This rule is issued under Marketing Agreement No. 115 and Marketing Order No. 982, both as amended (7 CFR part 982), regulating the handling of hazelnuts grown in Oregon and Washington, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is intended that this action apply to all merchantable hazelnuts handled during the 2002-2003 marketing year (July 1, 2002, through June 30, 2003). This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule continues in effect marketing percentages that allocate the quantity of inshell hazelnuts that may be marketed in domestic markets. The Board is required to meet prior to September 20 of each marketing year to compute its marketing policy for that year, and compute and announce an inshell trade demand if it determines that volume regulations would tend to effectuate the declared policy of the Act. The Board also computes and announces preliminary free and restricted percentages for that year.

The inshell trade demand is the amount of inshell hazelnuts that handlers may ship to the domestic market throughout the marketing season. The order specifies that the inshell trade demand be computed by averaging the preceding three “normal” years' trade acquisitions of inshell hazelnuts, rounded to the nearest whole number. The Board may increase the three-year average by up to 25 percent, if market conditions warrant an increase. The Board's authority to recommend volume regulations and the computations used to determine the percentages are specified in § 982.40 of the order.

The quantity to be marketed is broken down into free and restricted percentages to make available hazelnuts which may be marketed in domestic inshell markets (free) and hazelnuts which must be exported, shelled, or otherwise disposed of by handlers (restricted). Prior to September 20 of each marketing year, the Board must compute and announce preliminary free and restricted percentages. The preliminary free percentage releases 80 percent of the adjusted inshell trade demand to the domestic market. The purpose of releasing only 80 percent of the inshell trade demand under the preliminary percentage is to guard against an underestimate of crop size. The preliminary free percentage is expressed as a percentage of the total supply subject to regulation (supply) and is based on the preliminary crop estimate.

The National Agricultural Statistics Service (NASS) estimated 2002-2003 hazelnut production at 18,000 tons for the Oregon and Washington area. The majority of domestic inshell hazelnuts are marketed in October, November, and December. By November, the marketing season is well under way.

At its August 29, 2002, meeting, the Board adjusted the NASS crop estimate up to 19,887 tons by deducting the average crop disappearance over the preceding three years (5.23 percent) and adding the undeclared carryin (2,828 tons) to the 18,000 ton production estimate. Disappearance is the difference between orchard-run production (crop estimate) and the available supply of merchantable product available for sale by handlers. Disappearance consists of (1) unharvested hazelnuts, (2) culled product (nuts that are delivered to handlers but later discarded), or (3) product used on the farm, sold locally, or otherwise disposed of by producers. The Board computed the adjusted inshell trade demand of 3,133 tons by taking the difference between the average of the past three years' sales (3,563 tons) and the declared carry-in from last year's crop (430 tons).

The Board computed and announced preliminary free and restricted percentages of 12.6012 percent and 87.3988 percent, respectively, at its August 29, 2002, meeting. The Board computed the preliminary free percentage by multiplying the adjusted trade demand by 80 percent and dividing the result by the adjusted crop estimate (3,133 tons × 80 percent/19,887 tons = 12.6012 percent.) The preliminary free percentage thus initially released 2,506 tons of hazelnuts from the 2002 supply for domestic inshell use, and the preliminary restricted percentage withheld 17,381 tons for the export and shelled (kernel) markets.

Under the order, the Board must meet again on or before November 15 to recommend interim final and final percentages. The Board uses current crop estimates to calculate interim final and final percentages. The interim final percentages are calculated in the same way as the preliminary percentages and release the remaining 20 percent (to total 100 percent of the inshell trade demand) previously computed by the Board. Final free and restricted percentages may release up to an additional 15 percent of the average of the preceding three years' trade acquisitions to provide an adequate carryover into the following season ( i.e. , desirable carryout). The order requires that the final free and restricted percentages shall be effective 30 days prior to the end of the marketing year, or earlier, if recommended by the Board and approved by USDA. Revisions in the marketing policy can be made until February 15 of each marketing year, but the inshell trade demand can only be revised upward, consistent with § 982.40(e).

The Board met on November 15, 2002, and reviewed and approved an amended marketing policy and recommended the establishment of final free and restricted percentages. The Board decided that market conditions were such that immediate release of an additional 15 percent for desirable carryout would not adversely affect the 2002-2003 domestic inshell market. Accordingly, no interim final free and restricted percentages were recommended. Final free and restricted percentages were recommended at 18.4392 and 81.5608 percent, respectively. The final free percentage released 3,667 tons of inshell hazelnuts from the 2002 supply for domestic use.

The final marketing percentages are based on the Board's final production estimate and the following supply and demand information for the 2002-2003 marketing year:

In addition to complying with the provisions of the order, the Board also considered USDA's 1982 “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” (Guidelines) when making its computations in the marketing policy. This volume control regulation provides a method to collectively limit the supply of inshell hazelnuts available for sale in domestic markets. The Guidelines provide that the domestic inshell market has available a quantity equal to 110 percent of prior years' shipments before allocating supplies for the export inshell, export kernel, and domestic kernel markets. This provides for plentiful supplies for consumers and for market expansion, while retaining the mechanism for dealing with oversupply situations. The established final percentages will make available an additional 534 tons for desirable carryout. The total free supply for the 2002-2003 marketing year is 4,097 tons of hazelnuts, which is the sum of the final trade demand of 3,563 tons and the 534 ton desirable carryout. This amount is 115 percent of prior years' sales and exceeds the goal of the Guidelines.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those having annual receipts of less than $5,000,000. There are approximately 750 producers of hazelnuts in the production area and approximately 20 handlers subject to regulation under the order. Average annual hazelnut revenue per producer is approximately $36,500. This is computed by dividing NASS figures for the average value of production for 2000 and 2001 ($27,369,500) by the number of producers. The level of sales of other crops by hazelnut producers is not known. In addition, based on Board records, about 95 percent of the handlers ship under $5,000,000 worth of hazelnuts on an annual basis. In view of the foregoing, it can be concluded that the majority of hazelnut producers and handlers may be classified as small entities.

Board meetings are widely publicized in advance of the meetings and are held in a location central to the production area. The meetings are open to all industry members and other interested persons who are encouraged to participate in the deliberations and voice their opinions on topics under discussion. Thus, Board recommendations can be considered to represent the interests of small business entities in the industry.

Currently, U.S. hazelnut production is allocated among three market outlets: domestic inshell, export inshell, and kernel markets. Handlers and growers receive the highest return on domestic inshell, less for export inshell, and the least for kernels. Based on Board records of average shipments for 1992-2001, the percentage going to each of these markets was 13 percent (domestic inshell), 41 percent (export inshell), and 46 percent (kernels).

The inshell market can be characterized as having limited demand and being prone to oversupply and low grower prices in the absence of supply restrictions. This volume control regulation provides a method for the U.S. hazelnut industry to limit the supply of domestic inshell hazelnuts available for sale in the continental U.S. On average, 78 percent of domestic inshell hazelnut shipments occur from October 1 through November 30, primarily to supply holiday nut demand.

Many years of marketing experience led to the development of the current volume control procedures. These procedures have helped the industry solve its marketing problems by keeping inshell supplies in balance with domestic needs. Volume controls fully supply the domestic inshell market while preventing an oversupply of that market.

The estimated inshell trade demand (3,133 tons) and the high level of carryin (2,828 tons) were key market factors leading to the 18.4392 percent final free percentage. Hazelnut production in 2002 was only 2,500 tons more than in 1998, which was the shortest crop in the last ten years. Even if carryin had been zero, the amount that handlers typically ship into the domestic inshell market (i.e., average trade acquisitions of 3,563 tons) equals about 18 percent of the supply (19,887 tons subject to regulation). Although the domestic inshell market is a relatively small proportion of total sales (13 percent of average shipments over the last ten years, and 10 percent of average shipments for the last two years), it remains a profitable market segment. The volume control provisions of the marketing order are designed to avoid oversupplying this particular market segment, because that would likely lead to substantially lower grower prices. The other market segments, export inshell and kernels, are expected to continue to provide good outlets for U.S. hazelnut production.

Since high production years typically follow low production years (a consistent pattern for hazelnuts), higher production is expected in 2003.

Recent production and price data reflect the stabilizing effect of the volume control regulations. Industry statistics show that total hazelnut production has varied widely over the 10-year period between 1992 and 2001, from a low of 16,500 tons in 1998 to a high of 49,500 tons in 2001. Production in the shortest crop year and the biggest crop year was 48 percent and 153 percent, respectively, of the 10-year average tonnage of 32,240. The coefficient of variation (a standard statistical measure of variability; “CV”) for hazelnut production over the 10-year period is 0.36. In contrast, the coefficient of variation for hazelnut grower prices is 0.16, less than half the CV for production. The considerably lower variability of prices versus production provides an illustration of the order's price-stabilizing impacts.

Comparing grower cost of production to grower revenue in recent years highlights the financial impacts on growers at varying production levels. A recent study from Oregon State University (OSU) estimated the cost of production per acre of hazelnuts to be approximately $1,340 for a typical 100-acre hazelnut enterprise. Average grower revenue per bearing acre (based on NASS acreage and value of production data) equaled or exceeded the OSU estimate twice between 1995 and 2000. Average grower revenue was below typical costs in the other years. Since 1995, the highest level of revenue per bearing acre was $1,552 (1997) and the lowest was $561 in 1996. Without the stabilizing impact of the order, growers may have lost more money. While crop size has fluctuated, volume regulations contribute to orderly marketing and market stability, and help to moderate the variation in returns for all producers and handlers, both large and small.

While the level of benefits of this rulemaking is difficult to quantify, the stabilizing effects of volume regulations impact both small and large handlers positively by helping them maintain and expand markets even though hazelnut supplies fluctuate widely from season to season. This regulation provides equitable allotment of the most profitable market, the domestic inshell market. That market is available to all handlers, regardless of size.

As an alternative to this regulation, the Board discussed not regulating the 2002-2003 hazelnut crop. However, without any regulations in effect, the Board believed that the industry would oversupply the inshell domestic market. Although the 2002-2003 hazelnut crop is much smaller than last year, the release of 18,000 tons on the domestic inshell market would cause producer returns to decrease drastically, and completely disrupt the market.

Section 982.40 of the order establishes a procedure and computations for the Board to follow in recommending to USDA the preliminary, interim final, and final quantities of hazelnuts to be released to the free and restricted markets each marketing year. The program results in plentiful supplies for consumers and for market expansion while retaining the mechanism for dealing with oversupply situations.

Hazelnuts produced under the order comprise virtually all of the hazelnuts produced in the U.S. This production represents, on average, less than 4 percent of total U.S. production for other tree nuts, and less than 4 percent of the world's hazelnut production.

During the 2001-2002 season, 78 percent of the kernels were marketed in the domestic market and 22 percent were exported. Domestically produced kernels generally command a higher price in the domestic market than imported kernels. The industry is continuing its efforts to develop and expand other markets with emphasis on the domestic kernel market. Small business entities, both producers and handlers, benefit from the expansion efforts resulting from this program.

Inshell hazelnuts produced under the order compete well in export markets because of quality. Based on Board statistics, Europe has historically been the primary export market for U.S. produced inshell hazelnuts, with a 10-year average of 5,436 tons out of total average exports of 12,132 tons. Recent years have seen a significant shift in export destinations. Inshell shipments to Europe totaled 4,526 tons in the 2001-2002 season, representing 17 percent of exports, with the largest share going to Germany. Inshell shipments to Southwest Pacific countries, and Hong Kong in particular, have increased dramatically in the past few years, rising to 73 percent of total exports of 25,868 tons in the 2001-2002 season. The industry continues to pursue export opportunities.

There are some reporting, recordkeeping, and other compliance requirements under the order. The reporting and recordkeeping burdens are necessary for compliance purposes and for developing statistical data for maintenance of the program. The information collection requirements have been previously approved by the Office of Management and Budget under OMB No. 0581-0178. The forms require information which is readily available from handler records and which can be provided without data processing equipment or trained statistical staff. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. This rule does not change those requirements. In addition, as noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

Further, as mentioned earlier, the Board's meetings were widely publicized throughout the hazelnut industry and all interested persons were invited to attend the meetings and participate in Board deliberations. Like all Board meetings, those held on August 29, and November 15, 2002, were public meetings and all entities, both large and small, were able to express their views on this issue.

An interim final rule concerning this action was published in the Federal Register on March 12, 2003. The Board's staff mailed copies of this rule to all Board members. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. That rule provided for a 60-day comment period that ended May 12, 2003. No comments were received.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant material presented, including the Board's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the Federal Register (68 FR 11733, March 12, 2003) will tend to effectuate the declared policy of the Act.

This rule is issued under Marketing Order No. 985, as amended (7 CFR part 985), regulating the handling of spearmint oil produced in the Far West (Washington, Idaho, Oregon, and designated parts of Nevada and Utah), hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, Far West spearmint oil handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable spearmint oil beginning on June 1, 2003, and continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule increases the assessment rate established for the Committee for the 2003-2004 and subsequent marketing years from $0.09 to $0.10 per pound of spearmint oil handled.

The Far West spearmint oil marketing order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Committee are producers of Far West spearmint oil. They are familiar with the Committee's needs and with the costs for goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate was formulated and discussed in a public meeting. Thus, all directly affected persons had an opportunity to participate and provide input.

For the 2000-2001 and subsequent marketing years, the Committee recommended, and USDA approved, an assessment rate that would continue in effect from marketing year to marketing year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other information available to USDA.

The Committee met on February 26, 2003, and unanimously recommended 2003-2004 expenditures of $173,700 and an assessment rate of $0.10 per pound of spearmint oil handled. In comparison, last year's budgeted expenditures were $191,300. The recommended assessment rate is $0.01 higher than the $0.09 per pound rate currently in effect. Because spearmint oil assessable poundage and assessment income have been lower than estimated the last two marketing years, the Committee has had to use reserve funds to cover its budgeted expenses. To keep its reserve fund at an acceptable level, the Committee recommended the $0.01 increase and reduced its expenses for 2003-2004.

The major expenditures recommended by the Committee for the 2003-2004 marketing year include $138,400 for committee expenses, $23,300 for administrative expenses, and $12,000 for market research and promotion expenses. Budgeted expenses for these items in 2002-2003 were $164,200, $23,100, and $4,000, respectively.

The Committee estimates that spearmint oil sales for the 2003-2004 marketing year will be approximately 1,697,200 pounds, which should provide $169,720 in assessment income. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, should be adequate to cover budgeted expenses. The Committee estimates that its monetary reserve will be approximately $72,394 at the beginning of the 2003-2004 marketing year. It is not anticipated that the reserve fund will exceed the maximum permitted by the order of approximately one marketing year's operational expenses (§ 985.42).

The assessment rate will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate will be in effect for an indefinite period, the Committee will continue to meet prior to or during each marketing year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2003-2004 budget and those for subsequent marketing years will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are 7 spearmint oil handlers subject to regulation under the marketing order, and approximately 98 producers of Class 1 (Scotch) spearmint oil and approximately 100 producers of Class 3 (Native) spearmint oil in the regulated production area. Small agricultural service firms are defined by the Small Business Administration (SBA)(13 CFR 121.201) as those whose annual receipts are less than $5,000,000, and small agricultural producers are defined as those having annual receipts less than $750,000.

Based on SBA's definition of small entities, the Committee estimates that 2 of the 7 handlers regulated by the order could be considered small entities. Most of the handlers are large corporations involved in the international trading of essential oils and the products of essential oils. In addition, the Committee estimates that 11 of the 98 Scotch spearmint oil producers and 13 of the 100 Native spearmint oil producers could be classified as small entities under the SBA definition. Thus, a majority of handlers and producers of Far West spearmint oil may not be classified as small entities.

