This action has been determined to be not significant for purposes of Executive Order 12866, and has not been reviewed by the Office of Management and Budget (OMB).

Pursuant to the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ), the Administrator of AMS has considered the economic impact of this proposed action on small entities.

AMS, through its MGC Branch, provides voluntary meat grading and certification services to a total of 370 businesses of which 261 are small entities. Small entities, which account for approximately 38 percent of the MGC Branch's total revenues, are defined as those that employ less than 500 employees. AMS provides meat grading and certification services to 93 meat processors, 90 livestock slaughterers, 52 facilities that further process federally donated products, 13 trade associations, 9 livestock feeders, 3 trucking companies, and 4 brokers. These entities are under no obligation to use meat grading and certification services provided under the authority of the Agricultural Marketing Act of 1946 (AMA), as amended, 7 USC 1621 et seq.

Meat grading and certification services facilitate the orderly marketing of meat and meat products and enable consumers to obtain the quality of meat they desire. Grading services consist of the evaluation of carcass beef, lamb, pork, veal, and calf for conformance with the grades of an official U.S. Standard for each species. Approximately 21 billion pounds of meat are graded each year. Certification services consist of the evaluation of meat and meat products for compliance with specification and contractual requirements. Certification services are used most often by large-scale meat purchasers to ensure that the quality and yields of the products they purchase comply with their stated requirements. Approximately 17 billion pounds of meat and meat products are certified each year.

AMS regularly reviews its user-fee-financed programs to determine if the fees are adequate. The most recent review determined that the existing fee schedule would not generate sufficient revenues to recover program costs for current and near-term periods while maintaining an adequate reserve balance. Without a fee increase, the projected operating losses for fiscal year (FY) 2000, FY 2001, and FY 2002 will be $1.9 million, $2.9 million, and $4.1 million respectively. Operating losses at these levels will deplete MGC Branch's operating reserve and place the Branch in an unstable financial position that will adversely affect its ability to provide the current level of grading and certification services. Any reduction in Branch services has the potential to substantially harm small and limited resource firms that rely on grading and certification services to market their products and compete in a global marketplace.

This proposed action would raise the fees charged to all users of grading and certification services. AMS estimates that overall, this proposed rule would yield an additional $175,000 in revenue per month for the balance of FY 2000. Of this $175,000, small businesses would pay approximately $66,500 or an average of $255 per month. In FY 2001 and 2002, small entities will pay approximately $798,000, an average of $255 per month or $3,058 per year. However, due to increased program and industry efficiencies, the FY 2000-2002 unit costs of program services (revenue/total pounds graded and certified) will remain virtually unchanged at approximately $0.0006 per pound for each fiscal year. Accordingly, the Administrator of AMS has determined that this proposal would not have a significant economic effect on a substantial number of small business entities.

This proposed fee increase, only the second since November 1993, is necessary to offset increased program operating costs resulting from: (1) The congressionally-mandated, governmentwide salary increases for 1998, 1999, and 2000; (2) inflation of nonsalary operating costs; (3) accumulated increases in CONUS per diem rates; (4) increased costs of servicing less than full-time applicants; and (5) costs associated with updating the MGC Branch's automated information management system to ensure compliance with year 2000 operating requirements.

Since 1993, in an ongoing effort to control operating costs, the MGC Branch has closed 3 field offices, reduced mid-level supervisory staff by over 50 percent, and reduced the number of support staff by 38 percent. At the same time, the MGC Branch has become more reliant on automated information management systems for data collection, retrieval, and dissemination, account billing, and disbursement of employee entitlements. The reduction in field offices, supervisory staff, support personnel, and the increased reliance on automated systems has enabled the MGC Branch to absorb a substantial portion of the increased operating costs and minimize increases in user-fees over the past 7 years.

Despite the MGC Branch's vigilant cost reduction efforts since 1993, the operating expenses projected for FY 2000 and beyond can only be balanced by adjusting the hourly fee rate charged to users of meat grading and certification services. Any further reduction in personnel, services, or management infrastructure beyond those already implemented would have a detrimental effect on the program's ability to provide meat grading and certification services and ensure the accurate and uniform application of such services. The hourly rate increase is necessary to recover the costs of providing voluntary Federal meat grading and certification services and for the program to continue serving all segments of the industry.

This proposed action has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not intended to have retroactive effect. This rule will not pre-empt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of this rule.

This proposed action will not impose any additional reporting or recordkeeping requirements on either small or large meat slaughters, processors, and other applicants who use Federal meat grading and certification services.

The Secretary of Agriculture is authorized by the AMA, 1946 as amended, 7 U.S.C. 1621 et seq. , to provide voluntary Federal meat grading and certification services to facilitate the orderly marketing of meat and meat products and to enable consumers to obtain the quality of meat they desire. The AMA also provides for the collection of fees from users of the Federal meat grading and certification services that are approximately equal to the cost of providing these services. The hourly fees for service are established by equitably distributing the projected annual program operating costs over the estimated hours of service—revenue hours—provided to users of the service. Program operating costs include salaries and fringe benefits of meat graders, supervision, travel, training, and all administrative costs of operating the program. Employee salaries and benefits account for approximately 80 percent of the total budget. Revenue hours include base hours, premium hours, and service performed on Federal legal holidays. As program operating costs continue to rise, the hourly fees must be adjusted to enable the program to remain financially self-supporting as required by law.

AMS regularly reviews its user-fee-financed programs to determine if the fees are adequate. The most recent review determined that the existing fee schedule for the meat grading and certification program would not generate sufficient revenues to recover operating costs for current and near-term periods while maintaining an adequate reserve balance. Without a fee increase, the projected operating losses for FY 2000, FY 2001, and FY 2002 will be $1.9 million, $2.9 million and $4.1 million respectively. These losses will totally deplete MGC Branch's operating reserve and place the Branch in an unstable financial position that will adversely affect its ability to provide the current level of grading and certification services.

This proposed fee increase is necessary to offset increased program operating costs resulting from: (1) Congressionally mandated salary increases for all Federal Government employees in 1998, 1999, and 2000; (2) inflation of nonsalary operating costs; (3) accumulated increases in CONUS per diem rates; (4) increased costs of servicing less than full-time applicants; and (5) costs associated with updating MGC Branch's automated information management system to ensure compliance with year 2000 requirements.

Since 1993, in an ongoing effort to control operating costs, the MGC Branch has closed three field offices, reduced mid-level supervisory staff by over 50 percent, and reduced the number of support staff by 38 percent. At the same time, the MGC Branch has become more reliant on automated information management systems for data collection, retrieval, and dissemination, account billing, and disbursement of employee entitlements. The reduction in field offices, supervisory staff and support personnel and the increased reliance on automated systems has enabled the MGC Branch to absorb a substantial portion of the increased operating costs and minimize increases in user-fees over the past 7 years.

In addition to increases in salary, nonsalary and employee entitlement costs, the MGC Branch can no longer absorb less than full cost recovery for providing service to noncommitment applicants. A noncommitment applicant is a less than full-time user of the meat grading and certification services who only pays for the actual time service is provided. Almost always, the cost of providing service to a noncommitment applicant is significantly more than providing service to a commitment applicant (full-time user of meat grading and certification services), and this difference has become more pronounced in the past several years. The cost of servicing noncommitment applicants is significantly increased by the nonrevenue and travel time of the meat graders assigned to provide service. Additionally, administrative and travel costs associated with supervising noncommitment applicants are significantly higher. This places an undue burden on commitment applicants and other users of the service. Under the current fee structure, these additional costs are not fully recovered and must be absorbed by the program. In addition to recovering all costs from commitment applicants, the proposed action will fully recover all costs associated with servicing less than full-time (noncommitment) applicants.

In FY 1999, the MGC Branch incurred significant unfunded costs in updating its automated information management system to ensure compliance with year 2000 requirements. These updates are complete and program managers do not anticipate any delays or lapses in service delivery as a result of non-compliance with year 2000 requirements. Additionally, automated administrative functions have been improved and are more efficient. Therefore, AMS can deliver services to customers in a more efficient and cost-effective manner which will help minimize future cost increases to applicants.

Despite the cost reduction efforts since 1993 and a user-fee increase in 1998, AMS has determined that the MGC Branch incurred a $852,000 operating loss in FY 1999. Further, AMS projects that without the proposed fee increase the MGC Branch will incur combined losses totaling over $9 million over the next three fiscal years and deplete program reserves. Such operating deficits can only be balanced by adjusting the hourly fee rate charged to users of the service. Any further reduction in personnel, services, or management infrastructure beyond those already implemented would have a detrimental effect on the program's ability to provide meat grading and certification services and support the accurate and uniform application of such services.

In view of these increases in costs, AMS is proposing to increase the base hourly rate charged to commitment applicants from $39.80 to $45. A commitment applicant is a user of meat grading and certification services who agrees to pay for five continuous 8 hour days, Monday through Friday between the hours of 6 a.m. and 6 p.m., excluding legal holidays. The base hourly rate for noncommitment applicants will increase from $42.20 to $52. A noncommitment applicant is a user of meat grading and certification services for eight consecutive hours or less per day between the hours of 6 a.m. and 6 p.m., excluding legal holidays. The hourly rate for premium hours would increase from $47.80 to $57, and will be charged to users of the service for hours worked in excess of 8 hours per day for each assigned official grader and for work performed before 6 a.m. and after 6 p.m., Monday through Friday, and any time on Saturday or Sunday, except on Federal legal holidays. The holiday rate for all applicants will increase from $79.60 to $90, and will be charged to users of the service for all hours worked on legal holidays.

For the reasons set forth in the preamble, it is proposed that 7 CFR Part 54 be amended as follows:

Prior to the enactment of the Gramm-Leach-Bliley Act, Public Law 106-102, (GLBA or the Act), national banks generally conducted activities in the bank itself, in an operating subsidiary, or in a subsidiary authorized for national banks to own pursuant to a specific statute ( e.g., a bank service company authorized under 12 U.S.C. 1861 et seq. ). Section 5.34 of the OCC's regulations governs national bank operating subsidiaries. Under § 5.34, an operating subsidiary may engage in activities that are part of, or incidental to, the business of banking as determined by the OCC. A national bank may acquire or establish an operating subsidiary, or commence a new activity in an existing operating subsidiary, by following specific filing procedures that vary depending upon the nature of the activity and whether the bank meets certain eligibility standards.

Section 5.34(f) also permits national banks to engage through a special type of operating subsidiary in activities that are part of, or incidental to, the business of banking but that are not permissible for the national bank to conduct directly, if the bank satisfies certain safety and soundness conditions. In addition, the bank must meet the definition of “eligible bank” in § 5.3(g) if the subsidiary is to engage in those activities as principal.

On November 12, 1999, the President signed the GLBA, which comprehensively restructures the statutory framework that governs the financial services industry. Section 121 of the Act adds a new section 5136A to the Revised Statutes that authorizes a national bank to acquire control of, or hold an interest in, a new type of subsidiary called a “financial subsidiary.” The GLBA defines a financial subsidiary as a company that is controlled by one or more insured depository institutions, other than a subsidiary that engages solely in activities that national banks may engage in directly (under the same terms and conditions that govern the conduct of these activities by national banks) or a subsidiary that a national bank is specifically authorized to control by the express terms of a Federal statute. A financial subsidiary may engage in specified activities that are financial in nature and in activities that are incidental to financial activities if the bank and the subsidiary meet certain requirements and comply with stated safeguards. A financial subsidiary also may combine these newly authorized activities with activities that are permissible for national banks to engage in directly.

The GLBA does not affect a national bank's authority to own and control an operating subsidiary that engages in activities that are part of, or incidental to, the business of banking and that are permissible for national banks to engage in directly. Thus, once the financial subsidiary provisions of the GLBA take effect, a national bank may continue to own or establish these operating subsidiaries and also may have financial subsidiaries that engage in new activities that the GLBA authorizes.

The OCC is issuing this proposal to implement section 121 of the GLBA by establishing a process under which a national bank may obtain OCC approval to engage in activities authorized pursuant to section 5136A of the Revised Statutes through a financial subsidiary by filing a written notice with the OCC. The following is a description of the provisions contained in proposed new § 5.39.

Section 5.39(d) defines key terms that are used in the proposal. As the GLBA requires, a number of these terms, such as “affiliate,” “company,” “control,” and “subsidiary,” have the same meaning that is set forth in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). Other terms, such as “well managed,” “equity capital,” “eligible debt,’ and “financial subsidiary” have the same definitions that are contained in the GLBA. The term “eligible debt,” is defined, in part, as unsecured “long term debt” meeting certain requirements. The proposal defines “long term debt” as any debt obligation with an initial maturity of 360 days or more.

Sections 5.39(e) and (f) provide a simple format describing the types of activities permissible and impermissible for a financial subsidiary. Under § 5.39(e), a financial subsidiary may engage in activities that are financial in nature or incidental to a financial activity that are not permissible for a national bank to conduct directly (expanded financial activities), as well as activities that may be conducted by an operating subsidiary pursuant to § 5.34 (that is, generally activities that are part of, or incidental to, the business of banking that national banks may conduct directly.) There is no requirement, however, that a financial subsidiary also conduct bank-permissible activities.

