On January 28, 2002, the U.S. Small Business Administration (SBA or Agency) published in the Federal Register , 67 FR 8739, a proposed rule to amend its regulations governing the HUBZone program. SBA had proposed regulations addressing amendments made to the HUBZone Act by the Small Business Reauthorization Act of 2000 (Reauthorization Act), Public Law 106-554. Specifically, the Reauthorization Act amended the eligibility requirements for small business concerns (SBCs) owned by Tribal Governments or Community Development Corporations (CDCs). Further, it amended the definition of HUBZone to include “redesignated areas,” and added definitions for the terms “Indian Reservation” and “Alaska Native Corporation.” This final rule addresses these statutory amendments, clarifies several regulations, and makes some technical changes, including changes to Web site addresses.

In addition, SBA has amended its regulations that address subcontracting limitations. Specifically, SBA has consolidated all of the subcontracting limitation requirements into one regulation, rather than have them scattered throughout SBA's chapter of the Code of Federal Regulations. In addition, SBA has clarified how to petition for changes in the subcontracting limitation requirements.

The comment period for the proposed rule closed on February 27, 2002. SBA extended the comment period because it believed that affected businesses needed more time to adequately respond. 67 FR 8739 (Feb. 26, 2002). The comment period was extended through March 29, 2002.

SBA received 977 comments on the proposed rule. The overwhelming majority of the comments addressed the issue of the relationship of the HUBZone Program to the 8(a) Business Development (8(a)BD) Program. This issue is discussed below. The majority of the other comments supported the proposed regulatory amendments. A few commenters recommended modifications to several of the proposed amendments. SBA considered all of the comments and recommendations in developing this final rule and the rule includes changes based on some of the comments received.

In § 121.406, SBA proposed amending paragraph (b), pertaining to the application of the nonmanufacturer rule. Specifically, SBA proposed permitting a nonmanufacturer to supply the product of any domestic business, small or large, and still be considered small with respect to any contract below the simplified acquisition threshold. This change corresponded to a similar proposed change made in this rule for the HUBZone Program in proposed § 126.601(e)(2) (discussed later in the preamble).

SBA received one comment on this proposed section. The commenter stated that this proposed section could dilute the impact small business programs have in fostering growth and opportunity for the small business sector. This commenter believed that SBA should research this issue further to determine the true impact of such a blanket waiver for small business programs. SBA has determined that this issue needs further evaluation. Consequently, SBA has decided not to amend the rule at this time.

SBA received one comment on the proposed amendments to § 125.6, which added the subcontracting limitations for qualified HUBZone SBCs (set forth in § 126.700) so that all such subcontracting limitations would be located in one place and easy for SBCs and contracting officials to locate. In addition, SBA proposed language explaining when it may use different subcontracting limitation percentages. The commenter stated that SBA should use the term “will perform” rather than “spends” when defining the subcontracting limitations for qualified HUBZone SBCs. In response, SBA notes that the statutory requirements for these limitations require that the qualified HUBZone SBC “expend” a certain percentage of the cost of contract performance or manufacturing costs on certain employees or in one or more HUBZones. Therefore, SBA adopts the rule as proposed. However, because of the change to § 126.700 discussed below, this rule changes the HUBZone prime contractor performance of work requirements for construction to clarify that it is the prime HUBZone contractor, and not the prime plus other HUBZone subcontractors, that must perform 15% (general construction) or 25% (special trade construction) of the contract.

SBA received one comment concerning the definition of “AA/HUB” set forth in § 126.103. This commenter stated that SBA should not define the “AA/HUB” to mean the “Associate Administrator for HUBZone Empowerment Contracting” because the program is titled the “HUBZone Program” and not the “HUBZone Empowerment Contracting Program.” SBA concurs and has not amended the current regulation, which defines “AA/HUB” to mean the Associate Administrator for the HUBZone Program.

One commenter recommended that SBA place a definition for “ANCSA” in § 126.103. This commenter believes that the term, which refers to the Alaska Native Claims Settlement Act, is used several times in the regulations and therefore a definition is needed to eliminate confusion. Also, the commenter recommended referring to ANCSA as the “Alaska Native Claims Settlement Act, as amended” because the act has been amended several times since its inception. SBA concurs with these recommendations and has made those changes in this regulation.

SBA received one comment on the definition of “Community Development Corporation (CDC),” set forth in § 126.103. This commenter stated that the definition of CDC should refer to “part 1 of subchapter A of the Community Economic Development Act of 1981” and not the open-ended reference proposed. SBA concurs and has amended the final regulation accordingly.

SBA received several comments on the proposed definition for the term “employee.” SBA proposed removing the current provision concerning “full-time equivalents” and allowing persons employed on a full-time or part-time basis to be considered employees of the concern. In addition, SBA proposed allowing leased or temporary employees to be counted as employees of the concern. The proposed definition also stated that volunteers would not be counted as an employee of a HUBZone SBC. The proposed rule defined a volunteer as a person who receives no compensation for work performed. With this definition, SBA intended that a person who receives food, housing, or other non-monetary compensation in exchange for work performed would generally not be considered a volunteer and could therefore be considered an employee of the HUBZone SBC. SBA reiterated that it would use the “totality of circumstances” to determine whether a person is an “employee.”

SBA received several comments expressing concern over the proposed definition. One commenter believed the proposed rule could cause a large-scale shift of workers from full-time equivalents to leased or part-time status with reduced benefits. Another commenter believed that this change would weaken the nexus between participating firms and HUBZone areas. In addition, one commenter expressed concern that companies could intentionally exploit the change and hire temporary employees only to gain HUBZone certification or to receive HUBZone contracts. One commenter recommended that, to prevent such abuse, the definition of employee should include a requirement that a certain percentage of HUBZone employees must be paid the same as, or have the same job classifications as, non-HUBZone employees. Another commenter believed that an individual should be required to work a certain number of hours before he or she is counted as an employee for purposes of the 35%, reasoning that a concern could get around the 35% requirement by hiring various HUBZone residents to work one, two or some other number of minimum hours per week.

One commenter stated that using the totality of circumstances to determine whether part-time employees are bona fide employees and allowing non-monetary compensation to be acceptable are invitations to arbitrariness. Another commenter stated that the definition of volunteer was too narrow.

In comparison, several commenters believe that the proposed rule would create more job opportunities for HUBZone residents and agreed that leased and temporary employees represent a substantial portion of today's workforce. One commenter noted that several firms are using the current exemption for leased and temporary employees to qualify for the program by claiming only a few employees, when in reality they have many employees, all of whom are leased and very few of whom live in a HUBZone. One commenter agreed with the proposed rule, but suggested that SBA expand the definition to allow employees of co-employer arrangements to be treated as employees of a HUBZone SBC.

As a result of the numerous comments received and the issues raised, SBA has decided not to implement this aspect of the proposed rule. The Agency plans to issue an Advanced Notice of Proposed Rulemaking (ANPRM) in the near future so that it can further examine this issue and determine the best method for determining “employees” for HUBZone Program purposes.

SBA received one comment on the definition of “HUBZone SBC.” The commenter suggested that SBA clarify that Alaska Native Corporations (ANCs) or ANC-related entities must be small to be eligible for the program. SBA concurs and has amended the regulation accordingly.

SBA also received comments on the definition of “Indian Reservation.” One commenter was against any changes that would increase Native American lands for HUBZone participation. Other commenters expressed support for proposals that re-classified the guidelines for determining Native American lands. One commenter stated that the proposed regulations should include all formerly-held Indian land in Oklahoma and not just reservations. The commenter believed that this would benefit Oklahoma small businesses trying to participate in the HUBZone Program by expanding the areas classified as HUBZones. Another commenter recommended that SBA clarify the rule with respect to Indian Reservations in Oklahoma and not “bury” it deep within a subparagraph where it may be overlooked.

SBA has amended the definition of “Indian Reservation” so that the paragraph concerning Oklahoma does not appear “buried” in the definition. In addition, SBA notes that the definition of Indian reservation for purposes of the HUBZone Program is statutory. The regulation sets forth the statutory requirements. As stated in the preamble to the proposed regulation, essentially, the statutory definition of “Indian Reservation” for HUBZone Program purposes includes federally-recognized Indian reservations, Indian communities dependent on the Federal Government, and certain federal Indian allotments (parcels of land created out of a diminished Indian reservation and held in trust by the Federal Government for the benefit of individual Indians). Pursuant to a decision by the U.S. Supreme Court, Alaska v. Native Village of Venetie Tribal Government , 522 U.S. 520 (1998), the new statutory definition of “Indian Reservation” does not include lands transferred to Alaskan Natives pursuant to ANCSA. In the state of Oklahoma, an “Indian Reservation” includes a federally recognized Indian reservation and trust land. SBA has been and intends to continue working with the U.S. Department of the Interior, and specifically the Bureau of Indian Affairs, to appropriately identify these areas.

SBA received one comment suggesting that it cross-reference the “attempt to maintain” references in §§ 126.200, 126.601(c)(4), and 126.602 to the definition of the term set forth in § 126.103 because SBCs may not realize that the phrase has been defined in the regulations. SBA concurs and has made the changes in the final rule and has also added a reference to the term in § 126.401(b).

SBA received two comments concerning the eligibility, in general, of SBCs. Both comments concerned ownership of a HUBZone SBC by U.S. citizens. One commenter stated that the regulations should not preclude ownership by non-U.S. citizens. SBA notes that this is a statutory requirement and that the regulations follow the statute. Another commenter favored allowing publicly held small businesses to participate in the HUBZone Program because it would help a greater number of small businesses. SBA notes that publicly-held businesses have always been able to participate in the program, so long as they meet the eligibility requirements.

SBA received three comments regarding the eligibility requirements for Tribally-owned concerns. In the proposed rule, SBA amended § 126.200 to establish eligibility requirements for such concerns because Congress had changed these requirements with the enactment of the Reauthorization Act. According to the Reauthorization Act, SBCs owned by Indian Tribal Governments or tribal corporations must certify: (1) That they are owned by an Indian Tribal Government, by a wholly-owned tribal corporation, or owned in part by an Indian Tribal Government or tribal corporation and in part by another SBC or U.S. citizens, and (2) when the concern obtains a HUBZone contract, that at least 35% of its employees engaged in performing that contract will reside within any Indian reservation governed by one or more of the Indian Tribal Government owners, or reside within any HUBZone adjoining any such Indian reservation.

One commenter did not support requiring a Native American concern to have 35% of its employees reside on or adjacent to the Indian reservation during the performance of a contract. This commenter believed that the requirement is too stringent and contradicts the requirements for other HUBZone SBCs. SBA notes that this requirement is statutory and the regulation states the same as the statute on this point.

In addition, one commenter stated that SBA's regulations do not clarify that Tribally-owned concerns must “attempt to maintain” the relevant 35% employment requirement and must comply with the limitations on subcontracting. SBA concurs with this comment and has amended § 126.200 to clarify that Tribally-owned concerns must “attempt to maintain” the 35% employment requirement during the performance of a HUBZone contract. SBA believes, however, that the regulations are clear that all qualified HUBZone SBCs must meet the subcontracting limitations set forth in the statute and regulations, and therefore it is unnecessary to amend the regulations with respect to that issue.

As discussed above, the statutory amendments provide that an Indian Tribal Government or tribal corporation may own a HUBZone SBC “in part” with a SBC or U.S. citizens. For example, an SBC in which a Tribal Government or tribal corporation owned 1% or less could qualify for the program if the other owners were SBCs or U.S. citizens. Further, there is no principal office eligibility requirement for such applicants. Thus, SBA stated in its preamble that it was considering whether or not to require a Tribal Government or tribal corporation own at least 51% of the HUBZone SBC and specifically requested comments addressing this proposal. In the proposed regulation, SBA proposed no specific ownership interest by a Tribal Government or tribal corporation.

SBA received two comments on this specific issue. One commenter supported the proposal to amend the ownership percentage to either 51% or 100% for tribally owned HUBZone SBCs because it will expand opportunities for Native American firms. This commenter recommended allowing only Native American, small and disadvantaged businesses (SDBs) or SBCs owned by U.S. citizens to own the other part of the HUBZone SBC. Another commenter disagreed with the proposal to require 51% ownership for tribally owned HUBZone SBCs. Although SBA proposed the rule to reduce the possibility of “fronting,” this commenter believes that Indian Tribes have additional restrictions (35% of the employees must be performing on the HUBZone contract), which are more stringent, and therefore the 51% requirement is unnecessary.

After further review of the issues and comments received, SBA concurs that it is unnecessary to require 51% ownership for tribally-owned HUBZone SBCs, for the reasons stated above. However, SBA believes that it does not matter who owns the other “part” of the Tribally-owned HUBZone SBC, so long as it is an SBC or U.S. citizens and the HUBZone SBC meets the contract performance requirements. SBA believes this will help Native American communities. Therefore, SBA retains the rule as proposed.

SBA received one comment pertaining to § 126.201, which addresses ownership of a qualified HUBZone SBC. The commenter stated that it was in favor of allowing certain types of Employee Stock Option Plans (ESOPs) to participate in the HUBZone Program. However, the commenter argued that some forms of ESOPs have corporate structures that restrict shareholder rights. As a result of these restrictions, such entities should be eligible to participate in the program and the employees should not be considered to “own or control” the company. Therefore, this commenter believed that the employees should not be counted toward the 100% U.S. ownership requirement. The commenter stated that, in the alternative, SBA should create a de minimus exception for non-U.S. citizen ownership.

