A proposal to amend 14 CFR part 39 to include an AD for Eurocopter Model SA-365N, N1, AS-365N2, AS 365 N3, SA-366G1, AS355 F, F1, F2, N, and EC130 B4 helicopters with certain servocontrols installed was published in the Federal Register on February 14, 2003 (68 FR 7451). That action proposed to require removing the servocontrol and replacing it with a servocontrol that does not fall within the “Applicability” of the AD at specified intervals.

The Direction Generale De L'Aviation Civile (DGAC), the airworthiness authority for France, notified the FAA that an unsafe condition may exist on Eurocopter Model AS 365 N, EC 130, AS 355, and SA 366 helicopters. The DGAC advises of a report of incorrect tightening torque load found in service on servocontrols that were overhauled by Hawker Pacific Aerospace.

Eurocopter has issued the following alert telexes, all dated April 29, 2002, which specify removing the servocontrols and returning them to the Hawker Pacific Aerospace:

• Alert Telex No. 67.00.08 for Model AS-365N, N1, N2, and N3 helicopters;

• Alert Telex No. 67.03 for Model AS-366G1 helicopters;

• Alert Telex No. 67.00.23 for Model AS355F, F1, F2, and N helicopters;

• Alert Telex No. 67A001 for Model EC130 B4 helicopters.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

On July 10, 2002, the FAA issued a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs the FAA's AD system. The regulation now includes material that relates to altered products, special flight permits, and alternative methods of compliance. However, for clarity and consistency in this final rule, we have retained the language of the NPRM regarding that material.

The FAA estimates that 252 helicopters of U.S. registry will be affected by this AD, that it will take approximately 8 work hours per helicopter to accomplish the required actions, and that the average labor rate is $60 per work hour. Required parts will cost approximately $6,853, but the manufacturer has stated in the service information that it will rework the servocontrols at no cost to the owner/operator. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be $1,847,916, assuming no costs are covered by the manufacturer's warranty.

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

For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas; or at the Office of the Federal Register, 800 North Capitol Street, NW., suite 700, Washington, DC.

The Civil Aviation Authority (CAA), which is the airworthiness authority for the U.K., recently notified the FAA that an unsafe condition may exist on RR RB211-524G2, -524G2-T, -524G3, -524G3-T, -524H, -524H-T, -524H2, and -524H2-T series, and models RB211 Trent 768-60, -772-60, and 772B-60 turbofan engines with HPC stage 1 through stage 6 drums, P/Ns FK25502 and FW20195 installed. The CAA advises that reports have been received of a number of RR Trent 700 series HPC rotor stage 1 through stage 6 drums found with cracks in the blade loading slots. The RB211-524G2, -524G2-T, -524G3, -524G3-T, -524H, -524H-T, -524H2, and -524H2-T series turbofan engines use an identical HPC rotor stage 1 through stage 6 drum. To date, one drum has been found with cracks. The manufacturer's investigation has revealed that the mechanism inducing the cracking is a function of engine operating time and temperature, and is initiating cracks in the area of peak stress location. This AD requires removal from service of affected HPC rotor stage 1 through stage 6 drums at a newly established reduced cyclic life limit. We are requiring certain actions in this AD to prevent crack initiation and propagation leading to uncontained failure of the HPC rotor stage 1 through stage 6 drum, and damage to the airplane.

Although none of these affected engine models are used on any airplanes that are registered in the United States, the possibility exists that the engine models could be used on airplanes that are registered in the United States in the future. Since an unsafe condition has been identified that is likely to exist or develop on other Rolls-Royce plc RB211-524G2, -524G2-T, -524G3, -524G3-T, -524H, -524H-T, -524H2, and -524H2-T series, and models RB211 Trent 768-60, 772-60, and 772B-60 turbofan engines of this same type design, we are issuing this AD to prevent crack initiation and propagation leading to uncontained failure of the HPC rotor stage 1 through stage 6 drum, and damage to the airplane. This AD requires removal of HPC rotor stage 1 through stage 6 drums, P/Ns FK25502 and FW20195, at a newly established reduced cyclic life limit of 4,200 cycles-since-new.

This engine model is manufactured in the U.K., and is type certificated for operation in the United States under the provisions of § 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. In keeping with this bilateral airworthiness agreement, the CAA has kept the FAA informed of the situation described above. We have examined the findings of the CAA, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

Since there are currently no domestic operators of this engine model, notice and opportunity for prior public comment are unnecessary. Therefore, a situation exists that allows the immediate adoption of this regulation.

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

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES . Include “AD Docket No. 2003-NE-20-AD” in the subject line of your comments. If you want us to acknowledge receipt of your mailed comments, send us a self-addressed, stamped postcard with the docket number written on it; we will date-stamp your postcard and mail it back to you. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify it. If a person contacts us through a nonwritten communication, and that contact relates to a substantive part of this AD, we will summarize the contact and place the summary in the docket. We will consider all comments received by the closing date and may amend the AD in light of those comments.

We are reviewing the writing style we currently use in regulatory documents. We are interested in your comments on whether the style of this document is clear, and your suggestions to improve the clarity of our communications with you. You may get more information about plain language at http://www.plainlanguage.gov .

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that the regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES . Include “AD Docket No. 2003-NE-20-AD” in your request.

This AD applies to the following McCauley Systems, Inc. propeller assemblies that are installed on BAE Systems (Operations) Limited Jetstream Model 4101 airplanes:

• Hub Model B5JFR36C1101, with Model 114GC series propeller blades,

• Hub Model C5JFR36C1102, with Model L114GC series propeller blades, and

• Hub Model B5JFR36C1103, with Model 114HC series propeller blades,

• Hub Model C5JFR36C1104, with Model L114HC series propeller blades. This AD requires a one time FPI of the retention area of the propeller blade. A July 1, 2003, report of vibration prompted this AD. An operator of a Jetstream Model 4101 airplane notified McCauley Propeller Systems, Inc. of a vibration during flight. Investigation found a crack that appeared to extend through the butt of the propeller blade for about one-half of the circumference of the blade shank. We also received two reports of cracks in the hubs of the same propeller models that may be related to this issue. We are requiring the actions specified in this AD to detect cracks in the propeller blade shank that could cause a failure of the propeller blade and loss of control of the airplane.

We have reviewed and approved the technical contents of McCauley Alert Service Bulletin (ASB) ASB246B, Revision 2, dated July 11, 2003, that describes procedures for FPI of the propeller blade.

McCauley ASB ASB246B, Revision 2, dated July 11, 2003, requires the operator to perform a blade shake check at 72-hour intervals. This AD does not require the blade shake check.

The unsafe condition described previously is likely to exist or develop on other McCauley Systems, Inc. propeller hub Models B5JFR36C1101, C5JFR36C1102, B5JFR36C1103, and C5JFR36C1104, of the same type design that are installed on BAE Systems (Operations) Limited Jetstream Model 4101 airplanes. We are issuing this AD to detect cracks in the propeller blade shank that could cause a failure of the propeller blade and loss of control of the airplane. You must use the service information described previously to perform these actions.

Since an unsafe condition exists that requires the immediate adoption of this AD, we have found that notice and opportunity for public comment before issuing this AD are impracticable, and that good cause exists for making this amendment effective in less than 30 days.

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

These actions are interim actions and we may take further rulemaking actions in the future.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES. Include “AD Docket No. 2003-NE-32-AD” in the subject line of your comments. If you want us to acknowledge receipt of your mailed comments, send us a self-addressed, stamped postcard with the docket number written on it; we will date-stamp your postcard and mail it back to you. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify it. If a person contacts us verbally, and that contact relates to a substantive part of this AD, we will summarize the contact and place the summary in the docket. We will consider all comments received by the closing date and may amend the AD in light of those comments.

We are reviewing the writing style we currently use in regulatory documents. We are interested in your comments on whether the style of this document is clear, and your suggestions to improve the clarity of our communications with you. You may get more information about plain language at http://www.faa.gov/language and http://www.plainlanguage.gov.

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that the regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES. Include “AD Docket No. 2003-NE-32-AD” in your request.

On May 22, 2003, the FAA proposed to amend part 71 of the Federal Aviation Regulations (14 CFR part 71) by amending Class E5 airspace at Augusta, GA, (68 FR 27946). This action provides adequate Class E5 airspace for IFR operations at Augusta Regional Airport At Bush Field. Designations for Class E are published in FAA Order 7400.9K, dated August 30, 2002, and effective September 16, 2002, which is incorporated by reference in 14 CFR part 71.1. The Class E designations listed in this document will be published subsequently in the Order.

Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the FAA. No comments objecting to the proposal were received.

This amendment to part 71 of the Federal Aviation Regulations (14 CFR part 71) amends Class E5 airspace at Augusta, GA.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (30 does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The Securities and Exchange Commission (“Commission” or “SEC”) is adopting technical amendments to rules 0-4, 203-1, 203-3, and 204-1 [17 CFR 275.04, 275.203-1, 275.203-3, and 275.204-1] and to Forms ADV, ADV-W and ADV-H [17 CFR 279.1, 279.2 and 279.3] under the Investment Advisers Act of 1940 [15 U.S.C. 80b] (“Advisers Act” or “Act”). The Commission is also withdrawing rule 203A-6 [17 CFR 275.203A-6] under the Advisers Act.

Investment advisers today utilize the Investment Adviser Registration Depository (“IARD”), a one-stop electronic filing system, to make registration and “notice” filings with the SEC and state regulators over the Internet. In conjunction with launching electronic filing for advisers in 2000, the Commission adopted several rules and rule amendments under the Advisers Act, related to the IARD. 1 Certain administrative issues have arisen regarding these revised rules and forms, and we are making technical amendments to address these issues. 2

We are amending rule 0-4 to extend filing deadlines when the IARD is closed to filings. Electronic filings otherwise required to be made in late December, when the IARD is shut down to process state renewals, must be filed on or before the following January 7. Other IARD filings required to be made on a day the IARD is closed to filings will be considered timely if filed on the following business day. 3

We are deleting language in rule 204-1(b) that set out the transition period to IARD for SEC-registered advisers; this transition period ended April 30, 2001. 4 We are also amending the rule to clarify that advisers must file all amendments to Part 1A of Form ADV electronically with the IARD absent a continuing hardship exemption.

We are revising the instructions to Form ADV, Part 1A, Items 7A and 7B. The change to Item 7A accommodates advisers that share personnel with an affiliated broker-dealer. NASD will accept a single Form U-4 filing, through IARD, to register an individual both as the advisory firm's investment adviser representative and as a registered representative of the advisory firm's affiliated broker-dealer, provided the adviser names the affiliated brokerage firm on its Form ADV. 5 Duplicative Form U-4 filings by an adviser and its affiliated broker-dealer create unnecessary burdens; as a convenience to filers, we are amending Part 1A, Item 7 to permit (but not require) an adviser to name, on Section 7.A. of Schedule D, any related persons that are broker-dealers.

Another change, to Item 7B, allows an adviser to cross-reference to the Form ADV of its SEC-registered affiliate in order to disclose the limited partnerships and limited liability companies that the affiliate advises. 6 An SEC-registered adviser may omit, from Section 7.B. of Schedule D, the details of LPs or LLCs managed by its related persons that are also SEC-registered advisers, so long as the adviser explains in the miscellaneous section of Schedule D that the detailed list is available on the related person's Form ADV. 7 In order to pass a “completeness check” on the IARD, however, all advisers that answer “yes” to Item 7B must list at least one LP or LLC in Section 7.B of Schedule D. The IARD will not allow an adviser to file a Form ADV that fails the completeness check.

The technical amendments adopted today shall become effective July 11, 2003. An adviser is not required to file a separate amendment to its Form ADV solely to reflect these revisions. However, when it next files a Form ADV (including amending its Form ADV), Form ADV-W or Form ADV-H on or after the effective date, the adviser must use the rules and forms as revised. 8 These amendments make minor, technical changes to the manner in which advisers submit registration information to the Commission through the IARD, or eliminate outdated or confusing material contained in the rules and instructions for submitting such information. Therefore, the Commission finds that there is good cause to adopt them as final rules. Moreover, the amendments impose no new obligations on advisers; they are “rules of agency * * * procedure” that fall within exceptions to the general notice and comment requirements of the Administrative Procedure Act. 9

Section 202(c) of the Advisers Act requires the Commission, when engaging in rulemaking that requires it to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. 10

As discussed above, the rule and form amendments will aid advisers in the completion of Forms ADV, ADV-W and ADV-H. The technical amendments may enhance efficiency further by clarifying the forms and their instructions, thereby improving an adviser's understanding of IARD and eliminating duplicative filings.

Because the rule and form amendments apply equally to all advisers, we do not anticipate that any competitive disadvantages would be created. We do not expect the amendments, as technical changes, to have an effect on capital formation or the capital markets.

We are adopting amendments to rule 0-4, General Requirements of Papers, under sections 204 and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-4 and 80b-11(a)].

We are adopting amendments to rule 203-1, Application for Investment Adviser Registration, under sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].

We are adopting amendments to rule 203-3, Hardship Exemptions, under sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].

We are withdrawing rule 203A-6 [17 CFR 275.203A-6], Transition Period for Ohio Investment Advisers, under section 203(h) [15 U.S.C. 80b-3(h)]; section 203A(c) [15 U.S.C. 80b-3a(c)]; and section 211(a) [15 U.S.C. 80b-11(a)] of the Investment Advisers Act of 1940.

We are adopting amendments to rule 204-1, Amendments to Application for Registration, under sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].