Section 5.39(e) also lists the activities that are defined in the Act as “financial in nature.” Among other things, this list includes activities that the Board of Governors of the Federal Reserve System (Board) has determined under section 4(c)(8) of the Bank Holding Company Act (12 U.S.C. 1843(c)(8)) to be so closely related to banking or controlling or managing banks as to be a proper incident thereto, and activities that the Board has found under section 4(c)(13) of the BHCA (12 U.S.C. 1843(c)(13)) to be usual in connection with the transaction of banking or other financial operations abroad.

The proposal also recognizes that the Secretary of the Treasury (in consultation with the Board) may determine that additional activities are financial in nature or incidental to a financial activity and therefore are permissible for a financial subsidiary. The Act provides specific procedures, not detailed in this proposal, for coordination between the Secretary of the Treasury and the Board in defining financial and incidental activities under this provision.

Section 5.39(f) sets forth activities that the Act specifically denotes as impermissible for financial subsidiaries. These activities include providing annuities and certain types of insurance as principal, real estate development or real estate investment (unless otherwise expressly authorized by law), and certain activities described in new sections 4(k)(4)(H) and (I) of the Bank Holding Company Act of 1956 (BHCA) as added by the GLBA. At the end of the five-year period beginning on November 12, 1999, however, the Board and the Secretary of the Treasury may find by regulation that the activities described in section 4(k)(4)(H) of the BHCA are permissible for financial subsidiaries.

Section 5.39(g) contains three conditions that a national bank must satisfy to acquire control of, or hold an interest in, a financial subsidiary. First, the national bank and each of its depository institution affiliates must be “well capitalized” and “well managed.” Those terms are defined in proposed § 5.39(d) consistent with their definitions in the GLBA. Second, the aggregate consolidated total assets of all financial subsidiaries of the bank may not exceed the lesser of 45 percent of the consolidated total assets of the parent bank or $50 billion. The $50 billion limit is to be adjusted according to an indexing mechanism established jointly by the Secretary of the Treasury and the Board. Third, a bank that is one of the 100 largest insured banks, as determined by the bank's consolidated total assets at the end of the calendar year, must have at least one issue of outstanding “eligible debt” that is rated in one of the three highest investment grade rating categories by a nationally recognized statistical rating organization (eligible debt requirement). If a national bank is one of the second 50 of the 100 largest insured banks, the proposal permits the bank to satisfy the eligible debt requirement if it meets alternative criteria to be set jointly through regulation by the Secretary of the Treasury and the Board. The eligible debt requirement does not apply to a bank that intends to acquire control of, or hold an interest in, a financial subsidiary that engages solely in activities in an agency capacity.

Consistent with the GLBA, the OCC also prohibits a national bank from commencing any expanded financial activity pursuant to section 5136A(a) of the Revised Statutes, or directly or indirectly acquiring control of a company engaged in any expanded financial activity under section 5136A(a) of the Revised Statutes, if the bank or any of its insured depository institution affiliates received a Community Reinvestment Act (CRA) rating of less than “satisfactory record of meeting community credit needs” on its most recent CRA examination prior to when the bank files a notice under § 5.39.

A national bank that establishes or maintains a financial subsidiary must comply with six conditions. First, for purposes of determining regulatory capital, the bank must deduct the aggregate amount of its outstanding equity investment, including retained earnings, in its financial subsidiaries from the assets and tangible equity of the bank. The term “tangible equity” is defined in § 5.39(d) by reference to the definition of that term in 12 CFR 6.2(g). The bank also may not consolidate its assets and liabilities with those of the financial subsidiary for purposes of determining compliance with regulatory capital requirements.

Second, any published financial statement of the national bank must, in addition to providing information prepared in accordance with generally accepted accounting principles, separately present financial information for the bank in a manner that reflects these capital adjustments. The third and fourth conditions require the bank to establish reasonable policies and procedures to preserve the separate corporate identity and limited liability of the bank and its financial subsidiaries, and to establish procedures to identify and manage financial and operational risks within the bank and the financial subsidiary that adequately protect the bank from these risks.

The fifth condition provides that a financial subsidiary is deemed a subsidiary of a bank holding company and not a subsidiary of the bank for purposes of the anti-tying prohibitions set forth in 12 U.S.C. 1971 et seq.

Finally, consistent with the Act, § 5.39(h)(5) provides that sections 23A and 23B of the Federal Reserve Act (FRA) (12 U.S.C. 371c and 371c-1) apply to certain transactions between a bank and its financial subsidiary. The Act effected this coverage by deeming a financial subsidiary to be an affiliate of the bank and not a subsidiary of the bank for FRA section 23A and 23B purposes. The GLBA exempts from the 10 percent quantitative limit of FRA section 23A(a)(1)(A), however, covered transactions between a bank and any individual financial subsidiary of the bank. Thus, covered transactions between a bank and any one financial subsidiary may exceed 10 percent of the bank's capital and surplus, but are subject to the 20 percent aggregate limit on transactions with all affiliates found in FRA section 23A(a)(1)(B). The proposal also provides that, for purposes of FRA sections 23A and 23B, the bank's investment in a financial subsidiary does not include retained earnings of the financial subsidiary. However, investment in the securities of a financial subsidiary of a bank by an affiliate of the bank are considered to be an investment in those securities by the bank; and any extension of credit by an affiliate of a bank to a financial subsidiary of the bank may be considered an extension of credit by the bank to the financial subsidiary if the Board determines that this treatment is necessary or appropriate to prevent evasions of the FRA or the GLBA.

The proposal provides a streamlined process for national banks seeking OCC approval to acquire control of, or hold an interest in, a financial subsidiary, or to commence an expanded financial activity in an existing financial subsidiary. This process is intended to accommodate individual bank preferences by permitting two alternative procedures for obtaining OCC approval.

Under the first option, a national bank may file a “Financial Subsidiary Certification” with the OCC listing the bank's depository institution affiliates and certifying that the bank and each of those affiliates is well capitalized and well managed. Thereafter, at such time as the bank seeks OCC approval to acquire control of, or hold an interest in, a new financial subsidiary, or commence a new expanded financial activity authorized under section 5136A in a financial subsidiary, the bank may file a written notice with the appropriate district office at the time of acquiring control of, or holding an interest in, a financial subsidiary, or commencing a new expanded financial activity authorized pursuant to section 5136A of the Revised Statutes in an existing financial subsidiary. The written notice must be labeled “Financial Subsidiary Notice,” must state that the bank's certification remains valid, and describe the activity or activities to be performed in the financial subsidiary as well as cite to the specific authority permitting the expanded financial activity to be conducted by a financial subsidiary. (Where the authority relied on is an agency order or interpretation under section 4(c)(8) or 4(c)(13), respectively, of the Bank Holding Company Act of 1956, a copy of the order or interpretation should be attached.) The written notice also must demonstrate that the aggregate consolidated total assets of all financial subsidiaries of the national bank do not exceed the lesser of 45% of the bank's consolidated total assets or $50 billion, that the bank will remain well capitalized after making the necessary capital adjustments, and, if applicable, that the bank meets the eligible debt requirement.

Alternatively, a bank may choose to seek approval by filing a combined certification and notification with the appropriate OCC district office at least five business days prior to acquiring control of, or an interest in, a financial subsidiary, or commencing a new expanded financial activity authorized pursuant to section 5136A of the Revised Statutes in an existing financial subsidiary. This type of notice would combine the information from the certification and notice described above, and should be labeled “Financial Subsidiary Certification and Notice.”

Because the GLBA specifically states that OCC approval shall be based solely upon specific statutory factors, the OCC believes its approval may occur upon a bank's submission of information demonstrating satisfaction of these statutory criteria. Thus, under both of the proposed alternatives, OCC approval occurs upon filing the requisite information within the time frames provided. Appropriate remedies exist under current law and OCC regulations to address any situations where a certification or notification is inaccurate, e.g. , § 5.13(h) and 18 U.S.C. 1001.

A national bank and its affiliated depository institutions must continue to satisfy the qualification requirements in § 5.39(g)(1) and (2) (well managed, well capitalized, and asset size requirements applicable to its financial subsidiaries) and the conditions in § 5.39(h)(1), (2), (3), and (4) after the bank acquires control of, or an interest in, a financial subsidiary. A national bank that fails to continue to satisfy these requirements is subject to several procedural requirements and OCC remedies. For example, the OCC must give notice to the bank promptly upon determining that the bank does not continue to meet these requirements. Under the proposal, the bank is deemed to have received this notice three days after mailing of the letter by the OCC. Not later than 45 days after receipt of this notice, or any additional time as the OCC may permit, the bank must execute an agreement with the OCC to comply with these requirements.

At any time until the conditions described in the notice are corrected, the OCC may impose limitations on the conduct or activities of the national bank or any subsidiary of the national bank that the OCC determines appropriate under the circumstances and consistent with the purposes of section 5136A of the Revised Statutes. The OCC may require the bank to divest control of a financial subsidiary if the bank does not correct the conditions giving rise to the notice within 180 days after its receipt of the notice.

A national bank that does not meet the eligible debt requirement may not purchase, directly or through a subsidiary, any additional equity capital of any financial subsidiary. The term “equity capital” is defined in § 5.39(j)(2), consistent with the GLBA, to include, in addition to any equity investment, any debt instrument issued by a financial subsidiary if the instrument qualifies as capital of the subsidiary under Federal or State law, regulation, or interpretation applicable to the subsidiary.

Finally, as required by the GLBA, the OCC will prohibit a national bank from commencing an expanded financial activity pursuant to section 5136A of the Revised Statutes, or directly or indirectly acquiring control of a company engaged in such activities, if the national bank or any of its insured depository institution affiliates received a CRA rating of less than “satisfactory record of meeting community credit needs” on its most recent CRA examination.

Section 5.34 authorizes national banks to engage through operating subsidiaries in activities that are part of, or incidental to, the business of banking. The proposal changes § 5.34 to be more consistent with the procedural requirements of new § 5.39, to remove unnecessary regulatory burden, and to make other adjustments that are necessary in light of the GLBA.

Current § 5.34 groups permissible operating subsidiary activities into three categories based on the novelty and risk of the activity and prescribes a different approval process depending on the category in which the activity is placed. For example, an adequately capitalized or well capitalized bank that is not in “troubled condition,” as defined in § 5.51, may establish or acquire an operating subsidiary to engage in certain activities listed in § 5.34, by providing the OCC a written notice within 10 days after commencing the activity. In addition, a bank that qualifies as an “eligible bank” may obtain expedited approval of an application to establish or acquire an operating subsidiary that will engage in certain additional activities listed in § 5.34.

This proposal changes several of the procedural requirements for national banks that wish to conduct activities through an operating subsidiary. First, the proposal consolidates and moves activities formerly listed in the expedited processing list into the notice category. Second, the proposal expands the list of notice activities to include other activities that the OCC has found to be part of, or incidental to, the business of banking  1 and has approved on a regular basis for national bank operating subsidiaries. Finally, given the expansion of the notice category, a national bank using the notice procedure must be well capitalized and well managed; the requirement that the bank not be in a “troubled condition” within the meaning of § 5.51 is removed to conform more closely to the financial subsidiary requirements in the GLBA.

The proposal also clarifies that “authorized products” referenced in the GLBA are activities permissible for operating subsidiaries under § 5.34. The term “authorized product” is defined at § 5.34(d)(1) to include certain insurance products that national banks may provide as principal pursuant to the GLBA because, as of January 1, 1999, either the OCC had determined that national banks could provide the product as principal or national banks were lawfully providing the product as principal, and as of that date no court had issued a final judgment overturning the OCC's determination that national banks could provide the product as principal. The term “authorized product” does not include title insurance or an annuity the income of which is subject to treatment under section 72 of the Internal Revenue Code of 1986 (26 U.S.C. 72). However, providing title insurance as principal is a permissible activity for an operating subsidiary if the national bank or subsidiary thereof was actively and lawfully underwriting title insurance before November 12, 1999, and no affiliate of the national bank (other than a subsidiary) provides insurance as principal.

The proposal also revises § 5.34 to conform to other changes made by the GLBA. First, the OCC has removed former § 5.34(f) from the rule because the GLBA makes clear that an operating subsidiary may engage only in activities that are permissible for the parent bank to engage in directly, and that an operating subsidiary conducts its activities subject to the same terms and conditions that apply to the conduct of those activities by its parent bank. Second, the proposal removes the former statement that “each operating subsidiary is subject to examination and supervision by the OCC” and clarifies that the OCC's authority to examine and take action against certain subsidiaries is subject to the limitations and requirements of new section 45 of the Federal Deposit Insurance Act and section 115 of the GLBA. The purpose of this change is to recognize the provisions in the GLBA relating to functional regulation of certain types of bank subsidiaries and affiliates.

