The Office of Government Ethics is amending various sections of its executive branchwide ethics regulations on financial disclosure, standards of ethical conduct (the Standards), and Government ethics responsibilities, as codified at 5 CFR parts 2634, 2635 and 2638, in order to update them. These technical amendments also include a correction of a typographical error in 5 CFR 2634.301(d)(6).

These revisions to pertinent provisions of OGE's branchwide financial disclosure regulation, as codified at 5 CFR 2634.301(d) and 2634.302(b)(1), will add to the regulation the higher categories of value for assets, income, transactions and liabilities over $1,000,000 as required for public reports (on the Standard Form (SF) 278) under the Ethics in Government Act (the Ethics Act), as amended by sections 20 and 22 of the 1995 Lobbying Disclosure Act (Public Law 104-65). See section 102(a)(1)(B), (d)(1) and (e)(1) and the then-newly added section 102(a)(8) of the Ethics Act, 5 U.S.C. appendix, section 102(a)(1)(B), (a)(8), (d)(1) and (e)(1). The higher categories of value for assets, transactions (as recently determined by OGE for reports on the new 2000 edition of the SF 278 only), and liabilities are: $1,000,001 to $5,000,000; $5,000,001 to $25,000,000; $25,000,001 to $50,000,000; and over $50,000,000. For income, the higher categories are: $1,000,001 to $5,000,000; and over $5,000,000. The new regulatory text would also clarify that the higher categories only apply to items held by the report filer alone or jointly with his or her spouse and/or dependent children. For any such items held solely by a filer's spouse and/or dependent children, only the traditional “over $1,000,000” category would apply. To date, in a series of guidance memorandums over the years, OGE has asked departments and agencies to so notify filers administratively.

In addition, OGE is retroactively adjusting, to January 1, 1999, the reporting thresholds for gifts and travel reimbursements in the OGE executive branchwide regulation at 5 CFR 2634.304 (& as illustrated in examples following that section) for both the public and confidential financial disclosure systems under section 102(a)(2)(A) & (B) of the Ethics Act, 5 U.S.C. appendix, section 102(a)(2)(A) & (B), as extended to the executive branch confidential reporting system in subpart I of OGE's 5 CFR part 2634 regulation. These changes are necessitated by the increase by the General Services Administration (GSA) of the “minimal value” to $260 or less (from the prior level of $245 or less) for the three-year period 1999-2001 under the Foreign Gifts and Decorations Act, to which the Ethics Act and OGE regulatory thresholds are pegged. See 64 FR 13700-13701 (March 22, 1999), revising the GSA foreign gifts regulation, now to be codified at new 41 CFR 102-42.10 (formerly § 101-49.001-5), see 65 FR 45540 (July 24, 2000). The new reporting thresholds being codified in OGE's financial disclosure regulation are “more than $260” for the aggregation threshold for reporting and “$104 or less” for gifts and reimbursements which do not have to be counted towards the aggregate threshold (from the prior levels of $250 and $100, respectively). Further, OGE will adjust those thresholds in the future as needed in light of GSA's revaluation of “minimal value” every three years for foreign gifts purposes.

Finally, the widely attended gathering gift exception ceiling for nonsponsor gifts of free attendance under the standards of ethical conduct regulation, at 5 CFR 2635.204(g)(2) (& as illustrated in a couple of examples following paragraph (g)), will likewise be raised from $250 to $260. As OGE noted in the preambles to the proposed and final rules on such nonsponsor gifts, that ceiling is based in part on the financial disclosure gifts reporting threshold. See 60 FR 31416 (June 15, 1995) and 61 FR 42968 (August 20, 1996). Thus, it is reasonable now to adjust the nonsponsor gift ceiling to match the increase in the reporting threshold. The other requirements for acceptance of such nonsponsor gifts, including an agency interest determination and expected attendance by more than 100 persons, remain unchanged.

In addition, OGE is adding an unrelated reference in the related statutes section of the Standards, at 5 CFR 2635.902(l), to the criminal prohibition at 18 U.S.C. 1030 on fraudulent access and related activity in connection with computers.

Finally, OGE is updating the citations to the Ethics Act financial disclosure provisions, current Executive Order 12674 (as modified by E.O. 12731), and the definition of the executive branch in the pertinent provisions of 5 CFR part 2638 on ethics responsibilities of OGE and designated agency ethics officials.

Pursuant to 5 U.S.C. 553(b) and (d), as Director of the Office of Government Ethics, I find good cause exists for waiving the general notice of proposed rulemaking, opportunity for public comment and 30-day delay in effectiveness as to these technical updates and the correction. The notice, comment and delayed effective date provisions are being waived in part because these minor amendments concern matters of agency organization, practice and procedure. Further, it is in the public interest that correct and up-to-date information be contained in the affected sections of OGE's regulations as soon as possible. The increase in the reporting thresholds for gifts and reimbursements also lessens the reporting burden somewhat, and thus the effective date of that regulatory revision is being made retroactively effective to January 1, 1999, when the change became effective under the Ethics Act, as amended.

In promulgating these minor amendments, OGE has adhered to the regulatory philosophy and the applicable principles of regulation set forth in section 1 of Executive Order 12866, Regulatory Planning and Review. These amendments have not been reviewed by the Office of Management and Budget under that Executive order, since they are not deemed “significant” thereunder.

As Director of the Office of Government Ethics, I have reviewed this final amendatory regulation in light of section 3 of Executive Order 12988, Civil Justice Reform, and certify that it meets the applicable standards provided therein.

As Director of the Office of Government Ethics, I certify under the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this rulemaking will not have a significant economic impact on a substantial number of small entities.

The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply because this amendatory rulemaking does not contain information collection requirements that require the approval of the Office of Management and Budget.

The Office of Government Ethics has determined that this amendatory rulemaking is a nonmajor rule under the Congressional Review Act (5 U.S.C. chapter 8) and has provided a report thereon to the Senate, House of Representatives and General Accounting Office in accordance with that law.

The FAA has received reports of four incidents on McDonnell Douglas Model DC-10 and MD-11 series airplanes, in which a short circuit occurred in the electrical connector between the power lead and the housing of a fuel pump. The circuit breaker did not trip in any of these incidents because the electrical arcing that occurred was shorter in duration than necessary for the circuit breaker to detect the arcing and open the circuit. In the event of such a short circuit of a fuel pump electrical connector, continued arcing of the electrical connector could damage the conduit that protects the power lead inside the fuel tank, which could create a potential ignition source in the fuel tank.

The subject fuel pump electrical connector on all McDonnell Douglas Model MD-10 series airplanes is identical to that on McDonnell Douglas Model DC-10 and MD-11 series airplanes on which the incidents occurred. Therefore, all of these airplanes may be subject to the unsafe condition described above.

In addition, the Procedures Section of the FAA-approved Airplane Flight Manual (AFM) for McDonnell Douglas Model DC-10 and certain MD-11 series airplanes permits the flight crew to reset the fuel pump circuit breaker one time if the circuit breaker is tripped. (If it is tripped again, the AFM prohibits resetting it.) However, tripping of the circuit breaker may be caused by arcing following short circuit of a fuel pump electrical connector. Resetting the fuel pump circuit breaker if it is tripped due to arcing could allow arcing to continue and create a potential ignition source in the fuel tank. (The Limitations Section of the AFM for McDonnell Douglas Model MD-10 series airplanes already prohibits resetting the fuel pump circuit breaker; therefore, these airplanes are not subject to this unsafe condition.)

The FAA has reviewed and approved Boeing Flight Operations Bulletin DC-10-00-01A, MD-11-00-03A, and MD-10-00-02A, dated September 20, 2000. The flight operations bulletin provides instructions for revising the Procedures Section of the FAA-approved AFM by inserting certain Interim Operating Procedures (IOP). These IOP's advise the flight crew of proper procedures for disabling certain fuel pump electrical circuits following failure of a fuel pump electrical connector.

Since an unsafe condition has been identified that is likely to exist or develop on other airplanes of the same type design, this AD is being issued to prevent continued arcing following a short circuit of the fuel pump electrical connector, which could damage the conduit that protects the power lead inside the fuel tank, and result in the creation of a potential ignition source in the fuel tank. This AD requires accomplishment of the actions specified in the flight operations bulletin described previously. For certain airplanes, this AD also requires revising the Limitations Section of the FAA-approved AFM to prohibit resetting of any fuel pump circuit breakers.

This is considered to be interim action. The manufacturer has advised that it currently is developing an inspection and a modification that will positively address the unsafe condition addressed by this AD. Once these actions are developed, approved, and available, the FAA may consider additional rulemaking.

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

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

Submit comments using the following format:

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

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

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2000-NM-345-AD.” The postcard will be date stamped and returned to the commenter.

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

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

A proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an airworthiness directive (AD) applicable to Pratt & Whitney (PW) JT9D series turbofan engines was published in the Federal Register on November 24, 1999 (64 FR 66118). That action proposed to require installation of an improved No. 4 bearing internal oil pressure tube, initial and repetitive inspections of the No. 4 bearing oil pressure tube for TEC strut clearance and alignment, and, if necessary, replacement with serviceable parts, in accordance with PW Service Bulletin (SB) No. 5707, dated September 17, 1986, and in accordance with certain sections of the PW JT9D Engine Manuals: part numbers (P/Ns) 646028, 770407, 770408, 777210, 785059, and 754459.

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

One commenter states that the reports referenced in the NPRM focus only on engine fires, not uncontained engine failure and aircraft damage. Since the commenter has been using a tube of a design earlier to the one required by this AD for a long time without incident, the commenter requests that the FAA confirm the reasons for the modification and inspection program.

The FAA investigated the reports of oil fires in and around the No. 4 bearing area on the PW JT9D series turbofan engines and concluded that the heat generated by the oil fires could cause excessive thermal growth of the sixth stage LPT disk, liberation of the sixth stage LPT disk, uncontained engine failure, and damage to the airplane.

One commenter requests the modification of the applicability section of the AD to specify the BG 700 series of the JT9D-7R4D engines. The applicability section of the NPRM includes the JT9D-7R4D series engines. The PW SB JT9D-7R4-72-289, dated March 26, 1986, applies to the BG 700 series. The commenter has the JT9D-7R4D (BG 900) series engines and would like the applicability section of the AD to reflect the BG 700 series.

The FAA agrees. The applicability section has been changed accordingly. Another commenter requests that the list of aircraft on which the affected engines may be installed be expanded to include Airbus A300 airplanes. The FAA agrees. The FAA will add Airbus A300 airplanes to the list, but cautions that this AD list is advisory in nature and does not limit the applicability of the AD to just those engines which are installed on the listed airplanes.

One commenter requests that paragraph (b) reflect the JT9D-7A engine manual P/N 770408. The commenter also requests that the section title of 72-53-01 of the JT9D-59A engine manual, P/N 754459, be revised to reflect “Heavy Maintenance Check” instead of “Inspection 01.”

The FAA agrees. The engine manual P/Ns listed in the NPRM contain all engine models affected. However, the engine manufacturer has issued model-specific versions of these manuals. Therefore, it is possible that the operator may only have the model-specific version of the manual and not the all-encompassing engine manuals referred to in this AD. Revised paragraph (b) includes references to the model-specific JT9D engine manuals and to correct the reference to the title of Section 72-53-01 of P/N 754459.

Another commenter requests that the FAA weigh the benefits of conducting frequent inspections against the additional risks incurred by conducting the inspections. The commenter also states that it has not experienced an oil pressure tube failure due to TEC strut misalignment. The commenter considers an inspection interval at each heavy engine shop visit to be adequate, as opposed to every time the “N” or “P” flange is separated.

Two commenters recommend that the FAA replace the word “disconnected” with the word “separated.” The phrase “at the next time when the “N” or “P” flange is disconnected” occurs three times in the AD. One of the commenters suggests that since a flange is normally separated, not disconnected, this language may cause some confusion.

The FAA agrees in part. The FAA has decided to change the definition of shop visit to better reflect the original intent of the inspection. The original intent was that the inspections be performed during a complete disassembly of the TEC; this is the frequency interval contained in the engine manuals. The proposed language even if the recommended change from “disconnected” to “separated” is made, could still be perceived as a more frequent inspection interval than that intended by the FAA. Based on comments received and further coordination with the engine manufacturer, the FAA has developed a more precise definition. Therefore, the FAA has revised the phrase, “at the next time when the “N” or “P” flange is disconnected,” to read: “at the next turbine exhaust case disassembly when all hardware is stripped from the case.” These inspections are required at the same frequency contained in the engine manuals.

One commenter requests that the FAA confirm if there is a terminating action for the repetitive clearance and alignment check in accordance with the engine manual. The commenter questions if replacement of the pressure tube in accordance with PW SB 5707 and JT9D-7R4-72-289 constitutes the terminating action.

The FAA does not agree. There is no terminating action for this inspection. The inspections are required to make sure that there is sufficient tube clearance and that the TEC strut is aligned correctly. This inspection is an integral part of maintaining the airworthiness of this tube.

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

There are approximately 2,310 engines of the affected design in the worldwide fleet. Approximately 1,183 of these engines are installed on airplanes of U.S. registry. Review of purchase orders indicate that approximately 1,547 pressure tubes have been sold to the airlines; therefore this action will affect no more than 763 engines. It will take approximately one work hour per engine to accomplish the proposed actions; the average labor rate is $60 per work hour. Required parts will cost approximately $1,465 per engine. Based on these figures, the total cost impact of the proposed AD on U.S. operators is estimated to be no more than $1,163,575.

This rule does not have federalism implications, as defined in Executive Order 13132, because it does 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. Accordingly, the FAA has not consulted with state authorities prior to publication of this rule.

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

The FAA has developed RNAV RWY 30 ORIGINAL, SIAP to serve the Algona Municipal Airport, Algona, IA. The amendment to Class E airspace at Algona, IA, will provide additional controlled airspace at and above 700 feet AGL in order to contain the new SIAP within controlled airspace, and thereby facilitate separation of aircraft operating under Instrument Flight Rules (IFR). The amendment at Algona Municipal Airport, IA, will provide additional controlled airspace for aircraft operating under IFR procedures. The area will be depicted on appropriate aeronautical charts. Class E airspace areas extending upward from 700 feet or more above the surface of the earth are published in paragraph 6005 of FAA Order 7400.9H, dated September 1, 2000, and effective September 16, 2000, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

The FAA anticipates that this regulation will not result in adverse or negative comment and, therefore, is issuing it as a direct final rule. Previous actions of this nature have not been controversial and have not resulted in adverse comments or objections. The amendment will enhance safety for all flight operations by designating an area where VFR pilots may anticipate the presence of IFR aircraft at lower altitudes, especially during inclement weather conditions. A greater degree of safety is achieved by depicting the area on aeronautical charts. Unless a written adverse or negative comment, or a written notice of intent to submit an adverse or negative comment is received within the comment period, the regulation will become effective on the date specified above. After the close of the comment period, the FAA will publish a document in the Federal Register indicating that no adverse or negative comments were received and confirming the date on which the final rule will become effective. If the FAA does receive, within the comment period, an adverse or negative comment, or written notice of intent to submit such a comment, a document withdrawing the direct final rule will be published in the Federal Register , and a notice of proposed rulemaking may be published with a new comment period.

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 00-ACE-34.” The postcard will be date stamped and returned to the commenter.

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

The FAA has determined that this regulation is noncontroversial and unlikely to result in adverse or negative comments. For the reasons discussed in the preamble, I certify that this regulation (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (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.

On July 5, 2000, the FAA proposed to amend 14 CFR part 71 (part 71) to eliminate a segment of V-382 (65 FR 41388). This action was considered necessary due to the failure of repeated flight inspections on this segment of V-382. Interested parties were invited to participate in this rulemaking by submitting written comments on the proposal to the FAA. No comments were received. Except of editorial changes, this amendment is the same as that proposed in the notice.

The FAA is amending part 71 to modify V-382 by eliminating the route segment between Bryce Canyon and Grand Junction, CO, VORTAC. Since 1998, V-382 has been unusable between Bryce Canyon, UT, VORTAC and the Grand Junction, CO, VORTAC. This segment of V-382 no longer passes flight inspection and is out of service. The action retains the route segment from Grand Junction, CO, VORTAC to Durango, CO, VORTAC.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Domestic VOR Federal airways are published in paragraph 6010(a) of FAA Order 7400.9H dated September 1, 2000, and effective September 16, 2000, which is incorporated by reference in 14 CFR 71.1. The Domestic VOR Federal airway listed in this document would be published subsequently in the order.

On June 29, 2000, the FAA was notified by Transport Canada that Camp Scott, BC, RBN was decommissioned. This decommissioning action affects J-501 within Canada.

This action amends title 14 CFR part 71 (part 71) by amending the legal description of J-501 in Canadian airspace due to the decommissioning of the Camp Scott, BC, RBN. The FAA is taking this action to remove reference to the Camp Scott RBN in the description of J-501. The decommissioning of the Camp Scott RBN will generate a break in the J-501 between the Tofino, BC, RBN and the Sandspit, BC, very high frequency omnidirectional range/tactical air navigation facility. This action provides an uninterrupted route on J-501.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. Therefore, this regulation: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Jet routes are published in paragraph 2004 of FAA Order 7400.9H, dated September 1, 2000, and effective September 16, 2000, which is incorporated by reference in 14 CFR 71.1. The jet route listed in this document will be published subsequently in the order.

The Commission is correcting certain civil penalty inflation adjustments, 65 FR 60857 (Oct. 13, 2000), that were intended to update civil penalty amounts that the Commission last adjusted for inflation in 1996 under the Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended by the Debt Collection Improvement Act of 1996 (DCIA), 28 U.S.C. 2461 note. See 61 FR 54548 (Oct. 21, 1996), 55840 (Oct. 29, 1996). Section 5 of the FCPIAA requires, in relevant part, that any inflation “increase” since the last adjustment be rounded to the nearest multiple of $10 (for “penalties less than or equal to $100”), the nearest $100 (for “penalties greater than $100 but less than or equal to $1,000”), the nearest $1,000 (for “penalties greater than $1,000 but less than or equal to $10,000”), or the nearest $5,000 (for “penalties greater than $10,000 but less than or equal to $100,000”).

In determining how these rounding categories apply, the Commission had referred to the original statutory penalty amounts. For example, for penalties under section 5 of the FTC Act, the Commission used the rounding category “for penalties greater than $1,000 but less than or equal to $10,000” (i.e., increases are rounded in multiples of $1,000), even though section 5 penalties had been increased to $11,000 in 1996.

The rounding categories, however, do not expressly rely upon or refer to the original statutory amounts of the penalties, nor is the Commission aware of any legislative history to support a retroactive reading of “penalties” once the original statutory penalty amount has been increased. Rather, in calculating increases, the statute expressly refers to the increase since the penalties were last set “or adjusted” by law. See FCPIAA Sec. 5(b) (defining cost-of-living adjustment). Thus, for example, increases in the penalty for a violation of section 5 of the FTC Act (i.e., $11,000) must be rounded in multiples of $5,000 (rather than multiples of $1,000, as when the penalty was only $10,000).

Applying the rounding rules this way, the Commission has determined that the relevant increase in the Consumer Price Index (CPI) since the last adjustment in 1996 is not large enough yet to authorize the recently published increased in the civil penalty amounts within the Commission's jurisdiction. 1 Accordingly, the Commission has determined that the civil penalty amounts in Commission Rule 1.98, 16 CFR 1.98, as last adjusted in 1996, should remain unchanged for now. This determination does not affect the previously published rule amendments to include civil penalties for Recycled Oil Rule violations, which were inadvertently omitted from the 1996 adjustment. The Commission is re-publishing its final rule amendments to preserve these conforming amendments while making the civil penalty corrections discussed earlier.

These procedural amendments are exempt from the notice-and-comment requirements of the Administrative Procedure Act. See 5 U.S.C. 553(b)(B). The requirements of the Regulatory Flexibility Act also do not apply. See 5 U.S.C. 603, 604.

FDA periodically issues regulations requiring changes in the labeling of food. If the effective dates of these labeling changes were not coordinated, the cumulative economic impact on the food industry of having to respond separately to each change would be substantial. Therefore, the agency periodically has announced uniform compliance dates for new food labeling requirements (see e.g., the Federal Registers of October 19, 1984 (49 FR 41019), December 24, 1996 (61 FR 67710), December 27, 1996 (61 FR 68145), and December 23, 1998 (63 FR 71015)). Use of a uniform compliance date provides for an orderly and economical industry adjustment to new labeling requirements by allowing sufficient lead time to plan for the use of existing label inventories and the development of new labeling materials. This policy serves consumers' interests as well because the cost of multiple short-term label revisions that would otherwise occur would likely be passed on to consumers in the form of higher prices.

The agency has determined under 21 CFR 25.30(k) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

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

FDA has examined the economic implications of this final rule as required by Executive Order 12866. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, safety, distributive, and equity effects). Executive Order 12866 classifies a rule as “economically significant” if it meets any one of a number of specified conditions including having an annual effect on the economy of $100 million, adversely affecting some sector of the economy in a material way, or adversely affecting jobs or competition. A regulation is considered a “significant” regulatory action under Executive Order 12866 if it raises novel legal or policy issues. FDA finds that this final rule is neither an economically significant rule nor a significant regulatory action as defined by Executive Order 12866. In addition, in accordance with the Small Business Regulatory Enforcement Fairness Act of 1996, the administration of OMB has determined that this final rule is not a major rule for purposes of congressional review. The establishment of a uniform compliance date does not impose either costs or benefits. For future labeling requirements, FDA will assess the costs and benefits of the uniform compliance date as well as the option of setting other dates.

Because FDA has issued this final rule without first publishing a general notice of proposed rulemaking, a final regulatory analysis is not required by the Regulatory Flexibility Act (5 U.S.C. 601-612). Nonetheless, the uniform compliance date does not impose any burden on small entities. The agency will assess the costs and benefits of setting alternative dates as part of the regulatory flexibility analyses of future labeling regulations.

FDA has analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies 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. Accordingly, the agency has concluded that the rule does not contain policies that have federalism implications as defined in the order and, consequently, a federalism summary impact statement is not required.

This action is not intended to change existing requirements for compliance dates contained in final rules published before January 1, 2001. Therefore, all final FDA regulations published in the Federal Register before January 1, 2001, will still go into effect on the date stated in the respective final rule.

The agency generally encourages industry to comply with new labeling regulations as quickly as feasible, however. Thus, when industry members voluntarily change their labels, it is appropriate that they incorporate any new requirements that have been published as final regulations up to that time.

In rulemaking that began with publication of a proposal on April 15, 1996 (61 FR 16422), and ended with a final rule on December 24, 1996 (61 FR 67710), FDA provided notice and an opportunity for comment on the practice of establishing uniform compliance dates by issuance of a final rule announcing the date. Receiving no comments objecting to this practice, FDA finds any further rulemaking unnecessary for establishment of the uniform compliance date. Nonetheless, under 21 CFR 10.40(e)(1), FDA is providing an opportunity for comment on whether this uniform compliance date should be modified or revoked.

Interested persons may submit to the Dockets Management Branch (address above) written comments regarding this final rule by February 5, 2001. Two copies of any comments are to be submitted, except that individuals may submit one copy. Comments are to be identified with the docket number found in brackets in the heading of this document. Received comments may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday. After its review of any comments received to this final rule, FDA will either publish a document providing its conclusions concerning the comments or will initiate notice and comment rulemaking to modify or revoke the uniform compliance date established by this final rule.

The new uniform compliance date will apply only to final FDA food labeling regulations that require changes in the labeling of food products and that publish after January 1, 2001, and before December 31, 2002. Those regulations will specifically identify January 1, 2004, as their compliance date. All food products subject to the January 1, 2004, compliance date must comply with the appropriate regulations when initially introduced into interstate commerce on or after January 1, 2004. If any food labeling regulation involves special circumstances that justify a compliance date other than January 1, 2004, the agency will determine for that regulation an appropriate compliance date, which will be specified when the final regulation is published.

This document amends § 1.197-2 of the Income Tax Regulations (26 CFR Part 1) to provide additional rules regarding the application of section 197(f)(9) to partnership transactions under sections 732(b) and 734(b). This document also amends certain provisions of the final regulations under section 197 issued on January 25, 2000 (TD 8865, 65 FR 3820).

On January 16, 1997, the IRS published proposed regulations (REG-209709-94) in the Federal Register (62 FR 2336) under sections 167(f) and 197, including the anti-churning rules in section 197(f)(9). In commenting on the proposed regulations, some practitioners noted that additional guidance was needed regarding how the special anti-churning rule of section 197(f)(9)(E) should apply to increases in the basis of partnership property under sections 732, 734, and 743. In response to these comments, the IRS published proposed regulations (REG-100163-00) in the Federal Register (65 FR 3903) on January 25, 2000, providing rules for determining the portion of a basis adjustment under sections 732(b) and 734(b) that will be subject to the anti-churning rules. Final regulations (TD 8865, 65 FR 3820) (referred to herein as the “existing regulations”) were issued at the same time as the proposed regulations. The existing regulations provide guidance regarding the application of the anti-churning rules to basis adjustments under sections 732(d) and 743(b) and to remedial allocations of deductions for amortization of section 197(f)(9) intangibles (i.e., goodwill and going concern value that was held or used at any time during the period beginning on July 25, 1991, and ending on August 10, 1993 (unless an election was made under § 1.197-1T) and any other section 197 intangible that was held or used during such period and was not depreciable or amortizable under prior law).

The IRS received no requests to speak at a public hearing that was scheduled for May 24, 2000, and consequently the IRS canceled the hearing. Written comments were received in response to the notice of proposed rulemaking. The comments received and revisions made are discussed below.

Section 197(f)(9)(E) provides that, in applying the anti-churning rules for basis adjustments under sections 732, 734, and 743, determinations are made at the partner level, and each partner is treated as having owned and used such partner's proportionate share of the partnership's assets. With respect to basis adjustments under sections 732(b) and 734(b), this rule requires taxpayers and the IRS to analyze transactions that actually involve a distribution of property from the partnership to a partner as deemed transactions involving transfers of property directly among the partners. In applying the anti-churning rules to basis adjustments under section 732(b), the distributee partner is deemed to acquire the distributed intangible directly from the continuing partners of the distributing partnership. Similarly, in applying the anti-churning rules to basis adjustments under section 734(b), the continuing partners are deemed to acquire interests in the intangible that remains in the partnership from the partner who received a distribution (giving rise to the section 734(b) basis adjustment) of property other than the intangible.

Consistent with this view of the transactions, § 1.197-2(g)(3) of the existing regulations provides that the increase in the basis of a distributed section 197(f)(9) intangible under section 732(b) or the increase in the partnership's basis of an undistributed section 197(f)(9) intangible under section 734(b) is treated as a new intangible acquired as a result of the distribution. The rules for determining whether such basis adjustments are subject to the anti-churning rules under section 197(f)(9) operate by reference to the facts surrounding each partner's acquisition of its interest in the partnership, the relation of the distributee partner and the continuing partners, and the portion of the intangible that is allocable to such partners. Although the specific rules are not phrased in terms of analyzing a deemed transfer of a portion of an intangible between the distributee partner and the continuing partners, the effect of the rules is to analyze such a deemed transfer.

