On June 9, 2000 (65 FR 36647), the NRC published a notice of receipt of a petition for rulemaking filed by the Nuclear Energy Institute (NEI) on April 19, 2000. The petitioner supplemented the petition in an August 23, 2000 letter. The petition requests that the NRC amend its regulations at 10 CFR Part 72 governing the issuance of Certificates of Compliance (CoCs) for cask designs for dry cask storage of spent nuclear fuel for use under a general license. The petition proposes to eliminate rulemaking as the method for issuing and amending CoCs. Thus, the primary aim of the petition is to remove § 72.214, which lists approved cask designs. Under the petitioner's proposal, the NRC would continue to approve cask designs after a safety review but would issue and amend CoCs by order rather than by rulemaking.

The petitioner proposes an alternative process for providing an opportunity for public input on CoC and CoC amendment approvals. With respect to applications for a CoC for a new cask design, the NRC would publish in the Federal Register a notice of receipt and availability of the application. The NRC would then prepare a draft CoC and a draft Safety Evaluation Report (SER) and would notice the availability of these documents in the Federal Register for a 60-day comment period. The NRC would evaluate the public comments and publish a response in the Federal Register , together with an order granting the CoC.

Amendments to CoCs would be processed in the same manner as new CoCs except with respect to amendments where the applicant asserted that the amendment “did not have the potential to have a significant impact on public health and safety.” As part of the regulatory changes proposed in the petition, the NRC would amend § 72.238 to include criteria for determining whether this “no significant impact” standard is met in any given case. If the NRC staff agreed with the assertion of no significant impact considerations, a notice of availability of the order granting the amendment and the associated SER would be published in the Federal Register . A post-effectiveness comment period on the amendment and the no significant impact considerations determination would be provided. If the NRC staff determined that the amendment posed a potential significant impact, the draft CoC and SER would be published in the Federal Register for a 60-day comment period and the amendment would not become effective until the NRC had published a response to the comments and an order granting the amendment. The petitioner submitted examples of amendments likely to involve, and not involve, significant impact considerations that it proposed for inclusion in a regulatory guidance document. Thus, the main focus of the NEI petition is to abbreviate the CoC amendment approval process by allowing amendments which do not involve significant impact considerations to become effective upon completion of the NRC staff's safety review and prior to the receipt of any public comments.

In NEI's view, NRC's existing process for issuing and amending CoCs takes too long to complete. NEI believes that the length of the process may create a substantial impediment to the increased future deployment of dry spent fuel storage by reactor licensees and/or to the reactor decommissioning process. In particular, the petitioner believes that NRC is in need of a regulatory process capable of dealing with a potentially large number of amendments on a more timely basis. The petitioner states that, as of the date of the petition, the rulemaking process to amend cask CoCs has taken about 24 months to complete. Use of notice and comment rulemaking procedures, as the petitioner sees it, unnecessarily expends resources on what petitioner views as a ministerial task—maintaining a list of certified casks. Replacing the present process with a simplified, streamlined procedure will have the additional benefit, NEI believes, of making the process for approving spent fuel storage casks similar to the process for approving spent fuel transportation casks.

The petitioner believes that its suggested alternative process is consistent with legal requirements. NEI takes the position that the notice and comment rulemaking used by the NRC to issue CoCs and CoC amendments is a discretionary choice of the Commission which may have been appropriate when the scope of safety issues associated with the issuance and amendment of CoCs was unknown, but is no longer necessary following more than a decade of experience with these rulemakings. Nor is a license proceeding of any kind needed for the approval of a CoC or CoC amendment, in the petitioner's view, because “a CoC has been recognized legally as something less than a license.” The petitioner bases this position on the court's statement in Kelley v. Selin, 42 F.3d 1501, 1518 (6th Cir. 1995), cert. denied, 515 U.S. 1159 (1995), that “certification of designs is not identical to the grant of a general license. Certification is a narrower procedure that approves designs in theory while the grant of a license is a broader form of permission.” Thus, the petitioner believes that the alternative approval process suggested in the petition would not be subject to Section 189a of the Atomic Energy Act of 1954, as amended (AEA), and would not result in opportunities for adjudicatory hearings. Because there is no legal requirement, in the petitioner's view, to use either rulemakings or adjudicatory hearings for the approval of CoCs or CoC amendments, the petitioner asserts that the NRC is free to adopt whatever approval procedures it believes are adequate for public consideration of the type of safety issues likely to arise in these proceedings.

The petitioner also believes that its proposal meets the NRC's four performance goals:

(1) Maintain safety, protect the environment and the common defense and security; (2) increase public confidence; (3) make NRC activities and decisions more effective, efficient, and realistic; and (4) reduce unnecessary regulatory burden. With respect to the first goal, the petitioner points out that its proposal will have no effect on the substantive safety standards which the CoC applicant must meet nor on NRC's safety and environmental review of an application. Further, orders are as fully enforceable as rules, so there will be no diminution of NRC's enforcement authority. With respect to the public confidence goal, the petitioner believes that public confidence will be maintained because the public will still be able to participate in a meaningful way by providing comments on all new CoCs and all amendments. The only change will be that prior comment on amendments will be appropriately reserved for those CoC amendments that have the potential for a significant safety impact. The goal of making NRC regulatory decisions more efficient will be obtained by elimination of the delay and expenditure of resources involved in notice and comment rulemaking. Finally, the goal of burden reduction will be achieved because the burdensome aspects of rulemaking would be eliminated and amendment requests which do not present significant impacts would be subject to a suitably streamlined review and approval process.

The notice of receipt of the petition for rulemaking invited interested persons to submit comments. The comment period closed on August 23, 2000. NRC received 24 comment letters from industry, an individual, and a State government agency. All industry commenters supported the petition; the State supported the petition with reservations; and the individual opposed the petition. The NRC reviewed and considered all the comments in developing its decision on this petition.

The commenters supporting the petition did so for the same reasons as those expressed by the petitioner, primarily because the present process involving notice and comment rulemaking takes too long and involves an unnecessary expenditure of resources. One commenter observed that elimination of rulemaking would avoid the need for general licensees to seek exemptions to enable them to use a particular cask design before completion of the rulemaking process. These commenters also supported NEI's proposed alternative process. One commenter cautioned that any change to the current rulemaking process should ensure that the finality and standing of current and future CoCs as adjudicated in Kelley v. Selin be preserved. The State commenter emphasized that any criteria used to determine the significance of an amendment should be in the rule and not in a separate guidance document. Several commenters encouraged the adoption of standard technical specifications and stated that this would reduce the number of amendment requests.

One commenter opposed the petition. This commenter expressed concern that the effect of the alternative proposal would be to reduce public input and that many documents would no longer be publicly available. The commenter felt that any burden imposed by the present process was basically the fault of the industry; that if the vendors “did their homework” and got the proposed cask design complete before submitting it to the NRC, amendments would not be necessary. The commenter stated that the cask designs were supposed to be generic to avoid the need for site-specific approvals, yet amendments are regularly needed to accommodate minor differences in cask content unique to particular plants. The commenter objected to NRC being able to decide, prior to any public notice, whether an amendment has any significant impact or not, noting that this deprives the agency of any public insight on health and safety issues before the amendment becomes immediately effective. This commenter also believes that the present rulemaking process is not a matter of agency discretion but rather is imposed by Section 133 of the Nuclear Waste Policy Act of 1982.

The Commission is denying the petition for rulemaking because (1) improvements in the approval process have already significantly decreased the length of time for approval of CoC amendments, making regulatory change unnecessary; (2) the petitioner's approval process may require the offer of an opportunity for a hearing, which could eliminate any efficiency obtained by generic consideration of cask design issues; and (3) the Commission's performance goals would be better served by retaining the present process than by adopting the process suggested by petitioner.

1. The length of the rulemaking process for CoC amendments has been significantly shortened since submission of the petition, obviating any need for a regulatory change.

The petitioner's primary reason for requesting an amendment of Part 72 to delete the use of notice and comment rulemaking for initial and amended CoCs is the assertion that this process is too lengthy and may interfere with efficient, expeditious use of dry cask storage. The petitioner's proposed process for approving initial cask designs—which includes public notice of the availability of the draft SER and environmental assessment (EA) for a 60-day comment period, and effectiveness of the CoC only after NRC has responded to any comments—is little different from the present process and would not produce any significant time savings. Under the petitioner's proposed process for amending CoCs, however, when the NRC agreed with an applicant's proposed finding of no significant impact, the amendment would become effective upon completion of the NRC staff's safety evaluation of the amendment. This would eliminate the time needed for the current CoC amendment rulemaking process.

At the time the petitioner submitted its petition, the petitioner stated that the rulemaking process to amend cask CoCs took about 24 months to complete. The Commission agrees that this is an excessive amount of time for very simple amendment rulemaking. However, the Commission now uses the direct final rule process for CoC amendments. In this process, the rule automatically becomes effective 75 days after its publication in the Federal Register unless a significant adverse comment is received within 30 days of publication. If such a comment is received, it is treated as a comment on a companion proposed rule published at the same time as the direct final rule. The NRC withdraws the direct final rule and subsequently issues a final rule responding to the comment. The NRC has now published 9 direct final rules for CoC amendments, only one of which has been withdrawn. NRC's current experience is that the rulemaking process for CoC amendments takes between 4 and 6 months rather than the 24 months which is the premise of the petition. We do not believe the current amount of time devoted to CoC amendments is inordinate given the advantages, discussed below, of using the present process.

2. Although NRC agrees with petitioner that the use of rulemaking to approve cask designs is discretionary, we are not convinced that, in the absence of rulemaking, NRC should approve CoCs for casks without an opportunity for an adjudicatory hearing.

The petitioner's suggested alternative process for the approval of cask designs and their amendment rests on two legal assumptions: (1) That the Commission has the discretion to eliminate rulemaking from the approval process; and (2) that if the Commission does eliminate rulemaking from this process it will not be necessary to provide an adjudicatory hearing in its place. As explained below, the Commission agrees with the first assumption but has reservations about the second.

In 1990, the Commission amended Part 72 to provide, in new Subpart K, a general license to enable Part 50 reactor licensees to store spent fuel in an on-site independent spent fuel storage installation (ISFSI) without the need for a site-specific NRC approval, provided storage is in casks approved by the NRC and that certain other conditions are met. (55 FR 29181; July 18, 1990.) The same rulemaking added subpart L, in which the Commission established a cask approval program. Under this regulatory regime, a CoC is issued on a finding that the applicant has satisfied NRC requirements (10 CFR 72.236; 72.238), but before the certified cask design can be used under the general license, the cask design must be added to the list of approved designs in 10 CFR 72.214 via a rulemaking.

This regulatory scheme was intended to implement two statutory provisions of the Nuclear Waste Policy Act of 1982, Sections 218(a) and 133. Section 218(a), in part, provides:

Section 133, in part, provides:

In its 1990 rulemaking, the Commission stated that the storage technology it was approving was storage of spent fuel in dry casks (55 FR 29182; July 18, 1990). Thus, the Commission saw its statutory duty under Section 218(a) as being fulfilled by its approval of a particular class of dry storage technology rather than by its approval of particular cask designs which were all of the same class. The Commission's statutory duty under Section 133 was fulfilled by the process it established to provide for the use of the approved technology under a general license.

The NRC agrees with petitioner that the Commission's choice to use rulemaking to list approved cask designs was a discretionary choice not mandated by statute. What must be kept in mind, however, is the process that the regulatory scheme, adopted in 1990, replaced. Before cask designs were approved by generic rulemaking for use by a general licensee, the only process available to approve the ISFSI and the cask design was the site-specific licensing proceeding, which included the opportunity for a hearing. In these site-specific proceedings, NRC approval was granted only to one licensee to use a particular cask design. If other licensees wanted to use the same design, a separate approval was needed and a separate opportunity for a hearing was provided. 1 Thus, the regulatory regime put in place in 1990 was designed to encourage and to expedite the use of dry cask storage technology because it meant that a cask design would only need to be approved once, and then it would be available to any general licensee who wished to use it and who could meet the conditions of the CoC without the need for any further site-specific approval. The new cask approval process was more efficient than the one it replaced, but its success depended upon the approval and manufacture of cask designs which could be used by a large number of reactor licensees. Instead, cask vendors have optimized cask designs for particular licensees, resulting in a need for amendment of the designs to make them more widely usable. Even with the additional time needed to amend cask designs, we believe the current process is more efficient and less time-consuming than the one it replaced.

The second assumption on which the petition is based is the expectation that it would not be necessary to provide an opportunity for an adjudicatory hearing in the proposed alternative approval process. Section 189a(1)(A) of the AEA provides, in relevant part:

At present, any obligation the NRC may have under Section 189a of the AEA to provide an opportunity for a hearing on a cask approval is satisfied by the rulemaking procedures it employs for these approvals. In the absence of these rulemaking procedures, the Commission's obligations under Section 189a would need to be revisited. As the petitioner points out, the court in Kelley v. Selin , in dicta, did characterize certification of designs as being a narrower form of permission than the grant of a license (42 F.3d at 1518), and this could conceivably support an argument that Section 189a does not apply to NRC's approval of CoCs or CoC amendments. However, whether Section 189a requires a hearing opportunity on a cask certification in the absence of rulemaking was not at issue before the court and was not decided by the court. Thus, there has been no judicial determination of this issue. The Commission concludes that there is a significant risk that the procedures offered by the petitioner, which fall short of the ingredients of a normal rulemaking, 2 would be seen as deficient.

Similarly, the court did not address, even in dicta, whether the Part 72 Subpart K general licensing scheme for ISFSIs that relies on the CoC process being accomplished by rulemaking, would be acceptable in the absence of either a rulemaking or a § 189a hearing on the CoC. Nor did the court address the specific licensing schemes for ISFSIs that also relies on the CoC rulemaking proceedings to eliminate repetitious review of cask design issues that are resolved by CoC rulemakings. See 10 C.F.R. 72.46(e). Consequently, if the CoC process were streamlined as NEI suggests and conducted without a rulemaking or offering a § 189a hearing, the Commission may be required to resolve cask design issues on a case-by-case basis in proceedings for specific ISFSI licenses or license amendments.

3. NRC's performance goals would be better served by retention of the present process than by adoption of petitioner's suggested process.

The Commission examined the petitioner's suggested alternative proposal in the context of NRC's four performance goals and in comparison with NRC's existing cask approval process. With respect to the first goal—maintaining safety and protecting the environment and the common defense and security—there is no difference between the two processes. The petitioner has not suggested any change in NRC's safety review of applications for CoCs or CoC amendments nor for NRC's inspection and enforcement activities.

With respect to the second goal—increasing public confidence—we think that the present process is more likely to obtain this objective. The petitioner notes that its alternative process provides the public with essentially the same opportunities for public comment; the only difference being that for amendments for which a no significant impact considerations is demonstrated, the comment period will be after, rather than prior to, the effectiveness of the amendment. However, this difference, could generate new public objections to being denied an opportunity to comment before the NRC's decision and, in particular, before to NRC's no significant impacts decision. 3 Both the public commenter who opposed the petition and the State commenter questioned petitioner's characterization of some potential amendments as being non-significant. Under the petitioner's suggested scheme, NRC would publish a notice in the Federal Register that would both announce its determination that the amendment had no potential for significant impacts and its immediately effective decision approving the amendment. Although, under the petitioner's scheme, the public would have a post-effectiveness opportunity to comment on both the amendment and the no significant impact considerations determination, the public may not regard this as a meaningful opportunity to comment. Under the present process, publication of an amendment as a direct final rule gives the Commission an opportunity to test its judgment that the amendment is non-controversial and will not attract any significant adverse comments. If a significant adverse comment is received, the rule is withdrawn before it becomes effective and the Commission proceeds with normal notice and comment rulemaking. We think this process is more likely to achieve the goal of increasing public confidence in the Commission's decisionmaking process.

With respect to the third goal of making NRC decisions more effective, efficient, and realistic, the only advantage of petitioner's alternative process over the present process would be a shortening of the time between the completion of the NRC staff's safety review of CoC amendments which meet the no significant impact considerations test and the effectiveness of the amendment. But, as described supra, this time interval—which petitioner asserted to be 24 months—has already been significantly shortened to 4 to 6 months through use of direct final rules and other measures taken to expedite the process, such as elimination of the need for a rulemaking plan and issuance of the rule by the Executive Director for Operations. Moreover, the NRC staff continues to find ways to expedite the internal approval process as additional experience is gained. Under the alternative process suggested by the petitioner, the staff's technical review would take longer than it currently takes because the staff would be required to conduct some activities currently conducted under rulemaking and some new activities that they do not perform under the current process. An environmental assessment would need to be prepared for each new CoC and each CoC amendment (this is currently performed during rulemaking). As part of this process, the staff would need to consult with the states. If appropriate, a Finding of No Significant Impact (associated with the environmental review) would need to be prepared and published in the Federal Register . The NRC staff would need to prepare, and have published in the Federal Register , the no significant impact consideration finding (a new action). In addition, an order granting the CoC (new action) would need to be prepared and issued. These activities would increase the staff effort and review time necessary for approval of a CoC amendment. Moreover, whatever time savings petitioner's process might achieve would be offset if it should prove necessary to resolve cask design issues on a case-by-case basis in ISFSI proceedings. Unquestionably, a case-by-case consideration, rather than a generic review, would significantly increase the time and resources necessary for finally resolving cask design issues. Any uncertainty in the finality of the NRC's decision on cask design issues could postpone the loading of casks, because one outcome of any case-by-case consideration could be to overturn the NRC decision to approve a cask.

Finally, with respect to the fourth goal of reducing unnecessary regulatory burden, the petitioner asserts that its alternative process achieves this goal because “the new process removes the burdensome aspects of rulemaking which are unnecessary because they do not add to the quality of the regulatory decision” and “the new process identifies the CoC amendment requests which do not present significant potential impacts and subjects those amendment requests to a suitably streamlined review and approval process.” The NRC notes that the petitioner's suggested process for considering initial CoCs and amendments which do involve significant impacts—a process that involves a 60-day comment period and no final NRC action until NRC has addressed the comments—is not significantly different from the present process and would not provide significant burden reduction for either the NRC staff or the industry. There could be a slight increase in burden for the staff because petitioner's process calls for publication in the Federal Register of a Notice of Receipt and Availability of the Application, a step not part of the current process. The petitioner's process for CoC amendments would require the applicant to submit a no significant impacts determination consideration along with the application. This would actually place an additional burden on the applicant and on the NRC staff assigned to reviewing the determination even though the extra burden might produce the benefit of an immediately effective amendment. Staff effort would also continue to be expended on preparation of an environmental assessment and the necessary Federal Register notices (currently part of the rulemaking process). The staff would also have the added burden of preparing an order to issue the CoC amendment. In short, there would be little, if any, burden reduction stemming from petitioner's alternative process. Moreover, if it should prove necessary to offer an opportunity for a hearing, a hearing request would also result in an increased expenditure of resources by both staff and the industry.

In conclusion, for the reasons explained above, we believe that NRC's performance goals are better served by retention of the current process.

For the reasons cited in this document, the NRC denies this petition.

Section 503(a) of the Act permits a state to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, “a state law which provides for the regulation of surface coal mining and reclamation operations in accordance with the requirements of the Act; and rules and regulations consistent with regulations issued by the Secretary pursuant to the Act.” See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Oklahoma program on January 19, 1981. You can find background information on the Oklahoma program, including the Secretary's findings, the disposition of comments, and the conditions of approval in the January 19, 1981, Federal Register (46 FR 4902). You can find later actions concerning the Oklahoma program at 30 CFR 936.15 and 936.16.

By letter dated November 1, 2001 (Administrative Record No. OK-993), Oklahoma sent us an amendment to its program under SMCRA and the Federal regulations at 30 CFR 732.17(b). Oklahoma sent the amendment at its own initiative. Oklahoma proposes to amend the Oklahoma Administrative Code (OAC), Title 460, Chapter 20. Below is a summary of the changes proposed by Oklahoma. The full text of the program amendment is available for your inspection at the locations listed above under ADDRESSES.

Oklahoma proposes to add definitions for “Lands eligible for remining” and “Unanticipated event or condition.”

In this section, Oklahoma proposes to add persons who are prohibited from having any direct or indirect financial interest in any underground or surface coal mining operation. These additional persons are (1) members of advisory boards, (2) the Oklahoma Mining Commission, and (3) commissions representing multiple interests.

Currently, the state's regulations prohibit employees of the Department of Mines who perform any function or duty under the Oklahoma Coal Reclamation Act of 1979 from having any direct or indirect financial interest in any underground or surface coal mining operation. Oklahoma proposes to expand the list of persons who perform any function or duty under the Oklahoma Coal Reclamation Act of 1979 and who are prohibited from these financial interests to include (1) members of advisory boards, (2) the Oklahoma Mining Commission, and (3) commissions representing multiple interests.

Oklahoma proposes to remove the authority of the Director of the Department of Mines to “file all statements and supplements received pursuant to 45 O.S. Supp., Section 765 from members of advisory boards and the Oklahoma Mining Commission with the Oklahoma Governor's Office, Director of Appointment.”

a. In paragraph (a), Oklahoma proposes to require the Financial Officer of the state Department of Mines to furnish a blank employment and financial interest statement to each state employee, and members of advisory boards, the Oklahoma Mining Commission, and commissions representing multiple interests who are required to file a statement. The blank statement must be provided 45 days in advance of the filing date established by Section 460:20-5-8(a). In addition, the Financial Officer must provide annually to all state employees (required to file the statement) the name, address, and telephone number of the person whom they may contact for advice and counseling.

b. Oklahoma proposes to add a new paragraph (b) that sets forth the duties of the Director of Appointments of the Oklahoma Governor's Office.

c. Oklahoma proposes to revise paragraph (c) to read as follows:

(c) Department of Mines employees, members of advisory boards, the Oklahoma Mining Commission, or commissions representing multiple interests performing any duties or functions under the Act shall:

In paragraph (a), Oklahoma proposes to require any employee, and members of the Oklahoma Mining Commission, advisory boards, and commissions representing multiple interests who perform any function or duty under the Oklahoma Coal Reclamation Act of 1979 to file a statement of employment and financial interests.

a. In paragraph (a), Oklahoma proposes to add that members of the Oklahoma Mining Commission who perform functions or duties under the Oklahoma Coal Reclamation Act of 1979 must file employment and financial interest statements.

b. In paragraph (b), Oklahoma proposes to add that new appointments to advisory boards, the Oklahoma Mining Commission, and commissions representing multiple interests who are hired, appointed, or transferred to perform functions or duties under the Oklahoma Coal Reclamation Act of 1979 will be required to file employment and financial interest statements at the time of entrance to duty.

c. In paragraph (c), Oklahoma proposes to add that new appointments to advisory boards, the Oklahoma Mining Commission, and commissions representing multiple interests are not required to file annual employment and financial interest statements on the subsequent annual filing date if this date occurs within two months after their initial statement was filed.

In paragraph (b), Oklahoma proposes to add that members of the Oklahoma Mining Commission must file employment and financial interest statements with the Governor's Office, Office of Appointments.

a. In paragraph (a), Oklahoma proposes to add that advisory board members and commissioners must report all information required on the statement of employment and financial interests for themselves, their spouses, minor children, or other relatives who are full-time residents of their homes.

b. Oklahoma proposes to revise paragraph (a)(2) to read as follows:

c. In paragraphs (b)(1) through (b)(4), Oklahoma proposes to require advisory board members and commissioners, in addition to employees, to provide information regarding any financial interests pertaining to employment, securities, real property, and creditors. d. In paragraph (c), Oklahoma proposes to require advisory board members and commissioners, in addition to employees, to provide a signed certification that (1) none of the financial interests shown on the financial interest statement represent an interest in an underground or surface coal mining operation except as specifically identified and described as exceptions, and (2) the information shown on the statement is true, correct, and complete. Also, in paragraph (c)(3)(C) regarding exceptions in the financial interest statements, Oklahoma proposes to require advisory board members and commissioners, in addition to employees, to provide any other information which they believe should be considered in determining whether or not an interest represents a prohibited interest.

Oklahoma proposes to designate the existing paragraph as paragraph (a) and to add new paragraph (b) to read as follows:

(b) Members of advisory boards, the Oklahoma Mining Commission, and commissions representing multiple interests should follow any appeals process provided for by the Oklahoma Governor's Office, Director of Appointments.