SBA notes that it agrees with the commenter as a matter of public policy (SBA does not want to encourage or make incentives for firms to discriminate in hiring based on national origin), but the Agency's actions are constrained by the statute. The U.S. citizen ownership requirement is statutory. With only certain statutory exceptions for CDCs, ANCs, and Tribally-owned concerns, a HUBZone SBC must be owned and controlled 100% by U.S. citizens. Therefore, SBA can not create a de minimus exception to the statutory rule. Further, SBA has researched the issue pertaining to ESOPs and reviewed the comment carefully. Under an ESOP, employees may purchase or are awarded stock in the employing firm. The stock held by most ESOPs are placed in trust. The employee can vote its shares through a trustee or the trustee has the authority to vote the shares. Both forms of ESOPs are variations of ownership of a firm under a trust arrangement. SBA considers any person who has a legal or equitable interest in the concern, or who owns stock, whether voting or non-voting, to be an owner. Therefore, under either form of ESOP, the stock trustees and the plan members must be regarded as the owners of the firm's stock for purposes of the HUBZone Program. This final rule adopts this regulation as proposed.

SBA received one comment on § 126.205, which clarifies that all SBCs, and not just 8(a) Participants, women-owned businesses, and SDBs, may be qualified HUBZone SBCs, if they meet the HUBZone Program's eligibility requirements. The commenter concurs with this re-draft but recommends that SBA consider adding a statement that participation in other SBA programs is not a requirement for participation in the HUBZone Program. SBA concurs with this recommendation and has amended this regulation accordingly.

SBA received one comment on § 126.303, which addresses the filing of a HUBZone application. The commenter stated that SBA should clarify that applicants need only submit a written or an electronic application. SBA concurs and has amended this regulation accordingly.

SBA received one comment on § 126.304, which addresses what concerns must submit with their application for certification into the program. The commenter recommended that, with respect to determining the location of Indian Reservations, SBA should clarify in the regulations where the HUBZone maps referenced can be found. SBA concurs and has added the Web site address for its HUBZone maps to the regulations.

SBA received one comment on § 126.306, which addresses how SBA will process applications to the HUBZone Program. The commenter recommended that SBA require applicants to notify SBA, prior to certification, of all material changes that could affect eligibility so that SBA could rely on the application materials as submitted. SBA concurs with this recommendation, but has amended § 126.304(a) and not § 126.306, accordingly. In addition, SBA notes that this amendment does not preclude SBA from requesting additional information or clarification of information.

SBA received one comment concerning § 126.307, which concerns the “List” of qualified HUBZone SBCs. The commenter recommended that SBA clarify that it is necessary to run a search on Central Contractor Registration (CCR) Dynamic Small Business Search (DSBS), ( http://www.dsbs.sba.gov/dsbs/dsp_dsbs.cfm ) or its successor, if any, to find qualified HUBZone SBCs because there is no “List,” per se, on that Web site. SBA concurs and has amended the regulation accordingly.

SBA received one comment on § 126.308, which addresses what happens if SBA inadvertently omits a qualified HUBZone SBC from the “List.” The commenter stated that SBA should allow the qualified HUBZone SBC to show the contracting officer (CO) SBA's certification and that the concern must be on the “List” within 30 calendar days thereafter. The commenter believed that this would provide more flexibility to the process. SBA understands the commenter's concern. However, the purpose of the List is to provide COs a quick and accurate mechanism for finding qualified HUBZone SBCs. In those rare circumstances when qualified HUBZone SBCs have been inadvertently omitted from the “List,” SBA has quickly resolved the problem. For these reasons, SBA has implemented this rule as proposed.

SBA received one comment on § 126.401(b), which addresses program examinations. The commenter did not agree with the proposal to allow program exams in more than one location because it could be a nuisance to SBCs. SBA notes that the purpose of that provision is to ensure that all concerns certified into the HUBZone Program and receiving the benefits of the program are eligible. If a SBC has more than one office, it may be necessary to visit each office to determine the principal office. However, reviews will occur in the fewest number of offices needed to satisfy the purpose of the review. In performing a program examination, SBA takes into account and attempts to reduce the burden of the exam on the SBC. SBA will ensure that this process is streamlined and not overly burdensome to HUBZone SBCs. This final rule implements the regulation as proposed.

SBA received two comments on § 126.403 which requested that HUBZone SBCs submit updated financial information and information relating to its number of employees to SBA. One commenter stated that instead of requiring SBCs to report this information, SBA should verify initial and continued eligibility of HUBZone SBCs as it pertains to employment automatically by cross-referencing employee data with the IRS using the IRS's Form 941 (Employer's Quarterly Federal Tax Return). The commenter recommended SBA implement an automated system connected to the IRS for financial data reporting instead of the proposed request that SBA collect records and data from SBCs.

SBA plans to research this suggestion further. However, SBA believes that if this recommendation can be implemented, it will take time. In the meantime, SBA needs this information as soon as possible in order to effectively gauge the success of the program.

Another commenter stated that this information request should be mandatory so that the resulting data is reliable. SBA concurs with this comment and agrees that the HUBZone SBC's response to the request for updated financials and employee data should be mandatory and has amended the final rule accordingly. However, because SBA has changed this proposal from a voluntary to a mandatory one, at this time the Agency requests comments on the effects implementing this requirement will have on SBCs. In addition, in order to provide SBCs with sufficient time to set up a recordkeeping system if necessary (although SBA believes that all of this information is information generally collected and retained by SBCs during the course of business) to meet this requirement, or to understand what this requirement entails, SBA does not plan to request this information in the near future.

SBA received two comments on § 126.500, concerning SBA's proposal to change the re-certification period from an annual re-certification to every three years. One commenter stated that the annual re-certification requirement is not a burden and that the 3-year term will only increase the likelihood of a concern falling out of compliance. In addition, the commenter suggested that HUBZone SBCs sign a certification each time they submit a bid stating that they agree to notify the SBA anytime there is a change in the business.

Another commenter supported the change as an administrative convenience for the SBA and HUBZone SBCs. However, the commenter recommended SBA amend this rule to provide a cross-reference to § 126.501, which shows that qualified HUBZone SBCs have a continuing obligation to notify SBA of material changes. In addition, this commenter also recommended that SBA change the section heading to read: “How does a qualified HUBZone SBC maintain HUBZone certification?” SBA concurs with this commenter and has retained the three-year re-certification period in this final regulation. SBA believes that protests, program examinations, and the requirement that qualified HUBZone SBCs notify SBA of a material change ensure that only qualified HUBZone SBCs receive HUBZone contracts. In addition, SBA has amended the section heading for § 126.500.

In response to another comment, SBA does not believe that changing the re-certification requirements from one to three years will increase the likelihood of firms receiving benefits from the program that do not in fact qualify as HUBZone SBCs. SBA believes that the more important safeguard to prevent this from occurring is the protest mechanism tied to each contract. Where a firm is the apparent successful offeror because of its HUBZone status (either through the HUBZone price evaluation preference or a HUBZone set aside), other affected firms may challenge the firm's HUBZone status. SBA has found that the procurement community is very able to police itself and stop abuse from occurring. However, SBA notes that should the HUBZone Program Office develop electronic on-line capability to efficiently process re-certification actions in a timely manner and a risk assessment supports the need for such a change, SBA will consider amending the regulation to require annual re-certification.

SBA received only one comment on § 125.501, which addresses a qualified HUBZone SBC's ongoing obligations, such as notification to SBA of any material changes. The commenter stated that SBA should consider a cross- reference to § 126.200, to direct concerns to a more comprehensive list of HUBZone Program eligibility requirements. SBA concurs with the recommendation and has amended this regulation accordingly. However, SBA notes that the eligibility requirements set forth in § 126.200 do not provide a complete list of areas where notification of material changes is necessary.

SBA received one comment on § 126.503, which addresses de-certification. The commenter suggested that the regulation should be written in a more impartial tone. Although SBA believes that the regulation as proposed is impartial, the Agency has amended the regulation to clarify that it will notify the concern it is proposing de-certification, the reasons for the proposed de-certification, and that the concern must rebut each of the reasons SBA sets forth in the letter.

In addition, with respect to § 126.503, the commenter recommended that SBA check for consistency with respect to who makes the de-certification decision—the AA/HUB or designee, or the Deputy AA/HUB or designee. SBA notes that the Deputy AA/HUB or designee may propose the de-certification and the AA/HUB or designee makes the final decision.

SBA received several comments on proposed § 126.601. SBA received one comment on proposed § 126.601(b), which provided that a qualified HUBZone SBC must be qualified at both bid submission and at contract award. The commenter stated that the proposal is counterproductive and inconsistent with 13 CFR 121.404, which provides that the size of an SBC is determined as of the date of the initial offer, with two exceptions. In addition, the commenter noted that sometimes there is a lengthy time between bid submission and award and this is out of the control of the HUBZone SBC.

SBA notes that a concern that is not a qualified HUBZone SBC at the time it submits its initial offer can not submit an offer on a HUBZone sole source or set-aside contract, or receive the benefits of the HUBZone price evaluation preference. Although it is true that there may be a lengthy time period between bid submission and award, SBA believes that awarding a HUBZone contract to a concern that does not meet the requirements of the program provides no help to the HUBZone community or its residents. Therefore, SBA has decided to implement this rule as proposed.

SBA received several comments on § 126.601(e). SBA proposed amending paragraph (e) and addressing confusion regarding the nonmanufacturer rule. The statutory nonmanufacturer rule generally requires a small business nonmanufacturer to supply the product of a domestic small business manufacturer or processor in connection with an 8(a) or small business set aside supply contract. The SBA Administrator may waive that requirement in certain cases.

The nonmanufacturer rule that currently applies to HUBZone contracts requires a qualified HUBZone SBC nonmanufacturer to supply the product of a qualified HUBZone SBC manufacturer, except that for HUBZone contracts valued at or below $25,000, a qualified HUBZone SBC may supply the end item of any domestic manufacturer, including a large business. The proposed rule clarified that for purposes of a HUBZone contract, there are no waivers of the nonmanufacturer rule. The proposed rule provided, however, that for HUBZone contracts at or below the simplified acquisition threshold (currently $100,000), a qualified HUBZone SBC may supply the end item of any domestic manufacturer, including a large business.

SBA received several comments supporting the need for a waiver provision to the nonmanufacturer rule, similar to the one in the 8(a)BD Program. One commenter stated that the proposed rule precluding waivers would make it difficult for HUBZone SBCs to obtain contracts and argued that since the rule is different from the one set forth in the 8(a)BD Program, there is no real “parity” between the two programs. In contrast, one commenter expressed support for the proposed rule precluding waivers of the non-manufacturer rule for the HUBZone Program because the program is intended to foster economic growth and job creation in specific geographic areas and frequent waivers would remove the program's incentives for manufacturers to start operations in distressed areas.

SBA has reviewed these comments and believes that the program is designed to assist HUBZones by assuring that individuals residing in those areas are employed generally by a qualified HUBZone SBC and specifically in connection with the performance of a HUBZone contract. SBA believes that allowing a non-HUBZone manufacturer to be the firm ultimately supplying the product for a HUBZone contract would be contrary to the intent of the program. Therefore, this final rule implements that part of the rule as proposed, in that there are no waivers for the nonmanufacturer rule in the HUBZone Program.

In response to the proposal allowing HUBZone SBCs to supply the end item of any business for acquisitions at or below the simplified acquisition threshold, one commenter stated that it is inconsistent with the “job creation” goals of the program. On a similar note, one commenter expressed support for the current nonmanufacturer threshold of $25,000 (where the HUBZone SBC can supply the product of any business for contracts at or below $25,000), rather than the simplified acquisition threshold of $100,000, because contracts below $100,000 are not significant enough to entice manufacturers to move into HUBZone areas due to the costs of setting up such an operation. This commenter also believed that SBA should research this issue further to determine the true impact of such a blanket waiver for acquisitions below the simplified acquisition threshold on small business programs, especially the HUBZone Program. SBA has decided not to implement that part of the proposed rule permitting HUBZone SBCs to provide the end item of any manufacturer or contractor at or below the simplified acquisition threshold.

SBA received one comment on § 126.603, which addresses the marketing of HUBZone contracts. As proposed, the regulation referenced only HUBZone set-asides. The commenter suggested that the regulation refer to all HUBZone contract opportunities, which would include sole source acquisitions, set asides, and full and open competition with a price evaluation preference. SBA concurs and has amended this regulation accordingly.

SBA received one comment supporting the proposal in § 126.605 to allow HUBZone contracts for micropurchases. This final rule implements the proposed regulation.

SBA received several comments concerning § 126.605(b) and § 126.606. Both provisions address the requirement that if an 8(a) Participant is currently performing a requirement, or SBA has accepted that requirement for performance under the authority of the 8(a)BD Program, it cannot be available for a HUBZone contract unless SBA has consented to release the procurement from the 8(a)BD Program. Several commenters thought that SBA had deleted this provision from the regulations and argued that the requirement should be put back in the final regulation. SBA notes that the proposed regulation did not delete the requirement. This final rule slightly amends the wording of § 126.605(b) to clarify that only contracts being performed by 8(a) Participants through the 8(a)BD Program are not available for award through the HUBZone Program. SBA intended that result, and believes that the current regulation provides for that result, but is clarifying the regulation to ensure that it is not misconstrued.

Although SBA proposed amendments to § 126.606, the proposal provided that SBA may release a procurement requirement from the 8(a)BD Program only when neither the incumbent nor any other 8(a) Participant can perform the requirement. If no 8(a) Participant is available to perform the requirement and SBA does not “release” it and allow it to become available for HUBZone contracting, then the contracting officer can issue the solicitation as a full and open competition. Thus, the logical alternative is “releasing” the requirement. Even if the requirement is “released,” if it is later offered to the 8(a)BD Program or an 8(a) Participant performs on it, then § 126.605 takes effect and the requirement is no longer available for HUBZone contracting. The regulation protects the 8(a)BD Program, yet provides opportunities for qualified HUBZone SBCs, but only if an 8(a) Participant is unavailable to perform the requirement.

SBA received over 900 comments on proposed § 126.607, which sought to clarify the interaction between the HUBZone and 8(a)BD Programs. The proposed rule provided for parity between the two programs by requiring a CO look first to the HUBZone and 8(a)BD Programs in determining how to fulfill a particular procurement requirement. In deciding which contracting vehicle to use, the proposed rule required a CO to consider the contracting activity's progress in fulfilling its HUBZone and 8(a) goals, as well as other pertinent factors. The proposed rule directed the CO to exercise his/her discretion on whether to offer the requirement to the 8(a)BD or HUBZone Program.

