A. Background

NCUA identified part 703 as in need of revision. To that end, NCUA issued an advanced notice of proposed rulemaking (ANPR) on October 18, 2001. 66 FR 54168 (October 26, 2001). In the ANPR, NCUA solicited comments as to how it could revise part 703 to make it easier to understand. The ANPR also solicited comments as to how NCUA could provide FCUs with greater flexibility and enhanced investment authorities without sacrificing safety and soundness. NCUA received thirty-eight comment letters: fifteen from FCUs, two from state credit unions, eleven from financial services entities, nine from credit union trade organizations, and one from a banking trade organization. The comments were generally supportive of the ANPR, except for those offered by the banking trade organization. As discussed more fully below, the commenters offered numerous suggestions of ways part 703 could be improved. NCUA has considered these comments, and other issues that have arisen since the ANPR was issued, and is issuing this proposal to amend part 703.

Section 703.50(a) describes the minimum criteria a broker-dealer must meet for an FCU to conduct business with a broker-dealer. 12 CFR 703.50(a). In general, it requires FCUs to use broker-dealers that are registered with the Securities and Exchange Commission or depository institutions whose broker-dealer activities are regulated by a federal regulatory agency. NCUA believes depository institutions whose broker-dealer activities are regulated by a state regulatory agency are supervised to a similar degree as those regulated by a federal agency. Accordingly, in proposed § 703.8, NCUA proposes to amend this provision to permit FCUs to also use the services of depository institutions whose broker-dealer activities are regulated by a state regulatory agency. This will provide FCUs with greater access to broker-dealers.

NCUA has become increasingly aware of circumstances where broker-dealers have engaged in deceptive practices in the sale of CDs to FCUs, such as misrepresenting yields, providing misleading information about the terms of the CD, and inducing purchases of unsuitable and impermissible CDs. Some FCUs have asked NCUA to intervene and pursue remedies on their behalf in these circumstances.

In recent years, NCUA has issued three Letters to Credit Unions to warn credit unions about the risks associated with certain brokered CDs: 00-CU-05, Investment in Brokered Certificates of Deposit, September 2000; 01-FCU-04, Broker Registration/Short-Term Investments, April 2001; and 01-CU-23, Investments in Brokered Certificates of Deposit sold By Bentley Financial Services, Inc. and Entrust Group, December 2001. NCUA has also issued Interpretive Ruling and Policy Statement 98-2, Supervisory Policy Statement on Investment Securities and End-User Derivatives Activities, which describes best practices when making investment decisions. Despite these efforts, NCUA believes further regulatory action is necessary to address the problems associated with brokered CDs.

The ANPR asked whether setting minimum standards for broker-dealers would help prevent deceptive practices by broker-dealers. The ANPR contemplated requiring broker-dealers to have at least one General Securities Representative registered with the National Association of Securities Dealers (NASD). Alternatively, if a depository institution wishes to transact purchases and sales of investments with an FCU, its broker-dealer activities would have to be regulated by a federal or state regulatory agency. The ANPR further suggested that an individual broker-dealer might also have to be registered with the NASD as a General Securities Representative, whether the individual broker-dealer works with a brokerage firm or a federal or state regulated depository institution. NCUA was not contemplating imposing these standards on a broker-dealer acting only as a CD finder. A CD finder provides information about CD offering rates and terms, but does not take custody of the funds or the investment at any time.

Twenty-eight commenters responded to NCUA's statement that it was considering more clearly defining minimum criteria a broker-dealer must meet for an FCU to buy or sell investments through that broker-dealer. Twenty-one commenters supported NCUA's efforts to clarify and set minimum standards for broker-dealers. In general, the commenters viewed the registration requirements as prudent and did not believe they would significantly impair an FCU's ability to conduct investment activities. Four commenters supported NCUA's intention to provide guidelines to help FCUs make their own evaluation of a broker-dealer's qualifications, but were not in favor of NCUA setting rigid standards. One commenter not only supported NCUA setting the standards, but called for a more restrictive approach than that suggested by the ANPR. One commenter stated the current rule does not need to be changed. The banking trade group commented that it would be unfair for the NCUA to require individual broker-dealers working for a depository institution to be registered with the NASD as a General Securities Representative. It explained that the nature of their employment with the depository institution and NASD rules preclude those individuals from complying with the contemplated registration requirement.

In certain cases, broker-dealer's deceptive practices have caused losses in credit unions, but it is not clear that additional standards on broker-dealers such as those suggested in the ANPR, would have prevented those losses. NCUA has determined that the existing rules represent prudent minimum criteria that a broker-dealer must meet for a credit union to purchase and sell investments through the broker-dealer.

The Board believes that education is the key to mitigating risk by improving credit unions' due diligence regarding the selection and monitoring of brokers-dealers. For this reason, the broker-dealer rules have not been revised to require more stringent broker-dealer requirements. However, NCUA will continue to provide guidance to the industry.

An FCU may only use the services of a safekeeping firm that meets the minimum criteria provided for in § 703.60. 12 CFR 703.60. A safekeeper secures the FCU's ownership interest in investments without an FCU having to register the securities in its name or take physical possession of investment documents. Safekeepers that do not operate scrupulously, independently from broker-dealers, or under sufficient supervisory oversight can pose a risk to FCUs. NCUA's primary concern about safekeeper activities is in the brokered CD context. NCUA is aware of instances where a safekeeper, working with an unscrupulous broker-dealer, aided the broker-dealer in misleading the FCU about the terms and characteristics of brokered CDs or otherwise failed to fulfill its fiduciary responsibilities. NCUA is not aware of any problems with the safekeeping of other securities such as securities issued by the U.S. Department of the Treasury and other authorized credit union investments. The ANPR suggested the possibility of expanding the current safekeeping requirements to address this problem.

Twenty-six commenters responded to NCUA's statement that it was considering limiting permissible safekeepers to clearing broker-dealers regulated by the Securities and Exchange Commission or depository institutions regulated by a state or federal agency. Twenty-one commenters supported this position. Five commenters were in favor of minimizing risk associated with safekeepers, but did not support the approach contemplated by the ANPR. These commenters preferred allowing FCUs to make their own evaluations of the qualifications of their safekeepers, but supported NCUA guidelines to help FCUs make those determinations. Three commenters wanted to replace depository institutions regulated by a state or federal agency with financial institutions regulated by a state or federal agency to increase the universe of eligible safekeepers.

NCUA has concluded that the more stringent safekeeper standards contemplated in the ANPR would not effectively address the problems associated with brokered CDs. NCUA believes federal credit unions are best served by conducting thorough evaluations of safekeeping firms prior to doing business with them. The current rule requires a federal credit union to investigate a safekeeper's background to determine the safekeeper's reputation and compliance with laws and regulations. The NCUA Board is proposing to add a due diligence requirement that a federal credit union review the safekeeper's financial condition as well. Ascertaining the safekeeper's financial capacity to fulfill its custodial responsibilities is a sound business practice. NCUA will also emphasize education and understanding in the industry. In this regard, NCUA will continue to issue guidance to credit unions and promote due diligence reviews of safekeepers.

Several commenters suggested that NCUA expand permissible safekeepers to include state-regulated trust companies, which are entities created for the purpose of meeting the fiduciary needs of their clients and customers and are subject to regular examinations. NCUA agrees with this suggestion and, in proposed § 703.9, NCUA proposes to permit state-regulated trust companies to be safekeepers for FCUs. In addition, in proposed § 703.4, NCUA proposes to require FCUs to retain the documentation their boards of directors used to approve the use of a safekeeper in the same manner and to the same extent this must be done in the broker-dealer context.

The Federal Credit Union Act (Act) enumerates FCU investment powers. 12 U.S.C. 1757. NCUA has adopted regulatory prohibitions against certain investments and investment activities permitted by the Act on the basis of safety and soundness concerns. 12 CFR 703.100 and 703.110. Investments and investment activities prohibited by regulation include financial derivatives, stripped mortgage-backed securities, residual interests in collateralized mortgage obligations/real estate mortgage investment conduits (CMOs/REMICs), commercial mortgage or small business related securities, mortgage servicing rights, short sales, adjusted trading, and variable rate products with indexes tied to foreign interest rates.

The ANPR solicited comments regarding granting FCUs expanded investment authority and possible methods of doing so. Fifteen commenters supported expanded investment authority for FCUs that demonstrate, through an application process, the expertise to manage a particular investment product. Ten commenters supported expanded authority, but objected to an FCU having to apply to NCUA each time it wished to add a new investment product to its portfolio. Five commenters suggested an FCU's CAMEL rating should determine its level of expanded authorities and its application requirements. Many of the commenters noted specific investment products they would like to have available, but there was no discernable consensus in that regard. Two commenters were opposed to granting any expanded investment authority to FCUs.

Section 107(15)(B) of the Act, 12 U.S.C. 1757(15)(B), permits FCUs to purchase mortgage related securities as that term is defined in Section 3(a)(41) of the Securities Exchange Act of 1934. 15 U.S.C. 78c(a)(41). That definition includes mortgage related securities backed solely by residential mortgages, solely by commercial mortgages (Commercial Mortgage Related Securities or CMRS), and mixed residential and commercial mortgages. Generally speaking, section 107(7)(E) of the Act permits FCUs to purchase investments issued, guaranteed, or sold by government agencies, government corporations and other government enterprises. 12 U.S.C. 1757(7)(E). Although section 107(15)(B) and section 107(7)(E) permit different kinds of investments for FCUs, there is some overlap between the two. Specifically, some CMRS described in section 107(15)(B) also fit the description of investments permitted by section 107(7)(E).

Part 703 currently prohibits the purchase of section 107(15)(B) CMRS that are not otherwise permitted by section 107(7)(E). This is because when part 703 was last revised, the CMRS market was not well established, and NCUA had concerns about liquidity and performance of the market. This market has since grown and seasoned to a point where NCUA believes an expansion of FCU authority in this context is justified. Accordingly, NCUA proposes to permit Regulatory Flexibility Program (RegFlex) eligible FCUs to purchase CMRS, that are not otherwise permitted by section 107(7)(E), subject to certain safety and soundness related restrictions. Specifically, a RegFlex eligible FCU may purchase CMRS, that are not otherwise permitted by section 107(7)(E), if the CMRS: (1) Are rated in one of the two highest rating categories by at least one nationally-recognized statistical rating organization; (2) otherwise meet the definitions of mortgage related security as defined in 15 U.S.C. 78c(a)(41) and commercial mortgage related security as defined in proposed section 703.2 and (3) have an underlying pool of loans containing more than 50 loans with no one loan representing more than 10 percent of the pool. A RegFlex eligible FCU is limited to purchasing CMRS that are not otherwise permitted by section 107(7)(E) up to 50 percent of its net worth in the aggregate. As with all investments, FCUs should develop written policies and an understanding of the risks associated with CMRS before purchasing them.