Oklahoma proposes to add a provision that each regulatory program must provide for the coordination of review and issuance of permits for surface coal mining and reclamation operations with applicable requirements of, among other things, all state, federal, and local permitting and licensing requirements.

a. Oklahoma proposes to add new paragraphs (b)(4) and (b)(5) to read as follows:

(4) Subsequent to October 24, 1992, the prohibitions of paragraph (b) of this Section regarding the issuance of a new permit shall not apply to any violation that:

(A) Occurs after that date;

(B) Is unabated and

(C) Results from an unanticipated event or condition that arises from a surface coal mining and reclamation operation on lands that are eligible for remining under a permit:

(i) Issued before September 30, 2004, or any renewals thereof; and

(ii) Held by the person making application for the new permit;

(5) For permits issued under Section 460:20-33-12 of this Chapter, an event or condition shall be presumed to be unanticipated for the purposes of this paragraph if it:

(A) Arose after permit issuance;

(B) Was related to prior mining; and

(C) Was not identified in the permit.

b. Oklahoma proposes to add new paragraph (c)(13) to read as follows:

(13) For permits to be issued under Section 460:20-33-12 of this Chapter, the permit application must contain:

(A) Lands eligible for remining;

(B) An identification of the potential environmental and safety problems related to prior mining activity which could reasonably be anticipated to occur at the site; and

(C) Mitigation plans to sufficiently address these potential environmental and safety problems so that reclamation as required by the applicable requirements of the regulatory program can be accomplished.

Oklahoma proposes to add this new section to its regulations. It contains the permitting requirements for conducting coal mining operations on lands eligible for remining.

1. Oklahoma proposes to revise paragraphs (b)(6) to read as follows:

2. Oklahoma proposes to revise paragraphs (c)(2) through (c)(3) to read as follows:

1. Oklahoma proposes to revise paragraphs (b)(6) to read as follows:

2. Oklahoma proposes to revise paragraphs (c)(2) through (c)(3) to read as follows:

Under the provisions of 30 CFR 732.17(h), we are seeking comments on whether the proposed amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the Oklahoma program.

Written Comments: If you submit written or electronic comments on the proposed rule during the 30-day comment period, they should be specific, should be confined to issues pertinent to the notice, and should explain the reason for your recommendation(s). We may not be able to consider or include in the Administrative Record comments delivered to an address other than the one listed above (see ADDRESSES ).

Electronic Comments: Please submit Internet comments as an ASCII, WordPerfect, or Word file avoiding the use of special characters and any form of encryption. Please also include “Attn: SPATS NO. OK-028-FOR” and your name and return address in your Internet message. If you do not receive a confirmation that we have received your Internet message, contact the Tulsa Field Office at (918) 581-6430.

Availability of Comments: Our practice is to make comments, including names and home addresses of respondents, available for public review during regular business hours at OSM's Tulsa Field Office (see ADDRESSES ). Individual respondents may request that we withhold their home address from the administrative record, which we will honor to the extent allowable by law. There also may be circumstances in which we would withhold from the administrative record a respondent's identity, as allowable by law. If you wish us to withhold your name and/or address, you must state this prominently at the beginning of your comment. However, we will not consider anonymous comments. We will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety.

Public Hearing: If you wish to speak at the public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT by 4:00 p.m., c.s.t. on December 26, 2001. We will arrange the location and time of the hearing with those persons requesting the hearing. If no one requests an opportunity to speak at the public hearing, the hearing will not be held.

To assist the transcriber and ensure an accurate record, we request, if possible, that each person who speaks at a public hearing provide us with a written copy of his or her testimony. The public hearing will continue on the specified date until all persons scheduled to speak have been heard. If you are in the audience and have not been scheduled to speak and wish to do so, you will be allowed to speak after those who have been scheduled. We will end the hearing after all persons scheduled to speak and persons present in the audience who wish to speak have been heard.

If you are disabled and need a special accommodation to attend a public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT.

Public Meeting: If only one person requests an opportunity to speak at a hearing, a public meeting, rather than a public hearing, may be held. If you wish to meet with us to discuss the proposed amendment, you may request a meeting by contacting the person listed under FOR FURTHER INFORMATION CONTACT. All such meetings are open to the public and, if possible, we will post notices of meetings at the locations listed under ADDRESSES. We will also make a written summary of each meeting a part of the Administrative Record.

This rule is exempted from review by the Office of Management and Budget under Executive Order 12866.

This rule does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulations.

This rule does not have federalism implications. SMCRA delineates the roles of the federal and state governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that state laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that state programs contain rules and regulations “consistent with” regulations issued by the Secretary under SMCRA.

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that, to the extent allowed by law, this rule meets the applicable standards of subsections (a) and (b) of this section. However, these standards are not applicable to the actual language of state regulatory programs and program amendments since each program is drafted and promulgated by a specific state, not OSM. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed state regulatory programs and program amendments submitted by the states must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR Parts 730, 731, and 732 have been met.

On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a State of Energy Effects for a rule that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rule is exempt from review under Executive Order 12866, and because it is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

Section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that a decision on a proposed state regulatory program provision does not constitute a major Federal action within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)). A determination has been made that such decisions are categorically excluded from the NEPA process (516 DM 8.4.A).

This rule does not contain information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3507 et seq. ).

The Department of the Interior has determined that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The state submittal which is the subject of this rule is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. Therefore, this rule will ensure that existing requirements previously promulgated by OSM will be implemented by the state. In making the determination as to whether this rule would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

a. Does not have an annual effect on the economy of $100 million.

b. Will not cause a major increase in costs or prices for consumers, individual industries, federal, state, or local government agencies, or geographic regions.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S. based enterprises to compete with foreign-based enterprises.

This determination is based upon the fact that the state submittal which is the subject of this rule is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rule.

This rule will not impose a cost of $100 million or more in any given year on any governmental entity or the private sector.

Since the CAA's inception in 1970, EPA has set NAAQS for six common air pollutants: carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter, and sulfur dioxide. The CAA requires these standards be set at levels that protect public health and welfare with an adequate margin of safety. These standards present state and local governments with the air quality levels they must meet to achieve clean air. Also, these standards allow the American people to assess whether or not the air quality in their communities is healthful.

The 1-hour ozone NAAQS of 0.12 parts per million (ppm) was promulgated in 1979 and areas were designated and classified as attainment/unclassifiable or nonattainment pursuant to the 1990 CAA amendments. It is the designation and classification of the Atlanta area relative to the 1-hour ozone NAAQS that is addressed in this document.

The Atlanta 1-hour ozone nonattainment area consists of the following counties: Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Paulding and Rockdale.

Under section 107(d)(1)(C) of the CAA, each ozone area designated nonattainment for the 1-hour ozone NAAQS prior to enactment of the 1990 CAA amendments, such as the Atlanta area, was designated nonattainment by operation of law upon enactment of the 1990 amendments. Under section 181(a) of the Act, each ozone area designated nonattainment under section 107(d) was also classified by operation of law as “marginal,” “moderate,” “serious,” “severe,” or “extreme,” depending on the severity of the area's air quality problem. These nonattainment designations and classifications were codified in 40 CFR part 81 (see 56 FR 56694, November 6, 1991). The design value for an area, which characterizes the severity of the air quality problem, is represented by the highest design value at any individual ozone monitoring site (i.e., the highest of the fourth highest 1-hour daily maximums in a given three-year period with complete monitoring data). Table 1 in section 181(a) provides the design value ranges for each nonattainment classification. Ozone nonattainment areas with design values between 0.160 ppm and 0.180 ppm for the three year period 1987-1989 were classified as serious. The Atlanta area design value was 0.162 ppm and thus the area was classified as serious.

Under section 182(c) of the CAA, states containing areas that were classified as serious nonattainment were required to submit SIPs to provide for certain controls, to show progress toward attainment, and to provide for attainment of the ozone NAAQS as expeditiously as practicable but no later than November 15, 1999.

The CAA requires serious areas to use a photochemical grid model to demonstrate attainment with the 1-hour ozone NAAQS. EPA's guidance provides that states may also rely on a weight of evidence (WOE) analysis to support attainment if the modeled demonstration does not facially demonstrate that the area will attain by the attainment date.

On October 28, 1999, the GAEPD submitted to EPA a 1-hour ozone attainment demonstration for the Atlanta area that was based on photochemical grid modeling and also provided a WOE analysis to support attainment. In addition, Georgia requested that the Atlanta area attainment date be extended to November 15, 2003. The request for an extension of the attainment date was based on the belief that ozone is transported from upwind areas and affects the ability of the downwind area to attain the 1-hour ozone NAAQS. Thus, emission reductions that were going to be achieved by upwind states under EPA's final NO X SIP Call rule, published on October 27, 1998 (63 FR 57356), by May 1, 2003, were critical to the State's demonstration that Atlanta would attain the standard by November 2003. The states identified in EPA's final NO X SIP Call rule as affecting Atlanta are Alabama, Kentucky, North Carolina, South Carolina and Tennessee.

In the October 28, 1999, SIP, as part of the WOE analysis, GAEPD committed to identify and adopt regulations to achieve additional reductions of NO X and VOC emissions as needed for attainment and to implement these control measures by May 1, 2003. 1 On December 16, 1999, EPA proposed approval of the attainment demonstration and the request for an extension of the attainment date in the Federal Register (64 FR 70478), provided that the State would take several actions before final approval: (1) fulfill the commitments to adopt additional VOC and NO X controls necessary to attain the standard and to perform and to complete an early attainment assessment—i.e., prior to the attainment date—of whether the area will attain; and (2) revise the State's low sulfur fuel rule to address enforcement and waiver issues. EPA received comments on the December 1999 proposal during the comment period. All relevant comments pertaining to the December 1999 proposal, as well as this supplemental proposal, will be addressed in the final action pertaining to the 1-hour ozone attainment demonstration for the Atlanta area. Detailed information on the 2003-based attainment photochemical modeling demonstration, the supplemental WOE analysis and EPA modeling requirements are contained in the Technical Support Document (TSD) for the December 16, 1999 Federal Register document. Copies of this TSD can be obtained from the EPA contact listed in the addresses section of this document.

The GAEPD submitted revisions to the attainment demonstration, including the additional adopted emission control regulations identified as part of the WOE analysis as necessary to attain the standard, to EPA on January 31, 2000, and July 31, 2001. EPA proposed approval of the emission control regulations on December 18, 2000 (65 FR 79034), and granted final approval on July 10, 2001 (66 FR 35906).

On July 17, 2001, the State submitted a revised attainment demonstration, which relied upon emission reductions from the State's low sulfur fuel rule—“(bbb) Gasoline Marketing”—and included a commitment to perform an early attainment assessment. As described more fully below, in this action, EPA is proposing to approve the revised attainment demonstration (including a new request to extend the attainment date to 2004) and the commitment to perform an early attainment assessment. EPA will propose action on the revised low sulfur rule and an associated fuel waiver request that was submitted on May 31, 2000, and revised on November 4, 2001, in a separate document. However, because the State is relying on the low sulfur rule and the associated waiver request as part of it's attainment demonstration, EPA cannot take final action approving the attainment demonstration unless and until EPA takes final action approving the low sulfur fuel rule and the associated waiver request.

The photochemical grid ozone modeling performed for the Atlanta 1-hour ozone nonattainment area is based on an emissions projection to 2003, the attainment extension year that the GAEPD requested of EPA in its October 28, 1999, submittal. Under a WOE determination, a state can rely on, and EPA will consider, factors such as other modeled attainment tests, e.g., a rollback analysis; other modeled outputs, e.g., changes in the predicted frequency and pervasiveness of exceedances and predicted changes in the design value; actual observed air quality trends; estimated emissions trends; analyses of monitored air quality data; the responsiveness of the model predictions to further controls; and, whether there are additional control measures that are or will be approved into the SIP but were not included in the modeling analysis. This list is not an exclusive list of factors that may be considered and these factors could vary from case to case. The EPA's guidance contains no limit on how close a modeled attainment test must be to passing to conclude that other evidence besides an attainment test is sufficiently compelling to suggest attainment. However, the further a modeled attainment test is from being passed, the more compelling the WOE needs to be.

Detailed information on the 2003 Atlanta attainment photochemical modeling demonstration, the supplemental WOE analysis and EPA modeling requirements are contained in the TSD for the December 16, 1999, proposal (64 FR 70478). The 2003 modeled control strategy simulations indicate that ozone levels in the Atlanta area would be significantly reduced when the state and local controls identified in the October 1999 submission (and subsequently approved by EPA) and NO X SIP Call plans in upwind states are implemented. Even though the statistical and deterministic modeled attainment tests and the modeling exceedance test used in the photochemical grid modeling assessment for attainment are not satisfied, there were several reasons to believe that Atlanta could reasonably attain the 1-hour ozone NAAQS in 2004 through the development of a WOE analysis for the 2003 demonstration. The WOE submitted as a part of the attainment demonstration for the October 28, 1999, Atlanta SIP includes: (a) an estimate of additional reductions needed for attainment, calculated without the use of additional photochemical grid modeling, (b) estimates of the future design value using EPA's modeling of the NO X SIP Call; and (c) estimates of the future design value using the Relative Reduction Factor (RRF) analysis. The additional reductions identified by this method, considered along with the results of the Urban Airshed Model (UAM) modeled attainment tests and other weight of evidence presented in the technical analyses for the attainment demonstration, indicate the area would attain the 1-hour ozone NAAQS by November 2003. This analysis strengthens the WOE and accounts for high modeled peaks by estimating the additional measures that at a minimum bring the model estimated future ozone design value to 124 parts per billion (ppb) or below. An air quality and emissions trends analysis is also reviewed as a part of the WOE analysis in attainment demonstrations for other urban areas. Though not submitted as part of Georgia's WOE, EPA considered that air quality in Georgia has improved since the 1980s. The average design value of 162 ppb in the 1980s had decreased to an average design value of 148 ppb in the 1990s. This improvement in air quality has occurred despite growth. The reductions associated with VOC and NO X reductions implemented in 1999 appear to be beneficial.

Subsequent to the State's October 1999 submission and EPA's December 1999 proposed approval of the Atlanta attainment demonstration, the source compliance date under the NO X SIP Call rule was extended from May 1, 2003 to May 31, 2004. In May 1999, the Court of Appeals for the District of Columbia Circuit stayed the obligation of states to submit SIPs in response to EPA's NO X SIP Call rule, pending litigation over the rule. In March 2000, the Court issued an opinion largely upholding the SIP Call rule. In later rulings in the summer of 2000, the Court lifted the stay of the SIP submission obligation, but provided that since SIP submissions were delayed, EPA could not mandate that states require sources to comply with state-adopted rules under the SIP Call earlier than May 31, 2004. Because the source compliance date under the SIP Call was delayed, Georgia determined that it could not attain in the year preceding the source-compliance date under the SIP and submitted a revised SIP requesting an attainment date of November 2004.

The revised attainment demonstration submitted by the State on July 17, 2001, relies on the photochemical grid modeling that was submitted in October 1999, but provides additional analysis. The photochemical grid modeling demonstration assumed an attainment year of 2003. The time and resources to redo the modeling for 2004 were not available. Allowing additional time to redo the modeling for 2004 would not be consistent with the CAA intent that areas come into attainment as expeditiously as practicable nor would it significantly advance the technical basis for the attainment demonstration. Therefore, EPA agreed that attainment for 2004 could be demonstrated with the submittal of a 2004 emissions inventory as a supplement to the 2003 demonstration, provided that the 2004 emissions are less than or equal to the level of emissions used in the modeling. It could then be concluded that if emissions for 2004 were modeled, the predicted concentrations of ozone would be less than or equal to the 2003 1-hour ozone concentrations modeled. If increases in the 2004 emissions were indicated, the supplemental WOE analysis would have to demonstrate why the increase in emissions would not produce an increase in ozone concentrations. Although a 2004 attainment year is being proposed for approval for the Atlanta nonattainment area because of the upwind contribution, the local controls in the attainment strategy will all be implemented no later than May 2003.

The 2004 demonstration is based on the following procedures. First, the State uses information from the photochemical grid modeling and ambient air modeling to assess whether or not additional levels of emission reductions are needed beyond those that were necessary to demonstrate attainment. This assessment was completed using the emissions projections for 2004. The second part of the analysis involves an assessment of the levels of attainment emissions for 2004 and whether or not attainment in 2004 is reasonably likely to occur. A determination was made that if the estimates of the projected 2004 emissions with controls implemented are at or below the 2003 modeled levels then attainment by 2004 is reasonably likely to occur. Both parts of the analysis are described in the following subsections.

On December 16, 1999, EPA proposed to approve the 2003 attainment demonstration if the State identified, adopted, and submitted additional controls needed for attainment and revised Georgia's low sulfur fuel rule to address the enforcement and waiver issues in accordance with EPA guidance.

As provided above, the State adopted, and EPA approved, the additional controls identified in the December 1999 proposed approval. In identifying the additional emissions reductions needed to achieve attainment, the State opted to implement controls outside of the nonattainment area, thus requiring a recalculation of the emissions reductions needed. GAEPD used EPA's “Guidance for Improving Weight of Evidence Through Identification of Additional Emission Reductions, Not Modeled” identified additional controls needed beyond those identified in the 2003 modeling analysis. This analysis involved the use of information from the photochemical grid modeling and ambient air quality monitoring to estimate additional levels of emission reductions needed for attainment of the 1-hour NAAQS for ozone. GAEPD used the analysis to identify the additional percentage reduction in NO X and VOC from the 1996 emissions base year that are needed for attainment. The method is based on the assumption that the relationship between ozone and its precursors (VOC and NO X ) can be calculated. A detailed discussion of the steps used in the analysis to calculate the additional emission reductions needed for attainment is provided in the TSD which can be obtained from the Regional Office staff contact. GAEPD's application of this analysis estimated that additional reductions of 3.94 percent NO X and 3.59 percent VOC were needed to attain by 2003. This equates to an additional reduction of 35.75 tons per day (TPD) NO X and 20.81 TPD VOC. To achieve these reductions the GAEPD adopted and implemented open burning prohibition regulations outside the nonattainment area, additional electric generating units regulations applicable to power plants, and a new combustion rule. An excess of reductions of 5.6 TPD NO X and 6.0 TPD VOC were available beyond the needed reductions for attainment.

The GAEPD developed a 2004 projected emission inventory for the 4-km fine-grid domain from the 2003 modeling inventory and adjusted the projected 2004 emissions inventory with the additional emission reductions identified through the WOE analysis. Mobile source emissions were recalculated using the most recent data available. The emissions from major point sources within the nonattainment area were assumed to have zero growth from 2003 to 2004 because of the Offset Rule, 391-3-1-.03 section (8) (c) 13 that was adopted by the Department of Natural Resources (DNR) Board in September of 1999 and approved by EPA on July 10, 2001. However, this assumption is conservative because the regulation requires an offset ratio (1.2 to 1 for external; 1.3 to 1 for internal) in emissions, so point source emissions in this area should decrease if any new sources are permitted for this area. Also, with the new power plant offset rule in 32 counties, there should be no growth of electric generating unit (EGU) point source NO X ( i.e. , >50 TPD in 13 counties, > 100 TPD in 32 counties) emissions. Furthermore, zero growth should have been assumed in projecting the 1999 point source emissions in the nonattainment area to 2003 for the 2003 modeling. Therefore, the 2003 modeling inventory contains approximately 2 to 3 TPD more NO X emissions in the nonattainment area than it should in Table 2. In the remainder of the fine-grid domain, the Emission Processing System 2 (EPS2) was used to grow point sources outside the 13-County Atlanta nonattainment area to 2004 by applying the appropriate Bureau of Economic (BEA) projection factors to 2003 emission rates for the relevant industry. The emissions from non-road mobile sources were calculated using EPA's version 2000 of the draft NONROAD Model and the 2003 control emissions. The model was used to develop a growth or reduction factor between 2003 and 2004. The calculated factors were multiplied by the 2003 projected controlled emissions for off-road mobile sources to determine the projected 2004 emissions. The TSD contains additional details on the development of the inventory for the 2004 non-road mobile source emissions.

The 2003 on-road mobile source emissions inventory was calculated using 12-speed vehicle categories. However, the metropolitan planning organization, the Atlanta Regional Commission (ARC), develops mobile emissions based on 64 averaged speeds. For consistency, GAEPD and ARC needed to develop a methodology to incorporate the higher-resolution information from ARC as well as the result from the Atlanta speed study without revising the mobile source ozone modeling inventory software. The speed study was conducted to update data (i.e., higher speeds and consider the impact of congestion on speeds) for on-road mobile emissions, based on submitted comments indicating faults in that data. The speed study is located on the GAEPD website at http://www.dnr.state.ga.us/dnr/environ/plans_files/plans/Speed _ Study.pdf. Data from the Atlanta Nonattainment Area Speed Study were used by ARC to develop a typical summer day 2004 mobile source inventory. The 2003-to-2004 adjustment factors for the ozone episode modeling inventories in the 13-county Atlanta nonattainment area were developed by taking the ratio of the 2004 64-speed inventory to the 2003 12- speed inventory submitted by GAEPD in the October 28, 1999, attainment SIP. These factors were then applied to 2003 episode-day-specific mobile source modeling inventories to adjust them to 2004 modeling inventories reflecting all of the mobile modeling changes between 2003 and 2004, including the revised speed data and the more disaggregate speed averaging. For the 30 counties within the UAM-IV domain but outside the nonattainment area, an area not covered by ARC's travel demand model, an adjustment factor (the percent difference between the resulting 2004 30-county typical summer day inventory and a 2003 30-county typical summer day mobile inventory) was applied to episode-day-specific 2003 mobile modeling inventories in the 30 attainment area counties to produce 2004 mobile modeling inventories. EPA believes that the projected growth rates, methodologies and emissions reductions from the sources subject to the federal and local measures were calculated correctly.

In the 2004 attainment demonstration submitted in the July 2001 SIP, the State included a projected emissions inventory for the 2004 attainment extension year which accounts for (a) growth between 2003 and 2004; (b) the results of the speed study conducted pursuant to comments on the December 1999 proposal; (c) correction to the PSG voluntary program SIP reductions; (d) removal of NSR and VOC and NO X RACT for attainment counties within the fine grid domain; and (e) revised estimates to the original “additional reductions” identified in the October 28, 1999, SIP. Table 1 provides a comparison between the 2003 projected inventory used for the 2003 modeling demonstration and the 2004 projected attainment inventory in the 4-km fine grid modeling domain. The emissions represent the typical summer day emissions derived from averaging emissions from the three days used in the modeling demonstration as submitted in the July 2001 SIP (i.e., July 31, 1987, August 1, 1987, and July 8, 1988). The levels of anthropogenic NO X and VOC that were modeled in the 2003 strategy for the Atlanta nonattainment area are 591.6 TPD and 525.8 TPD, respectively. The levels of anthropogenic NO X and VOC projected for 2004 are 604.5 TPD and 482.1 TPD, respectively. This comparison of emission estimates resulted in an additional reduction of 43.7 TPD VOC and increase of 12.9 TPD NO X emissions in 2004.

A comparison of the 2003 and 2004 modeling inventories indicate that NO X emissions increase about 2 percent over the modeling domain, while VOC emissions decrease over 8 percent. Since the total NO X emissions projected for 2004 are more than the levels modeled for 2003, a demonstration was needed to show why this would not adversely affect the ability of the area to attain the 1-hour ozone NAAQS by 2004. We believe that the relationship between VOC emission reductions and ozone concentration reductions and between NO X emission reductions and ozone concentration reductions can be determined using the photochemical modeling results. Sensitivity analyses from the photochemical modeling in the fine grid were used to develop a relationship to assess the potential for increases in ozone formation for the emission levels projected for 2004. The majority of the local emissions reductions for the attainment strategy occur within the 4-km fine grid with the exception of two power plants near the southern boundary. The sensitivity simulations used were based on the three episode days ( i.e., July 31, 1987; August 1, 1987; and July 8, 1988) that were used in the 2003 control strategy simulations. These sensitivity simulations represented modeling scenarios based on reductions across emission inventory categories (e.g., low-level source or elevated sources) while holding all other emissions source categories constant. The air-quality-to-emission-change ratio (i.e., tons per day of emissions change per ppb change in ozone) was developed for each day and sensitivity simulation. The average of these ratios over all days and sensitivities was then determined for each pollutant for each episode day.

The submitted ratios indicate that a 41.5 TPD increase in NO X is needed to cause a 1.0 ppb increase in ozone or a 164.9 TPD increase in VOC is needed to cause a 1.0 ppb increase in ozone. These relationships were applied to the emissions changes predicted between 2003 and 2004 as presented in Table 1. The tables indicate that NO X emissions are expected to increase by 12.9 TPD and VOC emissions will decrease by 43.7 TPD in 2004. The NO X and VOC ratios were applied to the emission changes between 2003 and 2004 to determine how ozone formation would be affected in 2004. This analysis indicated that a 0.3 ppb increase in ozone from the increase in NO X emissions is offset by the a 0.3 ppb decrease in ozone from the VOC emissions. The identified shortfall gap has thus been met by the State and the necessary control measures approved by EPA. Therefore, the assessment supports the conclusion that the area will attain the NAAQS in 2004.

