This final rule has been determined to be economically significant and was reviewed by the Office of Management and Budget in conformance with Executive Order 12866.

The Food Stamp Program (FSP) is listed in the Catalog of Federal Domestic Assistance under No. 10.551. For the reasons set forth in the final rule in 7 CFR 3015, subpart V and related notice (48 FR 29115), the FSP is excluded from the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.

This rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Eric M. Bost, Under Secretary for Food, Nutrition, and Consumer Services, has certified that this rule will not have a significant economic impact on a substantial number of small entities. This rule does not regulate the activities of small businesses or other small entities; instead it regulates the administration of the FSP, which is administered only by State or county social service agencies.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is intended to have preemptive effect with respect to any State or local laws, regulations or policies which conflict with its provisions or which would otherwise impede its full and timely implementation. Prior to any judicial challenge to the provisions of this rule or the application of its provisions, all applicable administrative procedures must be exhausted.

The paperwork burden associated with the food stamp certification process is approved under OMB control number 0584-0064. The maximum excess shelter expense deduction provisions of this proposed rule would result in no change in the burden for either applicants or State agencies. For applicants and State agencies, the effect of this provision is simply to substitute new maximum deductions for the previous ones.

The vehicle provisions of this rule do not change the paperwork burden on applicants. States that elect to substitute their TANF vehicle rules for their food stamp vehicle rules will experience minor increases or decreases in burden associated with the complexity or simplicity of each case. States that elect to retain the food stamp vehicle rules will experience no change in burden. The Department has concluded that the burden will vary from case to case and State to State but not enough to affect the average total processing time data upon which all burden estimates for food stamp certification (and re-certification) are based.

Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. We note that all references to State agencies when used in the context of Federalism also refer to local welfare agencies in States in which the FSP is administered by local governments. The Department has considered the impact of this rule on State agencies while drafting the rule. The rule codifies procedures mandated by statute and already implemented under the terms of a guidance memorandum issued on January 4, 2001.

Prior to drafting this rule, we consulted with State and local agencies at various times. Because the FSP is a State-administered, Federally-funded program, our regional offices have formal and informal discussions with State and local officials on an ongoing basis regarding program implementation and policy issues. This arrangement allows State and local agencies to provide comments that form the basis for many discretionary decisions in this and other FSP rules. We have also had numerous written requests for policy guidance on the implications of Public Law 106-387 from the State agencies that deliver food stamp services. These questions have helped us make the rule responsive to concerns presented by State agencies.

State agencies generally want greater flexibility in their implementation of FSP asset policy, especially with regard to vehicle ownership. This rule provides much greater flexibility in this area and also addresses another major State concern, the need to conform FSP rules to the rules of other means-tested Federal programs. Specific policy questions submitted by State agencies after enactment of the Agriculture Appropriations Act of 2001, but prior to the promulgation of regulations, helped us identify issues that needed to be clarified in the rule.

The Department has considered the impact of this rule on State and local agencies. The rule makes changes that the law required to be implemented in 2001. The effects on State agencies are minimal. While the vehicle provision of the rule requires eligibility workers to make additional computations in some cases, the ability to substitute TANF vehicle rules for FSP vehicle rules, when doing so results in a lower attribution of resources, allows a growing number of States to exclude some or all vehicles from household assets. The maximum excess shelter expense deduction provision simply increases the amount of the deduction and indexes it to the CPI, resulting in no additional requirements for State agencies. In this final rule, we have addressed every question submitted during the comment period by State agencies regarding both of these provisions.

Title II of UMRA establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under § 202 of the UMRA, the Department generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, or tribal governments in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, § 205 of the UMRA generally requires the Department to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, and tribal governments or the private sector of $100 million or more in any one year. This rule is, therefore, not subject to the requirements of section 202 and section 205 of the UMRA.

The Department has reviewed this rule in accordance with the Department Regulation 4300-4, “Civil Rights Impact Analysis,” to identify and address any major civil rights impacts the rule might have on minorities, women, and persons with disabilities. After a careful review of the rule's intent and provisions, and the characteristics of food stamp households and individual participants, the Department has determined that there is no adverse effect on any of the protected classes. The Department has minimal discretion in implementing many of these changes. The changes required by law have been implemented. All data available to the Department indicate that protected individuals have the same opportunity to participate in the FSP as non-protected individuals. The Department specifically prohibits the State and local government agencies that administer the program from engaging in actions that discriminate based on race, color, national origin, gender, age, disability, marital or family status. Regulations at 7 CFR 272.6 specifically state that “State agencies shall not discriminate against any applicant or participant in any aspect of program administration, including, but not limited to, the certification of households, the issuance of coupons, the conduct of fair hearings, or the conduct of any other program service for reasons of age, race, color, sex, handicap, religious creed, national origin, or political beliefs. Discrimination in any aspect of program administration is prohibited by these regulations, the Food Stamp Act, the Age Discrimination Act of 1975 (Pub. L. 94-135), the Rehabilitation Act of 1973 (Pub. L. 93-112, section 504), and title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under any applicable Federal law. Title VI complaints shall be processed in accord with 7 CFR part 15.” Where State agencies have options, and they choose to implement a certain provision, they must implement it in such a way that it complies with the regulations at 7 CFR 272.6.

This action is needed to implement § 846 and § 847 of the Agriculture Appropriations Act of 2001, Public Law 106-387. The rule increases the amounts of the maximum excess shelter expense deductions, and for future years, indexes them to the CPI. It also allows States the option of substituting their TANF vehicle rules for their food stamp vehicle rules when doing so would result in a lower attribution of resources to a household.

Section 846 (maximum excess shelter expense deduction provision): this final rule allows a larger income deduction for shelter expenses to those low-income families whose shelter expenses exceed 50 percent of their monthly income, after all other applicable deductions have been made. The Department does not expect raising the excess shelter deduction limit to significantly increase FSP participation. Instead, we estimate that the change will raise benefits for 8.4 percent of current participants. Applying this percentage to the participation projections for the President's Fiscal Year (FY) 2005 budget baseline, we estimate that 1.98 million persons will each receive an average of $6.23 more per month in food stamp benefits in FY 2004, compared to the benefits they would have received if the shelter cap had remained frozen as legislated prior to this provision. These impacts are already incorporated into the President's FY 2005 budget baseline.

Section 847 (vehicle provision): the rule allows food stamp applicants to benefit when State agencies elect to use more expansive TANF vehicle policy rules that will allow them to own a reliable vehicle and still be eligible for food stamps. The Department estimates that this provision will increase average participation in the FSP by 298,000 persons in FY 2004, compared to what participation would have been in its absence. Among those newly eligible, we estimate that their average monthly food stamp benefit will be $80.71. These impacts are already incorporated into the President's FY 2005 budget baseline. State agencies will benefit from the increased flexibility in program administration afforded by the rule and from an anticipated decrease in payment errors.

Although the provisions have already been implemented by State agencies, the Department estimates that the cost to the Government of section 846 will be $148 million in FY 2004 and $883 million over the five years, FY 2004 through FY 2008, compared to what costs would have been in its absence. Likewise, the Department estimates that the cost to the Government of section 847 will be $289 million in FY 2004 and $1.527 billion over the five years, FY 2004 through FY 2008, compared to what costs would have been in its absence. These impacts are already incorporated into the President's FY 2005 budget baseline.

On August 29, 2003, we published a rule at 68 FR 51932 in which we proposed to amend FSP regulations at 7 CFR 273.8 by adding a new paragraph (f)(4), and at 7 CFR 273.9(d)(6)(ii) by inserting new monthly shelter expense deduction limits mandated by Congress and by indexing future limits to the CPI. We solicited comments on provisions of the proposed rule through October 28, 2003, and received a total of 36 comments of which 28 expressed support for the rule as proposed without making specific suggestions for improvements. This final rule addresses issues raised by the remaining 8 comments.

The proposed rule added a new paragraph (f)(4) that explains how State agencies must administer the provision that allows substitution of the vehicle rules from a TANF-funded or TANF Maintenance-of-Effort-funded assistance program for those of the FSP. We received two comments that asked us to use the final rule to eliminate the long-standing equity test for vehicles at 7 CFR 273.8(f). The purpose of this final rule is to implement very specific statutory provisions, not to overhaul existing vehicle policy. Therefore, we will not adopt this suggestion. A commenter asked us to ensure that the final rule states that State agencies must exclude the most valuable vehicle that is not excluded under TANF rules if a TANF exclusion exists. While we agree with this suggestion, we also believe that the rule, as originally proposed, conveys this meaning quite clearly. For this reason, we will not add further details to this provision. The same commenter suggested that the final rule should state clearly that it applies only to vehicles not excluded by food stamp regulations at 7 CFR 273.8(e)(5) and (e)(11). We agree and have added language to this effect. The same commenter asked us to integrate the rule into the existing vehicle rules instead of according it a separate paragraph. The commenter's opinion is that by presenting this State option in a separate paragraph, we appear to suggest that State agencies must compute vehicle valuations twice, once under TANF rules and once under FSP rules. We disagree for two reasons: first, the statute presents this State option as an “alternative vehicle allowance,” which suggests to us the intent to offer it to States as a clear option rather than merge it with other aspects of the FSP vehicle rules; second, we issued guidance on January 4, 2001 that closely mirrors the proposed rule and States have long ago worked out their procedures for valuing vehicles under that guidance. As of February 2003, only 9 States had not elected to substitute TANF rules for FSP rules. We think the high level of response to this State option, and the absence of requests for clarification or simplification from the States themselves, shows that the rule as drafted will reduce rather than increase administrative complexities for State agencies.

Another commenter stated that the final rule should permit a State agency to substitute its TANF Fair Market Value (FMV) test for its FSP FMV test even if the TANF rules for that State do not include a FMV test. The comment argued that the absence of any reference to an FMV test is an FMV policy. We disagree. The statute allows the substitution of a State's TANF vehicle rules, as written, for the FSP vehicle rules, not the substitution of an un-stated provision. Under the final rule, this commenter's State may use FSP vehicle rules or the vehicle rules of its TANF program. Another commenter asked how to treat the resources, including vehicles, of a household member disqualified for an intentional program violation. Our view is that a State agency can substitute its TANF vehicle rules for all food stamp rules affecting treatment of vehicles. Therefore, a State agency can exclude from resources vehicles owned by a household member disqualified for an intentional program violation if the State's TANF vehicle rules permit the exclusion. The same interpretation holds for vehicles owned by persons disqualified for drug felony convictions, fleeing felon disqualifications, or workfare or work sanctions.

The proposed rule deleted the existing maximum excess shelter expense deductions and inserted the new ones contained in the statute. It also proposed in the preamble to index the maximum deductions for future years to the Shelter Component and Fuels and Utilities Component of the Consumer Price Index for all Urban Consumers (CPI-U). One commenter asked us to modify the regulatory language to include details on how these two components would be used in making future annual adjustments and recommended that the Department give them the same weights they receive within the overall CPI-U. When the Department made the adjustments for FY 2003 and FY 2004, we weighted the two components exactly as the commenter suggests, and will probably weight them the same way in future calculations. However, because the computation of the CPI-U and the weighting of components within it are not under the control of the Department, we have decided not to adopt the commenter's recommendation. We are concerned that future changes in the CPI-U, and unpredictable factors in the economy, may make the commenter's recommended methodology less favorable to food stamp participants than alternative methodologies at some point in the future. In addition, the rule, as drafted, is consistent with the Department's treatment of annual adjustments of the maximum excess shelter expense deduction in previous regulations.

The proposed rule, published August 29, 2003, closely mirrored the January 4, 2001 guidance memorandum sent to States by the Food and Nutrition Service (FNS). The proposed rule, however, specified no implementation dates for this final rule's two provisions: the vehicle provision is a State option that can be implemented at any time after July 1, 2001; the statute required State agencies to implement the new maximum excess shelter expense deduction limits beginning March 1, 2001.

This rule is issued under Marketing Agreement and Order No. 906, as amended (7 CFR part 906), regulating the handling of oranges and grapefruit grown in the Lower Rio Grande Valley in Texas, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, orange and grapefruit handlers in the Lower Rio Grande Valley are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable oranges and grapefruit beginning August 1, 2004, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule decreases the assessment rate established for the Committee for the 2004-05 and subsequent fiscal periods from $0.14 per to $0.12 per 7/10 -bushel carton or equivalent of oranges and grapefruit.

The Texas orange and grapefruit marketing order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers and handlers of Texas oranges and grapefruit. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2003-04 and subsequent fiscal periods, the Committee recommended, and USDA approved, an assessment rate that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on May 21, 2004, and recommended 2004-05 expenditures of $1,005,956 and an assessment rate of $0.12 per 7/10 -bushel carton or equivalent of oranges and grapefruit. Thirteen of the 14 Committee members and alternates acting as members voted in support of the $0.02 decrease per 7/10 -bushel carton or equivalent. One Committee member voted against the recommendation because he wanted the decrease to be larger. In comparison, last year's budgeted expenditures were $1,322,506. The assessment rate of $0.12 is $0.02 lower than the rate currently in effect. The decrease in the assessment rate and budget is primarily due to lower promotion and Mexican Fruit Fly program budgets. The reduced assessment rate and budget will lower handler costs by about $180,000 and will keep the Committee's operating reserve at an acceptable level.

