges have generally failed to meet these goals.

Based upon this experience with non-binding completion dates, the Commission has determined that timely completion of proceedings can be achieved more successfully through the adoption of mandatory deadlines and procedures designed to meet these deadlines. Because there is a wide variation in the subject matter, complexity and urgency of administrative proceedings, the Commission believes that a “one-size-fits-all” approach to timely disposition is not feasible. Instead the Commission is adopting procedures in which it will specify, in the order instituting proceedings, a deadline for completion of the hearing process and the issuance of an initial decision. In every non-settled administrative proceeding, the Commission's Order Instituting Proceedings will specify the maximum time for completion of the hearing and issuance of the initial decision. This deadline will be either 120, 210, or 300 days, in the Commission's discretion, after consideration of the type of proceeding, the complexity of the matter, and its urgency. Certain commenters expressed concern that setting one time period with only an outside deadline for the issuance of an initial decision by the hearing officer would create an irresistible incentive for the hearing officer to set very short timelines for the litigants to prepare for hearing and for post hearing briefing, and to reserve the majority of the overall time period for the hearing officer to draft the initial decision. 1 In response to this concern, the Commission has provided in Rule 360(a)(2), that each of these periods is further broken down into three parts to ensure fairness to both the litigants and the administrative law judges by providing sufficient time: (1) For the litigants and the judge to prepare for hearing, (2) for the litigants to obtain the transcript and prepare briefs, and (3) for the administrative law judge to prepare an initial decision.

As provided in Rule 360(a)(3), if during the proceeding the presiding hearing officer were to decide that the proceeding could not be concluded in the time specified, the hearing officer could request an extension of the stated deadline. To obtain an extension, the hearing officer would first consult with the Chief Administrative Law Judge (ALJ). If the Chief ALJ concurs in the need for an extension, the Chief ALJ would file a motion with the Commission on behalf of the hearing officer explaining why circumstances require an extension and specifying the length of the extension. An extension could be granted by the Commission, in its discretion, on the basis of the motion filed by the Chief ALJ. Parties to the proceeding would be provided copies of the motion and could separately or jointly file in support of or in opposition to the request. Any such motion by the Chief ALJ would have to be filed no later than thirty days prior to the expiration of the time period specified in the order instituting proceedings.

To complement this new procedure, the Commission has amended Rule 161 to make explicit a policy of strongly disfavoring extensions, postponements or adjournments except in circumstances where the requesting party makes a strong showing that the denial of the request or motion would substantially prejudice their case. This amendment to Rule 161 effects a significant change in administrative cease-and-desist proceedings. Section 21C(b) of the Securities Exchange Act of 1934 (and parallel provisions in the other Federal securities laws) requires that the notice instituting proceedings “shall fix a hearing date not earlier than 30 days nor later than 60 days after service of the notice unless an earlier or a later date is set by the Commission with the consent of any respondent so served.” Under current practice, parties routinely request extensions of the 60-day deadline, and the hearing officers routinely grant such requests. To the extent that the Commission has chosen a timeline under which the hearing would occur beyond the statutory 60-day deadline, the amendment exempts these requests from the policy of strongly disfavoring such requests, absent a strong showing of substantial prejudice. This would typically be the case under both the 300-day and 210-day timelines articulated in new Rule 360(a)(2).

We requested comment on the impact of the proposed changes to the scheduling of cease and desist proceeding hearings. The Commission received very few comments on the proposal. However, most of the comments were supportive. 2 Certain commenters did express concern that respondents will have less time to meet the charges against them. 3 In response to this concern, the Commission has amended Rule 230(d) to provide for earlier production of the Commission staff's investigative record.

In addition to the adopted amendments to the Commission's Rules of Practice, the Commission has provided guidance to its staff that they should not seek or support extensions or stays not consistent with the standards set forth above. Similarly, staff have been instructed to adopt new procedures to ensure that settlement negotiations do not delay the hearing process. These procedures are consistent with those described in Rule 161(c)(2). Under that rule, if the Commission staff and one or more respondents in the proceeding file a joint motion notifying the hearing officer that they have agreed in principle to a settlement on all major terms, then the hearing officer shall stay the proceeding as to the settling respondent(s), or in the discretion of the hearing officer as to all respondents, pending completion of Commission consideration of the settlement offer. Any such stay will be contingent upon: (1) The settling respondent(s) submitting to the Commission staff, within fifteen business days of the stay, a signed offer of settlement in conformance with Rule 240, and (2) within twenty business days of receipt of the signed offer, the staff submitting the settlement offer and accompanying recommendation to the Commission for consideration. If the parties fail to meet either of these deadlines, or if the Commission rejects the offer of settlement, the hearing officer must be promptly notified and, upon notification of the hearing officer, the stay shall lapse and the proceeding will continue.

Because unnecessary delays may result from multiple “agreements in principle” that do not result in an actual signed offer, this procedure will be limited. In the circumstance where (1) a hearing officer has granted a stay because the parties have “agreed in principle to a settlement,” (2) the agreement in principle does not result in the submission of a signed settlement offer in conformance with Rule 240 within 15 business days of the stay, and (3) the stay lapses, the ALJ will not be required to grant another stay related to the settlement process until both parties have notified the ALJ in writing that a signed settlement offer has been prepared, received by the enforcement staff, and will be submitted to the Commission.

Finally, the Commission recognizes that it too must shoulder responsibility for delays in its appellate review process. In fact, some comment letters suggested that delay in the Commission's appellate review is a more significant problem than delay in the hearing process. Accordingly, during the past year, the Commission has changed certain internal processes to reduce delay in its deliberations and substantially reduce the time taken to complete its appellate review duties. Accordingly, the Commission has amended Rule 900, reducing the guideline for issuance of Commission opinions from eleven months to seven months from the date of an appeal.

As part of this initiative to expedite appellate review, the Commission has amended Rule 450 to provide that opening briefs must be filed within 30 days of the date of a briefing schedule order rather than the current 40 days.

Any and all deadlines and timelines established by these amendments to the Commission's Rules of Practice confer no substantive rights on respondents.

The Commission finds, in accordance with the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(A), that this revision relates solely to agency organization, procedures, or practice. It is therefore not subject to the provisions of the Administrative Procedure Act requiring notice, opportunity for public comment, and publication. The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , also does not apply. Nonetheless, the Commission previously determined that it would be useful to publish the proposed rule changes for notice and comment before adoption. The Commission has considered all comments received.

These rule amendments are adopted pursuant to section 19 of the Securities Act, 15 U.S.C. 77s; section 23 of the Securities Exchange Act, 15 U.S.C. 78w; section 20 of the Public Utility Holding Company Act, 15 U.S.C. 79t; section 319 of the Trust Indenture Act, 15 U.S.C. 77sss; sections 38 and 40 of the Investment Company Act, 15 U.S.C. 80a-37 and 80a-39; and section 211 of the Investment Advisers Act, 15 U.S.C. 80b-11.

Throughout this document, wherever “we” or “our” is used it means the EPA.

Section 553 of the Administrative Procedures Act, 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public procedures are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. We have determined that there is good cause for making today's rule final without prior proposal and opportunity for comment because we are merely correcting incorrect text in previous rulemakings. Thus notice and public procedure are unnecessary. We find that this constitutes good cause under 5 U.S.C. 553(b)(B).

When we approved the Denver-Boulder metropolitan carbon monoxide (CO) area redesignation to attainment, maintenance plan and amendments to Colorado's Regulation No. 11, “Motor Vehicle Emissions Inspection Program,” on December 14, 2001 (66 FR 64751), we inadvertently removed the appendices to Regulation No. 11. Specifically, we approved Regulation No. 11 at 40 CFR 52.320(c)(96)(i)(A) and indicated that Regulation No. 11, part A, part B, part C, part D, part E and part F, effective March 1, 2000, superseded and replaced all earlier versions of the Regulation. However, on March 10, 1997 (62 FR 10690), we approved revisions to Regulation No. 11, including Appendices A and B ( see 40 CFR 52.320(c)(80)). The December 14, 2001, approval should not have superseded and replaced Appendices A and B of Regulation No. 11 approved on March 10, 1997, because the December 14, 2001, approved version of Regulation No. 11 did not contain revisions to Appendices A and B. Therefore, we are correcting the introductory text of 40 CFR 52.320(c)(96) to indicate that the version of Regulation No. 11 being approved supersedes and replaces all earlier versions of Regulation No. 11 except for Appendices A and B to Regulation No. 11 as approved at 40 CFR 52.320(c)(80).

On April 25, 1999 (64 FR 46279), we approved the Colorado Springs carbon monoxide area redesignation to attainment and maintenance plan. In the notice approving that plan we chronicled the history of Federal Register actions that had been completed for the Colorado Springs carbon monoxide area. Among other things we indicated that we approved the Clean Air Campaign into the SIP on May 30, 1989 (54 FR 22893), because of its underlying benefits for the area ( see our April 25, 1999, document, 64 FR 46281, right column). However, in our April 25, 1999, document, we failed to mention that the maintenance plan being approved removes the Clean Air Campaign from the SIP. Therefore, we are correcting 40 CFR 52.349(c) to indicate that the Clean Air Campaign, approved at 40 CFR 52.320(c)(43)(i)(A), has been removed from the SIP.

