This rule is issued under Marketing Agreement Nos. 124 and 85, and Marketing Order Nos. 916 and 917 (7 CFR parts 916 and 917) regulating the handling of nectarines and peaches grown in California, respectively, hereinafter referred to as the “orders.” The orders are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

Under the orders, lot stamping, grade, size, maturity, container, container marking, and pack requirements are established for fresh shipments of California nectarines and peaches. Such requirements are in effect on a continuing basis.

This rule amends an interim final rule published in the Federal Register on April 9, 2003 (68 FR 17257). That rule, which was based on a unanimous recommendation from the committees made at meetings on December 3, 2002, changed the handling requirements under the orders by establishing a 31-pound minimum net weight for all five down Euro containers used by the industry, among other changes.

This amended interim final rule is based upon recommendations from the Nectarine Administrative Committee (NAC) and the Peach Commodity Committee (PCC) at meetings on May 1, 2003. The vote on the recommendation by the NAC was 7 to 1 and the vote on the recommendation by the PCC was unanimous. This amended interim final rule also incorporates changes requested on May 27, 2003, by a commenter on the previous interim final rule.

This amended rule revises the net weight for five down Euro containers as recommended by the NAC and PCC. In response to the comment received, this rule also exempts Peento type peaches from all round peach weight-count standards. In addition, this rule clarifies the provisions regarding how packages or containers must be marked with the name of the variety if known, and “unknown variety” when the variety is not known. This clarification is based on recommendations of the NAC and PCC, although their recommendations that the term “variety” be defined is not adopted because this change should be implemented following notice and comment rule making procedures.

The committees meet prior to and during each season to review the rules and regulations effective on a continuing basis for California nectarines and peaches under the orders. Committee meetings are open to the public and interested persons are encouraged to express their views at these meetings, such as the May 1, 2003 meetings. USDA reviews committee recommendations and information, as well as information from other sources, and determines whether modification, suspension, or termination of the rules and regulations would tend to effectuate the declared policy of the Act.

Sections 916.52 and 917.41 of the orders authorize establishment of container, pack, and marking requirements for shipments of nectarines and peaches, respectively. Under §§ 916.350 and 917.442 of the orders, the specifications of container markings, net weights, well-filled requirements, weight-count standards for various sizes of nectarines and peaches, and lists of standard containers are provided.

The committees recommended that a revised minimum net weight be established for all “five down” boxes (commonly referred to as “Euro” boxes) that are volume-filled. Currently, the minimum net weight requirement for “five down” boxes is 31 pounds, as established by the prior interim final rule. The committees have now recommended that the minimum net weight for five down containers be revised to include a 29-pound net weight for five down containers for the 2003 season only.

“Five down” boxes are containers that lay in a pattern of five containers per layer on each pallet. In other words, each layer of boxes on a pallet contains only five Euro boxes. Other container sizes and “footprints” may result in nine boxes per layer, etc.

The committees met on May 1, 2003 and recommended that the current net weights for five down Euro containers be revised to include both a 29-pound box and a 31-pound box. The 29-pound box will be permitted for the 2003 season only, after which time the Grade and Size Subcommittee will review the results from the season and make a recommendation to establish either a 29-pound box or a 31-pound box or other appropriate weight.

Containers used in the nectarine and peach industry have largely resulted from retailer demands. Many retailers want all of their suppliers to provide them with commodities in containers of the same footprint (length and width dimensions), thereby creating consistency and ease of transportation, storage, etc., for the retailer. Euro containers meet those demands, but require the industry to make changes in pack styles and package weights to conform to the evolving demands of the retail sector.

This recommendation resulted from a request by a handler who wanted to respond to a demand from one of his larger retail customers. The customer wanted volume-filled containers of nectarines and peaches of the same weight as tray-packed containers, which currently weigh 29 pounds.

At the meeting, the handler advised the committees that the current minimum net weight of 31 pounds for volume-filled Euro containers is not flexible enough to afford him the opportunity to meet the demands of his buyer.

Nectarines: For the reasons stated above, paragraph (a)(8) of § 916.350 is revised to include a 29-pound net weight for all volume-filled, five down Euro containers of nectarines, in addition to the current 31 pounds. The 29-pound container will be permitted during the 2003 season only. At the end of the 2003 season, the committees will recommend either a 29-pound, 31-pound container, or other appropriate weight. The container markings shall be placed on one outside end of the container in plain sight and in plain letters.

Peaches: For the reasons stated above, paragraph (a)(9) of § 917.442 is revised to include a 29-pound net weight for all volume-filled, five down Euro containers of peaches, in addition to the current 31 pounds. The 29-pound container will be permitted during the 2003 season only. At the end of the 2003 season, the committees will recommend either a 29-pound, 31-pound container, or other appropriate weight. The markings shall be placed on one outside end of the container in plain sight and in plain letters.

Under the requirements of § 917.41 of the order, containers of peaches are required to meet weight-count standards for a maximum number of peaches in a 16-pound sample when such peaches, which may be packed in tray-packed containers, are converted to volume-filled containers. Under § 917.442 of the order's rules and regulations, weight-count standards are established for all varieties of peaches as TABLES 1, 2, and 3 of paragraph (a)(5)(iv).

According to the PCC, the Peento type peaches were initially packed in trays because they were marketed as a premium variety, whose value justified the added packing costs. However, as the volume has increased, the value of this peach has diminished in the marketplace, and some handlers converted their tray-packed containers of Peento type peaches to volume-filled containers.

Prior to the 2002 season, weight-count standards established for peaches and nectarines were developed solely for round fruit. Peento type peaches are shaped like donuts, and weight-count standards for round fruit were inappropriate. In an effort to standardize the conversion from tray-packed containers to volume-filled containers for Peento type peaches, the committee staff conducted weigh-count surveys to determine the most optimum weight-counts for the varieties at varying fruit sizes.

As a result of those surveys, a new weight-count table applicable to only the Peento type peaches was added for the 2002 season and amended for the 2003 season. The new weight-count tables accommodate very large Peento type peaches that were not previously converted from tray-packs to volume-filled containers, but were being packed in volume-filled containers and required weight-count standards specifically for those sizes.

However, Peento peaches, which are subject to weight-count standards in TABLE 3 of paragraph (a)(5)(iv) in § 917.442, were not exempted from weight-count standards in the non-listed variety size requirements specified in paragraphs (b)(3) and (c)(3) of § 917.459, according to the commenter. This was an inadvertent omission in the previous interim final rule and requires this conforming change in this amended interim final rule. Therefore, the words “except for Peento type peaches” will be added at the end of paragraphs (b)(3) and (c)(3) of § 917.459.

In §§ 916.350 and 917.442 of the orders' rules and regulations, specifications of container markings, net weights, well-filled requirements, weight-count standards for various sizes of fruit, and lists of standard containers are provided.

In §§ 916.356 and 917.459 of the orders' rules and regulations, specifications of grade, maturity, and size regulations for nectarines and peaches, respectively, are provided for each variety by the variety's name. These variety-specific requirements are applied based upon the name of the variety, the size each variety is known to attain, the appropriate maturity guide (e.g., color chip) for the variety, and the historic harvest period specific to each named variety.

In §§ 916.60 and 917.50, handlers are required to report on shipments of nectarines and peaches. Sections 916.160 and 917.178 of the orders' rules and regulations specify the types of reports that handlers must file with the committees. Among the requirements, handlers must report the total shipments of nectarines and peaches by variety by November 15 of each year.

Thus, ensuring that each variety is regulated and reported on using the appropriate name is important to the operation of the nectarine and peach marketing orders.

Some handlers are using trademark names in place of the variety name. Thus, inspection service may not be able to provide appropriate inspection for a variety with an unfamiliar name. Accordingly, paragraphs (a)(2) of §§ 916.350 and 917.442 are amended by adding that a marketing name, trademark or brand name may be associated with the variety name, but cannot be substituted for a variety name.

This amended rule establishes handling requirements for fresh California nectarines and peaches consistent with expected crop and market conditions, and will help ensure that all shipments of these fruits each season meet the handling requirements established under each of these orders. This amended rule will also help the California nectarine and peach industries continue to provide fruit desired by consumers. This amended rule is designed to establish and maintain orderly marketing conditions for these fruit in the interests of producers, handlers, and consumers.

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

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

There are approximately 300 California nectarine and peach handlers subject to regulation under the orders covering nectarines and peaches grown in California, and about 1,800 producers of these fruits in California. Small agricultural service firms, which include handlers, are defined by the Small Business Administration [13 CFR 121.201] as those whose annual receipts are less than $5,000,000. Small agricultural producers are defined by the Small Business Administration as those having annual receipts of less than $750,000. A majority of these handlers and producers may be classified as small entities.

The committees' staff has estimated that there are less than 20 handlers in the industry who could be defined as other than small entities. For the 2002 season, the committees' staff estimated that the average handler price received was $9.00 per container or container equivalent of nectarines or peaches. A handler would have to ship at least 556,000 containers to have annual receipts of $5,000,000. Given data on shipments maintained by the committees' staff and the average handler price received during the 2002 season, the committees' staff estimates that small handlers represent approximately 94 percent of all the handlers within the industry.

The committees' staff has also estimated that less than 20 percent of the producers in the industry could be defined as other than small entities. For the 2002 season, the committees' estimated the average producer price received was $4.00 per container or container equivalent for nectarines and peaches. A producer would have to produce at least 187,500 containers of nectarines and peaches to have annual receipts of $750,000. Given data maintained by the committees' staff and the average producer price received during the 2002 season, the committees' staff estimates that small producers represent more than 80 percent of the producers within the industry. With an average producer price of $4.00 per container or container equivalent, and a combined packout of nectarines and peaches of 45,354,000 containers, the value of the 2002 packout level is estimated to be $181,416,000. Dividing this total estimated grower revenue figure by the estimated number of producers (1,800) yields an estimate of average revenue per producer of about $101,000 from the sales of peaches and nectarines.

This rule amends a prior interim final rule that changed the handling requirements under the orders. The prior interim final rule was published in the Federal Register on April 9, 2003 (68 FR 17257). That rule modified §§ 916.115, 916.350, 916.356, 917.150, 917.442, and 917.459, which regulate handling of nectarines and peaches, respectively, under the orders.

In addition, this interim final rule revises the net weight for five down Euro containers, exempts Peento type peaches from all round variety weight-count standards, and clarifies provisions relating to the use of variety names.

Under §§ 916.52 and 917.41 of the orders, grade, size, maturity, container, container marking, and pack requirements are established for fresh shipments of California nectarines and peaches, respectively. Such requirements are in effect on a continuing basis. The NAC and PCC met on May 1, 2003, and recommended that these handling requirements be revised for the 2003 season. These recommendations had been presented to the committees by the Stone Fruit Grade and Size Subcommittee, which is charged with review and discussion of such changes.

The Stone Fruit Grade and Size Subcommittee discussed the 31-pound net weight requirement for volume-filled five down Euro containers at its meeting on April 8, 2003. At that time, one handler advised that the current net weight of 31 pounds is not flexible enough to afford him the opportunity to meet the demands of his buyers. The handler noted that one large customer has begun demanding volume-filled boxes of nectarines and peaches in a 29-pound box rather than a 31-pound box, which makes the volume-filled container weight consistent with the tray-packed container weight. The handler added that he was unable to provide what his customer wanted, given that the current requirements limit him to a box with a 31-pound minimum weight. In the absence of change, the handler would be forced to ship 31 pounds to the customer, and risk receiving payment for only the 29 pounds the customer wanted.

The subcommittee agreed that the 31-pound box did not provide enough flexibility for all handlers and unanimously recommended that the minimum 31-pound requirement for volume-filled containers be revised. The alternative would have meant that this handler at least would have been unable to meet the demands of a buyer without pricing considerations. In an effort to enhance each handler's ability to provide what the market demands, such an alternative was unacceptable.

The NAC and PCC discussed the subcommittee's recommendation at their meeting on May 1, 2003. They debated the value of simply making 29 pounds the sole minimum net weight for volume-filled Euro containers, but opted to maintain the 31-pound container and add the 29-pound container for the 2003 season, contingent upon review at the end of the season by the Grade and Size Subcommittee. At that time, the subcommittee is expected to recommend only one net weight for five down, volume-filled Euro containers of nectarines and peaches for the 2004 season.

The NAC voted 7 in favor and one opposed to this recommendation, while the PCC voted unanimously in favor of the recommendation. The NAC member opposed to the recommendation noted that additional box styles are costly to the industry and should be avoided, if possible. However, the large majority of committee members disagreed, opting instead to take steps to be responsive to buyers.

Section 917.442 also establishes minimum weight-count standards for containers of peaches. Under these requirements, containers of peaches are required to meet weight-count standards for a maximum number of peaches in a 16-pound sample when such peaches are packed in a tray-packed container. Those same maximum numbers of peaches are also applicable to volume-filled containers, based upon the tray-packed standard. The weight-count standard was developed so handlers may convert tray-packed peaches to volume-filled containers and be assured that fruit of a specific size in the volume-filled container will be the same as that in the tray-packed container.

When Peento type peach varieties were first introduced and marketed, they were generally tray-packed because they were a novel and premium product. As production has increased, the value of the varieties has diminished in the marketplace, and some handlers have converted their tray-packed containers of Peento type peaches to volume-filled containers. Weight-count standards provide a basis for volume filling containers of other varieties of peaches. Currently, Peento type peaches are regulated under a new table of weight-count standards applicable to only these uniquely-shaped peaches.

However, due to an inadvertent omission, Peento type peaches were not exempted from the weight-count standards for round peaches in the non-listed (blanket) variety sizes in paragraph (b)(3) and (c)(3) of § 917.459, as noted by the commenter. Thus, under the rules and regulations in the orders, varieties of Peento type peaches that are not regulated by name would be regulated by date of harvest in the blanket regulations. To correct that omission, the words “except Peento type peaches” will be added to the end of each of those paragraphs, in response to the concerns of the commenter.

The alternative to this conforming change would be to have Peento type peaches in non-listed variety sizes subject to the same weight-count standards assigned to round varieties, treating these Peento type peaches differently than other varieties of Peento type peaches. Clearly, that is not an acceptable alternative, given that these donut-shaped peaches cannot meet the requirements established for round peaches, and require their own weight-count standards.

The Grade and Size Subcommittee also discussed the issue of variety nomenclature at its meeting on April 8, 2003. Several members expressed concern that use of different marketing names by different handlers for the same variety was causing mismarking situations, which affect inspections, size and maturity assignments, and data collection. The current regulations require that containers bear the name of the variety. This is clarified by adding that trademarks, marketing names, and brand names may be associated with the variety name, but cannot be substituted for the variety name. This is expected to foster consistent variety identification within the industries, and uniform application of maturity and size requirements.

The committees voted unanimously to define “variety” as part of the orders' rules and regulations and to specify more detailed identification requirements. A commenter also recommended changes to the names of several peach varieties to bring them into conformity with the recommendations of the PCC. However, because these recommendations limit how handlers must identify the variety names, USDA plans to issue a proposed rule on these recommendations. USDA recognizes that there may be a need for consistency in naming the various peach and nectarine varieties to prevent misleading variety markings, but believes that notice and comment rulemaking, rather than an interim final rule, should be used for implementing such changes.

The committees make recommendations regarding all the revisions in handling requirements after considering all available information, including recommendations by various subcommittees, comments of persons at subcommittee meetings, and comments received by committee staff. Such subcommittees include the Stone Fruit Grade and Size Subcommittee, the Inspection and Compliance Subcommittee, and the Executive Committee.

At the meetings, the impact of and alternatives to these recommendations are deliberated. These subcommittees, like the committees themselves, frequently consist of individual producers and handlers with many years of experience in the industry who are familiar with industry practices and trends. Like all committee meetings, subcommittee meetings are open to the public and comments are widely solicited. In the case of the Stone Fruit Grade and Size Subcommittee, many growers and handlers who are affected by the issues discussed by the subcommittee attend and actively participate in the public deliberations. In addition, minutes of all subcommittee meetings are distributed to committee members and others who have requested them, thereby increasing the availability of information within the industry.

Each of the recommended handling requirement changes for the 2003 season is expected to generate financial benefits for producers and handlers through increased fruit sales, compared to the situation that would exist if the changes were not adopted. Both large and small entities are expected to benefit from the changes, and the costs of compliance are not expected to be substantially different between large and small entities.

This rule does not impose any additional reporting and recordkeeping requirements on either small or large handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule. However, as previously stated, nectarines and peaches under the orders have to meet certain requirements set forth in the standards issued under the Agricultural Marketing Act of 1946 (7 CFR 1621 et seq.). Standards issued under the Agricultural Marketing Act of 1946 are otherwise voluntary.

In addition, the committees' meetings are widely publicized throughout the nectarine and peach industry and all interested parties are encouraged to attend and participate in committee deliberations on all issues. Like all committee meetings, the May 1, 2003, meetings were public meetings, and entities of all sizes were encouraged to express views on these issues. These regulations were also reviewed and thoroughly discussed at a subcommittee meeting held on April 8, 2003. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

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

As stated previously, an interim final rule regarding changes to the handling requirements for nectarines and peaches grown in California was published in the Federal Register on April 9, 2003 (68 FR 17257). A 60-day comment period was provided to allow interested persons to respond to the rule. Committee staff provided copies of the rule to all committee members. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. One comment was received, as noted, and has been addressed herein.

This amended interim final rule invites further comments on changes to the handling requirements currently prescribed under the marketing orders for California fresh nectarines and peaches. Any comments received will be considered prior to finalization of this rule.

