The Service published a proposed rule in the Federal Register on August 8, 2001, at 66 FR 41456, to adjust certain fees of the IEFA. The fee adjustments are necessary to comply with specific federal immigration laws and the federal user fee statute and corresponding regulations and guidance, which require federal agencies to charge a fee for services when such services provide special benefits to recipients that do not accrue to the public at large. The revised fees are calculated to recover the full costs of providing these special benefits. The proposed rule was published with a 60-day comment period, which closed on October 9, 2001. The Service received 467 comments pertaining to the increases to the fees of the IEFA. The final rule implements the fee structure as outlined in the proposed rule, without change. Any applications or petitions mailed, postmarked, or otherwise filed, on or after February 19, 2002 will require the new fee.

Comments were received from a broad spectrum of individuals and organizations, including 5 refugee and immigrant service organizations, 17 public policy and advocacy groups, 5 attorney organizations, 129 past and present adopting parents, and 311 concerned citizens or prospective citizens. All of the comments were carefully considered before preparing this final rule. The following is a discussion of these comments and the Service's response.

One hundred and thirty comments were received expressing dissatisfaction with the fee increases associated with Forms I-600 and I-600A, Petition to Classify an Orphan as an Immediate Relative, and the Application for Advance Processing of Orphan Petition, respectively. All 130 comments received were similar in nature. The commenters indicated that these fees discriminated against United States citizens who wished to adopt abandoned children living in orphanages around the world.

For the Service, adjudication of the I-600 and I-600A “orphan petitions” has been a priority. This commitment is established in the regulations at 8 CFR 204.3(a)(2). Specifically, orphan petitions are filed at District Offices and adjudicated by senior District Adjudication Officers. This is due to both the complexity of the international adoption process in general and the process of adjudication required by law and regulation. In addition, because of the sensitivity of international adoptions, handling these cases in District Offices by experienced officers allows for personalized customer service.

The Service may be in constant contact with the petitioner throughout the process of a U.S. citizen's effort to adopt a child from abroad. The earliest contact may be a request for information and forms, followed by the filing of the I-600A and the home study. The adjudication of the I-600A petition requires knowledge of state law requirements regarding adoptions, including pre-adoption requirements in certain states, such as counseling. Each petition must be accompanied by a home study, for which there are state requirements as well as federal requirements. Since there is no single national standard, it makes sense to handle these in District Offices that are better able to stay on top of ever-changing state requirements and establish effective local liaisons.

The home study process is complex and often the adjudicator needs to request that additional information be provided in the home study. When the child to be adopted is identified, further information and contact may ensue. Documentation is usually added to the petition as the adoption process progresses. It is not unusual for a case to be with the Service for many months, demanding an intense and protracted level of customer service. There is a great deal of communication in person, telephonically, and in writing, between the Service, adoption agencies, social workers, prospective adoptive parents, and, often, congressional offices on these cases.

The home study review makes this petition particularly labor-intensive. The adjudicator is tasked with the careful review of the home study, perhaps 10-20 pages long, addressing a number of issues including, any history of abuse and history of arrests. This information is carefully compared against Federal Bureau of Investigation (FBI) fingerprint checks. If necessary, the officer must request and review the arrest dispositions of petitioners with criminal records. When there are discrepancies, the home study must be revised or supplemented to include the new information and consider the impact it has on the placement.

The I-600 petition establishes eligibility of a child as an orphan. Adjudication of these petitions requires the Service to determine if the child meets the regulatory definition of an orphan. Accordingly, the adjudicator must develop and maintain a level of expertise in the laws and processes governing adoption in countries from which children are adopted. This assessment may require working with the Department of State or Service offices to verify the validity of documents and interpretation of laws regarding international adoptions in countries other than the United States.

Finally, the I-600 adjudication also includes an I-604 investigation. The I-604, Request for and Report on Overseas Orphan Investigation, is used to document the investigations that must be completed in every orphan case before the I-600 can be approved. This includes: the child's birth name, and date/place of birth; where the child lives, and if the child lives at an orphanage or with someone other than the biological parent(s), how and why that placement occurred; the child's physical and mental condition, and information about any known physical or mental illnesses (e.g. is the child a special needs child); if the child has siblings and, if so, if the child lives with the brothers or sisters; information concerning the child's biological parents and the determination that the child is an orphan because he/she has a “remaining parent”, “sole parent” or “surviving parent” (as defined in the regulations); and any other pertinent facts that the investigation uncovers. The purpose of the investigation is to verify that the child is an orphan, address specific concerns articulated by the adjudicating officer or consular officer that can only be resolved by an investigation, and resolve significant differences between the facts presented in the advanced processing application (Form I-600A or an I-600 approved by an INS office in the United States). The investigation is conducted at the overseas visa-issuing post by INS, or by the Department of State if there is no INS office at that U.S. Embassy or Consulate. An I-604 investigation often entails travel to a remote location to establish whether or not a child is actually an orphan. In many countries, a field investigation may require 2 or 3 days away from the office. Not every case requires a field investigation, however, a certain percentage of cases must have one, if only as an auditing tool.

Since the Service relies on fees to recover the full cost of processing immigration and naturalization benefits, the increase in fees for the I-600 and I-600A to $460 is necessary to recover the full costs associated with processing orphan petitions. Accordingly, the Service will charge a fee of $460 for processing Forms I-600 and I-600A.

One hundred and twenty-three comments were received opposing the increase in the fees given the current level of services provided by the Service. Many people noted the lengthy waiting times to process their benefit applications as well as the need to improve overall customer service.

Although the Service has made significant progress in improving productivity in the areas of naturalization and adjustment of status applications over the last few years, the Service continues to work toward improving efficiencies in all aspects of its service. At his confirmation hearing before the Senate Judiciary Committee, Commissioner James W. Ziglar clearly stated his commitment to improving customer service:

The Service is committed to building and maintaining an immigration services system that provides immigration information and benefits in a timely, accurate, consistent, courteous, and professional manner. To support this commitment, the Service has developed a plan to eliminate backlogs and obtain a 6-month processing time standard for all applications and petitions. The plan outlines an aggressive 5-year strategy to reduce the backlogs. By the end of FY 2003, the Service expects to reach a national average processing time of 6 months or less for all applications and petitions. By the end of FY 2004, the Service intends to reduce the processing times to 6 months or less at every Service office. The Service will use the remaining 2 years to continue improving the infrastructure to ensure that backlogs do not recur in the future. The Service is committed to improve the current information technology and business processes to eliminate all backlogs.

To achieve these results, the Service will: (1) Set backlog reduction milestones by application for every office, (2) assign staffing resources to offices based on a comprehensive workload analysis, (3) monitor office accomplishments of the backlog reduction milestones, and (4) establish performance incentives for individual offices to meet and exceed the backlog reduction milestones.

The Service is applying a $5 surcharge to each application and petition to recover information technology and quality assurance costs associated with application processing. These costs were not included previously. The Service believes that this approach will ensure the resources necessary to support streamlined business processes, including on-line filing and case status inquiry via telephone or on-line; and expand quality assurance efforts to ensure the accurate and consistent adjudication of benefits.

It is also important to note that restructuring of the Service will result in improved services by clearly separating its conflicting missions of service and enforcement, clarifying its priorities, and ensuring adequate resources to carry out its mission.

One hundred and forty-nine comments stated that the fee increase was either too high or too burdensome on those applying for immigration and naturalization benefits. Many commenters noted that the Service only recently increased the majority of fees.

The Service is increasing fees by an average of $20 per application/petition, or 17 percent. The current fees, which were most recently increased in 1998, were based on a fee review that began in 1996 and was completed in 1997. Those fee levels reflected costs in 1997.

Other than the $5 per application surcharge for quality assurance and information technology, the fee schedule is based solely on the recovery of costs for general cost-of-living increases since 1997, not from the period in which the fees were implemented. Bearing this in mind, the increase in fees on an annual basis equates to a less than 4 percent average increase. In this context, the Service believes the fee increases are reasonable.

With regard to the fingerprint fee, this is the first time the fee was ever reviewed for the purpose of full cost recovery. As stated in the proposed rule, Congress directed the Service to implement changes to its fingerprint process in a short timeframe. To the extent that the revised fee may be viewed by some as a significant increase over the current fee, such an increase is both necessary and justified in an effort to recover the full cost of providing the service in accordance with applicable fee setting laws, regulations, and guidance.

The Service does have the ability to waive fees on a case-by-case basis. Any applicant or petitioner who has an inability to pay the fees may request a fee waiver from either a District or Service Center Director depending on where the petition/application is to be filed. Service regulations at 8 CFR 103.7(c) concerning the granting of fee waivers is posted on the Service Web site at www.ins.usdoj.gov.

Thirty-eight of the commenters encouraged the Service to seek additional sources of funding from Congress instead of relying solely on fees. From FY 1989 to FY 1998, the fees collected and deposited into the IEFA have been the sole source of funding for immigration and naturalization benefits. In creating the IEFA, Congress intended that the activities supported by this account be self-sustaining, and not be funded by tax dollars (P.L. 100-459). The Service has been managing this account consistent with federal law and congressional direction. In the past, however, fees did not recover the full costs of processing applications and petitions. In an effort to eliminate the backlog this created, Congress provided additional appropriated resources. With this support, the Service dramatically improved productivity for naturalization and adjustment of status benefit applications.

The President included $100 million in the FY 2002 budget request as the first installment of a multi-year effort to support elimination of backlogs and overall improvements in service. The funding sources for the $100 million installment are $20 million from the Premium Processing fee and $80 million in appropriations. In contrast to the new fees that will recover the full costs of processing newly filed immigration benefit applications, the $100 million budget request will provide funding for reduction and elimination of the current backlog of immigration benefit applications. The Service will use this supplemental funding for the backlog elimination plan primarily to finance the costs of term staffing increases. Without this additional staff, the Service cannot process enough immigration benefit applications to meet the processing time goals and backlog reduction milestones. The Service will also use this supplemental funding to recover the costs to develop a performance incentives program for all Service offices.