NCUA believes the investment pilot program is the most appropriate system for evaluating and granting expanded investment authority to FCUs. The pilot program's application and approval process gives an FCU the opportunity to demonstrate it has the ability to implement and administer safely an investment activity prohibited by regulation. Not only does the investment pilot program provide flexibility to FCUs, but it is also a useful tool for NCUA to evaluate whether granting additional investment authorities is appropriate. This approach allows NCUA to analyze an FCU's management's abilities and knowledge, and understand how an FCU plans to incorporate an investment activity into its overall investment and risk management strategies. In this regard, NCUA encourages those credit unions that possess the necessary knowledge and expertise to administer investments or investment activities currently prohibited by the regulation, but permitted by the FCU Act (e.g., the purchase of MSRs from other credit unions, stripped mortgage-backed securities) to apply for expanded powers through the pilot program.

Although the purchase of mortgage servicing rights remains an impermissible investment, the proposed rule recognizes that a credit union, as a financial service to a member that is engaged in making mortgage loans, may perform servicing for a member's mortgage loans. For this activity to be permissible as a financial service to a member, the member must continue to own the loan during the time that the credit union provides servicing. In this context, the NCUA Board concludes that providing mortgage servicing is an appropriate exercise of a credit union's incidental powers to provide financial service to a member.

To expedite the investment pilot program application and approval process, NCUA will make available guidelines for participation in approved investment pilot programs. These guidelines will be available on the NCUA website or by contacting the appropriate NCUA regional office. NCUA expects these guidelines will help FCUs better understand NCUA's criteria and will enable FCUs to submit more complete applications. These guidelines may also help FCUs determine where they may need to improve their infrastructure, resources, or knowledge before beginning the application process. Additionally, investment pilot program applicants are encouraged to submit alternative guidelines for NCUA's consideration. NCUA will make minor revisions to the proposed § 703.19 investment pilot program to clarify it and reflect this discussion.

On October 25, 2002, NCUA issued a final rule revising part 704 of its rules regarding corporate credit unions. 67 FR 65640 (October 25, 2002). As part of that final rule, NCUA also revised § 703.100(c). 12 CFR 703.100(c). Specifically, NCUA increased the limit on an FCU's purchase of paid-in capital and membership capital in one corporate to 2 percent of the FCU's assets and 4 percent for purchases in all corporates. The below revisions in proposed § 703.14 conform to the final revisions made in October 2002.

On September 19, 2002, NCUA issued a proposed rule regarding federally-insured credit unions branching outside the United States. 67 FR 60607 (September 26, 2002). In that proposal, NCUA recognized that part 703 may not permit sufficient investment tools for FCUs to manage currency rate risk and other risks associated with conducting business in foreign countries. NCUA has determined that FCUs with foreign branches may apply to NCUA for expanded investment authority to address those risks under the investment pilot program.

Section 703.40(c)(6) authorizes an FCU to delegate to an outside third party discretionary control over the purchase and sale of investments up to 100 percent of an FCU's net capital at the time of delegation. 12 CFR 703.40(c)(6). RegFlex. exempts FCUs meeting specific eligibility requirements from the § 703.40(c)(6) cap. 12 CFR 742.4. The ANPR solicited comments on whether this cap should be raised for all FCUs and under what circumstances. Eleven commenters supported raising the cap and did not object to NCUA requiring FCUs to meet certain minimum standards or seek prior approval to exceed the cap. Six commenters supported raising the cap but did not favor a process requiring prior agency approval. Rather, some of these commenters preferred NCUA setting guidelines that an FCU could follow and requiring only that an FCU notify the NCUA when it exceeds the cap. One of these commenters recommended setting minimum standards for investment managers to whom FCUs entrust discretionary control. Nine commenters opposed raising the cap.

NCUA believes that it would not be prudent to raise the cap on discretionary control of investments for all FCUs. NCUA believes that the exemption from this cap for RegFlex eligible FCUs is sufficient relief at this time. NCUA wishes to clarify that the cap on delegating discretionary control over the purchase and sale of investments is not applicable to the purchase or sale of mutual funds.

The Board also believes it is prudent that the cap be evaluated annually so that the amount of investments under discretionary control does not exceed the credit union's net worth subsequent to the original delegation of investment authority. Therefore, the Board has added the requirement that, should the amount of investments under discretionary control exceed the net worth cap at the time of the annual evaluation, the federal credit union's board of directors must receive notice as soon as possible, but no later than the next regularly scheduled board meeting. The board of directors must notify the appropriate regional director within 5 days after the board meeting. The FCU must also develop a plan to bring the credit union into compliance with the cap. The plan does not need to require divestiture of the investments, but the credit union must be brought back into compliance within a reasonable period of time.

Currently, an FCU must conduct a credit analysis for any investment that is not issued by or fully guaranteed as to principal and interest by the U.S. government or its agencies, enterprises, or corporations, or fully insured by the NCUA or the Federal Deposit Insurance Corporation. 12 CFR 703.40(d). FCUs are not required to express credit exposure in terms of risk to capital and, except for municipal bonds and privately issued mortgage related securities, FCUs are not required to obtain or monitor credit ratings on the issue or issuer. The ANPR solicited comments as to whether standards should be set.

Six commenters supported NCUA setting regulatory standards for evaluating investment credit risk. Fourteen commenters opposed regulatory standards, but supported NCUA guidelines to assist FCUs in assessing credit risk on their own without hampering their ability to manage their investments according to their individual risk management capabilities. Six commenters suggested that, unless an investment is fully insured or guaranteed by the U.S. government or its agencies, it should only be permissible for FCUs if it meets certain minimum credit ratings as established by a national rating organization such as Moody's or Standard and Poor's. NCUA has determined that the current rule sufficiently encourages FCUs to adopt prudent credit review practices and that no revisions are necessary at this time. Further, if NCUA established specific, minimum criteria such as credit ratings and capital-at-risk levels, it might encourage credit unions to forsake other prudent credit evaluation practices, for example, monitoring pertinent current events and news stories or reviewing financial statements.

Borrowing repurchase transactions, presently referred to as reverse repurchase transactions in § 703.100(j), enable an FCU to sell securities under an agreement to repurchase in order to borrow funds. 12 CFR 703.100(j). Section 703.100(j)(2) prohibits an FCU from purchasing an investment with the proceeds from a borrowing repurchase agreement if the purchased investment matures after the maturity of the borrowing repurchase agreement. 12 CFR 703.100(j)(2). Before this restriction, FCUs could incur significant interest rate risk by borrowing funds at short-term interest rates and investing in long-term fixed rate instruments. Problems can result when the spreads between short-term and long-term rates narrow, adversely affecting earnings and capital. NCUA has not imposed similar prohibitions for other borrowing arrangements. For example, if an FCU borrows funds without engaging in a borrowing repurchase agreement, it is not limited by the maturity limit of § 703.100(j)(2) when it invests the proceeds.

The ANPR solicited comments on whether removing this restriction would raise liquidity or safety and soundness concerns and whether an approval process is preferable to removing the restriction. Twenty commenters supported NCUA removing the maturity limit restriction on borrowing repurchase transactions without imposing on FCUs a prior approval requirement. Three commenters stated they did not want the restriction removed.

One of the commenters that opposed removing the restriction stated there are risks associated with this kind of activity and there should be regulatory limitations to mitigate that risk. That commenter further stated that borrowing repurchase transactions are typically used for positive arbitrage opportunities. Interest rate risk is created if the proceeds of the transaction are invested significantly shorter or longer than the borrowing transaction.

The NCUA agrees with this commenter and intends to leave in place the prohibition on purchasing an investment with the proceeds from a borrowing repurchase transaction if the purchased investment matures after the maturity of the borrowing repurchase transaction. To increase flexibility for qualified credit unions, however, the NCUA proposes to expand RegFlex in proposed § 742.4 to include a limited exemption from this restriction. Specifically, RegFlex eligible FCUs will be able to purchase securities with maturities exceeding the maturity of the borrowing repurchase transaction in an amount not to exceed the credit union's net worth.

Section 703.100(i) defines repurchase transactions. 12 CFR 703.100(i). The proposed rule renames them “investment repurchase transactions” and conforms the requirements for investment repurchase transactions to those of securities lending transactions. Other than these revisions, the proposal does not make any substantive amendments in this regard.

Section 703.100(k) addresses securities lending transactions and requires the FCU to take a perfected first priority security interest in all collateral the FCU receives. 12 CFR 703.100(k). Proposed § 703.13 removes the word “perfected”, but still requires a first priority security interest through possession or control of the collateral. Often, under state law, possession or control of collateral constitutes a perfected security interest. In addition, the proposed rule clarifies that an FCU's agent may act in its place in these transactions.

Although § 703.110(a) prohibits FCUs from purchasing financial derivatives, including options, 12 CFR 703.110(a), NCUA has approved an investment pilot program permitting a vendor to act as agent for an FCU to purchase equity-linked options for limited purposes. Specifically, under the pilot program, an FCU may offer share certificates where the dividend rate is tied to the performance of the S&P 500 stock index and may purchase equity-linked options to fund the dividend. NCUA has placed limitations on the pilot program to minimize risk and continues to prohibit FCUs from investing in options for their own accounts.

Because of the positive experience with the pilot program, the ANPR stated that NCUA was considering amending the investment regulation to make the purchase of equity-linked options a permissible investment activity for FCUs for the limited purpose of funding equity-linked dividends. The ANPR discussed potential regulatory limitations to this new authority and solicited comments. Fourteen commenters supported FCUs being permitted to purchase equity-linked options for the purpose of offering equity-linked dividends to their members and also supported the limitations suggested by NCUA. Two commenters opposed FCUs being given permission to purchase equity-linked options.

Proposed § 703.14 expands permissible investment activities for all FCUs to permit them to purchase equity-linked options for the sole purpose of offering equity-linked dividends to their members, subject to limitations including: (1) Maximum shares permitted in the program; (2) minimum counterparty rating; (3) collateral requirements; (4) option proceeds to fund dividend costs only; (5) final maturity of the options coincide with the maturity of the share account; and (6) minimum monthly reporting requirements. FCUs are still prohibited from investing in options for their own accounts.