The major expenditures recommended by the Committee for the 2004-05 fiscal period include $550,000 for promotion, $204,000 for the Mexican Fruit Fly Support Program, $123,679 for management and administration of the program, and $72,777 for compliance. Budgeted expenses for these items in 2003-04 were $800,000, $279,000, $119,929, and $72,777, respectively.

The assessment rate recommended by the Committee was derived by dividing anticipated expenses by expected shipments of Texas oranges and grapefruit. Texas orange and grapefruit shipments for the fiscal period are estimated at 9 million 7/10 -bushel cartons or equivalents, which should provide $1,080,000 in assessment income. Income derived from handler assessments will be more than adequate to cover budgeted expenses. Funds in the reserve (currently $175,000) will be kept within the maximum of one fiscal period's expenses permitted by the order (§ 906.35).

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate is effective for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2004-05 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

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

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

There are approximately 215 producers of oranges and grapefruit in the production area and approximately 13 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.

An updated Texas citrus industry profile shows that 2 of the 13 handlers (15 percent) could be considered large businesses under SBA's definition, and the remaining 11 handlers (85 percent) could be considered small businesses. Of the approximately 215 producers within the production area, few have sufficient acreage to generate sales in excess of $750,000. Thus, the majority of handlers and producers of Texas oranges and grapefruit may be classified as small entities.

This rule decreases the assessment rate established for the Committee and collected from handlers for the 2004-05 and subsequent fiscal periods from $0.14 to $0.12 per 7/10 -bushel carton or equivalent of oranges and grapefruit.

The Committee met on May 21, 2004, and recommended 2004-05 expenditures of $1,005,956 and an assessment rate of $0.12 per 7/10 -bushel carton or equivalent of oranges and grapefruit. The assessment rate of $0.12 is $0.02 lower than the current rate. As mentioned earlier, the quantity of assessable oranges and grapefruit for the 2004-05 fiscal period is estimated at 9 million 7/10 -bushel cartons or equivalents. Thus, the $0.12 assessment rate should provide $1,080,000 in assessment income and be more than adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2004-05 fiscal period include $550,000 for promotion, $204,000 for the Mexican Fruit Fly Support Program, $123,679 for management and administration of the program, and $72,777 for compliance. Budgeted expenses for these items in 2003-04 were $800,000, $279,000, $119,929, and $72,777, respectively.

The Committee recommended the $0.12 assessment rate primarily because it reduced its promotion and Mexican Fruit Fly programs. At a $0.14 assessment rate, the Committee projected its reserve on July 31, 2005, to be $401,160, which it believed was more than needed to administer the program. It also recommended the reduced assessment rate to lower handler costs by about $180,000 during 2004-05.

The Committee reviewed and recommended 2004-05 expenditures of $1,005,956, which included decreases in the promotion and Mexican Fruit Fly programs and an increase in the management and administration of the marketing order program. In arriving at the budget, the Committee considered information from various sources, including the Executive Committee. Alternative expenditure levels were discussed, based upon the relative need of the Mexican Fruit Fly program to the Texas citrus industry.

The assessment rate recommended by the Committee was derived by dividing the total recommended budget by the 9 million 7/10 -bushel cartons of oranges and grapefruit estimated for the 2004-05 fiscal period. The $0.12 rate will provide $1,080,000 in assessment income. This is approximately $74,044 above the anticipated expenses, which the Committee determined to be acceptable.

A review of historical information from recent seasons (2000-2002) and preliminary information pertaining to the upcoming fiscal period indicates that the season average packinghouse door price for the 2004-05 fiscal period could likely range from $1.40 to $2.60 per 7/10 -bushel carton of Texas oranges, and from $2.15 to $2.70 for Texas grapefruit. Therefore, the estimated assessment revenue for the 2004-05 fiscal period as a percentage of total grower (packinghouse door) revenue could range between 8.6 and 4.6 percent for oranges and between 5.6 and 4.4 percent for grapefruit.

This action decreases the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers, and may reduce the burden on producers. In addition, the Committee's meeting was widely publicized throughout the Texas orange and grapefruit industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 21, 2004, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

This action imposes no additional reporting or recordkeeping requirements on either small or large Texas orange and grapefruit handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

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

After consideration of all relevant material presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect, and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) The 2004-05 fiscal period begins on August 1, 2004, and the marketing order requires that the rate of assessment for each fiscal period apply to all assessable oranges and grapefruit handled during such fiscal period; (2) this action decreases the assessment rate for assessable oranges and grapefruit beginning with the 2004-05 fiscal period; (3) handlers are aware of this action which was recommended by the Committee at a public meeting and is similar to other assessment rate actions issued in past years; and (4) this interim final rule provides a 60-day comment period, and all comments timely received will be considered prior to finalization of this rule.

This rule is issued under Marketing Agreement and Order No. 922 (7 CFR part 922) regulating the handling of apricots grown in designated counties in Washington, and Marketing Agreement and Order No. 923 (7 CFR part 923) regulating the handling of sweet cherries grown in designated counties in Washington, hereinafter referred to as the “orders.” The orders are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing orders now in effect, handlers in designated counties in Washington are subject to assessments. Funds to administer the orders are derived from such assessments. It is intended that the assessment rates as issued herein will be applicable to all assessable Washington apricots and Washington sweet cherries beginning April 1, 2004, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

This rule decreases the assessment rates established for the Committees for the 2004-2005 and subsequent fiscal periods from $3.00 to $2.50 per ton for Washington apricots and from $1.00 to $0.75 per ton for Washington sweet cherries.

The orders provide authority for the Committees, with the approval of USDA, to formulate annual budgets of expenses and collect assessments from handlers to administer the program. The members of the Committees are producers and handlers of apricots and sweet cherries in designated counties in Washington. They are familiar with the Committees' needs and with the costs for goods and services in their local areas and are thus in a position to formulate appropriate budgets and assessment rates. The assessment rates are formulated and discussed in public meetings. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2003-2004 and subsequent fiscal periods, the Washington Apricot Marketing Committee (Apricot Committee) recommended, and USDA approved, an assessment rate of $3.00 per ton of apricots handled. This assessment rate continues in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Apricot Committee or other information available to USDA.

The Apricot Committee met on May 17, 2004, and unanimously recommended 2004-2005 expenditures of $10,594 and a decreased assessment rate of $2.50 per ton of assessable apricots handled. In comparison, last year's budgeted expenditures were $10,559. The assessment rate of $2.50 is $0.50 lower than the rate currently in effect. Due to an anticipated increase in apricot production this season, the Apricot Committee recommended the assessment rate decrease to maintain the level of income at or near the level of expenses.

The assessment rate recommended by the Apricot Committee was derived by dividing anticipated expenses by expected shipments of Washington apricots. Applying the $2.50 per ton rate of assessment to the Apricot Committee's 4,350-ton crop estimate should provide $10,875 in assessment income. Thus, income derived from handler assessments will be adequate to cover the recommended 2004-2005 budget of $10,594. Funds in the reserve ($11,418 as of March 31, 2004) will be maintained at a level equal to approximately one fiscal period's operational expenses as authorized by the order (§ 922.42).

For the 2003-2004 and subsequent fiscal periods, the Washington Cherry Marketing Committee (Cherry Committee) recommended, and the USDA approved, an assessment rate of $1.00 per ton of sweet cherries handled. This rate continues in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Cherry Committee or other information available to USDA.

The Cherry Committee met on May 18, 2004, and unanimously recommended 2004-2005 expenditures of $72,297 and a decreased assessment rate of $0.75 per ton of assessable cherries handled. In comparison, last year's budgeted expenditures were $71,865. The assessment rate of $0.75 is $0.25 lower than the rate previously in effect. Due to an anticipated increase in cherry production this season, the Cherry Committee recommended the assessment rate decrease in order to maintain the level of income near the level of expenses.

The assessment rate recommended by the Cherry Committee was derived by dividing anticipated expenses by expected shipments of Washington sweet cherries. Applying the $0.75 per ton rate of assessment to the Cherry Committee's 112,600-ton crop estimate should provide $84,450 in assessment income. Thus, income derived from handler assessments will be adequate to cover the recommended 2004-2005 budget of $72,297. Funds in the reserve ($58,970 as of March 31, 2004), will be kept within the maximum permitted by the order of approximately one fiscal period's operational expenses (§ 923.42).

Both Committees are managed from the same office, thus combined major expenses recommended by the Committees for the 2004-2005 year include staff salaries ($50,572), rent and maintenance ($6,624), compliance ($4,740), and Committee travel and compensation ($3,200). These budgeted expenses are the same as those approved for the 2003-2004 fiscal period.

The assessment rates established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committees or other available information.

Although these assessment rates are effective for an indefinite period, the Committees will continue to meet prior to or during each fiscal period to recommend budgets of expenses and consider recommendations for modification of the assessment rates. The dates and times of the Committees' meetings are available from the Committees or USDA. The Committees' meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate the Committees' recommendations and other available information to determine whether modification of the assessment rates is needed. Further rulemaking will be undertaken as necessary. The Committees' 2004-2005 budgets and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

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

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

There are approximately 272 apricot producers and 1,800 sweet cherry producers in designated counties in Washington. In addition, there are approximately 28 Washington apricot handlers and 69 Washington sweet cherry handlers subject to regulation under the respective marketing orders. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $5,000,000.

Based on the total number of apricot producers (272), the most recent three-year average fresh apricot production of 3,975 tons (Apricot Committee records), and the most recent three-year average producer price of $355 per ton as reported by National Agricultural Statistics Service (NASS), average annual revenue per producer from the sale of apricots is approximately $5,188. In addition, based on Apricot Committee records and 2003 f.o.b. prices ranging from $10.50 to $12.50 per 24-pound container as reported by USDA's Market News Service (MNS), the entire Washington apricot industry handles less than $5,000,000 worth of apricots.

Based on the total number of sweet cherry producers (1,800), the most recent three-year average fresh cherry production of 79,763 tons (Cherry Committee records), and the most recent three-year average producer price of $1,390 per ton as reported by NASS, the average annual revenue per producer from the sale of cherries is approximately $61,595. In addition, based on Cherry Committee records and an average 2003 f.o.b. price of $28.00 per 20-pound container as reported by the MNS, 75 percent of the Washington cherry handlers ship under $5,000,000 worth of cherries. In view of the forgoing, the majority of Washington cherry producers and handlers may be classified as small entities.

This rule decreases the assessment rates established for the Committees and collected from handlers for the 2004-2005 and subsequent fiscal periods from $3.00 to $2.50 per ton for apricots and from $1.00 to $0.75 per ton for sweet cherries. The Apricot Committee and the Cherry Committee unanimously recommended 2004-2005 expenditures of $10,594 and $72,297, respectively. With the 2004-2005 crop estimates of 4,350 tons for apricots and 112,600 tons for sweet cherries, the Committees anticipate assessment income of $10,875 and $84,450, respectively, which will be adequate to cover budgeted expenses for both programs. These assessment incomes will maintain the Committees' reserve funds at or near the levels authorized by the orders of approximately one fiscal period's operational expenses (§§ 922.42 and 923.42).

Both Committees are managed from the same office, thus combined major expenses recommended by the Committees for the 2004-2005 year include staff salaries ($50,572), rent and maintenance ($6,624), compliance ($4,740), and Committee travel and compensation ($3,200). These budgeted expenses are the same as those approved for the 2003-2004 fiscal period.

The Committees discussed alternatives to this rule, including alternative expenditure levels, but determined that the recommended expenses were reasonable and necessary to adequately cover program operations. Lower assessment rates were considered, but not recommended because they would not generate the income necessary to administer the programs.

A review of historical information and preliminary information pertaining to the upcoming crop year indicates that the producer price for the 2004-2005 season could range between $353 and $357 per ton for Washington apricots and between $1,230 and $1,550 per ton for Washington sweet cherries. Therefore, the estimated assessment revenue for the 2004-2005 fiscal period as a percentage of total producer revenue could range between 0.70 and 0.71 percent for Washington apricots and between 0.05 and 0.06 percent for Washington sweet cherries.

This action decreases the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rates reduces the burden on handlers, and may reduce the burden on producers. In addition, the Committees' meetings were widely publicized throughout the Washington apricot and Washington sweet cherry industries and all interested persons were invited to attend and participate in the Committees' deliberations on all issues. Like all Committee meetings, the May 17 and May 18, 2004, meetings were public meetings and all entities, both large and small, were able to express views on the issues. Finally, interested persons are invited to submit information on the regulatory and informational impacts of this action on small businesses.

This action imposes no additional reporting or recordkeeping requirements on either small or large Washington apricot or Washington sweet cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

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

After consideration of all relevant material presented, including the information and recommendation submitted by the Committees and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect, and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) The 2004-2005 fiscal period for both orders began on April 1, 2004, and both orders require that the rate of assessment apply to all assessable Washington apricots and Washington sweet cherries handled during such fiscal period; (2) the Committees need to have sufficient funds to pay for expenses which are incurred on a continuous basis; (3) handlers are aware of this action which was unanimously recommended by both Committees at public meetings and are similar to other assessment rate actions issued in past years; and (4) this interim final rule provides a 60-day comment period, and all comments timely received will be considered prior to finalization of this rule.