The OCC requests comment on all aspects of this proposal, including the specific issues that follow.

The OCC seeks comment on the impact of this proposal on community banks. The OCC recognizes that community banks operate with more limited resources than larger institutions and may present a different risk profile. Thus, the OCC specifically requests comment on the impact of the proposal on community banks' current resources and available personnel with the requisite expertise, and whether the goals of the proposal could be achieved, for community banks, through an alternative approach.

Second, while as a matter of corporate law a subsidiary of a branch or agency of a foreign bank would technically be a subsidiary of the parent bank, for regulatory purposes the company could be treated as if it were a subsidiary of the branch or agency itself, provided the company is in fact operated in that manner. Thus, the OCC also seeks comment on whether national treatment principles would be furthered if Federal branches and agencies of foreign banks are authorized (as are national banks) to invest in financial and operating subsidiaries, and, if so, how the applicable qualification standards would be applied.

Finally, the OCC requests comment on whether the proposal is written clearly and is easy to understand. On June 1, 1998, the President issued a Memorandum directing each agency in the Executive branch to write its rules in plain language. This directive applies to all new proposed and final rulemaking documents issued on or after January 1, 1999. In addition, Public Law 106-102 requires each federal agency to use plain language in all proposed and final rules published after January 1, 2000. The OCC invites comment on how to make this rule clearer. For example, you may wish to discuss:

(1) Whether we have organized the material to suit your needs;

(2) Whether the requirements of the rule are clear; or

(3) Whether there is something else we could do to make the rule easier to understand.

Pursuant to section 605(b) of the Regulatory Flexibility Act, the Comptroller of the Currency certifies that this proposal will not have a significant economic impact on a substantial number of small entities. The principal effect of the rule is to provide procedures for implementing section 121 of the GLBA for national banks that wish to engage in activities through financial subsidiaries. The proposal also would reduce regulatory burden by increasing the number of activities that are subject to notice requirements rather than application requirements where a national bank intends to engage in activities through an operating subsidiary.

Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 104-4 (Unfunded Mandates Act) requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. The OCC has determined that the proposal will not result in expenditures by State, local, or tribal governments or by the private sector of $100 million or more. Accordingly, the OCC has not prepared a budgetary impact statement or specifically addressed the regulatory alternatives considered.

The Comptroller of the Currency has determined that this rule does not constitute a “significant regulatory action” for the purposes of Executive Order 12866.

The collection of information requirements in this proposal are found in 12 CFR 5.34(b) and (e) and 12 CFR 5.39(b) and (i). These collection of information requirements have been reviewed and approved by the Office of Management and Budget in accordance with the emergency review procedures of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(j)) under OMB Control Number 1557-0215.

For the reasons set forth in the preamble, the OCC proposes to amend Chapter I of Title 12 as follows:

Interested persons are invited to participate in the making of the proposed rule by submitting such written data, views, or arguments as they may desire. Communications should identify the Rules Docket number and be submitted in triplicate to the address specified above. All communications received on or before the closing date for comments, specified above, will be considered before taking action on the proposed rule. The proposals contained in this notice may be changed in light of the comments received.

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this notice must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 98-SW-82-AD.” The postcard will be date stamped and returned to the commenter.

Any person may obtain a copy of this NPRM by submitting a request to the FAA, Office of the Regional Counsel, Southwest Region, Attention: Rules Docket No. 98-SW-82-AD, 2601 Meacham Blvd., Room 663, Fort Worth, Texas 76137.

Following the issuance of our emergency priority letter AD on July 30, 1986, on March 3, 1987, the FAA issued AD 86-15-10, Amendment 39-5517 (52 FR 13233, April 22, 1987), to require an initial inspection within 10 hours time-in-service and repetitive inspections of the main rotor head components, the MGB suspension bars, and the ground resonance prevention system components at intervals not to exceed 300 hours TIS. That action was prompted by three reports of main rotor head component damage and MGB suspension bar damage in Model AS 355 helicopters that exhibited severe vibrations on approach or landing. That condition, if not corrected, could result in failure or unacceptable deterioration of the main rotor head, MGB suspension, or ground resonance prevention components which could result in failure of a main rotor head or MGB suspension component, and subsequent loss of control of the helicopter. On February 8, 1990, the FAA revised AD 86-15-10 (55 FR 5833, February 20, 1990), to require the same actions, except the repetitive inspections were required at intervals not to exceed 400 hours TIS. That action was prompted by reports of confusion and unnecessary costs caused by the differences in inspection intervals between AD 86-15-10 and the manufacturer's service bulletins that were incorporated by reference into that AD.

Since the issuance of that AD, no further incidents have occurred. The master maintenance interval has shifted from 400 to 500 hours TIS. Since flight safety will not be adversely impacted, and to alleviate any confusion between the AD and the master maintenance interval, the FAA proposes to revise the AD to match the master maintenance interval.

These helicopter 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 Direction Generale De L'Aviation Civile (DGAC) has kept the FAA informed of the situation described above. The FAA has reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

Since an unsafe condition has been identified that is likely to exist or develop on other Eurocopter France AS-350B, BA, B1, B2, C, D, and D1, and AS-355E, F, F1, F2 helicopters of the same type design, the proposed AD would revise AD 86-15-10 R1 to require repetitive inspections of the main rotor head components, the MGB suspension bars, and the ground resonance prevention system components at intervals not to exceed 500 hours TIS.

The FAA has determined that this regulation is relieving in nature and imposes no additional costs or regulatory burden on any person.

The regulations proposed herein would 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 proposal would not have federalism implications under Executive Order 13132.

For the reasons discussed above, I certify that this proposed 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) if promulgated, 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 copy of the draft regulatory evaluation prepared for this action is contained in the Rules Docket. A copy of it may be obtained by contacting the Rules Docket at the location provided under the caption “ ADDRESSES .”

Accordingly, pursuant to the authority delegated to me by the Administrator, the Federal Aviation Administration proposes to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:

Executive Order 12866, ‘Regulatory Planning and Review’

It has been determined that 32 CFR part 323 is not a significant regulatory action. The rule does not:

(1) Have an annual effect to the economy of $100 million or more; or adversely affect in a material way the economy; a section of the economy; productivity; competition; jobs; the environment; public health or safety; or state, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof;

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.

Public Law 96-354, ‘Regulatory Flexibility Act’ (5 U.S.C. 601)

It has been certified that this rule is not subject to the Regulatory Flexibility Act (5 U.S.C. 601) because it would not, if promulgated, have a significant economic impact on a substantial number of small entities.

Public Law 96-511, ‘Paperwork Reduction Act’ (44 U.S.C. Chapter 35)

It has been certified that this part does not impose any reporting or record keeping requirements under the Paperwork Reduction Act of 1995.

Privacy.

Accordingly, 32 CFR part 323 is proposed to be amended as follows:

thnsp;Appendix H to Part 323-DLA Exemption Rules.

See the information provided in the direct final rule which is located in the rules section of the Federal Register .

Docket . The docket is an organized file of the information considered by the EPA in the development of this rulemaking. The docket is a dynamic file, because material is added throughout the rulemaking development. The docketing system is intended to allow members of the public and industries involved to readily identify and locate documents so that they can effectively participate in the rulemaking process. Along with the proposed and promulgated standards and their preambles, the contents of the docket, except for certain interagency documents, will serve as the record for judicial review. (See the Act section 307(d)(7)(A).)

Electronic Comments . If you submit comments by e-mail, your comments must be submitted as an ASCII file avoiding the use of special characters and any form of encryption. You may also submit comments on a diskette in WordPerfect® version 5.1, 6.1, or Corel 8 file format (or ASCII). You must identify the docket number A-90-19 at the beginning of your comments. You should not submit confidential business information (CBI) through e-mail. You may file electronic comments online at many Federal depository libraries.

Regulated Entities . The regulated category and entities affected by this action include:

This table is not intended to be exhaustive but, rather, provides a guide for readers regarding entities likely to be interested in the revisions to the regulation affected by this action. This action is expected to be of interest to owners and operators subject to this rule who have process vents that may be affected by these rule amendments and to those owners or operators who are sending vent streams (gas streams) to another facility for disposal. Entities potentially regulated by the HON are those which produce as primary intended products any of the chemicals listed in table 1 of 40 CFR part 63, subpart F and are located at facilities that are major sources as defined in section 112 of the Clean Air Act (Act). Potentially regulated entities generally are companies that manufacture industrial organic chemicals and cyclic organic crude and intermediates. To determine whether your facility is regulated by this action, you should carefully examine all of the applicability criteria in 40 CFR 63.100. If you have questions regarding the applicability of this action to a particular entity, consult Janet Meyer (See FOR FURTHER INFORMATION CONTACT ).

Outline . The information presented in the preamble is organized as follows:

Currently, the rule defines a “process vent” as:

In recent months, industry representatives have stated that they understand the definition to define a process vent as the discharge point to the atmosphere. These industry representatives have raised concerns that our interpretation of the definition would significantly alter the information that must be submitted as part of an operating permit application and included in an operating permit. Specifically, industry representatives have expressed concerns that because a process vent is an “emission point,” the operating permit rule would require submittal of information on all gas streams originating from HON process units and all processes receiving these gas streams. Because HON process units frequently send gas streams to numerous other process units throughout a plant site, they have argued that it would be very burdensome to provide information on every gas stream originating from a HON process unit. Industry representatives have also questioned whether this language could result in some people classifying process equipment (such as downstream distillation units and reactors) as control equipment.

We considered the implementation issues associated with the existing definition of “process vent” and concluded that a new approach toward identification of gas streams subject to the control requirements would be appropriate. This approach consists of: (1) Defining a process vent as a discharge point instead of as a gas stream; (2) adding a section to subpart F to ennumerate characteristics of gas streams that when discharged would be subject to the process vent provisions; and (3) adding additional reporting requirements to § 63.151 and § 63.152 to ensure that the point of origination of a gas stream is identified as well as the point of discharge. This group of amendments is expected to achieve the outcome that was originally intended while addressing implementation problems.

We are proposing to revise the definition of “process vent” to read:

Batch process vent means gaseous venting to the atmosphere from a batch operation.

Our intent with the process vent provisions of the rule was to address operations that created continuous gaseous discharges during the operation of the process unit.

Section 63.110(a). We are proposing to amend § 63.110(a) to include in-process equipment subject to § 63.149 of subpart G. We overlooked the need to amend this paragraph in preparation of the January 17, 1997 amendments to the rule. Today's action would correct that error.

Miscellaneous conforming edits to process vent provisions (§§ 63.113 to 63.118). We are also proposing to amend several paragraphs in subpart G to improve consistency in terminology. These changes are:

• Revision of § 63.113(e) to refer to the defined term “TRE index value” instead of “TRE index.”

• Revision of § 63.113(g) to refer to “total organic HAP concentration” instead of “concentration.” This proposed change would correct unclear language in this paragraph.

• Revision of the term “gas stream flow” in the introductory language to § 63.114(a)(4)(ii) and in § 63.114(a)(4)(ii)(C) to read “gas flow rate.”

We are also proposing to revise § 63.118(a)(3) and (f)(3) to require records for periods when the gas stream is diverted to the atmosphere instead of records for periods when the gas stream is diverted from the control device. These revisions will make the recordkeeping requirement consistent with the monitoring requirement. We overlooked the need for these changes when we made the January 17, 1997 amendments to the rule that revised the wording of the monitoring requirement.

Miscellaneous amendments to wastewater provisions in §§ 63.132 through 63.147 and tables to subpart G. We are proposing changes to these sections of subpart G to address a number of minor drafting errors and oversights in the January 17, 1997 amendments to the rule. The sections and the associated proposed revisions are:

• § 63.132(a)(3) and (b)(4)—these paragraphs currently send the reader to the recordkeeping and reporting provisions in §§ 63.146 and 63.147. However, at this time there is no explicit statement that Group 2 wastewater streams are also subject to the recordkeeping and reporting requirements despite table 15 of subpart G requiring such information. Today's proposal would explicitly specify these requirements for Group 2 wastewater streams and would add cross references for them to § 63.132(a)(3) and (b)(4).

• § 63.138(i)—Today's proposed amendments are to clarify that in some cases, process wastewater streams included in the 1 megagram (Mg) exemption from treatment requirements in § 63.138(b) and (c) are also exempt from the suppression requirements in §§ 63.133 through 63.137. In cases where the mass flow rate is determined at the point of determination, it was never our intent to require suppression of these wastewater streams. We intended to require suppression of the partially treated streams that are part of the 1 Mg exemption option provided in § 63.138(i)(2). The proposed amendments would also clarify that process wastewater streams included in the 1 Mg exemption must be identified in the Notification of Compliance Status for both options presented in § 63.138(i). The current text inadvertently omitted stating this requirement explicitly for the option that requires all Group 1 wastewater streams at the source to have a mass flow rate less than 1 Mg per year (§ 63.138(i)(1)). (Identification of all Group 1 and Group 2 wastewater streams is currently required to be included in the Notification of Compliance in Table 15.)