SBA received 235 comments stating, generally, that the proposed rule will reduce the number of contracts available to companies in the 8(a)BD Program and will hinder entrepreneurship in minority communities. Several commenters were concerned with the proposed rule because the 8(a)BD Program does not have statutory goals like the HUBZone Program. The commenters believe that adopting this rule will be harmful to the interests of businesses owned by socially and economically disadvantaged individuals.

SBA received 732 comments in support of the proposed rule. Commenters believed that parity is consistent with the HUBZone and 8(a) statutes and that it is the only fair position. One commenter noted that this will help the Native American community. Other commenters noted that without parity the HUBZone Program cannot be effective. SBA received some comments suggesting that SBA retain the parity rule, but does not allow goaling to be the basis of determination for a CO. Some commenters believed the “other factors” criteria would allow COs to act arbitrarily, while others supported the requirement.

As a result of the numerous comments received, SBA has decided to further examine the issues raised by the commentators and will not amend the rule at this time.

SBA received two comments supporting the proposal to allow HUBZone opportunities at or below the simplified acquisition threshold because it would create more opportunities for HUBZone SBCs. SBA notes that the proposed regulation merely clarified § 126.608 by allowing HUBZone contract opportunities “at or below” the simplified acquisition threshold, as opposed to just below the simplified acquisition threshold. This final regulation implements the rule as proposed.

SBA received two comments recommending that the Agency expand sole-source-contracting opportunities for HUBZone SBCs, arguing that such contracting opportunities should be the same as for the 8(a)BD Program in order to achieve parity between two programs. SBA notes that the requirements for sole source contracting opportunities for HUBZone SBCs are set forth in the Small Business Act, and SBA therefore cannot expand those opportunities beyond the statute's limits. This final regulation implements the rule as proposed.

In the proposed rule, SBA amended § 126.613 to conform to the recent statutory amendments made by the Reauthorization Act, which addressed calculating the price evaluation preference for purchases by the Secretary of Agriculture of agricultural commodities. In addition, SBA proposed to add more examples to § 126.613, regarding the price evaluation preference for a qualified HUBZone SBC in full and open competition and to clarify that only qualified HUBZone SBCs should benefit from the preference. SBA also proposed amending the current example by correcting a mathematical error.

SBA received three comments on this proposed section. One commenter stated that contracting officers are skirting the use of the price evaluation preference by using an “up-front” budget ceiling to eliminate any offer from consideration that exceeds a specific dollar amount. Two commenters stated that the adoption of the price evaluation preference/best value clarification language was long overdue. Further, two commenters believed that the examples were incorrect.

SBA has reviewed the comments and the proposed regulation and has concluded that the examples are correct. With respect to the “up-front” budget ceiling, SBA notes that procuring activities may have to abide by certain statutory fiscal limitations. However, in a similar vein, SBA notes that if there is no statutory limit, an agency can not reject, as unreasonably high, a bid which was low by virtue of the application of the HUBZone price evaluation preference in order to make award to a higher evaluated, but lower actual price bidder. The U.S. General Accounting Office confirmed SBA's position ( see AMI Construction, B-286351, Dec. 27, 2000, at http://www.gao.gov ), noting that if a procuring activity could reject a HUBZone SBC's bid as unreasonably high, and yet with the application of the price evaluation preference the bid is the low bid in an Invitation for Bids, then the purpose of the evaluation preference in 15 U.S.C. 657a(b)(3) would be thwarted.

SBA received several comments on its proposal to amend § 126.616 and allow for joint ventures comprised of only qualified HUBZone SBCs. Several commenters stated that this amendment will limit the opportunities available for HUBZone SBCs, it is not necessary as limits to joint ventures already exist in § 126.616(b)(1) and (2) (relating to size), and any joint venture limitation should be the same as for the 8(a)BD Program. One commenter supported the proposed regulation, stating that it will protect the HUBZone Program from becoming a tool for unqualified firms to use a “front” to get HUBZone benefits.

SBA believes that allowing HUBZone contracts to go to qualified HUBZone SBCs that joint venture with a non-HUBZone SBC will dilute the benefits intended to go to the HUBZone area and residents. Therefore, SBA has implemented this final rule as proposed.

SBA stated in the preamble to the proposed rule that it was considering a new paragraph to § 126.700, which would add an additional contract performance requirement for construction HUBZone contracts. Specifically, in the case of HUBZone construction contracts (either general construction or specialty trade construction), SBA considered requiring qualified HUBZone SBCs to perform at least 50% of the contract, either at the prime or subcontracting level. Such a provision would not affect the prime performance of work requirements set forth in § 125.6 ( i.e., 15% for general construction and 25% for specialty trade construction); rather, it would be a new overall performance of work requirement for HUBZone construction contracts. Thus, for general construction, if a prime contractor will perform 15% of the contract, it would be required to subcontract at least 35% of the contract to one or more other qualified HUBZone SBCs. For a specialty trade construction contract, if a prime contractor will perform 25% of the contract, it would be required to subcontract at least 25% of the contract to one or more other qualified HUBZone SBCs.

In addition, SBA also stated that it was considering several alternatives that would attempt to encourage increased performance by qualified HUBZone SBCs, but that would not adversely affect the HUBZone Program. One alternative that SBA considered is requiring that HUBZone SBCs perform at least 50% of a construction contract through prime or subcontracting arrangements, but allowing the CO to waive this requirement where he or she believes it cannot be met for a particular procurement. Where a CO believed that the 50% requirement could be met, it would continue to apply. Where a CO waived the 50% requirement, the solicitation would have to specify that the 50% requirement does not apply to the HUBZone procurement. The 15% or 25% prime contractor performance of work requirement would continue to apply. As another alternative, SBA considered imposing an evaluation factor in the award of negotiated HUBZone set-asides relating to overall performance by qualified HUBZone SBCs. SBA specifically requested comments on these proposals, including whether the 50% requirement is one that could be met by the affected concerns, and whether and to what extent an evaluation factor could be used to make the requirement acceptable to COs and the procurement community.

SBA received three comments in support of the idea, in general, to add a contract performance requirement for construction HUBZone contracts. Commenters believed it would further the job creation goal of the program and reduce the chances of abusing the benefits offered by the program by allowing non-HUBZone SBCs to perform the majority of the work. In addition, commenters believed it was consistent with the overall goal that 50% of contract costs be expended in HUBZones.

After review of the comments, SBA believes that an additional contract performance requirement for construction contracts is necessary because the HUBZone Program is intended to stimulate historically underutilized business zones through job creation and capital investment. Where a qualified HUBZone SBC is able to subcontract up to 85% of a general construction contract or up to 75% of a specialty trade construction contract to non-HUBZone SBCs (which may be large businesses), SBA is concerned that it would not be meeting the underlying Congressional purpose of the program. At the same time, however, SBA does not want to impose a barrier that could dissuade COs from using the HUBZone Program. Therefore, the final regulation at § 126.700 requires qualified HUBZone SBCs to perform at least 50% of the contract either at the prime or subcontracting level. In addition, the regulation will allow the CO to waive the requirement where he or she determines that it can not be met by at least two qualified HUBZone SBCs.

SBA proposed amending § 126.801 to clarify that SBA does not review protest issues concerning the conduct or administration of a HUBZone contract. One commenter noted a typo in the proposed regulation—the word “not” was missing. SBA concurs and has amended the regulation accordingly. In addition, SBA has made a technical amendment clarifying that for sealed bid acquisitions, an interested party must submit its protest by close of business on the fifth business day after bid opening, or if the price evaluation preference was not applied at the time of bid opening, by close of business on the fifth business day from the date of identification of the apparent successful offeror.

As indicated above, this final rule is effective 30 days after the date of publication in the Federal Register . To ensure that applicants to and participants in the HUBZone Program are subject to the same requirements, this final rule applies to all HUBZone applications submitted on or after the effective date of this rule, to all pending HUBZone applications, and to all currently certified HUBZone SBCs.

OMB has determined that this rule constitutes a “significant regulatory action” under Executive Order 12866. SBA prepared an economic impact analysis relating to the rule when it was published as a proposed rule in January. We noted in our analysis that implementing the changes in the rule would provide significant benefits, including (1) Increasing the base number of small businesses in the HUBZone Program and increasing the viability and practicability of using the HUBZone Program by Federal agencies; (2) greater administrative efficiency and program integrity; and (3) greater contracting efficiency for Federal agencies. We did not receive any comments on the economic impact analysis that we published with the proposed rule. We continue to believe that our analysis was accurate.

SBA has determined that this rule imposes additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C., Chapter 35 and has submitted the requirement to OMB for review. Section 126.403(b) requires a HUBZone SBC to submit updated financial information and information relating to the number of its employees. This information is needed to gauge the degree to which the HUBZone Program has resulted in increased employment opportunities and an increased level of investment in HUBZones. SBA received two comments on this request for information. One commenter stated that instead of requiring SBCs to report this information, SBA should verify initial and continued eligibility of HUBZone SBCs as it pertains to employment automatically by cross-referencing employee data with the IRS using the IRS's Form 941 (Employer's Quarterly Federal Tax Return). The commenter recommended SBA implement an automated system connected to the IRS for financial data reporting instead of the proposed request that SBA collect records and data from SBCs.

SBA plans to research this suggestion further. However, SBA believes that if this recommendation can be implemented, it will take time. In the meantime, SBA needs this information as soon as possible in order to effectively gauge the success of the program.

Another commenter stated that this information request should be mandatory so that the resulting data is reliable. SBA concurs with this comment and agrees that the HUBZone SBC's response to the request for updated financials and employee data should be mandatory.

SBA has certified over ten thousand concerns into the HUBZone Program. Each of these concerns could be subject to this request for information. SBA estimates the burden of this collection of information as follows. SBA requires updated financial information and information relating to the number of employees from a qualified HUBZone SBC annually. SBA estimates that the time needed for a HUBZone SBC to complete this collection will average less than one-half hour. SBA estimates that the cost to complete this collection will be approximately $30 per hour. Thus, the estimated aggregated burden for each qualified HUBZone SBC is 0.5 hours per annum costing an estimated $15 for the year. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information. SBA has submitted this information collection package to OMB for review.

For purposes of Executive Order 12988, SBA has drafted this rule, to the extent practicable, in accordance with the standards set forth in section 3 of that Order.

For purposes of Executive Order 13132, SBA has determined that this rule has no federalism implications warranting the preparation of a Federalism Assessment.

The Regulatory Flexibility Act (RFA) requires SBA to publish a final analysis. According to the RFA, the analysis must include: a statement of the need for and objective of the rule; a summary of significant issues raised by public comments in response to the IRFA and an assessment of issues and any changes made as a result; a description of and estimate of the number of small entities to which this rule applies; a description of the reporting, recordkeeping and other compliance requirements and an estimate of the classes of small entities subject to the requirements and type of professional skills necessary for the preparation of the report or record; and a description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the objectives of applicable statutes and why the agency selected the alternative adopted in the rule.

The regulations address amendments made to the HUBZone Act by the Reauthorization Act. Specifically, Congress amended the eligibility requirements for SBCs owned by Indian Tribal Governments or tribal corporations, or CDCs. Congress also amended the definition of HUBZone to include “redesignated areas,” and added definitions for the terms Indian Reservation and ANC. This regulation addresses those amendments.

The regulation also makes technical amendments, and clarifies existing regulations. Some amendments address certain issues SBA has become aware of while reviewing HUBZone applications.

It is important to remember that the HUBZone Program is a program designed to assist community development through small businesses. SBA's focus in implementing any of its small business programs is always to keep the interests of small businesses in mind. Any regulatory changes made must necessarily consider those interests. The changes made in this final rule are meant to implement new statutory provisions, to make the HUBZone regulations easier to read and understand, to eliminate confusion regarding the intended meaning of several provisions, and to close perceived loopholes that could otherwise open the program to abuse.

SBA received two comments on its IRFA. One commenter stated that SBA failed to propose regulatory alternatives that would minimize the impact of this regulation on small firms. This commenter also believed that SBA failed to comply with section 609(a) of the Regulatory Flexibility Act, which requires agencies to assure that small businesses have an opportunity to participate in rulemakings that will considerably impact them.

With respect to the first comment, SBA notes that as the federal agency charged with the responsibility of implementing small business programs to “further the interests of small business,” it always attempts to minimize any regulatory impact on small business in its own regulations. In addition, the proposed rule cited several alternatives under consideration for different provisions, and asked for public comment on those alternatives, including ones on subcontracting limitations and ownership by Indian Tribes. With respect to the second comment, SBA notes that it extended the original comment period for the rule because it believed that affected businesses needed more time to adequately respond. 67 FR 8739 (Feb. 26, 2002). In addition, SBA received over 900 comments on the rule. Therefore, SBA believes that SBCs had an opportunity to participate in the rulemaking, and did in fact participate in the process.

Another commenter stated that the IRFA failed to incorporate the complete definition of “small entities” in its analysis. According to the Regulatory Flexibility Act (RFA), “small entities” are small businesses, “small organizations” (non-profits), and small governmental jurisdictions. SBA's programs do not apply to “small organizations” or “small governmental jurisdictions;” rather, under SBA's size regulations, in order to be considered a small “business concern,” a business entity must be organized for profit. In addition, according to the Federal Procurement Data Center (FPDC), Javits Wagner O'Day nonprofit agencies, education, non-profit and Historically Black Colleges and Universities, and state and local governments received over $15 billion in Federal government contracts in fiscal year (FY) 2001. In comparison, according to the same data, HUBZone SBCs received far less— about $700 million. Even though certain provisions of the Reauthorization Act, such as the provisions on Indian Tribes, could increase the pool of SBCs eligible for the program, SBA notes that the majority of these concerns were eligible prior to the Reauthorization Act's amendments. Further, the addition of CDC ownership by the Reauthorization Act may also widen the pool of eligible applicants. Although CDCs can now own a HUBZone SBC and there are more HUBZones as a result of the redesignated areas, concerns still need to have a principal office in a HUBZone. This means that some concerns need to move into a HUBZone, which requires the expenditure of funds before any benefit is received. As a result, SBA believes that the provisions of this rule will not alter the pool of eligible small businesses by a sufficient number to change the procurement strategy of a contracting activity. Therefore, the proposed regulation will not impact “small organizations” or “small jurisdictions.”