Part 705 of NCUA's regulations implements the CDRLP. 12 CFR part 705. The purpose of the CDRLP is to support the community development activities of participating credit unions. 12 CFR § 705.2. Participating credit unions are defined as those that are specifically involved in the stimulation of economic development and community revitalization activities in the communities they serve, whose membership consists of predominantly low-income members as reflected by a current low-income designation pursuant to § 701.34, § 741.204, or other applicable standards, and have submitted an application for participation and have been selected. 12 CFR § 705.3(b); 12 CFR § 701.34; 12 CFR § 741.204. The CDRLP achieves its purpose by making low interest loans and providing technical assistance to those credit unions. A credit union that participates in the CDRLP increases economic and employment opportunities for its low-income members.

Previously, NCUA took the position that although student credit unions are designated as low-income credit unions for purposes of receiving nonmember deposits, they did not qualify to participate in the CDRLP because they were not specifically involved in the stimulation of economic development activities and community revitalization. 61 FR 50694 (September 27, 1996); 58 FR 21642 (April 23, 1993). The NCUA believes this historical perspective underestimates the importance of student credit unions and the impact they have on the economic development and revitalization of the communities they serve. Student credit unions not only provide their members with valuable financial services generally not available but also a unique opportunity for financial education. NCUA believes that well run student credit unions would benefit greatly from participation in the CDRLP and, as a result, would be better able to serve their communities. Accordingly, in April 2004, NCUA issued a proposed rule to amend the CDRLP regulation to allow student credit unions to participate in the program. 69 FR 21443 (April 21, 2004).

NCUA received twenty-six comment letters regarding the proposed rule: eleven from federal credit unions, four from state credit unions, one from a private individual, and ten from credit union and student trade organizations. Twenty-one commenters fully supported the proposal. Four low-income designated credit unions involved in community development activities and one trade organization that represents community development credit unions opposed the proposal. Those opposed took the position that student credit unions do not fulfill the same mission as those credit unions for which the CDRLP was created. As noted above, NCUA believes that viewpoint underestimates the impact the few remaining student credit unions have on the communities they serve. Student credit unions not only provide their members with valuable financial services generally not available but also a unique opportunity for financial education. Also, NCUA believes a small CDRLP loan or technical assistance grant might help a student credit union survive or prosper while having a minor impact on CDRLP funding availability. Accordingly, NCUA adopts the amendments to part 705 as proposed.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a rule may have on a substantial number of small credit unions, defined as those under ten million dollars in assets. This rule permits student credit unions to participate in the CDRLP, without imposing any additional regulatory burden. The final amendments 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.

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 final rule would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order.

The NCUA has determined that this final 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 Fairness 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 has determined that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

On May 20, 2004, the NCUA Board requested comment on a proposed change to parts 724 and 721 of its regulations to permit federal credit unions (FCUs) to serve as trustee or custodian for health savings accounts (HSAs) established by their members. 69 FR 29907 (May 26, 2004). As authorized by Title XII of the Medicare Act, HSAs are available to anyone with a qualifying high deductible health plan. The NCUA proposed amending Part 724 of its regulations to specifically include HSAs in the listing of the types of accounts for which an FCU may fulfill the role of trustee or custodian on behalf of members. In addition, NCUA proposed to amend Part 724 to clarify that an FCU's authority to fulfill this role is not limited to pension or retirement accounts, but rather includes other specific types of tax advantaged savings accounts, such as Coverdell Education Savings Accounts and HSAs. The amendment also clarifies that HSAs are among the types of accounts for which a member may direct investment decisions. Finally, NCUA proposed to amend Part 721 to include serving as trustee or custodian for member HSAs within the category of activities in which an FCU may engage as a preapproved exercise of its incidental powers.

NCUA received six comments regarding the proposed changes from three federal credit unions, two national credit union trade associations, and one credit union service provider.

The commenters uniformly supported all aspects of the proposal. All commenters noted that the proposed amendments would provide FCU members with a viable, tax-advantaged option for obtaining health insurance and health care at a reasonable cost. Three commenters noted the importance of the proposal in assuring that FCUs can maintain parity with banks and thrifts, each of which are able to offer these types of accounts to their customers. Two commenters specifically approved of the proposal to broaden the rules to refer to “Tax Advantaged Savings Plans,” which they believe is more accurate and will allow for a more flexible approach toward offering similar types of savings plans that may become available in the future. Three commenters noted their agreement with the NCUA's assessment, as discussed in the preamble to the proposed rule, that FCUs should not have difficulty in handling the administrative duties associated with serving as account trustee or custodian, based on their experience with IRAs.

Additional information about HSAs, including important details concerning the type of high deductible health plan an individual must obtain to qualify for an HSA, is available from the Public Affairs Office of the U.S. Department of the Treasury. The Treasury Department has also developed proposed model forms for use in establishing an HSA. The information and the proposed forms are directly accessible from the Treasury Web site, http://www.ustreas.gov.

In view of the comments, NCUA is adopting the proposed amendments as a final rule without change.

The final rule conforms current regulations to recent changes in the federal tax law and implements authority for FCUs to offer HSAs to their members. The Board has determined and certifies that the rule will not have a significant economic impact on a substantial number of small credit unions. Accordingly, the NCUA Board has determined that a Regulatory Flexibility Analysis is not required.

NCUA has determined that the proposed rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

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 final rule would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this rule does not constitute a policy that has federalism implications for purposes of the executive order.

The NCUA has determined that this final 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 Fairness 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 has determined that this rule is not a major rule for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.

Effective April 1, 2004, NCUA revised its living trust account rules to provide for insurance coverage of up to $100,000 per qualifying beneficiary who, as of the date of a credit union's failure, would become entitled to the living trust assets upon the owner's death, regardless of the existence of a defeating contingency affecting the beneficiary's interest. The NCUA Board determined that elimination of the defeating contingency provisions in the rule was beneficial to credit unions and their members because the operation of the rule was complex and not widely understood. The amendment also clarified that a credit union need not maintain records disclosing the names and interests of beneficiaries of living trusts. In addition, the amendment preserved parity between the NCUA and the Federal Deposit Insurance Corporation (FDIC), which administers the insurance fund that protects bank depositors and which had, in January of 2004, adopted a similar amendment to its rules.

Even though NCUA issued the amendment as an interim final rule, the Board established a sixty-day comment period in which interested members of the public could comment on any aspect of the amendment. We received five comments, all of which were fully supportive of the amendment. The commenters uniformly indicated the changes would result in elimination of confusion by credit unions and their members and an enhanced understanding of the scope and operation of the share insurance rules for beneficial interests in living trust accounts. The commenters also cited the benefit of having uniformity of insurance coverage between living trust accounts and other types of revocable trust accounts, as well as the benefit of parity between the NCUA and the FDIC.

In view of the comments and the benefits described herein and in the preamble to the interim rule, the NCUA Board has determined to adopt the rule as final without change.

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 McDonnell Douglas Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83 (MD-83), DC-9-87 (MD-87), and Model MD-88 airplanes was published in the Federal Register on December 5, 2003 (68 FR 67978). That action proposed to require replacement of certain freeze protection ribbon heaters in the lavatory water supply system, and flushing, cleaning, and sterilizing the potable water system; disconnecting, coiling, and stowing the wiring of the freeze protection ribbon heater; or removal of freeze protection heaters.

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received.

One commenter requests that the FAA give credit for actions accomplished in accordance with McDonnell Douglas MD-80 Service Bulletin 38-56, dated September 20, 1991. The commenter states that the McDonnell Douglas service bulletin refers to Jamco Corporation Service Bulletin MD080-25-829 as an additional source of service information for “instructions to replace the modular lavatory potable water supply hose and ribbon heater.”

We agree, since we find that both Boeing Alert Service Bulletin MD80-25A381, dated August 5, 2002; and McDonnell Douglas MD-80 Service Bulletin 38-56, dated September 20, 1991, as revised by McDonnell Douglas MD-80 Service Bulletin Change Notification 38-56 CN1, dated June 11, 1992; refer to Jamco Corporation Service Bulletin MD080-25-829 as an additional source of service information for instructions on replacing the existing freeze protection ribbon heater in the lavatory water supply system with a new, reidentified heater hose assembly. Therefore, we have determined that completion of all the steps in the Accomplishment Instructions of McDonnell Douglas MD-80 Service Bulletin 38-56, dated September 20, 1991, is acceptable for compliance with the corresponding actions specified in paragraph (a)(1) of this final rule. We have added new paragraph (b) to this final rule to give credit for accomplishment of the alternative service bulletin.

Another commenter requests that we revise the proposed AD to reference Revision 6 of Jamco Corporation Service Bulletin MD080-25-829 as an additional source of service information. The commenter states that Revision 6 is “in the approval cycle,” and that if it is approved ”. . . and the AD restates the version of the Jamco service bulletin, there will be a problem.” The commenter provided no justification for the request.

We agree with the commenter's request to reference Jamco Corporation Service Bulletin MD080-25-829, Revision 6, dated March 10, 2003. We find that Revision 6 of the Jamco service bulletin describes procedures that are essentially the same as the procedures described in Revision 5 of the Jamco service bulletin. Therefore, we have revised Note 1 of this final rule to reference Revision 6 of the Jamco service bulletin as an additional source of service information.

In Note 1 of the proposed AD, we inadvertently omitted the revision level for Jamco Corporation Service Bulletin MD080-25-829. We have revised this final rule to specify Revision 6.

After careful review of the available data, including the comments noted above, the FAA has determined that air safety and the public interest require the adoption of the rule with the changes previously described. The FAA has determined that these changes will neither increase the economic burden on any operator nor increase the scope of the AD.

There are approximately 1,180 airplanes of the affected design in the worldwide fleet. The FAA estimates that 724 airplanes of U.S. registry will be affected by this AD, and that each airplane has approximately 3 lavatories, and that the average labor rate is $65 per work hour. Table 1 shows the estimated cost impact, based upon the action taken, for airplanes affected by this AD.

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 A330-202, -203, -223, -243, and -300 series airplanes was published in the Federal Register on March 5, 2004 (69 FR 10369). That action proposed to require modification of the control box of the auxiliary power unit (APU).

Interested persons have been afforded an opportunity to participate in the making of this amendment. Due consideration has been given to the comments received.

One commenter, the airplane manufacturer, states that, according to French airworthiness directive 2003-350(B), dated September 17, 2003, the action specified in the proposed AD is applicable to Airbus Model A330-202, -203, -223, -243, and A330-301, -321, -322, -323, -341, -342, and -343 series airplanes, all serial numbers, on which Airbus Modification 50245 has not been embodied.

Although the commenter does not make a specific request, the FAA infers that the commenter is asking that the applicability specified in the proposed AD be changed to match the applicability specified in the French airworthiness directive. Per the model designation listed on the type certificate data sheet, specifying Airbus Model A330-300 “series airplanes” in the AD applicability encapsulates the airplane models identified as “Airbus Model A330-301, -321, -322, -323, -341, -342, and -343 series airplanes.” While we have not matched the French airworthiness directive, we have provided clarification throughout this AD preamble and in the applicability section of this AD by differentiating between “airplanes” and “series airplanes.” We have changed the applicability section to specify Airbus Model A330-202, -203, -223, and -243 airplanes, and A330-300 series airplanes.

In addition, the applicability section of the AD already excludes Airbus Modification 50245 and references the service bulletin, which includes the serial numbers. No change to the AD is made in this regard.

The same commenter states that the proposed AD specifies accomplishment of the modification per Airbus Service Bulletin A330-49-3025, dated June 11, 2003; however, the referenced French airworthiness directive allows that any later approved revisions of the service bulletin are acceptable.

We infer that the commenter is asking that later revisions of Airbus Service Bulletin A330-49-3025 be added to the AD for accomplishment of the modification. We do not agree. We cannot approve the use of revisions of a service document issued after publication of the AD because doing so would violate Office of the Federal Register (OFR) regulations for approval of materials “incorporated by reference” in rules. In general terms, we are required by these OFR regulations to either publish the service document contents as part of the actual AD language; or submit the service document to the OFR for approval as “referenced” material, in which case we may only refer to such material in the text of an AD. To allow operators to use later revisions of the referenced service bulletin, we must either revise the AD to reference specific later revisions, or operators must request approval to use later revisions as an AMOC under the provisions of paragraph (b) of this AD. Accordingly, no change to the AD is made in this regard.

The same commenter states that the compliance time of 12 months after the effective date of the AD, as specified in the proposed AD, differs from the compliance time of September 30, 2004 (at the latest), as required by the referenced French airworthiness directive. The commenter states that its intention is simply to note the difference; no change is requested.

Although the commenter does not request a change, we provide the following explanation of the differences between the compliance times. We do not express compliance times in terms of calendar dates unless engineering analysis establishes a direct relationship between the date and the compliance time. Additionally, in consideration of the average utilization rate by the affected U.S. operators, and the practical aspects of an orderly modification of the U.S. fleet during regular maintenance periods, we determined that 12 months after the effective date of the AD is appropriate.

Another commenter asks that the implementation schedule for the modification of the control box of the APU, as specified in the proposed AD, be done more rapidly. The commenter states that, given the small number of airplanes identified in the proposed AD (nine), and the short time, and limited and easily acquired materials, implementation should be accomplished much sooner, without causing a burden to operators.