Thirty days are provided for interested persons to submit comments. A period of 30 days is deemed appropriate because 2003 crop shipments are now being made and the changes made by interim final rule and this amended interim final rule should be finalized by the end of the shipping season. The nectarine shipping season ends at the end of October, and the peach season ends in late November.

After consideration of all relevant matters presented, the information and recommendations submitted by the committees, and other information, it is found that this amended interim final rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined, upon good cause, that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect, and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) California nectarine and peach producers and handlers should be apprised of this rule as soon as possible, since shipments of these fruits have already begun; (2) the committees recommended these changes at public meetings and interested persons had opportunities to provide input at these meetings; (3) these changes are relaxations; and (4) the rule provides a 30-day comment period, and any written comments timely received will be considered prior to any finalization of this interim final rule.

Section 36 of the FDIA (12 U.S.C. 1831m), as implemented by FDIC regulations, requires every large insured depository institution to submit an annual report containing its financial statements and certain management assessments to the FDIC, the appropriate Federal banking agency, and any appropriate state bank supervisor.1 Section 36 of the FDIA also requires that an independent public accountant audit the insured depository institution's annual financial statements to determine whether those statements are presented fairly in accordance with generally accepted accounting principles (GAAP) and with the accounting objectives, standards, and requirements described in section 37 of the FDIA. Under section 37, the accounting principles applicable to financial statements required to be filed with the Agencies must be uniform and consistent with GAAP.2 In addition, the accountant must attest to and report on management's assertions concerning internal controls over financial reporting.3 The institution's annual report also must contain the accountant's audit and attestation reports.4

Section 36 of the FDIA gives the Agencies the authority to remove, suspend, or bar an accountant from performing the audit services required under section 36 for good cause.5 This authority is in addition to the enforcement tools the Agencies have under section 8 of the FDIA, which enable the Agencies to remove or prohibit an institution-affiliated party (IAP), including an accountant, from further participation in the affairs of an insured depository institution for certain types of misconduct.6 Section 36 authority is also distinct from the Agencies' authority to remove, suspend, or debar from practice before an Agency parties, such as accountants, who represent others.7

Section 36 does not define good cause, but authorizes the Agencies to implement section 36 through the joint issuance of rules of practice.8 A removal, suspension, or debarment under section 36 would limit an accountant's or accounting firm's eligibility to provide audit services to insured depository institutions with total assets of $500 million or more. A section 36 action would not restrict the ability of accountants and firms to provide audit services to financial institutions with less than $500 million in total assets, however, or to provide other types of services to all financial institutions.

On January 8, 2003, the Agencies proposed amending their rules of practice by adding provisions for the removal, suspension, or debarment of accountants or accounting firms from performing the audit services required by section 36 of the FDIA.9 The proposed rules defined “good cause” for such actions and established procedures for removal, suspension, or debarment of accountants. The proposals also contained conforming amendments to the existing practice rules of the OCC, Board, and FDIC.

The Agencies received six comments. One comment was from a major trade association for community banks; another was from four large accounting firms and a major professional association for the accounting industry; a third was from three accounting firms that provide audit services to publicly held and non-publicly held banks in one state; the fourth and fifth comments were from certified public accountants; and the final comment was from a banking, management, and economic consultant. The commenters generally stated their support for the underlying goals of section 36 and the proposal—to bolster the quality of audit services.

One commenter expressed concern about immediate suspensions. The commenter asked how an insured depository institution can meet the deadline for submitting section 36 audits if the institution's accountant is subject to an order of immediate suspension and requested guidance on the Agencies' expectations under these circumstances. Another commenter questioned why the Agencies are pursuing this rulemaking, given the role of the newly constituted Public Company Accounting Oversight Board (PCAOB) as a regulator of accountants. The commenter's more specific concern was with the level of due process associated with immediate and automatic suspensions. A third commenter questioned whether the Agencies have authority to use a negligence standard of any kind, given the higher standards elsewhere in the FDIA for IAPs who are independent contractors. The commenter also questioned the authority of the Agencies to extend sanctions to accounting firms and offices.

In response to the comments, the Agencies have revised the proposal, as discussed in detail below.

Below is a more detailed discussion of the issues raised in response to the proposal and the Agencies' responses thereto. Because each Agency is codifying the final rules using different section numbers, this discussion will follow the order of the proposal, using captions instead of section numbers for reference.

The proposal defined “accounting firm,” “audit services,” and “independent public accountant.” Under the proposal, “accounting firm” means a corporation, proprietorship, partnership, or other business firm providing audit services. “Audit services” means any service required to be performed by an independent public accountant by section 36 of the FDIA and 12 CFR part 363, including attestation services. “Independent public accountant” means any individual who performs or participates in providing audit services.

The Agencies did not receive any comments on the definitions. The final rule adopts the definitions as proposed.

Good Cause for Removal, Suspension, or Debarment. The proposed rules defined “good cause” for removal, suspension, or debarment of accountants from providing audit services required by section 36. Under the proposal, the Agencies would have “good cause” if the accountant does not possess the requisite qualifications to perform audit services; engages in knowing or reckless conduct that results in a violation of applicable professional standards, including those standards and conflicts of interest provisions applicable to accountants through the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act) 10 and developed by the PCAOB and the Securities and Exchange Commission (SEC), as such standards and provisions become effective; engages in a single instance of highly unreasonable conduct that results in a violation of applicable professional standards in circumstances in which an accountant knows, or should know, that heightened scrutiny is warranted; or engages in repeated instances of unreasonable conduct, each resulting in a violation of applicable standards, that indicate a lack of competence to perform annual audit services.

Under the proposal, good cause also included knowingly or recklessly giving false or misleading information to the Agencies with respect to any matter before the Agency; knowingly or recklessly violating any provision of the Federal banking or securities laws or regulations, or any other law, including the Sarbanes-Oxley Act; and removal, suspension, or debarment from practice before any Federal or state agency regulating the banking, insurance, or securities industry on grounds relevant to the provision of audit services, other than those actions that result in automatic removal, suspension, and debarment under the proposed rules.

Conduct giving rise to good cause under the proposed rules does not have to occur in connection with the provision of audit services or in connection with services provided to depository institutions. Any actions or failures to act by an independent public accountant or accounting firm that meet the criteria for good cause set forth in the regulation, whether or not related to the banking industry, could constitute good cause for Agency action.

One commenter expressed a variety of reservations about the good cause standard. The commenter's broadest suggestion was that the Agencies should refer all section 36 actions against accountants to the PCAOB and SEC, given the entities' new roles as regulators of accountants under the Sarbanes-Oxley Act.

This comment does not reflect the jurisdictional differences among the Agencies, PCAOB, and SEC. The Agencies have enforcement jurisdiction that is separate and distinct from the PCAOB's and the SEC's enforcement jurisdictions. Congress gave the Agencies discretion to suspend or debar accountants from performing annual audit services for good cause under section 36 of the FDIA. While an enforcement action by the PCAOB or the SEC could provide good cause for section 36 actions, neither the PCAOB nor the SEC has statutory authority under the FDIA to suspend or debar an accountant from performing annual audit services. Even if the PCAOB or the SEC could accomplish this outcome indirectly, by barring an accountant from associating with an accounting firm, neither the PCAOB nor the SEC has authority to take action against an accountant who performs services for an institution that is not publicly held. Accordingly, the Agencies are not adopting the commenter's suggestion that all section 36 cases be referred to the PCAOB or the SEC.

The commenter further asserted that there might be potential inconsistencies between the good cause standards in the proposed rules and those the PCAOB may establish in the future. To address these potential problems, the commenter suggested that the Agencies should, as stated above, defer to the PCAOB and the SEC, or at a minimum coordinate with them before taking suspension or debarment actions against accountants.

The Agencies intend to coordinate with the PCAOB and the SEC in section 36 cases under appropriate circumstances. However, the Agencies do not believe that the proposed rule creates a conflict in professional or substantive standards for accountants among the Agencies, the PCAOB, and the SEC. The proposed rule did not suggest new standards for accountants. Rather, it incorporated accountants' existing responsibility to adhere to applicable professional standards, such as generally accepted auditing standards and generally accepted standards for attestation engagements, and existing SEC and Agency standards, into the definition of good cause. The proposed rules were also consistent with the Sarbanes-Oxley Act and anticipated future actions by the SEC and PCAOB to enforce standards set by those agencies. The proposed rules were also drafted to accommodate the new standards that will be adopted by the SEC and the PCAOB.

The commenter's next point concerned the possibility that conduct at non-depository institutions could provide the basis for an action against an accountant. The commenter questioned whether the Agencies have the capability to evaluate the relevance of suspensions and debarments of accountants in non-banking contexts, e.g., suspensions or debarments by regulators of different types of businesses. The commenter opposed using suspensions by non-banking agencies to serve as good cause for suspensions or debarments in the banking industry.

The proposal was consistent with the Agencies' current authority under section 8(e)(1)(A)(ii) of the FDIA, which allows the Agencies to take into account unsafe business practices in connection not only with any insured depository institution, but more broadly, any business institution. 11 The Agencies continue to believe that there may be cases in which misconduct by accountants at non-depository institutions could raise serious questions about the ability of the accountant to provide audit services for an insured depository institution. Under the final rule, therefore, the Agencies can consider as “good cause” suspensions and debarments of accountants in non-depository institution contexts that come to the attention of the Agencies.

Another commenter questioned whether the Agencies have the authority to use negligence as a basis for a removal, suspension, or debarment of an accountant. The commenter argued that the negligence standard is not consistent with remedies available now to the Agencies against independent contractor IAPs under section 8 of the FDIA.12

In response, the Agencies note that section 36 of the FDIA broadly refers to “good cause” as grounds for section 36 enforcement actions. There is no limitation in the statute on the use of negligence as a basis for action, nor does section 36 tie “good cause” to existing section 8 standards. On the contrary, section 36 of the FDIA states that the good cause enforcement remedies are in addition to those available under section 8.13 The commenter's position would essentially require this clause to be eliminated from section 36 of the statute. Also, the negligence standard is one the SEC has used for many years in its suspension and debarment actions against accountants. Congress recently codified this standard for the SEC in the Sarbanes-Oxley Act.

For the foregoing reasons, the Agencies are adopting in the final rules the good cause standard from the proposed rules.

Removal, Suspension, or Debarment of Accounting Firms or Offices of Firms. The proposed rules provided that if an Agency determines that there is good cause for the removal, suspension, or debarment of a member or an employee of an accounting firm, the Agency “also may remove, suspend, or debar such firm or one or more offices of such firm.” The proposed rule listed five illustrative factors that the Agency may consider when deciding (a) whether to remove, suspend, or debar a firm or one or more offices of such firm, and (b) the term of any sanction imposed.

Some of the commenters questioned the authority of the Agencies to take action against accounting firms or offices of firms. One commenter noted that section 36(g)(4) of the FDIA specifically permits removal, suspension, or debarment of “an independent public accountant.” The commenter then asserted “[t]here is no mention in the statute of the possible extension of those sanctions to accounting firms or offices, or of extended or vicarious liability in any other way or of any kind.” The commenter concluded that the Agencies lack authority to implement this aspect of their proposal.

Another commenter did not specifically question the authority of the Agencies to propose rules permitting the removal, suspension, or debarment of an accounting firm or office thereof. Rather, the commenter quoted a portion of the legislative history of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183 (1989), to the effect that enforcement actions should usually be limited to the individuals who participated in the wrongful action to “prevent unintended consequences or economic harm to innocent third parties.” 14 The commenter argued that the rules should include an explicit presumption against taking action against an entire firm, that this sanction should only be available in the most egregious circumstances, specifically articulated in the rules, and that a sanction against a firm should only be permissible after the affected firm has had the opportunity for a meaningful hearing before an independent trier of fact.

The Agencies believe that the proposed rules, as they pertain to actions against accounting firms and offices, are well within the Agencies' statutory authority. As noted in the preamble to the proposed rule, under the current practice regulations, the Agencies may “remove, suspend, or debar a firm by naming each member of the firm or office in the order * * *.” Thus, the proposal also employed this scope and provided guidance on when a firm sanction might be appropriate. In addition, there is no indication that in using the term “independent public accountant” Congress intended to restrict removals, suspensions, or debarments solely to natural persons. The term “independent public accountant” is used throughout section 36 and its implementing regulation, 12 CFR part 363, not just in the section 36(g)(4) provision relating to removal, suspension, or debarment. Indeed, section 36 specifically provides that all required audit services must be performed by an “independent public accountant” who has agreed to provide requested work papers and has received an acceptable peer review. All required audit and other reports are universally signed by accounting firms, not individual accountants,15 and peer reviews are performed at the firm level. Thus, the Agencies believe that enforcement action at the firm level in appropriate circumstances is entirely consistent with the section 36 statutory scheme.16

With respect to the legislative history quoted by the commenter, we note that the history is from FIRREA, not the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA),17 which added section 36 to the FDIA, so it is not directly relevant to our construction of section 36. Even if this legislative history were applicable to section 36, the commenter quoted only a portion of the relevant legislative history material—the section not quoted supports the view that, in extending Agency enforcement jurisdiction to independent contractors, including “any attorney, appraiser, or accountant,” 18 Congress intended such enforcement jurisdiction to extend to business organizations under appropriate circumstances. In this regard, the House Banking Committee's Report on FIRREA, H.R. Rep. No. 54(I), at 466-67, states:

Accordingly, the similar reference in section 36 to “independent public accountant” can reasonably be read to reach firms as well.

The Agencies understand that severe economic consequences may result from action barring an accounting firm from performing section 36 audit services. The Agencies are also sensitive to the consequences that barring a firm might have on innocent third parties not directly involved in the misconduct at issue. While the Agencies have had the authority since FIRREA to pursue enforcement actions against entire firms of professionals, such authority has been used only a handful of times and only in the most egregious circumstances. In addition, the Agencies believe that the five factors specified in the proposed rule appropriately focus the inquiry on whether sufficient involvement of firm management is present to justify action against the entire firm. Accordingly, the Agencies see no reason to amend the proposal to include an explicit presumption against action at the firm or office level. The comment concerning the need for a prior hearing before action at the firm or office level will be addressed in the sections discussing automatic and immediate suspensions.

Proceedings to Remove, Suspend, or Debar. Under the proposed rules, the Agencies would hold formal hearings on removals, suspensions, and debarments under rules that are consistent with the Agencies' Uniform Rules of Practice and Procedure (Uniform Rules).19 The Uniform Rules provide, among other things, for written notice to the respondent of the intended Agency action and the opportunity for a public hearing before an administrative law judge. The administrative law judge would refer a recommended decision to the Agency, which would issue a final decision and order. Each Agency would have the discretion to limit an order of removal, suspension, or debarment so that it applied solely to audit services provided to specified insured depository institutions, rather than to all insured depository institutions supervised by the issuing Agency. This was referred to in the proposed rules as a “limited scope order.” 20

The procedures in the proposed rules for removal, suspension, and debarment were drawn principally from the Agencies' existing practice rules. The Agencies did not receive comment on these procedures. Therefore, the Agencies are adopting the procedures as proposed.

Immediate Suspension from Performing Audit Services. The proposed rule implemented the authority in section 36 to “suspend” an independent public accountant by providing that an Agency may issue a notice immediately suspending an accountant or a firm subject to a notice of intention to remove, suspend, or debar if the Agency determines that immediate suspension is necessary for the protection of an insured depository institution, or its depositors, or for the protection of the insured depository system as a whole. In making this proposal, the Agencies stated that the authority to immediately suspend an accountant or firm could prevent seriously harmful conduct relating to accounting matters at an insured depository institution from being repeated or escalating while the administrative proceedings relating to a permanent removal, suspension, or debarment order are pending.

One commenter asked for guidance to insured depository institutions on what to do if their accountant were suspended immediately, more specifically, how to meet the deadlines for filing annual audits. The commenter was concerned that there would not be sufficient time to complete the audit, given the time it would take for a new accountant to become familiar with the facts.

The Agencies understand that an immediate suspension may cause disruption to an institution and make it difficult to meet the deadlines for submitting annual audits. The Agencies expect that immediate suspensions would only be issued in compelling situations. In the case where an Agency head imposed an immediate suspension, the Agency will make appropriate adjustments to the filing deadlines, if warranted, at the institution's request.

Another commenter expressed a variety of objections to the proposed procedures for contesting an immediate suspension. The commenter generally stated that the proposed procedures do not comport with due process and suggested that the Agencies modify the proposed procedures in a number of areas to follow more closely those procedures governing issuance of temporary cease-and-desist orders by the SEC. Except for the modifications explained below, the Agencies do not believe that the proposed procedures should be conformed to the procedures applicable to temporary cease-and-desist orders issued under the securities laws. With regard to the protection of the nation's banking system, judicial decisions have recognized that there is a compelling governmental interest that can justify regulatory action with abbreviated procedures when necessary.21 The Agencies expect that the immediate suspension remedy would be used only in circumstances where serious harm to a depository institution, its depositors, or to the depository system as a whole would occur unless immediate enforcement action is taken.

The commenter also had more specific suggestions for revisions to the proposal. First, the commenter stated that the Agencies' proposed procedures should allow for a quicker agency decisionmaking process. The commenter noted that, under the time frames contained in the proposed rules, an accountant or a firm that petitions the Agency to stay a notice of immediate suspension may not receive a decision with respect to the petition until 70 days after the immediate suspension becomes effective. The commenter noted that, under the SEC Rules of Practice, a final agency decision on a challenge to a temporary cease-and-desist order issued by the SEC without a prior hearing is required within 20 days.22

The Agencies believe that the proposed maximum time period permitted for an Agency decision on a stay petition is consistent with due process requirements. The Agencies note that the Supreme Court has approved a procedural framework allowing up to 90 days for a final decision by the Agencies on a challenge to an ex parte suspension order issued by the Agencies against an IAP of a depository institution who has been indicted for certain types of crimes. FDIC v. Mallen, 486 U.S. 230 (1988).

