Notice and Comment

Section 1601(c) of the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171, 116 Stat 183) (the 2002 Act) requires that the regulations implementing Title I of the 2002 Act, which includes the Sugar Program, are to be promulgated without regard to the notice and comment provisions of 5 U.S.C. 553 or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and public participation in rulemaking. These regulations are thus issued as final.

Section 1403 of the 2002 Act amended the Agricultural Adjustment Act of 1938 (7 U.S.C. 359aa et seq. ) (the 1938 Act) to establish flexible sugar marketing allotments. A final rule implementing the regulations was published August 26, 2002 (67 FR 54926), and a correction was published October 28, 2002 (67 FR 65690). In administering the program, the Commodity Credit Corporation (CCC) has determined that a few regulatory provisions require clarification.

The regulations at 7 CFR 1435.307(a)(3)(i) and (ii) describe adjustments CCC makes to a sugar beet processor's weighted average sugar production history for opening or closing a “sugar factory” during the base period. This rule clarifies that the provisions refer to the opening or closing of a “sugar beet processing factory,” as provided by sections 359d(b)(2)(D)(ii)(I) and (II) of the 1938 Act.

The regulations at 7 CFR 1435.307(d) provide that during any crop year in which marketing allotments are in effect and allocated to processors, the quantity of sugar and sugar products a processor markets shall not exceed the quantity of the processor's allocation. Section 1435.307(e) contains exceptions to that requirement. This rule adds section 1435.307(e)(4) to clarify that the provision does not apply to the sale of purchased sugar because the sugar would already have been counted as part of the original processor's marketing.

The regulation at 1435.307(e)(3)(ii) permits a processor's marketings to exceed its allocation if the marketing enables the purchasing processor to fulfill its allocation and the marketing is reported to CCC within 5 days of the date of sale. This rule extends the time period to report the sale to 51 days because CCC is revising its monthly survey forms to include these sales and eliminate the need for separate reporting forms. Given the current schedule for submitting the monthly forms, the sale of overallocation sugar may take place up to 51 days before CCC receives the company monthly reports.

The regulations at 7 CFR 1435.307(f) provided that CCC may charge liquidated damages on surplus allocation after sales made after May 1 of the crop year if the purchasing processor had surplus allocation after May 1 because the purchasing processor provided incomplete or erroneous information provided to CCC. This rule revises the section to provide simply that CCC may charge liquidated damages on surplus allocations after the end of the crop year, if a processor provides incomplete or erroneous data that results in surplus allocation.

The regulations at 7 CFR 1435.308 are revised to add a new provision with respect to the elimination of a processor's allocation when there is a permanent termination of operations. Previously, § 1435.308(b) provided that CCC will eliminate the allocation of a processor that has been dissolved or liquidated in a bankruptcy proceeding and will distribute the allocation to all other processors on a pro rata basis. In addition to being dissolved or liquidated in bankruptcy proceeding, another condition that will eliminate a processor's allocation, “permanently terminated operations,” is added. CCC will consider a processor to have permanently terminated operations if it has ceased processing for 2 complete years or notifies CCC that it has permanently terminated operations.

This rule clarifies that only processors that are not purchasing all the assets of the selling processor must continue operation of the purchased plants for the remainder of the initial season and the following crop year. Purchasing processors that are purchasing all the assets of the selling processor and new entrants are not required to operate the acquired facilities for the required time period.

Section 1435.308(c) provided that if a processor purchasing factories is not a new entrant, the purchased plants must operate for the remainder of the initial season and the following crop year for the purchasing processor to permanently obtain the allocation. It also provided that CCC would reassign the allocation on a pro rata basis if the purchased plants failed to operate for the required time period. This section has been renumbered as § 1435.308(d).

Section 1435.308(d) provided that if the purchasing processor is a new entrant or a processor purchasing all the assets of the selling processor, CCC shall immediately transfer allocation commensurate with the purchased factories' production history with no requirement on operating the facility for the required time period. This section has been renumbered as § 1435.308(c).

Section 1435.308(f) provides that new entrants not acquiring existing facilities may apply to the Executive Vice President, CCC, for an allocation. That provision is clarified to provide that new entrants that are not acquiring existing facilities with production history in the base period may apply for an allocation. Section 1435.308(f)(5) is added to provide for a hearing in accordance with the statutory requirement that a hearing be held on a new can sugar entrant's application, if requested by interested parties.

Section 1435.310 is expanded to clarify the 1938 Act's requirement in section 359f so that a processor's “allocation will be shared among producers served by the processor in a fair and equitable manner that adequately reflects producers' production histories.” CCC has determined that cooperatively owned processors, not in a proportionate share state, have met this requirement if they share their allocation with their growers according to their cooperative agreement. CCC has determined that, for a State subject to proportionate shares, a processor will be in compliance with this requirement if it establishes a priority system for payment that pays growers first for production on proportionate share acreage, then for production on base acreage other than the proportionate share acreage, then for production on non-base acreage. Production from a grower with no production history at a mill will be considered the same as production from non-base acreage, unless the grower had an allocation release from a predecessor mill or was designated by the mill as replacing sugarcane lost to the mill after the 2001 crop year. In determining the payment priority in Louisiana, processors may aggregate the acreage of an operator (producer making the crop production decisions) across all the operator's farms delivering cane to the processor. Growers should note that there is no change to the requirements of § 1435.318 that provide penalties for farms exceeding their proportionate shares if proportionate shares are in effect and a processor exceeds its allocation.

Clarifying this provision of the regulation will reduce uncertainty about the effect the marketing allotment program has on the relationship between growers and processors. This clarification should also reduce arbitrations under the provision in the statute and regulation that permits a grower to request Departmental arbitration of disputes with processors.

Section 1435.319(b) concerns the appeal of issues arising under sections 359d, 359f(b) and (c), and 359(i) of the 1938 Act and provides that after reconsideration of an adverse decision by the Executive Vice President, CCC, an adversely affected person may appeal the determination and that any hearings with respect to the matter shall be conducted by USDA's Judicial Officer. This section is revised to clarify that appeals of decisions of the Executive Vice President, CCC under section 359d are limited to the establishment of the allocations of marketing allotments. This is in accordance with the limited jurisdiction set forth in section 359i(a) of the 1938 Act. The language in the regulation was never intended to provide broader appeal rights than what was required under the statute and therefore is amended to clarify this.

This final rule has been determined to be not significant under Executive Order 12866 and has not been reviewed by the Office of Management and Budget (OMB).

The title and number of the Federal assistance program found in the Catalog of Federal Domestic Assistance to which this final rule applies are Commodity Loans and Loan Deficiency Payments, 10.051.

The Regulatory Flexibility Act is not applicable to this rule because CCC is not required by 5 U.S.C. 553 or any other law to publish a notice of proposed rulemaking for the subject matter of this rule.

The environmental impacts of this rule were considered for the sugar program final rule published in the Federal Register August 26, 2002 (67 FR 54926). This rule does not make changes that will affect the Finding of No Significant Impact.

This final rule has been reviewed under Executive Order 12778. This rule preempts State laws that are inconsistent with it. However, this rule is not retroactive. Before judicial action may be brought concerning this rule, all administrative remedies must be exhausted.

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

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) does not apply to this rule because CCC is not required by 5 U.S.C. 553 or any other law to publish a notice of proposed rulemaking about this rule. Nonetheless, this rule contains no mandates as defined in sections 202 and 205 of UMRA.

Section 1601(c) of the 2002 Act requires that the regulations necessary to implement Title I of the 2002 Act must be issued within 90 days of enactment and that such regulations shall be issued without regard to the notice and comment provisions of 5 U.S.C. 533. Section 1601(c) also requires that the Secretary use the authority in section 808 of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121 (SBREFA), which allows an agency to forego SBREFA's usual 60-day Congressional review delay of the effective date of a major regulation if the agency finds that there is a good cause to do so. These regulations affect the planting and marketing decisions of a large number of agricultural producers. Accordingly, this rule is effective upon the date of filing for public inspection by the Office of the Federal Register.

Section 1601(c) of the 2002 Act provides that the promulgation of regulations and the administration of Title I of the 2002 Act shall be done without regard to chapter 5 of title 44 of the United States Code (the Paperwork Reduction Act). Accordingly, these regulations and the forms and other information collection activities needed to administer the program authorized by these regulations are not subject to review by the Office of Management and Budget under the Paperwork Reduction Act.

On March 1, 2003, the former Immigration and Naturalization Service (Service) transferred from the Department of Justice to DHS pursuant to the Homeland Security Act of 2002 (HSA), Public Law 107-296, 116 Stat. 2135 (November 25, 2002). The Service's adjudication functions transferred to the Bureau of Citizenship and Immigration Services (CIS), and the Service's SEVIS function transferred to the Bureau of Border Security, now the Bureau of Immigration and Customs Enforcement (ICE). For the sake of simplicity, any reference to the Service has been changed to DHS, even when referencing events that preceded March 1, 2003.

Section 641 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Public Law No. 104-208, 110 Stat. 3546 (September 30, 1996), codified at 8 U.S.C. 1372, required the creation of a program to collect information relating to nonimmigrant foreign students and exchange visitor program participants during the course of their stay in the United States, using electronic reporting technology to the fullest extent practical. While the pilot program initially involved a small number of schools, the program has been expanded and fully implemented to cover all DHS-approved schools and DOS-designated exchange visitor program sponsors that enroll foreign nationals. The program became known as SEVP, and its core technology became known as SEVIS. The substantive requirements and procedures for SEVIS have been promulgated in separate rulemaking proceedings. See 67 FR 34862 (May 16, 2002, proposed rule for implementing SEVIS); 67 FR 44343 (July 1, 2002, interim rule for schools to apply for preliminary enrollment in SEVIS); 67 FR 60107 (September 25, 2002, interim rule for certification of schools applying for enrollment in SEVIS); 67 FR 76256 (December 11, 2002, DHS's final rule implementing SEVIS); and 67 FR 76307 (December 12, 2002, DOS interim final rule implementing SEVIS). Under section 442(a)(4) of the HSA, as amended, responsibility over SEVIS specifically transferred to ICE. Section 641(e) of IIRIRA requires that a fee be established and charged to aliens tracked in SEVIS to fund the program, and further requires that the fee be used only for SEVP related purposes. Consistent with this mandate, a sub-account will be created within the Immigration Examination Fee Account into which SEVIS fees will be deposited and maintained for exclusive use related to SEVP.

The Immigration and Nationality Act (Act) provides for the admission of different classes of nonimmigrant aliens, who are foreign nationals seeking temporary admission to the United States. The purpose of the alien's intended stay in the United States determines his or her proper nonimmigrant visa classification. Some visa classifications permit the nonimmigrant's spouse and qualifying children to accompany the nonimmigrant to the United States, or to join the nonimmigrant who is already in the United States. To qualify, the alien's child must be unmarried and under the age of 21.

F-1 nonimmigrants, as defined in section 101(a)(15)(F) of the Act, are foreign nationals who come to the United States as foreign students to pursue a full course of study in DHS-approved colleges, universities, seminaries, conservatories, academic high schools, private elementary schools, other academic institutions, or in language training programs in the United States. For the purposes of this rule, the term “school” refers to all of these types of DHS-approved institutions. Generally, F-1 nonimmigrants are subject to the SEVIS fee and monitoring in SEVIS. An F-2 nonimmigrant is a foreign national who is the spouse or qualifying child of an F-1 student. While F-2 nonimmigrants are subject to monitoring in SEVIS, as an alien deriving his or her status from that of the F-1 nonimmigrant, they are not required to pay a separate SEVIS fee.

J-1 nonimmigrants, as defined in section 101(a)(15)(J) of the Act, are foreign nationals who have been selected by an exchange visitor program sponsor designated by the United States DOS to participate in an exchange visitor program in the United States. The J-1 classification includes nonimmigrants participating in programs in which they will receive graduate medical education or training. Generally, J-1 nonimmigrants are required to pay a SEVIS fee, and are subject to monitoring in SEVIS. A J-2 nonimmigrant is a foreign national who is the spouse or qualifying child of a J-1 exchange visitor. While J-2 nonimmigrants are subject to monitoring in SEVIS, as an alien deriving his or her status from that of the J-1 nonimmigrant, they are not required to pay a separate SEVIS fee.

M-1 nonimmigrants, as defined in section 101(a)(15)(M) of the Act, are foreign nationals pursuing a full course of study at a DHS-approved vocational or other recognized nonacademic institution (other than in language training programs) in the United States. The term “school” also encompasses those institutions attended by M-1 students for the purposes of this rule. Generally, M-1 nonimmigrants are subject to the SEVIS fee and monitoring in SEVIS. An M-2 nonimmigrant is a foreign national who is the spouse or qualifying child of an M-1 student. While M-2 nonimmigrants are subject to monitoring in SEVIS, as an alien deriving his or her status from that of the M-1 nonimmigrant, they are not required to pay a separate SEVIS fee.

On November 2, 2002, Congress passed the Border Commuter Student Act of 2002, Public Law 107-274, 116 Stat. 1923 (2002), which created the F-3 and M-3 nonimmigrant classifications for certain aliens who are citizens of Canada or Mexico and who continue to reside in their home country while commuting to the United States to attend an approved school. Such border commuter students are not subject to the existing requirement for F-1 and M-1 students to be pursuing a full course of study. Instead, these border commuter students are specifically permitted to engage in either full-time or part-time studies. DHS adopted regulations relating to border commuter students, 67 FR 54941 (August 27, 2002) (codified at 8 CFR 214.2(f)(18) and (m)(19)), and will be amending those regulations in the future to conform to the new legislation. In this rule, DHS notes that F-3 and M-3 students will be subject to the same rules as F-1 and M-1 students regarding the collection of the fee.

DHS initially proposed a rule implementing section 641(e) of IIRIRA, requiring fee collection related to SEVIS on December 21, 1999, at 64 FR 71323, and received 4,617 comments in response to this proposed rule. On October 26, 2003, DHS published a second proposed rule in the Federal Register at 68 FR 61148. The October 26, 2003, proposed rule addressed the 4,617 comments, as well as setting forth a new proposal for collection of the SEVIS fee. Comments to the second proposed rule were due to DHS on or before December 26, 2003. DHS received 239 comments regarding the collection of the required fee, as set forth in the second proposed rule. The following paragraphs will address each substantive issue raised in comments received in response to the October 2003 proposed rule. However, this discussion will not describe in detail all the provisions outlined in either of the prior proposed rules. Rather, it will address only those provisions relevant to the October 2003 comments. Commenters frequently addressed identical issues in their comments and, as a result, the number of comments received exceeds the number of issues discussed.