We do not agree that the compliance time for the modification should be reduced. In developing an appropriate compliance time for this action, we considered not only the degree of urgency associated with addressing the subject unsafe condition, but the practical aspect of doing the modification within an interval of time that parallels normal scheduled maintenance for the majority of affected operators. In addition, we find that adequate maintenance will provide an acceptable level of safety until the modification is done. However, operators are always permitted to accomplish the actions earlier than the compliance time specified in an AD. Accordingly, no change to the AD is made in this regard.

We have carefully reviewed the available data, including the comments noted above, and determined that air safety and the public interest require adopting the AD with the change described previously. This change will neither increase the economic burden on any operator nor increase the scope of the AD.

We estimate that 9 airplanes of U.S. registry will be affected by this AD, that it will take about 1 work hour per airplane to do the required actions, and that the average labor rate is $65 per work hour. Required parts will cost about $140 per airplane. Based on these figures, the cost impact of the AD on U.S. operators is estimated to be $1,845, or $205 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.

The Direction Générale de l'Aviation Civile (DGAC), which is the airworthiness authority for France, notified the FAA of numerous reports of the intermittent interruption of the electrical power supply. The power interruption has been attributed to arcing of the electrical harness of the integrated drive generator (IDG) at the pin-to-socket connector at the firewall. The affected IDG connectors are installed on Airbus Model A319, A320, and A321 series airplanes equipped with International Aero Engines (IAE) Model V2500. In most of the incidents, the generator control unit (GCU) detected the arcing and shut down the associated IDG with only minor consequences. However, in some cases, the GCU—because of intermittent arcing—did not shut down the IDG. Investigation revealed that the arcing is due to fretting corrosion between the Cannon connector installed on the nacelle side of the firewall and the Souriau connector installed on the pylon side of the firewall. The following events have occurred or could occur during flight as a result of the intermittent loss of electrical power supply:

• Flickering cabin lights;

• Flickering primary flight and navigation displays;

• Transient disconnection of several systems (autopilot, yaw damper, auto throttle), triggering warnings from the electronic centralized aircraft monitoring (ECAM) displays and prompting diversions to the nearest available airport; and

• Loss of IDG power supply on the affected engine.

These conditions, if not corrected, could result in reduced ability of the flightcrew to cope with adverse flight conditions.

Airbus has issued Temporary Revision (TR) 4.02.00/20 to the A318/319/320/321 Airplane Flight Manual (AFM). The TR, dated May 3, 2004, provides background information and operational recommendations regarding the intermittent interruption of electrical power supply.

Airbus has also issued Service Bulletin A320-71-1030, dated February 27, 2003. The service bulletin describes procedures for replacing the IDG harness on the nacelle side of the firewall to eliminate the pin-to-socket arcing. Specifically, harnesses having Cannon connectors are replaced with harnesses having Souriau connectors. The Souriau connector provides a better connection of the IDG electrical harness at the firewall. Airbus Service Bulletin A320-71-1030 refers to International Aero Engines Information Bulletin V2500-NAC-70-0736, dated January 28, 2003, as an additional source of information for the IDG harness/connector replacement.

The DGAC approved these service documents. The DGAC has issued French airworthiness directive F-2004-074, dated May 26, 2004, to ensure the continued airworthiness of these airplanes in France.

These airplane models are manufactured in France and are type certificated for operation in the United States under the provisions of section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and the applicable bilateral airworthiness agreement. Pursuant to this bilateral airworthiness agreement, the DGAC has kept the FAA informed of the situation described above. We have examined the DGAC's findings, evaluated all pertinent information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

Therefore, we are issuing this AD to prevent transient loss of the systems connected to the affected arcing connector and consequent reduced ability of the flightcrew to cope with adverse flight conditions. This AD requires revising the AFM to advise the flightcrew of procedures associated with the intermittent interruption of the electrical power. Under certain conditions, this AD also requires inspecting for signs of arcing and performing any necessary corrective actions. This AD also provides for optional terminating action for the requirements of the AD. The actions must be done in accordance with the service information described previously, except as described below.

The following differences have been coordinated between the FAA and the DGAC.

The French airworthiness directive does not require inspecting an IDG that has been shut down in accordance with the TR or that has been shut down automatically. We have determined that investigative and corrective actions (including an inspection for signs of arcing, and repair or replacement of any discrepant IDG harness/connector with a new harness/connector) are necessary due to the severity of the problem to prevent the unsafe condition from recurring. The inspections and corrective actions must be done in accordance with a method approved by the FAA.

The French airworthiness directive applies to all Model A319, A320, and A321 series airplanes equipped with IAE V2500 series engines—regardless of the type of connector installed. This AD, however, applies to only those airplanes having Cannon connectors on the nacelle side of the firewall and Souriau connectors on the pylon side of the firewall. There have been no reported problems on airplanes equipped with Souriau connectors on both sides of the firewall. Therefore, the applicability of this AD excludes production airplanes that have been equipped with Souriau connectors on both sides of the firewall on both engines (accomplished via Airbus Modification 32943). This AD also includes a provision for replacing, on both engines, the IDG harnesses having Cannon connectors with IDG harnesses having Souriau connectors; this replacement would terminate the requirements of this AD.

We consider this AD interim action. We may consider further rulemaking at a later date to mandate replacement of the subject connectors, as specified in Airbus Service Bulletin A320-71-1030.

An unsafe condition exists that requires the immediate adoption of this AD; therefore, providing notice and opportunity for public comment before the AD is issued is impracticable, and good cause exists to make this AD effective in less than 30 days.

This AD is a final rule that involves requirements that affect flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES. Include “Docket No. FAA-2004-18681; Directorate Identifier 2004-NM-56-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the AD. We will consider all comments received by the closing date and may amend the AD in light of those comments.

We will post all comments we receive, without change, to http://dms.dot.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this AD. Using the search function of our docket Web site, anyone can find and read the comments in any of our dockets, including the name of the individual who sent the comment (or signed the comment on behalf of an association, business, labor union, etc. ). You can review the DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477-78), or you can visit http://dms.dot.gov .

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

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

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

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

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

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD. See the ADDRESSES section for a location to examine the regulatory evaluation.

A final rule AD, FR Doc. 04-759, applicable to RR RB211-22B series, RB211-524B, -524C2, -524D4, -524G2, -524G3, and -524H series, and RB211-535C and -535E series turbofan engines with HPC stage 3 disc assemblies, P/Ns LK46210, LK58278, LK67634, LK76036, UL11706, UL15358, UL22577, UL22578, and UL24738 installed, was published in the Federal Register on January 20, 2004 (69 FR 2661). The following corrections are needed:

“(5) Discs in RB211-535C operation are unaffected by the interim rework cyclic band limits in Table 1 of this AD, but must meet the calendar life requirements of either paragraph (f)(1) or (f)(2) of this AD, as applicable.”

This file is available for download without charge in ASCII and Adobe Acrobat readable (*.PDF) formats at GPO Access. GPO Access supports HTTP, FTP, and Telnet at fedbbs.access.gpo.gov. It may also be accessed by modem dialup at 202/512-87 followed by typing “/GO/FAC.” Paper copies of this document can be obtained by calling the Government Printing Office at 202/512-1530. This document and additional information concerning the programs of the Office of Foreign Assets Control are available for downloading from the Office's Internet Home Page: http://www.treas.gov/ofac, or via FTP at ofacftp.treas.gov. Facsimiles of information are available through the Office's 24-hour fax-on-demand service: call 202/622-0077 using a fax machine, fax modem, or (within the United States) a touch-tone telephone.

On March 6, 2003, the President, invoking the authority, inter alia, of the International Emergency Economic Powers Act (50 U.S.C. 1701-1706) (“IEEPA”), issued Executive Order 13288 (68 FR 11457, Mar. 10, 2003). The order declared a national emergency with respect to “the actions and policies of certain members of the Government of Zimbabwe and other persons to undermine Zimbabwe's democratic processes or institutions, contributing to the deliberate breakdown in the rule of law in Zimbabwe, to politically motivated violence and intimidation in that country, and to political and economic instability in the southern African region * * *”

These regulations are promulgated in furtherance of the sanctions set forth in Executive Order 13288. Section 1 of the order blocks, with certain exceptions, all property and interests in property of the persons described in sections 1(a) and 1(b) that are in the United States, that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons, including their overseas branches. The persons described in section 1(a) are those listed in the Annex to the order. The persons described in section 1(b) are any persons determined by the Secretary of the Treasury, in consultation with the Secretary of State, to be owned or controlled by, or acting or purporting to act directly or indirectly for or on behalf of, any of the persons listed in the Annex to the order.

Section 2(a) of the order prohibits any transaction or dealing by a United States person or within the United States in property blocked pursuant to the order, including but not limited to, the making or receiving of any contribution of funds, goods or services to or for the benefit of a person listed in or designated pursuant to the order. Section 2(b) of the order prohibits any transaction by a United States person or within the United States that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the order. Section 2(c) also prohibits any conspiracy formed to violate such prohibitions.

Section 4 of the order authorizes the Secretary of the Treasury, in consultation with the Secretary of State, to take such actions, including the promulgation of rules and regulations, as may be necessary to carry out the purposes of the order. Acting under authority delegated by the Secretary of the Treasury, the Department of the Treasury's Office of Foreign Assets Control (“OFAC”) is promulgating these Zimbabwe Sanctions Regulations, 31 CFR part 541 (the “Regulations”).

Subpart B of the Regulations implements the prohibitions contained in sections 1 and 2 of the order. See §§ 541.201, 541.204. Appendix A to 31 CFR chapter V has previously been amended to incorporate the names of persons set forth in the Annex to the order. Persons identified in the Annex to the order or designated by or under the authority of the Secretary of the Treasury pursuant to the order are referred to throughout the Regulations as “persons whose property or interests in property are blocked pursuant to § 541.201(a).” Their names are or will be published on OFAC's Web site, announced in the Federal Register and incorporated on an ongoing basis into appendix A to 31 CFR chapter V, which lists persons that are the targets of various sanctions programs administered by OFAC.

Sections 541.202 and 541.203 of subpart B, respectively, detail the effect of transfers of blocked property in violation of the Regulations and set forth the requirement to hold blocked funds in interest-bearing blocked accounts. Section 541.205 of subpart B provides that all expenses incident to the maintenance of blocked physical property shall be the responsibility of the owners and operators of such property, and that such expenses shall not be met from blocked property. The section further provides that blocked property may, in the discretion of the Director of OFAC, be sold or liquidated and the net proceeds placed in a blocked interest-bearing account in the name of the owner of the property.

Section 541.206 of subpart B details transactions that are exempt from the prohibitions of part 541. These exemptions derive from the exemptions set out in sections 203(b)(1), (3) and (4) of IEEPA (50 U.S.C. 1702(b)(1), (3), and (4)) and relate to personal communications, the importation and exportation of information or informational materials, and travel.

Subpart C of part 541 defines key terms used throughout the Regulations, and subpart D sets forth interpretive sections regarding the general prohibitions contained in subpart B. Transactions otherwise prohibited under part 541 but found to be consistent with U.S. policy may be authorized by one of the general licenses contained in subpart E or by a specific license issued pursuant to the procedures described in subpart D of 31 CFR part 501.

Subpart F of part 541 refers to subpart C of part 501 for applicable record keeping and reporting requirements. Subpart G describes the civil and criminal penalties applicable to violations of the Regulations, as well as the procedures governing the imposition of a civil monetary penalty.

Subpart H of part 541 refers to subpart D of part 501 for applicable provisions relating to administrative procedures. Subpart I of the Regulations sets forth a Paperwork Reduction Act notice.

Because the Regulations involve a foreign affairs function, the provisions of Executive Order 12866 and the Administrative Procedure Act (5 U.S.C. 553) (the “APA”) requiring notice of proposed rulemaking, opportunity for public participation, and delay in effective date are inapplicable. However, because of the importance of the issues addressed in these regulations, this rule is being issued in interim form and comments will be considered in the development of final regulations. Accordingly, the Department encourages interested persons who wish to comment to do so at the earliest possible time to permit the fullest consideration of their views. Comments may address the impact of the Regulations on the submitter's activities, whether of a commercial, non-commercial or humanitarian nature, as well as changes that would improve the clarity and organization of the Regulations.

The period for submission of comments will close September 27, 2004. The Department will consider all comments postmarked before the close of the comment period. Comments received after the end of the comment period will be considered if possible, but their consideration cannot be assured. The Department will not accept public comments accompanied by a request that a part or all of the submission be treated confidentially because of its business proprietary nature or for any other reason. The Department will return such submission to the originator without considering them in the development of final regulations. In the interest of accuracy and completeness, the Department requires comments in written form.

All public comments on these Regulations will be a matter of public record. Copies of the public record concerning these Regulations will be made available no sooner than October 27, 2004, and will be obtainable from OFAC's Web site ( http://www.treas.gov/ofac ). If that service is unavailable, written requests for copies may be sent to: Office of Foreign Assets Control, U.S. Department of the Treasury, 1500 Pennsylvania Ave., NW., Washington, DC 20220, Attn: Chief, Records Division.

Because no notice of proposed rulemaking is required for this rule, the Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply.

The collections of information related to the Regulations are contained in 31 CFR part 501 (the “Reporting and Procedures Regulations”). Pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), those collections of information have been previously approved by the Office of Management and Budget under control number 1505-0164. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

Regulatory Information

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553 (b)(B), the Coast Guard finds that good cause exists for not publishing a NRPM. Publishing a NPRM, which would incorporate a comment period before a final rule could be issued, and delaying the rule's effective date is contrary to public safety because immediate action is necessary to protect the public and waters of the United States.