The maximum time limits in the proposed rules were designed by the Agencies to permit a sufficient period for the creation of a meaningful record with regard to a stay petition and for careful and deliberate review of that record by the Agency decision maker, consistent with the recognized necessity for prompt administrative action on such a petition. As with the post-deprivation Agency hearing at issue in the Mallen decision, a stay petition could necessitate resolution of factual disputes that would require at least some examination of relevant evidence.

The Agencies intend that an administrative decision on a stay petition under the rules should be made at the earliest practicable time. Thus, the time limits imposed in the rules are intended to establish only the maximum period allowable for issuing a decision and a decision is expected to be made more promptly whenever feasible. Nevertheless, in order to further minimize concerns about undue delay in the decision on a stay petition, the Agencies believe that the date by which a hearing on a petition to stay is ordered can be shortened without unduly impairing the administrative decisionmaking process. Accordingly, the final rules require that an Agency must order a hearing on a petition to stay to be held 10 days after receipt of the petition, rather than within 30 days as proposed.

As the commenter pointed out, the Supreme Court's approval of a 90-day agency decisionmaking period in the Mallen decision depended in part on the fact that, under the statutory framework at issue, the suspension of an IAP may be issued only after the individual involved has been indicted by an independent entity, like a grand jury. According to the Court, the indictment serves to reduce the likelihood that the banking agency suspension is unjustified. Under the proposed rules, an immediate suspension notice may be issued by an Agency without any similar action by a third party. In the Agencies' view, however, the lack of an independent triggering event by a third party for accountant suspensions does not mean that the maximum time limits in the final rules would result in the denial of a prompt and meaningful hearing before the Agency on the propriety of the suspension. The Agencies intend that, under the final rules, an immediate suspension could be issued only where there is probative evidence that substantial harm to an insured depository institution, its depositors, or to the depository system as a whole is likely to occur prior to completion of the proceedings on a permanent order of removal, suspension, or debarment. In addition, under the final rules, the maximum time period permitted for a decision on a stay petition (50 days) is only slightly longer than half the maximum time limit approved in the Mallen case for an agency decision on an indictment-triggered suspension. In the Agencies' judgment, the maximum time for decision in the final rules represents the shortest realistic period necessary for adequate consideration of the suspended party's opposition to the suspension.23 As the Supreme Court noted in Mallen, the public has a strong interest in seeing that the ultimate agency decision with respect to a suspension is made in a “considered and deliberate manner.” 24

The commenter's second objection to the procedures was to the proposed provisions under which the decision on a petition to stay an immediate suspension is made by a presiding officer designated by the Agency. According to the commenter, the stay petition should be decided by an administrative law judge, who by statute has some independence from the agency whose cases the judge hears.

The Agencies do not believe that an administrative law judge must be designated as the decisionmaking official with regard to a petition to stay the immediate suspension of an accountant or firm. The Agencies note that under their existing rules of practice, a similar type of decision on an interim order, namely the decision with respect to whether a suspension of an IAP who has been indicted should be lifted pending completion of the criminal trial, is made by a presiding officer, not by an administrative law judge.25 A court decision that prescribed the minimum procedures required by due process for these suspensions did not suggest that the agency decision on lifting the suspension had to be made by an administrative law judge in order to meet constitutional requirements.26

The Agencies recognize, however, that it may be useful to clarify that the presiding officer who decides a petition to stay an immediate suspension must be insulated from the Agency staff responsible for prosecuting the charges against the suspended accountant or firm. The provisions of the proposed rules relating to the hearing on a stay petition are therefore being modified to add a new sentence, which follows the requirements of the Administrative Procedure Act 27 for formal agency adjudications. The final rules explicitly state that an Agency employee engaged in investigative or prosecuting functions for the Agency in a particular action against an accountant or a firm, or in a factually related action, may not serve as the presiding officer or otherwise participate or advise in the decision with respect to a petition to stay the immediate suspension.

The commenter's third suggestion was that the proposed immediate suspension provisions be modified to make clear that, except in unusual cases, an accountant or firm should be suspended immediately only after prior notice and opportunity for the party involved to contest the suspension. In the Agencies' judgment, the modification to the proposed procedures advocated by the commenter is neither necessary nor appropriate. There is nothing in section 36 that requires prior notice and opportunity for hearing before a suspension under that provision may be issued. Moreover, the courts have long recognized that the strong governmental interest in protecting depositors and preserving confidence in the financial system can justify immediate action by the regulatory agencies prior to notice and the opportunity for hearing.28

Fourth, the commenter asserted that, like the SEC Rules of Practice, the Agencies' procedures should require a showing that irreparable harm would result before authorizing an immediate suspension. Contrary to this comment, there is no requirement in section 36 that the Agencies show “irreparable harm.” Nor are the agencies aware of any authority that requires a finding by the Government of irreparable harm in order to satisfy minimum constitutional standards of due process before immediate action can be taken. The Agencies further note that the suspension procedures in the proposed rules and the finding that must be made by the Agencies to justify an immediate suspension are very similar to those prescribed in section 8(e)(3) of the FDIA, which govern the suspension of an IAP of an insured depository institution pending completion of administrative proceedings concerning a proposed permanent order of removal or prohibition.29 Nevertheless, to better express the immediate suspension standard, the rule has been revised to require “immediate harm” to an insured depository institution, its depositors, or to the depository system as a whole.

The commenter's fifth criticism of the proposed rule was that it did not establish a procedure for judicial review of immediate suspensions imposed by the Agencies. However, section 36 contains no specific provision for review by the courts of any action taken by the Agencies under the authority of that provision. Administrative agencies have no authority to create a right to judicial review of agency action.30 Any right to judicial review of an immediate suspension must be based on some statutory authority.

The commenter's sixth point concerned immediate suspensions of accounting firms. The commenter stated that the Agencies' authority under the proposal to immediately suspend a firm from providing audit services is too broad and subjective and any firm subject to an immediate suspension should have greater procedural protections than what is provided in the proposed rules.

The Agencies recognize that the immediate suspension of an entire firm could have a serious effect on the firm as well as on the insured depository institutions that may be relying on the firm for audit services. However, as explained above, the Agencies intend that the immediate suspension sanction would be applied to a firm only when clearly necessary to protect a depository institution or the depository system and when the factors specified in the rules for applying disciplinary action to a firm support such a regulatory response. Because the Agencies believe that these circumstances, though unusual, warrant disciplinary action against an entire accounting firm should they occur, the Agencies have retained that authority in the final rule. The procedural protections afforded an immediately suspended party in the final rules, whether an individual or a firm, represent an appropriate balance between protecting the banking system and protecting the rights of affected parties.

Automatic Removal, Suspension, and Debarment. The proposed rule provided that accountants or firms subject to certain specified disciplinary actions would automatically be prohibited from providing audit services. No further proceedings or hearings by the Agency would be required in these instances. Under each Agency's proposed rule, the actions giving rise to such an automatic bar include: (1) A final order of removal, suspension, or debarment under section 36 (other than a limited scope order) issued by any of the other Agencies; (2) certain actions by the PCAOB (specifically, a temporary suspension or permanent revocation of registration or a temporary or permanent suspension or debarment from further association with a registered public accounting firm); (3) certain actions by the SEC (specifically, an order of suspension or a denial of the privilege of appearing or practicing before the SEC); and (4) suspension or debarment for cause from practice as an accountant by the licensing authority of any state, possession, commonwealth, or the District of Columbia.

Under the proposed rules, disciplinary actions not giving rise to an automatic bar could still serve as grounds for an Agency to take action against an accountant or a firm. In this respect, grounds for Agency action set forth in the proposal specifically include removal, suspension, or debarment by any Federal or state agency regulating the banking, insurance, or securities industries. If such an action were grounds for an Agency proceeding, however, the full array of hearings and procedures in the proposed rules would be required.

One commenter objected to the proposed rules' approach to the automatic bar, contending that it was too broad in scope because the reasons for an action by the SEC, PCAOB, or a state might be irrelevant to the provision of audit services under the rules. The commenter argued that, to prevent an unwarranted automatic bar, an accountant or a firm should in all cases have the opportunity for a hearing before an Agency considering removal, suspension, or debarment, and that the Agency should be required to conduct an independent analysis. The commenter also asserted that the SEC's automatic suspension provisions are more limited and generally require license revocation, criminal conviction, or prior action by the SEC. Finally, the commenter urged the Agencies to include in the final rule an expedited review process for an automatic removal, suspension, or debarment.

The Agencies believe that the automatic bar provisions are generally appropriate, notwithstanding certain differences from the SEC's practice, and that the protections granted in the rule are adequate. In a case where another Agency has taken disciplinary action against an accountant or a firm under section 36, the Agency has resolved issues that are relevant to the provision of audit services throughout the banking system. If an accountant or a firm were entitled to a separate hearing before each Agency, four separate hearings would be required to prevent an accountant or firm from providing audit services under the rules, notwithstanding the similarity of the issues. Such a requirement would essentially result in duplicative proceedings to implement a single action, and the Agencies do not believe that the repetitive proceedings would result in any significant additional protection for the accountant or firm. The Agencies believe it is appropriate and within the statutory direction of section 36 for the joint rules to provide that each Agency will defer to the proceedings of the other federal banking supervisors.

It should be noted that the automatic bar resulting from an action by another Agency does not apply in a case where the other Agency has issued a limited scope order effective only with respect to audit services provided to one or more specified institutions. If another Agency sought to remove, suspend, or debar an accountant subject to a limited scope order, it would have to provide the accountant with the hearings and procedures set forth in the rule. Moreover, in the event that the particular facts and circumstances of a removal, suspension, or debarment justify an exception from the automatic, industry-wide bar, each Agency's proposed rule provided that the Agency has discretion to override the automatic bar with respect to the institutions it supervises. An accountant or firm would be entitled to make such a request in any case, and the Agency could grant written permission.

One commenter suggested that the Agencies should include in the rule substantive standards for when they will override the automatic bar. In response, we note that the general standard for suspension or debarment under section 36—“good cause”—would apply to the decision of whether or not to override an automatic bar. It is impossible to predict all the situations in which the facts will support an override of an automatic suspension or debarment. A bright-line test could have the effect of limiting an Agency's flexibility to give the relief sought by the accountant or firm. Accordingly, the final rule retains the provision permitting the accountant or firm to request that an Agency grant an exception from the automatic bar.

With regard to SEC and PCAOB actions as a predicate for the automatic bar, the Agencies believe that the SEC's and PCAOB's expertise and jurisdiction in this area warrant recognition by the Agencies of their actions against an accountant or firm. While there are differences between insured depository institutions and institutions under the primary jurisdiction of the SEC, the conduct giving rise to suspension or debarment by the SEC is likely to be of equally significant concern to the banking regulators. In the rare case where an action by the SEC or the PCAOB is based on conduct that is unrelated to the provision of audit services to an insured institution, the Agencies retain override authority, and an accountant or firm would be able to request Agency permission to provide audit services notwithstanding SEC or PCAOB action.

The final trigger for an automatic bar in the proposed rule was suspension or debarment for cause by a state licensing authority. The Agencies have further considered the potential effects of this provision in light of the comments received and agree that there are likely to be instances in which a state's action is not relevant to the provision of audit services—there may be a wide range of “for cause” grounds for suspension or debarment under various state laws. In addition, the procedural protections afforded to accountants in state proceedings may not be as uniform and as broad as those provided by the Agencies, the SEC, and the PCAOB. Accordingly, the Agencies have determined that suspension or debarment of an accountant for cause by a state licensing authority should properly be treated as grounds for discretionary Agency removal, suspension, or debarment, rather than as a trigger for the automatic prohibition on the provision of audit services. The final rule amends both the automatic bar section and the section on grounds for Agency action to reflect this change.

One commenter raised a concern about whether the automatic bar provision of the proposed rule could violate an accountant's or a firm's right to due process by imposing a penalty without allowing opportunity for a hearing. As set forth above, the automatic bar only applies in instances where the accountant or a firm has already received due process protections in proceedings before another Agency, the SEC, or the PCAOB. Moreover, an accountant or a firm may petition an Agency to perform audit services for a bank or savings association. The Agencies believe that these procedures will provide ample opportunity for an accountant or firm to obtain a fair hearing that comports with due process protections of the Constitution.

Notice of Removal, Suspension, or Debarment. The proposed rules required the Agencies to make public any final order of removal, suspension, or debarment against an accountant or accounting firm and notify the other Agencies of such orders. This was consistent with the presumption in favor of public notice for enforcement actions in the FDIA.31 The proposed rules also contained notification provisions for accountants and firms.

The proposal required that an accountant or accounting firm performing section 36 audit services for any insured depository institution must provide the Agencies with written notice of any currently effective disciplinary sanction against the accountant or firm issued by the PCAOB under sections 105(c)(4)(A) or (B) of the Sarbanes-Oxley Act, relating to revocation of registration and association with a public accounting firm or issuer; any current suspension or denial of the privilege of appearing or practicing before the SEC; or any suspensions or debarments for cause from practice as an accountant by any duly constituted licensing authority of any state, possession, commonwealth, or the District of Columbia. Written notice under the proposed rules is also required of any removal, suspension, or debarment from practice before any Federal or state (non-licensing) agency regulating the banking, insurance, or securities industry on grounds relevant to the provision of audit services; and any action by the PCAOB under sections 105(c)(4)(C) or (G) of the Sarbanes-Oxley Act, relating to limitations on the activities of accountants and accounting firms and any other appropriate sanction provided in the rules of the PCAOB. Written notice must be given no later than 15 calendar days following the effective date of an order or action, or 15 calendar days before an accountant or accounting firm accepts an engagement to provide audit services, whichever date is earlier.

The Agencies did not receive any comments on the notice provisions. The Agencies are therefore adopting the provisions as proposed, although there are technical changes to accommodate changes to the good cause and automatic suspension provisions described above.

Petition for Reinstatement. Under the proposal, a removed, suspended, or debarred “independent public accountant or accounting firm” may request reinstatement by the Agency that issued the order. The individual or firm would be able to request reinstatement at any time more than one year after the effective date of the order and, thereafter, at any time more than one year after the most recent request for reinstatement.

One commenter asked that the Agencies revise the proposal to permit a firm to petition for reinstatement of individual offices that have been removed, suspended or debarred, in addition to permitting petitions for reinstatement of individual accountants or the firm as a whole. The Agencies did not intend in the proposed rule to prohibit offices of a firm that have been removed, suspended, or debarred from petitioning for reinstatement. The proposed reinstatement provision, therefore, has been revised in the final rule to clarify that a removed, suspended, or debarred office of a firm may petition for reinstatement.

Another commenter urged the Agencies to state factors that the Agencies would consider in evaluating a reinstatement request so that affected parties would know what type of information the Agencies need to make a decision. The Agencies understand that petitioners will wish to tailor their reinstatement requests in a manner that they believe will yield them success in obtaining the relief they seek. In the past and in other contexts, the Agencies have looked at various factors in reviewing reinstatement petitions. These factors included: (1) The nature, extent, and duration of the conduct that led to the issuance of the order; (2) the period of time that an order has been outstanding, as well as any prior requests made by the petitioner; (3) activities of the petitioner since the order was issued, including evidence of rehabilitation; (4) the nature of the position or proposed action the requestor is seeking, and the scope of relief sought; (5) the likelihood of future misconduct giving good cause for removing, suspending, or debarring the petitioner; and (6) the views and opinions of other Federal banking agencies, when applicable. The Agencies will include these factors in their evaluations of petitions for reinstatement.

Second, the commenter asserted that the Agencies failed to explain the necessity for a one-year waiting period before a suspended, removed, or debarred party could seek reinstatement. The commenter argued in favor of a case-by-case approach. In addition, the commenter argued that the Agencies' requirement of a one-year period is inconsistent with the SEC's rules, which permit a petitioner to file for reinstatement at any time.

The Agencies believe that the proposed rule made room for a case-by-case approach to reinstatement by providing that, “unless otherwise ordered” by the appropriate agency decision maker, the one-year waiting period would apply. Under the proposed rule, if a petitioner believed that the circumstances merited review prior to the expiration of the one-year period, the petitioner could seek an order from the Agency decision maker permitting the petitioner to seek such earlier review. Given the Agencies' intention, as reflected in the proposed rule, that the one-year waiting period for reinstatement have some flexibility and considering the comments received, the Agencies have amended the final rule to permit persons, firms, and offices to petition for reinstatement at any time.

The proposal reflected the view of the Agencies that petitions for reinstatement filed close in time, either to the Agency's decision or the last petition for reinstatement, are unlikely to present new issues or bases for reinstatement and would waste Agency resources. Thus, although the final rule permits a petition for reinstatement at any time, it will be unusual for the Agencies to grant such relief within one year of a removal, suspension or debarment order.32

The OCC proposed adding “recklessness” to its description of “disreputable conduct” that may lead to removal, suspension, or debarment of parties or their representatives who practice or appear before the OCC.33 This change would conform the OCC's general rules of practice with the standards in the proposal for removal, suspension, or debarment of accountants from performance of section 36-required audit services, which in turn reflects the addition of the recklessness standard to the SEC's rules of practice by the Sarbanes-Oxley Act. The purpose of adding the recklessness standard was to clarify that conduct more culpable than incompetence, but less culpable than willful or knowing action, may form the basis for a suspension or debarment.