Under the proposed regulations, it first is necessary to determine whether the portion of an intangible that a partner is deemed to acquire as a result of the distribution was subject to the anti-churning rules immediately prior to the deemed transfer. Even if the intangible is a section 197(f)(9) intangible with respect to the partnership, for purposes of analyzing a deemed transfer, the partner's share of the intangible is treated as not being subject to the anti-churning rules if the intangible was held by the partnership at the time that the partner (or predecessor partner) acquired the partnership interest, and the partner (or predecessor partner) would have been able to amortize the intangible had the partner (or predecessor partner) directly acquired the intangible under the same circumstances that the partner (or predecessor partner) acquired the partnership interest. If a partner's share of the intangible is treated as not being subject to the anti-churning rules for this purpose, then the anti-churning rules would not apply to the portion of the basis adjustment that is attributable to the deemed transfer.

If the partner's share of the intangible was treated as being subject to the anti-churning rules immediately prior to the deemed transfer, it is necessary, as a further step, to determine whether the deemed transferor and transferee are related. If the partners are not related, the anti-churning rules would not apply to the basis adjustment that gives rise to the deemed transfer.

The proposed regulations also contain rules for measuring the portion of the intangible that is deemed to be transferred by the relevant partners in the deemed transactions together with certain additional rules designed to prevent circumvention of the anti-churning rules through the use of partnerships.

The proposed regulations provide that, for purposes of analyzing basis adjustments under section 734(b), a continuing partner's share of a basis increase is equal to (1) the total basis increase allocable to the intangible; multiplied by (2) a fraction equal to (A) the unrealized appreciation from the intangible that would have been allocated to the continuing partner if the partnership had sold the intangible immediately before the distribution for its fair market value in a fully taxable transaction; over (B) the total unrealized appreciation from the intangible that would have been realized by the partnership if the partnership had sold the intangible immediately before the distribution for its fair market value in a fully taxable transaction.

One commentator stated that, under the proposed regulations, the fraction for determining a continuing partner's share of the basis adjustment under section 734(b) could lead to inappropriate results in some circumstances. For example, if a partner contributes to a partnership a section 197(f)(9) intangible which has a fair market value that exceeds its tax basis at the time of the contribution, and, at some later date, in an unrelated transaction, the contributing partner is redeemed from the partnership resulting in a section 734(b) adjustment to the intangible, the proposed regulations could determine that the entire adjustment under section 734(b) is allocable to the contributing partner (assuming that the basis adjustment does not exceed the section 704(c) gain attributable to the property), even though the contributing partner is no longer a partner in the partnership.

Treasury and the IRS agree that the fraction used in the proposed regulations can lead to inappropriate results. Furthermore, as discussed below, particularly in situations involving intangibles with built-in gain that are contributed to a partnership, an approach relying on a partner's share of appreciation in an intangible (whether measured before or after a distribution) to determine the partner's share of a basis increase under section 734(b) appears to be inconsistent with the purpose of section 197(f)(9)(E).

Positive basis adjustments under section 734(b) can be analyzed from two different perspectives: gain eliminated or deductions created. Under § 1.755-1(c)(2)(i), positive section 734(b) basis adjustments are allocated first to appreciated properties within a class so as to eliminate the built-in gain (and hence section 704(c) gain) with respect to such properties. In analyzing gain on disposition of the asset, the basis adjustment inures first to the benefit of the contributing partner since it will reduce the section 704(c) gain recognized by the partner upon the disposition of the asset by the partnership. However, in analyzing depreciation or amortization deductions attributable to the asset, the basis will inure first to the non-contributing partners to the extent that they were being denied such deductions as a result of the ceiling rule. In determining the portion of an intangible that a partner is deemed to receive from the distributee partner for purposes of applying the anti-churning rules, it seems that a rule focused on who would receive a deduction as a result of a section 734(b) basis adjustment, rather than who would avoid gain, is more appropriate.

A partner's proportionate share of partnership capital generally serves as a good proxy for estimating a partner's share of deductions. Accordingly, for purposes of determining a continuing partner's share of a section 734(b) basis adjustment, the fraction utilized in the final regulations compares a continuing partner's post-distribution capital account as determined under section 704(b) and § 1.704-1(b)(2)(iv) to the aggregate of all of the continuing partners' post-distribution capital accounts (or if the partnership does not maintain capital accounts in accordance with § 1.704-1(b)(2)(iv), the fraction is determined by reference to the partner's overall interest in the partnership under § 1.704-1(b)(3)). Treasury and the IRS believe this change best reflects how deductions are likely to flow from the intangible asset in a typical partnership arrangement.

The proposed regulations provide that taxpayers may use any reasonable method to determine amortization of a section 734(b) adjustment with respect to an intangible for book purposes, provided that the method does not permit any portion of the tax deduction for amortization attributable to the adjustment to be allocated to a partner who is subject to the anti-churning rules. Several commentators requested guidance as to what methods would be considered reasonable in situations where part, but not all, of a section 734(b) basis adjustment is attributable to an intangible that is subject to the anti-churning rules.

In response to the comments, the final regulations contain an example illustrating one method for determining book amortization that will be considered reasonable under the regulations.

The existing regulations provide that the anti-churning rules apply with respect to positive basis adjustments under section 743(b) only if the person acquiring the partnership interest is related to the person transferring the partnership interest. One commentator pointed out that, even if the transferor partner is related to the transferee partner, there still may be situations where the section 743(b) adjustment should be amortizable by the transferee.

To illustrate the commentator's point, consider the following example: A partnership (PRS) with two partners, A and B, held an intangible subject to the anti-churning rules on August 10, 1993. The partnership has made a section 754 election. On June 1, 1995, A transfers his entire interest in PRS to C, an unrelated person. C has a positive section 743(b) basis adjustment with respect to the intangible that is not subject to the anti-churning rules. On April 30, 2000, C transfers his entire interest in PRS to D, a person related to C. C's section 743(b) basis adjustment disappears as a result of the transfer, and D obtains a new section 743(b) basis adjustment with respect to the intangible. According to the commentator, the ownership of the interest in PRS by C (a party unrelated to A) should permanently purge any taint with respect to a section 743(b) basis adjustment attributable to C's interest. The fact that D is related to C should not prevent D from amortizing the basis adjustment.

The commentator's suggestion is consistent with the aggregate approach in the regulations for adjustments under sections 732(b) and 734(b). Under § 1.197-2(h)(12)(ii) and (iv) of these final regulations, if a partner acquires an interest in a partnership from an unrelated partner after August 10, 1993, and after the partnership has acquired the section 197(f)(9) intangible, the partner will be treated as holding a portion of the intangible that is not subject to the anti-churning rules for purposes of analyzing subsequent deemed transfers relating to basis adjustments under sections 732(b) and 734(b). The existing regulations are amended to include similar provisions for purposes of analyzing the application of the anti-churning rules with respect to basis adjustments under section 743(b).

The existing regulations pertaining to section 732(d) adjustments also are amended to coordinate those provisions with the change discussed above for section 743(b) adjustments. The amendment provides that the anti-churning rules do not apply to an increase in the basis of a section 197(f)(9) intangible under section 732(d) if, had an election been in effect under section 754 at the time of the transfer of the partnership interest, the distributee partner would have been able to amortize the basis adjustment made pursuant to section 743(b).

Section 1.197-2(h)(12)(vi) of the proposed regulations provides a rule to prevent avoidance of the anti-churning rules where a partner subject to the anti-churning rules becomes or remains a user of the intangible after the basis of the intangible is adjusted with respect to another partner under section 732, 734, or 743. One commentator noted that § 1.197-2(h)(12)(vi) could apply if the partnership itself continues to use the intangible, at least where the deemed transferor of the intangible continues to own more than a 20 percent interest in the partnership, because the partner would be treated under the attribution rules as continuing to use the intangible by virtue of the partnership's use of the intangible. The commentator stated that such a result appears inconsistent with the policies underlying section 197(f)(9)(E), which ignore the existence of the partnership for purposes of anti-churning determinations with respect to basis adjustments under sections 732, 734, and 743. The commentator requested that the final regulations make clear that a partnership's continued use of an intangible would not invoke the rule of § 1.197-2(h)(12)(vi).

Consistent with this comment, § 1.197-2(h)(12)(vi) of these final regulations makes clear that the proscribed use must be by an anti-churning partner or related person other than the partnership. Attributed use of the intangible from the partnership to a partner will not cause this rule to apply.

Section 1.197-2(g)(4)(ii) of the existing regulations provides that “if a partner contributes a section 197 intangible to a partnership and the partnership adopts the remedial allocation method for making section 704(c) allocations of amortization deductions, the partnership generally may make remedial allocations of amortization deductions with respect to the contributed section 197 intangible in accordance with § 1.704-3(d).” Comments have been received expressing concern that, because no similar affirmative rule is contained in the anti-churning section of the regulations, if a contributing partner owns a greater than 20 percent interest in the partnership (and thus is considered related to the partnership), the rule allowing remedial allocations will not be available. While Treasury and the IRS believe that it was clear under the existing regulations that remedial allocations of amortization deductions could be made where the contributing partner is related to the partnership (as opposed to the non-contributing partners), an affirmative rule has been added to the anti-churning rules at § 1.197-2(h)(12)(vii)(B) in order to eliminate any doubt with respect to this issue.

In addition, the rule regarding the disallowance of remedials where a non-contributing partner is related to the contributing partner is amended in these final regulations to also cover situations where, as part of a series of related transactions that includes the contribution of the section 197(f)(9) intangible to the partnership, the contributing partner (or a related person) becomes or remains a direct user of the contributed intangible. Consistent with the analysis of remedials as being akin to a section 743(b) basis adjustment for the non-contributing partners, Treasury and the IRS believe that it is inappropriate for a non-contributing partner to obtain amortization deductions with respect to a portion of a contributed section 197(f)(9) intangible where the prior owner of the intangible becomes or remains a direct user of the intangible in connection with the contribution. See also section 197(f)(9)(A)(iii) and § 1.197-2(h)(12)(vi).

For purposes of analyzing deemed transfers resulting from basis adjustments under sections 732(b) and 734(b) in applying the anti-churning rules, the proposed regulations provide that if a partner contributed the distributed section 197(f)(9) intangible to the partnership, the partnership interest acquired by such partner is treated as not being described in § 1.197-2(h)(12)(ii)(A)(2) and (3) (for section 732(b) adjustments) or 1.197-2(h)(12)(iv)(A)(2) and (3) (for section 734(b) adjustments) ( i.e. , the rules that allow a prior purchase of a partnership interest from an unrelated person to purge the partner's anti-churning taint in analyzing subsequent deemed transfers relating to basis adjustments). Accordingly, in order for a basis adjustment to a section 197(f)(9) intangible under section 732(b) or 734(b) to be amortizable, the deemed transfer (as a result of the basis adjustment) from the contributing partner must be to an unrelated partner.

Commentators indicated that this rule is unnecessary. According to the commentators, §§ 1.197-2(h)(12)(ii)(A)(2) and (3) and 1.197-2(h)(12)(iv)(A)(2) and (3), by their terms, cannot apply where the deemed transferor contributed the section 197(f)(9) intangible to the partnership. Treasury and the IRS agree with this comment. Accordingly, the final regulations omit the rule regarding a partner who contributes the distributed section 197(f)(9) intangible.

It has been determined that the final regulations are not a significant regulatory action as defined in Executive Order 12866. It also has been determined that section 533(b) of the Administrative Procedures Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the final regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal authors of these regulations are David J. Sotos and Robert G. Honigman of Associate Chief Counsel (Passthroughs & Special Industries). However, other personnel from the Treasury Department and IRS participated in their development.

This rule does not contain any new information collection requirements and does not modify any existing requirements. Thus, the rule contains no reporting or recordkeeping requirements subject to the Paperwork Reduction Act of 1995.

Apart from the brief periods, as discussed below, when the suspended “helper” regulations were implemented, the longstanding practice of the Department of Labor (“DOL” or “the Department”) has been to allow the use of helper classifications on DBRA-covered construction projects only where (1) the duties of the helper are clearly defined and distinct from those of the journeyworker and laborer; (2) the use of such helpers is an established prevailing practice in the area; and (3) the term “helper” is not synonymous with “trainee” in an informal training program.

On May 28, 1982, Wage and Hour published revised final Regulations, 29 CFR Part 1, Procedures for Predetermination of Wage Rates, and 29 CFR Part 5, Subpart A—Davis-Bacon and Related Acts Provisions and Procedures (47 FR 23644 and 23658, respectively), containing new provisions intended to allow contractors to expand their use of helpers on Davis-Bacon covered projects at wages lower than those paid to skilled journeyworkers. 1

These regulations were challenged in a lawsuit brought by the Building and Construction Trades Department, AFL-CIO, and a number of individual unions. On December 23, 1982, the U.S. District Court for the District of Columbia Circuit held that the new helper regulations conflicted with the Davis-Bacon Act and enjoined DOL from implementing the regulations. See Building and Construction Trades Department, AFL-CIO, et al. v. Donovan, et al., 553 F. Supp. 352 (D.D.C. 1982). On appeal, the U.S. Court of Appeals for the District of Columbia upheld the Department's authority to allow the increased use of helpers, concluding that the Secretary's regulatory definition was “not clearly unreasonable.” Building and Construction Trades Department, AFL-CIO, et al. v. Donovan, et al., 712 F.2d 611, 630 (D.C. Cir. 1983), cert. denied, 464 U.S. 1069 (1983). However, the court struck down that part of the regulation that allowed for the issuance of a helper wage rate where helpers were only “identifiable.” Id. at 624.

On remand, the district court lifted the injunction as it applied to the helper definition, but maintained it as to the remaining helper regulations. The district court added that the Secretary “may, however, submit to this Court reissued regulations governing the use of helpers, and if these regulations conform to the decision of the Court of Appeals, they will be approved.” 102 CCH Labor Cases ¶ 34,648, p. 46,702 (D.D.C. 1984).

In accordance with the district court's order, DOL published in the Federal Register (52 FR 31366, August 19, 1987) proposed revisions to the helper regulations to add the requirement that helpers must prevail in an area in order to be recognized. The Department, on January 27, 1989, published a revised final rule governing the use of helpers on federal and federally assisted construction contracts subject to the Davis-Bacon and Related Acts (54 FR 4234).

On September 24, 1990, the district court vacated its injunction, and on December 4, 1990, Wage and Hour published a Federal Register notice implementing the helper regulations, effective February 4, 1991 (55 FR 50148).

In April 1991, Congress passed the Dire Emergency Supplemental Appropriations Act of 1991, Public Law 102-27 (105 Stat. 130), which was signed into law on April 10, 1991. Section 303 of Public Law 102-27 (105 Stat. 152) prohibited the Department from spending any funds to implement or administer the helper regulations as published, or to implement or administer any other regulation that would have the same or similar effect. In compliance with this directive, the Department did not implement or administer the helper regulations for the remainder of fiscal year 1991.

After fiscal year 1991 concluded and subsequent continuing resolutions expired, a new appropriations act was passed that did not include a ban restricting the implementation of the helper regulations. On January 29, 1992, Wage and Hour issued All Agency Memorandum No. 161, instructing the contracting agencies to include the helper contract clauses in contracts for which bids were solicited or negotiations were concluded after that date. On April 21, 1992, the U.S. Court of Appeals for the District of Columbia invalidated the regulation that prescribed a ratio of two helpers for every three journeyworkers for being without sufficient support in the record, but upheld the remaining helper provisions. Building and Construction Trades Department, AFL-CIO v. Martin, 961 F.2d 269 (D.C. Cir. 1992). To comply with this ruling, on June 26, 1992, Wage and Hour issued a Federal Register notice removing the invalidated text, 29 CFR 5.5(a)(4)(iv), from the Code of Federal Regulations. 57 FR 28776.

Subsequently, Section 104 of the Department of Labor Appropriations Act of 1994, Public Law 103-112, enacted on October 21, 1993, prohibited the Department of Labor from expending funds to implement or administer the helper regulations during fiscal year 1994. Accordingly, on November 5, 1993, Wage and Hour published a Federal Register notice (58 FR 58954) suspending the regulations governing the use of semi-skilled helpers on DBRA-covered contracts, and reinstating the Department's prior policy regarding the use of helpers. The Department of Labor Appropriations Act for fiscal year 1995 again barred the Department from expending funds with respect to the helper regulations (Section 102, Public Law 103-333). That prohibition extended into fiscal 1996 as a result of several continuing resolutions. There was no such prohibition in the Department of Labor's Appropriations Acts for fiscal 1996 and 1997, Public Law 104-134, enacted on April 26, 1996, and Public Law 104-208, enacted on September 30, 1996.

On August 2, 1996, Wage and Hour published in the Federal Register (61 FR 40366) a proposal to continue to suspend the implementation of the helper regulations while additional rulemaking procedures were undertaken to determine whether further amendments should be made to those regulations. On December 30, 1996, a final rule was published in the Federal Register (61 FR 68641) continuing the suspension. Pursuant to that final rule, the November 5, 1993 suspension of the helper regulations continues in effect until Wage and Hour either (1) issues a final rule amending (and superseding) the suspended helper regulations; or (2) determines that no further rulemaking is appropriate, and issues a final rule reinstating the suspended regulations.

By decision dated July 23, 1997, the U.S. District Court for the District of Columbia upheld the Department's December 30, 1996 final rule continuing the suspension of the helper regulations until the completion of rulemaking proceedings. Associated Builders & Contractors, Inc. v. Herman, C.A. No. 96-1490, 1997 WL 525268 (D.D.C. July 23, 1997).

The Department, by Notice of Proposed Rulemaking (NPRM) published in the Federal Register on April 9, 1999 (64 FR 17442), proposed for public comment an amendment to the regulations that would reflect the longstanding policy of recognizing helpers as a distinct classification on DBRA-covered work only where Wage and Hour determines that (1) the duties of the helpers are not performed by other classifications in a given area, i.e., the duties of the helper are clearly defined and distinct from those of the journeyworker and laborer; (2) the use of such helpers is an established prevailing practice in the area; and (3) the term “helper” is not synonymous with “trainee” in an informal training program.

In addition to the proposed rule, the Administrator also presented for comment the reasons the Department had concluded that the suspended rule should not be implemented, as well as the various other alternatives that had been considered by the Department: (1) Add a ratio requirement to the suspended helper definition; (2) change the “helper” definition to emphasize the semi-skilled nature of the classification; (3) define “helpers” based on the Bureau of Labor Statistics, Occupational Employment Statistics (OES) Dictionary of Occupations, which focuses on unskilled duties and the worker's interaction with journeylevel craft workers; and (4) explicitly delineate the semi-skilled tasks performed by each helper classification. The Administrator also presented for comment an Economic Impact Analysis comparing the economic costs of the proposed rule governing the use of helpers under the DBRA to those under the suspended rule and the other alternatives considered by DOL, and a Regulatory Flexibility Analysis.

The Department received 23 responses to the NPRM. These included 18 responses providing substantive comments, one with no comments, and four requesting an extension of the comment period. Comments were received from three groups of Congressional Representatives: Representatives Charlie Norwood, Bill Goodling, Cass Ballenger, John Boehner, Peter Hoekstra, Buck McKeon, and Ron Paul; Representatives William L. Clay, Major R. Owens, and James E. Clyburn; and Representatives Jan Schakowsky and Anthony Weiner. Comments were also submitted by six contractor associations: The Associated General Contractors, Inc. (AGC); the Associated Builders and Contractors, Inc. (ABC); the Small Business Survival Committee (SBSC); the Associated Prevailing Wage Contractors, Inc. (APWC); the AGC of Texas (Highway, Heavy, Utilities and Industrial Branch); and the Mechanical Electrical Sheet Metal Alliance (MESMA), which is a coalition of members of the Mechanical Contractors Association of America (MCAA), the National Electrical Contractors Association (NECA) and the Sheet Metal and Air Conditioning Contractors National Association (SMACNA).

Also submitting comments were three union organizations and a union-contractor group: The Building and Construction Trades Department, AFL-CIO (Building Trades); the Laborers' International Union of North America (LIUNA); the International Brotherhood of Electrical Workers (IBEW); and the National Joint Apprenticeship and Training Committee for the Electrical Industry (NAJTC), which was jointly created by the IBEW and NECA.

The Texas Department of Transportation (TxDOT) commented on the proposal, as did two academic sources: A.J. Thieblot, Ph.D., Adj. Prof., University of Baltimore and the Regulatory Studies Program, Mercatus Center, George Mason University, Wendy L. Gramm, Director. Comments were also provided by two individual companies, Halliburton/Kellog Brown & Root (through in-house counsel) and Elevator Control Service (Elcon).

Finally, two elevator contractors' associations (the National Association of Elevator Contractors and the National Elevator Industry, Inc.) and two elevator contracting companies (Quality Elevator Co. and Barbee Curran Elevator Co., Inc.) requested an extension of the comment period. Requests for extension of time were not granted.

In the NPRM, the Department proposed not to implement the suspended “semi-skilled” helper rule, but instead, to issue a rule reflecting the current, longstanding practice of recognizing helpers only where they are a separate and distinct class with clearly defined duties. The Department also provided therein a detailed explanation of the problems it identified with respect to the suspended helper definition, as well as a discussion of other alternatives for identifying helpers that were considered.

As explained in the NPRM, the Department had preliminarily concluded that the suspended rule was not capable of being administered and enforced effectively in accordance with the goals and requirements of the Davis-Bacon Act, especially in view of the court-ordered abandonment of the ratio provision. The Department stated that the suspended rule is problematic because it represents a sharp departure from the Department's traditional practice of identifying job classifications based on the duties performed by such classifications. The suspended helper definition is unique in that it allows the determination of a Davis-Bacon classification based on subjective standards—the worker's skill level (“semi-skilled”) and the existence of work-site supervision. Furthermore, the Department noted that the definition is internally inconsistent in that the examples given of the types of assistance the helper might provide to a journeyworker are not semi-skilled, but rather are largely unskilled duties commonly performed by laborers. The Department also stated that the requirements that the helper be “semi-skilled” and work under the supervision of a journeyworker are vague and would provide little assistance in enforcement.

The Department reasoned that, because the suspended rule allows the duties of a helper to overlap with those of both journeyworkers and laborers and provides no readily ascertainable means for distinguishing helpers from other classifications, contractors would find it difficult to determine whether they were in compliance and the Department in turn would find it difficult to enforce the regulation. Additionally, the Department expressed concern that the ambiguities in the suspended rule would make it difficult to prevent unscrupulous contractors from intentionally reclassifying large numbers of both journeyworkers and laborers as helpers when they work on DBRA projects, thus undermining locally prevailing wages for construction job classifications. The Department indicated that this is an even greater concern now that there is no longer any numerical limitation to using helpers on DBRA projects.

The Department also concluded that there seemed to be no generally accepted meaning for the term “helper” in the construction industry, and therefore there was reason to believe that the definition in the suspended rule did not in fact represent industry practice. For this reason, the Department was concerned that it would be difficult to conduct meaningful wage surveys and, therefore, specifically requested that commenters submit evidence regarding how helpers are in fact used.

Wage data collected by the Department during the implementation period provided further support for the Department's decision to reconsider the advisability of implementing the suspended rule. A key underpinning of the helper rule at the time it was proposed was the notion that helper use is widespread in construction in the private sector. According to the preamble to the proposed rule published in 1987, the Secretary projected that helpers would prevail in two-thirds to 100% of all craft classifications. 2 The wage survey data submitted to the Department during the implementation period, though admittedly limited in quantity and geographic scope, indicated to the Department that use of helpers might not be as widespread as previously thought. This led the Department to examine other available data sources in order to reassess its previous assumption that helper use is widespread.

The Department also became concerned, as a secondary matter, that the suspended rule might have a negative impact on apprenticeship and training by lessening the incentive for contractors to employ apprentices and trainees participating in formal programs.

After a full and careful review of the suspended rule, as well as a number of alternative approaches, the Department decided to propose for implementation the duties-based approach to recognizing helpers, which reflects longstanding policy. As discussed in the NPRM, it is the Department's view that this approach is more consistent with the intent of the Davis-Bacon Act to assure that workers employed on federal and federally-assisted construction work are paid at least the wages paid to workers doing similar work on similar construction in the area. The Department also stated in the NPRM that this approach, in sharp contrast to that under the suspended rule, would provide an objective basis for administration and enforcement of helper use, as well as clear criteria to facilitate compliance.

The following is a summary and analysis of the comments received as they relate to the proposed regulation, the alternatives considered, the problems identified by the Department with respect to the suspended rule, and the Department's analysis and conclusions concerning the proposed rule set forth in the NPRM. Each submission has been thoroughly reviewed and each comment has been carefully considered.

The Building Trades commented that the suspended rule would be unenforceable because it is simply too difficult to distinguish a helper from a journeylevel worker on a job site. The Building Trades stated that, if contractors and subcontractors were permitted to assign helpers to perform the tasks of any and all classes of laborers and mechanics at less pay, as the suspended definition would allow, the requirement in the Davis-Bacon Act that wages be based on “corresponding classes” would effectively be read out of the statute. The AGC, the ABC, and Dr. Thieblot, on the other hand, stated in their respective comments that the Department should be able to identify helper classes through area practice surveys as easily as it differentiates among the various trade classifications.

The Department believes that it is much more difficult to identify a helper classification under the suspended rule, than to identify a craft or laborer classification under the traditional duties-based approach. Under DBRA, a laborer or mechanic is entitled to be paid the prevailing rate for the work performed according to the local area practice, and therefore, is classified based on the duties the worker performs. Because under the suspended definition, helpers may perform the duties of other classifications—both journeylevel workers and laborers—without any limitations other than that they be supervised by and assist a journeyworker, it would be extremely difficult for the Department to identify the work of a helper in any given area, both for enforcement and wage determination purposes.

Comments suggesting that the Department can simply examine prevailing practices to identify helpers provide no practical guidance for resolving the suspended rule's inherent definitional problems. Construction craft workers generally perform certain basic, core duties that are specific to their respective classifications and therefore, are more easily identifiable for both enforcement and wage determination purposes. For example, it is widely understood that carpenters use hammers, saws and other tools of the trade to construct structures made of wood. Area practice issues arise concerning gray areas, where in a particular locality certain types of duties may be performed by another craft as an adjunct to its core duties, or may be carved out as a separate classification altogether. Thus, in some areas, carpenters may install drywall, while in others it may be installed by a specialty classification referred to as “drywall installers.” An area practice survey can make this determination. But it is not necessary for Wage and Hour to conduct an area practice survey to determine the work of each and every classification. For example, an area practice survey would not be needed to determine whether, instead of building wood structures, carpenters install water pipes, because such work is part of the basic, core duties of a plumber. Conversely, helpers, under the suspended rule, cannot be identified under the duties-based approach because there is no generally accepted subset of duties performed by helpers that would distinguish the helper from other classifications.