When we approved revisions to the Colorado Ozone State Implementation Plan (SIP) along with amendments to Regulation No. 7, “Regulation To Control Emissions of Volatile Organic Compounds,” on May 30, 1995 (60 FR 28055), we inadvertently submitted extraneous pages for incorporation by reference into the SIP. Therefore, we are correcting this error by resubmitting the incorporation by reference material in 40 CFR 52.320(c)(70)(i)(A) to the Air and Radiation Docket and Information Center and the Office of the Federal Register. Additionally, the regulatory text in 40 CFR 52.320(c)(70)(i)(A) incorrectly referenced two state rules. The reference to “7.IX.N.” and “7.IX.O.” should have been “7.IX.M.” and “7.IX.N.” We are correcting the references to the state rules. This correction only impacts our May 30, 1995, approval and does not supersede subsequent actions on Regulation No. 7 that have been approved since May 30, 1995.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget. 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. Because the agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the Administrative Procedure Act or any other statute as indicated in the Supplementary Information section above, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C 601 et seq. ), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This rule also does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

This technical correction action does not involve technical standards; 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. The rule also does not involve special consideration of environmental justice related issues as required by Executive Order 12898 (59 FR 7629, February 16, 1994). 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, as required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996). EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1998) 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 Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). EPA's compliance with these statutes and Executive Orders for the underlying rules are discussed in the December 14, 2001, rule approving the Denver-Boulder metropolitan carbon monoxide (CO) area redesignation to attainment, maintenance plan and amendments to Colorado's Regulation No. 11 “Motor Vehicle Emissions Inspection Program,” the August 25, 1999, rule approving the Colorado Springs carbon monoxide area redesignation to attainment and maintenance plan, and the May 30, 1995, rule approving the Colorado Ozone State Implementation Plan (SIP) along with amendments to Regulation No. 7, “Regulation To Control Emissions of Volatile Organic Compounds.”

The Congressional Review Act (5 U.S.C. 801 et seq. ), as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. This determination must be supported by a brief statement. 5 U.S.C. 808(2). As stated previously, EPA has made such a good cause finding, including the reasons therefore, and established an effective date of July 17, 2003. 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 . These corrections to the identification of plan for Colorado is not a “major rule” as defined by 5 U.S.C. 804(2).

The EPA is correcting addresses for Region VII and the states of Iowa and Kansas in 40 CFR parts 60, 61, 62, and 63. Certain provisions of these regulations require the submittal of reports, applications, and other documents to the EPA regional office and to the state air agencies. This technical amendment updates and corrects the mailing addresses for Region VII and the states of Iowa and Kansas.

On November 19, 1999, we published a first interim rule with request for comments (64 FR 63213). It established updates to the licensing and manning for officers of towing vessels and the qualifications of those officers. We had chosen an interim rule to provide the towing industry further opportunity for comment; to answer comments received on the Supplemental Notice of Proposed Rulemaking (SNPRM) (62 FR 55548 (October 27, 1997)); to address concerns received at public meetings; and to provide the public an opportunity to respond to changes reflected in the SNPRM. On October 27, 2000, we published a second interim rule (65 FR 64388), which delayed the implementation of the first interim rule until May 21, 2001. Delaying the rule gave us the opportunity and time to clarify this rule through a third interim rule, which we published on April 26, 2001 (66 FR 20931), and to issue guidelines implementing it.

This final rule constitutes an essential part of a comprehensive initiative to improve navigational safety for towing vessels. (Although the Coast Guard shifted from the Department of Transportation to the Department Of Homeland Security on March 1, 2003, by authority of subsection 103(c) of the Homeland-Security Act of 2002 (Pub. L. 107-296), the current Secretary shares the judgment of the former that this rulemaking constitutes such an essential part.) You can glean the full background of the final rule from the preambles to the notice of proposed rulemaking (NPRM) (61 FR 31332 (June 19, 1996)); to the SNPRM; and to the first and third interim rules (64 FR 63213 (November 19, 1999) and 66 FR 20931 (April 26, 2001), respectively). The following are separate sections on Discussion of Comments for those two interim rules.

We now list and discuss comments from the first interim rule, treated together in groups by alphabetical order of topics:

Three comments stated that the interim rule would greatly disrupt the towing industry since steersmen's licenses would not be issued for 18 months and masters' licenses for 48 months after the effective date. The Coast Guard acknowledges a reduction in the number of mariners initially licensed as masters; however, we disagree that a gap will last 48 months. Further, in the third interim rule and in this final rule, we have also reduced these impacts by allowing unlicensed mariners with service on towing vessels before May 21, 2001, to seek licenses under the rules in place before that date.

One comment asked whether we consider an apprentice mate (steersman) to be an officer of a towing vessel. As we stated in previous preambles, we do not.

One comment supported the concept of a steersman license, but recommended reducing the service time from 12 months to 6 months. Even though some apprentice mates (steersmen) may be able to meet these requirements within 6 months in specific locations, this final rule sets the minimum requirements that apply to all apprentice mates (steersmen), in all locations.

One comment asked that the Coast Guard grandfather time spent in training for steersmen before the implementation date. The Coast Guard sees this as a reasonable request, and has already taken the appropriate action to accommodate it.

One comment suggested reducing the training time for intra-coastal canals, noting that towing on the Western Rivers may require 12 months training but that training on the Intra-Coastal Waterway does not require so much training. It is the Coast Guard's opinion that reducing training would be inconsistent with the spirit and intent of this rule: to ensure its appropriateness to all mariners in all locations.

One comment asked whether direct supervision by a licensed master or mate (pilot) required that officer to be physically present. Yes, it means physically present and more directly supervising the apprentice mate (steersman).

One comment stated that it would take significant work to establish the guidance, standards, and procedures necessary to effect an orderly transition to the new system. The Coast Guard recognizes this issue and agrees. We published the second interim rule delaying implementation just so we could develop such guidance, which is available in the form of Navigation and Vessel Inspection Circular (NVIC) 4-01.

Two comments recommended limiting the length of disabled vessels to not more than 100 feet for assistance towing. It is beyond the scope of this final rule to redefine “assistance towing”.

One comment stated that the definition of a “disabled vessel,” which excludes a barge or any other vessel not regularly operated under its own power, would cause a hardship on the assistance-towing industry and would eliminate the exemptions on marine-assistance vessels. The comment also recommended a limit on the size of small work-barges used in assistance towing. The Coast Guard disagrees; 46 U.S.C. 8904(b) lays down a specific requirement for us to license those persons involved in towing disabled vessels for consideration. Rules already cover the towing of vessels that are not disabled, and barges are not disabled vessels unless they cannot be used for their intended purpose.

One comment suggested that the rule let the Captain of the Port (COTP) grant exemptions to the towing rules applied to assistance-towing vessels. The COTPs already have this authority in emergencies. It would be inconsistent with extant Federal rules, which for good reason prohibit the practice of the towing of a vessel that is not disabled by an individual licensed for assistance towing.

One comment stated that assistance-towing time should count toward a license as master of towing vessels. The crediting of assistance towing or other service, except as noted in 46 CFR 10.466, toward a license as master or mate (pilot) of towing vessels for commercial towing, has never been contemplated in this rulemaking or discussed in previous forms of this rule.

One comment stated that assistance towing comprises assisting not only pleasure vessels but also commercial vessels and non-self-propelled barges. The Coast Guard agrees that assistance towing is limited to assisting disabled vessels. A disabled vessel can be a commercial vessel; however, the test in this case is whether such a vessel is disabled and is in need of assistance.

One comment stated that the rules on licensure in towing are inappropriate for the work done by the assistance-towing industry. This rule does not revise the rules that apply to assistance towing, it merely clarifies the definition of “disabled vessel”.

One comment stated that companies should have to reply to requests for service letters. 46 CFR 10.211 requires the documenting of sea service. This final rule provides another method for mariners' own documenting through a Towing Officers' Assessment Record (TOAR).

One comment read 46 CFR 10.464(f) and 10.465(f) to require that all companies ensure 30 days of observation and training for new hires before releasing them to work under the authority of their licenses as members of the wheelhouse complement. The Coast Guard agrees.

Two comments believed it is the responsibility of companies, only, to make sure that mariners are competent. The Coast Guard disagrees; the responsibility is also incumbent upon the Coast Guard as well as, in the first instance, upon the mariner himself or herself.

One comment asked whether companies should ensure that their vessels are under the direction and control of persons with appropriate experience on the water. The answer to this question is yes, as required under 46 CFR 15.401.

One comment asked how the Coast Guard intends to ensure that the training and evaluation of mariners are consistent. The Coast Guard establishes the minimum acceptable standards for assessment, training, and courses. This arrangement allows industry the freedom to develop programs within a wide spectrum, while maintaining at least these standards.

One comment suggested that the Coast Guard actively and personally solicit the views of smaller towing companies rather than those of the larger companies. That was the purpose of two of the interim rules—to receive comments from all interested parties.

One comment stated that the nominal cost neglects both the loss of licensed mariners who are unwilling to submit to the stringent regimen of this final rule through early retirement and the training of replacements. The Coast Guard disagrees with the comment since current towing-vessel operators are grandfathered and need only meet minimal added requirements.

Four comments stated that the definition of “disabled vessel” is unduly restrictive to the assistance-towing industry, because it excludes the towing of a barge or any other vessel not regularly operated under its own power of any length, and voids our rules' own exemption for marine-assistance vessels. We disagree, as we stated in our response to the third comment under “Assistance Towing”. Furthermore, our rules do not provide an exemption for assistance-towing vessels; rather, they cover assistance-towing endorsements under a specific rule, 46 CFR 10.482. And, finally, the definition was developed in concert with Congressional staff members, assistance-towing companies, and the U.S. Coast Guard.

One comment asked whether the term “Western Rivers” should apply to pilots of towing vessels. The term applies as intended. Inland routes include Great Lakes and Western Rivers.

Three comments disagreed with a requirement of check rides for persons already doing the job (licensed commercial towing). The Coast Guard agrees in part. Only those mariners who fail to provide documentation of proficiency, and those who have had their licenses suspended, will need to demonstrate proficiency.

Two comments questioned the duration of the demonstration of proficiency: Whether the demonstration would be a short-term evaluation or conducted over the full period of training. It is the Coast Guard's opinion that the demonstration should extend over the full period of training; except that, in the case of a mariner returning from the suspension of his or her license, that demonstration may be short-term.

One comment sought clarification on what documentation of proficiency the Regional Examination Centers (RECs) would require before license renewal, and on the meaning of “current license”. The Coast Guard clarified this issue in NVIC 4-01. The “current license” mentioned in the preamble refers to the license the mariner held before May 21, 2001.

One comment stated that the check-ride requirement for license renewal might unfairly affect a small business without a Designated Examiner (DE) and might result in increased expense. The Coast Guard disagrees. Check rides are necessary only when a mariner lacks other documentation of training and service at renewal. Although this requirement may affect businesses, the process of developing DEs should allow every company, regardless of size, to have a DE.