The OCC also proposed broadening the scope of “disreputable conduct” to allow the OCC to consider suspensions or debarments of accountants—for any reason—by the other Agencies, the SEC, the Commodity Futures Trading Commission, or any other Federal agency. This change would remove the requirement in the current § 19.196(g) that suspensions by other agencies concern “matters relating to the supervisory responsibilities of the OCC.” This change takes into account the possibility that a suspension of an accountant by another agency, relating to the professional conduct of an accountant, could be grounds for removal, suspension, or debarment by the OCC, even if the suspension by the other agency did not relate to a banking matter.

Unlike the other amendments in the proposal, which would address an accountant's or a firm's ability to perform section 36-required audits, this part of the proposal concerned who may practice before the OCC in other capacities, such as in adjudications, or through preparation of documents for submission to the OCC. Under the proposed rule, the OCC also revised a number of sections within part 19 to make conforming and technical changes to implement section 36 of the FDIA and bring procedural aspects of part 19 up to date.

The OCC did not receive any comments on these proposed changes. Accordingly, the conforming and technical changes are adopted in the final rule as proposed.

The Board proposed to amend its Rules of Practice Before the Board (12 CFR 263, subpart F) to expand the type of conduct for which an individual may be censured, debarred, or suspended from practice before the Board. In particular, the Board proposed to revise the description of the conduct that would warrant sanctions to include reckless violations, or reckless aiding and abetting violations, of specified laws and the reckless provision of false or misleading information, or reckless participation in the provision of false or misleading information, to the Board. The regulation currently provides for sanctions only for willful misconduct. The purpose of this proposed amendment was to clarify that conduct more culpable than incompetence, but less culpable than willful or knowing action, may form the basis for a suspension or debarment from practice before the Board. This change also reflected the modification made to the SEC's rules of practice by the Sarbanes-Oxley Act.

The Board did not receive any comments on these proposed changes. Accordingly, the conforming and technical changes are adopted in the final rule as proposed.

The FDIC proposed making a clarifying and conforming amendment to 12 CFR 308.109, which deals with the suspension and disbarment of the right of any counsel to appear or practice before the FDIC, to specify that an application for reinstatement must comply with the general filing procedures established by part 303. The amendment would add a new sentence before the current last sentence of section 308.109(b)(3) to read as follows: “The application shall comply with the requirements of 12 CFR 303.3.”

The FDIC did not receive any comments on these proposed changes. Accordingly, the conforming and technical changes are adopted in the final rule as proposed.

OCC: Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b) (RFA), the appropriate Federal banking agencies must either provide a Final Regulatory Flexibility Analysis for a final rule or certify that the rule will not have a significant economic impact on a substantial number of small entities. For purposes of this Regulatory Flexibility Analysis and final regulation, the OCC defines “small entities” to be those national banks with less than $150 million in total assets. For other entities that could be affected by this rule, such as accountants and accounting firms, a small entity is defined as an accounting office with $7 million or less in annual receipts.

We have reviewed the impact this final rule will have on small banks. Based on that review, we certify that the final rule will not have a significant economic impact on a substantial number of small entities. The basis for the certification is that the requirement for audits does not apply to national banks with less than $500 million in total assets. In addition, only a limited number of small accounting firms provide section 36 audit services to national banks. For these reasons, the OCC does not anticipate that the proposal will affect a substantial number of small entities.

Board: Pursuant to section 605(b) of the RFA, 5 U.S.C. 605(b), the Board certifies that the suspension and debarment amendments in this final rulemaking will not have a significant adverse economic impact on a substantial number of small entities. For purposes of this Regulatory Flexibility Analysis, the Board defines “small entity” as (1) any insured state member bank with less than $150 million in total assets, or (2) any bank holding company with a subsidiary insured state member bank with less than $150 million in total assets. For other entities that could be affected by this rule, such as accountants and accounting firms, a small entity is defined as an accounting office with $7 million or less in annual receipts. The basis for the Board's certification is that the final rule will not apply to state member banks that have less than $500 million in total assets. In addition, only a limited number of small accounting firms provide section 36 audit services to institutions that are regulated by the Federal Reserve.

FDIC: The FDIC certifies, pursuant to section 605(b) of the RFA, 5 U.S.C. 605(b), that the final suspension and debarment amendments will not have a significant economic impact on a substantial number of small entities. The basis for the certification is that the rule will not apply to insured depository institutions that have less than $150 million in total assets. Furthermore, only a limited number of small accounting firms provide section 36 audit services to insured depository institutions for which the FDIC is the appropriate Federal banking agency.

OTS: Under the RFA, OTS must either provide a Final Regulatory Flexibility Analysis, or certify that the rule will not have a significant economic impact on a substantial number of small entities. For purposes of this RFA analysis, the OTS defines “small banks” to be those savings associations with less than $150 million in total assets.

Pursuant to section 605(b) of the RFA, 5 U.S.C. 605(b) certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The basis of this certification is that this rule does not apply to savings associations with less than $500 million in assets.

The Agencies have determined that this proposed rule does not involve a collection of information pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.).

The OCC and OTS have determined that this final rule is not a significant regulatory action under Executive Order 12866.

Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency prepare a budgetary impact statement before promulgating any rule likely to result in a Federal mandate that may result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. The OCC and OTS have determined that the final rule will not result in expenditures by state, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, this rulemaking requires no further analysis under the Unfunded Mandates Act.

On April 11, 2003, the FAA issued AD 2003-06-51, amendment 39-13121 (68 FR 19328, April 21, 2003), applicable to certain Learjet Model 45 airplanes, to require an inspection to determine the part number (P/N) of the horizontal stabilizer actuator assembly (A66) (HSAA), and replacement of any suspect HSAA (A66) having P/N 6627401000-001 or SA9200F with a new or serviceable HSAA (A66) having P/N 6627401000-005. That action was prompted by a report of severe vibration followed by a rapid nose down pitch change on a Learjet Model 45 airplane. The cause of the incident is attributed to brittle fracture material properties of certain components of the HSAA. The requirements of that AD are intended to prevent structural failure of the HSAA, which could result in possible loss of control of the airplane.

Since issuance of AD 2003-06-51, we have determined that the MPC Products Corporation acme screw having P/N 2A94568008 and nut having P/N 2A94567005 within the new HSAA having P/N 6627401000-005 installed per that AD are physically similar (not identical) to and have the same material as the suspect assembly having P/N 6627401000-001. Although the HSAA having P/N-005 is an improvement over the P/N-001, it was not manufactured per the type design data. A brittle fracture could occur on the acme screw and nut within the assembly having P/N-005, similar to that on the assembly having P/N-001. During our investigation of this problem, we determined that the configuration and quality controls over the production of these parts were so deficient that we do not have confidence that the airplane can be operated safely for any period of time. Therefore, this AD allows operation only for the purpose of positioning the airplane where the replacement required by this AD can be accomplished. The airplane manufacturer is currently substantiating the design data for the new replacement part. We anticipate that the new part will be available in the near future.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design registered in the United States, this AD requires replacement of the HSAA with a new HSAA. The effect of this AD is that operation is prohibited after the effective date of this AD, except to position the airplane as described previously, until the required replacement can be accomplished.

This is considered to be interim action until final action is identified, at which time the FAA may consider further rulemaking.

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. The regulation now includes material that relates to altered products, special flight permits, and alternative methods of compliance (AMOCs). Because we have now included this material in part 39, only the office authorized to approve AMOCs is identified in each individual AD.

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

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

Submit comments using the following format:

• Organize comments issue-by-issue. For example, discuss a request to change the compliance time and a request to change the service bulletin reference as two separate issues.

• For each issue, state what specific change to the AD is being requested.

• Include justification (e.g., reasons or data) for each request.

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2003-NM-142-AD.” The postcard will be date stamped and returned to the commenter.

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

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

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs). The complete regulatory description on each SIAP is contained in the appropriate FAA Form 8260 and the National Flight Data Center (FDC)/Permanent (P) Notices to Airmen (NOTAM) which are incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Federal Aviation's Regulations (FAR). Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction of charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR (and FAR) sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes SIAPs. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained in the content of the following FDC/P NOTAMs for each SIAP. The SIAP information in some previously designated FDC/Temporary (FDC/T) NOTAMs is of such duration as to be permanent. With conversion to FDC/P NOTAMs, the respective FDC/T NOTAMs have been canceled.

The FDC/P NOTAMs for the SIAPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these chart changes to SIAPs by FDC/P NOTAMs, the TERPS criteria were applied to only these specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a National Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days.

Further, the SIAPs contained in this amendment are based on the criteria contained in the TERPS. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this 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 (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes Standard Instrument Approach Procedures (SIAPs). The complete regulatory description of each SIAP is contained in official FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Federal Aviation Regulations (FAR). The applicable FAA Forms are identified as FAA Forms 8260-3, 8260-4, and 8260-5. Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR (and FAR) sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to part 97 is effective upon publication of each separate SIAP as contained in the transmittal. Some SIAP amendments may have been previously issued by the FAA in a National Flight Data Center (NFDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP amendments may require making them effective in less than 30 days. For the remaining SIAPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this 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 (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Customs and Border Protection (CBP) assesses and collects tonnage duties and light money on vessels brought into the United States from a foreign port or place, under the authority of 46 U.S.C. App. 121. Tonnage duties, which are in effect charges for the privilege of entering, trading in, or lying in a port, cover the expenses incurred in clearing and improving harbors, erecting lighthouses and keeping up lights. The amount of tonnage duty depends on the registry of the vessel, subject to certain exemptions, as prescribed by law.

On November 5, 1990, the President signed the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508), which amended 46 U.S.C App. 121 to increase the tonnage taxes collected from vessels arriving in the United States from foreign ports. The amendment intended to offset the costs incurred by Coast Guard operations. For vessels calling on the United States from North American ports and certain Central American, South American and Caribbean ports, the amount of tonnage tax was increased to 9 cents per ton, not to exceed in the aggregate 45 cents per ton per annum. For vessels entering a port of the United States from any other foreign port or place, the amount of tonnage tax was increased to 27 cents per ton, not to exceed $1.35 per ton per annum. These increases were in effect until the end of fiscal year 2002; thereafter the duties were to revert to the same amount as in effect prior to the passage of this legislation.

Congress has not enacted legislation renewing these provisional tonnage duty rates. In accordance with the statute, the tonnage tax rates have reverted to the previous rates of 2 cents per ton (10 cents annual aggregate cap) for vessels arriving in the United States from the first group of ports and 6 cents per ton (30 cents annual aggregate cap) for vessels arriving from all other originating ports.

Thus, CBP has determined that current statutory provisions require CBP to amend Part 4 of the Customs Regulations (19 CFR 4.20) to revise the amounts of tonnage duties applicable to vessels entering from a foreign port or place. Following is a summary of those changes.

1. Section 4.20(a) generally provides for the payment of tonnage tax on vessels entering from a foreign port or place. Section 4.20(a) is revised to reflect changes in the regular tonnage duty applicable in such circumstances.

2. Section 4.20(b) is amended to reflect the revised maximum assessment amount of tonnage duty of a vessel per tonnage year. The revised aggregate amount for vessels arriving in the United States from North American ports, certain Central American, South American and Caribbean ports is 10 cents per ton. For vessels arriving from all other originating ports the revised amount is 30 cents per ton.

3. Section 4.20(c) generally provides for the payment of special tonnage tax and light money on vessels entering from a foreign port or place. The present table in this section listing the vessel tonnage and light money rates payable under various conditions is revised to reflect the current tonnage duty rates.

The following chart indicates the provisional tonnage tax amount that has expired and the currently assessed amount.

On July 11, 2003, Treasury published a final rule containing definitions and other general provisions under the Act (68 FR 41250, July 11, 2003) (the July final rule). Treasury is now making a clarifying revision to the definition of “direct earned premium” in the July final rule to ensure that the rule parallels the definition in section 102(4) of the Act.

Under section 102(6) of the Act, an “insurer” calculates its “insurer deductible” based on the insurer's “direct earned premium.” Except in the case of new insurers, an “insurer deductible” is an insurer's direct earned premiums over the preceding calendar year, multiplied by a percentage specified in the Act for that year. If a certified act of terrorism occurs, an insurer would only be entitled to federal payment under the Program if the insurer's insured losses exceed its insurer deductible and other required conditions are met.

Section 102(4) of the Act defines the term “direct earned premium” as “a direct earned premium for property and casualty insurance issued by any insurer for insurance against losses occurring at the locations described” in section 102(5)(A) and (B) of the Act (emphasis added). These cross-referenced locations appear within the definition of “insured loss.” The locations are (1) “within the United States,” (2) “to an air carrier” (as defined), (3) “to a United States flag vessel (or a vessel based principally in the United States, on which United States income tax is paid and whose insurance coverage is subject to regulation in the United States),” and (4) “at the premises of any United States mission.” Therefore, there is a relationship between the locations contained in the definition of “insured loss” and the scope of the definition of “direct earned premium,” since both make reference to the same specified locations.

The July final rule was preceded by an interim final rule that requested public comments (68 FR 9804, February 28, 2003). No comments were received on the interim final rule concerning the relationship of the terms “insured loss” and “direct earned premium.” Upon further review, Treasury notes that the current regulatory definition of “direct earned premium” in the July final rule could be interpreted as inconsistent with the statutory definition of “direct earned premium.” This is because the regulatory definition “direct earned premium” includes an abbreviated reference to “insured losses” under the Program. Treasury's intent was to reflect the statutory definition, including the specified locations, as described above. An unintended consequence of the current text of the regulatory definition of direct earned premium is that it might be read to narrow the statutory definition of “direct earned premium” to refer only to direct earned premiums for losses resulting from acts of terrorism rather than direct earned premiums on all commercial property and casualty insurance covering all risks within the specified locations.

After further review of the definition in the July final rule, Treasury is by this final rule revising the regulatory definition of “direct earned premium” in section 50.5(d) to ensure that it parallels the definition in the Act. Treasury is also revising the related provisions in the definition of direct earned premium for State licensed or admitted insurers that report to the NAIC and certain eligible surplus line carrier insurers. (Although there are no changes to some of these provisions, paragraphs (d)(1) and (d)(3) of section 50.5(d) are being set out in their entirety for ease of reading and understanding.) The effect of these changes to the current regulatory text is to clarify that direct earned premium, as provided in the Act, consists of direct earned premium for all commercial property and casualty insurance (as that term is used in the Act and Treasury's regulations) issued by an insurer for insurance against losses at the specified locations. Consistent with the preamble discussion in the July final rule, premiums for retroactive insurance may continue to be excluded by an insurer if they are associated with losses that occurred prior to the date of enactment of the Act (November 26, 2002). An insurer receiving premiums for retroactive insurance associated with losses that occurred prior to November 26, 2002 may continue to follow the guidelines in section 50.5(d)(1) for the purposes of calculating the appropriate measure of direct earned premium.

The Act established a Program to provide for loss sharing payments by the Federal Government for insured losses resulting from certified acts of terrorism. The Act became effective immediately upon the date of enactment (November 26, 2002). Treasury has issued and will be issuing additional regulations to implement the Program. This final regulation merely clarifies the current regulatory definition of “direct earned premium” to parallel the definition in the Act. Since no one can predict if, or when, an act of terrorism may occur, there is a clear need for Treasury to modify the previously issued final rule to clarify the definition and avoid any possible reading that it is narrower than the definition in the Act. Moreover, the definition in the Act is unambiguous and the regulatory change merely clarifies the current regulatory definition to parallel the definition in the Act.

For these reasons, Treasury has determined that notice and public procedure are unnecessary and contrary to the public interest, pursuant to 5 U.S.C. 553(b)(B). For the same reasons, pursuant to 5 U.S.C. 553(d)(3), Treasury has determined that there is good cause for this final rule to become effective immediately upon publication.

This final rule is not a significant regulatory action for purposes of Executive Order 12866. Because no notice of proposed rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. However, the Act and the Program are intended to provide benefits to the U.S. economy and all businesses, including small businesses, by providing a federal reinsurance backstop to commercial property and casualty insurance policyholders and spreading the risk of insured loss resulting from an act of terrorism.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for not publishing an NPRM and for making this rule effective less than 30 days after publication in the Federal Register. Publishing a NPRM would be contrary to public interest since immediate action is necessary to ensure the safety of vessels and persons that transit in the vicinity of the Tacoma Narrows Bridge. The Coast Guard did not initially intend to issue a safety zone for this project. However, recent events of boaters navigating too close to the construction zone and reports of scuba divers diving near the caissons make a safety zone necessary. If normal notice and comment procedures were followed, this rule would not become effective in sufficient time. For this reason, following normal rulemaking procedures in this case would be impracticable and contrary to the public interest.

The Coast Guard is adopting a temporary safety zone regulation on the Tacoma Narrows and adjoining waters, for the Tacoma Narrows Bridge Project. The Coast Guard has determined it is necessary to limit access to a 250-yard radius around each of the two new bridge piers. Caissons are being used to build the new bridge piers. The new bridge piers are located just north of the existing Tacoma Narrows Bridge. The dangers to persons and vessels transiting this area include, but are not limited to, hazards to navigation, allisions with the caissons, allisions with the caisson mooring system, and collisions with work vessels and barges. The Coast Guard, through this action, intends to promote the safety of persons and vessels in the area. Entry into these zones will be prohibited unless authorized by the Captain of the Port. Coast Guard personnel will enforce these safety zones. The Captain of the Port may be assisted by other Federal, State, or local agencies.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not significant under the regulatory policies and procedures of the Department of Homeland Security (DHS). We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10(e) of the regulatory policies and procedures of DOT is unnecessary. This expectation is based on the fact that the regulated area established by the regulation would encompass a small area that should not impact commercial or recreational traffic. The Coast Guard does not anticipate any significant economic impact.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this rule will have a significant economic impact on a substantial number of small entities. “Small entities” include 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. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit this portion of the Tacoma Narrows when this rule is in effect. The zone will not have a significant economic impact due to its short duration and small area. Because the impacts of this rule are expected to be so minimal, the Coast Guard certifies under 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.