LIUNA commented that the combination of the suspended rule's allowance of overlap with laborers' duties and the lower wages generally paid to helpers would result in either the displacement of laborers in favor of workers classified and paid at lower helpers' rates, or the performance by the existing laborer workforce of the same work at lower wage and fringe benefit rates—contrary to the purpose of the Davis-Bacon Act to prevent Federal construction from depressing locally prevailing wages. LIUNA observed that many of the work activities of certain construction laborer classifications are precisely the same as the potential helper duties specifically enumerated under the suspended rule. LIUNA noted, for example, that a wide variety of “tender” classifications, which are negotiated between the Laborers' local unions and construction employers throughout the country, include the same duties that would be performed by helpers under the suspended regulations. 3 Dr. Thieblot, however, stated that the fact that the suspended helper definition may include work that would otherwise be done by laborers should be of no more concern to the Department than the performance by “tender” classifications of work that could be done by laborers.

The Department believes that LIUNA's concerns on the overlap of helper duties with other existing laborer classifications under the suspended rule are valid. The Department also believes that the recognition of a wide variety of tender classifications under its current policy demonstrates the manner in which helper classifications will be recognized under the final rule. The Department under its current policy, and under the final rule, will issue rates for helper classifications where the duties they perform are distinct from those of other classifications, including the journeyworkers they assist and other laborer or tender classifications. Tender classifications recognized by the Department must meet these criteria. While tender classifications do perform laborer-type duties, their performance of such work must be prevailing in the locality, i.e., more tenders than any other classification perform the work in question in that particular locality. In contrast, under the suspended rule, the use of helpers by contractors must be prevailing in the locality and the duties they perform is determined by area practice, but there is no requirement that their performance of certain duties be prevailing in relation to those performed by other classifications in the locality. Thus, the suspended rule would allow the duties of a helper to overlap with those of other classifications that prevail within the locality, possibly leading to the employment of helpers to perform the work of other classifications at lower wages. Because tender/helper classifications must perform distinct duties for which the tender/helper classifications prevails in the locality, the recognition of such classifications does not carry the same potential for abuse and, therefore, the undermining of prevailing wages associated with the use of helpers under the suspended rule.

The Department indicated in the NPRM that it does not believe that the suspended rule can be effectively enforced under the vague, subjective criteria of its definition. For instance, the Department stated in the NPRM that the suspended definition's failure to distinguish between “semi-skilled” and “skilled” workers presented the Department with a “fundamental problem” when it tried to develop enforcement guidelines. LIUNA commented that the suspended definition provides no guidance for distinguishing between a “semi-skilled” helper who uses tools of the trade, and a journeyworker with little experience. The ABC stated, on the other hand, that contractors have developed methods for recognizing differences between skilled and semi-skilled work and have implemented pay scales based on such differences. None of the commenters, however, has identified any methods or criteria used by contractors that would be helpful to the Department in distinguishing between skilled and semi-skilled work. Similarly, the AGC stated that contractors routinely make hiring decisions based on skill level and compensate craft workers based on their training and experience. The Department believes that these practices are reflective of the normal practice of non-union employers in many industries where workers within an occupation are paid a range of rates based on their training and experience. The Department does not believe that such a practice demonstrates the existence of separate classes of workers within the meaning of the Davis-Bacon Act. 4

The AGC stated that whether a skilled worker would accept and perform a “semi-skilled” job as a helper is an irrelevant concern, because compliance should focus on ensuring that individuals are properly compensated for the work they actually perform. This point echoes one of the Department's main concerns which led it to reject the suspended helper rule in favor of the traditional duties-based approach under the proposed rule. Under the suspended rule, individuals classified as helpers, who may perform the work of both higher paid craft workers and laborers, would not be compensated based on the work they perform, but rather on their comparatively lower skill levels. Furthermore, the Department still does not believe it could draw the line effectively between semi-skilled and skilled work, especially given that, in today's construction market, skilled craft workers may perform a whole range of duties from unskilled to semi-skilled to skilled, and laborers often perform what may be considered semi-skilled work as well.

The Department also observed in the NPRM that the supervision aspect of the suspended helper definition would provide little assistance in distinguishing a helper from other classifications of workers. LIUNA agreed that supervision by a journeyworker is not a practical standard for distinguishing “semi-skilled” helpers from others on the work-site, because many classifications are supervised by other workers or supervisors. LIUNA stated that laborers, apprentices, trainees and lesser skilled journeyworkers all may work under the “direction and supervision” of other, more highly skilled journeyworkers. The AGC, on the other hand, stated that the definition of a helper does not need to “indicate the nature or amount of direction that helpers must receive to distinguish them from others on a worksite,” because this should be left to local prevailing practice. None of the commenters offered suggestions as to how, from a practical standpoint, the Department could determine local supervisory practices.

Nothing in the comments received by the Department contradicts its view that laborers and journeylevel construction workers, like helpers under the suspended rule, also may work under the “direction and supervision” of other journeyworkers. In the Department's experience, which is supported by LIUNA's comments, supervision on a construction worksite is often an amorphous concept, especially where it is performed by a “team leader,” and therefore, does not lend itself to objective evaluation. Thus, the Department continues to be of the opinion that supervision by a journeyworker is not a practical standard for distinguishing semi-skilled helpers from other classifications on the worksite.

The Department also stated in the NPRM that it believes the problems resulting from the suspended rule's definitional ambiguities are compounded by evidence that the term “helper” has multiple, quite different meanings within the construction industry. LIUNA stated that the examples of duties that a helper may perform, as listed in the suspended definition, are not “semi-skilled,” but rather include a range of skilled, semi-skilled, and unskilled duties commonly performed by other classifications. AGC, on the other hand, stated that many different craft classifications have multiple, quite different meanings within the construction industry, and that this is the primary reason that no standard definitions have ever been promulgated for craft classifications performing Davis-Bacon work.

While it is true, as discussed above, that craft classifications may have somewhat different meanings within the industry, craft classifications generally encompass certain well-recognized duties that are widely understood to be the core duties of the craft occupation. Thus, despite the occasional need for clarification regarding the prevailing classification used by contractors in an area for workers performing specialized work, the fundamental scope of work of most construction craft occupations is not usually in question.

In contrast, it appears to the Department, as demonstrated by the rulemaking record, that a helper classification can have various meanings and uses even within the same locality. For example, the APWC stated that helpers, in its view, “are semi-skilled workers who work under the direction of and provide assistance to journeymen,” whereas the AGC of Texas described the use of helpers in the State of Texas as “allow[ing] construction contractors to utilize unskilled workers while teaching them a trade or skill through our on-the-job training programs.” [Emphasis added]. Similarly, commenters on the proposed rule to continue the suspension of the helper regulations, variously characterized helpers as skilled workers who have not been trained in the full range of journeylevel work, short-term entry-level workers assisting journeyworkers in unskilled laborer duties, and longer-term specialized workers who perform a limited number of duties that overlap journeylevel workers. 61 FR 68646. In this regard, the Department, in the NPRM, invited commenters to submit further evidence regarding how helpers are in fact used by contractors, particularly any data regarding whether there is in fact a generally recognized definition of helpers that is capable of being objectively identified. No such data were submitted by the commenters. The Department therefore believes that it was correct in its view that no definition of helpers exists that could adequately reflect “the actual and varied practice in the construction industry as a whole or even in any particular area.”

The Department also expressed its concern that Wage and Hour would not be able to conduct a meaningful wage determination process using the suspended definition of helpers in light of the likelihood that contractors responding to area wage surveys would ascribe very different meanings to the term “helpers.” Dr. Thieblot stated that surveying for helper rates presents no special difficulties since it is Wage and Hour's practice “to accept the rates and job titles as submitted by the contractors who paid them, whatever those titles might be” without analyzing job content. Dr. Thieblot stated, for example, that it should be no more difficult for Wage and Hour to determine if the job title “mason's helper” prevails in a given area, than to determine if the job title “mason's tender” prevails.

This comment highlights a common misunderstanding of the Department's wage determination process. Wage and Hour, in gathering wage data, does not automatically accept the job titles as submitted by reporting employers. Wage and Hour's experience in collecting wage data is that contractors may use different job titles for the same craft work. When faced with more than one name for the same type of work, Wage and Hour must determine whether the workers with the various job titles in question perform the same basic duties, in which case the data for such work will be combined for the purpose of determining the prevailing classification and issuing a single prevailing rate for the particular work performed. In other cases, Wage and Hour might determine that it is the prevailing practice in a certain area for workers under a more specific job title ( e.g., drywall hanger) to perform a subset of the duties of a more generalized craft ( e.g., carpenter), and thus issue a separate wage rate for the specific job title where the data indicate that the specialized classification prevails for such work in the area. Thus, Wage and Hour does not automatically accept job titles as submitted by employers, but rather analyzes job content, as appropriate, as part of the wage determination process.

The problem with gathering data for helper classifications differs significantly from the difficulty presented where workers in an area perform the same craft work, but under different job titles. A helper classification, even if referred to by many different names within the locality, could nonetheless be surveyed effectively if the duties performed by workers with the various job titles for a helper were distinct from those of other classifications and essentially the same under each title. The problem with identifying helpers during the wage determination process is that the term “helper” under the suspended rule can serve to describe a variety of workers performing many different types of work. The Department is additionally concerned that the suspended helper rule, which imposes upon the wage determination process a definition of a helper that was created by the Department, may not necessarily reflect the reality of how helpers are in fact utilized in any given locality. Some employers may classify workers performing the work of helpers under the suspended rule as journeylevel workers, craft workers, or semi-skilled workers, while still others may classify such workers as laborers, unskilled workers, or tenders. In this regard, the Department notes that several contractors surveyed in the processing of helper conformance requests during the period the suspended regulations were in effect indicated that they used the job title “laborer” for workers meeting the definition of “helper” under the suspended regulation. Thus, because their practices vary from each other and from the definition in the suspended rule, the Department continues to be of the view that contractors, when responding to Davis-Bacon wage surveys, would likely be inconsistent in how they classify workers as helpers. This in turn would raise questions regarding the reliability of any wage data received for a given locality concerning employment of helpers.

The SBSC acknowledged that the suspended helper rule is a break from the tradition under the DBRA of identifying and differentiating among job classifications on the basis of tasks performed by each classification. SBSC commented, however, that the Wage and Hour Division has an outdated construction mentality and that its complaints about the use of helpers suggest a hesitancy to modernize its views. SBSC's comments also questioned the Department's concern that helpers will replace laborers, stating that it is a misclassification to insist that helpers are laborers; it “is the old class of laborer that has become suspect.” SBSC's comments provide little practical guidance on how to create a definition of helpers that could be effectively enforced consistent with the underlying intent of the DBRA. In addition, the substantial number of laborers reported in the wage surveys in the record, as well as the comments submitted by LIUNA in support of the interests of laborers in this rulemaking procedure, do not support SBSC's view that laborers no longer constitute a viable worker classification on Davis-Bacon covered construction.

The Mercatus Center acknowledged that the Department's enforcement and administrative concerns may be justified, but cautions that they must be balanced against the productivity and cost-saving benefits from the suspended definition of helpers. The Mercatus Center further noted that by proposing to eliminate the flexibility of a helper to perform the duties of other job classifications, the Department would eliminate one of the most important cost-saving features of the helper position. While the Department believes that cost-saving features are certainly desirable, they cannot be determinative where the approach in question ( i.e., the definition of helpers under the suspended rule) cannot be fairly and effectively administered in a manner consistent with the goals of the statute to protect prevailing wages for the corresponding classes of work performed. Indeed, one of the principal objectives of the Davis-Bacon Act was to set a floor on wages so that wages would not be reduced below the prevailing wage as a result of competitive bidding for Federal construction contracts.

The ABC stated that the absence of a significant number of complaints or incidents of abuse during the time the suspended rule was in effect should be viewed as evidence that the Department's stated concerns about enforcement difficulties are overstated. Neither the absence nor presence of complaints had a bearing on the Department's determination that the suspended helper rule cannot be administered and enforced effectively; rather, as explained in the NPRM, it was the difficulty encountered in attempting to develop effective enforcement guidelines during the implementation period that initially raised these concerns. The suspended helper regulations were in effect for too brief a period for the absence of complaints to be indicative of a lack of enforcement difficulties. Though the suspended rule had an implementation period of approximately 20 months, it was nearly a year after implementation before the helper provisions could begin to be included in DBRA-covered construction contracts, following changes to the Federal Acquisition Regulations and the Defense Acquisition Regulations. Thus, the suspended helper rule simply was not in force for a sufficient period of time to draw any conclusions from the number of complaints received during its application.

After carefully reviewing the comments, the Department is persuaded that the suspended rule cannot be effectively administered and enforced. The suspended rule provides no objective basis for distinguishing between helpers and other classifications, and furthermore is vague and internally inconsistent. Its effect, contrary to the intent of the statute, would be to allow contractors and subcontractors on DBRA projects to assign the duties of both craft workers and laborers to helpers who are paid at lower wage rates, with virtually the only restriction being that the worker receive some supervision. As a result, the Department remains concerned that implementation of the suspended rule would lead to many instances of intentional and unintentional misclassification of workers and potential abuse of the rule, which the Department would be unable to prevent or remedy. None of the comments submitted provided any information or arguments which alleviated these concerns.

Additionally, the Department believes it would not be able to collect meaningful, consistent wage data regarding use of helpers for wage determination purposes. The Department believes that the ambiguous language of the definition in the suspended rule would not give contractors adequate guidance and would lead to inconsistent wage reporting. Because there is no generally recognized practice regarding how helpers are used, contractors reporting wage data in accordance with the definition in the suspended rule in some instances probably would report as helpers workers whom they consider journeymen or laborers.

The court of appeals, in its review of the Department's original rulemaking concerning helpers, stated that its deference to the Secretary's choice of policy “is properly near its greatest when his decision turns on the enforceability of various regulatory schemes.” Donovan, 712 F.2d at 629. The Department has been unable to develop a method for determining whether workers classified as helpers have been correctly classified under the suspended rule, consistent with the fundamental statutory goal of preserving locally prevailing wages for construction job classifications. Since the rulemaking record does not demonstrate that the suspended rule is capable of practical and efficient administration and enforcement to achieve the statutory goals under DBRA, the Department must reject implementation of the suspended rule.

As explained in the preamble to the proposed rule, the belief that a distinct class of “helpers” was in widespread use in the construction industry was a key assumption underlying the Department's development of the suspended helper regulation. 64 FR 17445. Although not a representative sample, the data submitted to the Department in the 78 surveys conducted during the brief period the suspended rule was in effect failed to substantiate that assumption. In its earlier rulemaking, the Department had projected that use of helpers would be found to be a prevailing practice in from two-thirds to 100 percent of all craft classifications surveyed, except where collectively bargained rates were found to prevail and did not provide for a helper classification. 52 FR 31366, 31369-70 (August 19, 1987); 54 FR 4234, 4242 (January 27, 1989). The Department's experience with the survey data collected in 1992 and 1993 during the brief time that the suspended regulations were in effect was quite different. In the 78 surveys conducted, the use of helpers prevailed in only 69, or 3.9 percent of the 1763 classifications issued, and only 48 of the 69 helper classifications, or 2.7 percent of the 1763 classifications, were based on the practices of non-union contractors and subcontractors. Furthermore, in only 20 of the 78 surveys conducted were any non-union helper classifications found to prevail.

The Economic Impact and Flexibility Analysis in the proposed rule also provided data showing that helpers were less widespread than previous analyses had assumed. The 1996 Current Population Survey (CPS), compiled and published by the Bureau of Labor Statistics (BLS) and the Bureau of the Census, shows that helpers constituted only 1.2 percent of total construction employment. Data from the Occupational Employment Statistics (OES) program showed that helpers comprised 8.7 percent of the total construction work force. Because OES does not contain a separate classification for construction laborer, and its definitions of the helper classifications appear to include laborers, the Department believes the OES overstates the use of helpers. For this reason, the Department developed an alternative estimate, adjusting the OES data by utilizing the percentage of laborers in the CPS workforce. The adjusted OES data resulted in an estimate that helpers constituted 3.4 percent of the total construction workforce.

In their comments, the Building Trades stated that the Department's data on helper use are consistent with the 1996 Current Population Survey (CPS) compiled by BLS and the Bureau of the Census, which showed that helpers only account for 1.2 percent of total construction industry employment. The Building Trades believes that these data support its longstanding contention that the underlying purpose of the suspended helper regulation was not to reflect locally prevailing practices, but to “artificially interject” a non-prevailing classification of construction workers into Davis-Bacon covered projects as a means of undercutting prevailing wages.

The ABC questioned the appropriateness of the Department's consideration of whether the use of helpers in the construction industry is “widespread.” The ABC stated that the proper test for determining the existence of helper classifications under the statute is not whether the use of helpers is “widespread,” but rather whether it “prevails.” The Department acknowledges that a basic prerequisite to issuing wage rates for classifications under Davis-Bacon, including helper classifications, is a determination of whether such classifications and corresponding pay rates prevail in the particular locality where the project is to be performed. However, the Department believes its consideration of the overall extent of helper use in the construction industry, i.e., whether helper use is “widespread,” is appropriate as part of a broad inquiry concerning the advisability of implementing the suspended regulations. As the Department stated in the NPRM, “[t]he belief that a distinct class known as ‘helpers’ was in widespread use in the construction industry was a key assumption underlying the Department's development of the helper regulation.” 64 FR 17445. It is appropriate for the Department to determine, before taking further regulatory action, if the original underlying assumption concerning the extent of helper use, which provided the impetus for the suspended rule, was borne out by the data collected during the period the regulations were in effect, or by any other more recent, relevant data available to the Department. The Department believes this is a particularly significant consideration where there is so little consensus on a definition of helpers or how helpers are used.

Several commenters expressed their belief that the Department has underestimated the prevalence of helpers in the construction industry. Representative Norwood and the congressmen who joined in his comments state that “[o]ver 75 percent of all construction in the private sector are performed by contractors who use semi-skilled helpers. One study found that on a given open-shop job, 35-50 percent of the workers in each craft are likely to be helpers.” The source for these data was not identified, and therefore, the Department is unable to weigh this information against the data already available to the Department concerning the prevalence of helpers. These data, furthermore, do not indicate to what extent helper classifications actually prevail in the construction industry.

The AGC stated that more recent BLS survey data contradict the Department's conclusions regarding employment of helpers. In support, the AGC cites the NCS test surveys discussed above for Jacksonville and Tucson, which, according to the AGC, showed that helpers comprise 13.6 percent and 14.8 percent, respectively, of the total number of construction craft workers in those two localities.

The AGC is referring to four fringe benefit pilot surveys in Tucson, Arizona; Jacksonville, Florida; Salt Lake City, Utah; and Toledo, Ohio, which BLS conducted pursuant to its National Compensation Survey (NCS) program to test the feasibility of collecting detailed fringe benefit data for occupations within the construction industry. In these surveys, helpers  5 constituted 9.6 percent, 8.3 percent, 4.2 percent, and 2.5 percent, respectively, of the total construction workforce. 6 Laborers constituted 14.3 percent, 6.9 percent, 9.9 percent, and 10.1 percent, respectively, of the total workforce. Combined, helper employment in these areas was 5.8 percent of total construction employment.

It is important to note that the four pilot surveys, which included Jacksonville and Tuscon, were not designed to collect data on the employment of helpers, and do not report helpers by craft. In addition, because the NCS studies obtained data for only four geographic areas, the information produced by these studies cannot be projected to a nationwide estimate of the percent of helpers relative to the construction workforce as a whole. The Department believes that the information provided by these surveys is generally in line with the estimates used for the cost impact analysis provided in the NPRM.

The helper data reported in these four pilot studies also reflect inconsistencies between the level of skill associated with the “helper” and their compensation levels. Logically, a semi-skilled job would be expected to command a higher wage than an unskilled one, but this was not borne out by the NCS survey data. Helpers are defined, for purposes of these surveys, as “semi-skilled” workers; however, Table 2 of the NCS surveys shows that “semi-skilled” helpers are paid approximately the same wage as “unskilled” non-union laborers. 7 This inconsistency lends credence to the view that there is a widely disparate use of “helpers” in the construction industry.

The ABC stated that the Occupational Employment Statistics (OES) data show as many as 500,000 helpers currently working in the construction industry. As explained in the NPRM, the OES survey did not include a separate construction laborers definition, and the helper definition appears to encompass laborers where they assist craft workers. It is likely therefore that the OES figures include many laborers and other unskilled workers in the helper category. For this reason, the Department believes that OES figures overstate the use of helpers in the construction industry.

The ABC also noted that the Department, when first publishing the suspended rule in 1982, relied upon earlier BLS estimates that helpers constitute between 3 and 9 percent of the total workers in the industry, and stated that these estimates do not differ greatly from the statistics cited in the most recent NPRM. In the preamble to its 1982 Final Rule, the Department stated that BLS survey data of large metropolitan areas indicated that the estimated helper share of employment in the construction industry was between 3.2 percent and 5.6 percent. 47 FR 23650. However, the Department indicated that this estimate might be understated because the survey was limited to areas that were “heavily unionized.” Id. To correct this understatement, the Department assumed that the true union share of Davis-Bacon employment was 50 percent and, accordingly, adjusted the estimate of the helper share of employment in the construction industry to between 5.98 and 9.4 percent. Id. The Impact Analysis in the 1987 proposed rule utilized the OES survey as the basis for its assumption that 15 percent of employees in construction will be helpers. 52 FR 31368-31369. As discussed in the Impact Statement published in the NPRM, the Department now believes these estimates overstate the percentage of helpers in construction employment.

However, none of these surveys and studies shows the degree to which the use of helper classifications is actually prevailing within the meaning of the DBRA. 8 As discussed above, the 1987/1989 rulemaking projected helper classifications would prevail in two-thirds to 100% of all non-union craft classifications. The Department's limited experience, as reflected in the data collected during the implementation period, does not support these projections.

Several commenters stated that the 78 wage surveys conducted in 1992-93, upon which the Department relied in part to assess the extent of helper use, constituted too small a sample to be a reliable measure of the extent of helper employment throughout the construction industry. The AGC and the ABC cited a GAO audit of the Davis-Bacon wage survey process as the basis for their opinion that the Davis-Bacon surveys are unreliable and should not be used as a basis for estimating the extent of helper employment. GAO/HEHS-96-130 (May 1996). The ABC suggested that these survey results might also be unreliable because a large number of non-union contractors either did not voluntarily participate in the survey process or were not aware that helpers should be reported during the implementation period. Dr. Thieblot also expressed his belief that factors other than scarcity explain why relatively few helper rates were determined to prevail during the implementation period. Dr. Thieblot stated that the Department's inability to find helper rates prevailing during this period was due to the type of surveys conducted, where they were conducted, and how the results were interpreted.

The Department agrees with the comments that the 78 surveys were not a statistically valid sample and are not a reliable measure of the extent of helper employment in the industry. However, the Department has found its 1992-1993 survey data to be consistent with the relatively low incidence of helpers reflected in the other available data sources discussed in the Impact Analysis. The Department believes that a sufficient number of surveys were conducted to provide evidence that the earlier estimates of the extent to which use of helpers prevails were overstated. It is also worth noting that most of the surveys were selected to target areas where the Department believed that use of helpers would likely be found to be prevailing. 9

While the report from the GAO raises the possibility that some prevailing wage decisions issued during this period might be affected by the submission of erroneous data, there is no evidence that the data collected by the Department concerning prevalence of the use of helpers were inaccurate or skewed by the submission of erroneous data. 10 Erroneous reporting of an employee's classification is not a typical error mentioned in the GAO report. 11 Thus, the GAO findings are not relevant to the issue of prevalence of the use of helpers and cannot be used to support the conclusion that the surveys conducted during the time that the semi-skilled helper rule was in effect are an unreliable source of information on that issue. The Department also disagrees with the comment that contractors were not made aware that they should be reporting helper employment during the implementation period. Specific instructions were included on the WD-10 survey forms to inform contractors of the definition of “helper” and that workers falling within that definition should be listed as helpers, regardless of job title.

Dr. Thieblot re-analyzed the non-union data on helper use, discarding all surveys which, based on the areas in which the surveys were performed and the type of construction surveyed, he did not believe would be likely to produce helper classifications. He then proceeded to eliminate all classifications that he believed would not ordinarily utilize helpers, such as truck drivers and equipment operator classifications. After paring down the data in this manner, Dr. Thieblot concluded that helper use prevails in 14.5% (48 of 331) of those non-union classifications he believed could possibly use helpers.

The assumptions on which Dr. Thieblot's analysis was based, regarding which geographic areas and which types of construction and classification are likely to produce helper classifications, appear to be speculative and inconsistent with the data in the surveys. 12 In any event, this total is much less than the two-thirds to 100% of all (non-union) craft classifications in which the Department previously estimated helpers would prevail.

Dr. Thieblot also questioned what he termed the Department's “unexplained rejections of helper rates as prevailing * * *.” However, the Department followed the suspended rules at 29 CFR 1.7(d) for determining the circumstances in which a helper classification is found to prevail. For example, where the union electrician's rate was found to prevail, an electrician's helper classification would not be found to be prevailing unless it was the practice for union contractors to hire electrician's helpers. Where the electrician's rate was based on an average of wages paid, the determination of whether use of electrician's helpers prevailed was based on a comparison of the number of craft workers (journeymen, apprentices, trainees and helpers) working on projects utilizing electrician's helpers with the number of craft workers (journeymen, apprentices, and trainees) working on projects without helpers. Finally, the Department's data sufficiency guidelines in effect at the time required that the Department not list a classification and wage rate where the number of helpers used (or any other classification), or the number of contractors using helpers was not sufficient to determine a prevailing wage. 13

After review of the comments, the Department continues to believe that helpers are not as widespread as it had previously assumed.

Although not its primary concern in this rulemaking, the Department believes that the potential impact of the suspended rule on formal apprenticeship and training programs merits discussion, given the Secretary's broad authority to protect and promote the welfare of workers, including the authority under the National Apprenticeship Act of 1937, 29 U.S.C. 50, et seq. (also known as the Fitzgerald Act) to promote apprenticeship. As stated in the NPRM, the Department believes that the suspended helper regulations could undermine effective training in the construction industry if contractors are permitted to use helpers, who may never become journeylevel workers, in lieu of apprentices and trainees participating in formal programs that place ratio limits on their use, assure that they receive full training, and lead to jobs at the journey level.

Several commenters were concerned about the negative impact the suspended helper rule would have on formal apprenticeship and training programs. Congressional Representatives Clay, Owens, and Clyburn stated that minority and female workers would suffer reduced earning opportunities and/or lost wages and benefits if the suspended helper regulation were implemented. These congressmen expressed concern that the suspended rule would trap younger workers, including a disproportionate share of minority workers, in the new helper classifications; as a result these workers would never enter apprenticeship programs, which are the primary route to obtaining decent wages and fringe benefits. Representatives Schakowsky and Weiner echoed these concerns, stating that the suspended rule, which contains no requirement that contractors provide any training to helpers, would have an adverse impact on construction worker training and apprenticeship programs, thus exacerbating the current skills shortage in the construction industry. These congressmen also stated their belief that the suspended regulation would reduce opportunities available to minority and female workers within the construction industry by relegating them to helper status.