In general, commenters acknowledged the Congressional mandate that DHS collect this fee and stated that this 2003 proposed rule was a significant improvement over the 1999 proposed rule. A significant number of commenters stated that they were generally pleased with SEVIS and DHS efforts to reach out to the schools and exchange visitor program sponsors. However, most of these commenters further stated that they believed the imposition of the fee would adversely impact participation by foreign students and exchange visitors. The commenters discussed the fee amount, the collection and remittance process, exemptions and reductions to the fee, the frequency of the fee, the applicability of the fee, and the propriety of the fee.

The October 2003 proposed rule set the fee amount at $100, with the exception of specific J-1 exchange visitor programs. Although several commenters stated that the $100 fee was not overly burdensome, the majority of commenters stated that the fee was excessive and should be set at $54, based upon the fee study conducted in September 2002 by an independent contractor for DHS. Some commenters expressed concern regarding the use of the SEVIS fee to pay for SEVIS-related enforcement and compliance costs. Additionally, some commenters expressed concern that excessive fee receipts would become a money-generating tool for DHS, subsidizing other, unrelated programs.

DHS reviewed and considered all comments on the fee amount, but has made the decision not to change the amount of the $100 proposed fee. Comments in response to the 1999 rule raised concerns about the proposed $95 fee, which had been determined by a fee study done in conjunction with the 1999 rule making. An independent fee study, carried out in September 2002, was done to respond to those commenter concerns, and to reassess the amount of the fee, based on changes in the SEVIS project funding since the publication of the 1999 proposed rule. An independent consulting firm was hired to conduct an objective fee review and ensure that applicable Federal law and fee guidance were followed. The fee review included the recovery of historical costs and costs over the FY 2003/2004 time period, as well as the appropriated monies received. The fee review also included costs for increased staffing and training for DHS personnel involved in the SEVP at DHS headquarters, district offices, service centers, and regional offices, as well as training for DOS personnel. The fee study determined that the fee should be set at $54.

DHS arrived at the final rule fee amount of $100 by taking the fee recommended in the independent study ($54) and adding estimated compliance and enforcement costs, which the fee study did not include. DHS has determined that this fee should offset the resources necessary to ensure compliance with regulations, since compliance and maintenance of system integrity are an integral part of SEVP. Indeed, Congress, in placing SEVIS within ICE, specifically directed that the information collected in the program be used for enforcement purposes; thus, the use of the SEVIS fee for enforcement purposes is consistent with the HSA. See HSA 442(a)(4). This application of user fees as a funding source for compliance activities is also consistent with the introduction of user fees in the early 1980s. A Federal agency is authorized to recoup the “full cost” of providing special benefits, including the costs of enforcement, collection, research, as well as establishment of standards and regulations, when calculating its fees. DHS currently recoups some of the costs of detecting and deterring fraud and protecting the integrity of benefits and documents through its immigration benefit application fees.

One important program benefit to be funded by the $100 fee is the establishment of localized personnel, or SEVIS Liaison Officers. These SEVIS Liaison Officers will be a local resource for schools and students, providing timely and accurate information or assistance in meeting the requirements of the program. SEVIS Liaison Officers may visit schools, interview school officials, review records, compare system information to school information, and assist schools with SEVP issues. They will also coordinate with local school representatives and assist with local training program development and implementation. Finally, SEVIS Liaison Officers will be available to assist immigration and other law enforcement officials who may have a need for information derived from SEVIS.

As previously noted, consistent with the HSA mandate to utilize the information collected in SEVIS for enforcement purposes, also included in the fee calculation are funds that will be used to offset the total cost of SEVP enforcement. A portion of the fee will be used to fund new positions and to support officers in existing positions who are performing SEVIS enforcement, as well as to pay for any training, equipment, technical systems, or other items necessary to enhance their ability to enforce SEVIS. The ICE officers supported by the SEVIS fee will conduct investigations to ensure compliance with student and exchange visitor regulations. These officers are essential to ensuring data integrity in SEVIS. In addition, these officers will work in conjunction with SEVIS Liaison Officers on school reviews and re-certifications. As noted in the 2003 proposed rule, while the fee will fund only a portion of the ICE officer positions needed to ensure SEVP integrity, DHS intends to staff all of the ICE officers necessary to ensure the success of compliance efforts.

This rule sets the fee at the maximum amount initially authorized by IIRIRA ($100) for all F, M, and J nonimmigrants, with the exception of exchange visitors admitted as au pairs, camp counselors, or participants in summer work/travel programs who will be subject to a fee of $35, and those exempt from the fee altogether. IIRIRA also provides that the Secretary of Homeland Security may, on a periodic basis, revise the amount of the fee imposed and collected to take into account changes in the cost of carrying out the SEVP. Pursuant to the Chief Financial Officers Act of 1990, DHS will review this fee amount at least every 2 years. Upon review, if DHS finds that the fee is either too high or too low, the fee amount may be adjusted. Adjustments will be made subject to the Federal rulemaking process.

Fee reviews to determine the appropriate amount of the fee and any adjustments required typically look at historical costs as well as anticipated costs based upon programmatic changes. Since DHS is establishing a dedicated sub-account for SEVIS fees within the Immigration Examination Fee Account, any excess revenue will accrue until the next scheduled fee review and will then be factored into the establishment of the new fee. As required by section 641 of IIRIRA, DHS will not use the proceeds from SEVIS fees except for SEVIS-related purposes, and will not generate revenue for other programs from this source. DHS notes that several commenters suggested that future fee studies be conducted by independent contractors and DHS acknowledges the value of this suggestion. However, DHS will not specifically comment in this rule on how future fee studies will be conducted.

Several commenters objected to both the concept of a fee and the fee amount proposed. Some commenters stated that the imposition of a fee would deter participation and adversely affect the position of the United States in the international student/exchange visitor market, and that the regulations authorizing collection of such a fee will interfere with important cultural exchanges. DHS acknowledges these concerns; however, Congress has mandated that DHS set the SEVIS fee at an amount sufficient to cover the costs associated with the SEVP, including recouping the historical costs of program implementation, and ongoing costs of program maintenance. Thus, DHS is required to impose a fee on the nonimmigrants for whom the system was developed and maintained. DHS set the fee amount based upon program costs and is statutorily prohibited from lowering the fee to an amount that does not fund the program in order to address these concerns.

Some commenters expressed concern that imposition of a SEVIS fee might lead to fraudulent use of visitor visa classifications to attend non-SEVIS-certified schools (particularly short-term English language programs). However, DHS cannot fail to implement the statutorily mandated fee because of potential fraud. Rather, DHS enforcement officers will continue to work to ensure that all nonimmigrant entries and stays in the United States are legal and based upon appropriate visa classifications.

The 1999 proposed rule required that educational institutions and exchange visitor program sponsors collect the fee, based upon then existing law, and mandated that the fee be collected prior to visa issuance. Congress subsequently amended the law to permit DHS to collect the fee directly from the F-1, F-3, J-1, M-1, or M-3 nonimmigrants. Based upon these amendments to the law, the October 2003 proposed rule provided for fee collection by DHS and required that proof of payment be presented during the visa application process or prior to submitting a change of status request.

A number of the comments DHS received focused on the DHS fee collection process. The majority of commenters suggested that DOS collect the fee at the time of the visa interview, similar to the payment methodology used for collecting visa fees. Many commenters felt that without this change, nonimmigrants would experience difficulties and delays with payment methods that required use of the Internet, use of credit cards, use of checks drawn on U.S. banks and payable in U.S. dollars, and/or use of foreign mail delivery systems which may not be timely or reliable. A few commenters proposed the collection of the fee at the ports-of-entry when students and exchange visitors entered the United States, as an alternative payment method.

DHS has considered the concerns raised by the commenters and will continue to work on alternate fee payment methodologies. DHS will not be able to establish a workable arrangement for fee collection by DOS prior to the effective date of this rule. However, a pilot DOS fee collection methodology is being developed at this time. Additionally, DHS is unable to implement fee collection at ports-of-entry due to the statutory mandate that the SEVIS fee be paid prior to visa issuance. Aliens who are exempt from the F, M, or J visa requirement, as described in section 212(d)(4) of the Act ( e.g. , Canadians), will be required to pay the fee and have the fee processed prior to applying for admission at a U.S. port-of-entry. Ports-of-entry will not be equipped to collect fees or provide mechanisms for nonimmigrants to submit fee payments. Also, consistent with the requirements of section 641 of IIRIRA, nonimmigrants who are already located in the United States will be required to pay the fee prior to being approved for a change of classification to an F or M student or J exchange visitor, unless specifically exempt by DHS due to extenuating circumstances as determined by SEVP.

In order to allow for fee collection by DHS under the constraints outlined in the preceding paragraph, this rule establishes the same fee payment methods discussed in the proposed rule. However, recognizing that aliens abroad will be required to pay the fee prior to obtaining an F, J, or M visa at a U.S. embassy or consulate, DHS has sought to build in as much flexibility as possible for the payment of the fee. Accordingly, DHS establishes two options for fee payment:

(1) The fee may be paid by mail, by submitting Form I-901, Fee Remittance for Certain F, M, and J Nonimmigrants, together with a check or money order drawn on a U.S. bank and payable in U.S. currency; or

(2) The fee may be paid electronically, by completing Form I-901 through the Internet and using a credit card.

These options are similar to the means currently used by nonimmigrants abroad to pay fees and expenses to a school or exchange visitor program sponsor, as well as methods used by aliens in other circumstances to pay fees to DHS for immigration purposes.

DHS acknowledges the commenters' concerns that some aliens may have difficulty making these payments. To alleviate these problems as much as possible, DHS will accept fee payment from a third party, either in the United States or abroad, using the methods outlined previously. This allows schools and exchange visitor program sponsors to pay for some or all of their participants, as they choose. Friends, family, or other interested parties may also make the fee payment on behalf of an alien.

Additionally, some commenters requested a bulk or batch fee payment system that would allow exchange visitor program sponsors to pay the fee for their participants. In response, DHS has established a bulk fee payment process that will allow an exchange visitor program sponsor to pay the fee for large numbers of individuals at one time. This automated fee payment system has been successfully pilot tested. At this time, only exchange visitor program sponsors have expressed an interest in making bulk payments on behalf of affected aliens. As a result, DHS has only developed the bulk payment option for exchange visitor program sponsors. Although this regulation does not provide for a bulk payment option for schools enrolling F and M nonimmigrants, should schools express an interest in bulk payments in the future, DHS will assess the feasibility of developing this option for them.

DHS wishes to clarify that the requirement that a check or money order be drawn on a U.S. bank does not necessitate that the student or potential exchange visitor living outside the United States approach a U.S. bank to make a payment. As provided in 8 CFR 103.7(a)(1), an application fee submitted from outside the United States, “may be made by bank international money order or foreign draft drawn on a financial institution in the United States,” and payable in U.S. currency. Many foreign banks are able to issue checks or money orders drawn on a U.S. bank. Accordingly, students or potential exchange visitors may obtain checks from banks chartered or operated in the United States, from foreign subsidiaries of U.S. banks, or from foreign banks that have an arrangement with a U.S. bank to issue a check, money order, or foreign draft that is drawn on a U.S. bank.

DHS also clarifies that any Visa, MasterCard, or American Express credit card, whether issued in the United States or overseas, can be used to pay the fee over the Internet.

DHS will continue to explore alternate fee payment methods that might ease potential difficulties associated with fee payment from foreign countries. Most significantly, DHS is working closely with DOS to establish a pilot project for DOS collection of the SEVIS fee overseas. This pilot is being developed to explore the feasibility of SEVIS fee collection at both consular offices with outsourced fee collection using foreign financial institutions and at consular offices with internal cashiers. The pilot will be conducted in a small number of consulates.

A number of issues surround the implementation of SEVIS fee collection at DOS consulates. It is important to note that fee settlement costs are distributed among all fee-payers. DHS will avoid implementing collection solutions that result in excessively high fee collection costs. The very real possibility of excessive costs associated with fee collections performed by some foreign financial institutions may make this method untenable in some locations. It is also possible that DHS and DOS will not be able to reach a negotiated agreement with foreign financial institutions to collect the fees in some locations where the Machine Readable Visa Fee is currently collected. The visa application fee is collected from all visa applicants every time they apply for a visa with no reductions or exceptions; the SEVIS fee is collected from a select group of nonimmigrants, does not apply each time a new visa is sought, and the amount varies depending upon several factors. Further, the SEVIS fee must be associated with an I-901 form so that the payment can be linked to a specific nonimmigrant in the SEVIS system. Because these factors may complicate collection, some foreign financial institutions may not be interested in collecting the fee. Further difficulties may arise with foreign government regulations limiting the ability of the Consulate Offices to transfer funds to the United States.

Additionally, a needs analysis will be done to document the requirement for an alternative fee collection method in each individual country being considered. To avoid increased fee settlement costs that would be spread among all fee payers, the DOS pilot would be extended only post-by-post, country-by-country, on the basis of documented need. For these reasons, DHS will assess the feasibility, efficiency, and effectiveness of these pilot projects to determine whether and how SEVIS fee collection can occur through DOS consulates.

Two additional methods being explored are the use of payment clearinghouses and the establishment of direct contractual relationships with foreign financial institutions to allow the potential nonimmigrant to pay that financial institution in foreign funds, similar to the process used by DOS for visa fee payments. While DHS remains committed to providing many options for fee payment, DHS can only allow for two avenues for fee remittance at this time. The alternative types of fee remittance discussed in this section will be fully explored and piloted as appropriate; however they will not be fully implemented without a cost-benefit analysis and a needs analysis. DHS will issue further guidance and a Federal Register notice relating to alternative collection methods when they become feasible.