Section 172(c)(1) of the CAA requires attainment demonstration SIPs to provide for the implementation of all RACM as expeditiously as practicable (including such reductions in emissions from existing sources in the area as may be obtained through the adoption, at a minimum, of reasonably available control technology, RACT) and shall provide for the attainment of the NAAQS. EPA issued a memo dated December 2, 1999, and entitled, “Guidance on the Reasonably Available Control Measures (RACM) Requirement and Attainment Demonstration Submissions for Ozone Nonattainment Areas” stating that states need to provide justification as to why potential RACM have not been adopted. The justification should clearly demonstrate that implementation of feasible measures will not advance the attainment date and will not compensate for any transport contribution such that attainment could be achieved prior to upwind reductions. Evaluations of control measures may be based on technological or economic grounds.

The Georgia RACM analysis must address measures from any anthropogenic source of emissions, i.e., point, area, on-road mobile or non-road mobile. The RACM analysis contains an exhaustive set of control measures, addresses several reasons as to why many of the measures have not been adopted, and contains a demonstration as to why the implementation of remaining potential RACM by the 2003 ozone season would not advance the attainment of the 1-hour ozone NAAQS. Georgia EPD performed a RACM analysis for potential control of NO X and VOC emission sources not included in the attainment demonstration for the Atlanta 1-hour ozone nonattainment area. Most of the controls identified in the RACM analysis were included in a study completed by Georgia State University (“The Direct Costs of Controlling NO X and VOC emissions in Atlanta.” Georgia State University. Atlanta, Georgia: November 1, 1997, pp. 43-65). In the Georgia State Report, the 1990 NO X and VOC emissions inventory data were updated using growth factors to reflect emissions in 1999. Georgia EPD multiplied the percent reduction expected from a particular control measure from the study by a 2003 base level of emissions in order to calculate 2003 reductions for VOC and NO X . The 2003 base level was acquired from the 2003 Base Modeling run for the day of July 31. This method was applied to most of the calculations in the RACM analysis. For many of the remaining RACM calculations, GAEPD applied reduction factors from sources such as STAPPA/ALAPCO and EPA to emissions data derived from modeling runs for the Atlanta nonattainment area in order to get projected 2003 VOC and NO X reductions from a particular control measure. Other reductions were based on similar control measures enacted in other areas and the reduction results obtained in those areas. Georgia EPD performed a RACM analysis to determine if the 2004 attainment date could be advanced. They analyzed the 2003 season to determine if control measures could be implemented that were sufficient to prevent 1-hour ozone NAAQS violations during the 2003 season and thus advance the attainment date.

Each control option was evaluated according to: (1) the State's authority to implement controls; (2) the amount of NO X reductions; (3) the amount of VOC reductions; (4) whether a similar control measure is already being implemented in the SIP; (5) the cost effectiveness of the control; (6) whether SIP credit has already been taken for the measure; and (7) whether the measure can be implemented to achieve reductions during the 2003 ozone season, (measures implemented after the 2003 ozone season cannot advance the 2004 attainment date). Any measures determined to be feasible to implement after the above described evaluation were grouped, by primary category, under the heading “remaining measures.” Georgia used a cut-off of $5,000 per ton in their analysis of whether a measure was cost effective. Georgia has used this threshold for over 12 years in developing their VOC and NO X RACT regulations. It was, therefore, used in the RACM analysis for consistency. EPA does not consider this cut-off valid for all areas and it may not be valid for Georgia in all areas. However, for the purpose of this RACM demonstration and considering consistency in developing other measures supporting this demonstration, EPA believes this cut-off is acceptable for Atlanta. The RACM analysis indicates that additional reductions of 18.66 TPD NO X and 51.76 TPD VOC are available for implementation by 2003 in the Atlanta 1-hour ozone nonattainment area. For the RACM analysis, the GAEPD had to demonstrate why these remaining reductions would not advance attainment for a 2003 attainment year prior to the regional NO X reductions expected from the EPA NO X SIP Call in 2004. To do this, GAEPD estimated the effect of the NO X SIP Call and the RACM reductions on ozone concentrations.

The SIP for bringing the Atlanta area into compliance with the 1-hour ozone NAAQS relies upon reductions from the NO X SIP Call implemented in upwind states. In order to advance the attainment date from November 15, 2004, and thereby be classified as RACM, a control measure or set of control measures would need to provide a greater effect, during the 2003 ozone season, on ozone reduction than the NO X SIP Call measures will provide in 2004. Appendix C, “1-Hour Upwind/Downwind Linkages” of The Air Quality Modeling Technical Support Document for the NO X SIP Call, September 23, 1998, lists Alabama, Kentucky, North Carolina, South Carolina, and Tennessee as significant contributors to Atlanta's ozone exceedances. Table 6 of EPA's Final 2007 Base NO X emission rates published in the Federal Register on March 2, 2000, (65 FR 11222) gives totals for these five states equal to 1,109,255 tons per season or 10,177 tons per day.

Not all of these emissions are transported into Georgia or the Atlanta area. Therefore, any meaningful comparison must be based on the NO X SIP Call's effect on ozone concentrations in Atlanta. Appendix G of the EPA NO X SIP TSD referenced above, “Evaluation of Contributions—Tables of Metrics, 1-Hour CAMX: Upwind States to Downwind States,” page G-6, gives average contributions to an Atlanta area exceedance as follows: Alabama 8 percent; Kentucky, 1 percent; North Carolina, 1 percent; South Carolina, 1 percent; and Tennessee, 4 percent for a total contribution of 15 percent. The State calculated the effect on a monitored exceedance occurring at 125 ppb, the result being a contribution of 18.6 ppb (125 ppb x 15 percent) from upwind states. The implementation of the NO X SIP Call in 2004 would reduce the contribution to ozone exceedances in Atlanta by 18.6 ppb.

The effect the “remaining measures” would have on air quality if implemented during the 2003 ozone season is calculated by dividing the estimated NO X or VOC reduction amount times the change in pollutant per change in ozone. Using the factors developed in the air quality assessment to determine the change in ozone concentration from emissions reductions (i.e., 41.45 TPD NO X per 1 ppb ozone, 164.9 TPD VOC per 1 ppb ozone), the expected change in ozone concentration from the emissions reductions from the remaining measures in the RACM analysis (i.e., 18.66 TPD NO X , 51.71 TPD VOC) can be estimated. The procedure used to develop the NO X and VOC factors are discussed in the TSD. Taking the ratio of the factors and the remaining measures reductions would yield 0.45 ppb of ozone decreases from the NO X reductions and 0.31 ppb of ozone decreases from the VOC reductions. The total ozone reduction due to remaining measures would be 0.75 ppb of ozone. Hence, implementation of the remaining measures in 2003 from the RACM analysis is much less than would be needed to achieve attainment in 2003 without the much larger reductions from the NO X SIP Call that will be achieved in 2004. This analysis therefore demonstrates that no additional RACM measures are reasonably available for the Atlanta 1-hour ozone nonattainment area.

Approval of a RACM analysis must be done on a case-by-case basis and the approval for the Atlanta area is not intended to set precedent for any other area requiring a RACM analysis or for any other pollutant.

Although EPA does not believe that section 172(c)(1) requires implementation of additional measures for the Atlanta area, this conclusion is not necessarily valid for other areas. Thus, a determination of RACM is necessary on a case-by-case basis and will depend on the circumstances for the individual area. In addition, if in the future EPA moves forward to implement another ozone standard, this RACM analysis would not control what is RACM for these or any other areas for that other ozone standard.

Also, EPA has long advocated that states consider the kinds of control measures that the commenters have suggested, and EPA has indeed provided guidance on those measures. See, e.g., http://www.epa.gov/otaq/transp.htm. In order to demonstrate that they will attain the 1-hour ozone NAAQS as expeditiously as practicable, some areas may need to consider and adopt a number of measures-including the kind that GAEPD evaluated in its RACM analysis —that even collectively do not result in many emission reductions. Furthermore, EPA encourages areas to implement technically available and economically feasible measures to achieve emissions reductions in the short term-even if such measures do not advance the attainment date-since such measures will likely improve air quality. Also, over time, emission control measures that may not be RACM now for an area may ultimately become feasible for the same area due to advances in control technology or more cost-effective implementation techniques. Thus, areas should continue to assess the state of control technology as they make progress toward attainment and consider new control technologies that may in fact result in more expeditious improvement in air quality.

The MVEB for 2004 were calculated using the revised speeds, updated registration data, updated vehicle miles traveled (VMT), and projected 2004 VMT, and the control measures identified in the 1-hour ozone attainment demonstration for the Atlanta area. The resulting budgets are 106.25 and 225.12 tons per typical summer day of VOC and NO X , respectively.

These MVEB reflect the most up-to-date mobile modeling assumptions including 2004 VMT projected from the travel demand model for the Atlanta area and July 2004 emission factors from EPA's MOBILE5b emission factor model and 1999 vehicle registration data, which was the most recent available data at the time of SIP adoption. The control measures identified and modeled for mobile emissions used to establish the MVEB, along with other control measures in this plan, will result in attainment of the 1-hour ozone NAAQS by 2004.

The GAEPD has provided a clearly identified conformity budget for which the Region has initiated the adequacy review process. Comments received during the public comment period are being addressed and the response to these comments will be posted on the agency's internet location at http://www.epa.gov/otaq/transp/conform/adequacy.htm. (Memorandum, “Conformity Guidance on Implementation of March 2, 1999 Conformity Court Decision,” from Gay MacGregor, Director, Regional and State Programs Division, Office of Mobile Sources, issued May 14, 1999, to Regional Air Division Directors.)

EPA is proposing to approve the 2004 MVEB because they are based on the most recent data, they reflect reductions from the control measures included in the attainment demonstration and they are consistent with the overall attainment demonstration. However, a final decision on adequacy will be made on a later date.

In 1997, EPA published the “Voluntary Mobile Source Emission Policy” (VMEP) in order to assist states considering nonregulatory emission strategies, which are generally not effective on a mandatory basis. The VMEP policy allows states to take credit for expected emission reductions from voluntary mobile source programs, and allows states to take credit for up to 3 percent of the total emission reductions needed for attainment through the VMEP policy. Georgia is using this policy to take credit for its PSG program. The PSG promotes effective voluntary actions that employers, their employees and general residents in the region can take to help improve air quality in the metro Atlanta region during the ozone season. Since 1997, EPA and the State have been working to evaluate the PSG program and its corresponding emission reductions. It was agreed that the best way to evaluate the program was to set VMT emission targets based on assumptions which are consistent with the existing emission models and travel demand models used in the region. The program assumes that 20 percent of the PSG program members will use a non-single occupancy vehicle (SOV) method to commute to work. Data collected between 1997 and 2000 indicates that non-PSG partners also change commuter patterns and that about 40 percent of the non-PSG commuters use non-SOV methods to get to work at least one day per week. However, due to programmatic uncertainty, the State reduced this expectation by 75 percent and is assuming 10 percent of all non-PSG program commuters will commute using non-SOV methods. This assumption is consistent with the VMEP policy regarding programmatic uncertainty. The GAEPD has committed to attaining 4.28 tpd of NO X reductions and 6.51 tpd of VOC reductions by the year 2003 through this program.

The VMEP policy allows the State to take credit for projected emission reductions without the need for preapproved contingency measures should the program fall short of the expected emission reductions. However, the State has committed to meeting the specific emission targets and will make up any emission reduction shortfall through other means. The State has demonstrated that it has sufficient funding to implement an effective program and is committed to annual program evaluation to ensure that target levels are met. In addition, the State is committing to provide annual evaluation reports to EPA each February 1 beginning in 2002. The State will use these evaluations to adjust the PSG program prior to the 2004 attainment date if needed to ensure that target levels are met or the emission reductions are achieved through other means. Additional information can be found in the corresponding TSD. Therefore, EPA is proposing to approve the PSG program, its evaluation procedures, and the expected emission reduction targets as an enforceable part of the SIP.

A mid-course review (MCR) is a reassessment of modeling analyses and more recent monitored data to determine if a prescribed control strategy is resulting in emission reductions and air quality improvements needed to attain the ambient air quality standard for ozone as expeditiously as practicable but no later than the statutory dates.

The EPA believes that a commitment to perform a MCR is a critical element of the WOE analysis for the attainment demonstration on which EPA is proposing to take action today. In order to approve the attainment demonstration SIP for the serious areas requesting an attainment date extension to a year prior to 2005, a review that occurs at a midpoint prior to the attainment date would be impractical in terms of timing. Therefore, for these areas, the State's commitment to an MCR would be a commitment to perform an early attainment assessment to be submitted by the end of the attainment year (e.g., 2003). GAEPD has committed to perform an early attainment assessment of the Atlanta 1-hour ozone attainment demonstration and submit it to EPA by November 15, 2003.

The ozone attainment demonstration for the Atlanta 1-hour ozone SIP, as submitted on July 17, 2001, contains modeling that was developed according to EPA recommended modeling protocols. Based on the results of the modeling plus additional WOE analysis, the supplemental assessment for attainment in 2004, the suite of control measures to be implemented by 2003 and the RACM analysis, EPA is proposing that the State has adequately demonstrated that the Atlanta area will attain the 1-hour ozone NAAQS by the end of the 2004 ozone season. Prior to, or simultaneous with, taking final action on this proposal, EPA will need to take action on the Georgia fuel rule and the associated fuel waiver request.

EPA's policy regarding an extension of the ozone attainment date for areas affected by transport was set forth in a July 16, 1998, guidance Memorandum entitled “Extension of Attainment Dates for Downwind Transport Areas” which was published in a notice of interpretation on March 25, 1999 (64 FR 12221). In it, EPA set forth its interpretation of the CAA regarding the extension of attainment dates for ozone nonattainment areas that have been classified as moderate or serious for the 1-hour ozone NAAQS, and which are downwind of areas that have interfered with the moderate and serious nonattainment areas's attainment of the ozone NAAQS by dates prescribed in the CAA. EPA stated that it will consider extending the attainment date for an area or a state that:

a. Has been identified as a downwind area affected by transport from either an upwind area in the same state with a later attainment date or an upwind area in another state that significantly contributes to downwind ozone nonattainment;

b. Has submitted an approvable attainment demonstration with any necessary, adopted local measures, and with an attainment date that shows it will attain the 1-hour NAAQS no later than the date that the emission reductions are expected from upwind areas in the final NO X SIP Call and/or the statutory attainment date for upwind nonattainment areas, i.e., assuming the boundary conditions reflecting those upwind emission reductions;

c. Has adopted all applicable local measures required under the area's current ozone classification and any additional emission control measures demonstrated to be necessary to achieve timely attainment, assuming the emission reductions occur as required in the upwind areas; and

d. Has provided that it will implement all adopted measures as expeditiously as practicable, but no later than the date by which the upwind reductions needed for attainment will be achieved.

(i) The State has cited EPA's NO X SIP Call modeling and analyses documented in EPA's final NO X SIP Call notice published on October 27, 1998, (63 FR 57356) to demonstrate that the Atlanta area is affected by an upwind area in another state that significantly contributes to ozone nonattainment in the Atlanta area. In our December 16, 1999, notice (64 FR 70478) proposing approval of the initial 1-hour ozone attainment demonstration for the Atlanta area submitted on October 28, 1999, we explained how the Ozone Transport Assessment Group (OTAG) modeling which supported the NO X SIP Call and the attainment demonstration for the Atlanta area demonstrates the impacts of transport. The NO X SIP Call notice provides that emissions from sources in Alabama, Kentucky, North Carolina, South Carolina, and Tennessee significantly contribute to violations of the 1-hour ozone standard in the Atlanta area.

(ii) As explained elsewhere in this notice, the GAEPD has submitted an attainment demonstration that EPA believes is approvable. All of the local control measures relied upon in the attainment demonstration have been adopted and submitted to EPA. These measures include all serious area requirements under section 182(c) and the additional controls discussed in the December 16, 1999, proposal (64 FR 70478) and the July 10, 2001, (66 FR 35906) final rule.

(iii) The GAEPD has adopted all local measures required by section 182(c) of the CAA for the Atlanta serious nonattainment area. (See 59 FR 46176, 60 FR 12691, 60 FR 66150, 61 FR 3819, 62 FR 42918, 64 FR 20188). Additionally, see discussion of contingency measures discussed below.

(iv) With respect to implementation of all adopted measures as expeditiously as practicable but no later than the time upwind controls are expected, the Atlanta SIP requires that all local control measures needed for attainment be in place by May 1, 2003, or earlier. The upwind areas identified above are required to implement controls consistent with the NO X SIP Call by May 31, 2004. All of the local control measures in the Atlanta SIP will, therefore, be implemented prior to that time and EPA also proposes to find that they will be implemented as expeditiously as possible.

EPA proposes, based on the above discussion, that the Atlanta SIP has met the criteria for an attainment date extension. Therefore, EPA is proposing to extend the attainment date for the Atlanta area to November 15, 2004, to allow the reductions in transport to occur before attainment is required. This does not affect the GAEPD's obligation to implement the remaining local measures by the dates required in the approved SIP regulations. Additional background information on EPA's attainment date extension policy can be found in the following Federal Register notices:

Table 2 lists the number of exceedances of the 1-hour ozone NAAQS for each monitor in the Atlanta nonattainment area for the period 1997-1999. The ozone design value for each monitor is also listed for the same period. A complete listing of the ozone exceedances for each monitoring site, as well as EPA's calculations of the design values, can be found in the docket file. For the three year period ending in 1999 ( i.e., 1997-1999), the design value for the Atlanta area was 0.156 ppm. For this three year period and each three year period thereafter, the Atlanta area had a design value greater than 124 ppm. Therefore, if EPA does not approve an attainment date extension for Atlanta pursuant to section 181(b)(2)(A) of the CAA, EPA proposes to find that the Atlanta area did not attain the 1-hour NAAQS by the November 15, 1999, statutory attainment deadline.

Section 181(b)(2)(A) of the CAA requires that, when an area is reclassified for failure to attain, its reclassification be the higher of the next higher classification or the classification applicable to the area's ozone design value at the time the notice of reclassification is published in the Federal Register . Section 181(b)(2)(A)(ii) provides that no area shall be reclassified as Extreme. The Atlanta area is a serious nonattainment area with a design value of 0.156 ppm. Therefore, if EPA finalizes the finding of failure to attain, the Atlanta area would be reclassified, by operation of law, as a severe nonattainment area.

Section 182(i) states that the Administrator may adjust applicable deadlines (other than attainment dates) to the extent such adjustment is necessary or appropriate to assure consistency for submission of the new requirements applicable to an area which has been reclassified. An area reclassified to severe is required to submit SIP revisions addressing the severe area requirements for the 1-hour ozone NAAQS in section 182(d).

If the Atlanta area is reclassified to severe, EPA must also address the schedule by which Georgia is required to submit SIP revisions meeting the severe area requirements. EPA is proposing to require that the State submit SIP revisions containing all the severe area requirements no later than 12 to 18 months after final action on the reclassification. EPA is soliciting comments pertaining to the time frame for SIP submission. This submission would include a new attainment demonstration and all additional measures required by section 182(d) of the CAA. The additional measures include, but are not limited to, the following: (1) the use of reformulated gasoline in the nonattainment area, (2) the new source review offset requirements would increase from 1.2 to 1 to 1.3 to 1, (3) the definition of a major source would decrease from 50 tons per year to 25 tons per year, and (4) sources in the nonattainment area could be subject to enforcement penalties for failure to attain. Additionally, the attainment date will be as expeditiously as practicable, but no later than 2005.

Section 172(c)(9) and 182(c)(a) of the Act require SIPs to contain additional measures that will take effect without further action by the state or EPA if an area fails to attain the standard by the applicable date or to meet rate-of-progress (ROP) deadlines. The CAA does not specify how many contingency measures are needed or the magnitude of emissions reductions that must be provided by these measures. However, EPA provided guidance interpreting the control measure requirements of 172(c)(1) and 182(c)(a) in the April 16, 1992, General Preamble for Implementation of the CAA (see 57 FR 13498, 13510). In that guidance, EPA indicated that states with moderate and above ozone nonattainment areas should include sufficient contingency measures so that, upon implementation of such measures, additional emissions reductions of up to 3 percent of the emissions in the adjusted base year inventory (or such lesser percentage that will cure the identified failure) would be achieved in the year following the year in which the failure has been identified. States must show that their contingency measures can be implemented with minimal further action on their part and with no additional rulemaking actions such as public hearings or legislative reviews. The additional 3 percent reduction would ensure that progress toward attainment occurs at a rate similar to that specified under the reasonable further progress requirements for moderate areas (i.e., 3 percent per year), and that the state will achieve these reductions while conducting additional control measure development and implementation as necessary to correct the shortfall in emissions reductions.

EPA has also determined that federal measures can be used to analyze whether the contingency measure requirements of section 179(c)(9) and 182(c)(a) have been met. While these measures are not SIP-approved contingency measures which would apply if an area fails to attain, EPA believes that existing federally enforceable measures can be used to provide the necessary substantive relief. Therefore, federal measures may be used in the analysis, to the extent that the attainment demonstration does not rely on them or take credit for them ( see, e.g., 66 FR 586, 615 (January 3, 2001)).

EPA believes the contingency measure requirements of sections 172(c)(9) and 182(c)(9) are independent requirements from the attainment demonstration requirements under sections 172(c)(1) and 182(c)(2)(A) and the ROP requirements under sections 172(c)(2) and 182(c)(2)(B). The contingency measure requirements are to address the event that an area fails to meet a ROP milestone or fails to attain the ozone NAAQS by the attainment date established in the SIP. The contingency measure requirements have no bearing on whether a state has submitted a SIP that projects attainment of the ozone NAAQS or the required ROP reductions toward attainment. The attainment or ROP SIP provides a demonstration that attainment or ROP requirements ought to be fulfilled, but the contingency measure SIP requirements concern what is to happen only if attainment or ROP is not actually achieved. The EPA acknowledges that contingency measures are an independently required SIP revision, but does not believe that submission of contingency measures is necessary before EPA may approve an attainment or ROP SIP. However, EPA believes that areas should have sufficient reductions to meet contingency measure requirements, even if a contingency measure SIP has not been approved, in order to receive an attainment date extension.

EPA has examined the 15 percent ROP and 9 percent ROP plans which were submitted to EPA on June 17, 1996. EPA believes that contingency measure requirements can be met by surplus reductions achieved in the ROP plans. EPA granted approval to the 15 percent ROP in a Federal Register published on April 26, 1999, (64 FR 20186). The 9 percent ROP was approved in a Federal Register published on March 18, 1999, (64 FR 13348). Detailed information relating to the calculation of Georgia's 1990 adjusted baseline inventory for VOC and NO X emissions for the Atlanta area can be found in the above referenced Federal Register actions. The adjusted baseline inventory for VOC found in Georgia” 15 percent ROP is 526.19 tpd and the adjusted baseline inventory for NOX found in the 9 percent ROP is 483.12. Therefore, the required 3 percent ROP reductions would be 15.79 tps for VOC (0.03 × 526.19 = 15.79) and 14.50 tpd for NO X (0.03 × 483.12 = 14.5). In the 15 percent ROP Georgia exceeds the required VOC emissions reduction by 1.06 tpd. This equates to 0.20 percent of the required 3 percent reduction, leaving a balance of 2.80 percent to be made up by NO X reductions. This must be 2.8 percent of the NO X adjusted baseline inventory. Therefore, the required NO X reductions to satisfy contingency requirements for ROP equal 13.53 tpd (0.0280 × 483.12). The 9 percent ROP achieves an excess NO X emissions reduction of 19.47 tpd. Thus, the excess emission reductions achieved in the ROP plans meet the 3 percent contingency requirement. EPA is proposing to approve these contingency measures for ROP.

Additionally, EPA examined the attainment demonstration for the Atlanta area submitted on July 17, 2001, for contingency measures. Although no measures have been specifically designated as contingency measures, EPA has found that measures that could reasonably constitute appropriate contingency measures are already contained in the SIP or exist in promulgated federal regulations. These measures include EPA's Tier 2 tailpipe standards, national low emission vehicle program, heavy duty diesel emission standards for 2004. Additionally, the Atlanta area will benefit from fleet turnover, as well as an additional model year of light duty vehicles subject to on-board diagnostic (OBD) testing. These measures will continue to provide reductions after November 2004, the attainment date EPA is proposing to approve for the Atlanta area. The measures are estimated to reduce emissions in the area by 1.45 percent of the 1990 VOC adjusted baseline emissions and 3.31 percent of the 1990 NO X adjusted baseline emissions by 2005 (the year following the time by which EPA must determine whether the area has attained). More details on EPA's contingency measure analysis are included in the docket for this rulemaking action. While there is not an approved contingency measure that would apply if the Atlanta area failed to attain, EPA believes that existing federally enforceable measures would provide the necessary substantive relief sufficient to provide the basis for proposing approval of an extension to the area's attainment date.