• § 63.146(b)(1)—The proposal would add a statement of the reporting requirements for Group 2 wastewater streams. The proposed text is consistent with the information presently required by Table 15 to subpart G. Paragraph (b)(1) is presently a reserved paragraph in subpart G.

• § 63.147(b)(8)—The proposed amendment would clarify the recordkeeping requirements for Group 2 wastewater streams. The proposed addition to this section is consistent with the information presently required by Table 15 to subpart G.

• § 63.147(d) introductory text, paragraphs (d)(2) and (d)(3)—The proposed amendments would clarify requirements for non-regenerative carbon adsorbers. Section 63.147(d) only specifies the records to keep in lieu of daily averages for regenerative carbon adsorbers. Due to an oversight, the present rule text does not specify the required records for non-regenerative carbon adsorbers. Presumably, without today's correction, facilities operating non-regenerative carbon adsorbers would have to keep daily averages, which is not EPA's intent. Today's amendments would provide an alternative to daily averages for non-regenerative carbon adsorbers. The proposed amendments would also make this section of the rule consistent with Table 13 to subpart G.

• Table 12 to subpart G—The proposed amendments would remove “design” and the reference to § 63.138(d) from item 2 of the table. We intended that the continuous monitoring requirements specified in item 2 apply to all steam strippers used to comply with the wastewater provisions in subpart G, not just design steam strippers. Without this change, owners or operators of sources using steam strippers to comply with the wastewater treatment requirements are required to request approval of the monitoring parameters. It was not EPA's intent to require approval for these parameters.

• Table 20 to subpart G—The proposed amendments would add requirements for non-regenerative carbon absorbers. These amendments are necessary because we omitted non-regenerative carbon adsorbers from this table. See discussion accompanying § 63.147(d) for further explanation of the need for this amendment.

Section 63.151(b)(1)(iii). We are proposing to correct a drafting error in § 63.151(b)(1)(iii). This paragraph in the rule requires identification of the kinds of emission points within the chemical manufacturing process units that are subject to subpart G. The proposed amendment to § 63.151(b)(1)(iii) would replace the phrase “within the chemical manufacturing process unit” with the phrase “within the source.” This change is necessary because wastewater streams are not included in the definition of the chemical manufacturing process unit, but they are part of the source regulated by the HON. Consequently, this reporting requirement does not accomplish its intended purpose. Therefore, we are proposing to revise § 63.151(b)(1)(iii) to require identification of the kinds of emission points within the source that are subject to subpart G.

We are proposing amendments to § 63.116(a), § 63.128(b), § 63.14(j), and § 63.180(e) to clarify that a compliance demonstration for flares must be conducted using the provisions found in § 63.11(b). Specifically, we are now specifying that the owner or operator must (1) conduct a visible emission test, (2) determine the net heating value of the gas being combusted, and (3) determine the actual exit velocity. In each case, we are specifying specific procedures required in 63.11(b) for the determination. We are adding this more explicit language to the rule to address questions concerning the obligation to do these compliance determinations. We intend this change to remove any doubt concerning the applicability of these requirements.

We are proposing to amend appendix C to part 63 to add a concentration measurement procedure for determining the fraction biodegraded (f bio ) in biological treatment units that are not thoroughly mixed, and thus, have multiple zones of mixing. As part of these proposed revisions, we are proposing to add a Form XIII to appendix C to part 63, and we are proposing conforming edits to section I to refer to the new procedure in section III.E.

The purpose of adding this new procedure, called Multiple Zone Concentration Measurements, to appendix C is to provide an alternative concentration measurement test that can be used for units with multiple zones of mixing. The present concentration measurement procedure in appendix C, called the Inlet and Outlet Concentration Measurement Procedure, can only be used for thoroughly mixed treatment units. To use this new multiple zone procedure, you would identify zones with substantially uniform characteristics and would measure representative organic compound concentrations within the biological treatment unit as well as the inlet and outlet of the biological treatment unit. The estimated mass transfer coefficient for each compound is determined using the characteristics of each zone. You calculate f bio for each compound and each zone using Form XIII.

In addition to adding the Multiple Zone Concentration Measurements Procedure to appendix C, we are also proposing corrections to a term in Equation App. C-6 and to clarify that Equation App. C-4 is the solution to Equation App. C-3.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), the EPA must determine whether a regulatory action is “significant” and, therefore, subject to Office of Management and Budget (OMB) review and the requirements of the Executive Order. The Executive Order defines “significant” regulatory action as one that is likely to lead to a rule that may:

(1) Have an annual effect on the economy of $100 million or more, or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety in State, local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

It has been determined that this proposed rule is not a “significant regulatory action” within the meaning of the Executive Order and is therefore not subject to OMB review. These proposed changes to the HON are primarily technical and administrative and do not raise any novel legal or policy issues. These proposed changes are not expected to impose significant new costs. This proposed action will not have an annual effect on the economy of $100 million or other adverse economic impacts, not create any inconsistencies with other actions by other agencies, not alter any budgetary impacts, or raise any novel legal or policy issues.

Under Executive Order 13084, the EPA may not issue a regulation that is not required by statute, that significantly or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments, or EPA consults with those governments. If EPA complies by consulting, Executive Order 13084 requires EPA to provide to the OMB, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation. In addition, Executive Order 13084 requires EPA to develop an effective process permitting elected officials and other representatives of Indian tribal governments “to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.”

Today's proposed amendments to the rule would not significantly or uniquely affect the communities of Indian tribal governments. The proposal would amend the definition of “process vent” and would make other technical and administrative changes to the rule. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this proposed rule.

Executive Order 13045, “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), applies to any rule that: (1) is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that the EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the EPA must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This action is not subject to Executive Order 13045 because it is based on technology performance and not on health or safety risks.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. The EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

If EPA complies by consulting, Executive Order 13132 requires EPA to provide to OMB, in a separately identified section of the preamble to the rule, a federalism summary impact statement (FSIS). The FSIS must include a description of the extent of EPA's prior consultation with State and local officials, a summary of the nature of their concerns, and the Agency's position supporting the need to issue the regulation, and a statement of the extent to which the concerns of State and local officials have been met. Also, when EPA transmits a draft final rule with federalism implications to OMB for review pursuant to Executive Order 12866, EPA must include a certification from the Agency's Federalism Official stating that EPA has met the requirements of Executive Order 13132 in a meaningful and timely manner.

These proposed amendments to the final rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Today's proposed amendments would not impose any enforceable duties on these entities. The proposal would amend the definition of “process vent” and would make other technical and administrative changes to the rule. Thus, the requirements of section 6 of the Executive Order do not apply to these proposed amendments to the final rule.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of UMRA, the EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed or final rules with “Federal mandates” that may result in estimated costs to State, local, or tribal governments in the aggregate, or to the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires the EPA 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. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows the EPA to adopt an alternative other than the least costly, most cost-effective, or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before the EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

The EPA has determined that today's proposed action does not contain a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate or to the private sector in any 1 year. Therefore, the requirements of sections 202 and 205 of the UMRA do not apply to this action. The EPA has likewise determined that the action proposed today does not include any regulatory requirements that might significantly or uniquely affect small governments. Thus, today's action is not subject to the requirements of section 203 of the UMRA.

The Regulatory Flexibility Act of 1980 (RFA) (5 U.S.C. 601, et seq. ), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), requires the EPA to give special consideration to the effect of Federal regulations on small entities and to consider regulatory options that might mitigate any such impacts. The EPA is required to prepare a regulatory flexibility analysis and coordinate with small entity stakeholders if the Agency determines that a rule will have a significant economic impact on a substantial number of small entities.

The EPA has determined that it is not necessary to prepare a regulatory flexibility analysis in connection with these proposed amendments to the rule. The EPA has also determined that these amendments will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small government jurisdictions. See the April 22, 1994 Federal Register (59 FR 19449) for the basis for this determination. The proposed changes are primarily technical and administrative, and are not expected to impose significant new costs. The EPA does not anticipate that the proposed changes will create any significant additional burden for any of the regulated entities.

The OMB has approved the information collection requirements contained in the rule under the provisions of the Paperwork Reduction Act , 44 U.S.C. 3501, et seq. , and has assigned OMB control number 2060-0282. An Information Collection Request (ICR) document was prepared by the EPA (ICR No. 1414.03) and a copy may be obtained from Sandy Farmer, OP Regulatory Information Division, U.S. Environmental Protection Agency (2137), 401 M St. SW, Washington, DC 20460 or by calling (202) 260-2740.

An agency may not conduct or sponsor, and a person is not required to respond to an information collection request unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations are listed in 40 CFR part 9 and 48 CFR chapter 15.

Today's proposed amendments to the rule should have a very minor effect on the information collection burden estimates made previously. Based on discussions with industry representatives, EPA believes that this action would result in less than a 2 percent increase in the estimated information collection burden. This potential increase would include the burden associated with identification of and submittal of compliance documentation for previously unreported process vents subject to this rule. The potential increase would also include the burden associated with preparation of a supplemental report to identify the point of origination of the reported process vents as well as the discharge point. The EPA also estimates that a small (less than 2 percent) number of facilities may be required to install controls as a result of today's proposed changes. The EPA considers these changes to the rule to represent a clarification of the definition of process vent and the reporting requirements for process vents. Thus, EPA considers these potential increases in the burden estimate to be well within the uncertainty of the analysis. Consequently, the ICR has not been revised for these proposed amendments to the rule.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Pub. L. No. 104- 113, § 12(d) (15 U.S.C. 272 note), directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g. , materials specifications, test methods, sampling procedures, business practices, etc.) that are developed or adopted by voluntary consensus standard bodies. The NTTAA directs the EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This proposed action includes amendments to appendix C to add another procedure for determining fraction biodegraded. Therefore, we conducted a search to identify potentially applicable voluntary consensus standards for this case. However, we identified no such standards. Therefore, EPA proposes to add this additional procedure to appendix C. The EPA welcomes comments on this aspect of the proposed rulemaking and, specifically, invites the public to identify potentially-applicable voluntary consensus standards and to explain why such standards should be used in this regulation.

In the event commenters identify potentially-applicable voluntary consensus standards, EPA will carefully evaluate whether these procedures are viable alternatives to the proposed procedure. However, EPA does not anticipate that there will be any standards identified that are equivalent in terms of stringency and other criteria.

For the reasons set out in the preamble, title 40 chapter I, part 63 of the Code of Federal Regulations is proposed to be amended as follows:

a. Revising paragraph (a) introductory text.

b. Revising paragraph (b) introductory text.

c. Revising paragraph (c) introductory text,

(c)(4)(i), and (c)(4)(ii).

d. Revising paragraph (d)(1) introductory text and

(d)(1)(iii)(D)( 4 ).

e. Revising paragraph (d)(2) introductory text, (d)(2)(i) and (d)(2)(ii) introductory text, and (d)(2)(ii)(C).

f. Adding paragraph (f).

The revisions and addition read as follows:

22. Section 63.180 is amended by revising paragraph (e) to read as follows:

The Index to the docket is available on the Internet. Access it by following these directions:

The official record for this action will be kept in paper form. Accordingly, EPA will transfer all comments received electronically into paper form and place them in the official record, which will also include all comments submitted directly in writing. The official record is a paper record maintained at the address in ADDRESSES at the beginning of this notice. EPA responses to comments, whether the comments are written or electronic, will be in a notice in the Federal Register or in a response to comments document placed in the official record for this rulemaking. EPA will not immediately reply to commenters electronically other than to seek clarification of electronic comments that may be garbled in transmission or during conversion to paper form.

This is a summary of the Commission's Notice of Proposed Rule Making, FCC 00-16, adopted January 13, 2000, and released January 13, 2000. The full text of this Commission Notice of Proposed Rule Making is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12 St. S.W., Washington, D.C. The complete text of this Notice may also be purchased from the Commission's copy contractor, International Transcription Services, 445 Twelfth Street, S.W., CY-B402, (202) 857-3800. It is also available on the Commission's web page at www.fcc.gov/Bureaus/Mass_Media/Orders/2000/fcc00016.txt.

1. On November 29, 1999, Congress enacted the Community Broadcasters Protection Act of 1999 (“CBPA”). The CBPA requires the Commission, within 120 days after the date of enactment, to prescribe regulations establishing a Class A television license available to licensees of qualifying low-power television (“LPTV”) stations. The CBPA directs that Class A licensees be subject to the same license terms and renewal standards as full-power television licensees, and that Class A licensees be accorded primary status as a television broadcaster as long as the station continues to meet the requirements set forth in the statute for a qualifying low-power station. In addition to other matters, the CBPA sets out certain certification and application procedures for low-power television licensees seeking to obtain Class A status, prescribes the criteria low-power stations must meet to be eligible for a Class A license, and outlines the interference protection Class A applicants must provide to analog (or “NTSC”), digital (“DTV”), LPTV, and TV translator stations. We are initiating this proceeding to implement the Community Broadcasters Protection Act.