Several commenters expressed concerns that, due to the timeframes involved in the visa application process, requiring fee payment prior to visa issuance creates an undue burden on F, M, and J visa applicants. DHS wishes to clarify that fee payment does not need to be completed prior to scheduling an interview with the consulate, or any other activities undertaken prior to the in-person application process at the consulate. However, in order to assure that fee payment can be verified for purposes of visa issuance, the fee payment must be processed at least 3 business days prior to the date upon which the alien reports to the consulate to submit the visa application and undergo a visa interview. For nonimmigrants paying the fee electronically using the Internet, and who choose to rely on electronic fee verification at the consulate, the fee must be submitted at least 3 days in advance of the interview. However, a nonimmigrant paying the fee electronically by using the Internet is able to print out a receipt at the time of fee payment, and will be able to use that printed fee receipt for immediate verification of payment. For nonimmigrants paying the fee by mail, the fee must be submitted in a manner that assures arrival at the DHS address listed on the Form I-901 at least 3 business days before the scheduled interview. This timeframe is also required for aliens who are exempt from the F, M, or J visa requirement, as described in section 212(d)(4) of the Act ( e.g. , Canadians). For the fee to be verified electronically, the nonimmigrant must pay the fee either electronically via the Internet or by mail so that it arrives at the address listed on the I-901 form at least 3 business days prior to applying for admission at a U.S. port-of-entry. Again, a nonimmigrant paying electronically using the Internet who is able to print out the receipt at the time of fee payment will immediately be able to use that printed fee receipt for verification of payment.

Other commenters expressed concern that the use of paper receipts would lead to fraud. DHS acknowledges this concern, but also must make receipts available to nonimmigrants because the statute requires that nonimmigrants be able to present proof of fee payment before being granted certain benefits, such as admission, a visa, or change of status. At this time, certain SEVIS users ( e.g., DHS service centers processing change of status requests, SEVP telephone hotline) will be able to electronically verify fee payment status for nonimmigrants. DHS is working with DOS to finalize the interface that will allow consular officers overseas to see fee payment status electronically in the DOS data management system. Unfortunately, not every DOS consulate and embassy is anticipated to have electronic fee verification upon the effective date of this final rule. However, DHS believes that if fee collection were delayed until such time as paper receipts can be eliminated this would be inconsistent with Congressional statements favoring expeditious implementation of a SEVIS fee, and also with the Congressional requirement that nonimmigrants be able to present proof of fee payment before receiving benefits. See Visa Waiver Permanent Program Act of 2000 404(6), Public Law 106-396, 114 Stat 1637 (October 30, 2000); 8 U.S.C. 1372(e)(5). Therefore, at this time, DHS will issue an official paper receipt acknowledging every payment regardless of payment method used. The paper receipt will be mailed or sent via express delivery service to the address provided on the Form I-901. Additionally, anyone who submits an individual fee electronically will be able to print out an electronic receipt immediately at the time of payment for use pending the mail delivery of the official paper receipt. Exchange visitor program sponsors who submit Form I-901s and pay the fee via the bulk filing process will receive receipts via express delivery for distribution to their program participants.

While DHS will continue to provide a paper fee receipt, consular officials will use the DOS system to verify fee payment when validating Form I-20 or Form DS-2019 information, wherever possible. Even in cases where DOS can generally use the system to verify fee payment, the paper receipts will continue to serve as a secondary means of fee verification. Paper receipts will serve to assist students in demonstrating that the fee has been paid. However, a paper receipt is not required for the visa interview, admission at the port-of-entry, or any other part of the SEVIS process when proof of payment can be verified electronically. This dual system will ensure that, in instances where paper receipts sent by mail are either delayed in transit or not received at all, the issuance of the nonimmigrant visa will proceed unimpeded; additionally, in instances where paper receipts are presented as proof of fee payment, the electronic records will serve as fraud prevention. As part of the regulatory implementation and during this initial period of dual paper and electronic fee payment verification, DHS will also initiate and maintain a telephone hotline to be used by DOS consular officers, DHS inspectors at ports-of-entry, and DHS officers adjudicating change of status cases at service centers as a backup means to allow these officials to verify the electronic record of fee payment. This dual process, in which paper receipts may be relied upon for fee verification until electronic verification is available at every consulate, is necessary to assure a timely and effective implementation of the fee payment validation process. DHS may issue a notice in the Federal Register to eliminate the paper receipt at some time in the future, if it has been clearly demonstrated that it is no longer necessary. In summation, non-immigrants affected by this rule are encouraged to present a paper receipt in the following cases:

• Nonimmigrants applying for an F, M, or J visa abroad should present a paper receipt to verify fee payment until such time that all consular officers can electronically verify fee payment. DHS will inform all schools and program sponsors when an electronic fee verification capability has been established at all consulates.

• Nonimmigrants exempt from the visa requirement (pursuant to section 212(d)(4) of the Act) should present a paper receipt to verify fee payment at the port-of-entry, prior to being admitted to the United States as an F, M, or J nonimmigrant, although all DHS inspectors should be able to electronically verify fee payment if a paper receipt is not available.

• Nonimmigrants applying for a change of status to F, M, or J from within the United States will not be required to send the paper receipt with their change of status application. Rather, the adjudicating officer will access SEVIS to verify payment of the fee. However, students and exchange visitors should note that if the adjudicating officer does not find verification of fee payment in SEVIS, the applicant will receive a request for evidence from the service center and the applicant may be required to submit a paper receipt in response to this request.

Finally, in response to the notice published in the Federal Register (68 FR 59800) on October 17, 2003, some commenters expressed concern about the Form I-901, Fee Remittance For Certain F, J, and M Nonimmigrants. Commenters were concerned that a fee payment was linked to a single SEVIS identification number, since a nonimmigrant may apply to more than one school or exchange visitor program, and, therefore, may have multiple I-20s or DS-2019s with multiple SEVIS identification numbers. DHS clarifies that fee verification will allow for a fee payment made on one SEVIS identification number to be applied to another SEVIS identification number issued to the same individual. Nonimmigrants are strongly encouraged to bring proof of both SEVIS identification numbers to the consulate or port-of-entry when payment has been made on a SEVIS identification number that is different than the one being used to obtain a visa or entry. DHS notes that if a new fee payment is required, as explained fully below, it must be paid, regardless of payments made on the same or different SEVIS identification numbers. In the future, multiple SEVIS identification numbers for a single nonimmigrant are likely to be augmented with the unique biometric identifier used by the United States Visitor and Immigrant Status Indicator Technology Program (US-VISIT). This will enable positive matches where more than one record exists for a single person.

In response to comments, several minor changes are being made to the I-901 form. The titles for the name blocks are being further clarified. DHS is amending the instructions to clarify that a credit card may be used to pay the fee when the Internet version of the form is used. In addition, DHS is changing the form so that an “N” will automatically populate the first space of the SEVIS identification number to help prevent data entry errors. And finally, DHS is adding a street address to the form to allow for courier delivery of the form and payment to DHS.

IIRIRA section 641provides that an alien seeking J-1 status to participate in an exchange visitor program that is sponsored by the Federal government is exempt from paying a fee. Several commenters requested clarification on how to determine which programs the Federal government sponsors. DHS clarifies that those potential J-1 exchange visitors exempt from the fee as participants in a Federal government sponsored exchange visitor program are those participating in an exchange visitor program with a program identification designator prefix of G-1, G-2, or G-3.

Commenters suggested that other students and/or exchange visitors should be exempt from the fee. Similarly, a number of commenters suggested that the fee be reduced below $100 for other programs to mirror the reduction Congress expressly provided to certain J-1 participants, including lower fees for short-term English language programs, for all English language programs, for some or all short-term programs, for part-time and full-time commuter students, and for secondary school students. As noted in the 2003 proposed rule, Congress specifically exempted from the SEVIS fee only J-1 nonimmigrants who are participating in an exchange visitor program sponsored by the Federal government, and explicitly reduced it only for certain other J-1 nonimmigrants. DHS interprets the Congressional mandate such that no other groups of nonimmigrants should be exempted from the SEVIS fee or have a reduced SEVIS fee based upon the principle of expressio unius: when one or more things of a class are expressly mentioned, others of the same class are necessarily excluded.

Additionally, DHS cannot adopt the suggestion made by some commenters, that secondary school students and exchange visitors should be exempt from the fee payment because they were not initially required to be tracked in SEVIS. DHS is requiring that all elementary and secondary non-immigrant students on F-1 and J-1 visas be tracked in SEVIS, based upon amendments to section 641(e)(1) of IIRIRA made by section 416 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, Public Law 107-56, 115 Stat 272 (October 26, 2001). Since these students are required to be tracked in SEVIS and are not expressly exempted from paying fees by Congress, DHS requires fee payment from them.

In the 2003 proposed rule, DHS suggested that aliens who paid the fee and were denied a visa would not have to pay another fee to apply for the same visa classification for a period of 9 months, and specifically sought comments on this timeframe. The majority of commenters felt that this timeframe should be extended to 12 months to accommodate the academic and program-specific annual calendars. This suggestion was accepted and adopted in this final rule.

Although DHS provided an explanation of when a new fee payment would be required in the 2003 proposed rule, several commenters requested a more detailed clarification. In the following paragraphs, DHS re-states and further clarifies exactly when a fee is initially required, and when an additional fee payment would be subsequently required by the same individual. The SEVIS fee is a one-time fee for each nonimmigrant program in which the student or exchange visitor participates. For purposes of this fee, a “single program” for an F or M student generally extends from the time that the student is granted a particular nonimmigrant status, until such time that the nonimmigrant falls out of status, changes status, or departs the United States for an extended period of time. For a J exchange visitor, a single program is defined by the category and/or sponsor at the time of initial program participation, and extends until a change of category, a transfer from a fee-exempt sponsor to a non-fee-exempt sponsor, or until such time as the nonimmigrant falls out of status or changes status. In general:

• An F or M student will be required to pay only one fee if he/she maintains continuous status in a single visa classification, or if he/she is granted a reinstatement to student status in a timely manner following a violation of status;

• A J exchange visitor will be required to pay only one fee if he/she maintains status while participating in a single exchange visitor program, or if he/she resumes status within the same program following a violation of status;

• A student or exchange visitor will be required to pay a new fee if he/she violates status and cannot or does not resume status in a program, in accordance with 8 CFR 214.2 (f)(16) and (m)(16) or 22 CFR 62.45, and subsequently returns to the United States to participate in another program;

• A student or exchange visitor will be required to pay a new fee if he/she wishes to change to another student or exchange visitor status, unless explicitly exempt; and,

• An exchange visitor will be required to pay a new fee prior to applying for a change of category.

This final rule further clarifies that an F or M student will not be required to pay a new fee upon transfer to a new school, extension of stay, change in educational level, when obtaining a new visa for re-entry for program continuation, upon a temporary absence of less than 5 months, or upon a period of approved absence in which the student is engaged in overseas study as a part of his/her U.S. educational program requirements. Further, a student will not have to pay a new fee if he/she falls out of status and files for reinstatement prior to the presumptive ineligibility deadline set forth in 8 CFR 214.2(f)(16)(i)(A) or (m)(16)(i)(A). An exchange visitor will not generally be required to pay a new fee upon transfer between programs within the same exchange visitor category. However, an exchange visitor that transfers from a fee-exempt program to a non-fee-exempt program under the same exchange visitor category, e.g. , a program with a prefix of G-1, G-2 or G-3, to another program with a program prefix that is not G-1, G-2 or G-3, but is within the same program category ( e.g., research scholar), will be required to pay the fee upon transfer. Further, as previously stated, a change of J-1 exchange visitor category will require payment of a new fee. An intending J-1 nonimmigrant will be required to pay a new fee if, after completion of an exchange visitor program, he/she wishes to return to the United States to begin a new program, even if it is in the same category. An exchange visitor will not be required to pay a new fee if he/she falls out of valid program status due to a minor or technical infraction. However, an exchange visitor will be required to pay the SEVIS fee prior to applying for reinstatement under 22 CFR 62.45 with DOS.

As previously noted, this final rule extends the period of time from 9 months to 12 months during which an alien does not need to repay the fee when re-applying for the same category of visa after initial denial. Additionally, DHS clarifies that this 12-month exemption applies to a student or exchange visitor who has been denied a change of status within the United States, and whose application is subsequently re-opened and approved. However, DHS wishes to clarify that if a visa is denied for a particular J-1 exchange visitor category, and the alien is applying for a visa in a different J-1 category, the alien will have to pay a new fee in conjunction with that visa application, even if the second application is made within the 12-month period identified previously. This restriction on J-1 applications also applies to applications for change of status to a J-1 exchange visitor program.

Where an F or M nonimmigrant is applying for reinstatement to student status, and has been out of status for a period that exceeds 5 months at the time of filing, the nonimmigrant will be required to pay a new fee to DHS prior to the adjudication of the reinstatement request. This 5-month time limit is set in accordance with the 5-month presumptive ineligibility deadline at 8 CFR 214.2(f)(16)(i)(A) and (m)(16)(i)(A). Similarly, pursuant to 22 CFR 62.45, where an exchange visitor applies for reinstatement after a substantive violation or after falling out of his/her valid J program status for longer than 120 days but less than 270 days, the exchange visitor will be required to pay a new fee prior to applying with DOS for reinstatement.

A new fee would also be required if an F, M, or J nonimmigrant changes to a non-student/exchange visitor visa classification and then wishes to return to the previously held F, M, or J status. Finally, a new fee is needed if an alien re-applies for the same visa status or for the same change in status more than 12 months after a denial is issued either overseas at a U.S. embassy or consulate, or within the United States.

The following charts outline who is exempt from paying a fee, who is required to pay a fee and when a fee payment is required, and who may pay a reduced fee:

Chart I—Fee payment not required if applicant is:

A continuing F, M, or J nonimmigrant who maintains that status, and whose initial Form I-20 or DS-2019 was issued before September 1, 2004, as evidenced by their SEVIS record and the issuance date on their form.

An F-2, J-2, or M-2 dependent .

A J-1 participant in an exchange visitor program sponsored by the Federal government. A program sponsored by the Federal government is identified by a program designation prefix of G-1, G-2, or G-3 .

An F-1, F-3, J-1, M-1, or M-3 nonimmigrant applying for a visa to return to the United States as a continuing student or a continuing participant of an exchange visitor program.

• This provision applies only to nonimmigrants returning to the United States to resume participation in a program that was previously begun, in which he or she has maintained status, and which has not yet been completed.

• This includes F or M nonimmigrants who will return as continuing students after a temporary absence from the United States for a period of less than 5 months in duration.

• This provision also includes F or M students returning as continuing students after working towards completion of the U.S. program in authorized overseas study.

An F-1 or F-3, nonimmigrant maintaining continuous status and changing educational levels. Examples include F students:

• Moving directly from high school to college.