The Far West spearmint oil industry is characterized by producers whose farming operations generally involve more than one commodity, and whose income from farming operations is not exclusively dependent on the production of spearmint oil. A typical spearmint oil producing operation has enough acreage for rotation such that the total acreage required to produce the crop is about one-third spearmint and two-thirds rotational crops. Thus, the typical spearmint oil producer has to have considerably more acreage than is planted to spearmint during any given season. Crop rotation is an essential cultural practice in the production of spearmint oil for weed, insect, and disease control. To remain economically viable with the added costs associated with spearmint oil production, most spearmint oil-producing farms fall into the SBA category of large businesses.

This rule increases the assessment rate established for the Committee and collected from handlers for the 2003-2004 and subsequent marketing years from $0.09 to $0.10 per pound of spearmint oil handled. The Committee unanimously recommended 2003-2004 expenditures of $173,700 and an assessment rate of $0.10 per pound. The assessment rate is $0.01 higher than the $0.09 per pound rate currently in effect. The quantity of assessable spearmint oil for the 2003-2004 marketing year is estimated at 1,697,200 pounds. Thus, the $0.10 rate should provide $169,720 in assessment income. This, along with interest income and funds from the Committee's authorized reserve, should be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2003-2004 marketing year include $138,400 for committee expenses, $23,300 for administrative expenses, and $12,000 for market research and promotion expenses. Budgeted expenses for these items in 2002-2003 were $164,200, $23,100, and $4,000, respectively.

The Committee reviewed and unanimously recommended 2003-2004 expenditures of $173,700, which included a decrease to committee expenses, and increases in administrative and market research and promotion expenses. Prior to arriving at this budget, the Committee considered information from various sources, including the Committee's Executive Committee and the current marketing year's actual and anticipated expenditures. The proposed budget includes an expenditure reduction of $17,600 and no further alternative expenditure levels were discussed. The Committee estimates that spearmint oil sales for the 2003-2004 marketing year will be approximately 1,697,200 pounds, which should provide $169,720 in assessment income. This, together with interest and other income, is approximately $280 below the anticipated expenses, which the Committee determined to be acceptable.

A review of historical information and preliminary information pertaining to the upcoming 2003-2004 marketing year indicates that the producer price for the 2003-2004 marketing year could be about $9.13 per pound. Therefore, the estimated assessment revenue for the 2003-2004 marketing year as a percentage of total producer revenue could be about 1.1 percent.

This action increases the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs would be offset by the benefits derived by the operation of the marketing order. In addition, the Committee's meeting was widely publicized throughout the Far West spearmint oil industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the February 26, 2003, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Finally, interested persons were invited to submit information on the regulatory and informational impacts of this action on small businesses.

This rule imposes no additional reporting or recordkeeping requirements on either small or large Far West spearmint oil handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

A proposed rule concerning this action was published in the Federal Register on April 22, 2003 (68 FR 19755). A copy of the rule was provided to Committee staff, which in turn made it available to spearmint oil producers, handlers, and other interested persons. Finally, the rule was made available through the Internet by the Office of the Federal Register and USDA. A 20-day comment period ending May 12, 2003, was provided to allow interested persons to respond to the proposal. No comments were received.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant matter presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because the 2003-04 marketing year begins June 1, 2003, and the marketing order requires that the rate of assessment for each marketing year apply to all assessable spearmint oil handled during such marketing year. In addition, the Committee needs to have sufficient funds to pay its expenses, which are incurred on a continuous basis. Further, handlers are aware of this action which was recommended by the Committee at a public meeting. Also, a 20-day comment period was provided for in the proposed rule and no comments were received.

This rule is issued under Marketing Agreement and Order No. 989 (7 CFR part 989), both as amended, regulating the handling of raisins produced from grapes grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This rule continues in effect modifications to the administrative rules and regulations regarding the RDP specified under the order. The changes are designed to provide the RAC with additional flexibility when implementing a RDP, and provide the opportunity for all producers to participate in a program. The changes include: Adding an additional date by which the RAC can increase the tonnage allotted to a RDP; adding authority for the RAC to limit the amount of tonnage allocated for vine removal; modifying application of the production cap for spur pruners under a RDP; adding authority for the RAC to condition a vine removal program with a producer's agreement not to replant and to compensate the RAC for damages if replanting occurs; revising the requirements for prioritizing and allocating tonnage for spur pruners under a RDP; and allowing partial production units to be included in a RDP and allowing the RAC to specify provisions to maintain the integrity of the program.

These regulatory changes were recommended by the RAC at meetings on October 15, and December 12, 2002, by a near unanimous vote. A member voting no expressed concern with the definition of partial production unit as proposed by the RAC.

Given the above changes, appropriate revisions were made to the text of § 989.156 to include specific references to approval of USDA for a program's provisions.

The order provides authority for volume regulation designed to promote orderly marketing conditions, stabilize prices and supplies, and improve producer returns. When volume regulation is in effect, a certain percentage of the California raisin crop may be sold by handlers to any market (free tonnage) while the remaining percentage must be held by handlers in a reserve pool (reserve) for the account of the RAC. Reserve raisins are disposed of through various programs authorized under the order. For example, reserve raisins may be sold by the RAC to handlers for free use or to replace part of the free tonnage they exported; carried over as a hedge against a short crop the following year; or may be disposed of in other outlets not competitive with those for free tonnage raisins, such as government purchase, distilleries, or animal feed. Net proceeds from sales of reserve raisins are ultimately distributed to reserve pool equity holders.

The RDP is another program concerning reserve raisins authorized under the order and may be used as a means for bringing supplies into closer balance with market needs. Authority for the program is provided in § 989.56 of the order. Paragraph (e) of that section provides authority for the RAC to establish, with the approval of USDA, such rules and regulations as may be necessary for the implementation and operation of a RDP. Accordingly, additional procedures and deadlines are specified in § 989.156.

Pursuant to these sections, the RAC must meet during the crop year to review raisin data, including information on production, supplies, market demand, and inventories. If the RAC determines that the available supply of raisins, including those in the reserve pool, exceeds projected market needs, it can decide to implement a diversion program, and announce the amount of tonnage eligible for diversion during the subsequent crop year. Producers who wish to participate in the RDP must submit an application to the RAC.

Approved producers curtail their production by vine removal or some other means established by the RAC. Such producers receive a certificate the following fall from the RAC which represents the quantity of raisins diverted. Producers sell these certificates to handlers who pay producers for the free tonnage applicable to the diversion certificate minus the established harvest cost for the diverted tonnage. Handlers redeem the certificates by presenting them to the RAC, and paying an amount equal to the established harvest cost plus payment for receiving, storing, fumigating, handling, and inspecting the tonnage represented on the certificate. The RAC then gives the handler raisins from the prior year's reserve pool in an amount equal to the tonnage represented on the diversion certificate. The new crop year's volume regulation percentages are applied to the diversion tonnage acquired by the handler, as if the handler had bought raisins directly from a producer.

The California raisin and grape industries continue to be plagued by burdensome supplies and severe economic conditions. Industry members have been reviewing various options to help address some of these concerns. The RAC also has been reviewing options to help the industry address these issues through the marketing order. The RAC proposed some requirements for a 2003 RDP at a meeting on October 15, 2002. Additional revisions were proposed by the RAC's Executive Committee on October 24, and November 4 and 26, 2002. The RAC met on December 12, 2002, to review the Executive Committee's changes and proposed program. The RAC ultimately recommended specific changes to the order's regulations regarding the RDP that could apply to any future RDP. The changes were designed to provide the RAC with additional flexibility when implementing a RDP, and provide opportunity for all producers to participate in a program. The changes are described in the following paragraphs.

With the exception of the 2002-03 crop year, § 989.56(a) of the order and § 989.156(a)(1) of the regulations specify that the RAC must announce the quantity of tonnage allotted to a RDP on or before November 30 of each crop year. Section 989.156(a)(1) specifies further, with the exception of the 2002-03 crop year, that the RAC may announce an increase in the tonnage eligible for a RDP on or before January 15 of each crop year. The November 30 deadline in the order was suspended, and the November 30 and January 15 dates in the regulations were extended for the 2002-03 crop year to dates specified by the RAC (67 FR 71072, November 29, 2002) to allow time for review and modification of the RAC's proposed RDP changes.

The RAC recommended that the regulations be modified to allow the RAC an additional opportunity to increase the tonnage eligible for a RDP on or before May 1 of each crop year subsequent to 2002-03. This will allow the RAC the opportunity to allocate additional tonnage to a RDP in years when raisin deliveries may be slow, or when additional reserve raisins may be available later during the crop year. Section 989.156(a)(1) was modified accordingly.

Section 989.156(h)(1) specifies that the RAC may limit a RDP to vine removal only. This requirement remains unchanged by this rule. However, the RAC proposed having the ability to cap, or limit, the amount of tonnage allocated to a RDP for vine removal. For example, the RAC may allocate 100,000 tons to a RDP, of which 50,000 tons would be allotted for vine removal only. Under this scenario, the remaining 50,000 tons would be available for spur pruners (or producers who opted to reduce their production by methods other than vine removal). As described later in this rule, the RAC recommended revising the regulations to allow for the allocation of tonnage to spur pruners pro rata to all who applied. Imposing a cap on vine removers would ensure that a certain amount of tonnage would be available for a spur prune program. This additional requirement is specified in § 989.156(a)(2).

The RAC recommended that authority be added for the RAC to condition a vine removal program with a producer's agreement not to replant and to compensate the RAC for damages if replanting occurs. Producers who agree to remove vines, but replant within a specified number of years (maximum of 5 crop years), as determined by the RAC, with the approval of USDA, must agree to compensate the RAC for appropriate damages for the tonnage specified in the applicable diversion certificate. The payment of damages would be appropriate because replanting would cause serious damage to a RDP and the raisin industry. On January 29, 2003, the RAC recommended, and USDA subsequently approved, imposing a 5-year restriction on replanting as a feature of a 2003 RDP for NS raisins (35,000 tons of 2002 reserve raisins were allocated to a 2003 RDP). This should remove acreage from production for at least 8 crop years because it takes about 3 years for a new vineyard to have significant production. Adding this requirement to a RDP is expected to help the industry reduce its burdensome oversupply.

Accordingly, the producer application for a 2003 RDP was modified to condition a vine removal program with a producer's agreement not to replant. Producers who elect to participate in a RDP and later replant will be required to compensate the RAC for damages at a rate of $700 per ton, as recommended by the RAC and approved by USDA, for the tonnage specified on the diversion certificate.

The interim final rule specified that funds collected by the RAC for such damages will be deposited in the reserve pool applicable to the particular diversion program and be distributed to the equity holders in that pool. An addition has been made to this final rule, based on a comment received. The comment is addressed in detail later in this rule. Specifically, if the applicable reserve pool has been closed and equity distributed, damages collected will be deposited in the reserve pool for the crop year in which such monies are received. If no reserve pool exists for that year, then damages collected will be deposited in an open reserve pool of the crop year closest to the applicable diversion pool. Finally, as stated in the interim final rule, if a determination is made by the RAC that a producer violated the agreement not to replant and is subject to damages, the producer may appeal the RAC's decision in accordance with paragraph (m) of § 989.156.

Under a RDP, the reserve tonnage allocated to a program becomes part of the following year's supply. For example, if 100,000 tons of 2002-03 reserve raisins were allocated to a RDP, that tonnage would be issued to RDP producers in the fall of 2003 in the form of certificates from the RAC. The certificates represent actual raisins. The 100,000 tons would then be included in the 2003-04 crop estimate. A higher crop estimate reduces the free tonnage percentage. Since producers are paid by handlers for their free tonnage raisins, a lower free tonnage percentage reduces producer returns. The industry has had concerns with the impact of large diversion programs on the following year's free tonnage percentage.

As a result, the RAC recommended that the concern about large RDP's adversely impacting the following year's free tonnage percentage be addressed through application of the production cap. A production cap is a limit on the yield per acre that is permitted under a RDP. Section 989.56(a) specifies that the RAC must announce the production cap at the same time it announces a RDP for the crop year. The section specifies further that the production cap shall equal 2.75 tons per acre, unless it is lowered by the RAC, with approval of the Secretary.

The RAC proposed that it have the flexibility to limit the production cap to a percentage of the yield per acre for production units on which producers agree to spur prune (or curtail production by methods other than vine removal) to lessen the adverse effects a large RDP would have on the following year's free tonnage percentage. For example, the RAC could specify that the production cap applicable to 2003 spur pruners would equal the lesser of 2.75 tons per acre, or 80 percent of the 2002 yield per acre on that production unit. The following table illustrates this further.

Participants who agree to remove vines would not be subject to the percentage limit on the production cap because of the effectiveness of vine removal in reducing production capacity. However, such participants would remain subject to the established production cap. This additional flexibility is specified in § 989.156(a)(2).

Prior to implementation of the interim final rule, § 989.156(d) required that, if reserve tonnage existed after the allocation of diversion tonnage had been made to all eligible producer applicants who agreed to remove vines, a lottery would be held to allocate remaining tonnage. The RAC recommended that it have the flexibility to allocate such tonnage either pro rata to remaining applicants or by a lottery for complete production units to remaining applicants if a minimal amount of tonnage remains. Allocating tonnage pro rata will provide the opportunity for all producers to participate in a spur prune program. Accordingly, §§ 989.156(a)(2) and 989.156(d) were modified to incorporate this option.

As described above, the RAC contemplates future RDP's where the tonnage allotted to applicants who agree to spur prune vines (or divert production using a method other than vine removal) may be done on a pro rata basis. Such producers would spur prune only a portion of a production unit, or a “partial” unit.

In 1997, the RAC recommended that partial production units no longer be accepted into the RDP, and § 989.156 was modified accordingly (62 FR 60764; November 13, 1997). This action was taken because the RAC had concerns that some producers were removing weak vines in a production unit and getting credit under a RDP for an inflated amount of tonnage.

To implement the RAC's proposal for allocating tonnage on a pro-rata basis to applicants who agree to spur prune their vines, and help maintain integrity of the program, the RAC recommended that a partial production unit must have two permanent, contiguous (natural or man-made) boundaries. This should eliminate the ability for producers to select certain rows of weak vines and artificially inflate the tonnage on their unit. This definition was added to paragraph (o) of § 989.156. Additionally, the words “or portion thereof” were added to paragraphs (h) and (i) of § 989.156 to indicate that partial units may be included in a RDP.

Finally, the RAC recommended that it be given the authority to specify provisions for a partial production unit to maintain the integrity of the program. For example, the RAC indicated that it might want to specify that only a certain corner of each vineyard may be accepted into a spur-prune RDP to further alleviate the problem of a producer choosing the weakest corner of his/her vineyard, and to help maintain the integrity of the RDP. Accordingly, paragraph (a) of § 989.156 was modified to reflect that the RAC may limit a program that is applicable to partial production units by specifying the portion of the production units that can be diverted, or like provisions to maintain the integrity of the program.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Thus, both statutes have small entity orientation and compatibility.

There are approximately 20 handlers of California raisins who are subject to regulation under the order and approximately 4,500 raisin producers in the regulated area. Small agricultural firms are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts of less that $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000. Thirteen of the 20 handlers subject to regulation have annual sales estimated to be at least $5,000,000, and the remaining 7 handlers have sales less than $5,000,000. No more than 7 handlers, and a majority of producers, of California raisins may be classified as small entities.

The California Agriculture Statistics Service (CASS) forecasted the 2002 production of raisin variety grapes at 2,550,000 tons (green). This is a relatively high level of production. The record high production occurred in 2000, at 2,921,000 tons (green).

Producers market raisin variety grapes in the fresh market (table), wine or juice market (crush), or dry them into raisins. Typically, 67 percent of the crop is dried for raisins, 20 percent crushed for wine and juice, and the remaining 13 percent of the crop is utilized in fresh and canned sales. These outlets provide a hedge for producers attempting to minimize risk from bad weather (rain) or a depressed market (concentrate, wine, or raisins).