One commenter also recommended SBA address how the rule will impact service disabled veterans, women-owned small businesses, SDBs, 8(a) Participants and other programs that are part of the 23% annual procurement goal for SBCs. With respect to this comment, SBA notes that prior to the enactment of the HUBZone Act, the government-wide goal for small business participation was 20%. When Congress enacted the HUBZone Act, it changed the government-wide contracting goal from 20% to 23% to address participation by qualified HUBZone SBCs. See Public Law 105-135, section 603(b)(1)(B). The HUBZone Program was intended to add on to, not subtract from, other small business programs. SBA's programs are not meant to compete against each other. As further evidence that the HUBZone Program is not intended to take away from other programs, the regulations provide that SBA will not consent to releasing a requirement previously performed through the 8(a)BD Program to the HUBZone Program unless neither the incumbent nor any other 8(a)BD participant can perform the requirement.

Further, in FY 2001, the Federal Government spent over $234 billion dollars ( see http://www.fpdc.gov ). SBA believes that all SBCs, no matter which program they participate in, can and should be receiving their fair share of this $234 billion. In addition, SBA notes that the statute and regulations now provide that qualified HUBZone SBCs can be owned by CDCs and one or more SBCs, or Indian Tribes and one or more SBCs. Therefore, SBCs, including SDBs and 8(a) Participants, can participate in the HUBZone Program not only by becoming a qualified HUBZone SBC, but also by acquiring ownership of a qualified HUBZone SBC. Thus, SBA does not believe that this rule will negatively impact other SBCs.

Another comment stated that it was not possible to ascertain from the rule or IRFA the full impact of allowing SBCs owned by ESOPs to be eligible for the program. This commenter believed that the proposed regulation could create a cost/economic burden on SBCs by requiring them to make a major decision to hire or not hire qualified employees that are not United States citizens.

In response to this comment, SBA notes that the requirement for ownership by United States citizens is a statutory requirement. The HUBZone Act, the statute that creates the HUBZone Program, outlines the eligibility requirements for SBCs. It requires 100% ownership by U. S. citizens, ownership in part by Tribes or tribal-entities, or ownership in part by CDCs. SBA has no choice but to implement the statute as written. Any perceived “burden” is not one created by SBA's regulations. In addition, SBA notes that it has received only a handful of applications from concerns owned by ESOPs. After reviewing the issue, SBA determined that a concern owned by an ESOP is owned and controlled by the trustee of the ESOP and the employees. Consequently, to meet the eligibility requirements of the statute, the employees participating in the ESOP must be U.S. citizens. With respect to whether or not a concern should hire or not hire an employee, SBA believes those are decisions to be made solely by the concern. The benefits of the program for concerns owned by an ESOP are the same as for all other eligible concerns—the possibility of receiving a HUBZone contract. This “possibility” was explained in the proposed rule at § 126.603. Further, according to FPDC data, this “possibility” amounted to approximately $700 million in contracts awarded to HUBZone SBCs in FY 2001. Only the concern itself can weigh the benefit of receiving a potential HUBZone contract to the benefit of hiring a certain employee. These are everyday business decisions that are made by all concerns, not just concerns wishing to participate in the HUBZone Program.

This commenter also stated that SBA did not determine the costs associated with keeping an accurate system to insure that all employees of an ESOP are United States citizens or that corporations that are HUBZone SBCs must maintain an accurate system to verify that all stock holders are U.S. citizens. SBA did not discuss these costs because such “systems” are required of the business in the normal course of business, and any costs are not costs associated with this rule. Every time a concern hires an employee, the employee must complete a W-2 (IRS) tax form. These forms are maintained by the concern. The tax form provides the information on the citizenship of each employee. With respect to public companies, SBA notes that such companies have always been eligible for the program.

Finally, this commenter stated that SBA did not provide economic impact data on the proposed provisions expanding contract performance requirements for construction HUBZone contracts. In response to this comment, SBA provides the following information.

In FY 2001, the Federal Government spent over $16 billion in construction ( see www.fpdc.gov ). It is not clear how much of that went to HUBZone SBCs, although according to the same data, HUBZone SBCs received between $600 million and $700 million in contracts total. According to SBA's CCR/DSBS ( http://dsbs.sba.gov/dsbs/dsp_dsbs.cfm ), there are 2,021 qualified HUBZone SBCs, which are engaged in construction. The rule requiring qualified HUBZone SBCs to perform at least 50% of the construction contract itself or through a subcontract with other qualified HUBZone SBCs may increase the number of subcontracts issued to such concerns. In addition, this could increase the number of contracts ultimately awarded HUBZone SBCs in this area because more concerns could be gaining experience through subcontracting. Further, because there are over 2,000 qualified HUBZone SBCs in this field, a prime HUBZone SBC should not have a problem subcontracting to another HUBZone SBC to meet this requirement. In the alternative, SBA's final regulation provides that COs may waive this requirement if it can not be met.

The RFA requires a description of the reporting, recordkeeping and other compliance requirements and an estimate of the classes of small entities subject to the requirements and type of professional skills necessary for the preparation of the report or record.

The rule authorizes SBA to request that a qualified HUBZone SBC submit updated financial information and information relating to the number of its employees. This information is needed to gauge the degree to which the HUBZone Program has resulted in increased employment opportunities and an increased level of investment in HUBZones. The office manager of a concern should be able to provide this information.

In addition, because SBA has changed this proposal from a voluntary to a mandatory one, at this time the Agency requests comments on the affects implementing this requirement will have on SBCs. Further, in order to provide SBCs with sufficient time to set up a recordkeeping system if necessary (although SBA believes that all of this information is information generally collected and retained by SBCs during the course of business) to meet this requirement, or to understand what this requirement entails, SBA does not plan to request this information in the near future.

The RFA requires a description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the objectives of applicable statutes and why the agency selected the alternative adopted in the rule. SBA has addressed this in the preamble.

In the Federal Register of October 10, 2003 (68 FR 58894), FDA published an interim final rule on Registration of Food Facilities under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. Since that time, FDA has discovered that the interim final rule contains several errors.

First, FDA is correcting the phone number to which registration form requests and other technical questions should be directed. The appropriate phone numbers are 1-800-216-7331 or 301-575-0156.

Second, § 1.232 of the interim final rule contains several editorial errors. Section 1.232(d) currently states that each foreign facility must submit “the name, address, phone number, and emergency contact phone number of its U.S. agent (if there is no other emergency contact designated under § 1.233(c)).” To improve the clarity of this provision, FDA is also revising § 1.232(d). The reference to § 1.233(c) in this sentence is incorrect; the proper reference is to § 1.233(e). Also, the reference in § 1.232(g) to § 1.233(e) is incorrect; the proper reference is to § 1.233(j).

In a notice published in the Federal Register of April 6, 1999 (64 FR 16742), FDA announced that an FAP (FAP 9A4652) was filed by the Procter & Gamble Co., 6071 Center Hill Ave., Cincinnati, OH 45224 (P&G, the petitioner) proposing that the food additive regulations be amended in § 172.867 Olestra to provide for the safe use of olestra in place of fats and oils in prepackaged, unpopped popcorn kernels that are ready-to-heat. In this document, such prepackaged popcorn kernels will be referred to as “microwave popcorn.” 1

Although not noted in the FAP (64 FR 16742), the petitioner also requested two editorial changes in the regulation that would have no effect on the substance of the regulation. Because the identity and specifications for olestra are now listed in the Food Chemicals Codex (FCC), the petitioner requested that the regulation incorporate by reference the specifications for olestra provided in the FCC, consistent with other regulations. The petitioner also requested that FDA update § 172.867(f) because it is “out-of-date.” Section 172.867(f) requires FDA to hold a Food Advisory Committee (FAC) meeting on olestra within 30 months of olestra's January 30, 1996, approval.

In the Federal Register of January 30, 1996 (61 FR 3118, “the 1996 final rule”), FDA announced the approval of olestra for use as a replacement for fats and oils in prepackaged ready-to-eat savory (i.e., salty or piquant but not sweet) snacks (§ 172.867). As part of the 1996 final rule, FDA concluded that olestra inhibits the absorption of the fat-soluble components of the diet when these components are present in the gastrointestinal (GI) tract simultaneously with olestra (61 FR 3118 at 3132 to 3147). Such components include the fat-soluble vitamins A, D, E, and K. Based on data from nutritional studies conducted prior to the 1996 approval, FDA concluded that addition of the four fat-soluble vitamins (A, D, E, and K) to savory snacks containing olestra would compensate for any decreased absorption of these vitamins due to the action of olestra, thus ensuring that consumption of an olestra-containing savory snack would not alter the amount of vitamin available for absorption (61 FR 3118 at 3144 to 3147). As part of its 1996 final rule approving the use of olestra in savory snacks, FDA required that specified amounts of vitamins A, D, E, and K be added to olestra-containing savory snacks (§ 172.867(d)).

The 1996 final rule allowed the use of olestra in savory snacks that are ready-to-eat. Ready-to-eat savory snacks, including olestra-containing ready-to-eat savory snacks and their added fat-soluble vitamins, do not require preparation (i.e., heat treatment) by the consumer prior to consumption. Therefore, in such olestra-containing savory snacks, the levels of added fat-soluble vitamins are unlikely to change between manufacturing and consumption by the consumer. In contrast, the current petition requests approval for a use of olestra in which the olestra-containing savory snack (microwave popcorn), including the added fat-soluble vitamins, must be heated by the consumer prior to consumption. 2 This heat treatment may cause degradation of the added fat-soluble vitamins, resulting in the levels of fat-soluble vitamins present after heat preparation being less than those added by the manufacturer. This is not the case for ready-to-eat savory snacks which are not normally heated by consumers prior to consumption. Therefore, in ruling on this petition, FDA must consider whether heat preparation of olestra-containing microwave popcorn causes any nutritionally important effects in the levels of added fat-soluble vitamins. Additionally, FDA must consider whether any degradation products resulting from the heating of fat-soluble vitamins in olestra-containing microwave popcorn raise any safety concerns.

The use of olestra as a replacement for fats and oils in microwave popcorn will not change the estimated intake of olestra. In FDA's 1996 decision, FDA calculated the estimated daily intake (EDI) of olestra based on the conservative assumption that all of the fat used in all savory snacks would be replaced by olestra. This approach to calculating the EDI included the assumption that all popcorn, regardless of source, would be made with olestra. Because the agency has already included popcorn consumption from all sources in its estimate of olestra consumption, approval of the current petition would not change the EDI of olestra (Ref. 1).

As noted, the current petition requests the approval of the use of olestra in a savory snack that will be heated by consumers prior to consumption. Heat treatment may cause degradation of vitamins, including those fat-soluble vitamins that would be added to olestra-containing microwave popcorn. To address this concern, P&G studied the effect of heating on the degradation of fat-soluble vitamins A, D, E, and K. 3 The petitioner chose to use microwave oven heating to study the thermal degradation of fat-soluble vitamins, asserting that: (1) Both stovetop-prepared and microwave oven-prepared products rely on lipids as a heat transfer medium to “fry” the kernels in either a foil package on a stovetop or in a bag in a microwave oven, (2) both the stovetop and microwave deliver similar amounts of heat during popcorn preparation, and (3) most consumers prepare popcorn at home in microwave ovens.

FDA agrees that microwave heating of popcorn kernels is adequate to study the degradation of fat-soluble vitamins during heat preparation of both popcorn kernels in microwavable bags with heat susceptors and popcorn kernels in aluminum foil packages intended for stovetop heating (Ref. 1).

As part of its petition, P&G presents data about the temperatures reached during typical microwave heating of popcorn kernels by consumers. 4 P&G demonstrates that the temperature inside bags of microwave popcorn increases from approximately 30 degrees Celsius at the start of heating to a maximum temperature of approximately 175 degrees Celsius. The petitioner reported that exposure to temperatures of 150-175 degrees Celsius occurs for only a fraction (30-60 seconds) of a typical 3.5 minute popping cycle. 5 For comparison, P&G points out that it is not uncommon to fry foods for 2 to 5 minutes at similar temperatures (150-200 degrees Celsius), including foods that serve as dietary sources of fat-soluble vitamins. Thus, fat-soluble vitamins added to microwave popcorn and heated in the home will not experience heating temperatures or times greater than those currently used in common food preparation practices.

To assess the effect of microwave popcorn preparation on fat-soluble vitamin degradation the petitioner analyzed samples from olestra-containing microwave popcorn prepared using a microwave oven. This analysis shows that 44 percent of vitamin A, 4.3 percent of vitamin D, and 24.4 percent of vitamin K are lost during microwave popcorn preparation. 6

With respect to vitamin E, P&G states that loss of this vitamin was considered during FDA's review of the use of olestra in prepackaged, ready-to-eat savory snacks. Vitamin E loss was reported to be only 3-4 percent (as a -tocopherol) under frying conditions (including time and temperature) that exceed those encountered during microwave popcorn preparation. 7 Thus, vitamin E loss resulting from microwave popcorn preparation is unlikely to exceed 3-4 percent.