Section 703.40(c)(2) currently requires an FCU to analyze an investment adviser's background, including whether there are any enforcement actions against the adviser or the adviser's associated personnel before transacting business with the adviser. 12 CFR 703.40(c)(2). NCUA proposes to amend this provision to clarify that, as part of this background check, an FCU should analyze the background of the firm for whom the investment adviser works, in addition to the investment adviser and associated personnel.

The Act provides that the accounting principles applicable to reports or statements required to be filed with the NCUA by insured credit unions, except those with total assets of less than $10 million, must be uniform and consistent with generally accepted accounting principles (GAAP). 12 U.S.C. 1782a(a)(6)(C). The accounting standard required in § 703.40(a) only requires FCUs to classify their securities as hold-to-maturity, available-for-sale, or trading, in accordance with GAAP. 12 CFR 703.40(a). Accordingly, in proposed § 703.4, NCUA proposes to revise that rule to clarify that FCUs having total assets of $10 million or more must comply with all GAAP provisions related to the accounting principles applicable to reports or statements required to be filed with the NCUA, not just selected ones. While not mandatory for FCUs with total assets of less than $10 million, NCUA encourages them also to comply with GAAP or to account for their investments consistent with the NCUA Accounting Manual For Federal Credit Unions (Accounting Manual). NCUA recognizes that at the present the Accounting Manual, which can be found on NCUA's web site, is only in draft form.

Part 703 defines the term “net capital” and uses an FCU's net capital, or percentage of net capital, as the basis for measuring and specifying limits on some of an FCU's investment activities. Amendments to the Act related to prompt corrective action define “net worth” and use net worth as its unit of measure instead of net capital. To be consistent, NCUA proposes to replace in the investment rule all references to “net capital” with “net worth.”

The ANPR solicited comments as to whether the format of part 703 needs to be changed. Nine commenters stated that the current format of part 703 should be changed to make the rule easier to read and more conducive to finding information quickly. They suggested eliminating the question and answer format and dividing large, cumbersome sections of the rule into smaller, distinct sections with individual topic headings. Two commenters preferred the current format remain unchanged. NCUA agrees with the nine commenters who favor a more user-friendly investment rule and proposes to reformat the rule.

As part of this effort to make the investment rule easier to read and locate information, NCUA proposes to revise the manner in which specific terms are defined. Specifically, the proposed rule adds a number of new definitions, deletes a number of existing definitions, and segregates all definitions into proposed § 703.2 to make the rule easier to understand.

The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a proposed rule may have on a substantial number of small credit unions (those under one million dollars in assets). The proposed rule clarifies the investment authority granted to FCUs and conforms the regulatory flexibility program to the investment rule. The proposed rule would not have a significant economic impact on a substantial number of small credit unions, and, therefore, a regulatory flexibility analysis is not required.

The current Office of Management and Budget control number assigned to Part 703 is 3133-0133. NCUA has determined that the proposed rule would not increase paperwork requirements under the Paperwork Reduction Act of 1995 and regulations of the Office of Management and Budget.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. The proposed rule would not have substantial direct effects on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined that this proposed rule does not constitute a policy that has federalism implications for purposes of the executive order.

The NCUA has determined that this proposed rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

NCUA's goal is to promulgate clear and understandable regulations that impose minimal regulatory burden. We request your comments on whether the proposed rule is understandable and minimally intrusive.

Accordingly, NCUA proposes to amend 12 CFR parts 703 and 742 as follows:

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

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

Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this action must submit a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket Number 2002-NE-35-AD.” The postcard will be date stamped and returned to the commenter.

Any person may obtain a copy of this NPRM by submitting a request to the FAA, New England Region, Office of the Regional Counsel, Attention: Rules Docket No. 2002-NE-35-AD, 12 New England Executive Park, Burlington, MA 01803-5299.

In November of 2000, the FAA became aware that a CF6-80C2 engine high pressure turbine disk was rejected at inspection because it was cracked. GE and the disk supplier investigated and determined that the crack resulted from the presence of an iron-rich inclusion that was inadvertently introduced into the lot of INCO 718 disk material during the manufacturing melt process. GE and the disk supplier have since identified another lot that potentially had iron-rich inclusions introduced during the manufacturing melt process. That lot was used to manufacture eight CF6-50 engine LPT stage 1 disks. GE and the disk supplier have since coordinated and implemented corrective actions to prevent inclusions from being introduced in the manufacturing melt process.

On November 30, 2001, GE issued service bulletin (SB) SB 72-1225, requesting that operators remove the eight suspect disks from service at the next engine shop visit. On January 7, 2002, GE issued All Operators Wire No. 02.CF6/002, again informing the operators of the above SB, recommending removal of the suspect disks from service, and requesting report back of the disk removal date to GE. Currently, not all of the eight disks have been reported as having been removed or scheduled for removal. This condition, if not corrected, could result in LPT stage 1 disk cracking, leading to uncontained disk failure.

Since an unsafe condition has been identified that is likely to exist or develop on other CF6 series turbofan engines of a similar type design and manufacturing sequence, the proposed AD would require removal from service of CF6-50 LPT stage 1 disks, P/N 9061M21P03, SN's SNL17693, SNL17694, SNL44200, SNL47624, SNL47625, SNL47626, SNL47627, and SNL47628 at the next engine shop visit after the effective date of the AD.

There are approximately 2,101 CF6-50 series turbofan engines of the affected design in the worldwide fleet. The FAA estimates that no more than eight of the 469 engines installed on airplanes of U.S. registry would be affected by this proposed AD. The FAA also estimates that it would take approximately 32 work hours per engine to perform the proposed actions, and that the average labor rate is $60 per work hour. Required parts would cost approximately $75,490 per engine. Based on these figures, the total cost of the proposed AD to eight U.S. operators is estimated to be $619,280.

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

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

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

The FAA invites comments on this proposed rule. You may submit whatever written data, views, or arguments you choose. You need to include the rule's docket number and submit your comments to the address specified under the caption ADDRESSES. We will consider all comments received on or before the closing date. We may amend this proposed rule in light of comments received. Factual information that supports your ideas and suggestions is extremely helpful in evaluating the effectiveness of this proposed AD action and determining whether we need to take additional rulemaking action.

The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this proposed rule that might suggest a need to modify the rule. You may view all comments we receive before and after the closing date of the rule in the Rules Docket. We will file a report in the Rules Docket that summarizes each contact we have with the public that concerns the substantive parts of this proposed AD.

If you want FAA to acknowledge the receipt of your mailed comments, you must include a self-addressed, stamped postcard. On the postcard, write “Comments to Docket No. 2000-CE-59-AD.” We will date stamp and mail the postcard back to you.

The FAA received reports of two incidents, one in 1994 and one in 1995, in which the vertical fin front spar fitting and rear spar fitting failed, while in flight, on an Air Tractor Model AT-402 and a Model AT-502 airplane. Failure of the vertical fin front spar fitting causes the rear spar fitting to fail. These failures result in the vertical tail lying over against the elevator creating difficulty in controlling the airplane.

These vertical fin front spar fittings were made of 3/16 -inch thick aluminum. Investigation revealed that Air Tractor models with the 3/16 -inch front spar attach plates installed were subject to fatigue failure.

This unsafe condition was addressed in AD 95-20-06, Amendment 39-9384. AD 95-20-06 applied to airplanes with 3/16 -inch thick and 1/4 -inch thick aluminum fin front spar fittings installed.

In 1997, we issued AD 97-14-05, Amendment 39-10063, that supersedes AD 95-20-06. Further investigation revealed that only Air Tractor models with a 3/16 -inch thick fin front spar fitting installed were developing cracks. Therefore, we issued AD 97-14-05 to remove Air Tractor models with a 1/4 -inch thick fin front spar fitting installed from the applicability.

Recently, a Model AT-502 airplane was found with a cracked 1/4 -inch thick fin front spar fitting. The crack was found during a routine inspection. The rear spar had not yet failed. This recent finding demonstrates that Air Tractor models with a 1/4 -inch thick fin front spar fitting are subject to fatigue failure.

This condition, if not detected and corrected, could result in structural failure of the vertical fin front spar fitting and eventually the rear spar fitting. Such failure could result in loss of directional control of the airplane.

Snow Engineering Company has issued Service Letter # 155, Revised November 27, 2002.

The service letter includes procedures for:

After examining the circumstances and reviewing all available information related to the incidents described above, we have determined that:

This proposed AD would require you to incorporate the actions in the previously-referenced service bulletin.

We estimate that this proposed AD affects 440 airplanes in the U.S. registry.

We estimate the following costs to accomplish the proposed inspection:

On October 8, 2002, ATF published a temporary rule (T.D. ATF-483, 67 FR 62856) to amend the alcohol labeling and advertising rules to cross-reference the United States Department of Agriculture's (USDA) National Organic Program (NOP) rules, which took effect October 21, 2002. Any alcohol beverage labeled or advertised with an organic claim must comply with both NOP rules administered by USDA and the applicable rules administered by ATF.

At the same time, we published a notice of proposed rulemaking (Notice No. 954, 67 FR 62860) to solicit comments on the temporary rule. The original comment period for Notice No. 954 closed on December 9, 2002.

Before the close of the original comment period, ATF received a request from the Wine Institute, a trade association, to extend the comment period for an additional 90 days. The Wine Institute, representing producers of 90% of the wine made in California, requested the extension in order to provide thoroughly researched comments that have been fully discussed among their members.

In consideration of the above, ATF finds that a reopening of the comment period is warranted.

See the “Public Participation” section of Notice No. 954 for detailed instructions on submitting and reviewing comments. Comments received on or before the new closing date will be carefully considered.

ATF will not recognize any submitted material as confidential and comments may be disclosed to the public. Any material that the commenter considers confidential or inappropriate for disclosure to the public should not be included in the comments. The name of the person submitting a comment is not exempt from disclosure.

Marjorie Ruhf of the Regulations Division, Bureau of Alcohol, Tobacco & Firearms, drafted this notice.

Notice No. 954 was issued under the authority of 27 U.S.C. 205.