The Building Trades commented that, in the NPRM, the Department greatly understated the long-term negative impact the suspended regulation would have on formal apprenticeship and training programs. The Building Trades stated that the suspended helper regulations would permit almost unfettered use of low-paid semi-skilled helpers on DBRA-covered projects, thus offering contractors and subcontractors savings in labor costs without the quid pro quo of investing in apprenticeship training. The Building Trades stated that contractors and subcontractors who participate in and provide financial support for formal apprenticeship and training programs would be placed at a competitive disadvantage vis-á-vis contractors using helpers, thus undermining their continued participation in such programs. The Building Trades also expressed its concern that the suspended rule's failure to encourage formal craft training would eventually lead to a severe shortage of skilled craft workers in the industry.

LIUNA cited the GAO's finding that a “major incentive” for contractors to use apprentices has been the ability to pay less than the prevailing wage on DBRA projects. GAO/HRD-92-43 (1992), p. 11. LIUNA stated that the reduced apprenticeship opportunities that would accompany the suspended rule would result in additional costs for training workers, a long-term shortage of skilled workers, fewer genuine training opportunities for women and minority craft workers, and an increase in construction injuries, since most injuries occur to new, entry-level workers who are untrained or inadequately trained.

MESMA noted that prevailing wage laws support the funding and viability of many labor-management apprenticeship programs that provide state-of-the-art training and produce the most productive workers in the industry. MESMA stated that the overuse of helpers could lead to a reduction in skills and diminishing quality of construction, as well as an increase in industrial accidents, because helpers generally receive little or no safety training.

The NJATC commented that helpers under the suspended definition would likely perform the same role that apprentices now perform on the jobsite, only at a lower cost. The NJATC stated its belief that this practice would result in fewer indentured apprentices, as contractors, in competition to win federal construction contracts, would replace “journeymen-in-training” apprentices with lower-paid helpers in continually increasing numbers. NJATC stated that, within five to ten years, this replacement of apprentices with helpers on DBRA projects would result in an acute shortage of skilled construction workers.

The IBEW commented that, if use of helpers is allowed extensively on DBRA projects, contractors would no longer be motivated in a competitive setting to spend 2 percent or more of their payroll on training, and use an apprenticeship system requiring ratios, when they could use helpers and avoid such requirements.

On the other hand, both the ABC and the AGC commented that there is no basis for the Department's concern that increased recognition of helper classifications may have a detrimental effect on apprenticeship and training programs. The ABC stated that, over the last decade, funding and participation by open shop contractors in apprenticeship and training programs has increased significantly, independent of the Davis-Bacon regulatory process. The ABC stated that the Department's policies regarding apprenticeship programs and ratio requirements have made apprenticeship training unavailable to some workers who desire to enter the construction industry in semi-skilled jobs. The ABC further stated that the helper classification is an important point of entry into the construction industry for young people, women and minorities, and that it is improper for the Department to refuse to recognize the prevailing practice of employing helpers in an effort to force into training programs workers who either may not be qualified or may not desire such training.

While acknowledging that the helper classification cannot be used as an informal training program, the APWC stated that it fulfills an important entry-level job opportunity for many construction workers. The AGC of Texas, on the other hand, stated that the use of helpers allows contractors to utilize unskilled workers while teaching them a trade or skill. Dr. Thieblot expressed concern that a larger number of skilled journeymen will be needed to sustain the construction industry in the future than the number which can be provided by existing apprenticeship and formal training programs. Dr. Thieblot also expressed his belief that the suspended helper rules, to the extent they would allow informal, on-the-job training of semi-skilled workers, would provide a necessary alternative to formal apprenticeship and training programs for training and upgrading workers to journeyman status.

The Mercatus Center expressed its belief that the increased employment of helpers under the suspended rule would provide greater employment and training opportunities for minorities and women. The ABC recommended more study on the potential impact on minorities and women prior to issuance of the proposed rule. The APWC stated that it is inappropriate for the Department, in analyzing the merits of the helper regulations, to express a preference for formal training, such as provided under union-sponsored apprenticeship plans, over the informal training methods utilized in the non-union sector.

The Department continues to believe that formal structured training programs are more effective than informal on-the-job training alone. The Department's encouragement of formal training is reflected in the provisions of the Secretary's DBRA regulations that currently allow laborers and mechanics classified as “apprentices” or “trainees” to be paid less than the prevailing wage rate on Davis-Bacon covered projects only if they are enrolled in a bona fide apprenticeship program registered with the Department's Office of Apprenticeship, Training Employer and Labor Services (ATELS) (formerly, Bureau of Apprenticeship and Training (BAT)) or a State Apprenticeship Agency recognized by ATELS, or a bona fide training program approved by the Department's Employment and Training Administration.

The Department views any increases in funding and participation in formal training programs in the open-shop construction community as a positive development, but this does not address the concerns expressed by several of the commenters that the implementation of the suspended rule would discourage the growth of such programs and result in the replacement on DBRA-covered projects of apprentices and trainees enrolled in formal programs, by helpers who could perform the same work as apprentices and trainees at a lower cost to the construction contractor and without any restrictions as to how helpers are used. The Department shares this concern, along with the additional concern that workers employed as helpers—and particularly, young, minority and female workers—will not receive the type of training necessary to become higher skilled, better paid workers. The Department notes that the Congressional Budget Office (CBO) has also recognized that the suspended rule might have a negative impact on apprenticeship and training programs. 14

Although not the paramount concern in this rulemaking, the Department is of the view that the increased use of helpers under the suspended rule poses a significant risk that formal apprenticeship and training programs on DBRA-covered projects would be undermined.

Except for TxDOT, which appears to favor a combination of the proposed alternatives, none of the commenters urged the Department to adopt any of the alternatives set forth below. The ABC stated that, while it believes that the Department should reinstate the suspended rule, it would support further study of any of the proposed alternatives. The ABC commented that each of the proposed alternatives is preferable to adoption of the proposed rule, and that the Department has not given sufficient study to the alternative approaches. On the other hand, both the Building Trades and LIUNA indicated their belief that none of the alternative approaches considered by the Department is viable.

The Mercatus Center commented that the Department has not properly assessed the quantitative benefits of the alternatives presented in the NPRM. The Mercatus Center stated that, without better information on the costs and benefits of the alternatives, the Department places inordinate weight on such factors as ease of administration and enforcement, rather than on net social benefits. As explained in the NPRM, “[e]ach alternative would likely result in greater use of helpers than under the proposed rule, but less than under the suspended rule,” and therefore, “the economic impact would presumably yield some portion but not all, of the savings anticipated under the suspended rule.” 64 FR 17455. The Department also stated that it would not be possible to provide detailed estimates of the economic impacts of the alternatives because “each alternative encompassed many possible variations and outcomes” and “there is no data source that would provide appropriate information on these variations and outcomes.” Id .

The Department stated in the NPRM that it believed that implementation of a ratio provision would be essential if the suspended rule were implemented, in order to reduce the potential for abuse. The Department recognized, however, that adoption of a ratio provision would not address or resolve the suspended rule's definitional problems that make it extremely difficult for contractors, as well as Wage and Hour and contracting agencies, to identify and distinguish helpers from other workers for DBRA enforcement and wage determination purposes. The Department also questioned whether, as a practical matter, an appropriate nationwide or local ratio standard could be determined, and expressed concern for the substantial resources that would be required to determine appropriate ratios based on local practices.

The Building Trades expressed the view that any fixed nationwide ratio, like the ratio that was struck down in Federal court, would be arbitrary and capricious because it would be inconsistent with the underlying principle of DBRA that labor standards reflect local prevailing practices. LIUNA stated that the addition of a ratio requirement under the suspended rule would not address or resolve the definitional problems inherent in the suspended rule, and that it would be extremely difficult to develop an appropriate ratio standard that would reflect local practices.

Noting that the D.C. Circuit Court of Appeals allowed the Department to reinstate a ratio requirement provided that the Department can support such ratio with an administrative record, the ABC commented that the Department failed to develop such a record and did not attempt to set local ratios through the wage survey process.

The Mercatus Center stated that the Department should re-evaluate the original rationale for including a ratio in the suspended rule. The Mercatus Center noted that ratios appropriate for productive construction efforts are subject to change with changes in production methods, materials, technology, and population, and that due to regulatory time lag, any binding ratio might be obsolete in a few years. The Center suggested that if a rationale for the type of abuse a ratio is intended to prevent could be articulated, then a ceiling that is non-binding, but that would prevent any feared abuse of the helper category, might be workable.

TxDOT recommended that the Department adopt a combination of measures, including the addition of a ratio requirement to the suspended definition to prevent abuse of the helper classification. TxDOT suggested that varying the ratio requirement, depending on the type of work performed, might be a way of validating the ratio provision.

None of the commenters has provided the Department with specific guidance as to how an appropriate nationwide or local ratio standard could be determined. As noted in the NPRM, a nationwide ratio would not accord with local practices, whereas locally developed ratios would present significant administrative and enforcement concerns and would require substantial resources for implementation.

The difficulty with determining locally prevailing ratios begins with deciding how that ratio should be calculated. The easiest method would be to compare the total number of helpers to the total number of journeyworkers reported for the classification. This methodology, however, does not measure the typical ratio of helpers to journeyworkers on any particular job. For example, four hypothetical data submissions might report carpenters and carpenter helpers as follows:

In this example, the prevailing jobsite ratio of carpenter helpers to carpenters is clearly 1:2 ( i.e. , on three of the four projects, contractors used one helper for every two carpenters). However, if the ratios are averaged, the resulting ratio would be almost 2:1 (1.875), and a ratio derived by dividing the total number of helpers by the number of carpenters would be greater than 1:1 ( i.e. , 9:7 or 1.286). Therefore, either of these approaches could frequently yield a distorted picture of the true prevailing ratio.

Collecting and verifying data on the ratio of helpers to journeyworkers for each jobsite is likewise a difficult task. Currently, Wage and Hour collects data for each classification based on the “peak week” of employment on the project. This “peak week” may differ for each classification. Since one may find that the peak week of employment for carpenters is a different week than that for the carpenters' helpers, the ratio would vary as well. It is not clear how the peak week concept should be applied in this situation. Any solution to this question could be administratively costly and time-consuming for Wage and Hour and for contractors, thereby impacting the Department's ability to obtain the cooperation of contractors to collect accurate data.

The Department remains of the view that adding a ratio requirement would be essential to reduce the potential for abuse from the excessive use and misclassification of helpers if the suspended rule were implemented. The D.C. Circuit Court of Appeals also recognized the importance of a ratio provision to the effective administration and enforcement of the suspended helper rule when it stated that “the Secretary has increased the likelihood that gross violations will be caught, or at least that evasion will not get too far out of line, by putting the forty-percent cap on the use of helpers. * * * [T]he existence of some cap at least increases our confidence that the Secretary has considered the enforcement problems of the new definition and responded to them.” Donovan, 712 F.2d at 630.

More importantly, the Department continues to believe the addition of a ratio provision to the suspended helper rule—although it might curb the worst abuses—would not address or resolve the problems inherent in the suspended rule's definition, which, as discussed above, make it extremely difficult to identify helpers for DBRA enforcement and wage determination purposes.

In the NPRM, the Department stated that it believed that amending the “helper” definition to emphasize its semi-skilled nature would help assure that the helper classification would be a true “semi-skilled” classification rather than a broad catch-all classification that could perform everything from laborer duties to an undefined and potentially unlimited assortment of skilled tasks overlapping the work of journeyworkers. The Department suggested that this approach would aid in distinguishing helpers from laborers by emphasizing the “semi-skilled” nature of helpers, as distinguished from the unskilled duties in the definition in the suspended rule. Under this approach the definition would elaborate on the supervisory relationship between the helper and the journeyworker and the craft-specific assistance provided, and expressly limit the unskilled work the helper could perform. The Department noted, however, that this alternative would not resolve the administrative and enforcement problems that stem from the overlap of duties between journeyworkers and helpers, and that it might result in helper classifications being used to replace, rather than supplement, the use of apprentices and trainees registered in bona fide training programs.

The Building Trades commented that, even under this modified definition of a helper, it would not be possible to distinguish a helper from a laborer because laborers also assist craft workers and many use tools of the trade to perform certain duties. The Building Trades also noted that a laborer working under the supervision of a journeylevel worker could be classified as a lower-paid helper under this definition, simply by adding to his or her duties a few relatively low-skilled tasks using tools of the trade.

LIUNA stated that this alternative would not prevent the substitution of helpers for laborers, because laborers perform not only unskilled duties, but a wide array of semi-skilled duties as well. LIUNA further stated that, because laborers generally earn higher wages than helpers, this alternative would result in misclassification of laborers just as would the suspended rule.

The ABC stated that the Department's rejection of this alternative on the grounds that helpers would continue to have overlapping duties with journeymen is inappropriate. The ABC stated that, if the prevailing practice is to employ helpers to perform duties overlapping with those of journeylevel workers, it is the Department's statutory obligation to recognize that practice.

The Department continues to believe that this alternative would not resolve the administrative and enforcement problems that would stem from the overlap of duties between journeyworkers and helpers. The Department remains of the view that the emphasis on semi-skilled duties under this approach might result in helper classifications being used to replace, rather than supplement, the use of apprentices and trainees registered in bona fide training programs. Furthermore, it appears that this alternative might not even resolve the problems of overlap of duties between helpers and laborers.

The Department noted in the NPRM that this approach, by focusing on the role of the helper in assisting the journeyworker and eliminating the “semi-skilled” characterization from the definition of helpers, could provide a more practical basis for distinguishing helpers from journeyworkers. However, the Department expressed its concern that laborers may often perform the same work encompassed within the OES helper definition, thereby causing significant problems for Wage and Hour in conducting wage and area practice surveys and in enforcement because of the lack of clear differentiation between the classifications. The Department also stated that it might be difficult under this approach for contractors to determine whether workers performing similar or identical duties are “laborers” or “helpers” when submitting DBRA survey data and in classifying workers on DBRA-covered projects.

Both the Building Trades and LIUNA commented that this alternative would present the same problem as that presented by the suspended rule, viz., helpers and laborers both perform the work as described in the operative definition. The Building Trades and LIUNA state that it would be difficult for contractors to determine whether workers performing similar or identical duties are laborers or helpers when submitting Davis-Bacon survey data and in classifying workers on DBRA projects.

The AGC commented that the OES definition of a helper is consistent with the definition in the suspended regulation, and can be used by contractors to effectively distinguish helpers from laborers and other craft workers. The ABC objected to the Department's characterization of the OES definition as “eliminating the semi-skilled characterization” from the definition of helpers. The ABC further stated that any such elimination would deny an essential component of helpers and would defeat the statutory mandate of recognizing prevailing practices.

None of the commenters has demonstrated how helpers can be effectively distinguished from laborers under this approach for both enforcement and wage determination purposes, given that laborers would often perform the same work as that described in the OES helper definition. Moreover, the Department does not believe that focusing on the role of the helper in assisting the journeyworker is an effective means for distinguishing helpers from laborers. None of the commenters disputes that laborers, too, are frequently called upon in the performance of their regular duties to assist journeymen.

As this so-called “job family” approach was described in the NPRM, an employee who performs only lower level duties that are associated with a particular craft may be classified and paid at the lower level helper rate; however, an employee who performs some lower level duties and some higher level duties must be paid the higher journeylevel rate for all of the employee's work time. The Department stated that this approach, in effect, would allow for the expanded use of helpers, with differentiation based on the skill and knowledge required to perform particular duties. The Department theorized that once the duties or tasks that the helpers could perform were clearly defined, wage data could be collected on that basis, and contractors could reasonably be expected to comply with the wage requirements for the various classifications employed on their contracts, thereby facilitating administration and enforcement. The Department stated, however, that developing clear definitions of the duties or tasks that helpers to each journeylevel craft worker would be allowed to perform would be very difficult, requiring extensive occupational analyses and further rulemaking to promulgate helpers' duties descriptions. The Department further questioned whether this approach, which presumably would result in uniform, nationwide definitions, would be consistent with the underlying principle that DBRA classifications are determined based on local area practices.

The Building Trades and LIUNA stated that developing clear definitions of the duties or tasks that helpers would be allowed to perform would be very difficult, requiring extensive occupational analyses to develop accurate and specific descriptions of helpers' duties. They also commented that the uniform, nationwide definitions that would result from application of this alternative would not necessarily reflect locally prevailing practices, as DBRA requires.

TxDOT appears to favor this or a similar approach, in that it recommended (in conjunction with other recommendations) the use of standardized definitions for both journeylevel and helper classifications, stating that each level of classification should require a specific level of skill, and for those classifications where a specific skill is not required, the common laborer classification should be utilized in lieu of a helper classification. TxDOT stated that, under this approach, the need for a semi-skilled worker classification would be eliminated. The AGC of Texas provided a copy of its “Standard Job Classifications” booklet to demonstrate the use of standard, uniform job definitions for job classifications, including several helper classifications, in connection with highway, heavy, utility, and industrial construction projects in the State of Texas.

TxDOT also proposed that the Department expand and define the role of training programs with regard to such helper classifications, thus allowing helpers to progress to a status of “journeyman trainee” and then journeyman. However, though the Department has concern for the impact its helper regulations may have on apprenticeship and training programs, it is not within the Department's purview in the context of this Davis-Bacon Act rulemaking to expand and define the role of training programs with respect to helpers.

The Department believes that adoption of this approach is simply not practicable because of the expenditure of time and resources that would be necessary to develop job descriptions for all the construction crafts. The Department also believes that this approach is inadvisable because it would amount to recognizing sub-classifications within each craft, a practice that has never been permitted under DBRA.

Furthermore, close examination reveals that the helper definitions created by the AGC of Texas suffer from the same infirmities as the helper definition in the suspended rule. For example, the AGC of Texas booklet provides the following job description for a “Carpenter Helper, Rough” classification:  16

Like the suspended helper definition, this definition uses the undefined term “semi-skilled” to describe the carpenters' helper classification without explaining what it means to be “semi-skilled.” Additionally, this definition is internally inconsistent in that it defines the carpenters' helper as “semi-skilled,” but specifically lists duties that might commonly be performed by unskilled laborers. The definition not only allows the duties of a helper to overlap with those of a journeyworker, but also provides no limitation on the duties a carpenter's helper can perform by including the open-ended phrase “[p]erforms other related duties.” Lastly, this definition, by referring to a carpenter helper as a “learner,” poses perhaps an even greater risk than the suspended helper definition that helpers will be substituted for apprentices and trainees participating in formal programs that lead to workers achieving journeylevel status.

Congressional Representatives Norwood, Goodling, Ballenger, Boehner, Hoekstra, McKeon, and Paul opposed the Department's proposed helper regulations, stating that they would tend to discourage rather than facilitate the use of helpers on DBRA projects. They commented that the proposed regulations are deficient because they do not reflect current industry practice and are not responsive to the needs and practices of the vast majority of the construction industry. These congressmen also stated that the proposed helper rule, in contrast to the suspended rule, will not encourage access by low-skilled workers to valuable entry-level jobs. They further stated that opening more helper jobs under the suspended rule would attract workers to the construction industry, which suffers from a serious shortage of skilled workers.

Representatives Clay, Owens, and Clyburn supported the proposed rule on the basis that it not only better reflects the current practices of Davis-Bacon contractors, but also ensures that minority workers will be paid locally prevailing wages and fringe benefits. They further commented that the proposed rule will ensure that the Federal government, through its procurement practices, will not act to undermine the living standards of workers, and will promote continued access to the kinds of apprenticeship programs that are essential if new workers in the construction industry are to better themselves.

Representatives Schakowsky and Weiner also urged the Department to adopt as final the proposed rule because it recognizes the need for a clear delineation and limitation on the use of helpers on DBRA-covered projects. They stated that the proposed rule will encourage proper training for young, minority and female workers by promoting formal and effective apprenticeship programs. They also commented that the proposed rule will enhance the presence of more skilled and productive workers on Davis-Bacon projects, thus reducing the costs resulting from job-related injuries and improving the economic situation of the entire community.

The AGC, the ABC, Dr. Thieblot, and the SBSC all opposed the Department's proposed rule and advocated implementation of the suspended rule. These commenters, as well as the APWC, stated that where the use of helpers prevails, they should be recognized by the Department in accordance with its statutory mandate to reflect prevailing practices. For example, the ABC commented that, if it is the prevailing practice to employ helpers in a given locality to perform overlapping duties with journeymen, the Department of Labor has an obligation to recognize that practice. The AGC echoed this point, stating that even if helpers prevail in only 3.9 percent or 2.7 percent of surveyed job classifications, as surmised by the Department in its NPRM, helper classifications should nonetheless be recognized in those instances where they are found to prevail. The ABC also urged the Department to delay issuance of the proposed rule until the upgrade of the Department's survey and data collection processes has been completed and a fair and objective study of the helper issue is conducted.

The AGC of Texas supported restoring the increased use of helpers under the suspended rule, stating that for more than 35 years helper classifications have been recognized in Texas and are still being used on projects that have no Federal funds. The Mercatus Center generally opposed adoption of the proposed rule, primarily based on economic considerations. Elcon specifically objected to the Department's refusal under its current policy to approve the elevator helper classification negotiated by the International Union of Elevator Constructors. Elcon stated that the Davis-Bacon Act should not be used to make new rules that would reduce competition, unnecessarily inflate costs on Federal construction projects, provide unfair advantages for nonunion organizations, and create separate job definitions for Federal projects.

The Building Trades and LIUNA both urged the Department to adopt the proposed rule. They favored the proposed rule because it reestablishes the duties-based classification approach, provides an objective basis for administration and enforcement, including clear criteria that facilitate contractor compliance, and is consistent with the statutory intent to assure that workers employed on DBRA projects receive the prevailing wages paid to workers performing similar work on similar construction in the same area. They also stated that the proposed rule's lack of overlapping duties will discourage contractor misclassification and abuse and that the requirement that helpers be separate and distinct from journeylevel workers and laborers will facilitate collection of wage data used to establish prevailing wage rates on DBRA work. Finally, they stated that the proposed rule will provide strong incentives to contractors and subcontractors to establish and participate in formal apprenticeship and training programs.

MESMA opposed the use of helpers without stringent enforcement by the Department as part of a comprehensive Davis-Bacon reform effort. MESMA expressed concern that the overuse of helpers could lead to a reduction in workforce skills, diminishing quality of construction, and an increase in industrial accidents. The NJATC opposed the helper concept in general based on its belief that the institution of helpers will have a negative impact on apprenticeship and training programs. The IBEW opposed adoption of the Department's proposed rule based on its general opposition to use of helper classifications, under any definition, on DBRA projects. The IBEW suggested that the creation of helper classifications may bring down wage scales, put more people in poverty, and force construction workers to work more than one job in order to survive economically. MESMA and the IBEW both questioned whether the helper criteria under the proposed regulation can be effectively administered and enforced.

Based on careful review of the comments and further consideration of the alternatives, the Department has decided to adopt as a final rule an amendment to the regulations that will incorporate the longstanding policy of recognizing helpers as a distinct classification on DBRA-covered work only where Wage and Hour determines that (1) the duties of the helper are clearly defined and distinct from those of the craft worker and laborer, i.e., the duties of the helper are not routinely performed by any other classifications in a given area; (2) the use of such helpers is the prevailing practice in the area; and (3) the helper is not used as a “trainee” in an informal training program.

The Department favors this approach because it incorporates the duties-based methodology for distinguishing classifications that the Department utilizes in identifying other classifications under the DBRA. By providing for the recognition of helpers based on the duties they perform, rather than on the worker's skill level and the existence of supervision, the proposed rule provides an objective basis for Wage and Hour to administer and enforce the statute's prevailing wage requirements with respect to the employment of helpers. This duties-based approach also facilitates compliance by providing clearer criteria to be followed by contractors who wish to employ helpers on DBRA-covered projects.

The Department also believes that, by recognizing helpers only where their duties are distinct and do not overlap with those routinely performed by other classifications, the proposed rule will discourage contractor misclassification and/or abuse that could result from contractors reclassifying journeyworkers and laborers as helpers at lesser rates of pay on DBRA jobs.

The Department believes that the proposed rule provides the only approach that is administratively feasible. Unlike some of the other alternatives considered, the policy under the proposed rule does not require Wage and Hour, in its enforcement, to make a fact-bound inquiry of each worker to assess his or her skill level and the nature of the worksite supervision he or she receives to determine whether the worker will be recognized as a “helper” for Davis-Bacon purposes. The requirement that helpers have distinct duties from those of other classifications on the wage determination also facilitates the collection of wage data that more reliably reflect the prevailing wage rates paid for work performed by helpers on DBRA-covered construction work.

Under the regulations, helpers—whatever their job title—will be recognized, as they are today, whenever their duties are separate and distinct from duties routinely performed by other classifications. For example, tender classifications are common on Davis-Bacon wage determinations. On the other hand, where helpers are just lesser skilled workers of a particular craft, they will be included in the surveys under the craft classification, and their rates averaged together with the journeylevel workers (where there is no rate paid to a majority of the workers in the classification). 17

Additionally, this approach maintains the current incentive to contractors to establish and participate in structured apprenticeship and training programs that facilitate the advancement of lesser skilled workers to journeylevel status.

The chief objection to the proposed rule expressed by commenters in this rulemaking is that it disregards local area practices in those instances where there may be a prevailing practice of employing helpers who do not meet the three-part regulatory test as set forth above. The gravamen of this objection is that the proposed rule does not accord with the Department's statutory obligation to provide classifications and wage rates that mirror locally prevailing practices.

The Department believes that the proposed rule is fully consistent with the DBRA's underlying prevailing wage goals and requirements. The Davis-Bacon Act provides little guidance concerning the methodology the Secretary is to use in determining “classes” of laborers and mechanics and their respective prevailing wage. Consequently, the Secretary has a substantial amount of flexibility and discretion in devising a methodology to fulfill the Department's statutory obligations and responsibilities under the Act. Donovan, 712 F.2d at 616, 629-630; Miami Elevator Company and Mid-American Elevator Company, Inc., ARB Case Nos. 98-086 and 97-145 (April 25, 2000), slip op. at 35.

The Davis-Bacon Act directs the Secretary to determine the prevailing wage for “corresponding classes” of laborers and mechanics. It has been the longstanding practice of the Department—with the exception of the short period during which the suspended rule was implemented—to utilize a duties-based approach to identifying classes of laborer and mechanics. 18 Under this practice, the duties that a particular class of worker performs may vary somewhat from one area to another; and a classification may be recognized in one area and be subsumed under another classification in another area, in accordance with prevailing area practice. Thus, in one area a helper may be a separate class, while, in another area, it may be subsumed under another classification in accordance with prevailing area practice. Although this duties-based distinction is not mandated by the statute, the Department believes it is fully consistent with the legislative history and statutory intent.