Five of the commenters opposed increasing fees when service varies so greatly from office to office. The Service recognizes the need for a consistent level of service among offices. As previously stated, the Service's backlog elimination plan includes a two-step effort to achieve processing time goals for all immigration benefit applications. In the first step, the Service will reduce national average processing times to 6 months or less by the end of FY 2003. In the second step, the Service will achieve the processing time goals of 6 months or less in every Service office by the end of FY 2004. This fee schedule will begin to bring consistency of processing at all field offices, as well as ensure that backlogs do not recur in the future.

Two of the commenters objected to the methodology used to calculate the proposed fees. Some of the commenters felt that the activity-based costing methodology calculated fees based upon inefficient practices.

The fee review adhered to the guidance contained in the Office of Management and Budget (OMB) Circular A-25, User Charges, which requires that user charges imposed recover the full cost to the Government for providing a special benefit. In addition, the Federal Accounting Standards Advisory Board (FASAB) provides additional guidance on the meaning of full-cost recovery. In FASAB Statement No. 4, full cost is defined as:

The fees reflect the full cost of processing immigration and naturalization benefits. The review was conducted consistent with the requirements of subsection 205(a)(8) of the Chief Financial Officers Act of 1990, Pub. L. 101-576, 104 Stat. 2838 (1990) (31 U.S.C. 902(a)(8)), which requires a biennial review of user fees to ensure that full costs are being recovered.

Two of the commenters opposed the use of the applicant fees to pay for expenses that they perceived to be for unrelated services, such as the running of the asylum, refugee, parole, and the Cuban-Haitian Entrant programs. In the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1991, Pub. L. 101-515, 104 Stat. 2101 (1990), Congress authorized the Service to provide certain immigration and naturalization services at no cost to the applicants. Subsection 210(d)(2) of Public Law 101-515 states that “fees for providing adjudication and naturalization services may be set at a level that will ensure recovery of the full costs of providing all such services, including the costs of similar services provided without charge to asylum applicants or other immigrants. Such fees may also be set at a level that will recover any additional costs associated with the administration of the fees collected.” (8 U.S.C. 1356(m)). As a result of this legislation, Congress no longer provided the Service with an appropriation to cover the costs of asylum and refugee services, and directed the Service to fund these costs with revenue from the IEFA.

In FY 1996, Congress also authorized the Service to pay for the cost of the Cuban-Haitian Entrant Resettlement Program from the IEFA. See H.R. Conf. Rep. No. 104-378, at 83 (1995). In FY 1997, Congress transferred the cost of other asylum and refugee services that had been paid from the Violent Crime Trust Fund to the IEFA. See Pub. L. 104-208, 110 Stat. 3009 (1996). Through explicit legislative language and subsequent appropriation action, Congress has signaled its desire that certain asylum and refugee services should be provided at no charge to the recipient. The revenue to pay for these costs must be recovered from the fees charged to other applicants for immigration and naturalization benefits. All expenses being included for cost recovery are consistent with federal law and federal accounting standards.

Many of these commenters also opposed the Service paying for costs that are unusual or atypical when compared to the usual costs in a normal processing year. They claimed that the type of organizational activities that the Service is currently engaged in, such as infrastructure building, should not be funded by current applications and must not be included in the fee calculation. Proper accounting treatment requires inclusion of unusual or atypical costs, such as improvement of automation activities or upgrading of records management. These types of costs were assigned a useful life, and the cost of these projects amortized or depreciated over the assigned useful life. Therefore, a portion of the unusual or atypical cost has been included in the fee calculation framework for the current year and treated like any other cost based on the useful life assigned to that asset.

Seventeen comments were received in favor of the fee increases. Commenters noted several reasons for this:

(1) Current fees are too low given the benefit received;

(2) taxpayers should not pay for the increasing costs of providing immigration and naturalization benefits; (3) fee increases are justified given the increasing demand for immigration and naturalization benefits over the last several years; and (4) fee increases are necessary in order to increase the current level of services.

In the proposed rule, the Service requested comments on whether it should set separate fee schedules for FY 2002 and FY 2003 versus the proposed single, blended schedule effective for both years. The Service also noted that commenters might want to consider whether changing fee schedules would unduly confuse applicants and petitioners.

The Service received one comment on this subject. The commenter was in favor of a separate year fee schedule. The commenter noted that a separate, single year fee schedule will allow applicants to follow fee increases in relation to yearly inflation figures, making it easier to understand why fees increased more in one year versus another. The Service respectfully disagrees. Upon consideration of the issue, the Service has decided that changing fees every year will create unnecessary confusion with applicants and practitioners. Therefore, the Service will proceed with the single, blended fee schedule.

In the proposed rule, the Service questioned whether it should change the established $330 fee for filing legalization applications under section 1104 of the Legal Immigration Family Equity Act, Pub. L. 106-553, 114 Stat. 2762 (2000) (LIFE Act). In establishing the fee, on an interim final basis on June 1, 2001, the Service first identified the adjustment of status application (Form I-485) process as most similar to the new legalization application process. 66 FR 29661, 29667 (June 1, 2001). The Service then referred to the 1999 fee review, which identified an estimated full cost of the Form I-485 to be $330. Id. at 29,668.

The Service questioned the methodology and limited nature of the 1999 fee review and proposed that the Form I-485 fee be $255. Id. The Service then said it would review the $330 fee established for filing legalization applications. Id.

Although no comments were received on this subject, the Service has reviewed the Form I-485 fee for legalization applications and has deemed it fair and reasonable to reduce the fee from $330 to $255, and refund the difference to those who have already paid the $330 fee. The Service will undertake a separate rulemaking to notify the public of the timing for this action.

The fee adjustments, as adopted in this rule, are shown as follows:

The Attorney General, in accordance with 5 U.S.C. 605(b), has reviewed this regulation and by approving it has determined that this rule will not have a significant economic impact on a substantial number of small entities.

The majority of applications and petitions are submitted by individuals and not small entities as that term is defined in 5 U.S.C. 601(6). The Service acknowledges, however, that a number of small entities, particularly those filing business-related applications and petitions, such as Forms I-140, Immigrant Petition for Alien Worker; I-526, Immigrant Petition by Alien Entrepreneur; and I-829, Petition by Entrepreneur to Remove Conditions may be affected by this rule. For FY 2001, the Service projects approximately 130,000 Forms I-140, 400 Forms I-526, and 400 Forms I-829 will be filed. However, this volume represents petitions filed by a variety of businesses, ranging from large multi-national corporations to small domestic businesses. The Service does not collect data on the size of the businesses filing petitions, and therefore does not know the number of small businesses that may be affected by this rule. Even if all of the employers applying for benefits met the definition of small businesses, the resulting degree of economic impact would not require a Regulatory Flexibility Analysis to be performed.

This rule will not impose a mandate of enforceable duty on State, local, and tribal governments in the aggregate, or on the private sector, and it will not significantly or uniquely affect small governments. Accordingly, no further actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is a major rule as defined by the Small Business Regulatory Enforcement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996). Based on the data included in the proposed rule, this rule will result in an annual effect on the economy of $169 million, in order to generate the revenue necessary to fund the increased expenses of processing the Service's immigration and naturalization applications and petitions. The increased fees will be paid by persons who file applications or petitions to obtain immigration benefits.

This rule is considered by the Department of Justice to be an economically “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, because it will have an annual effect on the economy of over $100 million. Without the fee adjustments, the Service estimates that it will collect approximately $815 million in fees for immigration and naturalization benefits in FY 2002. If the fee adjustments become effective on January 1, 2002, the Service anticipates collecting approximately $942 million in FY 2002—$127 million in additional revenue.

The projected increase in revenues may overstate the actual receipt of applications and petitions since fewer applications and petitions may be filed due to the implementation of the higher fees. The decrease in volume due to the higher fees has a real economic effect in that there may be fewer people applying for and receiving benefits paid for by the Service's user fees.

This increase in revenue will be used to fund the processing of immigration and naturalization applications and petitions. The revenue increase is based on the Service's costs and workload volumes. The volume of applications and petitions filed is projected based on a regression analysis of a 5-year history of actual applications and petitions received by the Service. The regression analysis is adjusted for any anticipated or actual changes in laws, policies, or procedures that may affect future filing patterns. The proposed fees will be paid by an estimated 6.6 million individuals and businesses filing immigration and naturalization applications and petitions. Accordingly, this regulation has been reviewed by the Office of Management and Budget (OMB).

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

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

Under the Paperwork Reduction Act of 1995, Public Law 104-13, 109 Stat. 163 (1995), all Departments are required to submit to OMB, for review and approval, any reporting or recordkeeping requirements inherent in a final rule. This rule does not impose any new reporting or recordkeeping requirements under the Paperwork Reduction Act.

However, it should be noted that the Service solicited public comments on the change of fees in the proposed rule which was published in the Federal Register on August 8, 2001. It should also be noted that the changes to the fees will require changes to the application/petition forms to reflect the new fees. As a result of the changes to the forms, the Service will be submitting the forms to OMB for its approval.

Pursuant to the authority of sections 10(b), 13, 14, 19, et al., of the Federal Reserve Act, the Board has amended its Regulation A (12 CFR part 201) to incorporate changes in discount rates on Federal Reserve Bank extensions of credit. The discount rates are the interest rates charged to depository institutions when they borrow from their district Reserve Banks.

The “basic discount rate” is a fixed rate charged by Reserve Banks for adjustment credit and, at the Reserve Banks' discretion, for extended credit for up to 30 days. In decreasing the basic discount rate from 1.5 percent to 1.25 percent, the Board acted on requests submitted by the Boards of Directors of the twelve Federal Reserve Banks. The new rates were effective on the dates specified below. The 25-basis-point decrease in the discount rate was associated with a similar decrease in the federal funds rate approved by the Federal Open Market Committee (FOMC) and announced at the same time.