Regulatory Information

The Coast Guard has determined that good cause exists under the Administrative Procedure Act 5 U.S.C. 553(d)(3) for a shortened comment period of thirty days and for making this rule effective less than thirty days after publication in the Federal Register . The Coast Guard believes this is reasonable because the work scheduled at the bridge should be conducted between February and April to take advantage of the time period when the bridge has the fewest number of opening requests. The Coast Guard believes that any delay encountered in this regulation's effective date would be unnecessary and contrary to the public interest because the work to be performed under this temporary rule is necessary safety modifications that are scheduled to be performed when the bridge receives the fewest number of opening requests.

We encourage you to participate in this rulemaking by submitting comments or related material. If you do so, please include your name and address, identify the docket number for this rulemaking (CGD01-02-143), 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 8 1/2 by 11 inches, suitable for copying. If you would like to know if they 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 the First Coast Guard District, Bridge Branch, 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 later notice in the Federal Register .

The New York City highway bridge has a vertical clearance of 34 feet at mean high water, and 39 feet at mean low water in the closed position. The existing drawbridge operating regulations are listed at 33 CFR § 117.795(b).

The bridge owner, New York City Department of Transportation, requested a temporary bridge closure to install median safety barriers between the vehicular travel lanes at the bridge.

The bridge presently has no median safety barriers between the vehicular travel lanes that pass over the moveable lift spans at the bridge. There have been many serious head on automobile accidents at this bridge as a result of the absence of median safety barriers.

The average traffic count is 140,000 vehicles a day. There have been seven (7) head-on travel lane crossover accidents over the past several years, four (4) resulting in fatalities. These accidents resulted from the absence of a median safety barrier separating the opposite vehicular travel lanes.

The installation of the median safety barriers is considered necessary safety repairs that should be performed without delay.

In order to facilitate this structural work the bridge must remain in the closed position for the passage of vessel traffic from 7 a.m. on February 24, 2003 through 5 p.m. on April 14, 2003.

The time frame requested to perform this necessary safety work, February 24, 2003 through April 14, 2003, is the best time to perform this work because the bridge has historically had very few requests to open during that time period. In 2001 only one commercial vessel transit required a bridge opening and in 2002 only three commercial vessel transits required bridge openings between February 24 and April 14.

During the last ten days of the above closure the bridge will be balanced and tested. A limited number of bridge openings would be available for the passage of vessel traffic during the time period the bridge will be balanced and tested.

The Coast Guard believes this proposed closure is reasonable because this work is essential for public safety and will be performed when the bridge has the fewest number of requests to open.

Under this temporary rule in § 117.795, paragraph (b) will be temporarily suspended and a new temporary paragraph (d) will be added to allow the New York City highway bridge, mile 0.8, across Mill Basin, to remain closed to vessel traffic from 7 a.m. on February 24, 2003 through 5 p.m. on April 14, 2003.

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 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, Feb. 26, 1979).

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 conclusion is based on the fact that the waterway users who normally navigate Mill Basin are predominantly recreational vessels. There are four commercial facilities, two recreational vessel marinas, and two recreational/commercial vessel repair yards upstream from the bridge.

The proposed time period is historically the time period during which the fewest requests are made to open the bridge. Between February 24 and April 14, 2001, only one commercial vessel transit required the bridge to open. Only three commercial vessel transits required bridge openings during the same period in 2002.

Vessels that can pass under the bridge without a bridge opening may do so at all times.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we 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 section 5 U.S.C. 605(b), that this proposed rule would not have a significant economic impact on a substantial number of small entities.

This conclusion is based on the fact that the waterway users who normally navigate Mill Basin are predominantly recreational vessels. There are four commercial facilities, two recreational vessel marinas, and two recreational/commercial vessel repair yards upstream from the bridge.

The proposed time period is historically the time period during which the fewest requests are made to open the bridge. Between February 24 and April 14, 2001, only one commercial vessel transit required the bridge to open. Only three commercial vessel transits required bridge openings during the same period in 2002.

Vessels that can pass under the bridge without a bridge opening may do so at all times.

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.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

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 E.O. 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 may 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.

To help the Coast Guard establish regular and meaningful consultation and collaboration with Indian and Alaskan Native tribes, we published a notice in the Federal Register (66 FR 36361, July 11, 2001) requesting comments on how to best carry out the Order. 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 considered the environmental impact of this proposed rule and concluded that, under figure 2-1, paragraph (32)(e), of Commandant Instruction M16475.1d, this proposed rule is categorically excluded from further environmental documentation because promulgation of drawbridge regulations have been found not to have a significant effect on the environment. A written “Categorical Exclusion Determination” is not required for this rule.

Bridges.

For the reasons set out in the preamble, the Coast Guard proposes to amend 33 CFR part 117 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 Los Angeles-Long Beach 02-005), 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 8 1/2 by 11 inches, suitable for copying. If you would like to know 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.

In our final rule, we will include a concise general statement of the comments received and identify any changes from the proposed rule based on the comments.

We do not now plan to hold a public meeting. But you may submit a request for a meeting by writing to Waterways Management 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 .

Since the September 11, 2001 terrorist attacks on the World Trade Center in New York, the Pentagon in Arlington, Virginia and Flight 93, the Federal Bureau of Investigation (FBI) has issued several warnings concerning the potential for additional terrorist attacks within the United States. In addition, the ongoing hostilities in Afghanistan and growing tensions in Iraq have made it prudent for U.S. ports to be on a higher state of alert because the al Qaeda organization and other similar organizations have declared an ongoing intention to conduct armed attacks on U.S. interests worldwide.

In its effort to thwart terrorist activity, the Coast Guard has increased safety and security measures on U.S. ports and waterways. As part of the Diplomatic Security and Antiterrorism Act of 1986 (Pub. L. 99-399), Congress amended section 7 of the Ports and Waterways Safety Act (PWSA), 33 U.S.C. 1226, to allow the Coast Guard to take actions, including the establishment of security and safety zones, to prevent or respond to acts of terrorism against individuals, vessels, or public or commercial structures. The Coast Guard also has authority to establish security zones pursuant to the Act of June 15, 1917, as amended by the Magnuson Act of August 9, 1950 (50 U.S.C. 191 et seq. ) (the “Magnuson Act”) and implementing regulations promulgated by the President in Subparts 6.01 and 6.04 of Part 6 of Title 33 of the Code of Federal Regulations.

In this particular rulemaking, to address the aforementioned security concerns and to take steps to prevent the catastrophic impact that a terrorist attack against a LHG tank vessel would have on the public interest, the Coast Guard proposes to revise current LHG safety zone regulations by establishing security zones around and under any LHG tank vessels entering, departing, or moored within the ports of Los Angeles and Long Beach. These proposed security zones will help the Coast Guard to prevent vessels or persons from engaging in terrorist actions against LHG tank vessels.

Current regulations issued under 33 CFR 165.1151 provide for safety zones around LHG tank vessels that are anchored, moored, or underway near the Los Angeles-Long Beach port areas. However, these safety zones are inadequate to address increased security requirements for LHG tank vessels.

On January 28, 2002, we published a temporary final rule (TFR) entitled “Security Zones; San Pedro Bay, California” in the Federal Register (67 FR 3814). In that rule, which expired on June 15, 2002, we temporarily replaced the LHG safety zones with security zones of a similar size and location.

On June 19, 2002, we published a TFR entitled “Security Zones; Liquefied Hazardous Gas Tank Vessels, San Pedro Bay, CA” in the Federal Register (67 FR 41625). In that rule, which is set to expire on December 21, 2002, we continue to temporarily replace the safety zones with security zones for LHG tank vessels near Los Angeles-Long Beach. Although we had anticipated using the effective period of this TFR to engage in notice and comment rulemaking, the Captain of the Port will extend the effective period again to allow sufficient time to properly develop permanent regulations tailored to the present and foreseeable security environment. Accordingly, this rulemaking proposes to make permanent the temporary security zones established on June 11, 2002.

The Coast Guard proposes to revise 33 CFR 165.1151 by replacing the existing safety zones with moving and fixed security zones around any LHG tank vessels that are anchored, moored, or underway within the Los Angeles and Long Beach port areas. These proposed security zones will take effect upon the entry of any LHG tank vessel into the waters within 3 nautical miles outside of the Federal breakwaters encompassing San Pedro Bay and will remain in effect until the LHG tank vessel departs this 3 nautical mile regulatory limit. Section 104 of the Maritime Transportation Security Act (MTSA) of 2002 (Pub. L. 107-295, 116 Stat. 2064) extended the geographical reach of the Magnuson Act to 12 nautical miles seaward of the baseline of the United States and added civil penalty liability for violation. This proposed rule does not exercise the full extent of the geographical limit allowed by the PWSA and the recently amended Magnuson Act. The Coast Guard retains discretion to extend the geographical reach of this rule via notice and comment procedures to the 12 nautical mile limit should circumstances warrant such action.

This proposed rule, for security concerns, prohibits entry of any vessels or persons inside the security zone surrounding any LHG tank vessel. These security zones are within a 500 yard radius around any LHG tank vessels that are anchored at a designated anchorage; within a 500 yard radius around any LHG tank vessels that are moored, or in the process of mooring, at any berth within the Los Angeles or Long Beach port areas; and within 1000 yards ahead and 500 yards on each side and astern of any LHG tank vessels that are underway.

These security zones are needed for national security reasons to protect LHG tank vessels, the public, transiting vessels, adjacent waterfront facilities, and the ports from potential subversive acts, accidents, or other events of a similar nature. Entry into these zones will be prohibited unless specifically authorized by the Captain of the Port or his designated representative. Vessels already moored or anchored when these security zones take effect are not required to get underway to avoid either the moving or fixed zones unless specifically ordered to do so by the Captain of the Port or his designated representative.

Liquefied hazardous gas (LHG) as used in this section means a liquid containing one or more of the products listed in Table 127.005 of this part that is carried in bulk on board a tank vessel as liquefied petroleum gas, liquefied natural gas, or similar liquefied gas products.

Vessels or persons violating this section will be subject to the penalties set forth in 33 U.S.C. 1232 and 50 U.S.C. 192.

Pursuant to 33 U.S.C. 1232 and 33 CFR part 27, any violation of the security zone described herein is punishable by civil penalties (not to exceed $27,500 per violation, where each day of a continuing violation is a separate violation), criminal penalties (imprisonment up to 6 years and a maximum fine of $250,000), and in rem liability against the offending vessel and license sanctions. Any person who violates this section using a dangerous weapon or who engages in conduct that causes bodily injury or fear of imminent bodily injury to any officer authorized to enforce this regulation also faces imprisonment up to 12 years.