For the week ending March 22, 2003, seasonal deliveries for all varietal types of raisins were at 421,725 tons (381,992 tons for Natural (sun-dried) Seedless (NS)). This will be the third consecutive year that raisin production has been above 400,000 tons. Combined domestic and export demand (shipments) is estimated at approximately 300,000 tons. These levels of production, combined with stable demand have resulted in a large build-up of free and reserve carryin inventories.

At the beginning of the 2002-2003 crop year (August 1, 2002), the RAC reported that 48,749 tons of NS raisins were currently being held in the reserve pool from the 2001 crop. In addition, 153,152 free tons were held by handlers in inventories. With total dried production initially estimated at 446,449 tons, and combined free and reserve inventories at 201,901 tons, the industry had over 600,000 tons of raisins.

This type of surplus situation leads to serious marketing problems. Handlers compete against each other in an attempt to sell more raisins to reduce inventories and to market their crop. This situation puts downward pressure on producers' prices and incomes.

In addition, it has been reported that the wineries offered $65 a ton for green NS raisins for crushing. In recent years, wineries have typically offered prices ranging from $164 to $200 per ton. The wine price for NS grapes was lowered to $125 per ton in 2000 and fell to $85.70 per ton in 2001. This has resulted in more raisin variety grapes being dried for raisins, which has added to the surplus situation in the raisin market.

Typically, 500,000 tons of raisin variety grapes are delivered to the wineries for crushing. In 2001, this volume decreased to 261,000 tons. The 2002 crop year deliveries for crushing are expected to remain low.

Surplus situations are often the result of increased bearing acres, which are encouraged by high prices. However, bearing acres for raisin variety grapes have fallen from 280,000 acres in 2000 to 273,000 acres in 2002. In addition, 27,000 acres were idle due to the raisin diversion program. The increased raisin production is largely the result of producers deciding to dry more grapes for raisins due to the low crush prices and increased yields. The RAC hopes to utilize the RDP to help alleviate the industry's oversupply. The RAC's recommended changes were designed to add flexibilities to the RDP, and provide the opportunity for all producers to participate in a program. The overall impact of a RDP with the recommended flexibility is expected to impact small and large entities positively by reducing the industry's production capacity, and by bringing supplies in closer balance with market needs.

This rule continues to revise § 989.156 of the order's rules and regulations regarding the RDP. Under a RDP, producers receive certificates from the RAC for curtailing their production to reduce burdensome supplies. The certificates represent diverted tonnage. Producers sell the certificates to handlers who, in turn, redeem the certificates with the RAC for raisins from the prior year's reserve pool. Specifically, this rule continues to revise the requirements of a RDP by: Adding an additional date by which the RAC can increase the tonnage allotted to a RDP; add authority for the RAC to limit the amount of tonnage allocated for vine removal; modifying application of the production cap for spur pruners under a RDP; adding authority for the RAC to condition a vine removal program with a producer's agreement not to replant and to compensate the RAC for damages if replanting occurs; revising the requirements for prioritizing and allocating tonnage for spur pruners under a RDP; allowing partial production units to be included in a RDP and adding authority for the RAC to specify provisions to maintain the integrity of the program; and specifying in the regulations the approval of a RDP's provisions by USDA. Authority for these changes is provided in § 989.56(e) of the order.

Regarding the impact of this action on affected entities, these changes are designed to provide the RAC with additional flexibility when implementing a RDP. Adding the May 1 date whereby the RAC may increase the tonnage allotted to a RDP will give more producers an opportunity to participate in the program. The changes regarding the way tonnages are allocated under a program (cap on vine removal that will allow a specified amount of tonnage available for spur pruners, and allocating spur prune tonnage pro rata to all applicants) are intended to provide the opportunity for all producers to participate at some level in a RDP. Thus, all producers could potentially have the opportunity to earn some income for curtailing their production.

With regard to cost, based on past RDP's, the RAC estimates that compliance and verification costs associated with a RDP average about $150 per production unit. Using an estimate of 1.25 production units per RDP producer application, if all 4,500 producers participated in a RDP, there could potentially be about 5,625 production units in a program. Thus, using the $150 per unit figure, compliance and verification costs for the program could average about $843,750. The overall impact of the changes is difficult to quantify. However, if a RDP implemented using the increased flexibility helps bring supplies into balance with market needs over time, the benefits for both small and large entities would be positive. When supplies and market needs are in balance, experience has shown that producers and handlers both benefit, regardless of size.

Regarding alternatives to the RAC's recommendation, the industry has been considering various options and programs to help alleviate the severe economic conditions adversely impacting both raisin producers and handlers. Industry groups outside of the RAC are seeking financial assistance under section 32 of the Act of August 24, 1935 (7 U.S.C. 612c). The RAC also has a subcommittee that is reviewing long-term solutions to help the industry that would require formal rulemaking changes to the marketing order. RAC members have been seeking short-term solutions available through the existing order, or slight modifications thereto. Thus, the changes incorporated through the interim final rule were designed to add flexibilities to the RDP and provide the potential for all producers to participate in a program. The RAC hopes to utilize the RDP to help alleviate the industry's oversupply situation.

The RAC and Executive Committee did consider options to some of the features recommended by the RAC. One option concerned an alternative to application of the production cap. That is, specifying that producers who agreed to spur prune their vines would have to spur prune an additional percentage of their acreage that would not be reflected on their diversion certificates. However, the order does not provide authority for the application of a “multiplier” in this fashion to vineyards that were spur pruned. The RAC ultimately proposed that it have the flexibility to limit the production cap to a percentage of the yield per acre for production units on which producers agree to spur prune (or curtail production by methods other than vine removal).

At its meetings, the Executive Committee also considered other dates besides May 1 whereby the RAC could increase the tonnage allotted to a RDP. An April date was contemplated, but not proposed because industry members would rather be past the threat of an April frost before making a decision whether to add tonnage to a RDP. Thus, the May 1 date was deemed appropriate and ultimately proposed by the RAC.

There was some discussion by industry members about partial production units. Some members questioned whether authority for partial units should be added back into the order's regulations, and some questioned whether a partial unit should be required to have two permanent, contiguous boundaries. There was also concern that a producer could spur prune a corner of his/her vineyard, redesign his/her trellising system to provide for significantly increased yields, and contribute to future oversupplies. After much discussion, the majority of RAC members concurred with allowing partial production units in a RDP, and limiting such a unit to one that has two permanent, contiguous boundaries.

This rule does not add measurably to the current burden on reporting or recordkeeping requirements for either small or large raisin handlers. In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirement referred to in this rule ( i.e. , the RDP application) has been approved by the Office of Management and Budget (OMB) under OMB Control No. 0581-0178. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

Further, this action was reviewed by the RAC's Administrative Issues Subcommittee October 7 and 15, and December 10 and 12, 2002, by the RAC's Executive Committee on October 24, and November 4 and 26, 2002, and by the RAC on October 7 and 15, and December 12, 2002. All of these meetings where this action was deliberated were public meetings widely publicized throughout the raisin industry. All interested persons were invited to attend the meetings and participate in the industry's deliberations.

An interim final rule concerning this action was published in the Federal Register on January 28, 2003 (68 FR 4079). Copies of the rule were mailed by the RAC staff to all RAC members and alternates, the Raisin Bargaining Association, handlers and dehydrators. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. That rule provided for a 60-day comment period that ended March 31, 2003. One comment was received. The commenter supported the changes, but suggested some minor modifications.

The commenter suggested adding language to § 989.156(a)(1) to clarify the authority of the RAC to make program modifications should the RAC announce an increase in eligible tonnage in a RDP on or before May 1. The commenter added that additional clarification may not be necessary because of existing language in § 989.156(r). That section contemplates that modifications can be made to the terms and conditions of a RDP after a producer's application has been approved, and requires producers to be notified of the changes and given the opportunity to agree with them or withdraw from the program. USDA concurs that authority for program modifications already exists in § 989.156(r) and no further clarification is necessary.

The second suggested language change by the commenter was to add “raisin-variety” prior to the word “vines” in § 989.156(a)(2)(iv) that refers to producers who replant vines. USDA believes that this clarification is not needed because all references to vines in § 989.56 are within the context of a raisin diversion program and are intended to refer to raisin-variety vines.

The third suggested change by the commenter was to add language as to how to handle damages that may be collected should a producer replant raisin-variety vines on the approved production unit within the announced period of up to 5 years. A 5-year period was announced for the 2003 RDP. The 2003 RDP requirements require approved applicants to remove their vines by June 1, 2003. Producers may not replant raisin variety vines on approved production units until June 1, 2008. The interim final rule stated, in § 989.156(a)(2)(iv), that any damages collected for a vine replanting violation must be deposited to the reserve pool fund of the reserve pool applicable to the particular RDP. In the case of the 2003 RDP, the 2002 reserve pool could not be closed until June 1, 2008, to ensure that no vine removal violations had occurred. Moreover, any collection process for a late occurring violation could cause a pool to remain open even longer.

Normally, reserve pools are closed and equity is distributed within 2 years of the crop year in which the reserve was established. The commenter suggested that damages collected be deposited in the “reserve pool for the crop year in which the monies are received, or if there is no reserve pool for the current year, then to the next prior year for which there was a reserve pool.”

USDA concurs that a reserve pool need not remain open just because a potential vine replanting violation might occur. However, based on discussions with RAC staff, USDA has concluded that, if the applicable pool has been closed, damages collected should be deposited in the next open reserve pool for the crop year closest to the RDP pool. This distribution is more orderly. For example, under the 2003 RDP, producers who removed vines cannot replant until 2008. Raisins from the 2002 reserve pool have been allocated to the 2003 RDP. If damages are collected in 2008, and the 2002 pool is closed, but the 2006 and 2007 reserve pools are open, such damages would be deposited in the 2006 pool. Accordingly, language is added to § 989.156(a)(2)(iv) to state that if the applicable RDP reserve pool has been closed and equity distributed, then any damages collected for that RDP shall be deposited in the next open reserve pool of the crop year closest to the applicable diversion pool.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant material presented, including the RAC's recommendation, comment received, and other information, it is found that finalizing the interim final rule, as published in the Federal Register (68 FR 4079; January 28, 2003), with changes, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because the 2003 RDP is well underway and this action should be made effective as soon as possible.

This final rule is issued in conformance with Executive Order 12866 and has been determined to be not significant and therefore has not been reviewed by the Office of Management and Budget.

It has been determined that Regulatory Flexibility Act is not applicable to this final rule because FSA is not required by 5 U.S.C. 553 or any other provisions of law to publish a notice of final rule making regarding the subject matter of this rule.

It has been determined by an environmental evaluation that this action will have no significant impact on the quality of the human environment. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.

This rule has been reviewed in accordance with Executive Order 12988. The provisions of this final rule preempt State laws to the extent such laws are inconsistent with the provisions of this rule.

This activity is not subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with State and local officials. See the notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115 (June 24, 1983).

This rule contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) for State, local, and tribal governments or the private sector. Thus, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

This rule does not contain any new information collection requirements.

It has been determined that this rule does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment. The provisions contained in this rule will not have a substantial direct effect on States or their political subdivisions, or on the distribution of power and responsibilities among the various levels of Government.

The Commodity Credit Corporation is amending its regulations at 7 CFR part 1405 to remove obsolete requirements that crop insurance be obtained in order to be eligible for USDA benefits under some programs. Section 508(b)(7) of the Federal Crop Insurance Act (FCIA) (7 U.S.C. 1508(b)(7)) provided that in order to be eligible for payments under the Agricultural Market Transition Act (7 U.S.C. 7201 note) (AMTA) the producer must obtain at least the catastrophic level of insurance for each crop of economic significance in which the producer has an interest or provide a written waiver to the Secretary that waives any eligibility for emergency crop loss assistance in connection with the crop, if insurance is available in the county for the crop. The AMTA programs, which included production flexibility contracts for wheat, feed grains, and upland cotton, 1996- through 2002-crop loans and loan deficiency payments for grains and similarly handled commodities and cotton, and the Sugar and Peanut Programs, ended September 30, 2002. The regulations for those programs were contained at 7 CFR parts 1412, 1421, 1427, 1435, 1443 and 1446 and were replaced by regulations for new programs under the Farm Security and Rural Investment Act of 2002 (7 U.S.C. 7901 note) (the 2002 Act). The 2002 Act did not include the requirement that producers obtain crop insurance in order to receive payments under the new programs and the Agency is therefore removing references to those parts from 7 CFR part 1405. Also, an unnecessary reference to 7 CFR part 1464, dealing with tobacco, is removed. Tobacco payments under 7 CFR part 1464 were at one time covered by a statutory tie to crop insurance, which has since been repealed. The crop insurance requirements for the Conservation Reserve Program and the Tobacco Program contained in 7 CFR part 1405 will remain as provided for in section 508(b)(7) of the FCIA. Some non-CCC loans and payments are also covered in section 508(b)(7) and are governed by other regulations. They are not impacted by this rule. This rule also does not impact crop-insurance ties to eligibility for CCC benefits that arise from provisions other than section 508(b)(7).

Pursuant to Executive Order 12866, Regulatory Planning and Review, the Natural Resources Conservation Service has conducted a benefit cost analysis of the Environmental Quality Incentives Program (EQIP) as formulated for the final rule. The Department of Agriculture Reorganization Act of 1994 and the Unfunded Mandates Reform Act of 1995 also require analysis of costs, benefits and risks associated with major regulation. These requirements provide decision-makers with the opportunity to develop and implement a program that is beneficial, cost effective and that minimizes negative impacts to health, human safety and the environment.

The analysis finds EQIP will have a beneficial impact on the adoption of conservation practices and, when installed or applied according to technical standards, will achieve economic and environmental gains. In addition, benefits would accrue to society for long-term productivity maintenance of the resource base, reductions in non-point source pollution damage, and wildlife enhancements. As a voluntary program, EQIP will not impose any obligation or burden upon agricultural producers that choose not to participate. In the Farm Security and Rural Investment Act of 2002 (FSRIA), EQIP funding was authorized at $6.16 billion over the six-year period of FY 2002 through FY 2007, with annual amounts for the base program and the ground and surface water conservation provisions increasing to $1.36 billion in FY 2007 after the initial authorization in FY 2002 of $425 million. In addition, the 2002 Act authorizes a total of $50 million for the Klamath Basin in California and Oregon.

In considering alternatives for implementing the program, NRCS followed the legislative intent to optimize environmental benefits, address natural resource problems and concerns, establish an open participatory process, and provide flexible assistance to producers who apply appropriate conservation measures while complying with Federal, State, and tribal environmental laws. The analysis recognizes that several other Federal conservation programs will be implemented which will generate environmental benefits as well.

The analysis initially compared the 2002 NOFA (with certain changes required by the 2002 Farm Bill) to the original EQIP program as established in 1996. Then, benefits and costs for all alternatives for the rule were compared to the NOFA, which was used as the analytical baseline. Lastly, the new EQIP program as formulated for the final rule, is compared to the NOFA together with a display of how benefits compared with the original 1996 program.

Confined Animal Feeding Operations (CAFOs) may participate in the new program and it is estimated that $563 million (12.5 percent of the total) of EQIP funds will be allocated for that purpose. CAFOs are generally defined as those operations with greater than 1,000 animal units, subject to some exceptions. However, since the Environmental Protection Agency published its final rule for “National Pollutant Discharge Elimination System Permit Regulation and Effluent Limitation Guidelines and Standards for Concentrated Animal Feeding Operations” (EPA CAFO) on December 15, 2002, benefits from treatment of those CAFOs are attributed to that rule rather than to EQIP, regardless of the extent to which EQIP funds may be used to assist the CAFO managers with rule compliance. The economic analysis shows estimates from two perspective alternatives: (1) with CAFO benefits and costs included, and (2) with CAFO benefits and costs excluded.