One comment asked whether the decision requiring a check ride at the time of renewal would belong to a license evaluator instead of a higher authority. The evaluator should be the person best able to identify whether there is sufficient information within an application package. Although a check ride is available for the REC to use, this process is only for those cases when the mariner is unable to furnish documentary evidence that he or she obtained training and service during the preceding licensed period.

One comment identified a need for objectives and assessment criteria for the DE to use when conducting check rides. The Coast Guard agrees. The objectives should be based upon the TOAR published in NVIC 4-01. The assessment criteria are before the Towing Safety Advisory Committee (TSAC) and will become available in the Federal Register .

Three comments stated that the term “designated examiner” (DE) needs further clarification in regard to qualifications and expectations. The term and what it entails are fully explained in NVICs 4-01 and 6-97.

One comment stated that any process for developing DEs must be smooth and that the requirements must use common sense. The commenter also suggested that the process contemplated by this rulemaking draws too much from the International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (STCW), as amended, and is inconsistent with towing on inland rivers and the Western Rivers. There is no compelling rationale to remove the requirement; however, the Coast Guard eased the process for obtaining the letter of designation as a DE, which it describes in NVIC 4-01.

One comment stated that qualifications for DEs are a point of controversy in the offshore industry, and that the towing industry should expect similar controversy. With or without controversy, the Coast Guard must ensure that DEs are adequately trained and qualified.

One comment asked that the final rule clearly reflect that the same person may both instruct and evaluate a candidate. There is nothing in this rule or previous rules prohibiting a person from both instructing and evaluating a candidate.

One comment asked whether any liability attaches to the DE for his or her recommendations. If evidence exists demonstrating that the DE is not ensuring the proficiency of the candidates, the Coast Guard may withdraw his or her designation. The DE is able to determine only that a candidate is competent at the time of assessment.

One comment stated that mariners, who are already overworked and in short supply, would face an added workload by participating in the program for Qualified Instructors (QIs) and DEs. The commenter also stated that mariners who are retired, disabled, or otherwise inactive, even if not holding licenses, should be eligible to be QIs and DEs. The Coast Guard disagrees. The process establishes that a mariner must hold a valid license to become a DE. If a mariner holding a license chooses to become a DE, he or she may do so; however, he or she must still comply with the watch-hour requirements of 46 CFR 15.705.

One comment stated that the rule overlooks the fact that a DE should expect payment for his services. The commenter also stated that an employer could use coercion to gain a favorable evaluation, “while the threat of a Coast Guard subpoena could cause stress, anxiety, and embarrassment for the Designated Examiner.” There are numerous ways a DE could receive payment. Coercion could occur, but we don't believe it is a substantial concern. Although our authority to issue subpoenas might intimidate some, there are too many personalities involved to determine why or when, or to prevent coercion in all cases.

One comment asked why the Coast Guard does not see a DE's administering check rides for his employer as a conflict of interest. Our opinion is that no conflict of interest arises since it is in both the employer's and the DE's best interest to ensure that a mariner receiving certification can safely complete his or her duties.

One comment stated that maritime educators and marine-membership organizations need leeway to effectively deal with rehabilitating mariners and returning them to service. The comment asked whether the Coast Guard had fully considered that a mariner returning from a suspension of a license might be unemployed and not have access to a vessel for his or her testing, and whether the Coast Guard would let a mariner get a job, return to work, and then arrange for his or her check ride. Our rules state that no mariner may return to work in a position requiring a license if his or her license is suspended; yet nothing in those rules or this rule limits his or her ability to work in an unlicensed position.

One comment asked whether tonnage restrictions contained in 46 CFR 15.910 would persist. No. The tonnage restrictions that existed in § 15.910 until May 21, 2001, no longer exist, since this final rule effectively removes the equivalent provision on licensure.

Two comments stated that the most critical challenge is implementing the final rule. They suggested that the best way to meet the challenge is through an ongoing consultative process involving the industry, the Coast Guard, and licensed operators. The Coast Guard agrees with this comment and has been working with the TSAC on implementing the rule.

One comment stated that the rule should differentiate between licenses for towing on oceans and near-coastal waters and those for towing on inland waters and Western Rivers, since these two methods of towing are extremely different. That was the rule's main intent—to separate the types of towing. The TOARs fit the methods of towing in the areas of operation and the routes sought.

One comment asked whether mariners currently operating towing vessels would have to obtain towing-vessel endorsements after the final rule became effective but before their licenses expired. No, they would not need the endorsement until their first renewal after the rule became effective.

One comment suggested that the rule allow a mariner to obtain a towing-vessel endorsement on a license as master of steam and motor vessels of not more than 200 gross register tons (GRT). This would allow a mariner to operate towing vessels after only 12 months of sea service. The Coast Guard disagrees. This rule seeks to improve safety through increased service and training. Acceptance of this suggestion would result in decreasing the level of service and training throughout the fleet.

One comment questioned the phrase “oceans (domestic trade).” This phrase persists from the current rules. This is due, in part, to restricting operators of uninspected towing vessels (OUTVs) to domestic trade only.

One comment stated that the changes are superficial because they merely codify standard practice. The Coast Guard disagrees. Many companies still lack established training programs.

One comment stated that pilots should not have to be trained just to be in the good graces of a company. The purpose of this rule is to increase safety on towing vessels, not to influence personnel management within a company.

One comment asked whether 46 CFR 15.910 contradicts 46 CFR 15.610. No, it does not. Section 15.910 removes the provision on equivalents in the rules effective before May 21, 2001, and restates the manning requirements in § 15.610.

One comment raised three questions about 100-ton licenses: whether mariners holding such licenses and operating towing vessels could continue that service, whether other mariners could undertake that service, and whether the license would show tonnage under the International Tonnage Convention (ITC). Mariners legally operating towing vessels could continue operating them under the current restrictions of their licenses. Mariners without experience operating towing vessels before May 21, 2001, even if they held licenses authorizing service on vessels of less than 200 GRT, could not get towing endorsements, unless they went through the training outlined in the rules. If mariners want their licenses to show tonnage under the ITC, we will place GT (gross tons) instead of GRT on their licenses.

One comment recommended that we use Table 10.910-2, instead of the list in § 10.465(g), to ensure the adequacy of approved training courses. We agree and will institute that change.

One comment asked whether waters specified by 33 CFR 89.25 are inland waters rather than Western Rivers. Yes, 33 CFR 89.25 prescribes inland rules 9(a)(ii), 14(d), and 15(b) for specific, named waterways. By contrast, 46 CFR 10.103 identifies inland waters in general (with reference to the Boundary Lines described elsewhere).

One comment asked about the scope of limited exams in 46 CFR 10.418(b) and 10.426(a)(2). These exams remain the same as those in place before May 21, 2001.

One comment asked about the scope of the exam for apprentice mate (steersman). It is the same as the scope of the exam required for OUTVs before May 21, 2001. ( See Table 46 CFR 10.910, columns 11 and 12.)

One comment asked which exam a mariner takes when moving from mate of inspected steam vessels (not more than 200 GRT) to mate of towing vessels. Moving between these vessel types as described is impermissible under this rule.

One comment opposed the two-watch system for offshore towing vessels. The Coast Guard acknowledges the comment, but notes that this standard is statutory and is not the subject of this or any other regulatory process.

One comment wanted the Department of Transportation to clamp down on employers who knowingly hire, and entrust their vessels to, unlicensed personnel. (We take this comment to apply with equal force to the Department of Homeland Security, or DHS.) The Coast Guard and DHS need the assistance of all hands in the industry, both corporate and private, to identify such wrongdoing for appropriate investigation.

One comment questioned “time-and-a-half” as it affects straight 12-hour shifts. This issue is a matter of policy and sometimes of collective-bargaining agreements but not a subject of this rule.

One comment wanted to see passenger-vessel combinations, of any type, operated by masters of inspected vessels of appropriate route and tonnage, and passenger-carrying tug-barge combinations, operated by masters of towboats or of passenger barges at the owners' option. The Coast Guard agrees, and has provided guidance to the local Officers in Charge, Marine Inspection, by way of Navigation and Vessel Inspection Circular (NVIC) 4-01, when determining the manning of such vessels.

Five comments asked whether the final rule would affect licensed routes. We do not intend to remove any routes currently on any license. Each mariner would keep any routes he or she holds on his or her license.

Two comments asked for a clearer definition of “recent towing service.” The Coast Guard will accept (and expect) evidence of service on towing vessels within the last 90 days, before it will confer the initial towing-vessel endorsement.

One comment suggested that the TSAC determine the procedures for grandfathering mariners. The Coast Guard disagrees, as we established the grandfathering of mariners in the third interim rule.

One comment recommended that the final rule allow the grandfathering of persons licensed as masters of vessels of 100 GRT, mates of vessels of 200 GRT, or first-class pilots whose licenses were issued before the effective date. The Coast Guard disagrees, and maintains that a towing endorsement requires towing experience.

One comment suggested grandfathering persons with current licenses endorsed for assistance towing. The Coast Guard disagrees for the reasons set forth in the fourth paragraph under “Assistance Towing”.

One comment asked whether a mariner grandfathered as a master of towing vessels could work on an integrated tug and barge (ITB). Yes, that mariner could work on any towing vessel unless his or her license held a limit or a route inconsistent with the operation of the ITB.

One comment asked how the license for master (harbor assist) would fit in ports where several different types of towing take place. That license has been merged with the license for master (limited local area) by this rulemaking.

One comment requested that the Coast Guard adjust the service time for master (harbor assist) by reducing the time to 36 months, which would become possible if it reduced the service time for apprentice mate from 30 months to 18 months. Again, the Coast Guard has combined this master's license with the license for master (limited local area) and removed the license as mate (pilot) of towing vessels (limited). The total service time already stands at 36 months.

Two comments stated that altering the definition of “inland waters” potentially reaches every license-holder. We have revised the definition to reach only masters and mates (pilots) of towing vessels on the Western Rivers.

One comment stated that inland waters currently comprise the Gulf Intracoastal Waterway and Western Rivers, and that separating those two would create work for the mariner. The Coast Guard agrees; however by request of industry and the public during the comment periods on the NPRM and the SNPRM, the two were separated, and will remain distinct.