Today, EPA is proposing to approve the 1-hour ozone attainment demonstration for the Atlanta area as submitted on July 17, 2001, the RACM analysis, commitment to perform an early attainment assessment, contingency measures, the 2004 MVEB, PSG program and to extend the attainment date to November 15, 2004. In the alternative, EPA is proposing to find that the Atlanta area failed to attain the 1-hour ozone NAAQS by November 15, 1999. Should EPA not take final action to approve the attainment demonstration and extend the attainment date, EPA is also proposing, in the alternative, to reclassify the Atlanta area to severe. In such case, additional Federal Register action will be taken to set the appropriate submittal dates for any additional measures required for severe areas and the attainment date.

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

This proposed rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely proposes to approve a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This proposed rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant. In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The following section provides the rationale for EPA's approval of the Georgia fuel requirements into the SIP, as provided in section 211(c)(4)(C) of the Act. Georgia's fuel requirements are being implemented in two phases. The initial phase requires the low-sulfur/low-RVP gasoline sold in the 13-county Atlanta nonattainment area and 12 surrounding attainment counties during the regulatory control period (June 1 through September 15) each year through 2002. The second phase of the Georgia fuel program expands the low-sulfur/low-RVP requirements to an additional 20 attainment counties. The program becomes a year-round program in 2003, except that the RVP requirement applies only during the June 1 through September 15 control period.

On October 28, 1999, the State of Georgia, through the GAEPD, submitted an attainment demonstration for the 1-hour ozone NAAQS for the Atlanta nonattainment area for inclusion into the Georgia SIP. This submittal included a version of the low-sulfur/low-RVP fuel regulations that has subsequently been amended by the State, and submitted by the State to EPA in revised form in subsequent SIP revisions dated July 31, 2000, and August 21, 2001. The version submitted on August 21, 2001, which is the subject of this proposed rulemaking, is the “Gasoline Marketing Rule,” provided in Georgia's Rules for Air Quality Control, Chapter 391-3-1.02(2) (bbb).

On May 31, 2000, in support of its request for SIP approval of the State fuel regulations, GAEPD also submitted a demonstration that, in accordance with section 211(c)(4)(C) of the Act, the fuel control is necessary to achieve a NAAQS. On November 9, 2001, GAEPD submitted an updated “necessity” demonstration which reflected the revised motor vehicle emissions budget, the request for an attainment date extension from 2003 to 2004, and the revised Partnership for a Smog Free Georgia emissions calculations.

The SIP submittals, including the rule for Georgia's low-sulfur/low-RVP fuel control program, meet the requirements outlined in section 110 and Part D of Title I of the CAA amendments and 40 CFR part 51 (Requirements for Preparation, Adoption and Submittal of Implementation Plans). The current version of the fuel rule was formally adopted by the GAEPD Board on June 27, 2001, and became effective July 18, 2001.

As noted above, on October 28, 1999, GAEPD submitted for EPA approval an ozone attainment demonstration for the Atlanta nonattainment area, which relies upon a number of control measures, including the low-sulfur/low RVP fuel program, to support the demonstration. On December 16, 1999, EPA proposed to approve the October 28, 1999, attainment demonstration for the Atlanta nonattainment area, as well as the underlying rule revisions with the exception of the Georgia fuel rule (the subject of this proposed rulemaking) (see 64 FR 70478). EPA's proposed approval was based on the condition that the GAEPD satisfy certain requirements.

Subsequently, the GAEPD submitted revisions to the Atlanta attainment demonstration on January 31, 2000, and July 31, 2000, along with revisions to State rules supporting the attainment demonstrations. Those rule revisions were proposed for approval on December 18, 2000 (see 65 FR 79034). No adverse comments were received pertaining to any rule revisions.

On July 10, 2001, EPA granted final approval to the rule revisions contained in the December 16, 1999, and December 18, 2000, proposals (see 66 FR 35906). The final rule noted that EPA action for the Atlanta attainment demonstration would be taken in a separate notice.

On July 17, 2001, GAEPD submitted another revised attainment demonstration. The attainment demonstration continues to rely in part on the expected emissions reductions that will be achieved by the low-sulfur/low-RVP fuel control being proposed for SIP approval in this action. Based on the revised Atlanta attainment demonstration, submitted on July 17, 2001, EPA is currently proposing approval for the Atlanta attainment demonstration in a separate notice.

This approval action is being taken pursuant to section 110 of the Act. The approval of the State's fuel control measure must also meet the requirements of section 211(c)(4)(C). Under this section of the Act, EPA may approve a state fuel control into a SIP if it is found that the control is “necessary” to achieve a NAAQS.

EPA's August 21, 1997, Guidance on Use of Opt-in to RFG and Low-RVP Requirements in Ozone SIPs gives further guidance on what EPA is likely to consider in making a finding of necessity. The guidance sets out four issues to be analyzed:

1. The quantity of emission reductions needed to achieve the NAAQS;

2. Other possible control measures and the reductions each would achieve;

3. The explanation for rejecting alternatives as unreasonable or impracticable;

4. A demonstration that reductions are needed even after implementation of reasonable and practicable alternatives, and that the fuel control will provide some or all of the needed reductions.

In this notice of proposed rulemaking and associated Technical Support Document (TSD), EPA addresses these issues.

The State's low-sulfur/low-RVP regulation includes two phases of fuel controls that will eventually apply in the 13-county Atlanta nonattainment area and 32 surrounding attainment counties. Described below are the primary features of these phases of control. The first phase of fuel controls apply to the 13-county Atlanta nonattainment area (highlighted in bold) and 12 surrounding attainment counties which include the following: Barrow, Bartow, Butts, Carroll, Cherokee, Clayton, Cobb, Coweta, Dawson, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Hall, Haralson, Henry, Jackson, Newton, Paulding, Pickens, Rockdale, Spalding, and Walton. The controls for the first phase of the State's program, effective through 2002, require that all gasoline sold during the control period (June 1 through September 15) in these counties contain a maximum RVP of 7.0 pounds per square inch (psi) and maximum volume-weighted seasonal average sulfur level of 150 parts per million (ppm) (by weight) and, effective April 1, 2001, a maximum per-gallon volume-weighted sulfur level of 500 ppm (by weight). For ethanol blends meeting specified conditions, Georgia's regulations limit RVP to a maximum of 8.0 psi.

The second phase of fuel controls apply to the aforementioned counties and 20 additional attainment counties surrounding the Atlanta nonattainment area. These additional counties include: Banks, Chattooga, Clarke, Floyd, Gordon, Heard, Jasper, Jones, Lamar, Lumpkin, Madison, Meriwether, Monroe, Morgan, Oconee, Pike, Polk, Putnam, Troup, and Upson. The fuel controls for the second phase of the State's program are effective April 1, 2003. Under this phase of the State's program, the RVP requirement is maintained and extended to the additional counties but otherwise does not change. The sulfur requirements, however, become more stringent annual averages. The maximum annual average sulfur level allowed in gasoline is reduced to 30 ppm (by weight); the per-gallon limit is reduced to 150 ppm (by weight). Effective June 1, 2004, the seasonal per-gallon sulfur limit is reduced to 80 ppm (by weight) during the June 1 through September 15 control period.

EPA finds that the fuel rule contains adequate enforcement provisions. GAEPD will enforce the low-sulfur/low-RVP rule. Producers, importers, terminals, pipelines, truckers, rail carriers, and retail dispensing outlets are subject to provisions of this rule. Registration, recordkeeping, reporting, and certification requirements are included. GAEPD will conduct sampling for the fuel program in accordance with the “Methodology for Randomized Sampling to Estimate Mean Sulfur in Gasoline During a Specified Ozone Season” (contained in Appendix XXX of the attainment demonstration) or by some EPA-approved modification of this sampling plan. Samples, the number to be determined in coordination with GAEPD and EPA, will be collected and analyzed for RVP and sulfur throughout the control period. Any sample that exceeds the limits specified in the fuel rule will be considered a violation and may require an enforcement action. If an enforcement action is warranted, GAEPD would use one of two approaches. Upon learning of a violation, the GAEPD will issue a notice of violation and negotiate a consent order. If a consent order cannot be negotiated, GAEPD will issue an administrative order. Another provision of the fuel rule provides that the seasonal sulfur average will not exceed 140 ppm when the sulfur limit is 150 ppm. If the seasonal sulfur average exceeds 140 ppm, GAEPD will require 100 percent terminal testing in lieu of testing at the retail level for future control periods. Also, when Georgia's sulfur requirement is reduced to 30 ppm, 30 ppm is the “trigger” that will require 100 percent terminal testing in lieu of testing at the retail level for future control periods. Additional commitments related to the enforcement and implementation of the Georgia fuel program are provided in the transmittal letter for the November 9, 2001, fuel control supplemental “necessity” demonstration.

The State's modeling for this attainment demonstration shows that, even with implementation of all reasonable and practicable measures, including the low-sulfur/low-RVP fuel program, the design value for the nonattainment area will just barely meet the 1-hour ozone standard. Please refer to the accompanying TSD for more information about the photochemical modeling and the weight-of-evidence (WOE) analysis. Once fully implemented, the low-sulfur/low-RVP fuel program will provide 42.93 tons per day (TPD) of NO X and 24.16 TPD of VOC emission reductions. Thus, the low-sulfur/low-RVP fuel program will provide emissions reductions needed for the Atlanta nonattainment area to achieve the 1-hour ozone NAAQS.

On May 1, 1998, EPA released a staff paper presenting EPA's understanding of the impact of gasoline sulfur on emissions from motor vehicles and exploring what gasoline producers and automobile manufacturers could do to reduce sulfur's impact on emissions. The staff paper noted that gasoline sulfur degrades the effectiveness of catalytic converters and that high sulfur levels in commercial gasoline could affect the ability of future automobiles—especially those designed for very low emissions—to meet more stringent NO X and VOC standards that are in use. The paper also pointed out that sulfur control will provide additional NO X benefits by lowering emissions from the current fleet of vehicles.

Lowering the RVP in gasoline reduces VOC emissions, primarily through reducing evaporative losses from vehicle fuel tanks, lines, and carburetors as well as losses from gasoline storage and transfer facilities. To a lesser degree, lowering RVP can also reduce VOCs in vehicle exhaust.

Reducing these emissions in both the nonattainment area and the surrounding attainment areas will help address the ozone problem in the Atlanta nonattainment area. Specifically, lowering NO X and VOC emissions through the Atlanta low-sulfur/low-RVP program will benefit the Atlanta nonattainment area by reducing NO X and VOCs emitted within the 13-county nonattainment area, and by vehicles that originate in the 32-county attainment area and drive into the nonattainment area. Please refer to the TSD for more information on the commuting patterns for the area.

The State conducted thorough analyses of potential non-fuel control measures available for the Atlanta nonattainment area. The attainment demonstration for the Atlanta nonattainment area contains a detailed discussion of point and other source controls that are required to help achieve attainment of the 1-hour ozone NAAQS in the Atlanta nonattainment area. Many of these control measures were analyzed in a study, “The Direct Cost of Controlling NO X and VOC emissions in Atlanta,” completed by the Georgia State University on November 1, 1997. Following the completion of this study, the State made its own review of possible control measures, including its review of “reasonably available control measures” (RACM) as required under the Act. The State's summary of its review of non-fuel control measures is contained in Attachment 3 to the November 9, 2001 “necessity” demonstration, which is available in the docket for this rulemaking. The discussion below briefly describes the State's evaluation of the reasonableness and practicability of the non-fuel alternatives that are potentially available after adopting those control measures already included in the revised attainment demonstration. For more detail on the control measures that have already been included in the revised attainment demonstration, and on the State's evaluation of remaining potential alternatives, see the TSD for this rulemaking.

Each potential control option was evaluated according to: (1) The State's authority to implement controls; (2) the amount of NO X reductions; (3) the amount of VOC reductions; (4) whether a similar control measure is already being implemented; (5) the cost-effectiveness of the controls; (6) whether SIP credit has already been taken for the measure; and (7) whether the measure can be implemented by May 1, 2003 (since measures implemented after this date cannot advance the 2004 attainment date).

GAEPD considered the following source categories for additional VOC and NO X control measures for the purposes of evaluating the “necessity” of the fuel control measure: (for point sources) furniture and fixtures manufacturing facilities, food and kindred products facilities, commercial printing facilities, chemical products facilities, rubber and plastic facilities, paper and allied products facilities, primary metal facilities, fabricated metal products facilities, non-electrical machinery facilities, electrical equipment facilities, petroleum refining facilities, asphalt and coating facilities, air transportation facilities, transportation equipment facilities, stone, clay, and glass products facilities, hydraulic cement facilities, and sewage plants; (for area sources) auto refinishing operations, surface cleaning and preparation operations, solvent degreasing operations, new residential natural gas water heaters, certain commercial and/or industrial watertube and firetube boilers and pesticide application; (for on-road mobile) elimination of vehicle I/M waivers and exemptions, transportation demand management and vehicle usage disincentives; (for nonroad mobile) railroad switcher engines, specific recreational vehicle types and/or pleasure craft, and lawn and garden equipment.

After further analysis of potential controls on each of the above sources, GAEPD concluded that it was not reasonable or practicable to further control these sources. Specifically, for many of the sources listed above GAEPD stated that the time required to implement controls is unpredictable because legislative action authorizing such regulation by GAEPD would be required, or the number of facilities and potential discharge points affected by these control measures would require a tremendous increase in GAEPD resources to implement and ensure compliance.

Based on the State's analysis of the potentially available alternatives, we agree that there are no reasonable or practicable non-fuel control measures available to the State to achieve the 1-hour ozone NAAQS in a timely manner. Individually, none of these controls would supply enough emissions reductions to displace the need for the fuel measure. In order to replace the needed VOC reductions provided by the fuel measure, the State would need to implement nearly all of the potential controls which would require substantial resources and may not be possible in the time allowed, i.e., by 2004. Even if the State did adopt and implement all of the potentially available NO X control measures, the State would not be able to replace the needed NO X reductions provided by the fuel measure. Compared to all of the potentially available measures outlined in the TSD, the low-sulfur/low-RVP fuel, which has already been implemented in its first phase, is the most reasonable and practicable measure available to reduce the emissions from ozone precursors for the Atlanta nonattainment area. Low-sulfur/low-RVP fuel is readily available to the State because it is also being provided to the Birmingham, Alabama nonattainment area. The benefits of this fuel program are already being felt in the Atlanta nonattainment area.

EPA is proposing to approve Georgia's low-sulfur/low-RVP fuel program into the SIP. The State has demonstrated necessity as required by section 211(c)(4)(C) of the Act. Without the fuel control program in both the nonattainment area and in the surrounding attainment areas, the design values for the nonattainment area will continue to exceed the 1-hour ozone NAAQS. In the Atlanta attainment demonstration, the State examined control measures, not previously implemented, and concluded that, even with adoption of all reasonable and practicable non-fuel control measures, additional VOC and NO X reductions in the area are necessary to achieve the 1-hour ozone NAAQS. The State further demonstrated that the fuel control satisfies the requirements of section 110 and will supply reductions needed to achieve the ozone NAAQS.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)). This proposed action merely approves state law as meeting federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

Because this rule proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This proposed rule also does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely proposes to approve a state rule implementing a federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. This proposed rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this proposed rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings' issued under the executive order.

This proposed approval of the Georgia fuel control necessity demonstration does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Under Section 111(d) of the Clean Air Act, EPA published regulations at 40 CFR part 60, subpart B which require states to submit control plans to control emissions of designated pollutants from designated facilities. In the event that a state does not have a particular designated facility located within its boundaries, EPA requires that a negative declaration be submitted in lieu of a control plan.

The Vermont ANR submitted the negative declaration to satisfy the requirements of 40 CFR part 60, subpart B. In the Final Rules Section of this Federal Register , EPA is approving the Vermont negative declaration as a direct final rule without a prior proposal. EPA is doing this because the Agency views this action as a noncontroversial submittal and anticipates that it will not receive any significant, material, and adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If EPA does not receive any significant, material, and adverse comments to this action, then the approval will become final without further proceedings. If EPA receives adverse comments, the direct final rule will be withdrawn and EPA will address all public comments received in a subsequent final rule based on this proposed rule. EPA will not begin a second comment period.

This is a synopsis of the Notice of Proposed Rule Making (“ NPRM ”) in MM Docket No. 01-317, and Docket No. 00-244; FCC 01-329, adopted November 8, 2001, and released November 9, 2001. The complete text of this NPRM is available for inspection and copying during normal business hours in the FCC Reference Center, Room CY-A257, 445 12th Street, S.W., Washington, D.C. and may also be purchased from the Commission's copy contractor, Qualex International, Portals II, 445 12th Street SW, Room CY-B-402, Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-2898, or via email qualexint@aol.com. This document is also available in alternative formats (computer diskette, large print, audio cassette, and Braille). Persons who need documents in such formats may contact Martha Contee at (202) 4810-0260, TTY (202) 418-2555, or mcontee@fcc.gov. The NPRM can be found on the Internet at the Commission's website: http://www.fcc.gov.

1. In accordance with sections 309(a) and 310(d) of the Communications Act of 1934 (“the 1934 Act”), the Commission issues new radio broadcast licenses and approves the assignment and transfer of those licenses only when those actions are consistent with the public interest, convenience, and necessity. Pursuant to its public interest authority, the Commission historically has sought to promote diversity and competition in broadcasting by limiting by rule the number of radio stations a single party could own or acquire in a local market. In section 202(b) of the Telecommunications Act of 1996 (“the 1996 Act”), Congress directed the Commission to revise its local radio ownership rule to relax the numerical station limits in the ownership rules. In the almost six years since the Commission implemented this congressional directive, the local radio market has been significantly transformed as many communities throughout the country have experienced increased consolidation of radio station ownership. In this proceeding, we seek to examine the effect that this consolidation has had on the public and to consider possible changes to our local radio ownership rules and policies to reflect the current radio marketplace.

2. To guide our evaluation of the regulatory policies that we should adopt in light of the current radio marketplace, we review the background of the local radio ownership rule and the traditional interests that the rule was intended to advance.

3. The Commission first limited local radio ownership in 1938, when it denied an application for a new AM station on the ground that the parties that controlled the applicant also controlled another AM station in the same community. The Commission found that the commonly owned, same service stations would not compete with each other and that granting the application could preclude a competitive station from entering the market. Accordingly, “to assure a substantial equality of service to all interests in a community” and “to assure diversification of service and advancements in quality and effectiveness of service,” the Commission held that it would allow commonly owned “duplicate facilities” only where it would fulfill a community need that otherwise could not be fulfilled. Based on this policy, the Commission found that the “public convenience, interest or necessity” would not be served by grant of the application.

4. In the early 1940s, this policy was codified in the Commission's rules. AM licensees were prohibited from owning another AM station that would provide “primary service” to a “substantial portion” of the “primary service area” of a commonly owned AM station, except where the public interest would be served by multiple ownership. FM licensees were prohibited from owning another FM station that served “substantially the same service area.” Between 1940 and 1964, the Commission determined on a case-by-case basis whether two commonly owned, same service radio stations served substantially the same area.

5. In 1964, the Commission replaced its case-by-case analysis with a “fixed standard” consisting of a contour-based test that looked solely to the overlap of the radio stations' signals. The new rule prohibited common ownership of same service stations when any overlap of contours occurred, not just the situation where there was a “substantial” overlap. The Commission explained that the purpose of the multiple ownership rules was “to promote maximum diversification of program and service viewpoints and to prevent undue concentration of economic power contrary to the public interest.” The Commission found that the local radio ownership rule in particular was based on two principles: first, that “it is more reasonable to assume that stations owned by different people will compete with each other, for the same audience and advertisers, than stations under the control of a single person or group;” and second, that “the greater the diversity of ownership in a particular area, the less chance there is that a single person or group can have an inordinate effect, in a political, editorial, or similar programming sense, on public opinion at the regional level.” The Commission cited, as support for the local ownership limits, the principle that the First Amendment “rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.”

6. In the early 1970s, the Commission briefly restricted local radio ownership further by prohibiting, with certain exceptions, common ownership of different service broadcast stations in the same market. These limits were designed to advance diversity by maximizing the number of independent owners of broadcast media in a market, and the Commission rejected arguments that common ownership of local broadcast stations would enhance the ability of station owners to provide better quality, more responsive programming. The Commission also found that common ownership of local broadcast stations could “lessen the degree of competition for advertising among the alternative media” and that common owners could “use practices [such as special discounts] which exploit [their] advantage over the single station owner.” On reconsideration, however, the Commission relaxed its new ownership restrictions to allow again, in all circumstances, a party to hold a single AM-FM combination.

7. In 1989, the Commission relaxed certain technical aspects of the contour overlap test, which decreased the likelihood of contour overlap between closely located stations and thereby increased the ability of a single party to own those stations. In making this change, the Commission determined that ownership diversity was not an end in itself, but a means of “promoting diversity of program sources and viewpoints.” The Commission determined that its rule change would not adversely affect programming and viewpoint diversity because the number of media outlets had increased since the contour overlap test was developed in 1964 and because the efficiencies that common ownership would generate could lead to programming benefits. The Commission also cited the increase in media outlets and the competition that radio stations faced in the advertising market from television stations, cable systems, and newspapers to support its conclusion that relaxing the contour-based test would not harm competition.

8. In a 1992 proceeding, the Commission found that increases in the number and types of media outlets warranted further relaxation of the rule. Citing greater numbers of radio and television stations and the growth of cable, particularly cable radio networks, the Commission determined that relaxing the local radio ownership rule would not harm diversity or competition. Specifically with respect to competition, the Commission found that the radio industry's share of the local advertising market, in which the Commission included television stations and cable systems, had remained flat. The Commission found that the inability of radio stations to realize the efficiencies arising from common ownership harmed diversity and competition by making it more difficult for radio stations to compete and to provide valuable programming services. Accordingly, the Commission decided to relax its ownership rules to permit greater consolidation of radio stations in the local market.

9. The Commission initially adopted a tiered approach, similar to the approach that would be adopted in the 1996 Act. Under the Commission's framework, although common ownership of stations with overlapping signals technically remained prohibited, an exception was created to allow common ownership of a specified number of radio stations based on the number of radio stations in the market. To determine the number of stations that could be commonly owned, radio markets were divided into four tiers, and the maximum number of radio stations that a single party could own was 3 AM and 3 FM stations in the top tier, i.e., markets having 40 or more radio stations. In markets with more than 15 radio stations (the top 3 tiers), the numerical limits were also subject to an audience share cap of 25 percent. Although the Commission recognized that the 25 percent limit was “substantially more restrictive than ordinary antitrust concerns would mandate,” the Commission “decline[d] to base [the] common ownership restrictions solely on economic concentration considerations” because the restrictions also were “designed to protect and promote a diversity of voices—a concern distinct from antitrust objectives.” Both the market size and the audience share were calculated based on the relevant Arbitron market. In adopting this framework, the Commission reserved the right to “implement a full range of remedies” where “ownership levels in a particular market might threaten the public interest.”

10. On reconsideration, the Commission again modified its local radio ownership rule. The rule still generally prohibited common ownership of overlapping stations, but the Commission revised the exception to allow common ownership of up to only 2 AM and 2 FM stations in all markets with 15 or more radio stations. In smaller markets, a single party could own up to 3 stations, of which no more than 2 could be in the same service. The Commission also replaced the audience share cap with a provision that, in markets with 15 or more radio stations, “evidence that grant of any application will result in a combined audience share exceeding 25 percent will be considered prima facie inconsistent with the public interest.” The Commission explained that this provision was designed to prevent “excessive concentration” even if the combination complied with the 2 AM-2 FM limit. The language of the rule indicated that the excessive concentration determination would be made under the public interest standard.

11. The Commission also altered the market definition for calculating the numerical caps; instead of Arbitron markets, the Commission adopted a contour overlap market definition. To determine audience share, the Commission retained use of Arbitron markets, or, if Arbitron data was unavailable, the market created by the counties covered by the contours of the stations to be combined. In certain cases, the Commission permitted applicants to make alternative showings to demonstrate that the proposed combination would not lead to excessive concentration.