2. On September 22, 1999, the Commission adopted a Notice of Proposed Rule Making (“September 22 Notice”), 64 FR 56,999 (1999), considering a wide range of issues related to the establishment of a form of primary status for certain low-power television stations. That Notice responded to a petition for rule making filed by the Community Broadcasters Association (“CBA”). Initial comments on the September 22 Notice were due December 21, 1999. In light of passage of the Community Broadcasters Protection Act, which addresses many of the same issues raised in the earlier Notice and the CBA petition, we are terminating today our earlier proceeding, and are initiating this new proceeding to implement the CBPA.

3. From its creation by the Commission in 1982, the low power television service has been a “secondary spectrum priority” service whose members “may not cause objectionable interference to existing full service stations, and * * *must yield to facilities increases of existing full service stations or to new full service stations where interference occurs.” Currently, there are some 2,200 licensed LPTV stations in approximately 1000 communities, operating in all 50 states. These stations serve both rural and urban audiences. Because they operate at reduced power levels, LPTV stations serve a much smaller geographic region than full-service stations and can be fit into areas where a higher power station cannot be accommodated in the Table of Allotments. In many cases, LPTV stations may be the only television station in an area providing local news, weather, and public affairs programming. Even in some well-served markets, LPTV stations may provide the only local service to residents of discrete geographical communities within those markets. Many LPTV stations air “niche” programming, often locally produced, to residents of specific ethnic, racial, and interest communities within the larger area, including programming in foreign languages.

4. The LPTV service has significantly increased the diversity of broadcast station ownership. Stations are operated by such diverse entities as community groups, schools and colleges, religious organizations, radio and TV broadcasters, and a wide variety of small businesses. The service has also provided first-time ownership opportunities for minorities and women.

5. The Community Broadcasters Protection Act, Congress found that the future of low-power television is uncertain. Because LPTV stations have secondary regulatory status, they can be displaced by full-service stations that seek to expand their own service area, or by new full-service stations seeking to enter the same market. The statute finds that this regulatory status affects the ability of LPTV stations to raise necessary capital. In addition, Congress recognized that the conversion to digital television further complicates the uncertain future of LPTV stations. To facilitate the transition from analog to digital television, the Commission has provided a second channel for each full service television licensee in the country that will be used for digital broadcasting during the period of conversion to an all-digital broadcast service. In assigning DTV channels, we maintained the secondary status of LPTV stations and TV translators and, in order to provide all full-service stations with a second channel, were compelled to establish DTV allotments that will displace a number of LPTV stations. Although the Commission has taken a number of steps to mitigate the impact of the DTV transition on stations in the LPTV service, that transition will have significant adverse effects on many stations, particularly LPTV stations operating in urban areas where there are few, if any, available replacement channels.

6. Congress sought in the Community Broadcasters Protection Act to address some of these issues by providing certain low power television stations “primary” regulatory status. Congress also recognized, however, that, because of the emerging DTV service, not all LPTV stations could be guaranteed a certain future. Congress indicated its recognition of the importance and engineering complexity of the FCC's plan to convert full-service stations to digital format, and protected the ability of these stations to provide both digital and analog service.

7. Section (f)(1)(A) of the CBPA requires the Commission, within 120 days after the date of enactment (November 29, 1999), to prescribe regulations establishing a Class A television service. The CBPA establishes a two-part certification and application procedure for LPTV stations seeking Class A status. First, the CBPA directs the Commission to send a notice to all LPTV licensees describing the requirements for Class A designation. Within 60 days of the date of enactment, licensees intending to seek Class A designation are required to submit to the Commission a certification of eligibility based on the applicable qualification requirements.

8. The CBPA provides that, absent a material deficiency in a licensee's certification of eligibility, the Commission shall grant the certification of eligibility to apply for Class A status. The CBPA further provides that licensees have 30 days after final regulations implementing the CBPA are adopted by the Commission in which to submit an application for Class A designation. The Commission has 30 days after receipt of an application to act on applications that meet applicable interference and other criteria.

9. One issue not addressed by the statute is whether LPTV stations must apply for a Class A license within the time frame established in the legislation, or whether the Commission may continue to accept and approve applications from qualifying LPTV stations to convert to Class A status in the future. Section (f)(1)(B) of the statute states that licensees intending to seek Class A designation “shall” submit a certification of eligibility within 60 days after the date of enactment of the Act. Section (f)(1)(C) provides that consistent with the requirements set forth in section (f)(2)(A), a licensee may submit an application for Class A designation within 30 days after the Commission adopts rules in this docket. However, section (f)(2)(B) of statute also gives the Commission discretion to determine that the public interest, convenience and necessity would be served by treating a station as a qualifying LPTV station, or that a station should be considered to qualify for such status for other reasons. We ask commenters to address whether the statute permits the Commission to continue to accept applications to convert to Class A in the future. In addition, in the event the Commission concludes it does have this authority, we invite commenters to discuss whether the Commission should, as a matter of policy, allow LPTV stations to apply to convert to Class A status after the application period provided for in the Act.

10. The statute requires the Commission to “preserve the service areas of low-power television licensees pending the final resolution of a Class A application.” Since the inception of the LPTV service, the service areas of LPTV stations have been defined in terms of protected signal contours. LPTV are protected from interference from other LPTV and TV translator stations to the following signal contours: 62 dBu for stations on channels 2-6; 68 dBu for stations on channels 7-13; and 74 dBu for stations on channels 14-69, calculated using the Commission's F(50,50) signal propagation curves. Consistent with the proposal in the September 22 Notice, we propose herein to use the same protected areas now afforded LPTV stations for analog Class A television. This would preserve existing service provided by LPTV stations and minimize disruption or preclusion of other services. The CBPA also provides for digital Class A operations for which we have no readily available contour values other than those values that define DTV noise-limited service: 28 dBu for channels 2-6; 36 dBu for channels 7-13; and 41 dBu for channels 14-69, calculated as a predicted F(50,90) field strength. We invite comment on the protected service area of Class A stations and, in particular, on whether other field strength values might be better suited for analog and digital Class A service.

11. The CBPA also provides that if, after granting certification of eligibility for Class A license, technical problems arise requiring an engineering solution to a full-power DTV station's allotted parameters or channel assignment in the digital television Table of Allotments, the Commission shall make the modifications necessary to (i) ensure replication of the full-power digital television applicant's service area as provided for in §§ 73.622 and 73.623 of the Commission's regulations, and (ii) to permit maximization of a full-power digital television applicant's service area consistent with these sections, if the applicant has filed an application for maximization or a notice of its intent to seek maximization by December 31, 1999, and filed a “bona fide” application for maximization by May 1, 2000.

12. We propose to preserve the service area of LPTV licensees from the date the Commission receives an acceptable certification of eligibility for Class A status; that is, a certification that is complete and that, on its face, indicates eligibility for Class A status pursuant to the eligibility criteria established by statute and any other criteria ultimately approved in this proceeding. This timing appears most consistent with the CBPA's dual certification and application scheme for Class A status. Thus, the service area of an LPTV station would be protected, to the extent provided in the CBPA and our rules, from the date a certification for eligibility is filed with the Commission, as long as the certification is ultimately granted by the Commission. The CBPA permits the Commission to establish alternative criteria for Class A eligibility if it determines that the public interest, convenience and necessity would be served thereby, or for other reasons. We invite comment later in this Notice on what those alternative criteria should be. There may be instances in which a certification of eligibility may be granted but the corresponding Class A application may not be granted because the alternative eligibility showing cannot be approved. We further note that a Class A application could be denied if a certification of eligibility were later determined to be incorrect.

13. Thus, with certain exceptions, we believe that the statute requires that we act to preserve the service areas of LPTV stations that have been granted a certificate of eligibility for Class A status. We further believe that this requirement can be met by protecting the protected LPTV signal contours against predicted interference from NTSC, DTV, LPTV, and TV translator stations authorized after the enactment date of the Act (November 29, 1999). We interpret the statute as creating three exceptions to the LPTV service preservation requirement: (1) DTV stations seeking to replicate their analog TV service areas within the station's allotted engineering parameters, (2) DTV stations who filed a maximization application or statement of intent to maximize their service areas by December 31, 1999 and a maximization application by May 1, 2000 and (3) DTV stations that encounter technical problems that necessitate adjustments to the stations' DTV allotment parameters, including channel changes. We believe that the statute prohibits us from authorizing any other analog or digital station proposals that would be predicted to interfere with the protected contours of LPTV stations subsequent to the date the station has filed its certification for Class A eligibility, as long as the certification is ultimately granted. We invite comment on this tentative conclusion.

14. We propose the following methods of protecting the service contours of Class A stations and LPTV stations whose contours are to be preserved from interference under the certification of eligibility provisions. Where a full-service NTSC application or rule making proposal must protect a Class A station, the protection should be based on a contour overlap approach similar to that used for LPTV applications protecting the Grade B contour of NTSC stations; i.e., according to the criteria given in § 74.705 of the LPTV rules. The interference predictions would be based on the facilities proposed in the application. Petitioners for analog channels must identify reference NTSC facilities (location, effective radiated power, antenna height above average terrain and, if desired, horizontal antenna radiation pattern) for the purpose of showing the necessary contour protection. It is necessary to consider a variation on this approach for situations that may occur due to the manner in which LPTV stations have been authorized. Secondary LPTV stations must accept interference from full-service TV stations, and predicted interference from full-service stations is not considered in the LPTV application process. Therefore, it is possible that the authorized facilities of full-service stations would be predicted to interfere with protected Class A/LPTV service contours. Such stations may later file applications to modify their facilities; for example, to relocate the sites of transmitting antennas or increase power. In such an event, we would consider the full-service modification application proposal to be acceptable provided it did not increase the amount of predicted interference to the Class A/LPTV station; i.e., by further reducing the required separation between the stations or by further decreasing the interference protection ratios. We request comment on this approach or other approaches we should consider. We note that protection based on minimum distance separations between Class A and NTSC TV stations would be simpler, but would provide less flexibility. We also note that Class A stations can propose DTV operations and we seek comment on the approach that should be used to protect digital Class A operations.

15. Class A stations and certified eligible LPTV stations are also entitled to protection from some DTV stations, except as provided in the statute. For example, petitioners for a new DTV allotment would have to protect the contours of licensed or Class A-designated stations. We seek comment on whether we should use the approach described above for Class A protection from NTSC station proposals, but with desired-to-undesired signal strength (D/U) ratios applicable to protection of analog signals from DTV signals. In this regard, we could apply the co-channel and first adjacent channel, and possibly other, D/U ratios for “DTV-into-analog TV” given in § 73.623(c) of our rules. Alternatively, we seek comment on protecting licensed Class A and Class A-designated service areas from DTV station proposals in the manner in which DTV applicants protect full-service NTSC stations. If we were to adopt this approach, should we permit the same de minimis interference allowances to Class A service that are now permitted for DTV protection of NTSC stations? For either alternative approach, petitioners for DTV allotments would need to identify reference facilities that would satisfy the required method of protection. We invite comment on these matters and other approaches to protecting Class A service from DTV station proposals. As above, we note that a Class A station may choose digital operation and we seek comment on the method that should govern protection to digital Class A service.

16. We propose that LPTV and TV translator application proposals protect licensed Class A contours and the contours of LPTV stations that have filed certifications of eligibility in the manner that LPTV and translators stations now protect each other, as provided in § 74.707 of the LPTV rules. This approach is also based on D/U ratio compliance at points along the protected signal contour. We propose that applications to modify Class A stations (subsequent to receiving initial Class A licenses) protect existing Class A service in the same manner. We further propose to apply this approach to applicants for new Class A stations that would not qualify for this status within 90-days of enactment of the CBPA; that is, if we were to extend Class A application filing opportunities beyond the 30-day period permitted in the CPBA. We invite comment on these matters and ask in which manner we should protect the service of digital Class A stations from analog or digital LPTV, TV translators and other Class A stations.

17. Section (f)(1)(E) of the CBPA provides for protection of a DTV station that has been granted a construction permit to maximize or significantly enhance its service area and later files an application for a change in facilities that reduces its service area. In such a case, the statute provides that the protected contour of the DTV station is the reduced service area. We believe that the protection of the reduced coverage area would become effective upon grant of the application that requested the reduced facilities and that, in these circumstances, Class A stations would no longer need to protect the service area produced by the “replication” facilities established in the initial DTV Table of Allotments. We expect that few, if any, DTV stations will follow this course, but those licensees considering it should be aware of the consequences. We seek comment on this interpretation.