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 (Public Law 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

This 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 rule would not impose an unfunded mandate.

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.

The Coast Guard recognizes the rights of Native American Tribes under the Stevens Treaties. Moreover, the Coast Guard is committed to working with Tribal Governments to implement local policies to mitigate tribal concerns. Given the flexibility of this rule to accommodate the special needs of mariners in the vicinity of the bridge construction, and the Coast Guard's commitment to working with the Tribes, we have determined that safety in the vicinity of the bridge construction project and fishing rights protection need not be incompatible and therefore have determined that 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.

The Coast Guard's preliminary review indicates this rule is categorically excluded from further environmental documentation under figure 2-1, paragraph 34(g) of Commandant Instruction M16475.1D. The environmental analysis and Categorical Exclusion Determination will be prepared and be available in the docket for inspection and copying where indicated under ADDRESSES. All standard environmental measures remain in effect.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for not publishing an NPRM and for making this rule effective less than 30 days after publication in the Federal Register. Publishing an NPRM and delaying the effective date of this rule would be contrary to the public interest since immediate action is necessary to minimize potential danger to the public and required to ensure the safety or persons and vessels operating on the Atlantic Intracoastal Waterway (AICW) in this area at the times specified. Advanced notice was not received from the originator that would have allowed publication to occur in the Federal Register.

Naval gunfire will be conducted crossing the AICW and impacting areas in Camp Lejeune from 12 p.m. to 4 p.m. Eastern Daylight Time on August 15, 19 & 20, 2003. The safety zone is in effect to ensure the safety of persons and vessels operating on the AICW in this area.

The safety zone will cover the AICW extending from Bogue Sound-New River Daybeacon 58 (LLNR 39210) southeast to Bogue Sound-New River Light 64 (LLNR 39230). This safety zone will be in effect to ensure the safety of persons and vessels operating on the AICW in this area. Entry into this safety zone is prohibited unless authorized by the Captain of the Port or his/her designated representative. A Coast Guard or U.S. Navy vessel will patrol each end of the safety zone to ensure that the public is aware that the firing exercises are in progress and that the firing area is clear of traffic before firing commences.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS). This rule only affects a small portion, less than two miles, of the AICW in North Carolina for a limited time. The regulations have been tailored in scope to impose the least impact on maritime interests, yet provide the level of safety necessary for such an event.

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 or anchor in a portion of the AICW from 12 p.m. to 4 p.m. Eastern Daylight Time on August 15, 19 & 20, 2003. The Coast Guard expects a minimal economic impact on a substantial number of small entities due to this rule because little commercial traffic transits this area of the AICW.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Small Entities requesting guidance or exemption from this rule may contact LCDR Chuck Roskam, Chief, Port Operations, USCG Marine Safety Office Wilmington at (910) 772-2207.

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 affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

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

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not 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.

The Office is amending its rules to separate the provisions for patent and trademark matters with respect to correspondence, requesting copies of documents, payment of fees, and general information. Specifically, the Office is (1) amending 37 CFR Part 1 to delete all references to trademarks, and (2) amending 37 CFR Part 2 to add new rules setting forth provisions for corresponding with and paying fees to the Office in trademark cases, and for requesting copies of trademark documents.

The Office is amending rules 1.1, 1.4, 1.5, 1.6, 1.8, 1.10, 1.12, 1.13, 1.22, 1.26, 2.1, 2.2, 2.6, and 2.123; and adding new rules 2.190, 2.191, 2.192, 2.193, 2.194, 2.195, 2.196, 2.197, 2.198, 2.200, 2.201, 2.206, 2.207, 2.208, and 2.209.

The Office is removing § 1.1(a)(2), amending § 1.1(a) to delete reference to § 1.1(a)(2), amending § 1.1(a)(4) to delete reference to trademark-related documents, and revising the note following § 1.1(f) to delete the reference to “trademark cases.”

The Office is removing and reserving § 1.4(d)(1)(iii), amending § 1.4(d)(1)(ii) to change a semicolon to a period, and amending §§ 1.4(a)(1), (a)(2), (b) and (d)(1) to delete references to trademark applications, trademark registrations, and trademark filings.

The Office is removing and reserving § 1.5(c).

The Office is removing and reserving §§ 1.6(a)(4), (d)(7) and (d)(8), and revising §§ 1.6(d), (d)(3), and (d)(4) to delete all references to trademark matters.

The Office is removing and reserving § 1.8(a)(2)(ii).

The Office is amending § 1.10(a) to delete all references to trademark correspondence.

The Office is amending § 1.12(a) to delete all references to trademark assignments.

The Office is amending § 1.13 to delete all references to copies of trademark documents.

The Office is amending § 1.22 to delete all references to trademark fees and trademark registration files.

The Office is amending § 1.26(a) to delete the reference to trademark filing.

The Office is removing and reserving § 2.1, which provides that §§ 1.1 to 1.26 of this chapter apply to trademark cases.

The Office is amending § 2.2 to add definitions of “Director,” “Office,” “TEAS,” and “Federal holiday within the District of Columbia.”

The Office is adding a new § 2.6(b)(12), requiring a fee for processing any payment refused or charged back by a financial institution. This is consistent with current § 1.21(m).

The Office is adding a new § 2.6(b)(13), setting forth the fee for establishing a deposit account, and a service charge for each month when the balance at the end of the month is below $1,000. This is consistent with current §§ 1.21(b)(1) and (2).

The Office is amending § 2.123(f)(2) to change a cross-reference.

The Office is adding a new § 2.190, setting forth the addresses for trademark correspondence. This is consistent with current §§ 1.1(a)(2) and 1.1(a)(4).

The Office is adding a new § 2.191, providing that business with the Office must be transacted in writing, and that no attention will be paid to any alleged oral promise, stipulation, or understanding. This is consistent with current § 1.2.

The Office is adding a new § 2.192, providing that business must be conducted with decorum and courtesy. This is consistent with current § 1.3.

The Office is adding a new § 2.193, setting forth the requirements for correspondence and signatures in trademark cases. This is consistent with current § 1.4.

The Office is adding a new § 2.194, setting forth the requirements for identifying correspondence relating to trademark applications and registrations. This is consistent with current § 1.5.

The Office is adding a new § 2.195, setting forth the procedures for according filing dates in trademark cases. This is consistent with current § 1.6.

The Office is adding a new § 2.196, providing that when the last day for taking an action or paying a fee falls on a Saturday, Sunday, or Federal holiday within the District of Columbia, the action may be taken or fee may be paid on the next succeeding day that is not a Saturday, Sunday, or Federal holiday within the District of Columbia. This is consistent with current § 1.7.

The Office is adding a new § 2.197, setting forth the requirements and procedures for filing a document under a certificate of mailing or certificate of transmission. This is consistent with current § 1.8.

Section 2.197(b) requires that if correspondence is timely mailed or transmitted, but not received in the Office, the party who filed the correspondence must inform the Office of the timely mailing or transmission within two months after becoming aware that the Office has no evidence of receipt of the correspondence. This does not change current practice. While current § 1.8(b)(1) requires that the party inform the Office of the timely mailing or transmission “promptly,” § 2.146(d) requires that a petition for revival or reinstatement in a trademark case be filed within two months of the date that the party who filed the correspondence became aware that there was a problem with the filing date of the correspondence, unless a different deadline is specified elsewhere in the rules. Trademark Manual of Examining Procedure §§ 305.02(f), 306.05(d) and 1705.04.

The Office is adding a new § 2.198, setting forth the procedures and requirements for filing correspondence by Express Mail. This is consistent with current § 1.10. Section 2.198(a)(1) provides that the Express Mail procedure cannot be used to file: Trademark applications filed under section 1 or section 44 of the Trademark Act; amendments to allege use under section 1(c) of the Trademark Act; statements of use under section 1(d) of the Trademark Act; requests for extension of time to file a statement of use under section 1(d) of the Trademark Act; affidavits of continued use under section 8 of the Trademark Act; renewal applications under section 9 of the Trademark Act, 15 U.S.C. § 1059; requests to change or correct addresses; combined filings under sections 8 and 9 of the Trademark Act; or combined affidavits or declarations under sections 8 and 15 of the Trademark Act.

Sections 2.198(c)(1), (d)(1) and (e)(1) require that if correspondence is sent by Express Mail under §§ 2.198(a) and (b) but not accorded a filing date as of the date of deposit with the United States Postal Service (USPS), the party who filed the correspondence may petition for a filing date as of the date of deposit with the USPS, within two months after becoming aware that the Office did not receive the correspondence, or that the Office accorded an incorrect filing date to the correspondence. This does not change current practice. While current § 1.10(c)(1), (d)(1) and (e)(1) require that the party inform the Office of the timely mailing or transmission “promptly,” § 2.146(d) requires that a petition for revival or reinstatement in a trademark case be filed within two months of the date that the party who filed the correspondence became aware that there was a problem with the filing date of the correspondence, unless a different deadline is specified elsewhere in the rules. Trademark Manual of Examining Procedure §§ 305.03 and 1705.04.

The Office is adding a new § 2.200, setting forth the procedures for requesting copies of trademark assignments. This is consistent with current § 1.12.

The Office is adding a new § 2.201, setting forth the procedures for requesting copies of trademark registrations. This is consistent with current § 1.13.

The Office is adding a new § 2.206, providing that trademark fees must be paid in advance and must be itemized. This is consistent with current § 1.22.

The Office is adding a new § 2.207, setting forth the methods for paying fees in trademark cases. This is consistent with current § 1.23.

The Office is adding a new § 2.208, providing for the payment of trademark fees from deposit accounts. This is consistent with current § 1.25.

The Office is adding a new § 2.209, setting forth the procedures for refunding trademark fees. This is consistent with current § 1.26.

Regulatory Flexibility Act: As prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553 (or any other law), an initial regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is not required. See 5 U.S.C. 603.

Executive Order 13132: This rule making does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

Executive Order 12866: This rule making has been determined not to be significant for purposes of Executive Order 12866 (Sept. 30, 1993).

Paperwork Reduction Act: This rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number.

Administrative Procedure Act: This final rule merely renumbers rules of agency practice and procedure. There are no substantive changes to the rules. Therefore, this final rule may be adopted without prior notice and opportunity for public comment under 5 U.S.C. 553(b) and (c).

See 67 FR 79538 (12/30/2002).

In order no. 1355, the Commission proposed to amend its rules of practice in two principal ways.1 First, the proposed rulemaking would require the Postal Service to submit testimony of a single witness providing an overview (or roadmap) of its request, which, among other things, would both explain the interrelationship of the testimony submitted in support of the filing and highlight all methodological changes. See proposed rule 53(b). Second, the rules would be clarified regarding the Postal Service's obligation to submit testimony addressing material methodological changes affecting costing, volume projections, or rate design. See proposed rules 53(c) and 54(a). Interested persons were invited to comment on the proposed rules.

Six sets of initial comments were received,2 plus four sets of reply comments.3 Aside from the Postal Service, all initial commenters supported the proposed rule. For its part, the Postal Service, while expressing concerns about the proposed rule changes, characterizes itself as “generally sympathetic to the proclaimed need for a better overview of its case[.]” 4

Its principal concern lay with the form of the roadmap, favoring an institutional document over testimony. Id. at 3-6. To that end, the Postal Service offers an alternative version of the proposed rules. It also outlines its concept of the roadmap document as well as expressing concerns regarding the details associated with reporting methodological changes. Id. at 6-25.

Other commenters also suggest revisions to the proposed rule. For example, OCA suggests that the Postal Service be required to quantify the impact of every methodological change. In a similar vein, ABA/NAPM urge the Commission to quantify the meaning of material changes. See OCA Comments at 3-6 and ABA/NAPM Comments at 2. UPS suggests revisions to the proposed rules regarding details reported by the Postal Service. UPS Comments at 4.

This rulemaking grew out of the Ratemaking Summit, jointly sponsored by the Commission and the Postal Service during the spring of 2002 to consider potential improvements in the ratemaking process. The conferences provided a useful public forum to discuss various alternatives intended to make the current process more efficient. In order no. 1355, the Commission addressed the alternatives suggested. Based on participants' written and oral comments, the Commission proposed to amend its rules of practice to require that the Postal Service file roadmap testimony as well as testimony explaining each material methodological change in its filing when submitting formal requests under subparts B and C of the Commission's rules.

The proposed rule is widely supported by mailer-participants, and the OCA. The Postal Service opposes the form of the proposed rule, if not (entirely) its substance. Among other things, the Postal Service expresses concern over any burden that may be associated with the proposed rule. In concluding that the proposed rule, with a minor modification, will facilitate the ratemaking process, the Commission has been particularly mindful of the relative burdens borne by all participants during omnibus rate proceedings. Based on a thorough consideration of the comments received in this proceeding, the Commission concludes that the rules adopted herein represent a reasonable balance among competing interests and will improve the ratemaking process.

Participants are commended for their comments. The Commission has found them useful during its deliberations. The merit of the various suggestions to modify the proposed rule is addressed below. The discussion begins with consideration of the Postal Service's comments.

Roadmap testimony. The Postal Service offers several reasons in support of its contention that the roadmap would be more effective as an institutional document than as testimony. As the “most obvious reason,” it questions whether an individual could be sufficiently familiar with the various testimonies to be able to explain them and their interrelationship. Even if such a witness were available, the Postal Service questions the usefulness of the undertaking, including the need to respond to discovery and possibly stand cross-examination. Expanding on this point, the Postal Service expresses concern that there may be confusion as to the proper scope of the roadmap testimony and that of the substantive witnesses, and further that there may be an increased need to redirect questions among witnesses.5

An additional concern voiced by the Postal Service is that a witness would be required to present evidence regarding Commission methodologies. This result, the Postal Service contends, would be inappropriate since the witness would not be sponsoring the PRC version. 6

The Commission is not persuaded that an institutional roadmap is preferable to testimony. For several reasons, testimony, as opposed to an institutional document, is a more appropriate vehicle for providing an overview of the Postal Service's filing.

A witness is directly responsible for the substance of his or her testimony. Thus, there is a direct accountability that does not attach to an institutional roadmap. Form in this instance matters. Testimony from a single witness is more likely to present the Postal Service's filing as a coherent whole. Furthermore, discovery can be directed to the roadmap witness, an option not available if the roadmap were an institutional document.7

Requiring the roadmap to be in the form of testimony does not mean that the witness could not rely on others for assistance in producing the testimony. Rather, as with any testimony, it must be prepared by or under the supervision of the sponsoring witness. This should put to rest any concerns that a single witness would be unable to understand the elements of the Postal Service's filing. Moreover, that an institutional document could be produced belies the suggestion that an individual would be incapable of providing the same information in the form of testimony.

Testimony by a roadmap witness is analogous to that of a policy witness. Each speaks on behalf of the proponent, providing a focal point for its proposal. Thus, including the roadmap testimony as part of the evidentiary record is appropriate. The Postal Service compares the testimony to documents such as the list of library references or of the attorney-witness assignments.8 Unlike those documents, which simply identify certain organizational features of the filing, the testimony has substantive value that warrants its treatment as record evidence.

Streamlining the administrative process is central to the proposed rule. The roadmap testimony is intended to provide an overview of the Postal Service's filing by, among other things, explaining the interrelationship of the testimony submitted with the request and describing material methodological changes. This testimony is likely to be the participants' starting point in attempting to understand the Postal Service's filing. Participants will benefit because the testimony will provide a means to quickly grasp the essential elements of the Postal Service's filing and focus on issues of principal concern. This should produce a more focused and comprehensive evidentiary record in the limited time available for § 3624 cases and lead to more informed and cogent decisions by the Commission. Being able to direct clarifying questions to the roadmap witness should facilitate the process, and questions going to the substance of particular matters should more readily be addressed to the witness sponsoring that proposal.9

In its comments, the Postal Service notes that it has and is willing to make reasonable efforts to better explain its rate case presentations.10 In any rate proceeding, the burden initially lies with the proponent. The Commission is sensitive to the issue and recognizes the Postal Service's considerable efforts in rate cases, particularly as relates to discovery. Omnibus rate cases are complex and subject to a very expedited schedule. As a consequence, the burdens imposed on participants are not insignificant. The roadmap testimony attempts to reasonably balance these relative burdens, while also facilitating the ratemaking process. As several comments note, the testimony should help participants focus more quickly on substantive issues.11 This, in turn, should reduce the Postal Service's burden of responding to discovery, particularly that of an exploratory nature. These efficiencies will redound to the benefit of all stakeholders.

The Postal Service's related contentions that participants may be confused about the scope of the roadmap testimony and that this may cause them to direct interrogatories to the wrong witness are largely makeweights. As set forth in the proposed rule, the roadmap testimony simply provides an overview of the Postal Service's filing. Participants are unlikely to confuse that purpose with the role played by witnesses sponsoring the more substantive aspects of the testimony on point. However, even if on occasion an interrogatory is directed to the wrong witness, the solution is simple. The Postal Service is well practiced at redirecting interrogatories to the appropriate witness, and the roadmap witness should be especially familiar with which witness addresses a particular topic. Hence, the Postal Service's argument provides no basis to reject the roadmap testimony.