12. In the 1996 Act, Congress directed the Commission to revise its local ownership rule. Specifically, section 202(b)(1) of the 1996 Act, entitled “Local Radio Diversity—Applicable Caps,” required the Commission to revise its local radio ownership rule to provide that:

(a) In a radio market with 45 or more commercial radio stations, a party may own, operate, or control up to 8 commercial radio stations, not more than 5 of which are in the same service (AM or FM);

(b) In a radio market with between 30 and 44 (inclusive) commercial radio stations, a party may own, operate, or control up to 7 commercial radio stations, not more than 4 of which are in the same service (AM or FM);

(c) In a radio market with between 15 and 29 (inclusive) commercial radio stations, a party may own, operate, or control up to 6 commercial radio stations, not more than 4 of which are in the same service (AM or FM); and

(d) In a radio market with 14 or fewer commercial radio stations, a party may own, operate, or control up to 5 commercial radio stations, not more than 3 of which are in the same service (AM or FM), except that a party may not own, operate, or control more than 50 percent of the stations in such market. The Conference Report provides little additional detail concerning section 202(b), stating merely that “[n]ew paragraph NPRM 202](b) directs the Commission to further modify its rules with respect to the number of radio stations a party may own, operate or control in a local market.” In particular, neither the 1996 Act nor the legislative history elaborates on the intended interplay between section 202(b) and the public interest standard contained in sections 309(a) and 310(d) of the 1934 Act.

13. In addition to section 202(b), Congress enacted section 202(h) in the 1996 Act. Section 202(h) directs the Commission to “review its rules adopted pursuant to this section and all of its ownership rules biennially * * * and [to] determine whether any of such rules are necessary in the public interest as the result of competition.” Section 202(h) further directs the Commission to “repeal or modify” any ownership rules that it finds to be “no longer in the public interest.” The legislative history provides little additional discussion concerning the implementation of section 202(h).

14. The Commission responded to Congress's directive in section 202(b) by issuing an order in March, 1996 replacing a portion of the local radio ownership rule, including both the numerical station limits and the presumption that an audience share of greater than 25% was prima facie inconsistent with the public interest, with the language set forth in section 202(b). The Commission found that prior notice and an opportunity for public comment were unnecessary because the “rule changes [did] not involve discretionary action on the part of the Commission, [but] simply implement[ed] provisions of the Telecom Act that direct the Commission to revise its rules according to the specific terms set forth in the legislation.”

15. In 1998, the Commission commenced a biennial review to examine whether the local radio ownership rule was “necessary in the public interest as a result of competition (NOI, 63 FR 15353, March 31, 1998).” In its biennial review final report, the Commission concluded that the rule continued to serve the public interest. Although the Commission noted that consolidation had produced financial benefits for the radio broadcast industry, the Commission expressed concern that consolidation could be having an adverse affect on local advertising rates. The Commission also expressed concern that consolidation could reduce diversity of viewpoint and source diversity. Accordingly, the Commission decided to retain the local radio ownership rule without modification.

16. In the 1998 biennial review proceeding, the Commission also decided to examine the method by which it defined the relevant geographic market and counted the number of commonly owned and independent commercial radio stations for purposes of applying the rule. The Commission expressed concern that its current method of defining radio markets might be achieving results that frustrate the Congress' intent and that, together with its method of counting stations in a market for various purposes, might be undermining legitimate expectations of broadcasters, advertisers and the public as to the size of the market and the number of stations in it. The Commission accordingly initiated a rulemaking proceeding in December 2000 to examine possible revisions to its methodology for defining the market and counting the number of commonly owned and independent radio stations.

17. The 1996 revisions to the local radio ownership rule enabled greater consolidation of radio station ownership at the local level, and, since 1996, thousands of assignment and transfer of control applications have been filed to effectuate this consolidation. Although most of these applications were granted summarily, the Commission in certain instances faced concerns regarding the competitive impact of proposed transactions. In response to these concerns, the Commission concluded in a written decision that it had “an independent obligation [under the statute] to consider whether a proposed pattern of radio ownership that complies with the local radio ownership limits would otherwise have an adverse competitive effect in a particular local radio market and[,] thus, would be inconsistent with the public interest.” In several written decisions since 1996, the Commission engaged in public interest analyses that considered the potential competitive impact of the proposed transaction.

18. In addition to competitive analyses, in August 1998 the Commission began “flagging” public notices of radio station transactions that, based on an initial analysis by the staff, proposed a level of local radio concentration that implicated the Commission's public interest concern for maintaining diversity and competition. Under this policy, the Commission flagged proposed transactions that would result in one entity controlling 50% or more of the advertising revenues in the relevant Arbitron radio market or two entities controlling 70% or more of the advertising revenues in that market. Most of these flagged applications that proposed radio concentration levels that were consistent with Commission precedent were granted on delegated authority. A number of applications that remain pending propose concentration levels that would exceed the levels previously approved in Commission-level decisions.

19. We propose to undertake a comprehensive examination of our rules and policies concerning local radio ownership. The radio industry has undergone substantial changes since 1996, and we are concerned that our current policies on local radio ownership do not adequately reflect current industry conditions. Our framework for analyzing proposed radio combinations particularly has led to unfortunate delays that do not serve well the interests of the agency, the parties, or the public. Our goal in this proceeding is to develop a new framework that will be more responsive to current marketplace realities while continuing to address our core public interest concerns of promoting diversity and competition.

20. We start with a review of the statutory framework from which we derive our regulatory authority and under which we implement our radio ownership policy. We next consider the traditional goals that have supported the local radio ownership rule—diversity and competition—and possible ways to measure and promote those goals in the modern media environment. After discussion of these subjects, we lay out possible changes to our radio ownership rules and policies. Our goal here is to consider the public interest advantages and disadvantages of various potential rule and policy changes as well as questions surrounding their implementation. In the final substantive section of this NPRM, we adopt an interim policy to provide guidance on the processing of radio applications pending completion of this rulemaking.

21. Before 1996, Commission regulation of local radio ownership was governed primarily by the statutory mandate of sections 309(a) and 310(d) that the Commission regulate the granting and transfer of radio licenses consistent with the public interest, convenience, and necessity. This public interest authority has long been held to authorize regulations, such as the local radio ownership rule, that are designed to promote the goals of diversity and competition.

22. As a result of the 1996 Act, the broad public interest standards of Title III are no longer the sole congressional statement bearing on the question of local radio ownership. We also must consider the impact of section 202(b) and the rule changes it mandated. In deciding prior cases, the Commission expressed the view that the numerical limits mandated by section 202(b) were important tools for promoting our public interest concerns in local radio markets, but that competitive analyses were appropriate in particular cases where compliance with those limits did not fully address those concerns. Because that view developed out of decisions issued in specific cases, the Commission never received the benefit of public input that a rulemaking proceeding would have afforded. This proceeding will provide us with that opportunity. We propose alternative views on the interplay between section 202(b) and our public interest mandate. We seek comment on these views and invite comment on other possible interpretations of the relevant statutory provisions and the impact any such interpretation would have on our diversity and competition goals if adopted.

23. Commenters should explain the relevance, if any, of section 202(h)'s directive that the Commission review its ownership rules biennially to determine if they are no longer in the public interest as a result of competition. Aside from modifying or eliminating the local radio ownership rule if it is no longer in the public interest as a result of competition, are we permitted to revise or replace the current rule with another framework to address our public interest goals?

24. Commenters also are encouraged to explain how their interpretation of the relevant statutory provisions comports with traditional principles of statutory construction and the specific rule of construction set forth in section 601(c)(1) of the 1996 Act.

25. Numerical limits are definitive. One interpretation of the statutory framework is that Congress conclusively determined that the numerical limits specified in section 202(b) establish radio station concentration levels that are consistent with the public interest in diversity and competition.

26. Numerical limits address diversity only. Another possible interpretation of the statutory framework is that section 202(b) addresses the diversity prong of our public interest analysis, while leaving competition concerns to be addressed by the general public interest standard.

27. Numerical limits presumptively consistent with public interest. A third possible interpretation of the statutory framework is that section 202(b) established presumptively permissible levels of radio station ownership and that, therefore, the Commission should rely on section 202(b)'s numerical limits absent a specific reason to conclude that the rule is ineffective in addressing diversity or competition issues with respect to a particular proposed combination.

28. If we determine that section 202(b) permits us to exercise our public interest authority to promote diversity and competition in radio broadcasting, we seek to explore the contours of these public interest goals, which have been the touchstone of our rules and policies on local radio ownership. We undertake this analysis to guide us as we consider, in accordance with the statutory framework, revisions to those rules and policies to reflect the rapidly changing media marketplace. In that regard, we are especially interested in receiving comments that provide not only the theoretical justifications for adopting a particular regulatory framework, but also relevant empirical data on the effect that consolidation in the radio industry since 1996 has had on diversity and competition in local markets.

29. Diversity is one of the guiding principles of the Commission's local radio ownership rule. This principle is intended to advance the values of the First Amendment, which, as the Supreme Court stated, “rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.”

30. In this proceeding, we intend to consider how our rules and polices concerning local radio ownership affect our goal of promoting diversity. To do this, we first must define the types of diversity we seek to ensure. Viewpoint diversity ensures that the public has access to “a wide range of diverse and antagonistic opinions and interpretations.” Outlet diversity ensures that the public has access to multiple distribution channels ( e.g., radio, broadcast television, and newspapers) from which it can access information and programming. Source diversity ensures that the public has access to information and programming from multiple content providers. We seek comment on which one or more of these three types of diversity should guide our public interest considerations. Are there other aspects of diversity that we should consider? Parties commenting on this issue should explain in detail how the public will be affected if we decide to emphasize one or more of these various aspects of diversity. We especially seek empirical data in support of parties' positions.

31. We also seek comment on how we should measure the success or failure of our diversity goal, however that goal is defined. We seek comment on the advantages and disadvantages of measuring diversity by looking, in whole or in part, to the number of independent station owners. What other measures of diversity, quantitative or qualitative, should we consider, and what tools do we have that enable us to measure diversity with a reasonable degree of accuracy? Are audience demographics an appropriate measure of diversity? Is competition an appropriate proxy for diversity, such that the presence of a competitive local market will assuage our concerns about diversity? Should we take a radio owner's market share, audience share, or subscribership into account in measuring diversity, and if so, how? In considering the various potential ways to measure diversity, we also seek comment on how their use comports with the values and principles embodied in the First Amendment of the Constitution.

32. In searching for ways to define and measure diversity, we are especially interested in the particular impact of our analysis on the radio broadcast industry and radio listeners. We seek comment on whether there are attributes of radio broadcasting that should lead us to define and measure diversity in radio differently from other media. Two attributes of radio broadcasting—its ability to reach mobile users and its audio-only programming—may give radio stations singular access to the public in certain situations, most notably when listeners are in their cars or at their offices or other places of employment. Are those or other attributes of radio broadcasting sufficiently unique that we should look at radio separately for diversity purposes, or do consumers consider other outlets as substitutes for radio? Are there other attributes we should consider, and how does any particular attribute affect how we define and measure diversity in conducting our public interest analysis?

33. We also must consider the appropriate geographic area over which to measure diversity as it relates to radio broadcasting. The current local radio ownership rule contemplates that diversity in radio will be measured at the local level. This appears to be an appropriate result if diversity analysis is restricted to radio since radio stations that do not serve the local community do not contribute to media diversity in that community. Would the appropriate geographic area change if we consider other media, in particular Internet-related media such as Internet radio, as significant contributors of diversity? Does the appropriate geographic area for measuring diversity differ based on the type of information or programming involved, for example, local news and sports versus nationwide entertainment programming? Even if some aspects of diversity are not local in nature, should we nonetheless evaluate diversity at the local level in light of the value we traditionally have placed on “localism” in the broadcasting industry? Should the appropriate geographic area for measuring diversity be coextensive with the relevant geographic market for competition purposes? We seek comment responding to these questions.

34. We also seek comment on whether the level of diversity that the public enjoys varies among different demographic or income groups. Does this or other differences between broadcasting and other media reduce the level of diversity that certain demographic or income groups enjoy? What is the extent of any disparity in access to diversity, and how should we factor in that disparity in our diversity analysis? Parties commenting on this issue are encouraged to submit empirical data to support their positions.

35. As we have found previously, the current media marketplace appears robust in terms of the aggregate number of media outlets. As of June 30, 2001, the Commission had licensed 12,932 radio stations, 1,678 full power television stations, 2,396 low power TV stations, and 232 Class A TV stations. Today, there are seven national commercial television broadcast networks. The nation was served in 2000 by 1,422 daily newspapers with a total circulation of 55.8 million, and in 1996 by 7,915 weekly newspapers with a total circulation of approximately 81.6 million. As of June 2000, cable television systems served 67.4% of TV households, or 67.7 million people. These systems offered in the aggregate over 200 video programming services. Direct broadcast satellite (DBS) providers now serve nearly 13 million subscribers, or over 15% of all households served by multichannel video programming distributors (MVPDs), and other MVPDs serve another nearly 4 million subscribers. As of November 2000, 56% of Americans had access to the Internet from their homes. We accordingly seek comment on the significance of these figures and any other information about marketplace conditions that would inform our analysis.

36. The Commission has had both local and national ownership limits for radio broadcast stations. Pursuant to the 1996 Act, the Commission eliminated the national ownership limit on radio stations, in addition to relaxing its local radio ownership rules. As a result, significant consolidation occurred in the national and local radio markets. At approximately the same time that the 1996 Act became law, there were approximately 5,100 owners of commercial radio stations nationwide, while now there are only approximately 3,800 owners, a decrease of 25%. In March 1996, an Arbitron metro market had an average of 13.5 owners; in March 2001, the average was 10.3, a decrease of 22%. Other media also appear to have undergone similar consolidation. For example, in 1995 there were 543 entities nationwide that owned commercial TV stations, while today there are only 360. Does this consolidation in ownership offset the increases in media outlets? What is the relevance of this consolidation to our local radio ownership policies and to diversity in particular? Commenters are encouraged to submit empirical data on the impact of consolidation on diversity.

37. In examining the impact of greater media outlets and increased media consolidation, we note that there is considerable debate concerning the relationship between consolidation and viewpoint and source diversity. The Commission has noted the contrary theory that “the greater the increase in concentration of ownership, the greater the opportunity for diversity of content.” Under that theory, competing parties in a market have a commercial incentive to air “greatest common denominator” programming, while a single party that owns all stations in a market has a commercial incentive to air more diverse programming to appeal to all substantial interests.

38. We seek comment on these competing theories and on any relevant empirical analysis of these theories. Should commonly-owned media outlets be considered a single media “voice” in evaluating diversity? Does the answer depend on the type of programming involved, for example, entertainment programming versus news or public affairs programming, or on the type of media outlet involved? Does it make sense to treat increased media consolidation as contributing to diversity if the common owner exercises editorial discretion over news and programming? Even if some consolidation of media outlets does lead to greater diversity, is there a level of consolidation at which the maximum amount of diversity is achieved? How do we determine what that level is? In considering these questions, we are particularly interested in the actual experience of the radio industry. Has consolidation in local radio markets since 1996 lead to greater diversity? Commenters responding in the affirmative are encouraged to submit empirical data and analysis demonstrating both the increase in diversity and the causal link, as opposed to mere correlation, between the increase and greater consolidation in local markets. Commenters arguing that greater consolidation harms diversity also are encouraged to submit empirical data and analysis supporting their view. Evidence comparing the levels of diversity in local communities with different levels of radio concentration would be especially useful.

39. Radio station groups compete with each other in two ways: they compete to attract listeners, and they compete to attract advertising dollars. These two forms of competition are interrelated since advertising revenue is used to finance the production of programming, which in turn helps attract listeners, which then enables radio stations to charge advertisers. Between 1992 and 1996, the local radio ownership rule included, along with numerical limits, a presumption that a combination that created a station group with a greater than 25% audience share resulted in “excessive concentration” that was prima facie inconsistent with the public interest. As consolidation in local radio markets increased as a result of the 1996 Act, the Commission began to examine in assignment and transfer cases the potential competitive effect of proposed transactions in the local radio advertising market. Because advertisers provide the financial support for programming on commercial stations and have an incentive to prefer programming with widespread appeal, the Commission has considered competition in advertising markets to enhance the welfare of consumers.

40. As Americans increasingly are willing to pay for information and programming by subscribing to programming services, like satellite radio services, for example, it is incumbent on us to define more precisely the goals of our competition analysis. Should we be interested in competition for listeners, competition for advertisers, or a combination of the two? With respect to advertising, does our authority to regulate the radio market justify our basing regulation on the level of competition in the radio advertising market? Are we interested in competition as a proxy for ensuring an appropriate level of diversity in a local community? If we conclude that section 202(b) definitively establishes the levels of radio station concentration that are consistent with our diversity interest, how would this affect the role of our competition analysis, if at all? Is one objective of competitive analysis to ensure a healthy radio advertising market so that radio stations not affiliated with larger station groups in a community will be able to attract sufficient advertising dollars to support their operations and their ability to provide valuable news and programming services to the public? Is one objective to protect radio advertisers from any anticompetitive pricing or conduct that could occur if a single party achieved market power or monopoly using the public airways? What precisely are the harms consumers suffer as advertising prices rise, and what empirical evidence of these harms is available? One of the objectives of our competition analysis must be to guide our biennial review examination. We seek comment on these objectives and on any other objectives that should guide the competition aspect of our public interest analysis.

41. Competition analysis requires us to define the relevant product and geographic markets in which radio stations compete, as well as the market share of the participants within the relevant market, and then weigh the competitive benefits of consolidation ( e.g., economies of scale and scope that may lead to lower costs and prices or superior products) against the harms ( e.g., the exercise of market power or reduction in output). We seek information that would help us conduct our analysis.

42. We seek comment on the relevant product market. If we look at advertising, does radio advertising constitute a separate market from other forms of media advertising? First, radio is exclusively sound-based. Second, radio allows advertisers to focus narrowly on specific demographic groups ( e.g., women age 18-49). Third, radio allows an advertiser to build repetition or frequency by advertising at a reasonable price. Fourth, the cost of producing a radio commercial is much lower than producing a television commercial. Fifth, radio allows for fast turnaround of advertising copy. Sixth, radio can reach people driving in their cars. We seek pertinent data that will help us determine the relevant product market.

43. We also seek comment on the relevant geographic market. We tentatively conclude that the relevant geographic market is local in nature, but we seek comment on the precise parameters of that market. What would be the appropriate market if we focused on listenership rather than advertising? With respect to advertising, is there a distinct regional or national market we also should consider in our analysis? If so, what are the relative sizes, in terms of radio station revenue and media revenue, of those markets vis-a-vis each other and local advertising markets? Do some radio stations rely more on national or regional advertising than on local advertising, and, if so, what characteristics lead to that result?

44. Under the Commission's current local radio ownership rule, the geographic market is defined based on a system of mutually overlapping signal contours, which makes the geographic market endogenous to a common owner's particular station holdings. Is this the appropriate basis for defining a relevant geographic market for purposes of a competition analysis? If so, why, and what are the benefits of this market definition? If not, what other geographic market definition should we use? Are Arbitron markets the relevant geographic market for purposes of our competition analysis? Can Arbitron radio markets be manipulated to make a particular market or transaction appear less troublesome. If so, how should we deal with this issue? If we adopt the Arbitron market as the relevant geographic market, how should we treat “below-the-line” stations that Arbitron reports as having audience shares or reportable revenues in the relevant market? Commenters advocating use of the Arbitron market should propose a relevant geographic market definition for radio stations not located in an Arbitron radio market. We also seek comment on any other potential geographic market definitions we should consider.

45. Once we define the relevant product and geographic markets, how should we measure the market share of those that compete in the market? The Commission has flagged proposed transactions based on market share. We seek comment on other sources of available data that we could use to determine market share and concentration levels. Although we have focused on advertising revenue and audience share as the principal potential measures of concentration, there may be other approaches we should consider.

46. Although a large market share in itself does not demonstrate market power, market power may be inferred when a party's market share is protected by high barriers to entry. We seek comment on barriers to entry into the relevant product and geographic markets.

47. Although we believe that entry by new stations is unlikely, we seek comment on whether the mere existence of other stations in the market negates market power, even where the current market shares of those stations are low. Should we consider the number of other stations in the market and their signal strength, either as an alternative to or in addition to market share? Is it easier to increase market share in the radio industry than it is in other industries? Or do market shares tend to remain static, with only small shifts in listening audiences? Further, does the amount of concentration in the market have an impact on the ability of stations to increase their market share? Is it easier for a station with a low audience share to increase its listenership in markets with low concentrations than it is in markets where one or two owners control a majority of the stations? What has been the experience of the radio industry since 1996?

48. After identifying and defining key market characteristics, we next consider the economic benefits and harms of permitting greater horizontal consolidation of local radio stations under common ownership. What are the benefits of these combinations, not only to the radio stations, but also to advertisers, and the public? We seek information on the nature and scope of efficiencies combinations might realize, and the nature and magnitude of benefits that flow through to advertisers and ultimately to consumers. We seek evidence that horizontal radio combinations produce efficiencies that flow through to advertisers and consumers. What economic harms might radio station consolidation bring? We seek additional information on the nature and scope of the economic harms that radio station combinations might bring. Studies and other evidence showing that advertising rates for radio station combinations are significantly higher after a consolidation than before a consolidation would be particularly useful. We also seek comment on associated harm to consumers. For example, if the existence of market power would prevent any efficiencies that otherwise would arise out of consolidation from flowing to the public, or would harm the incentive of radio stations to produce quality programming responsive to community tastes and needs, that may be a harm we should consider. Similarly, if a certain level of consolidation causes the market to “tip” such that independently owned radio stations could not obtain sufficient revenue to remain on the air or fulfill their public interest obligations, the public interest also may be harmed.

49. We are also concerned about the possibility that coordinated behavior would increase as the number of independently owned competitors in a local market declines. Three factors could provide incentives for coordinated behavior in highly concentrated local radio markets: the ability to price discriminate, the ease of monitoring a collusive agreement, and the existence of barriers to entry. We seek comment on the relationship between radio concentration and coordinated behavior, and the adverse effects such behavior would have on listeners and advertisers.

50. To assist us in formulating our radio rules and policies, we seek not only theoretical arguments but specific interest. We examine in detail particular local markets that have empirical data on the effect that consolidation will have on the public undergone substantial consolidation since 1996. We seek data on the public interest harms, if any, that have been caused by this consolidation. Has the public in these markets suffered from an unacceptable reduction in diversity? Have advertising rates increased? What has been the financial impact on independently owned radio stations? We also seek data on the specific benefits that consolidation has produced in those markets. Have the listeners received better quality radio programming, or greater diversity? Have efficiencies produced more radio voices than would otherwise have been possible? Has news and local affairs programming improved? We seek information that addresses these questions and any other public interest factors that we should consider in this proceeding.

51. Parties are encouraged to file information on any local market that they feel is relevant or helpful. In addition we would appreciate comments on three specific local markets that have experienced consolidation. The Arbitron metros that we seek information on are Syracuse, New York; Rockford, Illinois; and Florence, South Carolina.

52. The Syracuse radio metro consists of three New York counties: Madison, Onondaga and Oswego. The population of the Syracuse metro is estimated to be 650,100. This metro is the 75th largest metropolitan area by population and ranks 67th in terms of radio advertising revenue. The three Syracuse counties generated $7.2 billion in retail sales in 2000. Local advertising accounts for approximately 73 percent of station revenues.

53. The Rockford radio metro consists of two Illinois counties: Boone and Winnebago . The population of the Rockford metro is estimated to be 308,500. This metro is the 150th largest metropolitan area by population and ranks 139th in terms of radio advertising revenue. The three Rockford counties generated $3.9 billion in retail sales in 2000. Local advertising accounts for approximately 93 percent of station revenues.

54. The Florence radio metro consists of two South Carolina counties: Darlington and Florence. The population of the Florence metro is estimated to be 192,400. This metro is the 204th largest metropolitan area by population and ranks 181st in terms of radio advertising revenue. The three Florence counties generated $2.4 billion in retail sales in 2000. Local advertising accounts for approximately 80 percent of station revenues.

55. We explore the potential ways we could use the results of the preceding diversity and competition analyses to formulate a concrete framework for addressing proposed combinations of radio stations in local markets.

56. We first seek comment on the general advantages and disadvantages of relying on numerical limits or other bright-line rules to guide our public interest determination versus conducting a case-by-case public interest analysis. We see several advantages to the use of bright-line rules rather than case-by-case analysis.

57. We also see several advantages to conducting case-by-case analyses. A case-specific analysis, would allow the Commission to take into account the nuances of the particular case, and to adapt more readily to changing market (and other regulatory) conditions.

58. We seek comment on the various trade-offs between bright-line rules and case-by-case analysis. We seek comment whether the characteristics of the radio industry make it more susceptible to bright line strictures or case-by-case review or proposed radio combinations. What are the common characteristics of various radio combinations, and what differences do they have that would be difficult to encapsulate in a rule? Are there other characteristics that weigh in favor of relying on either predetermined rules or case-specific review in conducting a public interest review of a proposed combination? Are diversity concerns more amenable to being encapsulated in a bright-line rule than competition concerns?