The petitioner considered the safety of degradation products resulting from the heating of fat-soluble vitamins. The petitioner stated that exposure to fat-soluble vitamin degradation products is not a new or unusual dietary experience because the chemical pathways producing fat-soluble vitamin degradation products in microwave popcorn and other heated foods are the same. Degradation products from vitamins A, D, E, and K are a natural consequence of cooking, and these degradation products are commonly eaten. P&G also states that the amount of fat-soluble vitamin degradation products in a serving of microwave popcorn is comparable to the amount found in servings of other fried/heated foods. P&G concludes that the exposure to fat-soluble vitamin degradation products formed during the heating of microwave popcorn does not result in an increased safety risk relative to the exposure to degradation products arising from the frying of other foods commonly found in the diet. P&G states that microwave popcorn would just be another source of such degradation products.

FDA considered that the exposure to fat-soluble vitamin degradation products from this use of olestra would be similar to, or less than, that from other foods fried in oils, or otherwise cooked (Ref. 1). Based on its safety review, FDA concludes that exposure to fat-soluble vitamin degradation products from this use of olestra would be safe (Ref. 2).

P&G states that the nutritional impact of fat-soluble vitamin degradation during microwave popcorn preparation can be assessed by examining the likelihood of these losses having a nutritionally significant effect on the overall vitamin status of microwave popcorn consumers. P&G asserts that a nutritionally significant impact on microwave popcorn consumers cannot occur if olestra's potential to interact with dietary sources of fat-soluble vitamins is limited or infrequent. The current petition includes data from the Snack Food Association's 1996 Consumer Snacking Behavior Report. These data demonstrate that microwave popcorn is eaten an average of two eating occasions in 14 days among popcorn eaters and is rarely eaten with meals. (Popcorn is eaten with only about 0.4 percent of all meals.) Microwave popcorn is consumed alone 45 percent of the time and rarely with other foods that are significant sources of fat-soluble vitamins. When other foods are consumed with microwave popcorn, a beverage is the preferred choice (42 percent of popcorn eating occasions). Based on these data, P&G asserts that there is little potential for the use of olestra in microwave popcorn to have an effect on the fat-soluble vitamin status of microwave popcorn consumers. Therefore, the petitioner concluded that the levels of vitamins A, D, E, and K currently required to be added to olestra-containing savory snacks under § 172.867(d) are sufficient for addition to microwave popcorn.

FDA agrees with the petitioner that the levels of vitamins A, D, E, and K required to be added to microwave popcorn should be those specified in § 172.867(d). FDA reached this conclusion because olestra-containing microwave popcorn is not likely to be consumed concurrently with dietary sources of fat-soluble vitamins. Therefore, it is unlikely that a person's daily intake of fat-soluble vitamins would be affected by the consumption of microwave popcorn that contains olestra. Moreover, the levels of vitamins D and E that are degraded during the heating process amount to such a small quantity (approximately 4 percent) that the systemic levels of these vitamins would not be affected by the small amounts degraded (Ref. 2).

Although section 409 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 348) establishes no comment period for FAPs, and the agency generally does not solicit comments in notices announcing the filing of an FAP, it is FDA's practice to consider any relevant comments timely submitted. FDA received one comment on the use of olestra in microwave popcorn. The comment and the agency's response follow.

A comment from an individual consumer requested that FDA deny the current petition. The comment expressed concern about the amount of iron added to foods and the potential effects on infants of excess folic acid in their mother's diet. The comment states that the public does not know about the amounts of excess vitamins and iron added to their diets. The comment also requested that FDA allow each individual to add their own vitamins as needed.

The regulation that is the subject of this petition does not require that either iron or folic acid be added to olestra-containing products. Thus, issues surrounding excess levels of these nutrients in the diet are outside the scope of this petition.

Based on a fair evaluation of the data and information in the current FAP, as well as data and information in the original FAP (FAP 7A3997) that resulted in the establishment of § 172.867, FDA has concluded that there is a reasonable certainty that no harm will result from the use of olestra as a replacement for fats and oils in microwave popcorn. FDA is requiring that vitamins A, D, E, and K be added to microwave popcorn at levels specified in § 172.867(d).

In its petition, P&G requested that § 172.867(b), which contains specifications for food-grade olestra, be amended to reference the specifications for food-grade olestra set forth in the FCC, fourth edition, first supplement. P&G observes that the specifications set out in the FCC monograph for olestra are identical to those currently provided in § 172.867(b) (Ref. 1).

In establishing food additive approval regulations, FDA generally incorporates by reference FCC specifications where such specifications have been issued and are consistent with FDA's safety evaluation. As noted, the FCC specifications are the same as those issued by FDA and thus, this change is simply editorial. In addition, manufacturers generally look to the FCC for food grade specifications. Accordingly, FDA agrees that current § 172.867(b) should be amended to remove the current specifications in this paragraph and in their place to incorporate by reference the FCC specifications for food-grade olestra. FDA has concluded that the use of olestra as a replacement for fats and oils in microwave popcorn is safe. Accordingly, the agency is amending § 172.867(c) to include this use of the additive.

In its petition, P&G also noted that § 172.867(f) is obsolete. In the 1996 final rule, FDA committed to review and evaluate all data and information bearing on the safety of olestra received by the agency after the effective date of the regulation (January 30, 1996) and present such data, information, and evaluation to the agency's Food Advisory Committee (FAC) within 30 months of the approval of olestra (61 FR 3118 at 3168-3169; § 172.867(f)). Consistent with its obligation under § 172.867(f), FDA convened a meeting of its FAC on June 15-17, 1998, fulfilling its obligation under § 172.867(f). 8 Thus, FDA has concluded that § 172.867(f) no longer serves a function and should be deleted.

FDA has concluded that there is reasonable certainty that no harm will result from the use of olestra in microwave popcorn (21 CFR 170.3(i)). FDA is requiring that vitamins A, D, E, and K be added to microwave popcorn at levels currently specified in § 172.867(d). FDA has also concluded that § 172.867 should be updated by revising § 172.867(b) to incorporate by reference the food-grade specifications for olestra set forth in the FCC, fourth edition, first supplement and by deleting § 172.867(f).

The agency has carefully considered the potential environmental effects of this action. FDA has concluded that the action will not have a significant impact on the human environment, and that an environmental impact statement is not required. The agency's finding of no significant impact and the evidence supporting that finding, contained in an environmental assessment, may be seen in the Division of Dockets Management (see ADDRESSES ) between 9 a.m. and 4 p.m., Monday through Friday.

This final rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

In accordance with § 171.1(h) (21 CFR 171.1(h)), the petition and the documents that FDA considered and relied upon in reaching its decision to approve the petition are available for inspection at the Center for Food Safety and Applied Nutrition (see ADDRESSES ) by appointment with the information contact person (see FOR FURTHER INFORMATION CONTACT ). As provided in § 171.1(h), the agency will delete from the documents any materials that are not available for public disclosure before making the documents available for inspection.

Any person who will be adversely affected by this regulation may file with the Division of Dockets Management (see ADDRESSES ) written or electronic objections (see DATES ). Each objection shall be separately numbered, and each numbered objection shall specify with particularity the provisions of the regulation to which objection is made and the grounds for the objection. Each numbered objection on which a hearing is requested shall specifically so state. Failure to request a hearing for any particular objection shall constitute a waiver of the right to a hearing on that objection. Each numbered objection for which a hearing is requested shall include a detailed description and analysis of the specific factual information intended to be presented in support of the objection in the event that a hearing is held. Failure to include such a description and analysis for any particular objection shall constitute a waiver of the right to a hearing on the objection. Three copies of all documents shall be submitted and shall be identified with the docket number found in brackets in the heading of this document. Any objections received in response to the regulation may be seen in the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

The following references have been placed on display in the Division of Dockets Management and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday.

The MMS published a final rule entitled “Federal Oil Valuation” in the Federal Register on May 5, 2004 (69 FR 24959). The May 2004 final rule amended the existing regulations governing the valuation of crude oil produced from Federal leases for royalty purposes, and related provisions governing the reporting thereof. The amendments primarily affect which published market prices are most appropriate to value crude oil not sold at arm's length and what transportation deductions should be allowed. The effective date for the May 2004 final rule as originally published is July 6, 2004.

The original intent in publishing the May 2004 final rule was to make the rule become effective on the first day of the calendar month that is more than 60 days following the date of publication in the Federal Register . Through an inadvertent clerical error, just prior to publication, the effective date was changed to 60 days following the date of publication in the Federal Register . Consequently, the rule was published with an effective date of July 6, 2004. If left unchanged, Federal lessees would have to apply the existing rule to oil produced from July 1 through July 5, 2004, and then apply the May 2004 final rule to oil produced from July 6 to July 31, 2004. It was not MMS's intent to require Federal lessees to value oil produced during a particular production month (in this case, July 2004) using two different valuation rules. The MMS recognizes that to do so would be both administratively burdensome and costly to Federal lessees and MMS. Therefore, MMS is changing the effective date of the May 2004 final rule from July 6, 2004, to August 1, 2004.

This change does not require public comment under 5 U.S.C. 553(b)(3)(B). Public comment is unnecessary for the reasons explained above. Under 5 U.S.C. 553(d), MMS, for good cause, finds that this final rule—technical amendment, should be immediately final upon publication to correct MMS's inadvertent clerical error regarding the May 2004 final rule's effective date.

The final regulations that are the subject of this correction amended 30 CFR 250.160 and 30 CFR 250.1012.

As published, the final regulations contained two references to 30 CFR 250.1009 (d), although the regulation now is numbered 30 CFR 250.1013. Moreover, § 250.1013 has no application to rights-of-use and easement.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. Logistical details surrounding the event were not finalized and presented to the Coast Guard in time to draft and publish an NPRM. As such, the event would occur before the rulemaking process was complete. Any delay in implementing this rule would be contrary to the public interest since immediate action is necessary to temporarily close the area around the fireworks barge during loading, transit, and the fireworks display to protect the maritime public from the hazards associated with the pyrotechnics and the fireworks display, which are intended for public entertainment.

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

The San Francisco Giants Baseball Team is sponsoring a short fireworks display on May 29, 2004 in the waters of San Francisco Bay near SBC Park immediately following a baseball game on Memorial Day Weekend. The fireworks barge will be located approximately 500 feet off of Pier 48. The safety zone is necessary to protect the spectators, vessels, and other property from the hazards associated with the pyrotechnics on the launch barge and the fireworks show. The temporary safety zone will consist of a portion of the navigable waters of San Francisco Bay, California. The Coast Guard has granted the San Francisco Giants and Pyro Spectaculars a marine event permit for this event.

During the loading of the fireworks barge at Pier 50 in San Francisco, while the barge is being towed from Pier 50 to the location of the fireworks display, and until the start of the fireworks display, the safety zone will encompass the navigable waters around and under the fireworks barge within a radius of 100 feet. During the 15-minute fireworks display, which will take place in a position approximately 500 feet off of Pier 48 in position 37°46′34″ N, 122°23′00″ W, the safety zone will increase in size to encompass the navigable waters around and under the fireworks barge within a radius of 1,000 feet. Entry into, transit through or anchoring within this safety zone is prohibited, unless authorized by the Captain of the Port or his designated representative.

U.S. Coast Guard personnel will enforce this safety zone. The Coast Guard may be assisted by other Federal, State, or local agencies, including the Coast Guard Auxiliary. Section 165.23 of Title 33, Code of Federal Regulations, prohibits any unauthorized person or vessel from entering or remaining in a safety zone. Vessels or persons violating this section will be subject to the penalties set forth in 33 U.S.C. 1232. Pursuant to 33 U.S.C. 1232, any violation of the safety zone described herein, will be punishable by civil penalties (not to exceed $32,500 per violation, where each day of a continuing violation is a separate violation), criminal penalties (imprisonment up to 6 years and a maximum fine of $250,000), and in rem liability against the offending vessel. Any person who violates this section, using a dangerous weapon, or who engages in conduct that causes bodily injury or fear of imminent bodily injury to any officer authorized to enforce this regulation, also faces imprisonment up to 12 years.

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

Although the safety zone will restrict boating traffic within San Francisco Bay, the effect of this regulation will not be significant as the safety zone will encompass only a small portion of the waterway and will be short in duration. The entities most likely to be affected are pleasure craft engaged in recreational activities and sightseeing.

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. As discussed above, the safety zone may affect the following entities, some of which may be small entities: The owners and operators of pleasure craft engaged in recreational activities and sightseeing. The safety zone will not have a significant economic impact on a substantial number of small entities for several reasons: Vessel traffic can pass safely around the area, vessels engaged in recreational activities and sightseeing have ample space outside of the safety zone to engage in these activities, and this zone will encompass only a small portion of the waterway for a limited period of time. The maritime public will be advised of the safety zone via public notice to mariners.

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

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

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

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

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

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

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

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

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

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

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

A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” will be available in the docket where indicated under ADDRESSES .

The SIP is a living document which the state can revise as necessary to address the unique air pollution problems in the state. Therefore, EPA from time to time must take action on SIP revisions containing new and/or revised regulations as being part of the SIP. On May 22, 1997 (62 FR 27968), EPA revised the procedures for incorporating by reference Federally-approved SIPs, as a result of consultations between EPA and the Office of Federal Register (OFR). The description of the revised SIP document, IBR procedures and “Identification of plan” format are discussed in further detail in the May 22, 1997, Federal Register document.

On June 29, 1999, EPA published a document in the Federal Register (64 FR 34717) beginning the new IBR procedure for Missouri. Today EPA is updating the IBR material.

EPA is also making minor corrections to the table in § 52.1320(c) as follows:

On November 26, 2003 (68 FR 66350), EPA updated rules 10-2.390 and 10-5.480. We are correcting the title of the rules in the table.

On May 18, 2000 (65 FR 31491), EPA updated rules 10-5.220, 10-5.295, 10-5.500, 10-5.520, 10-5.530, 10-5.540, and 10-5.550. The table is being corrected to include the missing Federal Register citation (65 FR 31491) for each rule.

On August 24, 1994 (59 FR 43480), EPA updated rule 10-5.350. The Federal Register page citation is being corrected to read 43480.

On November 30, 2003 (66 FR 59708), EPA updated rule 10-6.400. The table is being corrected to include the missing Federal Register citation (66 FR 59708).