Decisions leading to the final rule were made after consideration of all comments on the proposed rule and a review of their effects on program benefits and costs. Program benefits and costs under alternative scenarios in the main body of this report were available to guide decision-makers. Decision-makers reviewed these alternatives as the final rule was defined.

The final rule allows for adoption of a combination of the alternatives to the NOFA that are described in the report. The following scenarios are recommended as a result of the benefit-cost analysis in order to achieve benefits described. In particular, the final rule incorporates a scenario with the following features:

(1) Twenty five percent of livestock funds are allocated to each AFO/CAFO size class;

(2) A $450,000 payment ceiling to any contract and to any program participant over a six year period;

(3) An average cost share rate of 65 percent on any practice;

(4) National Priority targeting that implies lower cost share rates (55 percent) for practices linked to grazing, wind erosion, and wildlife habitats (since the benefits computed for the latter two do not match the specifications in the rule for air quality and at-risk species);

(5) Fund allocation that varies as a function of cost-share (practice/benefit categories with higher priorities are the ones with higher cost share rates); and

(6) A spatial evaluation process focusing on environmentally sensitive areas such as impaired watersheds that improves benefits by 10 percent in all categories except grazing.

(7) Performance incentive for efficient implementation of EQIP.

The new EQIP program in the final rule has a substantial beneficial effect on the environment compared to continuation of the 1996 program. A total of 96 million acres of agricultural land will be treated over the six years of the program with the final rule, compared to 41 million acres under the 1996 program. This includes 70.3 million acres of cropland, 15.5 million acres of grazing land (pasture and rangeland), and 10.3 million acres for wildlife habitat improvement. Resource treatment increases compared to the 1996 rules include an additional 2.9 million acres for sheet and rill water erosion (USLE) reduction, 3.5 million acres for wind erosion, 14.7 million acres for non-waste nutrient management, 22.0 million acres for net irrigation water reduction, 6.2 million acres for grazing productivity, and 5.5 million acres for wildlife habitat will occur on the landscape. Also, an additional, 31,000 animal feeding operations (5.6 million animal units) will be treated under the final rule, as compared to continuing the 1996 program, excluding CAFO treatments (34,000 animal feeding operations) and 11.4 million animal units if the CAFOs are included. Also, compared to the 1996 rules, an additional 12.8 million animal units and 39,468 animal feeding operations will be treated, and water induced soil loss from agricultural land will decrease by 24.5 million tons/year.

The Table below shows the costs and benefits (in $ million) of the final rule compared to the NOFA and the 1996 program.

As described in the above paragraphs, implementation of the final rule will generate significant environmental and economic benefits. The final rule benefit cost ratio is equal to the 1996 rule when the costs and benefits of CAFOs are excluded and is slightly higher when the costs and benefits of CAFOs are included. The final rule has higher net benefits than the NOFA because of the prioritization based on natural resource concerns.

This benefit cost analysis represents a comprehensive study of alternative ways to implement the new EQIP authorities contained in the 2002 farm bill. The best available data, including selected data on EQIP experiences, and economic and natural resource effects analytical models were used in its development.

Natural Resources Conservation Service decision-makers reviewed the findings of the analysis and chose a combination of the elements described in the report as they are formulated for the final rule. For example, the significant benefits achievable by focusing on reducing water erosion and sedimentation from otherwise excessive levels on agricultural land resulted in it becoming a National priority. In addition, a definition of cost effectiveness was introduced in the final rule and will be used selecting conservation practices and emphasizing their adoption.

The complete analysis addressed several issues critical to the implementation of the final EQIP rule. These included the impacts of selected alternatives concerning: (1) Fund allocations among different sized livestock facilities; (2) payment ceiling limits; (3) cost share rates; (4) National priority targeting; (5) variable cost-share rates to address higher priority problems; and (6) a spatial evaluation process to improve benefits.

A copy of this analysis is available upon request from Anthony J. Esser, Conservation Operations Division, Natural Resources Conservation Service, PO Box 2890, Washington, DC 20013-2890 or on the Internet at http://www.nrcs.usda.gov/programs/eqip.

The Regulatory Flexibility Act is not applicable to this rule because NRCS is not required by 5 U.S.C. 533 or any other provision of law to publish a notice of proposed rulemaking with respect to the subject matter of this rule.

NRCS has determined through an amendment to the “Environment Assessment for the Environmental Quality Incentives Program, April 2003” that the issuance of this final rule will not have a significant effect on the human environment. Copies of the Environmental Assessment, the amendment, and the finding of no significant impact may be obtained from Anthony J. Esser, Conservation Operations Division, Natural Resources Conservation Service, PO Box 2890, Washington, DC 20013-2890 or on the Internet at http://www.nrcs.usda.gov/programs/eqip.

Section 2702(b)(1)(a) of the 2002 Act provides that the promulgation of regulations and the administration of Title II of the Act shall be made without regard to chapter 35 of Title 44 of the United State Code, the Paperwork Reduction Act. Accordingly, these regulations and the forms, and other information collection activities needed to administer the program authorized by these regulations, are not subject to provisions of the Paperwork Reduction Act, including review by the Office of Management and Budget.

NRCS is committed to compliance with the Government Paperwork Elimination Act (GPEA) and with the Freedom to E-File Act, which require Government agencies in general and NRCS in particular to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. The forms and other information collection activities required for participation in the program proposed under this rule are not yet fully developed for the public to conduct business with NRCS electronically. However, the application form will be available electronically through the USDA eForms Web site at http://www.sc.egov.usda.gov for downloading. Applications may be submitted at the local USDA Service Centers, by mail, or by facsimile. Currently, electronic submission is not available because signatures from multiple producers with shares in agricultural operations are required.

This proposed rule has been reviewed in accordance with Executive Order 12988, Civil Justice Reform. The provisions of this proposed rule are not retroactive. The provisions of this proposed rule preempt State and local laws to the extent such laws are inconsistent with this proposed rule. Before an action may be brought in a Federal court of competent jurisdiction, the administrative appeal rights afforded persons at 7 CFR parts 614, 780, and 11 must be exhausted.

Pursuant to Section 304 of the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354), USDA classified this proposed rule as major and NRCS conducted a risk analysis. The risk analysis establishes that the EQIP proposed rule will produce benefits and reduce risks to human health, human safety, and the environment in a cost-effective manner. A copy of the risk analysis is available upon request from Anthony J. Esser, Conservation Operations Division, Natural Resources Conservation Service, PO Box 2890, Washington, DC 20013-2890, and electronically at http://www.nrcs.usda.gov/programs/eqip.

Pursuant to Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), NRCS assessed the effects of this rulemaking action on State, local, and Tribal government, and the public. This action does not compel the expenditure of $100 million or more by any State, local, or Tribal governments, or anyone in the private sector; therefore, a statement under Section 202 of the Unfunded Mandates Reform Act of 1995 is not required.

Pursuant to 5 U.S.C. Section 808 of the Small Business Regulatory Enforcement Fairness Act of 1996, it has been determined by NRCS that it is impracticable, unnecessary, and contrary to the public interest to delay the effective date of this rule. Making this final rule effective immediately will permit NRCS to offer the public timely, reliable information about funding for conservation practices as early before the start of the spring 2003 planting season as possible. Information about the availability of the program for establishing conservation practices influence planting decisions and should, therefore, be disseminated to producers before planting decisions are made. Failure to provide this information in a timely manner may mean that the realization of important conservation benefits available under EQIP may be delayed for another year before the start of another planting season. Accordingly, this rule is effective upon publication in the Federal Register .

The Farm Security and Rural Investment Act of 2002 (the 2002 Act) (Pub. L. 107-171, May 13, 2002) re-authorized and amended the Environmental Quality Incentives Program, which had been added to the Food Security Act of 1985 (the 1985 Act) (16 U.S.C. 3801 et seq. ) by the Federal Agriculture Improvement and Reform Act of 1996 (the 1996 Act) (Pub. L. 104-127). The 2002 Act also amended the Environmental Conservation Acreage Reserve Program by changing the section name to the Comprehensive Conservation Enhancement Program and removing the authority for the Secretary of Agriculture to designate areas as conservation priority areas.

As provided by section 1241 of the 1985 Act (16 U.S.C. 3841), as amended by the 2002 Act, the funds, facilities, and authorities of the Commodity Credit Corporation (CCC) are available to NRCS for carrying out EQIP. (The Chief of the NRCS is a vice-president of the CCC.) Accordingly, where NRCS is mentioned in this rule, it also refers to the CCC's funds, facilities, and authorities where applicable.

Through EQIP, NRCS provides assistance to farmers and ranchers who face threats to soil, water, air, and related natural resources on their land. These include grazing lands, wetlands, private non-industrial forest land, and wildlife habitat. Participation in the program is voluntary. Under EQIP, NRCS will provide assistance in a manner that will promote agricultural production and environmental quality as compatible goals, optimize environmental benefits, and help farmers and ranchers meet Federal, State, and local environmental requirements. NRCS will offer the program throughout the Nation using the services of NRCS and Technical Service Providers. NRCS will implement a consolidated and simplified process to reduce any administrative burdens that would otherwise be placed on producers.

In this rule, NRCS proposes to incorporate changes in the EQIP regulations, 7 CFR 1466, resulting from the passage of the 2002 Act. Several important changes were made in the 2002 Act that require changes to the regulation. These include:

(1) Changing the maximum payment limitation from $50,000 per person per contract to $450,000 per individual or entity for all contracts entered into in fiscal years 2002 through 2007;

(2) Revising the purpose from “maximize environmental benefits per dollar expended” to “optimize environmental benefits”;

(3) Eliminating the competitive bidding by applicants;

(4) Allowing payments to be made in the first year of the contract;

(5) Removing language authorizing targeting of funds to Conservation Priority Areas;

(6) Removing the provision prohibiting a producer from receiving cost-shares for an animal waste facility on an animal operation with more than 1,000 animal units;

(7) Allowing cost-share rates of up to 90 percent for limited resource farmers or ranchers and beginning farmers or ranchers;

(8) Reducing the minimum length of a contract from five years to one year after installation of the last practice;

(9) Increasing funding from $200 million per year to $400 million in FY 2002 and increasing to $1.3 billion per year in FY 2007; and,

(10) Imposing an average adjusted gross income (AGI) limitation.

In an effort to make the program more effective and efficient, the Department has initiated several streamlining changes, including:

(1) Eliminating the program's dual administration by changing Farm Service Agency (FSA) participation from concurrence to consultation;

(2) Reducing the planning requirements needed to develop the contract; and

(3) Allowing producers to have more than one contract per tract at any given time.

The fundamental philosophy of the program, assisting agricultural producers install conservation practices to provide environmental benefits, has not changed. The statutory and Departmental changes respond to limitations and restrictions identified by agency staff and participants. Agricultural producers who are interested in participating in the program will apply as they have in the past and should experience a quicker turn-around on their application. Producers also have some expanded financial opportunities with higher contract limits and the ability to receive payments earlier in the contract period.

On February 10, 2003, NRCS published a proposed rule with request for comments. The proposed rule described the program requirements, administrative processes, and eligibility criteria that NRCS would use in implementation of EQIP. The proposed rule also described how NRCS would manage the program to optimize environmental benefits and what information would be considered in designating program funds for natural resource concerns to states and to contracts. Over 1,250 separate responses containing about 4,900 specific comments were received during the 30-day comment period: 608 responses from farmers, ranchers, and other individuals, 175 from agricultural and rural community organizations, 54 from environmental organizations, 268 from conservation districts and related groups, 37 from business entities, 118 from State and local agencies, 24 from tribes and tribal organizations, and nine from congressional representatives.

Additional responses were received from Federal agencies and employees; their comments are not included in the following analysis of public comments. These responses were treated as inter and intra-agency comments and considered along with the public comments where appropriate.

All comments received are available for review in Room 5229 South Building, 14th and Independence Ave., SW., Washington, DC, during regular business hours (8 a.m. to 5 p.m.) Monday through Friday.

Overall, almost all respondents expressed appreciation for the opportunity to comment on the EQIP proposed rule. Many offered valuable suggestions for improving or clarifying specific sections of the proposed rule. Some of these suggestions were group efforts, where individual responses used similar or identical language to identify and describe their interests, concerns, and recommended modifications to the proposed rule.

The majority of comments centered on six major issues in the proposed rule: (1) Funding, payments and cost-share rates; (2) setting priorities, ranking of applications and contract approval; (3) use of EQIP assistance for CAFO/AFO; (4) locally-led conservation; (5) limited resource producer/ranchers and beginning farmer or rancher; and (6) use of conservation planning in the EQIP program. These comments were considered as part of the rulemaking record to the extent that they were relevant to the provisions of the rulemaking. Numerous minor editorial and other language clarification changes were suggested; these comments are not included in the following analysis but all were considered and many of the minor technical changes were included in the final rule.

To implement the final rule, NRCS will be responsible for establishing and documenting in program guidance the overall policies, priorities, procedures, and guidelines for EQIP. NRCS will seek the review and input by other Federal agencies, as appropriate, when developing the guidance documentation.

Under the proposed rule, NRCS would set out EQIP regulations in 7 CFR part 1466. The following summarizes general comments received on the proposed rule and NRCS's response to them.

Support for both the legislative and Departmental changes to EQIP was expressed in two-thirds of the comments received. One-third of the comments expressed concern that proposed rule removed the conservation planning requirement from EQIP, provided for unrestricted cost-share assistance to new and expanding animal operations and CAFOs in flood plains. The Department recognizes that Congress made adjustments to the EQIP legislation in response to concerns from their constituents. The Department included those concerns when developing the proposed rule. The Department is required to administer the laws as passed by Congress and provide EQIP assistance to all producers. Also, the Department feels EQIP, as proposed, fully supports the NRCS progressive planning policy by allowing producers to request assistance for only those conservation practices they are ready to implement.

Two comments received were concerned with the length of the public comment period and requested an extension of the comment period. Several hundred comments appreciated the opportunity given for input and the varied mediums by which comments would be accepted. Over 1,250 responses were received from a range of interested parties from across the Nation. NRCS believes that a sufficient length of time was provided and it has received sufficient input to proceed to a final rule.

A basic element of EQIP implementation throughout the proposed rule is the use of the locally-led process to adapt EQIP to local conditions. The Department received 176 comments in support of locally-led conservation, frequently commenting that the process in the proposed rule over-rides local decision making and is a top down process. NRCS believes that the locally-led process is the optimal mechanism for implementation of EQIP and believes that the proposed rule strengthens the process. The locally-led process utilizing the State Technical Committees and Local Work Groups has been discussed in detail in the preamble to the 1997 EQIP final rule (FR 28258, vol. 62, no. 99, May 22, 1997) and does not need to be reiterated.

In the preamble NRCS requested comments on eight specific issues. Where applicable the public comments and recommendations have been incorporated in the final rule or will be included in program guidance and delivery activities.

One of the questions in the proposed rule asked for comments on adopting a limited waiver program, as well as on innovative mechanisms that NRCS could consider to institutionalize alternatives for encouraging conservation implementation. NRCS received 46 comments regarding credits and credit trading. Twenty-seven respondents suggested pilot programs to resolve the issues discussed, three suggested proceeding with caution, seven respondents did not support the concept, 4 suggested that the waiver should apply to all previously applied practices, and three respondents stated that USDA does not have any interest in credits a producer might receive from applying conservation practices with EQIP assistance. Some respondents interpreted the discussion in the proposed rule that NRCS would initiate, support and administer an environmental credit trading program. The actual intent is that NRCS would waive all financial interest to any environmental credits that accrue to a participant implementing conservation practices using EQIP assistance. NRCS has determined that NRCS does not have any financial interest in any environmental credits that may accrue to a participant who implements conservation practices with EQIP assistance.