The Postal Service expresses concern that the roadmap witness would, in effect, be sponsoring testimony regarding PRC methodologies when addressing material changes to the preexisting PRC versions proposed by the Postal Service in that proceeding.12 The comparison required by this exercise cannot be equated with sponsoring the preexisting methodology. It merely identifies and gives context to the proposed change, serving as a benchmark so that the impact can be assessed. Testimony by the roadmap witness describes the areas of change. This does not amount to sponsoring the preexisting methodology. Similarly, witnesses submitting testimony under rule 53(c) sponsor the proposed methodological changes, not the preexisting methodology. That they may be compelled to reference the preexisting methodology does not mean they are sponsoring it.13

Interrelationships among testimonies. The Postal Service suggests the format and level of detail that would, in its view, satisfy the intent of the proposed rule to provide an overview of its filing.14 For example, the Postal Service states that a roadmap explaining the functional components of the case, including identifying testimonies that addressed each component, would appear to provide a sufficient overview of its filing in conformance with the proposed rule, except as relates to methodological changes.15 While it states that one might quibble over whether such a document would adequately explain how the testimonies interrelate, it believes that “the description of the functional organization of the filing would encapsulate the informational flows that define the interrelationships [among] the testimonies.” 16 Further, it indicates that it would have no difficulty summarizing sources of material inputs, including outputs used as inputs, employed by its various witnesses.17

In order no. 1355, the Commission, illustratively citing the testimony of witness Van-Ty-Smith in docket no. R2001-1, observed that she briefly notes that certain witnesses use her mail processing volume-variable costs. The order concludes that “something more” would be required of the roadmap witness.18

Quoting an excerpt from Van-Ty-Smith's testimony, the Postal Service questions what more would be required of it to satisfy this facet of the proposed rule.19 Order no. 1355, as pointed out by the OCA, expands on the statement: 20 “Specifically, the roadmap witness's overview of the Postal Service's filing would identify the subject matter of each witness's testimony, explain how the testimony of the various witnesses interrelates, and highlight changes in cost methodology, volume estimation and rate design.” See proposed § 3001.53(b). Thus, with reference to Van-Ty-Smith's testimony, the roadmap witness would, among other things, explain the linkage between her analysis and the testimony of those witnesses who rely on it.

The roadmap testimony should provide a coherent overview of the Postal Service's filing. To be sure, the excerpt from Van-Ty-Smith's testimony does identify some interrelationship between her testimony and that of other witnesses. Certain interrelationships are reasonably clear, e.g., the description regarding witness Kay's development of incremental costs and Meehan's base year costs. It is less clear, however, regarding the “updates [of] other types of information coming out of the methodology for mail processing costs which are used by other witnesses, such as [Smith, Mayes, Eggleston, and Miller], as the source of inputs for some of their cost studies.” 21 While the statement would alert the reader that some relationship exists between Van-Ty-Smith's and the referenced testimony, it lacks specifics other than a general reference to cost studies. Moreover, the statement is somewhat qualified, referring to witnesses “such as” Smith, et al., and that the inputs are used in “some of their cost studies.” 22

As written, that testimony falls short of explaining the linkage between Van-Ty-Smith's analysis and the testimony of those witnesses who rely on it. The Commission recognizes, of course, that the testimony was not written with the proposed rule in mind. Moreover, as the Postal Service suggests, the foregoing description might be sufficient “[i]n the context of a comprehensive roadmap * * * because any potential questions with respect to the more specific purposes of, for example, the testimony of witness Miller, could be quickly resolved by other information within the roadmap document discussing Mr. Miller's cost study testimony.” 23 Thus, if the linkages to Van-Ty-Smith's testimony are adequately detailed in the portion of the roadmap testimony that addresses, for example, witness Miller's testimony, the proposed rule would be satisfied.

The description in the roadmap testimony is not a surrogate for the underlying testimony of the witness referenced, e.g., Miller's testimony in docket no. R2001-1, USPS-T-22. It should, however, be sufficiently detailed to explain linkages between the two testimonies. This does not mean that the roadmap testimony is to function as a cross-referencing vehicle. That function, as the Postal Service notes, is “fulfilled by the complete documentation submitted by each witness.” 24

In sum, the roadmap testimony is intended to facilitate consideration of complex rate and classification requests by providing participants with an overview of the filing, including identifying changes in methodology. It should enable participants to focus more quickly on issues affecting rates (or service) of concern to them. The level of detail to be included in the roadmap testimony undoubtedly will evolve over time. Based on its comments, the Postal Service appears committed to making a good faith effort to comply with the rules. The Commission would expect no less and, based on experience, believes that Postal Service adheres to that standard in matters before the Commission.

Changes in methodology. Under the proposed rule, the roadmap testimony would highlight changes in cost methodology, volume estimation, and rate design. In addition, the witness sponsoring the methodological changes would be required to explain each material change and quantify its impact. The Postal Service raises concerns about each.

First, the Postal Service states its assumptions regarding the term “cost methodology,” correctly noting that the term extends to subclass costs (CRA costs) and cost study costs.25 The Postal Service then outlines what it characterizes as an appropriate response to address changes in cost methodology under proposed Rule 53(b) and (c). Under its suggested approach, the roadmap document would contain a summary of each witness's testimony, identifying material changes in cost methodology.26 The summaries could include a comparison of results under the proposed methodology with those obtained under that used by the Commission in the most recent rate proceeding. Generally, such comparisons would simply present the relevant material from PRC-version library references along with the results of the witness sponsoring the change.27

If the roadmap were an institutional document perhaps the foregoing would be satisfactory. That approach, however, has been rejected. Moreover, under the Postal Service's proposal, any distinctions between rule 53(b) and (c) are lost. The distinctions are not insignificant.

Perhaps because it would prefer the roadmap be an institutional document, the Postal Service pays scant attention to proposed rule 53(c), suggesting that the rule be revised in two ways. The Postal Service proposes that any discussion of the impact of material changes be removed to its proposed rule 53(b), the institutional roadmap document.28 In addition, because of its concern over sponsoring PRC versions, the Postal Service suggests modifying proposed rule 53(c) to eliminate any reference to the Commission.29

These suggested revisions reflect the Postal Service's preference for an institutional roadmap document in lieu of testimony. Since that approach has been rejected, these suggestions will not be adopted. Accordingly, the Commission will adopt rule 53(c) as initially proposed.

Proposed rule 53(b) requires the filing of a single piece of testimony providing an overview of the request, including, among other things, highlighting methodological changes. Proposed rule 53(c) directs the Postal Service to file testimony addressing the details of material methodological changes, including the impact of such changes. The rule assures that testimony will be filed by a witness sponsoring and explaining each relevant methodological change.

Aside from reiterating its advocacy of an institutional roadmap document in lieu of testimony, the Postal Service, in a rather extensive discussion, compares the proposed rule to what is required under current rule 54(a).30 The discussion is useful to the extent it points out that, as a practical matter, judgment must be exercised in reporting on various types of changes, e.g., those due to updates, operational changes, or new analytical approaches. In the context of current rule 54(a), the Postal Service indicates that it has attempted “to employ a rule of reason” in responding to the requirements of that rule.31 The larger point of the discussion, however, is concern that the proposed rule not undermine the Postal Service's ability to develop, support, and present its case.32 This concern appears to be overstated. While the Commission is not adopting the Postal Service's suggestion that the roadmap take the form of an institutional document, the end result nonetheless strikes a reasonable balance between competing interests. The roadmap testimony will facilitate litigation of Postal Service rate requests without significantly increasing burdens borne by the Postal Service. Moreover, should they not work as intended, the rules may be revisited in the future.

Second, the Postal Service expresses a preference for eliminating any discussion of volume forecasting from the roadmap, arguing, for example, that the issue is uncontroversial and that there are no appreciable differences between its approach to forecasting volume and the Commission's.33 Nonetheless, the Postal Service does not foresee any major difficulties in complying, and this aspect of the proposed rule will be retained. While the volume estimates currently are perhaps less controversial than other rate issues, they remain important in determining an overall revenue requirement and methodological changes should be identified clearly at the outset of any rate proceeding.

Finally, the Postal Service addresses changes in rate design. It questions the need for any extensive discussion within the roadmap, finding it unlikely that any participant interested in rates for a particular subclass would not turn to the testimony of the relevant rate design witness. Thus, it suggests that the rule would be satisfied if the subclasses or services addressed by each rate design witness plus any material rate design changes were identified in the roadmap.34

Systems for developing rates for some subclasses rival the complexity of those used to develop costs, and changes may be difficult to identify easily. The Postal Service's interpretation might appear to be a reasonable first cut in complying with this facet of the proposed rule in some instances, but it should be borne in mind that the purpose of these amendments is to facilitate immediate awareness of changes and their impact. Rate design is an undeniably important ratemaking function. To the extent that the Postal Service proposes changes, whether as a classification change or part of its rate request, the discussion of rate design changes is part of the coherent whole that the roadmap testimony is designed to present. Whether the level of detail provided in the testimony is adequate or not can best be assessed after experience with the rule is gained. Thereafter, changes, if any, can be considered. It bears emphasizing, however, that the proposed rule attempts to strike a reasonable balance between the litigation burdens imposed on participants and the Postal Service. It makes more sense to specifically identify changes in one place than to assume that all intervenors can, without help, identify the testimony most relevant to their specific interest areas. In the Commission's view, the rules adopted will improve the process and thus benefit all concerned.

In order no. 1355, the Commission stated that “[p]ursuant to proposed rule 53(c), it would fall to the sponsoring witness to provide details of the change, including estimating (or quantifying) its effects.” 35 The responsibility of the sponsoring witness is clear. The Commission recognized, however, that quantifying a material change was subject to some ambiguity. Accordingly, it invited interested parties to comment on the benefits of imposing the requirement.

OCA urges the Commission to modify proposed rule 53(c) to make more explicit the requirement that the Postal Service quantify the impact of material changes in cost methodology, volume estimation, and rate design.36 OCA contends that the proposed rule does not specifically require the Postal Service to quantify such effects, as, in its view, the text of order no. 1355 suggests is required. Thus, OCA suggests that proposed rule 53(c) employ specific language to require quantitative estimates of the impact of each methodological change. 37

The Postal Service opposes this suggestion, asserting that the rule should not be altered to require quantification in all circumstances.38 Reiterating its initial comments, the Postal Service states that, when comparisons between the PRC and Postal Service versions can be made, the most relevant type of quantification would be routinely provided in the roadmap document it envisions.39 It asserts that in most instances parties will be interested in only the cumulative effect of the changes, particularly as relates to the roadmap document. The Postal Service also criticizes the suggestion as overlooking the extensive documentation that it files in support of its requests. The Postal Service concludes that its focus should be on the cumulative effects of new analyses, with participants free to investigate whatever components they believe to be most significant.40

To some degree, OCA and the Postal Service appear to be talking at cross-purposes. OCA's comments address proposed rule 53(c), which directs the Postal Service to file testimony addressing the details of material methodological changes, including the impact of such changes. For its part, however, the Postal Service's response is based on “the roadmap document it envisions[,]” 41 an approach, as noted, that ignores distinctions between proposed rules 53(b) and (c).

As proposed, rule 53(c) requires the Postal Service to submit testimony that identifies and explains each material change in cost methodology, volumes, and rate design. That testimony shall also discuss the impact of each such change on the levels of attributable costs, volumes, and rate levels. In order no. 1355, the Commission recognized that quantifying the effects of methodological changes may, in some instances, prove difficult. The Commission further noted that the proposed rules are not intended to require the Postal Service to address each change regardless of its consequences.

The Commission appreciates the OCA's comments. OCA's comments, however, gloss over any difficulties associated with quantifying interrelated methodological changes. OCA's suggestion that the Commission's rules be revised to require the Postal Service to quantify the impact of each separate methodological change overreaches. Furthermore, while OCA's basic point that the proposed rule does not hew explicitly to the discussion in order no. 1355 is not in dispute, the intent of the proposed rule is nonetheless reasonably clear.

As the Postal Service indicates, quantification becomes more difficult when several changes operate jointly.42 To be sure, the cumulative effect of these changes is important. It remains to be seen whether parties will, for the most part, be interested only in the cumulative effect as the Postal Service contends. In any event, parties wanting more detail can avail themselves of discovery. Moreover, as the Postal Service notes, as part of its filing it provides comprehensive rate case documentation that permits replication of its analyses. Consequently, the Commission declines to adopt the OCA's suggestion.

The OCA also suggests that the rules be amended to bar institutional responses to interrogatories seeking to clarify a proponent's proposal(s) and evidence.43 In support, OCA notes that responses to presiding officer information requests are sponsored by witnesses. In addition, OCA argues that timing may become an issue with written discovery.44 The Postal Service opposes this suggestion, arguing, principally, that OCA fails to demonstrate that institutional responses have caused problems in recent dockets.45

The expedition required in omnibus rate cases puts a premium on attempting to quickly understand the Postal Service's filing. Written discovery is the principal means for clarifying the Postal Service's proposals. Informal discussions with the Postal Service and technical conferences may supplement this process. While timing can be an issue with respect to written discovery, cross-examination remains available to participants as well. The rationale offered by OCA for the suggestion does not warrant its adoption. It is well understood that participants submitting institutional responses to discovery requests must be prepared to provide a sponsoring witness if follow-up oral cross-examination is required. OCA has failed to demonstrate that institutional responses have caused participants problems in understanding the Postal Service's case in recent proceedings. Should it become a problem, however, the Commission's rules provide means for seeking redress.

OCA also proposes that the Commission should, as a matter of practice, formally notice in the Federal Register participants' alternative proposals in any case set for hearing.46 OCA believes that such notice would apprise interested persons of any new proposals and preempt any due process claims that adequate notice was not given. No commenter addressed this suggestion.

The Commission declines to adopt this suggestion. OCA does not advocate codifying this practice in the Commission's rules.47 Thus, for purposes of this rulemaking, the suggestion is essentially a nullity. The Commission could, were it so inclined, adopt the practice irrespective of this rulemaking. Moreover, as OCA notes, generally the original notice issued by the Commission is sufficient to apprise interested persons of the nature of the proceeding, including the possibility that its recommendations may differ from the Postal Service's request.

Finally, OCA incorporates its comments from docket no. RM2003-3 to the extent they may be more appropriately considered in this proceeding.48 The Commission finds those comments more relevant to docket no. RM2003-3.

UPS proposes two modifications to the proposed rules. The Postal Service opposes both. First, UPS suggests revising rule 53(b) by substituting the word “describing” for “highlighting.” The intent of this proposal is to have the roadmap witness generally explain the change and the reason for it.49 The Postal Service opposes the wording change. While acknowledging that the word describe may not be “utterly inappropriate,” contending that the use of “highlighting” better conveys the appropriate level of detail.50

The Commission adopts this UPS suggestion. On reflection, the term “highlighting” is perhaps too ambiguous in the context of the rule. The roadmap witness should describe changes in cost methodology, volume projections, and rate design in sufficient detail to inform the reader of the nature of the change.51 This should adequately inform the reader of the change and direct him or her to the testimony of the witness sponsoring the proposed change, where the complete details of material methodological changes will be contained. In this fashion, the roadmap testimony will fulfill its intended role. Moreover, this clarifying change appears to be consistent with the Postal Service's understanding of the roadmap's function. Specifically, the Postal Service recognizes that the description of the changes must be sufficient to enable readers to understand the nature of the changes.52

Second, UPS suggests that rule 53(c) be modified by inserting the phrase “for each affected subclass” at the end of the final sentence to that subsection.53 UPS states that its proposal is intended to make the intent of the proposed rule clear.54 In opposing this suggestion, the Postal Service observes, first, that the effect of some changes cannot be presented at the subclass level. In support, it references a study done by witness Bozzo. Second, the Postal Service states that certain cost studies are done below the subclass level. Finally, the Postal Service asserts the change is unnecessary as it intends, where appropriate, to provide the impacts by subclass.55

The rule will be adopted as proposed. The testimony required by this subsection directs, first, that material changes in cost methodology, volume projections, and rate design be identified and explained. The intent of this provision is that the relevant witness explain each material change, which may affect the system as a whole or individual classes or subclasses of mail. Rule 53(c) also requires that the impact of each material change on the levels of attributable costs, projected volumes, and rate levels be discussed. The nature and impact of the change will dictate the form of the discussion. On occasion, it may involve the system as a whole. More often, however, the discussion of impacts is likely to be at the subclass level or below. The Postal Service appears to acknowledge this possibility with its comment that “certain cost studies are done below the subclass level (i.e., at the rate category level).” 56

The Postal Service's contention that the impact of certain changes cannot be presented at the subclass level warrants brief comment, albeit not for its substance. As support for its position, the Postal Service refers to witness Bozzo's analyses of mail processing cost pool variabilities, stating that his results did not relate directly to subclasses. The Postal Service notes that witness Van-Ty-Smith distributed mail processing costs to subclasses in the last proceeding.57 While the Bozzo example may adequately answer UPS's suggestion, ambiguity may nonetheless persist as to Van-Ty-Smith's testimony. Under the proposed rule, it would fall to witness Van-Ty-Smith to discuss the impact of any material changes in the distribution of mail processing costs.

ABA/NAPM suggest that the Commission should quantify, perhaps by examples, what constitutes “material effect.” 58 While the phrase “material effect” appears in the text of order no. 1355 (at 9), it does not, as the Postal Service notes,59 appear in the proposed rule. At that point in the text, the phrase is describing the responsibilities of the roadmap witness, which are set forth in proposed rule 53(b). The details of the change, however, are the responsibility of the witness sponsoring the change. See order no. 1355, December 12, 2002 at 9.