For the same reason, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The Coast Guard will issue a broadcast notice to mariners and may place Coast Guard vessels in the vicinity of this zone to advise mariners of the restriction.

This rule is needed to protect spectator craft in the vicinity of the fireworks presentation from the hazards associated with the transport, storage, and launching of fireworks. Anchoring, mooring, or transiting within this zone is prohibited, unless authorized by the Captain of the Port, Jacksonville, FL. The temporary safety zone encompasses all waters within a 500 yard radius around the fireworks barge during the storage, preparation, transport, and launching of fireworks. During the fireworks show, the barge will be located at approximate position 28° 85. 6768′ N, 081° 69.152′ W.

This regulation is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential cost and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has exempted it from review under the order. It is not significant under the regulatory policies and procedures of the Department of Homeland Security (DHS) because these regulations will only be in effect for a short period of time, and the impacts on routine navigation are expected to be minimal.

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

The Coast Guard certifies under section 5 U.S.C. 605 (b) that this rule will not have a significant economic impact upon a substantial number of small entities because the regulation will only be enforced for approximately one hour the day it is in effect and the impact on routine navigation are expected to be minimal because traffic may transit safely around the zone and traffic may enter upon permission of the Captain of the Port or his representative.

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

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

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

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

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

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

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

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

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

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

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

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. The permit application was not received in time to publish an NPRM followed by a final rule before the 2004 International Children's Games-Festivities and Barbeque takes place. Under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Publication of a notice of proposed rulemaking and delay of effective date would be contrary to the public interest because immediate action is necessary to prevent possible loss of life, injury, or damage to property.

The following area is a security zone: All waters located within 300 feet of Voinovich Park and East 9th Street Pier, to include the entire Rock and Roll Inner Harbor.

Entry into, transit through, or anchoring within this security zone is prohibited unless authorized by the Captain of the Port Cleveland or his designated on-scene representative. The designated on-scene representative will be the Coast Guard Patrol Commander. The Coast Guard Patrol Commander may be contacted via VHF Channel 16.

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

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. This determination is based on the limited time that the security zone will be in effect, and the extensive advance notice that will be made to the maritime community via Local Notice to Mariners, facsimile, and marine safety information broadcasts. This regulation is tailored to impose a minimal impact on maritime interests without compromising security.

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

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

This rule would affect the following entities, some of which might be small entities: The owners or operators of recreational or commercial vessels intending to transit a portion of the activated security zone.

This security zone would not have a significant economic impact on a substantial number of small entities for the following reasons: The proposed zone is only in effect for the duration of the event. Before enforcing the security zone, the Coast Guard will issue maritime advisories available to users who may be impacted through notification in the Federal Register , Local Notice to Mariners, facsimile, and marine safety information broadcasts.

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

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

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

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

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

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

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

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

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

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

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

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. This rule fits the category from paragraph (34)(g) because it establishes a security zone. Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

Pursuant to its authorities in Section 7 of the Rivers and Harbors Act of 1917 (40 Stat. 266; 33 U.S.C. 1) and Chapter XIX of the Army Appropriation Act of 1919 (40 Stat.892; 33 U.S.C. 3) the Corps is amending the Restricted Area regulations in 33 CFR Part 334 by establishing a new Restricted Area at 334.783, in the waters of Arlington Channel surrounding U.S. Coast Guard Base Mobile at Mobile, Alabama. The points defining the proposed restricted area were selected to minimize interference with other users of Arlington Channel, and to minimize the restricted area's interference with commercial and recreational fisheries. In addition to the publication of the proposed rule, the Mobile District Engineer published public notices dated 18 July 2003 and 20 April 2004. No objections to establishment of the final Restricted Area were received.

This rule is issued with respect to security and safety functions of the U.S. Coast Guard and the provisions of Executive Order 12866 do not apply.

This rule has been reviewed under the Regulatory Flexibility Act (Pub. L. 96-354), which requires the preparation of a regulatory flexibility analysis for any regulation that will have a significant economic impact on a substantial number of small entities ( i.e. , small businesses and small governments). The Corps expects that the economic impact of the establishment of this Restricted Area would have no impact on the public, no anticipated navigational hazard or interference with existing waterway traffic, and accordingly, certifies that this proposal, if adopted, will have no significant economic impact on small entities.

The Mobile District has prepared an Environmental Assessment (EA) for this action. We have concluded that this action will not have a significant impact on the human environment, and preparation of an Environmental Impact Statement (EIS) is not required. The EA will be available for review at the Mobile District office listed at the end of the FOR FURTHER INFORMATION CONTACT paragraph above.

This rule does not impose an enforceable duty among the private sector and, therefore, is not a Federal private sector mandate and is not subject to the requirements of Section 202 or 205 of the Unfunded Mandates Act. We have also found under Section 203 of the Act that small governments will not be significantly and uniquely affected by this rulemaking.

Pursuant to Section 801(a)(1)(A) of the Administrative Procedure Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, the Army has submitted a report containing this rule to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the General Accounting Office. This rule is not a major rule within the meaning of Section 804(2) of the Administrative Procedure Act, as amended.

Before the effective date of this final rule, pallet preparation standards in DMM M045.3.0 prohibited mailers from merging (placing together) carrier route bundles and noncarrier route 5-digit bundles of flat-size pieces on the same 5-digit scheme pallet or on the same 5-digit pallet until the “5-digit metro” pallet level had been reached. Mailers wanting to perform such mergers at a finer pallet level previously had to use the preparation options in DMM M900. Those optional standards, however, are limited to flat-size mail only, and were generally developed for application with flat-size mailpieces compatible with the automated flat sorting machine 100 (AFSM 100). These optional standards will continue to be available for mailer use.

The previous prohibition on merged 5-digit scheme and merged 5-digit pallets under M045.3.0 also applied to bundles of all flats, including upgraded flat sorting machine (UFSM) 1000-compatible automation flats and irregular parcels (generally flat-shaped pieces exceeding the maximum dimensions for flats). The operational need for this prohibition, however, is relevant only to flat-size pieces compatible with the AFSM 100. DMM criteria for AFSM 100-compatible flats (DMM C820.2.0) can be viewed using Postal Explorer® at http://pe.usps.gov.

Five-digit bundles of non-AFSM 100-compatible flat-size pieces (that is, flats meeting the physical criteria of the UFSM 1000 under DMM C820.3.0) are further sorted to carrier routes at the delivery unit, where the carriers prepare mail for delivery, rather than the mail processing facility, where employees handle and stage the palletized mail before its transport to the delivery unit. As a consequence, it is more practical to have the 5-digit bundles of UFSM 1000-compatible flats merged on the same 5-digit or 5-digit scheme pallets with the corresponding carrier route bundles so that both the carrier route mail and the noncarrier route mail can be cross-docked to the delivery unit at the mail processing facility.

The addition of these merged pallet sort levels to the existing pallet sort levels should increase operational efficiencies by reducing the total number of pallets that must be prepared. These additional pallet levels should also improve customer service by transporting more mail closer to the point of delivery. Unlike the limitations in DMM M920, M930, and M940, preparation of merged 5-digit scheme and merged 5-digit pallets under revised M045.3.0 is accomplished without limitations (that is, without the use of the “A” and “C” or the “B” and “D” indicators in the City State Product, along with a 5 percent threshold for 5-digit noncarrier route bundles).

Besides adding the new merged pallet levels in DMM M045, this final rule:

• Standardizes the presentation and language of mailing standards used for pallet preparation and labeling in DMM E230, L001, L802, M011, M041.5.0, and M045.3.0, including the standards for Package Services irregular parcels and for Standard Mail and Package Services machinable parcels.

• Clarifies the rate eligibility for Periodicals irregular parcels in DMM E220 and for Standard Mail irregular parcels in DMM E620.

• Clarifies the availability of DMM M045.3.0 for palletizing flat-size mailpieces cobundled under DMM M950.

• Replaces the term “package” with “bundle” when referring to multiple pieces prepared as a single unit to a presort destination. This change was announced in Postal Bulletin 22132 (7-8-04, page 35).

On April 26, 2004, the Postal Service published a proposed rule in the Federal Register (69 FR 22464-22470) that amended mailing standards in the Domestic Mail Manual (DMM) by adding merged 5-digit scheme (DMM L001) and merged 5-digit pallet sort levels to the sequence of sort levels already available in DMM M045.3.0 for Periodicals, Standard Mail, and Bound Printed Matter pieces.

The Postal Service received comments on the proposed rule from five different parties, all involved in some aspect of mail preparation: two national mailers, two printers and mail service providers, and one software developer. The Postal Service appreciates the time, effort, and thought taken by these parties in preparing the comments. The comments have each been identified and, when possible, grouped together under the same heading. The Postal Service has carefully reviewed these comments and has provided responses below.

Comment. All five parties approved the proposed rule, with three expressly citing the benefits that both the mailing industry and the Postal Service would gain from the implementation of this rule. One commenter stated that the implementation of this rule would improve mail preparation and mail entry, increase operational and distribution efficiencies, and enhance service for the mailing industry and the Postal Service. Another commenter believed that the major change from the implementation of this rule would be the placement of mail on 5-digit pallets, increasing productivity for the mailing industry and the Postal Service. Another commenter noted that the implementation of this rule would allow better utilization of mailers' equipment and, equally important, that it would reduce the number of times that certain 5-digit palletized mail is handled, decreasing potential damage to the mail before delivery to customers.

On account of the benefits that the mailing industry and the Postal Service would derive from this rule, one commenter specifically requested immediate implementation of the rule. Another commenter, however, believed that an implementation date in January 2005 would be more appropriate than an immediate implementation date, given the number of changes in the rule and the additional complexities associated with those changes. The same commenter also noted that many vendors and developers supplying presort software used by mailers would be shipping releases early this summer in support of the August 1 implementation of the new minimum volume requirements for 5-digit scheme and (individual) 5-digit bundles for Standard Mail flat-size pieces. The final requirements were first published on April 1 in the Federal Register . See 69 FR 17059-17063.

Response. In view of the many operational efficiencies and improved service that mailers would gain from the change to current pallet preparation standards in DMM M045.3.0, yet still mindful of the complications posed by immediate implementation, the Postal Service has determined to make this rule optional at first, with an effective date of September 2, 2004, and then mandatory, with an effective date of January 6, 2005 (both dates coinciding with monthly online updates of the electronic DMM). The mandatory compliance date of January 6, 2005, should give mailers and software developers sufficient time to prepare for this change and make appropriate adjustments to their internal mailing operations.

The use of an advance (optional) effective date before the mandatory compliance date complicates the online presentation and the continued availability of the existing mailing standards for palletized mail. Beginning on September 2, 2004, mailers may use either the existing standards or the new standards for palletizing mail. Beginning on January 6, 2005, the new standards must be used exclusively. The new standards are designated as DMM M045.3.0 as presented in this final rule. The existing standards are placed at the end of DMM M045 and redesignated as new DMM M045.15.0. This placement simplifies their elimination when the new standards become mandatory on January 6, 2005.

Comment. One commenter requested that the mailing standards for labeling scheme pallets consistently permit the optional use of the abbreviation “SCH” for “SCHEME” for all applicable sort levels. In the proposed rule, for example, DMM M045.3.1a permits only “SCHEME” on pallet labels for merged 5-digit scheme pallets, whereas DMM M045.3.1b permits either “SCHEME” or the abbreviation “SCH” for pallet labels for 5-digit scheme carrier routes pallets.

Response. The Postal Service agrees with the commenter's request and has corrected this oversight in the final rule. The pallet labeling instructions now consistently permit the optional alternative abbreviation “SCH” for “SCHEME” at all sort levels.

Comment. One commenter questioned whether carrier route bundles of flat-size mailpieces meeting the criteria for the automated flat sorting machine (AFSM) 100 under DMM C820.2.0 are permitted on merged 5-digit scheme and merged 5-digit pallets. The commenter noted that noncarrier route pieces (in 5-digit bundles) meeting the criteria in DMM C820.2.0 are not permitted. The same commenter reasoned that if bundles of both AFSM 100-compatible carrier route pieces and UFSM 1000-compatible flat-size pieces were permitted, and no noncarrier route pieces were on the same pallet, the pallet would be essentially no different from a 5-digit scheme carrier routes pallet.

The commenter noted that wording in the proposed rule for this sort level stipulated that bundles containing noncarrier route AFSM 100-compatible flats under C820.2.0 are not permitted on the merged 5-digit scheme and merged 5-digit pallets. By contrast, bundles of carrier route AFSM 100-compatible flats and bundles of carrier route UFSM 1000-compatible flats are both permitted on the same merged pallet.

Response. The Postal Service acknowledges that the commenter is correct in questioning how a pallet with only carrier route mail could be designated as a merged pallet. By its very definition, a merged pallet must contain not only carrier route mail but also noncarrier route mail (presorted rate mail and/or automation rate mail). The proposed rule presented the correct definitions of merged pallets in various sections in revised DMM M011.1.2 and M011.1.3, but failed to carry those definitions forward to the proposed pallet preparation standards in DMM M045.3.0 for merged 5-digit scheme (DMM L001) and merged 5-digit pallets. The final rule corrects the wording throughout DMM M045.3.0 by requiring the placement of either presorted rate or automation rate mail or both on the same pallet with the carrier route mail.