We are adopting amendments to rule 279.1, Form ADV, under section 19(a) of the Securities Act of 1933 [15 U.S.C. 77s(a)], sections 23(a) and 28(e)(2) of the Securities Exchange Act of 1934 [15 U.S.C. 78w(a) and 78bb(e)(2)], section 319(a) of the Trust Indenture Act of 1939 [15 U.S.C. 77sss(a)], section 38(a) of the Investment Company Act of 1940 [15 U.S.C. 78a-37(a)], and sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].

We are adopting amendments to rule 279.2, Form ADV-W, under sections 203(h), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(h), 80b-4, and 80-11(a)].

We are adopting amendments to rule 279.3, Form ADV-H, under sections 203(c)(1), 204, and 211(a) of the Investment Advisers Act of 1940 [15 U.S.C. 80b-3(c)(1), 80b-4, and 80b-11(a)].

As published, the final regulations contain errors which need to be clarified.

In FR Doc. 03-14107, appearing on page 33381 in the Federal Register of June 4, 2003, the following corrections are made:

Ivy Laboratories, Division of Ivy Animal Health, Inc., 8857 Bond St., Overland Park, KS 66214, filed a supplement to ANADA 200-346 for COMPONENT TE-H (trenbolone acetate and estradiol), a subcutaneous implant used for increased rate of weight gain and improved feed efficiency in heifers fed in confinement for slaughter. The supplemental ANADA provides for the addition of a pellet containing 29 milligrams tylosin tartrate to the approved implant. The supplemental application is approved as of April 18, 2003, and the regulations are amended in 21 CFR 522.2477 to reflect the approval. The basis of approval is discussed in the freedom of information summary.

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

Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 360b(c)(2)(F)(iii)), this approval qualifies for 3 years of marketing exclusivity beginning April 18, 2003.

The agency has determined under 21 CFR 25.33(a)(1) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

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

This document amends section 1361 of the Income Tax Regulations (26 CFR part 1) regarding a qualified subchapter S trust (QSST) election for testamentary trusts and the definition of testamentary trusts.

On August 24, 2001, a notice of proposed rulemaking (REG-106431-01, 2001-2 C.B. 272) relating to QSST elections for testamentary trusts and the period for which former qualified subpart E trusts and testamentary trusts may be permitted shareholders under section 1361 was published in the Federal Register (66 FR 44565). No public hearing was requested. Comments responding to the proposed regulations were received. After consideration of the comments, the proposed regulations are adopted as revised by this Treasury decision.

Section 1361(a) defines an S corporation as a small business corporation for which an election under section 1362(a) is in effect for the year. Section 1361(b) provides, in part, that a small business corporation is a domestic corporation that is not an ineligible corporation and that does not have as a shareholder a person (other than an estate, a trust described in section 1361(c)(2), or an organization described in section 1361(c)(6)) who is not an individual. Under section 1361(c)(2), qualified subpart E trusts and testamentary trusts are permitted S corporation shareholders. A qualified subpart E trust is a trust, all of which is treated (under subpart E of part I of subchapter J, chapter 1) as owned by an individual who is a citizen or resident of the United States. A qualified subpart E trust that continues in existence after the death of the deemed owner (former qualified subpart E trust) is a permitted shareholder, but only for the 2-year period beginning on the day of the deemed owner's death. A testamentary trust is a trust to which S corporation stock is transferred pursuant to the terms of a will, but only for the 2-year period beginning on the day the stock is transferred to the trust.

These final regulations are substantially the same as the proposed regulations, but reflect certain revisions based on the comments that were received. The revisions are discussed below.

The proposed regulations provide that a former qualified subpart E trust is a permitted shareholder of an S corporation for the 2-year period beginning on the day of the deemed owner's death. In addition, the proposed regulations provide that a testamentary trust is also a permitted shareholder of an S corporation for the 2-year period beginning on the day the stock is transferred to the testamentary trust. If a former qualified subpart E trust or a testamentary trust continues to own stock after the expiration of the 2-year period during which it is a permitted shareholder, the corporation's S election will terminate unless the trust otherwise qualifies as a permitted shareholder. The trust might otherwise qualify as a permitted shareholder if, for example, the trust is a QSST that has an election under section 1361(d)(2) in effect at the end of the 2-year period (an electing QSST).

One commentator suggested that certain sections of the proposed regulations should be clarified because those sections indicate that if a former qualified subpart E trust or a testamentary trust continues to own stock of an S corporation after the 2-year period and is not otherwise a qualified subpart E trust or an electing QSST, the trust is not a permitted shareholder. The commentator noted that a former qualified subpart E trust or a testamentary trust that continues to own stock after the 2-year period could also be a permitted shareholder if the trust is an electing small business trust (ESBT) at the end of the 2-year period. The sections of the proposed regulations for which the commentator suggested clarification, however, address rules regarding QSSTs. Section 1.1361-1(m) of the Income Tax Regulations addresses rules regarding ESBTs. The final regulations clarify that if a former qualified subpart E trust or a testamentary trust continues to own stock of an S corporation after the 2-year period and is not otherwise a qualified subpart E trust, an electing QSST, or an ESBT, the trust is not a permitted shareholder. Additionally, the final regulations clarify that a QSST or an ESBT election may be made for a former qualified subpart E trust or a testamentary trust that qualifies as a QSST or an ESBT.

Another commentator suggested that after August 5, 1997, the effective date of section 645, a testamentary trust should also include a trust that receives S corporation stock from a qualified revocable trust (QRT) for which an election under section 645 has been made (an electing trust). Under section 645, an electing trust is treated and taxed as part of the decedent's estate (and not as a separate trust) for purposes of subtitle A of the Code for all taxable years of the estate during the section 645 election period. The section 645 election period begins on the date of the decedent's death and generally terminates on the day before the applicable date described in section 645(b)(2). Section 1.645-1(h)(1) provides that on the close of the last day of the election period the share comprising the electing trust is deemed to be distributed to a new trust.

Thus, according to the commentator, the final regulations should clarify that testamentary trusts include trusts to which S corporation stock is transferred pursuant to the terms of the electing trust during the section 645 election period as well as new trusts to which S corporation stock is deemed to be distributed at the end of the section 645 election period. The commentator noted that the purpose of section 645 is to create parity between electing trusts and wills. In furtherance of this purpose, the commentator reasoned that if an electing trust transfers or is deemed to distribute S corporation stock to a new trust, the new trust should be a permitted shareholder for the 2-year period beginning on the day the stock is transferred or deemed distributed to the new trust. The final regulations adopt the commentator's suggestion to clarify that a testamentary trust also includes a trust that receives S corporation stock from an electing trust.

The IRS is considering issuing guidance on whether a trust that has a QSST or an ESBT election in effect may make an election under section 645.

Except where otherwise specifically provided, these final regulations are applicable on and after July 17, 2003. In addition, the IRS will not challenge the treatment of certain testamentary trusts that receive S corporation stock from an electing trust under section 645 as permitted shareholders of the S corporation for periods after August 5, 1997, and before the earlier of July 17, 2003, or the effective date of any QSST or ESBT election for the trust.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 533(b) of the Administrative Procedures Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding these regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

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

Paperwork Reduction Act

The collections of information contained in these final regulations have been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-1795. Responses to these collections of information are required to obtain a benefit (to be treated as a 10 or more employer plan excepted from the deduction limits for employer contributions to a welfare benefit fund).

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

The estimated annual burden per respondent and/or recordkeeper varies, depending on individual circumstances, with an estimated average of 25 hours.

Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be sent to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:T:T:SP Washington, DC 20224, and to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503.

Books or records relating to these collections of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

This document contains amendments to the Income Tax Regulations under section 419A of the Internal Revenue Code (Code). Sections 419 and 419A, which were added to the Code by section 511 of the Deficit Reduction Act of 1984 (Pub. L. 98-369, 98 Stat. 494) set forth special rules limiting the deduction of employer contributions to a welfare benefit fund. Pursuant to section 419A(f)(6), the rules of sections 419 and 419A do not apply in the case of a welfare benefit fund that is part of a plan to which more than one employer contributes and to which no employer normally contributes more than 10 percent of the contributions of all employers under the plan, but only if the plan does not maintain experience-rating arrangements with respect to individual employers.

Section 419A(i) of the Code provides that the Secretary shall prescribe regulations as may be appropriate to carry out the purposes of sections 419 and 419A. Section 419A(i) further provides that the regulations may provide that the plan administrator of any welfare benefit fund to which more than one employer contributes shall submit such information to the employers contributing to the fund as may be necessary to enable the employers to comply with the provisions of section 419A.

The legislative history of sections 419 and 419A of the Code explains that the principal purpose of the deduction limits for contributions to welfare benefit funds “is to prevent employers from taking premature deductions, for expenses which have not yet been incurred, by interposing an intermediary organization which holds assets which are used to provide benefits to the employees of the employer.” H.R. Conf. Rep. No. 861, 98th Cong., 2d Sess. 1155 (1984), 1984-3 C.B. (Vol. 2) 1, 409.

The legislative history of section 419A(f)(6) of the Code explains that the reason the deduction limits of sections 419 and 419A do not generally apply to a fund that is part of a 10 or more employer plan is that “the relationship of a participating employer to [such a] plan often is similar to the relationship of an insured to an insurer.” H.R. Conf. Rep. No. 861, 98th Cong., 2d Sess. 1159 (1984), 1984-3 C.B. (Vol. 2) 1, 413. Thus, the premise underlying the exception is that no special limitation on deductions is necessary in situations where a payment by an employer in excess of the minimum necessary to currently provide for the benefits under the plan is effectively lost to that employer, because the economics of the plan will discourage excessive contributions.

The 10 or more employer plan exception to the deduction limitation does not apply, however, where the plan maintains experience-rating arrangements with respect to individual employers. The reason for excluding these plans from the exception is that an experience-rating arrangement with respect to an individual employer changes the economics of the plan and allows an employer to contribute an amount in excess of the minimum amount necessary to provide for the current benefits with the confidence that the excess will inure to the benefit of that employer as the excess is used to provide benefits to its employees. The legislative history notes that making the exception to the deduction limits unavailable to plans that determine contributions on the basis of experience rating is consistent with the general rules relating to the definition of fund because “the employer's interest with respect to such a plan is more similar to the relationship of an employer to a fund than an insured to an insurer.” H.R. Conf. Rep. No. 861, 98th Cong., 2d Sess. 1159 (1984), 1984-3 C.B. (Vol. 2) 1, 413.

In Notice 95-34 (1995-1 C.B. 309), the IRS identified certain types of arrangements that do not satisfy the requirements of section 419A(f)(6). Those arrangements typically require large employer contributions relative to the cost of the coverage for the benefits to be provided under the plan. The plans identified in the Notice often maintain separate accounting of the assets attributable to the contributions made by each participating employer. 1 In some cases an employer's contributions are related to the claims experience of its employees, while in other cases benefits are reduced if assets derived from an employer's contributions are insufficient to fund the benefits to that employer's employees. Thus, a particular employer's contributions or its employees' benefits may be determined in a way that insulates the employer to a significant extent from the experience of other participating employers.

The arrangements described in Notice 95-34 and similar arrangements do not satisfy the requirements of section 419A(f)(6) of the Code and do not provide the tax deductions claimed by their promoters for any of several reasons. For example, such an arrangement may be providing deferred compensation; the arrangement may be separate plans maintained for each employer; or the plan may be maintaining, in form or in operation, experience-rating arrangements with respect to individual employers ( e.g. , where the employers have reason to expect that, at least for the most part, their contributions will benefit only their own employees). The Notice also states that even if an arrangement satisfies the requirements of section 419A(f)(6), so that the deduction limits of sections 419 and 419A do not apply to the arrangement, the employer contributions may represent expenses that are not deductible under other sections of the Code.

Transactions that are the same as or substantially similar to the transactions described in Notice 95-34 are listed transactions for purposes of the tax shelter disclosure, registration, and list maintenance requirements. See Notice 2000-15 (2000-1 C.B. 826) (supplemented and superseded by Notice 2001-51 (2001-2 C.B. 190)), § 1.6011-4(b)(2) of the Income Tax Regulations, and §§ 301.6111-2(b)(2) and 301.6112-1(b)(2) of the Procedure and Administration Regulations.

On July 11, 2002, a notice of proposed rulemaking (REG-165868-01) relating to whether a welfare benefit fund is part of a 10 or more employer plan (as defined in section 419A(f)(6) of the Internal Revenue Code) was published in the Federal Register (67 FR 45933). Written and electronic comments responding to the notice of proposed rulemaking were received. A public hearing was held on November 14, 2002. After consideration of all the comments, the proposed regulations are adopted as amended by this Treasury decision. The revisions are discussed below.

These regulations provide guidance under section 419A(f)(6) of the Code regarding the requirements that a welfare benefit fund must satisfy in order for an employer's contribution to the fund to be excepted from the rules of sections 419 and 419A.

Section 419A(f)(6) of the Code provides that sections 419 and 419A do not apply in the case of a welfare benefit fund that is part of a 10 or more employer plan that does not maintain experience-rating arrangements with respect to individual employers. A 10 or more employer plan is a plan to which more than one employer contributes and to which no employer normally contributes more than 10 percent of the total contributions contributed under the plan by all employers. The regulations provide that an employer is determined by aggregating all of the entities required to be aggregated under the rules under section 414(b), (c), or (m). This is particularly relevant for purposes of determining how many employers contribute, whether an employer normally contributes more than 10 percent of the total contributions under the plan, and whether the plan maintains experience-rating arrangements with respect to individual employers.