In urging the Commission to quantify “material effect,” ABA/NAPM focus on rate changes, noting that changes as small as a few hundreds of a cent are material to them.60 Attempting to quantify “material effect” at the rate cell level, as the commenters appear to suggest, would be impractical and would impose an unwarranted burden on the Postal Service. The central issue is what is material, and that, as the Postal Service recognizes, may vary depending on the circumstances. Thus, while the Postal Service's observation that small rate changes may be material for one rate schedule but not another may adequately rebut ABA/NAPM's request for quantification, it also implies the standard of materiality that should govern its response to the rules. As the Postal Service recognizes, small changes, e.g., tenths of a cent, might be material for certain rate schedules, e.g., First-Class, Standard, but unlikely to be for others, e.g., Express Mail, Priority Mail.61 Accordingly, the issue of materiality fairly answers itself.

In order no. 1355, the Commission provided guidance concerning the types of changes that fall within the scope of the proposed rule.62 In brief, as set forth in proposed rule 53(c), the “intent is to capture substantive changes.” 63 The Postal Service appears to understand the intent of the proposed rule. In opposing ABA/NAPM's suggestion, it states that in testimonies it routinely addresses methodological changes considered to be material.64 The new rules should not impose substantial additional burden on the Postal Service. Inevitably, the rules will require the Postal Service to exercise some judgment. In its initial comments, the Postal Service indicates it employs a rule of reason when addressing the requirements of rule 54(a). When addressing the requirements of the new rules, the Postal Service would do well to bear that standard in mind. If in doubt, however, it should err on the side of noting the matter in the relevant testimony.

ABA/NAPM also request that the Commission require that the “alternate cost presentation” mandated by rule 54(a)(1) be sponsored by a Postal Service witness rather than simply being submitted as a library reference. ABA/NAPM indicate that sponsorship would be limited essentially to explaining the calculations.65 The Postal Service opposes this suggestion.66

ABA/NAPM have not shown that the current format fails to provide participants with sufficient information about results under the PRC version to warrant requiring a Postal Service witness to sponsor the results. Institutional discovery and technical conferences remain available to participants. Accordingly, the suggestion will not be adopted at this time.

Finally, ABA/NAPM request that the Commission clarify that the proposed amendment to rule 54(a)(1) does not change the reporting requirements regarding attribution procedures, but rather that they will now be covered by rule 53(c).67 The Commission clarifies that ABA/NAPM's understanding is correct.

For the reasons discussed above, the Commission hereby amends subparts B and C of its rules of practice and procedure as set forth below. Any suggestion or request to modify the Commission's rules raised by any participant not specifically addressed herein is denied.

It is ordered:

1. The Commission adopts the provisions set forth below as final rules amending 39 CFR 3001.53, 54, and 63.

2. These rules will take effect on October 1, 2003.

3. The Secretary shall cause this notice and order adopting final rule to be published in the Federal Register.

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:

•  Crop production (NAICS 111)

•  Animal production (NAICS 112)

•  Food manufacturer (NAICS 311)

•  Pesticide manufacturer (NAICS 32532)

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. To determine whether you or your business may be affected by this action, you should carefully examine the applicability provisions in Unit II. of this preamble. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT

1. Docket. EPA has established an official public docket for this action under docket identification (ID) number OPP-2003-0180. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall#2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.

2. Electronic access. You may access this Federal Register document electronically through the EPA Internet under the “Federal Register” listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cf r180_00.html, a beta site currently under development. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B.1. Once in the system, select “search,” then key in the appropriate docket ID number.

In the Federal Register of March 21, 2003 (68 FR 13920-13924) (FRL-7295-5), EPA issued a notice pursuant to section 408 of the FFDCA, 21 U.S.C. 346a, as amended by the FQPA (Public Law 104-170), announcing the filing of a pesticide petition (PP 6F4631) by Sygenta Crop Protection, Inc, P.O. Box 18300, Greensboro, N.C, 27419-8300. This notice included a summary of the petition prepared by Syngenta Crop Protection, the registrant. There were no comments received in response to the notice of filing.

The petition requested that 40 CFR 180.548 be amended by establishing a tolerance for residues of the herbicide tralkoxydim, 2-(Cyclohexen-1-one, 2-[1-(ethoxyimino) propyl]-3-hydroxyl-5-(2,4,6-trimethylphenyl)-(9Cl), in or on barley, grain at 0.02 parts per million (ppm) ; barley, hay at 0.02 ppm; barley, straw at 0.05 ppm; wheat, forage at 0.05 ppm; wheat, grain at 0.02 ppm; wheat, hay at 0.02 ppm; and wheat, straw at 0.05 ppm. The tolerance will expire on May 1, 2005.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of the FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of the FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997) (FRL-5754-7).

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA , for a tolerance for residues of tralkoxydim on barley, grain at 0.02 parts per million (ppm) ; barley, hay at 0.02 ppm; barley, straw at 0.05 ppm; wheat, forage at 0.05 ppm; wheat, grain at 0.02 ppm; wheat, hay at 0.02 ppm; and wheat, straw at 0.05 ppm EPA's assessment of exposures and risks associated with establishing the tolerance was discussed in the Federal Register December 16, 1998 (63 FR 69194-69200) and will not be repeated in this notice.

Therefore, the tolerance is established for residues of tralkoxydim, 2-(Cyclohexen-1-one, 2-[1-(ethoxyimino) propyl]-3-hydroxyl-5-(2,4,6-trimethylphenyl)-(9Cl), in or on barley, grain at 0.02 ppm ; barley, hay at 0.02 ppm; barley, straw at 0.05 ppm; wheat, forage at 0.05 ppm; wheat, grain at 0.02 ppm; wheat, hay at 0.02 ppm; and wheat, straw at 0.05 ppm

Due to the second species carcinogenicity study data gap: EPA believes it is inappropriate to establish permanent tolerances for the uses of tralkoxydim at this time. EPA believes that the existing data support time-limited tolerances to May 1, 2005. Therefore, time-limited tolerances are established for residues of the herbicide, tralkoxydim, 2-(Cyclohexen-1-one, 2-[1-(ethoxyimino)propyl]-3-hydroxy-5-(2,4,6-trimethylphenyl)-(9Cl), in or on the raw agricultural commodities: barley grain, barley hay, wheat grain and wheat hay at 0.02 ppm, and barley straw, wheat forage and wheat straw at 0.05 ppm. These time-limited tolerances will expire and be revoked on May 1, 2005.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) of the FFDCA provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d), as was provided in the old sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number -OPP-2003-0180. in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before October 14, 2003.

1. Filing the request. Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900C), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Rm.104, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA-. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (703) 603-0061.

2. Tolerance fee payment. If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.”

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

3. Copies for the Docket. In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.1. Mail your copies, identified by docket ID number- OPP-2003-0180., to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.1. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes a tolerance under section 408(d) of the FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of the FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism(64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

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

You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected entities may include, but are not limited to:-

• Crop production (NAICS 111)

•  Food manufacturing (NAICS 311)

•  Pesticide manufacturing (NAICS 32532)

•  Animal production (NAICS 112)-

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in this unit could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether this action might apply to certain entities. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT.

1. Docket. EPA has established an official public docket for this action under docket identification (ID) number OPP-2003-0251 The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.-

2. Electronic access. You may access this Federal Register document electronically through the EPA Internet under the “Federal Register” listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cfr180_00.html, a beta site currently under development. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.-

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in Unit I.B.1. Once in the system, select “search,” then key in the appropriate docket ID number.

In the Federal Register of October 6, 1999 (64 FR Page 54300-54303) (FRL-6029-9), EPA issued a notice pursuant to section 408 of FFDCA, 21 U.S.C. 346a, as amended by FQPA (Public Law 104-170), announcing the filing of a pesticide petition (PP 2F02609) by BASF Corporation, 26 Davis Drive, P.O. Box 13528, Research Triangle Park, NC 27709-3528. That notice included a summary of the petition prepared by BASF Corporation, the registrant. There were no comments received in response to the notice of filing.-

The petition requested that 40 CFR 180.395 be amended by establishing a tolerance for residues of the insecticide Hydramethylnon in or on pineapple at 0.05 parts per million (ppm). -

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of the FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of the FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue....”-

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 of the FFDCA and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997) (FRL-5754-7).

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA, for a tolerance for residues of hydramethylnon on pineapple at 0.05 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by hydramethylnon are discussed in Table 1 of this unit as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies reviewed.

The dose at which no adverse effects are observed (the NOAEL) from the toxicology study identified as appropriate for use in risk assessment is used to estimate the toxicological level of concern (LOC). However, the lowest dose at which adverse effects of concern are identified (the LOAEL) is sometimes used for risk assessment if no NOAEL was achieved in the toxicology study selected. An uncertainty factor (UF) is applied to reflect uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. An UF of 100 is routinely used, 10X to account for interspecies differences and 10X for intra species differences.-

For dietary risk assessment (other than cancer) the Agency uses the UF to calculate an acute or chronic reference dose (acute RfD or chronic RfD) where the RfD is equal to the NOAEL divided by the appropriate UF (RfD = NOAEL/UF). Where an additional safety factors (SF) is retained due to concerns unique to the FQPA, this additional factor is applied to the RfD by dividing the RfD by such additional factor. The acute or chronic Population Adjusted Dose (aPAD or cPAD) is a modification of the RfD to accommodate this type of FQPA SF.-

For non-dietary risk assessments (other than cancer) the UF is used to determine the LOC. For example, when 100 is the appropriate UF (10X to account for interspecies differences and 10X for intraspecies differences) the LOC is 100. To estimate risk, a ratio of the NOAEL to exposures (margin of exposure (MOE) = NOAEL/exposure) is calculated and compared to the LOC.-

The linear default risk methodology (Q*) is the primary method currently used by the Agency to quantify carcinogenic risk. The Q* approach assumes that any amount of exposure will lead to some degree of cancer risk. A Q* is calculated and used to estimate risk which represents a probability of occurrence of additional cancer cases (e.g., risk is expressed as 1 x 10-6 or one in a million). Under certain specific circumstances, MOE calculations will be used for the carcinogenic risk assessment. In this non-linear approach, a “point of departure” is identified below which carcinogenic effects are not expected. The point of departure is typically a NOAEL based on an endpoint related to cancer effects though it may be a different value derived from the dose response curve. To estimate risk, a ratio of the point of departure to exposure (MOEcancer = point of departure/exposures) is calculated. A summary of the toxicological endpoints for hydramethylnon used for human risk assessment is shown in the following Table 2:

1. Dietary exposure from food and feed uses. Tolerances have been established (40 CFR 180.395) for the residues of hydramethylnon, on grass and grass hay for pasture and rangeland at 0.05 ppm established in terms of parent only, tetrahydro-5,5-dimethyl-2(1H)-pyrimidinone (3-(4-(trifluoromethyl)phenyl)-1-(2-(4-(trifluoromethyl)phenyl)ethenyl)-2- propenylidene) hydrazone. The Agency determined that the residue of concern in grasses and the milk, meat, and meat byproducts of ruminants is hydramethylnon per se, and that there is no reasonable expectation of finite hydramethylnon residues of concern in the milk, meat, and meat byproducts of ruminants 40 CFR 180.6(a)(3) as a result of hydramethylnon use on grasses. The Agency has also previously recommended that the grass forage tolerance be increased to 2.0 ppm and the grass hay tolerance be increased to 0.1 ppm. The residue chemistry and toxicological databases support the requested tolerance of 0.05 ppm for hydramethylnon on pineapple. Since there are no detectable hydramethylnon residues in the pineapple feed item, process residues, tolerances for hydramethylnon residues in animal commodities need not be established. Risk assessments were conducted by EPA to assess dietary exposures from hydramethylnon in food as follows: --

i. Acute exposure. Acute dietary risk assessments are performed for a food-use pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a one day or single exposure. An unrefined, Tier 1 acute dietary exposure assessment was conducted using tolerance-level residues and assuming 100% crop treated (CT) for all registered and proposed commodities. The acute analysis was conducted for females 13-49 years old only as no appropriate single dose endpoint was established for the general U.S. population and infants and children.

The acute dietary exposure estimates are well below the Agency's level of concern (<100% aPAD) at the 95th exposure percentile for females 13-49 years old (<1% of the aPAD).

ii. Chronic exposure. In conducting this chronic dietary risk assessment the Dietary Exposure Evaluation Model (DEEM®) analysis evaluated the individual food consumption as reported by respondents in the USDA 1994-1996/1998 nationwide Continuing Surveys of Food Intake by Individuals (CSFII) and accumulated exposure to the chemical for each commodity. The following assumptions were made for the chronic exposure assessments: A Tier 1 (conservative, deterministic assessment using tolerance-level residues, and 100% crop treated (CT) for the proposed commodity; and DEEM-FCID® ver. 1.30, processing factors set to (1) a chronic dietary exposure assessment was conducted for the general U.S. population and various population subgroups. The chronic dietary exposure estimates are well below the Agency's level of concern (<100% cPAD) for the general U.S. population (<1% of the cPAD) and all population subgroups.

iii. Cancer. In a chronic feeding/carcinogenicity study in Charles River CD rats, no compound-related clinical signs were observed and survival was not affected by treatment. The LOAEL was based on small, soft testes, decreased testicular weights (27%), and testicular atrophy in males; and decreased body weight gain in females (22%). Statistically significant findings of neoplasia were found in the uterus (adenomatous polyps) and adrenals (medullary adenomas), but these were not considered toxicologically significant because they were seen at doses above the MTD.

In an 18 month carcinogenicity feeding study in Charles River CD-1 mice, survival decreased as the dose increased, but not enough to jeopardize the study. The LOAEL was based on testicular degeneration (hypospermia, interstitial cell hyperplasia of Leydig cells, and germinal cell degeneration) in males, and combined lung adenomas and carcinomas in females. Findings of hyperplasia and neoplasia in the lungs of males were not considered toxicologically significant because they were seen at doses above the MTD. Findings in females of statistically significant increases in lung adenomas and combined lung adenomas/carcinomas were, however, considered toxicologically significant.

The Agency's Cancer Peer Review Committee classified hydramethylnon as a Group C-possible human carcinogen, and recommended that, for the purpose of risk characterization, the Reference Dose approach should be used for quantification of human risk. This classification was based upon statistically significant increases in lung adenomas and combined lung adenomas/carcinomas in female mice. Dietary risk concerns due to long-term consumption of hydramethylnon residues are adequately addressed by the chronic exposure analysis using the RfD.

iv. Anticipated residue and percent crop treated (PCT) information. Section 408(b)(2)(F) of the FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if the Agency can make the following findings: Condition 1, that the data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain such pesticide residue; Condition 2, that the exposure estimate does not underestimate exposure for any significant subpopulation group; and Condition 3, if data are available on pesticide use and food consumption in a particular area, the exposure estimate does not understate exposure for the population in such area. In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by section 408(b)(2)(F) of the FFDCA, EPA may require registrants to submit data on PCT.

A routine chronic dietary exposure analysis for pineapple was based on 100% of pineapple crop treated, and 100% of grasses, forage (pasture and rangeland) treated with hydramethylnon.

The Agency believes that the three conditions previously discussed have been met. With respect to Condition 1, EPA used a conservative, model assessment as outlined in Unit III.C.1.ii. above, using tolerance-level residues and 100% CT for the proposed commodity pineapple, and existing commodities. As to Conditions 2 and 3, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available information on the regional consumption of food to which hydramethylnon may be applied in a particular area.

2. Dietary exposure from drinking water. The Agency lacks sufficient monitoring exposure data to complete a comprehensive dietary exposure analysis and risk assessment for hydramethylnon in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the use pattern, physical characteristics and environmental fate of hydramethylnon.

The Agency uses the FQPA Index Reservoir Screening Tool (FIRST) or the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS), to produce estimates of pesticide concentrations in an index reservoir. The screening concentation in ground water (SCI-GROW) model is used to predict pesticide concentrations in shallow groundwater. For a screening-level assessment for surface water EPA will use FIRST (a tier 1 model) before using PRZM/EXAMS (a tier 2 model). The FIRST model is a subset of the PRZM/EXAMS model that uses a specific high-end runoff scenario for pesticides and an index reservoir with the percent crop area adjustment.

None of these models include consideration of the impact processing (mixing, dilution, or treatment) of raw water for distribution as drinking water would likely have on the removal and transformation of pesticides from the source water. The primary use of these models by the Agency at this stage is to provide an initial screen for sorting out pesticides for which it is highly unlikely that drinking water concentrations would ever exceed human health levels of concern.-

Since the models used are considered to be screening tools in the risk assessment process, the Agency does not use estimated environmental concentrations EECs from these models to quantify drinking water exposure and risk as a percent of reference dose or percent of population adusted dose (%RfD or %PAD). Instead, drinking water levels of comparison (DWLOCs) are calculated and used as a point of comparison against the model estimates of a pesticide's concentration in water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food, and from residential uses. Since DWLOCs address total aggregate exposure to hydramethylnon they are further discussed in the aggregate risk sections in Unit III.E.

Based on the FIRST and SCI-GROW models the EECs of hydramethylnon for acute exposures are estimated to be 76.09 parts per billion (ppb) for surface water and 0.035 ppb for ground water. The EECs for chronic exposures are estimated to be 1.45 ppb for surface water and 0.035 ppb for ground water.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Hydramethylnon is currently registered for use on the following residential non-dietary sites: Hydramethylnon is used as a bait in child resistant packaging (CRP) and as a gel bait to control ants and roaches indoors, and as a granular formulation to control ants in yards and on lawns. It is also applied by pest control operators (PCOs) in the same forms for indoor and outdoor pest control. The risk assessment was conducted using the following residential exposure assumptions: The Agency has completed a non-dietary exposure and risk assessment for hydramethylnon including the following uses: residential consumers applying granular and gel formulations; children and adults contacting recreational turf or residential lawns treated with hydramethylnon; and toddlers' incidental nondietary ingestion of products applied around the home. Non-occupational handler exposures from the granular formulations applied to outdoor residential sites are assumed to be short-term in duration, based on rapid dissipation and insect foraging.