In a joint press release announcing these actions, the FOMC and the Board of Governors stated that economic activity remains soft, with underlying inflation likely to edge lower from relatively modest levels. To be sure, weakness in demand shows signs of abating, but those signs are preliminary and tentative. The Committee continues to believe that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future. Although the necessary reallocation of resources to enhance security may restrain advances in productivity for a time, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Board certifies that the change in the basic discount rate will not have a significant adverse economic impact on a substantial number of small entities. The rule does not impose any additional requirements on entities affected by the regulation.

The provisions of 5 U.S.C. 553(b) relating to notice and public participation were not followed in connection with the adoption of the amendment because the Board for good cause finds that delaying the change in the basic discount rate in order to allow notice and public comment on the change is impracticable, unnecessary, and contrary to the public interest in fostering price stability and sustainable economic growth. The provisions of 5 U.S.C. 553(d) that prescribe 30 days prior notice of the effective date of a rule have not been followed because section 553(d) provides that such prior notice is not necessary whenever there is good cause for finding that such notice is contrary to the public interest. As previously stated, the Board determined that delaying the changes in the basic discount rate is contrary to the public interest.

OTS is amending its regulations to incorporate a number of technical and conforming amendments. These changes are outlined below.

OTS is changing the headings for several parts to more accurately reflect the contents. The following chart illustrates the changes made by this rule:

In addition, OTS makes the following miscellaneous changes:

• Part 505—Freedom of Information Act (FOIA). The final rule revises §§ 505.1 to 505.4, which describe the availability of materials under FOIA and the procedures for requests for records and administrative appeals. The final rule indicates that materials are available through the Dissemination Branch, General Law Division and the Public Reading Room, and that the Public Reading Room is available only by appointment. The final rule also provides that requests for records and administrative appeals of initial determinations to deny records must be submitted to the Dissemination Branch, General Law Division.

• Part 506—Information Collection Requirements under the Paperwork Reduction Act (PRA). The final rule updates the table displaying the OMB control numbers assigned to various OTS regulations under the PRA by inserting additional references to the control numbers and by correcting minor typographical errors. See 12 CFR 506.1(b).

• Part 516—Application Processing Guidelines and Procedures. The final rule updates § 516.40 to include current addresses for OTS Regional Offices.

• Part 556—Statements of Policy. This final rule moves the statement of policy on branching at 12 CFR 556.5 to 12 CFR 545.93. This provision will now directly follow OTS rules on branch offices and branch office applications at 12 CFR 545.92. The only remaining provision in part 556 is the policy statement on receipt of interest expressed as a percentage of other income. See 12 CFR 556.13. This policy statement has limited applicability and is adequately addressed in various OTS legal opinions. See Op. Chief Counsel (May 3, 1996). OTS has concluded that it is unnecessary to continue to include this policy statement in its rules. Accordingly, this final rule deletes part 556.

• Part 560—Lending and Investment. The final rule corrects the indentation in the supervisory loan-to-value limits chart in the Appendix to § 560.101.

• Part 563d—Securities of Savings Associations and Part 563g—Securities Offerings. The final rule updates the filing requirements at §§ 563d.1, 563d.2, 563g.5, and 563g.18.

• Part 565—Prompt Corrective Action. The final rule corrects a statutory citation in § 565.4(b)(1)(iv).

• Part 568—Security Procedures. The final rule corrects the authority citation for this part.

• Part 573—Privacy of Consumer Financial Information. The final rule adds a phrase that was inadvertently omitted from § 573.15(a)(7)(ii). This change conforms this section to the text of the rule published on 65 FR 35162 (June 1, 2000).

• Part 590—Preemption of State Usury Laws. OTS is correcting a grammatical error in § 590.3(c).

OTS finds that there is good cause to dispense with prior notice and comment on this final rule and with the 30-day delay of effective date mandated by the Administrative Procedure Act. 1 OTS believes that these procedures are unnecessary and contrary to public interest because the rule merely corrects and clarifies existing provisions. Because the amendments in the rule are not substantive, these changes will not detrimentally affect savings associations.

Section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 provides that regulations that impose additional reporting, disclosure, or other new requirements may not take effect before the first day of the quarter following publication. 2 This section does not apply because this final rule imposes no additional requirements and makes only technical changes to existing regulations.

Pursuant to section 605(b) of the Regulatory Flexibility Act, 3 the OTS Director certifies that this technical corrections regulation will not have a significant economic impact on a substantial number of small entities.

OTS has determined that this rule is not a “significant regulatory action” for purposes of Executive Order 12866.

OTS has determined that the requirements of this final rule will not result in expenditures by State, local, and tribal governments, or by the private sector, of $100 million or more in any one year. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Reform Act of 1995.

OTS periodically reviews its lending and investment regulations to ensure that they enhance safe and sound lending, implement statutory requirements, protect consumers, minimize regulatory burden, and are clearly written. OTS lending and investment regulations have been considerably modified over time as savings associations, their markets, their competition, and the economy have changed. For the most part, OTS has taken a contract and market-based approach to provide flexibility for thrifts and their customers and to encourage innovations in lending to help make credit more available.

OTS last substantively revised its lending regulations and subordinate organizations regulations in 1996. 1 Since that time, the markets in which thrifts operate have changed substantially. In the primary market, savings associations now compete with other mortgage lenders to offer potential borrowers a wide variety of options besides the traditional 30-year fixed-rate purchase money mortgage. The secondary market continues to narrow the interest-rate spread on high quality mortgages.

As the residential mortgage market has evolved, thrifts have increasingly begun to explore offering other types of credit needed in their communities, including consumer lending and small business lending. A variety of community-related investment opportunities offer thrifts new ways to serve and to participate in the economic development of their communities. Thrifts have asked whether and how such loans and investments may be made by either the thrift itself or through an operating subsidiary or service corporation.

This evolving environment made it appropriate for OTS to again re-examine and update its lending and investment and subordinate organizations regulations. Accordingly, on November 1, 2001, OTS published a proposed rule intended to help thrifts take better advantage of the flexibility available under the Home Owners' Loan Act (“HOLA”), to provide low-cost credit to their customers, and to invest in their communities while still operating safely and soundly. 66 FR 55131 (Nov. 1, 2001).

OTS received eight public comments from three Federal savings associations, three trade associations, a community group, and an individual. Seven commenters supported the rule, but recommended modifications. The commenter opposing the rule incorrectly believed that the rule applied to institutions with a common bond ( i.e. , credit unions), rather than thrifts. The remaining comments are summarized below.

Existing § 560.3 provides two alternatives for determining whether a particular loan qualifies as a small business loan. 2 First, a loan of any size qualifies if the loan is made to a business that meets the size standards established by the Small Business Administration. Second, a loan qualifies if a savings association makes a loan to a business and the amount of the loan is less than $1 million, or makes a loan to a farm and the amount of the loan is less than $500,000. OTS proposed to raise this safe harbor amount to $2 million for both small business and farm loans.

Most commenters supported the increase. One commenter, however, noted that the existing definition is more consistent with an emphasis on serving the smallest businesses and farms and with the Community Reinvestment Act (CRA) definition of small business and farm loan. This commenter feared that the proposed increase could cause thrifts to neglect the smallest businesses.

The proposed changes were designed to define the scope of a Federal savings association's lending and investment powers, rather than to assess the adequacy of its CRA performance. OTS believes that the additional flexibility afforded by the proposed modification will enable more savings associations to provide a broader range of small business customers with credit products tailored to their needs, particularly in higher price geographic areas. OTS will continue to assess an institution's record of meeting the credit needs of the local communities, including small business lending, under the CRA and CRA implementing regulations at 12 CFR part 563e. 3

To satisfy the safe harbor under the current and proposed rules, a savings association must make the loan to “a business or farm.” Several commenters noted that commercial loans are often made to individuals who use the proceeds for their own small businesses. To accommodate this lending, commenters suggested that OTS should apply the $2 million safe harbor if loan proceeds are used for business or commercial purposes. OTS has always believed that such loans fall within the definition, but has modified the safe harbor in the final rule to make clear that it applies to loans that are for “commercial, corporate, business, or agricultural purposes.” See 12 U.S.C. 1464(c)(2)(A).

Existing § 560.36 permits a Federal savings association to invest the greater of one-fourth of one percent of its total capital or $100,000 in community development investments of the type permitted under 12 CFR part 24. OTS proposed to increase these limits to the greater of one percent of an association's total capital or $250,000. One commenter urged OTS to increase this limit to the national bank limit (five percent of capital stock paid in and five percent of unimpaired surplus). See 12 U.S.C. 24 (Eleventh) and 12 CFR part 24.

The proposed increase to the community development investment limits attempts to give thrifts authority as comparable to that of banks as possible, given the different statutory authority. 4 Because Federal thrifts have other community development investment options that are not available to national banks, OTS is not inclined to increase the de minimis authority beyond the proposed amount at this time.

In addition to the de minimis authority, Federal savings associations are permitted to invest in certain community development and charitable activities through service corporations. 5 One commenter requested clarification that the authority to invest in public welfare investments under the de minimis authority in § 560.36 is not contingent on the balance of public welfare investments made under the service corporation authority. OTS has consistently stated that if a loan or investment is authorized under more than investment authority, a Federal savings association may designate the section under which the loan or investment is made. See 12 CFR 560.31. 6 Section 559.3(i) also specifically provides that investments made at the service corporation level are not aggregated with those made at the thrift level when calculating HOLA investment limitations. Compare § 559.3(i)(1) (operating subsidiaries) with § 559.3(i)(2) (service corporations). Thus, the amount a savings association may invest directly in public welfare investments under § 560.36 is not contingent on the balance of public welfare investments made through a service corporation.

Existing § 560.40 reiterates HOLA's grant of statutory authority to Federal thrifts to invest in commercial paper and corporate debt securities and sets out limitations on that authority. 7 Recently, some Federal savings associations have purchased complex investment securities with nonstandard ratings, ratings that only apply to the principal amount rather than both the principal and interest, or payment features such as residuals. These investments tend to be speculative in nature, and their likelihood of producing a particular rate of return is difficult to assess even where they may be partially guaranteed or rated investment grade. These investments are clearly not intended to hedge interest rate risk or credit risk. Rather, their potential purchase creates risks that highlight the need for savings associations to perform thorough underwriting analyses. To address issues raised by these types of investments, OTS proposed changes to § 560.40 to codify the agency's existing expectations about the circumstances under which these investments may be made.

Among other requirements, OTS proposed that a Federal savings association must determine whether an investment security is safe and sound and suitable for the association before committing to acquire the security. The proposed rule indicated that a Federal savings association must consider, as appropriate, the interest rate, credit, liquidity, price, transaction, and other risks associated with the investment activity. One commenter supported this provision, but requested confirmation that an investment need not be reasonable under each separate criterion. The risks of each investment should be evaluated on an overall basis. Individual risk factors may impact the overall safety and soundness of a particular investment so significantly that they may not be offset by other strengths of the investment. On the other hand, a slight deviation in one area may not have such an impact on the overall safety and soundness of an investment. These determinations are inherently case-by-case. As a result, OTS cannot provide the requested confirmation.

The preamble to the proposed rule indicated that a savings association has an ongoing responsibility to monitor its investments in commercial paper and debt securities. One commenter observed that the rule text does not incorporate a review requirement or indicate what factors should be addressed in this analysis. OTS believes that the ongoing review responsibilities should be left to each institution based on the level and complexity of its investment activity. OTS has issued guidance concerning appropriate initial and continuing underwriting criteria. 8

The commenter also noted that the rule does not address the actions required of an institution if an investment fails to meet the original assumptions or suitability requirements subsequent to its acquisition. Depending on the circumstances of each case, OTS may, as a part of its ongoing supervision and oversight, criticize an institution's investments, its investment activities, or its investment policies, and will require appropriate remedial action as necessary.

One commenter asked OTS to add a new provision requiring savings associations to screen loan purchases for abusive and predatory features. This request addresses important issues beyond the scope of the proposal and is not an area OTS believes appropriate to address in this final rule without further public input and analysis. Nonetheless, a Federal savings association must determine the safety, soundness, and suitability of any investment or purchase, and should consider the reputation of the seller and the quality and underwriting standards of the loans it purchases.

In the proposed rule, OTS stated that it intended to publish a final rule that will be effective on January 1, 2002. See 66 FR 55131, at 55135 (Nov. 1, 2001). Section 553 of the Administrative Procedure Act (APA), however, provides that a final rule must not be made effective before 30 days after its publication, 5 U.S.C. 553(b)(B), unless the rule grants or recognizes an exemption or relieves a restriction.

Today's final rule relieves restrictions by enhancing savings associations' flexibility to offer a greater range of products, to invest in activities that support their local communities, and to compete more effectively with other financial institutions. It also relieves restrictions by permitting savings associations to make a greater amount of community development investments. Finally, the final rule rewrites certain provisions using plain language drafting techniques, which will make it easier for all savings associations to comply with OTS regulations. Accordingly, OTS has concluded that the final rule relieves restrictions and that the APA does not require OTS to delay its effective date for 30 days.

This rule is effective on January 1, 2002. This date is consistent with section 302 of the Riegle Community Development and Regulatory Improvement Act of 1994 (CDRIA), which requires final rules to take effect on the first day of a calendar quarter that begins on or after the date of publication of the rule. 12 U.S.C. 4802.

The Director of OTS has determined that this final rule does not constitute a “significant regulatory action” for purposes of Executive Order 12866.

Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4 (“Unfunded Mandates Act”), requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in expenditure by state, local, and tribal governments, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of the Unfunded Mandates Act also requires an agency to identify and consider a reasonable number of regulatory alternatives before promulgating a rule. OTS has determined that the final rule will not result in expenditures by state, local, or tribal governments or by the private sector of $100 million or more. Accordingly, a budgetary impact statement is not required under section 202 of the Unfunded Mandates Act of 1995.

Pursuant to section 605(b) of the Regulatory Flexibility Act, OTS certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The final rule makes certain changes that reduce burden on all savings associations, including small institutions. The final rule reduces burden on all savings associations by enhancing thrifts' flexibility to offer a greater range of products, to invest in activities that support their local communities, and to compete more effectively with other financial institutions. The final rule allows small savings associations to make a greater amount of community development investments. Finally, the final rule revises § 560.42 into plain language, which will make it easier for all savings associations to comply with the regulation. Accordingly, OTS concludes that this final rule will not have a significant economic impact on a substantial number of small entities.

A proposal to amend 14 CFR part 39 by superseding AD 99-13-02, Amendment 39-11195 (64 FR 32399, June 17, 1999), which applies to Eurocopter France Model AS 332C, L, L1, and L2 helicopters, was published in the Federal Register on April 14, 2000 (65 FR 20104). That action proposed to require the same actions as AD 99-13-02 but would have added another fuel filter part number to the applicability.

After issuing that notice of proposed rulemaking (NPRM), Eurocopter France issued Alert Service Bulletin No. 01.00.56, dated January 16, 2001 (ASB), which changed the compliance and operational procedures and added a part number to the affected fuel filters. The Direction Generale De L'Aviation Civile, which is the airworthiness authority for France, classified that ASB as mandatory and issued AD Nos. 1998-318-071(A)R6 and 1998-319-012(A)R6, both dated April 18, 2001, to ensure the continued airworthiness of these helicopters in France. The FAA determined that the actions and all the fuel filter part numbers specified in the SB should be included in the proposal. Because the changes expanded the scope of the originally proposed rule, the FAA determined that it was necessary to reopen the comment period to provide additional opportunity for public comment and issued a supplemental NPRM on August 17, 2001 (66 FR 45651, August 29, 2001).

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed except for a minor editorial change in Note 2 of the AD. The word “bulletin” is inserted to reference the applicable service information. This change neither increases the economic burden on any operator nor increases the scope of the AD.

The FAA estimates that one helicopter of U.S. registry will be affected by this AD, that it will take approximately 3 work hours per helicopter to accomplish the required actions, and that the average labor rate is $60 per work hour. Based on these figures, the total cost impact of the AD on U.S. operators is estimated to be $180, assuming no valve needs to be replaced.

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

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

Reports of excessive backlash in the flap actuators of the internal gear system on certain Pilatus Models PC-12 and PC-12/45 airplanes caused FAA to issue AD 99-19-32, Amendment 39-11319 (64 FR 50439, September 17, 1999).

AD 99-19-32 currently requires you to inspect the flap actuator internal gear system for correct end-play and backlash measurements and accomplish any corrective adjustments, as necessary.

The Federal Office for Civil Aviation (FOCA), which is the airworthiness authority for Switzerland, recently notified FAA of the need to change AD 99-19-32. The FOCA reports that Pilatus has identified modifications for the flap system and designed and manufactured a new flap control and warning unit (FCWU) that permits the flap power drive-unit circuit breaker to close during flight.

The previous FCWU does not allow the pilot to close the flap power drive-unit circuit breaker during flight and the FCWU cannot sense when a single actuator becomes worn. This could result in flap panel distortion. The incorporation of these modifications to the flap system and the installation of the new design FCWU, Pilatus part number FCWU 99-3, make the current end-play and backlash measurement procedures incorrect.

Pilatus has also identified quality deficiencies with serial numbers less than 100,001 of Pilatus part number FCWU 99-3.

In addition, the FOCA reports that electrical surges in the flap system can decrease the electrical life of the flap power drive-unit motor contactor. At the 40-degree flaps position, the flaps-down limit switch (S035) operates before the flap control warning unit can stop the extend command, which causes the flap power drive-unit's Up/Down relay (K32) to change from the extend to the retract position. The current in the field winding then goes in the opposite direction while a current still flows to the motor. Electrical current to the flap power drive-unit motor and field windings remains when the circuit breaker (CB034) closes and the motor contactor (K31 or K670) stays closed.

We issued a proposal to amend part 39 of the Federal Aviation Regulations (14 CFR part 39) to include an AD that would apply to all Pilatus PC-12 and PC-12/45 airplanes. This proposal was published in the Federal Register as a notice of proposed rulemaking (NPRM) on September 20, 2001 (66 FR 48381). The NPRM proposed to supersede AD 99-19-32 and proposed to require you to accomplish the following:

Accomplishment of these proposed actions as specified in the NPRM would be required in accordance with the following:

The FAA was recently notified of a report from a forging manufacturer of a metallurgical inclusion (contaminant) found by ultrasonic inspection in a certain forged part. This part was made from a certain ingot of titanium. The engine manufacturer also reports that CFE738 fan rotor disks were manufactured from this same ingot and are, therefore, suspected of containing these metallurgical inclusions. Metallurgical inclusions are known to be crack initiation sites in highly stressed engines parts. Cracks that have initiated from inclusions in disk material have caused uncontained disk failures. The FAA has therefore determined that these suspect fan rotor disks could fail as a result of having metallurgical inclusions. This condition, if not corrected, could result in uncontained engine failure and damage to the airplane.

Since an unsafe condition has been identified that is likely to exist or develop on other CFE Company model CFE738-1-1B turbofan engines of the same type design, this AD is being issued to remove from service affected fan rotor disks, which if not removed, could result in uncontained engine failure and damage to the airplane. This AD requires the removal from service of certain fan rotor disks, either before further flight or by an engine cycle schedule, based on fan rotor disk serial number.

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

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2001-NE-28-AD.” The postcard will be date stamped and returned to the commenter.

This final rule does not have federalism implications, as defined in Executive Order 13132, because it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the FAA has not consulted with state authorities prior to publication of this final rule.

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

This action will establish a Class E enroute domestic airspace area with a base altitude of 1,200 feet AGL in the vicinity of Iron Mountain, CA. A review of the airspace in southern California revealed large areas of uncontrolled (Class G) airspace immediately adjacent to numerous federal airways. Because this airspace is Class G (uncontrolled) below 14,500 feet mean sea level (MSL), the Los Angeles Air Route Traffic Control Center (ARTCC) cannot initiate instrument flight rules (IFR) air traffic services within Class G airspace. IFR services may be provided to aircraft operating in Class G airspace only when the pilot requests such service. This procedure effectively limits the flexibility of Los Angeles ARTCC in providing off route vectors and direct routing to aircraft in these areas. En route domestic airspace areas are intended to create controlled airspace in those areas where there is a requirement, or need, to provide Instrument Flight Rules (IFR) en route air traffic control services but the Federal airway segment is inadequate. The intended effect of this action is to establish Class E controlled airspace within the boundaries of the above-mentioned area, thereby replacing the existing uncontrolled airspace.

Class E enroute domestic airspace areas are published in Paragraph 6006 of FAA Order 7400.9J dated August 31, 2001, and effective September 16, 2001, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in this Order.

The FAA anticipates that this regulation will not result in adverse or negative comment and therefore is issuing it as a direct final rule. Unless a written adverse or negative comment, or a written notice of intent to submit an adverse or negative comment is received within the comment period, the regulation will become effective on the date specified above. After the close of the comment period, the FAA will publish a document in the Federal Register indicating that no adverse or negative comments were received and confirming the date on which the final rule will become effective. If the FAA does receive, within the comment period, an adverse or negative comment, or written notice of intent to submit such a comment, a document withdrawing the direct final rule will be published in the Federal Register , and a notice of proposed rulemaking may be published with a new comment period.

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this rule must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. 01-AWP-27.” The postcard will be date stamped and returned to the commenter.

The regulations adopted herein will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 12612, it is determined that this final rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

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

Consistent with Section 6 of Executive Order 12938 of November 14, 1994, as amended, this action removes the following Russian entities, their sub-units and successors from the Entity List found in Supplement No 4. to Part 744 of the EAR: INOR Scientific Center, Moscow, Russia; and, Polyus Scientific Production Association, 3 Ulitsa Vvedenskogo, 117342, Moscow.

BXA maintains an Entity List to provide notice to the public of export license requirements for such entities. These two Russian entities were added to BXA's Entity List on July 29, 1998 (63 FR 40363), due to an investigation then underway by the Russian government of these entities for suspected activities involving weapons of mass destruction and missile technology. However, the State Department determined on November 17, 2000, that it is in the foreign policy and national security interests of the United States to remove nonproliferation measures on these two entities. These entities have taken action on the issues that caused the U.S. to impose these measures in 1998. Removing these additional license requirements and restoring the previous license review policy for these entities in light of the action taken by them will support U.S. nonproliferation policy.

Although the Export Administration Act expired on August 20, 2001, Executive Order 13222 of August 17, 2001 (66 FR 44025, August 22, 2001) continues the Regulations in effect under the International Emergency Economic Powers Act.

1. This final rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid Office of Management and Budget Control Number. This rule involves a collection of information subject to the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq. ). This collection has been approved by the Office of Management and Budget under control number 0694-0088, “Multi-Purpose Application,” which carries a burden hour estimate of 45 minutes for a manual submission and 40 minutes for an electronic submission.

3. This rule does not contain policies with Federalism implications as this term is defined under Executive Order 13132.

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public participation, and a delay in effective date, are inapplicable because this regulation involves a military and foreign affairs function of the United States (5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this interim rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under the Administrative Procedure Act or by any other law, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) are not applicable. Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Sharron Cook, Office of Exporter Services, Bureau of Export Administration, Department of Commerce, P.O. Box 273, Washington, DC 20044, or scook@bxa.doc.gov.

The Commission published, in the Federal Register of August 2, 2001, a regulation to require CR packaging of oral drug products approved by the FDA for OTC sale that contain active ingredients previously available only by prescription. 66 FR 40111. The regulation as proposed and as issued in final form was intended to apply only to an OTC drug product containing one or more previously prescription-only active ingredients first granted OTC status as a result of applications submitted to the FDA on or after the January 29, 2002 effective date of the final OTC-switch rule.

Nevertheless, the August 2, 2001 rule can be read to require CR packaging of a drug product approved for the switch to OTC status after the rule becomes effective on January 29, 2002, even if that drug product contains only an active ingredient or ingredients for which application(s) for OTC switch were submitted to the FDA by any manufacturer(s) prior to the effective date. The CR packaging requirement of the rule could also be interpreted to be triggered by non-prescription active ingredients in previously prescription-only drug products. This was not the intent of the rule.

The following examples are intended to clarify the scope of the rule as corrected today:

Each of these examples pertains only to the scope of this rule. Any other special packaging requirements of 16 CRF 1700.14 otherwise applicable to a drug product remain in full force and effect.

Section 553(b)(3)(B) of the APA authorizes an agency to dispense with certain notice procedures for a rule when it finds “good cause” to do so. 5 U.S.C. 553(b)(3)(B). Specifically, under section 553(b)(3)(B), the requirement for notice and an opportunity to comment does not apply when the agency, for good cause, finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” This amendment does not alter the intended scope of the August 2, 2001 rule or otherwise widen its applicability. Accordingly, the Commission hereby finds that notice of, and public comment on, this technical amendment are unnecessary.

Because this amendment makes no change in the intended scope or applicability of the August 2, 2001 rule, the Commission hereby incorporates by reference the findings made with respect to it concerning the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., the National Environmental Policy Act, 42 U.S.C.4321, et seq., and Executive Order No. 12988. See 66 FR 40114-5 (August 2, 2001).

For the foregoing reasons, the Commission corrects rule FR Doc. 01-19225 published in the Federal Register on August 2, 2001, (66 FR 40111) by making the following correcting amendment. On page 40115, in the third column, revise paragraph (a)(30)(i) in § 1700.14 to read as follows:

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a NPRM. Publishing a NPRM and delaying the rule's effective date would be contrary to the public interest since immediate action is needed to protect the public, ports and waterways of the United States. As appropriate the Coast Guard will issue a broadcast notice to mariners and place Coast Guard or other law enforcement vessels in the vicinity of these zones to advise mariners of the restriction.

For the same reasons, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

Based on the September 11, 2001, terrorist attacks on the World Trade Center buildings in New York and the Pentagon in Arlington, Virginia, there is an increased risk that subversive activity could be launched by vessels or persons in close proximity to the Sunshine Skyway Bridge in Tampa Bay, located at approximate position 27° 37′12″ N Latitude, 82° 39′20″ W Longitude. These security zones will encompass all waters extending 100 feet around all bridge supports and rocky outcroppings at the base of the supports for the Sunshine Skyway Bridge in Tampa Bay. Entry into these security zones is prohibited, unless specifically authorized by the Captain of the Port, Tampa, Florida or his designated representative.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that order. The Office of Management and Budget has not reviewed it under that order. It is not significant under the regulatory policies and procedures of the Department of Transportation (DOT) (44 FR 11040; February 26, 1979) because this will only affect a small group of recreational fisherman that occasionally fish next to the bridge supports and they may be allowed to enter these zones with the permission of the Captain of the Port.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities because small entities may be allowed to enter these zones on a case by case basis with the authorization of the Captain of the Port.

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

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

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

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

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

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

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

The Coast Guard considered the environmental impact of this rule and concluded under Figure 2-1, paragraph 34(g) of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. A “Categorical Exclusion Determination” is available in the docket for inspection or copying where indicated under ADDRESSES.

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

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

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

You may be affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this action might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http://www.epa.gov/. To access this document, on the Home Page select “Laws and Regulations,” “Regulations and Proposed Rules,” and then look up the entry for this document under the “ Federal Register —Environmental Documents.” You can also go directly to the Federal Register listings at http://www.epa.gov/fedrgstr/. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.

2. In person . The Agency has established an official record for this action under docket control number OPP-301184. The official record consists of the documents specifically referenced in this action, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

In the Federal Register of April 14, 1997 (62 FR 18116) (FRL-5599-7), EPA issued a notice pursuant to section 408 of the FFDCA, 21 U.S.C. 346a as amended by the of FQPA 1996 (Public Law 104-170) announcing the filing of a pesticide petition (PP) for tolerance by K-I Chemical U.S.A., Inc., 11 Martine Avenue, 9th Floor, White Plains, NY 10606. This notice included a summary of the petition prepared by K-I Chemical U.S.A. Inc., the registrant. There were no comments received in response to the notice of filing. In the Federal Register of October 6, 1998 (63 FR 53656) (FRL-6033-8), EPA issued a notice pursuant to the same Acts, announcing an amendment to the petition. There were no comments received in response to the notice of filing. Addition tolerances for residues of fluthiacet-methyl per se in or on cottonseed and cotton gin by products were requested; however, a revised Section F to the petition was submitted in which these tolerances were not requested.

The petition requested that 40 CFR 180.551 be amended by establishing a tolerance for residues of the herbicide, fluthiacet-methyl, acetic acid, [2-chloro-4-fluoro-5-[(tetrahydro-3-oxo-1H,3H-[1,3,4]thiadiazolo[3,4-α]pyridazin-1-ylidene)amino]phenyl]thio]-methyl ester), in or on corn, field, grain at 0.010 part per million (ppm); corn, field, forage at 0.050 ppm; corn, field, stover at 0.050 ppm; corn, pop, grain at 0.010 ppm; corn, pop, stover at 0.050 ppm; corn, sweet, forage at 0.050 ppm; corn, sweet, K + CWHR at 0.010 ppm; and corn, sweet, stover at 0.050 ppm.

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue”.

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. For further discussion of the regulatory requirements of section 408 and a complete description of the risk assessment process, see the final rule on Bifenthrin Pesticide Tolerances (62 FR 62961) (FRL-5754-7) November 26, 1997.

Consistent with section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2), for tolerances for residues of fluthacet-methyl on corn, field, grain at 0.010 ppm; corn, field, forage at 0.050 ppm; corn, field, stover at 0.050 ppm; corn, pop, grain at 0.010 ppm; corn, pop, stover at 0.050 ppm; corn, sweet, forage at 0.050 ppm; corn, sweet, K + CWHR at 0.010 ppm; and corn, sweet, stover at 0.050 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by fluthiacet-methyl are discussed in the following Table 1 as well as the no observed adverse effect level (NOAEL) and the lowest observed adverse effect level (LOAEL) from the toxicity studies reviewed.

The dose at which the NOAEL from the toxicology study identified as appropriate for use in risk assessment is used to estimate the toxicological level of concern (LOC). However, the LOAEL of concern are identified, the LOAEL is sometimes used for risk assessment if no NOAEL was achieved in the toxicology study selected. An uncertainty factor (UF) is applied to reflect uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. An UF of 100 is routinely used, 10X to account for interspecies differences and 10X for intra species differences.

For dietary risk assessment (other than cancer) the Agency uses the UF to calculate an acute or chronic reference dose, (acute RfD or chronic RfD), where the RfD is equal to the NOAEL divided by the appropriate UF (RfD = NOAEL/UF). Where an additional safety factor is retained due to concerns unique to the FQPA, this additional factor is applied to the RfD by dividing the RfD by such additional factor. The acute or chronic Population Adjusted Dose (aPAD or cPAD) is a modification of the RfD to accommodate this type of FQPA Safety Factor.

For non-dietary risk assessments (other than cancer) the UF is used to determine the LOC. For example, when 100 is the appropriate UF (10X to account for interspecies differences and 10X for intraspecies differences) the LOC is 100. To estimate risk, a ratio of the NOAEL to exposures (margin of exposure (MOE) = NOAEL/exposure) is calculated and compared to the LOC.

The linear default risk methodology (Q * ) is the primary method currently used by the Agency to quantify carcinogenic risk. The Q * approach assumes that any amount of exposure will lead to some degree of cancer risk. A Q * is calculated and used to estimate risk which represents a probability of occurrence of additional cancer cases (e.g., risk is expressed as 1 x 10 -6 or one in a million). Under certain specific circumstances, MOE calculations will be used for the carcinogenic risk assessment. In this non-linear approach, a “point of departure” is identified below which carcinogenic effects are not expected. The point of departure is typically a NOAEL based on an endpoint related to cancer effects though it may be a different value derived from the dose response curve. To estimate risk, a ratio of the point of departure to exposure (MOE cancer = point of departure/exposures) is calculated. A summary of the toxicological endpoints for fluthiacet-methyl used for human risk assessment is shown in the following Table 2:

1. Dietary exposure from food and feed uses . Tolerances have been established (40 CFR 180.551) for the residues of fluthiacet-methyl, in or on a variety of raw agricultural commodities. There are presently no tolerances established for meat, milk, poultry and eggs. Based upon the results of a ruminant feeding study and a goat metabolism study, this Agency concluded that there is no reasonable expectation of finite residues in ruminant tissues and milk. Based upon the results of a poultry metabolism study, fluthiacet-methyl and its metabolite (CGA-300403) are unlikely to occur in poultry or eggs. Risk assessments were conducted by EPA to assess dietary exposures from fluthiacet-methyl in food as follows:

i. Acute exposure . Acute dietary risk assessments are performed for a food-use pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. There were no toxicological effects that could be attributed to a single oral exposure (dose) in an appropriate toxicological study. Thus, an acute exposure/risk assessment was not conducted for fluthiacet-methyl.

ii. Chronic exposure. Percent crop treated (PCT), anticipated market share percentages and tolerance level residues were used.

A chronic reference dose (RfD) (0.001 mg/kg/day) was identified for fluthiacet-methyl, based on non-neoplastic liver findings (increase in absolute and relative liver weights, fatty changes, chronic inflammation, karyomegaly, single cell necrosis and ceroid/lipofuscin pigmentation). The chronic PAD is the same as the chronic RfD since the FQPA factor was reduced to 1X. The chronic PAD was used to assess chronic risk.

EPA's Office of Pesticide Programs (OPP) Health Effects Division used Dietary Exposure Evaluation Model (DEEM TM ), version 7.075) software for conducting a chronic dietary (food) exposure analysis. DEEM TM is a dietary exposure analysis system developed by Novigen Sciences, Inc. that is used to estimate exposure to pesticide residues in foods comprising the diets of the U.S. population, including population subgroups. DEEM TM contains food consumption data as reported by respondents in the USDA Continuing Surveys of Food Intake by Individuals conducted in 1989-1992.

A Tier 2 chronic DEEM TM analysis was performed. The assumptions of this Tier 2 analysis were tolerance level residues and estimates of PCT for soybeans and projected market-share for corn commodities. The following tolerance levels were used in the analysis: soybeans at 0.01 ppm, sweet corn at 0.01 parts per million (ppm), pop corn at 0.01 ppm, and corn grain (field corn) at 0.01 ppm. These values were also used for corresponding processed commodities since processing studies for soybeans and field corn showed no concentration of residues into processed commodities. Thus, default concentration factors for corn grain, bran; corn grain, endosperm; corn grain, oil; soybean, other; soybeans, sprouted seeds; soybeans, flour (defatted, low fat, and full fat); soybean, oil; and soybean, protein isolate were set to 1X. DEEM TM default processing factors for corn grain/sugar/hfcs (1.5X), and corn grain/sugar-molasses (1.5X) were retained as processing data for these commodities are not available. A PCT value of 1% was used for soybeans and a projected market share value of 1% was used for all types of corn. These estimates of PCT/projected market share were derived based on Agency analysis of information on weed-pests for the use sites.

The chronic dietary exposure (food only) to fluthiacet-methyl for some population subgroups are presented in Table 3. The resulting dietary food exposures occupy < 1% of the Chronic PAD for all population subgroups included in the analysis. The results of this dietary exposure analysis should be viewed as partially refined. Refinements such as use of anticipated residue values may yield even lower estimates of chronic dietary exposure.

You may be affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. Potentially affected categories and entities may include, but are not limited to:

This listing is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by this action. Other types of entities not listed in the table could also be affected. The North American Industrial Classification System (NAICS) codes have been provided to assist you and others in determining whether or not this action might apply to certain entities. If you have questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT .

1. Electronically . You may obtain electronic copies of this document, and certain other related documents that might be available electronically, from the EPA Internet Home Page at http://www.epa.gov/. To access this document, on the Home Page select “Laws and Regulations,” “Regulations and Proposed Rules,” and then look up the entry for this document under the “ Federal Register —Environmental Documents.” You can also go directly to the Federal Register listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cfr180_00.html, a beta site currently under development.

2. In person . The Agency has established an official record for this action under docket control number OPP-301196. The official record consists of the documents specifically referenced in this action, and other information related to this action, including any information claimed as Confidential Business Information (CBI). This official record includes the documents that are physically located in the docket, as well as the documents that are referenced in those documents. The public version of the official record does not include any information claimed as CBI. The public version of the official record, which includes printed, paper versions of any electronic comments submitted during an applicable comment period is available for inspection in the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA, from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The PIRIB telephone number is (703) 305-5805.

In the Federal Register of September 6, 2000 (65 FR 54015) (FRL-6738-4), EPA issued a notice pursuant to section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, as amended by the Food Quality Protection Act (FQPA) (Public Law 104-170) announcing the filing of a pesticide petition (PP 0E6177) by Eden Bioscience, 11816 Creek Parkway North, Bothell, Washington, 98011-8205. This notice included a summary prepared by the petitioner. There were no comments received in response to the notice of filing.

The petition requested that 40 CFR 180.1001(c) be amended by establishing an exemption from the requirement of a tolerance for residues of sodium thiosulfate penthydrate (CAS Reg. No. 10102-17-7). The petition requested only the use of sodium thiosulfate pentahydrate; however, sodium thiosulfate is also available in an anhydrous form. The two chemical substances differ only in the attachment of the water molecules. The petition specified that sodium thiosulfate should be used at a concentration of 1 to 6% of the formulated product.

The sodium thiosulfate will be used as a pretreatment for the water in tank mixes to remove chlorine or other reactant species, thus functioning as a dechlorinator or reducing agent. When mixed with chlorine-containing water, sodium thiosulfate reacts with the chlorine according to the equation Na 2 S 2 O 3 + 4Cl 2 + 5H 2 O → 2NaHSO 4 + 8HCl. Sodium thiosulfate also reacts with hydrochloric acid (produced in the previous reaction) to form breakdown products such as sulfur, salt and water: Na 2 S 2 O 3 + 2HCl → 2NaCl + H 2 O + S + SO 2 .

Section 408(b)(2)(A)(i) of the FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.

Consistent with section 408(b)(2)(D) of FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by sodium thiosulfate are discussed in this unit. The information submitted in support of this petition included portions of the Food and Drug Administration (FDA) generally recognized as safe (GRAS) determination (“Evaluation of the Health Aspects of Sodium Thiosulfate as a Food Ingredient”), articles from open literature, and an acute oral toxicity study.

There are medical uses of sodium thiosulfate. It has been used as an antidote for acute cyanide poisoning (intravenous injection), and is an ingredient in various dermally-applied lotion formulations used to treat acne and ringworm.

Sodium thiosulfate pentahydrate has been classified as GRAS by the FDA when used as a formulation aid or reducing agent in alcoholic beverages (not to exceed 0.00005%) and table salt (not to exceed 0.1%). A GRAS determination means general recognition of safety by experts qualified by scientific training and experience to evaluate the safety of the substance for the specified use pattern. As noted by the limitations stated above, sodium thiosulfate has a very limited use pattern. EPA will use the information evaluated as part of the FDA GRAS determination to inform the Agency's decision.

In its 1975 Evaluation, FDA reported the following information on the sodium thiosulfate absorption and metabolism: Sodium thiosulfate is a normal constituent of human body fluids and is excreted in the urine of man and higher animals. Quantitative studies have demonstrated the consistent presence of 2 to 17 milligrams (mg) of thiosulfate sulfur in 24-hour urine specimens of healthy young adults. Variations in excretion of thiosulfate are related to the extent of protein metabolism, activity of the intestinal flora, and the sulfur-amino acid content of the diet. The sulfur-containing amino acids of dietary protein are the source of the endogenous thiosulfate pool. Orally administered thiosulfate that is absorbed from the gastrointestinal tract is excreted in the urine unchanged or after oxidation to sulfate. From 5 to 70% of an oral dose of sodium thiosulfate is considered to be absorbed from the gastrointestinal tract of man and the remainder to be excreted in the feces.

According to the Evaluation, sodium thiosulfate was found to cause no mutagenic effects.

The Evaluation also included a summary of the results of developmental studies on rats, mice, and hamsters. It was determined there was no effect on nidation, maternal or fetal survival, or fetal development.

Three of the articles from open literature were reviewed to determine if the articles could supply information to the Agency on the genotoxicity of sodium thiosulfate. There is no indication of any mutagenic activity associated with exposure to sodium thiosulfate.

An acute oral toxicity study in the rat performed with sodium thiosulfate pentahydrate was submitted. The study was classified as acceptable, toxicity category IV. The LD 50 is greater than 5,050 milligrams/kilograms (mg/kg) (males and females combined).

As part of the information submitted in support of the petition, the petitioner submitted the final reports for the rat, mouse, and hamster developmental studies that were discussed in the FDA Evaluation (dated 1972), as well as the final report for a rabbit developmental toxicity study (dated 1974). These studies were performed using the anhydrous form of sodium thiosulfate. Due to the passage of almost 30 years, as well as the changes in laboratory techniques that have occurred during this time, the data tables in the reports were reviewed to determine if any additional information were contained in the tables.

1. Mouse . Animals were tested at the following dose levels: Negative control, positive control, 5.5, 25.5, 118 or 550 mg/kg/day over a 10-day period from day 6 through day 15 of gestation. There was no indication of any effect on maternal or fetal survival, or in incidences of visceral or skeletal abnormalities. The male/female ratio of the fetuses were calculated to be, respectively, 1.08, 0.93, 0.74, 0.90, 0.88, or 0.68. The ratios at the lowest and highest dose levels are lower than the other ratios.

2. Rat . Animals were tested at the following dose levels: Negative control, positive control, 4.0, 19.0, 86.0, or 400 mg/kg/day over a 10-day period from day 6 through day 15 of gestation. There was no indication of any effect on maternal or fetal survival, or in incidences of visceral or skeletal abnormalities. The male/female ratio of the fetuses were calculated to be, respectively, 0.84, 0.78, 0.84, 0.98, 0.92, or 0.73. There is an indication of skewing (a lowering) in these ratios at the highest dose level and in the positive control.

3. Hamster . Animals were tested at the following dose levels: negative control, positive control, 4.0, 19.0, 86.0, or 400 mg/kg/day over a 5-day period from day 6 through day 10 of gestation. There was no indication of any effect on maternal or fetal survival, or in incidences of visceral or skeletal abnormalities. The male/female ratio of the fetuses were calculated to be, respectively, 0.52, 0.54, 0.59, 0.47, 0.40, or 0.53. These ratios (including those from the controls) are very unusual.

4. Rabbit . The results of the rabbit developmental study were not considered in the FDA Evaluation. Animals were tested over a 13-day period from day 6 through day 18 of gestation. There was no indication of any effect on maternal or fetal survival, or in incidences of visceral or skeletal abnormalities at the highest dose level of 580 mg/kg/day. There was no indication of any effect on the male/female ratio of the fetuses since the ratio ranged from 1.13 to 1.26.

To ascertain whether additional information on sodium thiosulfate were available, the Agency also searched the Tox Net website at the National Library of Medicine (http://www.toxnet.nlm.nih.gov). This website contained only information on sodium thiosulfate anhydrous (CAS. Reg. No. 7772-98-7). The Tox Net website classified sodium thiosulfate as moderately toxic, and generally supported the information presented in the petition. The excerpts and summaries indicated that sodium thiosulfate is not mutagenic.No internet information indicated concerns for carcinogenicity or developmental/reproductive toxicity. One study which investigated the ability of sodium thiosulfate to cross the placenta in sheep, concluded that maternally-administered sodium thiosulfate (50 mg/kg) does not increase fetal plasma thiosulfate concentrations. No information on sodium thiosulfate was available on the National Toxicology Program website, the Agency for Toxic Substances and Disease Registry website, or the Agency's Integrated Risk Information System website. The TSCATs database (http://esc.syrres.com/efdb/TSCATS.htm) did not contain any summaries of any developmental or reproductive studies conducted with sodium thiosulfate.

Overall, sodium thiosulfate presents as a chemical with slight to moderate toxicity. It is Category IV for acute oral toxicity (the lowest classification), and there are no indications of mutagenicity. The available developmental data indicates no effect on maternal or fetal survival or increase in incidences of visceral or skeletal abnormalities. The sex ratios (the male/female ratio of the fetuses) should cluster close to 1, indicating equal numbers of males and females. This is evident in the range of ratios in the rabbit study. However, the Agency's re-evaluation of the summary data for the rat and mouse developmental data (two out of four species) suggest the possibility that various doses of sodium thiosulfate may be associated with an apparent skewing (a lowering) of the sex ratio. However, it was also most unusual that this skewing occurred not only for certain dose levels, but also for a positive control. The sex ratios for the hamster are very unusual. Therefore, there is an uncertainty as to what these ratios mean. But, there is the possibility of technician error in sex identification. In the three studies included in the FDA Evaluation (rat, mice, and hamster), the description of the studies included the following: All fetuses were examined grossly for the presence of external congenital abnormalities. One-third of the fetuses of each litter underwent detailed visceral examinations employing 10X magnification. “The remaining two-thirds were cleared and examined for skeletal defects.” Thus, there was no chance to correct any mis-sexing. The rabbit study, in which there was no effect on the male/female ratio of the fetuses, was performed in a different manner: “All fetuses underwent a detailed gross examination for the presence of external congenital abnormalities.” All were examined for visceral abnormalities. “All fetuses were then cleared and examined for skeletal defects.” Thus, the examination of all fetuses apparently allowed for greater accuracy in sexing.

In examining aggregate exposure, FFDCA section 408 directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

EPA establishes exemptions from the requirement of a tolerance only in those cases where the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

For the purposes of assessing potential exposure under this exemption, EPA considered that sodium thiosulfate could be present in all raw and processed agricultural commodities and drinking water, and that non-occupational non-dietary exposure was possible.

1. Food . Protein, which is composed of various amino acids, is required for human survival. Sodium thiosulfate is produced in the human body during the metabolism of sulfur-containing amino acids. There is an effective self-regulating mechanism to rid the body of excess sodium thiosulfate through excretion in the urine. As previously stated, sodium thiosulfate is considered to be GRAS for a very specific use pattern. In the 1975 Evaluation, it was estimated that the per capita consumption of sodium thiosulfate was 12 micrograms (μg) per day. Considering the use of sodium thiosulfate in pesticide products, as a dechlorinator when mixed with certain proteins such as harpin protein, and given the reactive nature (as a reducing agent) of sodium thiosulfate, this use pattern should not significantly increase the amount of sodium thiosulfate in the food supply above those amounts permitted by FDA.

2. Drinking water exposure . Thiosulfate can be produced naturally by the reaction of elemental sulfur with sulfite ion in boiling water. Therefore, thiosulfate occurs naturally in such environments as hot springs, geysers, and marine hydrothermal vents. It can also occur in nature as the result of the biological or chemical oxidation of sulfide, and thus can be found in freshwater and marine sediments, and salt marshes.

Considering that thiosulfate can be metabolized by sulfate-reducing bacteria, and given its ability to react with chlorine (to act as a reducing agent), sodium thiosulfate is unlikely to occur in drinking water.

The medicinal uses of sodium thiosulfate are also regulated by FDA. There are other industrial uses of sodium thiosulfate which include use as a photographic fixing agent. Sodium thiosulfate is also used to remove chlorine from water used in aquariums.

As previously stated, it was estimated that the per capita consumption of sodium thiosulfate was 12 μg per day. This was based on the amount of sodium thiosulfate used by the food industry and assuming a population of 210 million. (The Agency acknowledges that this exposure estimate is almost 30 years old.) If this were converted to mg/kg/day using a 60 kg (female) body weight, then the exposure could be estimated as 0.0002 mg/kg/day. The highest dose levels in each of the developmental toxicity studies (mouse, rat, hamster, and rabbit) were respectively 550, 400, 400, and 580 mg/kg/day. No effects were noted at these levels. The Agency has not attempted to use a safety factor analysis for sodium thiosulfate; however, the 0.0002 mg/kg/day is orders of magnitude lower than the highest dose levels from any of the developmental toxicity studies. Thus, the reported uses of sodium thiosulfate, its use as a GRAS substance and its use as an inert ingredient (a dechlorinator) should result in human exposure far below any dose level that could possibly produce an adverse effect.

Section 408 (b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance or tolerance exemption, the Agency consider “available information” concerning the cumulative effects of a particular chemical's residues and “other substances that have a common mechanism of toxicity.” Sodium thiosulfate is produced in the human body during the metabolism of sulfur-containing amino acids. There is an effective self-regulating mechanism (excretion) to rid the body of excess sodium thiosulfate, so cumulative effects are unlikely as a result of exposure to sodium thiosulfate and a substance sharing a common mechanism of toxicity, assuming such a substance exists. The Agency has not made any conclusions as to whether or not sodium thiosulfate shares a common mechanism of toxicity with any other chemicals, since cumulative effects for sodium thiosulfate and other substances are unlikely.

Based on the low-moderate toxicity of sodium thiosulfate and the low potential for exposure from the EPA regulated uses of sodium thiosulfate, as well as the FDA GRAS uses, the Agency has determined that aggregate exposure to sodium thiosulfate under reasonably foreseeable circumstances will pose no appreciable risks to human health. Accordingly, EPA concludes that there is a reasonable certainty of no harm to the U.S. population from aggregate exposure to residues of sodium thiosulfate and that a tolerance is not necessary.

FFDCA section 408 provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA concludes that a different margin of safety will be safe for infants and children. Due to the expected low toxicity of sodium thiosulfate, EPA has not used a safety factor analysis to assess the risk. For the same reasons the additional tenfold safety factor is unnecessary. The Agency has determined that there is a reasonable certainty of no harm to infants and children from aggregate exposure to residues of sodium thiosulfate and that a tolerance is not necessary.

FQPA requires EPA to develop a screening program to determine whether certain substances, including all pesticide chemicals (both inert and active ingredients), “may have an effect in humans that is similar to an effect produced by a naturally occurring estrogen, or such other endocrine effect.” EPA has been working with interested stakeholders to develop a screening and testing program as well as a priority setting scheme. As the Agency proceeds with implementation of this program, further testing of products containing sodium thiosulfate for endocrine effects may be required.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

There are no existing exemptions for sodium thiosulfate anhydrous or sodium thiosulfate pentahydrate.

The Agency is not aware of any country requiring a tolerance for sodium thiosulfate anhydrous or sodium thiosulfate pentahydrate nor have any CODEX Maximum Residue Levels (MRLs) been established for any food crops at this time.

Based on the information in this preamble, EPA concludes that there is a reasonable certainty of no harm from aggregate exposure to residues of sodium thiosulfate anhydrous or sodium thiosulfate pentahydrate. Accordingly, EPA finds that exempting sodium thiosulfate anhydrous or sodium thiosulfate pentahydrate from the requirement of a tolerance will be safe.

Under section 408(g) of the FFDCA, as amended by the FQPA, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. The EPA procedural regulations which govern the submission of objections and requests for hearings appear in 40 CFR part 178. Although the procedures in those regulations require some modification to reflect the amendments made to the FFDCA by the FQPA of 1996, EPA will continue to use those procedures, with appropriate adjustments, until the necessary modifications can be made. The new section 408(g) provides essentially the same process for persons to “object” to a regulation for an exemption from the requirement of a tolerance issued by EPA under new section 408(d), as was provided in the old FFDCA sections 408 and 409. However, the period for filing objections is now 60 days, rather than 30 days.

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket control number OPP-301196 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before February 19, 2002.

1. Filing the request . Your objection must specify the specific provisions in the regulation that you object to, and the grounds for the objections (40 CFR 178.25). If a hearing is requested, the objections must include a statement of the factual issues(s) on which a hearing is requested, the requestor's contentions on such issues, and a summary of any evidence relied upon by the objector (40 CFR 178.27). Information submitted in connection with an objection or hearing request may be claimed confidential by marking any part or all of that information as CBI. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2. A copy of the information that does not contain CBI must be submitted for inclusion in the public record. Information not marked confidential may be disclosed publicly by EPA without prior notice.

Mail your written request to: Office of the Hearing Clerk (1900), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460. You may also deliver your request to the Office of the Hearing Clerk in Rm. C400, Waterside Mall, 401 M St., SW., Washington, DC 20460. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (202) 260-4865.

2. Tolerance fee payment . If you file an objection or request a hearing, you must also pay the fee prescribed by 40 CFR 180.33(i) or request a waiver of that fee pursuant to 40 CFR 180.33(m). You must mail the fee to: EPA Headquarters Accounting Operations Branch, Office of Pesticide Programs, P.O. Box 360277M, Pittsburgh, PA 15251. Please identify the fee submission by labeling it “Tolerance Petition Fees.”

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460.

3. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VIII.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.2. Mail your copies, identified by docket control number OPP-301196, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.2. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

A request for a hearing will be granted if the Administrator determines that the material submitted shows the following: There is a genuine and substantial issue of fact; there is a reasonable possibility that available evidence identified by the requestor would, if established resolve one or more of such issues in favor of the requestor, taking into account uncontested claims or facts to the contrary; and resolution of the factual issues(s) in the manner sought by the requestor would be adequate to justify the action requested (40 CFR 178.32).

This final rule establishes an exemption from the tolerance requirement under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review (58 FR 51735, October 4, 1993). Because this rule has been exempted from review under Executive Order 12866 due to its lack of significance, this rule is not subject to Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use (66 FR 28355, May 22, 2001). This final rule does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501 et seq. , or impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Public Law 104-4). Nor does it require any special considerations under Executive Order 12898, entitled Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (59 FR 7629, February 16, 1994); or OMB review or any Agency action under Executive Order 13045, entitled Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997). This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act of 1995 (NTTAA), Public Law 104-113, section 12(d) (15 U.S.C. 272 note). Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) do not apply. In addition, the Agency has determined that this action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” This final rule directly regulates growers, food processors, food handlers and food retailers, not States. This action does not alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). For these same reasons, the Agency has determined that this rule does not have any “tribal implications” as described in Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (65 FR 67249, November 6, 2000). Executive Order 13175, requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.” This rule will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this rule.

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

This is a summary of the Commission's Twenty-Third Order on Reconsideration in CC Docket No. 96-45 released on July 11, 2001. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, S.W., Washington, D.C., 20554.

1. In this document, the Commission makes a correction to section 36.605(c)(3)(ii) of its rules adopted in the Fourteenth Report and Order , 66 FR 30080, June 5, 2001. The correction concerns the calculation of safety net additive support in the years following qualification for such support and is necessary to make the rule consistent with the text of the underlying order. Specifically, this correction revises the language in section 36.605(c)(3)(ii) to make it clear that rural telephone companies receive the lesser of either: (1) the sum of capped support and the safety net additive support in each year or (2) uncapped support in each year when the cap is not triggered.

As published, the final regulations contain errors which may prove to be misleading and need to be clarified.

This is a summary of the Commission's Order on Reconsideration in CC Docket No. 96-45 released on November 6, 2001. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, S.W., Washington, D.C., 20554.

1. In this Order on Reconsideration, we deny the request of the United States Telecom Association (USTA) to reconsider portions of the Contribution Interval Order , 66 FR 16145, March 23, 2001, modifying the methodology used to assess contributions that carriers make to the federal universal service support mechanisms. Specifically, we deny USTA's request to reconsider the imposition of additional filing requirements and the method of calculating contributions from carriers that either under-report or over-report quarterly revenue. In so doing, we affirm our prior conclusion that the provision of sufficient and competitively neutral funding for the universal service support mechanisms depends on the timely submission of accurate revenue information from contributors.

2. We deny the request of USTA to reconsider portions of the Contribution Interval Order. We find that USTA has raised no new issues or facts to persuade us to reconsider the decisions made in the Contribution Interval Order. Specifically, we conclude that the accurate submission of quarterly revenue data is essential to ensure that sufficient contributions are made to the federal universal service support mechanisms on a competitively neutral basis. The Commission carefully considered the implications of imposing additional reporting requirements on carriers in the Contribution Interval Order and concluded that such requirements were necessary. In addition, we conclude that the method adopted by the Commission of calculating contributions from carriers that under-report or over-report revenues provides an appropriate incentive for carriers to accurately report quarterly revenues to USAC.

3. Reporting Requirements. We deny USTA's request to reconsider the Commission's decision to increase carriers' reporting requirements. USTA's petition raises no new arguments that would convince us to reconsider the conclusion that the benefits of substantially reducing the contribution interval outweigh any increased administrative burden on carriers. Although the Commission acknowledged that the prior contribution methodology was competitively neutral and satisfied the requirements of the Act, as discussed, the Commission concluded that revisions were necessary to ensure that the contribution methodology remains competitively neutral in light of recent changes in the telecommunications marketplace, such as the entry of new carriers into the interexchange market and the declining revenue bases faced by some existing carriers. The submission of quarterly revenue data allows us to reduce the interval, from 12 months to six months, between the accrual and assessment of revenues for contribution to the universal service fund. The shortened interval between the accrual and assessment of revenues therefore reduces the possibility that certain carriers will be placed at a competitive disadvantage as they lose market share. As a result, the revised methodology furthers the Commission's goal of maintaining competitive neutrality.

4. Under and Over-Reporting of Revenues. We find no basis to reconsider the method adopted by the Commission to calculate refunds from carriers that over-report revenue or the collection of additional contributions from carriers that under-report revenue. Contrary to USTA's contention, we do not find the method of calculating such adjustments to be punitive. A true-up mechanism merely ensures that carriers' contributions to the universal service mechanisms are based on accurate revenue data over the course of the year. Moreover, the Commission allows carriers up to three months after each filing to correct errors that appear on the Form 499-Q. Thus, we find unpersuasive USTA's contention that carriers will be penalized as a result of insufficient time to ensure the complete accuracy of the information submitted. Only if such errors are not corrected in a timely fashion will USAC apply the refund and additional collection rules. Based on the record before us, we have no reason to overturn the prior conclusion that three months should be sufficient time for carriers to compute, and correct if necessary, revenue information.

5. We affirm our conclusion that the methodology adopted in the Contribution Interval Order encourages carriers to provide accurate data and discourages “gaming.” For example, the methodology will deter carriers that otherwise might be tempted to under-report revenue to reduce their current contributions and free up capital for other uses. A carrier that did so would be forced to contribute additional funds following the annual true-up based on the average of the two highest quarterly contribution factors for the year. We are convinced that assessment of contributions based on this higher contribution rate will reduce the incentive for such conduct while giving carriers ample time to correct honest mistakes.

6. We are not persuaded by USTA's contention that it is sufficient to rely on existing federal law prohibiting willful false statements to protect against abuse of our rules. The methodology set forth in the Contribution Interval Order also provides incentives to carriers to avoid negligent or careless errors in reporting revenues to USAC. In order to maintain sufficient and competitively neutral support mechanisms, it is essential that carriers provide accurate revenue information to USAC in a timely manner. For similar reasons, we also decline to adopt USTA's alternative proposal to exclude from this calculation methodology those carriers whose reported quarterly revenues fall within 10 percent of their reported annual revenues. This proposed 10 percent margin of acceptable error may translate into significant contributions for some carriers, who would be able to avoid payment by intentionally under-reporting their revenues by 10 percent or less. Thus, USTA's proposal may provide carriers with a substantial incentive to under-report their revenues. In light of the opportunity provided each quarter to correct such errors, we believe that adopting this proposal would also be contrary to our goal of encouraging carriers to report accurate information.

1. It is ordered, pursuant to sections 1, 4(i) and 254 of the Communications Act of 1934, as amended, and § 1.429 of the Commission's rules, that the Petition for Reconsideration filed April 23, 2001 by USTA is denied.