Furthermore, the Department believes it simply is not feasible to graft onto a duties-based system of classifications, one class defined on the basis of skill and supervision. Since the craft worker is not defined on the basis of skill and supervision, and the prevailing wage of the craft worker is based on rates paid to workers with a range of skills and supervision, it does not make sense to carve out certain workers who may have less skill and receive more supervision.

In addition, the Department has been unable to determine how the suspended helper rule can be administered and enforced in accordance with the DBRA's prevailing wage requirement. A review of the comments reveals no consensus as to how helpers are used in the construction industry, and the commenters provided no information to aid the Department in identifying a generally accepted definition of a helper that corresponds to industry practices. Nor is there a practicable, reasonable way to identify helpers, when the manner in which they are used varies so in each and every area where DBRA-covered construction is taking place.

The Department's Administrative Review Board in its recent decision in the case of Miami Elevator Company and Mid-American Elevator Company, Inc., ARB Case Nos. 98-086 and 97-145 (April 25, 2000), explained the Department's position. In response to an argument that the Department's refusal to approve an elevator helper classification because it did not meet the current three-part test resulted in “a staffing pattern that is inconsistent with locally prevailing practice,” the Board stated as follows:

Accordingly, the Department concludes that the proposed rule, by requiring that the duties of a helper be distinct from those of other classifications employed on the jobsite, best fulfills the fundamental purpose of the Davis-Bacon Act to assure that workers employed on federal and federally-assisted construction work be paid at least the wages paid to corresponding classes of workers on similar construction in the area.

The Department points out that it is not its intention that a helper classification would never be issued simply because some workers in another classification occasionally perform the work in question. As discussed above, the Department intends to issue helper classifications where the duties in question are not routinely performed by another classification on the wage determination and it is the prevailing practice in the area for helpers/tenders to perform the work in question, provided the other criteria of the regulation are met. In other words, although roofers may occasionally tear off roofing or carry roofing materials, the Department will issue a roofer's helper classification in a wage determination if more roofer's helpers perform these tasks than roofers on the projects surveyed, provided that the helpers tasks are clearly defined and do not include duties that prevail for other classifications in the area ( e.g., application of roofing where it is prevailing practice that roofers perform this work), and that the helper is not an informal trainee. Consistent with the Department's practice on approval of additional classifications under the conformance procedures at section 5.5(a)(1)(ii)(A), moreover, the Department will not approve an additional classification of helper if the helper performs any tasks that are ever performed by other classifications on the wage determination. Thus, in the example given, the Department would not approve the roofer's helper as an additional classification because tearing off of roof and carrying of roofing materials are sometimes done by roofers.

Consistent with the above discussion, the regulations have been amended to delete the suspended provision at section 1.7(d), defining the circumstances in which use of helpers would be found to prevail. The Department will apply its longstanding policies in determining prevailing practices. Section 5.2(n)(4) has been revised to set forth the circumstances in which helpers will be recognized on wage determinations and in additional classification (conformance) requests. Finally, the conformance provisions at section 5.5(a)(1)(ii) have been revised to delete the special references to helpers from the suspended paragraphs, and the second conformance provision at section 5.5(a)(1)(v), which was in effect during the period of the suspended regulation, has been deleted.

The regulations are further amended to reflect the organizational change in the title of the Bureau of Apprenticeship and Training (BAT) to the Office of Apprenticeship, Training Employer and Labor Services (ATELS).

The Department determined that the proposed rule should be treated as “economically significant” within the meaning of Executive Order 12866 and as a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act because the various alternatives to the proposed rule, including reinstatement of the suspended rule, could result in potential savings in excess of $100 million per year. Therefore, a full economic impact analysis was prepared and presented for comment. 19 The principal finding of this analysis was that any impact resulting from the increased use of helpers under the suspended rule, or any of the other alternatives considered, would be relatively modest. The Department estimated potential savings under the suspended rule to be from $72.8 million (utilizing Current Population Survey (CPS) data) to $296.0 million (utilizing Occupational Employment Statistics (OES) data). The Department also devised an alternative methodology that is OES-based, but utilizes CPS data to compensate for the likelihood that OES data overestimate the number of helpers and underestimate the number of laborers. This “adjusted-OES data” provided an estimate of $108.6 million in possible savings. As discussed in the NPRM, the Department believes that the potential savings are likely to be closer to $72.8 million than $296.0 million.

The AGC does not believe that the surveys and data sources used by the Department support the conclusion that the employment of helpers is not as widespread as previously believed. Specifically, the AGC pointed out that, although the OES survey used does combine laborers, helpers and other categories, the survey is being revised to separate the helpers and laborers, making it more useful in the future. The AGC states that independent contractors rarely bid on Federal construction contracts, but rather are frequently hired by the contractors that are awarded the contracts. It therefore disagreed with the Department's view that inclusion of self-employed workers in the CPS is a strength of the survey. Furthermore, the AGC disagreed with the Department's statement that the OES definition of helpers is very similar to laborers who assist journeymen. Finally, the AGC disagreed with the Department's conclusion that the OES survey likely includes laborer employment with helper employment, thereby overstating the number of helpers and stated that the Department offers no support for its view that contractors cannot distinguish between helpers and laborers.

The ABC believes that the Department's economic impact and flexibility analysis greatly understates the economic costs of the proposed rule. Raising similar concerns to those raised by the AGC, the ABC stated that the Department's analysis is flawed by: (1) A lack of evidence that helpers would replace laborers and apprentices in proportion to the number of workers in each of those occupations; (2) the absence of a basis for assuming that OES statistics include large numbers of laborers in the estimates of helpers; (3) improper inclusion of self-employed workers in the universe of “relevant” construction employment; and (4) the use of flawed and distorted 1992-1993 wage surveys to estimate the number of classifications in which helpers would prevail. The ABC estimates that the proposed rule will cost hundreds of millions of dollars each year.

Turning first to the CPS survey, the Department continues to believe that it is appropriate to include independent contractors in construction workforce data. As the AGC said, independent contractors (performing as journeylevel workers) are frequently hired by contractors on Davis-Bacon contracts. Furthermore, independent contractors performing the work of laborers or mechanics are covered by the Act. No other concerns have been raised regarding the appropriateness of the data in the CPS. Therefore, as stated in the NPRM ( see 64 FR 17561), based principally on the fact at this time the OES has not published data with a separate classification for laborer, together with the fact that OES does not collect data on self-employed individuals, Wage and Hour continues to believe that the CPS data are more likely than the OES data to be representative of the distribution of employment in construction by occupation for helpers and laborers.

The assumption that helpers would replace laborers, apprentices, and journeyworkers in proportion to the number of workers in each of these occupations is addressed in the NPRM at 64 FR 17499. The Department explained that the 1989 helper impact analysis assumed that helpers would replace only journeyworkers, and measured the wage differentials based only on this replacement effect. The Department now believes this assumption was incorrect because helpers frequently perform laborers' duties and laborers' wage rates would sometimes be higher than helpers' rates on the wage determination. The Department observed that comments received from some contractors surveyed in the processing of helper conformance requests during the period the suspended regulations were in effect indicated that they used the job title “laborer” for workers meeting the definition of “helper” under the suspended regulation. The Department took a “middle ground” in its impact analysis by assuming that helpers would replace laborers, apprentices, and journeyworkers in the same proportion as their relative occupational employment. 20 The comments do not undermine the reasonableness of this assumption or provide a reasonable, alternative approach.

The assumption that large numbers of laborers are included in the OES helper data is based on the absence of a separate OES laborer classification, and the fact that the duties described in the OES helper definition are similar to those performed by laborers. 21 Furthermore, other available surveys, such as the CPS, the Decennial Census, and the four NCS pilot surveys conducted by BLS show a much greater incidence of laborer employment than could be gleaned from the OES survey data. As AGC pointed out, a separate construction laborer classification is included in the new Standard Occupational Classification definitions and will be used in future OES surveys.

The ABC's contention that the 1992-1993 wage surveys were distorted has been discussed above. In addition, these survey results were used only for the assumption that helpers would be likely to “prevail” for a limited number of classes in areas representing about half the construction employment covered by the Davis-Bacon and Related Acts.  22

Representative Norwood and the congressmen who joined in his comments stated that the proposed rule is based on an unrealistic economic impact analysis, noting that the Congressional Budget Office (CBO) has estimated that legislation allowing the increased use of helpers could save the Federal government $1.4 billion over five years and $3.5 billion over 10 years. The CBO's precise methodology for estimating the reduction in discretionary outlays over five and ten year periods has not been provided. It is the Department's understanding that the CBO estimates are based on the methodology used by the Department to estimate savings in its original impact analysis conducted in 1982, with estimated percentages of savings modified (from 1.6 percent of federal construction costs to .8 percent) to account for changes to certain assumptions made in the 1982 analysis. 23 For the reasons set forth in the NPRM, the Department now believes, based on more current information and data sources that were not then available, that many of those assumptions were wrong. The Department also points out that the CBO savings estimates are consistent with the high end of the savings estimates set forth in the Department's latest economic impact analysis, based on the OES data.

The Building Trades and LIUNA both state that the Department's economic impact analysis overstates any possible cost savings under the suspended rule and that consideration of certain other factors would eliminate the “modest” savings predicted by the Department in its analysis. The other factors that the Building Trades and LIUNA believe would offset any potential savings under the suspended rule include: (1) Lowered productivity of construction workers as contractors employ more low-wage, lesser-skilled workers; (2) lowered income and sales tax revenues resulting from lowered worker income; (3) negative impact on apprenticeship programs with reduced training levels and lower skill levels among construction workers; (4) increased incidences of accidents and increased workers' compensation premiums due to the increase in the number of new, entry-level workers who are untrained or inadequately trained; and (5) the negative impact on the quality of public construction resulting from the increased use of lower-paid, lesser-skilled workers. Finally, the Building Trades and LIUNA believe that the suspended rule, in and of itself, would probably have no effect on Federal budgetary outlays, as it is unlikely that there would be a reduction in congressional appropriations for Federal and federally-assisted public building and public works projects to reflect the anticipated cost savings from the increased use of helpers.

While the factors mentioned by the Building Trades and LIUNA could have some bearing on impact analysis estimates (the NPRM did, for example, note the possibility of reduced savings as a result of fewer apprenticeships and higher journeyworker wage rates), adequate data simply are not available to allow detailed consideration of these factors. Of the many studies cited, none provides the framework or data necessary for integration into an economic impact analysis. Furthermore, there may be offsetting factors which could neutralize the effects of the factors cited.

Of the many studies cited by these commenters, none provides the framework or data necessary for integration into an economic impact analysis. For the most part, the studies cited in the union comments do not focus directly on the comparative costs of the two helper rules, but rather on the more general cost differentials associated with union versus open shop construction. Moreover, the Department has determined that comparisons would be made using only primary, direct costs for the following reasons: (1) Generally accepted databases maintained by Federal agencies should be relied upon in the comparative cost study; and (2) the impact of such factors as productivity, social costs/benefits, and construction quality are not definitive, and therefore, consideration of these factors would invite considerable debate from those who have reached opposite conclusions based on their research.

The Department therefore concludes that the belief expressed by the Building Trades and LIUNA that adoption of the suspended rule would probably have no effect on Federal budgetary outlays is too speculative to form an appropriate basis for their integration into a cost-impact analysis.

After review of the comments, the Department has concluded that there is no reason to change its estimates of the potential savings under the suspended rule and the other alternatives considered, in comparison to the proposed rule, as set forth in the preliminary regulatory impact analysis.

The Department has reviewed this rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” The rule does not “have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

Under the Regulatory Flexibility Act, Public Law 96-354 (94 Stat. 1164; 5 U.S.C. 601 et seq. ), Federal agencies are required to prepare and make available for public comment an initial regulatory flexibility analysis that describes the anticipated impact of proposed rules that would have a significant economic impact on small entities. Though the Department determined that a regulatory flexibility analysis was not necessary for the proposed rule because it would not have a significant economic impact on a substantial number of small entities, it nonetheless published for comment such an analysis because of the interest in the rule. 24 After review of the comments and consideration of the various alternatives, the Department has prepared the following regulatory flexibility analysis regarding this rule:

In 1982, Wage and Hour published final regulations which, among other things, would have allowed contractors to use “semi-skilled” helpers on Davis-Bacon covered projects at wages lower than those paid to skilled journeyworkers. These rules represented a sharp departure from Wage and Hour's longstanding practice of not allowing overlap of duties between job classifications. To protect against possible abuse, a provision was included limiting the number of helpers which could be used on a covered project to a maximum of two helpers for every three journeyworkers. This ratio provision was subsequently invalidated by the U.S. Court of Appeals for the District of Columbia.

As discussed in greater detail above, during its existence, the helper rule has been the subject of considerable litigation and Congressional attention. The rule has been enjoined by the district court and modified on two occasions as a result of court of appeals decisions. It has twice been implemented for short periods of time. It has also been suspended on two occasions as the result of Congressional action prohibiting Wage and Hour from spending any funds to implement or administer the helper rule. On December 30, 1996, the Department's suspension of the 1982 rule was continued pending completion of this rulemaking.

The helper rule was originally proposed and adopted because it was believed that it would result in a construction workforce on Federal construction projects that more closely reflected private construction's “widespread” use of helpers to perform certain craft tasks and, at the same time, effect significant cost savings in federal construction costs. It was also believed that the expanded definition would provide additional job and training opportunities for unskilled workers, in particular women and minorities. The Department's subsequent efforts to develop enforcement guidelines led it to conclude that administration and enforcement of the revised helper rule would be much more difficult than anticipated, especially in light of the court's invalidation of the ratio provision. Moreover, new data has led the Department to conclude that the use of helpers is not as widespread as previously thought. The Department is also concerned about the possible negative effect of the helper regulations on formal apprenticeship and training programs. These factors led the Department to conclude that the suspended helper rule should not be implemented and that new regulations were needed to govern employment of helpers on DBRA-covered projects. The objective of these regulations is to establish the most appropriate approach to governing employment of helpers on DBRA-covered projects.

The Department received a number of comments regarding the economic impact analysis prepared pursuant to Executive Order 12866. Those comments were discussed in the previous section containing the Department's economic impact analysis. The Department received no separate comments concerning its initial regulatory flexibility analysis.

Size standards for the construction industry are established by the Small Business Administration (SBA), and are expressed in millions of dollars of annual receipts for affected entities, i.e., Major Group 15, Building Construction—General Contractors and Operative Builders, $17 million; Major Group 16, Heavy Construction (non-building), $17 million; and Major Group 17, Special Trade Contractors, $7 million. The overwhelming majority of construction establishments would have annual receipts under these levels. According to the Census, 98.7 percent of these establishments have annual receipts under $10 million. Therefore, for the purpose of this analysis, it is assumed that virtually all establishments potentially affected by this rule would meet the applicable criteria used by the SBA to define small businesses in the construction industry.

As explained above, however, the final rule would cause no impact on small entities since it does not propose to make any changes in requirements applicable to small businesses. Implementation of the suspended rule or any of the alternatives considered would expand the use of helpers and could result in some savings to the Federal government and to recipients of Federal assistance. The impact would depend upon the specifications of the alternative relative to current practice. Even relative to unlimited use, however, possible savings would be very modest, ranging from 0.239 percent of the value of Davis-Bacon annual construction starts (CPS), to 0.359 (adjusted OES), and 0.958 (unadjusted OES) percent and, as discussed in the Department's economic impact analysis in the NPRM, may very well be short-termed.

There are no reporting or recording requirements for contractors under the final rule. Nor would there be any such requirements under the suspended rule or any of the alternatives considered. The compliance requirements under any rule regarding helpers would merely require contractors who use helpers to do so in accordance with a chosen regulatory framework and pay helpers at least the prevailing wages for the helper classification as set by the Department.

The Department carefully analyzed the suspended rule, as well as a number of alternative approaches, to determine whether they could be enforced and administered in a manner consistent with the objectives of the Davis-Bacon and Related Acts. Based on this analysis, the Department concluded that the final rule, which adopts the Department's current policy governing employment of helpers, is the only alternative considered that is both consistent with the purposes of the Davis-Bacon and Related Acts and capable of practical and efficient administration, enforcement, and compliance.

The Department also performed an economic impact analysis wherein the Department estimated the relative economic costs under the suspended rule, the various alternatives considered, and the final rule, respectively. As detailed above, the Department concluded from this analysis that any economic cost savings to the Federal government and recipients of Federal assistance, resulting from the increased use of lower-paid helpers under the suspended rule or any of the other alternatives considered, would be relatively modest. The Department therefore determined that implementation of the final rule, which preserves the status quo concerning employment of helpers on DBRA-covered projects, would not have a significant economic impact on a substantial number of small entities.

This document was prepared under the direction and control of John R. Fraser, Deputy Administrator, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor.

This is a summary of the Commission's Memorandum Opinion and Order , in MM Docket No. 99-282, adopted October 25, 2000, and released November 3, 2000. The full text of this Commission decision is available for inspection and copying during normal business hours in the FCC Reference Information Center (Room CY-A257), 445 Twelfth Street, SW., Washington, DC. The complete text of this decision may also be purchased from the Commission's copy contractor, International Transcription Service, Inc., 1231 20th Street, NW., Washington, DC 20036, (202) 857-3800.

The tidewater goby ( Eucyclogobius newberryi ) is the only member of the monotypic genus Eucyclogobius and is in the family Gobiidae. This fish was first described in 1857 by Girard as Gobius newberryi. Based on Girard's specimens, Gill (1862) erected the genus Eucyclogobius for this distinctive species. The majority of scientists have accepted this classification ( e.g. , Bailey et al. 1970, Miller and Lea 1972, Hubbs et al. 1979, Robins et al. 1991, Eschmeyer et al. 1983). A few older works including Ginsburg (1945) placed the tidewater goby and the eight related eastern Pacific species into the genus Lepidogobius. This classification includes the currently recognized genera Lepidogobius , Clevelandia , Ilypnus , Quietula , and Eucyclogobius. Birdsong et al. (1988) coined the informal Chasmichthys species group, recognizing the phyletic relationship of the eastern Pacific group with species in the northwestern Pacific.

Crabtree's (1985) allozyme work on tidewater gobies from 12 localities throughout the range shows fixed allelic differences at the extreme northern (Lake Earl and Humboldt Bay) and southern (Canada de Agua Caliente, Winchester Canyon, and San Onofre Lagoon) ends of the range. The northern, central, and southern California populations are genetically distinct from each other. The more centrally distributed populations are relatively similar to each other (Brush Creek, Estero Americano, Corcoran Lagoon, Arroyo de Corral, Morro Bay, Santa Ynez River, and Jalama Creek). Crabtree's results indicate that there is a low level of gene flow (movement of individuals) between the populations sampled in the northern, central, and southern parts of the range. However, Lafferty et al. (1999a) point out that Crabtree's sites were widely distributed geographically, and may not be indicative of gene flow on more local levels.

Dawson et al. (2000) conducted an analysis of mitochondrial DNA from populations ranging from Humboldt to San Diego counties. Results indicated the southern California populations of tidewater gobies diverged from other tidewater gobies along the California coast long ago. These southernmost populations may have begun diverging from the remainder of the gobies in excess of 1,000,000 years ago. We recently proposed recognition of the tidewater gobies in southern California ( i.e. , Orange and San Diego Counties) as an endangered distinct population segment (DPS) (June 24, 1999; 64 FR 33816).

The tidewater goby is a small elongate fish seldom exceeding 50 millimeters (mm) (2 inches (in.)) standard length. This fish is characterized by large, dusky pectoral fins and a ventral sucker-like disk formed by the complete fusion of the pelvic fins. Tidewater gobies are nearly transparent, with a mottled brownish upper surface, and often with spots or bars on dusky dorsal and anal fins. The mouth is large and oblique with the upper jaw extending nearly to the rear edge of the eye. The eyes are widely spaced. The tidewater goby is a short-lived species, apparently having an annual life cycle (Eschmeyer and Herald, 1983, Irwin and Soltz 1984, Swift et al. 1997).

The tidewater goby is endemic to California, and is unique in that it is restricted to coastal brackish water habitats. Historically, the species ranged from Tillas Slough (mouth of the Smith River, Del Norte County) near the Oregon border to Agua Hedionda Lagoon (northern San Diego County). Within the range of the tidewater goby, shallow, brackish water conditions occur in two relatively distinct situations: 1) the upper edge of tidal bays, such as Tomales, Bolinas, and San Francisco bays near the entrance of freshwater tributaries, and 2) the coastal lagoons formed at the mouths of small to large coastal rivers, streams, or seasonally wet canyons, along most of the length of California. Few well documented records of this species are known from marine environments outside of coastal lagoons and estuaries (Swift et al. 1989). Historically, the southern population of tidewater gobies occupied the coastal lagoons formed at the mouths of small to large coastal rivers, streams, or seasonally wet canyons from Aliso Creek in Orange County, to Agua Hedionda Lagoon in Northern San Diego County.

The tidewater goby is often found in waters of relatively low salinities (around 10 parts per thousand (ppt)) in the uppermost brackish zone of larger estuaries and coastal lagoons. However, the fish can tolerate a wide range of salinities and is frequently found throughout lagoons (Swift et al. 1989, 1997; Worcester 1992, Worcester and Lea 1996). Tidewater gobies regularly range upstream into fresh water, and downstream into water of up to 28 ppt salinity (Worcester 1992, Swenson 1995). Specimens have also been collected at salinities as high as 42 ppt (Swift et al. 1989). The species' tolerance of high salinities (up to 60 ppt for varying time periods) likely enables it to withstand exposure to the marine environment, allowing it to colonize or reestablish in lagoons and estuaries following flood events (Swift et al. 1989; Worcester and Lea 1996; Lafferty et al. 1999a). Tidewater gobies in southern California appear to be highly tolerant of varying salinities. Tidewater gobies were collected in May 2000 from French and Aliso lagoons, San Diego County, two lagoons located within 500 m of each other. Although both lagoons had hundreds of larval, juvenile and adult tidewater gobies, the salinities of the two lagoons varied markedly. Aliso Lagoon consisted of entirely fresh water, while French Lagoon ranged from 45 to 51 ppt (Service field data 2000).

Tidewater gobies are usually collected in water less than 1 meter (m) (3 feet (ft)) deep and many localities have no area deeper than this (Wang 1982, Irvin and Soltz 1984; Swenson 1995). However, they have been found in waters over 1 m ( 3ft) in depth (Worcester 1992, Lafferty and Altstatt 1995; Swift et al. 1997; Smith 1998). In lagoons and estuaries with deeper water, the lack of collections of tidewater gobies in depths greater than 1 m (3 ft) may be due to the inadequacy of the sampling methods, rather than the lack of gobies (Worcester 1992, Lafferty 1997, Smith 1998).

Tidewater gobies often migrate upstream into tributaries up to 2.0 kilometers (km) (1.2 miles) (mi) from the estuary. However, in San Antonio Creek and the Santa Ynez River in Santa Barbara County, tidewater gobies are often collected 5-8 km (3-5 mi) upstream of the tidal or lagoonal areas, sometimes in beaver-impounded sections of streams (Swift et al. 1989). The fish move upstream in summer and fall as sub-adults and adults. There is little evidence of reproduction in these upper areas (Swift et al. 1997). Tidewater gobies in Southern California have been found as far as 5 km (3 mi) from the estuary in the Santa Margarita River (Holland and Swift 1992; Dan Holland, Camp Pendleton Amphibian and Reptile Survey, pers. comm. 2000).

The life of tidewater gobies is tied to the annual hydrologic cycles of the coastal lagoons and estuaries (Swift et al. 1989, 1994; Swenson 1994, 1995). Water in estuaries, lagoons and bays is at its lowest salinity during the winter and spring as a result of precipitation and runoff. During this time, high runoff causes the sandbars at the mouths of the lagoons to breach, allowing mixing of the relatively fresh estuarine and lagoon waters with seawater. This annual building and breaching of the sandbars is part of the normal dynamics of the systems in which the tidewater goby has evolved (Zedler 1982, Lafferty and Alstatt 1995, Heasly et al. 1997). The time of sandbar closure varies greatly among systems and years, and typically occurs from spring to late summer. Summer salinity in the lagoon depends upon the amount of freshwater inflow at the time of sandbar formation (Zedler 1982, Heasly et al. 1997).

Males begin digging breeding burrows 75 to 100 mm (3-4 in.) deep, usually in relatively unconsolidated, clean, coarse sand averaging 0.5 mm (0.02 in.) in diameter, in April or May (Swift et al. 1989; Swenson 1994, 1995). Swenson (1995) demonstrated that tidewater gobies prefer this substrate in the laboratory, but also found tidewater gobies digging breeding burrows in mud in the wild (Swenson 1994). Page (C. Page, Biological Consultant, pers. com. 2000) found that tidewater gobies commonly built breeding burrows and spawned in silt-dominated muddy habitats. Inter-burrow distances range from about 5 to 275 centimeters (cm) (2 to 110 in) (Swenson 1995). Females lay about 100 to 1,000 eggs per clutch, averaging 400 eggs per clutch, with clutch size depending on the size of both the female and the male. Females can lay more than one clutch of eggs over their lifespan, with captive females spawning 6-12 times (Swenson 1995). Spawning frequency in wild females probably varies due to fluctuations in food supply and other environmental conditions. Male gobies remain in the burrow to guard the eggs that are attached to sand grains in the walls of the burrow. Males also spawn more than once per season (Swenson 1995) and have been observed guarding multiple clutches in the same burrow (Swift et al. 1989, Swenson 1995). Males frequently go at least for a few weeks without feeding and this probably contributes to mid-summer mortality (Swift et al. 1989; Swenson 1994, 1995).

Reproduction peaks during spring to mid-summer (late April or May to July) and can continue into November or December depending on the seasonal temperature and rainfall. Reproduction sometimes increases slightly in the fall (Swift et al. 1989). Reproduction takes place when the water temperature is from 15-20 degrees Celsius (°C) (60-65 degrees Fahrenheit (°F)) and at salinities of 0-25 ppt (Swift et al. 1989; Swenson 1994, 1995). Typically, winter rains and cold weather interrupt spawning, but in some warm years reproduction may occur throughout the year (Goldberg 1977, Wang 1984). Goldberg (1977) showed by histological analysis that females have the potential to lay eggs all year in Southern California, but this rarely has been documented. Length-frequency data from southern and central California (Swift et al. 1989; Swenson 1994, 1995) and age data analysis from central California populations (Swift et al. 1997) indicate that tidewater gobies typically live one year or less, although some may overwinter upstream (Irwin and Soltz 1984).