• Moving directly from a masters degree program to a doctoral program.

An F-1, F-3, M-1, or M-3 nonimmigrant transferring between approved schools at the same educational level.

A J-1 nonimmigrant transferring between programs in the same exchange visitor category where no differential fee exists. Examples include transfers:

• Between two fee-exempt programs (a transfer between G-1, G-2, or G-3 programs).

• Between two non-fee-exempt programs.

• From a non-fee-exempt program to a fee-exempt program (G-1, G-2, or G-3 program).

A nonimmigrant applying for a change of classification from within the United States between an F-1 and F-3 status, or between M-1 and M-3 status.

An F-1, F-3, J-1, M-1, or M-3 nonimmigrant requesting/applying for an extension of stay in a single program.

• “Extension” for purposes of this example applies to students who have maintained participation in a program when additional time is needed for program completion.

An alien who paid an initial fee when seeking an F-1, F-3, M-1, or M-3 visa from an embassy or consulate abroad, was denied a visa, and is applying again for a visa for the same type of program within 12 months of the initial denial.

An alien who paid an initial fee when seeking a J-1 visa from an embassy or consulate abroad, was denied a visa, and is applying again for a visa in the same J-1 exchange visitor category within 12 months of the initial visa denial.

• This provision does NOT apply to J-1 applicants who initially applied for a fee exempt program ( e.g., a program with a program identifier designation prefix of G-1, G-2 or G-3), and who, after visa denial, apply for a program that is not fee exempt.

A nonimmigrant who has applied for a change of status in the United States to an F, M, or J classification, had the initial application for the change of status denied for a reason other than failure to pay the SEVIS fee, and is applying for a motion to re-open the case within 12 months of the original denial.

Pursuant to SEVP discretion, certain nonimmigrants changing between F and M status due solely to a change in school classification during their course of study.

An F or M nonimmigrant applying for reinstatement of student status, who has not been out of student status for a period exceeding the presumptive ineligibility requirement set forth in 8 CFR 214.2(f)(16)(A) or 214.2(m)(16)(A).

Chart II—Fee payment of $100 is required if the applicant is:

An alien seeking an initial F-1, F-3, J-1, M-1, or M-3 visa from an embassy or consulate abroad for initial attendance at a DHS-approved school or initial participation in a Department of State-designated exchange visitor program that is subject to the $100 fee amount. (Specific J-1 programs not subject to the $100 fee are described in both Chart I and Chart III.)

The fee must be processed 3 business days before the consular interview, unless the applicant has a printed receipt from Internet payment. Fees will not be payable at the consulate.

An alien exempt from the visa requirement described in section 212(d)(4) of the Act, who will be applying for admission at a United States port-of-entry to begin initial attendance at a DHS-approved school or initial participation in a Department of State-designated exchange visitor program that is subject to the $100 fee amount. (Specific J-1 programs not subject to the $100 fee are described in both Chart I and Chart III.) Such fee must be processed at least 3 business days prior to making an application for admission at the port-of-entry, unless the applicant has a printed receipt from Internet payment. Fees will not be payable at the port-of-entry.

An alien in the United States seeking a change of status to F-1, F-3, J-1, M-1, or M-3 . Exceptions are listed in Chart I for instances not requiring fee payment.

A nonimmigrant who was initially granted J-1 status as a participant in an exchange visitor program sponsored by the Federal government, ( i.e., with a program identifier designation prefix of G-1, G-2, or G-3), and who is now transferring to another J-1 program in the same category that is not similarly sponsored ( i.e., has a program identifier designation prefix other than G-1, G-2, or G-3).

A J-1 nonimmigrant who is applying for a change of category within the United States, with the exception of a change to a J-1 program specifically requiring an alternate fee, as indicated in Chart III, or a program whose program identifier designation prefix is G-1, G-2, or G-3.

A J-1 nonimmigrant who is applying for reinstatement after a substantive violation, or who has been out of program status for longer than 120 days but less than 270 days during the course of his or her program.

An F or M nonimmigrant applying for reinstatement of student status, who has been out of student status for a period exceeding the presumptive ineligibility requirement set forth in 8 CFR 214.2(f)(16)(A) or 214.2(m)(16)(A).

An F or M nonimmigrant, including an F-3 or M-3 nonimmigrant, who has been absent from the United States for a period exceeding 5 months, was not working towards completion of curriculum in authorized overseas study, and now wishes to re-enter for a new F or M program of study in the United States.

Chart III—Fee payment is reduced to $35 if applicant is:

A J-1 nonimmigrant applying for participation in a summer work/travel, au pair, or camp counselor program.

A number of commenters to the proposed rule stated that the fee should not be implemented without adequate notice. Generally, commenters suggested that implementation be delayed to not earlier than September 2004, although one commenter felt that January 2005 would be most appropriate. Additionally, various commenters stated that fee implementation should not take place in the spring, summer, or fall due to considerations with academic and program calendars. However, Congress mandated in section 641 of the IIRIRA that the Student and Exchange Visitor Program information collection effort be funded by those aliens included in the program, and made express provisions to expedite implementation and collection of the fee. See, e.g., Visa Waiver Permanent Program Act of 2000, 404, Public Law 106-396, 114 Stat. 1637 (October 30, 2000) (exempting the SEVIS fee from the Administrative Procedures Act rulemaking process in order to “ensure the expeditious, initial implementation of this section”). SEVIS is currently operational and DHS is incurring associated operating costs. As such, while the fee is not being imposed retroactively, this fee must be collected as soon as feasible. This final rule imposes the fee requirement for students and exchange visitors whose Form I-20 or Form DS-2019 is initially issued on or after September 1, 2004. In general, nonimmigrants maintaining F, M, or J status will not be subject to the fee. Further, intending F, M, or J nonimmigrants issued an I-20 or DS-2019 prior to September 1, 2004, (as evidenced by the issuance date on the form) will not be subject to the fee except as defined in the preceding charts. While some school and exchange visitor programs requested more time to prepare for the implementation of the fee, a proposed rule on this fee was initially published in 1999 and, most recently, a revised proposal was published in October 2003. The statutory provisions and proposed rules have informed the schools and exchange visitor programs that this fee collection will occur. Moreover, DHS is collecting the fee, which is a change to the 1999 proposal that schools and exchange visitor program sponsors collect this fee. Thus, DHS believes that there has been sufficient time to prepare for fee implementation.

As noted, this rule will be effective on September 1, 2004, and will apply to potential nonimmigrants that are initially issued a Form I-20 or Form DS-2019 on or after that date. Potential nonimmigrants, for purposes of this rule, are those aliens who will apply to DOS or DHS for initial attendance as an F, M, or J nonimmigrant, certain nonimmigrants in the United States that will apply for a change of status to an F, M, or J classification, and current J-1 nonimmigrants that will apply for a J-1 category change, on or after that date. If a Form I-20 or Form DS-2019 for initial status in a new program is issued on or after the effective date, the nonimmigrant traveling on that document will be required to pay the fee. Applicants, schools, and exchange visitor program sponsors should refer to the fee pay table contained in this rule for more detailed information concerning when a fee is required.

Some commenters stated that it is unfair to charge fees to nonimmigrants who were denied a visa, stating that these nonimmigrants receive no benefit from the program. A few commenters further stated that the fee should only be paid by those who choose to actually come to the United States, regardless of whether or not a visa is issued. These recommendations, while acknowledged, cannot be adopted by DHS. Pursuant to statutory mandate, the fee payment must be processed prior to obtaining a nonimmigrant visa.

DHS has modified the proposed rule to make the fee payable prior to obtaining a visa, rather than prior to starting the visa application process. Likewise, for aliens who are exempt from the visa requirements, the fee must be paid and processed prior to making an application for admission at a port-of-entry. However, DHS wishes to further clarify this distinction. Fee payment does not need to be completed prior to scheduling an interview with the consulate or any other activities undertaken prior to the in-person application process at the consulate. In order to assure that fee payment can be verified for purposes of visa issuance, the fee payment should be processed at least 3 business days prior to the date upon which the alien reports to the consulate to submit the visa application and undergo a visa interview, unless the alien can present a printed receipt from Internet payment. Similarly, 3 business days also must elapse between the processing of a fee and submitting an application for admission at a port-of-entry for aliens exempt from the visa provisions, as described in section 212(d)(4) of the Act, unless the alien can present a printed receipt from Internet payment. As stated in previous sections, if the visa or admission is subsequently denied and the alien applies again within 12 months, no new SEVIS fee will be required.

DHS further wishes to clarify that those nonimmigrants who are denied a visa or who are granted a visa and then choose not to come to the United States have already benefited from SEVIS. A nonimmigrant seeking F, M, or J status must prove to the consular officer granting his or her visa that he or she has been admitted by a DHS certified school or DOS designated exchange visitor program sponsor. Prior to SEVIS, nonimmigrants used hard copy forms issued by the schools or sponsors to verify their claim. These forms were subject to fraud and difficult to verify. This led to abuse of these nonimmigrant classifications as well as delays and denials of visa applications when consular officers suspected fraud. SEVIS allows nonimmigrant information to be entered into the system by certified schools or designated sponsors. The nonimmigrant is then granted a Form I-20 or Form DS-2019, which he or she can then use to apply for an F, M, or J visa. SEVIS allows for immediate electronic verification of an alien's I-20 or DS-2019 information, assisting consular officers as they determine the alien's eligibility for F, M, or J status. This constitutes a benefit for every applicant seeking student or exchange visitor status.

Further, some commenters argued that the tracking of F, M, and J nonimmigrants while they are in the United States does not benefit individuals, but rather benefits the population as a whole by increasing the security of the United States. DHS disagrees. SEVIS was developed subsequent to the discovery that some of the terrorists participating in the 1993 World Trade Center bombing and the September 11, 2001 attacks were nonimmigrants using student visas. At a time when some Americans felt that student and exchange visitor visas ought to be severely curtailed or eliminated, the development of SEVIS with its ability to maintain information on F, M, and J nonimmigrants allowed for the continued use of these visa classifications. Thus, SEVIS benefits the individual nonimmigrants able to obtain and use visas of these classifications. Additionally, when an F, M, or J nonimmigrant seeks further benefits such as employment, change of status, or reinstatement, SEVIS is used to verify their eligibility.

Further, enforcement of F, M, or J status violations benefits all F, M, or J nonimmigrants. DHS notes that these visa classifications allow nonimmigrants to enter the United States for long periods of time with benefits (such as employment opportunities) not available for many other visa classifications. Prior to SEVIS, there was widespread abuse of these visa classifications, including overstays. Widespread abuse of the F, M, and J visa classifications undermines the legitimacy of the entire foreign student and exchange visitor program. An effective enforcement program that relies upon SEVIS information to identify and initiate investigations of status violations enhances the integrity of the entire program. Enforcement oversight leads to the increased integrity of the program; it is possible to differentiate between legitimate students and exchange visitors and the status violators. This benefits the individual F, M, or J nonimmigrants who are legitimate.

SEVIS allows each F, M, or J nonimmigrant to provide easily verifiable documentation that confirms that he or she is abiding by the requirements of his or her student or exchange visitor status. Further, SEVIS creates alerts when certified schools or designated sponsors provide or fail to provide certain required information. These alerts are used to initiate investigations in which ICE enforcement officers verify whether or not a violation of status has occurred. By enforcing status violations, DHS helps ensure that the majority of students and exchange visitors in SEVIS are legitimately in status and that the data in SEVIS is reliable. Without enforcement, the violations of status that undermined the student and exchange visitor program in the past would occur again. With enforcement ensuring the integrity of SEVIS data, legitimate students and exchange visitors can provide reliable documentation of their status and avoid difficulties and delay when seeking benefits.

As previously stated, some nonimmigrants may not be granted visas or may choose not to come to the United States after their visas are granted. DHS will not refund the fee in these cases. However, fees paid in error will be refunded.

A number of commenters suggested that the proposed fee will deter participation by foreign students and exchange visitors. In particular, it was noted that participation in short-term or intensive English language programs has already dropped significantly. DHS recognizes that there have been significant changes in the national security environment since September 11, 2001. However, DHS notes that while the demand for foreign student and exchange visitor visas has been down in the past 2 years, so has the demand for visas in general. Therefore, there is little reason to believe that this downward trend for students and exchange visitors is based solely upon the implementation of SEVIS. Similarly, future reduced participation (especially that already evidenced by reduced applications) will not necessarily be linked directly to the implementation of the SEVIS fee. It is noted that in many cases, compared with the overall cost of a U.S. education or participation in an exchange visitor program, the imposition of the SEVIS fee does not significantly increase the financial burden on foreign students and exchange visitor program participants.

Additionally, a few commenters expressed a belief that the imposition of this fee would deter the participation of students and exchange visitors with the most limited resources, particularly those from the least developed countries. While DHS acknowledges this possibility, the statute mandating the implementation of the fee allows for no specific fee reductions, exemptions, or delayed payments based upon a nonimmigrant's available resources or the infrastructure limitations of his/her country. Further, F, M, and J nonimmigrants are required by DHS and DOS regulations to provide evidence of sufficient financial resources to support themselves throughout their program. When considering the average cost of a temporary stay in the United States, including all related program costs, DHS does not believe that the SEVIS fee presents an additional cost burden sufficient to act as a deterrent to F, M, or J program participation. DHS notes that many schools and exchange visitor program sponsors, as well as other interested third party organizations (such as advocacy groups), already make special efforts to assist these nonimmigrants. DHS commends and encourages this assistance and, to facilitate such assistance, DHS will accept fee payment from third parties.

I have reviewed this final rule in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)) and, by approving it, I preliminarily certify that this rule will not have a significant economic impact on a substantial number of small entities. The students and exchange visitors impacted by this rule are not considered “small entities,” as that term is defined in 5 U.S.C. 601(6).

Since Congress changed the law to provide that DHS will collect the fee directly from the nonimmigrant, rather than having the school or exchange visitor program sponsor collect and remit the fee, schools and exchange visitor program sponsors will no longer need to be involved in any way with respect to the collection of the fee. However, they are free to offer assistance to their students or potential exchange visitors if they choose to do so. Exchange visitor program sponsors who choose to participate in the bulk payment process to pay the fee on behalf of their participants may incur costs associated with establishing their batch file connection with the fee payment system, as well as the costs of the fees. However, the program sponsor's assumption of these costs on behalf of their participants is voluntary and, therefore, not subject to the Regulatory Flexibility Act.