The proposed EQIP rule also asked for comments regarding how to administer a loan program in accordance with the Ground and Surface Water Provisions of the 2002 Farm Bill. NRCS received 13 comments suggesting looking into existing funding programs such as the Nonpoint Source Partnership, which is a collaborative effort between the state and EPA. The Department believes that the 2002 Farm Bill authorizes the implementation of a loan program and does not need to address the issue in the final rule. NRCS will reserve the option to utilize a loan program in the future and will do so with policy and program guidance in appropriate manuals and handbooks.

The proposed rule also requested comments regarding how the Klamath Basin water conservation provisions should be implemented. NRCS received 10 comments; five suggesting that the Klamath Basin issue was more than agriculture and that NRCS should cooperate with other stakeholders in the development of a basin plan; 4 recommending water quality improvements should be considered as “net savings” because the end result is more water available for wildlife purposes; and one comment that the administrative costs should not be borne by the Klamath Basin allocation. NRCS reaffirms the language of the proposal rule that the two Klamath Basin State Conservationists will lead a basin planning effort that may require additional funding from sources other than EQIP funding. NRCS also believes that there is sufficient water in certain times of the year that can be captured with on-farm storage allowing participants to accomplish the statutory intent of “net-savings” without reducing irrigation water usage. NCRS will provide guidance through the EQIP Program Manual that “net-savings” in the Klamath Basin can be accomplished in three ways; reduced irrigation water usage, improved off-site water quality, and increased on-farm storage of water.

The proposed rule indicated that farmers and ranchers could receive program assistance to address soil, water, air, and related natural resources concerns, and to encourage enhancements on their lands in an environmentally beneficial and cost-effective manner. There were seven comments expressing support to include language that another purpose of the program is to assist producers in complying with environmental regulations. Several other comments suggested that wildlife should be specifically stated as a resource issue and that NRCS should explicitly state which land uses are eligible. EQIP shall be implemented in a balanced manner in accordance with the statutory purposes for which EQIP was established, including the objective to optimize environmental benefits. The proposed rule contained broad language to facilitate the identification of a range of priority natural resource concerns at the state and local level based on National priorities and the Department believes that this is the appropriate approach. The final rule now contains, however, compliance with environmental regulations as a purpose of the program.

In this section, NRCS is identified as an agent of CCC and that NRCS will consult with FSA at the National level in the development of policies, priorities and guidelines. This section also reaffirms NRCS's commitment to locally-led conservation through the State Technical Committees and Local Work Groups. One hundred and sixty-six comments express support for locally-led conservation. One comment suggest including private landowners on Local Work Groups. USDA believes that it is important for both NRCS and FSA to consult on program implementation and that the proposed arrangement takes advantage of the proven expertise of both agencies. USDA strongly supports locally-led conservation and recommends that Local Work Groups include public comment periods in their meetings but must limit membership to representatives of state and local governments and political subdivisions and agencies thereof in accordance with the Federal Advisory Committee Act (FACA).

NRCS received 23 comments in response. Ten respondents suggested it should be limited to the field where the practice is being implemented, whereas one respondent suggested the field plus any contiguous parcels, and 13 respondents suggested all the land operated by the producer. The definition has been modified in the final rule to include all parcel or parcels of land, both contiguous and non-contiguous.

The proposed rule identified at-risk species habitat recovery as a National priority. Eight respondents suggested the need for a definition of at-risk species. One respondent suggested the definition to include invertebrate pollinators, one suggested imperiled species and seven respondents suggested to include Federally listed and candidate species as well as species of local concern. The Department agrees with the suggestion to define at-risk species and a definition has been included in the final rule.

Six comments suggesting the 10-year time frame is too long. Three respondents recommended five years and one recommended a maximum of three years. The Department has an established definition for Beginning Farmer and will continue to use the existing definition in the final rule.

Two respondents recommended this definition was not necessary for implementation of EQIP. The Department does not use confined livestock feeding operation in the implementation of EQIP and has removed the definition from the final rule.

Four respondents commented on the definition of Indian tribe and how there appeared to be some inconsistency in how it was used in the Proposed Rule, including the lack of reference to Conservation District established under tribal law. No change to the definition of Indian Tribe is proposed because it reflects the definition provided by 25 U.S.C. 3701. However, the rule has been clarified to reflect the appropriate use of Indian Tribe in the text. Conservation Districts established under Tribal law has been added to the definition of Conservation Districts.

Six comments were received; three respondents suggesting that the gross farm sales value was too low and three respondents suggesting it was deficient by not identifying future year adjustments. The Department's interagency task force reviewed the comments and modified the definition for the final rule.

Three comments were received. One respondent supported the definition of priority natural resource concern as written and two respondents suggested including a resource objective that is being addressed through an environmental regulation. NRCS believe that optimization of environmental benefits can be achieved through a prioritization process. The definition in the final rule is not changed.

Fifty-one comments were received. Seventeen suggested that this definition specifically include private non-industrial forest land, 17 want assurance that the definition does not preclude agroforestry, and 36 suggested language that provides assurance that private non-industrial forest land is eligible for EQIP assistance. The Department recognizes forest products as an agricultural commodity and forest land as agricultural land. The definition in the final rule is not changed.

NRCS received 10 comments to revise the definition of wildlife; five suggest a rewording and five respondents suggested crafting the definition to allow for exclusion of exotic species. The Department believes that the National Invasive Species Council operating under the authority of Executive Order 13112 provides sufficient direction and guidance for USDA to implement EQIP without specifically including invasive species concerns in the definition. In the past, many state and local decision-makers have identified invasive species as a priority natural resource concern and used EQIP resources to support control.

Several respondents suggest new definitions be included in the final rule, including: at-risk species (eight comments). One respondent suggested the definition to include invertebrate pollinators, one suggested imperiled species and seven respondents suggest the definition to include Federally listed and candidate species as well as species of local concern. The Department agrees with the suggestion to define at-risk species and a definition has been included in the final rule.

The 2002 Farm Bill established an earnings limit for an individual or entity. For purposes of consistency, the Department uses FSA's Payment Limitation and Payment Eligibility rule (7 CFR 1400) for definitions of entities and joint ventures. This rule, however, does not contain a definition of individual. The Department added definitions of entity and joint operation to the final EQIP rule and utilizes the definition of person for individual. NRCS has adjusted usage of these terms throughout the EQIP rule to assure the final rule is consistent with 7 CFR1400 and the statutory earnings limit.

During the review process the Department recognized a concern that cancellation of EQIP contracts results in a loss of financial assistance and an expenditure of unproductive technical assistance. In an effort to minimize these losses, NRCS will include a Liquidated Damages policy in EQIP for producers who cancel contracts without proper cause and include a definition of liquidated damages in the final rule.

Three comments on the Indian trust land definition were considered restrictive and there is a need for more land inclusion. To be more inclusive a definition for Indian Land, consistent with 25 CFR part 150, has been included in the final rule and the definition for Indian Trust Land was removed from the final rule.

NRCS received 378 comments regarding National priorities; 141 regarding water resources, 60 related to air resources, 45 regarding soil erosion, 56 comments related to at-risk species and wildlife and 71 of a general nature.

Of the 141 comments related to water resource; 52 recommended separating water quality and water quantity into two priorities; 93 respondents recommended removing the focus on Total Maximum Daily Loads (TMDL), 82 because TMDL does not always include drinking water supplies, nine because including TMDL is analogous to targeting, and two for including 305(b) reaches (non-TMDL); and one respondent suggested the Gulf of Mexico hypoxia and contributing factors should be included as a specific National priority.

Forty four respondents recommended adjusting the air quality National priority by adding “atmospheric concentration” before or emissions and 16 recommended that national air quality priorities should not apply to Indian Tribes.

NRCS received 60 comments that the soil erosion National priority limited use of EQIP to land with lower rates of erosion that are of a particular concern. Additionally, NRCS has determined that the reference to highly erodible land could be misleading with regards to providing assistance for compliance with the Highly Erodible Land (HEL) provisions of the 1985 Farm Bill.

The fourth National priority, at-risk species habitat recovery, received 56 comments. Thirty two respondents recommended that this priority be directed to wildlife and wildlife habitat. Six respondents recommended defining at-risk to include Federally listed as well as species of regional concern with one of these misinterpreting the proposed rule to be Federally listed species only. Four respondents supported the priority as presented and 14 respondents suggested removing at-risk species priority with two suggesting there were other programs to accomplish this objective.

In addition, NRCS received recommendations to emphasize or add National priorities; five suggested EQIP is the implementation vehicle for salinity control measures authorized by the Colorado River Basin Control Act; five recommended adding quail restoration; eight suggested emphasizing grassland, grazing land and rangeland, 13 wanted the National priorities to support private non-industrial forest land, and three wanted the priorities to include promoting agricultural production.

NRCS received five comments that the National priorities appeared to be a compliance assistance program for laws and regulations of other agencies. Fifty comments supported the establishment of state level conservation priority areas at the state's discretion, three respondents suggested that there should not be National priorities but national guidance in support of state and local priority resource concerns, and two suggested that legislative requirement for 60 percent for livestock practices be applied at the state level and not the national level. The Department believes that the National priorities in the proposed rule meets Congressional intent in providing direction and flexibility to the state and local decision-makers to utilize EQIP resources to address locally identified priorities and optimize environmental benefits. The National priorities in the proposed rule are focused on natural resources and resource issues. These priorities are sufficient to guide local program delivery and only the soil erosion priority will change in the final rule to remove any potential conflict with Highly Erodible Land provisions of the 1985 Farm Bill.

Although the fundamental philosophy of the program, assisting agricultural producers to install conservation practices to provide environmental benefits, has not changed; the 2002 Farm Bill removed the authority of the Department to establish priority areas to which program resources are focused. NRCS eliminated the requirement that a portion of the funds allocated to the states would be focused into Conservation Priority Areas. The Department believes that NRCS methodology to optimize environmental benefits through an approach that integrates consideration of National Priorities in four key program components: (1) The allocation of financial resources to States; (2) the allocation of financial resources within states; (3) the selection of conservation practices and the establishment of cost-share and incentive payment levels; and (4) the application ranking process will provide the same level of environmental conservation as targeting to conservation priority areas. The intent of EQIP is to provide maximum flexibility to local decision-makers to implement the program. The identification of National priorities is the first step to accomplish this and is the basis for the allocation for funds from the National NRCS to state-level NRCS.

Two respondents commented on the need to include the use of EQIP to mitigate the impact of natural disasters in the National priorities. No changes to the rule were made because EQIP is not intended to be a disaster program.

This section of the proposed rule contains information regarding allocation of funds from the national level to the state level, the establishment of an incentive payment, reviewing progress and accountability, and delegation of authority to the State Conservationists to implement the program to achieve National priorities.

USDA received 37 comments related to the National allocation. Nine respondents suggested including the amount of tribal land in the allocation formula, three suggested adding unmet need based on previous year's number of applications, 4 recommended using regulatory compliance as a factors, two suggested forest land as a factor, and six suggested directing more funding to crop base agriculture and less to animal agriculture. Several respondents also recommended adjusting the allocation based on the intensity of agriculture in each state. Another five respondents suggested that National Association of Conservation Districts (NACD) and the Forest Service (USFS) should be consulted when making allocation decisions and one respondent supported making National Allocation task force report strategy available to the public. NRCS is in full support of reviewing and revising, as necessary, the National EQIP allocation formula on a regular basis. NRCS intends to incorporate a wide variety of partners and customers in this process and intends to fully disclose the strategy of the task force to the public.

NRCS also received 10 comments regarding the use and reuse of EQIP funds, suggesting that funds made available from cancelled contracts should be able to be re-used to fund new contracts. The Department understands the position of the respondents, however, the re-use of funds is a limitation associated with the authorization language in the 2002 Farm Bill.

In the proposed rule, NRCS specifically asked for comments regarding implementation of an incentive award; “what approaches NRCS can use to efficiently and effectively implement this award incentive”. NRCS received over 472 comments regarding this item, the majority of which, 415, supported the concept and suggested that the incentive be substantial but did not offer other specifics. Eleven respondents suggested that accomplishments with Indian tribes should be considered as a factor for determining the incentive award; three recommended using only how local conservation needs were addressed; and one suggested using leveraging, use of TSPs, and multiple resource and long-term benefits. Forty one respondents were against the incentive award because they felt it would penalize states for not having National priorities, penalizing farmers for reasons beyond their control, or establish a bidding competition between states to compete for available funds. One respondent suggested using pervious year performance to allow the award to be made early in the year. NRCS believes there is a potential confusion between the term “incentive award” used in the proposed rule and the incentive payment level established for a producer to implement a land management practice and therefore will revise the term to “performance incentive”. NRCS will use the performance incentive as one of its approaches to optimize environmental benefits by supporting the state decision-makers with additional EQIP resources based on performance. The guidelines for administering this award will be developed and made available in EQIP program guidance. NRCS is committed to full disclosure of program implementation policy and will make this information publicly available as it is finalized.

NRCS received 422 comments in response to the request for comments on how best to evaluate the performance of the EQIP program. How should environmental changes be measured, and what methodologies would best identify environmental effects due to contract activities? What kind of output measures and data collection strategies should NRCS consider? What approaches could NRCS use to evaluate cost-effectiveness? Four hundred and one responders commented on NRCS's intent to move toward actual environmental outcomes and benefits rather than the number of contracts and practices. Seven respondents suggested a national team to develop a framework for monitoring and reporting, 4 respondents wanted assurance that NRCS would include forestry performance measures in any process that is used, 10 respondents recommended encouraging scientific measurement of conservation practices, and seven respondents did not support Technical Service Providers as a measure of performance. One respondent suggested a crucial element of performance evaluation is consideration of the cumulative impact. NRCS is actively developing approaches to evaluate performance for EQIP as well as all other conservation programs administered by NRCS. NRCS is committed to public disclosure and transparency as evidenced by the posting of data and information on the NRCS Web site at http://www.nrcs.usda.gov and the NRCS Performance and Results Measurement System (PRMS) at http://prms.nrcs.usda.gov/prms/index.html. NRCS will continue to refine its accountability system to make performance data available to the public.

In the final rule, NRCS removed those incentive payment factors that are an iteration of the National measures identified in the preamble of the proposed rule. The measures: Increasing overall environmental benefits, addressing multiple resource concerns, ensuring more durable environmental benefits and limiting adverse ancillary impacts, encouraging innovation, supporting the statutory mandate to apply nationally 60 percent of available financial assistance to livestock-related conservation practices, and employing appropriate tools to more comprehensively serve EQIP purposes will be reviewed periodically and adjusted as necessary. The National measures will be provided in the program guidance in the EQIP Manual and will be made available to the public.

The proposed rule provides that the State Conservationist with advice from the State Technical Committee will determine how EQIP will be implemented in the state, identify the priority resource concerns, and determine how EQIP funds will be utilized. NRCS received 47 comments regarding state level fund allocation and program management. Twelve respondents recommended that tribal land should be a State allocation factor, 4 recommend using regulatory compliance needs, and 18 suggested multi-tribal collaborative efforts. Another 12 respondents wanted assurance that the state and local decision-makers will consider forestry issues and private non-industrial forest land as eligible for EQIP. NRCS also received one comment raising a concern that if the State Conservationist, in support of locally-led conservation, allocates EQIP funds to counties in smaller amounts the needs of the large animal facilities and large agricultural operations will not be satisfied. The Department defines row crop, rangeland, specialty crop, animal and agroforestry as agricultural land. The state allocation process, which uses locally led conservation through advice from the State Technical Committee, is based on state identified priority resource concerns and is the second component of NRCS's optimizing environmental benefits process. EQIP has been over subscribed since 1997 and will continue to be so in the future. The economic analysis conducted to evaluate the impact of EQIP has determined that EQIP will treat approximately 10 percent of crop and grazing land. The final rule will provide specific direction to State Conservationist's to prioritize resource concerns and to do so in accordance with the National priorities.