Vessels or persons violating this section are also subject to the penalties set forth in 50 U.S.C. 192: Seizure and forfeiture of the vessel to the United States; a maximum criminal fine of $10,000; imprisonment up to 10 years; and a civil penalty of not more than $25,000 for each day of a continuing violation.

The Captain of the Port will enforce these zones and may request the use of the resources and personnel of other government agencies to assist in the patrol and enforcement of the proposed rule. The Captain of the Port retains discretion to initiate Coast Guard civil penalty action against non-compliant parties pursuant to the PWSA or the Magnuson Act, or, refer appropriate cases to the cognizant U.S. Attorney Office for disposition. This rule is proposed under the authority of 33 U.S.C. 1226 in addition to the authority contained in 33 U.S.C. 1231.

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, 1979).

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.

The effect of this regulation will not be significant because the zones will encompass only a small portion of the waterway for a limited period of time. Furthermore, vessels will be able to pass safely around the zones and may be allowed to enter these zones on a case-by-case basis with permission of the Captain of the Port, or his designated representative.

The sizes of the zones are the minimum necessary to provide adequate protection for the LHG tank vessels, their crews, cargo, other vessels operating in the vicinity of the LHG tank vessels and their crews, adjoining areas, and the public. The entities most likely to be affected are commercial vessels transiting the main ship channels of Los Angeles or Long Beach and pleasure craft engaged in recreational activities and sightseeing. These security zones will prohibit commercial vessels from meeting or overtaking any LHG tank vessels in the main ship channels, effectively prohibiting use of the channels. However, the moving security zones will only be effective during LHG tank vessel transits, which last for approximately 30 minutes. Most vessels will be able to safely transit around these zones while a LHG tank vessel is moored or at anchor in the Ports of Los Angeles and Long Beach.

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. We expect this proposed rule may affect the following entities, some of which may be small entities: The owners and operators of private and commercial vessels intending to transit or anchor in these small portions of the ports of Los Angeles and Long Beach near LHG tank vessels covered by these security zones. The impact to these entities would not, however, be significant since these zones are proposed to encompass only small portions of the waterway for limited periods of time while the LHG tank vessels are transiting, moored, or in the anchorage. Delays, if any, are expected to be less than thirty minutes in duration.

Small vessel traffic can pass safely around the area and vessels engaged in recreational activities, sightseeing, and commercial fishing have ample space outside of the security zone to engage in these activities. When LHG tank vessels are at anchor, vessel traffic will have ample room to maneuver around the security zone. The outbound or inbound transit of a LHG tank vessel will last about 30 minutes. Although this proposed regulation would prohibit simultaneous use of portions of the channel, this prohibition is of a short duration. And while a LHG tank vessel is moored, commercial traffic and small recreational traffic will have an opportunity to coordinate movement through the security zone with the COTP or his or her designated representative.

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 (Pub. L. 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 the person indicated in FOR FURTHER INFORMATION CONTACT.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

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. To help the Coast Guard establish regular and meaningful consultation and collaboration with Indian and Alaskan Native Tribes, on July 11, 2002, we published a notice in the Federal Register (66 FR 36361) requesting comments on how to best carry out the order. 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 because we are proposing to establish security zones. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

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

Request for Comments

The Coast Guard encourages interested persons to participate in this rulemaking by submitting written data, views, or arguments. Persons submitting comments should include their names, addresses, identify this rulemaking (CGD13-02-018) and the specific section of this proposal to which each comment applies, and give the reason for each comment. Please submit two copies of all comments and attachments in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. Persons wanting acknowledgement of receipt of comments should enclose stamped, self-addressed postcards or envelopes.

The Coast Guard will consider all comments received during the comment period. It may change this proposal in view of the comments.

The Coast Guard plans no public hearing. Persons may request a public hearing by writing to the Marine Safety Office at the address under ADDRESSES. The request should include the reasons why a hearing would be beneficial. If it is determined that the opportunity for oral presentations will aid this rulemaking, the Coast Guard will hold a public hearing at a time and place to be announced by a later notice in the Federal Register

Recent events highlight the fact that there are hostile entities operating with the intent to harm U.S. National Security. The President has continued the national emergencies he declared following the September 11, 2001 terrorist attacks (67 FR 58317 (Sept. 13, 2002) (continuing national emergency with respect to terrorist attacks), 67 FR 59447 (Sept. 20, 2002) continuing national emergency with respect to persons who commit, threaten to commit or support terrorism)). The President also has found pursuant to law, including the Magnuson Act (50 U.S.C. 191 et seq.), that the security of the United States is and continues to be endangered following the attacks (E.O. 13273, 67 FR 56215 (Sept. 3, 2002) (security endangered by disturbances in international relations of U.S. and such disturbances continue to endanger such relations).

On October 15, 2002, the Captain of the Port Puget Sound issued a TFR (67 FR 66335, CGD13-02-015, 33 CFR section 165.T13-011) establishing tank ship protection zones, which expires on April 15, 2003. The Coast Guard, through this action, intends to assist tank ships by establishing a permanent security zone that upon activation by the Captain of the Port would exclude persons and vessels from the immediate vicinity of all tank ships. Entry into this zone will be prohibited unless authorized by the Captain of the Port or his designee. The Captain of the Port may be assisted by other federal, state, or local agencies.

This proposed rule, for safety and security concerns, would control vessel movement in a regulated area surrounding tank ships. This proposed rule would be activated from time to time by the Captain of the Port Puget Sound for such time as he deems necessary to prevent damage or injury to any vessel or waterfront facility, to safeguard ports, harbors, territories, or waters of the United States or to secure the observance of the rights and obligations of the United States. The Captain of the Port Puget Sound will cause notice of the activation of this security zone to be made by all appropriate means to effect the widest publicity among the affected segments of the public. For the purpose of this regulation, a tank ship means a self-propelled tank vessel constructed or adapted primarily to carry oil or hazardous material in bulk as cargo or cargo residue in the cargo spaces. The definition of tank ship does not include tank barges. All vessels within 500 yards of a tank ship shall operate at the minimum speed necessary to maintain a safe course, and shall proceed as directed by the official patrol. No vessel, except a public vessel (defined below), is allowed within 100 yards of a tank ship, unless authorized by the official patrol or tank ship master. Vessels requesting to pass within 100 yards of a tank ship shall contact the official patrol on VHF-FM channel 16 or 13. The official patrol or tank ship master may permit vessels that can only operate safely in a navigable channel to pass within 100 yards of a tank ship in order to ensure a safe passage in accordance with the Navigation Rules. In addition, measures or directions issued by Vessel Traffic Service Puget Sound pursuant to 33 CFR Part 161 shall take precedence over the regulations in this proposed rule. Similarly, commercial vessels anchored in a designated anchorage area may be permitted to remain at anchor within 100 yards of passing tank ships. Public vessels for the purpose of this Rule are vessels owned, chartered, or operated by the United States, or by a State or political subdivision thereof.

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, 1979).

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.

Although this proposed rule would restrict access to the regulated area, the effect of this proposed rule will not be significant because: (i) Individual tank ship security zones are limited in size; (ii) the official patrol or tank ship master may authorize access to the tank ship security zone; (iii) the tank ship security zone for any given transiting tank ship will effect a given geographical location for a limited time; and (iv) the Coast Guard will make notifications via maritime advisories so mariners can adjust their plans accordingly.

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.

This proposed rule would affect the following entities, some of which may be small entities: the owners or operators of vessels intending to operate near or anchor in the vicinity of tank ships in the navigable waters of the United States.

This proposed rule would not have a significant economic impact on a substantial number of small entities for the following reasons: (i) Individual tank ship security zones are limited in size; (ii) The official patrol or tank ship master may authorize access to the tank ship security zone; (iii) the tank ship security zone for any given transiting tank ship will affect a given geographic location for a limited time; and (iv) the Coast Guard will make notifications via maritime advisories so mariners can adjust their plans accordingly.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 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 rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact one of the points of contact listed under FOR FURTHER INFORMATION CONTACT.

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

This proposed rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

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 will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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.

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 proposed rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

The Coast Guard recognizes the rights of Native American Tribes under the Stevens Treaties. Moreover, the Coast Guard is committed to working with Tribal Governments to implement local policies to mitigate tribal concerns. Given the flexibility of this proposed rule to accommodate the special needs of mariners in the vicinity of tank ships, and the Coast Guard's commitment to working with the Tribes, we have determined that tank ship security and fishing rights protection need not be incompatible and therefore have determined that this Proposed Rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

We have analyzed this 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.

The Coast Guard's preliminary review indicates this proposed rule is categorically excluded from further environmental documentation under figure 2-1, paragraph 34(g) of Commandant Instruction M16475.1D. The environmental analysis and Categorical Exclusion Determination will be prepared and be available in the docket for inspection and copying where indicated under ADDRESSES. All standard environmental measures remain in effect.

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

Clean Water Act sections 106, 205(g), 205(j), 208, 301, 302, 303, 305, 308, 319, 402, 501, 502, and 603; 33 U.S.C. 1256, 1285(g), 1285(j), 1288, 1311, 1312, 1313, 1315, 1318, 1329, 1342, 1361, 1362, and 1373.

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is now aware could potentially be regulated by this action. Other types of entities not listed in this table could also be regulated. To determine whether you may be regulated by this action, you should carefully examine the applicability criteria in § 130.20 of title 40 of the Code of Federal Regulations. If you have any questions regarding the applicability of this action to you, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

a. Docket. EPA has established an official public docket for this action under Docket ID No. OW-2002-0037. The official public docket is the collection of materials that is available for public viewing at the Water Docket in the EPA Docket Center (EPA/DC), EPA West, Room B-102, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Water Docket is (202) 566-2426. For access to docket materials, please call ahead to schedule an appointment. A reasonable fee may be charged for copying.

b. Electronic Access. An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http://www.epa.gov/edocket to submit or view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Once in the system, select “search,” then key in the appropriate docket identification number.

Certain types of information will not be placed in the EPA Dockets. Information claimed as CBI and other information whose disclosure is restricted by statute, which is not included in the official public docket, will not be available for public viewing in EPA's electronic public docket. EPA's policy is that copyrighted material will not be placed in EPA's electronic public docket but will be available only in printed, paper form in the official public docket. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified in the preceding section C.1.a.