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

This rule is not a major rule, as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will not result in an annual effect on the U.S. economy of $100 million or more; a major increase in costs or prices; or, significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based companies to compete with foreign-based companies in domestic and export markets. As mandated by Congress, this rule levies a fee in the amount of $100 on some nonimmigrant students and exchange visitors, and a fee in the amount of $35 for exchange visitors admitted as au pairs, camp counselors, or participants in a summer work/travel program.

DHS is required to implement this rule under section 641(e) of IIRIRA, 8 U.S.C. 1372. This rule is considered by DHS to be a significant regulatory action under Executive Order 12866, section 3(f), Regulatory Planning and Review. Accordingly, this regulation has been submitted to the Office of Management and Budget (OMB) for review. In particular, DHS has assessed both the costs and benefits of this rule, as required by Executive Order 12866, section 1(b)(6), and has made a reasoned determination that the benefits of this regulation justify its costs.

The costs to the public that this rule imposes are primarily the fees that must be paid by nonimmigrant students and exchange visitors that will be processed through SEVIS prior to being admitted to the United States. DHS is required by section 641 of IIRIRA to collect a fee to recover the cost of collecting student and exchange visitor information electronically. After careful evaluation of the costs to design, develop, and accurately maintain the statutorily mandated information collection system, DHS is now imposing a fee of $100 for nonimmigrant students and most intending exchange visitors, and $35 for potential exchange visitors admitted as au pairs, camp counselors, or participants in a summer work/travel program. The fees imposed under this final rule will support personnel costs, ongoing system operation and maintenance costs, training costs, and other costs related to the program, as well as offset the resources necessary to ensure compliance with the regulations.

Approximately 362,400 F-1 students and 312,400 J-1 exchange visitors are expected to enter the United States in Fiscal Year 2004. Based upon historical trends, it is further estimated that as many as 10% may subsequently violate the terms of their nonimmigrant status each year. However, in an effort to compensate for the possible inaccuracies of earlier systems and data on student and exchange visitor noncompliance, the estimated number of violators has been reduced to 5%. Using this percentage, DHS estimates 33,720 foreign students and exchange visitors might be subject to enforcement actions on an annual basis, although no actual measure of the number of student and exchange visitors who have violated their immigration status has ever been conducted. While remaining within the initial $100 statutory limitation, DHS has calculated the fee to cover the costs of systems and program office operations and maintenance, training, and personnel, including SEVIS liaison officers and ICE officers in the field. Based upon estimates of the total F, M, and J visa population and estimates of the total staff-hours that will be needed to ensure compliance with SEVIS requirements, DHS has estimated that the fee will fund approximately 60% of the personnel resources needed for compliance efforts.

If DHS failed to assess a SEVIS fee, it would be in violation of the law. Additionally, should DHS either not assess the fees under this rule or assess the fees at a lesser amount, DHS would be unable to continue to implement and operate SEVIS or, at a minimum, be forced to sustain a more limited capability to ensure compliance by foreign students and exchange visitors with the requirements of SEVIS. This would be contrary to the intent of Congress in giving ICE responsibility over SEVIS. If the fees are not imposed or are imposed at a lesser amount, the public could incur the intangible impact of reduced security, as a result of a more limited ability to ensure compliance. The imposition of this fee shifts the burden of funding program operating and compliance efforts to the population whose data is actually entered and tracked in SEVIS. If the fees are not imposed, or are imposed at a lesser amount, the general public would become responsible for bearing the shortage in the funding of program implementation and conformity. This would be contrary to the explicit directive of Congress, as set out in section 641 of IIRIRA, and subsequent amendments.

SEVIS is a vital tool in protecting the public by: (1) Enhancing the process by which nonimmigrants seeking to be foreign students and exchange visitors gain admission to the United States; and (2) increasing the ability of DHS to track and monitor foreign students and exchange visitors to ensure that they arrive in the United States, show up and register at the school or be validated as participating in their exchange visitor program activity, and properly maintain their status during their stay in this country. SEVIS enables a proper balance between openness in admitting foreign students and exchange visitors into the United States and preserving the security enhanced by enforcing the law.

The projected time per response for this collection of information were derived by first breaking the process into three basic components:

Learning about the Law and the Form—5 Minutes

Completion of the Form—9 Minutes

Assembling and Filing the Form—5 Minutes

Total Time per Response—19 Minutes

For all components, DHS used tests to determine completion times. People who were not conversant with immigration processes were used to determine average completion times. The Total annual reporting burden hours is 192,000. This figure was derived by multiplying the number of respondents (600,000) × frequency of response (1) × 19 minutes or (.32 hours) per response. The estimated annual public cost is $61,920,000. This figure is based on the number of respondents 600,000 multiplied by 19 minutes (.32), multiplied by $10 (average hourly rate); plus the number of respondents (600,000) × fee of $100.

Balanced against the costs and requirements to collect information electronically, the burden imposed by this regulation is fully justified by the benefits it provides.

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

This final rule requires the use of the Form I-901, Fee Remittance Form for Certain F, J, and M Nonimmigrants. This form is considered an information collection document and subject to review and clearance under Paperwork Reduction Act procedures. On October 17, 2003, at 68 FR 59800, DHS published a notice in the Federal Register , soliciting public comments on the Form I-901 for a period of 60 days. The comments that were filed by the public and OMB have been addressed and reconciled in the preamble of this final rule. DHS has received OMB approval for proposed information collection, Form I-901, Fee Remittance for Certain F, J, and M Nonimmigrants (OMB No. 1653-0034) that is contained in this final rule. The costs and benefits of Form I-901 have been fully set out in the supporting statement for the Form I-901 that will be published separately in the Federal Register .

The Federal Credit Union Act permits FCUs and corporate credit unions to purchase mortgage related securities (MRS) subject to such regulations as the NCUA Board may prescribe. 12 U.S.C. 1757(15)(B). NCUA regulations generally permit the purchase of CMOs, a multi-class MRS, but not if the CMO is a stripped mortgage backed security (SMBS). 12 CFR 703.14(d) and 703.16(e); 704.5(c)(5) and (h)(4). SMBS include interest-only CMOs (IOs) and principal-only CMOs (POs).

Currently, many CMO issues contain one or more classes of exchangeable CMOs. An exchangeable CMO represents a beneficial ownership interest in a combination of two or more underlying CMOs, and the owner may pay a fee and take delivery of the underlying CMOs. In many cases, these underlying CMOs include IOs and POs.

Because NCUA regulations prohibit investment in SMBS, the regulations also prohibit investment in an exchangeable CMO that represents an interest in one or more IOs or POs. Certain exchangeable CMOs representing IOs or POs, however, do not carry the risk or raise the same safety and soundness concerns associated with direct investment in an SMBS.

On January 22, 2004, the NCUA Board issued a notice of proposed rulemaking to amend NCUA rules to authorize FCUs and corporate credit unions to invest in an exchangeable CMO representing interests in one or more IOs or POs if the exchangeable CMO meets certain conditions. 69 FR 4886 (February 2, 2004).

The first condition concerned the rate of amortization of the underlying IOs and POs. For an exchangeable CMO representing one or more IOs, the Board proposed that the notional principal of each IO must decline at the same rate as the principal on one or more non-IO CMOs included in the combination. For an exchangeable CMO representing one or more POs, the Board proposed that the principal of each PO must decline at the same rate as the notional principal of one or more IOs included in the combination or at the same rate as the principal on one or more interest-bearing CMOs included in the combination. The Board also proposed a second condition: that, at the time of purchase, the ratio of the market price of the CMO to its remaining principal balance is between .8 and 1.2, meaning that the discount or premium of the market price to par must be less than 20 points. The proposed rule also stated that credit unions may not exercise the right to exchange an exchangeable CMO if it represents an interest in one or more SMBS that would be impermissible for that credit union to hold as a separate investment.

The Board's proposal also contained several definitional changes and other technical corrections to Parts 703 and 704 of NCUA's rules and regulations. In Part 703, the Board proposed to add a definition of “collateralized mortgage obligation;” amend the definitions of “put,” “call,” “custodial agreement,” “derivative,” and “european financial options;” and change the phrase “nationally recognized statistical rating agency” to “nationally recognized statistical rating organization.” In Part 704, the Board proposed to add a definition of “derivative,” amend the definitions of “small business related security” and “weighted average life,” and change the phrase “interest rate risk simulation tests” to “interest rate sensitivity analysis requirements.”

In this final rule, the Board generally adopts the rule as proposed with some variations. The Board will permit the purchase of exchangeable CMOs representing interests in SMBS only if the CMOs satisfy the conditions established in the proposed rule. The final rule differs from the proposed rule as follows: First, the Board believes that CMOs are not appropriate for all credit unions, and notes that those with investment authority at a credit union must be qualified by education or experience to assess the risk characteristics of every investment that they make, including CMOs. Since exchangeable CMOs are a more complex investment, the final rule specifically requires that a credit union seeking to invest in exchangeable CMOs must have the expertise to apply the unique price range and amortization conditions in this rule. Second, the final rule relaxes the proposed conditions on exchangeable CMOs containing SMBS, but only for CMOs that are accepted by the credit union as assets associated with repurchase transactions or as collateral associated with securities lending transactions. Third, the rule clarifies that derivatives in the form of interest rate lock commitments and forward sales commitments on loans originated by the credit union are not prohibited. Fourth, the rule changes the NCUA office to which applications for an Investment Pilot Program should be addressed from the Office of Examination and Insurance to the Office of Strategic Program Support and Planning.

NCUA received 30 comment letters regarding the proposed rule. Many commenters supported the exchangeable CMO portion of the proposed rule without reservation, and all but a few of the remaining commenters expressed general support for the Board's intent to allow credit unions to invest in certain exchangeable CMOs containing strips. In addition, the commenters uniformly supported the miscellaneous technical corrections and clarifying amendments.

Several commenters supported authorizing credit unions to purchase exchangeable CMOs representing SMBS without conditions, or with significantly lesser conditions, than those NCUA proposed.

One commenter suggested that NCUA authorize credit unions to buy any exchangeable CMO containing strips, without restriction, so long as the credit union does not exercise the exchange option. This commenter believes a simple statement that the exchange option cannot be exercised is sufficient, and no other conditions are necessary.

Several commenters thought that, for corporate credit unions, NCUA should focus on the interest rate risk associated with the corporate's aggregate portfolio and should not place conditions on particular individual investments such as exchangeable CMOs and strips. These commenters believe that the proposed conditions on the purchase of individual exchangeable CMOs are unnecessary and overly complex in light of the requirement that corporate credit unions conduct a periodic interest rate sensitivity analysis on their investment portfolios and limit their risk exposure as described in § 704.8. 12 CFR 704.8.

Two commenters said NCUA should allow FCUs to invest directly in SMBS, and in exchangeable CMOs containing SMBS, without restriction when used for the purpose of reducing balance sheet risk and earnings volatility.

One commenter suggested that credit unions qualifying under NCUA's Regulatory Flexibility Program, 12 CFR part 742, should be exempt from the Part 703 prohibition on investment in SMBS and any prohibition on exchangeable CMOs representing SMBS.

A few commenters question the need for the proposed rule. One of these commenters stated, “It appears that the proposed rule is basically seeking to prevent practices that simply do not exist today. Current rules clearly state that investing in IO and PO Strips is not allowed because of the highly volatile nature of theses investments. Exchangeable CMOs are clearly not MBS strips.” The commenter requests a simple clarification that “a credit union may not exercise the right to exchange an exchangeable CMO nor undertake any re-engineering of mortgage cash flows that results in the creation of securities that are impermissible under NCUA rules and regulations.”

While the Board appreciates these comments, it is concerned about the volatile and risky nature of SMBS. The Board believes SMBS are generally inappropriate investments for credit unions and are not normally well suited to risk reduction practices such as hedging, even in a well-run credit union or a credit union conducting aggregate portfolio interest rate risk analysis. On the other hand, the Board agrees that very few, if any, of the existing exchangeable CMOs that represent SMBS are overly risky. In fact, the Board believes that all or almost all currently existing exchangeable CMOs satisfy the safety and soundness conditions imposed in the final rule. Nevertheless, the securities market is constantly evolving, and the Board anticipates that, in the future, the market may include exchangeable CMOs representing SMBS that do have the substantive risks of those SMBS. The Board wants to make clear in this rulemaking how federal credit unions and corporate credit unions can determine the permissibility of any exchangeable CMO representing SMBS.

Two commenters remarked on the complexity of the exchangeable CMO investment and thought credit unions that invest in them should demonstrate a complete understanding of how these products work and the risks they entail. Another commenter noted that SMBS are volatile and should only play a limited role, if any, as a core investment. Still another commenter thought NCUA should not authorize credit unions to purchase exchangeable CMOs representing SMBS because of a perceived lack of expertise and sophistication at some credit unions.

The Board appreciates that CMOs may offer a unique risk-reward tradeoff among the various investments permitted for FCUs by the FCU Act, and that CMOs may play an important role in a well-diversified investment portfolio. Still, the Board agrees with these commenters that CMOs are not appropriate investments for all credit unions and notes that NCUA's investment regulation specifically provides that “those with investment authority [at the FCU] must be qualified by education or experience to assess the risk characteristics of investments and investment transactions.” 12 CFR 703.3(g). The Board expects FCUs and corporate credit unions to understand each and every investment that they make, including CMOs, and how those investments work. Since exchangeable CMOs are a more complex investment and subject to unique price range and amortization conditions, the final rule specifically requires that a credit union seeking to invest in exchangeable CMOs must have the expertise to apply the price range and amortization conditions.

Most commenters thought the .8 to 1.2 range on the ratio of purchase price to par was a reasonable method to separate out those exchangeable CMOs with risk characteristics substantially similar to the underlying SMBS. Some commenters suggested variations on this condition.

A few commenters suggest NCUA should treat exchangeable CMOs containing PO strips differently from those containing IO strips. These commenters believe NCUA should allow the purchase at less than 80% of par of exchangeable CMOs containing PO strips. One commenter states “A PO that trades at a steep discount (less than 80% of par) is often less risky than one that trades at par, since it can result in significant gains if paid off early, and it does not have more downside risk than a PO CMO purchased at greater than 80% of par.”