18. The CBPA provides that an LPTV station may qualify for Class A status if, during the 90 days preceding the date of enactment of the statute: (1) The station broadcast a minimum of 18 hours per day; (2) the station broadcast an average of at least 3 hours per week of programming produced within the market area served by the station, or the market area served by a group of commonly controlled low-power stations that carry common local programming produced within the market area served by such group; (3) the station was in compliance with the Commission's requirements for LPTV stations; and (4) from and after the date of its application for a Class A license, the station is in compliance with the Commission's operating rules for full-power television stations. Alternatively, section (f)(2)(B) of the CBPA provides that a station may qualify for Class A status if “the Commission determines that the public interest, convenience, and necessity would be served by treating the station as a qualifying low-power television station for purposes of this section, or for other reasons determined by the Commission.”

19. The statute's requirement that, during the 90 days preceding the date of enactment of Community Broadcasters Protection Act, LPTV stations must have broadcast a minimum of 18 hours/day is straightforward. The statute also prescribes that, during this period, LPTV stations must have broadcast an average of at least 3 hours per week of programming produced within the “market area” served by the station. As the statute does not define “market area,” we propose to define it as the station's protected service area. As discussed above, we have proposed to define the Class A protected service area as the protected area now afforded LPTV stations. We ask commenters to address whether the protected service area ultimately adopted by the Commission should also be used to define “market area” in connection with the local programming criterion. With respect to a group of commonly controlled stations, we propose to define the “market area” of such stations as the area covered by the protected service area of all stations in the commonly-owned group. We are not inclined to include repeated programming or locally produced commercials as contributing to the mandatory 3 hours of locally produced programming, and invite comment on this tentative conclusion.

20. To qualify for Class A status, the CBPA also provides that, during the 90 days preceding enactment of the statute, a station must have been in compliance with the Commission's requirements for LPTV stations. In addition, beginning on the date of its application for a Class A license and thereafter, a station must be in compliance with the Commission's operating rules for full-power stations. Consistent with this mandate, we intend to apply to Class A applicants and licensees all part 73 rules, except for those which are inconsistent with the manner in which LPTV stations are authorized or the lower power at which these stations operate. Thus, for example, Class A stations must comply with the part 73 requirements for informational and educational children's programming and the limits on commercialization during children's programming, the political programming rules, and the public inspection file rule. We intend to exempt Class A licensees only from part 73 rules that clearly cannot apply, either due to technical differences in the operation of low-power and full-power stations, or for other reasons. For example, some Class A stations may not be able to comply with the requirement of § 73.685(a) that stations provide a specified level of coverage to their community of license. We request comment on this provision and any other part 73 requirements that, for technical or other reasons, either cannot apply to Class A stations or must be modified with respect to such stations. We also invite commenters to address whether the Commission should group the new Class A service under the part 73 rules, governing full-service facilities, or the part 74 rules, governing low-power stations.

21. Section (f)(2)(B) of the CBPA permits the Commission to establish alternative eligibility criteria for Class A designation if “the Commission determines that the public interest, convenience, and necessity would be served by treating the station as a qualifying low-power television station for purposes of this section, or for other reasons determined by the Commission.” We invite comment on the circumstances that might warrant a determination that a station that does not meet the eligibility criteria set forth in section (f)(2)(A) of the statute nonetheless should be considered qualified for Class A status. For example, under what circumstances should we permit stations that fall short with respect to one or more of the statutorily prescribed qualification criteria to nonetheless apply for a Class A license (e.g., a station that has broadcast less than 18 hours/day or less than an average of 3 hours/week of programming produced in the market during the 90 days preceding enactment of the statute)? If so, how far may a station have deviated from these minimum requirements to still be considered eligible for Class A status? In addition, we invite comment on whether we should establish a different set of criteria for certain types of stations, such as foreign language stations or translators that have converted to low power status and meet whatever alternative eligibility criteria we might adopt.

22. Section (f)(3) of the CBPA provides that no LPTV station “authorized as of date of the enactment of the Community Broadcasters Protection Act of 1999 may be disqualified for a Class A license based on common ownership with any other medium of mass communication.” Thus, stations authorized as of November 29, 1999 may seek Class A status without regard to the station owner's interest in any other media entity. We request comment on the appropriate interpretation of this provision. Does the ownership exemption confer a right to convert only; that is, does it guarantee only that stations authorized as of November 29, 1999 may convert to Class A status regardless of other cross media interests held by the owner? In this regard, we note that section (f)(3) states that stations authorized as of the date of the Act shall not be “disqualified for a Class A license;” that is, that such stations have the right to convert regardless of other media interests. Alternatively, does the exemption also confer a right to transfer the station regardless of the buyer's cross media interests? As the exemption applies to “stations” authorized as of November 29, 1999, conversions after transfer may be covered, but the statute is less clear as to transfers of stations already converted to Class A. Finally, does the exemption insulate an owner from application of the common ownership rules with respect to any new cross media interests acquired after conversion of the LPTV to Class A? We also request comment as to what, if any, ownership restrictions should apply to LPTV stations authorized after November 29, 1999 and seeking Class A status. The statute and legislative history are silent on this point. Our inclination is to treat all LPTV stations seeking Class A status equally; thus, no LPTV station, regardless of when authorized, would be disqualified from Class A status based on common ownership with other media entities. We invite comment on this tentative conclusion.

23. The CBPA provides that the Commission is not required to issue an additional DTV license to a Class A station licensee or to a licensee of a TV translator, but the Commission “shall accept a license application for such services proposing facilities that will not cause interference to the service area of any other broadcast facility applied for, protected, permitted, or authorized on the date of filing of the [DTV] application.” We seek comment on this provision and how to implement it. Does this provision mean that the Commission does not need to identify a paired DTV channel for each Class A station or TV translator, but that the Commission should authorize a paired channel for DTV operation if the Class A or TV translator station licensee identifies and applies for an acceptable channel? We note that this interpretation might create an apparent inequity with respect to full service permittees and licensees that do not have a paired DTV channel because they received their initial station construction permit after the April 3, 1997 date used to define eligibility for the initial paired DTV licenses.

24. Section (f)(6)(A) of the Act provides that the Commission may not grant a Class A license to an LPTV station for operation between 698 and 806 megahertz (television broadcast channels 52-69). Thus, only LPTV stations operating on channels in the core spectrum (television broadcast channels 2 through 51) are eligible for Class A status. That section also provides, however, that the Commission shall provide to LPTV stations assigned to and temporarily operating between 698 and 806 megahertz the opportunity to meet the qualification requirements for a Class A license. If a qualified Class A applicant is assigned a channel within the core spectrum, the statute further provides that the Commission shall issue a Class A license simultaneously with the assignment of the in-core channel. This provision does not address when a station operating outside the core channels becomes eligible for contour protection. We are inclined to provide protection to such stations only when the station is assigned a channel within the core spectrum and the Commission issues a Class A license. To provide interference protection before the station is assigned an in-core channel appears inconsistent with the Act's prohibition on awarding Class A status to stations outside the core. We request comment on this proposal. We also request comment on whether Class A status and contour protection should commence with the grant of a construction permit on the in-core channel or a license to cover construction.

25. The Act provides that the Commission may not grant a Class A license to an LPTV station operating on any of the 175 additional channel allotments referenced in paragraph 45 of the Commission's February 23, 1998 Memorandum Opinion and Order on Reconsideration of the Sixth Report and Order in MM Docket 87-268, 63 FR 13,546 (1998). In that Order, the Commission expanded the DTV core spectrum to include all channels 2-51, and noted that this expansion would add approximately 175 additional channels for DTV stations and other new digital data services, many in top markets. The Act requires the Commission to identify the channel, location and applicable technical parameters of those 175 channels within 18 months. At this time, we note that these additional 175 DTV allotments will be part of the spectrum reclaimed at the end of the transition when existing stations end their dual channel analog TV/DTV operation and begin providing only DTV service on a single channel. Some stations will be continuing DTV operation on their DTV channel. Other stations will convert to DTV operation on their analog channel. In either case, the channel on which these stations discontinue operation may become available for other parties. The protection of these DTV allotments that will become available after the transition is effectively provided now because either analog TV or DTV stations are currently authorized and protected on these channels at these locations. We seek comment on our interpretation of this provision. Specifically, are other steps necessary to protect a particular set of 175 additional DTV channel allotments and, if so, how should we go about identifying them? Alternatively, should we interpret the CBPA to prohibit the authorization of Class A service on TV channels 2-6, which were added to the permanent core spectrum in the DTV proceeding?

26. The Act provides that a Class A license or modification of license may not be granted where the station would cause interference to certain NTSC, DTV, LPTV, and TV translator stations and land mobile radio operations.

27. With respect to NTSC facilities, section (f)(7)(A) the CBPA provides that a Class A license or modification of license may not be granted where the station will cause interference “within the predicted Grade B contour (as of the date of enactment of the * * * [CBPA] * * * or as proposed in a change application filed on or before such date) of any television station transmitting in analog format.” We invite comment on how to interpret the phrase “transmitting in analog format.” We are inclined to include among the NTSC facilities that Class A stations must protect both stations actually transmitting in analog format and those which have been authorized to construct facilities capable of transmitting in analog format (i.e., construction permits). Under this interpretation, pending applications for new NTSC full power stations would not be protected, nor would allotment proposals for such facilities, modified allotment proposals for channel or other technical changes, or the facilities in modification applications filed after November 29, 1999. We request comment on this tentative conclusion. In this regard, we note that the statute does explicitly protect LPTV and TV translator applications filed prior to the date on which a Class A application is filed.

28. In September 1999, we held our first broadcast auction involving mutually exclusive applications for new NTSC stations. Under the deadlines established in the CBPA, applications for initial Class A licenses are due to be filed by late April 2000. It is unlikely all of these new NTSC stations will be authorized as of that date. In addition, there are still pending before the Commission applications and channel allotment rule making petitions involving channels 60-69 and requests for waiver of the 1987 TV filing freeze, which account for approximately 180 potential new NTSC stations. Some of these applications have been on file with the Commission for more than ten years. We note that these long pending applications are protected against new full service analog applications. They would not be protected against Class A service under this interpretation of the statute.

29. Consistent with the September 22 Notice, we propose that applicants for Class A stations should protect the NTSC Grade B contour in the manner given in § 74.705 of the LPTV rules. LPTV stations have been engineered to protect the Grade B contour of full-service stations, and continuation of the current standards would be more appropriate than a new and different form of interference protection such as minimum distance separations between stations. We tentatively conclude that Class A applicants should be permitted to utilize all means for interference analysis afforded to LPTV stations in the DTV proceeding, including the Longley-Rice terrain-dependent propagation model. We invite comment on these proposals.

30. With respect to digital television, the statute provides that Class A applicants must protect the DTV service areas provided in the DTV Table of Allotments and the areas protected in the Commission's digital television regulations (47 CFR 73.622(e) and (f)). Thus, Class A stations may not interfere with DTV broadcasters' ability to replicate insofar as possible their NTSC service areas. Although not addressed in the statute, we believe it would be appropriate for Class A applicants to determine noninterference to DTV in the same manner as applicants for full service NTSC facilities. In this manner, Class A facilities would not be permitted to increase the population receiving interference within a DTV broadcaster's replicated service area and any additional area associated with its DTV license or construction permit. We would not permit Class A stations to cause de minimis levels of interference to DTV service, other than a 0.5% rounding allowance. Criteria for protecting DTV service are given in §§ 73.622 and 73.623 of our rules and in OET Bulletin 69. We seek comment on these proposals.

31. The CBPA also requires Class A applicants to protect the digital television service areas of stations subsequently granted by the Commission prior to the filing of a Class A application. We interpret this provision not to apply to applications for initial Class A licenses that have filed acceptable certifications of eligibility, but rather to applications seeking to modify Class A facilities, such as power increases. Should we conclude that stations have an ongoing right to convert to Class A status, these Class A applicants would face the same requirement; that is, they would not be required to protect new DTV stations granted by the Commission after the Class A station has filed an acceptable certification of eligibility. Section (f)(1)(D) of the Act, which requires the Commission to preserve the service areas of LPTV licensees upon certification of eligibility except in the case of “technical problems” in connection with DTV replication and maximization, does not include an exception to service area protection for new DTV service. We believe that the exclusion of new DTV service in section (f)(1)(D) means that new DTV entrants must preserve the service areas of LPTV stations that have been granted a certification of eligibility. We invite comment on this interpretation. Class A applicants who have filed acceptable certifications of eligibility also would not be required to protect the DTV application and allotment proposals of new DTV entrants. We invite comment on these interpretations.

32. Finally, the statute provides that a Class A application for license or license modification may not be granted where the proposal would interfere with stations seeking to “maximize power” under the Commission's rules, if such station has complied with the notification requirements in section (f)(1)(D) of the statute. Section (f)(1)(D) requires that, to be protected against Class A applicants, DTV stations must file an application for maximization or a notice of intent to seek maximization by December 31, 1999, and file a bona fide application for maximization by May 1, 2000. We seek comment on whether the term “maximize” in the statute refers only to situations in which stations seek power and/or antenna height greater than the allotted values. Alternatively, does “maximization” also refer to stations seeking to extend their service area beyond the NTSC replicated area by relocating their station from the allotted site?