For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing in EPA's electronic public docket as EPA receives them and without change, unless the comment contains copyrighted material, CBI, or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in EPA's electronic public docket. The entire printed comment, including the copyrighted material, will be available in the public docket.

Public comments submitted on computer disks that are mailed or delivered to the docket will be transferred to EPA's electronic public docket. Public comments that are mailed or delivered to the Docket will be scanned and placed in EPA's electronic public docket. Where practical, physical objects will be photographed, and the photograph will be placed in EPA's electronic public docket along with a brief description written by the docket staff.

You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your comments. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments. Commenters who want EPA to acknowledge receipt of their comments should include a self-addressed, stamped envelope.

a. Electronically. If you submit an electronic comment as prescribed below, EPA recommends that you include your name, mailing address, and an e-mail address or other contact information in the body of your comment. Also include this contact information on the outside of any disk or CD ROM you submit, and in any cover letter accompanying the disk or CD ROM. This ensures that you can be identified as the submitter of the comment and allows EPA to contact you in case EPA cannot read your comment due to technical difficulties or needs further information on the substance of your comment. EPA's policy is that EPA will not edit your comment, and any identifying or contact information provided in the body of a comment will be included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.

i. EPA Dockets. Your use of EPA's electronic public docket to submit comments to EPA electronically is EPA's preferred method for receiving comments. Go directly to EPA Dockets at http://www.epa.gov/edocket and follow the online instructions for submitting comments. Once in the system, select “search,” and then key in Docket ID No. OW-2002-0037. The system is an “anonymous access” system, which means EPA will not know your identity, e-mail address, or other contact information unless you provide it in the body of your comment.

ii. E-mail. Comments may be sent by electronic mail (e-mail) to ow-docket@epa.gov., Attention Docket ID No. OW-2002-0037. Electronic comments must be submitted as a WordPerfect 5.1, 6.1, or 8 file or as an ASCII file, avoiding the use of special characters. Electronic comments on this action may be filed on line at many Federal Depository Libraries. In contrast to EPA's electronic public docket, EPA's e-mail system is not an “anonymous access” system. If you send an e-mail comment directly to the Docket without going through EPA's electronic public docket, EPA's e-mail system automatically captures your e-mail address. E-mail addresses that are automatically captured by EPA's e-mail system are included as part of the comment that is placed in the official public docket, and made available in EPA's electronic public docket.

iii. Disk or CD ROM. You may submit comments on a disk or CD ROM that you mail to the mailing address identified in section C.2.b., which follows. These electronic submissions will be accepted in WordPerfect 5.1, 6.1 or 8 file or an ASCII file format. Avoid the use of special characters and any form of encryption.

b. By Mail. Send an original and three copies of your comments and enclosures (including references) to: Water Docket, Environmental Protection Agency, Mailcode: 4101T, 1200 Pennsylvania Ave., NW., Washington, DC, 20460, Attention Docket ID No. OW-2002-0037.

c. By Hand Delivery or Courier. Deliver your comments to: the Water Docket in the EPA Docket Center (EPA/DC), EPA West, Room B-102, 1301 Constitution Ave., NW., Washington, DC, Attention Docket ID No. OW-2002-0037. Such deliveries are only accepted during the Docket's normal hours of operation from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays as identified in section C.1.a.

d. By Facsimile. No facsimiles (faxes) will be accepted.

Do not submit information through EPA's electronic public docket or by e-mail that you consider to be CBI. You may claim information that you submit to EPA as CBI by marking any part or all of that information as CBI. (If you submit CBI on disk or CD ROM, mark the outside of the disk or CD ROM as CBI and then identify electronically within the disk or CD ROM the specific information that is CBI). Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

In addition to one complete version of the comment that includes any information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket and EPA's electronic public docket. If you submit the copy that does not contain CBI on disk or CD ROM, mark the outside of the disk or CD ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket and EPA's electronic public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the FOR FURTHER INFORMATION CONTACT section.

You may find the following suggestions helpful for preparing your comments:

• Explain your views as clearly as possible.

• Describe any assumptions that you used.

• Provide any technical information and/or data you used that support your views.

• If you estimate potential burden or costs, explain how you arrived at your estimate.

• Provide specific examples to illustrate your concerns.

• Offer alternatives.

• Make sure to submit your comments by the comment period deadline identified.

• To ensure proper receipt by EPA, identify the appropriate docket identification number in the subject line on the first page of your response. It would also be helpful if you provided the name, date, and Federal Register citation related to your comments.

TMDLs are one of the many tools Congress authorized in the CWA to help achieve the Act's main objective to “restore and maintain the chemical, physical, and biological integrity of the Nation's waters.” (CWA section 101(a)). Section 303(d) of the CWA requires States to identify and establish a priority ranking for waters for which technology-based effluent limitations required by section 301 are not stringent enough to implement applicable water quality standards, establish TMDLs for the pollutants causing impairment in those waters, and submit to EPA, from time to time, the list of impaired waters and TMDLs. EPA must review and approve or disapprove lists and TMDLs within 30 days of the time they are submitted. If EPA disapproves a list or a TMDL, EPA must establish the list or TMDL. In addition, some courts have interpreted the statute as requiring EPA to establish lists and TMDLs when a State fails to do so.

Listing impaired waters and establishing TMDLs for waters impaired by pollutants from point and nonpoint sources does not, by itself, create any new or additional implementation authorities to control point or nonpoint sources. Section 303(d) of the Act requires that TMDLs “be established at a level necessary to implement the applicable water quality standards,” and section 303(d)(2) requires a State to incorporate TMDLs into its “current plan” under section 303(e). Under the section 303(e) process, States develop and update state-wide water quality management (WQM) plans, produced in accordance with sections 208 and 303(e) of the Act, to direct implementation of the requirements of the Act.

Under CWA section 402, the NPDES Program regulates the “discharge of a pollutant,” other than dredged or fill materials from a “point source” into “waters of the United States.” The CWA and NPDES regulations define “discharge of a pollutant,” “point source,” and “waters of the United States.” The NPDES Program is administered at the Federal level by EPA unless a State, tribe or U.S. Territory assumes the program after receiving approval by the Federal government. Currently, 45 States have received approval to administer the NPDES Program in their States. Under section 402, discharges of pollutants to waters of the United States are authorized by an individual NPDES permit or a general permit applicable to multiple similar facilities or activities. NPDES permits commonly contain numerical limits on the amounts of specified pollutants that may be discharged and may specify best management practices (BMPs) designed to minimize water quality impacts. These numerical effluent limitations and BMPs or other non-numerical effluent limitations implement both technology-based and water quality-based requirements of the Act. Technology-based limitations represent the degree of control that can be achieved by point sources using various levels of pollution control technology. If necessary to achieve or maintain compliance with applicable water quality standards, NPDES permits must contain water quality-based limitations more stringent than the applicable technology-based requirements. One basis for water quality-based effluent limits in NPDES permits is a wasteload allocation from a TMDL. See 40 CFR 122.44(d)(1)(vii). The NPDES Program regulations appear at 40 CFR parts 122-125.

EPA issued regulations governing identification of impaired waters and establishment of TMDLs in 1985 and revised them in 1992 (§§ 130.2 and 130.7). Among other things, these currently effective regulations provide that:

• States must identify those waters still requiring TMDLs because technology-based effluent limitations required by the CWA or more stringent effluent limitations and other pollution controls ( e.g., management measures) required by local, State, or Federal authority are not stringent enough to implement applicable water quality standards (WQS) (§ 130.7(b)(1));

• These lists of waters not meeting WQS must be submitted to EPA every two years (on April 1 of every even-numbered year) (§ 130.7(d)(1));

• The lists must include an identification of the pollutant or pollutants causing or expected to cause the impairment, and a priority ranking of the waters that identifies the waters targeted for TMDL development in the next two years (§ 130.7(b)(4));

• States, in developing lists, must assemble and evaluate all existing and readily available water quality-related data and information (§ 130.7(b)(5));

• States must submit with each list a description of the methodology used to develop the list and provide EPA with a rationale for any decision not to use any existing and readily available water quality-related data and information (§ 130.7(b)(6));

• A TMDL is the sum of individual wasteload allocations for point sources (WLA), load allocations for nonpoint sources and natural background (LA). Wasteload allocations are defined as the portion of a receiving water's loading capacity that is allocated to one of its point sources of pollution. (§ 130.2 (h) and (i));

• Load allocations are defined as the portion of a receiving water's loading capacity that is attributed to nonpoint sources of pollution or natural background. They are best estimates of the loading, which can range from reasonably accurate estimates to gross allotments. Where possible, natural, background and nonpoint source loads should be distinguished (§ 130.2(g));

• TMDLs must be established at levels necessary to attain and maintain the applicable narrative and numerical water quality standards with seasonal variations and a margin of safety that takes into account any lack of knowledge concerning the relationship between effluent limitations and water quality (§ 130.7(c)(1));

• If best management practices (BMPs) or other nonpoint source pollution controls make more stringent load allocations practicable, the wasteload allocations can be made less stringent allowing for nonpoint source control tradeoffs (§ 130.2(i));

• EPA must approve or disapprove lists and TMDLs within 30 days of submission. If disapproved, EPA must establish a list or a TMDL within 30 days (§ 130.7(d)(2));

• The process for involving the public in the development of lists of impaired waters and TMDLs must be described in the State's Continuing Planning Process (CPP) (§ 130.7(a));

• Under proper technical conditions, TMDLs can be calculated for all pollutants (43 FR 60665).

The 1985 regulation also identifies specific elements that comprise the WQM plan, including the “identification of implementation measures necessary to carry out the plan, including financing, the time needed to carry out the plan, and the economic, social and environmental impact of carrying out the plan in accordance with section 208(b)(2)(E)” (§ 130.6(c)(6)). Once approved by EPA, TMDLs are incorporated into these State WQM plans (§ 130.7(d)(2)). Permitting authorities implement wasteload allocations included in a TMDL through enforceable water quality-based discharge limits in NPDES permits authorized under section 402 of the CWA. The primary mechanism for implementing nonpoint source load allocations within TMDLs is through the State section 319 nonpoint source management program, coupled with a wide variety of other State, local, tribal, and Federal programs (which may be regulatory, non-regulatory, or incentive-based, depending on the program), as well as voluntary action by committed citizens.