Comment. One commenter requested clarification whether mailers preparing mailings of UFSM 1000-compatible flats could still palletize those mailings under DMM M930 and M940.

Response. The Postal Service assures mailers that they may continue using the preparation options in DMM M930 and M940 for palletizing UFSM 1000-compatible flats. For many mailers, however, the revisions to M045.3.0 simplify preparation of UFSM 1000-compatible flats on pallets and, with the new merged sort levels, provide operational efficiencies for pallet preparation without the complexity and limitations of the preparation options in M900.

Comment. One commenter noted that irregular parcels as defined in DMM C050.4.0 qualify only for basic rates under the eligibility standards for Periodicals rates in DMM E220.2.0 and only for basic rates under the eligibility standards for Standard Mail rates in DMM E620.2.0.

The commenter believed that irregular parcels prepared in 5-digit and 3-digit bundles and placed in or on the appropriate containers, including pallets, should be eligible for the corresponding rates for Periodicals mail (either 5-digit or 3-digit rate) and for Standard Mail (3/5 rate) service.

Response. The Postal Service believes that pallet preparation standards and rate eligibility standards should represent clearly and reflect accurately the relationship between the two. The following explanation for both Periodicals rates and Standard Mail rates for palletized bundles reconciles and clarifies this relationship.

The Periodicals rate structure recognizes nonautomation rates and automation rates. Automation rates are further divided into two separate rate categories: one for letter-size mail meeting the physical characteristics in DMM C810, and one for flat-size mail meeting the physical characteristics in DMM C820. Similar to First-Class Mail Presorted rates, Periodicals nonautomation piece rates make no rate distinction by processing category.

The wording for presorted rate eligibility standards has therefore been revised to reflect the actual intent of the rate structure as presented in the Domestic Mail Classification Schedule, which classifies Periodicals rate categories as nonautomation, automation letter, and automation flat.

For purposes of mail preparation, the revised wording in DMM E220.2.0 distinguishes between letter-size mail and nonletter-size mail (which includes flat-size mailpieces and irregular parcel mailpieces). As a result, this final rule aligns the revised rate eligibility standards for irregular parcels with the pallet preparation standards for irregular parcels. Neither the proposed rule nor this final rule changes the Periodicals rate eligibility standards in effect since January 10, 1999.

The Standard Mail rate structure recognizes presorted rates (nonautomation rates) and automation rates. Both rate categories are further divided into two separate categories for pieces weighing 3.3 ounces or less: one for letter-size mail meeting the physical characteristics in DMM C050.2.0 and, for automation rates, DMM C810; and one for nonletter-size mail meeting the physical characteristics in DMM C050.3.0 for flats, DMM C050.4.0 for machinable parcels, DMM C050.5.0 for irregular parcels, and DMM C820 for automation rate flats. The actual preparation standards, however, impose specific requirements based on mail processing categories. For example, the preparation of letter-size mail is quite different from the preparation of flat-size mail, machinable parcels, or irregular parcels.

Irregular parcels (see DMM C050.5.0), in particular, are best described as “none of the above” when reviewing the dimensional standards in DMM C050 for letter-size mail and flat-size mail, and the dimensional standards and relative uniform shape of machinable parcels. Only in rare occurrences, such as a publication or catalog exceeding the maximum 15-inch length or maximum 12-inch height permitted for flat-size mailpieces and thus categorizing it as an irregular parcel, would bundles of irregular parcels be uniform in thickness and suitable for placement directly onto pallets without compromising the integrity or stability of the pallets.

Before this final rule, all irregular parcels eligible for the 3/5 rate were required to be sacked (whether first bundled or not), including irregular parcels to be placed onto pallets. Five-digit scheme (L606) groups, 5-digit groups, and 3-digit groups of irregular parcels placed directly into sacks before placement on pallets compensate for parcels not even in shape or uniform in thickness, such as padded bags containing film or cylindrical medicine bottles, or parcels not easily stackable, such as rolls or mailing tubes. Requiring sacking of such irregular parcels stabilizes the pallets and prevents individual presort destination bundles from breaking apart, thus assuring the maintenance of the required separations for the rates being claimed.

Other points about Standard Mail irregular parcels that can affect the placement of presort destination bundles directly onto pallets include preparation of 5-digit scheme (DMM L001) pallets and exceptions to required bundling (DMM M610.5.3). The 5-digit scheme under DMM L606 may be used only for sacking machinable and irregular parcels (usually consisting of merchandise), or placing sacks (containing parcels) onto pallets, or for placing machinable parcels directly onto a pallet. The L606 5-digit scheme was not developed for preparing presort destination bundles (mailpieces consisting of publications, catalogs, etc.). In the final rule, the 5-digit scheme preparation for flats and irregular parcels, which is under DMM L001, applies to pallets as the containers.

The standards in DMM M610.5.3 that permit sorting irregular parcels directly into sacks without first preparing presort destination bundles apply to nearly all Standard Mail irregular parcel mailings except for those infrequent mailings containing “oversized flats” and irregular parcels that are less than 1/2 inch thick. Here 5-digit and 3-digit pieces can qualify for the 3/5 rate as sacked pieces.

The eligibility standards for Standard Mail 3/5 rate application have remained unchanged for the past 10 years. The mailing standards for pallet preparation, however, have been revised in the past 10 years in nearly every issue of the DMM, most substantially in DMM Issue 56 (effective January 7, 2001). With the evolution of those standards, the direct placement of bundles of flat-size pieces and bundles of irregular parcels onto pallets was permitted, even though the eligibility for 3/5 rates had not been extended to Standard Mail irregular parcels not first prepared in sacks.

In view of the possibility that a Standard Mail irregular parcel could consist of a catalog or printed publication (similar to a Periodicals publication) of flat, uniform thickness and prepared in stable presort destination bundles suitable for nesting directly onto pallets, the Postal Service amends the rate eligibility standards for such irregular parcels (oversized flats) in DMM E620.2.0.

For purposes of mail preparation, the revised wording in DMM E620.2.0 distinguishes between irregular parcels that are of uniform thickness (that is, printed publications or catalogs that can be prepared in presort destination bundles under DMM M020), placed directly onto pallets, and those that are not. As a result, this final rule aligns the revised rate eligibility standards for irregular parcels with the pallet preparation standards for irregular parcels.

Mailers are reminded that Standard Mail irregular parcels of uniform thickness prepared in presort destination bundles are still subject to the residual shape surcharge in addition to the applicable Standard Mail nonletter rates (see DMM E620.3.0).

Comment. One commenter recommended that the final rule allow all nonautomation rate Periodicals flats for the same 5-digit ZIP Code TM to be placed on the same 5-digit pallet, regardless of the presort level of each piece. That commenter believed making this change would improve delivery service for such mail.

Response. The Postal Service believes that the addition of merged pallets to DMM M045.3.0 should, in certain cases, improve delivery service for Periodicals mail. Under the final rule for placing Periodicals rate mail on merged 5-digit scheme (DMM L001) and merged 5-digit pallets for example, the pallets must contain carrier route bundles, and the same pallets must also contain automation rate and/or presorted rate bundles for the same 5-digit ZIP Code. The merged pallet levels do not permit noncarrier route 5-digit bundles containing AFSM 100-compatible flats under DMM C820.2.0.

If the commenter intended “regardless of the presort level of each piece” to mean both pieces in carrier route bundles, and pieces in noncarrier route 5-digit bundles on the same pallet, this merged 5-digit pallet level should alleviate the delivery issue mentioned by the commenter, as long as the pieces in the noncarrier route 5-digit bundles are UFSM 1000-compatible pieces under DMM C820.3.0.

Mailers are reminded that merged 5-digit scheme and merged 5-digit pallets are for bundles only. Sacked mail is not permitted on these merged pallets. Moreover, these pallets must also contain a minimum load of 250 pounds of mail.

Comment. One commenter recommended that the final rule clarify whether the new merged pallet levels for Periodicals mail would permit placement of low-volume 5-digit bundles on 5-digit or 5-digit scheme pallets. The commenter pointed out that permitting low-volume 5-digit bundles of UFSM-compatible 1000 flats on merged pallets would give mailers the ability to place all mail for a given 5-digit or 5-digit scheme on a single pallet, which can be cross-docked to the delivery unit.

Response. The Postal Service agrees with this recommendation and has added wording to the appropriate sections in the DMM to allow low-volume 5-digit bundles of Periodicals on merged 5-digit scheme (DMM L001) and merged 5-digit pallets. This revision to the final rule thus aligns the preparation standards in DMM M045 with those for palletizing low-volume 5-digit bundles found in other sections of the DMM.

Comment. One commenter noted that even though the proposed rule would help move UFSM 1000-compatible flats from lower pallet sort levels such as 3-digit and sectional center facility (SCF) to higher sort levels such as merged 5-digit scheme and merged 5-digit pallets, the rule would not improve the situation for flats prepared in sacks.

The commenter recommended that current mailing standards should be revised to allow 5-digit bundles of UFSM 1000-compatible flats to be placed in merged 5-digit scheme and merged 5-digit sacks regardless of the Address Management System (AMS) City/State indicator. In addition, the allowance for low-volume 5-digit bundles of Periodicals flats should be extended to merged sacks of non-AFSM 100 flats.

Response. The Postal Service notes that current standards in DMM M920 do permit merged sacks using the City State Product. Allowing merged sacks without the use of this product would require some modification of existing documentation standards, but it could provide simpler preparation for Periodicals mailings that do not warrant preparation on pallets.

The Postal Service believes, nevertheless, that this recommendation has merit for non-AFSM 100 Periodicals flats, especially from the perspective of production and operational efficiencies. Allowing the merger of flats in sacks could build density at the 5-digit level, and it could possibly eliminate a large number of low-volume sacks that many publishers currently prepare.

For publishers who enter their publications at destination delivery units (DDUs), merged sacks could possibly improve delivery service. Even so, mailing standards would require clarification on how to claim DDU rates for the bundles of carrier route mail and the destination sectional center facility (DSCF) rate for the noncarrier route 5-digit bundles. Many other mailing standards would also be affected by this recommended change. As a consequence, the Postal Service believes that this recommendation and the associated modifications to mailing standards warrant further study and comment from the mailing industry and therefore would not be appropriate to incorporate in this final rule.

Comment. One commenter asked whether Presort Accuracy Validation and Evaluation (PAVE) certification of presort software would be required for merging non-AFSM 100-compatible automation mail and/or presorted rate mail with carrier route mail on the same pallet. The commenter believed that the Postal Service should offer PAVE certification testing for software developers wishing to update their range of certified products for competitive reasons but that the Postal Service should not require PAVE-certified software for the revisions to DMM M045.3.0.

Response. The Postal Service agrees with the commenter and plans to offer tests for PAVE certification as an option but will not require the use of PAVE-certified software with the palletization standards in revised DMM M045.3.0.

An appropriate amendment to 39 CFR part 111 will be published to reflect these changes.

Issue 1 of the Purchasing Manual was issued on January 31, 1997, as the successor to former USPS Publication 41, the U.S. Postal Service Procurement Manual. At that time, purchasing organizations were advised that, pending the updating of contract-writing systems, the purchasing organizations could determine, subject to specific limitations, when and to what extent they may adopt its policies and procedures. The Purchasing Manual then became fully effective on January 27, 2000.

Subsequently, Issue 2 of the Purchasing Manual was issued on January 31, 2002. Pending the updating of purchasing support systems for consistency with the new policies contained in Issue 2, purchasing organizations were advised that they might adopt the policies and procedures contained in Issue 2 immediately, or might continue to follow the policies and procedures contained in Issue 1. If a purchasing organization adopted Issue 2 policies and procedures for any category or categories of purchases, it would be required to use those policies and procedures consistently for that category or categories, and not revert to previous policies and procedures. Contracting officers were required to ensure that solicitations and other purchasing documents made prospective offerors fully aware of the authority (Issue 2 or Issue 1, as revised through November 15, 2001) pursuant to which an individual purchase was made. Particular care was required that previous versions of provisions and clauses were not used in purchases made under the policies and procedures of Issue 2, and vice versa. To date, the Postal Service has not formally transitioned from PM Issue 1 to PM Issue 2 primarily because of problems in updating purchasing support systems for consistency with the new policies contained in Issue 2. The end of this transition period will be announced in the Federal Register .

The Purchasing Manual is published and available to all users on the World Wide Web at http://www.usps.com/business , and contains the Postal Service's purchasing policy.

It will be noted that on March 24, 2004 (69 FR 13786), the Postal Service published a proposed rule in the Federal Register entitled “Purchasing of Property and Services”. In this document, the Postal Service proposed to amend its regulations in order to implement the acquisition portions of its Transformation Plan (April 2000) and the similar recommendations of the President's Commission on the United States Postal Service (July 2003) as they relate to the acquisition of property and services. That earlier, ongoing rulemaking is proceeding separately and independently, and should not be considered to be a part of this current notice.

On June 28, 2004 (69 FR 36018), the Postal Service published in the Federal Register a detailed discussion of the policy changes and other major features contained in Issue 1 of the Purchasing Manual. The following is a similar discussion of the policy changes and other significant changes contained in Issue 2 of the Purchasing Manual.