One commenter suggests that, to keep an exchangeable CMO from having the substantive risk characteristics of an IO, NCUA should limit the coupon rate of the exchangeable CMO so that it is no higher than the coupon on the underlying collateral. The same commenter suggests that, to keep the exchangeable CMO from having the substantive risk characteristics of a PO, NCUA should require eligible securities to have a coupon at the time of issuance that is above a readily available index. For example, if the security has an expected weighted average life of 3 years at the time of issuance, the coupon for such security can not be below the yield on a 3 year Treasury plus a set spread, such as 50 basis points.

One commenter suggests that a credit union with adequate staff and resources to monitor an exchangeable CMO would be in the best position to determine acceptable risk tolerances and set premium or discount limits.

As stated above, the Board believes some safety and soundness conditions on exchangeable CMOs representing SMBS are necessary. The conditions in the final rule are simple enough for a credit union to apply but specific enough to ensure that any exchangeable CMO that meets these conditions will not be too risky. Any FCU that wishes to invest in exchangeable CMOs subject to different conditions may always submit an application seeking NCUA approval for an investment pilot program. 12 CFR 703.19.

Another commenter asks that NCUA provide more flexibility to allow for underlying IOs to amortize slower than other non-IO portions of exchangeable CMO. The commenter believes this would allow the investing credit union to receive more income over the life of the investment.

The Board notes that if the underlying IO amortized more slowly than the other non-IO portions of the exchangeable CMO, the credit union would eventually hold an exchangeable CMO that represented only an IO and had risk characteristics identical to the underlying IO. This is unacceptable to the Board and demonstrates the need for the amortization condition.

One commenter agreed with the proposed price range restrictions but stated that the amortization limitations do not materially advance NCUA's safety and soundness objectives and may unnecessarily restrict the investment flexibility of FCUs.

Another commenter also supported the “pre-purchase” condition, meaning the limit on premium or discount of purchase price to par, but objects to the “post-purchase” condition, meaning the amortization requirement. This commenter believes the latter issue is addressed for corporate credit unions by the interest rate modeling of § 704.8, and that “to require separate risk management requirements specific to exchangeable CMOs is both unnecessary and overly burdensome.”

The Board does not intend that the amortization condition be a “post-purchase” condition; that is, that the credit union monitor amortization speeds after purchase. The Board is changing the language of the final rule to clarify that the determination of whether a particular CMO complies with the amortization condition will be made at the time of purchase from estimates of amortization speeds contained in the offering circular or other official information.

One commenter suggests NCUA allow credit unions that hold otherwise permissible exchangeable CMOs representing IOs or POs to exchange the CMO for the underlying securities if the credit union immediately sells the impermissible IOs or POs resulting from the exchange. This commenter believes this approach will allow the credit union flexibility to make best use of the exchangeable CMO feature.

As stated above, the Board is generally opposed to credit unions holding SMBS. A credit union that invests in exchangeable CMOs representing impermissible SMBS and that would like to exercise the exchange option may, however, submit an investment pilot program for NCUA review and possible approval. 12 CFR 703.19.

Several commenters state a final prospectus may not be available for CMOs purchased at time of issue. These commenters ask that, for investments in exchangeable CMOs made before issuance of the final prospectus, NCUA authorize the credit union to rely on a preliminary prospectus to determine if the CMO is exchangeable and, if so, permissible. If the preliminary prospectus does not indicate the CMO will be exchangeable or does not include decrement tables allowing the CU to determine if the underlying investments amortize at the same rate, these commenters want NCUA to allow the credit union to purchase and hold the investment even if the final prospectus indicates the investment is an exchangeable CMO that fails the amortization requirement.

The Board appreciates that credit unions may have difficulty ascertaining if a CMO purchased at or before issuance satisfies the requirements of this final rule. Before committing to purchase, a credit union should use its best efforts to examine the available documentary information to determine if the CMO will satisfy the requirements. If necessary, a credit union may seek assurances of compliance from the issuer. If an FCU uses its best efforts, and then determines after purchase that the CMO fails the requirements of this rule, it should process the investment as specified in its investment policies for investments that fail a requirement of part 703. 12 CFR 703.3(j). Corporate credit unions should process the failed investment under the Investment Action Plan provisions of the corporate rule. 12 CFR 704.10.

Several commenters ask that NCUA provide guidance to credit unions currently holding exchangeable CMOs that fail the requirements in the proposed rule, preferring that NCUA allow credit unions to continue holding these CMOs. One of these commenters also noted that in 1993 NCUA indicated some CMOs created from SMBS might be permissible. See 58 FR 34868 (June 30, 1993) (“The NCUA Board notes that recently some CMOs and REMICs have been created from stripped mortgage-backed securities. These instruments are permitted if they can pass the high-risk security tests.”) This 1993 statement has lead the commenter to believe that there is no regulatory prohibition on CMOs containing strips.

As stated above, the Board believes that few, if any, existing exchangeable CMOs will fail the conditions established in this final rule. Any CMOs that do fail the conditions should be processed under the FCU's investment policies or, for corporate credit unions, under an Investment Action Plan. 12 CFR 703.3(j), 704.10. While the NCUA recognized in 1993 that some CMOs had been created from SMBS and that they might be permissible if they passed the high-risk securities test (HRST), any CMO that had substantially the same risk characteristics as the underlying SMBS would likely have failed the HRST. NCUA regulations no longer require HRS testing. To ensure that credit unions do not hold exchangeable CMOs with significant risks from the underlying SMBS, those CMOs must satisfy the conditions provided in this final rule.

One corporate credit union commenter is particularly concerned about the effect of the rule on repurchase transactions. FCUs and corporate credit unions may only accept as repurchase assets those assets in which they can invest directly, and this commenter believes it will be difficult to identify and cull out impermissible exchangeable CMOs. 12 CFR 703.13(c)(1), 704.5(d)(2). The commenter states that, since credit unions are a small portion of the repurchase market, it is improbable that repurchase custodians will restrict repurchase assets to those CMOs qualifying under this proposal. Given the speed and volume of repurchase transactions, the commenter believes it would be onerous for a credit union to review each CMO that is part of the repurchase transaction to ensure it complies with this proposal.

The Board appreciates the commenter's concerns about the difficulties in separating out impermissible assets and collateral in these transactions. The Board also notes that, in both repurchase transactions and securities lending transactions, a credit union relies primarily on the creditworthiness of the counterparty to get its money back and only secondarily on the repurchase asset or securities lending collateral. The potential for interest rate risk and price volatility associated with CMOs representing interests in SMBS is less significant in these transactions. Accordingly, the Board is amending parts 703 and 704 to indicate that exchangeable CMOs representing interests in SMBS may be used as assets or collateral in investment repurchase transactions or securities lending transactions, and the price range and amortization conditions need not be applied to exchangeable CMOs used in this way.

One commenter seeks clarification that the rule applies to both privately issued and federally issued CMOs. The Board intends that the rule apply to all exchangeable CMOs, regardless of issuer.

Two commenters suggested that NCUA modify the proposed exchangeable CMO definition, and references to CMOs in the rule text, to reflect that the purchase of a CMO is an investment in a particular class of a CMO structure, not in an instrument that is a multi-class CMO structure. The Board agrees with the commenter and amends the final rule text as suggested.

One commenter states credit unions should set aggregate investment limits, not NCUA. Another commenter states NCUA should amend the call report to obtain additional detail on exchangeable CMOs. These issues are beyond the scope of the proposed rule and are not addressed in the final rule.

One commenter states that, if NCUA does not intend with its proposed change to the definition of derivative to expand or contract permissible types of investments for credit unions, it should say so.

The Board does not intend, through its changes to the derivative definition and other provisions of parts 703 and 704 that reference that definition, to either expand or contract the universe of investments currently permissible for FCUs and corporate credit unions.

The Board is making additional changes not triggered by specific public comment. The Board proposed to change the definition of derivative so it would track the definition of derivative instrument used under generally accepted accounting principles (GAAP) while excluding those derivatives that, under GAAP, do not have to be recognized as an asset or liability in the statement of financial condition and be valued at fair market value. The Board's intent was to ensure that: (1) The regulatory definition of derivative is consistent with the accounting definition; and (2) embedded options in an otherwise permissible investment that are not significant enough to require separate accounting under GAAP would not cause that investment to be considered a prohibited derivative. The final rule retains the Board's intent but achieves it through different rule text. Instead of excluding embedded options from the regulatory definition of derivative, the final rule recognizes them as derivatives but excludes them from the general prohibition on derivatives.

Recently, the GAAP definition of derivative evolved to include loan commitments that relate to the origination of mortgage loans that will be held for sale. Financial Accounting Standards Board Statement of Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, paragraph 6(c). FCUs routinely enter into loan commitments such as interest rate lock commitments and forward sales commitments on mortgage loans they originate for sale, and the Board supports such commitments when used in a prudent manner. Since NCUA will now tie the regulatory definition of derivative to the GAAP definition, the general prohibition on derivatives could be interpreted to prohibit these types of commitments. Accordingly, the final rule clarifies that derivatives in the form of interest rate lock commitments and forward sales commitments on loans FCUs originate are excluded from the general prohibition on derivatives. Similarly, for corporate credit unions, the general prohibition on derivatives excludes forward sales commitments on loans originated by another credit union where the corporate intends to purchase the loan.

Currently, the responsibility for receipt and initial processing of applications under the Investment Pilot Program rests with NCUA's Office of Examination and Insurance. 12 CFR 703.19(c). The final rule transfers that responsibility to NCUA's Office of Strategic Program Support and Planning.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a proposed rule may have on a substantial number of small credit unions (those under $10 million in assets). This rule expands the investment authority granted to FCUs and corporate credit unions. The rule will not have a significant economic impact on a substantial number of small credit unions and, therefore, a regulatory flexibility analysis is not required.

NCUA has determined that the final rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget. NCUA currently has OMB clearance of part 703 and part 704 collection requirements. See OMB No. 3133-0133 for 12 CFR part 703, and OMB No. 3133-0129 for 12 CFR part 704.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The executive order states that: “[n]ational action limiting the policymaking discretion of the states shall be taken only where there is constitutional and statutory authority for the action and the national activity is appropriate in light of the presence of a problem of national significance.” Portions of the rule apply to all corporates that accept funds from federally insured credit unions, including state chartered corporates. The Board believes that the protection of such credit unions from unwarranted investment in risky investments, and ultimately the National Credit Union Share Insurance Fund (NCUSIF), warrants application of the proposed rule to all corporates, including both state chartered and nonfederally insured. The rule does not impose additional costs or burdens on the states or affect the states' ability to discharge traditional state government functions. NCUA has determined that this rule may have an occasional direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. However, the potential risk to the NCUSIF without the final changes justifies them.

The NCUA has determined that this rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 (1998).

The Small Business Regulatory Enforcement Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by section 551 of the Administrative Procedure Act. 5 U.S.C. 551. The Office of Management and Budget is reviewing whether this rule is a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) by superseding AD 2000-09-11, amendment 39-11720 (65 FR 30529, May 12, 2000), which is applicable to certain Fokker Model F.28 Mark 0070 series airplanes, was published in the Federal Register on April 15, 2004 (69 FR 19950). The proposed AD would require modifying the elevator tension control mechanism and revising the applicability to include additional airplanes.

We provided the public the opportunity to participate in developing this AD. No comments have been submitted on the proposed AD or on the determination of the cost to the public.

We have carefully reviewed the available data and determined that air safety and the public interest require adopting the AD as proposed.

This AD affects about 75 airplanes of U.S. registry. The actions take about 1 work hour per airplane, at an average labor rate of $65 per work hour. Required parts will be provided to operators at no cost. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $4,875, or $65 per airplane.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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

For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES.

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Gulfstream Aerospace LP Model Astra SPX, and 1125 Westwind Astra series airplanes; and Model Gulfstream 100 airplanes was published in the Federal Register on May 3, 2004 (69 FR 24103). That action proposed to require a one-time inspection of the outboard doors of the main landing gear (MLG) for evidence of impact with the surrounding structure, and for damage to the door seals and seal channels; measurements for adequate gaps and clearances; and related investigative and corrective actions, if necessary.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.

The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

The FAA estimates that 125 airplanes of U.S. registry will be affected by this AD, that it will take approximately 16 work hours per airplane to accomplish the required actions, and that the average labor rate is $65 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $130,000, or $1,040 per airplane.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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

For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES .

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) that is applicable to certain Airbus Model A300 B2 and A300 B4; Model A300 B4-600, B4-600R, C4-605R Variant F, and F4-600R (collectively called A300-600); and Model A310 series airplanes was published in the Federal Register on May 3, 2004 (69 FR 24099). That action proposed to require an inspection to determine the part number of certain passenger/crew escape slides; and related investigative action and corrective action, if necessary.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were submitted in response to the proposal or the FAA's determination of the cost to the public.

We have determined that air safety and the public interest require the adoption of the rule as proposed.

We estimate that 202 airplanes of U.S. registry will be affected by this AD, that it will take approximately 3 work hours per airplane to accomplish the required actions, and that the average labor rate is $65 per work hour. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $195 per slide.

The cost impact figure discussed above is based on assumptions that no operator has yet accomplished any of the requirements of this AD action, and that no operator would accomplish those actions in the future if this AD were not adopted. The cost impact figures discussed in AD rulemaking actions represent only the time necessary to perform the specific actions actually required by the AD. These figures typically do not include incidental costs, such as the time required to gain access and close up, planning time, or time necessitated by other administrative actions.

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

For the reasons discussed above, I certify that this action (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. A final evaluation has been prepared for this action and it is contained in the Rules Docket. A copy of it may be obtained from the Rules Docket at the location provided under the caption ADDRESSES .

Airspace Designations and Reporting Points Document 7400.9L dated September 2, 2003, and effective September 16, 2003, describes the Class E5 700 feet above the surface of the earth airspace as 6.1 mile radius distance around Durango-La Plata County Airport, Durango, CO. An error was discovered in the radius distance of that airspace. This action corrects that error.