On July 13, 2000, EPA published a final rule revising the TMDL regulations previously promulgated in 1985 and revised in 1992 (65 FR 43586). In 1996, the Agency determined that there was a need for a comprehensive evaluation of implementation of section 303(d) requirements. The reasons for this need were threefold. First, EPA was concerned with the lack of progress in the program despite the regulations issued by EPA in 1985 and 1992, and a series of policy memoranda including a 1997 request that States work to improve the rate of establishing TMDLs. Second, stakeholders had raised concerns with the lack of clarity and consistency in the program. Third, environmental and public interest organizations had started filing lawsuits alleging that EPA should be held accountable, under the CWA, for its failure to oversee and supplement inadequate State 303(d) listing and TMDL establishment efforts.

EPA convened a committee under the Federal Advisory Committee Act (TMDL FACA Committee) to undertake such an evaluation and make recommendations for improving implementation of the TMDL Program, including recommendations for revised regulations and guidance. In 1998, after careful deliberation, the Committee submitted to EPA its final report containing more than 100 recommendations, a subset of which required regulatory changes (Report of the Federal Advisory Committee on the Total Maximum Daily Load (TMDL) Program. EPA 100-R-98-006, July 1998). The committee reached consensus on most recommendations although minority reports were filed on some issues. These recommendations guided EPA in the development of the proposed rule of August 23, 1999, (64 FR 46012) and the final rule of July 13, 2000 (65 FR 43586). EPA proposed changes intended to resolve issues concerning the identification of impaired waterbodies by promoting more comprehensive inventories of impaired waters. The rule was also intended to improve implementation of TMDLs by requiring, as part of the TMDL, implementation plans containing lists of actions and expeditious schedules to reduce pollutant loadings. Finally, EPA proposed changes to the NPDES permitting regulations to assist in implementing TMDLs and to better address point source discharges to waters not meeting water quality standards prior to establishment of a TMDL.

The July 2000 rule was controversial from the outset. The August 1999 proposal attracted approximately 34,000 comments, a significant number of which criticized various aspects of the proposed rule. Before and after promulgation, the rule generated considerable controversy, as expressed in Congressional action, letters, testimony, public meetings, and litigation. Even before it was published in the Federal Register , Congress prohibited EPA from implementing the final rule through a spending prohibition included in the Military Construction Appropriations Act: FY 2000 Supplemental Appropriations (Pub. L. 106-426). This provision prohibited EPA from using funds made available for fiscal years 2000 and 2001 “to make a final determination on or implement” the July 2000 TMDL rule. Anticipating that this amendment would go into effect, the July 2000 rule provided that the effective date of the regulations would be 30 days after the date that Congress allowed EPA to implement the regulations. The spending prohibition was scheduled to expire on September 30, 2001, and, barring further action by Congress or EPA, the rule would have gone into effect 30 days later on October 30, 2001. Additionally, in the FY 2001 Appropriations Bill, Congress directed EPA to contract with the National Academy of Sciences' National Research Council (NRC) to evaluate the adequacy of scientific methods and approaches currently available to support development and implementation of TMDLs. In the Conference Report #106-988 describing the VA/HUD and Independent Agencies FY 2001 Appropriations Act, Congress also requested that the Agency prepare a comprehensive assessment of the development and implementation costs of the TMDL Program.

States, business and industry groups, agriculture and forestry organizations, and local governments questioned the scope, complexity, and cost of, and the legal authority for, many of the new provisions of the rule. Environmental groups expressed concern that the rule did not do enough to address water quality impairments from nonpoint sources, and argued that the new schedules in the rule unlawfully extend CWA deadlines. Stakeholder concerns were reflected in legal challenges to the July 2000 rule by a broad array of litigants. Ten petitions for review were filed by States, industrial and agricultural groups, and environmental organizations asserting that many of EPA's revisions to the TMDL regulations were either unlawful under the Administrative Procedure Act or exceeded the Agency's authority under the CWA. These petitions, which identified more than fifty alleged legal defects in the July 2000 rule, were ultimately consolidated in the American Farm Bureau Federation et al v. Whitman (No. 00-1320) for the District of Columbia Circuit United States Court of Appeals. In addition, several other stakeholders have intervened in these lawsuits. Some of the issues raised by the petitioners include the scope and content of the section 303(d) list, the elements of an approvable TMDL, scheduling and EPA backstopping of TMDLs, and the change to the NPDES regulations addressing EPA's authority to object to expired State permits. The litigation over the July 2000 rule is currently stayed pending EPA's determination regarding whether, and to what extent, that rule should be revised.

Because of these significant concerns, EPA, on August 9, 2001, proposed to delay the effective date of the July 2000 rule by 18 months (66 FR 41817) until April 30, 2003, to allow time for reconsideration of specific aspects of the rule. EPA stated that it intended to use the time to analyze the findings and recommendations of the NRC report; to discuss ideas for improving the TMDL Program with a broad array of interested parties; and, if deemed appropriate, to revise the regulations through a notice and comment process. The Agency believed that an 18-month delay of the July 2000 rule's effective date was the minimum time necessary to conduct a meaningful consultation process, analyze and reconcile the recommendations of the various stakeholders and promulgate desired program changes. In the same notice EPA proposed to revise from April 1, 2002, until October 1, 2002, the date by which States are required to submit their 303(d) lists of impaired waters for 2002. Following receipt and evaluation of comments, on October 18, 2001, EPA published in the Federal Register a final rule delaying for 18 months, until April 30, 2003, the effective date of the July 2000 rule and delaying until October 1, 2002, the due date for the States' 2002 submission of section 303(d) lists of impaired waters (66 FR 53044).

As part of the effort to solicit additional input on the TMDL Program, EPA published a notice in the Federal Register announcing the dates, locations and discussion themes for five “public listening sessions” addressing the Agency's TMDL Program and possible revisions to the TMDL rule (66 FR 51429). EPA announced that it would use the information received at these public listening sessions as it considered changes to the regulations that implement the TMDL Program and related provisions in the NPDES Program. These listening sessions were held in the following cities, each with a primary focus on a specific theme:

• Chicago, Illinois (Oct. 22-23, 2001): “Implementation of TMDLs Addressing Nonpoint Sources.”

• Sacramento, California (Nov. 1-2, 2001): “Scope and Content of TMDLs.”

• Atlanta, Georgia (Nov. 7-8, 2001): “EPA's Role, the Pace/Schedule for Development of TMDLs, and NPDES Permitting Pre and Post TMDL.”

• Oklahoma City, Oklahoma (Nov. 15-16, 2001): “Listing Impaired Waters.”

• Washington DC (Dec. 11, 2001): “Comprehensive Discussion of All Listing and TMDL Issues.”

Nearly 1,000 people attended the five meetings. At each meeting attendees, representing a broad cross-section of stakeholder interests, heard presentations from EPA representatives and other members of the meeting's “listening panel,” and participated in facilitated small-group discussions focused on the meeting's overall theme and the specific discussion questions. The meetings provided participants an opportunity to exchange ideas with various stakeholder groups, including representatives from petitioners and interveners in litigation, and members of the public. EPA has published detailed summaries on its website of all the listening sessions, including oral and written comments from each meeting as well as letters received afterwards. ( http://www.epa.gov/owow/tmdl/meetings ). These meetings demonstrated that there continued to be a wide divergence of opinion regarding whether and how the Agency should revise the implementing regulations for the TMDL and NPDES Programs.

Subsequent to the public listening sessions, EPA met individually with numerous public and private stakeholder groups to solicit additional input on how best to modify the TMDL and NPDES regulations. These stakeholder groups represented a broad array of interested parties, and included the following: The Association of State and Interstate Water Pollution Control Administrators; Environmental Council of States; Western Governors' Association; Clean Water Coalition; Clean Water Network; Advisory Council on Water Information; Interstate Commission on Water Policy; Association of Metropolitan Sewerage Agencies; Water Environment Federation; American Chemical Council; American Farm Bureau; Earthjustice Legal Defense Fund; Ocean Conservancy; Natural Resources Defense Council; and TMDL rule petitioners. Between August 2001 and April 2002, EPA also attended periodic meetings with the United States Department of Agriculture (USDA) to solicit input on ways to improve the TMDL Program and to discuss approaches to taking advantage of USDA and State planning processes to support watershed-based TMDLs. EPA formed an internal EPA workgroup in October 2001 to begin evaluating the future direction and scope of the TMDL Program. Draft concepts developed by the workgroup have been shared with stakeholder groups, and the workgroup has developed a draft proposal that would amend the regulations at 40 CFR part 130 as well as some NPDES Program provisions.

Despite the efforts described above, the Agency needs more time to evaluate whether and how to revise the currently-effective regulations. At this point, EPA is not sure how long that effort will take. However, EPA believes that continuing to examine the regulatory needs of the TMDL and NPDES Programs when faced with the impending April 30, 2003, effective date for the July 2000 rule sends confusing signals to the States and other interested parties about which set of rules they should be prepared to implement. Due to the significant controversy, pending litigation and lack of stakeholder consensus on key aspects of the July 2000 rule, it has become apparent to EPA that, as promulgated, the July 2000 rule cannot function as the blueprint for an efficient and effective TMDL Program without significant revisions. Moreover, the existence of the approaching April 30, 2003, effective date for the July 2000 rule—a mere four months away—is beginning to act as an unnecessary and artificial distraction from an orderly completion of the Agency's efforts now underway to chart the future direction and scope of the TMDL Program. Consequently, EPA is proposing to withdraw the July 2000 TMDL rule so that the Agency can consider whether and how to revise the TMDL rules without concern that those efforts will be adversely affected by the July 2000 rule's effective date.

Withdrawal of the July 2000 rule will not adversely affect the increasing momentum of State TMDL Programs across the country. Should EPA ultimately decide to withdraw the July 2000 rule, the effect of such a withdrawal would be that the TMDL Program would continue to operate under the rules promulgated in 1985, as amended in 1992, at 40 CFR part 130. Thus, there would be no gap in regulatory coverage. Indeed, States would continue to establish lists of impaired waters and TMDLs according to the currently-effective regulations. Pursuant to these rules, States were required to submit new lists of impaired waters by October 1, 2002, and as described in section A above, these currently effective rules provide a comprehensive set of requirements for the identification of impaired waters, establishment of TMDLs and incorporation of TMDLs into State water quality management plans.