Four respondents commented that State allocations should consider Indian lands. Two respondents commented that a Tribal Conservation Advisory Council should be at the same level as the State Technical committee in terms of providing advice to the State Conservationist. No rule change has been made because allocations made by the State Conservationist consider the natural resource concerns identified with advice from the State Technical Committee and Local Work Group. Indian tribes are represented on State Technical Committee under 7 CFR 610.

One hundred and eighty-seven comments made specific recommendations supporting USDA's outreach efforts to assist limited resource producers/ranchers, beginning farmers or ranchers and under-served populations. These recommendations include: Permit flexible schedules for applying practices and systems; offer low-cost conservation practice alternatives; consider the value of a producer's labor as the producer's share of the cost; utilize local cooperative extension service agencies in the education efforts; conduct a survey of producers who do not normally participate and ask them the reasons for their non-participation; provide flexibility regarding the control of land for American Indians and others. The Department remains dedicated to increasing program availability to all eligible producers. The recommendations made in the public comments have been incorporated in the final rule where applicable or will be included in program guidance and delivery activities.

Two respondents asked that NRCS include Tribal level in the description of where NRCS will conduct outreach activities. The rule has not been amended because the language referred to the NRCS organizational structure and Indian tribes are specifically included as a targeted group for outreach.

One respondent recommended that the State Conservationist instead of the Chief of NRCS be given the authority to grant waivers for having control of the land allotted by the Bureau of Indian Affairs, Tribal land and other instances. The rule has not been amended because definition of Chief includes a designee.

NRCS received one comment expressing concern that a complete comprehensive nutrient management plan (CNMP) was required to be submitted in entirety during the initial planning phase of the EQIP application in response to NRCS's request for comments regarding how incentive payments to develop a CNMP should be implemented. The proposed rule did not require that a full CNMP needed to be developed during the initial planning process, the proposed rule stated that a participant who receives EQIP assistance for an animal waste storage or treatment facility will provide for the development and implementation of a CNMP. This provision will remain unchanged in the final rule in support of the legislative intent for implementation of CNMPs in the 2002 Farm Bill.

The use of EQIP assistance for new and expanding large animal facilities received 520 comments two of which supported using EQIP for all animal facilities regardless of size and 518 respondents suggest that the final EQIP rule that prohibit funding of new and expanding large animal facilities and of large animal facilities in floodplains except to move the facility out of the floodplain. The Department removed the restriction on providing EQIP assistance to waste storage or treatment facilities for large animal facilities in accordance with the 2002 Farm Bill. The Department supports the concept that the program assistance should be available to all operations and should be awarded to those operations that provide the optimal environmental benefits. Section 1466.20 and program direction will provide state and local decision-makers guidance for ranking of applications and selecting contracts to achieve this objective.

NRCS received 4 comments to remove the provision to start or complete a conservation practice within the first twelve months of an EQIP contract. NRCS believes that the purpose of EQIP is to implement conservation activities. Producers who are not ready to implement practices should not apply for assistance. However, NRCS also understands that there often are extraneous circumstances that can delay implementation, therefore, the final EQIP rule will provide an opportunity for the participant to request a waiver from the State Conservationist to delay implementation.

NRCS received five comments regarding allowing more than one contract on a tract of land at the same time; 4 in support and one against. The proposed EQIP rule removed this eligibility requirement from the previous rule. NRCS believes that allowing producers to have two or more contracts on a parcel supports the concept of “progressive planning” which allows producers to implement practices in accordance with their ability.

NRCS received two comments recommending that marketing facilities be eligible for EQIP contract. The Department believes that the statutory intent is to direct EQIP assistance to producers for implementation of conservation practices on working agricultural land. NRCS will provide guidance with the EQIP Program Manual that non-production ancillary businesses such as agricultural supply buyers and sellers are not eligible to participate in EQIP. This interpretation also applies to producer organizations and cooperatives that provide support but do not operate working land for the production of food or fiber.

NRCS received two comments that a producer who prematurely terminates an EQIP contract should be eligible to reapply for a new contract. NRCS believes that the proposed rule does not prevent a participant from reapplying after prematurely terminating a contract. NRCS's objectives are to implement cost-effective conservation and optimize environmental benefits and will award contracts to those applications that best achieve these goals. Since funds released by termination of an EQIP contract are not available for reuse on another contract, NRCS has provided, in the final rule, an option for reimbursement of administrative and assistance expenses (liquidated damages) incurred. NRCS will provide guidance in the EQIP Program Manual regarding the nature and extent of liquidated damages.

The EQIP plan of operations identifies the time and place of the conservation practices that the applicant has decided to implement. The Department has received 485 comments requesting NRCS to reinstate the provision for conservation planning that was removed from the 1997 EQIP rule. One additional comment was received in support of the reduced planning requirements but with a caveat that a level of planning should be maintained to assure that the implementation of one conservation practice that addresses one resource concern will not have a negative impact on another resource concern. The Department fully supports the comment and feels the policy guidance of NRCS adequately addresses the issue. NRCS planning policy contained in the NRCS General Manual and NRCS National Planning Procedures Handbook require the assessment of positive and negative impacts as part of the technical assistance provided to producers. The objective of NRCS planning policy is a whole farm resource management plan and NRCS policy incorporates the philosophy of “progressive planning” that includes development and analysis of alternatives and documentation of the producer's decisions. The EQIP final rule supports the “progressive planning” philosophy and allows EQIP assistance to be used to help a producer implement conservation practices as they make resource conservation decisions.

NRCS received 19 comments related to the definition of net-water savings. The Department will not create a National definition of “net water savings” due to the complexity of state and local water rights laws, and water programs and policies. In the final rule the responsibility for establishing a definition for “net water savings” is delegated to the State Conservationist.

NRCS received 67 comments which did not support the provision in the proposed rule to consider only land irrigated in three out of the last five years as eligible for EQIP assistance for irrigation practices. Sixty one respondents identified that NRCS recommended crop rotations for certain crops only required irrigation two years in a five year rotation. Six comments supported assistance for irrigation on land with no irrigation history to reduce production risk and in support of farm viability. The Department believes EQIP resources should be utilized to reduce the environmental impacts of irrigation on water resources. The Department has changed the restriction in the final rule to provide opportunities for irrigation assistance for those crops that are irrigated two out of five years.

NRCS received eight comments opposing the availability of incentive payments to participants for development of a CNMP especially when they are required to do so by EPA regulation. The Department supports the statutory intent to encourage the development of comprehensive nutrient management plans and provides the state and local decision-makers the authority to offer incentive payments and to determine incentive payment levels.

NRCS received 10 comments supporting allowing NRCS to approve interim conservation practices and financial assistance for pilot testing new technologies or innovations. Ten respondents recommended that state-of-the-art technology should not be the only basis for defining innovation and that innovation could also be defined as a particular group of producers who have not adopted a commonly accepted technology. The Department believes that innovative approaches should be supported. NRCS has agency policy to provide for the development and implementation of innovative technology. NRCS also believes that unproven innovative technology that has not been field tested should be used cautiously until its utility is proven for a specific or wide spread application. NRCS will provide program guidance that innovation is more than state-of-the-art technology; innovation could also mean new techniques to certain groups or could also mean application evaluation approaches that consider the benefits of grouping practices rather than a scattered approach.

Several general comments were received regarding lack of access to USDA programs and need for special considerations for Indian lands. One respondent commented about the types of practices to be cost shared. Consideration must be given to those large blocks of land that have basic conservation practice needs or needs differing from those who have had access to programs since inception. Recommend that NRCS: (1) Develop “special project” areas that warrant the prioritization of conservation practices differing from those of the state. (2) Develop “allowable rates” for construction, labor, and material specific to the special project areas. The final rule has not changed. The process in the proposed rule allows for implementation of EQIP at the local level to adapt program delivery for varying resource issues, costs of implementation and other unique circumstances.

Four comments were received related to the inclusion of the private sector as qualified personnel who can provide EQIP assistance. The final rule added individuals who are certified by NRCS as a Technical Service Provider (TSP) to the list of providers an EQIP participant may select from to provide assistance.

Selection of appropriate TSP by EQIP participants was a concern of two respondents. The proposed EQIP rule allows participants to select a TSP. Participants may choose any qualified TSP or NRCS to provide EQIP related technical assistance.

Seven respondents asked to add 1994 Land Grant Colleges to the list of potential TSPs. The rule has been edited to show the inclusiveness of possible TSP rather than exclusiveness by naming various groups or individuals. “Participants may use technical and other assistance from qualified personnel who are certified as Technical Service Providers by NRCS.”

A total 46 comments on Technical Service Provider liability, certification, confidentiality and training were received. At the time the proposed EQIP rule was developed the specifics of TSP were not known. The TSP interim final rule was promulgated in 7 CFR part 652 and it addresses the issues of liability, certification, confidentiality, and training.

NRCS received 58 comments suggesting the objective of cost-effectiveness was to reinstate competitive bidding and 466 respondents suggested rewriting the rule to prohibit competitive bidding. Another 14 responders recommended reinstating competitive bidding. NRCS does not believe using cost-effectiveness means competitive bidding since the cost refers to the total cost, not just the federal cost-share. Cost-effectiveness can be interpreted two ways. First in terms of greater environmental benefits for the same cost or second, providing EQIP assistance for the least-cost alternative. NRCS believes that the first interpretation will be accomplished by the ranking processes developed by state and local decision-makers. NRCS will provide program direction that in EQIP cost-effectiveness means NRCS will provide assistance to implement the least-cost alternative that would achieve the desired resource benefits. Participants may choose to adopt more costly alternatives but they would have to bear the additional costs. The proposed rule will not be changed.

Two respondents commented that the ranking factors should include recognition of the need for outreach or targeting of populations and areas with historically low participation rates. Additional comments recommended the insertion of tribal law compliance requirements into this section and include a reference to consulting with Tribal Conservation Advisory Councils. The EQIP ranking criteria consider the significance of the resource concerns, not the type of land ownership. However, any unique resource concerns identified by underserved populations may be added as a priority natural resource concern through participation in the State Technical Committees. NRCS also intends to conduct outreach to increase program accessibility for underserved populations.

The Department received 56 comments that suggest EQIP assistance should not be used for large animal facilities. EQIP should prioritize funding to small and medium size producers and two of which supported using EQIP for all animal facilities regardless of size. Another 94 respondents suggest that EQIP should be targeted to small and medium farms and 560 recommend language to prevent discrimination against small and medium sized farms. The Department has reviewed the economic benefits of several alternatives and determined that EQIP can treat the waste from the largest number of animal units for the least cost by allowing funding for large facilities. However, the Department also recognizes that small and medium producers may be least able to afford the adoption of conservation practices in their operation, and that EQIP may assist these producers avoid future regulations. NRCS has therefore included a provision in the final rule that the ranking process used to select application for contracts will be size neutral, that is, the process will not give preferential treatment to an application based on the size of the agricultural operation.

Additionally NRCS received 466 comments that the EQIP application ranking process should explicitly reward sustainable practices and exceptional performance and that will prioritize the best solutions not the biggest problems. NRCS believes that the state and local decision-makers will develop processes that achieve both cost-effectiveness and optimal environmental benefits. NRCS will provide full public disclosure by providing the EQIP ranking processes used at the state and local level on the NRCS Web site at http://www.nrcs.usda.gov/programs/eqip. NRCS intends to reward exceptional performance through the performance incentive funding.

NRCS received 162 comments on the approval of EQIP contracts by the Regional Conservationist when the contract totals more than $100,000. The comments related to the increased administrative burden and delay this requirement will have on the development of EQIP contracts and in producers implementing practices. The Department feels this is a necessary component of EQIP to assure that the program is implemented to achieve the stated EQIP program objective. Therefore, the requirement is maintained in the final EQIP rule.

More than 175 comments were received on the requirement that State Conservationist approved EQIP contracts that included practices with cost share rates greater than 50 percent. The concern was the delay this would have on EQIP contract development and practice implementation. This requirement changed in the final rule (1466.23(d)) to allow the State Conservationist, with concurrence of the Regional Conservationist, to approve state and local EQIP practice cost lists that include any structural practice with a cost share rate greater than 50 percent. This change maintains the program objective of optimizing environmental benefits and improves program delivery compared to the proposed rule.

NRCS received 31 comments regarding the amount of an EQIP contract. Eight respondents support a $50,000 contract cap, 16 support a $450,000 contract limit and seven respondents support no limit. Another 34 responders suggested the $450,000 contract limit was an injustice against small farmers since only large farmers can afford 25 percent of $450,000. NRCS believes that, due to the large demand for the limited resources which have been made available for EQIP, a contract limit is appropriate at this time. The final rule will establish the maximum amount of financial assistance for an EQIP contract is $450,000.

NRCS also received 19 comments regarding statutory language. Three respondents opposed attribution of payments to individuals and support tracking payments to tax identification number of entities. Another 16 supported payments in the first year of a contract. The Department does not have flexibility to change either of these provisions. The statutory limit for payments to any individual or entity, directly or indirectly, for all EQIP contracts between 2002 and 2007 of $450,000 requires NRCS to track EQIP payments to an individual. NRCS has removed compliance with the triple entity rule (7 CFR 1400.301(a)) as an EQIP eligibility requirement.

The Department received no comments relative to this section of the proposed rule.

NRCS received a total of 638 comments related to the setting of cost-share rates and incentive payment levels. The proposed rule's preamble stated that NRCS intends to fund most structural practices at no more than 50 percent cost-share. Over 545 respondents recommended that cost-shares for structural practices should be no less than 75 percent as permitted by the 2002 Farm Bill. They suggested that this provision was analogous to a “buy-down” which was removed from the previous rule; is contrary to locally-led conservation philosophy, and detrimental to the producers who have suffered severe economic hardships over the last few years. Another 177 respondents identified that the requirement in section 1466.20 of the proposed rule that established the State Conservationist as the approving authority for any EQIP contract with a structural practice with a cost-share greater than 50 percent is an administrative burden. Another 10 respondents suggested providing 90 to 100 percent cost-share rates to limited resource producers/ranchers and beginning farmers/ranchers, or 75 percent cost-share for specific practices such as salinity control, diesel engine emission control, or wildlife plant species pollinators.

Two respondents suggested that a practice cap could be used in place of a reduced cost-share rate, 4 respondents expressed concern that the state and local decision-makers should be allowed to establish differential cost-share rates for practice that offer more environmental benefits, and three respondents suggested that producers required to develop a CNMP under the EPA CAFO/AFO rule should not be eligible for incentive payments for the development of a CNMP.

The setting of cost-share rates and incentive payment levels is the third component of optimizing environmental benefits. The guidance for optimizing environmental benefits in the proposed rule directs state and local decision-makers to identify the priority natural resource concerns and then select the most appropriate practices that will address those concerns and set rates to encourage the implementation of the best suited practices. The Department fully supports using locally-led conservation to identify the practices that will be used and setting the cost-share rates. Except for 100 percent cost-share, the final rule does not prohibit any of the recommendations received and allows for local innovation to structure a cost-effective program delivery. The Department feels the proposed rule provides the flexibility necessary for the state and local decision-makers to optimize program delivery. However, the final rule will require that the State Conservationist, with the Regional Conservationist's concurrence, must approve the EQIP cost-share lists used in the state.

NRCS received 11 comments opposing the guidance provided in the preamble of the proposed rule that “no payments will be made for land management practices that are currently accepted and practiced in the agricultural community”. The Department believes that EQIP should provide cost-effective conservation. Producers who have not adopted commonly accepted techniques for their operation are in the minority and therefore the funds would most likely have a greater benefit when used for other practices. If, however, the particular circumstances warrant the implementation of these practices, the proposed rule does not prohibit the State Conservationist from offering assistance for them. The guidance will continue to be provided in the EQIP Program Manual.