On October 13, 1992 (57 FR 46778), EPA rescinded rule 50-2.400 under the heading Missouri Department of Public Safety Division 50—State Highway Patrol Chapter 2—Motor Vehicle Inspection. This rule is being removed from the table.

On April 22, 1998 (63 FR 19825) EPA approved and incorporated by reference revisions to the Kansas City Chapter 8—Air Quality rule Section 8-4. When Sections 8-2 and 8-5 of the Kansas City Air Quality rules were updated and added on December 22, 1999 (64 FR 71666), Section 8-4 was inadvertently removed from the table. We are restoring Section 8-4 into the table. The table is also being corrected to include the missing Federal Register citation (64 FR 71666) for Sections 8-2 and 8-5.

EPA is also making a minor correction to the table in § 52.1320(d). On May 5, 1995 (60 FR 22274), EPA approved consent orders for Doe Run Lead Smelter, Herculaneum, Missouri, numbers (7), (8) and (9) in the table. The Federal Register page citation is being corrected to read 22274.

EPA has determined that today's rule falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedures Act (APA) which, upon finding “good cause,” authorizes agencies to dispense with public participation and section 553(d)(3) which allows an agency to make a rule effective immediately (thereby avoiding the 30-day delayed effective date otherwise provided for in the APA). Today's rule simply codifies provisions which are already in effect as a matter of law in Federal and approved state programs. Under section 553 of the APA, an agency may find good cause where procedures are “impractical, unnecessary, or contrary to the public interest.” Public comment is “unnecessary” and “contrary to the public interest” since the codification only reflects existing law. Immediate notice in the CFR benefits the public by updating citations.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act (CAA). This rule also is not subject to Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 23, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

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

On July 2, 2003, PADEP submitted formal revisions to its SIP to establish and impose case-by-case RACT for several major sources of VOC and NO X . This rulemaking pertains to two of those sources, namely, National Fuel Gas Supply Corporation's Roystone Compressor Station, located in Sheffield, Warren County, Pennsylvania; and Crompton Corporation's facility located in Fairview Township, Butler County, Pennsylvania. These facilities are considered major for NO X and VOC. The RACT determinations and requirements are included in operating permits issued by PADEP. The RACT requirements imposed by PADEP and submitted to EPA for approval as SIP revisions are described in the following paragraphs.

The National Fuel Gas Supply Corporation (National) operates natural gas compressors and generators at its Roystone Compressor Station located in Sheffield Township, Warren County. The PADEP established and imposed RACT for both NO X and VOC in operating permit No. OP 62-141F, issued and effective April 1, 2003. Under the conditions of the permit, the allowable NO X emission rate for Units 1, 2, and 3 shall not exceed 5.3 pounds per hour (lbs/hr) and the allowable NO X emission rate for Units 4, 5, 6, 7 and 8 shall not exceed 2.5 lbs/hr. The three boilers manufactured by Penneco, Struthers and Peerless; the two Smith Reboilers for Line D and Line L; and the two Pipeline Heaters (Erie L and Line D) are subject to 25 PA Code Section 129.93(c)(1). The RACT emission limitations for these sources are the installation, maintenance and operation of the sources in accordance with the manufacturers specifications. Standby generators 1 and 2 and the Waukesha Air Compressor shall comply with the presumptive RACT requirements as stated in 25 PA Code Section 129.93(c)(5). These units are to be installed, maintained, and operated in accordance with the manufacturer's specifications and good air pollution control practices. Under the conditions of its operating permit for the Roystone station, National must maintain records of the VOC emissions from the Line D and Line L dehydrators. National must maintain records of the actual throughput per day, the actual hours of operation and the glycol circulation rate for each dehydrator. The emissions from the regenerator overheads shall be exhausted through the reboiler heater exhaust stack. National must monitor the control device by conducting a visual observation of the device and the pilot light at least once per manned 8-hour shift, and maintain a log of the visual observations. National must maintain a Leak Detection and Repair (LDAR) Plan for the fugitive emissions from the facility to represent RACT for facility-wide fugitive emissions.

The Crompton Corporation (Crompton) operates a facility in Fairview Township, Butler County subject to RACT for NO X and VOC. The PADEP established and imposed RACT for this facility in operating permit No. 10-037, issued and effective June 4, 2003. Under the conditions of this permit, NO X emissions at Boiler #7 shall not exceed 0.180 lbs/MMBTU while burning natural gas, and shall not exceed 0.40 lbs/MMBTU while burning oil. Under the conditions of the permit, RACT for Boiler #7 shall also consist of an annual adjustment or tune-up that will consist of an inspection, adjustment, cleaning or replacement of the fuel burning equipment, inspection and adjustment of the flame characteristics, and the inspection and adjustment of the air-to-fuel control system. The tune up shall be performed in accordance with the EPA document “Combustion Efficiency Optimization Manual for Operators of Oil and Gas-Fired Boilers”, EPA-340/1-83-023, September 1983. The permit also requires that Boiler #7 boiler be tested annually by Crompton with a PADEP-approved portable analyzer. Under the conditions of the permit, PADEP may require annual stack tests in accordance with EPA reference methods pending the submission of the results from the portable analyzer. Separate tests shall be performed to demonstrate compliance with the NO X emission rates imposed on Boiler #7 when firing natural gas and when firing oil. The VOC emissions from the Low-Cat Hydrogen Recovery Unit Vent V-64 (Source 125) shall not exceed 9.29 lbs/hr. The facility shall comply with the record-keeping requirements of 25 PA Code Section 129.95. It should also be noted that under Condition 8 of OP 10-137, the Utility Fractionator Unit Vent D-204 (Source 131) which had potential VOC emissions of 20.95 lbs/hr and 82.11 tons/year (based upon 7838 hours of operation) was shutdown in January 2002 and shall no longer be operated. Therefore, under OP 10-137, Crompton is not required to demonstrate RACT for this source.

EPA is approving the operating permits issued to the National and Crompton facilities by PADEP as described in section II. EPA is approving them as SIP revisions because the Commonwealth established and imposed requirements in accordance with the criteria set forth in SIP-approved regulations for imposing RACT or for limiting a source's potential to emit. The Commonwealth has also imposed recordkeeping, monitoring, and testing requirements on these sources sufficient to determine compliance with these requirements.

EPA is approving revisions to the Commonwealth of Pennsylvania's SIP submitted by PADEP on July 2, 2003. These revisions consist of operating permits which establish and require RACT for National Fuel Gas Supply Corporation's Roystone Compressor Station, located in Sheffield, Warren County, Pennsylvania (OP 62-141F); and Crompton Corporation's facility located in Fairview Township, Butler County, Pennsylvania (OP 10-037). EPA is publishing this rule without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comment. However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This direct final rule will be effective on July 23, 2004, without further notice unless we receive adverse comment by June 23, 2004. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. Section 804 exempts from section 801 the following types of rules: (1) Rules of particular applicability; (2) rules relating to agency management or personnel; and (3) rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). EPA is not required to submit a rule report regarding today's action under section 801 because this is a rule of particular applicability establishing source-specific requirements for two named sources.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 23, 2004. Filing a petition for reconsideration by the Administrator of this final rule to approve RACT for National Fuel Gas Supply Corporation's Roystone Compressor Station located in Sheffield, Warren County, Pennsylvania and Crompton Corporation's facility located in Fairview Township, Butler County, Pennsylvania does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

This supplementary information section is organized as follows:

Probably not because this action applies to a single source, Horween, in Chicago, IL.

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In this action, EPA is approving into the Illinois VOC SIP an amendment to the leather coating rules that apply in the Chicago ozone nonattainment area. Specifically, EPA is approving a new Section 218.929 that changes the VOC control requirements for coating a small amount of specialty leathers at Horween's leather production facility located at 2015 North Elston Avenue, Chicago, Illinois. These control requirements were adopted in the Illinois Pollution Control Board's February 20, 2003, Final Order R02-20 which adopts a revision to 35 Ill. Adm. Code 218.112 (in which a test method is added to Illinois' Incorporation by Reference Section) and new Section 35. Ill. Adm. Code 218.929.

The VOC control requirements contained in Section 218.929 represent a RACT level of VOC control for the specialty shoe leathers that are covered by them. They are based upon leather coating requirements that had previously been approved by EPA as a SIP revision for a company making products similar to Horween.

Section 218.929 adds control requirements, and measures to ensure their enforceability, that apply to certain specialty leathers coated at Horween's Chicago leather manufacturing facility. These specialty leathers are cementable and dress or performance shoe leathers. Cementable shoe leather has over 12 percent but less than 25 percent wax, grease, polymers and oils embedded into the leather. By contrast, the previously approved definition of specialty leather (with less stringent VOC content limits) specifies leather with over 25% by weight grease, wax, and oils. Dress or performance shoe leather is finished with coating materials containing water emulsified materials using water miscible solvent materials and is used primarily for the manufacture of sewn shoes where the leather must be capable of soaking with a fine, dressy finish. Also, the 10-ton exemption for stain pursuant to Section 218.926(b)(2)(i) does not apply to the specialty leathers covered by Section 218.929.

Section 218.929 (b) provides numeric limitations on emissions of the specialty leather products described above and in Section 218.929 (a). They are 14 lbs. VOC/1000 square feet for non-water resistant leathers; 24 lbs. VOC/1000 square feet for water resistant leather; and a total annual VOC emission limit of 20 tons. The leather will be designated as water resistant or non-water resistant by using ASTM D 2099-00, which is incorporated by reference in Section 218.112 of Part 218.

Section 218.929 (c) requires that Horween comply with its approved standard operating and maintenance procedures, which minimize the volatilization of solvents during the measuring and/or mixing of coatings, minimize VOC fugitive losses from the coating and solvent storage rooms, and minimize solvent usage or VOC losses during equipment cleanup and during transport.

Section 218.929 (d) specifies reporting and recordkeeping requirements to ensure that the coating limits in section 218.929 (b) are met. This includes keeping records of the VOC content and gallons of each coating and the total pounds of VOC of all coatings applied to each category of leather, and the total area of each category of leather produced during each month.

The Illinois EPA submitted the following information and supporting documentation (along with other less substantive procedural documents) in support of its request for an Amendment, contained in 35 Ill. Adm. Code 218.929, to the leather coating rules for Horween.

(a) Horween's Petition for a site-specific rulemaking filed with the Illinois Pollution Control Board on February 4, 2002.

(b) On May 17, 2002, the Illinois Pollution Control Board issued a notice of public hearing for June 26, 2002, in Chicago. A public hearing was subsequently held on that day.

(c) Testimony by Horween in support of its petition filed with the Illinois Pollution Control Board on June 19, 2002.

(d) On July 19, 2002, Horween filed post-hearing comments in which it successfully argued that high-volume, low-pressure (HVLP) spray application equipment is not feasible at its leather manufacturing facility.

(d) The February 20, 2003, Opinion and Order of the Illinois Pollution Control Board, in which it adopted the amendments to the leather coating rules for Horween's Chicago leather manufacturing facility in 35 Ill. Adm. Code 218.929.

A public hearing was held on June 26, 2002, in Chicago and a transcript of the hearing was submitted by Illinois EPA in support of its request for a SIP revision.

Horween petitioned the Illinois Pollution Control Board for a site-specific rule revision that would apply to a small amount of new specialty leathers that it would like to produce. In order to meet changing customer demands, to counter its loss of business since 1995, it must meet the requirements of its customers for different types of specialty-type leathers, including cementable pull up, leathers designed for hand-sewn shoes, and other performance leathers that were not considered when Illinois' existing leather coating rules were adopted.

These include leathers with between 12% and 25% grease, wax and oil content which cannot be finished with coatings that comply with the generally applicable 3.5 lbs. VOC per gallon regulation (because coating difficulties begin to occur at a grease, wax and oils content of 12%) and cannot satisfy the definition of specialty leather, with its less stringent 38 lbs. VOC per 1000 square feet of leather limitation. A second group of leathers are intended for hand-sewn shoes with an extremely glossy, dressy look and fine, smooth finish. The top finish of the leather must be able to withstand ironing with high temperatures to give a uniform, smooth appearance, and be compatible with finishes used to stain and antique the shoes. Water-based finishes that comply with the 3.5 lbs. VOC per gallon regulation do not satisfy these requirements.

In order to satisfy Horween's leather manufacturing requirements and to ensure that RACT coating limits are achieved, Illinois adopted leather coating limits which had been previously approved by EPA as RACT for a similar facility. In addition, the emissions from these coatings are limited to 20 tons of VOCs per year. These control requirements, therefore, satisfy RACT and are approvable.

For the reasons given above, EPA is approving into the Illinois VOC SIP a revision to the Incorporation by Reference list in 35 ILL. Adm. Code 218.112 and a new Section 218.929 that changes the VOC control requirements for coating a small amount of specialty leathers at Horween's leather manufacturing facility.

The EPA is publishing this action without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comments. However, in the proposed rules section of this Federal Register publication, we are publishing a separate document that will serve as the proposal to approve the state plan if relevant adverse comments are filed. This rule will be effective July 23, 2004 without further notice unless we receive relevant adverse written comments by June 23, 2004. If we receive such comments, we will withdraw this action before the effective date by publishing a subsequent document that will withdraw the final action. All public comments received will then be addressed in a subsequent final rule based on the proposed action. The EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. If we do not receive any comments, this action will be effective July 23, 2004.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget.

For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001).

This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act.

This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.

This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 23, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

On October 29, 2002 (67 FR 65873), we published a limited approval and limited disapproval of VCAPCD Rule 70 as revised locally on November 14, 2000 and submitted by the State on January 15, 2004. We based our limited disapproval action on a deficiency in the submittal. This limited disapproval action started a sanctions clock for imposition of offset sanctions on May 30, 2004, 18 months after November 29, 2002, and highway sanctions 6 months later, pursuant to section 179 of the Clean Air Act (CAA) and our regulations at 40 CFR 52.31.