In Title 33 of the Code of Federal Regulations, Parts 125 to 199, revised as of July 1, 2003, on page 565, in § 161.15, the last sentence of paragraph (b) is corrected to read as follows:

The Regulation added as part 705 implements certain provisions of the American Television and Radio Archives Act, 2 U.S.C. 170, which was enacted in 1976. Section 170(b) of title 2 authorizes the Librarian to prescribe regulations to reproduce, compile, and distribute television and radio transmission programs of regularly scheduled newscasts or on-the-spot coverage of news events. The Regulation provides definitions of relevant terms, describes the authority and procedures for Library of Congress staff to make reproductions of such newscasts and on-the-spot coverage of news events, and outlines procedures for the disposition and use of such copies by the Library of Congress. In addition, the Regulation authorizes Library of Congress staff to make compilations of recordings, provided that they are not edited, and also authorizes the Library to reproduce these compilations for preservation, security or distribution purposes under specified conditions. The Regulation further provides that Library of Congress staff may distribute such reproductions by loan to a researcher under certain circumstances and by deposit in a library or archive meeting the requirements of 17 U.S.C. 108(a). At the same time, the Regulation requires Library staff to advise recipients of such reproductions that they may be used for research only and not for reproduction or performance.

(10) Performing any other inappropriate or illegal act, such as accessing or showing child pornography, online or otherwise on Library premises; and

(11) failing to wear appropriate clothing in Library facilities, including, but not limited to, footwear (shoes or sandals) and shirts.

(12) any behavior or interaction by a member of the public that unnecessarily hinders staff from performing the Library's public service functions.

(b) Specific notice of an intent to copy a transmission program will ordinarily not be given. In general, the Library of Congress will seek to copy off-the-air selected portions of the programming transmitted by both noncommercial educational broadcast stations as defined in section 397 of title 47 of the United States Code, and by commercial broadcast stations. Upon written request addressed to the Chief, Motion Picture, Broadcasting and Recorded Sound Division by a broadcast station or other owner of the right of transmission, the Library of Congress will inform the requestor whether a particular transmission program has been copied by the Library.

The provisions of 38 U.S.C. 2402 set forth eligibility requirements for burying the remains of persons in any national cemetery with available space under the jurisdiction of the National Cemetery Administration. This final rule implements provisions of the Veterans Benefits Act of 2003, to extend eligibility for burial in a national cemetery to a remarried surviving spouse whose death occurred on or after January 1, 2000, based on his or her prior marriage to an eligible veteran. This revision acknowledges the importance of the prior marriage and will allow the deceased veteran to be buried with a spouse with whom he or she expected to be buried. It will also allow any children to visit a single gravesite to pay their respects to their parents.

Additionally, this final rule implements provisions of the Veterans Benefits Act of 2003, extending eligibility for burial in a national cemetery to certain New Philippine Scouts. To be eligible, a person must have died on or after December 16, 2003, and must have enlisted in the U.S. Armed Forces with the consent of the Philippine government between October 6, 1945, and June 30, 1947, pursuant to section 14 of the Armed Forces Voluntary Recruitment Act of 1945. At time of death, the person must have been a citizen of the United States or an alien lawfully admitted for permanent residence in the United States, and residing in the United States.

We are making changes to the format of 38 CFR 1.620(e) and (h) to provide better organization and clarity.

We are publishing this as a final rule without notice and comment under the provisions of 5 U.S.C. 553 because the changes it makes either are non-substantive or merely reflect statutory changes.

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

This document does not contain new provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. Only individual VA beneficiaries would be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), this final rule is exempt from the initial and final regulatory flexibility analyses requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance program number for this document is 64.201.

In a document published in the Federal Register on October 16, 2003 (68 FR 59557), we proposed to amend VA's medical regulations by modifying provisions regarding the methodology of computing copayments for extended care services provided to veterans either directly by VA or by contract. These changes are as follows: We are revising the formulas to clarify what resources veterans have available for purposes of determining the appropriate copayment. We are excluding from the definition of “available resources” contained in paragraph (d)(1) of § 17.111 income, assets, expenses and allowance of legally separated spouses. We are removing from the definition of “veterans allowance” the inclusion of expenses because we are now including expenses in the definition of “available resources” contained in paragraph (d)(1) of § 17.111. We are also changing the definition of “expenses,” to include (1) insurance premiums of the veteran and the veteran's spouse and dependents and (2) personal property taxes, not just income taxes. Further, we are clarifying that the definition of “liquid assets,” includes art, rare coins, stamp collections, and collectibles and changing that definition to exclude household and personal items such as furniture, clothing, and jewelry when the veteran's spouse or the veteran's dependents are living in the community or the veteran is receiving noninstitutional extended care services. We are adding at paragraph (d)(2)(vi) of § 17.111 a definition of “spousal resource protection amount” to permit a spouse to maintain some liquid assets while they live in the community. Lastly, we are clarifying that a veteran must report a change in marital status to a VA medical facility within 10 days of the change.

The public comment period ended on December 15, 2003, without any comment. Based on the rationale set forth in the proposed rule, we are adopting the provisions of the proposed rule as a final rule without any changes.

The Office of Management and Budget has approved the collections of information requirements related to this rulemaking proceeding under OMB control number 2900-0629.

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

The Secretary hereby certifies that this regulatory amendment will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612. This amendment would not directly affect any small entities. Only individuals could be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance numbers for the programs affected by this document are 64.005, 64.007, 64.008, 64.009, 64.010, 64.011, 64.012, 64.013, 64.014, 64.015, 64.016, 64.018, 64.019, 64.022, and 64.025.

On June 23, 2004, the Postal Service published a document amending its rules dealing with records and information (69 FR 34932). Inspection of the notice disclosed the presence of minor errors in two exhibits in 39 CFR part 265. Accordingly, the Postal Service makes the following corrections effective immediately.

On October 19, 2001 (66 FR 53094), EPA redesignated the Pittsburgh area to attainment for the 1-hour ozone NAAQS and approved the maintenance plan submitted by the Pennsylvania Department of Environmental Protection (DEP) as a revision to the Pennsylvania SIP. The Pittsburgh area consists of Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland Counties. The approved maintenance plan demonstrates that the area will maintain the 1-hour ozone NAAQS for ten years from the date of its approval (through 2011). The plan includes VOC and NO X emission inventories for all (point, area, highway and non-road mobile) source sectors for the years 1990, 1999, 2007 and 2011. The highway, or on-road, portion of the mobile inventories also constitute the MVEBs for each year. These MVEBs are to be used to demonstrate conformity when performing analyses of transportation plans. The MVEBs in the maintenance plan approved on October 19, 2001 are based upon the MOBILE5 emissions model.

On April 22, 2004, the Pennsylvania DEP submitted a formal revision to its SIP. The revision amends the ten-year maintenance plan for the 1-hour ozone NAAQS in the Pittsburgh area. The maintenance plan is being amended to revise the highway mobile emissions, and, therefore, the MVEBs to reflect the use of the MOBILE6 emissions model. The MOBILE6 model is an updated version of the MOBILE model used for calculating highway mobile source emissions of the ozone precursors VOC and NO X . The remaining sectors of the VOC and NO X emission inventories (point, area and non-road mobile) are unchanged from those in the original maintenance plan approved by EPA on October 19, 2001. The 1-hour ozone NAAQS, the maintenance plan approved by EPA on October 19, 2001 demonstrated continued attainment of the 1-hour ozone NAAQS by showing that total emissions (from all emission source sectors) projected to 2011 would remain below the total emissions in the 1999 attainment year. The year 1999 was chosen as it was one the three years of consecutive air quality data used to demonstrate attainment of the 1-hour ozone NAAQS. The year 2007 was chosen as an interim year between 2001 and 2011.

The following table presents the revised highway mobile emissions, and, therefore, MVEBs for the Pittsburgh area based upon MOBILE6. Emissions are presented in tons per Summer day:

In the following tables, the revised MOBILE6-based highway emissions are entered in place of the original MOBILE5-based highway mobile emissions. The tables show the same VOC and NO X emission levels for each of the other emission inventory sectors as those of the maintenance plan approved by EPA on October 19, 2001. When the Pittsburgh area maintenance plan's original MOBILE5 based highway mobile emissions are replaced with the revised MOBILE6 based highway mobile emissions, the tables indicate that attainment will continue to be maintained through 2011. All emissions are presented in tons per Summer day:

EPA is approving Pennsylvania's April 22, 2004 SIP revision. The revision amends the Pittsburgh-Beaver Valley area maintenance plan for the 1-hour ozone NAAQS by updating the highway mobile emission inventories and, therefore, the MVEBs to reflect the use of the MOBILE6 emissions model. The revised plan for the Pittsburgh-Beaver Valley area continues to demonstrate maintenance of the 1-hour NAAQS for ozone through 2011.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates 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 rule will be effective on August 30, 2004 without further notice unless EPA receives adverse comment by August 2, 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.

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 (Public Law 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 . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 30, 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 to approve a revision to the Pittsburgh-Beaver Valley area's maintenance plan for the 1-hour NAAQS may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

EPA is conditionally approving the New Jersey State Department of Environmental Protection's (New Jersey's) source-specific reasonably available control technology (RACT) determination for controlling oxides of nitrogen (NO X ) from the sodium nitrite manufacturing plant operated by Repauno Products, LLC (Repauno).

The following table of contents describes the format for this SUPPLEMENTARY INFORMATION section:

EPA is conditionally approving the New York State Department of Environmental Conservation's (New York's) source-specific reasonably available control technology (RACT) determination for controlling oxides of nitrogen (NO X ) from the sodium nitrite manufacturing plant operated by General Chemical Corporation (General Chemical).

The following table of contents describes the format for this SUPPLEMENTARY INFORMATION section:

EPA is conditionally approving New York's revision to the ozone State Implementation Plan (SIP) submitted to EPA on April 12, 2000 and supplemented on May 12, 2000, May 16, 2000, October 10, 2002 and February 24, 2003. This SIP revision relates to New York's NO X RACT determination for General Chemical's sodium nitrite manufacturing plant located in Solvay, Onondaga County.

EPA published in the Federal Register on April 7, 2004 (69 FR 18319) a proposal to conditionally approve New York's SIP revision. The April 7, 2004 proposed rule contains additional information regarding New York's SIP revision, EPA's rationale for conditionally approving New York's SIP revision, and describes in detail the deficiencies that New York must address in order for EPA to fully approve this SIP revision. The three deficiencies are to:

1. Reassess as part of the RACT analysis, the technical and economic feasibility of installing selective catalytic reduction (SCR) technology, switching from soda ash to sodium hydroxide for the entire manufacturing process, and correcting Director Discretion provisions in any permit conditions;

2. Demonstrate compliance with the NO 2 National Ambient Air Quality Standard, based on a cumulative air quality modeling analysis, consistent with EPA Guidance, as provided under section 110 of the Act; and,

3. Provide recent continuous emissions monitoring (CEM) data in order to determine an appropriate NO X RACT emission limitation.

In a letter dated May 7, 2004, New York committed to correct the three deficiencies discussed in the April 7, 2004 proposed rule, and to submit a new SIP revision within one year of the effective date of this rule. Once New York submits a new SIP revision to address these deficiencies, EPA can take action to fully approve the SIP revision. If New York does not submit approvable revisions within one year of the effective date of this rule, this conditional approval will automatically revert to a disapproval of New York's SIP revision. EPA will publish a document in the Federal Register indicating whether the conditional approval was satisfied or became a disapproval.

EPA's April 7, 2004 proposed rule provided a 30-day public comment period. EPA did not receive any comments.

EPA is conditionally approving the New York SIP revision for a source-specific RACT determination for General Chemical's sodium nitrite manufacturing plant. This SIP revision contains source-specific NO X emission limitations for General Chemical. EPA is conditionally approving New York's SIP revision, since New York committed to correct the three deficiencies discussed in the April 7, 2004 proposal, and to submit them to EPA as a SIP revision within one year of the effective date of this final rule. EPA received no comments on the April 7, 2004 proposal, therefore EPA is finalizing the conditional approval. EPA has determined that until such time that New York corrects the three deficiencies and submits them to EPA as a SIP revision, the NO X emission limits identified in New York's special permit conditions represents RACT for General Chemical's sodium nitrite manufacturing process.

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 August 30, 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 April 9, 2004 (69 FR 18853), EPA proposed to approve the Commonwealth of Pennsylvania's (the Commonwealth's) request to redesignate the areas of Conewango Township, Pleasant Township, Glade Township, and the City of Warren in Warren County, Pennsylvania, from nonattainment to attainment of the NAAQS for SO 2 . EPA's April 9, 2004 notice of proposed rulemaking (NPR) also proposed approval of the Commonwealth's request to change the status of Mead Township and Clarendon Borough in Warren County from unclassifiable to attainment of the NAAQS for SO 2 . Finally, EPA's NPR published on April 9, 2004 proposed to approve the maintenance plan for these areas submitted by the Pennsylvania Department of Environmental Protection (PADEP) as a SIP revision.

EPA proposed approval of these requests on April 9, 2004 under a procedure called parallel processing, whereby EPA proposes its rulemaking action on a SIP revision concurrently with a state's procedures for amending its SIP. The PADEP submitted its redesignation requests and proposed SIP revision to EPA on March 15, 2004 for parallel processing. No comments were submitted to EPA on the NPR it published on April 9, 2004 proposing to approve the Commonwealth's March 15, 2004 submittal. The Commonwealth concluded its SIP revision procedures, and the PADEP submitted the formal SIP revision along with the redesignation requests to EPA on May 7, 2004. That final version of the submittal had no substantive changes from the proposed version submitted to EPA on March 15, 2004. A detailed description of Pennsylvania's submittal and EPA's rationale for its proposed approval of the redesignation requests and maintenance plan were presented in the NPR published on April 9, 2004, and will not be restated here.

EPA is redesignating the areas of Conewango Township, Pleasant Township, Glade Township, and the City of Warren, in Warren County, Pennsylvania from nonattainment to attainment of the NAAQS for SO 2 , and is changing the status of Mead Township and Clarendon Borough in Warren County, Pennsylvania, from unclassifiable to attainment of the NAAQS for SO 2 . EPA is also approving a maintenance plan for these areas submitted by the PADEP on May 7, 2004 as a revision to the Pennsylvania SIP.

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 . This rule is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 30, 2004. Filing a petition for reconsideration by the Administrator of this final rule, which redesignates Conewango Township, Pleasant Township, Glade Township, and the City of Warren, in Warren County, Pennsylvania, to attainment of the NAAQS for SO 2 , changes the status of Clarendon Borough and Mead Township in Warren County from unclassifiable to attainment for SO 2 , and approves a maintenance plan for these areas as a SIP revision, 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).)