Overview: Issue 2 of the Postal Service Purchasing Manual (PM) contains a number of major policy changes. These major changes are centered on the Postal Service's continuing efforts (1) To reflect the best practices of the private and public sectors, (2) to streamline the purchasing process and ensure it concentrates on furthering the business and competitive interests of the Postal Service, and (3) to provide a policy structure that furthers the Postal Service's use of supply chain management business practices. Issue 2 also contains the cumulative changes made to Issue 1 of the Purchasing Manual between January 31, 1997, and January 31, 2002. A discussion of all significant changes contained in Issue 2 is available to all users on the World Wide Web at http://www.usps.com/business.

Supply Chain Management: Supply chain management is a business philosophy that concentrates on analyzing the purchasing process and the supply stream in order to increase customer satisfaction and lower overall cost. It involves a number of business practices, including close coordination between end-users, buyers and suppliers, long-term contracts, and ongoing analysis and improvement of operating and administrative processes. With the issuance of PM Issue 1, the Postal Service began to make many of these practices a central part of its purchasing policies; that foundation has been built upon and is reflected throughout Issue 2. The supply chain management philosophy and its importance to Postal Service purchasing is discussed in a new section 3.1.2. Additionally, new text has been added to section 3.1.1 addressing the fact that some Postal Service-supplier relationships are closer and more interdependent than others, based upon the impact the relationship has or may have on the Postal Service's business and competitive interests.

Establishment of Standard Solicitation Provisions and Clauses: PM Issue 1 established a single, streamlined purchasing process modeled on private sector business practices while maintaining the Postal Service's commitment to the accountability and fairness expected of a public institution. To further this continuing objective, PM Issue 2 establishes basic solicitation provisions and contract clauses that may be modified, added to or supplemented as required by the particular purchase. These provisions (Provisions 4-1, Standard Solicitation Provisions, 4-2, Evaluation, and 4-3, Representation and Certifications) and clauses (Clauses 4-1, General Terms and Conditions and 4-2, Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders) are based on and replace the commercial-purchasing provisions and clauses in PM Issue 1. With their establishment as the basic contractual documentation, the need for a specific commercial purchasing process has been obviated. The new provisions and clauses are contained in Appendices A, Solicitations, and B, Contract Clauses, and their use is discussed in the appendices and in 4.2.2.e, Solicitation Provisions, and 4.2.7, Contract Clauses.

Prescriptions for Use of Provisions and Clauses: The provisions and clauses noted above incorporate by reference a number of other provisions and clauses that are: (1) Required by Postal Service policy (such as the Postal Service's preference for domestic supplies or construction materials); (2) required by law (such as the Service Contract Act and the Davis-Bacon Act); or applicable by Executive Order (such as Equal Employment Opportunity). In some cases, these incorporations are included in the basic provision or clause, and in others they are incorporated when checked-off by the contracting officer in light of the particular purchase. This modular approach to solicitation and contract formation ensures that contractual documentation remains simple and streamlined while also ensuring that the Postal Service continues to meet its policy, legislative, and other mandates. At the same time, provisions and clauses that address other aspects of the purchasing process, such as contract type, have been left available to contracting officers to use when their terms and conditions match the needs of the particular purchase. This means that there are a number of subjects in the basic provisions and clauses that may be replaced by more effective terms and conditions, and that the provision and clause prescriptions throughout PM Issue 2 allow contracting officers to make such additions and replacements as they feel necessary. Contracting officers have also been given the discretion to modify, add to or supplement provisions and clauses as they see fit, subject to review of assigned counsel.

Purchase Method: A new section 2.1.6, Purchase Method, has been included in PM Issue 2. This section addresses the responsibility of the purchase team to decide during purchase planning and as part of the individual purchase plan whether a purchase should be made competitively or noncompetitively. This section spells-out under what business scenarios the noncompetitive method may best meet the Postal Service's business and competitive interests, and also requires the purchase team to prepare a business case documenting the rationale for the decision. This section also delineates review and approval thresholds for the business case and the purchase. A new section 1.6.1, Business Objectives and Practices, discusses in general how these objectives and practices fit into overall organizational strategy, and there have been ancillary changes in sections 1.6.2, Best Value, and 1.6.3, Competition. PM Issue 1 section 3.5.5, Noncompetitive Purchases, has been deleted.

Publicizing: PM section 3.5.3, Publicizing Purchasing Opportunities, has been retitled Publicizing Purchase Opportunities and Contract Awards. This part has been revised to: (1) Maintain the $1 million publicizing threshold for commercially available goods and services; (2) provide purchase teams the discretion to publicize noncompetitive purchase opportunities when the team determines that such publicizing would improve market research, while at the same time changing the mandatory publicizing threshold for noncompetitive awards from $500,000 to $1 million; (3) encourage purchase teams to publicize other noncompetitive awards (generally over $500,000) when it feels the award holds significant subcontracting opportunities; and (4) encourage the team to publicize other awards when it feels such an announcement would benefit future competition. In addition, previous references to the Commerce Business Daily (CBD) throughout the PM have been replaced by the term “Governmentwide point of entry (GPE)” which has replaced the CBD as the means of publicizing purchase opportunities and contract awards.

Appendix A, Solicitations: Appendix A has been revised to reflect the establishment of the basic solicitation provisions discussed above and to address their use. Several provisions included in PM Issue 1 have been deleted due to the subject matter being covered in the new standard provisions or because they were inconsistent with the Postal Service's continuing efforts to streamline purchasing policies and procedures.

Appendix B, Contract Clauses: Appendix B has been revised to reflect the establishment of the basic contract clauses discussed above and to address their use. Several clauses included in PM Issue 1 have been deleted due to the subject matter being covered in the new general clauses or because they were inconsistent with the Postal Service's continuing efforts to streamline purchasing policies and procedures. Commodity-specific clauses used in design and construction, and mail transportation contracts are listed as they were in PM Issue 1.

Appendix C, Contract Format: Appendix C, Forms and Formats, of PM Issue 1, has been replaced by a new Appendix C, Contract Format. This appendix describes the four-part contract format used in Postal Service purchasing.

Chapter 1, Authority, Responsibility, and Policy: 1.1.1.c, Applicability (Purchasing Manual), has been revised to reference new Handbooks P-1, General Purchasing Concepts and Practices, P-2, Design and Construction Purchasing Practices, and to provide the Web site where they may be accessed.

1.1.2.b, Purchasing Policy Committee (Responsibility for Purchasing Policy), has been revised to state that the PPC evaluates proposed changes to the PM for the vice president, Purchasing and Materials.

1.1.2.c, Membership, has been revised to add the manager, Supplier Development and Diversity (Purchasing and Materials), and the manager, Materials, to the PPC and to remove the managers, Facilities Program Management, and Supplier Diversity, (Diversity Development).

1.2, Publication and Changes, has been revised as discussed in Major Policy Changes above.

1.3.1.b.1 (Deviations) has been revised to state that replacing text contained in Provisions 4-1, Standard Solicitation Provisions and 4-2, Evaluation, and Clause 4-1, General Terms and Conditions, with another PM provision or clause does not constitute a deviation and does not require review and approval. As a result of this change, previous 1.3.1.b.2 has been deleted.

1.3.2.c, Records (Authorization of Deviations), has been revised to require approval officials to retain copies of approved deviations.

1.4.1.b.4, Required Approvals (Contracting Authority—Vice President, Purchasing and Materials), has been revised to clarify that the subject approvals are the responsibility of the vice president, Purchasing and Materials.

1.4.2, Contracting Officers, has been revised and reorganized for clarity.

1.4.3, Contracting Officer's Representatives, has been revised to reference Management Instruction PM-610-2001-1, Contracting Officer's Representative Program.

1.4.4.b.3(d), Training (Selection), has been revised to state that Level I design and construction contracting officers are required to complete the training courses on Contract Administration, Pricing and Claims, and Introduction to Facilities R&A Contracting.

1.6.1, Business Objectives and Practices, is a new section and has been added as a general statement addressing the primary goal of Postal Service purchasing and the business practices used to further that goal. 1.6.2, Best Value, and 1.6.3, Competition, have been revised to reinforce the new policy discussed in Major Policy Changes above.

1.6.5, Release and Exchange of Information, and 1.6.6, Privacy Protection, have been revised to conform to Postal Service policy regarding privacy protection. As a result of these changes, Clause 1-1, Privacy Protection, has been revised and retitled, Clause 1-7, Nondisclosure of Address Information, has been deleted, and ancillary changes have been made to subparagraphs 4.5.3.c.4 and 4.5.5.f.

1.6.7.c.1, Progress Payments, has been revised to exclude the required approval of the vice president, Finance, when the contract is for architect/engineer and construction management services.

1.6.13, Domestic Preference, replaces previous part 1.7.12, Buy American Policy. The new title is intended to reflect the voluntary aspect of the Postal Service's policy in this area. The titles of the related provisions and clauses have also been changed to reflect the new term.

1.6.13.b.2(c), Domestic End Products, and 1.6.13.b.2(g), Canadian End Products (previous 1.7.13.b.2.(c) and 1.7.13.b.(g)) have been revised to update definitions.

1.6.14, Contracts with Former Postal Service Officers, Executives, and Employees, is a new section that replaces previous 1.7.13. This revision, providing new or revised policies regarding contracts with former employees and the use of personal services contracts, resulted in related changes to 4.5.3, Professional/Technical and Consultant Services, and a new section 4.5.4, Personal Services Contracts. Lastly, this change also resulted in a new Provision 1-5, Proposed Use of Former Postal Service Employees, and a new Clause 1-12, Use of Former Postal Service Employees.

Previous 1.7.14, Year 2000 Compliance, has been deleted as have Clauses 1-12, Year 2000 Warranty—Commercial Items, and 1-13, Year 2000 Warranty—Noncommercial Items.

Previous 1.9.4, Supplier's Statement of Contingent Fees, has been deleted, as has Provision 1-2, Contingent Fee Representation, to conform to current general federal practice. Contingent fees are now addressed in subchapter 1.8.

Chapter 2, Purchase Planning: 2.1.1, The Importance of Purchase Planning, is a new section discussing the central role purchase planning plays in a successful purchase, and the factors that go into effective planning.

2.1.3.a (Purchase Planning) has been revised to further discuss the role of the contracting officer as leader of the purchase team.

2.1.3.b 2(b) (Responsibilities) has been revised to state that the purchasing organization is responsible for gathering and analyzing spend and demand data in order to identify opportunities for strategic sourcing and consolidated purchases. 2.1.3.b.3 is a new subparagraph describing the expertise the materials organization can bring to a purchase team.

2.1.4.a, Importance (Market Research), has been revised to add commodity or industry trends as an important element of successful market research.

2.1.5.b, Elements (Individual Purchase Plans), has been revised to include a statement that effective plans should address the total cost of ownership of the purchase (subparagraph 2.1.5.b.6) and to require that individual purchase plans contain a written description of the purchase method to be used (subparagraph 2.1.5.b.14). See Major Policy Changes above.

2.1.6, Purchase Method, is a new part discussing the manner in which a purchase will be conducted, specifically, whether the purchase will be made competitively or noncompetitively. This part discusses when either method is appropriate, and describes the various business scenarios under which a noncompetitive purchase is most appropriate and the business case required when the noncompetitive method is used. See Major Policy Changes above.

2.1.7.b.5 (Developing Strategies) has been revised to state that, depending on the particular purchase, it is a good business practice to develop supplier selection strategies that invite new and emerging suppliers to compete for Postal Service purchases.

2.1.9.c.2, Past Performance, has been revised to remove supply chain management as a subfactor of past performance and to address it as a more general aspect of past performance as a whole.

2.1.9.c.3, Suppler Capability: Subparagraph 2.1.9.c.3(b)(4), has been revised to require that suppliers have a sound quality control program that complies with solicitation requirements in order to be deemed capable. Subparagraph 2.1.9.c.3(b)(7) has been revised to state that the fact that a supplier is suspended, debarred or otherwise declared ineligible, bars award without regard to the weight assigned to capability as an evaluation factor. Subparagraph 2.1.9.c.3(c)(1) has been revised to state that the Postal Service's list of debarred and suspended suppliers, and GSA's consolidated list of debarred, suspended or declared ineligible suppliers are sources of information for determining that a supplier is capable. Subparagraph 2.1.9.c.3(d) has been revised to include workforce, subcontractors and other resources to be used in contract performance as appropriate subjects of a preaward survey, and Subparagraph 2.1.9.c.3(e) has been revised to require that preaward survey results must be in writing.

2.1.10, Performance Evaluation and Cost/Price Factors, is a new section combining text from previous sections 2.1.7 and 2.1.8.

2.2.1.a Policy (Quality Requirements) has been revised to clarify that the supplier is responsible for providing supplies or services conforming with the requirements of the purchase and for providing reasonable assurance that requirements are met, and that the purchase team is responsible for determining the necessary quality requirements.

2.2.1.b, Quality Assurance Requirements, has been revised to state that the supplier is responsible in most cases for performing necessary inspection and testing and that the Postal Service may opt to perform these functions.

2.2.2.a, Uses (First Article Approval), 2.2.3.b, Delayed Acceptance (Acceptance), and 2.2.5.f, FOB Points (Delivery or Performance Schedule), have been revised for clarity.