On November 11, 2003, ADEQ adopted revisions to Rule 70 that were intended to correct the deficiency identified in our limited disapproval action. On January 15, 2004, the State submitted these revisions to EPA. In the Rules section of today's Federal Register , we have made direct final approval on this submittal because we believe it corrects the deficiencies identified in our October 29, 2002 disapproval action. Based on today's direct final approval, we are taking this final rulemaking action, effective on publication, to stay the imposition of sanctions that were triggered by our October 29, 2002 limited disapproval.

EPA is providing the public with an opportunity to comment on this stay of sanctions. If comments are submitted that change our assessment described in this final determination and the direct final approval of revised VCAPCD Rule 70, we intend to take subsequent final action to reimpose sanctions pursuant to 40 CFR 51.31(d). If no comments are submitted that change our assessment, then all sanctions and sanction clocks will be permanently terminated on the effective date of a final rule approval.

We are making an interim final determination to stay the CAA section 179 sanctions associated with VCAPCD Rule 70 based on our concurrent direct final approval of the State's SIP revision as correcting a deficiency that initiated sanctions.

Because EPA has preliminarily determined that the State has corrected the deficiencies identified in EPA's limited disapproval action, relief from sanctions should be provided as quickly as possible. Therefore, EPA is invoking the good cause exception under the Administrative Procedure Act (APA) in not providing an opportunity for comment before this action takes effect (5 U.S.C. 553(b)(3)). However, by this action EPA is providing the public with a chance to comment on EPA's determination after the effective date, and EPA will consider any comments received in determining whether to reverse such action.

We believe that notice-and-comment rulemaking before the effective date of this action is impracticable and contrary to the public interest. EPA has reviewed the State's submittal and, through its proposed action, is indicating that it is more likely than not that the State has corrected the deficiencies that started the sanctions clocks. Therefore, it is not in the public interest to initially impose sanctions or to keep applied sanctions in place when the State has most likely done all it can to correct the deficiencies that triggered the sanctions clocks. Moreover, it would be impracticable to go through notice-and-comment rulemaking on a finding that the State has corrected the deficiencies prior to the rulemaking approving the State's submittal. Therefore, EPA believes that it is necessary to use the interim final rulemaking process to stay the sanctions while EPA completes its rulemaking process on the approvability of the State's submittal. Moreover, with respect to the effective date of this action, EPA is invoking the good cause exception to the 30-day notice requirement of the APA, because the purpose of this notice is to relieve a restriction. See 5 U.S.C. 553(d)(1).

This action stays and/or defers federal sanctions and imposes no additional requirements.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget.

This action is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action.

The administrator certifies that this action will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

This rule does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

This action does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999).

This rule is not subject to Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272) do not apply to this rule because it imposes no standards.

This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report to Congress and the Comptroller General. However, section 808 provides that any rule for which the issuing agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest, shall take effect at such time as the agency promulgating the rule determines. 5 U.S.C. 808(2). EPA has made such a good cause finding, including the reasons therefor, and established an effective date of May 24, 2004. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 23, 2004. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purpose of judicial review nor does it extend the time within which petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

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

Table 1 lists the rule we are approving with the date that it was amended or revised by the local air agency and submitted by the California Air Resources Board (CARB).

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 manufacturing (NAICS 311)

• Pesticide manufacturing (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. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

This is a summary of the Commission's Third Report and Order, ET Docket No. 01-278, FCC 04-98, adopted April 15, 2004 and released April 23, 2004. The full text of this document is available on the Commission's Internet site at www.fcc.gov. It is also available for inspection and copying during regular business hours in the FCC Reference Center (Room CY-A257), 445 12th Street., SW., Washington, DC 20554. The full text of this document also may be purchased from the Commission's duplication contractor, Qualex International, Portals II, 445 12th St., SW., Room CY-B402, Washington, DC 20554; telephone (202) 863-2893; fax (202) 863-2898; e-mail qualexint@aol.com.

1. In the Third Report and Order, the Commission adopted regulations to allow for operation of improved radio frequency identification (RFID) systems in the 433.5-434.5 MHz (“433 MHz”) band. Specifically, we are increasing the maximum permitted field strength and transmission duration for 433 MHz RFID systems used to identify the contents of commercial shipping containers in commercial and industrial areas to allow more rapid and reliable data transmission. Such improved RFID systems could benefit commercial shippers and have significant homeland security benefits by enabling the entire contents of shipping containers to be easily and immediately identified, and by allowing a determination of whether tampering with their contents has occurred during shipping.

2. RFID systems use radio signals to track and identify items such as shipping containers and merchandise in stores. A system typically consists of a tag mounted on the item to be identified, and a transmitter/receiver unit that interrogates the tag and receives identification data back from the tag. The tag may be a self-powered transmitter, or it may receive power from the interrogating transmitter and re-radiate an RF signal to the receiver. RFID systems can operate in a number of frequency bands under part 15 of the rules, such as the 13.110-14.010 MHz (13.56 MHz) and 902-928 MHz bands. RFID systems can also operate in the 40.66-40.70 MHz band and above 70 MHz.

3. On October 15, 2001, the Commission adopted a Notice of Proposed Rule Making and Order, (NPRM), 66 FR 59209, November 27, 2001, in this proceeding that proposed a number of changes to part 15 and other parts of the rules. These proposals were based on recommendations contained within the Biennial Regulatory Review 2000 Updated Staff Report, staff recommendations, and two petitions for rule making concerning RFID systems. The petitions for rule making were filed by the National Council for Information Technology Standardization Technical Committee B10 (“NCITS B10”) and Savi Technology, Inc. (Savi). The NCITS B10 petition requested rule changes for RFID systems operating in the 13.56 MHz band, and the Savi petition requested rule changes for RFID systems operating at 433 MHz.

4. Savi requests that the Commission modify the requirements in § 15.231 of the rules for RFID systems operating at 433 MHz. This section allows the operation of intentional radiators, including RFID systems, in the 40.66-40.70 MHz band and at any frequency above 70 MHz, except in designated restricted bands. There are two separate provisions for operation under this section. The first provision, in paragraph (a) of this rule section, contains operational requirements for devices that transmit control signals, such as those used with alarm systems, door openers and remote switches. A device operated under this paragraph must cease transmission within 5 seconds after being activated automatically or after a manually operated switch is released. Continuous transmissions such as voice and video are not permitted. Data is permitted to be transmitted with a control signal. Periodic transmissions at regular predetermined intervals are not permitted except for transmissions of not more than two seconds per hour per transmitter to verify the integrity of security transmitters in a system. The second provision, in § 15.231(e), allows any type of transmission, including data and transmissions at regular periodic intervals. However, the field strength limits for devices operating under the provisions of paragraph (e) are lower than the field strength limits for devices operating under the provisions of paragraph (a). In addition, the provisions of paragraph (e) limit transmissions to no more than one second, with a silent period between transmissions of at least 30 times the duration of the transmission, but in no case less than 10 seconds. The field strength limits for intentional radiators operating under either provision in this section are based on the average value of the measured emissions. The peak level of emissions must comply with a limit of 20 dB (ten times) higher than emission limits specified in § 15.231.

5. In the NPRM, the Commission proposed to create a new rule section for RFID systems operating in the 425-435 MHz band. The proposed rule would allow RFID tags to transmit data at the higher level normally permitted for control signals, with an average field strength of 11,000 μV/m and a peak field strength of 110,000 μV/m measured at a distance of 3 meters. Out-of-band emissions would have to meet the current limit in § 15.209. The Commission proposed to limit transmissions to 120 seconds with at least a 10 second silent period between transmissions, and to permit retransmissions in case of data errors. It also proposed to allow powered tags and readers to be approved either separately or under a single application, as proposed in the NPRM for RFID devices operating in the 13.56 MHz band. These proposals were intended to allow greater range for 433 MHz RFID systems and to allow data to be transferred from an RFID tag more quickly.

6. We are implementing these changes by adding a new rule section specifically for RFID systems operating in the band 433.5-434.5 MHz that contains the technical and operational requirements for these devices. The field strength limits will be 11,000 μV/m average and 55,000 μV/m peak, measured at a distance of 3 meters. The maximum permitted transmission duration will be 60 seconds rather than 120 seconds as proposed in the NPRM, with a ten second silent period between transmissions. While this change will result in somewhat slower data transmission speeds in cases where all the data in a device cannot be transmitted within 60 seconds, it represents a substantial improvement in speed over that which the current rules allow. In recognition of the fact that data transmission errors may occasionally occur, re-transmission of data will be permitted in case of transmission error without the need for a ten second silent period. As proposed in the NPRM, we are adopting the current out-of-band emission limits in § 15.209 for 433 MHz RFID devices because these limits have a long and successful history of controlling interference.

7. We recognize that the interference concerns raised with respect to 433 MHz RFID systems can be largely ameliorated by restricting the locations where they operate and the types of uses permitted. Such restrictions will limit the use of 433 MHz RFID systems to locations where they will not operate in close proximity to other users on the same frequency. Accordingly, we are restricting operation under the new RFID rule to the identification of the contents of commercial shipping containers. Voice communications will not be permitted. Further, we will require that operations be limited to commercial and industrial areas such as ports, rail terminals and warehouses. These requirements are essentially consistent with the conditions that Savi proposed and with which NTIA agreed that limit the types of devices and their operating locations to RFID systems used in commercial and industrial areas. We do not believe that these restrictions will inhibit the development of this technology for important homeland security applications. We are permitting two-way operation by 433 MHz RFID devices as currently allowed for remote control devices. Two-way operation will make RFID devices more useful by allowing a single device to both read data from, and write data to, remote devices. For example, an interrogator that reads data from a tag in a shipping container could also be used to update the data stored in the tag when items are added to or removed from the container. As proposed in the NPRM and consistent with our actions in the Second Report and Order, 68 FR 68531, December 9, 2003, for 13.56 MHz RFID tags, we will allow 433 MHz RFID tags to be approved either as part of a system with a tag reader under one FCC identification number, or under separate FCC identification numbers. Allowing powered tags and readers to be approved together will simplify the filing requirements in cases where the devices are always sold together, and permitting tags and readers to be approved separately will provide increased flexibility to manufacturers by permitting the sale of different combinations of tags and readers.

8. In the NPRM, the Commission proposed to require that 433 MHz RFID devices be self-contained with no external or readily accessible controls that may be adjusted to cause operation out of compliance with the rules, and proposed to require that devices have permanently attached antennas that are not readily modifiable by the user. Upon further consideration, we find that it is not necessary to specify these requirements in the final rules. Section 15.15(b) already prohibits readily accessible controls that can cause a device to operate in violation of the rules. Further, § 15.203 specifies that intentional radiators must have either a permanently attached antenna or other means to prevent a user from installing an antenna that causes a device to operate in violation of the rules. Because the existing rules provide adequate safeguards against these types of changes, the proposed requirements concerning external adjustments and antenna substitutions are not necessary.

9. NTIA requested that operation of 433 MHz RFID systems be prohibited for a distance of 40 kilometers around five Federal Government radar sites to prevent harmful interference to radar operations. NTIA supplied a list of these locations and their geographic coordinates that is shown in Appendix A of the Third Report and Order. None of the five sites are within 40 kilometers of large metropolitan areas. Such a prohibition will still allow 433 MHz RFID tags to be used in the vast majority of commercial and industrial areas in the United States. In light of the need to protect government radar operations from interference, we are prohibiting 433 MHz RFID operation within 40 kilometers of these five radar sites. The coordinates of these sites are specified in rule changes.

10. Consistent with NTIA's letter stating the need to protect critical government radar operations from interference, we are requiring grantees to register the locations of users of 433 MHz RFID systems with the Commission. Registration of 433 MHz RFID systems is not a coordination, pre-approval, or licensing process, and it is not intended to give unlicensed devices protection from interference from other unlicensed devices. Rather, registration will allow the Commission and NTIA to monitor the deployment of 433 MHz RFID systems and help pinpoint the source of interference to government operations in case such interference occurs. The information that the grantee must supply to the Commission in registering the devices shall include the name, address, telephone number and e-mail address of the user, the address and geographic coordinates of the operating location, and the FCC identification number of the device. The user will be responsible for submitting updated information in the event the operating location or other information changes after the initial registration. The registration information must be submitted to the Commission's Office of Engineering and Technology at the address provided in § 15.240 of the rules. The Commission will provide this information to NTIA. As a condition of the grant, we will require the grantee of an equipment authorization for a 433 MHz RFID device to inform purchasers of the locations where the devices may and may not be used, i.e., that they may be used only in commercial and industrial areas, and that they may not be used within 40 kilometers of the five Federal Government radar sites specified in the rules. We are also requiring grantees to notify users of their responsibility to register any changes in the operating location of devices or other registration information with the Commission.

11. We are also requiring grantees to register the locations of 433 MHz RFID system users as NTIA requests raises confidentiality issues for grantees. Savi states that a list of users and locations where equipment is used would likely be company sensitive information and that access should be restricted by password protection or otherwise limited to personnel at NTIA, the Department of Defense (DoD) or the Commission. We recognize Savi's concern that such a list would be commercial and/or financial information that a manufacturer would want to remain confidential because it would be the manufacturer's customer list and could indicate approximately how many units of a device have been sold. Consistent with statute, the Commission does not make certain information available for public inspection, including trade secrets and commercial and financial information that are privileged and confidential. The rules explicitly list certain types of materials in the category of trade secrets and commercial and financial information that are automatically afforded certain degrees of protection from public inspection. If material in this category is not explicitly listed as being protected from public inspection, the party submitting the material to the Commission must accompany it with a request for non-disclosure if it wants the material to remain confidential.