An additional six respondents wanted assurance that the provision in the proposed rule to adjust EQIP cost-share to ensure that the combined financial contributions (all public and private sources) for a structural conservation practice will not exceed 100 percent and would not restrict additional cost-shares from non-USDA sources. It is not the intent of the Department to restrict additional cost-shares that a participant may receive from non-USDA sources but to achieve cost-effectiveness, USDA will reduce EQIP assistance when non-USDA assistance together with USDA assistance for a practice exceeds 100 percent. The Department does not support providing maximum cost-share to a participant when other source of assistance bring the total to more than 100 percent of the cost of installing a structural conservation practice.

Six respondents commented that State Tribal Conservation Advisory Council (TCAC) should be included in the setting of cost-share rates and determination of cost-share rates and incentive payment levels. Five commented that cost-share should remain at 75 percent for structural practices on Indian Nations because of the economic hardships for Indian Nations. The rule has not been amended. Under existing rules, TCAC can be a part of the State Technical Committee that provides advice to the State Conservationist for setting cost-share rates incentive payments.

Ten respondents commented that a social security number should not be the only number used to keep track of EQIP payments to individuals because it would create a burden for many Indians who do not have them. Additional comments expressed concern for the requirement to collect all Tribal member names and numbers within the entity because Indian Tribes entering into EQIP contracts frequently have thousands of members who actually will not receive any portion of the EQIP payment. The rule has been amended to allow the use of individual Tribal enrollment numbers or other unique identification numbers in lieu of a social security number and only for those members who will receive a pro rata share of the EQIP payment. Tribal enrollment numbers (TEN) are unique to each individual tribal member. If the Tribal member does not have a TEN, then a social security number or other unique identifier will be used. Tribal member using the TEN identifier for payments received on tribal land will also use the TEN identified for all other EQIP contracts.

Six respondents did not want to be classified as an entity because of the perception that the Adjusted Gross Income (AGI) limitation would apply to Indian Tribes. Under 7 CFR 1400, Indian Tribes are exempt from the AGI qualifications.

The Department received no comments relative to this section of the proposed rule.

The Department received no comments relative to this section of the proposed rule.

This section is reserved for future regulations that address implementation of Conservation Innovation Grants.

The Department received no comments relative to this section of the proposed rule.

NRCS received 15 comments supporting using EQIP funds to assist private non-industrial forest land owners develop and prepare Habitat Conservation Plans (HCP). NRCS policy requires that all NRCS assistance must be compliant with all Federal, State and local laws. EQIP does not provide any authority to do otherwise. Therefore private landowners, corporations, State or local governments, or other non-Federal landowners who wish to conduct activities on their land that might incidentally harm (or “take”) a species listed as endangered or threatened must first obtain an incidental take permit from the U.S. Fish and Wildlife Service. To obtain a permit, the applicant must develop a HCP, designed to offset any harmful effects the proposed activity might have on the species. The HCP process allows development to proceed while promoting listed species conservation. NRCS will provide guidance that will allow technical assistance to be used for the development of a HCP for EQIP assisted activities that adversely affect listed species but costs or fees associated with the permit acquisition will not be an eligible cost. This concept applies to all laws, rules, and regulations that may require remedial actions; the planning can be provided through EQIP assistance but permit fees and costs cannot.

NRCS received 4 comments recommending that an authorized agent of NRCS must first obtain permission before accessing a participant's property. NRCS believes there are numerous cases where a participant may be absent from the property for a lengthy period of time, or the participant is an absentee landowner or tenant who may not be easily contacted. In order to conduct its business in a timely manner in these cases, USDA believes a reasonable effort should be made to contact the participant prior to accessing the property to enable the participant to attend at the same time. The program guidance documents will stipulate that the NRCS must document in the participant's file the efforts made to notify the participant before accessing the operating unit. No change was made in the final rule concerning these comments.

The Department received no comments relative to this section of the proposed rule.

The Department received no comments relative to this section of the proposed rule.

The Department received no comments relative to this section of the proposed rule.

On February 20, 2003, NCUA issued a proposed rule that would add § 709.13 to NCUA's involuntary liquidation regulation to designate swaps as QFCs. 68 FR 8860, February 26, 2003; 12 CFR part 709.

As discussed in the preamble to the proposed rule, section 207 of the Federal Credit Union Act (FCU Act) contains provisions concerning the treatment of QFCs in liquidation or conservatorship. 12 U.S.C. 1787(c)(3), (8). Generally, these QFC provisions enable a QFC counterparty to exercise its contractual rights to terminate and net QFCs and protect itself against the selective assumption of QFCs by a liquidating agent or conservator. QFC treatment limits counterparty exposure and preserves market stability when a credit union with QFCs enters liquidation or conservatorship.

Section 207 of the FCU Act also provides that “the term ‘qualified financial contract' means any securities contract, forward contract, repurchase agreement, and any similar agreement that the [NCUA] Board determines by regulation to be a qualified financial contract for purposes of this paragraph.” 12 U.S.C. 1787(c)(8)(D)(i). The Board has determined that swaps are similar to those agreements enumerated in the FCU Act's definition and should be recognized as QFCs. See H.R. Rep. No. 101-484 at 1 (recognizing that swaps are “similar” to forward contracts, securities contracts, and repurchase agreements), to accompany Pub. L. 101-311 (Bankruptcy: Swap Agreements and Forward Contracts), reprinted in 1990 U.S.C.C.A.N. 223. This Board determination that swaps receive QFC treatment will provide greater certainty about the treatment of swaps if a federally-insured credit union is placed into involuntary liquidation or a conservatorship and will encourage counterparties to engage in swaps with credit unions. This final rule also parallels the Federal Deposit Insurance Act's treatment of swaps involving banks. 12 U.S.C. 1821(e)(8)(D)(i), (vi), (vii).

As stated in the preamble to the proposed rule, the Board has determined that it will exercise its discretion as liquidating agent or conservator and provide swaps with QFC treatment if there is a liquidation or conservatorship involving swaps before this final rule is effective.

The Board received thirteen comment letters on the proposed rule: five from corporate credit unions, three from natural person credit unions, and five from credit union trade organizations.

All thirteen commenters expressed support for designating swaps as QFCs. Nine of the thirteen commenters recommended that the language of the proposed rule be amended to clarify that any master agreement involving swaps will be treated as a swap. The Board agrees with this recommended clarification and has added language to the final rule paralleling a similar provision in the Federal Deposit Insurance Act. 12 U.S.C. 1821(e)(8)(D)(vii).

One commenter asked that the new rule state explicitly that any conservator or liquidating agent of a credit union would be obligated to recognize all of the rights of QFC counterparties set out in section 207(c)(8)(A) of the FCU Act. 12 U.S.C. 1787(c)(8)(A). This commenter believes section 207(c)(8)(A) of the FCU Act contains an erroneous cross-reference to section 207(c)(12) of the FCU Act and that adoption of the commenter's proposed language would cure this error. 12 U.S.C. 1787(c)(12). The Board agrees that this cross-reference to section 207(c)(12) is erroneous. The correct cross-reference should be to section 207(c)(10), as indicated by comparison with parallel provisions in the Federal Deposit Insurance Act. 12 U.S.C. 1787(c)(8)(A) and 1821(e)(8)(A). Although the Board cannot issue a regulation for purposes of correcting a statute, the Board will limit its discretion when acting as a liquidating agent or conservator to allow counterparties to exercise their rights under section 207(c)(8)(A) as if that section contained a cross-reference to section 207(c)(10), not section 207(c)(12). The Board also notes the House of Representatives recently approved a bill that would, if enacted into law, correct this error. Bankruptcy Abuse Prevention and Consumer Protection Act of 2003, H.R. 975, Title IX (Toomey Amendment).

Another commenter asked that the Board also designate commodity contracts as QFCs. The proposed rule did not address commodity contracts, and, therefore, they are beyond the scope of this final rule. Furthermore, the Board notes that natural person federal credit unions do not currently have the authority to enter into commodity contracts and that corporate credit unions may not enter into commodity contracts unless specifically authorized to engage in commodity contracts under their expanded authorities. See 12 CFR part 703 and 12 CFR part 704, Appendix B, Part IV.

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 Board believes it unlikely that any small federally-insured credit unions engage in swaps. Accordingly, the Board believes that the final 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.

NCUA has determined that this final 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. This final 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 final rule does not constitute a policy that has federalism implications for purposes of the executive order.

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

The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by section 551 of the Administrative Procedures Act. 5 U.S.C. 551. NCUA has recommended to The Office of Management and Budget that it determine that this final rule is not a major rule, and is awaiting its determination.

NCUA's goal is clear, understandable regulations that impose minimal regulatory burden. NCUA requested comment on whether the proposed rule met this standard. No commenters addressed the issue.

This amendment to 14 CFR 71 modifies the Class E airspace area at Falls City, NE. An RNAV (GPS) RWY 14 ORIGINAL SIAP and an RNAV (GPS) RWY 32 ORIGINAL SIAP have been developed to serve Brenner Field, Falls City, NE. The Nondirectional Radio Beacon (NDB) A SIAP that serves Brenner Field has been amended. These SIAPs require additional controlled airspace to contain aircraft executing the approach procedures. This action expands Class E airspace extending upward from 700 feet AGL at Falls City, NE. A review of the Falls City, NE Class E airspace revealed a discrepancy in the Falls City, Brenner Field, NE airport reference point. Class E controlled airspace at Falls City, NE is defined, in part, by the Brenner Field airport reference point. This action corrects the discrepancy between the previous and revised airport reference points by modifying the Falls City, NE Class E airspace area. It incorporates the revised Brenner Field airport reference point in the Class E airspace legal description and brings the airspace area into compliance with FAA Order 7400.2E, Procedures for Handling Airspace Matters. The area will be depicted on appropriate aeronautical charts. Class E airspace areas extending upward from 700 feet or more above the surface of the earth are published in paragraph 6005 of FAA Order 7400.9K, dated August 30, 2002, and effective September 16, 2002, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

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

Interested parties are invited to participate in this rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2003-15256/Airspace Docket No. 03-ACE-49.” The postcard will be date/time stamped and returned to the commenter.

The regulations adopted herein will not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, it is determined that this final rule does not have federalism implications under Executive Order 12132.

The FAA has determined that this regulation is noncontroversial and unlikely to result in adverse negative comments. For the reasons discussed in the preamble, I certify that this regulation (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and (3) if promulgated, will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes Standard Approach Procedures (SIAPs). The complete regulatory description on each SIAP is contained in the appropriate FAA Form 8260 and the National Flight Data Center (FDC/Permanent (P) Notices to Airmen (NOTAM) which are incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of the Federal Aviation's Regulations (FAR). Materials incorporated by reference are available for examination or purchase as stated above.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction of charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. The provisions of this amendment state the affected CFR (and FAR) sections, with the types and effective dates of the SIAPs. This amendment also identifies the airport, its location, the procedure identification and the amendment number.

This amendment to part 97 of the Federal Aviation Regulations (14 CFR part 97) establishes, amends, suspends, or revokes SIAPs. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained in the content of the following FDC/P NOTAMs for each SIAP. The SIAP information in some previously designated FDC/Temporary (FDC/T) NOTAMs is of such duration as to be permanent. With conversion to FDC/P NOTAMs, the respective FDC/T NOTAMs have been canceled.

The FDC/P NOTAMs for the SIAPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these chart changes to SIAPs by FDC/P NOTAMs, the TERPS criteria were applied to only these specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a National Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days.

Further, the SIAPs contained in this amendment are based on the criteria contained in the TERPS. Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Section 301 of Public Law 106-396 (47 U.S.C. 763, Oct. 30, 2000) permits certain aliens who were officers or employees of INTELSAT before its privatization and who obtained and had maintained the status of “international organization alien” under the terms of section 101(a)(15)(G) of the Immigration and Nationality Act (INA) for the requisite period to continue to be eligible for such classification as long as they are officers or employees of INTELSAT or any successor or separated entity of INTELSAT. It also provides that, despite its privatization, INTELSAT or any successor or separated entity will continue to qualify as an “international organization” for purposes of the special immigrant provision of INA 101(a)(27)(I), relating to certain international organization aliens and family members.

On January 11, 2002, the Department published an interim rule to implement these new provisions, and on April 17, 2002, the Department published a second interim rule to revise the interim regulation to further clarify the status of privatized INTELSAT and the personnel affected. As made clear in the second interim rule, Public Law 106-396 confers the status of international organization on privatized INTELSAT only in connection with the special immigrant provision in INA section 101(a)(27)(I). It also allows certain officers and employees of privatized INTELSAT to retain their G-4 status despite the fact that INTELSAT, once privatized, no longer meets the definition of international organization for purposes of visa classification under INA 101(a)(15)(G). Additionally, as the second interim rule clarified, Public Law 106-396 does not provide for G-5 status for servants of privatized INTELSAT officers and employees.

The Department solicited comments to be received no later than June 17, 2002. No comments were received.

The definition for multipurpose dry-chemical fire extinguisher in subpart A of existing 30 CFR 56/57.2 states—

In 1985, MSHA promulgated a final rule [50 FR 4022] revising its “Fire Prevention and Control” standards for metal and nonmetal mines in subpart C of 30 CFR parts 56 and 57. The definition for multipurpose dry-chemical fire extinguisher in final §§ 56/57.4000 states—

In 1991, MSHA promulgated a final rule [56 FR 46508] revising its “Explosives” standards for metal and nonmetal mines in subpart E of 30 CFR parts 56 and 57. The definition for multipurpose dry-chemical fire extinguisher in final §§ 56/57.6000 of “Subpart E—Explosives” is identical to that contained in §§ 56/57.4000 of “Subpart C—Fire Prevention and Control.”

With the publication of the final rules for “Subpart C—Fire Prevention and Control” and “Subpart E—Explosives,” the definition for multipurpose dry-chemical fire extinguisher in subpart A became irrelevant because this term is used only in subparts C and E.

The definition for multipurpose dry-chemical fire extinguisher in subpart A (§§ 56/57.2) differs from the one in subpart C (§§ 56/57.4000) and subpart E (§§ 56/57.6000) in two ways. First, the definition in subpart A uses the word “minimum” instead of “nominal” in characterizing the amount of dry-chemical agent required. The preamble to the final rule for “Subpart C—Fire Prevention and Control,” however, states that—

Second, the definition in subpart A specifies that the multipurpose dry-chemical fire extinguisher be “listed or approved * * * by Underwriters Laboratories, Inc.” The preamble to the final rule for “Subpart C—Fire Prevention and Control,” however, states that—

Although the more recent definition in subparts C and E differs slightly from subpart A, the intent of the definition remains the same. This disparity, however, has created confusion for some fire extinguisher manufacturers and mine inspectors.

To eliminate any confusion and redundancy, this technical amendment (1) replaces the outdated and unnecessary definition for multipurpose dry-chemical fire extinguisher in subpart A of 30 CFR parts 56 and 57 with the most current definition from subparts C and E of these parts; and (2) removes the redundant definitions of multipurpose dry-chemical fire extinguisher from subparts C and E.

For background information on this rule, see the original submission published on April 30, 2003 (68 FR 23030).

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 (CGD01-03-060), indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 81/2 by 11 inches, suitable for copying. If you would like to know 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 temporary rule in view of them.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(3), the Coast Guard finds that good cause exists for not publishing an NPRM. The Captain of the Port conducts an ongoing assessment of the maritime domain security needs within the port and has determined that the temporary safety and security zones established by this rule are necessary to provide for the protection of Naval and Coast Guard vessels, critical port infrastructure and coastal facilities. This determination was reached after due consideration of various warnings publicly disseminated by the Federal Bureau of Investigation and other law enforcement agencies, and threatening statements attributed to the al Qaeda organization. In view of the urgent need to adequately safeguard Naval and Coast Guard vessels, critical coastal facilities and infrastructure from potential terrorist attack, any delay encountered by normal notice and comment rulemaking procedures would be contrary to the public interest.