Tidewater goby eggs hatch in 7-10 days at water temperatures of 15-18 °C (60-65 °F) at lengths of 4-7 mm (0.2 in.). The newly hatched larvae are planktonic (float in water column) for one to a few days and once they reach 8-18 mm (0.3-0.8 in.) in length, move to substrate oriented (living on or near the bottom of the estuary or lagoon). All larger size classes are substrate oriented and little habitat segregation by size has been noted (Swift et al. 1989, Swenson 1995). However, Worcester (1992) found that larval gobies in Pico Creek Lagoon tended to use the deeper portion of the lagoon. Individuals collected in marshes appear to be larger (43-45 mm (1.7-1.8 in.) standard length) than those collected in open areas of lagoons (32-35 mm (1.3-1.4 in.) standard length) (Swenson 1995).

Studies of the tidewater goby's feeding habits suggest that it is a generalist. At all sizes examined, tidewater gobies feed on small benthic (bottom-dwelling) invertebrates, crustaceans (usually mysids, amphipods, and ostracods), snails, and aquatic insect larvae, particularly flies (dipterans) (Irwin and Soltz 1984; Swift et al. 1989; Swenson 1994, 1995). The food items of the smallest tidewater gobies (4-8 mm (0.2-0.3 in.)) have not been examined, but they probably feed on unicellular phytoplankton or zooplankton similar to many other early stage larval fishes (Swenson and McCray 1996).

Tidewater gobies are preyed upon by native species such as prickly sculpin ( Cottus asper ), staghorn sculpin ( Leptocottus armatus ), starry flounder ( Platichthys californicus ) (Swift et al. 1997), and possibly steelhead ( Oncorhynchus mykiss ) (Swift et al. 1989). Tidewater gobies were found in stomachs of about 6 percent of 120 fish of the former three species examined, and comprised about 20 percent by volume of the prey. Predation by the native Sacramento perch ( Archoplites interruptus ) and tule perch ( Hysterocarpus traski ) may have prevented tidewater gobies from inhabiting the San Francisco Bay delta (Swift et al. 1989), although direct documentation to support this hypothesis is lacking.

Several non-native fish species, such as largemouth bass and yellowfin gobies, also prey on tidewater gobies. The shimofuri goby ( Tridentiger bifasciatus ), which has become established in the San Francisco Bay region (Matern and Fleming 1995), may compete with the smaller tidewater goby, based on dietary overlap (Swenson 1995) and foraging and reproductive behavioral alterations in captivity. Shimofuri gobies eat juvenile tidewater gobies in captivity, but usually were unable to catch subadult and adult tidewater gobies (Swenson and Matern 1995). Evidence of predation or competition in the wild is lacking (Swenson 1999), although Wang (1984) found that yellowfin gobies prey on tidewater gobies. Shapovalov and Taft (1954) documented the non-native striped bass ( Morone saxatilis ) preying on tidewater gobies in Waddell Creek Lagoon, but stated that striped bass were found only infrequently in the areas inhabited by the goby. Non-native sunfishes and black bass (centrarchids) have been introduced in or near coastal lagoons and may prey heavily on tidewater gobies under some conditions. Although tidewater gobies disappeared soon after centrarchids were introduced at several localities, direct evidence that the introductions led to the extirpations is lacking (Swift et al. 1989, 1994; Rathbun et al. 1991). Predation by young-of-the-year largemouth bass ( Micropterus salmoides ) on tidewater gobies was documented in one system (Santa Ynez River), where tidewater gobies accounted for 61 percent of the prey volume of 55 percent (10 of 18) of the juvenile bass sampled (Swift et al. 1997).

In Southern California, non-native sunfish (Centrarchidae), largemouth bass, and channel catfish ( Ictulurus punctatus ) are all suspected of impacting tidewater goby populations through predation in the San Mateo and Santa Margarita lagoons (Swift and Holland 1998). Yellowfin gobies are thought to have contributed to the extirpation of tidewater gobies from the Santa Margarita River (Swift et al. 1994). The tidewater goby population at Cockleburr Creek is reduced presumably due to predation and competition from the large numbers of non-native mosquitofish (Swift and Holland 1998).

Non-native African clawed frogs ( Xenopus laevis ) also prey upon tidewater gobies (Lafferty and Page 1997), although this is probably not a significant source of mortality due to the limited distribution of this species in tidewater goby habitats. The frogs are killed by the higher salinities that occur when the lagoons are breached (Glenn Greenwald, Service, pers. obs.).

Lafferty et al. (1999a) monitored persistence of 17 tidewater goby populations in Santa Barbara and Los Angeles counties during and after the heavy winter flood flows of 1995. All 17 populations persisted after the high flows and no significant changes in population sizes were detected. In addition, gobies apparently colonized Canada Honda, approximately 10 km (6 mi) from the closest known population during or after the flooding (Swift et al. 1997). Lafferty et al. (1999a, 1999b) proposed that flood events such as those that occurred in 1995, flush gobies out into the ocean's littoral zone where they are dispersed by longshore currents to other estuaries generally south along the coast. As Swenson (1999) points out, Lafferty's work suggests that, because prevailing longshore currents on the California coast are southerly, populations at the northern ends of geographic clusters of populations are more likely than southern populations to serve as source populations. Lafferty et al. (1999b) estimated the extirpation and recolonization rates for 37 populations in Southern California from over 250 presence-absence records and found a high rate of recolonization. The results suggest that there is more gene flow among populations within geographic clusters (e.g., northern California, San Francisco Bay, Santa Cruz, San Luis Obispo, and Southern California) than previously believed. They also found a positive association between tidewater goby presence and wet years, suggesting that flooding may contribute to recolonization of sites from which gobies have temporarily disappeared.

Lagoons in which tidewater gobies are found range in size from less than 0.10 hectare (ha) (0.25 acres (ac)) of surface area to about 800 ha (2,000 ac). Most lagoons with tidewater goby populations are in the range of 0.5-5.0 ha (1.25-12.5 ac). Surveys of tidewater goby localities and historical records indicate that persistence of tidewater goby populations is related to size, configuration, location, and access by humans (Swift et al. 1989, 1994). Water surface areas smaller than about 2 ha (5 ac) generally have histories of extinction, extirpation, or population reduction to very low levels, although some as small as 0.35 ha (0.86 ac) have been identified as having persistent tidewater goby populations (Swift et al. 1997, Lafferty 1997, Heasly et al. 1997). As evidenced by the Canada Honda colonization (Swift et al. 1997), relatively long distances from the nearest source populations are not obstacles to colonization or reestablishment. Many of the small lagoons with histories of intermittent populations are within 1-2 km (0.6-1.2 mi) of larger lagoons that can act as sources of colonizing gobies.

Today, the most stable and largest populations are in lagoons and estuaries of intermediate sizes, 2-50 ha (5-125 ac) that have remained relatively unaffected by human activities, although some systems that are heavily affected or altered also have relatively large and stable populations (e.g., Humboldt Bay, Humboldt County; Santa Clara River, Ventura County; Santa Ynez River, Santa Barbara County; and Pismo Creek, San Luis Obispo County). In many cases, these probably have provided the colonists for the smaller ephemeral sites (Swift et al. 1997; Lafferty et al. 1999b).

We first classified the tidewater goby as a Category 2 species in 1982 (47 FR 58454). It was reclassified as a Category 1 species in 1991 (56 FR 58804) based on status and threat information in Swift et al. (1989). At those times, Category 2 species were those taxa for which information in our possession indicated that proposing to list as endangered or threatened was possibly appropriate, but for which sufficient data on biological vulnerability and threats were not currently available to support a listing proposal. Category 1 species, now referred to as candidate species, were those taxa for which we had on file, sufficient information on biological vulnerability and threats to support a proposal to list as threatened or endangered. On October 24, 1990, we received a petition from Dr. Camm Swift, Associate Curator of Fishes at the Los Angeles Museum of Natural History, to list the tidewater goby as endangered. Our finding that the requested action may be warranted was published on March 22, 1991 (56 FR 12146). A proposal to list the tidewater goby as an endangered species was published on December 11, 1992 (57 FR 58770). On March 7, 1994, the tidewater goby was listed as an endangered species (59 FR 5494). At that time, we did not designate critical habitat, because critical habitat was not then determinable and a final decision on critical habitat required detailed information on the possible economic effects of designation. At that time, we did not have sufficient information to perform the economic analysis.

On September 18, 1998, the Natural Resources Defense Council, Inc., filed a lawsuit in Federal District Court in California against us for failure to designate critical habitat for the tidewater goby. On April 5, 1999, the court ordered that the “Service publish a proposed critical habitat designation for the tidewater goby in 120 days” ( Natural Resources Defense Council, Inc. v. U. S. Department of the Interior et al., CV 98-7596, C.D. Cal.).

On June 24, 1999, we proposed to delist the northern populations of the tidewater goby and to retain the tidewater goby populations in Orange and San Diego Counties as endangered based on our reevaluation of the species status throughout its range (64 FR 33816). We determined that north of Orange County more populations exist than were known at the time of the listing, that threats to those populations are less severe than previously believed, and that the tidewater goby has a greater ability to recolonize habitats from which it is temporarily absent than was known in 1994 (64 FR 33816). Moreover, we believe that the populations of tidewater gobies in Orange and San Diego Counties are genetically distinct and represent a DPS. We believe that this DPS, comprised of gobies from only eight localities, continues to be threatened by habitat loss and degradation, predation and competition by non-native species, and extreme weather and streamflow conditions. Therefore, we proposed that populations north of Orange County be removed from the List of Endangered and Threatened Animals, and that the southern DPS of tidewater gobies be retained as an endangered species on the list.

On August 3, 1999, we proposed critical habitat for the tidewater goby (64 FR 42250). We reopened the comment period on October 15, 1999 (64 FR 55892), to announce the time and location of public hearings and provide for additional public comment. This second comment period closed on November 30, 1999. On June 28, 2000, we published a notice (65 FR 39850) announcing the reopening of the comment period on the draft proposal to designate critical habitat for the tidewater goby and a notice of availability of the draft economic analysis on the proposed determination. The comment period was opened for an additional 30 days, closing on July 28, 2000.

Critical habitat is defined in section 3 of the Act as—(i) the specific areas within the geographic area occupied by a species, at the time it is listed in accordance with the Act, on which are found those physical or biological features (I) essential to the conservation of the species and (II) that may require special management considerations or protection; and (ii) specific areas outside the geographic area occupied by a species at the time it is listed, upon a determination that such areas are essential for the conservation of the species. “Conservation” means the use of all methods and procedures that are necessary to bring an endangered or threatened species to the point at which listing under the Act are no longer necessary.

Critical habitat receives protection under section 7 of the Act through the prohibition against destruction or adverse modification of critical habitat with regard to actions carried out, funded, or authorized by a Federal agency. Section 7 also requires consultations on Federal actions that are likely to result in the destruction or adverse modification of critical habitat. In our regulations at 50 CFR 402.02, we define destruction or adverse modification as “the direct or indirect alteration that appreciably diminishes the value of critical habitat for both the survival and recovery of a listed species. Such alterations include, but are not limited to, alterations adversely modifying any of those physical or biological features that were the basis for determining the habitat to be critical.” Aside from the added protection that may be provided under section 7, the Act does not provide other forms of protection to lands designated as critical habitat. Because consultation under section 7 of the Act does not apply to activities on private or other non-Federal lands that do not involve a Federal nexus, critical habitat designation would not afford any additional protections under the Act against such activities.

In order to be included in a critical habitat designation, the habitat must first be “essential to the conservation of the species.” Critical habitat designations identify, to the extent known using the best scientific and commercial data available, habitat areas that provide essential life cycle needs of the species (i.e., areas on which are found the primary constituent elements, as defined at 50 CFR 424.12(b)).

Section 4 requires that we designate critical habitat at the time of listing and based on what we know at the time of the designation. When we designate critical habitat at the time of listing or under short court-ordered deadlines, we will often not have sufficient information to identify all areas of critical habitat. We are required, nevertheless, to make a decision and thus must base our designations on what, at the time of designation, we know to be critical habitat.

Within the geographic area occupied by the species, we will designate only areas currently known to be essential. Essential areas should already have the features and habitat characteristics that are necessary to sustain the species. We will not speculate about what areas might be found to be essential if better information became available, or what areas may become essential over time. If the information available at the time of designation does not show that an area provides essential life cycle needs of the species, then the area should not be included in the critical habitat designation. Within the geographic area occupied by the species, we will not designate areas that do not now have the primary constituent elements, as defined at 50 CFR 424.12(b), that provide essential life cycle needs of the species.

Our regulations state that, “The Secretary shall designate as critical habitat areas outside the geographic area presently occupied by the species only when a designation limited to its present range would be inadequate to ensure the conservation of the species.” (50 CFR 424.12(e)). Accordingly, when the best available scientific and commercial data do not demonstrate that the conservation needs of the species require designation of critical habitat outside of occupied areas, we will not designate critical habitat in areas outside the geographic area occupied by the species.

Our Policy on Information Standards Under the Endangered Species Act, published in the Federal Register on July 1, 1994 (59 FR 34271), provides criteria, establishes procedures, and provides guidance to ensure that our decisions represent the best scientific and commercial data available. It requires our biologists, to the extent consistent with the Act and with the use of the best scientific and commercial data available, to use primary and original sources of information as the basis for recommendations to designate critical habitat. When determining which areas are critical habitat, a primary source of information should be the listing rule for the species and its supporting documentation. Additional information may be obtained from a recovery plan, articles in peer-reviewed journals, conservation plans developed by states and counties, scientific status surveys and studies, and biological assessments or other unpublished materials ( i.e. , gray literature).

Habitat is often dynamic, and species may move from one area to another over time. For these reasons, all should understand that critical habitat designations do not signal that habitat outside the designation is unimportant or may not be required for recovery. Furthermore, we recognize that designation of critical habitat may not include all of the habitat areas that may eventually be determined to be necessary for the recovery of the species. Areas outside the critical habitat designation will continue to be subject to conservation actions that may be implemented under section 7(a)(1) and to the regulatory protections afforded by the section 7(a)(2) jeopardy standard and the section 9 take prohibition, as determined on the basis of the best available information at the time of the action. We specifically anticipate that federally funded or assisted projects affecting listed species outside their designated critical habitat areas may still result in jeopardy findings in some cases. Similarly, critical habitat designations made on the basis of the best available information at the time of designation will not control the direction and substance of future recovery plans, habitat conservation plans, or other species conservation planning efforts if new information available to these planning efforts calls for a different outcome.

In determining areas that are essential to conserve the tidewater goby, we used the best scientific and commercial data available. This included data from research and survey observations published in peer-reviewed articles, data collected on the U.S. Marine Corps Base, Camp Pendleton (Camp Pendleton), data collected from reports submitted by biologists holding section 10(a)(1)(A) recovery permits, and comments received on the proposed rule and economic analysis.

In accordance with section 3(5) of the Act, for habitat within the geographic range occupied by the species, critical habitat is defined as specific areas that contain those physical or biological features that are essential to the conservation of the species and that may require special management considerations or protection. The habitat features (primary constituent elements) that provide for the primary biological needs of foraging, sheltering, reproduction, and dispersal that are essential for the conservation of the species are described at 50 CFR 424.12, and include, but are not limited to, the following:

The primary constituent habitat elements for the tidewater goby were determined from studies on their habitat requirements and population biology (Lafferty et al. 1999a, 1999b; Manion 1993; Swensen 1994, 1995, 1999; Swift et al. 1989) and include habitat components that are essential to the biological needs of foraging, nest construction, spawning, sheltering, and dispersal. The foundation for the primary constituent elements of the tidewater goby is provided by coastal lagoons and estuaries supported by a relatively natural hydrologic regime and an environment with so few exotic fishes that tidewater gobies are unaffected by their presence. These elements are described in greater detail below.

Coastal lagoons and estuaries with natural hydrology generally provide several specific habitat elements that gobies require. For instance, aquatic systems supported by a natural hydrological regime are often characterized by a combination of slightly different habitat types: freshwater creek, brackish lagoon, and coastal salt marsh. This habitat variance generally ensures that some deep pockets of permanent water remain as refugia during times of drought; provides for a variety of substrate types, of which sand and silt are necessary for construction of burrows; and provides for structural complexity of the stream channel, which supports various types of aquatic and emergent vegetation. This structural complexity and presence of vegetation may ensure that all gobies are not washed out to sea during flood events (Swensen 1995). Lastly, lagoons and estuaries with a natural hydrological regime and corresponding habitat complexity generally provide for the diversity of prey species ( e.g. , aquatic invertebrates, including aquatic insect larvae, ostracods, crustaceans, and snails) that gobies require.

The second constituent element of tidewater goby habitat is a system that is free from exotic species or nearly so. Exotic fishes can debilitate, perhaps to the point of extirpation, tidewater goby populations through competition and predation. Largemouth bass, black bass, sunfishes, striped bass, shimofuri gobies, and yellowfin gobies all appear to prey on tidewater gobies. Keeping exotic species out of occupied goby habitats, and eliminating them from potential reestablishment sites will be crucial to the conservation of the goby.

We have limited our designation to Orange and San Diego Counties, because it is within this area that tidewater gobies are threatened with extinction and essential habitat areas for this species can be identified. Currently, within Orange and San Diego Counties no known populations occur outside of Camp Pendleton. Populations on Camp Pendleton fluctuate and most have temporarily been extirpated on several occasions. Because there is a total of only eight populations currently known within Orange and San Diego Counties, a random event or combination of events could affect all eight populations and cause the species to be lost from those counties. Furthermore, because the best available information (Dawson et al. 2000) indicates that tidewater gobies in Orange and San Diego Counties comprise a unique genetic unit, we proposed this population for listing as a DPS (for additional discussion on the DPS, see the June 24, 1999, proposed rule 64 FR 33816).

Our critical habitat designation must take into consideration the fact that the current information indicates that tidewater goby populations north of Orange County are not in danger of extinction or likely to become so in the foreseeable future. North of Orange County, fluctuations in the number of populations of tidewater gobies are also common. However, these populations are of sufficient number (ranging from about 40 during drought conditions to about 80 under wet conditions) and distribution such that they are not in danger of extinction now or in the foreseeable future. The last pronounced drought (1987-1991) did not threaten the goby north of Orange County with extinction. In nearly all areas where populations were reported absent due to drought or a combination of drought and human-caused factors, gobies repopulated naturally shortly after a return to wetter conditions. Thus, a return to drought conditions does not mean endangerment for the goby populations north of Orange County.

Furthermore, most of the lagoons and estuaries that no longer support gobies north of Orange County lost them decades ago when they were altered in ways that severely, and for all practicable purposes permanently, affected the hydrology, such that they could no longer support gobies. Therefore, while there are some exceptions, north of Orange County tidewater gobies do live in most of the estuaries where they can live (not withstanding normal extirpation and re-colonization within the metapopulation (interconnected subpopulations)). Thus, this historical loss of habitat did not result in a continuing trend toward extinction. In effect, the information on the species current status and trends indicates that, for the tidewater goby populations north of Orange County, the 1994 listing rule misinterpreted the risk of extinction such that the goby was mistakenly listed as endangered (for additional discussion, see the proposed delisting rule 64 FR 33816).

This information was the basis for the delisting proposal, which addressed errors in the original 1994 listing for the tidewater goby populations north of Orange County, along with current goby status and threats. We have received a substantial number of comments on the proposed delisting. However, the main reaction expressed in the comment letters from the public was that the Service, armed with very little new information, was, in its delisting proposal, reversing its position on the status of the goby without basis. The public comment letters also expressed concern that the delisting proposal was arguing that the goby was in less danger of extinction now than in 1994. These comments included carefully reasoned and informed set of suggestions for improving our analysis of current risk of extinction, and we consider this designation in light of that information. At this time, we continue to believe that the 1994 listing rule misinterpreted the risk of extinction and that listing under the Act is not necessary for the tidewater goby populations north of Orange County. However, we want to ensure that we have made the best decision possible and intend to reopen the comment period on the proposed delisting in the near future.

We have not yet made a final determination on the delisting proposal. Therefore, the entire species remains listed, and the Act requires us to designate critical habitat for the species. The facts and analysis described above, however, are highly relevant to the question of what areas constitute critical habitat for the species. In order to be included in a critical habitat designation, the habitat must first be “essential to the conservation of the species.” This requires more than that the habitat be essential for the long-term survival and well-being of the species. Rather, the habitat must be essential for the “conservation” of the species. Under the Act, “conservation” is a technical term, defined as the use of all methods and procedures that are necessary to bring an endangered or threatened species to the point at which listing under the Act is no longer necessary. In the case of a species that, although technically listed, does not meet the standard for listing, e.g. , it should be delisted, but that action has not yet taken place, no methods or procedures are required to bring the species to the point where listing is no longer necessary. In other words, that species is already “conserved,” as that term is defined in the Act. Thus, as a technical legal matter, no areas can be “essential to the conservation” of a species that currently does not warrant listing.

This is precisely the situation with respect to the northern populations of the goby. The best available biological information indicates that listing under the Act is already not necessary for the tidewater goby populations north of Orange County. In other words, the northern populations are already conserved, as that term is used in the Act, and consequently no areas are essential to the conservation of the northern populations. Moreover, we find that no areas north of Orange County are essential to the conservation of the populations in Orange and San Diego Counties. Therefore, the habitat areas for the northern population are not essential to the conservation, as defined in the Act, of any of the populations, or the species as a whole. We are not suggesting that there are no threats to the goby populations north of Orange County or that these populations would not benefit from other actions to manage or protect the species or its habitat. However, given the technical legal requirements of the Act, critical habitat designation is not the appropriate vehicle for addressing this need. Under the Act's definition of critical habitat, no areas north of Orange County qualify for designation as critical habitat for the species. As we continue to analyze the proposed delisting, we will evaluate the best biological information available. If we identify additional areas that are essential to the conservation of the species, we will revise this critical habitat designation as appropriate.

The population in Orange and San Diego Counties is endangered because some of the places where it used to live have been altered so much that they are unsuitable for gobies. These remaining populations, currently eight, fluctuate, and periodically go extinct, only to be repopulated later by colonists from nearby populations. The conservation of the goby depends upon the existence of enough habitat areas to support this natural pattern (Swift et al. 1989, Lafferty et al. 1999). All of the remaining habitat areas which are presently inhabited by gobies are subject to various threats to habitat quality (see analysis in 64 FR 33816) and require special management considerations or protection. These are designated as critical habitat.

In accordance with section 3(5)(A)(ii) of the Act, areas outside the geographical area occupied by the species at the time it is listed may meet the definition of critical habitat upon determination that they are essential for the conservation of the species. The long-term survival of tidewater gobies in Orange and San Diego Counties depends upon the presence of enough habitat areas to support the natural pattern of local extinctions and recolonizations (Swift et al. 1989, Moyle et al. 1995, Lafferty et al. 1999b, Swenson 1999) that characterize its population biology. The eight fluctuating populations where gobies exist today are insufficient in number and quality to remove gobies in this part of the range from a high risk of extinction. Thus, unoccupied habitats which can support gobies in the future play an essential role in the conservation of the goby. To determine which unoccupied areas are essential and should be designated as critical habitat, we evaluated which unoccupied areas could support tidewater gobies, and, by virtue of their geographical distribution, provide for a network of habitat areas supporting gobies and acting as sources of recolonization for other nearby habitat areas.

Two sites that fulfill these criteria are Aliso Creek, Orange County, and Agua Hedionda Lagoon, San Diego County. The tidewater goby population at Aliso Creek was intensively studied in the 1970s, and the habitat parameters that supported tidewater gobies when they occurred there are well documented (Swift et al. 1989). Habitat parameters have not changed since tidewater gobies occupied the creek (Camm Swift, ichthyologist consultant, pers. comm. 2000, see Summary of Comments and Recommendations section). In Agua Hedionda Lagoon, recent fish surveys found cheekspot ( Ilypnus gilberti ) and shadow gobies ( Quietula y-cauda ), species which can co-occur with, and have similar habitat requirements to tidewater gobies indicating that suitable conditions may currently exist in the lagoon to support tidewater gobies (MEC 1995). More recently, a study carefully examined the suitability of habitat in Agua Hedionda Lagoon specifically for tidewater gobies. The study examined habitat parameters such as substrate, salinity, water temperature, water depth, and fish species assemblage, and compared these with values in habitats occupied by tidewater gobies. Results from this study demonstrated that the lagoon can currently support tidewater gobies (Merkel and Associates 1999a and 1999b, see Summary of Comments and Recommendations section). Because suitable habitat exists at both of these lagoons, and because additional tidewater goby localities are within 10 miles of these lagoons, we find that Aliso Creek, Orange County, and Agua Hedionda Lagoon, San Diego County can support tidewater gobies in the future and that these two estuaries contribute to the network of habitat areas that can support tidewater gobies and act as sources of recolonization following the natural pattern of local extinction in other nearby habitat areas. We are designating Aliso Creek, Orange County, and Agua Hedionda Lagoon, San Diego County, because they are essential to the conservation of tidewater gobies.

In defining critical habitat boundaries, it was not possible to exclude existing man-made features and structures within the area designated, such as buildings, roads, railroads, and other features. These features will not themselves contain one or more of the primary constituent elements. Federal actions limited to those features, therefore, would not trigger a section 7 consultation, unless they affect the species and/or primary constituent elements in adjacent critical habitat.

In summary, in determining areas that are essential to conserve tidewater goby, we used the best scientific information available to us. The critical habitat areas described below constitute our best assessment of areas needed for the species' conservation and recovery.

For the reasons described above, the following general areas are designated as critical habitat. Where delineated, the 50-year flood plain is used to establish boundaries within the designated waterways. In areas where the 50-year flood plain is not delineated, the presence of alluvial soils (soils deposited by streams), obligate and facultative wetland vegetation, abandoned river channels, or evidence of high water marks will be used to determine the extent of the flood plain and the boundaries for the designation (see legal descriptions for exact habitat boundaries):

1. Aliso Creek (Orange County) and its associated lagoon and marsh from the Pacific Ocean to approximately 1.0 km (0.6 mi) upstream;

2. San Mateo Creek and its associated lagoon and marsh, from the Pacific Ocean to approximately 1.3 km (0.9 mi) upstream;

3. San Onofre Creek and its associated lagoon and marsh from the Pacific Ocean to approximately 0.6 km (0.4 mi) upstream;

4. Las Flores Creek and its associated lagoon and marsh from the Pacific Ocean to Interstate 5 (approximately 1.0 km (0.6 mi));

5. Hidden Creek and its associated lagoon and marsh from the Pacific Ocean to Interstate 5 (approximately 0.8 km (0.5 mi));

6. Aliso Creek and its associated lagoon and marsh from the Pacific Ocean to Interstate 5 (approximately 0.7 km (0.4 mi));

7. French Creek and its associated lagoon and marsh from the Pacific Ocean to Interstate 5 (approximately 0.7 km (0.4 mi));

8. Cockleburr Creek and its associated lagoon and marsh, from the Pacific Ocean to Interstate 5 (approximately 1.0 km (0.6 mi));

9. Santa Margarita River from the Pacific Ocean to a point approximately 5.0 km (3.1 mi) upstream; and

10. Agua Hedionda Lagoon and its associated marsh and creek from the Pacific Ocean to a point approximately 3.7 km 2.3 mi) upstream.