In Title 40 of the Code of Federal Regulations, Part 63 (§§ 63.1200 to 63.1439), revised as of July 1, 2003, on page 575, in § 63.1427, the first equation in paragraph (e)(2) is corrected to read as follows:

The Agency has not included in this technical amendment a list of those who may be potentially affected by this action. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under the FOR FURTHER INFORMATION CONTACT .

In addition to using EDOCKET at http://www.epa.gov/edocket/ , you may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/ . A frequently updated electronic version of 40 CFR parts 152, 154, 158, 159, 168, and 178 are available at E-CFR Beta Site Two at http://www.gpoaccess.gov/ecfr/ .

In recent months the addresses and some mail codes for the Office of Pesticide Programs have changed. This technical amendment effects the changes necessary to conform 40 CFR parts 152, 154, 158, 159, 168, and 178 to the new addresses and mail code.

Section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. EPA has determined that there is good cause for making this rule final without prior proposal and opportunity for comment. EPA has determined that these amendments are technical and non-substantive in nature because these amendments only correct address related information. Thus, notice and public procedure are unnecessary. EPA finds that this constitutes good cause under 5 U.S.C. 553(b)(B).

EPA is issuing this document under its general rulemaking authority, Reorganization Plan No. 3 of 1970 (5 U.S.C. app.).

This final rule implements technical amendments and corrections to provisions that appear in 40 CFR parts 152, 154, 158, 159, 168, and 178 to reflect changes in the Agency's official address, and it does not otherwise impose or amend any requirements. As such, the Office of Management and Budget (0MB) has determined that a technical amendment and/or correction is not a “significant regulatory action” subject to review by OMB under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735. October 4, 1993). Nor does this rule contain any information collection requirements that require review and approval by 0MB pursuant to the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et. seq .).

Since the Agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the APA or any other statute, this action is not subject to provisions of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et. seq. ), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-94). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. entitled Federalism (64 FR 43255, August 10. 1999). Similarly, this rule will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000).

Because this action is not economically significant as defined by section 3(f) of Executive Order 12866, and does not involve impacts to children, this action is not subject to Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997).

This rule is not subject to Executive Order 13211, entitled Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001), because this action is not a significant regulatory action under Executive Order 12866, nor is it expected to adversely affect energy supply, distribution, or use.

This action does not involve any technical standards that require the Agency's consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note).

This action will not result in environmental justice related issues and does not, therefore, require special consideration under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994).

The Congressional Review Act (CRA) (5 U.S.C. 801 et seq.), 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. CRA section 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA, if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary, or contrary to the public interest. This determination must Be supported by a brief statement (5 U.S.C. 808(2)). As stated previously, EPA has made such a good cause finding, including the reasons therefore, and established an effective date of July 1, 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 . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

This is a summary of the Federal Communications Commission's Order, FCC 03-204, adopted on August 7, 2003, and released on August 19, 2003. The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center, 445 12th Street, SW., Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554. The full text may also be downloaded at: www.fcc.gov. Alternative formats are available to persons with disabilities by contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365 or at bmillin@fcc.gov.

1. The Order (a) declines to require that each 1392-1395 MHz band station register with the American Society of Health Care Engineering of the American Hospital Association (ASHE) upon initiating operations, as such a requirement would be contrary to the regulatory flexibility that is inherent with a geographic area license; (b) instructs ASHE and the Land Mobile Communications Council to present a joint coordination plan for the 1427-1432 MHz band, which is used by both Wireless Medical Telemetry Service (WMTS) and site-based non-medical telemetry, within one year of the release date of the Order (c) declines to impose coordination procedures on the 1432-1435 MHz band licensees that operate within a hundred miles of 1435-1525 MHz flight test sites; and (d) modifies the channel plans that were adopted in the Report and Order for the 217-220 MHz and 1427-1432 MHz bands so that licensees can employ 25 kHz or 50 kHz bandwidths with center frequencies that require no more than three decimal places of accuracy ( e.g. , 217.025 MHz), rather than five to six decimal places of accuracy ( e.g. , 217.015625 MHz).

3. The Order does not contain any new or modified information collection.

4. As required by the Regulatory Flexibility Act (“RFA”), a Final Regulatory Flexibility Analysis (FRFA) was incorporated in the Report and Order, 67 FR 41847. In view of the fact that we have adopted further rule amendments in this Order, we have included this Supplemental Final Regulatory Flexibility Analysis (SFRFA). This present SFRFA conforms to the RFA.

5. In this Order, on our own motion, we correct certain rules that were adopted in the Report and Order, and adopt further rule amendments that the Commission inadvertently failed to adopt in the Report and Order. In the Report and Order, the Commission adopted rules for the licensing and operation of fixed and mobile services in the 216-220 MHz, 1390-1395 MHz, 1427-1429.5 MHz, 1429.5-1432 MHz, 1432-1435 MHz, 1670-1675 MHz and 2385-2390 MHz bands pursuant to the provisions of the Communications Act of 1934, as amended, the Omnibus Budget Reconciliation Act of 1993 (OBRA-93), and the Balanced Budget Act of 1997 (BBA-97). The transfer of these bands to non-Government use should enable the development of new technologies and services, provide additional spectrum relief for congested private land mobile frequencies, and fulfill our obligations as mandated by Congress to assign this spectrum for non-Government use.

6. The Report and Order established competitive bidding rules and small business definitions for the unpaired 1390-1392 MHz, 1670-1675 MHz, and 2385-2390 MHz bands, and the paired 1392-1395 MHz and 1432-1435 MHz bands similar to those applied to the WCS 2.3 GHz band and the 700 MHz Guard Bands. Consistent with the Commission's responsibility under section 309(j) to promote opportunities for, and disseminate licenses to, a wide variety of applicants, the Report and Order adopted small business size standards and bidding preferences for qualifying bidders that will provide such bidders with opportunities to compete successfully against large, well-financed entities. Specifically, with respect to the aforementioned bands, we define a “small business” as any entity with average annual gross revenues for the three preceding years not exceeding $40 million, and a “very small business” as any entity with average annual gross revenues for the three preceding years not exceeding $15 million. Correspondingly, the Commission adopted a bidding credit of 15 percent for “small businesses” and a bidding credit of 25 percent for “very small businesses.” This bidding credit structure is consistent with the Commission's standard schedule of bidding credits, which may be found at § 1.2110(f)(2) of the Commission's rules.

7. We received no comments in response to the FRFA in the Report and Order. We continue to believe that the policies and rules adopted in this Report and Order will better enable small entities to compete for licenses in the unpaired 1390-1392 MHz, 1670-1675 MHz, and 2385-2390 MHz bands, and the paired 1392-1395 MHz and 1432-1435 MHz bands.

8. 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 proposed rules, if adopted. The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small business concern” under section 3 of the Small Business Act. A small business concern is one which: (i) Is independently owned and operated; (ii) is not dominant in its field of operation; and (iii) satisfies any additional criteria established by the SBA. Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities, and towns; of these, 37,566, or ninety-six percent, have populations of fewer than 50,000. The Census Bureau estimates that this ratio is approximately accurate for all governmental entities. Thus, of the 85,006 governmental entities, we estimate that 81,600 (ninety-one percent) are small entities.

9. Wireless Service Providers. The SBA has developed a definition for small business within the two separate categories of cellular and other wireless telecommunications or paging. Under that SBA definition, such a business is small if it has 1,500 or fewer employees. According to the Commission's Telephone Trends Report data, 1,495 companies reported that they were engaged in the provision of wireless service. Of these 1,495 companies, 989 reported that they have 1,500 or fewer employees and 506 reported that, alone or in combination with affiliates, they have more than 1,500 employees. We do not have data specifying the number of these carriers that are not independently owned and operated, and thus are unable at this time to estimate with greater precision the number of wireless service providers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are 989 or fewer small wireless service providers that may be affected by the rules adopted in this proceeding. Below, we further describe and estimate the number of small entity licensees and regulatees that may be affected by the rules adopted in this proceeding. Except as noted, these services are associated with the above SBA small business size standard.

10. With respect to the 1390-1392 MHz band, the Commission will award a single 2 MHz license in each of fifty-two Major Economic Areas (MEAs). For the 1670-1675 MHz, and 2385-2390 MHz bands, the Commission will award a single nationwide license in each band. For the paired 1392-1395 MHz and 1432-1435 MHz bands, the Commission will award a pair of 1.5 MHz licenses in each of six Economic Area Groupings (EAGs). For the 1432-1435 MHz band, the Commission will award licenses on a site by-site basis. The Commission does not yet know how many applicants or licensees in any of these bands will be small entities.

11. Existing services in other bands include entities that might be affected by the rules, either as existing licensees or potential applicants or licensees. Incumbent services in the 1427-1429.5 MHz and 1429.5-1432 MHz bands include wireless medical telemetry (WMTS) and general telemetry.

12. Telemetry. Incumbent non-medical telemetry operators in the 1427-1429.5 MHz and 1429.5-1432 MHz bands include Itron, Inc., Pueblo Service Company of Colorado and E Prime, Inc., and large manufacturers such as Deere and Company, Caterpillar, and General Dynamics. None of these licensees are likely to be small businesses. Itron, Inc. is the primary user of the 1427-1429.5 MHz and 1429.5-1432 MHz bands. Itron, Inc., with an investment of $100 million in equipment development, is not likely to be a small business. One licensee, Zytex, a manufacturer of high-speed telemetry systems, may be a small business. The Commission does not yet know how many applicants or licensees in these bands will be small entities.

13. WMTS. Users of medical telemetry are hospitals and medical care facilities, some of which are likely to be small businesses. The broad category of Hospitals consists of the following categories and the following small business providers with annual receipts of $29 million or less: General Medical and Surgical Hospitals, Psychiatric and Substance Abuse Hospitals, and Specialty Hospitals. For all these health care providers, census data indicate that there is a combined total of 330 firms that operated in 1997, of which 237 or fewer had revenues of less than $25 million. An additional 45 firms had annual receipts of $25 million to $49.99 million. We therefore estimate that most Hospitals are small, given SBA's size categories.

14. The broad category of Nursing and Residential Care Facilities consists of the following categories and the following small business size standards. The category of Nursing and Residential Care Facilities with annual receipts of $6 million or less consists of: Residential Mental Health and Substance Abuse Facilities, Homes for the Elderly, and Other Residential Care Facilities. The category of Nursing and Residential Care Facilities with annual receipts of $8.5 million or less consists of Residential Mental Retardation Facilities. The category of Nursing and Residential Care Facilities with annual receipts of less than $11.5 million consists of: Nursing Care Facilities and Continuing Care Retirement Communities. For all of these health care providers, census data indicate that there is a combined total of 18,011 firms that operated in 1997. Of these, 16,165 or fewer firms had annual receipts of below $5 million. In addition, 1,205 firms had annual receipts of $5 million to $9.99 million, and 450 firms had receipts of $10 million to $24.99 million. We therefore estimate that a great majority of Nursing and Residential Care Facilities are small, given SBA's size categories.

15. The Order imposes no new reporting, recordkeeping or other compliance requirements not previously adopted in this proceeding.

16. 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): (i) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (ii) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (iii) the use of performance, rather than design standards; and (iv) an exemption from coverage of the rule, or any part thereof, for small entities.

17. Regarding our affirmation in the Order of the Commission's decision in the Report and Order to require frequency coordination for primary and secondary telemetry operations in the 1427-1429.5 MHz and 1429.5-1432 MHz bands, we do not anticipate any adverse impact on small entities. Although there are certain costs associated with filing an application through an FCC-certified frequency coordinator, on balance, the benefits of frequency coordination, especially the avoidance of harmful interference, outweigh any costs. An alternative to this approach would have been to not require frequency coordination, but this is unacceptable because of high congestion, primary incumbent operations that must be protected, and the fact that licensees in these bands must share frequencies. Our amendment to the channel plans for telemetry operations in the 217-220 MHz and 1427-1432 MHz bands will benefit small entities by requiring less precise, and thus, less expensive equipment.

18. The Commission will send a copy of the Order, including this SFRFA, in a report to be sent to Congress pursuant to the Congressional Review Act. In addition, the Commission will send a copy of the Order, including this SFRFA, to the Chief Counsel for Advocacy of the Small Business Administration. A copy of this Order and SFRFA (or summaries thereof) will also be published in the Federal Register .

19. Accordingly, parts 1, 27, 90, and 95 of the Commission's Rules are amended effective August 30, 2004.

20. Pursuant to Sections 4(i), 303(r), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 405, and § 1.429 of the Commission's Rules, 47 CFR 1.429, that the petition for reconsideration filed by Aerospace and Flight Test Radio Coordinating Council on July 22, 2002 is denied in part to the extent set forth above.

21. Pursuant to Sections 4(i), 303(r), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 405, and § 1.429 of the Commission's Rules, 47 CFR 1.429, that the petition for reconsideration filed by the American Society for Health Care Engineering of the American Hospital Association on July 22, 2002 is denied.

22. Pursuant to Sections 4(i), 303(r), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 405, and § 1.429 of the Commission's Rules, 47 CFR 1.429, that the petition for reconsideration filed by Celtronix Telemetry, Inc. on July 22, 2002 is granted to the extent set forth above.

23. Pursuant to Sections 4(i), 303(r), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 405, that the petition for clarification filed by Final Analysis Communication Services, Inc. on July 22, 2002 is partially granted and partially denied to the extent set forth above.

24. Pursuant to Sections 4(i), 303(r), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 405, and § 1.429 of the Commission's Rules, 47 CFR 1.429, that the petition for reconsideration filed by Itron, Inc. on July 22, 2002 is dismissed.

25. Pursuant to Sections 4(i), 303(r), and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(r), 405, that the petition for clarification filed by the Ornithological Council on November 5, 2002 is granted.

This is a synopsis of the Commission's Report and Order, MM Docket No. 01-43, adopted April 29, 2004, and released May 7, 2004. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com . The Commission will send a copy of this Memorandum Opinion and Order to Congress and the General Accounting Office pursuant to the Congressional Review Act, see U.S.C.801(a)(1)(A).

This is a synopsis of the Commission's Report and Order, MB Docket No. 04-16, adopted May 13, 2004, and released May 28, 2004. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.

This is a synopsis of the Commission's Report and Order, MB Docket No.03-229, adopted May 13, 2004, and released May 21, 2004. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 445 12th Street, SW., CY-B402, Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com.