No chemical-specific data were submitted for the registration of hydramethylnon uses. Per an Agency policy, non-occupational handler assessments are based on surrogate unit exposures from the draft Standard Operating Procedures (SOPs) for Residential Exposure Assessments (12/18/97) and recommended approaches by the Agency's Exposure Science Advisory Committee (ExpoSAC). Updates to the Residential SOPs (02/01) alter the residential postapplication scenario assumptions. These updated assumptions are expected to better represent residential exposure and are still considered to be high-end, screening level assumptions. The non-occupational handler assessments for push type granular spreaders were based on surrogate unit exposures from two Outdoor Residential Exposure Task Force (ORETF) studies.

The ant bait stations containing hydramethylnon are in child-resistant packaging (CRP). The bait stations are supposed to be placed in less accessible locations such as in or under kitchen counters. However, handling or mouthing of the bait stations is the most commonly reported incidental “exposure” to hydramethylnon. Such exposures involve, at most, children mouthing the bait container with little or no contact with the actual bait. In the absence of an applicable acute dietary endpoint, and with the vast majority of incident data resulting in little or no health effects, no quantitative assessment of accidental exposure to the internal contents of bait stations was conducted. The gel product containing hydramethylnon is supposed to be applied in dime-sized portions in locations inaccessible to children. Accidental ingestion of gel from such application is considered unlikely and was therefore not assessed. -

Adult consumer exposures when installing and removing bait stations are expected to be minimal. Consumer exposure when applying the gel compound from a syringe is considered negligible. Limited accessibility (i.e., crack, crevice, behind appliances, in crawl spaces) of the gel and granular formulations when used by professional applicators in the home make it unlikely that residents would be exposed to these formulations indoors. For the proposed application of granules to outdoor residential sites, dermal MOEs calculated for non-occupational handlers were 10,000 or greater.

Dermal postapplication exposure from lawns treated with hydramethylnon granules at the maximum application rate of 2.2 lb product per acre (0.022 lb ai/A) were estimated using standard assumptions, as no chemical-specific residue data were available. For adults and children playing actively for two hours on a just-treated lawn, the estimated MOEs were 41,000 and 24,000, respectively. The aggregate (dermal, hand-mouth and object-mouth) MOE for a 15 kg child playing on a lawn was 4,000. The MOE for incidental ingestion of 3 mg of 1% hydramethylnon granules found on the surface of the lawn was 850. The hydramethylnon granules are formulated as small granules to allow for ant removal, and are therefore not easily noticed by a child, and ingestion is unlikely.-

4. Cumulative exposure to substances with a common mechanism of toxicity. Section 408(b)(2)(D)(v) of the FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” -

EPA does not have, at this time, available data to determine whether hydramethylnon has a common mechanism of toxicity with other substances or how to include this pesticide in a cumulative risk assessment. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, hydramethylnon does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that hydramethylnon has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the final rule for Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997).

1. In general. Section 408 of the FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base on toxicity and exposure unless EPA determines that a different margin of safety will be safe for infants and children. Margins of safety are incorporated into EPA risk assessments either directly through use of a MOE analysis or through using uncertainty (safety) factors in calculating a dose level that poses no appreciable risk to humans.-

2. Prenatal and postnatal sensitivity. The Agency has concluded that there is no concern for pre- and/or postnatal toxicity resulting from exposure to hydramethylnon.-

3. Conclusion. There is a complete toxicity data base for hydramethylnon and exposure data are complete or are estimated based on data that reasonably accounts for potential exposures. The Agency determined that no special FQPA Safety Factor is needed (1x) for hydramethylnon. The exposure databases (dietary food, drinking water, and residential) are complete and the risk assessment for each potential exposure scenario includes all metabolites and/or degradates of concern and does not underestimate the potential risk for infants and children.

To estimate total aggregate exposure to a pesticide from food, drinking water, and residential uses, the Agency calculates DWLOCs which are used as a point of comparison against the model estimates of a pesticide's concentration in water (EECs). DWLOC values are not regulatory standards for drinking water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and residential uses. In calculating a DWLOC, the Agency determines how much of the acceptable exposure (i.e., the PAD) is available for exposure through drinking water e.g., allowable chronic water exposure (mg/kg/day) = cPAD - (average food + residential exposure). This allowable exposure through drinking water is used to calculate a DWLOC.-

A DWLOC will vary depending on the toxic endpoint, drinking water consumption, and body weights. Default body weights and consumption values as used by the USEPA Office of Water are used to calculate DWLOCs: 2 liter (L)/70 kg (adult male), 2L/60 kg (adult female), and 1L/10 kg (child). Default body weights and drinking water consumption values vary on an individual basis. This variation will be taken into account in more refined screening-level and quantitative drinking water exposure assessments. Different populations will have different DWLOCs. Generally, a DWLOC is calculated for each type of risk assessment used: Acute, short-term, intermediate-term, chronic, and cancer.-

When EECs for surface water and groundwater are less than the calculated DWLOCs, EPA concludes with reasonable certainty that exposures to the pesticide in drinking water (when considered along with other sources of exposure for which EPA has reliable data) would not result in unacceptable levels of aggregate human health risk at this time. Because EPA considers the aggregate risk resulting from multiple exposure pathways associated with a pesticide's uses, levels of comparison in drinking water may vary as those uses change. If new uses are added in the future, EPA will reassess the potential impacts of residues of the pesticide in drinking water as a part of the aggregate risk assessment process.-

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food to hydramethylnon will occupy <1% of the aPAD for females 13 years and older. In addition, there is potential for acute dietary exposure to hydramethylnon in drinking water. After calculating DWLOCs and comparing them to the EECs for surface and ground water, EPA does not expect the aggregate exposure to exceed 100% of the aPAD, as shown in the following Table 3:

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to hydramethylnon from food will utilize <1% of the cPAD for the U.S. population, and <1% (0.02%) of the cPAD for children 1-2 years old. Based on the use pattern, chronic residential exposure to residues of hydramethylnon is not expected. In addition, there is potential for chronic dietary exposure to hydramethylnon in drinking water. After calculating DWLOCs and comparing them to the EECs for surface and ground water, EPA does not expect the aggregate exposure to exceed 100% of the cPAD, as shown in the following Table 4:

3. Short-term risk. Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Hydramethylnon is currently registered for use that could result in short-term residential exposure and the Agency has determined that it is appropriate to aggregate chronic food and water and short-term exposures for hydramethylnon.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded that food and residential exposures aggregated result in aggregate MOEs of exposures for both adults (MOE = 8,000; handler and post-application) and children (MOE = 680; post-application). Therefore, the turf-treatment exposure estimates were aggregated with the chronic dietary (food) to provide a worst-case estimate of short-term aggregate risk for the U.S. population and children 1-2 years old (the child population subgroup with the highest estimated average (chronic) dietary food exposure). These aggregate MOEs do not exceed the Agency's level of concern for aggregate exposure to food and residential uses. In addition, short-term DWLOCs were calculated and compared to the EECs for chronic exposure of hydramethylnon in ground and surface water. After calculating DWLOCs and comparing them to the EECs for surface and ground water, EPA does not expect short-term aggregate exposure to exceed the Agency's level of concern, as shown in the following Table 5:

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Though residential exposure could occur with the use of hydramethylnon, an intermediate-term aggregate risk assessment was not performed because it is based on the same toxic endpoint and dose as the short-term, and the higher exposure used in the short-term assessment represents a worse case.

5. Aggregate cancer risk for U.S. population. A separate cancer aggregate risk assessment was not performed because the Reference Dose approach was recommended for quantification of human risk. Cancer risks are adequately addressed by the chronic aggregate and assessment which used the chronic reference dose (cRfD).

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, and to infants and children from aggregate exposure to hydramethylnon residues.

The method presented by BASF Corporation and designated M 2458, is the predecessor to method M 2458.01 for which BASF Corporation has submitted as an independent method validation. The updated method corrects some typographical errors and clarifies some of the fractionation steps. Adequate enforcement methodology (example—gas chromatography) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov.

No maximum residue limits for hydramethylnon in/on pineapple have been established or proposed by Codex, Canada, or Mexico for any agricultural commodity; therefore, no compatibility concerns exist with respect to U.S. tolerances.

The following studies are required to further characterize the environmental effects of hydramethylnon: Estuarine/marine fish LC50 (72-1), Estuarine/marine invertebrate EC50 (72-2), and Sediment Toxicity Testing (Harmonized guidelines 850.1735 and 850.1740). In addition, the following studies are required for any future expansion of hydramethylnon uses: Aquatic Photodegradation (161-2), Aerobic Aquatic Metabolism (162-4), and Terrestrial Field Dissipation (164-1).

The residue chemistry and toxicological databases support the requested tolerance of 0.05 ppm for hydramethylnon on pineapple. The Agency has also previously recommended that the grass (pasture and rangeland) tolerance be increased to 2.0 ppm and the grass hay (pasture and rangeland) tolerance be increased to 0.1 ppm (Hydramethylnon RED, EPA 738-R-98-023, 12/98).

Therefore, the tolerance is established for residues of hydramethylnon, in or on pineapple at 0.05 ppm., and revised for grass (pasture and rangeland) at 2.0 ppm, and grass hay (pasture and rangeland) at 0.1 ppm respectively.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) of the FFDCA provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d) of FFDCA, as was provided in the old sections 408 and 409 of the FFDCA. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2003-0251 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before October 14, 2003.-

1. Filing the request. Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.-

Mail your written request to: Office of the Hearing Clerk (1900C), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Rm.104, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (703) 603-0061.-

2. Tolerance fee payment. If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.” -

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. -

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. -

3. Copies for the Docket. In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.1. Mail your copies, identified by docket ID number OPP-2003-0251, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.1. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).--

This final rule establishes a tolerance under section 408(d) of the FFDCA in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq., or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under section 408(d) of the FFDCA, such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of section 408(n)(4) of the FFDCA. For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and the Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.-

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

The Agency included in the final rule a list of those who may be potentially affected by this action. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT.

1. Docket. EPA has established an official public docket for this action under docket identification (ID) number OPP-2003-0134. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.

2. Electronic access. You may access this Federal Register document electronically through the EPA Internet under the “Federal Register” listings at http://www.epa.gov/fedrgstr/.

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket/ to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Once in the system, select “search,” then key in the appropriate docket ID number.

In the Federal Register of July 9, 2003 (68 FR 40803) (FRL-7303-6), EPA published a final rule establishing an exemption from the requirement of a tolerance for residues of diallyl sulfides (DADs) in/or garlic, leeks, onions, and shallots. This document corrects a typographical error that appeared in that document; the word pentasulfide should have appeared as tetrasulfide. The document is corrected as follows:

On page 40804, second column, under Unit IV., the second paragraph, the first sentence is corrected to read as follows: “DADs are a composition of diallyl sulfides that includes diallyl monosulfide, diallyl disulfide, diallyl trisulfide, and diallyl tetrasulfide.”

Section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), provides that, when an Agency for good cause finds that notice and public procedure are impracticable, unnecessary or contrary to the public interest, the agency may issue a final rule without providing notice and an opportunity for public comment. EPA has determined that there is good cause for making today's action final without prior proposal and opportunity for comment, because EPA is merely correcting a typographical error. EPA finds that this constitutes good cause under 5 U.S.C. 553(b)(B).

This final rule corrects a typographical error in the preamble of a previously published final rule, and it does not otherwise impose or amend any requirements. As such, the Office of Management and Budget (OMB) has determined that a correction is not a “significant regulatory action” subject to review by OMB under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Nor does this final rule contain any information collection requirements that require review and approval by OMB pursuant to the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et seq.). Since the Agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the APA or any other statute (see Unit III.), this action is not subject to provisions of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). In addition, this action does not significantly or uniquely affect small governments or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). This final rule will not have substantial direct effects on the States or on one or more Indian tribes, on the relationship between the national government and the States or one or more Indian tribes, or on the distribution of power and responsibilities among the various levels of government or between the Federal government and Indian tribes. As such, this action does not have any “federalism implications” as described in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), or any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Since this direct final rule is not a “significant regulatory action” as defined by Executive Order 12866, it does not require OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), and is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This action does not involve any technical standards that require the Agency's consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). This action will not result in environmental justice related issues and does not, therefore, require special consideration under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994) or Executive Order 12630, entitled Governmental Actions and Interference with Constitutionally Protected Property Rights (53 FR 8859, March 15, 1988). In issuing this final rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct, as required by section 3 of Executive Order 12988, entitled Civil Justice Reform (61 FR 4729, February 7, 1996).

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

EPA Region 8 is publishing this direct final notice of partial deletion of the Monticello Mill Tailings (USDOE) Superfund Site (the Site) from the NPL.

The EPA identifies sites that appear to present a significant risk to public health or the environment and maintains the NPL as the list of those sites. As described in 40 CFR 300.425(e)(3) of the NCP, sites deleted from the NPL remain eligible for remedial actions if conditions at a deleted site warrant such action.

Because EPA considers this action to be noncontroversial and routine, EPA is taking it without prior publication of a notice of intent to partially delete. This action will be effective October 14, 2003 unless EPA receives adverse comments by September 12, 2003 on this document. If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely withdrawal of this direct final partial deletion before its effective date and the partial deletion will not take effect. In such case, EPA will, as appropriate, prepare a response to comments and continue with the deletion process on the basis of the notice of intent to partially delete and the comments already received. There will be no additional opportunity to comment.

Section II of this document explains the criteria for deleting or partially deleting sites from the NPL. Section III discusses procedures that EPA is using for this action. Section IV discusses the Site and demonstrates how it meets the partial deletion criteria. Section V discusses EPA's action to partially delete the Site from the NPL unless adverse comments are received during the public comment period.

Section 300.425(e) of the NCP provides that releases may be deleted from the NPL where no further response is appropriate. Section 300.425(e) of the NCP governs partial deletions of releases from the NPL in the same manner. In making a determination to delete or partially delete a release from the NPL, EPA shall consider, in consultation with the State, whether any of the following criteria have been met:

Section 300.425(e)(1)(i): Responsible parties or other persons have implemented all appropriate response actions required;

Section 300.425(e)(1)(ii): All appropriate Fund-financed (Hazardous Substance Superfund Response Trust Fund) response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or

Section 300.425(e)(1)(iii): The remedial investigation has shown that the release poses no significant threat to public health or the environment and, therefore, the taking of remedial measures is not appropriate.

Even if a site is partially deleted from the NPL, where hazardous substances, pollutants, or contaminants remain at the deleted portion of the site above levels that allow for unlimited use and unrestricted exposure, CERCLA section 121(c), 42 U.S.C. 9621(c) requires that a subsequent review of the site be conducted at least every five years after the initiation of the remedial action at the site to ensure that the action remains protective of public health and the environment. If new information becomes available which indicates a need for further action, EPA may initiate remedial actions. Whenever there is a significant release at a site partially deleted from the NPL, the deleted portion may be restored to the NPL without application of the hazard ranking system.

The following procedures apply to the deletion of the OU II Non-Surface and Ground-Water Impacted Peripheral Properties portion of the Site from the NPL:

(1) The EPA consulted with the State of Utah (UDEQ) on the partial deletion of the Site from the NPL prior to developing this direct final notice of partial deletion.

(2) The State of Utah (UDEQ) concurred with partial deletion of the Site from the NPL provided that no adverse comments are received during the public comment period.

(3) Concurrently with the publication of this direct final notice of partial deletion, a notice of the availability of the parallel notice of intent to partially delete published today in the “Proposed Rules” section of the Federal Register is being published in a major local newspaper of general circulation at or near the Site and is being distributed to appropriate federal, state, and local government officials and other interested parties. The newspaper notice announces the 30-day public comment period concerning the notice of intent to partially delete the Site from the NPL.

(4) The EPA placed copies of documents supporting the partial deletion in the Site information repositories identified above.

(5) If adverse comments are received within the 30-day public comment period on this document, EPA will publish a timely withdrawal of this direct final partial deletion before its effective date and will prepare a response to comments and continue with the deletion process on the basis of the notice of intent to partially delete and the comments already received.

Deletion or partial deletion of a site from the NPL does not itself create, alter, or revoke any individual's rights or obligations. Deletion or partial deletion of a site from the NPL does not in any way alter EPA's right to take enforcement actions, as appropriate. The NPL is designed primarily for informational purposes and to assist EPA management. Section 300.425(e)(3) of the NCP states that the deletion of a site from the NPL does not preclude eligibility for future response actions, should future conditions warrant such actions. Section 300.425(e)(3) of the NCP governs partial deletion of a site from the NPL in the same manner.

The following information provides EPA's rationale for deletion of the OU II Non-Surface and Ground-Water Impacted Peripheral Properties portion of the Site from the NPL:

The Site is located in and adjacent to (primarily southeast) the City of Monticello (City), San Juan County, Utah. The Site consists of 36 private and public properties covering approximately two square miles. The Site is divided into OU I (the former Millsite and repository south of the Millsite), OU II (properties near the former Millsite, referred to as peripheral properties, primarily contaminated with windblown tailings, and properties with contaminated sediment from Montezuma Creek), and OU III (surface water and/or ground water contamination). The partial deletion area of the Site, designated as the OU II Non-Surface and Ground-Water Impacted Peripheral Properties, covers approximately one square mile within OU II. The OU II Non-Surface and Ground-Water Impacted Peripheral Properties are 22 of the 34 total properties that comprise OU II. These 22 properties are primarily vacant land, with portions of some properties being used for agricultural purposes. The following table lists the 22 OU II Non-Surface and Ground-Water Impacted Peripheral Properties that comprise the partial deletion area.