In addition, the regulations make clear that in order to be eligible for the exception from the deduction limits of sections 419 and 419A, a plan must satisfy the requirements of section 419A(f)(6) and these regulations both in form and operation. The determination of whether a plan is described in section 419A(f)(6) is based on the totality of the arrangement and all related facts and circumstances, including any related insurance contracts. Thus, all agreements and understandings (including promotional materials and policy illustrations) will be taken into account in determining whether the requirements of section 419A(f)(6) are satisfied in form and in operation. For example, if promotional materials indicate that an employer or its employees can be expected to receive a future benefit based on the employer's accumulated contributions, the plan will be treated as maintaining experience-rating arrangements with respect to individual employers, even if the formal plan does not specifically provide for experience rating.

The regulations provide generally that a plan maintains an experience-rating arrangement with respect to an employer—making the plan ineligible for the section 419A(f)(6) exception—if any employer's cost of coverage for any period is based, in whole or in part, either on the benefits experience or on the overall experience of that employer or one or more employees of that employer. For purposes of the regulations, an employer's cost of coverage is the relationship between that employer's contributions (including those of its employees) under the plan and the benefits or other amounts payable under the plan with respect to that employer. The term benefits or other amounts payable includes all amounts payable or distributable (or that will be otherwise provided), regardless of the form of the payment or distribution. Benefits experience refers, generally, to the benefits and other amounts incurred, paid, or distributed (or otherwise provided) in the past. The overall experience of an employer is the balance that would have accumulated in a welfare benefit fund if that employer were the only employer providing benefits under the plan. The overall experience of an employee is the balance that would have accumulated in a welfare benefit fund if that employee were the only employee being provided benefits under the plan. Overall experience is defined similarly for a group of employers or a group of employees.

A number of commentators suggested that the regulatory definition of experience-rating arrangement is inconsistent with industry usage and the discussions of experience rating set forth in United States v. American Bar Endowment, 477 U.S. 105 (1986) and Sears Roebuck and Co. v. Commissioner, 972 F.2d 858 (7th Cir. 1992). These commentators have urged that an experience-rating arrangement be narrowly defined to include only those situations in which the employer is automatically entitled to a refund of a portion of a premium payment if claims experience is better than expected.

The IRS and Treasury have reviewed these comments and have concluded that the proposed regulatory definition of experience-rating arrangement should be retained in the final regulations. Where a Code section provides an exception from the normal tax requirements, the exception must be narrowly applied and its exclusions interpreted broadly. Corn Products Refining Co. v. Commissioner, 350 U.S. 46, 52 (1955). See also, Arkansas Best Corporation v. Commissioner, 485 U.S. 212, 219-220 (1987). Thus, the exclusion for experience-rating arrangements under the 10 or more employer plan exception should be interpreted broadly.

While both the American Bar Endowment case and the Sears case discuss a specific type of experience rating, there are other ways an insurance contract or other arrangement might take experience into account. For example, under one type of experience-rating arrangement, if the premiums paid exceed the actual cost of providing insurance to the group, the excess (the source of the dividend described in American Bar Endowment ) is not refunded to the premium payer, but is instead used to reduce the cost of providing benefits for subsequent periods. This reduction in the cost of providing benefits for subsequent periods can be accomplished directly by adjusting premiums or indirectly by providing additional benefits under the arrangement at no cost to the premium payer, or through a combination of premium reductions and additional benefits.

In view of the variety of ways that an arrangement might take experience into account, the regulations provide that a plan maintains an experience-rating arrangement with respect to an individual employer if the current (or future) cost of coverage of the employer is (or will be) based on either the past benefits or other amounts paid with respect to one or more of that employer's employees (or any proxy therefor) or on the balance accumulated in the fund as a result of the employer's or its employees' past contributions (or any proxy therefor). Accordingly, the process for determining whether a plan maintains an experience-rating arrangement is to inquire whether the past experience of an individual employer or its employees is used, in whole or in part, to determine the employer's cost of coverage. This determination is not intended to be purely a computational one (although actual numbers often can be used to demonstrate the existence of an experience-rating arrangement).

Some commentators suggested that the regulations equate benefits provided to the employees of an employer with a payment to the employer and that such an equation improperly ignores the existence of the employer. This comment is based on a misreading of the regulations. The regulations reflect the fact that the provision of a benefit to an employee at no cost to the employer is, in effect, a credit to the employer that offsets the employer's otherwise applicable cost of providing that benefit. Accordingly, if the amount of such a benefit is based on the experience of the employer or its employees, the plan includes an experience-rating arrangement with respect to individual employers and is ineligible for the section 419A(f)(6) exception to sections 419 and 419A.

A number of commentators expressed concern with the results under the proposed regulations when the definition of an experience-rating arrangement was applied to a plan which provides for contributions equal to the premiums on a whole life insurance contract or other life insurance contract having level premiums. These commentators asserted that the purchase of such policies is not inconsistent with the requirements of section 419A(f)(6) and that, if the premiums under the contract are established using standardized actuarial factors (including issue age), the arrangement is not experience rated.

The final regulations retain the definition of experience rating arrangement and the general results that flow from the application of that definition to a level premium life insurance policy. This analysis recognizes that if whole life insurance contracts, or other insurance contracts that provide for level premiums or otherwise generate a savings element, are purchased under an arrangement, the economic values reflected under those contracts (including cash values, reserves, and any other economic values, such as conversion credits, high dividend rates, or the right to continue coverage at a premium that is lower than the premium that would apply in the absence of that savings element) are based on the excess of the premiums paid over the underlying mortality and related expense charges for providing the insurance and, hence, reflect the overall experience of the employers and employees who participate under the plan.

If those economic values are used to determine the current cost of coverage for that employer (as opposed to being shared among all of the employers participating in the plan), the employer can anticipate that its past contributions in excess of incurred losses for claims for its employees will inure to the benefit of the employer or its employees (as opposed to the other employers participating in the plan). This assurance that the employer or its employees will benefit from favorable past experience is the hallmark of an experience-rating arrangement. 2

Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its State program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act * * *; and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Kentucky program on May 18, 1982. You can find background information on the Kentucky program, including the Secretary's findings, the disposition of comments, and conditions of approval in the May 18, 1982, Federal Register (47 FR 21404). You can also find later actions concerning Kentucky's program and program amendments at 30 CFR 917.11, 917.12, 917.13, 917.15, 917.16 and 917.17.

By letter dated July 30, 1997 (administrative record no. KY-1410), Kentucky sent us a proposed amendment to its program under SMCRA (30 U.S.C. 1201 et seq. ). The amendment revises 405 KAR at sections 8:001, 8:030, 8:040, 16:001, 16:060, 16:090, 16:100, 16:160, 18:001, 18:060, 18:090, 18:100, 18:160, and 18:210.

We announced receipt of the proposed amendment in the September 5, 1997, Federal Register (62 FR 46933), and in the same document invited public comment period and provided an opportunity for a public hearing on the adequacy of the proposed amendment. The public comment period closed on October 6, 1997. On November 14, 1997, a Statement of Consideration of public comments was filed with the Kentucky Legislative Research Committee. As a result of the comments and by letter dated March 4, 1998, Kentucky made changes to the original submission (administrative record no. KY-1422). The revisions were made at 405 KAR 8:040, 16:060, 18:060, and 18:210. By letter dated March 16, 1998, Kentucky made additional changes to the original submission (administrative record no. KY-1423). The revisions were made at 8:001, 8:030, 8:040, 16:001, 16:060, 16:090, 16:100, 16:160, 18:001, 18:060, 18:090, 18:100, 18:160, and 18:210. By letter dated July 14, 1998, Kentucky submitted a revised version of the proposed amendments (administrative record no. KY-1431). All the revisions, except for a portion of those submitted March 16, 1998, were announced in the August 26, 1998, Federal Register (63 FR 45430).

During our review of the amendment, we identified concerns relating to the provisions at 405 KAR 8:001, 8:030, 8:040, 16:001, 16:060, 16:090, 16:100, 16:160, 18:001, 18:060, 18:090, 18:100, 18:160, and 18:210. We notified Kentucky of the concerns by letter dated May 26, 2000 (administrative record no. KY-1479). Kentucky responded in a letter dated August 10, 2000, and submitted additional explanatory information (administrative record no. KY-1489). The explanatory information and those revisions not included in previous notices were announced in the June 5, 2002, Federal Register (67 FR 38621).

By letter dated June 25, 2002 (administrative record no. KY-1544), Kentucky sent us a proposed change to 405 KAR 16/18:090, by adding section 6, which established performance standards for “other treatment facilities.” We announced this proposed revision in the August 16, 2002, Federal Register (67 FR 53540). In a letter dated October 30, 2002 (administrative record no. KY-1568), Kentucky sent us a final version of 405 KAR 16/18:090 section 6 as well as non-substantive changes to 405 KAR 6/18:090 section 1(1), (2)(a) and (4); section 2; section 4 and section 5(2).

We addressed Kentucky's revisions to its subsidence control regulations at 405 KAR 18:210 in a Federal Register notice published on May 7, 2002 (67 FR 30549). In this rule, we will address only those revisions at 405 KAR 8/16/18:001 definitions of “impounding structure,” “impoundment,” and “other treatment facilities,” 16/18:090 sections 1 through 5, 16/18:100, and 16/18:160 pertaining to sedimentation ponds and impoundments. The minor revisions to 16/18:090 submitted by Kentucky on October 30, 2002, will not be discussed in this rule. The October 30, 2002, revisions and any other remaining revisions to the Kentucky regulations not previously addressed, will be in a future Federal Register notice (KY-216) or in a recently approved notice (KY-241).

Following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. We are approving the amendment with the exception of one provision. Also, we are removing a required amendment at 30 CFR 917.16(d)(4). Any revisions that we do not specifically discuss below concern nonsubstantive wording or editorial changes.

Kentucky proposed minor wording, editorial, punctuation, grammatical, and recodification changes to the following previously-approved rules.

Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its State program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act * * *; and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Kentucky program on May 18, 1982. You can find background information on the Kentucky program, including the Secretary's findings, the disposition of comments, and conditions of approval in the May 18, 1982, Federal Register (47 FR 21426). You can also find later actions concerning Kentucky's program and program amendments at 30 CFR 917.12, 917.13, 917.15, 917.16, and 917.17.

On December 31, 1990, we published in the Federal Register (55 FR 53490) a requirement that Kentucky amend its program to require that public notice shall not be initiated until the Kentucky Natural Resources and Environmental Protection Cabinet (Cabinet) has determined that a permit application is administratively complete. Kentucky was required to respond by January 30, 1991, but by letter of February 1, 1991, requested an extension to February 28, 1991. We granted that extension by letter of February 22, 1991. On March 4, 1991, Kentucky responded by letter indicating that the existing regulation at 405 Kentucky Administrative Regulations (KAR) 8:010 is as effective as the Federal regulations. Kentucky's response reminded OSM that the initial program approval of May 18, 1982, considered these public notice differences and deemed them to be no less effective than the Federal regulations. No action was taken on the letter. We announced our intent to reconsider this required amendment when we published a proposed rule notice in the June 6, 2002, Federal Register (67 FR 38917), and in the same document we invited public comment on the proposed action during a public comment period that closed on July 5, 2002.

Following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17.

Our order that Kentucky amend its program was based on a regulation change made by us in 1983 that added the concept of an “administratively complete application” that starts the public notification process at 30 CFR 773.13(a)(1), later renumbered 30 CFR 773.6(a). As discussed below, the applicant could not begin the public notification process until the regulatory authority notified the applicant that the permit application was administratively complete. Our concern with the Kentucky program at the time, was that it appeared that if the permit application was determined not to be administratively complete after the notification process began, Kentucky did not have a provision that restarted the notification process once the permit application was determined to be administratively complete by Kentucky.

Kentucky's initial response to our order to amend its program stated that we had approved the provision, later found to be deficient in 1990, in 1982. However, the issue considered in the initial program approval in 1982 was different than the issue addressed in the required amendment since the required amendment was the result of a change in the Federal regulations in 1983.

The issue considered in the May 18, 1982, conditional approval is discussed in Finding 14.15 (47 FR 21415). That finding relates directly to an earlier finding, 14.27, regarding the review of Kentucky's initial program submittal published on October 22, 1980 (45 FR 69956). Finding 14.27 reads as follows: 405 KAR 8:010E Section 8(8) is less stringent than 30 CFR 786.11(d) concerning public notice of filing permit applications. The State regulation does not specify when the applicant must file a copy of the application in a local public office for public inspection; while the Federal regulation requires the filing by the first newspaper publication date. The newspaper publication would be meaningless if the application were not on file and available for public review at the same time.

As this finding indicates, the primary issue was when a copy of the submitted permit application would be made available for public review. When we conditionally approved the Kentucky program on May 18, 1982, we stated in finding 14.15 that Kentucky's explanation of its process persuaded us that Kentucky's program was no less effective than the Federal regulations.

The 1990 required amendment, on the other hand, resulted from a change in the Federal regulations that was made on September 28, 1983, when the concept of “administratively complete application” was added to the Federal definitions at 30 CFR 701.5 and applied at 30 CFR 773.13(a)(1) and later renumbered to the current 30 CFR 773.6(a), which provides for public notification of an administratively complete permit application.

Although Section 513(a) of SMCRA requires “At the time of submission such advertisement shall be placed by the applicant in a local newspaper of general circulation in the locality of the proposed surface mine at least once a week for four consecutive weeks”, we believed that to achieve consistency among the various State and Federal regulatory programs the initial regulations adopted to implement this provision needed to be revised. The revision of the definition of a “complete permit application” to an “administratively complete application” was discussed in the 1983 preamble. There, we stated that:

We believe the intent of notifying the public that a permit application has been submitted is to alert it to the right to comment on the application. The deadline for submitting those comments is thirty days after publication of the fourth consecutive and final newspaper advertisement, as set forth at 30 CFR 773.6(b)(2).