One comment stated that the interim rule would affect all mariners with ocean and near-coastal routes when they entered waters designated as Western Rivers. The Coast Guard agrees, but the rule would not affect currently licensed mariners able to document service on the Western Rivers. In this final rule we have taken further action to mitigate the effects.

Two comments expressed concern that the Coast Guard has neither shown the rationale for changing the manning of ITBs being used as passenger vessels nor shown that the masters of such vessels have different criteria to consider in operating the vessels. The comments asked the Coast Guard to withdraw the portion of the rules that apply to ITBs involving passenger vessels. The Coast Guard acknowledges the comments. This final rule does not change the rules on the manning of inspected passenger vessels; this responsibility still resides with the local OCMI. NVIC 4-01 provides specific information and non-binding guidance to assist the OCMI in determining the manning of towing vessels.

One comment stated that the interim rule imposes added requirements on personnel holding unlimited licenses for masters and mates on Great Lakes with pilotage, and is a needless burden. The Coast Guard deems this burden minor, whether to those with towing experience on the Great Lakes or to those with unlimited licenses.

One comment stated that the rule does not consider the nature of ITBs and their similarity to standard vessels, and that changing the rule would bar, from operating ITBs, those masters currently operating vessels before their conversion to ITBs. The Coast Guard disagrees. Mariners with licenses for vessels greater than 200 GRT may operate such vessels once they have completed 30 days of familiarization and their TOARs. Further, this situation is rare and would be best for the local OCMI to handle case by case.

One comment stated that the preamble said ITBs must be operated by mariners who hold towing-vessel licenses. This rule establishes a wholly independent process for obtaining such licenses and vacates the practice of allowing a superior license to subsume the “lesser included authority”. The Coast Guard, through this rule, recognizes the special skills required to operate towing vessels and requires a training program for mariners to achieve those skills.

One comment stated that every evaluator should go through training at Yorktown, Virginia, and that this training should be available to maritime educators. Like the towing industry, the Coast Guard runs on-the-job training for its own evaluators, similar to those for private-sector evaluators under the TOAR program. The training of marine educators is not part of this rulemaking.

Two comments stated that the renewal process should let the employer submit a letter attesting to the competence of a mariner, instead of practical demonstration or a TOAR. The Coast Guard agrees. The letter would need to meet the requirements of 46 CFR 10.211 and contain specific information about the mariner's competence, completed training, drills conducted, and so forth. The intent is to document competence and training over time, and to provide alternative methods for documenting them.

One comment stated that mariners who document service on their license, without incurring administrative action against the license, should be able to renew the license without completing practical demonstrations before DEs. The Coast Guard agrees. The primary purpose of the TOAR is assessing mariners' service between apprentice mate (steersman) and mate (pilot) of towing vessels, or between other adjacent points in their career, as required by these rules.

One comment asked whether a geographically limited license had to be renewed where it was issued. The answer is “yes”, since a limited license is issued to a mariner who does not meet all of the requirements for a “full” or non-limited license. A geographically limited license is issued at the discretion of the cognizant OCMI if, in the opinion of that OCMI, the mariner possesses the skills, knowledge, and experience to safely operate within the restrictions of the license. Because this determination requires local knowledge of a particular geographic area, and because conditions in that area may change, we feel the cognizant OCMI should have the opportunity to re-evaluate the candidate when the license is renewed. Geographically limited licenses, whether original or renewal, are best considered and issued by the REC for the area in which the mariner will operate.

One comment stated that 46 CFR 10.464-3 requires enough total service to adversely affect the availability of properly licensed operators of harbor tugs now and for the coming years, as well as impose a significant impact on small entities. The intent of this rule is to increase the training and experience (indicated by service) of mariners operating towing vessels; however, we have reduced the total service required for harbor assist towing vessels and are streamlining the process.

Two comments asked whether the Coast Guard would continue to exempt towing vessels involved in activities on the Outer Continental Shelf from these rules. The Coast Guard notes that 46 U.S.C. 8905(b) remains in effect, and is beyond the scope of this rulemaking.

One comment asked why the definition of “pilot of towing vessels” is limited to Inland routes. During the development of this project, the Western Rivers towing industry did not like using the term “mate”, a term commonly used to indicate a deckhand rather than an officer in charge of navigating the towing vessel. The definition of the term “pilot of towing vessels” is limited to operating only on inland routes to avoid the confusion with first-class pilot and various state pilot licenses.

One comment asked whether the choice of the title of a mate (pilot) license, as appropriate, would belong to the mariner and also whether any nation-wide guidance would be forthcoming. Yes, the choice would belong to the mariner, although such guidance would state that personnel of RECs should ensure that the mariner understands that changing the title of the license might result in extra fees. The guidance appears in NVIC 4-01.

Five comments sought public meetings at various locations so affected mariners could provide further comments, including the need for a general meeting on the Upper Mississippi River and another to discuss recency of towing service. The Coast Guard deemed that mariners have had adequate opportunity for comment during the five public meetings previously held. In addition, the Coast Guard has conducted public outreach on all issues throughout the towing industry since the publication of the first interim rule.

One comment received showed concern about the loss of licensed routes if a mariner is unable to show recency on a segment of a waterway. There is nothing in this final rule that would remove routes from a license for failure to maintain recency.

One comment asked about the recency requirement for towing service at the time of renewal. This rule has not changed this requirement. A mariner would have to show recency of service on towing vessels and ongoing training at time of renewal.

Three comments stated that this rule, as proposed, would significantly increase the workload at RECs. The Coast Guard acknowledges that it would increase the workload; however, the increased workload is acceptable for the expected gains from this rule.

Two comments disagreed that the master should be responsible for what occurs when he or she is not on watch. The Coast Guard partly agrees, and points to the SNPRM's preamble, where the issue is discussed. A master is not responsible for the negligence or misconduct of the mate (pilot) of towing vessels on watch.

Two comments stated it was unclear whether there would be a Great Lakes inland route and a Western Rivers route. Yes, there will be distinct Great Lakes inland and Western Rivers routes.

One comment sought clarification on the application of route-observation days for the towing endorsements on licenses for vessels over 200 GRT, as those days affect pilotage rules. This rulemaking does not address or revise the pilotage rules. The route-observation days in this rulemaking are specific to observation on a towing vessel while a candidate completes a TOAR.

One comment stated that a towing endorsement on a license over 200 GRT should be based on 30 days of total observation and be inclusive of all subordinate routes without necessitating service on each route. The Coast Guard agrees; however, throughout this rulemaking, the towing industry has emphasized the need to ensure that officers are familiar with the Western Rivers. That route will not be included without 90 days of observation on it.

One comment recommended consolidating two routes—the Western Rivers and the Great Lakes inland—and authorizing those licensed for the latter to operate on the Western Rivers. The Coast Guard acknowledges the comment, but the recommendation is not consistent with either the majority of input received on this issue or with the sounder policy on it.

One comment stated that the requirement of 90 days observation and training for Western Rivers would make it extremely difficult to obtain the proper endorsement for a mariner sailing on periodic ocean voyages but entering Western Rivers. The Coast Guard agrees, and maintains that this endorsement should be based on observation and training on Western Rivers, and not based on convenience. However, a process has been created for such a mariner to obtain an endorsement only for the Lower Mississippi River.

One comment asked whether there would be a fee for removing the restricted endorsement issued under 46 CFR 10.466(b). Yes, there will be a fee imposed under 46 CFR 10.109, since removal constitutes another transaction at a REC.

One comment agrees that geographic endorsements are a good idea, but recommends allowing a company to post a licensed mariner for a reasonable time without the cost of training the mariner. The Coast Guard disagrees. Having a mariner unfamiliar with a waterway operate the vessel, as distinct from having him or her train aboard it under supervision, does not make sense, even if he or she holds a license. A mariner must hold a license endorsed for the appropriate route to operate the vessel. A mariner may also, after completing an exam, hold a restricted endorsement for mate (pilot) of towing vessels and, after completing 90 days of service on the new route, have that route added to his or her license.

One comment stated that we should distinguish between oceans and near-coastal routes only in the exam, and, in the exam, only on such topics as celestial navigation. The Coast Guard disagrees. The two routes differ in two important respects: the practical assessment of mariners on STCW, and firefighting. This has not changed the exam requirements for the two routes.

Two comments urged that a mariner should be able to make a statement concerning his or her service in regard to his or her experience. For the first renewal after May 21, 2001, there should be some evidence, within the file on the license, describing where a mariner has completed towing service. The Coast Guard would need documentary evidence, provided by the mariner, if nothing existed within the file for certain routes.

One comment asked about the minimum towing service required for renewal within the 12 months of service. The towing service required for renewal remains the same except for added training.

One comment asked how seasonal operators' time would count for vessels visiting multiple limited construction areas over 12 months of service. Service time would count the same as it does under current practices.

One comment argued that, unless an uninspected towing vessel has a separate engine department, all the service should count toward engine or deck, as requested by the mariner. This rule does not modify the treatment of service, whether deck or engineering. Service will continue to count—or not—according to rule and policy.

One comment asked that we identify the civil penalties that apply to violations of these particular rules by either the company or the mariner. The commenter also asked where all current civil-penalty cites pertaining to violations of 46 CFR part 10 are compiled and available for public viewing. A list of these cites is available from: Commandant (G-LMI), U.S. Coast Guard Headquarters, 2100 Second Street, SW., Washington, DC 20593-0001. Actual cases may be requested from the Coast Guard under the Freedom of Information Act (FOIA). Specify cases under 46 U.S.C. 8906 and 46 CFR 15.610.

One comment stated that a company's withholding records would now become critically important to the mariner because these records, now, not only would cover service but also might cover training. The Coast Guard agrees. That is why the TOAR provides another method for documenting training and competency, as well as service.

One comment requested that simulators be one method of demonstrating proficiency under 46 CFR 10.209(c)(6)(i). The Coast Guard agrees and notes that full mission simulators, approved by the National Maritime Center, would meet the intent of the paragraph, within this final rule.