Although the majority of land being proposed for designation is under Federal administration and management, some estuary and riparian habitats are on State, county, city, and private lands. The Aliso Creek segment, Orange County, is owned by the County of Orange, the City of South Laguna, and private interests. Agua Hedionda Lagoon is owned by the San Diego Gas and Electric Company, which leases to the City of Carlsbad, and public and private interests. The segments on San Mateo Creek, San Onofre Creek, Las Flores Creek, Hidden Creek, Aliso Creek, French Creek, Cockleburr Creek, and the Santa Margarita River are on Camp Pendleton.

Section 7(a) of the Act requires Federal agencies, including the Service, to ensure that actions they fund, authorize, or carry out are not likely to jeopardize the continued existence of a threatened or endangered species, or result in the destruction or adverse modification of critical habitat to the extent that the action appreciably diminishes the value of the critical habitat for the survival and recovery of the species. Individuals, organizations, States, local governments, and other non-Federal entities are affected by the designation of critical habitat only if their actions occur on Federal lands, require a Federal permit, license, or other authorization, or involve Federal funding. In 50 CFR 402.02, “jeopardize the continued existence” (of a species) is defined as engaging in an activity likely to result in an appreciable reduction in the likelihood of survival and recovery of a listed species. “Destruction or adverse modification” (of critical habitat) is defined as a direct or indirect alteration that appreciably diminishes the value of critical habitat for the survival and recovery of the listed species for which critical habitat was designated. Thus, the definitions of “jeopardy” to the species and “adverse modification” of critical habitat are nearly identical.

Section 7(a) of the Act requires Federal agencies, including the Service, to evaluate their actions with respect to any species that is proposed or listed as endangered or threatened, and with respect to its critical habitat, if any is designated or proposed. Regulations implementing this interagency cooperation provision of the Act are codified at 50 CFR part 402. Section 7(a)(4) requires Federal agencies to confer with us on any action that is likely to jeopardize the continued existence of a proposed species or result in destruction or adverse modification of proposed critical habitat. Conference reports provide conservation recommendations to assist the agency in eliminating conflicts that may be caused by the proposed action. The conservation recommendations in a conference report are advisory. If a species is listed or critical habitat is designated, section 7(a)(2) requires Federal agencies to ensure that activities they authorize, fund, or carry out are not likely to jeopardize the continued existence of such a species or to destroy or adversely modify its critical habitat. If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency (action agency) must enter into consultation with us. Through this consultation, we would ensure that the permitted actions do not adversely modify critical habitat.

When we issue a biological opinion concluding that a project is likely to result in the destruction or adverse modification of critical habitat, we also provide reasonable and prudent alternatives to the project, if any are identifiable. Reasonable and prudent alternatives are defined at 50 CFR 402.02 as alternative actions identified during consultation that can be implemented in a manner consistent with the intended purpose of the action, that are consistent with the scope of the Federal agency's legal authority and jurisdiction, that are economically and technologically feasible, and that the Director believes would avoid resulting in the destruction or adverse modification of critical habitat. Reasonable and prudent alternatives can vary from slight project modifications to extensive redesign or relocation of the project. Costs associated with implementing a reasonable and prudent alternative are similarly variable.

Regulations at 50 CFR 402.16 require Federal agencies to reinitiate consultation on previously reviewed actions in instances where critical habitat is subsequently designated, and the Federal agency has retained discretionary involvement or control over the action or such discretionary involvement or control is authorized by law. Consequently, some Federal agencies may request reinitiation of consultation with us on actions for which formal consultation has been completed, if those actions may affect newly designated critical habitat and they have retained discretionary involvement in the action. Further, some Federal agencies may have conferenced with us on proposed critical habitat. We may adopt the formal conference report as the biological opinion when critical habitat is designated, if no significant new information or changes in the action alter the content of the opinion (see 50 CFR 402.10(d)).

Activities on Federal lands that may affect the tidewater goby or its critical habitat will require section 7 consultation. Activities on private or State lands requiring a permit from a Federal agency, such as a permit from the U.S. Army Corps of Engineers (Corps) under section 404 of the Clean Water Act, or some other Federal action, including funding (e.g., Federal Highway Administration, Federal Aviation Administration, or Federal Emergency Management Agency) will also continue to be subject to the section 7 consultation process. Federal actions not affecting listed species or critical habitat and actions on non-Federal lands that are not federally funded, authorized, or permitted do not require section 7 consultation.

Section 4(b)(8) of the Act requires us to briefly evaluate and describe in any proposed or final regulation that designates critical habitat those activities involving a Federal action that may adversely modify such habitat, or that may be affected by such designation. Activities that, when carried out, funded, or authorized by a Federal agency, may affect critical habitat and require that a section 7 consultation be conducted include, but are not limited to:

(1) Activities such as water diversion or impoundment, groundwater pumping, artificial lagoon breaching to protect urban or agricultural areas from inundation, or any other activity that alters water quality or quantity to an extent that water quality becomes unsuitable to support gobies, or any activity that significantly affects the natural hydrologic function of the lagoon system;

(2) Activities such as coastal development, sand and gravel mining, channelization, dredging, impoundment, or construction of flood control structures, that alter watershed characteristics or appreciably alter stream channel and/or lagoon morphology; and

(3) Activities which could lead to the introduction of exotic species, especially exotic fishes, into occupied or potential goby habitat.

To properly portray the effects of critical habitat designation, we must first compare the section 7 requirements for actions that may affect critical habitat with the requirements for actions that may affect a listed species. Section 7 prohibits actions funded, authorized, or carried out by Federal agencies from jeopardizing the continued existence of a listed species or destroying or adversely modifying the listed species' critical habitat. Actions likely to “jeopardize the continued existence” of a species are those that would appreciably reduce the likelihood of the species' survival and recovery. Actions likely to “destroy or adversely modify” critical habitat are those that would appreciably reduce the value of critical habitat for the survival and recovery of the listed species.

Common to both definitions is an appreciable detrimental effect on both survival and recovery of a listed species. Given the similarity of these definitions, actions likely to destroy or adversely modify critical habitat would almost always result in jeopardy to the species concerned, particularly when the area of the proposed action is occupied by the species. In those cases, it is highly unlikely that additional modification to the action would be required as a result of designating critical habitat. However, critical habitat may provide benefits toward recovery when designated in areas currently unoccupied by the species.

Designation of critical habitat could affect Federal agency activities. Federal agencies already consult with us on activities that may effect the species to ensure that their actions do not jeopardize the continued existence of the species. These actions include, but are not limited to:

(1) Regulation of activities affecting waters of the U. S. under section 404 of the Clean Water Act;

(2) Regulation of water flows, damming, diversion, and channelization by Federal agencies;

(3) Road construction, right of way designation, or regulation of agricultural activities by Federal agencies;

(4) Some military activities on the Camp Pendleton;

(5) Hazard mitigation and post-disaster repairs funded by the Federal Emergency Management Agency;

(6) Construction of communication sites licensed by the Federal Communications Commission; and

(7) Activities funded or authorized by Federal agencies.

This section serves in part as a general guide to clarify activities that may affect or destroy or adversely modify critical habitat. However, specific Federal actions will still need to be reviewed by the action agency. If the agency determines the activity may affect critical habitat, they will consult with us under section 7 of the Act. If it is determined that the activity is likely to adversely modify critical habitat, we will work with the agency to modify the activity to minimize negative impacts to critical habitat. We will work with the agencies and affected public early in the consultation process to avoid or minimize potential conflicts and, whenever possible, find a solution that protects listed species and their habitat while allowing the action to go forward in a manner consistent with its intended purpose.

If you have questions regarding whether specific activities will constitute adverse modification of critical habitat, contact the Field Supervisor, Carlsbad Fish and Wildlife Office (see ADDRESSES section). Requests for copies of the regulations on listed wildlife and inquiries about prohibitions and permits may be addressed to the U.S. Fish and Wildlife Service, Branch of Endangered Species, 911 N.E. 11th Ave, Portland, OR 97232 (telephone 503-231-2063, facsimile 503-231-6243).

In the August 3, 1999, proposed rule (64 FR 42250), we requested interested parties to submit factual reports or information that might contribute to development of a final rule. The 60-day comment period closed on October 4, 1999. We contacted appropriate Federal and State agencies, county and city governments, scientific organizations, and other interested parties. We reopened the comment period on October 15, 1999, (64 FR 55892) to announce the time and location of public hearings and provide for additional public comment. We published public notices of the proposed rule in the North County Times , the San Diego Union Tribune , and the Orange County Register, on October 18, 1999, which invited general public comment. We posted copies of the proposed rule and draft economic analysis on our internet site. We held two hearings on November 4, 1999, in Carlsbad, California. Notices appeared in the previously named newspapers on October 18, 1999, to announce the extension of the public comment period until November 30, 1999, and the scheduling of the public hearings in Carlsbad, California, on November 4, 1999. Transcripts of the hearings are available for inspection (see ADDRESSES section). On June 28, 2000, we published a notice (65 FR 39850) announcing the reopening of the comment period and the availability of the draft economic analysis on the proposed determination. The comment period was opened for an additional 30-days, closing on July 28, 2000.

We requested four ichthyologists (fish biologists) familiar with the species to review the proposed critical habitat designation. However, only two responded by the close of the comment period. Both of these reviewers provided valuable information about the biology, status, and range of the species, and suggested adding areas to the critical habitat designation. These comments are addressed in this section, and relevant data provided by the reviewers has also been incorporated into the “Background” section.

We received a total of 40 written and 28 oral comments during the public comment periods. Of those written comments, eight supported critical habitat designation, 30 opposed critical habitat designation, and two provided additional information. Of those oral comments, 3 supported critical habitat designation, 24 opposed critical habitat designation, and one provided additional information. Written and oral comments were received from one Federal agency, two state agencies, six local agencies, and 28 private organizations, companies, and individuals. Several commenters commented multiple times, both written and orally. All comments received were reviewed for substantive issues and new data regarding critical habitat and the biology and status of the tidewater goby. We address all comments received during the comment periods and public hearing testimony in the following summary of issues. Comments of a similar nature are grouped into a single issue.

The following comments and responses involve issues related to public involvement in the designation process and compliance with the Act and other laws, regulations, and policies.

Comment 1a: The creation of the Orange and San Diego Counties distinct population segment of the tidewater goby is invalid because it was created as part of a proposal to delist the tidewater goby in a portion of its range. The Service should first delist the species throughout its entire range, then propose the DPS separately.

Our Response: This final rule designating critical habitat for the tidewater goby finalizes the proposed designation of critical habitat for the tidewater goby (64 FR 42250) that addressed the conservation of the species throughout its entire range. The proposed rule to create a DPS and remove the northern populations of the tidewater goby from the list of threatened and endangered species was a separate proposed rule (64 FR 33816). In the section above titled “ Criteria Used To Identify Critical Habitat ,” we provide a detailed explanation as to the basis for this designation, including how this critical habitat designation relates to the proposed DPS and delisting. As discussed in our response to comment 1b, we must make a determination regarding critical habitat for the entire species at this time, based on the best information available.

Comment 1b: The Service cannot designate critical habitat on a proposed Distinct Population Segment (DPS). Because the Service has designated critical habitat for a DPS that has not yet been listed in a final rule, the proposed critical habitat designation is invalid.

Our Response: The Act requires us to designate critical habitat for the species, not the proposed DPS. Although our designation is limited to Orange and San Diego Counties, it is not because we are designating critical habitat for the proposed DPS, but rather those are the areas that we have identified that meet the definition of critical habitat for the species. In the section above titled “ Criteria Used To Identify Critical Habitat ,” we provide a detailed explanation as to the basis for this designation, including how the designation relates to the proposed DPS.

Comment 1c: The Service fails to include any economic analysis in its proposed rule, and thus gives inadequate notice of the action proposed.

Our response: In the proposed rule, we acknowledged that section 4(b)(2) of the Act requires us to consider the economic and other relevant impacts of designating a particular area as critical habitat. We also stated that we would conduct an analysis of the economic impacts of designating these areas as critical habitat prior to a final determination and announce the availability of the draft economic analysis with a notice in the Federal Register . We conducted an economic analysis. On June 28, 2000 (65 FR 39850), we published a notice in the Federal Register announcing the availability of the draft economic analysis and reopening the public comment period for 30 days.

We utilized the economic analysis, and took into consideration comments and information submitted during the public hearing and comment period, to make this final critical habitat designation. We may exclude areas from critical habitat upon a determination that the benefits of such exclusions outweigh the benefits of specifying such areas as critical habitat. We cannot exclude such areas from critical habitat when such exclusion will result in the extinction of the species.

Comment 1d: The Service cannot designate critical habitat until it first complies with National Environmental Policy Act requirements.

Our Response: An environmental assessment and/or an environmental impact statement as defined by the National Environmental Policy Act of 1969 need not be prepared in connection with regulations adopted pursuant to section 4(a) of the Act. We published a notice in the Federal Register outlining our reasons for this determination on October 25, 1983 (48 FR 49244). This rule does not constitute a major Federal action significantly affecting the quality of the human environment.

Comment 1e: The proposed rule is based on unpublished data that has not been made available to the public for review. The commenter asserts that the Service has proposed a regulatory action on the basis of secret data that has never been made available for public comment.

Our Response: The commenters use “Lafferty, et al. (in prep.)” and “Jacobs ( in litt. 1998)” as examples of unpublished data not available to the public for review. However, we made both references available to the public, as indicated in the “References Cited” section of the proposed rule. They were also part of the administrative record for the proposed rule. Additionally, the two citations referred to as “Lafferty, et al. (in prep.)” were published in 1999 (Lafferty et al. 1999a and 1999b) and were available as peer-reviewed literature during the second comment period on the proposed rule. The material cited in “Jacobs ( in litt. 1998)” is now in an unpublished manuscript that has been submitted for publication and is cited in this final rule as “Dawson et al. 2000.”

Comment 1f: One commenter stated that it was inappropriate for us to fail to designate critical habitat for the populations north of Orange County solely on the basis of the proposed rule to delist those populations. In particular, the commenter claims that doing so would be in violation of the April 5, 1999, order requiring the Service to propose designation of critical habitat for the species.

Our Response: The comment is based on the erroneous understanding that we artificially limited the proposed, and now final, rules to designate critical habitat for the tidewater goby because of the existence of a proposed rule to delist the tidewater goby in a portion of its range. In fact, the proposed and final critical habitat designation and the proposed delisting rule is irrelevant to the question of what areas should be designated as critical habitat for the tidewater goby. What is relevant is that our analysis of the best available information indicates that the areas north of Orange County do not constitute critical habitat as defined by the Act. This is discussed in greater detail in the section above titled, “ Criteria Used To Identify Critical Habitat .” Although this same information is also the basis for the proposed delisting, that action and this one are separate and independent administrative actions. Finally, the Court on November 19, 1999, dismissed a motion to enforce judgement based on the same grounds that the commenter raised.

The following comments and responses involve issues related to the biological basis for the designation.

Comment 2a: The use of the 50-year flood plain to define the lateral extent, or width of the critical habitat units, is unrealistic. The 50-year flood plain has not been delineated in most of the areas containing critical habitat units.

Our Response: We agree that the use of the 50-year flood plain is not easily defined in certain areas where the 50-year flood plain is not delineated or is in dispute. In those cases, we have changed the lateral extent of critical habitat designation to be the presence of alluvial soils (soils deposited by streams), obligate and facultative riparian vegetation (requiring and usually occurring in wetlands respectively), abandoned river channels, or known high water marks. These features characterize the lateral extent of critical habitat within rivers, streams, and their associated estuaries where the 50-year flood zone has not been identified. Existing man-made features and structures within this area, such as buildings, roads, railroads, and other features, do not contain, and do not have the potential to develop the primary constituent elements for the tidewater goby.

Comment 2b: Tidewater gobies are not documented to occur in upstream portions of rivers and streams in Orange and San Diego Counties. There is no evidence that the upstream areas proposed meet the Service's definition of critical habitat for the tidewater goby.

Our Response: Tidewater gobies often migrate upstream into tributaries up to 2.0 km (1.2 mi) from estuaries. In San Antonio Creek and the Santa Ynez River in Santa Barbara County, tidewater gobies are often collected 5-8 km (3-5 mi) upstream of the tidal or lagoonal areas, sometimes in beaver-impounded sections of streams (Swift et al. 1989). The fish move upstream in summer and fall as sub-adults and adults. There is little evidence of reproduction in these upper areas (Swift et al. 1997).

Tidewater gobies were collected in Trabuco Creek, Orange County, in 1939, approximately 4.5 km (2.8 mi) from the ocean (mouth of San Juan Creek) (UMMZ collection number 133000). In San Diego County, tidewater gobies were collected from the Santa Margarita River approximately 3.5 km (2.2 mi) from the mouth of the River in 1991. Presumably, they may have occurred further upstream if not for a beaver dam, which at that time acted as an effective barrier to fish movement (Holland 1992). This speculation turned out to be an accurate prediction when in May 2000, several years after the beaver dams were removed by high flood flows, gobies were collected approximately 4.5 km (2.8 mi) upstream of the mouth of the Santa Margarita River in the vicinity of the power line crossing (D. Holland, pers. comm. 2000). Clearly, tidewater gobies can occupy upstream portions of creeks in San Diego and Orange counties.

Little is known about why tidewater gobies utilize these upstream areas. Swenson (1995) found that tidewater gobies in marsh habitats in these upstream areas were larger and had fewer parasites than gobies in nearby creek and lagoon habitats. However, Swenson (1995) also found that gobies of all life stages occurred in lagoon, marsh, and creek habitats, indicating that they can complete their life cycle in any of the three habitat types. Because all life history stages of the species can be found here these areas are important to the species and we are including upstream areas as part of the critical habitat units in this designation.

Comment 2c: One commenter claimed that the proposed rule has overstated the potential impacts of the Foothill Transportation Corridor South to tidewater gobies. In contrast, another commenter expressed concern about the significant and enduring impacts to upland and riparian species, including tidewater gobies, from the proposed preferred alignment of the Foothill Transportation Corridor South.

Our Response: The proposed “CP alignment” of the Foothill Transportation Corridor South (FTCS), if constructed, may have substantial negative impacts to the tidewater goby, specifically in San Mateo and San Onofre Creeks (Michael Brandman and Associates 1997). The lagoons at the mouth of San Mateo Creek and San Onofre Creek are both now occupied by tidewater gobies, and these two lagoons typically support large goby populations from several thousand to approximately 70,000 gobies (Swift and Holland 1998). These two populations, along with Las Flores Creek, are the largest and most persistent in the region and are thought to serve as source populations for dispersal into the ephemeral estuaries and streams in the area. Thus these populations are important to the recovery of the tidewater goby.

The FTCS CP alignment would have both significant short-term and long-term impacts to tidewater gobies in the San Mateo Creek and San Onofre Creek drainage basins (Michael Brandman and Associates 1998). Short-term impacts would include mortality and temporary loss of habitat for breeding, feeding, and sheltering due to blockage or diversion of water flow, increased siltation from the required cut and fill of thousands of tons of earth, and the disturbance of low oxygen sediments. Long-term impacts would include: the permanent alteration of the hydrologic regime, primarily in changes to flow regimes, temperature patterns, and sediment movement characteristics of the streams; permanent loss of habitat for breeding, feeding, and sheltering due to siltation; and permanent deterioration in water quality of the streams from the continuous input of heavy metals and other contaminants. These types of changes to the abiotic elements of a stream are often associated with corresponding changes to the ichthyofauna (fish species assemblage within a region). Generally, this kind of disturbance results in an increase of exotic fish species to the detriment of the indigenous (native) ichthyofauna (Moyle and Light 1996). A preliminary investigation of the impacts to tidewater gobies from the CP alignment found that these impacts would be less than significant after mitigation (Michael Brandman and Associates 1998). However, we believe that the benefits of the proposed mitigation would be minimal and that construction of the CP alignment would likely result in the loss of these populations and potentially preclude recovery for this species.

There were numerous comments that addressed economic issues.

Comment 3a: The Service should recognize the importance of the coastal railway corridor and that any critical habitat designation is not intended to impede rail service or the maintenance or improvement of rail facilities in the coastal railway corridor.

Our Response: The coastal railway crosses all tidewater goby critical habitat units. Any activities permitted, funded, or carried out by a Federal agency that jeopardize the species or destroy or adversely modify its critical habitat will require a section 7 consultation with the Service. Any non-federal activity resulting in take of tidewater gobies, as defined by the Act, will require a section 10(a)(1) permit issued by the Service. We will work closely with the responsible agencies within the coastal railway corridor to avoid and minimize impacts to tidewater goby populations and critical habitat from future maintenance or improvements to the coastal railway. Consultations will now need to consider critical habitat.

Comment 3b: Designation of critical habitat will cause private property values to decline and will negatively affect businesses.

Our Response: The economic analysis indicates that designation of critical habitat for the tidewater goby will not have a significant economic impact. The economic analysis does acknowledge that the designation of critical habitat may affect private property values. We believe that this short-term effect would occur from market uncertainty and public perception of the perceived impacts of the critical habitat designation on property values. We also believe that this short-term effect on property values would diminish over time. We did not find supporting evidence during the preparation of the economic analysis to estimate or document this potential short-term effect on property values. The economic analysis determined that there will be an insignificant impact to businesses.

Comment 3c: The Service must consider the economic impacts of critical habitat designation on the Encina Power Station located at the mouth of Agua Hedionda Lagoon. The power plant is a must-run facility that provides 25 percent of all power used in San Diego County. The operators of the facility have raised concerns that the designation of critical habitat would result in ecological modifications to the marine environment in order to return the lagoon to the brackish coastal environment preferred by the goby. According to the operators, returning the lagoon to its former condition would threaten the power station's ability to maintain use of its cooling system, which currently relies on water temperature and flow more characteristic of a tidal environment.

Our Response: We believe that the existing characteristics of Agua Hedionda as fully tidal lagoon would not be altered by designation of critical habitat for the goby. As such, designation of critical habitat for Agua Hedionda is not expected to impact the ability of the power station to continue functioning. The Encina Power Station, however, currently operates under numerous Federal permits, including permits relating to air emissions, water discharge, dredging, and oil spill response. The main impact is that critical habitat will need to be considered in consultations on renewals of existing Federal permits or to obtain new permits.

Comment 3d: One commenter voiced concern that the draft economic analysis failed to consider impacts from critical habitat designation in unoccupied units.

Our Response: The draft economic analysis addressed current and future activities in unoccupied units. We have withdrawn the proposed designation of critical habitat for Buena Vista Lagoon (see explanation under response to comment 4b3, below). In most cases, there was no evidence that the proposed activity would involve a Federal nexus. In the absence of a Federal nexus, critical habitat designation would have no impact on the proposed activity. In a few cases, however, a Federal nexus associated with a proposed activity was identified. In such cases, the draft economic analysis addresses the potential delays and administrative costs attributable to new Section 7 consultations. Discussion of these costs can be found on pages 19, 20, 21, 22, and 24 of the report.

Comment 3e: One commenter indicated that the draft economic analysis is flawed because it does not account for the fact that the proposed critical habitat includes “waters of the United States.”

Our Response: The draft economic analysis considered the regulatory program of the U.S. Army Corps of Engineers to authorize the discharge of dredged and fill material into “waters of United States” under the section 404 of the Clean Water Act (see Exhibit ES-1, Summary of Impacts of Under the Proposed Designation of Critical Habitat for the Tidewater Goby in the final economic analysis available from the Carlsbad Fish and Wildlife Office (see ADDRESSES section)).

Comment 3f: Two commenters indicated that the incremental approach used in the draft economic analysis is improper and fails to comply with the requirements set forth in the Act.

Our Response: We do not agree that the economic impacts of the listing should be considered in the economic analysis for the designation of critical habitat. The Act requires that listing decisions be based solely on the best available scientific and commercial data available (section 4(b) of the Act). Congress also made it clear in the Conference Report accompanying the 1982 amendments to the Act that “economic considerations have no relevance to determinations regarding the status of species * * *.” We use the economic analysis to make decisions on excluding areas from critical habitat under section 4(b)(2) of the Act. The section 4(b)(2) exclusion process does not include an economic analysis related to the listing of a species. Our economic analysis evaluates the incremental effect of critical habitat on current or planned activities and practices and does not address effects associated with the listing of the species.

Comment 3g: One commenter stated that the draft economic analysis failed to account for the current housing shortage in California.

Our Response: The final critical habitat designation for the goby includes ten coastal tributaries in Orange and San Diego Counties. As the units are limited to bodies of water and its associated flood plain, the designation of critical habitat for the goby would not reduce the amount of developable land or exacerbate the current housing shortage in the affected counties.

Comment 3h: One commenter indicated that the draft economic analysis failed to address the cumulative impact of multiple critical habitat designations.

Our Response: Under the requirements set forth by the Act, the Service is required to estimate the potential impacts attributable to the proposed government action, in this case the designation of critical habitat for the goby. The Service is not required to evaluate the potential cumulative impacts associated with the listing or critical habitat for multiple species. However, the draft economic analysis of critical habitat for the goby considers the incremental impacts of designating critical habitat in the context of existing baseline regulations. As such, the analysis considers the economic effects of critical habitat designation for the goby in the context of other Federal, state, or local regulations, as well as additional species protected by the Act.

Comment 3i: One commenter stated that the draft economic analysis failed to address the economic impacts associated with modifying Agua Hedionda Lagoon.

Our Response: The designation of critical habitat for the goby will not result in modifications to the current ecological conditions at Agua Hedionda Lagoon. Recent research (Merkle and Associates 1999) indicates that the current ecological conditions at Agua Hedionda are suitable for the goby. As a result, no modifications to the lagoon will occur as a result of designation of critical habitat, and no economic impacts associated with modifications to Agua Hedionda are expected.

Comment 3j: One commenter stated the draft economic analysis failed to assess the economic impacts on private persons and state entities that lack a Federal nexus.

Our Response: The primary effect of a critical habitat designation is regulatory and occurs under section 7 consultation of the Act, when Federal agencies must consult with the Service whenever activities they fund, authorize, or carry out may affected listed species or designated critical habitat. Activities on land owned by individuals, organizations, states, local, and Tribal governments only require consultation with the Service if their actions occur on Federal lands; require a Federal permit, license, or other authorization; or involve Federal funding. If there is no Federal nexus, we do not anticipate that the designation will have a significant economic impact on private persons and state entities. The economic analysis does acknowledge that the designation of critical habitat has the potential to affect private property values (see response to comment 3b).

Comment 3k: One commenter expressed concern that public comments submitted by the North San Diego County Transportation Board (NCTD) on the proposal to designate critical habitat for the goby were not included in the draft economic analysis.

Our Response: Public comments submitted by the North San Diego County Transportation Board (NCTD) in July 2000, were incorporated into the final economic analysis of critical habitat designation for the goby.

Comment 3l: One commenter expressed concern that the draft economic analysis did not address current water quality maintenance activities in Aliso Creek conducted by the County of Orange.

Our Response: A discussion of current and future water quality maintenance activities in Aliso Creek, based on public comments submitted in July 2000, was incorporated into the final economic analysis of critical habitat designation for the goby.