Kentucky's law, at KRS Section 350.055(2) requires the applicant to publish a notice of intention to mine * * * at least once a week for four consecutive weeks beginning at the time of submission. This is consistent with SMCRA. The Kentucky regulations at 405 KAR 8:010 Section 8 (2)(a) state that “* * * [t]he first advertisement shall be published on or after the date the application is submitted to the Cabinet. The applicant may elect to begin notification on or after the date the applicant receives the notification from the Cabinet under Section 13(2) of this regulation that the application has been deemed administratively complete and ready for technical review * * * the final consecutive weekly advertisement being published after the applicant's receipt of written notice from the Cabinet that the application has been deemed administratively complete and ready for technical review * * *”

These Kentucky requirements were approved by us prior to our revisions promulgated in 1983 to require an “administratively complete application” determination before beginning public notification. Although Kentucky's program does not require the applicant to begin public notification until after the determination of administrative completeness, it does require the last notice to be after the determination of administrative completeness. Moreover, the Kentucky program does not explicitly address the question of whether the four consecutive weekly advertisements must be repeated if the application is determined to be administratively incomplete.

As noted above, Kentucky's regulations at 405 KAR Section 8(2)(a) state in part that “* * * the advertisement shall be published at least once each week for four (4) consecutive weeks, with the final consecutive weekly advertisement being published after the applicant's receipt of written notice from the Cabinet that the application is deemed complete.” This requires public advertisements to be published on “consecutive” weeks and that the final advertisement may only appear “after” the notification that the application is administratively complete. If an applicant chooses to begin publication before the administrative completeness determination, and Kentucky notifies the applicant that additional information is required before administrative completeness can be determined and the applicant stops advertising, it is quite likely that a “break” in the newspaper notices would occur and the “consecutive” advertisement requirement would not be complied with by the applicant. When this occurs, the applicant must restart the newspaper advertisements to comply with the “consecutive” requirement of the Kentucky program. In such instances, the current program, without modification, compels the applicant to begin the advertisement process anew. While there may be instances when no “break” in the advertisement sequence would occur, the Kentucky program does not prohibit the Cabinet from requiring the applicant to begin the advertisement sequence again after the administrative completeness determination is made. For this reason, and as discussed below, we believe the current program can be implemented in a manner that renders it no less effective than the Federal regulations.

After reviewing the Federal requirements and Kentucky's requirements we have decided to withdraw the required amendment as set forth at 30 CFR 917.16 (d)(2). This action is based on the understanding that Kentucky's implementation of the public participation requirements for permit application processing will require that, if a permit application is found not to be administratively complete, the four consecutive weeks advertisement sequence must start anew after the application is determined to be administratively complete. If in the future, we determine that the Kentucky program is not being implemented according to this decision, we may require Kentucky to amend its program.

No public or Federal agency comments were received on this proposed action during the public comment period.

Based on the above findings, we are removing the required amendment to Kentucky's program at 30 CFR 917.16(d)(2).

To implement this decision, we are amending the Federal regulations at 30 CFR part 917, which codify decisions concerning the Kentucky program. We find that good cause exists under 5 U.S.C. 553(d)(3) to make this final rule effective immediately. Section 503(a) of SMCRA requires that the Kentucky program demonstrate that Kentucky has the capability of carrying out the provisions of the Act and meeting its purposes. Making this regulation effective immediately will expedite that process. SMCRA requires consistency of Kentucky and Federal standards.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.

This rule is exempted from review by the Office of Management and Budget under Executive Order 12866.

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR Parts 730, 731, and 732 have been met.

This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally-recognized Indian tribes and have determined that the rule does not have substantial direct effects 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. The basis for this determination is that our decision is on a State regulatory program and does not involve a Federal program involving Indian Tribes.

On May 18, 2001, the President issued Executive Order 13211 that requires agencies to prepare a Statement of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

This rule does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)).

This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3507 et seq. ).

The Department of the Interior certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. For the reasons previously stated, this rule: (a) does not have an annual effect on the economy of $100 million; (b) will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based upon the fact that the State submittal which is the subject of this rule is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.

This rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate.

Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its State program includes, among other things, “a State law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act * * *; and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Maryland program on December 1, 1980. You can find background information on the Maryland program, including the Secretary's findings, the disposition of comments, and conditions of approval in the December 1, 1980, Federal Register (47 FR 79431). You can also find later actions concerning Maryland's program and program amendments at 30 CFR 920.12, 920.15 and 920.16.

By letter dated November 25, 2002, Maryland sent us an amendment to its program (Administrative Record No. MD-577-21) under SMCRA (30 U.S.C. 1201 et seq. ) in response to the issuance of an OSM 732 letter dated July 8, 1997. Specifically, Maryland was required to amend several sections of the Code of Maryland Regulations (COMAR) including sections 26.20.02.13, 26.20.21.01, 26.20.21.08, and 26.20.21.09, relative to: Detailed design plans, siltation structures, and impoundments and the reference to the U.S. Department of Agriculture (USDA) Natural Resources Conservation Service (NRCS) Technical Release No. 60 (criteria for dam classification).

We announced receipt of the proposed amendment in the March 25, 2003, Federal Register (68 FR 14360). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on the amendment's adequacy. We did not hold a public hearing or meeting because no one requested one. The public comment period ended on April 24, 2003. We did not receive any public comments.

Following are the findings we made concerning the amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. We are approving the amendment. Any revisions that we do not specifically discuss below concern nonsubstantive wording or editorial changes. The full text of the changes can be found in the March 25, 2003, Federal Register (68 FR 14360).

Maryland proposed revisions to the following sections of COMAR in order to be consistent with the corresponding Federal regulations. Because these proposed rules contain language that is the same or similar to the corresponding Federal regulations, we find that they are no less effective than the corresponding Federal regulations.

Maryland proposed to amend its regulations at Subsection U of COMAR 26.20.02.13 so that each application includes a “general plan for each proposed siltation structure, sedimentation pond, water impoundment, and coal processing waste bank, dam, or embankment within the proposed mine plan area.” The Federal regulations at 30 CFR 780.25(a) and 784.16(a) require that each application include “a general plan and a detailed design plan for each proposed siltation structure, water impoundment, and coal processing waste bank, dam, or embankment within the proposed permit area.”

Although subsection U of the State regulation does not refer to “a detailed design plan” as does the Federal regulation, a detailed design plan is required by the State under subsection V. Maryland proposed to amend Subsection V(1) so that, like the Federal regulations, it requires a detailed design plan for “each proposed siltation structure, sedimentation pond, water impoundment, and coal processing waste bank, dam, or embankment within the proposed mine plan area.”

Maryland also proposed to add a new subsection V(1)(a) that requires the design plan to be designed in compliance with COMAR 26.20.21.06 and .08, which provide performance standards for siltation structures and impoundments, respectively.

The deletion of the phrase, “excess spoil disposal structure” in the current subsection, and the replacement of this phrase with, “siltation structure” before the term “sedimentation pond” in the new subsection, make Maryland's rules substantively identical to the Federal rules at 30 CFR 780.25 and 784.16 which require siltation structures and sedimentation ponds to be designed in compliance with performance standards. The deletion of the reference to excess spoil does not render the Maryland program less effective because Maryland has permitting and performance standards for excess spoil at COMAR 26.20.02.13 AA and 26.20.26.01 respectively. Also the current subsection, (a)-(d) becomes subsections (b)-(e). The renumbering of the sections is purely administrative in nature.

We are approving these revisions, as they are no less effective than the Federal regulations.

Maryland also proposes revisions to subsection (3). The current subsection reads:

“(3) If a sedimentation pond, water impoundment, or coal processing waste dam or embankment is 20 feet or higher or impounds more than 20 acre-feet, the plan shall contain a stability analysis of each structure. The stability analysis shall include but not be limited to strength parameters, pore pressures, and long-term seepage conditions.

The plan shall also contain a description of each engineering design assumption and calculation with a discussion of each alternative considered in selecting the specific design parameters and construction methods.”

Maryland is substituting the following: “or embankment is 20 feet or higher or impounds more than 20 acre-feet” with “or siltation structure that meets the Class (b) or (c) criteria for dams in the USDA, Soil Conservation Service Technical Release No. 60, (October 1985), as incorporated by reference in COMAR 26.20.21.01-1 or meets the size or other criteria of 30 CFR 77.216(a).” The deleted language is not a requirement of the Federal regulations.

This subsection is substantively identical to 30 CFR 780.25(f) and 784.16(f).

We find these revisions to be no less effective than Federal regulations and are approving the revisions.

Maryland proposes revisions to subsection AA(1). Subsection AA requires descriptions of excess spoil disposal sites. Subsection AA(1) currently reads:

“Descriptions, including appropriate maps and cross-section drawings, of any proposed excess spoil disposal site and design of the spoil disposal structures. These plans shall describe the geotechnical investigation, design, construction, operation, maintenance, and removal, if appropriate, of the site and structures.”

Revision of the first paragraph of subsection AA(1) reads: “Each application shall contain descriptions including appropriate maps and cross-section drawings, of any proposed excess spoil disposal site and design of the spoil structures in accordance with COMAR section 26.20.26.”

We are approving this revision because it is substantively identical to 30 CFR 780.35(a). The reference to section 26.20.26, makes Maryland's program no less effective than 30 CFR 780.14(c) and 784.23(c) by clarifying that only registered professional engineers may certify designs for excess spoil fills. This is in accordance with item #3 of OSM's July 8, 1997, issue letter.

Maryland proposes a new COMAR subsection 26.20.21.01-1:01-1 which reads, “Incorporation by Reference, The U.S. Department of Agriculture, Soil Conservation Service Technical Release No. 60 (210-VI-TR60, October 1985), “Earth Dams and Reservoirs,” Technical Release No. 60 (TR-60) is incorporated by reference.”

We are approving this revision as the incorporation of the reference to the TR-60 makes Maryland's program no less effective than Federal regulations incorporation by reference to the same TR-60, at 30 CFR 780.25(a)(2) and 784.16(a)(2).

Maryland proposes several revisions to COMAR subsection 26.20.21.08. First, Maryland proposes to revise subsection 26.20.21.08A, which lists the general requirements for impoundments. Under the current regulations, the first requirement is that impoundments be designed and constructed to ensure:

(1) Compliance with USDA, Soil Conservation Service, Standards and Specifications for Ponds (Code 378), July, 1981, as incorporated by reference in COMAR subsection 26.17.05.05B(3), if impoundments do not meet the size or other criteria of 30 CFR Section 77.216(a) and are located where failure would not be expected to cause loss of life or serious property damage.

The revised COMAR section 26.20.21.08A(1) reads as follows: “(1) Compliance with USDA, Natural Resources Conservation Service, Maryland Conservation Practice, Standard Pond 378 (January 2000), as incorporated by reference in COMAR 26.17.02.01-1B(2).”

We are approving this revision because Code 378 addresses Class A Hazards. There is no direct Federal counterpart and we find it is not inconsistent with the Federal regulations at 30 CFR 816.49 and 817.49.

Maryland also proposes to revise the second requirement of subsection A. The new requirement reads as follows: “(2) Compliance with requirements of COMAR 26.17.04.05 if the embankment is more than 15 feet in height as measured from the upstream toe of the embankment to the crest of the emergency spillway.”

We are approving this revision to the Maryland program as it is not inconsistent with the Federal regulations. Maryland also proposes a new subsection (3) referencing:

“Impoundments meeting the Class (b) or (c) criteria for dams in Earth Dams and Reservoirs, TR-60 shall comply with “Minimum Emergency Spillway Hydrologic Criteria” table in TR-60 and the requirements of this regulation.”

We are approving this revision as it is substantively identical to and no less effective than the Federal counterpart under 30 CFR 816.49(a)(1) and 817.49(a)(1).

Maryland also proposes changes to subsection B of COMAR 26.20.21.08, which addresses the stability of impoundments. COMAR section 26.20.21.08B(1) currently requires that: “(1) Impoundments meeting the size or other criteria of 30 CFR 77.216(a), located where failure would be expected to cause loss of life or serious property damage, or a coal mine waste impounding structure, shall have a minimum static safety factor of 1.5 for a normal pool with steady state seepage saturation conditions and a seismic safety factor of at least 1.2.”

The language addition states: “(1) Impoundments meeting the Class (b) or (c) criteria for dams contained in “Earth Dams and Reservoirs”, TR-60 or the size or other criteria of 30 CFR 77.216(a) shall have a minimum static safety factor of 1.5 for a normal pool with steady state seepage saturation conditions and a seismic safety factor of at least 1.2.”

The deleted language does not render the Maryland program inconsistent with the Federal regulations because loss of life or serious property damage is a hazard criterion for Class C impoundments. Additionally, the deletion of the phrase “coal mine waste impounding structure” is not inconsistent with Federal regulations because Maryland has performance standards for coal mine waste impounding structures at COMAR 26.20.27.11. We are approving this revision to the Maryland program as it is substantively identical to the Federal regulations at 30 CFR 816.49(a)(4)(i) and 817.49(a)(4)(i). The revision is therefore no less effective than the Federal counterpart regulations.

COMAR section 26.20.21.08B(2) currently requires that: “(2) Except for coal mine waste impounding structures and impoundments located where failure would be expected to cause loss of life or serious property damage, impoundments not meeting the size or other criteria of 30 CFR 77.216(a) shall be constructed to achieve a minimum static safety factor of 1.3 for a normal pool with steady state seepage saturation conditions.”

Maryland proposes to make revisions to section 26.20.21.08B(2), which read:

“(2) Impoundments not included in Section B(1) of this regulation, except for coal mine waste impounding structures shall be constructed to achieve a minimum static safety factor of 1.3 for a normal pool with steady state seepage saturation conditions.”