33. The statutory language is ambiguous regarding the protection to be accorded by Class A applicants to DTV stations seeking to replicate or maximize power. Section (f)(1)(D), entitled “Resolution of Technical Problems,” directs the Commission to preserve the service areas of LPTV licensees pending final resolution of a Class A application. That section further provides that if, after certification of eligibility for a Class A license, “technical problems arise requiring an engineering solution to a full-power station's allotted parameters or channel assignment in the digital television Table of Allotments, the Commission shall make such modifications as necessary (1) to ensure replication of the full-power digital television applicant's service area * * * and (ii) to permit maximization of a full-power digital television applicant's service area * * * “(if the applicant has complied with the notification and application requirements established by that section). Although section (f)(1)(D) appears to tie replication and maximization to resolution of technical problems, section (7) appears to require all applicants for a Class A license or modification of license to demonstrate protection to stations seeking to replicate or maximize power, as long as the station seeking to maximize has complied with the notification and application requirements of (f)(1)(D), without reference to any need to resolve technical problems on the part of the DTV station. Despite the reference in section (f)(1)(D) to technical problems, we believe it would be more consistent with the statutory schemes both for Class A LPTV service and for digital full service broadcasting to require Class A applicants to protect all stations seeking to replicate or maximize DTV power, as provided in section (f)(7)(ii), regardless of the existence of “technical problems.” Stations seeking to maximize must comply with the notification requirements in paragraph (f)(1)(D). This interpretation seems most consistent with the intent of Congress to protect the ability of DTV stations to replicate and maximize service areas. We invite commenters to address this proposed interpretation of the statute, and to suggest any alternative method of resolving the conflicting references to replication and maximization in sections (f)(1)(D) and (f)(7) of the statute.

34. Finally, we also seek comment on how the maximization rights in the statute can be applied to full power stations that maximize their DTV facilities but subsequently move their digital operations to their original analog channel after the transition. Some of these stations may not be in a position to file maximization applications on their analog channels by the deadline prescribed in the statute. Can these stations preserve the right to maximize on their analog channels should they revert to those channels at the end of the transition? If so, how can the right to replicate the station's maximized DTV service area be preserved on the analog channel? As a corollary issue, we also seek comment on how the maximization allowance in the CBPA applies to full power stations for which the DTV channel allotment or both the NTSC and DTV channel allotments lie outside the DTV core spectrum (channels 2-51). Can these stations preserve their right to replicate their maximized DTV service area on a new in-core channel once that channel has been assigned?

35. As noted above, section (1)(D) of the CBPA directs the Commission to preserve the service areas of LPTV licensees, upon certification of eligibility, pending final resolution of a Class A application. However, that section also permits modifications to a full power station's allotted parameters or channel assignment in the DTV Table of Allotments, where made necessary by “technical problems” requiring an “engineering solution,” to ensure both replication and maximization of the DTV service area.

36. We discussed in our September 22 Notice the issue of channel changes and adjustments to station facilities necessary to correct unforeseen technical problems among DTV stations. For example, it was necessary in some cases to make DTV Table allotments on adjacent channels at noncollocated antenna sites in the same markets, which raised concerns among broadcasters over possible adjacent channel interference. In addition to changing some of those allotments, we stated that we would address these concerns by tightening the DTV emission mask and by “allowing flexibility in our licensing process and for modification of individual allotments to encourage adjacent channel co-locations * * *. ” We also provided broadcasters with flexibility to deal with allotment problems, for example, by permitting allotment exchanges in the same or adjacent markets. Section (1)(D) appears to give full power stations the flexibility to make these kinds of necessary adjustments to DTV allotment parameters, including channel changes, even after certification of an LPTV station's eligibility for Class A status.

37. The statute does not address certain questions regarding DTV allotment adjustments, some of which were posed in the September 22 Notice. Should a station requesting an adjustment to the DTV Table that would impinge upon the service area of a Class A station be required to show that the modification can only be made in this manner? If the modification requires displacement of the Class A station, should the affected Class A be permitted to exchange channels with the DTV station, provided it could meet interference protection requirements on the exchanged channel?

38. The CBPA also requires Class A stations to protect previously authorized LPTV and low-power TV translator stations (license and/or construction permit), as well as previously filed applications for these facilities. Specifically, section (f)(7)(B) of the statute provides that the Commission may not grant an application for a Class A license or modification of license unless the applicant shows that the Class A station will not cause interference within the protected contour of any LPTV or low-power TV translator station that was licensed, or for which a construction permit was issued, or for which a pending application was filed, prior to the date the Class A application was filed. We propose, as we did in our September 22 Notice, to require that Class A stations protect the LPTV and TV translator protected contours on the basis of the standards given in § 74.707 of the LPTV rules, i.e., on the basis of compliance with certain desired-to-undesired signal strength ratios.

39. Section (f)(7)(C) of the CBPA provides that the Commission may not grant a Class A license or modification of license where the Class A station will cause interference within the protected contour 80 miles from the geographic center of the areas listed in § 22.625(b)(1) or 90.303 of the Commission's rules (47 CFR 22.625(b)(1), 90.303) for frequencies in the 470-512 megahertz band identified in § 22.621 or 90.303 of our rules (47 CFR 22.621, 90.303), or in the 482-488 megahertz band in New York. This provision protects land mobile radio services which have been allocated the use of TV channels 14-20 in certain urban areas of the country, as well as Channel 16 in New York City metropolitan area. As we did in the September 22 Notice, we propose that these land mobile operations be protected by Class A applicants in the manner prescribed in § 74.709 of the LPTV rules.

40. We seek comment on whether the requirement to protect channel 16 in the New York metropolitan area applies to low power television station WEBR-LP, licensed to K Licensee, Inc. for New York City. In 1995, the Commission adopted an Order granting a conditional waiver for public safety land mobile use of Channel 16 in New York City. The waiver was granted for a period of at least five years or until any television broadcast licensee in the New York City metropolitan area initiated use of channel 16 for DTV operations, whichever is longer. The Order, at paragraph 16, stated that “the potential for adjacent channel interference to public safety operations on Channel 16 from LPTV operations on Channel 17 can be eliminated through engineering approaches and that Channel 16 can be utilized by public safety entities despite the close proximity of the LPTV operations.” The Commission concluded that “We therefore will specify in the grant of the Waiver Request that LPTV station W17BM [now WEBR-LP] has no responsibility to protect land mobile operations on adjacent TV Channel 16 other than from spurious emissions that exceed those permitted by our rules.” We note that we have no records of complaints of interference from Channel 17 to land mobile operations. In a Senate colloquy, Senator Burns, the prime sponsor of the Community Broadcasters Protection Act of 1999, stated his clarification of the meaning of section 5008(f)(7)(C)(ii) of the Bill with Senators Moynihan and Hatch. Senator Burns stated that this section was not intended to prevent LPTV station WEBR-LP (formerly W17BM) from qualifying for a Class A license, because the Commission waiver explicitly absolved WEBR-LP from any responsibility to protect the channel 16 land mobile operations other than from spurious emissions. Senators Hatch and Moynihan concurred with Senator Burns in this regard. In view of this colloquy, and the terms of the conditional grant, we are inclined to agree that station WEBR-LP is excepted from the requirement to show interference protection to use of channel 16 in the New York City metropolitan area. We seek comment in this regard.

41. We invite comment on the various Class A interference protection requirements. In particular, we ask whether, under the CBPA, we may distinguish for the purpose of interference protection requirements between applicants for initial Class A designation and applicants for new Class A technical facilities, for example, if we were to authorize new facilities by extending Class A filing opportunities to new entrants. We note that applications for initial designation will be filed by LPTV licensees who have already met the interference criteria to protect authorized full-service and other stations as a requirement for obtaining their licenses. Moreover, we propose that initial Class A applications may not include requests to modify these facilities.

42. We propose to grant initial Class A status to qualified LPTV stations as a modification of a station's license. The statute requires that we award Class A licenses within 30 days after receipt of acceptable applications. Accordingly, to ensure that we grant Class A licenses in a timely manner, we propose that initial Class A applications be limited to the conversion of existing facilities to Class A status, with no accompanying changes in those facilities. In this manner, there should be no possibility of mutual exclusivity between Class A conversion applications. Licensed LPTV stations also holding construction permits to modify their facilities should file Class A applications to modify their licensed facilities. Station licensees must subsequently file Class A license applications to cover the modified facilities authorized in their construction permits, and must provide all required interference protection showings in these applications. We also propose that applications for Class A stations be accepted for filing on the basis of the “substantially complete” acceptance standard used for LPTV applications. Under this standard, applicants have an opportunity to correct deficiencies identified by the processing staff.

43. In the September 22 Notice we proposed that all Class A applications be filed on FCC Form 301, including all required exhibits. Because the initial Class A status will be awarded as a modification of license, we ask which license application form, full-service FCC Form 302 or LPTV Form 347, would be the most appropriate vehicle for this purpose. If the Class A service is incorporated under part 73 of the rules, we propose that Class A facilities modification applications be filed on FCC Form 301. If it is placed under part 74, we propose that Class A construction permit applications be filed on FCC Form 346. We propose to apply to Class A applications the electronic filing policies and procedures applicable to the services whose application forms are being used for Class A. Initial Class A applications will be filed in April 2000, and we envision that at that time Class A applicants will have the option to file paper applications if they so desire. We invite comment on these matters.

44. In the September 22 Notice, we stated that the current LPTV minor change definition may be too restrictive, and we sought a revised definition for Class A stations that would permit additional flexibility to change facilities outside of filing windows, while also assuring that these changes would not interfere with other services. For the reasons given in that Notice, we propose to define Class A minor facilities modifications more in the manner of full-service TV stations. We propose to routinely grant Class A facilities changes that meet the current LPTV definition, but would permit other more expansive changes on a first-come first-served basis provided the proposed facilities would not conflict with previously authorized or proposed facilities. Under this approach, Class A stations could seek authorization for increased power, up to the limits of the service, outside of the window and auction procedures, provided their proposals met all interference protection requirements. This approach would be more consistent with the minor change provisions for full service radio and TV stations and we propose it for Class A stations. Channel changes would continue to be major changes.

45. The statute appears to contemplate facilities changes to Class A stations in the future, and provides that the Commission shall not grant such applications unless they provide the same protection to existing analog television facilities and to DTV service areas that an existing LPTV station converting to Class A status must provide. See section (f)(7). Among other things, this restriction requires that a modification to a Class A station protect the Grade B contour of an existing television station as that contour existed on November 29, 1999. If this provision alone were applied to Class A minor change applications as we have proposed to define them here, it would permit a Class A station to implement changes, such as substantial power increases, that do not protect the maximum facilities of full service stations allowed by the NTSC operating rules.

46. This approach was beneficial for LPTV stations because it allowed them to increase their facilities, yet had it no real adverse effect on full service stations because LPTV stations were all secondary. If a full service station were to subsequently seek to improve its facilities in a manner inconsistent with the upgraded LPTV station facilities, the LPTV station would have to yield if interference was caused to the reception of the full service station. Now that Class A LPTV stations have gained primary status, however, using “contour protection” as a basis for granting changes to their facilities could preclude a full service station from increasing its power or antenna height in the future. Moreover, if Class A stations may make preclusive changes based on protecting only the existing service of full service stations rather than their maximum facilities, it may not be appropriate to continue to insist that full service stations protect one another on the basis of maximum facilities. On the other hand, we recognize that, as a practical matter, the proximity of full service stations to DTV stations or allotments may permanently prevent them from increasing their facilities. In certain congested regions of the country many, if not most, NTSC stations may be constrained in this manner. Thus, under this approach, applicants for Class A facilities increases may be required to protect NTSC service areas that could not be achieved through authorized facilities, unnecessarily precluding them from increasing their facilities or making more difficult the location of replacement channels for displaced stations. We invite comment on these issues and how we should address them. Should we require Class A stations to protect the maximum facilities of full service stations? If so, should we apply a reciprocal rule as well based on protection to the maximum facilities of Class A stations; i.e., based on the power limits in the LPTV service? That is, should we oblige full service stations that seek to change their facilities to protect the maximum facilities of a Class A station considering that both stations have primary status? If we do require protection of the maximum facilities of Class A stations, what LPTV antenna height above average terrain should be used for this purpose?

47. Alternatively, should we simply adopt a “first come, first served” approach as between Class A and full service stations, as we proposed in the September 22 Notice, granting the modification application of whichever licensee files first? If we were to permit Class A modification applications that protect only the actual facilities of full service stations, should we permit full service stations an opportunity to file modification applications that could be mutually exclusive with the Class A application? Similarly, should we, despite our proposal that the Class A modification applications be considered minor, subject them to a petition to deny filing period?