59. We also seek comment on whether the advantages of both bright-line rules and case-by-case analysis be obtained by other regulatory tools, such as presumptions, processing guidelines, and screens. To what extent has the 50/70 screen been helpful, and what are its disadvantages? If appropriate, we could adopt a combination of rules, fact-specific analysis, and other formal and informal regulatory tools. We seek comment on the appropriate regulatory “mix” that would provide the greatest benefit to the agency, the industry, and the public.

60. We examine a number of possible frameworks that we could adopt to implement our policies on local radio ownership. We discuss several and seek comment on their advantages, disadvantages, and possible ramifications on our diversity and competition goals. We also invite suggestions for other possible frameworks that we should consider.

61. Rely exclusively on current numerical limits. To the extent we have the authority under the statutory framework to consider public interest factors other than compliance with the numerical limits of the local radio ownership rule, should we nonetheless rely on those limits to address our competition and diversity concerns? We seek comment on the advantages and disadvantages of relying exclusively on numerical limits. If we decide to rely exclusively on numerical limits, should we change the market definition we use to apply the rule to reflect more accurately the relevant geographic market? We seek any additional comments that would be useful in light of the broader policy issues raised in this proceeding.

62. Rely exclusively on modified rule. Another possibility we may consider is modifying the local radio ownership rule to revise the numerical limits or adopt a new framework entirely. We seek comment on whether our authority to tighten or loosen the numerical limits in the local radio ownership rule, or otherwise to alter the rule, is limited by the statutory framework. To the extent we have the authority to make such changes, we seek comment on what changes we should make. Aside from revising the numerical limits, are there other standards we could adopt? For example, between 1992 and 1996, the rule provided for consideration of excessive market concentration, which was presumed to exist if a proposed radio combination would have had an audience share exceeding 25% in the Arbitron market. Do we have the authority to adopt an audience share limit, and, if so, should we adopt a similar presumption or bright-line rule? Should such a limit replace or accompany a numerical limit? Would such a rule be beneficial in promoting diversity even if the relevant market is competitive, or would numerical limit best meet our concerns regarding diversity and a market share limit best meet our concerns regarding undue market power?

63. Commenters who propose a market share limit should discuss the following issues: Should we examine audience share, share of the advertising revenue, or some other measure? If we adopt a presumption instead of a rule, what evidence would be sufficient to overcome the presumption? What percentage limit should we adopt, and why should we adopt it? For example, we could adopt limits that attempt to ensure the presence of at least three competitive firms. Commenters supporting this approach should explain how many firms should we seek to ensure remain in the market (counting all commonly controlled stations as one firm) and what maximum market share limit should we impose. Commenters should provide economic, other theoretical, and actual evidentiary support for such limits.

64. Commenters proposing that we modify the local radio ownership rule to change the numerical limits or to include new standards or presumptions should also propose what action we should take with respect to existing combinations that would not comply with the revised rule? Should we require divestiture? Should we grandfather those station groupings? Should we permit assignment and transfer of potentially non-compliant station groups to third parties? What are the benefits and harms of adopting these various approaches?

65. Case-by-case competition analysis. Rather than attempting to establish a bright-line rule that would address competition issues, we could examine the public interest concerns of any proposed radio combination on a case-by-case basis. We could adopt an entirely case-by-case approach or conduct a case-by-case analysis within the context of specific rules or presumptions. We could limit our case-by-case approach to competition issues, while using a bright-line rule to protect diversity. We seek comment on these alternatives.

66. To the extent, we are required to conduct a competition analysis of a proposed assignment or transfer control of a radio broadcast license, we nevertheless may have some latitude to consider the actions of the antitrust enforcement agencies.

67. We consider what the framework for a case-by-case competitive analysis should be if we decide to adopt that approach. We lay out certain possible frameworks and competitive factors we could take into account in evaluating a proposed radio station combination. We seek comment on these factors and on our framework generally.

68. In evaluating the competitive impact of a proposed license transfer, we could adopt the framework that we have used for assessing market power in other contexts, which is also embodied in the antitrust laws. We would first analyze each proposed radio combination by defining the relevant markets. Next, we would evaluate the effects of the transaction on competition in the relevant market. We seek comment on this approach.

69. One alternative of the approach is to develop certain assumptions that would apply to all proposed radio station combinations. Earlier in this NPRM, we sought comment about the relevant product and geographic markets to which radio belongs, barriers to entry, and the benefits and costs of consolidation. We seek comment concerning the assumptions that we could consistently apply in evaluating applications proposing radio station combinations and the advantages or disadvantages of those assumptions. If we adopt certain assumptions, we propose that the party seeking to demonstrate that an assumption is not true in a particular case bears the burden of proof as to that fact. We seek comment on this proposal.

70. Another possible alternative to the basic analytical framework is to examine not only whether a proposed transaction could lead to the exercise of market power, but to take the additional step of considering whether that market power would harm consumers, as opposed to advertisers, of radio broadcasting services. Are there certain situations in which the exercise of market power would not harm consumers? Are there situations in which consumers would affirmatively benefit if we permitted a certain degree of market power in the relevant market? For example, would permitting some degree of market power in smaller geographic markets generate more diverse or better quality programming for the people living in those markets? If so, how do we draw the line between acceptable levels of market power and unacceptable levels of control over local media, and what are the relevant considerations we should examine to help us determine on which side of the line a particular transaction falls? We seek comment on these issues.

71. We seek comment on the specific factors we should consider within our general framework. We seek comment on how we should evaluate these factors in the context of a particular case. In addition, are there other factors we should consider?

72. We seek comment on how we should review applications proposing to assign or transfer control of existing station groups to a new owner.

73. We invite comment on how to treat under our proposed guidelines claims that a station is failing. Highly concentrated radio markets often contain stations with small revenue share that are independent of the one or two largest radio groups.

74. In our decision revising the television ownership rules, we adopted several criteria to evaluate whether a failing station showing would justify waiver of the television duopoly rule in a particular case. We stated that we would presume a waiver would serve the public interest if each of the following criteria were satisfied:

(a) One of the merging stations has had low all-day audience share.

(b) The financial condition of one of the merging stations is poor. A waiver is more likely to be granted where one or both of the stations has had a negative cash flow for the previous three years. We required the applicant to submit data, such as detailed income statements and balance sheets, to demonstrate this and stated that the Commission staff will assess the reasonableness of the applicant's showing by comparing data regarding the station's expenses to industry averages.

(c) The transaction will produce public interest benefits. A waiver will be granted where the applicant demonstrates that the tangible and verifiable benefits of the transaction outweigh any harm to competition and diversity. At the end of the stations' license terms, the owner of the combined stations must certify to the Commission that the public interest benefits of the transaction are being fulfilled, including a specific, factual showing of the program-related benefits that have accrued to the public. Cost savings or other efficiencies, standing alone, will not constitute a sufficient showing.

(d) The in-market buyer is the only reasonably available candidate willing and able to acquire and operate the station; selling the station to an out-of-market buyer would result in an artificially depressed price. As with the showing required of failed station waiver applicants, one way to satisfy this fourth criterion is to provide an affidavit from an independent broker affirming that active and serious efforts have been made to sell the station, and that no reasonable offer from an entity outside the market has been received.

We further provided that a combination formed as a result of a failing station waiver could be transferred only if the combination met the revised duopoly rule or the waiver standards (including the failing standard just described) at the time of the transfer.

75. We invite comment as to whether to use a similar approach in our competitive analysis. Third, we seek comment on how we should analyze applications proposing the granting of a new license or the acquisition of an unbuilt facility or a “dark” station. Competitive analysis focusing on concentration in the advertising market or audience shares would be insufficient to analyze these transactions because new licenses, unbuilt stations, and dark stations generally will not have an associated radio advertising business or audience share. In the absence of this data, what should we consider in determining the effect of a proposed transaction on competition? And how should we weigh the relevant public interest benefits and harms?

76. Local Marketing Agreements and Time Brokerage Agreements. A local marketing agreement (LMA) and time brokerage agreement (TBA) is “a type of contract that generally involves the sale by a licensee of discrete blocks of time to a broker that then supplies the programming to fill that time and sells the commercial spot announcements to support the programming.” As we consider whether and how to conduct case-by-case competitive analyses of radio transactions, we seek comment on the appropriate regulatory treatment of LMAs and TBAs.

77. To the extent we decide to conduct a case-by-case analysis of proposed radio transactions, how should we evaluate LMAs or TBAs? Should we continue the practice of treating the merging parties as independent economic actors regardless of the economic realities of the relevant market? If we ignore economic realities, what purpose would our competitive analysis serve? On the other hand, if we treat the merging parties as a single economic unit because of a pre-existing LMA or TBA, what potential competitive harm would our analysis ever uncover? We could address this problem by requiring prior Commission approval of LMAs and TBAs, in some if not all circumstances. If so, what would those circumstances be? What are the costs and benefits of these various procedures? If we adopt new policies towards LMAs or TBAs, how should we apply those policies towards pre-existing agreements? We seek comment on these proposals and on any other proposals that we should consider with regard to the regulatory treatment of LMAs and TBAs?

78. Joint Sales Agreement. Joint sales agreements (JSAs) involve primarily the sale of advertising time and not decisions concerning programming.

79. We seek comment on the appropriate regulatory treatment of JSAs. Even if we adopt a bright line rule, JSAs would not be attributable to the sales agent. Should we reconsider this blanket exemption to attribution in light of the new local radio ownership policy we intend to adopt? If so, what should our new rule be? To the extent we decide to conduct a case-by-case analysis of proposed radio transactions, how should we evaluate JSAs? Should we distinguish between JSAs and LMAs or TBAs in a case-by-case review of proposed transactions or in other contexts? What are the reasons for and against affording similar treatment to all three types of agreements?

80. We set forth in this section the interim policy that the Commission will apply to guide its actions on radio assignment and transfer of control applications pending a decision in this proceeding. We recognize that certain guidelines need to be established both to handle currently pending radio assignment and transfer applications and to address any future applications filed while this proceeding is pending. At the same time, we are mindful of the concern that our policy not expressly or implicitly prejudge, or be viewed as prejudging, our ultimate decision in this proceeding. In that regard, we believe that any fundamental changes we make to our policy and procedures governing radio station combinations should be the result of the record in this rulemaking proceeding, and should not be implemented as an interim measure. We believe that the interim policy we are adopting today strikes a fair balance that addresses our statutory responsibilities while providing guidance to applicants and the public on the process the Commission will use to resolve pending applications during this interim period.

81. Consistent with our precedent and the principles, we will continue to examine the potential competitive effects of proposed radio station combinations, and, and to that end, we will continue to rely on the 50/70 screen to bring to our attention proposed radio transactions that may raise competitive concerns. While we are aware that the utility and appropriateness of 50/70 screen has been the subject of disagreement, we are concerned that adopting another screen or set of processing guidelines on an interim basis would create significant confusion and uncertainty to applicants and could be seen as prejudging the rulemaking proceeding.

82. We will presume that an application that falls below the screen will not raise competition concerns, and the staff will not conduct a further competitive analysis of those proposed transactions absent the filing of a petition to deny raising competitive issues. We establish the following generic categories of information that may be requested or received by the staff in conducting its competitive analysis:

(a) Product market definition. During the interim period, the Commission will presume that the relevant product market is radio advertising. The staff nevertheless should consider evidence from the parties that the relevant product market in a specific case includes other forms of media advertising or should be based on listenership rather than advertising.

(b) Geographic market definition. During the interim period, the Commission will presume that the relevant geographic market is the Arbitron metro market. The staff nevertheless may ask for or receive evidence from the parties that the relevant geographic market in a specific case is larger, smaller, or otherwise different from the Arbitron metro market.

(c) Market participants. The staff may ask for or receive evidence concerning the firms that participate in the relevant product and geographic markets. The list of market participants should include firms that could enter the relevant product and geographic markets within one year without expending significant sunk costs of entry and exit in response to a small but significant and non-transitory increase in price. If the presumptive product and geographic market definitions are used, the list of market participants should include operating commercial radio stations and any “dark” station that might be expected to become operational in response to such an increase in price.

(d) Market shares and market concentration. The staff may ask for or receive evidence concerning the market shares of the market participants. If the presumptive product and geographic market definitions are used, the radio advertising revenues reported in the BIA Master Access Database will be presumed to be an accurate reflection of actual market shares, absent persuasive evidence that another measure of market share should be used.

(e) Barriers to entry. The staff may ask for or receive evidence concerning the barriers to entry into the relevant product and geographic markets, including the timeliness, likelihood, and sufficiency of entry to counter any potential market power.

(f) Potential adverse competitive effects. The staff may ask for or receive evidence concerning the potential adverse competitive effects of a proposed transaction. Relevant evidence may include direct proof of adverse competitive effects or facts that demonstrate that structural conditions ( e.g., a high market share and significant barriers to entry) will facilitate the exercise of market power.

(g) Efficiencies and other public interest benefits. The staff may ask for or receive evidence concerning any economic efficiencies that the proposed transaction would produce. In addition, the staff may ask for or receive evidence concerning other public interest benefits the proposed transaction would provide listeners or advertisers, such as improvements in the quality, scope, and quantity of community responsive programming, improved community service, and the furtherance of localism. Parties asserting that a proposed transaction will produce efficiencies or other public interest benefits should show both how the transaction will produce those benefits and how those benefits will flow through to listeners or advertisers.

83. After completing its preliminary competitive analysis of the proposed transaction, the staff may grant any application that is consistent with the public interest and that may be granted on delegated authority. For applications that the staff cannot grant, we establish the following timetable to ensure that they are resolved expeditiously. For each application that, as of the date of adoption of this NPRM , has been pending for over one year, within 90 days of the date of adoption of this NPRM , the staff will distribute to the Commission a draft order recommending that the application either be granted or designated for hearing. For all other currently pending applications, within six months of the date of adoption of this NPRM , the staff will distribute to the Commission a draft order recommending that the application either be granted or designated for hearing. For all applications filed after the date of adoption of this NPRM , within six months of the date after such application is filed, the staff will distribute to the Commission a draft order recommending that such application either be granted or be designated for hearing. In all of these cases, the draft order shall include the relevant facts of the proposed transaction, and the staff's competitive analysis and recommendation, including any issues to be resolved at hearing (if the staff recommends a hearing). After receiving the draft order, the Commission shall then decide whether the relevant factors support grant (with or without conditions) of an application or whether the application should be designated for hearing.

84. For applications that the Commission decides to designate for hearing, the hearing designation order shall afford the applicants with the opportunity to elect instead to have their applications held pending completion of this rulemaking proceeding and having the outcome of this proceeding apply to their application. We provide this election because we believe it is appropriate to provide applicants with the ability to have their applications evaluated under our permanent radio rules and policies rather than our interim policy. We caution, however, that our provision of this election will not in any way prejudice or limit the range of actions we could take in processing pending applications, including designation for hearing, upon completion of this rulemaking.

85. The interim policy will apply to currently pending applications to assign or transfer control of radio broadcast stations. This interim policy also will apply to radio assignment or transfer applications filed on or after the date we adopt this NPRM until we adopt a decision in this proceeding.

86. Comments and Reply Comments. Pursuant to sections 1.415 and 1.419 of the Commission's rules, interested parties may file comments on or before 60 days after publication of the item in the Federal Register , and reply comments on or before 90 days after publication of the item in the Federal Register . Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.

87. Comments filed through the ECFS can be sent as an electronic file via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, only one copy of an electronic submission must be filed. If multiple docket or rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one electronic copy of the comments to each docket or rulemaking number referenced in the caption. In completing the transmittal screen, commenters should include their full name, Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and should include the following words in the body of the message, “get form <your e-mail address.” A sample form and directions will be sent in reply. Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appear in the caption of this proceeding, commenters must submit two additional copies for each additional docket or rulemaking number. All filings must be sent to the Commission's Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 Twelfth Street, S.W., TW-A325, Washington, D.C. 20554.

88. Parties who choose to file by paper should also submit their comments on diskette. These diskettes should be submitted to: Wanda Hardy, 445 Twelfth Street, S.W., Room, 2-C207, Washington, D.C. 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM compatible format using WordPerfect 5.1 for Windows or compatible software. The diskette should be accompanied by a cover letter and should be submitted in “read only” mode. The diskette should be clearly labeled with the commenter's name, proceeding (including the docket number in this case, MM Docket Nos. 01-317, 00-244, type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy—Not an Original.” Each diskette should contain only one party's pleadings, preferably in a single electronic file. In addition, commenters must send diskette copies to the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, S.W., Room CY-B402, Washington, DC 20554.

89. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 Twelfth Street, S.W., CY-A257, Washington, D.C. 20554. Persons with disabilities who need assistance in the FCC Reference Center may contact Bill Cline at (202) 418-0270, (202) 418-2555 TTY, or bcline@fcc.gov. Comments and reply comments also will be available electronically at the Commission's Disabilities Issues Task Force web site: www.fcc.gov/dtf. Comments and reply comments are available electronically in ASCII text, Word 97, and Adobe Acrobat.

90. Ex Parte Rules. This is a permit-but-disclose notice and comment proceeding. Ex parte presentations are permitted except during the Sunshine Agenda period, provided they are disclosed as provided in the Commission's Rules. See generally sections 1.1202, 1.1203, and 1.1206(a).

91. Initial Regulatory Flexibility Analysis (“IRFA”). As required by section 603 of the Regulatory Flexibility Act (“RFA”), the Commission has prepared an IRFA of the possible significant economic impact on small entities of the proposals contained in this NPRM. Written public comments are requested on the IRFA. In order to fulfill the mandate of the Contract with America Advancement Act of 1996 regarding the Final Regulatory Flexibility Analysis, we ask a number of questions in our IRFA regarding the prevalence of small businesses in the radio broadcasting industry. Comments on the IRFA must be filed in accordance with the same filing deadlines as comments on the NPRM, but they must have a distinct heading designating them as responses to the IRFA. The Secretary shall send a copy of this NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (“SBA”) in accordance with section 603(a) of the RFA, Public Law 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. (1981), as amended.

92. Authority. This NPRM is issued pursuant to authority contained in sections 4(i), 303, and 307 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303, and 307.

93. Pursuant to the authority contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the Communications Act, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310 this NPRM are adopted.

94. The Interim Policy set forth herein is adopted.

95. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this NPRM , including the IRFA, to the Chief Counsel for Advocacy of the SBA.

96. As required by the Regulatory Flexibility Act of 1980, as amended, the Commission has prepared this present IRFA of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in this NPRM . Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the NPRM . The Commission will send a copy of the NPRM , including this IRFA, to the Chief Counsel for Advocacy of SBA. See 5 U.S.C. 603(a). In addition, the NPRM and IRFA (or summaries thereof) will be published in the Federal Register .

97. Application to and consent by the Commission are required under section 310 of the Communications Act before the sale of any licensed radio broadcast station may be consummated. The Commission may grant its consent only if it determines that “the public interest, convenience and necessity will be served thereby.” 47 U.S.C. 310(d). The effects of a proposed transaction on the diversity of voices and economic competition in a given market have long been core considerations in making this public interest determination. The Commission's concern for diversity and competition in broadcast markets has prompted us to adopt and maintain structural ownership rules intended to vindicate these interests. Until recently, these ownership rules have been sufficiently strict that we have not been presented with proposed transactions that comply with the ownership rules but nonetheless present economic concentration issues. The Telecommunications Act of 1996, however, substantially relaxed the Commission's local radio ownership rules. Heretofore, the Commission's radio ownership rules have been based strictly on the number of stations proposed for common ownership, without regard to the power or dominance of the stations that are being combined. This was not a problem under the former Commission rules which strictly circumscribed the number of radio stations that could be commonly owned in a local market. Now, however, under the new rules, which allow greater numbers of radio stations to be commonly owned in local markets, the Commission has encountered sales applications that propose transactions which comply with the numerical station limits but which result in substantial economic concentration in the relevant economic markets. In such cases, the Commission “has an independent obligation to consider whether a proposed pattern of radio ownership that complies with the local ownership limits would otherwise have an adverse competitive effect in a particular radio market and thus, would be inconsistent with the public interest. 47 U.S.C. 309(a) (requiring the Commission to make a determination that the transfer or assignment of a broadcast license would be in the public interest).” Accordingly, we are adopting this NPRM to consider possible changes to our local radio ownership rules and policies.

98. This NPRM is adopted pursuant to sections 1, 2(a), 4(i), 303, 307, 309, and 310, of the Communications Act, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310.

99. The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction. In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

100. Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency after consultation with the Office of Advocacy of the SBA and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register .” A “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96 percent, have populations of fewer than 50,000. Thus, of the 85,006 governmental entities, we estimate that 81,600 (91 percent) are small entities.

101. The SBA defines a radio broadcasting station that has $5 million or less in annual receipts as a small business. A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public. Included in this industry are commercial, religious, educational, and other radio stations. Radio broadcasting stations, which primarily are engaged in radio broadcasting and which produce radio program materials, are similarly included. However, radio stations which are separate establishments and are primarily engaged in producing radio program material are classified under another NAICS code. The 1992 Census indicates that 96 percent (5,861 of 6,127) of radio station establishments produced less than $5 million in revenue in 1992. Official Commission records indicate that 11,334 individual radio stations were operating in 1992. As of June 30, 2001, Commission records indicate that 12,932 radio stations (both commercial and noncommercial) were operating of which 2,216 were noncommercial educational FM radio stations. Applying the 1992 percentage of station establishments producing less than $5 million in revenue ( i.e., 96 percent) to the number of commercial radio stations in operation, ( i.e., 10,716) indicates that 10,287 of these radio stations would be considered “small businesses” or “small organizations.” These estimates may overstate the number of small entities because the revenue figures on which they are based do not include or aggregate revenues from non-radio affiliated companies.

102. The NPRM proposes no new recordkeeping or other compliance requirements associated with the subject rules and policies. These rules amend the Commission's procedures and review processes and do not change existing documentation and application requirements.

103. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

104. In this NPRM , the Commission explores the underpinnings of two principles underlying the regulation of the radio broadcast industry, namely diversity and competition. The principles of diversity and competition are of particular import to small entities. Thus we seek comment on the general advantages and disadvantages of relying on numerical limits or other bright-line rules to guide our public interest determination versus conducting a case-by-case competitive analysis. The framework minimizes the impact on small entities by not subjecting to further competitive analysis transactions below a threshold level.

105. This NPRM invites comment on a number of alternative interpretations of the relationship between the revision of local radio ownership rules, embodied in section 202(b) of the Telecommunications Act of 1996 and the Commission's public interest mandate. Specifically, we propose alternative views on that relationship in the NPRM seek comment on these proposals, and invite additional possible interpretations of the relevant statutory provisions. Further, the NPRM seeks comment on how the Commission's rules and policies concerning local radio ownership affect our goal of promoting diversity. In light of the fact that a majority of the radio broadcasting stations likely to be affected are small, we seek comment on the impact of industry consolidation on both viewpoint and source diversity.

106. In addition to the principle of diversity, this NPRM seeks comment on the principle of competition in the radio broadcast industry, with regard to the definitions of the marketplace and measurement of market share.

107. None.

This is a synopsis of the Further Notice of Proposed Rule Making (“ FNPRM ”) in MM Docket No. 00-244, FCC 01-329, adopted November 8, 2001, and released November 9, 2001. The complete text of this FNPRM is available for inspection and copying during normal business hours in the FCC Reference Center, Room CY-A257, 445 12th Street, SW., Washington, DC and may also be purchased from the Commission's copy contractor, Qualex International, Portals II, 445 12th Street SW., Room CY-B-402, Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-2898, or via email qualexint@aol.com. This document is also available in alternative formats (computer diskette, large print, audio cassette, and Braille). Persons who need documents in such formats may contact Martha Contee at (202) 4810-0260, TTY (202) 418-2555, or mcontee@fcc.gov. The FNPRM can be found on the Internet at the Commission's website: http://www.fcc.gov.

1. The issues presented herein, and the substance of this FNPRM are identical to those presented in the Notice of Proposed Rule Making, in the Matter of Rules and Policy Concerning the Multiple Ownership of Radio Broadcast Stations in Local Markets (MM Docket No. 00-317) published elsewhere in this issue of the Federal Register .

2. Comments and Reply Comments. Pursuant to sections 1.415 and 1.419 of the Commission's rules, interested parties may file. Comments are due February 11, 2002. Reply comments are due March 11, 2002. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies. See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.

3. Comments filed through the ECFS can be sent as an electronic file via the Internet to http://www.fcc.gov/e-file/ecfs.html. Generally, only one copy of an electronic submission must be filed. If multiple docket or rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one electronic copy of the comments to each docket or rulemaking number referenced in the caption. In completing the transmittal screen, commenters should include their full name, Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, and should include the following words in the body of the message, “get form <your e-mail address.” A sample form and directions will be sent in reply. Parties who choose to file by paper must file an original and four copies of each filing. If more than one docket or rulemaking number appear in the caption of this proceeding, commenters must submit two additional copies for each additional docket or rulemaking number. All filings must be sent to the Commission's Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 Twelfth Street, SW., TW-A325, Washington, DC 20554.