The deleted language does not render the Maryland program inconsistent with the Federal regulations because loss of life or serious property damage is a criteria for Class C impoundments referenced in subsection B(1). We are approving these proposed revisions to the Maryland program, as they are substantively identical to and no less effective than Federal regulations at 30 CFR 816.49(a)(4)(ii) and 817.49(a)(4)(ii).

Maryland also proposes a new COMAR section 26.20.21.08.C, which reads:

“C. Freeboard. (1) Impoundments shall have adequate freeboard to resist overtopping by waves and sudden increases in storage volume. (2) Impoundments meeting the Class (b) or (c) criteria for dams in “Earth Dams and Reservoirs”, TR-60 shall comply with the freeboard hydrograph criteria in “Minimum Emergency Spillway Hydrologic Criteria” table in TR-60. Subsequently, the current subsections C and D would therefore become subsections D and E, respectively.”

D. Foundation. The current subsection C(2) now reads: “(2) For an impoundment meeting the size or other criteria of 30 CFR 77.216(a), foundation investigation, as well as any necessary laboratory testing of foundation material, shall be performed to determine the design requirements for foundation stability.

Subsection C(2) becomes D(2) and reads:

“(2) For an impoundment meeting the Class (b) or (c) criteria for dams contained in ‘Earth Dams and Reservoirs’, TR-60 or the size or other criteria of 30 CFR 77.216(a), foundation investigation, as well as any necessary laboratory testing of foundation material, shall be performed to determine the design requirements for foundation stability.”

We are approving these proposed revisions to the Maryland program because they are substantively the same and no less effective than the Federal regulations at 30 CFR 816.49(a)(5)-(6) and 817.49(a)(5)-(6) regarding Freeboard and Foundation. Maryland is revising this section as a result of the July 8, 1997, issue letter requirements.

Maryland proposes changes to COMAR 26.20.21.08D. As noted above, the proposed addition of a new subsection C changes the current subsection D to E with approval of the proposed changes. Further, the State proposes changes to the current subsection D(3). Currently subsection D(3) contains subsections (a) and (b), which contain the required design precipitation event for impoundments meeting the spillway requirements of the section. The State proposes to add a new subsection D(3)(c): “(c) For impoundments meeting the Class (b) or (c) criteria for dams in ‘Earth Dams and Reservoirs’, TR-60, in accordance with the emergency spillway hydrograph criteria in the ‘Minimum Emergency Spillway Hydrologic Criteria’ table in TR-60, or larger event specified by the Department.”

Because a new subsection D(3)(c) is proposed, the State proposes to change subsection D(3)(b) by removing the period at the end of the sentence and adding a semicolon followed by the word “or.” With approval, the proposed changes, subsections E through I will change to F through J, respectively, but would otherwise remain unchanged.

We are approving these revisions to the Maryland program as they are no less effective than the counterpart Federal regulations at 30 CFR 816.49(a)(9)(ii)(A) and 817.49(a)(9)(ii)(A). The revisions make Maryland's language substantively the same as Federal language and are in response to the July 8, 1997, 732 issue letter requirements.

Maryland proposes changes to COMAR 26.20.21.09D, which relates to the examination of impoundments. Subsection D(1) currently states: “(1) Impoundments subject to 30 CFR 77.216 shall be examined in accordance with 30 CFR 77.21-3. Other impoundments shall be examined at least quarterly by a qualified person for appearance of structural weakness and other hazardous conditions.”

The new COMAR section 26.20.21.09D(1) reads: “(1) Impoundments meeting the Class (b) or (c) criteria for dams in “Earth Dams and Reservoirs”, TR-60 or the size or other criteria of 30 CFR 77.216 shall be examined in accordance with 30 CFR 77.216-3. Other impoundments not meeting the Class (b) or (c) criteria for dams in “Earth Dams and Reservoirs”, TR-60 or subject to 30 CFR 77.216 shall be examined at least quarterly by a qualified person for appearance of structural weakness and other hazardous conditions.”

We are approving this revision to the Maryland program, as it is substantively identical to and no less effective than the counterpart Federal regulations at 30 CFR 816.49(a)(12) and 817.49(a)(12). Maryland is making these revisions to its program in order to be consistent with Federal regulations and as a result of OSM's July 8, 1997, 732 issue letter requirements.

We asked for public comments on the amendment (Administrative Record No. MD-577-25), but did not receive any.

Under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, we requested comments on the amendment from various Federal agencies with an actual or potential interest in the Maryland program (Administrative Record No. MD-577-22). We received one comment. This comment from the USDA's NRCS, noted that the proposed changes were consistent with the NRCS's performance standards for impoundments.

Under 30 CFR 732.17(h)(11)(i), we requested comments on the amendment from EPA (Administrative Record No. MD-577-24). EPA did not respond to our request. Under 30 CFR 732.17(h)(11)(ii), we are required to obtain written concurrence from EPA for those provisions of the program amendment that relate to air or water quality standards issued under the Clean Water Act (33 U.S.C. 1251 et seq. ) or the Clean Air Act (42 U.S.C. 7401 et seq. ). This amendment does not contain provisions that relate to air or water quality standards and, therefore, concurrence by the EPA is not required.

Under 30 CFR 732.17(h)(4), we are required to request comments from the SHPO and ACHP on amendments that may have an effect on historic properties. On December 10, 2002, we requested comments on Maryland's amendment through the Maryland Historical Trust (Administrative Record No. MD-577-22), but received no response to our request.

Based on the above findings, we approve the amendment Maryland sent us. We approve, as discussed in the findings above: COMAR 26.20.02.13 U, concerning the elimination of the phrase “excess spoil disposal structure” and the addition of the phrase “siltation structure'; V(1)(a) an addition to the enumerated criteria and (3) concerning the added reference to the USDA NRCS (formerly the Soil Conservation Service) Technical Release No. 60 (TR-60) and the deletion of the phrase “excess spoil disposal structure at V(1)” and by deleting “or embankment is 20 feet or higher or impounds more than 20 acre-feet” at V(3); AA(1) referencing COMAR 26.20.26; a new COMAR subsection “26.20.21.01-1” concerning an incorporation by reference to (TR-60); 26.20.21.08 A(1) through (3) concerning an incorporation by reference to Maryland NRCS Conservation Practice, Standard Pond 378 (January 2000), and a new subsection referencing the (TR-60) “Minimum Emergency Spillway Hydrologic Criteria Table”, B(1) and (2) referencing the (TR-60) “Earth, Dams and Reservoirs”, a reference to subsection B(1) and non coal mine waste impoundments, and deleting the reference to 26.17.05.05B(3) at subsection A, and also deleting at subsection A and B, the phrase “if impoundments do not meet the size or other criteria of 30 CFR 77.216(a) and are located where failure would not be expected to cause loss of life or serious property damage''; a new subsection C pertaining to “Freeboard”, renumbering section D(2) and E(3) and 26.20.21.09D(1) regarding “examinations of impoundments''.

We approve the rules proposed by Maryland with the provision that they be fully promulgated in identical form to the rules submitted to and reviewed by OSM and the public.

To implement this decision, we are amending the Federal regulations at 30 CFR part 920, which codify decisions concerning the Maryland program. We find that good cause exists under 5 U.S.C. 553(d)(3) to make this final rule effective immediately. Section 503(a) of SMCRA requires that Maryland's program demonstrate that it has the capability of carrying out the provisions of the Act and meeting its purposes. Making this regulation effective immediately will expedite that process. SMCRA requires consistency of Maryland and Federal standards.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.

This rule is exempted from review by the Office of Management and Budget under Executive Order 12866.

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rule meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR parts 730, 731, and 732 have been met.

This rule does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

In accordance with Executive Order 13175, we have evaluated the potential effects of this rule on Federally-recognized Indian tribes and have determined that the rule does not have substantial direct effects 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. The basis for this determination is that our decision is on a State regulatory program and does not involve a Federal program involving Indian tribes.

On May 18, 2001, the President issued Executive Order 13211 that requires agencies to prepare a Statement of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

This rule does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)).

This rule does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3507 et seq. ).

The Department of the Interior certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule: (a) Does not have an annual effect on the economy of $100 million; (b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based upon the fact that the State submittal which is the subject of this rule is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.

This rule will not impose an unfunded mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rule, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate.

On May 20, 2003, we published a notice of proposed rule making (NPRM) entitled Toledo Tall Ships Parade 2003, Port of Toledo, OH in the Federal Register (68 FR 27498). We did not receive any letters commenting on the proposed rule. No public hearing was requested, and none was held.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. Delaying the effective date of this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property. The Coast Guard has not received any complaints or negative comments with regard to this event.

These temporary special local regulations are for the Toledo 2003 Tall Ships Parade of Sail that will be held in the Maumee River from 9 a.m. through 7 p.m. on July 16, 2003. These regulations will assist in providing for the safety of life on navigable waters and to protect commercial vessels, tall ships, spectators, and the Port of Toledo during this event.

American Sail Training Association is sponsoring Sail Toledo 2003. The scheduled events will occur July 16, 2003 in the Port of Toledo and surrounding waters. This event will consist of a Parade of Sail from the mouth of the Maumee River to Independence Park. The parade route will originate in Maumee Bay and continue inbound up the Maumee Bay and Maumee River channel to various berths throughout the Port of Toledo.

The Coast Guard expects several hundred spectator crafts to attend the parade of sail and tall ship celebration. The regulations will create temporary anchorage regulations and vessel movement controls through the regulated area. The regulations will be in effect from 9 a.m. through 7 p.m. on July 16, 2003. Vessel congestion, due to the anticipated large number of participating and spectator vessels, introduces extra or unusual hazards during this event pose a significant threat to the safety of life. This rulemaking is necessary to ensure the safety of life on the navigable waters of the United States.

The Coast Guard is establishing regulated areas in the Maumee River that will be in effect during the Toledo Parade of Sail 2003 event. These regulated areas are needed to permit unrestricted law enforcement vessel access to support facilities. Additionally, the regulated areas will protect the maritime public and participating vessels from possible hazards to navigation associated with the dense vessel traffic.

The regulated area will cover all portions of the Maumee River upriver of a line drawn between north-east corner of Grassy Island at 41°42′24″ N, 083°26′48″ W and the south-west corner of Spoil area at 41°42′17″ N, 083°26′38″ W to the downriver side of the Anthony Wayne Bridge. All coordinates are based upon North American Datum 1983 (NAD 83). This temporary regulated area would be in effect from 9 a.m. through 7 p.m. on July 16, 2003.

On July 16, 2003, following the Parade of Sail, restrictions on vessels on the Maumee River will reopen in sequence with the movement and mooring of the final flotilla of tall ships. After the final flotilla of tall ships have passed the Martin Luther King, Jr. Bridge, vessel operators anchored in spectator anchorages north of the Martin Luther King Bridge may depart for locations outside of the Maumee River. After the final flotilla of tall ships has safely moored, vessel operators may transit the Maumee River. Vessels transiting the Maumee River must proceed as directed by on-scene Coast Guard personnel.993

The Coast Guard is establishing spectator anchorage areas for spectator craft. All other vessels except those viewing the Parade of Sail Toledo 2003 are restricted from using these spectator anchorages. These spectator anchorage areas will be in effect on July 16, 2003.

To ensure the safety of the participating vessels during the parade, there will be two prolonged bridge openings on July 16, 2003. The CSX railroad bridge at mile 1.07, the Norfolk & Southern railroad bridge at 1.80, the Craig Memorial bridge at mile 3.30, and the Martin Luther King Memorial (a.k.a. Cherry Street) bridge at mile 4.30 will remain open from 12 p.m. until 1:30 p.m. and then from 2 p.m. until 3:30 p.m. Having two prolonged openings will accommodate participating vessels while at the same time allowing for both vehicular and pedestrian traffic the opportunity to cross the bridges during the parade.

No comments were received and no changes were made to this rule.

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

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

While this rule imposes traffic restrictions in portions of the Maumee River during the events, the effect of this regulation will not be significant for the following reasons: The regulated areas, spectator anchorages, will be limited in duration; and extensive advance notice will be made to the maritime community via Local Notice to Mariners, facsimile, marine safety information broadcasts, local Port Operators Group meetings, the Internet, and Toledo area newspapers and media. The advance notice will permit mariners to adjust their plans accordingly. Additionally, these regulated areas are tailored to impose the least impact on maritime interests without compromising safety.

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

For the reasons stated in the Regulatory Evaluation section above, the Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in portions of Maumee River during various times on July 16, 2003. These regulations will not have a significant economic impact on a substantial number of small entities because the Coast Guard will notify the public via mailings, facsimiles, Local Notice to Mariners, marine safety information broadcasts, local Port Operators Group meetings, the media, the Internet, and Toledo area newspapers. In addition, the sponsoring organization, Huntington Toledo Tall Ships 2003, plans to announce event information in local newspapers, pamphlets, and television and radio broadcasts. This advance notice will permit mariners to adjust their plans accordingly. Although these regulations will apply to a substantial portion of the Port of Toledo, areas for viewing the Parade of Sail, are being established to maximize the use of the waterways by commercial vessels that usually operate in the affected areas.

If you think that your businesses, organization, or governmental jurisdiction qualifies as a small entity and believe that this rule would significantly impact them may submit a comment (see ADDRESSES ) explaining why they think they qualify and how and to what degree this rule would economically affect them.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), the Coast Guard aims to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. If this rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Lieutenant Herb Oertli, MSO Toledo, at (419) 418-6040.