One comment stated that using a simulator would be an expensive way for an unemployed mariner, after a suspension of license, to demonstrate proficiency. The Coast Guard agrees; however, this rule provides many ways to demonstrate proficiency, of which using a simulator is just one.

One comment asked why tonnage calculated under the ITC does not figure in the rule. There is no clear conversion between ITC and domestic tonnage, for licensing. We hold vessels of 200 GRT equivalent to those of 500 GT (ITC).

One comment asked whether we would charge a user's fee for an STCW endorsement. No, the Coast Guard does not intend to charge user fees. Please see Table 10.109 of this title.

One comment stated that Figure 10.403 does not include licenses for Offshore Supply Vessels. This rule applies only to OUTVs. It revises Figure 10.403 only as necessary for them.

One comment discovered errors in the footnotes to the tables: “COTP” in place of “OCMI”, and “Training” in place of “Towing”. The Coast Guard appreciates the comment and has corrected the errors.

One comment asked whether an exam exists for each route referred to in the footnote regarding routes. Yes, the exams for routes are those where differences arise for “Rules of the Road”, such as changes to the International Regulations for Preventing Collisions at Sea, or to navigational requirements, such as a requirement of celestial navigation.

Two comments argued that we should strike the use of tonnage or any other limiting criteria as they apply to the licenses for officers of towing vessels. The Coast Guard agrees, with the exception of “inspected vessels”—defined by tonnage—whose officers must meet requirements on licenses, experience, and training beyond the normal requirements for towing vessels.

One comment insisted that tonnage limits on towing-vessel licenses are not appropriate and were not recommended by the TSAC. The third interim rule provided tonnage limitations for those mariners operating towing vessels under the equivalence provision existing before May 21, 2001. That interim rule continues to limit those mariners to the tonnage listed on the face of their license, if it was 200 GRT or less. This rule maintains this provision.

Two comments likewise challenged 46 CFR 10.464(d) and 10.465(b) in the first interim rule regarding the placement of tonnage limits on licenses for oceans and near-coastal waters. The Coast Guard agrees, and has revised those paragraphs by removing the reference to such limits.

Two comments stated that there is no reason why a Training Record Book (TRB) for the STCW cannot serve in place of the TOAR, as long as the TRB contains all the information required by the TOAR. The Coast Guard agrees. The use of a TRB will be permissible as long as the mariner accounts for any differences between the TOAR and the TRB, and documents the training beyond the TRB.

One comment stated that the TSAC should draft the NVIC and the TOAR for this rule to ensure uniformity. The TSAC was involved in the process and developed the TOAR incorporated in NVIC 4-01. The TSAC may be likewise involved with the next NVIC.

One comment requested that no mariner's photo appear in the TOAR. The Coast Guard disagrees. It is necessary for both the Coast Guard and the DE to be able to identify the mariner holding the TOAR. The photograph provides the most efficient method of this identification.

One comment asked whether the Coast Guard plans to tell the RECs, but not the mariners, what assessment records to maintain for renewal. The TOAR is not necessary for those mariners first renewing their license between May 21, 2001, and May 21, 2006.

One comment asked where a mariner can obtain a TOAR. An example accompanies NVIC 4-01, which is available on the Internet at www.uscg.mil/hq/g-m/nvic/4-01/n4-01.pdf.

One comment asked whether, since 95 percent of mariners affected choose to maintain TOARs, it would not be sensible for the Coast Guard to promote uniformity by making the necessary forms available free of charge. The Coast Guard is publishing an example in NVIC 4-01, which mariners may print from the Internet and use.

One comment stated that the interim rule is not clear whether the TOAR is going to be required at the first renewal after implementation. The TOAR will not be required for those mariners currently operating towing vessels.

One comment stated that the interim rule fails to provide sufficient details regarding the assessment records—including specific objectives and criteria on which to base assessments. NVIC 4-01 provides the details not covered in the rule.

One comment asked whether the limit of 200 GRT covers all routes. No, the limit of 200 GRT covers routes over limited local areas.

One comment recommended that the Coast Guard create the position of course evaluator, who could rule that a course meets a defined minimum standard and approve the course; otherwise, the Coast Guard needs to streamline the process. The Coast Guard agrees, and has course evaluators assigned at the National Maritime Center.

One comment sought clarification on the applicability of the requirement for masters and mates in 46 CFR 10.205(g)(2) to have training in firefighting when they serve on towing vessels over 200 GRT. The comment declared that that requirement would exceed the current one for OUTVs. A requirement for training in firefighting existed for OUTVs operating on oceans routes before May 21, 2001. Another, similar requirement persists in 46 CFR 10.205(g)(3) for certain masters and mates (pilots) of towing vessels. As the comment observed, § 10.205(g)(3) addresses this training. That paragraph expressly notes that its requirement applies only to masters and mates (pilots) of towing vessels in ocean service. However, its requirement would apply to officers of towing vessels if they were operating vessels of over 200 GRT in near-coastal service as well, by virtue of the rules implementing the STCW.

One comment stated that the requirements in 46 CFR 10.465(g), effective on May 21, 2001, for an approved training course go beyond those that are the subject of exams in Table 10.910-2. The commenter added that requirements must be consistent. The Coast Guard disagrees. The approved training course replaces completion of the TOAR, not the exam. All apprentice mates (steersmen) will have taken the exam, and may then choose either to take the approved training course or to complete their TOARs.

One comment alleged that the interim rule presents a problem: That few, if any, towboat operators have received formal training in firefighting. The comment further alleged that there is good reason to require such training for licensed officers of towing vessels. The Coast Guard agrees in part. Officers who would receive ocean endorsements on their licenses must receive such training.

One comment recommended language to grandfather candidates who anticipate completing training within three months of the interim rule's effective date. The Coast Guard accepts this recommendation.

One comment stated that the 90-day requirement would make it extremely difficult for a mariner, entering the Western Rivers on periodic ocean voyages, to obtain the proper endorsement. The Coast Guard agrees; and maintains that that endorsement should be based on observation and training on Western Rivers, and not based on convenience. However, a process has been created in this final rule to allow a mariner operating periodically on the Western Rivers to obtain an endorsement for the “pilotage waters of the Lower Mississippi River”, in less than the 90 days required for a Western Rivers endorsement.

One comment asked whether adding an endorsement for Western Rivers to an existing license would entail an exam. No, all that would be necessary would be proof of service.

One comment saw no need for the Coast Guard to start issuing endorsements for the Western Rivers again. We disagree: the desirability of issuing licenses for the Western Rivers arises precisely from the responses to the SNPRM.

One comment asked what the differences are between the Western Rivers and other rivers. Unlike other waterways, the Western Rivers have huge tows operating on them.

There were four comments beyond the scope of this rulemaking. We will not discuss them here.

We will, however, discuss here comments on the third interim rule (66 FR 20931 (April 26, 2001)), in alphabetical order. There were seven of them, in three letters.

One comment challenged our decision not to change the definition of “disabled vessel” in 46 CFR 10.103 of the third interim rule. The comment stated that, unchanged, the definition would not clarify confusion caused, and not lessen the burdens imposed, by that rule. The commenter added that the definition would leave a “tremendous burden on a large number of marine assistance firms,” and be “unduly restrictive because towing a barge or any other vessel not regularly operated under its own power of any length” would void the exemption for marine-assistance vessels. The Coast Guard reiterates that such towing very well should void the exemption. The rule for assistance towing established this license precisely for those mariners providing assistance to pleasure vessels. The rule also addressed head-on both the towing of barges and inter-marina towing, both of which the Coast Guard had found inconsistent with the intent of Congress.

Two comments expressed concern over the stipulation that the license for officers of towing vessels would not authorize foreign voyages, or even domestic voyages, of towing vessels over 200 GT. The Coast Guard agrees with this concern and, in this final rule, allows mariners licensed under this rule to operate all towing vessels of less than 300 GRT on domestic voyages on oceans and near-coastal waters, and, if they satisfy international requirements, on foreign voyages.

Two comments suggested that mariners seeking authority to operate on the Lower Mississippi River, above mile 304.1, have to obtain endorsements for Western Rivers by completing the TOAR for those Rivers—but equally that those mariners with endorsements for oceans, near-coastal service, or Great Lakes inland service seeking to operate below mile 304.1 should not have either to obtain the endorsement or to complete the TOAR. The Coast Guard agrees. However, we have chosen to use, instead of mile 304.1, mile 234, which is already established by rule as pilotage waters.

Two comments stated there should be a single track for licensing, to meet the unique needs of coastal harbor tugs, inland fleet boats, and other craft of such limited operations. They urged us to combine the tracks for “harbor assist” and “limited local area” in a single “limited” licensing-progression: Apprentice mate or steersman (limited) and master (limited). The Coast Guard agrees, and has combined the tracks in this final rule.

After the comment period closed, on July 25, 2001, the American Waterways Operators (AWO) and other towing-industry representatives identified an apparent inconsistency in the third interim rule. In that rule, mariners who began service and training on towing vessels before May 21, 2001, could continue training under the process in place then and obtain the license as master of towing vessels by May 21, 2004. After May 21, 2004, the requirements of this rule must be met. The apparent inconsistency arises in that such mariners are not also able to obtain the license as mate (pilot) of towing vessels.

In the development of that rule, the Coast Guard determined that the predominant licensing transaction for towing vessels was the obtaining of a license as an OUTV. That license corresponded directly to one as master of towing vessels. The license that corresponded to one as mate (pilot) of towing vessels was the 2nd-class operator's license—a license rarely issued even before May 21, 2001. Because of this rarity, the third interim rule did not include a provision to allow a mariner to obtain a license as mate (pilot) of towing vessels following the requirement for the 2nd-class operator's license. The Coast Guard agrees that an inconsistency exists and, in this final rule, allows a mariner to obtain the license as mate (pilot) of towing vessels, until November 21, 2003, using the process for a 2nd-class operator's license. This provides a more gradual implementation of this rule, as well as aligns the treatment of the licenses for master and mate (pilot) of towing vessels.

This final 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 (OMB) has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS)(44 FR 11040 (February 26, 1979)).

There were no comments on this section in response to the third interim rule (66 FR 20931 (April 26, 2001)), though the rule did invite comments.