4. Parties who choose to file by paper should also submit their comments on diskette. These diskettes should be submitted to: Wanda Hardy, 445 Twelfth Street, SW., Room, 2-C207, Washington, DC 20554. Such a submission should be on a 3.5 inch diskette formatted in an IBM compatible format using WordPerfect 5.1 for Windows or compatible software. The diskette should be accompanied by a cover letter and should be submitted in “read only” mode. The diskette should be clearly labeled with the commenter's name, proceeding (including the docket number in this case, MM Docket Nos. 01-317, 00-244, type of pleading (comment or reply comment), date of submission, and the name of the electronic file on the diskette. The label should also include the following phrase “Disk Copy—Not an Original.” Each diskette should contain only one party's pleadings, preferably in a single electronic file. In addition, commenters must send diskette copies to the Commission's copy contractor, Qualex International, Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554.

5. Comments and reply comments will be available for public inspection during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 Twelfth Street, SW., CY-A257, Washington, DC 20554. Persons with disabilities who need assistance in the FCC Reference Center may contact Bill Cline at (202) 418-0270, (202) 418-2555 TTY, or bcline@fcc.gov. Comments and reply comments also will be available electronically at the Commission's Disabilities Issues Task Force web site: www.fcc.gov/dtf. Comments and reply comments are available electronically in ASCII text, Word 97, and Adobe Acrobat.

6. Ex Parte Rules. This is a permit-but-disclose notice and comment proceeding. Ex parte presentations are permitted except during the Sunshine Agenda period, provided they are disclosed as provided in the Commission's Rules. See generally sections 1.1202, 1.1203, and 1.1206(a).

7. Initial Regulatory Flexibility Analysis (“IRFA”). As required by section 603 of the Regulatory Flexibility Act (“RFA”), the Commission has prepared an IRFA of the possible significant economic impact on small entities of the proposals contained in this FNPRM. Written public comments are requested on the IRFA. In order to fulfill the mandate of the Contract with America Advancement Act of 1996 regarding the Final Regulatory Flexibility Analysis, we ask a number of questions in our IRFA regarding the prevalence of small businesses in the radio broadcasting industry. Comments on the IRFA must be filed in accordance with the same filing deadlines as comments on the FNPRM, but they must have a distinct heading designating them as responses to the IRFA. The Secretary shall send a copy of this FNPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (“SBA”) in accordance with section 603(a) of the RFA, Public Law 96-354, 94 Stat. 1164, 5 U.S.C. 601 et seq. (1981), as amended.

8. Authority. This FNPRM is issued pursuant to authority contained in sections 4(i), 303, and 307 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303, and 307.

9. Pursuant to the authority contained in sections 1, 2(a), 4(i), 303, 307, 309, and 310 of the Communications Act, as amended, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310 this FNPRM are adopted.

10. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this FNPRM, including the IRFA, to the Chief Counsel for Advocacy of the SBA.

11. As required by the Regulatory Flexibility Act of 1980, as amended, the Commission has prepared this present IRFA of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in this FNPRM. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments on the FNPRM. The Commission will send a copy of the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of SBA. See 5 U.S.C. 603(a). In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register .

12. Application to and consent by the Commission are required under section 310 of the Communications Act before the sale of any licensed radio broadcast station may be consummated. The Commission may grant its consent only if it determines that “the public interest, convenience and necessity will be served thereby.” 47 U.S.C. 310(d). The effects of a proposed transaction on the diversity of voices and economic competition in a given market have long been core considerations in making this public interest determination. The Commission's concern for diversity and competition in broadcast markets has prompted us to adopt and maintain structural ownership rules intended to vindicate these interests. Until recently, these ownership rules have been sufficiently strict that we have not been presented with proposed transactions that comply with the ownership rules but nonetheless present economic concentration issues. The Telecommunications Act of 1996, however, substantially relaxed the Commission's local radio ownership rules. Heretofore, the Commission's radio ownership rules have been based strictly on the number of stations proposed for common ownership, without regard to the power or dominance of the stations that are being combined. This was not a problem under the former Commission rules which strictly circumscribed the number of radio stations that could be commonly owned in a local market. Now, however, under the new rules, which allow greater numbers of radio stations to be commonly owned in local markets, the Commission has encountered sales applications that propose transactions which comply with the numerical station limits but which result in substantial economic concentration in the relevant economic markets. In such cases, the Commission “has an independent obligation to consider whether a proposed pattern of radio ownership that complies with the local ownership limits would otherwise have an adverse competitive effect in a particular radio market and thus, would be inconsistent with the public interest. 47 U.S.C. 309(a) (requiring the Commission to make a determination that the transfer or assignment of a broadcast license would be in the public interest).” Accordingly, we are adopting this FNPRM to consider possible changes to our local radio ownership rules and policies.

13. This FNPRM is adopted pursuant to sections 1, 2(a), 4(i), 303, 307, 309, and 310, of the Communications Act, 47 U.S.C. 151, 152(a), 154(i), 303, 307, 309, and 310.

14. The RFA directs agencies to provide a description of, and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules, if adopted. The RFA defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction. In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

15. Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency after consultation with the Office of Advocacy of the SBA and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register .” A “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Nationwide, as of 1992, there were approximately 275,801 small organizations. “Small governmental jurisdiction” generally means “governments of cities, counties, towns, townships, villages, school districts, or special districts with a population of less than 50,000.” As of 1992, there were approximately 85,006 such jurisdictions in the United States. This number includes 38,978 counties, cities, and towns; of these, 37,566, or 96 percent, have populations of fewer than 50,000. Thus, of the 85,006 governmental entities, we estimate that 81,600 (91 percent) are small entities.

16. The SBA defines a radio broadcasting station that has $5 million or less in annual receipts as a small business. A radio broadcasting station is an establishment primarily engaged in broadcasting aural programs by radio to the public. Included in this industry are commercial, religious, educational, and other radio stations. Radio broadcasting stations, which primarily are engaged in radio broadcasting and which produce radio program materials, are similarly included. However, radio stations which are separate establishments and are primarily engaged in producing radio program material are classified under another NAICS code. The 1992 Census indicates that 96 percent (5,861 of 6,127) of radio station establishments produced less than $5 million in revenue in 1992. Official Commission records indicate that 11,334 individual radio stations were operating in 1992. As of June 30, 2001, Commission records indicate that 12,932 radio stations (both commercial and noncommercial) were operating of which 2,216 were noncommercial educational FM radio stations. Applying the 1992 percentage of station establishments producing less than $5 million in revenue ( i.e., 96 percent) to the number of commercial radio stations in operation, ( i.e., 10,716) indicates that 10,287 of these radio stations would be considered “small businesses” or “small organizations.” These estimates may overstate the number of small entities because the revenue figures on which they are based do not include or aggregate revenues from non-radio affiliated companies.

17. The FNPRM proposes no new recordkeeping or other compliance requirements associated with the subject rules and policies. These rules amend the Commission's procedures and review processes and do not change existing documentation and application requirements.

18. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.

19. In this FNPRM, the Commission explores the underpinnings of two principles underlying the regulation of the radio broadcast industry, namely diversity and competition. The principles of diversity and competition are of particular import to small entities. Thus we seek comment on the general advantages and disadvantages of relying on numerical limits or other bright-line rules to guide our public interest determination versus conducting a case-by-case competitive analysis. The framework minimizes the impact on small entities by not subjecting to further competitive analysis transactions below a threshold level.

20. This FNPRM invites comment on a number of alternative interpretations of the relationship between the revision of local radio ownership rules, embodied in section 202(b) of the Telecommunications Act of 1996 and the Commission's public interest mandate. Specifically, we propose alternative views on that relationship in the FNPRM, seek comment on these proposals, and invite additional possible interpretations of the relevant statutory provisions. Further, the FNPRM seeks comment on how the Commission's rules and policies concerning local radio ownership affect our goal of promoting diversity. In light of the fact that a majority of the radio broadcasting stations likely to be affected are small, we seek comment on the impact of industry consolidation on both viewpoint and source diversity.

21. In addition to the principle of diversity, this FNPRM seeks comment on the principle of competition in the radio broadcast industry, with regard to the definitions of the marketplace and measurement of market share.

22. None.

1  Elsewhere in today's Federal Register , FRA published an Interim Final Rule (new 49 CFR part 241). That rule requires all dispatching of railroad operations that occur in the United States to be performed in the United States, with three limited exceptions. First, a railroad is allowed to conduct extraterritorial dispatching (dispatching of railroad operations that occur in the United States by dispatchers who are located outside the United States) in emergency situations. Second, the grandfathering provision of the rule permits continued extraterritorial dispatching of the very limited track segments in the United States that were regularly being so dispatched in December 1999. Third, certain other fringe border operations are permitted. FRA does not propose at this time to apply part 219 to the limited number of extraterritorial dispatchers covered by the grandfathering provision in part 241, but invites public comment on this issue.

Paragraph (c) of § 219.3 now exempts employees of a foreign railroad whose primary reporting point is outside the United States (a foreign railroad's foreign-based employees or “FRFB employees”) who perform service in the United States covered by the hours of service laws (“covered service”)—train service, dispatching service, or signal service—from subparts E (identification of troubled employees), F (pre-employment testing), and G (random testing). FRA proposes to limit the exemption to FRFB signal service employees, who are currently few in number. FRA would apply all of part 219 to FRFB train and dispatching service employees, including pre-employment testing under subpart F for all individuals seeking to serve in such capacity, unless their employer qualifies as a small railroad under proposed § 219.3(b). This change, together with the Interim Final Rule discussed at footnote 1 below, and will ensure that dispatchers controlling the bulk of rail operations in the United States are covered by part 219

Paragraph (b)(2) of § 219.3 currently exempts railroads employing not more than 15 covered service employees from the requirements of subparts D (testing for cause), E, F, and G, and paragraph (b)(3) exempts railroads having fewer than 400,000 total manhours from the requirements of subpart I (annual reports). In this NPRM, FRA proposes to amend paragraphs (b)(2) and (3) to take into account a railroad's operations outside the United States in determining its size and eligibility for the “small railroad” exemptions.

As mentioned above, FRA also invites a discussion of part 219 implementation issues, and comment on whether it should expand the basis for requiring post-accident testing (subpart C) and testing for cause to include events that occur outside the United States.

The following abbreviations are used with some frequency in this preamble and are collected here for the convenience of the reader:

Train employees include engineers, conductors, switchmen, trainmen, brakemen, and hostlers. See statement of agency policy and interpretation of the hours of service laws (49 U.S.C. ch. 211 and related provisions in chs. 201 and 213), including 49 U.S.C. 21101(5) and 21103, at 49 CFR part 228, appendix A. These train employees are responsible for safely assembling, disassembling, and operating passenger and freight trains, including working on and around the equipment. Train crew members can become fatigued because of the long and varied hours they are expected to work. Because trains have long stopping distances, a small mistake in application of power or brakes by an engineer or the misreading or forgetting of a signal or a mandatory directive by any of the crew could have serious consequences. For example, such a small mistake could cause the train to run over a crew member, or to exceed its authorized speed and possibly derail or collide with another train, with resulting injuries or death to train crews, passengers, or both, and possible harm to surrounding communities by the release of hazardous materials. These errors by the train crew could also cause their train to enter into a track segment without authority, endangering authorized occupants of the track such as another train or a roadway work group. The crew's failure to sound the locomotive horn at a grade crossing could endanger motorists. Again, the long stopping distances required by trains can make it very difficult for a crew to recover from such mistakes or omissions in time to avoid accidents and consequent property damage, injury, or death. Train crew members whose judgment and motor skills are impaired by the use of alcohol or drugs pose a significant safety risk to themselves and others.

Adding to the criticality of the train crew's need to be subject to an effective safety program that encourages them to be in the best possible physical and mental state is the environment in which they work. Road train crews and road switching crews in particular (as opposed to switch crews who work in yards) normally work independent of supervision, without the supervisory monitoring that could assist in identifying substance-abuse symptoms, such as poor work performance, and allowing subsequent timely remedies. Misuse of drugs and alcohol is often difficult to identify under the best of circumstances, and this is particularly true of drugs such as cocaine, for which the chronic or after-effects of the drug may be of greater concern than the acute effects. Even practiced, functional alcoholics can sometimes avoid detection over long periods of time.

Train crews do not experience the deterrence provided by the timely oversight of a supervisor because of their normal, independent working conditions. Random alcohol and drug testing of these train employees helps to provide the necessary deterrent effect.

Proper dispatching is essential for safe railroad operations. Because trains have long stopping distances, train operations are generally not conducted by line of sight. Rather, the route ahead must be cleared for the train's movement. Switches must be aligned properly along the route. Potentially conflicting movements must be guarded against in order to prevent collisions. Dispatching service employees actually “steer” the train by remotely aligning switches; these dispatchers determine whether the train should stop or move, and if so, at what speed, by operating signals and issuing train orders and other forms of movement authority or speed restriction. See 49 U.S.C. 21101(2), 21105 and 49 CFR part 228, appendix A. In addition, dispatchers protect track gangs and other roadway workers from passing trains by issuing authorities for working limits. Train crews on board locomotives carry out the dispatchers' instructions and are responsible for actually moving the train, but dispatchers make it possible to do so safely. A dispatcher's judgment must be sound if railroad operations are to be conducted safely.

Alcohol and drug use results in safety risks and consequences that are unacceptable in the railroad environment. The loss of life, injuries, and property damage in accidents caused by train employees or dispatchers impaired by alcohol or drugs or both has been well documented. See 49 FR 24254-24264 (June 12, 1984) and 53 FR 47105 (Nov. 21, 1988). One of the most serious of these accidents in the United States was the January 4, 1987 train accident at Chase, Maryland, in which 16 persons were killed and 174 injured when a Conrail train passed an absolute restrictive signal and went through a switch into the path of a high-speed Amtrak train. The engineer and conductor of the Conrail train admitted smoking marijuana immediately prior to the accident.

Drug and alcohol abuse in the railroad industry is not limited to the United States. It also occurs in other countries, as evidenced by a 1987 Canadian survey commissioned by a Canadian Task Force on the Control of Drug and Alcohol Abuse in the Railway Industry. In that survey, 1,000 randomly-selected Canadian railway workers, including train employees, were interviewed by telephone. The survey revealed, among other things, that 20 percent of those surveyed had come to work feeling the effects of alcohol and nine percent felt that their use of alcohol had at some time compromised job safety. In addition, 2.5 percent admitted to using illegal drugs during their shift. As the following passage from a recent Canadian arbitration award involving CN illustrates, drug and alcohol abuse problems continue to exist in Canada:

In the Matter of an Arbitration Between Canadian National Railway Company and National Automobile, Aerospace, Transportation and General Workers Union of Canada (Union) and Canadian Council of Railway Operating Unions (Intervener), Re: the Company's Drug and Alcohol Policy at 123-24, Arbitrator Michel G. Picher (July 18, 2000). The drug and alcohol abuse problem in Canada is relevant to the current problem posed by FRFB employees who are performing train or dispatching service in the United States and helps demonstrate the need for more comprehensive drug and alcohol testing of such employees.

In 1991, the many alcohol- and drug-related railroad accidents caused Congress to require FRA to expand its existing comprehensive drug and alcohol program (and to strengthen FRA's 1988 regulations requiring random drug testing) because Federal regulations and the industry's own rule on drug and alcohol usage had not proven to be totally effective. 2 Congress determined that alcohol abuse and illegal drug use posed significant dangers to the safety of railroad operations, and mandated DOT to establish regulations to eliminate the abuse of alcohol and use of illegal drugs (whether on or off duty), by individuals involved in railroad operations. In passing the Omnibus Transportation Employee Testing Act of 1991, Pub. L. No. 102-143 (Omnibus Act), Congress specifically found that—

The Omnibus Act, as subsequently recodified in 1994 and amended in 1995, requires the Secretary of Transportation to issue regulations relating to alcohol and drug use in railroad operations (49 U.S.C. 20140, “section 20140”), aviation (49 U.S.C. 45101-45106), motor carriers (49 U.S.C. 31306), and mass transportation (49 U.S.C. 5331). Pub. L. No. 103-272 (1994); Pub. L. No. 104-59 (1995). Section 20140(b) provides that—* * *

In establishing these requirements, the Secretary is to act consistent with the international obligations of the United States, and to take foreign countries' laws and regulations into account. 49 U.S.C. 20140(e). Part 219 implements the requirements of the Omnibus Act.

In general, FRA's regulation on the control of alcohol and drug use (49 CFR part 219) currently applies to all railroads except a railroad that operates only on track inside an installation which is not part of the general railroad system of transportation or a rapid transit operation in an urban area that is not connected to the general railroad system of transportation. However, part 219 currently exempts certain operations by foreign railroads and certain small railroads from certain subparts. As discussed later in this notice, FRA proposes to narrow the scope of most of these exemption provisions.

Under part 219, dispatcher and train employees of a domestic railroad that perform their duties in the United States are generally subject to random, reasonable suspicion, reasonable cause, return-to-duty, follow-up, and post-accident drug and alcohol testing, as well as pre-employment testing for drugs. 3 See subparts B, C, D, F, and G of part 219. Post-accident testing is required for a dispatcher or train employee who is directly and contemporaneously involved in the circumstances of any train accident meeting FRA testing thresholds. See subpart C. A dispatcher or train employee found to have violated 219.101 or 219.102 of FRA's drug and alcohol rules is required to be immediately removed from covered service, and the railroad must follow specified procedures, including rehabilitation and return-to-duty and follow-up testing requirements, before returning the dispatcher or train employee to covered service. A dispatcher or train employee who refuses to cooperate with providing a required sample is required to be removed from covered service for a nine-month period and to complete a rehabilitation program. See subpart B. Additionally, employers of such dispatchers and train crews operating in the United States generally must provide self-referral and co-worker reporting (self-policing) programs for their employees (subpart E), submit random alcohol and drug testing plans for approval by FRA (subpart G), conduct random testing under part 219 and DOT procedures found in 49 CFR part 40 (part 40) (subpart H), submit annual reports (subpart I), and maintain program records (subpart J). 4 The reports and records required by part 219, especially subparts H through J are necessary for audit purposes in order to demonstrate the employer's compliance with part 219.

FRA's broad-based, multi-component alcohol and drug program has reduced alcohol and drug abuse in the railroad industry (the original regulations were implemented in 1986, and random alcohol testing began in 1994).

• In 1987, testing for cause conducted under FRA and railroad programs resulted in a 4.0 percent positive rate for alcohol and a 6.9 percent positive rate for drugs. These rates have declined each year, with the 1998 testing for cause resulting in a 0.36 percent positive rate for alcohol and a 0.95 percent rate for drugs.

• Random drug testing began in 1989. The first full year's data for 1990 indicated a 1.04 percent rate, declining in 1995 to a 0.93 percent rate, and to a 0.77 percent rate in 1998.

• Random alcohol testing began in 1994, with the first full year's data for 1995 resulting in a 0.42 percent rate, which has declined each year to a 0.003 percent rate for 1998.

FRA post-accident testing data provide perhaps the most stark and compelling proof of the decline in alcohol and drug abuse in the railroad industry. In its post-accident testing program, in which testing is triggered only by significant accidents, FRA may use lower drug detection levels (cutoffs) and test for more substances than those tested for in other types of FRA testing. Post-accident testing data are the most scrutinized because FRA reviews each testing event, and tests each specimen in a designated contract laboratory, which FRA inspects quarterly. Furthermore, because the program has been in effect since 1986, post-accident testing data provide the longest trend line.

An analysis of the post-accident testing data in the chart below demonstrates how positive test results have dramatically declined since FRA's program started. In 1987, the first year of the program, 42 employees produced a positive specimen, resulting in a post-accident positive rate of 0.4 percent for alcohol and 5.1 percent for drugs; by 1998 only four employees produced a positive specimen, resulting in positive rates of 0.0 percent for alcohol and 2.6 percent for drugs.

As shown in the post-accident testing chart, in each of the fields—“Qualifying Events,” “Employees Tested,” and “Employees Positive . . .”—FRA has achieved a desired reduction, despite a significant increase in rail traffic. The deterrent effect of random drug testing, which was implemented in 1988-1989, most certainly influenced the dramatic reduction in post-accident positives from 41 in 1988 to only 17 in 1990. Additionally, in the eight years from 1987 through 1994, there were 20 post-accident alcohol positives, but only two post-accident alcohol positives in the succeeding four years after implementation of random alcohol testing in 1994. Although some refinement of regulatory requirements over the years has reduced the class of qualifying events (damages criteria for two of the qualifying events have been increased), the remaining events are those for which higher positive rates would be expected due to a higher component of likely human factor involvement.

FRA is aware that many factors have contributed to these results and probably influenced movement in both directions. The number of employees tested has decreased due to fewer qualifying events and crew consist reductions. For Federal workplace detection programs such as FRA's (other than FRA post-accident testing under subpart C), Health and Human Services (HHS) has reduced the detection cut-off level for marijuana metabolites and has increased the detection levels for opiates. Another factor likely to have contributed to higher industry positive rates is the constant improvement in railroad random testing programs. Nonetheless, testing data remain the best indicator of the success that the comprehensive programs mandated by FRA have had in significantly reducing alcohol and drug abuse in the railroad industry.

Note on this chart, concerning 49 CFR 219, subpart C—Post-Accident Toxicological Testing:

The positives reflected in the chart indicate the presence of drugs or alcohol in a covered employee during the event. A positive result does not necessarily indicate a causal relationship with the accident. Causal determinations are made only after a thorough review of all factors that may have contributed to the accident.

With certain stated exceptions, post-accident toxicological tests are required to be conducted for the following events occurring in the United States:

1. Major Train Accident (involving damage exceeding the current FRA reporting threshold ($6,600 in 1998)) involving:

(a) a fatality;

(b) a release of hazardous material lading from railroad equipment resulting in either an evacuation or a reportable injury; or

(c) damage to railroad property of $1,000,000 or more.

2. Impact Accident (as defined in § 219.5 involving damage exceeding the FRA reporting threshold) involving:

(a) a reportable injury; or

(b) damage to railroad property of $150,000 or more.

3. Fatal Train Incident: fatality to any on-duty railroad employee involving movement of on-track equipment with damage not exceeding the reporting threshold.

4. Passenger Train Accident: passenger train involved in an accident that exceeds the reporting threshold and results in an injury reportable to FRA under 49 CFR part 225.

See 49 CFR 219.201(a). Rail/highway grade crossing accidents and accidents wholly resulting from natural causes (e.g., tornado), vandalism, or trespassing are exempt from FRA post-accident testing. See 49 CFR 219.201(b). For a major train accident, all train crewmembers must be tested, but any other covered employees (e.g., dispatchers, signalmen) determined not to have had a role in the cause or severity of the accident are not to be tested. See 49 CFR 219.201(c)(2).

Foreign railroads (railroads incorporated in a place outside the United States) have been subject to portions of FRA's regulations on the control of alcohol and drug use (part 219) since 1986. 51 FR 3973, Jan. 31, 1986. In 1992, FRA published an advance notice of proposed rulemaking (ANPRM) asking for comment on the international application of the additional areas of drug and alcohol testing discussed in the Omnibus Act. The ANPRM discussed departmental issues because the Federal Aviation Administration (FAA) and the Federal Highway Administration (FHWA, whose Office of Motor Carrier Safety is now the Federal Motor Carrier Safety Administration (FMCSA)), concurrently published separate ANPRMs on international application of the Omnibus Act.

As noted in FRA's ANPRM, section 4 of the Omnibus Act amended then section 202(r)(1) of the Federal Railroad Safety Act of 1970, as well as sections of the Federal Aviation Act and the Commercial Motor Vehicle Safety Act of 1988. 49 U.S.C. 20140, superseding 45 U.S.C. 432(r). Addressing concerns of all three modal administrations, the ANPRM stated that:

To implement Congress' intent, FRA proposed several rules (which later became final rules) and asked in its ANPRM for comments on whether FRA should extend the reach of all its substance abuse rules to FRFB employees who perform, or are assigned to perform, train service or other service covered by the hours of service laws (signal service or dispatching service) in the United States. The ANPRM also asked for information on any treaty obligations or principles of international law that could affect FRA's implementation of the Omnibus Act. Questions posed in the ANPRM are discussed in Section VIII of this preamble.

FRA received no comments in response to this ANPRM. Based on this lack of response and the perceived lack of interest in these issues that it implied, FRA decided not to proceed with a separate rulemaking on extraterritorial application. Accordingly, in 1994, FRA withdrew the ANPRM and instead, in its final rule implementing the Omnibus Act, codified at § 219.3(c) the scope of extraterritorial application already in effect. 59 FR 7448, 59 FR 7482; Feb.15, 1994.