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

The Coast Guard considered the environmental impact of this rule and concluded that, under figure 2-1, paragraphs 34 (f, g, and h) of Commandant Instruction M16475.1C, this proposed rule is categorically excluded from further environmental documentation. A written “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

On May 20, 2003, we published a notice of proposed rule making (NPRM) entitled Tall Ships 2003, Navy Pier, Lake Michigan, Chicago, IL in the Federal Register (68 FR 27501). We did not receive any letters commenting on the proposed rule. No public hearing was requested, and none was held.

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

Delaying the effective date of this rule would be contrary to the public interest of ensuring the safety of spectators and vessels during this event and immediate action is necessary to prevent possible loss of life or property. The Coast Guard has not received any complaints or negative comments with regard to this event.

During the Chicago Tall Ships event, tall ships will be participating in a Tall Ships Parade and then mooring in Chicago harbor and in the Chicago River. A Regulated navigation area (RNA) will be established that encompasses portions of both the Chicago Harbor as well as the Chicago River to protect those boarding the tall ships as well as spectator vessels from vessels transiting at excessive speeds creating large wakes, and also to prevent obstructed waterways. The RNA will be established on July 30, 2003 and terminate on August 3, 2003 after all the tall ships have departed the area.

A moving safety zone will be established around those vessels officially participating in the Tall Ships Parade of Ships. The Parade of Ships is the start of the Tall Ships 2003 in Chicago, Illinois and a large number of spectator vessels are expected. The parade will include approximately 20 to 30 tall ships and will take place starting on the morning of July 30, 2003 until the evening of July 30, 2003.

No comments were received and no changes were made to this rule.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866 on Regulatory Planning and Review and therefore does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed this rule under that Order. It is non-significant under Department of Homeland Security regulatory policies and procedures. We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10(e) of the regulatory policies and procedures of DHS is unnecessary. This finding is based on the minimal time that vessels will be restricted from the zone.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this final rule would not have a significant economic impact on a substantial number of small entities. This final rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in a portion of an activated safety zone. The safety zone and suspended anchorage area would not have a significant economic impact on a substantial number of small entities for the following reasons. Vessel traffic can safely pass outside the proposed safety zone during the event. Traffic would be allowed to pass through the safety zone only with the permission of the Captain of the Port or his on scene representative which will be the Patrol Commander. In addition, before the effective period, the Coast Guard would issue maritime advisories widely available to users who might be in the affected area.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), the Coast Guard wants to assist small entities in understanding this rule so that they can better evaluate its effects and participate in the rulemaking process. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact MSO Chicago ( see ADDRESSES. )

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

We have analyzed this rule under Executive Order 13132 and have determined that this rule does not have implications for federalism under that Order.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) governs the issuance of Federal regulations that require unfunded mandates. An unfunded mandate is a regulation that requires a state, local, or tribal government or the private sector to incur direct costs without the Federal Government's having first provided the funds to pay those costs. This final rule would not impose an unfunded mandate.

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

This 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 rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

The Coast Guard has considered the environmental impact of this final rule and concluded that, under figure 2-1, paragraph 32(g) of Commandant Instruction M16475.1C, this proposed rule is categorically excluded from further environmental documentation. A written categorical exclusion determination is available in the docket for inspection or copying where indicated under ADDRESSES .

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Due to the complex coordination involved in planning the festival, major planning components of the Sacramento Bridge to Bridge Water Festival were only recently completed, and the logistical details surrounding the boat races and water safety demonstrations were not finalized and presented to the Coast Guard in time to draft and publish an NPRM. As such the event would occur before the rulemaking process was complete. Any delay in implementing this rule would be contrary to the public interest since immediate action is necessary to temporarily close the area in order to protect the maritime public from the hazards associated with these boat races, water-skiing demonstrations and aircraft demonstrations, which are intended for public entertainment.

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

The Sacramento Convention & Visitors Bureau is sponsoring the Sacramento Bridge to Bridge Water Festival on July 19 and 20, 2003, an event involving aircraft and boat water safety demonstrations, high-speed boat races, and other water-borne demonstrations of short duration. This safety zone is necessary to protect the spectators along with vessels and other property from the hazards associated with the event. This temporary safety zone will consist of the navigable waters of the Sacramento River between the Pioneer Bridge and the mouth of the American River. The Coast Guard has granted the Sacramento Convention & Visitors Bureau a marine event permit for this event.

The following area will constitute a temporary safety zone: All navigable waters of the Sacramento River in an area four thousand yards by two hundred yards bounded by the following positions: 38°35′49.0″ N, 121°30′30.0″ W; thence to 38°35′49.0″ N, 121°30′23.0″ W; thence to 38°33′40.0″ N, 121°30′59.0″ W; thence to 38°33′46.0″ N, 121°31′11.0″ W; thence returning to the point of origin (NAD 83). Entry into, transit through or anchoring within the safety zone is prohibited, unless authorized by the Captain of the Port, or his designated representative.

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

Although this safety zone does restrict boating traffic within the Sacramento River, the effect of this regulation will not be significant as the safety zone will be short in duration.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. For the same reasons set forth in the above Regulatory Evaluation, the Coast Guard certifies under 5 U.S.C. 605(b) that this rule is not expected to have a significant economic impact on any substantial number of entities, regardless of their size.

This safety zone will not have a significant impact on a substantial number of small entities because although the safety zone will occupy most of the width of the river at that point, the Patrol Commander of the event will open it up from approximately 12:15 p.m. to 12:45 p.m. on each of the two days to allow vessel traffic to pass through. In addition, most of the vessels in that area will be participating in the event, so the impact will be at a minimum.

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

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

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation because we are establishing a safety zone.

An “Environmental Analysis Checklist” and a “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under ADDRESSES.

On June 6, 2003, we published a notice of proposed rulemaking (NPRM) entitled Safety Zone; Fireworks Display, Columbia River, Astoria, Oregon in the Federal Register (68 FR 109). We received no letters commenting on the proposed rule. No public hearing was requested, and none was held.

The Coast Guard is establishing a temporary safety zone to allow a safe fireworks display. This event may result in a number of vessels congregating near the fireworks launching barge. The safety zone is needed to protect watercraft and their occupants from safety hazards associated with the fireworks display.

No comments were received from the public regarding this proposed rule.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). The Coast Guard expects the economic impact of this rule to be so minimal that a full regulatory evaluation under the regulatory policies and procedures of DHS is unnecessary. This expectation is based on the fact that the regulated area established by the regulation will encompass less than one mile of the Columbia River for a period of only one hour at night, annually, when vessel traffic is low.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Waiting 30 days for this rule to be effective is contrary to the public interest. Due to the complex planning and coordination of the event in 2003, the event sponsor was unable to provide the Coast Guard with notice of details of this year's event in time to allow for notice and comment and a 30-day waiting period prior to the effective date after publication. Since immediate action is necessary to ensure the safety of vessels and spectators gathered in the vicinity of the fireworks launching barge, it is in the public interest to make the rule effective less than 30 days after publication in the Federal Register .

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

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

This rule will affect the following entities, some of which may be small entities: The owners or operators of vessels intending to transit a portion of the Columbia River from 9:30 p.m. to 10:30 p.m. on the second Saturday in August, annually. This safety zone will not have significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for only one hour in the evening when vessel traffic is low. Traffic will be allowed to pass through the zone with the permission of the Captain of the Port or his designated representatives on scene, if safe to do so. Because the impacts of this rule are expected to be so minimal, the Coast Guard certifies under 5 U.S.C. 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601-612) that this final 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 rule so that they could better evaluate its effects on them and participate in the rulemaking process. Request for comments and assistance was published in the notice of proposed rulemaking for this rule.

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

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

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

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

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

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

This is a summary of the Commission's Order on Reconsideration, in WT Docket 97-112 and CC Docket No. 90-6, FCC 03-130, adopted June 10, 2003, and released June 27, 2003. The full text of the Order on Reconsideration is available for public inspection during regular business hours at the FCC Reference Information Center, 445 12th St., SW., Room CY-A257, Washington, DC 20554. The complete text may be purchased from the Commission's duplicating contractor: Qualex International, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail at qualexint@aol.com.

1. In January 2002, the Commission released a Report and Order in WT Docket No. 97-112 and CC Docket 90-6 ( Gulf Report and Order ), in which it established a comprehensive regulatory scheme for the Gulf of Mexico designed to facilitate the provision of cellular service to unserved areas of the Gulf region and resolve operational conflicts between Gulf and land carriers, while minimizing the disturbance to existing operations and contractual relationships. See Cellular Service and Other Commercial Mobile Radio Services in the Gulf of Mexico, WT Docket No. 97-112, Amendment of Part 22 of the Commission's Rules to Provide for Filing and Processing of Applications for Unserved Areas in the Cellular Service and to Modify Other Cellular Rules, CC Docket No. 97-112, Report and Order, 67 FR 9596 (March 4, 2002) ( Gulf Report and Order ). As part of this licensing scheme, the Commission adopted a bifurcated approach for the Gulf that reflected the differences in deployment of cellular service in the Eastern Gulf and the Western Gulf. The Commission determined that the entirety of the Western Gulf would be included within the Gulf of Mexico Exclusive Zone (GMEZ) in which the Gulf carriers would not be subject to use-or-lose rules, but would have full flexibility to build, relocate, modify and remove offshore facilities without any impact on their rights to provide service to “unserved” areas. In the Eastern Gulf, the lack of offshore cellular deployment led the Commission to designate a Gulf of Mexico Coastal Zone (GMCZ) extending from the shoreline seaward twelve nautical miles, in which unserved area licensing rules would apply, while the remainder of the Eastern Gulf was included in the GMEZ, giving Gulf carriers full flexibility to operate beyond the twelve nautical mile limit.

2. By using the existing rules as the basis for its decision in the Western Gulf, the Commission reaffirmed the coastline as the legal demarcation line for the Western Gulf separating the service areas of Gulf and land-based cellular carriers. The Gulf Report and Order continued to bar land-based carriers from extending their service area boundaries (SABs) over any portion of the Western Gulf without the consent of the relevant Gulf carrier, regardless of whether the Gulf carrier is serving that portion of the Gulf from an offshore site. Conversely, the Gulf carriers are prohibited in the Western Gulf from extending contours over land that would encroach on areas served by land-based carriers, absent consent. The Commission also determined that because of the different propagation characteristics of radio signals transmitted over land and water, it would continue to use different formulas to determine the SABs of land and water-based sites. Accordingly, the Commission retained the rule that determined the reliable service area of Gulf-based sites using a 28 dBμV/m contour, while using a 32 dBμV/m contour to determine the reliable service area of land-based sites.

3. The Gulf Report and Order also addressed the issue of non-cellular commercial mobile radio services (CMRS) services in the Gulf. The Commission declined to create a Gulf licensing area for non-cellular services, noting the lack of support for this alternative in the record. However, the Commission clarified that in CMRS services that do not have a separately licensed Gulf market, licensees serving areas adjacent to the Gulf of Mexico were entitled to extend their coverage offshore. Because most non-cellular services use licensing areas based on county boundaries, which typically extend a specified distance over water pursuant to state law, the Gulf Report and Order clarified that such Commission licensing areas were co-extensive with county boundaries. The Gulf Report and Order also stated that licensees could extend service further into the Gulf on a secondary basis, provided they did not cause interference to others.

4. Petroleum Communications, Inc. (PetroCom) contends that the Commission's decision to continue using different formulas to determine the SABs of land and Gulf-based transmitters gives land-based carriers a signal strength advantage over Gulf carriers, thereby enabling land-based carriers to encroach into the Gulf and capture water-based cellular traffic. PetroCom maintains that either Gulf carriers should be entitled to use the 32 dBμV/m land-based formula to determine their predicted signal strength at the coastal boundary, or alternatively that the 28 dBμV/m water-based formula should be used by land-based as well as Gulf carriers. PetroCom also asserts that the Commission's adoption of the two-formula approach lacks adequate basis in the record and is procedurally flawed.

5. The Commission affirms its decision to use the two-formula approach in calculating service area contours for land-based and Gulf carriers. This approach recognizes a basic fact of signal propagation: due to the absence of path obstructions and typically quieter RF environment, a signal transmitted over water is likely to be stronger than a signal transmitted over land at the equivalent distance from the transmitter. The 32 dBμV/m land-based formula incorporates factors that typically affect propagation of signals over land, such as rolling terrain. The land formula also assumes a noisier environment and that the subscriber will be using a mobile handset near ground level. On the other hand, assumptions factored into the 28 dBμV/m water formula are quite different. The water formula assumes that a signal in the Gulf will not have the same path obstructions encountered by radio signals over land. The water formula does not factor in rolling terrain, presumes a quieter noise environment, and also takes into account the different characteristics of water-borne cellular receivers, which are typically mast-mounted and therefore able to receive a signal at a greater distance from the transmitter. Thus, the water formula assumes that the typical Gulf subscriber operating on a boat or drilling platform will have a receive unit with a mast-mounted antenna at a height of approximately 30 feet.

6. Indeed, using 28 dBμV/m as the basis for defining reliable service over water was originally proposed by PetroCom itself, which contended that it more accurately approximated actual coverage in the Gulf. PetroCom previously argued that 28 dBμV/m more accurately predicted reliable service in the Gulf due to the stronger propagation characteristics of over-water transmissions. In support of this argument, PetroCom submitted actual received power measurements from Gulf facilities to what it characterized as a typical mobile unit for a Gulf subscriber. The Commission concluded that PetroCom's technical exhibit provided a convincing demonstration of the service range of typical cellular facilities found in the Gulf, and therefore established the formula based on the data submitted by PetroCom.