48. We propose that the above provisions also be used for digital Class A stations. For example, the on-channel digital conversion of a Class A station would be filed as a minor change application. Facilities changes for analog or digital Class A stations not meeting the definition for minor changes would be subject to filing windows and the auction process. We invite comment on how we should define major and minor Class A TV facilities changes and on other ways to streamline the authorization of Class A TV service. If we were to adopt a more inclusive definition of minor facilities changes for Class A stations, we would be inclined to apply this definition to television translator and non Class A LPTV stations due to the technical and application processing similarities between the LPTV and proposed Class A services and to provide additional flexibility to these stations.

49. Through additional protections for Class A stations, we hope to reduce their risk of channel displacement or termination. However, it could be necessary for a Class A station to seek operations on a different channel, in order to avoid or eliminate an interference conflict. In that event, we propose that displaced Class A stations be permitted to apply for replacement channels on a first-come, first-served basis, not subject to mutually exclusive applications. We believe there is a need for displacement relief procedures for Class A stations, and we propose to adopt procedures similar to those used in the LPTV service, which have worked well over the years. Class A stations causing or receiving interference with NTSC TV, DTV or any other service or predicted to cause prohibited interference would be entitled to apply for a channel change and/or other related facilities changes on a first-come first-served basis. Given the protected status of Class A stations and the significant facilities changes implicit in displacement applications, we propose that displacement applications filed by Class A licensees be treated as major changes, with the specific exception that such applications would be permitted to be filed at any time that displacement status could be demonstrated. Thus, like displacement applications by LPTV stations, Class A displacement applications would not have to be filed in a window. Applications of Class A stations would not be mutually exclusive unless filed on the same day. Mutually exclusive applications would be subject to the auction procedures. We seek comment on these matters.

50. The Act provides a priority to LPTV stations that are displaced by the facilities proposed in Class A applications, and states that these LPTV stations “shall have priority over other low-power stations in the assignment of available channels.” We interpret this provision to mean that the channel displacement applications of LPTV stations displaced by Class A stations would have a higher priority than any other nondisplacement LPTV applications. In this regard, we note that in the LPTV service, displacement applications to avoid DTV interference conflicts are given priority over all other types of nondisplacement applications, regardless of when these were filed, and we propose to extend this policy to include LPTV stations displaced by Class A stations. We seek comment on whether we should adopt a similar policy for prioritizing Class A facilities modification applications, and whether some or all of the LPTV displacement relief provisions should apply to Class A. Should there be a limitation on how far a station should be permitted to relocate its antenna site to avoid or eliminate an interference conflict or would some form of a minimum coverage requirement provide a natural limit on this distance? Should we consider reasons for displacement other than electromagnetic interference, such an unavoidable loss of antenna site? The CBPA stipulates that we may not grant Class A facilities modification applications that do not protect against interference the facilities proposed in earlier filed LPTV and TV translator applications. Thus, we apparently cannot grant a processing priority to a Class A displacement application over an earlier filed LPTV or TV translator application. If a Class A station and a non-Class A LPTV station file mutually exclusive displacement applications, should we favor the Class A application? In this regard, we believe there may be merit to awarding a priority to Class A stations in view of their part 73 regulatory obligations. We invite comment on all of these issues.

51. The CBPA provides that Class A station licenses may not be granted to LPTV stations that operate between 698 to 806 MHz (TV channels 52-69). In the DTV proceeding, channels 2-51 were established as the permanent “core” spectrum, permitting the recovery of channels 52-59 at the end of the DTV transition period. Accordingly, we propose to grant Class A status only to qualifying stations authorized on channels 2-51.

52. The CBPA stipulates that its provisions do not preempt or otherwise affect section 337 of the Communications Act. Section 337 addresses two matters relevant to Class A television, the first of which involves the reallocation and licensing of TV channels 60-69. These channels are not available to Class A stations. Second, it contains certain provisions for LPTV stations already authorized to operate on TV channels 60-69. In the Balanced Budget Act of 1997 (“Budget Act”), Congress required that the Commission “seek to assure” that a qualifying LPTV station authorized on a channel from channel 60 to channel 69 be assigned a channel below channel 60 to permit its continued operation. In the DTV proceeding, we amended our rules to permit all LPTV stations on channels 60 to 69 to file displacement relief applications requesting a channel below channel 60, even where there is no predicted or actual interference conflict. We have received more than 300 hundred applications from LPTV and TV translator stations operating on these channels. These applications have a higher priority than all other nondisplacement applications for LPTV and TV translators, regardless of when the applications were filed. Other LPTV and TV translator stations on channels 60-69 have so far not elected to file displacement applications, but may do so at any time provided they protect the proposed facilities of earlier-filed displacement applications. The Commission has not selected channels for qualifying LPTV stations; however, it has provided the opportunity for affected stations to seek channels below channel 60 on a priority basis. We invite comment on whether the actions we have taken in this regard meet the Congressional mandate and what, if any, further actions should be taken. Should we give special consideration to the processing of displacement applications from qualifying stations in the LPTV service seeking to vacate use of a channel above channel 59? Should these applications be given priority where they are mutually exclusive with other displacement applications that do not qualify under the terms of the Budget Act? The CPBA does not permit the authorization of Class A stations on channels 52-59, while section 337 provides for these channels as replacement channels for LPTV stations on channels 60-69. We see no conflict between these provisions and believe that our proposals in this proceeding are consistent with both the CPBA and section 337. We invite comments on these matters.

53. We recognize that this spectrum limitation could adversely affect stations above channel 51. LPTV and TV translator operators on channels 60-69 have a presumption of displacement and may seek replacement channels at any time without further qualification. However, station operators on channels 52-59 may seek displacement relief only where there is an actual or potential interference conflict, including a conflict with a DTV co-channel allotment. Nonetheless, these operators face displacement when channels 52—59 are reclaimed, and would be barred from becoming Class A stations if they could not secure a replacement channel below channel 52. Thus, we ask if the presumption of displacement should be extended to LPTV and TV translator stations authorized on these channels, giving these operators an immediate opportunity to seek replacement channels while such channels might still available. We recognize this could lead to additional competition for replacement channels, channels that may be needed now by LPTV and translator stations facing displacement. We invite comment on whether we should extend a presumption of channel displacement to LPTV and TV translator stations authorized for channels 52-59.

54. We believe the current LPTV station power levels are sufficient to preserve existing service, and we believe that further increases could hinder the implementation of digital television and could limit the number of Class A stations that could be authorized. Although the CBA petition asked for higher power levels for Class A stations, our current belief is that any further power increases should await a fuller understanding of the coverage and interference potential of full service digital television stations.

55. Another issue to be resolved is whether to require Class A stations to provide some requisite level of coverage over their community. In its amended petition, CBA proposed that a certain minimum field strength be placed over at least 75% of the community of license. Several commenters opposed this proposal, believing that coverage of population was more important than geographic area or that a certain percentage (75%) of a station's minimum field strength contour must be over the station's community of license. We question whether a minimum coverage requirement should be imposed on Class A stations. Such stations may not operate with sufficient power to serve large communities, and we have expressed reservations about increasing power limits for Class A stations beyond the current limits in the LPTV service. Those Class A stations that are intended to serve an entire community that is otherwise unserved or underserved would appear to have ample incentive to provide a requisite level of service to the residents of the whole of that community without a Commission requirement to do so. Other stations, by their very nature, might intend to serve only a narrow segment of their community. We also recognize that some LPTV stations do not place a contour over the community named on their license. We invite comment on whether we should impose a coverage requirement on these stations.

56. We seek comment on whether to require any certain signal level or other measure of Class A reception quality to any particular geographical area or population. Alternatively, if we do adopt a coverage requirement, should it be couched in terms of a certain proportion of the Class A station's signal contour having to be placed over at least some part of its community of license? This type of requirement would serve to maintain a connection between the Class A station and its community of license without requiring it to serve any requisite portion of that community. This would be particularly beneficial where the community of license is large and the Class A station is intended to serve only a part of it. We seek comment on this issue and on what portion of a Class A station's signal contour, if any, should have to be placed over some part of its community of license.

57. Three remaining issues should be addressed as discussed in the earlier NPRM. One issue concerns the format of call signs to be issued to Class A stations. As these stations are changing status from LPTV to Class A, should they continue to use the suffix “-LP,” or should a different call sign scheme be used? Another issue is whether Class A transmitters should be certified (similar to the previous “type acceptance” requirement) or should the less stringent part 73 “verification” requirement or some other criteria apply? We are inclined to apply the part 73 verification requirement, but seek comment on whether the more stringent certification requirement should apply in view of the possibility that the transmitter could be used by a station that later chooses not to operate with Class A status. Finally, what class of fees should apply to Class A applicants? We believe it appropriate to classify Class A applications as minor modifications for fee purposes. How should Class A stations be considered for the purposes of regulatory fees assessed pursuant to section 9 of the Communications Act of 1934, as amended? We seek comment and these and other issues.

58. Comments and Reply Comments. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on or before February 10, 2000 and reply comments on or before February 20, 2000. We have established these relatively short comment periods due to the very short 120 day statutory deadline imposed by the CBPA. Moreover, in order to ensure that we meet the deadline imposed by Congress, we will not extend these comment deadlines. Given the existence of the statute and the relative narrowness of some of the issues raised in this Notice, we believe these deadlines will allow sufficient time for comment. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24,121 (1998).

59. Comments filed through ECFS can be sent as an electronic file via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, only one copy of an electronic submission must be filed. If multiple docket or rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one electronic copy of the comments to each docket or rulemaking number referenced in the caption. In completing the transmittal screen, commenters should include their full name, Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and should include the following words in the body of the message, “get form <your e-mail address.” A sample form and directions will be sent in reply.

60. Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appear in the caption of this proceeding, commenters must submit two additional copies for each additional docket or rulemaking number. All filings must be sent to the Commission's Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 Twelfth Street, S.W., TWA325, Washington, D.C. 20554.

61. Parties who choose to file by paper should also submit their comments on diskette. These diskettes should be submitted to: Wanda Hardy, Paralegal Specialist, 445 Twelfth Street, S.W., 2-C221, Washington, D.C. 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM compatible format using Word 97 or compatible software. The diskette should be accompanied by a cover letter and should be submitted in “read only” mode. The diskette should be clearly labeled with the commenter's name, proceeding (including the lead docket number in this case (MM Docket No. 00-10), type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy—Not an Original.” Each diskette should contain only one party's pleadings, preferably in a single electronic file. In addition, commenters must send diskette copies to the Commission's copy contractor, International Transcription Service, Inc., 445 Twelfth Street, S.W., CY-B402, Washington, D.C. 20554.

62. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 Twelfth Street, S.W., CY-A257, Washington, D.C. 20554. Persons with disabilities who need assistance in the FCC Reference Center may contact Bill Cline at (202) 418-0270, (202) 418-2555 TTY, or bcline@fcc.gov.

63. Ex Parte Rules. This proceeding will be treated as a permit-but-disclose notice and comment rulemaking proceeding, subject to the “permit-but-disclose” requirements under § 1.1206(b) of the rules. 47 CFR 1.1206(b), as revised. Ex parte presentations are permissible if disclosed in accordance with Commission rules, except during the Sunshine Agenda period when presentations, ex parte or otherwise, are generally prohibited. Persons making oral ex parte presentations are reminded that a memorandum summarizing a presentation must contain a summary of the substance of the presentation and not merely a listing of the subjects discussed. More than a one or two sentence description of the views and arguments presented is generally required. See 47 CFR 1.1202, 1.1203, and 1.1206(a).

64. Initial Regulatory Flexibility Analysis (“IRFA”). As required by section 603 of the Regulatory Flexibility Act, the Commission has prepared an IRFA of the expected impact on small entities of the proposals contained in this Notice. Written public comments are requested on the IRFA. In order to fulfill the mandate of the Contract with America Advancement Act of 1996 regarding the Final Regulatory Flexibility Analysis, we ask a number of questions in our IRFA regarding the prevalence of small business in the television broadcasting industry. Comments on the IRFA must be filed in accordance with the same filing deadlines as comments on the Notice, but they must have a distinct heading designating them as responses to the IRFA. The Reference Information Center, Consumer Information Bureau, will send a copy of this Notice, including the IRFA, to the Chief Counsel of Advocacy of the Small Business Administration.

65. Initial Paperwork Reduction Act Analysis. This Notice may contain either proposed or modified information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information collections contained in this Notice, as required by the Paperwork Reduction Act of 1995, Pub. Law 104-13. Written comments by the public on the proposed information collections are due February 10, 2000. Written comments must be submitted by the Office of Management and Budget (OMB) on the proposed information collection on or before March 20, 2000. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission's burden estimates; (c) ways to enhance the quality, utility and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology.

66. Accordingly, pursuant to the authority contained in sections 4(i), 303, 307, and 336(f) of the Communications Act of 1934, as amended, 47 USC 154(i), 303, 307, 336(f) this Notice of Proposed Rule Making is adopted.

67. The Commission's Reference Information Center, Consumer Information Bureau, shall send a copy of this Notice, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration in accordance with the Regulatory Flexibility Act.