The following comments and responses involve issues related to the inclusion or exclusion of specific areas, or our methods for selecting appropriate areas for designation as critical habitat. We received comments challenging our proposed determination of critical habitat for all the proposed units.

Comment 4a: Several commenters pointed out errors in mileages, locations, or descriptions in the proposed rule.

Our Response: Corrections have been made in the final rule to reflect these comments, where appropriate.

Issue 4b: We received comments for all 11 units proposed for designation asserting that the specified unit(s) was unsuitable for designation, or they recommended the specific unit(s) be excluded from designation.

Our Response: We carefully considered the information provided in the comments regarding requested exclusions and removals. The following is an overview of our rationale for areas retained as well as the rationale for specific units (responses 4b1 through 4b5).

Comment 4b1: Aliso Creek cannot currently support tidewater gobies, and restoration of the lagoon for the species is unrealistic at this time.

Our Response: Many of the ecological characteristics of Aliso Creek lagoon have not changed noticeably since gobies occupied the creek in the late 1970's (Camm Swift, ichthyologist consultant, pers. comm. 2000). The predominant substrate is sand. Small patches of aquatic vegetation typical of a coastal marsh ( Typha , Scirpus , Salicornia , and Distichlis ) grow around the margin of the lagoon. The system still forms a brackish water lagoon in the spring, which is usually opened to the ocean later in the year by winter flows. The water quality of the lagoon in the 1970's was such that warning signs were posted to keep beach visitors out of the lagoon's waters. This, too, has not changed. Although the watershed has become more urbanized over the past 2 decades, there has not been a noticeable change in the lagoon since it was formerly occupied by the species.

Currently, the local agency stakeholders are working with the U.S. Army Corps of Engineers to develop an Aliso Creek Watershed Management Plan with the central goal of restoring the watershed. We believe that because the lagoon has not changed noticeably since the 1970's, and because there is now a concerted effort by the community to restore the watershed upon which the lagoon depends, Aliso Creek represents one of the most promising prospects for reestablishing a goby population. As such, Aliso Creek and its lagoon are essential to the conservation of the species and are therefore designated as critical habitat.

Comment 4b2: The Service should not designate any areas on Camp Pendleton because populations on the base have remained relatively stable, and all threats to tidewater goby populations are addressed by the existing biological opinions, management programs, and within the ongoing NEPA-compliance program of the base.

Our Response: Currently, tidewater gobies occupy eight locations on Camp Pendleton. These include, from north to south, San Mateo Creek, San Onofre Creek, Las Flores Creek, Hidden Creek, Aliso Creek, French Creek, Cockleburr Creek, and the Santa Margarita River. All eight localities are relatively pristine coastal wetlands and are all crossed or just downstream of Interstate 5 and the coastal railway.

Although currently there are eight locations on Camp Pendleton occupied by the species, this situation is rare and has not previously been recorded. As recently as 1991 the number of occupied goby localities was only three (Swift and Holland 1998, Dan Holland in litt. 1999). Of the eight currently occupied areas, only one of these, Las Flores Creek, has remained continuously occupied since 1987. San Mateo Creek and San Onofre Creek have both been extirpated in recent years as a result of human-caused habitat alteration. Hidden Creek appears to be perennial but may become so hypersaline in a severe drought as to be unsuitable for any fish species (Swift and Holland 1998). Aliso Creek, French Creek, and Cockleburr Creek are all relatively ephemeral and have not supported gobies in times of drought. The Santa Margarita River seemed to be a large stable population until 1991, but gobies disappeared in 1991, shortly after the exotic yellowfin goby ( Acanthogobius flavimanus ) became abundant in the estuary.

In the proposed rule, we stated that all eight historic and currently occupied tidewater goby locations in southern California contained the primary constituent elements necessary to support gobies. This has been substantiated by the fact that all eight locations are now occupied. We believe that these localities represent the center of the metapopulation in Orange and San Diego Counties and will be the keystone for recovery of the species. As such, these areas are essential to the conservation of the species.

Pursuant to the definition of critical habitat, an area must also require “special management considerations or protections.” This is a term that originates in the definition of critical habitat in section 3 of the Act. Adequate special management or protection is provided by a legally operative plan that addresses the maintenance and improvement of the essential elements and manages for the long-term conservation of the species. The Service considers a plan adequate when it meets all of the following three criteria: (1) The plan provides a conservation benefit to the species (i.e., the plan must maintain or provide for an increase in the species' population or the enhancement or restoration of its habitat within the area covered by the plan); (2) the plan provides assurances that the management plan will be implemented (i.e., those responsible for implementing the plan are capable of accomplishing the objectives, have an implementation schedule and/or have adequate funding for the management plan); and (3) the plan provides assurances the conservation plan will be effective (i.e., it identifies biological goals, has provisions for reporting progress, and is of a duration sufficient to implement the plan and achieves the plan's goals and objectives). If an area is covered by a plan that meets these criteria, it does not constitute critical habitat as defined by the Act.

In 1995, the Service issued a programmatic biological opinion on the “Programmatic Activities and Conservation Plans in Riparian and Estuarine/Beach Ecosystems on Marine Corps Base, Camp Pendleton,” including an Estuarine/Beach Ecosystems Conservation Plan (Biological Opinion 1-6-95-F 02, 1995). The reasonable and prudent measures of the biological opinion require the Marines to adopt and implement the Estuarine/Beach Ecosystem Conservation Plan.

The Estuarine/Beach Ecosystem Conservation Plan is structured to minimize the effects to listed species resulting from programmatic impacts associated with ongoing and future training, maintenance, recreation, and construction activities. Because the terms and conditions are mandatory, there are assurances that Conservation Plan will be implemented, and the Marines have the authority to carry out the measures in the plan. Therefore, our second special management criterion is also met. However, because the conservation plan outlines broad goals for benefiting tidewater gobies without clearly identifying specific conservation efforts, its effectiveness is not assured. The Estuarine/Beach Ecosystem Conservation Plan does not contain specific biological objectives for the tidewater goby. The Conservation Plan focuses primarily on avian species. It does not identify specific measures or targets to achieve an increase in the tidewater goby population size. Also, because the plan is general in nature, it does not outline parameters that can be used to measure achievement of objectives or standards by which to measure them. Population surveys and monitoring requirements are identified in the Conservation Plan, but have not been met as defined in the plan. The Service is unable to determine that the Estuarine/Beach Ecosystem Conservation Plan will be effective, and consequently, it is not adequate to preclude the need to designate critical habitat.

Comment 4b3: Buena Vista lagoon is currently unsuitable for supporting a population of tidewater gobies. The designation of Buena Vista Lagoon as critical habitat for the tidewater goby is premature at best and could actually preclude the modifications needed to create such habitat.

Our Response: Buena Vista Lagoon, a California Department of Fish and Game Ecological Reserve, is currently predominated by freshwater marsh conditions, and is closed to the Pacific Ocean by a concrete weir. This configuration, as well as the Pacific Coast Highway, the coastal railway, and Interstate 5 bridges, which are all predominantly dirt fill structures, constrict the lagoon such that sediment can no longer be moved through the system. The lagoon has been gradually filling with sediment and, without modifications to the system, the lagoon will conceivably fill entirely, transforming the lagoon into a mud flat. This situation has become apparent to the California Department of Fish and Game (CDFG), the Buena Vista Lagoon Foundation, and residents of the local communities in Carlsbad and Oceanside (Tim Dillingham CDFG pers. comm. 1999, Ron Wooton, Buena Vista Lagoon Foundation, pers. comm 1999).

In its current configuration, Buena Vista Lagoon is essentially a freshwater lake with a fish fauna that consists entirely of non-native freshwater fishes. Some of these, such as largemouth bass ( Lepomis macrochirus ), have been implicated in the decline of tidewater gobies (Swift et al . 1997). However, if the lagoon were once again open to the Pacific Ocean, the habitat could support tidewater gobies. Opening the lagoon to tidal flushing would also provide an outlet to move sediment through the system, which would prevent the lagoon from becoming a mud flat, and provide some sediment to the ocean to help build local beaches. We believe that simply removing the weir structure at the mouth of the lagoon and replacing it with a structure that would permit tidal flow would be enough to restore some goby habitat to the lagoon.

The Buena Vista Lagoon Foundation is a non-profit private corporation dedicated to the protection and maintenance of Buena Vista Lagoon. The Foundation has a memorandum of understanding with the CDFG authorizing it to prepare an Ecological Reserve Land Management Plan (ERLMP) on behalf of the department. Among the proposals being considered is the potential for establishing a tidal flushing system which would open the lagoon to the Pacific Ocean. We feel that Buena Vista Lagoon could provide essential habitat for the tidewater goby and that the current direction of the ERLMP toward a more tidal system at Buena Vista Lagoon will accommodate the creation of tidewater goby habitat. However, while we believe Buena Vista Lagoon could be restored to provide tidewater goby habitat, we do not have information demonstrating such restoration is essential to the conservation of the species. Therefore, we are removing it from the designation.

Comment 4b4: Agua Hedionda Lagoon is unsuitable for tidewater gobies and so should not be designated as critical habitat.

Our Response: We received a number of comments questioning the feasability of Agua Hedionda Lagoon to support tidewater gobies. These commenters claimed that the habitat in Agua Hedionda Lagoon had been so altered since 1940, the last year in which gobies were collected from the lagoon, that the lagoon could not only not support tidewater gobies, but that the possibility of restoration of the lagoon for the species was not feasible. Many of these comments were grounded in the misconception that the lagoon would have to be restored to pre-1940 conditions to support the species. These commenters were concerned that critical habitat would trigger widespread lagoon alterations to restore habitat and thereby eliminate the many and varied uses of this tidal lagoon. Also, the commenters were concerned that alterations necessary to make suitable habitat for gobies would reduce the habitat suitability for other sensitive species that currently occupy the lagoon. We believe areas within the lagoon could support gobies now, without any restoration effort, and without any extensive changes to the current configuration or uses of the lagoon. We address habitat suitability within the lagoon here, and will deal with the effects of the designation on Agua Hedionda Lagoon and the various uses within it in the succeeding comment.

The comments we received generally cited four habitat elements within the lagoon as being unsuitable for gobies: water quality, salinity, sediment, and the presence of predatory species. The most recent survey effort of fishes and sediments was conducted by Merkel and Associates (1999) on September 23, 1999. The water quality, salinity, sediment, and fish species composition results of this survey indicated to us that not only are there areas within the lagoon that could support the tidewater goby, but that the lagoon will probably not require any restoration to do so (Merkel and Associates 1999).

Merkel and Associates (1999) reported that salinity measurements of the areas of the eastern lagoon ranged from 5 to 48 ppt with an average of about 26.5 ppt. The tidewater goby is often found in waters of relatively low salinities (around 10 ppt) in the uppermost brackish zone of larger estuaries and coastal lagoons, but can tolerate a wide range of salinities, and has been collected at salinities as high as 42 ppt (Swift et al. 1989, 1997; Worcester 1992, Worcester and Lea 1996; Swenson 1995). A recent survey of French Creek Lagoon in June of 2000 found thousands of tidewater gobies of all life stages. Salinity in French Creek Lagoon during this survey ranged from 45-51 ppt and temperatures ranged from 31-32 °C (Service field data 2000). Merkel and Associates (1999) also reported that water temperatures within the lagoon were 21-22 °C and depth ranged from 0.1 to 1.0 m. Tidewater gobies are usually collected in water less than 1 m (3 ft) deep, and in temperatures typically between 9-25 °C (Swift et. al . 1989; Wang 1982; Irvin and Soltz 1984; Worcester 1992; Swenson 1995). Thus, depth and temperature are also within the range usually occupied by gobies. Given what we know of the water quality tolerances and preferences of this species for salinity, temperature, and depth, the conditions in the eastern end of Agua Hedionda Lagoon appear suitable to support gobies.

Merkel and Associates (1999) found that sediments in the east end of Agua Hedionda Lagoon ranged from fine sand to silt/clay. Although there are no comprehensive studies comparing the sediment composition of tidewater goby habitats in different localities, there appears to be preference of gobies for coarser sand substrates, especially for breeding (Swift et al . 1989, Worcester 1992, Swenson 1995). However, muddy, marshy conditions are a typical feature in tidewater goby habitats, and have been shown to be occupied by gobies in San Antonio Creek, the Santa Ynez River, Aliso Creek (Orange County), San Mateo Creek, San Onofre Creek, Las Flores Creek, French Creek, Aliso Creek (San Diego County) and the Santa Margarita River (Swift et al . 1989, Holland 1992, Swift et. al . 1994, Swift et al. 1997, Swift and Holland 1998, Service field data 2000). Swenson (1995) found that in San Gregorio and Pescadero Creek, tidewater gobies inhabited a variety of habitats, including (1) sandy lagoons, (2) mud or gravel-bottomed reaches of creeks, and (3) muddy marsh pools. Swenson (1995) also found that tidewater gobies of all life stages were collected in all three of these habitat types, suggesting that tidewater gobies can complete their life cycle in any one of the three. Worcester (1992) found that although tidewater gobies were significantly associated with coarse sand and fine gravel substrates, their distribution was significantly associated with a number of other physical habitat parameters, so it was unclear how important substrate was in determining their presence. Page (Carl Page pers. com. 2000) has found that tidewater gobies are actually most strongly associated with food abundance in Lake Earl, Del Norte County, and showed little preference for substrate. Furthermore, Page found that tidewater gobies commonly utilized silt dominated muddy habitats, built breeding burrows and spawned in these muddy habitats, and that their post planktonic larvae utilized muddy silt dominated habitats exclusively, presumably due to food availability. Based on this information, we conclude that substrates in Agua Hedionda Lagoon would not preclude the occurrence of tidewater gobies, and that they could occupy these areas.

Merkel and Associates (1999) found that the shoreline was steep sided at the east end of Agua Hedionda Lagoon, and stated this feature may make the lagoon unsuitable for tidewater gobies. In fact, tidewater gobies occupy a number of lagoon and estuarine habitats that are more steeply sided than Agua Hedionda Lagoon. An example of such a lagoon is Hidden Creek, San Diego County. This lagoon consists of what can only be described as a slot canyon with vertical walls extending from the bottom of the lagoon to as much as 10 m above the water's surface. Other occupied lagoons at Aliso Creek (San Diego County), Cockleburr Creek, Shuman Lagoon, and the Santa Ynez River all have steep sides as a prominent habitat feature (Swift et al . 1997, Swift and Holland 1998). Therefore, the shoreline configuration at Agua Hedionda appears suitable for tidewater gobies.

Another contention of some commenters as to the suitability of Agua Hedionda for tidewater gobies was that occurrence of native and non-native competitors and predators in the lagoon would preclude the possibility of occupation by tidewater gobies. Merkle and Associates (1999) found the following fish species at Agua Hedionda in September 1999: California killifish ( Fundulis parvipinnis ), topsmelt ( Atherinops affinis ), deepbody anchovy ( Anchoa compressa ), arrow goby ( Clevelandia ios ), mosquitofish ( Gambusia affinis ), striped mullet ( Mugil cephalous ), and California butterfly ray ( Gymnura marmorata ). With the exception of the California butterfly ray, these are all species that the tidewater goby currently co-occurs with in other lagoons in San Diego County (Swift and Holland 1998). Fish surveys of the inner lagoon in 1994 and 1995 (Marine Environmental Consultants in litt. 1997) found 23 species, all native, and most, species that the tidewater goby co-occurs with, with the exception of the yellowfin goby ( Acanthogobius flavimanus ). Yellow fin gobies are a non-native species thought to compete and predate on tidewater gobies (Wang 1984, Swift and Holland 1998). Yellowfin gobies were not present in the most recent survey (Merkel and Associates 1999). We conclude that the fish fauna of Agua Hedionda Lagoon is suitable for tidewater gobies, and, in fact, is representative of faunas gobies co-occur with in other coastal lagoons.

Jenkins and Wasyl (1999) analyzed tidewater goby migration based on the coastal currents in the vicinity of Agua Hedionda Lagoon. The authors were addressing the effects of existing offshore current patterns on the success of tidewater goby dispersal to adjacent lagoon habitats. The authors found that 55-60 percent of nearshore currents at Agua Hedionda had a net southward transport, and 40-45 percent of nearshore currents had a net northward transport. The authors also estimated that the probability that northward nearshore currents would transport gobies to Buena Vista Lagoon to the north was about 0.4 percent. They did not estimate the probability of gobies being transported to Batiquitos Lagoon to the south. While this report examined an interesting line of research, two recently published studies documented the dispersal of tidewater gobies among coastal lagoons (Lafferty et al . 1999a, 1999b).

Comment 4b5: We received a number of comments concerning the potential changes or alterations to Agua Hedionda Lagoon resulting from a critical habitat designation. Many of these commenters believed that critical habitat designation would result in widespread changes to the existing configuration of the lagoon and the corresponding affects to current uses of the lagoon.

Our Response: Agua Hedionda Lagoon is dredged to retain tidal influence within the lagoon which provides for a deep tidal bay type of habitat. This configuration also accommodates a number of recreational and other uses, including motorboating, water skiing, and a commercial shellfish farm. Although this differs markedly from the historic conditions within the lagoon, we feel that there are still areas within the lagoon which provide potential habitat for tidewater gobies. We believe that the current configuration of the lagoon could support the species as well as the existing uses within the lagoon.

Comment 5: San Juan Creek and the San Luis Rey River should be included as critical habitat.

Our Response: We received several comments proposing that San Juan Creek and the San Luis Rey River should be designated as critical habitat. Recent investigations at San Juan Creek and the San Luis Rey River have provided some data as to the suitability of these habitats to support tidewater gobies (Michael Brandman and Assoc. 1998, Dan Holland pers. comm. 2000). These data indicate that if efforts were undertaken to restore tidewater goby habitat to these systems, they may support the species. San Juan Creek and the San Luis Rey River may be important in the species recovery and their potential value will be assessed in the recovery plan for the species. However, while San Juan Creek and the San Luis Rey River may be restored to provide suitable habitat for tidewater gobies, we do not have information demonstrating these areas are essential to the conservation of the species; therefore, these areas do not meet the definition of critical habitat.

We changed the rule to better define the lateral extent of critical habitat in response to a comment that the 50-year flood plain is undelineated or in dispute in many areas and is not useful in defining the lateral extent of critical habitat for the goby. In this final rule we have defined the lateral extent of critical habitat as the 50-year flood plain or the stream channels, estuaries, and other areas within these reaches potentially inundated by high flow events. The lateral extent of high flow events, and critical habitat, can be determined by the presence of alluvial soils (soils deposited by streams), obligate and facultative riparian vegetation (requiring and usually occurring in wetlands respectively), abandoned river channels, or known high water marks. This constitutes the present aquatic and riparian zones of the rivers, streams, and their associated estuaries designated as critical habitat. Existing human-constructed features and structures within this area, such as buildings, roads, railroads, and other features, do not contain, and do not have the potential to develop, those habitat components. It should be noted that this change does not increase the amount of critical habitat designated, but rather is a less ambiguous method of defining the same critical habitat boundaries.

We have also excluded Buena Vista Lagoon. We note that tidewater goby habitat could be created at Buena Vista Lagoon. Restoring tidal flow by removing the existing weir structure currently blocking the mouth of the lagoon would probably create some habitat for the species (see comment 4b3 in the “Summary of Comments and Recommendations” section above). However, as we do not have information demonstrating that restoration of Buena Vista Lagoon is essential for the conservation of the tidewater goby, we have not included the area in this final designation.

Additionally, we have changed the maps to better reflect the lateral extent of areas within these stream reaches that constitute critical habitat. The maps are a graphical representation only and do not constitute the definition of the critical habitat units. The maps are provided for reference purposes only, to guide Federal agencies and other interested parties in locating the general boundaries of the critical habitat unit (50 CFR 17.94(b)).

Section 4(b)(2) of the Act requires us to designate critical habitat on the basis of the best scientific and commercial information available and to consider the economic and other relevant impacts of designating a particular area as critical habitat. We completed a draft economic analysis and made it available to the public for comment (65 FR 39850). We also completed a final economic analysis that incorporated public comment, information gathered since the draft analysis, and changes to the critical habitat designation. The analysis found that there would be an economic impact from the designation that would vary on a situational level, and that most of the impact would come in the form of new section 7 consultations in unoccupied habitat units. We have determined that these economic impacts are minimal and do not warrant excluding any areas from the designation. The final economic analysis is available to the public at the Carlsbad Fish and Wildlife Office (see ADDRESSES section).

This document has been reviewed by the Office of Management and Budget (OMB), in accordance with Executive Order 12866. OMB makes the final determination under Executive Order 12866.

(a) This rule will not have an annual economic effect of $100 million or adversely affect an economic sector, productivity, jobs, the environment, or other units of government. A cost-benefit and economic analysis is not required. The tidewater goby was listed as an endangered species in 1994.

Under the Act, critical habitat may not be adversely modified by a Federal agency action; it does not impose any restrictions on non-Federal persons unless they are conducting activities funded or otherwise sponsored or permitted by a Federal agency (see Table 1 below). Section 7 requires Federal agencies to ensure that they do not jeopardize the continued existence of the species. Based upon our experience with the species and its needs, we conclude that any Federal action or authorized action that could potentially cause adverse modification of designated critical habitat would currently be considered as “jeopardy” under the Act. Accordingly, the designation of areas within the geographic range occupied by the tidewater goby does not have any incremental impacts on what actions may or may not be conducted by Federal agencies or non-Federal persons that receive Federal authorization or funding. The designation of areas outside the geographic range occupied by the species may have incremental impacts on what activities may or may not be conducted by Federal agencies or non-Federal persons that receive Federal authorization or funding. However, our analysis did not identify any significant incremental effects. Non-Federal persons that do not have a Federal “sponsorship” of their actions are not restricted by the designation of critical habitat, although they continue to be bound by the provisions of the Act concerning “take” of the species.

(b) This rule will not create inconsistencies with other agencies' actions. As discussed above, Federal agencies have been required to ensure that their actions do not jeopardize the continued existence of the tidewater goby since the listing in 1994. The prohibition against adverse modification of critical habitat is not expected to have a significant economic impact. Because of the potential for impacts on other Federal agency activities, we will continue to review this action for any inconsistencies with other Federal agency actions.

(c) This rule will not materially affect entitlements, grants, user fees, loan programs, or the rights and obligations of their recipients. Federal agencies are currently required to ensure that their activities do not jeopardize the continued existence of the species, and as discussed above we do not anticipate that the adverse modification prohibition (resulting from critical habitat designation) will have any significant incremental effects.

(d) This rule will not raise novel legal or policy issues. This final determination follows the requirements for determining critical habitat contained in the Endangered Species Act.

In the economic analysis, we determined that designation of critical habitat will not have a significant effect on a substantial number of small entities. As discussed under Regulatory Planning and Review above and in this final determination, this designation of critical habitat for the tidewater goby is not expected to have a significant economic impact. We have designated property owned by Federal, State and local governments, and private property.

Within these areas, the types of Federal actions or authorized activities that we have identified as potential concerns are:

(1) Regulation of activities affecting waters of the U. S. under section 404 of the Clean Water Act;

(2) Regulation of water flows, damming, diversion, and channelization by Federal agencies;

(3) Road construction, right of way designation, or regulation of agricultural activities by Federal agencies;

(4) Some military activities on the Camp Pendleton;

(5) Hazard mitigation and post-disaster repairs funded by the Federal Emergency Management Agency;

(6) Construction of communication sites licensed by the Federal Communications Commission; and

(7) Activities funded or authorized by Federal agencies.

Some of these activities sponsored by Federal agencies within critical habitat areas are carried out by small entities (as defined by the Regulatory Flexibility Act) through contract, grant, permit, or other Federal authorization. As discussed in section 1 above, these actions are largely required to comply with the listing protections of the Act, and the designation of critical habitat is not anticipated to have significant additional effects on these activities.

For actions on non-Federal property that do not have a Federal connection (such as funding or authorization), the current restrictions concerning take of the species remain in effect, and this final determination will have no additional restrictions.

In the economic analysis, we determined whether designation of critical habitat would cause (a) any effect on the economy of $100 million or more, (b) any increases in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions in the economic analysis, or (c) any significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S. based enterprises to compete with foreign-based enterprises. Refer to the final economic analysis for a discussion of the effects of this determination.

In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq. ):

(a) This rule will not “significantly or uniquely” affect small governments. A Small Government Agency Plan is not required. Small governments will only be affected to the extent that any Federal funds, permits, or other authorized activities must ensure that their actions will not adversely affect the critical habitat. However, as discussed in section 1, these actions are currently subject to equivalent restrictions through the listing protections of the species, and no further restrictions are anticipated.

(b) This rule will not produce a Federal mandate of $100 million or greater in any year, that is, it is not a “significant regulatory action” under the Unfunded Mandates Reform Act. The designation of critical habitat imposes no obligations on State or local governments.

In accordance with Executive Order 12630, this rule does not have significant takings implications, and a takings implication assessment is not required. This designation will not “take” private property and will not alter the value of private property.

In accordance with Executive Order 13132, the rule does not have significant Federalism effects. A Federalism assessment is not required. This designation of critical habitat imposes no additional restrictions to those currently in place, and therefore has little incremental impact on State and local governments and their activities. The designation may have some benefit to these governments in that the areas essential to the conservation of the species are more clearly defined, and the primary constituent elements of the habitat necessary to the survival of the species are specifically identified. While this definition and identification does not alter where and what federally sponsored activities may occur, it may assist these local governments in long- range planning (rather than waiting for case-by-case section 7 consultations to occur).

In accordance with Executive Order 12988, the Department of the Interior's Office of the Solicitor has determined that this rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order. We have made every effort to ensure that this final determination contains no drafting errors, provides clear standards, simplifies procedures, reduces burden, and is clearly written such that litigation risk is minimized.

This rule does not contain any information collection requirements for which Office of Management and Budget approval under the Paperwork Reduction Act is required.

We have determined that an Environmental Assessment and/or an Environmental Impact Statement as defined by the National Environmental Policy Act of 1969 need not be prepared in connection with regulations adopted pursuant to section 4(a) of the Act as amended. A notice outlining our reason for this determination was published in the Federal Register on October 25, 1983 (48 FR 49244). This final determination does not constitute a major Federal action significantly affecting the quality of the human environment.

In accordance with the President's memorandum of April 29, 1994, “Government-to-Government Relations with Native American Tribal Governments” (59 FR 22951) and 512 DM 2, we readily acknowledge our responsibility to communicate meaningfully with recognized Federal Tribes on a government-to-government basis. We have determined that there are no Tribal lands that are essential for the conservation of the tidewater goby because they do not support populations or suitable habitat. Therefore, we are not designating critical habitat for the tidewater goby on Tribal lands.

A complete list of all references cited in this final rule is available upon request from the Carlsbad Fish and Wildlife Office (see ADDRESSES section).

Author. The primary author of this final rule is the Carlsbad Fish and Wildlife Office (see ADDRESSES section).