2.2.5.h, Using Mail, has been revised to state that contracting officers should consult with a material management specialist when the weight of a consolidated mailing to a single destination exceeds 300 pounds.

2.2.5.i, Packing and Packaging, is a new paragraph stating that, generally, suppliers are expected to use standard packing and packaging practices, but that the purchase team may require more stringent standards when needed.

2.2.10.d, Noncompetitive Purchases (Value Engineering), has been revised to state the conditions under which a contracting officer may negotiate a noncompetitive contract or contract modification incorporating a change proposal.

2.4.6.e, Ordering (Indefinite Delivery Contracts), and 2.4.6, Provisions, have been revised as was discussed In Postal Bulletin 22037 (11/16/00).

2.4.7.b, Limitations (Ordering Agreements), has been revised to require the periodic—rather than annual—review of ordering agreements extending more than one year.

Chapter 3, Supplier Relations: 3.1.1, General (Policy), has been revised to address the fact that the nature of the partnership between the Postal Service and a given supplier will depend on the potential impact of the supplier's performance on the Postal Service's competitive and financial position. See Major Policy Changes above.

3.1.2, Supply Chain Management, is a new part discussing the Postal Service's use of this business philosophy. See Major Policy Changes above.

3.2.2a, Definition (Sourcing), has been revised to provide a clearer definition of this business practice.

3.2.2.c, Assistance (Sourcing), has been revised to direct purchase teams to Supplier Development and Diversity (Purchasing and Materials), when they need sourcing assistance.

3.2.3, Subcontracting with Small, Minority, and Woman-owned Businesses, has been revised to help the Postal Service more fully realize the benefit of a supplier base that reflects the diversity of the American supplier community. 3.2.3.d.1, Contracts Valued at $1 Million or More, has been revised in subparagraph b to state that Clause 3-1, Small, Minority, and Woman-owned Business Subcontracting Requirements, need not be included in subject contracts when the contract is an indefinite delivery contract or ordering agreement and the purchase team has determined that requiring a subcontracting plan would not be feasible. In addition, 3.2.3.d.2, Contracts Valued at $500,000 or More, has been revised to require the inclusion of Clause 3-2, Participation of Small, Minority, and Woman-owned Businesses, in design and construction contracts valued at $250,000 or more.

3.3.2, Existing Assets, has been revised to redefine this term, and to illustrate when they should be considered in lieu of new purchases. 3.3.5, Defense Energy Support Center, has been revised to provide the new name of this organization (previously called the Defense Fuel Supply Center).

3.5.1, Policy (Commercial Suppliers), has been revised to emphasize that, except for commodities available from mandatory sources, it is Postal Service policy to purchase goods and services from commercial suppliers using the business practices and terms and conditions customary to the commercial marketplace, or to purchase goods and services from the nonmandatory government sources in 3.4.

3.5.2.a, Policy (Prequalification), has been revised for clarity.

3.5.2.b.3 (General) has been revised to clarify the rules concerning prequalification and noncompetitive purchases.

3.5.2.b.4 (General) has been revised to state that during the prequalification process suppliers should be evaluated in the same manner as for any other purchase.

3.5.3, Publicizing Purchasing Opportunities and Contract Awards, is new and replaces PM Issue 1, 3.5.3, Publicizing Purchase Opportunities. See Major Policy Changes above.

3.5.4, Unsolicited Proposals, has been revised to direct readers to Publication 131, The Postal Service Unsolicited Proposal Program, for information regarding the submission and processing of unsolicited proposals.

3.7, Debarment, Suspension, and Ineligibility, has been revised to: (1) Provide a new definition of “Ineligible Suppliers”; (2) discuss the handling of the Postal Service's and the General Services Administration's lists of debarred and suspended suppliers; (3) require contracting officers to review the Postal Service's and GSA's lists before making a contract award; and (4) discuss the treatment of suppliers on the Postal Service's list.

Chapter 4, Purchasing: 4.1, Policy, has been revised to discuss in general the purchasing process and the basic terms and conditions used in Postal Service purchases.

4.2.2.b, Types (Solicitations), has been revised to discuss the use of written and oral solicitations and to state that the use of Form 8203, Order/Solicitation/Offer/Award, or equivalent, should be used as the request for proposal and subsequent award.

4.2.2.e, Solicitation Provisions, has been revised as discussed in Major Policy Changes above.

4.2.2.g, Availability of Solicitations, has been revised to state that requests for copies of solicitations may be denied once a reasonable number of copies have been distributed to the solicited suppliers and others who have requested them.

4.2.6.a (Contract Award) has been revised to state that contract award is made by the execution of a contract by both parties or by written acceptance of or performance against a purchase order.

4.2.7, Contract Clauses, is a new part discussing the new basic clauses (4-1, General Terms and Conditions, and 4-2, Contract Terms and Conditions Required to Implement Policies, Statutes, or Executive Orders) and their use. See Major Policy Changes above.

4.5.5.a.5, Information Technology (Definitions), has been revised and a new subparagraph 4.5.5.a.7, Undue Burden, has been added to align Postal Service policies and procedures regarding information technology accessibility with the approaches taken by other federal agencies. Paragraph 4.5.5.b.2 has been revised, and a new Clause 4-18, Information Technology Accessibility Standards, has been added to Appendix B, Contract Clauses.

4.5.5.d.2, General Services Administration (Sources—Information Technology), has been revised to provide new addresses, including an Internet address, for information regarding GSA contracts for information technology.

Previous subparagraph 4.6.5.b.3, Year 2000 Compliance, has been deleted.

Chapter 5, Contract Pricing: 5.2.5.a.13 (Unallowable Costs) is a new subparagraph and has been added to delineate a new category of unallowable costs: legal costs related to a defense against a Postal Service claim or appeal and legal costs related to the prosecution of a claim or appeal against the Postal Service.

Chapter 6, Contract Administration: 6.1.1.b, Contracting Officer's Representatives, has been revised to specifically describe what sort of authorities may be delegated to a contracting officer's representative (COR), what must be contained in the COR's appointment letter, and to reference Management Instruction PM-610-2001-1, Contracting Officer's Representative Program.

6.2.1.b.12 (Postaward Orientation) has been deleted in order to reinforce that commercially accepted accounting procedures should be used.

6.2.3.b.2, Other Contracts (Using Suppliers to Monitor Performance), has been revised to allow third parties to perform acceptance in addition to other contract administration responsibilities.

6.2.6.c, Clause (Bankruptcy), has been deleted, as has Clause 6-1, Bankruptcy, as part of the overall effort to reflect common commercial terms and conditions in Postal Service contracts.

6.3.2.b, Responsibility (Acceptance), has been revised to remove the reference to “another postal employee” and replace it with “other party.”

6.3.3, Receiving Reports (Quality Assurance), has been revised to clarify the use of certificates of conformance.

Chapter 7, Bonds, Insurance, and Taxes: 7.1.2.a.5, Amount (Performance and Payment Bonds for Construction Contracts), has been revised to reflect the provisions of the Construction Industry Protection Act of 1999.

7.2.2.c, Automobile Liability Insurance, has been revised to set a new minimum limit of $100,000 per accident for property damage.

Chapter 8, Patents and Data Rights: No significant changes have been made in this Chapter.

Chapter 9, Labor Policies: 9.2.1, Convict Labor (Policy), has been revised to state that the Postal Service may purchase supplies from firms employing persons on parole or probation under the terms of Executive Order 11755.

9.7.3, Preaward Compliance Reviews, has been revised in view of changes to Executive Order 11246, as have Provision 9-4, Preaward Equal Opportunity Compliance Review, and Clause 9-9, Equal Opportunity Preaward Compliance of Subcontracts.

9.10.1, Requirement (Veterans), has been revised to reference the Veterans Employment Opportunities Act of 1999.

Appendix A, Solicitations: This appendix has been revised as discussed in Major Policy Changes above. Provision 1-5, Proposed Use of Former Employees, is new.

Appendix B, Contract Clauses: This appendix has been revised as discussed in Major Policy Changes above. Clause 1-1, Privacy Protection, and Clause 1-12, Use of Former Postal Service Employees, are new clauses as discussed above. Clause 7-4, Insurance, has also been revised to establish new minimum liability coverage for automobile insurance.

Appendix C, Contract Format: This appendix has been changed as discussed in Major Policy Changes above.

Appendix D, Rules of Practice in Proceedings Relative to Debarment and Suspension from Contracting: No changes have been made to this appendix.

Appendix E, Rules of Practice Before the Postal Service Board of Contract Appeals: No changes have been made to this appendix.

Appendix F, Index: This appendix was revised to reflect the changes throughout PM Issue 2.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This section provides additional information by addressing the following questions:

The Clean Air Act (CAA) Amendments of 1990 require all states to develop operating permits programs that meet certain Federal criteria. In implementing this program, the states are to require certain sources of air pollution to obtain permits that contain all applicable requirements under the CAA. One purpose of the Part 70 operating permits program is to improve enforcement by issuing each source a single permit that consolidates all of the applicable CAA requirements into a Federally enforceable document. By consolidating all of the applicable requirements for a facility into one document, the source, the public and the permitting authorities can more easily determine what CAA requirements apply and how compliance with those requirements is determined. Sources required to obtain an operating permit under this program include: “major” sources of air pollution and certain other sources specified in the CAA or in EPA's implementing regulations. Revisions to the state operating permits program are subject to public notice, comment, and EPA approval.

The state of Kansas has requested a revision to the Operating Permits Program for the purpose of increasing emission fees for the Title V Operating Permits Program, revising the late fee provision, and other minor revisions. These revisions are made to Kansas Administrative Regulations 28-19-202.

The emission fee increase is necessary to offset the reductions in revenues resulting from reductions in emissions, an increase in the assessed indirect costs, and the transfer of fee fund interest to the general fund. The proposed increase is for major stationary sources for the years 2003 and beyond.

The late fee provision is revised with specific language that indicates that failure to pay within 10 calendar days after the department's written notification that the emissions fees were not received will result in continuation of the late fee. The late fee will be $10 per day or .05% of the annual emissions fee per day, whichever is greater and will be paid in addition to the late fee of $100.00 or 1% of the annual emissions fee, whichever is greater.

The minor revisions are addressed in the Technical Support Document that is a part of the EPA's electronic public docket listed previously in this document.

EPA is approving Kansas' revision of its Operating Permits Program. We are processing this revision to the Kansas Operating Permits Program as a direct final action because the revision makes routine changes to the existing rules which are noncontroversial. This revision will update the Kansas Air Quality Regulations, 28-19-202, to include an increase in annual emissions fees from $20.00 to $25.00 per ton for emissions occurring in the year 2003 and later, a revision to the late fee provisions, and other minor changes as outlined in the Technical Support Document that is a supplemental document to this rulemaking. This rule became effective on January 30, 2004. We do not anticipate any adverse comments. Please note that if EPA receives adverse comment on part of this rule and if that part can be severed from the remainder of the rule, EPA may adopt as final those parts of the rule that are not the subject of an adverse comment.

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

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

In reviewing state operating permits programs submitted pursuant to Title V of the CAA, EPA will approve state programs provided that they meet the requirements of the CAA and EPA's regulations codified at 40 CFR part 70. 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 state operating permits program for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews an operating permit program submission, to use VCS in place of a state program that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the 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 September 27, 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).)

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This section provides additional information by addressing the following questions:

The Clean Air Act (CAA) Amendments of 1990 require all states to develop operating permits programs that meet certain Federal criteria. In implementing this program, the states are to require certain sources of air pollution to obtain permits that contain all applicable requirements under the CAA. One purpose of the Part 70 operating permits program is to improve enforcement by issuing each source a single permit that consolidates all of the applicable CAA requirements into a Federally-enforceable document. By consolidating all of the applicable requirements for a facility into one document, the source, the public and the permitting authorities can more easily determine what CAA requirements apply and how compliance with those requirements is determined. Sources required to obtain an operating permit under this program include: “major” sources of air pollution and certain other sources specified in the CAA or in EPA's implementing regulations. Revisions to the state operating permits program are subject to public notice, comment, and EPA approval.

The state of Iowa has requested a revision to the Operating Permits Program for the purpose of revising the definition of stationary source categories in the state rule. EPA Region 7 advised the state of Iowa that the Federal definition had been revised to allow states to no longer require owners/operators of industrial facilities to count fugitive emissions of air pollutants not considered toxic in major source determinations, if the sources are in source categories subject to Federal emissions regulations promulgated after August 7, 1980. The state of Iowa acted on this revision and the amended rule (567-22.100(455B)) became effective on January 15, 2003.

The revision will make the definition consistent with the provisions of the New Source Review program and with EPA's major source definition in 40 CFR part 70.

EPA is approving Iowa's revision of its definition of stationary source categories. We are processing this action as a direct final action because the revisions make routine changes to the existing rules which are noncontroversial. Therefore, we do not anticipate any adverse comments. Please note that if EPA receives adverse comment on part of this rule and if that part can be severed from the remainder of the rule, EPA may adopt as final those parts of the rule that are not the subject of an adverse comment.

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

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

In reviewing state operating permits programs submitted pursuant to Title V of the CAA, EPA will approve state programs provided that they meet the requirements of the CAA and EPA's regulations codified at 40 CFR part 70. 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 state operating permits program for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews an operating permit program submission, to use VCS in place of a state program that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

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

Under section 307(b)(1) of the 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 September 27, 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).)