12. Because 433 MHz RFID registration information does not fall into a category that is explicitly listed as being protected from public inspection, the party supplying registration information would have to submit a request for confidentiality each time it files with the Commission, and the Commission would have to act upon each individual request. We expect that grantees would routinely request confidentiality for registration information filed with the Commission because they would consider this to be commercial and financial information that they do not want made available for public inspection. Each of these requests would be essentially identical and we expect that the Commission would grant them because the required registration information would fall into a category of information that the rules allow to be held confidential. Rather than process individual confidentiality requests each time a grantee registers a user's location or submits updated information, we find that it would be more efficient to adopt a change to § 0.457(d) of the rules to state that 433 MHz RFID registration information is not routinely available for public inspection. This action would save Commission resources that would be used for processing numerous confidentiality requests and would be less burdensome on grantees because grantees will not have to file a request for confidentiality each time new or updated registration information is submitted to the Commission. Therefore, we are adding 433 MHz RFID registration information to the list of materials that are automatically afforded protection from public inspection. We will, however, make this information available to NTIA, DoD or other Federal Government entities with a need for it.

13. We have made a number of adjustments from our proposal that will eliminate any significant risk of interference to garage door controls. First, we have restricted installation to use at only commercial and industrial areas for the express purpose of identifying the contents of shipping containers. Therefore, we do not anticipate widespread deployment in close proximity to door opener controls. Further, we have narrowed the frequency range for RFID systems from the proposed 10 MHz to 1 MHz. We note that garage door controls can operate anywhere in the 425-435 MHz band where we originally proposed operation for RFIDs, thus reducing the likelihood of interference to such controls. In addition, we have reduced both the peak signal level and the maximum permitted transmission duration for 433 MHz RFID systems by a factor of two from the proposed levels, further reducing the likelihood of interference. We find the arguments that 433 MHz RFID systems would cause interference unpersuasive in any event because the signal levels proposed in the NPRM are no greater than the rules permit for garage door controls. Further, users of unlicensed devices have no protection from interference from other devices and no vested right to the continued use of any frequency by virtue of prior certification of equipment. Because operation of 433 MHz RFID systems will be limited to commercial and industrial areas such as ports, rail yards and warehouses, there will generally be substantial geographic separation between 433 MHz RFID devices and most other devices such as residential garage door openers that could receive interference. Door opener controls used in close proximity to 433 MHz RFID devices would most likely be under the control of the party operating the RFID devices, who could take appropriate steps in the event interference occurs, including changing the frequency of a door opener control, if possible, or ceasing operation of a device that causes interference.

14. We observe that any potential interference to amateur operations is mitigated for the same reasons discussed for door opener controls. ARRL expressed concern that the 425-435 MHz band originally proposed for RFID systems encompasses several bands that it has designated for weak signal use in its band plan. However, the rules we are adopting limit 433 MHz RFID systems to the 433.5-434.5 MHz band. This band is separated by 500 kHz from the nearest weak signal band listed in ARRL's band plan, thus addressing ARRL's concern about RFID operation in weak signal bands.

15. The 433.5-434.5 MHz RFID band we are adopting falls within the 433-435 MHz band that ARRL has designated for auxiliary and repeater links. Auxiliary stations are required by the Commission's rules to operate on a point-to-point basis and are permitted to operate with a maximum power of 50 watts. Because point-to-point operations typically use directional antennas, there is less likelihood of interference from other sources. The rules we are adopting for 433 MHz RFID systems reduce the peak transmit level by a factor of 6 dB (two times) from the proposal, to a level 47 dB (55,000 times) lower than the level permitted for amateur auxiliary stations, further reducing the likelihood of interference. Additionally, the rules we are adopting limit operation to commercial and industrial areas such as ports and rail yards, so operation will not be permitted in residential areas and on delivery trucks as many parties expressed concern. While there are other bands besides 433 MHz where RFID systems could operate, such as the 902-928 MHz and 2400-2483.5 MHz bands, we recognize that there are advantages to allowing operation in the 433 MHz band. Signals at lower frequencies, i.e., 433 MHz, are attenuated less passing through objects, thus allowing more reliable operation. Further, although the 433 MHz band may not be available for use by unlicensed devices worldwide with the same technical parameters we are adopting for RFID systems, operation in the 433.05-434.79 MHz band is permitted in Europe, potentially allowing the development of RFID systems that are capable of operating in multiple countries.

16. We disagree with ARRL that the Commission lacks authority under § 301 of the Communications Act to authorize 433 MHz RFID devices to operate at the power levels adopted on an unlicensed basis because they will pose a significant potential for interference to licensed services. ARRL advanced a similar argument in a proceeding concerning certification of transmitters in the 24.05-24.25 GHz band. The Commission stated in that proceeding that it need not reach this statutory argument when it finds no significant interference potential. It also noted that ARRL concurs that it is appropriate for the Commission to make reasonable regulations regarding part 15 devices pursuant to § 302(a) of the Act. Because we find that the rules we are adopting for 433 MHz RFID systems will not result in an interference risk to amateur services, we reject ARRL's argument in this proceeding that the Commission lacks legal authority to adopt such rules.

17. The Third Report and Order contains new or modified information collections subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under § 3507(d) of the PRA. OMB, the general public, and other Federal agencies are invited to comment on the new or modified information collection(s) contained in this proceeding.

18. As required by the Regulatory Flexibility Act (RFA), 1 an Initial Regulatory Flexibility Analysis (IRFA) was incorporated in the Notice of Proposed Rule Making and Order, Review of Part 15 and other Parts of the Commission's Rules (NPRM). 2 The Commission sought written public comments on the proposals in the NPRM, including comment on the IRFA. 3 The Final Regulatory Flexibility Analysis conforms to the RFA. 4

19. Section 11 of the Communications Act of 1934, as amended, and § 202(h) of the Telecommunications Act of 1996 require the Commission (1) to review biennially its regulations pertaining to telecommunications service providers and broadcast ownership; and (2) to determine whether economic competition has made those regulations no longer necessary in the public interest. The Commission is directed to modify or repeal any such regulations that it finds are no longer in the public interest.

20. As part of the biennial review for the year 2000, the Commission reviewed its regulations pertaining to telecommunications service providers and broadcast ownership and recommended a number of changes to those rules. While not specifically required by statute, the Commission also reviewed parts 2, 15 and 18 as part of this process.

21. The Third Report and Order increases the maximum permitted field strength and transmission duration for radio frequency identification (RFID) systems operating in the 433.5-434.5 MHz band to allow more rapid and reliable data transmission. Operation of such systems is limited to commercial shipping containers in commercial and industrial areas. Improved RFID systems could benefit commercial shippers and have significant homeland security benefits by enabling the entire contents of shipping containers to be easily and immediately identified, and by allowing a determination of whether tampering with the contents has occurred during shipping.

22. None.

23. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. 5 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.”  6 In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. 7 A small business concern is one which: is independently owned and operated; is not dominant in its field of operation; and satisfies any additional criteria established by the SBA. 8

24. The SBA has developed small business size standards for two pertinent Economic Census categories, “Radio and Television Broadcasting and Communications Equipment” (RTB) and “Other Communications Equipment,” both of which consist of all such companies having 750 or fewer employees. 9 According to Census Bureau data for 1997, there were a total of 1,215 establishments in the first category, total, that had operated for the entire year. 10 Of this total, 1,150 had 499 or fewer employees, and an additional 37 establishments had 500 to 999 employees. 11 Consequently, we estimate that the majority of businesses in the first category are small businesses that may be affected by the rules and policies adopted herein. Concerning the second category, the data for 1997 show that there were a total of 499 establishments that operated for the entire year. 12 Of this total, 491 had 499 or fewer employees, and an additional 3 establishments had 500 to 999 employees. 13 Consequently, we estimate that the majority of businesses in the second category are small businesses that may be affected by the rules and policies adopted in the Third Report and Order.

25. Manufacturers of 433 MHz RFID systems will have to obtain certification for the equipment before it can be marketed. This requires the manufacturer to have the equipment tested for compliance, file an application with the Commission or a designated Telecommunication Certification Body (TCB) and wait for an approval before the equipment may be imported into or marketed within the United States. There will be no change to the certification procedure from what the rules currently require. There will be a new requirement for the grantee of certification to supply information to the Commission on where the devices are used. The information that must be submitted includes the name, address and other pertinent contact information of the user, the address and geographic coordinates of the operating location, and the FCC identification number of the device. In addition, the user of the device will have to notify the Commission of any changes to this information after the initial registration by the grantee.

26. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; the use of performance, rather than design, standards; and an exemption from coverage of the rule, or any part thereof, for small entities. 14

27. The rules specify performance standards for RFID equipment such as emission levels, as opposed to design standards. Because the rules are intended to minimize the potential for interference to authorized services in the 433 MHz band, and it is not possible to exempt small entities from complying with any requirements without increasing the risk of harmful interference. We note that a number of entities expressed concern about the possibility of interference from 433 MHz RFID systems to door opener controls. As discussed in paragraph 23 of the Third Report and Order, we have made a number of changes from our proposals that will eliminate any significant risk of interference to door opener controls.

28. Report to Congress: The Commission will send a copy of the Third Report and Order, including this FRFA, in a report to be sent to Congress pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of the Third Report and Order, including FRFA, to the Chief Counsel for Advocacy of the Small Business Administration.

29. Pursuant to the authority contained in sections 4(i), 301, 302, 303(e), 303(f) and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 301, 302, 303(e), 303(f) and 303(r), the Third Report and Order is hereby adopted. The rule changes set forth in the Third Report and Order contains an information collection requirement that has not yet been approved by OMB. The FCC will publish a document in the Federal Register announcing the effective date of these rule changes.

30. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, Shall send a copy of the Third Report and Order, including the Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

(f) As a condition of the grant, the grantee of an equipment authorization for a device operating under the provisions of this section shall provide information to the user concerning compliance with the operational restrictions in paragraphs (a) and (e) of this section. As a further condition, the grantee shall provide information on the locations where the devices are installed to the FCC Office of Engineering and Technology, which shall provide this information to the Federal Government through the National Telecommunications and Information Administration. The user of the device shall be responsible for submitting updated information in the event the operating location or other information changes after the initial registration. The grantee shall notify the user of this requirement. The information provided by the grantee or user to the Commission shall include the name, address, telephone number and e-mail address of the user, the address and geographic coordinates of the operating location, and the FCC identification number of the device. The material shall be submitted to the following address:

Experimental Licensing Branch, OET, Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554, ATTN: RFID Registration.

The Regional Administrator modified the season for the commercial fishery in the area from the U.S.-Canada Border to Cape Falcon, OR to close at midnight on Wednesday, May 5, 2004. On May 5 the Regional Administrator determined that available catch and effort data indicated that the quota of 29,300 chinook salmon would be reached by midnight. Automatic season closures based on quotas are authorized by regulations at 50 CFR 660.409(a)(1).

In the 2004 annual management measures for ocean salmon fisheries (69 FR 25026, May 5, 2004), NMFS announced the commercial fishery for all salmon except coho in the area from the U.S.-Canada Border to Cape Falcon, OR would open May 1 through the earlier of June 30 or a 29,800 chinook quota. The fishery would be managed to provide a remaining quota of 500 chinook for a June 26 through 30 open period with a 50-fish, per vessel, landing limit for the 5-day open period. The resulting quota for the first part of the May-June fishery is 29,300 chinook.

On May 5, 2004, the Regional Administrator consulted with representatives of the Pacific Fishery Management Council (Council), Washington Department of Fish and Wildlife, and Oregon Department of Fish and Wildlife by conference call. Information related to catch to date, the chinook catch rate, and effort data indicated that it was likely that the chinook quota would be reached by Wednesday, May 5, 2004. As a result, the states recommended, and the Regional Administrator concurred, that the area from the U.S.-Canada Border to Cape Falcon, OR close effective at midnight on Wednesday, May 5, 2004. All other restrictions that apply to this fishery remained in effect as announced in the 2004 annual management measures.

The Regional Administrator determined that the best available information indicated that the catch and effort data, and projections, supported the above inseason action recommended by the states. The states manage the fisheries in state waters adjacent to the areas of the U.S. exclusive economic zone in accordance with this Federal action. As provided by the inseason notice procedures of 50 CFR 660.411, actual notice to fishers of the above described action was given prior to the time this action was effective by telephone hotline number 206-526-6667 and 800-662-9825, and by U.S. Coast Guard Notice to Mariners broadcasts on Channel 16 VHF-FM and 2182 kHz.

This action does not apply to other fisheries that may be operating in other areas.

The Assistant Administrator for Fisheries, NOAA (AA), finds that good cause exists for this notification to be issued without affording prior notice and opportunity for public comment under 5 U.S.C. 553(b)(B) because such notification would be impracticable. As previously noted, actual notice of this action was provided to fishers through telephone hotline and radio notification. This action complies with the requirements of the annual management measures for ocean salmon fisheries (69 FR 25026, May 5, 2004), the West Coast Salmon Plan, and regulations implementing the West Coast Salmon Plan 50 CFR 660.409 and 660.411. Prior notice and opportunity for public comment was impracticable because NMFS and the state agencies have insufficient time to provide for prior notice and the opportunity for public comment between the time the fishery catch and effort data are collected to determine the extent of the fisheries, and the time the fishery closure must be implemented to avoid exceeding the quota. Because of the rate of harvest in this fishery, taking the time to provide notice and comment would have allowed the fishery to exceed the quota. One consequence of exceeding the quota is that the previously scheduled June 26-30 fishery would have to be canceled. A separate quota of 500 chinook was set aside for this fishery to take advantage of the market opportunities prior to a holiday weekend. Another consequence of exceeding the quota is that the previously scheduled July 8 - September 15 fishery would also be reduced or cancelled. A separate guideline of 14,700 chinook was set aside for this fishery to provide access to a quota of 67,500 coho during the summer season. Exceeding the quota in the May-June fishery would therefore reduce or eliminate the opportunity to catch harvestable coho. For the same reasons, the AA also finds good cause to waive the 30-day delay in effectiveness required under U.S.C. 553(d)(3).

This action is authorized by 50 CFR 660.409 and 660.411 and is exempt from review under Executive Order 12866.