7. The Commission also rejects PetroCom's argument that a single formula will “equalize” the signal strengths of land-based and Gulf carriers at the shoreline. If the Commission was to apply the land-based formula to establish the SABs of both land-based and Gulf carriers, as PetroCom proposes, the actual signal strength of the Gulf carrier's signal at the shoreline would very likely be higher than 32 dBμV/m. Because the land formula assumes rolling terrain that is not encountered over water, it will tend to underestimate the actual strength of a signal transmitted over water at the SAB radial distance. Thus, while the land formula will indicate that the Gulf carrier's SAB does not encroach on land, the Gulf carrier's actual 32 dBμV/m contour is likely to extend inland. Accordingly, use of the land formula over water could result in the Gulf carrier having an actual signal strength at the boundary that is greater than that of the adjacent land carrier, thereby leading to potential capture of the land carrier's customers. Alternatively, if the Commission were to apply the water formula to both land-based and Gulf carriers, the result would likely be dead spots and undesired carrier capture along the coastline. The water formula does not take into account variations in terrain that are present in over-land transmissions; accordingly, although use of the formula may make it appear that the land carrier has an adequate signal at the shoreline, in fact the signal may well be substantially weaker. In contrast, the Gulf carrier would be operating at a signal strength sufficient to provide reliable service. The use of the water formula by all parties would therefore likely lead to capture of land traffic by the Gulf carrier because of the stronger Gulf signal.

8. PetroCom argues that using different formulas for land-based and Gulf carriers gives a signal strength advantage to land carriers and thereby will cause subscriber capture problems for Gulf carriers. The Commission agrees that the two-formula approach will not prevent subscriber capture in all situations, and that capture of Gulf traffic by land carriers may occur on occasion. The Commission has always acknowledged that these formulas are theoretical models that approximate but do not precisely predict the extent of actual coverage provided by carriers beyond their respective sides of the coastline. However, in situations where the majority of the signal path is over a single medium—land or water—the two-formula approach provides the most reasonable estimate of a given station's service area. The Commission concludes that the PetroCom's proposal does not provide a better solution to subscriber capture than the two-formula approach, and that it is more likely to exacerbate capture problems in comparison to the two-formula approach.

9. PetroCom further argues that the two-formula approach does not preserve the status quo, but actually gives land-based carriers a bargaining advantage in negotiating agreements with Gulf carriers. However, because the Gulf Report and Order prohibits land carriers from extending their SAB contours anywhere into the Western Gulf, a land carrier seeking to place a site close to the boundary has no choice but to negotiate with the applicable Gulf carrier, regardless of whether the Gulf carrier has a facility in the area.

10. PetroCom also notes that it has negotiated agreements with land-based carriers in which both parties agreed to use of the land formula. This is not an argument for adopting the land formula as an across-the-board rule. The Commission found that land and Gulf carriers had been using the existing formulas and had been successful in reaching negotiated agreements under the existing framework. The Commission consequently found that changing the SAB definitions could lead to one side or the other unilaterally increasing their transmitter power under the revised definitions, which could upset existing agreements and create new conflicts. Parties remain free to negotiate alternative arrangements. PetroCom's current extension and co-location agreements with land carriers (where PetroCom has filed applications showing a 32 dBμV/m contour) were the end result of negotiations, rather than the starting points.

11. PetroCom further argues that in Petroleum Communications, Inc. v. FCC , 22 F.3d 1164 (DC Cir. 1994) ( PetroCom ), the DC Circuit Court vacated the water formula, and reinstated the original cellular rule that defined reliable service, which was based on a 39 dBμV/m contour. Accordingly, PetroCom argues, it is entitled under the “status quo” to a signal strength of 39 dBμV/m at the coastline, a significantly stronger signal than either 28 or 32 dBμV/m. The Commission disagrees with PetroCom's characterization of the effect of the remand on this issue. The issue that the Gulf carriers raised and which the DC Circuit Court remanded was whether the Gulf carriers should be limited to areas of actual service in light of their dependence on itinerant offshore platforms as sites for their transmitters. The Court held that the Commission had not addressed why it was treating land and Gulf carriers in the same manner ( i.e. , limiting both land and Gulf carriers to areas of actual service) even though the Gulf carriers are dependent on oil and gas rigs as transmitter sites.

12. Accordingly, the Court remanded “this issue to the Commission with instructions to vacate § 22.903(a) [now § 22.911(a)] insofar as it applies to [Gulf of Mexico Service Area (GMSA)] licensees pending reconsideration.” Pending resolution of the remand, the Commission adopted a note to paragraph (a) of the rule, in which it identified the status quo: “[U]ntil further notice, the authorized CGSAs of the cellular systems licensed to serve the GMSA are those which were authorized prior to January 11, 1993.” The Commission believed then, and continues to believe now that the Court's intent was to direct the Commission to vacate only that portion of former § 22.903(a) that limited Gulf licensees' CGSAs to their existing areas of actual service—the only issue as to which the Court was remanding—and not to compel the Commission to also vacate the formula it had adopted for determining reliable service in the Gulf, as to which no objection had been made and which played no role in defining the previous CGSA which was reinstated during the interim as a result of the Court's decision.

13. Following the PetroCom remand, the Commission has applied the 28 dBμV/m water formula as the applicable standard for Gulf carriers. This is consistent with its policy that, to the extent that Gulf carriers are allowed to serve up to the boundary of the GMSA, i.e. , the shoreline, they are permitted to operate at a height and power sufficient to provide reliable service at the shoreline. The use of the 39 dBμV/m field strength by Gulf carriers is inappropriate because it is clearly counter to data submitted to the Commission regarding the field strength necessary for reliable service by either land or water carriers. Indeed, carriers other than PetroCom have understood that the Gulf carriers were subject to the water formula. For example, Bachow/Coastel, the B-Block Gulf carrier, engineered its systems using the water formula as the applicable standard, and entered into agreements based on that formula.

14. In the Gulf Report and Order , the Commission declined to adopt its proposal to create a Coastal Zone that would encompass coastal waters in both the Eastern and Western Gulf, and proposed to develop a “hybrid” propagation formula that would be used by both land-based and Gulf carriers to measure service area contours within the Coastal Zone. The Commission noted that the record reflected little support for a hybrid formula, and found that it would be difficult to establish a single formula that would accurately account for the variations in signal propagation over both land and water. The Commission finds no merit in PetroCom's contention that the Commission erred in rejecting a hybrid approach in favor of retaining the two-formula approach. First, the proposal to create a hybrid formula was linked to the proposal to establish a Coastal Zone that could be served by both land and Gulf carriers, which the Commission ultimately did not adopt. Once the Commission decided to retain existing rules rather than establish a Coastal Zone in both the Eastern and Western Gulf, there was no longer a need to pursue development of a hybrid signal propagation formula as previously proposed. Second, the Commission rejects PetroCom's contention that there was a sufficient record to justify, much less compel, adoption of a hybrid formula. Although there were indeed some commenters who supported use of a hybrid formula, others did not. Moreover, few commenters actually proposed specific technical criteria for the development of such a formula, and the Commission found that those who did failed to provide the type of detailed technical analysis or supporting data (such as measurements) necessary to support their proposals. Given these and other factors, the Commission continues to believe that a hybrid formula would be very difficult to develop, and that the benefits of such a formula do not outweigh the costs and complications involved in establishing and employing one.

15. PetroCom argues that the Commission violated the Regulatory Flexibility Act (RFA) because its Initial Regulatory Flexibility Analysis (IRFA) did not describe the potential impact on Gulf carriers of retaining the two-formula approach. PetroCom further argues that the Final Regulatory Flexibility Analysis (FRFA) in the Gulf Report and Order was flawed because it did not contain a description of the steps the Commission has taken to minimize the significant economic impact on the Gulf carriers of continuing to allow land carriers to utilize the land formula. PetroCom also contends that the Commission was required to include a statement in the FRFA why proposals for the use of “an equal strength rule” were rejected as alternatives.

16. The RFA requires that agencies evaluate the effect that new regulations will have on small business entities. 5 U.S.C. 601 et seq. When proposing a new rule, agencies must perform an IRFA discussing the proposed new rule's impact on small entities. Further, when adopting a final rule, the agency must also perform a FRFA. The Commission complied with these requirements. PetroCom incorrectly asserts that as part of the RFA process, the Commission was required to analyze the effects that retaining existing rules would have on small entities. The Commission's decision to continue applying existing rules was not a new undertaking that falls under the provisions of the RFA. Instead, after reviewing alternatives, the Commission determined that, in light of the difficulties of adopting a single formula that would apply in all cases, the existing regulatory environment should be retained because of the flexibility provided by the Commission's rules for parties to enter into agreements that would allow carriers to choose for themselves which operating parameters to apply. This decision did not require additional discussion in the FRFA.

17. In December 1992, the Commission began accepting Phase II applications for unserved area licenses in the GMSA. However, following the PetroCom remand, the Commission suspended processing of these applications pending reconsideration of the Commission's policies in the Gulf region. Similarly, the Commission ceased processing de minimis extension requests along the Gulf coast due to uncertainty regarding the rules for the GMSA. In the Gulf Report and Order , the Commission dismissed all pending Phase II applications and extension requests (as well as associated petitions to deny). The Commission reasoned that in light of length of time since the applications had been filed, the fairest and most efficient resolution was to dismiss all pending applications and allow the carriers to reapply. In dismissing all pending Phase II and de minimis extension applications, however, the Commission erroneously dismissed a number of PetroCom's applications that were filed pursuant to agreements to co-license sites on land in markets adjacent to the Gulf of Mexico. A major goal of the Gulf Report and Order was to encourage parties to reach negotiated solutions to issues such as coverage, capture, and roaming rates. The policies set out in the Gulf Report and Order were also aimed at ensuring that existing contractual relationships are not disturbed. The dismissal of PetroCom's applications based on negotiated co-location agreements runs counter to that goal. Accordingly, the Commission reinstates the applications cited in PetroCom's petition to pending status.

18. In the Gulf Report and Order , the Commission gave the Gulf carriers full flexibility to build, relocate, modify, and remove offshore facilities throughout the GMEZ without seeking prior Commission approval or facing competing applications. Further, the Commission chose not to allow land carriers to make de minimis extensions into unserved areas of the GMEZ. The Commission agrees with PetroCom that the Commission's rules as currently worded may cause some confusion. Accordingly, the Commission clarifies that land-based carriers are precluded from extending their SABs into any part of the GMEZ, whether served by the applicable Gulf carrier or not, without the Gulf carrier's consent, and amends rule § 22.912 to reflect this fact.

19. The Commission also clarifies, on its own motion, the wording of § 22.911(a)(2) to remove confusion. In the Gulf Report and Order , the Commission amended § 22.911(a)(2) in order to reflect that areas of the GMCZ would be subject to Phase II licensing and open to all carriers. However, § 22.911(a)(2) in its current form may be misread as applying only to the two original Gulf (GMEZ) carriers. The Commission therefore clarifies that the rule applies to all cell sites actually located in the GMSA (whether in the GMEZ or GMCZ), and not just to GMEZ carriers.

20. PetroCom argues that it was material error for the Commission not to address an ex parte request made by PetroCom in October 2001, proposing that the Commission adopt a grandfathering rule that preserves the current operating parameters of all facilities that existed as of April 17, 1997. PetroCom argues that current operating parameters means the use of 32 dBμV/m contours as calculated using the land formula at the coastline. According to this proposal, all operating parameters, including contour extensions that cross the coastline boundary, would be grandfathered using the land formula. PetroCom's proposal would allow a carrier to modify or construct a new site as long as any new cross-boundary extensions (also calculated using the land formula) remain within the extension of the originally grandfathered contour.

21. The Commission declines to reconsider the grandfathering of existing cellular facilities as proposed by PetroCom. The Gulf Report and Order did not affect any existing operating parameters, including the use of the land formula by Gulf carriers or cross-boundary contours, that might have resulted from such agreements. However, while the Commission grandfathered such existing operations, it did not grant carriers, either land carrier or Gulf carrier, a permanent right to encroach across the coastline boundary or the right to Gulf carriers to calculate contours using the land formula in the absence of agreements permitting them to do so. As previously discussed, the use of the land formula by Gulf carriers has never been the status quo for the Gulf carriers. Instead, the Gulf carriers are required to operate using the water formula, absent an agreement with the applicable land carrier.

22. The Commission found in the Gulf Report and Order that it was in the public interest to allow land-based CMRS carriers to extend their coverage offshore, both to increase coverage and service quality for land-based customers along the coastline and to offer service to coastal boating traffic. The Commission further noted that the geographic service area definitions used for most non-cellular CMRS services—including those for PCS—are based on county boundaries, which typically extend over water pursuant to state law. Accordingly, the Gulf Report and Order clarified that such Commission licensing areas are co-extensive with the county boundaries on which they are based. The Commission also stated that licensees could provide service extending beyond county boundaries and into the Gulf on a secondary basis so long as they comply with the technical limitations applicable to the radio service and do not cause co-channel or adjacent channel interference to others.

23. VoiceStream Wireless Corp. (VoiceStream) argues that the Gulf Report and Order erroneously reduced the rights of existing PCS licensees along the Gulf coast to provide service extending out into the Gulf. VoiceStream and other commenters assert that by defining PCS licensing areas as co-extensive with county boundaries, allowing carriers to provide service in the Gulf beyond county boundaries only on a secondary basis, and leaving open the possibility of licensing separate PCS markets in the Gulf at a later date, the Gulf Report and Order has arbitrarily reduced the rights of existing PCS licensees. VoiceStream contends that PCS licensees bordering the Gulf should be expressly authorized to serve the entire Gulf area on a primary basis, and that the Commission should be precluded from establishing a separate PCS licensing area for the Gulf. Alternatively, VoiceStream requests that if the Commission concludes that PCS licensing areas along the Gulf coast are limited to county boundaries, the Commission should redefine the market area boundaries of PCS licensees extending into the Gulf based on the federally-defined Exclusive Economic Zone (EEZ) which extends 200 nautical miles into the Gulf of Mexico.