One impetus for the July 2000 rule was concern that States were not making enough progress in listing impaired waters, and scheduling, developing and implementing TMDLs. However, since 1996, when EPA established a Federal Advisory Committee to provide recommendations for revisions to the TMDL regulations, there have been many non-regulatory improvements to the TMDL Program that have resulted in States increasing the quality of their section 303(d) lists and greatly accelerating the pace of their TMDL development. States and EPA are continuing to establish TMDLs in accordance with schedules agreed upon between the States and EPA as well as in accordance with court orders and consent decrees (this is discussed in greater detail, below). The Agency has also increased outreach to States and issued TMDL technical guidance, monitoring guidance, and CWA section 319 nonpoint source guidance to help States develop better methods to more accurately and consistently monitor and list impaired waters, establish TMDLs, and identify the most appropriate and cost-effective methods and approaches to implement the TMDL Program. This outreach and guidance has taken the form of detailed policy memoranda, national guidance documents, technical protocol documents for developing pollutant-specific TMDLs, and information on best management practices for controlling nonpoint sources. A complete list of these documents can be found at EPA's website: http://oaspub.epa.gov/waters/national_rept.control. Key policy documents include: “New Policies for Establishing and Implementing Total Maximum Daily Loads (TMDLs)”, August 8, 1997; “Guidance: Use of Fish and Shellfish Advisories and Classifications in 303(d) and 305(b) Listing Decisions”—Oct. 24, 2000; “Supplemental Guidelines for the Award of Section 319 Nonpoint Source Grants to States and Territories in FY 2002 and Subsequent Years”—September 5, 2001; “2002 Integrated Water Quality Monitoring and Assessment Report Guidance”—November 19, 2001; “ Proposed Water Quality Trading Policy”—May 15, 2002; ( http://www.epa.gov/owow/watershed/trading/tradingpolicy.html ); and “EPA Review of 2002 Section 303(d) Lists and Guidelines for Reviewing TMDLs under Existing Regulations issued in 1992”—May 20, 2002.

States are the primary entities responsible for developing and implementing TMDLs under the CWA and EPA recognizes the financial burden faced by States in this effort. From FY 1999 to 2002, EPA has provided the States almost $30 million for TMDL-specific activities, including section 303(d) list development, water quality assessments/screening, and pollutant modeling support. States have used this funding to secure technical support through contracts and through grants to universities and not-for-profit organizations and institutions. The Agency also allowed the use of a portion of State grants for water program administration (CWA section 106 grants) and nonpoint source programs (CWA section 319 grants) for developing and implementing TMDLs. The guidelines for use of the section 319 funds recommend focusing incremental 319 grant dollars ($100 million) on implementing on-the-ground measures and practices that would reduce pollutant loads in accordance with approved TMDLs for waters that are impaired in whole or in part by nonpoint sources. In addition, since 1998 the Agency has spent more than $11 million to support development of technical guidance for developing TMDLs and identifying the most appropriate and efficient best management practices for nonpoint sources.

Helped by these programmatic initiatives, States have made considerable progress in developing TMDLs. Moreover, mechanisms are in place to ensure that those efforts do not diminish. Currently, there are 22 States in which EPA is under court order, generally resulting from entry of a consent decree, to establish TMDLs if States do not do so. Twelve consent decrees have been entered since 1999, the year the July 2000 TMDL rule revisions were proposed. Between 1996 and 1999, EPA and the States established approximately 800 TMDLs. Since then, and despite the fact that the July 2000 rule never became effective, EPA and the States have established more than an additional 7,000 TMDLs; and they continue to improve the pace at which TMDLs are established. Given this progress and the States' adoption since 1998 of schedules for TMDL development, EPA anticipates no reduction in the pace of TMDLs being developed even if the July 2000 rule does not take effect.

Another aim of the July 2000 rule was to promote more comprehensive State inventories of impaired waters. Under authority of the rules promulgated in 1985 and 1992, EPA issued the 2002 Integrated Water Quality Monitoring and Assessment Report Guidance (November 19, 2001) to promote a more integrated and comprehensive system of accounting for the nation's water quality attainment status. The guidance recommends that States submit an “Integrated Report” that will satisfy CWA requirements for both section 305(b) water quality reports and section 303(d) lists. The objectives of this guidance are to strengthen State monitoring programs, encourage timely monitoring to support decision making, increase numbers of waters monitored, and provide a full accounting of all waters and uses. The guidance encourages a rotating basin approach, and strengthened State assessment methodologies, and is intended to improve public confidence in water quality assessments and 303(d) lists. EPA extended the date for submission of 2002 lists by six months (66 FR 53044) to allow States and Territories time to incorporate some or all of the recommendations suggested by EPA in this 2002 Integrated Water Quality Monitoring and Assessment Report Guidance. At this time, most States and Territories have submitted a 2002 report which incorporates some or all of the elements of the guidance. In addition to releasing the Integrated Reporting Guidance, EPA also held five stakeholder meetings in 2001 and 2002 to review and comment on a best practices guide that EPA was developing for States on consolidated assessment and listing methodologies. This guidance “Consolidated Listing and Assessment Methodology-Toward a Compendium of Best Practices'' was released in July 2002.

For all the above reasons, the Agency believes that it is reasonable to withdraw the July 2000 rule. Continuing to evaluate whether and how to revise the current regulations under the April 30, 2003, effective date deadline is confusing to the States and other interested parties, and counterproductive to EPA's own continuing efforts to assess the future direction and scope of the TMDL Program. Moreover, in light of the significant progress States have made in the past three years in establishing TMDLs under the currently effective rules, EPA does not foresee any harm to States' efforts to implement section 303(d) from withdrawal of the July 2000 rule pending completion of EPA's effort. Consequently, the Agency is proposing to withdraw the July 2000 rule.

EPA invites and will consider comments received during the 30-day comment period that address the question of whether the Agency should withdraw the July 2000 rule. EPA is not requesting comments on the currently effective rule at 40 CFR part 130 or what, if any, changes the Agency should propose to the TMDL rules in effect at 40 CFR part 130. EPA's consideration of that issue is continuing and when or if EPA proposes changes to the currently-effective TMDL regulations, EPA will provide for public comment in a separate Federal Register notice. Should EPA ultimately decide to withdraw the July 2000 rule, the effect of such a withdrawal would be that the TMDL Program would continue to operate under the rules promulgated in 1985, as amended in 1992, at 40 CFR part 130. Similarly, the revisions to the NPDES regulations at 40 CFR parts 122-124 would not go into effect, but under section 301(b)(1)(C), NPDES permits would still be required to include limits as stringent as necessary to meet water quality standards, and under 40 CFR 122.44(d) permit limits would continue to be required to derive from and comply with water quality standards and be consistent with the assumptions and requirements of wasteload allocations in an approved TMDL.

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

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

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

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

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

Pursuant to the terms of Executive Order 12866, it has been determined that this rule is a “significant regulatory action.” As such, this action was submitted to OMB for review. Changes made in response to OMB suggestions or recommendations will be documented in the public record.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

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

The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) A small business based on SBA size standards; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. After considering the economic impacts of today's proposed rule on small entities, I certify that this action, which would withdraw the July 2000 rule that has not taken effect, will not have a significant economic impact on a substantial number of small entities. Like the July 2000 rule, this proposed rule will not impose any requirements on small entities. This action would withdraw the July 2000 rule, which has never taken effect.

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

Like the July 2000 rule, today's proposed rule, which would withdraw the July 2000 rule that has not taken effect, contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, or tribal governments or the private sector. The proposed rule imposes no enforceable duty on any State, local or tribal government or the private sector. Thus, today's rule is not subject to the requirements of sections 202 and 205 of UMRA. For the same reason, EPA has also determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments. This action does not impose any requirement on any entity. There are no costs associated with this action. Therefore, today's rule is not subject to the requirements of section 203 of UMRA.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

This proposal does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government as specified in executive Order 13132. It proposes to withdraw the July 2000 rule, which has never taken effect. Thus, Executive Order 13132 does not apply to this rule.

In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specifically solicits comment on this proposed rule from State and local officials.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes.”

This proposed rule does not have tribal implications. It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. It proposes to withdraw the July 2000 rule, which has never taken effect. Thus, Executive Order 13175 does not apply to this rule.

In the spirit of Executive Order 13175, and consistent with EPA policy to promote communications between EPA and tribal governments, EPA specifically solicits additional comment on this proposed rule from tribal officials.

Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, EPA must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by EPA. This proposed rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866.

This rule is not a “significant energy action” as defined in Executive Order 13211, “Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use”, (66 FR 28355; May 22, 2001) because it is not a likely to have a significant adverse effect on the supply, distribution, or use of energy. This rule simply proposes to withdraw the July 2000 rule which has never taken effect. We have concluded that this rule is not likely to have any adverse energy effects.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This proposed rulemaking does not impose any technical standards. Therefore, EPA is not considering the use of any voluntary consensus standards.

For the reasons stated in the preamble, EPA proposes:

1. To withdraw the amendments to 40 CFR part 9, 122, 123, 124 and 130 published July 13, 2000 (65 FR 43586).

a. The authority citation for part 130 continues to read as follows:

For additional information see the direct final rule which is published in the Rules section of this Federal Register .

For additional information see the direct final rule which is published in the Rules Section of this Federal Register .

The Commission by Notice of Proposed Rulemaking published October 31, 2002, 67 FR 66352, proposed amendments to its passenger vessel regulations at 46 CFR part 540 that would eliminate the current ceiling on required performance coverage; adjust the amount of coverage required by providing for consideration of the obligations of credit card issuers; provide for the use of Alternative Dispute Resolution (“ADR”), including the Commission's ADR program, in resolving passenger performance claims; revise the application form; and make a number of technical adjustments to the performance and casualty rules.

Royal Caribbean Cruises, Ltd.; Norwegian Cruise Line; the Travel Industry Association of America; the Florida Ports Council; Crystal Cruises; the Port of San Diego Unified Port District; Cruise the West and its Members; Congressmen Don Young, Chairman and James L. Oberstar, Ranking Democratic Member, of the Committee on Transportation and Infrastructure of the U.S. House of Representatives; and Disney Cruise Line are seeking an extension of time, up to 90 days beyond the current due date of January 8, 2003, to file comments. In support of this request, they argue, inter alia, that an extension would give the industry time to adequately evaluate the NPRM and to obtain the cost data the Commission encouraged commenters to submit. In anticipation of receiving cost and other data relevant to this NPRM, the Commission has determined to grant the parties request and is extending the comment period to April 8, 2003.