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

This rule will amend the licensing and manning for officers of towing vessels by making minor revisions to the third interim rule. This rule will help mariners obtain the appropriate licenses for such officers.

This rule makes changes or updates of technical information and reflects comments to both the first interim rule (64 FR 63213 (November 19, 1999)) and the third interim rule. These changes or updates will not impose any new costs on the towing industry.

There are around 5,400 documented towing vessels in the United States. We presented estimates of the aggregate costs of this set of rulemakings in the third interim rule. Below are the estimates as presented there.

The annual costs—including costs for new entrants into the industry and monetary costs due to industry's paperwork burden—of compliance total $1,310,644. The 10-year present value of cost to industry, from 2001 up to 2010, discounted at 7 percent to 2000, totals $9,205,414.

The annual costs to the Federal Government comprise the time and resources of the Coast Guard to review the documentation of ongoing training and drills such as TOARs for serving mariners, as well as the service records, applications, and check-ride results of entering mariners. We estimated the total costs to the Government at $70,464 a year. The 10-year present value of these costs, discounted at 7 percent to 2000, totals $494,910.

We estimate that the 10-year present value, discounted at 7 percent to 2000, of costs to industry and Government are $9,700,324.

This final rule will improve navigational safety for towing vessels and will clarify the requirements for obtaining appropriate licenses imposed by the amendments of the third interim rule. It will combine the licenses for “harbor assist” and “limited local area” into a single progression toward a limited license: Apprentice mate (steersman) (limited) and master (limited) for consistency.

This rule will also provide mariners with flexibility when seeking authority for service on the Lower Mississippi River, and when seeking to operate uninspected towing vessels on domestic voyages as long as they meet international requirements on foreign voyages.

We presented estimates of the aggregate benefits of this set of rulemakings in the third interim rule. Below are the estimates as presented there.

The annual benefits from preventing deaths range from $2,430,000 to $5,130,000, while those from preventing property damage range from $1,158,987 to $2,546,694. The 10-year present value of total benefits ranges from $25,207,543 to $53,917,886. Therefore, the 10-year benefit-cost ratio of this rule ranges from 2.60 to 5.56 with the average being 4.08.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this final rule will 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. (It does not include individual mariners.) This final rule will not impose any new costs on the towing industry beyond the costs imposed by the intermim rule(s).

There are 1,252 small businesses operating towing vessels, and none will suffer under this rule. We previously presented for public comment the effect of the set of rulemakings on small entities. We received no comments regarding that effect.

Therefore, 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.

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 rulemaking so that they could better evaluate its effects on them and participate in it. We have consistently provided small entities a point of contact for assistance in understanding this rule. We have also completed a number of outreach activities that provided small entities added opportunities to seek clarification on the rule (from the project officer).

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

The first and third interim rules did call for a collection of information. As required by 44 U.S.C. 3507(d), we submitted a copy of those rules to the OMB for its review of the collection of information. The OMB has approved the collection for two parts. The part numbers are 46 CFR parts 10 and 15, and the corresponding approval number is OMB Control Number 2115-0623, which expires on May 31, 2004.

You need not respond to a collection of information unless it displays a currently valid Control Number.

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 final 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 final rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This final 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 (53 FR 8859 (March 15, 1988)).

This final 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 final 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 concern an environmental risk to health or risk to safety that may disproportionately affect children.

This final rule will not have tribal implications; will not impose substantial direct compliance costs on Indian tribal governments; and will not preempt tribal law. Therefore, it is exempt from the consultation requirements of Executive Order 13175. If we had identified tribal implications during the comment period, we would have undertaken appropriate consultations with the affected Indian tribal officials.

We have analyzed this final 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 of the OMB 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 final rule and concluded that, under section 6(a) of the “Appendix to National Environmental Policy Act: Coast Guard Procedures for Categorical Exclusions, Notice of Final Agency Policy” (67 FR 48244 (July 23, 2002)), this rule is categorically excluded from further environmental documentation. Under section 6(a), this exclusion is appropriate for rules that are “editorial or procedural, such as those updating addresses or establishing application procedures.” A Determination of Categorical Exclusion is available in the docket where indicated under ADDRESSES.

1. In the Order and Further Notice of Proposed Rulemaking adopted April 14, 2003 and released April 25, 2003, we amend the Commission's Rules to extend the January 1, 2005 ban on integrated navigation devices until July 1, 2006. A synopsis of the Order follows.

2. Section 629 of the Communications Act directs the Commission to adopt regulations to assure the commercial availability of navigation devices equipment used by consumers to access services from multichannel video programming distributors (“MVPDs”). Pursuant to this directive, the Commission issued the Report and Order in the above-captioned proceeding establishing, inter alia, a January 1, 2005, deadline for MVPDs to cease deploying new navigation devices that perform both conditional access functions and other functions in a single integrated device. The Commission adopted the requirement to separate the conditional access function from the basic navigation device (the “host device”) in order to permit unaffiliated manufacturers, retailers, and other vendors to commercially market host devices while allowing MVPDs to retain control over their system security. The Commission later issued a Further Notice of Proposed Rulemaking and Declaratory Ruling (“Further Notice and Declaratory Ruling”), 65 FR 58255, September 28, 2000, that sought comment on the effectiveness of the Commission's navigation device rules, including the 2005 prohibition on integrated devices.

3. Since Section 629 and the Commission's rules were adopted, the cable and consumer electronics industries have made, and continue to make, significant progress in the development of technical standards in this area. However, the commercial market for navigation devices used in conjunction with the distribution of digital video programming remains in its infancy. In an effort to spur the transition to digital television, the cable and consumer electronics industry recently reached a Memorandum of Understanding (“MOU”) on a cable compatibility standard for a unidirectional digital cable television receiver with host device functionality, as well as other unidirectional digital cable products. This standard would allow consumers to directly attach their DTV receivers to cable systems using a point of deployment (“POD”) module and receive one-way cable television services without the need for an external navigation device. The Commission issued a Further Notice of Proposed Rulemaking (“FNPRM”), 68 FR 2278, January 16, 2003, seeking public comment on the MOU issued in the above-captioned proceeding and in the Compatibility Between Cable Systems and Consumer Electronics Equipment proceeding.

4. In its earlier Further Notice and Declaratory Ruling, the Commission had already sought comment, inter alia, on whether the 2005 date for the phase-out of integrated boxes remains appropriate, on what, if any, incentives the requirement creates for the development of a commercial retail market for navigation devices, and on the economic impacts and costs associated with the requirement. In response, the cable industry and set-top box manufacturers generally urged that the 2005 deadline should be eliminated in favor of the continued offering of integrated navigation devices for rent to consumers. Other equipment manufacturing and retail interests urged that the date should be advanced to ensure the timely development of a retail market in host devices. Given the equipment ordering and manufacturing cycles involved, it is necessary at this point to provide guidance as to the Commission's expectations with respect to the 2005 date. Other issues raised in the Further Notice and Declaratory Ruling will be addressed separately at a later time.

5. Commission action in response to the FNPRM could have a significant impact upon the development of a commercial market in separate host devices. In addition, the cable and consumer electronic industries are in the midst of negotiations on specifications for bidirectional digital cable receivers and products which would permit the receipt of advanced cable television services by direct connection to cable systems. This ongoing process, which we are hopeful will produce results in the near term, could impact the development of technical specifications relating to host devices and POD modules. In light of the ongoing notice and comment cycle relating to the FNPRM, the evolving nature of technical specifications relating to navigation devices, and the imminent business ordering and manufacturing cycles facing MVPDs and consumer electronics manufacturers in anticipation of the pending 2005 prohibition, we hereby extend the deadline concerning the prohibition on integrated devices until July 1, 2006.

6. This eighteen month extension should provide adequate time for the parties to complete their ongoing negotiations and for the Commission to make a more knowledgeable decision as to any further changes in the compliance date. By January 1, 2005, the Commission shall complete a reassessment of the state of the navigation devices market and determine whether the designated time frame remains appropriate or whether the ban on integrated devices will no longer be necessary. In the interim, the cable and consumer electronics industries are requested to provide the Commission with status reports on their negotiations on specifications for bidirectional digital cable receivers and products at 90, 180 and 270 day intervals following release of this Order. Following submission of the last status report to the Commission, the public shall have thirty days to submit comments on the status reports and whether any further changes in the phase-out date for integrated devices are warranted.

7. Based upon the record in the above-captioned proceeding and ongoing industry developments, we have concluded that a limited deferral of the date is consistent with the ultimate objectives of this proceeding and our statutory directive to act “in consultation with appropriate industry standard-setting organizations.” We are not persuaded at this point to eliminate the prohibition on integrated devices since future developments in both the marketplace and ongoing industry negotiations may yet dictate a need for this requirement in order to achieve the objectives of Section 629. However, the conclusion of the unidirectional MOU, as well as the ongoing negotiations towards a bidirectional agreement, do reflect progress towards the development of a retail market for consumer electronics equipment with navigation device functionality. As such, we do not believe that advancing the prohibition date, as previously suggested by a number of equipment manufacturing and retail interests, is necessary to further these objectives or would provide sufficient lead time for ordering and manufacturing prior to completion of the next phase of the standardization process.

8. Authority. This document is issued pursuant to authority contained in Sections 4(i), 303(r), and 629 of the Communications Act of 1934, as amended.

9. Accessibility Information. Accessible formats of this Order (computer diskettes, large print, audio recording and Braille) are available to persons with disabilities by contacting Brian Millin, of the Consumer & Governmental Affairs Bureau, at (202) 418-7426, TTY (202) 418-7365, or at bmillin@fcc.gov.

10. Paperwork Reduction Act of 1995 Analysis. This Order does not contain information collection(s) subject to the Paperwork Reduction Act of 1995 (“PRA”), Public Law 104-13.

11. Regulatory Flexibility Act. As required by the Regulatory Flexibility Act, the Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to this Order. The FRFA is set forth further.

12. Accordingly, part 76 of the Commission's rules, set forth in Title 47 of the Code of Federal Regulations, is amended.

13. As required by the Regulatory Flexibility Act of 1980, as amended (“RFA”) an Initial Regulatory Flexibility Analysis (“IRFA”) was incorporated in the Further Notice of Proposed Rulemaking and Declaratory Ruling (“Further Notice and Declaratory Ruling”) The Commission sought written public comment on the proposals in the Further Notice and Declaratory Ruling, including comment on the IRFA. No comments were received on the IRFA. This present Final Regulatory Flexibility Analysis (“FRFA”) conforms to the RFA.

15. Need for, and Objectives of, the Order. Section 629 of the Communications Act of 1934, as amended, requires the Commission to develop rules to assure competitive availability of navigation devices used in conjunction with services provided by multichannel video programming distributors (“MVPDs”). The statutory objective of Section 629 is to assure that navigation devices used by consumers to access a particular MVPD's programming are available to consumers from manufacturers, retailers and other vendors not affiliated with that MVPD. To this end, the Commission adopted a January 1, 2005, deadline for MVPDs to cease deploying new navigation devices that perform both conditional access functions and other functions in a single integrated device. Requiring MVPDs to separate the conditional access function from the basic navigation device (the “host device”) was intended to permit unaffiliated manufacturers, retailers, and other vendors to commercially market host devices while allowing MVPDs to retain control over their system security. In the Further Notice and Declaratory Ruling, the Commission indicated that it would reassess the need for the 2005 separation deadline in light of the evolving marketplace for navigation devices. In response, the cable industry and set-top box manufacturers generally urged that the 2005 deadline should be eliminated in favor of the continued offering of integrated navigation devices for rent to consumers. Other equipment manufacturing and retail interests urged that the date should be advanced to ensure the timely development of a retail market in host devices. Since the Further Notice and Declaratory Ruling was issued, the cable and consumer electronics industries have reached a Memorandum of Understanding (“MOU”) on a cable compatibility standard for a unidirectional digital cable television receiver with host device functionality, as well as other unidirectional digital cable products. This standard, which is the subject of a pending Further Notice of Proposed Rulemaking (“FNPRM”), would allow consumers to directly attach their DTV receivers to cable systems using a point of deployment (“POD”) module and receive one-way cable television services without the need for an external navigation device. The cable and consumer electronic industries are also in the midst of negotiations on specifications for bidirectional digital cable receivers and products which would permit the receipt of advanced cable television services by direct connection to cable systems. This ongoing process, which may produce results in the near term, could impact the development of technical specifications relating to host devices and POD modules. In light of the ongoing notice and comment cycle relating to the FNPRM, the evolving nature of technical specifications relating to navigation devices, and the imminent business ordering and manufacturing cycles facing MVPDs and consumer electronics manufacturers in anticipation of the pending 2005 prohibition, the present Order extends the prohibition on integrated devices until July 1, 2006. This limited deferral of the prohibition date is consistent with the ultimate objectives of this proceeding and our statutory directive to act “in consultation with appropriate industry standard-setting organizations.”

16. Summary of Significant Issues Raised by Public Comments in Response to the IRFA. There were no comments filed that specifically addressed the rules and policies proposed in the IRFA.

17. Description and Estimate of the Number of Small Entities to Which Rules Will Apply. The RFA directs the Commission to provide a description of and, where feasible, an estimate of the number of small entities that will be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (“SBA”).

18. Cable and Other Program Distribution. The SBA has developed a small business size standard for cable and other program distribution services, which includes all such companies generating $12.5 million or less in revenue annually. This category includes, among others, cable operators, direct broadcast satellite (“DBS”) services, home satellite dish (“HSD”) services, multipoint distribution services (“MDS”), multichannel multipoint distribution service (“MMDS”), Instructional Television Fixed Service (“ITFS”), local multipoint distribution service (“LMDS”), satellite master antenna television (“SMATV”) systems, and open video systems (“OVS”). According to the Census Bureau data, there are 1,311 total cable and other pay television service firms that operate throughout the year of which 1,180 have less than $10 million in revenue. We address below each service individually to provide a more precise estimate of small entities.

19. Cable Operators. The Commission has developed, with SBA's approval, our own definition of a small cable system operator for the purposes of rate regulation. Under the Commission's rules, a “small cable company” is one serving fewer than 400,000 subscribers nationwide. We last estimated that there were 1,439 cable operators that qualified as small cable companies. Since then, some of those companies may have grown to serve over 400,000 subscribers, and others may have been involved in transactions that caused them to be combined with other cable operators. Consequently, we estimate that there are fewer than 1,439 small entity cable system operators that may be affected by our action.

20. The Communications Act, as amended, also contains a size standard for a small cable system operator, which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1% of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” The Commission has determined that there are 68,500,000 subscribers in the United States. Therefore, an operator serving fewer than 685,000 subscribers shall be deemed a small operator if its annual revenues, when combined with the total annual revenues of all of its affiliates, do not exceed $250 million in the aggregate. Based on available data, we find that the number of cable operators serving 685,000 subscribers or less totals approximately 1,450. Although it seems certain that some of these cable system operators are affiliated with entities whose gross annual revenues exceed $250,000,000, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

21. Direct Broadcast Satellite (“DBS”) Service. Because DBS provides subscription services, DBS falls within the SBA-recognized definition of cable and other program distribution services. This definition provides that a small entity is one with $12.5 million or less in annual receipts. There are four licensees of DBS services under part 100 of the Commission's Rules. Three of those licensees are currently operational. Two of the licensees that are operational have annual revenues that may be in excess of the threshold for a small business. The Commission, however, does not collect annual revenue data for DBS and, therefore, is unable to ascertain the number of small DBS licensees that could be impacted by these proposed rules. DBS service requires a great investment of capital for operation, and we acknowledge, despite the absence of specific data on this point, that there are entrants in this field that may not yet have generated $12.5 million in annual receipts, and therefore may be categorized as a small business, if independently owned and operated.

22. Home Satellite Dish (“HSD”) Service. Because HSD provides subscription services, HSD falls within the SBA-recognized definition of cable and other program distribution services. This definition provides that a small entity is one with $12.5 million or less in annual receipts. The market for HSD service is difficult to quantify. Indeed, the service itself bears little resemblance to other MVPDs. HSD owners have access to more than 265 channels of programming placed on C-band satellites by programmers for receipt and distribution by MVPDs, of which 115 channels are scrambled and approximately 150 are unscrambled. HSD owners can watch unscrambled channels without paying a subscription fee. To receive scrambled channels, however, an HSD owner must purchase an integrated receiver-decoder from an equipment dealer and pay a subscription fee to an HSD programming package. Thus, HSD users include: (1) Viewers who subscribe to a packaged programming service, which affords them access to most of the same programming provided to subscribers of other MVPDs; (2) viewers who receive only non-subscription programming; and (3) viewers who receive satellite programming services illegally without subscribing. Because scrambled packages of programming are most specifically intended for retail consumers, these are the services most relevant to this discussion.

23. Multipoint Distribution Service (“MDS”), Multichannel Multipoint Distribution Service (“MMDS”) Instructional Television Fixed Service (“ITFS”) and Local Multipoint Distribution Service (“LMDS”). MMDS systems, often referred to as “wireless cable,” transmit video programming to subscribers using the microwave frequencies of the MDS and ITFS. LMDS is a fixed broadband point-to-multipoint microwave service that provides for two-way video telecommunications.

24. In connection with the 1996 MDS auction, the Commission defined small businesses as entities that had annual average gross revenues of less than $40 million in the previous three calendar years. This definition of a small entity in the context of MDS auctions has been approved by the SBA. The MDS auctions resulted in 67 successful bidders obtaining licensing opportunities for 493 Basic Trading Areas (“BTAs”). Of the 67 auction winners, 61 met the definition of a small business. MDS also includes licensees of stations authorized prior to the auction. As noted, the SBA has developed a definition of small entities for pay television services, which includes all such companies generating $12.5 million or less in annual receipts. This definition includes multipoint distribution services, and thus applies to MDS licensees and wireless cable operators that did not participate in the MDS auction. Information available to us indicates that there are approximately 850 of these licensees and operators that do not generate revenue in excess of $12.5 million annually. Therefore, for purposes of this analysis, we find there are approximately 850 small MDS providers as defined by the SBA and the Commission's auction rules.

25. The SBA definition of small entities for cable and other program distribution services, which includes such companies generating $12.5 million in annual receipts, seems reasonably applicable to ITFS. There are presently 2,032 ITFS licensees. All but 100 of these licenses are held by educational institutions. Educational institutions are included in the definition of a small business. However, we do not collect annual revenue data for ITFS licensees, and are not able to ascertain how many of the 100 non-educational licensees would be categorized as small under the SBA definition. Thus, we tentatively conclude that at least 1,932 licensees are small businesses.

26. Additionally, the auction of the 1,030 LMDS licenses began on February 18, 1998, and closed on March 25, 1998. The Commission defined “small entity” for LMDS licenses as an entity that has average gross revenues of less than $40 million in the three previous calendar years. An additional classification for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding calendar years. These regulations defining “small entity” in the context of LMDS auctions have been approved by the SBA. There were 93 winning bidders that qualified as small entities in the LMDS auctions. A total of 93 small and very small business bidders won approximately 277 A Block licenses and 387 B Block licenses. On March 27, 1999, the Commission re-auctioned 161 licenses; there were 40 winning bidders. Based on this information, we conclude that the number of small LMDS licenses will include the 93 winning bidders in the first auction and the 40 winning bidders in the re-auction, for a total of 133 small entity LMDS providers as defined by the SBA and the Commission's auction rules.

27. In sum, there are approximately a total of 2,000 MDS/MMDS/LMDS stations currently licensed. Of the approximate total of 2,000 stations, we estimate that there are 1,595 MDS/MMDS/LMDS providers that are small businesses as deemed by the SBA and the Commission's auction rules.

28. Satellite Master Antenna Television (“SMATV”) Systems. The SBA definition of small entities for cable and other program distribution services includes SMATV services and, thus, small entities are defined as all such companies generating $12.5 million or less in annual receipts. Industry sources estimate that approximately 5,200 SMATV operators were providing service as of December 1995. Other estimates indicate that SMATV operators serve approximately 1.5 million residential subscribers as of July 2001. The best available estimates indicate that the largest SMATV operators serve between 15,000 and 55,000 subscribers each. Most SMATV operators serve approximately 3,000-4,000 customers. Because these operators are not rate regulated, they are not required to file financial data with the Commission. Furthermore, we are not aware of any privately published financial information regarding these operators. Based on the estimated number of operators and the estimated number of units served by the largest ten SMATVs, we believe that a substantial number of SMATV operators qualify as small entities.

29. Open Video Systems (“OVS”). Because OVS operators provide subscription services, OVS falls within the SBA-recognized definition of cable and other program distribution services. This definition provides that a small entity is one with $12.5 million or less in annual receipts. The Commission has certified 25 OVS operators with some now providing service. Affiliates of Residential Communications Network, Inc. (“RCN”) received approval to operate OVS systems in New York City, Boston, Washington, D.C. and other areas. RCN has sufficient revenues to assure us that they do not qualify as small business entities. Little financial information is available for the other entities authorized to provide OVS that are not yet operational. Given that other entities have been authorized to provide OVS service but have not yet begun to generate revenues, we conclude that at least some of the OVS operators qualify as small entities.

30. Electronics Equipment Manufacturers. Rules adopted in this proceeding could apply to manufacturers of DTV receiving equipment and other types of consumer electronics equipment. The SBA has developed definitions of small entity for manufacturers of audio and video equipment as well as radio and television broadcasting and wireless communications equipment. These categories both include all such companies employing 750 or fewer employees. The Commission has not developed a definition of small entities applicable to manufacturers of electronic equipment used by consumers, as compared to industrial use by television licensees and related businesses. Therefore, we will utilize the SBA definitions applicable to manufacturers of audio and visual equipment and radio and television broadcasting and wireless communications equipment, since these are the two closest NAICS Codes applicable to the consumer electronics equipment manufacturing industry. However, these NAICS categories are broad and specific figures are not available as to how many of these establishments manufacture consumer equipment. According to the SBA's regulations, an audio and visual equipment manufacturer must have 750 or fewer employees in order to qualify as a small business concern. Census Bureau data indicates that there are 554 U.S. establishments that manufacture audio and visual equipment, and that 542 of these establishments have fewer than 500 employees and would be classified as small entities. The remaining 12 establishments have 500 or more employees; however, we are unable to determine how many of those have fewer than 750 employees and therefore, also qualify as small entities under the SBA definition. Under the SBA's regulations, a radio and television broadcasting and wireless communications equipment manufacturer must also have 750 or fewer employees in order to qualify as a small business concern. Census Bureau data indicates that there 1,215 U.S. establishments that manufacture radio and television broadcasting and wireless communications equipment, and that 1,150 of these establishments have fewer than 500 employees and would be classified as small entities. The remaining 65 establishments have 500 or more employees; however, we are unable to determine how many of those have fewer than 750 employees and therefore, also qualify as small entities under the SBA definition. We therefore conclude that there are no more than 542 small manufacturers of audio and visual electronics equipment and no more than 1,150 small manufacturers of radio and television broadcasting and wireless communications equipment for consumer/household use.

31. Description of Projected Reporting, Recordkeeping and other Compliance Requirements. The amended rule does not impose any additional reporting or recordkeeping requirements. To the extent that compliance may require the manufacture and purchase of non-integrated host devices by multichannel video programming distributors (“MVPDs”) by July 1, 2006, the present action does not impose any new requirements on consumer electronics equipment manufacturers or MVPDs, but rather extends the existing compliance date by eighteen months. We believe that the resulting impact on small entities is favorable to the extent that it provides them with additional time to come into compliance with the prohibition on integrated devices.

32. Steps Taken to Minimize Significant Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

33. To the extent that compliance with the amended prohibition deadline may require the manufacture and purchase of non-integrated host devices by multichannel video programming distributors (“MVPDs”) by July 1, 2006, the present action does not impose any new requirements on consumer electronics equipment manufacturers or MVPDs, but rather extends the existing compliance date by eighteen months. We believe that the resulting impact on small entities is favorable to the extent that it provides them with additional time to come into compliance with the prohibition on integrated devices. When the original prohibition deadline was adopted, we noted, inter alia, that Section 629 includes provisions which may lessen compliance impact on small entities, including Section 629(c), which specifies that the Commission shall waive its implementing regulations when necessary for an MVPD to develop new or improved services, and Section 629(e), which requires the Commission to sunset its implementing rules when certain conditions are met.

34. Report to Congress: The Commission will send a copy of the Order (“Order”), including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Order, including this FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register .

Regulations implemented under the authority of the Atlantic Tunas Convention Act (16 U.S.C. 971 et seq. ) and the Magnuson-Stevens Conservation and Management Act (16 U.S.C. 1801 et seq. ) governing the harvest of BFT by persons and vessels subject to U.S. jurisdiction are found at 50 CFR part 635. Section 635.27 subdivides the U.S. BFT quota recommended by the International Commission for the Conservation fo Atlantic Tunas (ICCAT) among various domestic fishing categories, and General category effort controls (including time-period subquotas and restricted fishing days (RFDs)) are specified annually under 50 CFR 635.23(a) and 635.27(a).

Implementing regulations for the Atlantic tuna fisheries at § 635.23 set the daily retention limits for BFT and allow for adjustments to the daily retention limits in order to provide for maximum utilization of the quota over the longest possible period of time. NMFS may increase or reduce the per angler retention limit for any size class BFT or may change the per angler limit to a per boat limit or the per boat limit to a per angler limit. Size class categories of BFT are defined as follows: school size BFT measure 27 to less than 47 inches (69 to less than 119 cm) curved fork length (CFL); large school BFT measure 47 to less than 59 inches (119 to less than 150 cm) CFL; small medium BFT measure 59 to less than 73 inches (150 to less than 185 cm) CFL; large medium BFT measure 73 to less than 81 inches (185 to less than 206 cm) CFL; and giant BFT measure 81 inches or greater (206 cm or greater) CFL.

A recommendation of ICCAT requires that NMFS limit the catch of school BFT to no more than eight percent by weight of the total domestic landings quota over each four-consecutive-year period. NMFS is implementing this ICCAT recommendation through annual and inseason adjustments to the school BFT retention limits, as necessary, and through the establishment of a school BFT reserve (64 FR 29090, May 28, 1999; 64 FR 29806, June 3, 1999).

The ICCAT recommendation allows for interannual adjustments for overharvests and underharvests, provided that the eight percent landings limit is not exceeded over the applicable 4-consecutive-year period. The 2003 fishing year is the first year in the current accounting period. This multi-year block quota approach provides NMFS with the flexibility to enhance fishing opportunities and to collect information on a broad range of BFT size classes.

Regulations at 50 CFR 635.23(b) restrict vessels fishing under the BFT Angling category quota to one BFT per vessel per day, which may be from the school, large school, or small medium category and, in addition, one large medium or giant BFT per vessel per year. This retention limit is subject to adjustment to provide for maximum utilization of the quota and enhanced fishing opportunities over the range of the recreational fisheries.

In 2002, NMFS increased the Angling category daily retention limit to four school, large school, or small medium BFT from June 15 through October 31, which is when recreational-sized BFT are on the fishing grounds, and then reduced it to one large school, or small medium BFT for November 1, 2002 through May 31, 2003 (67 FR 39869, June 11, 2002). The 2002 fishing year ended on May 31, 2003, and there is quota carry-over in the Angling category. Because of the large amount of quota available this year in the Angling category (over 499.2 metric tons (mt), 231 of which is carry-over from 2002) NMFS has determined that it is appropriate to adjust the recreational retention limit.

Since June 1, 2003, the retention limit of one school, large school or small medium as specified at 50 CFR 635.23(b) has been in effect. Effective June 15 through October 31, 2003, NMFS adjusts the daily retention limit for all areas to one BFT per person with a maximum of six BFT per vessel, in any combination of the school, large school, or small medium size classes. This limit applies to all vessels permitted in the Atlantic HMS Angling category and to vessels permitted in the Atlantic HMS Charter/Headboat category.

Over the last several years NMFS has also received comments that a recreational retention limit of three or four BFT per vessel per day does not provide reasonable fishing opportunities for headboats, which may carry up to 40 passengers on a tuna fishing trip. Headboats are defined as vessels that posses an Atlantic HMS Charter/Headboat category permit and that are inspected and licenced by the Coast Guard to carry more than six passengers. Headboat operators have requested a modified retention limit for their vessels that recognizes the high numbers of passengers they carry. On December 18, 2002, NMFS published a final rule that clarified the procedures to set differential BFT retention limits to provide equitable fishing opportunities for all types of fishing vessels (67 FR 77434). As noted above, the 2002 season closed on May 31, 2003, and there is quota carry-over from 2002. Because of the large amount of quota available this year in the Angling category (over 499.2 metric tons (mt), 231 mt of which is carry-over from 2002), NMFS has determined that it is appropriate to implement an alternative retention limit for headboats.

Effective August 15, 2003, which is when headboats normally target BFT, the daily recreational retention limit for headboats in all areas will be one BFT per passenger (not including Captain and crew), measuring 27 to less than 73 inches curved fork length, with a maximum of 35 BFT per vessel. This limit applies to all headboats defined as vessels that possess an Atlantic HMS Charter/Headboat permit and that are inspected and licenced by the Coast Guard to carry more than six passengers.

From November 1, 2003, through May 31, 2004, the daily retention limit for all vessels fishing under the Angling category quota is one large school or small medium BFT per vessel. Regardless of the length of the trip, no more than a single day's allowable catch may be possessed or retained.

NMFS selected the daily retention limits and the duration of the daily retention limit adjustments after examining past catch and effort rates and the available quota for the 2003 fishing year. NMFS will continue to monitor the Angling category fishery closely through the Automated Landings Reporting System, the state harvest tagging programs in North Carolina and Maryland, and the Large Pelagics Survey. Depending on the level of fishing effort and catch rates of BFT, NMFS may determine that an interim closure or an additional retention limit adjustment is necessary to enhance scientific data collection from, and fishing opportunities in, all geographic areas. Additionally, NMFS may determine that an allocation from the school BFT reserve is warranted to further fishery management objectives.