24. The Commission has clearly stated in its rules and proceedings that PCS is licensed using Major Trading Areas (MTAs) and Basic Trading Areas (BTAs), as defined in the Rand McNally Commercial Atlas and Marketing Guide. See Rand McNally, 1992 Commercial Atlas & Marketing Guide, 123rd Edition, 1992 ( Rand McNally ). Similarly, the PCS technical rules regarding field strength limits at licensing area borders do not entitle licensees to extend service on a primary basis beyond the licensing areas specified on their authorizations. Nothing in the Commission's rules indicates that carriers may serve areas outside of their markets on a primary basis simply because there is no adjacent licensee. To the contrary, the Commission's rules state that the holding of an authorization does not create any rights beyond the terms, conditions and period specified in the authorization. The Commission rejects the argument that its conclusions represent a “reduction” in the rights of PCS licensees, because primary rights to serve the Gulf beyond county boundaries were never granted as part of those licenses. The Commission also rejects the argument that it should grant land-based PCS licensees primary rights to serve the Gulf because PCS bidders allegedly relied on the lack of a separate PCS Gulf licensee in setting their bids. The Commission previously rejected a similar argument that bidders for Multipoint Distribution Service licenses along the Gulf coast could reasonably assume that there was no prospect of future licensing of the service in the Gulf. See Amendment of Parts 21 and 74 of the Commission's Rules With Regard to Licensing in the Multipoint Distribution Service and in the Instructional Television Fixed Service for the Gulf of Mexico, Notice of Proposed Rulemaking, WT Docket No. 02-68, RM-9718, 67 FR 35083 (May 17, 2002). Finally, the Commission sees no basis to adopt VoiceStream's request that the Commission change the geographic market definitions in PCS to extend existing Gulf coast markets 200 nautical miles into the Gulf based on the federally-defined Exclusive Economic Zone. The Commission adopted the specific market areas for PCS in 1993 after much debate over which type of service area is the most appropriate, and has repeatedly affirmed its decision to use such market areas on reconsideration.

25. The RFA requires that a regulatory flexibility analysis be prepared for rulemaking proceedings, unless the agency certifies that “the rule will not have a significant economic impact on a substantial number of small entities.” 5 U.S.C. 605(b). The RFA generally defines “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 601(b). In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 5 U.S.C. 601(3) (incorporating by reference the definition of “small business concern” in the Small Business Act, 15 U.S.C. 632). A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration. As required by the RFA, a FRFA was incorporated in the Gulf Report and Order. This Supplemental Final Regulatory Flexibility Analysis is limited to matters raised on reconsideration.

26. Because this decision affects only the small number of carriers providing cellular service along the coastline adjacent to the Gulf of Mexico, the Commission concludes that this action will not affect a substantial number of small businesses. Further, the Order on Reconsideration affirms or codifies decisions previously made in the Gulf Report and Order. Accordingly, the Commission certifies that this decision will not have a significant economic impact on a substantial number of small entities. The Commission will send a copy of the Order on Reconsideration including a copy of this certification, in a report to Congress pursuant to the Congressional Review Act of 1996. See 5 U.S.C. 801(a)(1)(A). In addition, the Order on Reconsideration and this certification will be sent to the Chief Counsel for Advocacy of the Small Business Administration, and will be published in the Federal Register . In this order, the Commission affirms the decision in the Gulf Report and Order to use different formulas for predicting the propagation of cellular signals over land and over water as the basis for determining the SABs of land-based and water-based cell sites in the Gulf of Mexico area. The Commission also affirms that the market boundaries of PCS licensees adjacent to the Gulf of Mexico are co-extensive with county boundaries. The Commission also amends rule § 22.912 to codify the Commission's decision in the Gulf Report and Order that a land carrier may not extend its SABs into any part of the GMEZ, served or unserved, without the Gulf carrier's consent. Further, the Commission clarifies language in § 22.911(a)(2) to more accurately reflect a rule change made in the Gulf Report and Order.

27. This Order on Reconsideration has been analyzed with respect to the Paperwork Reduction Act of 1995, Pub. L. 104-13, and found to impose no new or modified reporting and recordkeeping requirements or burdens on the public.

28. Pursuant to sections 1, 4(i), 4(j), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), and 405, and § 1.429 of the Commission's rules, 47 CFR 1.429, the April 3, 2002 Petition for Partial Reconsideration filed by Petroleum Communications, Inc., is denied in part and granted in part.

29. The February 22, 2002 Petition for Reconsideration filed by Petroleum Communications, Inc., is granted, and that File Nos. 02590-CL-97, 02593-CL-97, 02594-CL-97, 02595-CL-97, 02596-CL-97, 02600-CL-P2-97, and 02407-CL-P2-97 are reinstated and placed in pending status.

30. The Petition for Reconsideration filed by VoiceStream Wireless Corporation is denied.

31. The rule changes set forth below will become effective September 15, 2003.

This is a summary of the FCC's Report and Order, FCC 03-34, adopted on February 25, 2003, and released on February 12, 2003. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554. The complete text may be purchased from the FCC's copy contractor, Qualex International, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. The full text may also be downloaded at: www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365 or at bmillin@fcc.gov.

1. The major decisions adopted in the Order are as follows. The Order:

• Prohibits the filing of applications for new operations using 25 kHz channels, beginning six months after publication of the Order in the Federal Register.

• Prohibits any modification applications that expand the authorized contour of an existing station if the bandwidth for transmissions specified in the modification application is greater than 12.5 kHz, beginning six months after publication of the Order in the Federal Register.

• Prohibits the certification of any equipment capable of operating at one voice path per 25 kHz of spectrum, i.e. equipment that includes a 25 kHz mode, beginning January 1, 2005.

• Prohibits the manufacture and importation of any 150-174 MHz and 421-512 MHz band equipment that can operate on a 25 kHz bandwidth, beginning January 1, 2008.

• Imposes deadlines for migration to 12.5 kHz technology for PLMRS systems operating in the 150-174 MHz and 421-512 MHz bands. The deadlines are: January 1, 2013 for non-public safety systems, and January 1, 2018 for public safety systems.

2. As required by the Regulatory Flexibility Act (RFA), see 5 U.S.C. 604, the FCC has prepared a Final Regulatory Flexibility Analysis of the possible impact of the rule changes contained in this Order on small entities. The Final Regulatory Flexibility Act analysis is set forth further. The FCC's Consumer Information Bureau, Reference Information Center, will send a copy of this Order including the Final to the Chief Counsel for Advocacy of the Small Business Administration.

3. This Order does not contain any new or modified information collection. Therefore, it is not subject to the requirements for a paperwork reduction analysis, and we have not performed one.

4. As required by the Regulatory Flexibility Act (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Order in WT Docket 99-87. This present Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

5. The Order adopts rules to promote the transition to narrowband technology in bands 150-174 MHz and 421-512 MHz. Specifically, the FCC amends its rules to impose a deadline for migration to 2.5 kHz technology for non-public safety PLMRS systems operating on those bands, beginning January 1, 2013 and for public safety systems operating on those bands, beginning January 1, 2018. In addition, the FCC amends its rules to prohibit the certification of any equipment capable of operating at one voice path per 25 kHz of spectrum, i.e., multi-mode equipment that includes a 25 kHz mode, beginning January 1, 2005. The FCC also prohibits the manufacture and importation of 25 kHz equipment (including multi-mode equipment that can operate on a 25 kHz bandwidth) beginning January 1, 2008. The FCC amends its rules to prohibit any applications for new operations using 25 kHz channels beginning six months after notice of the Order is published in the Federal Register. Further, the FCC amends its rules to prohibit any modification applications that expand the authorized contour of an existing licensee if the bandwidth subject to the modification application is greater than 12.5 kHz, beginning six months after notice of the Order is published in the Federal Register. These actions will effect a transition to a narrowband channel plan. The resulting gain in efficiency will ease congestion on the PLMRS channels in these bands.

6. No comments or reply comments were filed in direct response to the IRFA. The FCC has, however, reviewed the general comments that may impact small businesses. Much of the potential impact on small businesses arises from the mandatory migration to 12.5 kHz technology beginning on January 1, 2013, the ban on importation and manufacture of 25 kHz equipment after January 1, 2008 and the freeze on new 25 kHz applications. The costs associated with replacement of current systems were cited in opposition to mandatory conversion proposals.

7. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the rules adopted. 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). A small organization is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations.

8. The rule changes effectuated by this Order apply to licensees and applicants of private land mobile frequencies in the 150-174 MHz and 421-512 MHz bands, and to manufactures of radio equipment.

9. Private Land Mobile Radio. PLMR systems serve an essential role in a vast range of industrial, business, land transportation and public service activities. These radios are used by companies of all sizes that operate in all U.S. business categories. Because of the vast array of PLMR users, the FCC had not developed, nor would it be possible to develop, a definition of small entities specifically applicable to PLMR users. For the purpose of determining whether a licensee is a small business as defined by the Small Business Administration (SBA), each licensee would need to be evaluated within its own business area. The FCC's fiscal year 1994 annual report indicates that, at the end of fiscal year 1994, there were 1,087,276 licensees operating 12,481,989 transmitters in the PLMR bands below 512 MHz. Further, because any entity engaged in a commercial activity is eligible to hold a PLMR license, these rules could potentially impact every small business in the U.S.

10. Public Safety. Public safety radio services include police, fire, local governments, forestry conservation, highway maintenance, and emergency medical services. The SBA rules contain a definition for small radiotelephone (wireless) companies, which encompass business entities engaged in radiotelephone communications employing no more that 1,500 persons. There are a total of approximately 127,540 licensees within these services. Governmental entities as well as private businesses comprise the licensees for these services. The RFA also includes small governmental entities as a part of the regulatory flexibility analysis. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities and towns; of these, 37,566, or 96 percent, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, the FCC estimates that 81,600 (96 percent) are small entities.

11. Equipment Manufacturers. We anticipate that at least six radio equipment manufacturers will be affected by our decisions in this proceeding. According to the SBA's regulations, a radio and television broadcasting and communications equipment manufacturer must have 750 or fewer employees in order to qualify as a small business concern. Census Bureau data indicate that there are 858 U.S. firms that manufacture radio and television broadcasting and communications equipment, and that 778 of these firms have fewer than 750 employees and would therefore be classified as small entities.

12. This Order adopts rules to promote the transition to narrowband technology for private land mobile licensees, in the 150-174 MHz and 421-512 MHz bands. In particular, applications for operations on 25 kHz equipment will no longer be accepted six months after publication of this item in the Federal Register. Additionally, modification applications that expand the authorized contour of an existing licensee if the bandwidth subject to the modification application is greater than 12.5 kHz will be prohibited beginning six months after publication of this item in the Federal Register. On January 1, 2005, certification will not be afforded any equipment capable of operating at one voice path per 25 kHz of spectrum. Further, this Order amends the FCC's current rules to prohibit the importation or manufacture of 25 kHz-only equipment beginning on January 1, 2008. All equipment utilized in non-public safety systems on or after January 1, 2018 must utilize a maximum channel bandwidth of 12.5 kHz. Lastly, all equipment utilized in public safety systems on or after January 1, 2018 must utilize a maximum channel bandwidth of 12.5 kHz.

13. 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.

14. The FCC adopted rules in this Order upon consideration of the economic burden on small businesses. For instance, many commenters supported adoption of rules that would require conversion to 12.5 kHz equipment as early as January 1, 2005. Such a proposal fails to give any consideration to the amortization and life-span of current equipment and the resources available to small entities. Rather than require small business licensees to convert its system to 12.5 kHz or equivalent technology beginning on January 1, 2005, the FCC delays mandatory migration to 12.5 kHz or equivalent technology until January 1, 2013 for non-public safety PLMR systems and until January 1, 2018 for public safety systems. Similarly, the rule changes permit modification to existing licensees, while the comments did not reflect such a consideration. The Order rejected a phased approach that would have burdened licensees to determine which market and which date applied to them. Although the FCC also takes intermediary steps to promote migration to 12.5 kHz equipment, it notes that none of the intermediary steps require the incumbent to immediately cease use of 25 kHz equipment. Exemption from coverage of the rule changes for small businesses would frustrate the purpose of the rule, i.e. , migration to more efficient spectrum use, and facilitate continued inefficient use of spectrum.

15. Report to Congress: The FCC will send a copy of this Order, including this FRFA, in a report to be sent to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996, see 5 U.S.C. 801(a)(1)(A). In addition, the FCC will send another copy of the Order, including the FRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the Order and FRFA (or summaries thereof) will also be published in the Federal Register. See 5 U.S.C. 604(b).

16. Accordingly, pursuant to sections 1, 2, 4(i), 5(c), 7(a), 11(b), 301, 302, 303, 307, 308, 309(j) , 310, 312a, 316, 319, 323, 324, 332, 333, 336, 337, and 351 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 155(c), 157(a), 161(b), 301, 302, 303, 307, 308, 309(j), 310, 312a, 316, 319, 323, 324, 332, 333, 336, 337, and 351, the Balanced Budget Act of 1997, Public Law Number 105-33, Title III, 111 Stat. 251 (1997), and §§ 1.421 and 1.425 of the FCC's rules, 47 CFR 1.421 and 1.425, it is ordered that the Second Report and Order is hereby adopted.

17. It is further ordered that part 90 of the FCC's rule is amended as set forth in the rule changes, and that these rules shall be effective September 15, 2003.

18. The Motion to Accept Supplemental Comments submitted by Industrial Telecommunications Association, Inc. is granted.