Section 219.3(a) makes all of the requirements of part 219 applicable to railroads that operate on the general system and to commuter railroads unless these railroads are exempted by paragraphs (b) (dealing with small railroads) or (c). Paragraph (c) explicitly exempts foreign railroads from only subparts E through G, therefore leaving them subject to subparts A, B, C, D, H, I, and J. Section 219.3(c) reads as follows:

The existing paragraph (c) exemption from subparts E through G applies to “covered service employees”—train crews, dispatchers, and signal maintainers subject to the hours of service laws at 49 U.S.C. ch. 21101—who are employed by a foreign railroad and whose primary reporting point is outside the United States. See , e.g., 57 FR 59606 (Dec. 15, 1992); 59 FR 7449-7450 (Feb. 15, 1994); and Section X of the preamble, “Section-by-Section Analysis,” infra. The following categories of employees do not fall within the exemption and are, therefore, subject to part 219 in its entirety, unless their employing railroad qualifies as a small railroad under § 219.3(b): (1) An employee of a United States railroad whose primary reporting point is outside the United States but who enters the United States to perform, or is assigned to perform, service subject to the hours of service laws; and (2) an employee of a foreign or domestic railroad whose primary reporting point is in the United States and who performs, or is assigned to perform, service subject to the hours of service laws.

Recent trends in the organization of North American railroads and the expansion of trade among the United States, Mexico, and Canada under such treaties as the North American Free Trade Agreement, together have resulted in a growth, and potential for further growth, in multinational railroad operations. See the preamble to FRA's Interim Final Rule (49 CFR part 241) published in today's edition of the Federal Register for a discussion of organizational trends, current and potential level of cross-border train dispatching operations, and other issues related to this NPRM. The Interim Final Rule points out the increasing prospect that, if unrestrained, foreign railroads will resort to the use of foreign-based dispatchers who are not subject to the same safety laws and regulations as United States-based dispatchers, to control rail operations in the United States.

Because of the existing level of cross-border train operations involving FRFB train crews, the potential for increase in such operations, and the increasing risk of foreign railroads using foreign-based dispatchers to control rail operation in the United States, and the resulting increased safety risk posed by such actions, FRA now proposes to narrow the scope of all three provisions of § 219.3 that create exemptions from portions of part 219. 5 With regard to the most important of these exemptions, § 219.3(c), FRA would limit the exemption from subparts E, F, and G to FRFB signal service employees, who are currently few in number. FRA would apply all of part 219 to FRFB train and dispatching service employees, including pre-employment testing under subpart F for all individuals seeking to serve in such capacity, unless their employer qualifies as a small railroad under proposed § 219.3(b).

Furthermore, FRA proposes to reduce the scope of the two exemptions at §§ 219.3(b)(2) and 219.3(b)(3) to make sure that they provide relief only to relatively small railroads, as originally intended, and that a railroad's operations outside the United States are taken into account in determining the size of the railroad for purposes of those exemptions. Currently, § 219.3(b)(2) provides relief from subparts D, E, F, and G for a railroad that both (1) does not operate on the track of another railroad except for purposes of interchange and (2) has 15 or fewer employees whose duties are covered by the hours of service laws. The other exemption, at § 219.3(b)(3), provides relief from subpart I (annual reports) for a railroad with fewer than 400,000 manhours. (See Section X of the preamble, “Section-by-Section Analysis,” infra. )

In the context of § 219.3(c), and omitting the special case involving pre-employment testing, the term “FRFB train employee” or “FRFB dispatching service employee” basically refers to an individual who meets all of the following three criteria. First, the individual must be employed by a foreign railroad or by a contractor to a foreign railroad. If the individual is employed by a United States railroad (a railroad incorporated in the United States) or a contractor to a United States railroad, the exemption in § 219.3(c) from subparts E through G does not apply. Second, the individual's primary place of service for rail transportation services (“home terminal”) must be located outside the United States. If the individual's home terminal is inside the United States, § 219.3(c) does not apply. Third, the individual must either—

(a) In the case of a train service employee, be engaged in or connected with the movement of a train, including a hostler (49 U.S.C. 21101(5)), or

(b) In the case of a dispatching service employee, report, transmit, receive, or deliver orders related to or affecting train movements (49 U.S.C. 21101(2))—in the United States during a duty tour or be assigned to perform such train service or dispatching service in the United States during a duty tour.

As previously noted, train and dispatching service in the United States conducted by FRFB employees who perform, or are assigned to perform, such service in the United States is already subject to subparts A (general requirements and definitions), B (prohibitions), C (post-accident toxicological testing), D (testing for cause), H (testing procedures), I (annual report), and J (recordkeeping procedures), unless their employer falls within an exemption at § 219.3(b).

FRA proposes to amend the exemption at § 219.3(c) to limit it to FRFB signal maintainers. Train operations and dispatching service in the United States performed by FRFB train or dispatching service employees, who are currently subject to all of part 219 other than subparts E (self-referral and co-worker report programs), F (pre-employment drug tests), and G (random testing), would become subject to these subparts as well. It should be noted that even though, broadly speaking, subparts H, I, and J currently apply to operations in the United States by FRFB train crews and dispatching service employees, some specific requirements in subparts H, I, and J do not by their terms apply to these operations because the requirements are partly or wholly triggered only if the employing railroad is required to do pre-employment or random testing. See the annual reporting requirements in subpart I at, e.g., §§ 219.801(d)(3)-(5) and 219.803(e)(3)-(5), for information by type of testing; § 219.803(d)(6), for number of persons denied a position as a covered employee following a pre-employment drug test; and § 219.801(d)(12), for number of covered employees who refused to submit to a random alcohol test required by part 219. By making pre-employment and random testing requirements applicable to such operations, the proposed amendments would trigger these additional reporting requirements in subpart I, increase the scope of the foreign railroad's activities subject to subpart H and 49 CFR part 40 testing safeguards and procedures, and require the keeping of additional records under subpart J.

To comply with these proposed requirements, foreign railroads that use FRFB train or dispatching service employees to conduct train operations in the United States would have to conduct pre-employment drug tests (subpart F) and submit random alcohol and drug testing plans for approval by FRA (subpart G) for these employees. To meet the same requirements already applicable to railroads with United States-based train and dispatching service employees and to United States railroads with foreign-based train and dispatching service employees, FRA would also require foreign railroads employing or contracting for the services of FRFB train or dispatching service employees operating in the United States to comply with subpart E by providing self-referral and co-worker report programs for such operations and employees. Finally, as indicated earlier, a foreign railroad's responsibilities to comply with subparts H, I, and J with respect to such operations and employees would become more complex because subpart H would also govern random and pre-employment testing, subpart I would require additional specific information on random or pre-employment tests if random or pre-employment testing is required, and subpart J would call for certain records for random and pre-employment tests. FRA's intent is to ensure that, unless exempted by proposed § 219.3(b), part 219 is fully applicable to all employees who perform, or are assigned to perform, train or dispatching service in the United States subject to the hours of service laws at 49 U.S.C. ch. 211, whether they are foreign- or domestically-based and whether employed by a foreign or a domestic railroad.

FRA's Interim Final Rule, also published in this edition of the Federal Register , generally requires dispatchers controlling United States railroad operations to be located in the United States; by way of exception, the rule (1) conditionally permits extraterritorial dispatching in an emergency, (2) permits continued extraterritorial dispatching of very limited track segments in the United States that were normally being so dispatched in December 1999, and (3) conditionally permits extraterritorial dispatching of certain other fringe border operations. The Interim Final Rule invites comments on whether FRA should adopt an alternative regulatory scheme under which extraterritorial dispatching would be permitted; under this alternative scheme extraterritorial dispatchers may be subject to part 219. As discussed in the Interim Final Rule, an extraterritorial dispatcher of railroad operations in the United States, who is not a “covered employee” and therefore generally outside the scope of application of part 219, could compromise safety in the United States if impaired by drugs or alcohol. Because of the de minimis nature of the exceptions to the prohibition against extraterritorial dispatching, FRA does not propose to apply any or all of part 219 to the few employees permitted to conduct extraterritorial dispatching under the Interim Final Rule based on that service. FRA invites comment on this issue.

FRA's safety analysis of extraterritorial dispatchers parallels its safety analysis of extraterritorial and FRFB signal maintainers. An impaired extraterritorial signal maintainer responsible for signals controlling rail operations in the United States could adversely impact safety in the United States without ever physically entering United States territory. An extraterritorial signal maintainer, who by definition is not a “covered employee” and therefore who is normally outside the scope of application of part 219, or an FRFB signal maintainer, who is exempt from subparts E, F, and G under § 219.3(c), could endanger railroad operations in the United States. For this reason, FRA considered proposing an expanded application of part 219 to cover such extraterritorial or FRFB signal maintainers. It appears that this activity is also de minimis. To FRA's knowledge, no FRFB signal maintainer comes into the United States to maintain a railroad signal system on a regular basis, and only a few FRFB signal maintainers do so on an occasional basis. This infrequent performance of signal service in the United States by FRFB signal maintainers occurs in the areas of Buffalo and Niagara Falls, New York; Detroit, Michigan; and Sarnia, Michigan. After examining the de minimis impact of such extraterritorial or FRFB signal maintainers on rail operations in the United States, FRA has decided that such a proposal is not necessary at this time. However, commenters are invited to address whether any or all of part 219 should be applied to extraterritorial signal maintainers and whether subparts E, F, and G should be applied to FRFB signal maintainers who perform signal service in the United States. (Again, it should be noted that signal maintainers based in the United States, whether employed by United States or foreign railroads, remain, as always, fully subject to part 219 with respect to their covered service (which by definition is in the United States) unless exempt under a provision of existing § 219.3(b). Likewise, signal maintainers employed by United States railroads but based outside the United States remain subject to part 219 in its entirety with respect to their covered service in the United States unless otherwise exempt.)

The preceding portions of this preamble discuss the issue of whether and how to broaden the application of principally random testing and pre-employment testing and of how to narrow three exemption provisions in § 219.3. In this portion of the preamble, FRA solicits comment on whether to broaden the application of other part 219 requirements to reach operations and employees outside the United States.

For example, FRA invites comment on whether it should expand the basis for requiring post-accident testing under subpart C and testing for cause under subpart D to events that occur outside the United States and, if so, what those events should include. Currently, under part 219, FRA limits qualifying events for post-accident and “for cause” testing to those within the borders of the United States. Should FRA expand post-accident testing to include FRFB train employees who are involved in an otherwise qualifying event while in transit to or from the United States?

If FRA decides against such an expansion, the agency will likely amend—

• § 219.201 to make explicit that events for which post-accident toxicological testing under subpart C is required are limited to those within the borders of the United States; and

• §§ 219.300 and 219.301 to clarify that events for which reasonable suspicion testing is mandatory and reasonable cause testing is authorized are limited to those that occur within the borders of the United States.

In its 1992 ANPRM, FRA raised for comment several practical issues associated with the extraterritorial application of part 219, including:

• How would foreign employers ensure that an employee who had tested positive did not engage in operations in the United States until after his or her reinstatement requirements had been met?

• How would FRA monitor or enforce compliance outside the United States?

As in its 1992 ANPRM, FRA seeks comment on potential implementation issues. FAA and FMCSA, the other DOT modes covered by the Omnibus Act, have taken divergent approaches to extraterritorial application of their regulations. (The Federal Transit Administration has not addressed this issue since to date there are no cross-border transit operations affecting United States transit safety.) Citing work in progress by the International Civil Aviation Organization, FAA withdrew a proposed rulemaking that would have required foreign air carriers to establish alcohol and drug testing programs for their employees performing safety-sensitive aviation functions within the United States (65 FR 2079, Jan. 13, 2000).

FMCSA, which, like FRA, does not have an international treaty organization for its regulated industry, adopted an approach similar to what FRA is proposing. FMCSA has applied all of 49 CFR part 382 (FMCSA's equivalent to part 219) to persons and employers of such persons who operate a commercial motor vehicle in commerce in the United States, including foreign-domiciled employees. See 49 CFR 382.115. In the preamble to its final rule (60 FR 49321, 49323, Sept. 22, 1995), FMCSA's predecessor agency, the FHWA, stated that “[a]ll drivers operating in the United States are to be subject to controlled substances and alcohol testing, regardless of domicile. The safety concerns which led to the Omnibus Act pertain equally to United States and foreign-based drivers.”

FRA is now reconsidering many of the issues first raised in its ANPRM about the implementation of part 219 testing in foreign countries, and invites comments on extraterritorial application issues. FRA post-accident toxicological testing, unlike other testing under part 219, does not parallel part 40 procedures. See part 219, subpart C. In its investigation of a qualifying accident, FRA may require testing for different substances (e.g., carbon monoxide in the remains of a deceased employee) or testing at lower levels of detection than those required under part 40. FRA therefore contracts out all post-accident testing to an HHS-certified special laboratory that meets its detailed testing specifications (currently NWT Inc. in Salt Lake City, Utah). For example, if based on comments received on this NPRM, FRA decides to apply part 219 to extraterritorial signal maintainers and an extraterritorial signal maintainer could have contributed to a qualifying accident on United States soil, is there a way to assure that the employing railroad will ship the maintainer's specimens to FRA's designated post-accident laboratory? Although several Canadian laboratories have been deemed equivalent by HHS, post-accident testing requires testing specifications beyond those of part 40.

Furthermore, clearance through customs and international mail may delay shipment of body fluid and tissue specimens, and may also cause problems with the timely transmission of specimens and their accompanying paperwork. FRA also seeks comment on whether employing railroads in foreign countries would have difficulty obtaining and using evidential breath testing devices that are on the National Highway Traffic Safety Administration Conforming Products List, as required for part 40 alcohol testing.

Train and dispatching service employees operating in the United States whose judgment and motor skills are impaired by the use of alcohol or drugs pose a significant safety risk to themselves and others. Significant portions of FRA's highly successful, broad-based, multi-component part 219 alcohol and drug program, including random drug and alcohol testing, do not currently apply to FRFB train and dispatching service employees operating in the United States. If such employees are impaired by alcohol or drugs, they can jeopardize the safety of United States railroad operations. Since train employees do not experience the deterrence provided by the timely oversight of a supervisor because of their normal, independent working conditions, random testing is especially necessary to provide the necessary deterrent effect. With the existing levels of cross-border train operations and the potential for increases in such operations, FRA believes that it is necessary to narrow the scope of three exemptions from part 219 and (absent exemption by proposed 219.3(b)) to apply all of its part 219 program to FRFB train and dispatching service employees operating in the United States, and to apply pre-employment testing to individuals seeking to perform such service. The proposed amendments to part 219 (together with the Interim Final Rule on extraterritorial dispatching published elsewhere in this issue), will help ensure the safety of railroad operations in the United States.

This section-by-section analysis is intended to explain the provisions of the proposed rule. A number of these provisions and issues related to them have been addressed earlier in this preamble. Accordingly, the preceding discussions should be considered in conjunction with those below and will be referred to as appropriate.

Paragraph (a) contains a general statement of the scope of applicability of part 219, and paragraphs (b) and (c) contain exceptions to the general statement of applicability. The three exemptions in paragraph (b) are available to both domestic and foreign railroads, which is noted in the new heading for the paragraph. The exemption in paragraph (c) is available only to foreign railroads, also noted in the new heading for paragraph (c).

Paragraph (a) is unchanged except to add the heading “General” and to make explicit that the commuter railroads to which part 219 applies must operate in the United States. Paragraph (a) means that part 219 applies to each railroad that operates on the general railroad system of transportation and each railroad providing commuter or other short-haul service as described in the statutory definition of “railroad,” unless the railroad falls into an exception stated in paragraph (b) or (c). The terms “railroad” and “general railroad system of transportation” are defined in § 219.5. Intercity passenger operations and commuter operations in the United States are covered even if not physically connected to other portions of the general railroad system. See discussion below.

Paragraph (b)(1) , which uses standardized regulatory language, means that railroads whose entire operations are conducted on track within an installation that is outside of the general railroad system of transportation in the United States (in this paragraph, “general system” or “general railroad system”) are not covered by this part. Tourist, scenic or excursion operations that occur on tracks that are not part of the general railroad system would, therefore, not be subject to this part. The word “installation” is intended to convey the meaning of physical (and not just operational) separateness from the general system. A railroad that operates only within a distinct enclave that is connected to the general system only for the purposes of receiving or offering its own shipments is within an installation. Examples of such installations are chemical and manufacturing plants, most tourist railroads, mining railroads, and military bases. However, a rail operation conducted over the general system in a block of time during which the general system railroad is not operating is not within an installation and, accordingly, not outside of the general system merely because of the operational separation.

Read together, proposed paragraphs (a) and (b)(1) mean that all of part 219 applies to all railroads that operate on the general railroad system of transportation or are commuter or intercity passenger railroads, except those exempted from one or more subparts of part 219 by proposed paragraphs (b)(2), (b)(3), or (c).

Paragraph (b)(2). Existing paragraph (b)(2) exempts from subparts D (testing for cause), E (self-referral and co-worker report programs), F (pre-employment testing), and G (random testing) a railroad that meets both of the following criteria: the railroad must (1) utilize 15 or fewer employees covered by the hours of service laws and (2) not operate on the tracks of another railroad or engage in other joint operations with another railroad except for purposes of interchange.

Under proposed paragraph (b)(2), the second criterion remains the same, but the first criterion changes. As proposed, a railroad (including, for example, a foreign railroad that utilizes FRFB employees to perform train operations in the United States) would qualify as a small entity exempt from subparts D, E, F, and G of part 219 upon satisfaction of the following two conditions. First, the total number of its employees covered by the hours of service laws (as train employees, dispatching service employees, or signal employees), and employees who would be covered by the hours of service laws if their services were performed in the United States, would have to be 15 or fewer. Second, as is the case currently, the railroad would also be obliged not to operate on the tracks of another railroad or otherwise engage in joint operations in the United States except in order to perform interchange.

The following example, the first of a series, illustrates the interpretation of proposed paragraph (b)(2):

Although under proposed paragraph (b)(2) FRA would partially determine the applicability of subparts D, E, F, and G to a railroad based on the total number of its employees who are, or would be, covered by the hours of service laws, a railroad that is exempted only under proposed paragraph (b)(2) from subparts D, E, F, and G would have to comply with all the other requirements of part 219 (subparts A, B, C, D, H, I, and J) generally only with respect to those of its employees who are “covered employees” within the meaning of the substantive provisions of part 219. In Example 1, Railroad XYZ with 10 foreign-based employees covered by the hours of service laws and 120 foreign-based employees who would be covered by the hours of service laws if their services were performed in the United States, would not be exempt under proposed paragraph (b)(2). The question remains whether Railroad XYZ is exempt from any subpart of part 219 under proposed paragraph (c) of § 219.3. The following examples illustrate the relationship between the exemption in proposed paragraph (b)(2) and the exemption in proposed paragraph (c).

Paragraph (b)(3). Existing paragraph (b)(3) reads as follows, “Subpart I does not apply to a railroad that has fewer than 400,000 total manhours.” Proposed paragraph (b)(3) would make two basic changes to that provision. First, it would replace the term “manhours” with the term “employee hours” to make the provision gender-neutral. Second, the proposed paragraph would change and clarify the way in which employee hours are to be calculated, in part by defining the term “employee” as used in that subsection. Under the proposal FRA would look to a railroad's total number of employee hours worked worldwide in a calendar year, not just those worked in the United States, to determine whether the railroad would be required to file an annual Management Information System (MIS) report under subpart I. For a railroad to be exempt from MIS reporting, the number of hours worked by all of the railroad's employees regardless of their location or occupation, not just those employees performing train operations or other covered service in the United States, would have to total fewer than 400,000. For purposes of proposed paragraph (b)(3), an “employee of a railroad” is any individual who performs a service for the railroad; the term would include, for example, people directly compensated by the railroad and people employed by a contractor to the railroad who perform a service for the railroad. Non-work time, such as holidays, sick leave, or annual leave, would be excluded from the calculation of employee hours, even though it is paid.

It should be noted that the calculation of employee hours under proposed paragraph (b)(3) differs in some respects from the calculation of employee hours for purposes of FRA's accident reporting rules at 49 CFR part 225. See 49 CFR 225.21(d) (regarding the Form FRA 6180.56, “Annual Railroad Report of Manhours by State”). When reporting employee hours under the accident reporting rules, a railroad is to include only the hours of individuals who are directly compensated by a railroad, not the hours of employees of railroad contractors, and, as a general rule, to include only hours worked in the United States. See the FRA Guide for Preparing Accident/Incident Reports (1997 edition), Ch. 3, p. 3; Ch. 11, p. 1.) (By way of exception to the general rule for part 225 purposes, a railroad reporting under part 225 must include hours worked outside the United States in the count of employee hours only if the employee works in both the United States and in a foreign country during the same tour of duty. Id. )

FRA proposes to base the application of subpart I on a railroad's total number of employee hours worldwide, rather than on the railroad's total number of employee hours worked in the United States, in order to ensure FRA's ability to monitor foreign-based railroads that impact rail safety in the United States. Requiring these railroads to submit MIS reports, which provide data on the required part 219 programs and tests on the subject employees, would allow FRA to capture basic compliance data even if budgetary and logistical concerns were to impact FRA's ability to conduct inspections in foreign countries.

Paragraph (c). This paragraph would revise existing paragraph (c). Proposed paragraph (c) would limit the existing exemption for operations of a foreign railroad conducted by a covered service employee whose primary reporting point is outside the United States and who is employed by a foreign railroad to FRFB signal maintainers. The change would make an FRFB train or dispatching service employee subject to part 219 to the same extent as a train or dispatching service employee whose primary reporting point is in the United States and as a train or dispatching service employee whose primary reporting point is outside the United States and who is employed by a United States railroad (a railroad incorporated in the United States). Proposed § 219.5 would define “foreign railroad” as a railroad that is incorporated outside the United States. The current term (“primary place of service (“home terminal”) for rail transportation services”) would be replaced by the more generic term (“primary place of reporting”) to convey more clearly that the proposed narrower exemption applies to signal employees, whose principal reporting point is not typically called a “home terminal.”

While the text of proposed paragraph (c) states that subparts E, F, and G do not apply to services of a foreign railroad performed by one of its employees whose principal reporting place is outside the United States and who performs signal maintenance in the United States, the note under that proposed paragraph states the positive inference that subparts A, B, C, D, H, I, and J of part 219 do apply to services in the United States performed by FRFB signal employees unless a provision of paragraph (b) provides an exemption from one or more of those subparts. (For example, if the foreign railroad is small enough and operationally isolated enough to come within proposed paragraph (b)(2), then none of its covered service employees (neither its train crews, nor its signal maintainers, nor its dispatchers who perform covered service in the United States) would be subject to subparts D, E, F, or G.) For clarity, the proposed rule adds subparts H, I, and J to the existing list (“subparts A, B, C, and D”) in the second sentence of paragraph (c) of those subparts applicable to individuals meeting all of the following criteria: (1) Whose principal reporting point is outside the United States, (2) who are employed by foreign railroads, and (3) who are covered signal employees, unless exempted by § 219.3(b).

As discussed above, FRA is also asking for comment on whether signal maintainers who are the counterparts of FRFB train and dispatching service employees and whether extraterritorial signal maintainers, who remain outside the United States but may affect rail operations in the United States without entering United States territory, should be treated differently from FRFB train and dispatching service employees.

The terms “covered service” and “covered employee” are closely interrelated and, therefore, their definitions are discussed together.

Covered service. FRA proposes to add this definition of a basic term used in part 219, which appeared in part 219 as originally issued in 1985 but which is no longer among the definitions. The proposed definition tracks the definition in the 1985 final rule, with the exception that FRA makes explicit that FRA continues to interpret “covered service” as occurring only in the United States. In this respect, no substantive change is intended. As stated in the section-by-section analysis of the 1985 final rule,

Covered service is service subject to the Hours of Service Act. This is a practical, rather than a craft-based, definition of the persons and functions subject to the regulations. However, the employees that will most often fall within the definition of covered employee are train and engine crews, yard crews (including switchmen), hostlers, train order and block operators, dispatchers, and signalmen. These are the functions identified by the Congress as being connected with the movement of trains and requiring maximum limits on duty periods and required off-duty periods in order to ensure their fitness.

Covered employee. The definition of this term is proposed to be revised to make clear that FRA interprets covered service as being performed only in the United States. It should be noted that the existing rule currently provides as follows:

General railroad system of transportation. FRA proposes to add this definition to clarify that the term is limited to that part of the general railroad system of transportation that is located within the borders of the United States.

In consideration of the foregoing, the FRA proposes to amend chapter II, subtitle B of title 49, Code of Federal Regulations as follows: