GIPSA published a proposed rule in the Federal Register on August 21, 2002 (67 FR 54133), asking for comments to allow interested persons to specify the quality factor(s) that would be predetermined during a reinspection or appeal inspection for grade. The regulations to be amended are issued under the United States Grain Standards Act, as amended (7 U.S.C. 71 et seq. )

Comments on the proposed rule were required to be received on or before October 21, 2002. Several potential commenters have indicated a need for additional time to formulate their responses to the proposed rule. Therefore, GIPSA is reopening and extending the comment period for the proposed rules for an additional 30 days. The action will allow interested persons additional time to prepare and submit comments.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. We ask that you send us two copies of written comments.

We will file in the docket all comments we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning these special conditions. The docket is available for public inspection before and after the comment closing date. If you wish to review the docket in person, go to the address in the ADDRESSES section of this preamble between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal holidays.

If you want the FAA to acknowledge receipt of your comments on this proposal, include with your comments a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it back to you.

On December 19, 2001, the Boeing Commercial Airplane Group (BCAG), P.O. Box 3707, Seattle, Washington, 98124, applied for a change to Type Certificate No. T00001SE for a design change to install an overhead flightcrew rest (OFCR) and an overhead flight attendant rest (OFAR) in the Boeing Model 777-200 series airplanes. The Boeing Model 777-200 series airplanes are large twin engine airplanes with various passenger capacities and ranges depending upon airplane configuration.

The OFCR compartment, adjacent to Door 1, is located in the overhead above the main passenger cabin and will include a maximum of two private berths and two seats. Occupancy of the OFCR will be limited to a maximum of four occupants. Several different OFAR compartments are being proposed under this design change. The OFAR adjacent to Door 3 will have berths for a maximum of seven occupants. The OFAR adjacent to Door 5 will have three compartment options available, with berths for a maximum of six, eight or ten occupants.

Both crew rests, the OFCR and OFAR, will be accessed from the main deck by stairs. In addition, an emergency hatch that opens directly into the main passenger cabin area will be provided for each compartment. A smoke detection system, an oxygen system, and occupant amenities will also be provided. These compartments will only be occupied in flight, not during taxi, takeoff, or landing.

Overhead crew rest compartments have been previously installed and certified in the main passenger cabin area, above the main passenger area, and below the passenger cabin area adjacent to the cargo compartment of the Boeing Model 777-200, -300 series airplanes. Also, overhead crew rest compartments have been installed on the Boeing Model 747 series airplanes.

The FAA has previously issued special conditions that contain the additional safety standards that must be met for the overhead crew rests on Boeing Model 747 series airplanes. The FAA certified the lower lobe flight attendant rest on the Boeing Model 777-200 series airplanes by an equivalent level of safety finding to the requirements of § 25.819. In addition, the FAA recently issued Special Conditions No. 25-169-SC, dated December 1, 2000, amended on May 2, 2001, for Boeing Model 777-200 series airplanes for overhead crew rest compartments for Flight Structures Inc. of Arlington, Washington. The FAA also issued Special Conditions No. 25-192-SC, dated November 6, 2001, for Model 777-200 series airplanes for overhead crew rest compartments for the Boeing Commercial Airplane Group—Wichita Division Designated Alteration Station (DAS) of Wichita, Kansas.

Under the provisions of § 21.101, Amendment 21-69, effective September 16, 1991, Boeing Commercial Airplane Group must show that the Model 777-200 series airplanes, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate Data Sheet No. T00001SE or the applicable regulations in effect on the date of application for the change. Subsequent changes have been made to § 21.101 as part of Amendment 21-77, but those changes do not become effective until June 10, 2003. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. T00001SE for the Boeing Model 777-200 series airplanes include 14 CFR part 25, as amended by Amendments 25-1 through 25-82. The U.S. type certification basis for the Boeing Model 777-200 series airplanes is established in accordance with 14 CFR 21.17 and 21.29 and the type certification application date. The type certification basis is listed in Type Certificate Data Sheet No. T00001SE.

If the Administrator finds that the applicable airworthiness regulations ( i.e. , 14 CFR part 25) do not contain adequate or appropriate safety standards for the Boeing Model 777-200 series airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 777-200 series airplanes must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36.

Special conditions as defined in § 11.19, are issued in accordance with § 11.38 and become part of the type certification basis in accordance with § 21.101(b)(2) Amendment 21-69, effective September 16, 1991.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design features, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design features, the special conditions would also apply to the other model under the provisions of § 21.101(a)(1) Amendment 21-69, effective September 16, 1991.

Compliance with these proposed special conditions does not relieve the applicant from the existing airplane certification basis requirements. One particular area of concern is that the overhead crew rest installation creates a smaller compartment volume within the overhead area of the airplane. The applicant must comply with the requirements of §§ 25.365(e), (f), and (g), for the overhead crew rest compartment, as well as any other airplane compartments whose decompression characteristics are affected by the installation of an overhead crew rest compartment. Compliance with § 25.831 must be demonstrated for all phases of flight where occupants will be present.

While the installation of an overhead crew rest compartment is not a new concept for large transport category airplanes, each compartment design has unique features by virtue of its design, location, and use on the airplane. Previously, crew rest compartments have been installed and certified in the main passenger cabin area of the Boeing Model 777-200 and -300 series airplanes and the overhead area of the passenger compartment of the Model 777-200. Other crew rest compartments have been installed below the passenger cabin area adjacent to the cargo compartment. Similar overhead crew rest compartments have also been installed on the Boeing Model 747 series airplanes. The modification is evaluated with respect to the interior and assessed in accordance with the certification basis of the airplane. However, part 25 does not provide all of the requirements for crew rest compartments within the overhead area of the passenger compartment. Further, these special conditions do not negate the need to address other applicable part 25 regulations.

Due to the novel or unusual features associated with the installation of this overhead crew rest compartment, special conditions are considered necessary to provide a level of safety equal to that established by the airworthiness regulations incorporated by reference in the type certificate.

These special conditions outline requirements for overhead crew rest compartment design approvals ( i.e. , type design changes and supplemental type certificates) administered by the FAA's Aircraft Certification Service. Prior to operational use of an overhead crew rest compartment, the FAA's Flight Standards Service must evaluate and approve the “basic suitability” of the overhead crew rest compartment for crew occupation. Additionally, if an operator wishes to utilize an overhead crew rest compartment as “sleeping quarters,” the crew rest compartment must undergo an additional evaluation and approval (Reference §§ 121.485(a), 121.523(b) and 135.269(b)(5)). Compliance with these special conditions does not ensure that the applicant has demonstrated compliance with the requirements of part 121 or part 135.

In order to obtain an operational evaluation, the type design holder must contact the Aircraft Evaluation Group (AEG) in the Flight Standards Service and request a “basic suitability” evaluation or a “sleeping quarters” evaluation of their crew rest. The results of these evaluations should be documented in a 777 Flight Standardization Board (FSB) Report Appendix. Individual operators may reference these standardized evaluations in discussions with their FAA Principal Operating Inspector (POI) as the basis for an operational approval, in lieu of an on-site operational evaluation.

Any changes to the approved overhead crew rest compartment configuration that effect crewmember emergency egress or any other procedures affecting the safety of the occupying crewmembers and/or related training shall require a re-evaluation and approval. The applicant for a crew rest design change that affects egress, safety procedures, or training is responsible for notifying the FAA's AEG that a new crew rest evaluation is required.

Procedures must be developed to assure that a crewmember entering the overhead crew rest compartment through the vestibule to fight a fire will examine the vestibule and the lavatory areas for the source of the fire prior to entering the remaining areas of the crew rest compartment. These procedures are intended to assure that the source of the fire is not between the crewmember and the primary exit.

In general, the requirements listed in these proposed special conditions are similar to those previously approved in earlier certification programs, such as for the Boeing Model 777-200 series airplanes and Boeing Model 747 overhead crew rest compartments. These proposed special conditions establish seating, communication, lighting, personal safety, and evacuation requirements for the overhead crew rest compartment. In addition, passenger information signs, supplemental oxygen, and a seat or berth for each occupant of the crew rest compartment would be required. These items are necessary because of turbulence and/or decompression. When applicable, the proposed requirements parallel the existing requirements for a lower deck service compartment and provide an equivalent level of safety to that provided for main deck occupants.

It is proposed that seats and berths must be certified to the maximum flight loads. Due to the location and configuration of the overhead crew rest compartment, it is proposed that occupancy during taxi, takeoff, and landing would be prohibited, and occupancy limited to crewmembers during flight. Occupancy would be limited to four in the overhead flightcrew rest (OFCR) or the combined total of approved seats and berths in the OFCR whichever is less. Occupancy would be limited to twelve in an overhead flight attendant rest (OFAR), or the combined total of approved seats and berths in the OFAR, whichever is less. Requirements are proposed for door access and locking and the installation of ashtrays. Appropriate placards are proposed to prohibit passenger access, access by crewmembers not trained in evacuation procedures, smoking and hazardous quantities of flammable fluids, explosives, or other dangerous cargo. The phrase “hazardous quantities” as used in this SC permits trained crewmembers to continue to carry baggage containing minute quantities of flammable fluids ( e.g. , finger nail polish, aerosol hairspray, etc.) that would pose no threat to the airplane or its occupants. This wording is consistent with the existing wording of §§ 25.831(d), 25.855 (h)(2), 25.857 (b)(2), (c)(3) & (e)(4) and 25.1353(c)(3).

During a previous publication of substantially identical special conditions, a comment was received after the comment period closed. The commenter thought that requiring placards prohibiting storage of “hazardous quantities of flammable fluids” was unnecessary and a duplication of International Air Transport Association (IATA) Dangerous Goods Regulations, specifically, “Provisions for Dangerous Goods Carried by Passengers or Crew.” The FAA concurs with the commenter that the placard requirement is similar to the IATA requirement, however, based on several factors the FAA finds that the duplication is warranted and consistent with maintaining an equivalent level of safety. While flammable fluid placards are not required in the passenger cabin, it is also an occupied area with a high degree of monitoring by passengers and crew. By contrast the overhead crew rest compartment may go unoccupied for long periods of time. The fire protection methods employed for this type of remote area are predicated on minimization of flammable materials.

It is proposed that to preclude occupants from being trapped in the crew rest compartment in the event of an emergency, there must be at least two emergency evacuation routes that could be used by each occupant of the overhead crew rest compartment to rapidly evacuate to the main cabin. These two routes must be sufficiently separated to minimize the possibility of an event rendering both routes inoperative. The main entry route meeting the appropriate requirements may be utilized as one of the emergency evacuation routes, or alternatively two other emergency routes must be provided. The intent of Special Condition No. 2(b) is to ensure that one of the two routes would be clear of moving occupants under most foreseeable circumstances.

The following clarifies the intent of Special Condition No. 2(b) concerning the utility of the egress routes. There are three issues that should be considered. First, occupied passenger seats are not considered an impediment to the use of an egress route, (for example, the egress route drops into one row of seats by means of a hatch), provided that the seated occupants do not inhibit the opening of the egress route (for example, a hatch).

Second, an egress route may utilize areas where normal movement of passengers occurs if it is demonstrated that the passengers would not impede egress to the main deck. If the egress means (a hatch in this design) opens into a main aisle, cross aisle, or galley complex to an extent that it contacts a standing ninety-fifth percentile male, then the contact should only momentarily interrupt the opening of the egress hatch. The interruption to the egress means can be considered momentary if the egress means would continue to open normally once the person has moved out of the way.

Third, the escape hatch should be provided with a means to prevent it from being inadvertently closed by a passenger on the main deck. This will ensure main deck passengers can not prevent the overhead crew rest occupants from using the escape route. The crew should be able to stow the escape hatch prior to landing.

Training requirements for the occupants of the overhead crew rest area are included in the proposal.

New qualitative and quantitative criteria have been added to this special condition since the issuance of Special Conditions No. 25-192-SC to clarify how compliance can be shown to Special Condition No. 2(a).

It is proposed that each evacuation route must be designed and procedures specified to allow for removal of an incapacitated person from the crew rest compartment to the main deck. Additional assistants to evacuate an incapacitated person may ascend up to one half the elevation change from the main deck to the overhead compartment, or to the first landing, whichever is lower. This proposed special condition allows for five passenger seats to be emptied for the purpose of demonstrating evacuation of an incapacitated person, where the escape route is over seats.

It is proposed that exit signs, placards for evacuation routes, illumination for signs, placards and door handles be required. This proposed special condition allows for exit signs with a reduced background area to be used. The material surrounding the sign must be light in color to more closely match and enhance the illuminated background of the sign that has been reduced in area (letter size stays the same). These reduced background area signs have been allowed under previous equivalent levels of safety for small transport executive jets.

An emergency lighting system is proposed to prevent the occupants from being isolated in a dark area due to loss of the crew rest compartment lighting. The emergency lighting must be activated under the same conditions as the main deck emergency lighting system.

It is proposed that a two-way voice communications and public address speaker(s) be required to alert the occupants to an in-flight emergency. Also, a system to alert the occupants of the overhead crew rest compartment in the event of decompression and to don oxygen masks is proposed.

It is proposed to inform occupants of each overhead crew rest of an emergency situation via emergency alarm means, use of the public address system, or crew interphone system. It is proposed that power is to be maintained to the emergency alarm system for a specific duration after certain failures.

It is proposed that a means be required that is readily detectable by seated or standing occupants of the overhead crew rest compartment to indicate when seat belts should be fastened. The requirement for visibility of the sign by standing occupants may be met by a general area sign that is visible to occupants standing in the main floor area or corridor of the crew rest compartment. It would not be essential that the sign be visible from every possible location in the crew rest compartment. However, the sign should not be remotely located or located where it may be easily obscured.

It is proposed that the overhead crew rest compartment, which is remotely located from the passenger cabin, be equipped with these tools specified to fight a fire should a fire occur: a hand-held fire extinguisher, protective breathing equipment, and a flashlight.

This proposed requirement has been modified from previously issued Special Conditions No. 25-192-SC to clarify how it should be interpreted relative to the requirements of § 25.1439(a). Amendment 25-38 modified the requirements of § 25.1439(a) by adding, “In addition, protective breathing equipment must be installed in each isolated separate compartment in the airplane, including upper and lower lobe galleys, in which crewmember occupancy is permitted during flight for the maximum number of crewmembers expected to be in the area during any operation.” The requirements of § 25.1439(a) apply to the overhead crew rest compartment, which is an isolated separate compartment. However, the PBE requirements for isolated separate compartments of § 25.1439(a) are not appropriate because the overhead crew rest compartment is novel and unusual in terms of the number of occupants. In 1976 when Amendment 25-38 was adopted, small galleys were the only isolated compartments that had been certificated with a maximum of two crewmembers expected to occupy those galleys. Special Condition No. 9 addresses overhead crew rest compartments that can accommodate up to 12 crewmembers. This large number of occupants in an isolated compartment was not envisioned at the time Amendment 25-38 was adopted. In the event of a fire, the occupant's first action should be to leave the confined space, unless the occupant(s) is fighting the fire. It is not appropriate for all overhead crew rest compartment occupants to don PBE. Taking the time to don the PBE would prolong the time for the occupant's emergency evacuation and possibly interfere with efforts to extinguish the fire.

A smoke detection system and appropriate warnings are proposed since the overhead crew rest compartment is remotely located from the main passenger cabin and will not always be occupied. The smoke detection system must be capable of detecting a fire in each area of the compartment created by the installation of a curtain or door.

It is proposed that the overhead crew rest compartment be designed such that fires within the compartment can be controlled without having to enter the compartment; or, the design of the access provisions must allow crew equipped for firefighting to have unrestricted access to the compartment. The time for a crewmember on the main deck to react to the fire alarm, to don the firefighting equipment, and to gain access must not exceed the time for the crew rest compartment to become smoke filled, making it difficult to locate the fire source.

The proposed special condition requirement concerning fires within the compartment was developed for, and applied to, Boeing Model 777-200 and -300 series airplanes lower lobe crew rest compartments. It was not applied to the overhead crew rest compartment in earlier certification programs such as the Boeing Model 747 airplanes. The Model 747 special conditions were issued before the new flammability requirements were developed. This requirement originated from a concern that a fire in an unoccupied overhead crew rest compartment could spread into the passenger compartment or affect other vital systems, before it could be extinguished. The proposed special conditions would require either the installation of a manually activated fire containment system that is accessible from outside the overhead crew rest compartment, or a demonstration that the crew could satisfactorily perform the function of extinguishing a fire under the prescribed conditions. A manually activated built-in fire extinguishing system would be required only if a crewmember could not successfully locate and extinguish the fire during a demonstration where the crewmember is responding to the alarm.

The overhead crew rest compartment smoke or fire detection and fire suppression systems (including airflow management features which prevent hazardous quantities of smoke or fire extinguishing agent from entering any other compartment occupied by crewmembers or passengers) is considered complex in terms of paragraph 6d of Advisory Circular (AC) 25.1309-1A, “System Design and Analysis.” In addition, the FAA considers failure of the overhead crew rest compartment fire protection system ( i.e. , smoke or fire detection and fire suppression systems) in conjunction with an overhead crew rest fire to be a catastrophic event. Based on the “Depth of Analysis Flowchart” shown in Figure 2 of AC 25.1309-1A, the depth of analysis should include both qualitative and quantitative assessments (reference paragraphs 8d, 9, and 10 of AC 25.1309-1A). In addition, it should be noted that hazardous quantities of flammable fluids, explosives, or other dangerous cargo are prohibited from being carried in the overhead crew rest compartment, a prohibition addressed in proposed Special Condition No. 1(a)(5).

The requirements to enable crewmember(s) quick entry to the overhead crew rest compartment and to locate a fire source inherently places limits on the amount of baggage that may be carried and the size of the overhead crew rest compartment. The overhead crew rest compartment is limited to stowage of crew personal luggage and it is not intended to be used for the stowage of cargo or passenger baggage. The design of such a system to include cargo or passenger baggage would require additional requirements to ensure safe operation.

The FAA accepts the fact that during the one-minute smoke detection time that penetration of a small quantity of smoke from this overhead crew rest design into an occupied area on this airplane configuration would be acceptable based upon the limitations placed in this and other associated special conditions. The FAA position is predicated on the fact that these special conditions place sufficient restrictions in the quantity and type of material allowed in crew carry-on bags that the threat from a fire in this remote area would be equivalent to that experienced on the main cabin.

It is proposed that the oxygen equipment and a supplemental oxygen deployment warning for the overhead crew rest compartment must be equivalent to that provided for main deck passengers.

Requirements are proposed for a divided overhead crew rest compartment to address supplemental oxygen equipment and deployment means, signs, placards, curtains, doors, emergency illumination, alarms, seat belt fasten signals, and evacuation routes.

The wording in the Special Condition No. 14(g) was modified from previously issued special conditions to clarify that oxygen masks are not required in common areas where seats or berths are not installed. A visual indicator to don oxygen masks is required in these areas. The visual indicator is in addition to the aural alert for donning oxygen masks.

It is proposed to eliminate the requirements for flight deck communication as required by Special Condition No. 6, and emergency fire fighting and protective equipment as required by Special Condition No. 9, for lavatories or other small areas within an overhead crew rest compartment.

It is proposed that where a waste disposal receptacle is fitted, it must be equipped with an automatic fire extinguisher.

It is proposed that the materials in the crew rest compartment must meet the flammability requirements of § 25.853(a), and the mattresses must meet the fire blocking requirements of § 25.853(c).

This proposed requirement is a reiteration of existing main deck lavatory requirements to provide clear applicability. Overhead crew rest compartment lavatories would be required to comply with the existing rules on lavatories in the absence of other specific requirements. In addition, any lavatory located in the crew rest compartment must also meet the requirements of Special Condition No. 10 for smoke detection due to placement within this remote area.

This special condition proposes fire protection requirements for overhead crew rest stowage compartments as a function of size (compartment interior volume). The special condition has been revised from the special conditions previously issued due to the introduction of larger stowage compartments into the overhead crew rest compartment. The fire protection requirements proposed for stowage compartments in the overhead crew rest compartment are more stringent than those for stowage in the main passenger cabin because the overhead crew rest compartment is a remote area that can remain unoccupied for long periods of time in contrast to the main cabin that is under continuous monitoring by the cabin crew and passengers. For stowage compartments less than 25 ft 3 the safety objective of these proposed requirements is to contain the fire. The FAA research indicates that properly constructed compartments meeting the proposed material requirements will prevent burn through. For stowage compartments greater than 25 ft 3 but less than 200 ft 3 the safety of objective of these proposed requirements is to detect and contain the fire for sufficient time to allow it to be extinguished by the crew. The requirements for these sizes of compartments are comparable to the requirements for Class B cargo compartments. The proposed fire protection requirements are intended to provide a level of safety for the overhead crew rest compartment that is equivalent the level of safety established by the existing regulations for the main cabin.

These proposed special conditions along with the original type certification basis provide the regulatory requirements necessary for certification of this modification. Other special conditions may be developed, as needed, based on further FAA review and discussions with the applicant, manufacturer, and civil aviation authorities.

The addition of galley equipment or a kitchenette incorporating a heat source ( e.g. , cook tops, microwaves, coffee pots, etc.), other than a conventional lavatory or kitchenette hot water heater, within the overhead crew rest compartment, may require further special conditions to be considered. A hot water heater is acceptable without further special conditions consideration.

As discussed above, these special conditions are applicable to Boeing Model 777-200 series airplanes. Should the Boeing Commercial Airplane Group apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design features, the special conditions would apply to that model as well under the provisions of § 21.101(a)(1) Amendment 21-69, effective September 16, 1991.

The authority citation for these special conditions is as follows:

Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Boeing Model 777-200 series airplanes with overhead crew rest compartments. These special conditions apply to both overhead flightcrew rest (OFCR) compartments and/or overhead flight attendant rest (OFAR) compartments, unless specifically stated otherwise.

1. Occupancy of the overhead crew rest compartment is limited to the total number of installed bunks and seats in each compartment. There must be an approved seat or berth able to withstand the maximum flight loads when occupied for each occupant permitted in the overhead crew rest compartment. The maximum occupancy is four in the OFCR and twelve in the OFAR.

(a) There must be appropriate placards, inside and outside each entrance to the overhead crew rest compartment to indicate:

(1) The maximum number of occupants allowed,

(2) That occupancy is restricted to crewmembers that are trained in the evacuation procedures for the overhead crew rest compartment,

(3) That occupancy is prohibited during taxi, take-off and landing,

(4) That smoking is prohibited in the overhead crew rest compartment, and

(5) That hazardous quantities of flammable fluids, explosives, or other dangerous cargo are prohibited from the overhead crew rest compartment.

(b) There must be at least one ashtray on the inside and outside of any entrance to the overhead crew rest compartment.

(c) There must be a means to prevent passengers from entering the overhead crew rest compartment in the event of an emergency or when no flight attendant is present.

(d) There must be a means for any door installed between the overhead crew rest compartment and passenger cabin to be capable of being quickly opened from inside the compartment, even when crowding occurs at each side of the door.

(e) For all doors installed, there must be a means to preclude anyone from being trapped inside the overhead crew rest compartment. If a locking mechanism is installed, it must be capable of being unlocked from the outside without the aid of special tools. The lock must not prevent opening from the inside of the compartment at any time.

2. There must be at least two emergency evacuation routes, which could be used by each occupant of the overhead crew rest compartment to rapidly evacuate to the main cabin and be able to be closed from the main passenger cabin after evacuation. In addition—

(a) The routes must be located with sufficient separation within the overhead crew rest compartment, and between the evacuation routes, to minimize the possibility of an event rendering both routes inoperative.

Compliance to the requirements of Special Condition No. 2(a) may be shown by inspection or by analysis. Regardless which method is used, the maximum acceptable exit separation is 60 feet measured between exit openings.

An overhead crew rest compartment in which the evacuation routes are located such that each occupant of the seats and berths has an unobstructed route to at least one of the evacuation routes regardless of the location of a fire would be acceptable by inspection. A fire within a berth that only blocks the occupant of that berth from exiting the berth need not be considered. Therefore, exits which are located at absolute opposite ends ( i.e., adjacent to opposite end walls) of the crew rest would require no further review or analysis with regard to exit separation.

Analysis must show the overhead crew rest compartment configuration and interior features provide for all occupants of the overhead crew rest to escape the compartment in the event of a hazard inside or outside of the compartment. Elements to consider in this evaluation are as follows:

(1) Fire inside or outside the overhead crew rest compartment considered separately and the design elements used to reduce the available fuel for the fire,

(2) Design elements to reduce the fire ignition sources in the overhead crew rest compartment,

(3) Distribution and quantity of emergency equipment within the overhead crew rest compartment,

(4) Structural failure or deformation of components that could block access to the available evacuation routes ( e.g. , seats, folding berths, contents of stowage compartments, etc),

(5) An incapacitated person blocking the evacuation routes,

(6) Any other foreseeable hazard not identified above that could cause the evacuation routes to be compromised.

Analysis must consider design features affecting access to the evacuation routes. The design features that should be considered include but are not limited to seat back break over, the elimination of rigid structure that reduces access from one part of the compartment to another, the elimination of items that are known to be the cause of potential hazards, the availability of emergency equipment to address fire hazards, the availability of communications equipment, supplemental restraint devices to retain items of mass that could hinder evacuation if broken loose and load path isolation between components that contain the evacuation routes.

Analysis of the fire threats should be used in determining the placement of required fire extinguishers and PBEs and should take into consideration the possibility of fire in any location in the overhead crew rest compartment. The location and quantity of PBEs and fire extinguishers should allow occupants located in any approved seats or berths access to the equipment necessary to fight a fire in the overhead crew rest compartment.

The intent of this special condition is to provide sufficient exit separation, therefore the exit separation analysis described above should not be used to approve exits which have less physical separation (measured between the centroid of each exit opening) than the minimums prescribed below, unless compensating features are identified and submitted to the FAA for evaluation and approval.

For overhead crew rest compartments with one exit located near the forward or aft end of an overhead crew rest compartment (as measured by having the centroid of the exit opening within 20 percent of the forward or aft end of the total overhead crew rest compartment length) the exit separation should not be less than 50 percent of the total overhead crew rest compartment length.

For overhead crew rest compartments with neither required exit located near the forward or aft end of the overhead crew rest compartment (as measured by not having the centroid of either exit opening within 20 percent of the forward or aft end of the total overhead crew rest compartment length) the exit separation should not be less than 30 percent of the total overhead crew rest compartment length.

(b) The routes must be designed to minimize the possibility of blockage, which might result from fire, mechanical or structural failure, or persons standing below or against the escape route. One of the two evacuation routes should not be located where, during times in which occupancy is allowed, normal movement by passengers occurs ( i.e. , main aisle, cross aisle or galley complex) that would impede egress from the overhead crew rest compartment. If an evacuation route utilizes an area where normal movement of passengers occurs, it must be demonstrated that passengers would not impede egress to the main deck. If there is low headroom at or near the evacuation route, provisions must be made to prevent or to protect occupants (of the overhead crew rest compartment) from head injury. The use of evacuation routes must not be dependent on any powered device. If the evacuation path is over an area where there are passenger seats, a maximum of five passengers may be displaced from their seats temporarily during the evacuation process of an incapacitated person(s). If the evacuation procedure involves the evacuee stepping on seats, the seats must not be damaged to the extent that they would not be acceptable for occupancy during an emergency landing.

(c) Emergency evacuation procedures, including the emergency evacuation of an incapacitated occupant from the overhead crew rest compartment, must be established. All of these procedures must be transmitted to the operator for incorporation into their training programs and appropriate operational manuals.

(d) There must be a limitation in the Airplane Flight Manual or other suitable means requiring that crewmembers be trained in the use of evacuation routes.

3. There must be a means for the evacuation of an incapacitated person (representative of a ninety-fifth percentile male) from the overhead crew rest compartment to the passenger cabin floor.

(a) The evacuation must be demonstrated for all evacuation routes. A crewmember (a total of one assistant within the overhead crew rest compartment) may provide assistance in the evacuation. Additional assistance may be provided by up to three persons in the main passenger compartment. These additional assistants must be standing on the floor while providing assistance. For evacuation routes having stairways, the additional assistants may ascend up to one half the elevation change from the main deck to the overhead crew rest compartment, or to the first landing, whichever is lower.

4. The following signs and placards must be provided in the overhead crew rest compartment:

(a) At least one exit sign, located near each exit, meeting the requirements of § 25.812(b)(1)(i), except that a sign with reduced background area of no less than 5.3 square inches (excluding the letters) may be utilized, provided that it is installed such that the material surrounding the exit sign is light in color ( e.g. , white, cream, light beige). If the material surrounding the exit sign is not light in color, a sign with a minimum of a one-inch wide background border around the letters would also be acceptable.

(b) An appropriate placard located near each exit defining the location and the operating instructions for each evacuation route.

(c) Placards must be readable from a distance of 30 inches under emergency lighting conditions.

(d) The exit handles and evacuation path operating instruction placards must be illuminated to at least 160 microlamberts under emergency lighting conditions.

5. There must be a means in the event of failure of the aircraft's main power system, or of the normal overhead crew rest compartment lighting system, for emergency illumination to be automatically provided for the overhead crew rest compartment.

(a) This emergency illumination must be independent of the main lighting system.

(b) The sources of general cabin illumination may be common to both the emergency and the main lighting systems if the power supply to the emergency lighting system is independent of the power supply to the main lighting system.

(c) The illumination level must be sufficient for the occupants of the overhead crew rest compartment to locate and transfer to the main passenger cabin floor by means of each evacuation route.

6. There must be means for two-way voice communications between crewmembers on the flight deck and occupants of the overhead crew rest compartment. There must also be two-way communications between the occupants of the overhead crew rest compartment and each flight attendant station required to have a public address system microphone per § 25.1423(g) in the passenger cabin.

7. There must be a means for manual activation of an aural emergency alarm system, audible during normal and emergency conditions, to enable crewmembers on the flight deck and at each pair of required floor level emergency exits to alert occupants of the overhead crew rest compartment of an emergency situation. Use of a public address or crew interphone system will be acceptable, providing an adequate means of differentiating between normal and emergency communications is incorporated. The system must be powered in flight, after the shutdown or failure of all engines and auxiliary power units (APU), or the disconnection or failure of all power sources dependent on their continued operation ( i.e. , engine & APU), for a period of at least ten minutes.

8. There must be a means, readily detectable by seated or standing occupants of the overhead crew rest compartment, which indicates when seat belts should be fastened. In the event there are no seats, at least one means must be provided to cover anticipated turbulence ( e.g. sufficient handholds). Seat belt type restraints must be provided for berths and must be compatible for the sleeping attitude during cruise conditions. There must be a placard on each berth requiring that seat belts must be fastened when occupied. If compliance with any of the other requirements of these special conditions is predicated on specific head location, there must be a placard identifying the head position.

9. In lieu of the requirements specified in § 25.1439(a) that pertain to isolated compartments and to provide a level of safety equivalent to that which is provided occupants of a small isolated galley, the following equipment must be provided in the overhead crew rest compartment:

(a) At least one approved hand-held fire extinguisher appropriate for the kinds of fires likely to occur, (b) Two protective breathing equipment (PBE) devices approved to Technical Standard Order (TSO)-C116 or equivalent, suitable for firefighting, or one PBE for each hand-held fire extinguisher, whichever is greater, and

(c) One flashlight.

10. A smoke or fire detection system (or systems) must be provided that monitors each occupiable area within the overhead crew rest compartment, including those areas partitioned by curtains. Flight tests must be conducted to show compliance with this requirement. Each system (or systems) must provide:

(a) A visual indication to the flightdeck within one minute after the start of a fire;

(b) An aural warning in the overhead crew rest compartment; and

(c) A warning in the main passenger cabin. This warning must be readily detectable by a flight attendant, taking into consideration the positioning of flight attendants throughout the main passenger compartment during various phases of flight.

11. The overhead crew rest compartment must be designed such that fires within the compartment can be controlled without a crewmember having to enter the compartment, or the design of the access provisions must allow crewmembers equipped for firefighting to have unrestricted access to the compartment. The time for a crewmember on the main deck to react to the fire alarm, to don the firefighting equipment, and to gain access must not exceed the time for the compartment to become smoke-filled, making it difficult to locate the fire source.

12. There must be a means provided to exclude hazardous quantities of smoke or extinguishing agent originating in the overhead crew rest compartment from entering any other compartment occupied by crewmembers or passengers. This means must include the time periods during the evacuation of the overhead crew rest compartment and, if applicable, when accessing the overhead crew rest compartment to manually fight a fire. Smoke entering any other compartment occupied by crewmembers or passengers when the access to the overhead crew rest compartment is opened, during an emergency evacuation, must dissipate within five minutes after the access to the overhead crew rest compartment is closed. Hazardous quantities of smoke may not enter any other compartment occupied by crewmembers or passengers during subsequent access to manually fight a fire in the overhead crew rest compartment (the amount of smoke entrained by a firefighter exiting the overhead crew rest compartment through the access is not considered hazardous). During the one-minute smoke detection time, penetration of a small quantity of smoke from the overhead crew rest compartment into an occupied area is acceptable. Flight tests must be conducted to show compliance with this requirement.

If a built-in fire extinguishing system is used in lieu of manual firefighting, then the fire extinguishing system must be designed so that no hazardous quantities of extinguishing agent will enter other compartments occupied by passengers or crew. The system must have adequate capacity to suppress any fire occurring in the overhead crew rest compartment, considering the fire threat, volume of the compartment and the ventilation rate.

13. There must be a supplemental oxygen system equivalent to that provided for main deck passengers for each seat and berth in the overhead crew rest compartment. The system must provide an aural and visual warning to warn the occupants of the overhead crew rest compartment to don oxygen masks in the event of decompression. The warning must activate before the cabin pressure altitude exceeds 15,000 feet. The aural warning must sound continuously for a minimum of five minutes or until a reset push button in the overhead crew rest compartment is depressed. Procedures for crew rest occupants in the event of decompression must be established. These procedures must be transmitted to the operator for incorporation into their training programs and appropriate operational manuals.

Procedures for overhead crew rest compartment occupants in the event of decompression must be established. These procedures must be transmitted to the operator for incorporation into their training programs and appropriate operational manuals.

14. The following requirements apply to overhead crew rest compartments that are divided into several sections by the installation of curtains or partitions:

(a) To compensate for sleeping occupants, there must be an aural alert that can be heard in each section of the overhead crew rest compartment that accompanies automatic presentation of supplemental oxygen masks. A visual indicator that occupants must don an oxygen mask is required in each section where seats or berths are not installed. A minimum of two supplemental oxygen masks are required for each seat or berth. There must also be a means by which the oxygen masks can be manually deployed from the flight deck.

(b) A placard is required adjacent to each curtain that visually divides or separates, for privacy purposes, the overhead crew rest compartment into small sections. The placard must require that the curtain(s) remains open when the private section it creates is unoccupied. The vestibule section adjacent to the stairway is not considered a private area and, therefore, does not require a placard.

(c) For each section of the overhead crew rest compartment created by the installation of a curtain, the following requirements of these special conditions must be met with the curtain open or closed:

(1) No smoking placard (Special Condition No. 1),

(2) Emergency illumination (Special Condition No. 5),

(3) Emergency alarm system (Special Condition No. 7),

(4) Seat belt fasten signal or return to seat signal as applicable (Special Condition No. 8), and

(5) The smoke or fire detection system (Special Condition No. 10).

(d) Overhead crew rest compartments visually divided to the extent that evacuation could be affected must have exit signs that direct occupants to the primary stairway exit. The exit signs must be provided in each separate section of the overhead crew rest compartment, and must meet the requirements of § 25.812(b)(1)(i).

(e) Sections within an overhead crew rest compartment that are created by the installation of a rigid partition with a door physically separating the sections, the following requirements of these special conditions must be met with the door open or closed:

(1) There must be a secondary evacuation route from each section to the main deck, or alternatively, it must be shown that any door between the sections has been designed to preclude anyone from being trapped inside the compartment. Removal of an incapacitated occupant within this area must be considered. A secondary evacuation route from a small room designed for only one occupant for short time duration, such as a changing area or lavatory, is not required. However, removal of an incapacitated occupant within a small room, such as a changing area or lavatory, must be considered.

(2) Any door between the sections must be shown to be openable when crowded against, even when crowding occurs at each side of the door.

(3) There may be no more than one door between any seat or berth and the primary stairway exit.

(4) There must be exit signs in each section meeting the requirements of § 25.812(b)(1)(i) that direct occupants to the primary stairway exit. An exit sign with reduced background area as described in Special Condition No. 4(a) may be used to meet this requirement.

(f) For each smaller section within the main overhead crew rest compartment created by the installation of a partition with a door, the following requirements of these special conditions must be met with the door open or closed:

(1) No smoking placards (Special Condition No. 1);

(2) Emergency illumination (Special Condition No. 5);

(3) Two-way voice communication (Special Condition No. 6);

(4) Emergency alarm system (Special Condition No. 7);

(5) Seat belt fasten signal or return to seat signal as applicable (Special Condition No. 8);

(6) Emergency firefighting and protective equipment (Special Condition No. 9); and

(7) Smoke or fire detection system (Special Condition No. 10).

15. The requirements of two-way voice communication with the flight deck and provisions for emergency firefighting and protective equipment are not applicable to lavatories or other small areas that are not intended to be occupied for extended periods of time.

16. Where a waste disposal receptacle is fitted, it must be equipped with an automatic fire extinguisher that meets the performance requirements of § 25.854(b).

17. Materials (including finishes or decorative surfaces applied to the materials) must comply with the flammability requirements of § 25.853(a) as amended by Amendment 25-83. Mattresses must comply with the flammability requirements of § 25.853(c), as amended by Amendment 25-83.

18. The addition of a lavatory within the overhead crew rest compartment would require the lavatory to meet the same requirements as those for a lavatory installed on the main deck except with regard to Special Condition No. 10 for smoke detection.

19. All enclosed stowage compartments within the overhead crew rest compartment that are not limited to stowage of emergency equipment or airplane supplied equipment ( i.e. , bedding) must meet the design criteria given in the table below. Enclosed stowage compartments greater than 200 ft 3 in interior volume are not addressed by this special condition. The in flight accessibility of very large enclosed stowage compartments and the subsequent impact on the crewmembers' ability to effectively reach any part of the compartment with the contents of a hand fire extinguisher will require additional fire protection considerations similar to those required for inaccessible compartments such as Class C cargo compartments.

You may submit or retrieve comments online through the Document Management System (DMS) at: http://dms.dot.gov/submit. Acceptable formats include: MSWord (versions 95 to 97), MS Word for Mac (versions 6 to 8), Rich Text File (RTF), American Standard Code Information Interchange (ASCII)(TXT), Portable Document Format (PDF), and WordPerfect (versions 7 to 8). The DMS is available 24 hours each day, 365 days each year. Electronic submission and retrieval help and guidelines are available under the help section of the Web site.

An electronic copy of this document may be downloaded by using a computer, modem and suitable communications software, from the Government Printing Office's Electronic Bulletin Board Service at (202) 512-1661. Internet users may reach the Office of the Federal Register's home page at: http://www.nara.gov/fedreg and the Government Printing Office's Web page at: http://www.access.gpo.gov/nara.

On June 22, 2001, the FHWA received a petition from the U.S. Department of the Army (DA), to amend 23 CFR 658.13 to include as “specialized equipment,” dromedary equipped truck tractor-semitrailer combination vehicles, when transporting Class 1 explosives  1 for the U.S. Department of Defense (DOD). A copy of the petition is included in the docket.

The U.S. DOT regulations require Class 1 explosives, such as ammunition shells, to be transported separately from the fuses or detonators (49 CFR 177.848). The most efficient way for Military Traffic Management Command (MTMC) munitions carriers to comply with this regulation is to use dromedary containers to carry ammunition-fuses, with the ammunition in the semitrailer. A dromedary, also known as a “drom,” is a box, deck, or plate mounted behind the cab and forward of the fifth wheel on the frame of the power unit of a truck tractor-semitrailer combination. With drom equipment, a single shipment of fuses and ammunition requires only one vehicle, but without drom equipment, the same shipment requires two vehicles. Shipping these non-compatible explosives in the same vehicle combination reduces the number of vehicles needed to transport munitions, increases military readiness and reduces the number of vehicles on the road.

Under the Surface Transportation Assistance Act of 1982 (STAA) [49 U.S.C. 31111(b)(1)(B), formerly 49 U.S.C. App. 2311(b)] States may not enforce an overall length limit against truck tractor-semitrailer combination vehicles operating on the National Network  2 or under reasonable access thereto. The same STAA also defined a truck tractor as a noncargo carrying power unit that operates in combination with a semitrailer or trailer. Drom equipped truck tractors are obviously cargo carrying, and, as a result, any combination vehicle that includes one of these units may be subjected to an overall length limit at the discretion of any State. In implementing the STAA during the mid-1980s, the FHWA chose to “grandfather” existing drom equipped units by allowing any such unit that could show that it was in use on December 1, 1982, to be considered a truck tractor for regulatory purposes. The reason for doing this was to allow an existing fleet of equipment to use up its useful life. By now the presumption must be that the vast majority of the units that would have met the 1982 grandfather requirement, are no longer in service, and those few that might remain, could not begin to satisfy the demands of the Defense Department for moving munitions. More importantly, the improvements in safety features and fuel efficiency of truck tractors over the last 20 years, pragmatically rule out use of older equipment by any carrier in the business today.

The FHWA received a similar petition  3 in 1989 from a group representing munitions carriers. While the petition was under consideration, the military action in the Middle East called Operation Desert Storm began. Because of the extreme urgency of moving munitions destined for U.S. military forces in the Persian Gulf, the FHWA issued an emergency rule (56 FR 4164, February 1, 1991) valid for six months, that declared vehicle combinations consisting of truck tractors equipped with dromedary units not exceeding 65 inches in length pulling semitrailers to be specialized equipment when hauling muntions, thus exempting these vehicles from State enforcement of overall length regulations. After the conclusion of Operation Desert Storm, the emergency rule was allowed to expire in August 1991. Subsequently, the FHWA again focused on the merits of the petition and ultimately denied it. The basic reasoning for denial was that since only one or two States were enforcing overall length limits at the time, the FHWA felt it would be inconsistent with the Executive Order on Federalism (E.O. 12612) in effect at the time to preempt State authority for what was considered a local problem, limited in scope. Although denying the petition, the FHWA recognized that even localized enforcement could interrupt this vital Defense Department activity of moving ammunition to where it could support our troops. Shortly after expiration of the emergency rule, the FHWA, through its field offices, asked States to continue to allow dromedary equipped munitions carriers as they had under the provisions of the emergency rule.

According to the current petition, some of the States that voluntarily refrained from imposing fines (after being approached by the FHWA following the Gulf War) have gone back to imposing fines. In addition, even if the States have enacted remedial legislation, it is not always consistent with neighboring States.

The major point of the 2001 petition is that a Federal standard is the only long-term solution to a growing problem that directly affects the manner and efficiency with which the U.S. DOD carries out its mission with respect to supporting our troops and defending the country. The U.S. DOD indicates that there is a constant need to move munitions in support of smaller contingencies (other than the Gulf War/Desert Storm) such as actions in Iraq, Kosovo, Haiti, and Somalia. Taken individually, these do not generate the high visibility public interest that may result in the issuance of emergency rules.

The solution to this problem, as proposed by the U.S. DOD and included in the proposed rule published today, is to provide a specialized equipment designation for the combination vehicle in question. A truck tractor equipped with a dromedary unit operating in combination with a semitrailer is proposed to be designated “specialized equipment,” when transporting Class 1 explosives, and/or any munitions related security material, as specified by the U.S. DOD in compliance with 49 CFR part 177. This designation would require States to allow operation of this combination on the National Network (NN), and provide reasonable access between the NN and service facilities and terminals. In order to accommodate the typical equipment in use today for this type of operation, the proposal includes a requirement that all States allow these combinations up to an overall length of 75 feet.

This designation would apply only to combinations directly used in carrying munitions for the U.S. DOD. When operating empty, the designation would continue to apply if the carrier can document that hauling munitions is the company's business, or that the most recent load consisted of a qualifying munitions load. The designation would not apply if any other cargo were being carried in either the semitrailer or dromedary unit. For those instances, the combination would no longer be considered “specialized equipment,” and would become subject to State regulations for drom equipped truck truck-semitrailers.

All comments received before the close of business on the comment closing date indicated above will be considered and will be available for examination using the docket number appearing at the top of this document in the docket room at the above address. We will file comments received after the comment closing date in the docket and will consider late comments to the extent practicable. We may, however, issue a final rule at any time after the close of the comment period. In addition to late comments, we will also continue to file, in the docket, relevant information becoming available after the comment closing date, and interested persons should continue to examine the docket for new material.

We have determined that this proposed action is a significant regulatory action within the meaning of Executive Order 12866 and the U.S. DOT regulatory policies and procedures. This proposed action comes in response to a request from, and would directly affect activities under the direct control, of the U.S. Department of Defense (DOD): supplying munitions to the military. The proposed action will improve the shipment of munitions by standardizing the regulatory control that States apply to the vehicles typically used for this activity. The anticipated result will be an improvement in the efficiency with which munitions are shipped. This potential improvement will aid the national security effort with respect to the armed forces, as well as activities associated with homeland security.

The proposed rule provides, at the Federal level, a regulatory standard that already exists in many States. Although it would preempt restrictions imposed by about 10 States, it would not affect any State's ability to discharge a traditional State government function, i.e. , issuing citations to illegally overlength vehicles.

The vehicles covered by this proposal are already operating in most States, and will not have to be modified in any way to achieve compliance. Accordingly, the anticipated annual economic effect of this rulemaking will be negligible. The proposed action will not have an adverse effect on any other governmental agency, any level of government, the industry, or the public, nor will it change any compliance or reporting requirements that already exist. The agency has decided that a 30-day comment period is needed for this proposal because of the critical need to implement the regulation in a timely manner. On going military actions require a continuous supply of munitions. It is critical that this supply stream is not interrupted.

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the FHWA has evaluated the effects of this proposed action on small entitles and has determined that the action would not have a significant economic impact on a substantial number of small entities.

This proposed action has been analyzed in accordance with the principles and criteria contained in Executive order 13132, dated August 4, 1999, and the FHWA has determined that this proposed action has sufficient federalism implications to warrant the preparation of a Federalism summary impact statement.

The proposal would provide a consistent national regulation applying only to vehicles hauling munitions for the Department of Defense in support of military activities. The proposal is based on the authority provided by 49 U.S.C. 31111(g) that allows the Secretary to make the decisions necessary to accommodate specialized equipment. The FHWA has also determined that, while this proposed action would preempt any inconsistent State law or State regulation, it would not affect the State's ability to discharge traditional State government function. The States would continue to be able to enforce length restrictions against these vehicles. What might change, however, depending on existing State law, would be the threshold at which an enforcement action is taken.

By allowing the vehicle described in this proposal to transport munitions, the total number of trucks needed to perform this task would be reduced. This reduction, in turn, improves the safety climate on the highway system and in a small way slows infrastructure wear. Only a small number of States (less than 10) would be affected by this rule, as most States already allow the combination vehicle covered by this proposed rule. However, due to the needs of the military and the nature of the cargo, it is imperative that all States allow the combination vehicle under discussion to operate. Even if only one or two States can prohibit, or deter this vehicle and its cargo, timely support of the military can be severely impacted.

The FHWA has engaged in consultation with States over this issue in past years. In February 1991, as a result of the activities surrounding the Desert Shield/Desert Storm campaign, the FHWA issued an emergency rule allowing the use of dromedary units to transport munitions (56 FR 4164, February 1, 1991) for many of the same reasons used in support of the current petition. That rule was in effect for 6 months, and was not renewed for various reasons deemed important in responding to the conditions at that time. After the emergency rule expired, in place of a regulatory solution the FHWA urged all States and in particular those where enforcement actions were taking place to recognize the importance of the situation, and to try and accommodate munitions haulers in some manner. According to the U.S. DOD's petitions, this “persuasion” method appeared to work, at least for a few years into the mid-1990's. As this verbal agreement method of handling the issue began to breakdown, a few States again began to enforce length rules on these combinations, causing interruptions in munitions delivery. While inconvenient, these actions did not become critically disruptive until the current activities aimed at terrorist actions around the world became a national priority.

Recently, the FHWA solicited comment on the Federalism implications of this proposed rule from the National Governors' Association (NGA) as representatives for the State officials. On May 9, 2002, the FHWA sent a letter seeking comment on the Federalism implications of this proposed rule to the NGA 4 . To date, the FHWA has received no response or indication of concerns about the Federalism implications of this rulemaking from the NGA. The FHWA will continue to adhere to Executive Order 13132 when issuing a final rule in this proceeding. Comment is solicited specifically on the Federalism implications of this proposal.

Catalog of Federal Domestic Assistance Programs Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501, et seq. ), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct, sponsor, or require through regulations. The FHWA has determined that this proposal does not contain collection of information requirements for the purposes of the PRA.

This proposed rule would not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995, 109 Stat. 48). This proposed rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (2 U.S.C. 1532). What is being proposed in each issue of this proposed rule would reduce the regulatory requirements that must be complied with. This proposed rule does not add any regulatory requirement that would require any expenditure by any private sector party, or governmental agency.

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

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

This proposed 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.

The Agency has analyzed this proposal for the purposes of the National Environmental Policy Act of 1969, as amended (42 U.S.C. 4321 et seq. ) and has determined that this action will not have any effect on the quality of the environment.

The FHWA has analyzed this proposal under Executive Order 13175, dated November 6, 2000, and believes that the proposed action will not have substantial direct effects on one or more Indian tribes; will not impose substantial direct compliance costs in Indian tribal governments; and will not preempt tribal law. Therefore, a tribal summary impact statement is not required.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a significant energy action under that order because it is not a significant regulatory action under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects under Executive Order 13211 is not required.

A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN contained in the heading of this document can be used to cross-reference this section with the Unified Agenda.

In consideration of the foregoing, the FHWA proposes to amend 23 CFR part 658 as follows:

The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, W:CAR:MP:FP:S, Washington, DC 20224. Comments on the collection of information should be received by December 23, 2002. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed collection of information (see below);

How the quality, utility, and clarity of the information to be collected may be enhanced;

How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and

Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

The collection of information in these proposed regulations is in § 1.1502-35(c) and § 1.1502-35(f). This information is required by the IRS to verify compliance with section 1502. This information will be used to determine whether the amount of tax has been calculated correctly. The collection of information is required to properly determine the amount permitted to be taken into account as a loss. The respondents are corporations filing consolidated returns. The collection of information is required to obtain a benefit.

Estimated total annual reporting and/or recordkeeping burden: 10,500 hours.

Estimated average annual burden per respondent: 2 hours.

Estimated number of respondents: 5,250.

Estimated annual frequency of responses: on occasion.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

Section 1502 of the Internal Revenue Code (Code) states that—

The legislative history regarding that grant of authority states that “[a]mong the regulations which it is expected that the commissioner will prescribe are [regulations addressing the] extent to which gain or loss shall be recognized upon the sale by a member of the affiliated group of stock issued by any other member of the affiliated group [and] the basis of property * * * acquired, during the period of affiliation, by a member of the affiliated group, including the basis of such property after such period of affiliation.” S. Rep. No. 960, 70th Cong., 1st Sess. 15 (1928).

In 1991, the IRS and Treasury Department promulgated § 1.1502-20, which set forth rules regarding the extent to which a loss recognized by a member of a consolidated group on the disposition of stock of a subsidiary member of the same group was allowed. Section 1.1502-20 provided that a loss recognized by a group member on the disposition of subsidiary member stock was allowable only to the extent it exceeded the sum of “extraordinary gain dispositions,” “positive investment adjustments,” and “duplicated loss.” The rule not only implemented section 337(d), which directed the Secretary to promulgate regulations to prevent the circumvention of corporate tax on appreciated property through the filing of a consolidated return, but also was intended to further single entity principles by preventing the deduction of stock losses that reflected a subsidiary member's loss carryforwards, deferred deductions, and unrecognized losses inherent in its assets.

In Rite Aid Corp. v. United States, 255 F.3d 1357 (Fed. Cir. 2001), the United States Court of Appeals for the Federal Circuit considered the validity of the duplicated loss component of § 1.1502-20. The court held that the duplicated loss component of § 1.1502-20 was an invalid exercise of regulatory authority.

In response to the Rite Aid decision, the IRS and Treasury Department issued Notice 2002-11 (2002-7 I.R.B. 526), stating that the interests of sound tax administration would not be served by the continued litigation of the validity of the duplicated loss component of § 1.1502-20. Notice 2002-11 announced that, because of the interrelationship in the operation of all of the loss disallowance factors of § 1.1502-20, the IRS and Treasury Department had decided that new rules governing loss disallowance on sales of subsidiary stock by members of consolidated groups should be implemented.

On March 7, 2002, the IRS and Treasury Department filed with the Federal Register temporary regulations under sections 337(d) and 1502 governing the determination of a consolidated group's allowable stock loss on a disposition of subsidiary member stock. Those regulations included § 1.337(d)-2T, which generally allows a loss on the disposition of subsidiary member stock only to the extent that a taxpayer can establish that the stock loss is not attributable to the recognition of built-in gain. Section 1.337(d)-2T does not disallow stock loss that reflects loss carryforwards, deferred deductions, or built-in asset losses of the subsidiary member.

Concurrently with the filing of § 1.337(d)-2T with the Federal Register , the IRS and Treasury Department issued Notice 2002-18 (2002-12 I.R.B. 644), which stated that regulations would be promulgated that would defer or otherwise limit the utilization of a loss on stock (or another asset that reflects the basis of stock) in transactions that facilitate the group's utilization of a single economic loss more than once. Notice 2002-18 is based on the principle that a consolidated group should not be able to obtain more than one tax benefit from a single economic loss. See Charles Ilfeld Co. v. Hernandez, 292 U.S. 62 (1934) (disallowing a worthless stock deduction recognized on a liquidation of a subsidiary member because the group had already obtained the tax benefit from the operating losses that gave rise to the deduction). The Notice stated that the regulations would apply to dispositions occurring on or after March 7, 2002.

These proposed regulations reflect the principle set forth in Notice 2002-18 that a consolidated group should not be able to obtain more than one tax benefit from a single economic loss. The proposed regulations consist primarily of two rules: a basis redetermination rule and a loss suspension rule. The proposed regulations also include a basis reduction rule to address certain cases not within the scope of the loss suspension rule. Finally, the proposed regulations include certain anti-avoidance rules to address certain transactions designed to avoid the application of the basis redetermination and loss suspension rules.

The rules in these proposed regulations are intended to address at least two types of transactions that may allow a group to obtain more than one tax benefit from a single economic loss. In the first type of transaction, a group absorbs an inside loss ( e.g. , a loss carryforward, a deferred deduction, or a loss inherent in an asset) of a subsidiary member and then a member of the group recognizes a loss on a disposition of stock of that subsidiary member that is duplicative of the inside loss. For example, assume that in Year 1, P, a member of a group, forms S with a contribution of $80 in exchange for 80 shares of common stock of S (representing all of the outstanding stock of S). In Year 2, P contributes Asset A with a basis of $70 and a value of $20 to S in exchange for an additional 20 shares of S common stock. In Year 3, S sells Asset A and recognizes a $50 loss, which offsets income of P on the group's return. Under the investment adjustment rules of § 1.1502-32, P's basis in each share of S common stock it holds is reduced by a pro rata share of the $50 loss, with the result that the shares acquired in Year 1 have a basis of $40 and the shares acquired in Year 2 have a basis of $60. In Year 4, P sells the shares acquired in Year 2 for $20 and recognizes a $40 loss, which offsets income of P on the group's return. In this transaction, the group has obtained a total of $90 tax benefit from the single $50 loss.

Alternatively, assume that, in Year 1, P forms S with a contribution of $100 in exchange for all of the common stock of S. In Year 2, P contributes Asset A with a basis of $50 and a value of $20 to S in exchange for all of the preferred stock of S. In Year 3, S sells Asset A and recognizes a $30 loss, which offsets income of P on the group's return. Under the investment adjustment rules of § 1.1502-32, P's basis in each share of S common stock it holds is reduced by a pro rata share of the $30 loss. P's basis in its preferred shares, however, is not reduced. In Year 4, P sells the preferred stock of S for $20 and recognizes a $30 loss, which offsets income of P on the group's return. In this transaction, the group has obtained a $60 tax benefit from the single $30 economic loss in Asset A.

Although, in both cases, a taxable disposition of the S common stock acquired in Year 1 would offset the excess tax benefit, the group has various non-taxable alternatives by which to ensure that the excess tax benefit is not reduced, including retention of the remaining shares of S or the liquidation of S in a transaction described in section 332.

In the second type of transaction, a member of the group recognizes a loss on a disposition of subsidiary member stock that is duplicative of an inside loss of the subsidiary member, the subsidiary remains a member of the group, and the group subsequently recognizes the inside loss of that subsidiary member. For example, assume that in Year 1, P forms S with a contribution of $80 in exchange for 80 shares of the common stock of S. In Year 2, P contributes Asset A with a basis of $50 and a value of $20 to S in exchange for an additional 20 shares of S common stock. In Year 3, P sells the 20 shares of S common stock that it acquired in Year 2 for $20 and recognizes a $30 loss, which offsets income of P on the group's return. The sale of the 20 shares of S common stock does not result in the deconsolidation of S. In Year 4, S sells Asset A and recognizes a $30 loss, which also offsets income of P on the group's return. In this transaction, the group has obtained the use of two losses from the single economic loss in Asset A. Again, although a taxable disposition by P of its remaining S common stock would offset the tax benefit of one of the losses, the group has various non-taxable alternatives by which to ensure that the excess tax benefit is not reduced, including retention of the remaining shares of S or the liquidation of S in a transaction described in section 332.

The investment adjustment rules of § 1.1502-32 are premised on certain assumptions regarding the shareholders' interests in the subsidiary. One assumption is that the subsidiary's losses are borne by the holders of the common stock before the holders of the preferred stock. Another assumption is that each share within a class is entitled to an equal portion of the subsidiary's items of income and gain, and, in the case of common stock, of deduction and loss. The investment adjustment rules, therefore, generally allocate basis adjustments without regard to differences in members' bases in their shares of the stock of the subsidiary member and without regard to whether a basis adjustment reflects an item of income, gain, deduction, or loss that was built-in with respect to contributed property. These assumptions can give rise to the results illustrated in the transactions described above.

The basis redetermination rule attempts to mitigate the effect of the assumptions underlying the investment adjustment rules by reversing certain investment adjustments to take into account the source of certain items of deduction and loss. In addition, where the subsidiary member remains a member of the group, the basis redetermination rule equalizes members' bases in subsidiary stock such that the loss suspension rule, described below, need not include inordinately complex rules to address the method by which inside losses reduce stock basis under § 1.1502-32.

The proposed regulations require the redetermination of the basis of subsidiary member stock held by members of the group immediately before a disposition or deconsolidation of a share of subsidiary member stock when the basis of such stock exceeds its value. The rule applies differently when the subsidiary remains a member of the group after its stock is disposed of or deconsolidated from when the subsidiary does not remain a member of the group.

If a subsidiary remains a member of the group, the basis redetermination rule requires that all members of the group aggregate their bases in all shares of the subsidiary member. That basis is then allocated first to the shares of the subsidiary member's preferred stock that are owned by the members of the group in proportion to, but not in excess of, their value on the date of the disposition or deconsolidation. After the allocation of the aggregated basis to all shares of the preferred stock of the subsidiary member held by members of the group, any remaining basis is allocated among all common shares of subsidiary member stock held by members of the group in proportion to their value on the date of the disposition or deconsolidation. This rule reallocates past adjustments to reflect an economic allocation of the built-in items of deduction and loss with respect to contributed property. The rule also reallocates stock basis that arose from capital contributions of property and stock basis that arose as a result of positive investment adjustments. The reallocation of basis obviates the need for complex rules addressing basis adjustments resulting from an inside loss that was reflected in a stock loss that is suspended pursuant to the loss suspension rule described below.

If the subsidiary is no longer a member of the group immediately after the disposition or deconsolidation of its stock, the basis redetermination rule requires a reallocation of a certain amount of the basis of the stock of the subsidiary member owned by group members. In particular, the amount of basis subject to reallocation is equal to the lesser of (1) the loss inherent in the stock disposed of or deconsolidated, and (2) the subsidiary member's items of deduction and loss that were taken into account in computing the adjustment to the basis of any share of stock of the subsidiary member, other than the shares disposed of or deconsolidated, during the time such subsidiary member was a member of the group. However, only those items of deduction and loss that are attributable to formerly unrecognized or unabsorbed items reflected in the basis of the subsidiary member stock disposed of or deconsolidated are included in the computation of the amount of basis subject to reallocation. For example, if a share of stock has a basis in excess of value because the stock was acquired in exchange for a built-in loss asset, the stock's basis reflects that unrecognized loss. If that loss is later recognized, the basis adjustment resulting from that recognition is an item of loss attributable to a formerly unrecognized item reflected in the basis of such stock. The proposed regulations contain a presumption that all items of deduction and loss included in the computation of prior investment adjustments to the basis of members' shares of the subsidiary member are attributable to the recognition and absorption of a deduction or loss reflected in the basis of the shares that are disposed of or deconsolidated. The regulations do, however, permit groups to establish that particular items of deduction and loss are not reflected in the basis of the shares disposed of or deconsolidated, and, therefore, are not reallocated to other shares.

If the subsidiary is no longer a member of the group immediately after the disposition or deconsolidation of its stock, the basis in the shares of subsidiary member stock disposed of or deconsolidated is reduced by the amount of basis subject to reallocation. Then, to the extent of the amount of basis subject to reallocation, the basis of all preferred shares of stock of the subsidiary member that are held by members of the group immediately after the disposition or deconsolidation is increased such that the basis of each such share equals, but does not exceed, its value immediately before the disposition or deconsolidation. Finally, to the extent that the amount of basis subject to reallocation does not increase the basis of such preferred shares of the subsidiary member, such amount increases the basis of all common shares of stock of the subsidiary member held by members of the group immediately after the disposition or deconsolidation in a manner that, to the greatest extent possible, causes the ratio of the basis to the value of each such share to be the same.

The basis redetermination rule does not apply if the group disposes of all its stock of the subsidiary member within a single taxable year, in one or more fully taxable transactions, or is allowed a worthless stock deduction with respect to all of the subsidiary member stock owned by the members. Under those circumstances, if a second tax benefit has been derived from an economic loss, the second tax benefit will be recaptured in the taxable year in which it was obtained.

The proposed regulations also include a look-through rule that applies the basis redetermination rule to stock of lower-tier subsidiary members when there is a disposition or deconsolidation of stock of a higher-tier member. In addition, the proposed regulations provide that basis adjustments made pursuant to the basis redetermination rule result in basis adjustments to higher-tier member stock.

While the basis redetermination rule may prevent the recognition of a current loss on a particular share of subsidiary member stock, it does not prevent a group from obtaining a benefit from its investment in the subsidiary member. The basis redetermination rule affects only the timing of the group's loss and, in so doing, prevents the group from inappropriately duplicating a single economic loss.

The loss suspension rule prevents duplication of an economic loss by effectively disallowing a stock loss if the economic loss giving rise to that stock loss is later reflected on the group's return as in the second type of transaction described above.

Under the loss suspension rule, if, after application of the basis redetermination rule, a member of a consolidated group recognizes a loss on the disposition of stock of a subsidiary member of the same group, and the subsidiary member is a member of the same group immediately after the disposition, then the selling member's stock loss is suspended to the extent of the duplicated loss with respect to such stock. The proposed regulations also include a special rule that applies the loss suspension rule in cases of a disposition of stock of a subsidiary member that leaves the group where the subsidiary owns stock of another subsidiary that remains a member of the group. In addition, the proposed regulations include a substitute asset rule that suspends a member's loss recognized on a disposition of an asset other than stock of a subsidiary member where such member's basis in the asset disposed of was determined, directly or indirectly, in whole or in part, by reference to the basis of stock of a subsidiary member with respect to which there was a duplicated loss, and immediately after the disposition, the subsidiary member is a member of such group.

The amount of duplicated loss is the excess of (1) the sum of the aggregate basis of the subsidiary member's assets (excluding stock in other subsidiary members of the group), the subsidiary member's losses that are carried to its first taxable year after the disposition, and the subsidiary member's deductions that have been recognized but deferred under another provision, over (2) the sum of the value of stock of the subsidiary member and the subsidiary member's liabilities that have been taken into account for tax purposes. Each of these items in the computation (except stock value) includes the subsidiary member's allocable share of the same items of any lower-tier subsidiary. This definition of duplicated loss is substantially identical to the one in former § 1.1502-20, except that securities of other members of the group are not excluded from the computation of the subsidiary's aggregate asset basis.

The application of the loss suspension rule can be illustrated as follows. Assume P, the common parent of a consolidated group, forms S in Year 1 by contributing $100 to S in exchange for all 10 shares of S's outstanding stock. Immediately after the contribution, S purchases a building for $100. In Year 2, the value of the building declines to $10. At the end of Year 2, P sells one share of S stock for $1 and recognizes a $9 loss. (Because the basis of P's shares of S stock is uniform at the time of the disposition, the basis redetermination rule does not alter P's basis in the share sold.) Immediately after the sale, S is still a member of the P group because P continues to own 90% of the S stock. On the date of the stock sale, S's duplicated loss is $90, the excess of its asset basis ($100) over the value of the assets (deemed to be equal to the aggregate stock value, $10). Of the total duplicated loss, 10%, or $9, is allocable to the share sold. Thus, under the loss suspension rule the $9 stock loss is suspended.

Because a suspended stock loss reflects the subsidiary member's unrecognized or unabsorbed deductions and losses, the suspended loss is reduced, with the result that it will not later be allowed, as the subsidiary member's deductions and losses are taken into account (i.e., absorbed) in determining the group's consolidated taxable income (or loss). The reduction of suspended loss is appropriate because, once the group takes the inside loss into account in determining consolidated taxable income (or loss), the group should not be able to take such loss (in the form of the stock loss or otherwise) into account again in determining consolidated taxable income or loss. Using the facts of the above example, assume that, in Year 3, S sells its building for $10 and recognizes a $90 loss. The P group uses the entire $90 loss to offset income of another member of the group. Under these proposed regulations, the absorbed loss ($90) reduces the suspended loss amount ($9), but not below zero. Thus, P will benefit from the economic loss once on its return, no suspended stock loss will remain, and P's basis in its remaining S stock will be reduced by its allocable share of the loss ($81).

The proposed regulations generally presume that all deductions and losses are attributable first to the duplicated loss that gave rise to a suspended stock loss. The presumption, however, is rebuttable. If a taxpayer can establish that an item of deduction or loss was not part of the duplicated loss that gave rise to a suspended stock loss, the taxpayer will not be required to reduce its suspended stock loss. To illustrate, assume that, instead of selling the building, S retained the building and, in Year 3, earned $50 which it then used to purchase a truck. In Year 4, S sells the truck, recognizing a $25 loss. That loss offsets income of another member of the P group. Assuming that P and S have kept adequate records, P should be able to establish that the loss on the truck was not reflected in the stock loss (because it was attributable to an asset that was acquired after the disposition of stock that gave rise to the suspended stock loss). In that case, P would not be required to reduce its suspended stock loss. The IRS and Treasury Department are concerned about, and specifically request comments regarding, the administrability aspects of this exception.

The proposed regulations provide that any suspended stock loss remaining at the time the subsidiary member leaves the group is allowed, to the extent otherwise allowable under applicable provisions of the Code and regulations thereunder. The loss is allowed on a return filed for the taxable year that includes the last day that the subsidiary member is a member of the group. Once the subsidiary member is no longer a member of the group, the group will not typically be able to use the subsidiary member's deductions or losses on the group's return. Accordingly, it is appropriate to allow any suspended stock loss remaining at the time the subsidiary member leaves the group.

The proposed regulations also provide that any suspended stock loss remaining is allowed at the time the group is allowed a worthless stock deduction with respect to all of the subsidiary member stock owned by members. In such cases, the basis reduction rule, described below, may reduce a worthless stock deduction effectively to prevent any second tax benefit that could be derived from the economic loss that gave rise to the suspended stock loss.

The proposed regulations require that in order for a group to be allowed a loss that was recognized on the disposition of a subsidiary member and that was suspended, the group must file a statement of allowable loss with the consolidated return for the year in which the loss is allowable.

The IRS and Treasury Department do not expect that the basis redetermination and the loss suspension rules will apply frequently. This expectation is based on the assumption that, when a group seeks to raise capital, the common parent will typically issue stock directly or sell all of the stock of a subsidiary member. Alternatively, groups sometimes seek to raise capital by creating minority interests in a subsidiary member. In such cases, however, the group will typically cause the subsidiary member to issue shares directly to the nonmember. Thus, the IRS and Treasury Department believe that a member's sale of less than all of the stock of a subsidiary member to a nonmember, which may trigger application of the basis redetermination and loss suspension rules, is not a common transaction in the absence of tax incentives.

The loss suspension rule apples only if there has been a disposition of subsidiary member stock and the subsidiary member is a member of the group immediately after the disposition. The IRS and Treasury Department, however, are concerned that a group may obtain more than one tax benefit from a single economic loss in certain cases in which a group member recognizes a loss with respect to subsidiary member stock and, in connection with such recognition event, the subsidiary member ceases to exist. For example, suppose P owns all of the stock of S. P's basis in its S stock is $100 and the value of the S stock is $0 because S is insolvent. S liquidates into P. In that case, P will recognize a loss of $100 on the disposition of the S stock. Because S is not a member of the P group immediately after the disposition of S stock, the loss suspension rule will not apply. The portion of the group's consolidated net operating and net capital loss carryforwards attributable to S, however, may remain with the P group. Therefore, to that extent, any loss on the stock of the subsidiary duplicates those losses. To address this case, these proposed regulations provide that if a member disposes of subsidiary member stock and on the following day the subsidiary is not a member of the group and does not have a separate return year, then the basis of the subsidiary member stock is reduced to the extent of the consolidated net operating loss and net capital loss carryforwards attributable to such subsidiary member, as though they were absorbed immediately prior to the disposition.

Similarly, where the subsidiary becomes worthless under the standards of § 1.1502-80(c), the group may be allowed a worthless stock loss while consolidated net operating and net capital loss carryforwards attributable to the worthless subsidiary member remain unabsorbed. Although the subsidiary may be viewed as remaining in the group, rather than rely on existing rules, including the excess loss account recapture rules, to prevent the possible duplication of the unabsorbed losses, these proposed regulations provide for a negative stock basis adjustment similar to that described above in such cases.

The IRS and Treasury Department are concerned that, in certain cases, taxpayers may structure transactions to avoid the application of the basis redetermination and loss suspension rules in a manner that is not consistent with the purpose of the proposed regulations to prevent a consolidated group from obtaining more than one tax benefit from a single economic loss. In particular, suppose P acquires 80 shares of S common stock in exchange for $80. In a later year, P contributes an asset with a basis of $50 and a value of $20 to S in exchange for 20 shares of S preferred stock. The following year, S sells the contributed asset, recognizing a loss of $30. As a result of the sale of the asset, P's basis in the S common stock is reduced by $30 from $80 to $50. In contemplation of the sale of the S preferred stock, P contributes the 80 shares of S common stock to PS, a partnership, in a transaction described in section 721. Because P's basis in the S common stock does not exceed the value of such stock, the deconsolidation of the S common stock does not trigger the application of the basis redetermination rule. In the same year, but after the contribution of the S common stock to PS, P sells the S preferred stock, recognizing $30 of loss. Absent the application of an anti-avoidance rule, the P group will have obtained more than one tax benefit from the single economic loss inherent in the contributed asset. Accordingly, the proposed regulations provide that if a share of subsidiary member stock is deconsolidated and such deconsolidation is with a view to avoiding application of the basis redetermination rule prior to the disposition of loss stock of the subsidiary member, then the basis redetermination rule will apply immediately prior to the deconsolidation.

In addition, suppose in Year 1, P forms S with a contribution of $100 in exchange for 100 shares of common stock of S which at that time represents all of the outstanding stock of S. In Year 2, P contributes 20 shares of common stock of S to PS, a partnership, in a transaction described in section 721. In Year 3, P contributes an asset with a basis of $50 and a value of $20 to PS in a transaction described in section 721. Also in Year 3, PS contributes the built-in loss asset to S and P contributes an additional $80 to S in transfers to which section 351 applies. In Year 4, S sells the built-in loss asset for $20, recognizing a loss of $30. The P group uses that loss to offset income of P. Also in Year 4, P sells its entire interest in PS for $40, recognizing a loss of $30, or PS sells its S stock for $20, recognizing a loss of $30. In either case, the P group would obtain more than one tax benefit from the single economic loss in the contributed asset. Accordingly, the proposed regulations provide that where a member of a consolidated group contributes a built-in loss asset to a partnership or a deconsolidated corporation, that partnership or deconsolidated corporation subsequently contributes the built-in loss asset to a subsidiary member of the group, and those contributions are with a view to avoiding the application of the basis redetermination rule or the loss suspension rule, adjustments must be made to prevent the consolidated group from obtaining more than one tax benefit from a single economic loss in the case.

The IRS and Treasury Department are also concerned that it may be possible to avoid the loss suspension rule by disposing of a sufficient amount of subsidiary member stock to cause a deconsolidation of the subsidiary member, but then engage in a transaction that has the effect of re-importing to the group losses of that subsidiary member. To address this concern, the proposed regulations include an anti-avoidance rule that prevents the group from obtaining the tax benefit of the re-imported loss. The rule applies whenever (1) a group recognizes and is allowed a loss on the disposition of subsidiary member stock with respect to which there is a duplicated loss, (2) as a result of that disposition or another disposition, the subsidiary member leaves the group, and (3) within ten (10) years after the date the subsidiary member leaves the group, a loss of the subsidiary member is re-imported into the group. A loss of a subsidiary may be re-imported into the group when the subsidiary member rejoins the group at a time when it has losses or deferred deductions that it had on the date of the disposition or has losses or deferred deductions that are attributable to built-in loss assets held by the subsidiary member on the date of the disposition, or has built-in loss assets that were built-in loss assets of the subsidiary member on the date of the disposition. A loss of a subsidiary member may also be re-imported into the group when a member of the group succeeds to losses or deferred deductions of the subsidiary member that were losses or deferred deductions of the subsidiary member on the date of the disposition, or losses or deferred deductions that are attributable to assets that were built-in loss assets of the subsidiary member on the date of the disposition, or acquires built-in loss assets that were built-in loss assets of the subsidiary member on the date of the disposition. If the anti-avoidance rule applies, then these proposed regulations generally prohibit the use of the re-imported item of deduction or loss to offset income of the group.

Finally, the proposed regulations make clear that the proposed rules do not preclude the application of anti-abuse rules of the Code and regulations thereunder, including to a transaction entered into to invoke the basis redetermination rule to avoid the effect of any other provision of the Code or regulations.

The IRS and Treasury Department are considering alternative approaches to the basis redetermination rule that would mitigate basis disparities in stock of a subsidiary member. In this regard, the IRS and Treasury Department are considering an approach that would adjust the bases of all shares of subsidiary member stock held by group members upon any acquisition of subsidiary member stock. Comments are requested regarding the appropriateness and desirability of such an approach as well as suggestions for alternative approaches.

In addition, under the proposed regulations, the basis redetermination and loss suspension rules apply only to certain events involving stock that has a basis in excess of value. The IRS and Treasury Department, however, are considering the appropriateness and feasibility of a rule that applies the principles of the basis redetermination and loss suspension rules to certain events involving stock that has a value in excess of basis. With respect to the application of the principles of the loss suspension rule to dispositions of stock that has a value in excess of basis and that reflects duplicated gain, a rule might require taking into account the stock gain upon the disposition of the stock but would eliminate gain recognized on the disposition of assets that had a built-in gain at the time of the stock transaction. The IRS and Treasury Department request comments on appropriate and administrable applications of the principles of the basis redetermination and loss suspension rules to dispositions and deconsolidations of stock that has a built-in gain.

Finally, as an alternative or supplement to the rule providing for basis reduction for unabsorbed losses in certain cases where the subsidiary member ceases to exist or the group is allowed a worthless stock deduction with respect to the stock of such subsidiary member, the IRS and Treasury Department are considering whether it would be more appropriate to restrict the losses pursuant to the approach set forth in section 382(g)(4)(D). Comments are requested regarding whether such an approach would be appropriate, desirable and administrable, as well as the application of such an approach in the context of consolidated attributes.

These regulations, other than the anti-avoidance rule that relates to the re-importing of losses, are proposed to apply to transactions that occur on or after March 7, 2002, but only if such transactions occur during a taxable year the original return for which is due (without regard to extensions) after the date these regulations are published as temporary or final regulations in the Federal Register . The anti-avoidance rule that relates to the re-importing of loss is proposed to apply to losses re-imported as a result of an event that occurs on or after October 18, 2002, that triggers the application of such rule, but only if such event occurs during a taxable year the original return for which is due (without regard to extensions) after the date these regulations are published as temporary or final regulations in the Federal Register .

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It is hereby certified that these regulations do not have a significant impact on a substantial number of small entities. This certification is based on the fact that these regulations will primarily affect affiliated groups of corporations, which tend to be larger businesses. Moreover, the number of taxpayers affected and the average burden are minimal. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection requirement on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Therefore, a Regulatory Flexibility Analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small businesses.

Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on the clarity of the proposed regulations and how they may be made easier to understand. All comments will be available for public inspection and copying.

A public hearing has been scheduled for January 15, 2003, beginning at 10 a.m. in room 6718, Internal Revenue Building, 1111 Constitution Avenue, NW., Washington, DC. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT portion of this preamble.

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments must submit written or electronic comments and an outline of the topics to be discussed and the time to be devoted to each topic (a signed original and eight (8) copies) by December 27, 2002. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

The principal author of these regulations is Aimee K. Meacham of the Office of the Associate Chief Counsel (Corporate), IRS. However, other personnel from the IRS and Treasury Department participated in their development.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (COTP Prince William Sound 02-011), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 81/2 by 11 inches, suitable for copying. If you would like to know that your submission reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Marine Safety Office Valdez at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a separate notice in the Federal Register .

The Coast Guard is taking this action for the immediate protection of the national security interests in light of terrorist acts perpetrated on September 11, 2001. The port of Valdez is a vital national commercial port, supporting the transfer and transport of a significant percentage of oil used in the United States. As such, it is crucial that actions be taken to protect the flow of commerce from possible terrorist or subversive acts designed to damage maritime facilities and vessels transiting to and from the Port of Valdez. The proposed rule would replace existing regulations in 33 CFR 165.1701 and the temporary rule issued in July, which will expire December 31, 2002, that created temporary § 165.T17-010, entitled “Port Valdez and Valdez Narrows, Valdez, Alaska.” The proposed rule would work to safely control the flow of commercial traffic and protect vital maritime facilities by creating security zones and check-in procedures designed to identify threats for response by appropriate law enforcement resources.

On November 7, 2001, we published three temporary final rules in the Federal Register (66 FR 56208, 56210, 56212) that created security zones effective through June 1, 2002. The section numbers and titles for these security zone regulations are—

Then on June 4, 2002, we published a temporary final rule (67 FR 38389) that established security zones to replace those security zones that expired June 1, 2002. That rule issued in June, which expired July 30, 2002, created temporary § 165.T17-009, entitled “Port Valdez and Valdez Narrows, Valdez, Alaska”.

Then on July 26, 2002 we published a temporary final rule (67 FR 49582-84) that established security zones to replace temporary § 165.T17-009 that expired July 30, 2002. That rule issued in July, which will expire December 31, 2002, created temporary § 165.T17-010, entitled “Port Valdez and Valdez Narrows, Valdez, Alaska”. This proposed rule would remove the temporary security zones in § 165.T17-010 and add permanent security zones in a new 33 CFR 165.1701.

Comments received regarding the temporary final rules currently in place will be taken into consideration.

This proposed rule would establish three security zones in new 33 CFR 165.1701(a) and move the current safety zone in existing 33 CFR 165.1701 to new 33 CFR 165.1701(b). This proposed rule also would establish procedures for vessel entry into the security and safety zones for management of the natural resources administered by the Alaska Department of Natural Resources.

The Trans-Alaska Pipeline (TAPS) Valdez Marine Terminal security zone encompasses the waters of Port Valdez between Allison Creek to the east and Sawmill Spit to the west and offshore to marker buoys A and B (approximately 1.5 nautical miles offshore from the TAPS Terminal). The Tank Vessel moving security zone encompasses the waters within 200 yards of a TAPS tanker within the Captain of the Port, Prince William Sound Zone. The Valdez Narrows security zone encompasses the waters 200 yards either side of the Tanker Optimum Trackline through Valdez Narrows between Entrance Island and Tongue Point. This zone is enforced only when a TAPS tanker is in the zone. The TAPS safety zone encompasses all waters within 200 yards of on shore and off shore facilities of the TAPS Terminal and is a safety buffer between potentially hazardous terminal operating areas and areas to which vessels may be permitted entry by the Captain of the Port, Prince William Sound, during State of Alaska managed fisheries openings and/or closings.

The Coast Guard has worked closely with local and regional users of Port Valdez and Valdez Narrows waterways to develop these security zones and the NPRM in order to mitigate the impact on commercial and recreational users. The limited size of the terminal security zone is designed to minimize impact on mariners while ensuring public safety by preventing interference with terminal operations. The Tank Vessel moving security zone and the Valdez Narrows security zone will be enforced only while vessels are transiting the area and are designed to provide a safe operating distance while minimizing threats to tanker operations.

This proposed 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, l979). We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary. This finding is based on the limited size of the zones and the limited duration of the Tank Vessel moving security zone and the Valdez Narrows security zone. Additionally, vessels will not be precluded from transiting and operating in these areas as The Captain of The Port will consider requests for entry on a case-by-case basis and requests for entry will be approved as appropriate. Those desiring to transit the area of the security or safety zones must contact the Captain of the Port under the provisions of proposed 33 CFR 165.1701(d).

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. The proposed rule would affect the following entities, some of which might be small entities: The owners and operators of commercial fishing vessels and native subsistence fishermen. Some of the areas that these entities might desire to use for fishing may fall within the security or safety zones. However, The Captain of The Port will consider requests for entry into the security or safety zones on a case-by-case basis and requests for entry will be approved as appropriate; therefore, it is likely that very few, if any, small entities will be impacted by this rule.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Lt. Chris Beadle, U.S. Coast Guard Marine Safety Office Valdez, Alaska, (907) 835-7222.

This proposed rule contains information collection requirements that have not been approved by OMB. This proposed rule would modify an existing collection of information requirement under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As defined in 5 CFR 1320.3(c), “collection of information” comprises reporting, recordkeeping, monitoring, posting, labeling, and other similar actions. The Captain of the Port, Prince William Sound, Alaska requires information on vessel owners and operators, and their vessels, crews and passengers desiring entry into the proposed security and safety zones in Port Valdez and Valdez Narrows, Alaska. This information is required to ensure port and vessel safety and security, uninterrupted fishing industry openings, control vessel traffic, develop contingency plans and enforce applicable laws and regulations.

You are not required to respond to a collection of information unless it displays a currently valid control number from OMB.

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

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

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

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

This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. We invite your comments on how this proposed rule might impact tribal governments, even if that impact may not constitute a “tribal implication” under the Order.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have 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.

We have considered the environmental impact of this proposed rule and concluded that, under figure 2-1, paragraph (34)(g), of Commandant Instruction M16475.lD, this rule is categorically excluded from further environmental documentation since implementation of this action will not result in any inconsistencies with any Federal, State, or Local laws or administrative determinations relating to the environment. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

For the reasons set forth in the preamble, the Coast Guard proposes to amend 33 CFR part 165 as follows:

The supplementary information is organized in the following order:

Section 169A of the federal Clean Air Act (CAA or Act) requires states to protect visibility in mandatory Class I federal areas. Mandatory Class I federal areas are specified large National Parks or Wilderness Areas. In Washington, there are 8 mandatory Class I federal areas; the Mount Rainier National Park, North Cascades National Park, Olympic National Park, Alpine Lake Wilderness Area, Glacier Peak Wilderness Area, Goat Rocks Wilderness Area, Mount Adams Wilderness Area, and Pasayten Wilderness Area. 40 CFR 81.434 The federal rules regulating visibility protection are set out in 40 CFR part 51, subpart P.

The Clean Air Act sets out a goal of preventing any future and remedying any existing impairment of visibility in mandatory Class I federal areas. 42 U.S.C. 7491. Employing a close coordination process among the state and the federal land managers (FLM), the federal rules require monitoring of visibility in mandatory Class I federal areas, as well as the development of a long-term strategy for making reasonable progress towards the national visibility goal. The visibility protection rules also provide for an assessment of visibility impacts from any new or major modification to a major stationary source that may affect mandatory Class I federal areas. Additionally, in the event that a federal land manager certifies impairment of visibility in a mandatory Class I federal area that could be caused, or contributed to, by an existing stationary facility, emission limitations representing Best Available Retrofit Technology (BART) may be imposed on the facility.

The federal visibility rules were modified in 1999 to include provisions for addressing regional haze. See 64 FR 35714, July 1, 1999. Regional haze is visibility impairment which results from the cumulative impact of emissions from many point and non-point sources. All states are currently in the process of developing revisions to their SIPs to address the regional haze provisions. Therefore, the SIP submission under discussion in this action is not required to comply with the regional haze provisions of 40 CFR part 51, subpart P.

The initial proposed Visibility SIP for Washington was submitted by the State and approved in part by EPA on May 4, 1987, (52 FR 16243). EPA approved the Washington State Visibility Protection Program (with exceptions described below), certain provisions of 173-403 Washington Administrative Code (WAC) Implementation of Regulations for Air Contaminant Sources, and the 1983 Smoke Management Program. EPA disapproved Section V.B., the new source review program, Appendix A, the Proposed Best Available Retrofit Technology (BART) rule, and the Proposed New Source Review Regulations.

40 CFR 51.302 provides the requirements for Visibility SIPs. These requirements and how the Washington Visibility SIP meets these requirements are summarized below.

The SIP needs to include a long-term (10-15 year) strategy that includes emission limitations, schedules of compliance, and other measures as deemed necessary to make reasonable progress toward the national goal. See 40 CFR 51.302(c)(2)(i). In general, Section VI of the proposed 1999 SIP revision provides a discussion of the long-term strategy, including measures for stationary sources, mobile sources, area sources, and interstate coordination. The long-term strategy must include:

• A strategy for evaluating visibility in mandatory Class I federal areas by visual observation or other appropriate monitoring techniques. See 40 CFR 51.305(a). Section V of the proposed 1999 SIP revision provides for monitoring through the IMPROVE monitoring network and an assessment strategy.

• A provision for the available visibility data and provide a mechanism for its use in decisions required by the regulations. See 40 CFR 51.305(b). Section IX of the proposed 1999 SIP revision provides for the development and use of available data for SIP review and development.

• A strategy covering any existing impairment the Federal Land Manager certifies to the State and integral vista of which the Federal Land Manager notifies the State at least 6 months prior to plan submission. See 40 CFR 51.306(a)(1). Section I of the proposed 1999 SIP revision discusses certification of impairment in federal mandatory Class I areas. Section III of the proposed 1999 SIP revision discusses integral vistas.

• A discussion, with reasonable specificity, why the long-term strategy is adequate for making reasonable progress. See 40 CFR 51.306(a)(3). Section VI of the proposed 1999 SIP revision discusses all source categories, the control measures that apply to them, and a qualitative assessment of how these are adequate for making reasonable progress. Section IX of the proposed 1999 SIP revision discusses the evaluation of progress toward achieving the national visibility goal.

• Coordination of the long-term strategy with other existing plans and goals, including those provided by affected Federal Land Managers. See 40 CFR 51.306(a)(3). Section IV of the proposed 1999 SIP revision provides for the consultation with Federal Land Managers for the review and revision of the visibility SIP and New Source Review rules.

• Provisions for periodic review and revision as appropriate of not less than every three years. See 40 CFR 51.306(c). This review must include:

(1) Progress achieved in remedying existing impairment;

(2) The ability of the long-term strategy to prevent future impairment;

(3) Any change in visibility since the last report;

(4) Additional measures, including the need for SIP revisions that may be needed to assure reasonable progress;

(5) The progress achieved in implementing BART and meeting other schedules set forth in the long-term strategy; and

(6) The impact of any exemption granted under 40 CFR 51.303.

(7) The need for BART to remedy existing visibility impairment of any integral vista.

Section IV of the proposed 1997 SIP revision provides for the review of the visibility SIP.

• Provisions for review of the impacts of any new or modified major stationary source. See 40 CFR 51.306(d). The Washington Department of Ecology has a fully delegated Prevention of Significant Deterioration (PSD) program. The Department of Ecology was notified of this delegation by letter dated February 7, 2002.

The plan must contain an assessment of visibility impairment and a discussion of how each element of the plan relates to preventing future or remedying existing impairment. See 40 CFR 51.302(c)(2)(ii). Section V of the proposed 1999 SIP revision provides for visibility monitoring of the mandatory Class I federal areas. Section IV of the proposed 1999 SIP revision provides a general discussion of the effect of measures on preventing future and remedying existing impairment.

The plan must contain emission limitations representing BART for any existing facility that meets the requirements of 40 CFR 51.301(e), and for which impairment has been certified by the Federal Land managers and for which the State has determined such impairment is reasonably attributed to that source. (40 CFR 51.302(c)(2)(iii).

The State has not determined that existing impairment in any mandatory Class I federal area for which impairment has been certified can be reasonably attributed to a specific major stationary source.

The 1987 SIP included a list of “Preliminary Integral Vistas” that were proposed by the National Park Service (NPS). The 1987 SIP provides that until the NPS finalizes the list of vistas, the panoramas listed in the January 15, 1981 Federal Register (Table III-2) will be protected under the visibility SIP. These integral vistas were never finalized by the NPS in accord with 40 CFR 51.304. Thus, there are no federally recognized Integral Vistas to be protected. In the interim, no emission limitation was established for a source that specifically protected an integral vista, nor is the State proposing to revise and relax an emission limitation established for integral vista protection. The 1999 proposed SIP revision removes the provisions that would have continued these protections. The federal visibility regulations (40 CFR 51.304(d)) indicate that a state need not in its implementation plan list any integral vista the identification of which was not made in accordance with the criteria in 40 CFR 51.304(a). Since no integral vistas have been identified by the FLM, there is no relaxation of SIP emission requirements and since the 1999 proposed SIP revision meets the applicable requirements for visibility protection in mandatory Class I federal areas, EPA proposes approval of this revision.

Washington's Smoke Management Plan (SMP) is a program designed to manage smoke impacts from the burning of silviculture and agriculture wastes. The SMP balances forest and agricultural land burning with preventing smoke from being carried to, or accumulating in, designated areas and other areas sensitive to smoke.

The Smoke Management Plan (SMP) of 1998 submitted in the proposed 1999 Visibility SIP revision is a significant improvement over the 1983 SMP included in the 1987 SIP. The 1983 SMP provides for reduced emissions through optimization of fuel conditions ( i.e. dry fuel), improves ventilation and dispersion through meteorology, and minimizes impact by controlling smoke drift into populated areas. There is no consideration for protection of visibility in mandatory Class I federal areas.

The 1998 SMP requires approval from the Resource Protection Division Manager, Department of Natural Resources for all burns. Approval requirements differ depending whether the fire is a “large fire” involving over 100 tons of fuel or small fire. Large fire burn approval considers a number of factors including likelihood of intrusion into populated areas and Class I areas, air quality regulations, violation of emission reductions targets, violations of another state's air quality standards, and whether smoke will disperse within given timeframes. Operators of small fires (less than 100 ton of fuel) must call a toll free phone number and follow the instructions that apply for that day and location of the proposed burn.

The SMP further requires emissions from burning be reduced by 20% from baseline levels (defined in the SMP) by December 1994 and until December 2000. Emissions from burning must be permanently reduced by 50% from baseline levels by December 2000.

The visibility protection provisions at 40 CFR part 51, subpart P suggest that states consider Smoke Management Plans in developing long-term strategies for visibility protection. However, there are no specific federal requirements for states to develop and adopt Smoke Management Plans. In September 1992, the Environmental Protection Agency published The Prescribed Burning Background Document and Technical Information Document for Best Available Control Measures to assist states in the development of Smoke Management Plans (EPA-450/2-92-003). These are a few examples of how the federal government acknowledges the benefits of smoke management plans.

Centralia Power Plant (CPP) is a coal fired electrical generating station that has a potential to emit (PTE) 90,000 t/yr SO2. It is a BART eligible source as defined by 40 CFR 51.301. It is located near the mandatory Class I federal area, Mt. Rainier National Park in Washington state. The National Park Service has certified visibility impairment at Mt. Rainier National Park. The State of Washington has NOT determined that this visibility impairment is reasonably attributable to the CPP.

The SIP must contain emission limitations representing BART and schedules for compliance with BART for each existing stationary facility identified according to 40 CFR 51.302 (c)(4). The state needs to identify each existing facility which may reasonably be anticipated to cause or contribute to impairment of visibility in any Class I federal areas where the impairment in the mandatory Class I area is reasonably attributable to that existing stationary facility. The State has not identified any source or group of small sources, including the Centralia Power Plant (CPP), as existing facilities that may reasonably be expected to contribute to visibility impairment to Class I areas. Therefore, under 40 CFR 51.302(c)(4), a BART analysis is not required for CPP. In the future regional haze SIP, a BART analysis may be required for the CPP under 40 CFR 51.308(e).

In a separate activity the State, Southwest Air Pollution Control Authority (SWAPCA), the National Park Service and Forest Service, owners of the CPP, and EPA entered into a negotiated agreement to establish emission limits for SO2, NO X , and PM-10 for the CPP. The SWAPCA, who has regulatory authority over the CPP, issued the CPP a Reasonably Available Control Technology (RACT) order under state law that contain emission limitations. This RACT Order is included in the proposed 1999 Visibility SIP revision.

Both SWAPCA in their Technical Support Document for the RACT Order and EPA Region 10 have independently conducted an analysis of the emission limits in the RACT Order comparing them against what would have been required using the Clean Air Act definition of BART and EPA BART guidelines. Additional details on this analyses can be found in the Technical Support Document accompanying this proposed action and docket of this proposed action. The conclusion of both analysis is that the RACT Order emission limits for SO2 and PM-10 represent BART. EPA proposes to approve these emissions limitations as meeting the BART requirements of 40 CFR 51.308(c)(4). Additionally, while the NO X emission limitation may have represented BART when the emission limits in the RACT Order were negotiated, recent technology advancements have been made. EPA cannot say that the emission limitations in the SWAPCA RACT Order for NO X represent BART. However EPA proposes to approve the emission limits for NO X as a strengthening of the SIP for visibility purposes.

The proposed 1999 SIP revision also included revised rules for Best Available Retrofit Technology (BART) (WAC 173-400-151 and New Source Review (NSR) (WAC 173-400-110, 112, 113, & 141). Subsequent to the submittal in 1999, the State has verbally indicated that new rules are being developed and the rules in this submittal will soon be obsolete. EPA proposes to take no action on these rules.

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

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

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note ) do not apply. This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Throughout this document wherever “we” or “our” is used means EPA.

The CAA requires States to observe certain procedural requirements in developing implementation plans and plan revisions for submission to EPA. Section 110(a)(2) of the Act provides that each implementation plan admitted by a State must be adopted after reasonable notice and public hearing. Section 110(1) of the Act similarly provides that each revision to an implementation plan submitted by a State under the Act must be adopted by such State after reasonable notice and public hearing.

EPA must also determine whether a submittal is complete and therefore warrants further EPA review and action (see section 110(k)(1) and 57 FR 13565). EPA's completeness criteria are set out at 40 CFR part 51, appendix V. EPA attempts to make completeness determinations within 60 days of receiving a submission. However, a submittal is deemed complete by operation of law if a completeness determination is not made by EPA six months after receipt of submission. This submittal became complete by operation of law on May 5, 2000, in accordance with section 110(k)(1)(B) of the Act.

To entertain public comment, the State of Colorado, after providing adequate public notice, held a public hearing on July 17, 1998, to address the revision to the SIP. Following the public hearing and public comment period, the Colorado Air Quality Control Commission adopted the revision. The revision to Regulation No. 1 was adopted on July 17, 1998, and the Governor of Colorado submitted the revisions to the SIP with a letter dated November 5, 1999.

Colorado has added a new subsection D to Regulation No. 1, section II, which provides an exemption for U.S. military training exercises at the United States Army Installation Fort Carson and the United States Army Pinon Canon Maneuver Site (PCMS) from opacity limits. The emissions of fog oil and other short duration military smokes, of twelve minutes or less, will be exempted from the opacity limits specified in Regulation No. 1, section II. Regulation No. 1, section II.A currently mandates “. . . no owner or operator of a source shall allow or cause the emission into the atmosphere of any air pollutant which is in excess of 20% opacity.” The military engages in training which creates emissions in excess of the 20% opacity standard, thus this exemption is necessary for the military to carry out realistic obscurant training.

The exemption is only granted if other restrictions are met, including the following: A three kilometer buffer zone for the entire perimeter of Fort Carson and PCMS is required, and no smoke generation will occur within this buffer zone; smoke generation will cease if smoke crosses or is in danger of crossing the boundary of Fort Carson or PCMS; and an observer will be posted to determine if training should be halted if there is potential for the smoke to drift across the boundary of Fort Carson and PCMS.

A modeling analysis of the smoke training exercises was conducted in an effort to determine the ambient air impacts at locations outside the Ft. Carson boundary. However, the modeling study did not address a potential maximum emissions scenario where a larger quantity of emissions could be emitted at locations closer to the property boundary. The report also did not address the possibility that certain smoke generation activities may release smaller particles which would stay airborne longer and be more likely to impact off-site receptors. In addition, the period of meteorological data that was used in the modeling study was insufficient to characterize the most adverse meteorological conditions that can occur in the Ft. Carson area. Therefore, EPA believes the modeling results are inconclusive, and our proposed approval of the opacity exemption is not based on these results. Several monitoring studies were also conducted over a period of years and the results of these studies were included with this SIP revision. However, it is not clear whether the monitoring data was collected during the Army's smoke training exercises, thus these data were also not used as a basis for the proposed approval of Colorado's SIP revision.

As stated above, the military engages by design in training that creates emissions in excess of the 20% opacity standard. Based on this fact and the restrictions that are imposed on the military's use of smokes by the proposed rule, the EPA is proposing to approve this SIP revision.

EPA is proposing to approve revisions Colorado's Regulation No. 1, submitted on November 5, 1999. EPA is soliciting public comments on the issues discussed in this document or on other relevant matters. These comments will be considered before taking final action. Interested parties may participate in the Federal rulemaking procedure by submitting written comments to the EPA Regional office listed in the Addresses section of this document.

Section 110(l) of the Clean Air Act states that a SIP revision cannot be approved if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress towards attainment of the NAAQS or any other applicable requirements of the Act. The Colorado SIP revisions that are the subject of this document do not interfere with the maintenance of the NAAQS or any other applicable requirement of the Act because the State of Colorado is requiring that an observer be placed to visibly determine whether the smoke is in danger of crossing the perimeter and will cease smoke generation if this occurs. This is protective of the NAAQS because PM10 concentrations are clearly visible to the human eye at levels much lower than the 24 hour PM10 NAAQS. Therefore, section 110(l) requirements are satisfied.

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

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

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. In this context, in the absence of a prior existing requirement for the State to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the Clean Air Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This proposed rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The Environmental Protection Agency (EPA) Region 8 announces a thirty (30) day extension of the public comment period for the intent to delete the western tier parcel of the Rocky Mountain Arsenal National Priorities List (RMA/NPL) Site, Commerce City, Colorado, from the National Priorities List (NPL) and requests comment on this proposed action. The NPL constitutes Appendix B of the National Oil and Hazardous Substances Pollution Contingency Plan (NCP), 40 CFR part 300, which EPA promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. 9605. EPA identifies sites that appear to present a significant risk to public health or the environment and maintains the NPL as the list of those sites. Sites on the NPL may be the subject of remedial actions financed by the Hazardous Substance Superfund (Fund). This partial deletion of the Site is proposed in accordance with 40 CFR 300.425(e) and Notice of Policy Change: Partial Deletion of Sites Listed on the National Priorities List (60 FR 55466 (Nov. 1, 1995)). As described in 40 CFR 300.425(e)(3), portions of a site deleted from the NPL remain eligible for further remedial actions if warranted by future conditions.

EPA will accept comments concerning its intent for partial deletion of the RMA/NPL Site until November 22, 2002.

Section II of this notice explains the criteria for deleting sites from the NPL. Section III discusses the procedures that EPA is using for this proposed partial deletion. Section IV discusses the western tier of the RMA/NPL Site and explains how it meets the deletion criteria.

The NCP establishes the criteria that EPA uses to delete sites from the NPL. In accordance with 40 CFR 300.425(e), sites may be deleted from the NPL where no further response is appropriate to protect public health or the environment. In making such a determination pursuant to section 300.425(e), EPA will consider, in consultation with the State, whether any of the following criteria have been met:

Section 300.425(e)(1)(i). Responsible parties or other persons have implemented all appropriate response actions required; or

Section 300.425(e)(1)(ii). All appropriate Fund-financed response under CERCLA has been implemented, and no further response action by responsible parties is appropriate; or

Section 300.425(e)(1)(iii). The remedial investigation has shown that the release poses no significant threat to public health or the environment and, therefore, taking remedial measures is not appropriate.

A partial deletion of a site from the NPL does not affect or impede EPA's ability to conduct CERCLA response activities for portions not deleted from the NPL. In addition, deletion of a portion of a site from the NPL does not affect the liability of responsible parties or impede agency efforts to recover costs associated with response efforts. The U.S. Army and Shell Oil Company will be responsible for all future remedial actions required at the area deleted if future site conditions warrant such actions.

Upon determination that at least one of the criteria described in Section 300.425(e) of the NCP has been met, EPA may formally begin deletion procedures. The following procedures were used for this proposed deletion of the western tier of the RMA/NPL Site:

(1) EPA has recommended the partial deletion and has prepared the relevant documents.

(2) The State of Colorado, through the CDPHE, concurred with publication of the notice of intent for partial deletion.

(3) Concurrent with the national Notice of Intent for Partial Deletion, a local notice was published in a newspaper of record and distributed to appropriate federal, State, and local officials, and other interested parties. These notices announced a thirty (30) day public comment period on the deletion package, ending October 23, 2002, based upon publication of the notice in the Federal Register and a local newspaper of record.

(4) Concurrent with this national Notice of the Public Comment Extension, a local notice has been published in a newspaper of record and has been distributed to appropriate federal, State, and local officials, and other interested parties. These notices announce a thirty (30) day extension of the public comment period, which ends on November 22, 2002.

(5) EPA has made all relevant documents available at the information repositories listed previously for public inspection and copying.

Upon completion of the thirty (30) calendar day extension of the public comment period, EPA Region 8 will evaluate each significant comment and any significant new data received before issuing a final decision concerning the proposed partial deletion. EPA will prepare a responsiveness summary for each significant comment and any significant new data received during the public comment period and will address concerns presented in such comments and data. The responsiveness summary will be made available to the public at the EPA Region 8 office and the information repository listed above and will be included in the final deletion package. Members of the public are encouraged to contact EPA Region 8 to obtain a copy of the responsiveness summary. If, after review of all such comments and data, EPA determines that the partial deletion from the NPL is appropriate, EPA will publish a final notice of partial deletion in the Federal Register . Deletion of the western tier of the RMA/NPL Site does not actually occur until a final notice of partial deletion is published in the Federal Register . A copy of the final partial deletion package will be placed at the EPA Region 8 office and the information repository listed above after a final document has been published in the Federal Register .

This notice announces a thirty (30) day extension of the public comment period for the proposed partial deletion of the RMA/NPL Site. EPA Region 8 announced its intent to delete the western tier parcel of the RMA/NPL Site from the NPL on September 23, 2002. The original basis for deleting the western tier parcel from the RMA/NPL Site has not changed. The Federal Register notice (67 FR 59487) provides a thorough discussion of the basis for the intended western tier parcel deletion.

Section 4(b)(3)(A) of the Endangered Species Act (Act) of 1973, as amended (16 U.S.C. 1531 et seq. ), requires that the U.S. Fish and Wildlife Service (Service) make a finding on whether a petition to list, delist, or reclassify a species presents substantial scientific or commercial information to demonstrate that the petitioned action may be warranted. This finding is based on information contained in the petition, supporting information submitted with the petition, and information otherwise available to us at the time we make the finding. To the maximum extent practicable, we make this finding within 90 days of the receipt of the petition, and the finding is to be published promptly in the Federal Register . If we find that substantial information was presented, we commence a review of the status of the species. After considering the comments and information submitted to us during the status review comment period following this 90-day finding, we will issue an additional finding ( i.e. , the 12-month finding) determining whether listing is in fact warranted.

On October 31, 2000, we received a petition to list the cerulean warbler as a threatened species and to designate critical habitat for the species pursuant to the Act. The petition was submitted by the Southern Environmental Law Center, which acted on its own behalf, and for 27 other organizations, and 7 scientists.

The letter clearly identified itself as a petition, and included the name, signature, and address of the representative of the parties submitting the petition. The petition referenced supporting information on the species' description, natural history, habitat, and population status. It also presented information on threats to the cerulean warbler including present or threatened destruction, modification, or curtailment of the species' habitat or range; predation; the inadequacy of existing regulatory mechanisms to protect the species; and other natural or manmade factors affecting the species' continued existence. This notice announces and summarizes our 90-day finding for the October 30, 2000, petition.

The cerulean warbler is a neotropical migratory bird that winters in montane forests of northern South America and breeds in deciduous forests of the eastern United States and southern Canada. The breeding range of cerulean warbler generally extends from the eastern Great Plains in eastern North and South Dakota, Nebraska, Kansas, and Oklahoma; south to Arkansas, Mississippi, Tennessee, northern Alabama and Georgia, and South Carolina; and north to Massachusetts, southern Quebec, southeastern Ontario, Michigan, Wisconsin, and central Minnesota (Hamel 2000a, Rosenberg et al. 2000). Breeding cerulean warblers are found in the Mississippi and Ohio River valleys, but appear to be concentrated in the upper Ohio valley in West Virginia and western Pennsylvania (Hamel 2000a, 2000b, Rosenberg et al. 2000). During migration, the birds pass through the southern United States, across the Gulf of Mexico to the highlands of Central America, and on to South America. Cerulean warblers winter in the middle and lower elevations of the subtropical zone of the eastern slope of the Andes and other mountains in northern South America (Hamel 2000a). Their winter range generally extends from Colombia and Venezuela south, mostly along the eastern slope of the Andes, to southern Peru and perhaps northern Bolivia (AOU 1998).

The petitioners assert that the cerulean warbler is threatened by destruction, modification, or curtailment of habitat or range by logging on public and private lands, construction of water projects e.g. , reservoirs, sewer lines and stream channelization), agricultural practices and urbanization through: (1) Loss and fragmentation of breeding habitat in the United States e.g. , loss of tall, mature deciduous forest, especially extensive bottomland hardwood forest throughout the floodplain of the Lower Mississippi River Alluvial Valley), (2) loss of winter habitat (within a relatively narrow elevation zone of the Andes in South America), and (3) loss of migratory habitat e.g. , development of property along the beaches of Texas, Louisiana, and the Florida panhandle). According to the petitioners, logging creates smaller and more fragmented forest tracts, resulting in higher rates of cerulean warbler nest predation by jays, crows, raccoons, opossums, and snakes. They also cite existing regulations and guidelines as inadequate mechanisms for protecting cerulean warbler breeding and wintering habitats on public and private lands. Finally, the petitioners assert that other natural or human-caused factors affecting the cerulean warbler's continued existence are the likely increase in nest parasitism by cowbirds resulting from the destruction and fragmentation of forests as well as direct mortality resulting from collisions with communication towers.

Historical data on the distribution and abundance of cerulean warblers are scant. However, it is clear from the nineteenth century accounts of several prominent naturalists that the cerulean warbler was a conspicuous and abundant species throughout the Ohio and Mississippi River valleys (Hamel 2000a). Presently, cerulean warblers are much less numerous, and they are absent from some areas where they were abundant (Hamel 2000a, Smith et al. 1996). However, the species has increased in numbers or expanded its range in the northeastern United States (Hamel 1992; R. Mulvihill, in litt. 3 April 2001), Quebec (Ouellet 1967), and Ontario (Eagles 1987, Oliarnyk and Robertson 1996), perhaps in response to the maturation of previously harvested forests. McCracken (1993) reports that cerulean warbler populations remain fairly stable overall in Canada. Current population trends and estimates are derived from several sources, such as the Breeding Bird Survey, Breeding Bird Census, Breeding Bird Atlas projects, research and monitoring.

Much of the support provided by the petitioners for the listing of cerulean warbler under the Endangered Species Act is based on Breeding Bird Survey (BBS) data they cite as an indication of a declining trend for this species. While it is clear that the cerulean warbler's range has contracted and the overall population has declined, the species exists at high densities at various locations in the core of its range, populations are increasing in several areas, and new populations have been identified. Using a standardized method for extrapolating bird populations from BBS data, the total population of cerulean warblers is estimated at 214,000 pairs (K. Rosenberg, in litt. 13 June 2002). Roughly 70% of this population is concentrated in the North Cumberland Plateau and Ohio Hills physiographic areas.

The adequacy of the BBS as a method to monitor forest birds, such as cerulean warblers, has been questioned (Peterjohn et al. 1995, James et al. 1996). These concerns focus on changes in habitat along roadside routes, which would reduce the detectability of the birds potentially more than their numbers. This is because habitat loss due to development tends to be focused along roadsides, thus areas with habitat lost to development likely will be over-sampled by BBS surveys, with the resulting data possibly overstating the actual decline of the cerulean warbler throughout its range. Furthermore, because BBS routes are always located along roadsides, BBS coverage may not adequately sample those forested habitats that frequently are more distant from roads, such as the bottomlands and ridgetops that are preferred by cerulean warblers (Hamel 2000a, 2000b). This criticism of BBS suggests that other census techniques might be developed that could be more effective for detecting cerulean warblers. For example, recent surveys conducted by canoe on rivers in Missouri have revealed several previously unknown cerulean warbler populations (Robbins 2001); however this method would be difficult to implement on a larger scale. In addition, there are several logistical concerns about the BBS, which arise from the nature of BBS as a volunteer program. Some biologists believe that another problem with BBS data for cerulean warblers is the potential for unfamiliarity with the song of this species among BBS observers (Hamel 2000a).

We and our colleagues who oversee and analyze BBS data believe that BBS data are of questionable value for reliably determining trends for making listing determinations even for declining mature forest associated species, like the cerulean warbler. For example, BBS routes in eastern Kentucky and West Virginia, particularly in the more remote parts of those States where cerulean warblers are numerous e.g. , in West Virginia, cerulean warblers were reported from 74 percent of the sites surveyed during the Cerulean Warbler Atlas Project, Rosenberg et al. 2000), were not uniformly covered throughout the period of the BBS; therefore, trend calculations cannot effectively utilize the data from some of these routes (Hamel 2000a). The net effect of these differences in coverage is to introduce an unknown amount of uncertainty into the BBS trend estimates, particularly in some of the areas central to the cerulean warbler's breeding range (Hamel 2000a). Moreover, Sauer (1993) indicated that, while sufficient sampling intensity in the BBS existed to detect a 50 percent decline in population of the species over a 25-year period with a probability of 0.9, low relative abundance of this species mandated caution when interpreting trend results.

The BBS estimate of the cerulean warbler's average annual population trend (for the period 1966 to 1996) of −3.7 percent per year (95 percent confidence interval −2.5 to −5.0) is based on 236 survey routes. The average annual trend for the survey period 1966 to 1979 (−5.5 percent per year, n = 113) indicates a significant decline in the cerulean warbler population over the first half of the survey period. However, the trend estimate for the remainder of the survey period, 1980 to 1996 (−0.4 percent per year, n = 183), is not significantly different from a stable population. These trend estimates suggest that the population declined most dramatically prior to 1980, and may not have declined since then. Whether this represents the primary or sole period of decline or perhaps indicates that, by 1980, populations were reduced to the point that the BBS became a less useful monitoring tool rangewide, is not clear (Hamel 2000b).

Hamel (2000a) stated that land use changes brought about by increasing human populations in the breeding, migratory, and winter range of cerulean warbler are the underlying causes of the population decline of the bird in this century. According to Hamel (2000a), Robbins et al. (1992a) compiled the most extensive listing of potential threats facing cerulean warblers. This list included six items which they categorized as constraints on the breeding grounds as well as non-breeding season constraints: (1) Loss of mature deciduous forest, especially along stream valleys; (2) fragmentation and increasing isolation of remaining mature deciduous forest; (3) change to shorter (timber harvest) rotation periods and even-aged management, so that less deciduous forest habitat reaches maturity; (4) loss of key tree species, especially oaks from oak wilt and gypsy moths, sycamores from a fungus, elms from Dutch elm disease, and American chestnuts from chestnut blight; (5) nest parasitism by the brown-headed cowbird; and (6) environmental degradation from acid rain and stream pollution. However, research is needed to determine whether these potential threats affect cerulean warbler populations, and if so, whether the effects of these potential threats vary across the species' breeding and winter range.

We agree with the petitioner's contention that there appear to be several potential threats to cerulean warbler migratory, breeding, and wintering habitats. Demographic data, and especially recruitment data, are currently lacking across the cerulean warbler's range, making it impossible to determine the important features of habitat that provide for successful reproduction, thus complicating the evaluation of potential threats to that habitat. We believe there are significant gaps in the threats data currently available to us, including: the degree to which timber management and harvest on privately owned forest habitat constitute a benefit or threat to the species; loss of habitat due to development has not been quantified or analyzed across the species' range; mountaintop mining impacts assessments and modeling effects on individual species, including the cerulean warbler, are currently unavailable; the magnitude of wintering habitat loss and its role in the species' decline; and mortality factors during migration.

We have reviewed the petition, supporting documentation, and other information available in our files. On the basis of the best scientific and commercial information, we find that substantial information exists indicating that listing the cerulean warbler as threatened may be warranted. When we make a 90-day finding that listing may be warranted, we are required to initiate a review of the status of the species. Following the status review we will issue a 12-month petition finding as required by section 4(b)(3)(B) of the Act. The 12-month finding considers all additional data received during the status review and determines whether listing is warranted. If the 12-month finding is “warranted,” we elevate the species to candidate status and assign it a listing priority number. We will then commence work on a proposal to list the species in the order dictated by its listing priority number and the listing priority numbers of other candidate species.

The petitioners also requested that critical habitat be designated for the cerulean warbler. We always consider the need for critical habitat designation when listing species. If the 12-month finding determines that listing the cerulean warbler is warranted, then the designation of critical habitat will be addressed in the subsequent proposed rule.

When we make a finding that substantial information exists to indicate that listing a species may be warranted, we are required to promptly commence a review of the status of the species involved, including providing an opportunity for data and other information to be provided by the public for our consideration. A rangewide status assessment of cerulean warbler was completed in April 2000, and this status assessment is available on the Service's Web site at http://midwest.fws.gov/endangered/lists/concern.html#Birds. This status assessment reviewed most of the information available at that time, so we are primarily interested in receiving data on the species that have become available since April 2000. We request any additional information, comments, and suggestions from the public, other concerned governmental agencies, the scientific community, industry, or any other interested parties concerning the status of the cerulean warbler. Of particular interest is information pertaining to the factors the Service uses to determine if a species is threatened or endangered: (1) The present or threatened destruction, modification, or curtailment of its habitat or range; (2) overutilization for commercial, recreational, scientific, or educational purposes; (3) disease or predation; (4) the inadequacy of existing regulatory mechanisms; and (5) other natural or manmade factors affecting its continued existence.

If you wish to comment or provide data for our consideration, you may submit your comments and materials to the Field Supervisor, Ecological Services Field Office, U.S. Fish and Wildlife Service, 608 East Cherry Street, Room 200, Columbia, Missouri 65201. Our practice is to make comments, including names and home addresses of respondents, available for public review. Respondents may request that we withhold their home address, which we will honor to the extent allowable by law. If you wish us to withhold your name or address, you must state this request prominently at the beginning of your comment and explain the reason for your request. However, we will not consider anonymous comments. To the extent consistent with applicable law, we will make all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, available for public inspection in their entirety. Comments and materials received will be available for public inspection, by appointment, during normal business hours at the above address.

You may request a list of all references cited in this document, as well as others, from the Columbia, Missouri Field Office (see ADDRESSES ).

The primary author of this document is Amy Salveter, Columbia, Missouri Field Office (see ADDRESSES ).

The authority for this action is the Endangered Species Act (16 U.S.C. 1531 et seq. ).