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

On September 11, 2001 three commercial aircraft were hijacked and flown into the World Trade Center in New York City, and the Pentagon, inflicting catastrophic human casualties and property damage. National security and intelligence officials warn that future terrorist attacks are likely. The President has continued the national emergencies he declared following the September 11, 2001 terrorist attacks. See, Continuation of the National Emergency with Respect to Certain Terrorist Attacks, 67 FR 58317 (September 13, 2002); Continuation of the National Emergency With Respect To Persons Who Commit, Threaten To Commit, Or Support Terrorism, 67 FR 59447 (September 20, 2002). The President also has found pursuant to law, including the Act of June 15, 1917, as amended August 9, 1950, by the Magnuson Act (50 U.S.C. 191 et seq. ), that the security of the United States is endangered by disturbances in international relations of United States that have existed since the terrorist attacks on the United States and such disturbances continue to endanger such relations. Executive Order 13273 of August 21, 2002, Further Amending Executive Order 10173, as Amended, Prescribing Regulations Relating to the Safeguarding of Vessels, Harbors, Ports, and Waterfront Facilities of the United States, 67 FR 56215 (September 3, 2002).

Since the September 11, 2001 terrorist attacks, the Federal Bureau of Investigation has issued several warnings concerning the potential for additional attacks within the United States. In addition, the ongoing hostilities in Afghanistan and growing tensions within Iraq have made it prudent for U.S. ports and properties of national significance 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.

The Coast Guard is establishing temporary security zones around the Stapleton Homeport Pier in Upper New York Bay, the New York City Passenger Ship Terminal and Intrepid Museum in the Hudson River. These security zones are necessary to provide for the security of the port and to ensure that vessels and facilities, are not used as targets of, or platforms for, terrorist attacks. These zones would restrict entry into or movement within portions of the New York Marine Inspection and Captain of the Port Zones.

This rule establishes the following temporary security zones:

The Coast Guard is establishing a temporary security zone in all waters of Upper New York Bay within approximately 400 yards of the Stapleton Homeport Pier bound by the following approximate positions: 40°38′00.6″ N, 074°04′22.3″ W, thence to 40°37′51.1″ N, 074°03′46.5″ W, thence to 40°37′27.5″ N, 074°03′54.5″ W, thence to 40°37′33.7″ N, 074°04′20.8″ W, (NAD 1983) thence along the shoreline to the point of origin.

The Coast Guard is establishing temporary security zones in all waters of the Hudson River within approximately 400 yards of Piers 86, 88, 90, and 92 bound by the following points: from the northeast corner of Pier 81 where it intersects the seawall, thence to approximate position 40°45′51.3″ N, 074°00′30.2″ W, thence to 40°46′27.7″ N, 074°00′04.9″ W, thence to the southeast corner of Pier 97 where it intersects the seawall.

The zones described above are necessary to protect the Naval and Coast Guard vessels participating in Fleet Week 2003, the Stapleton Homeport Pier, the New York City Passenger Ship Terminal; the Intrepid Museum, others in the maritime community, and the surrounding communities from subversive or terrorist attack against the vessels and piers that could potentially cause serious negative impact to vessels, the port, or the environment and result in numerous casualties. The Captain of the Port does not expect this rule to interfere with the transit of any vessels through the waterways adjacent to each facility. Vessels will still be able to transit around the security zones at all times. Additionally, vessels will not be precluded from mooring at or getting underway from commercial or recreational piers in the vicinity of the zones.

Any violation of any security zone herein is punishable by, among others, civil penalties (not to exceed $27,500 per violation, where each day of a continuing violation is a separate violation), criminal penalties (imprisonment for not more than 10 years and a fine of not more than $100,000), in rem liability against the offending vessel, and license sanctions. This regulation is established under the authority contained in 50 U.S.C. 191, 33 U.S.C. 1223, 1225 and 1226.

No person or vessel may enter or remain in a prescribed security zone at any time without the permission of the Captain of the Port, New York. Each person or vessel in a security zone shall obey any direction or order of the Captain of the Port. The Captain of the Port may take possession and control of any vessel in a security zone and/or remove any person, vessel, article or thing from a security zone.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

We expect the economic impact of this rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DHS is unnecessary. This finding is based on the fact that: the zones are temporary in nature; the zones implicate relatively small portions of the waterway; and vessels will be able to transit around the security zones at all times.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this 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 rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which might be small entities: the owners or operators of vessels intending to transit or anchor in a portion of Upper New York Bay and the Hudson River in which entry will be prohibited by these security zones.

These security zones will not have a significant economic impact on a substantial number of small entities for the following reasons: the zones are temporary in nature; the zones implicate relatively small portions of the waterways; and vessels will be able to transit around the security zones 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.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this temporary rule so that we 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 Lieutenant Commander W. Morton, Waterways Oversight Branch, Coast Guard Activities New York at (718) 354-4012.

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

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

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

This temporary 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, 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 temporary 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 temporary rule and concluded that under figure 2-1, paragraph 34(g), of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. This rule fits paragraph 34(g) as it establishes security zones. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

On March 27, 2003, we published a notice of proposed rulemaking (NPRM) entitled Safety Zones: Annual fireworks events in the Captain of the Port Portland Zone in the Federal Register (68 FR 14933). We did not receive any letters commenting on the proposed rule. No public hearing was requested, and none was held.

The Coast Guard is establishing permanent safety zones to allow for safe fireworks displays. These events may result in a number of vessels congregating near fireworks launching barges. Safety zones are needed to protect watercraft and their occupants from safety hazards associated with fireworks displays.

No comments were received from the public regarding this proposed rule.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

We expect the economic impact of this proposed rule to be so minimal that a full regulatory evaluation under the regulatory policies and procedures of DHS is unnecessary.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this 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 rule will not have a significant economic impact on a substantial number of small entities. This rule will affect the following entities, some of which may be small entities: the owners or operators of vessels intending to transit the designated areas at the corresponding times as drafted in this rule. These safety zones will not have significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for particular dates, all in the evening when vessel traffic is low. Traffic will be allowed to pass through the zones with the permission of the Captain of the Port or his designated representatives on scene, if safe to do so. Because the impacts of this proposal are expected to be so minimal, the Coast Guard certifies under 5 U.S.C. 605-(b) of the Regulatory Flexibility Act (5 U.S.C. 601-612) that this final rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking process. Request for comments and assistance was published in the notice of proposed rulemaking for this rule.

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

This rule calls for no new collection of information 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 rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the 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 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. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation. A Categorical Exclusion is provided for regulations establishing safety zones. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES.

On February 27, 2003, we published a temporary final rule (TFR) for High Interest Vessels (HIVs) in San Francisco Bay and Delta ports entitled “Security Zones; San Francisco Bay, CA” in the Federal Register (68 FR 9003) under § 165.T11-077. It has been in effect since February 10, 2003 and is set to expire 11:59 p.m. PDT on May 31, 2003.

We did not publish a notice of proposed rulemaking (NPRM) this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. In addition, under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register , for the following reasons. The threat of maritime attacks is real as evidenced by the October 2002 attack of a tank vessel off the coast of Yemen and the continuing threat to U.S. assets as described in the President's finding in Executive Order 13273 of August 21, 2002 (67 FR 56215, September 3, 2002) that the security of the U.S. is endangered by the September 11, 2001 attacks and that such disturbances continue to endanger the international relations of the United States. See also Continuation of the National Emergency with Respect to Certain Terrorist Attacks, (67 FR 58317, September 13, 2002); Continuation of the National Emergency With Respect To Persons Who Commit, Threaten To Commit, Or Support Terrorism, (67 FR 59447, September 20, 2002). Additionally, a Maritime Advisory was issued to: Operators of U.S. Flag and Effective U.S. controlled Vessels and other Maritime Interests, detailing the current threat of attack, MARAD 02-07 (October 10, 2002). As a result, a heightened level of security has been established around all HIVs in San Francisco Bay and Delta ports. Additionally, the measures contemplated by this rule are intended to prevent future terrorist attacks against individuals and facilities within or adjacent to HIVs. Any delay in the effective date of this TFR is impractical and contrary to the public interest.

The original temporary final rule was urgently required to prevent possible terrorist strikes against the United States and more specifically the people, waterways, and properties in and near the San Francisco and Delta ports. It was anticipated that we would assess the security environment at the end of the effective period to determine whether continuing security precautions were required and, if so, propose regulations responsive to existing conditions. We have determined that the need for continued security regulations exists.

We plan to publish a notice of proposed rulemaking (NPRM) for a permanent HIV security zone. In this NPRM, we will propose to amend 33 CFR 165.1183, which was added by the Final rule [COTP San Francisco Bay 02-019] published in the Federal Register (67 FR 79854) on December 31, 2002. 33 CFR § 165.1183, “Security Zones; Cruise Ships and Tank Vessels, San Francisco Bay and Delta ports, California”, establishes security zones around cruise ships and tank vessels, but does not address HIVs. The forthcoming NPRM will clarify the classes of vessels sought to be encompassed in the section and will allow for a public comment period and for a final rule to be put into effect without an interruption in the protection provided by this temporary rule establishing HIV security zones. Section 165.1183 will remain in effect until amended by a future rule.

The measures contemplated by this extension to the original temporary final rule are intended to facilitate ongoing response efforts and prevent future terrorist attack. The Coast Guard will utilize the extended effective period created by this TFR to engage in notice and comment rulemaking to develop permanent regulations tailored to the present and foreseeable security environment with the Captain of the Port (COTP) San Francisco Bay. Therefore, the public will still have the opportunity to comment on this rule. This revision preserves the status quo within the Ports while permanent regulations are developed.

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 Iraq have made it prudent to 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. ) 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 an HIV would have on the public interest, the Coast Guard is extending the effective period of security zones around and under HIVs entering, departing, moored or anchored within the San Francisco Bay and Delta ports. These security zones help the Coast Guard to prevent vessels or persons from engaging in terrorist actions against HIVs. Due to these heightened security concerns, and the catastrophic impact a terrorist attack on an HIV would have on the crew and passengers on board, and surrounding area and communities, security zones are prudent for these types of vessels.

As of today, the need for security zones around HIVs still exists. This temporary final rule will extend the effective period of security zones that were set to expire May 31, 2003, for 4 months—from May 31, 2003, to September 30, 2003. This will allow the Coast Guard time to publish a notice of proposed rulemaking (NPRM) in the Federal Register , which will include a public comment period, and for a final rule to be put into effect without there being an interruption in the protection provided by HIV security zones.

On December 31, 2002, we published the final rule [COTP San Francisco Bay 02-019] adding § 165.1183, “Security Zones; Cruise Ships and Tank Vessels, San Francisco Bay and Delta ports, California” in the Federal Register (67 FR 79854). That section set forth security zones for cruise ships and tank vessels. A forthcoming NPRM, under docket COTP San Francisco Bay 03-003 will propose to amend section 165.1183 to include HIVs as protected vessels in that section, along with cruise ships and tank vessels. The Coast Guard will utilize the extended effective period of the HIV security zones to engage in notice and comment rulemaking to develop permanent regulations tailored to the present and foreseeable security environment with the Captain of the Port (COTP) San Francisco Bay.

In this regulation, the Coast Guard is extending the effective period of the current security zones around all HIVs that are anchored, moored or underway within the San Francisco Bay and Delta ports. A security zone is automatically activated when any HIV passes shoreward of the line drawn between San Francisco Main Ship Channel buoys 7 and 8; LLNR 4190 & 4195, positions 37°46.9′ N, 122°35.4′ W & 37°46.5′ N, 122°35.2′ W, respectively and remains in effect while the vessel is underway, anchored or moored within the San Francisco Bay and Delta ports. When activated, this security zone will encompass all waters, extending from the surface to the sea floor, within 100 yards ahead, astern and extending 100 yards along either side of any HIV in the San Francisco Bay and Delta ports. This security zone is automatically deactivated when the HIV passes seaward of the line drawn between San Francisco Main Ship Channel buoys 7 and 8; LLNR 4190 & 4195, positions 37°46.9′ N, 122°35.4′ W & 37°46.5′ N, 122°35.2′ W, respectively on its departure from port. Vessels and people may be allowed to enter an established security zone on a case-by-case basis with authorization from the Captain of the Port.

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, 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. 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, and 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 enlist the aid and cooperation of any Federal, State, county, municipal, and private agency to assist in the enforcement of the regulation. This regulation is proposed under the authority of 33 U.S.C. 1226 in addition to the authority contained in 50 U.S.C. 191 and 33 U.S.C. 1231.

This rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not “significant” under the regulatory policies and procedures of the Department of Homeland Security (DHS).

Although this regulation restricts access to the zones, the effect of this regulation will not be significant because: (i) The zones will encompass only a small portion of the waterway; (ii) vessels will be able to pass safely around the zones; (iii) vessels 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; and (iv) vessels are able to safely transit around the zones while a vessel is moored or at anchor in the San Francisco Bay and Delta ports.

The sizes of the zones are the minimum necessary to provide adequate protection for HIVs, their crews and passengers, other vessels operating in the vicinity of HIVs, their crews and passengers, adjoining areas, and the public. The entities most likely to be affected are commercial vessels transiting the main ship channel en route the San Francisco Bay and Delta ports and pleasure craft engaged in recreational activities and sightseeing. The security zones will prohibit any commercial vessels from meeting or overtaking an HIV in the main ship channels, effectively prohibiting use of the channels. However, the moving security zones will only be effective during HIV transits, which will last for approximately 30 minutes.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this 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 rule will not have a significant economic impact on a substantial number of small entities. The security zones will not have a significant economic impact on a substantial number of small entities for several reasons: 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 zones to engage in these activities. When a HIV is at anchor, vessel traffic will have ample room to maneuver around the security zones. Small entities and the maritime public will be advised of these security zones via public notice to mariners.

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

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

This rule calls for no new collection of information 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 rule under that Order and have determined that it does not have implications for federalism.

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

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

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

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

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the 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 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. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We have analyzed this rule under Commandant Instruction M16475.1D, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that there are no factors in this case that would limit the use of a categorical exclusion under section 2.B.2 of the Instruction. Therefore, this rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction, from further environmental documentation because we are establishing a security zone.

Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” will be available in the docket where indicated under ADDRESSES.

The National Park Service is granted broad authority under 16 U.S.C. 1 et seq. , the NPS “Organic Act”, to regulate the use of the Federal areas known as national parks. In addition, the Organic Act (16 U.S.C. 3) allows the NPS, through the Secretary of the Interior, to “make and publish such rules and regulations as he may deem necessary or proper for the use and management of the parks * * *”

16 U.S.C. 1a-1 states, “The authorization of activities shall be conducted in light of the high public value and integrity of the National Park System and shall not be exercised in derogation of the values and purposes for which these various areas have been established * * *”

As with the United States Coast Guard, NPS regulatory authority over waters subject to the jurisdiction of the United States, including navigable waters and areas within their ordinary reach, is based upon the Property and Commerce Clauses of the U. S. Constitution. In regards to the NPS, Congress in 1976 directed the NPS to “promulgate and enforce regulations concerning boating and other activities on or relating to waters within areas of the National Park System, including waters subject to the jurisdiction of the United States * * *” (16 U.S.C. 1a-2(h)). In 1996 the NPS clarified its authority to regulate activities within the park boundaries occurring on waters subject to the jurisdiction of the United States by adopting 36 CFR 1.2(a)(3).

PWC use at Assateague Island National Seashore is a relatively recent phenomenon, paralleling the national trend of increasing popularity and sales during the 1980s and 1990s. During that period, the preponderance of PWC use within the National Seashore occurred in the ocean and bay waters surrounding the northernmost 6 miles of Assateague Island. This area is immediately adjacent to the town of Ocean City which, with its summertime population of 300,000 and numerous marinas and boat launching facilities, generates significant amounts of water-based recreation, including boating and PWC use.

On April 20, 2000, the National Park Service adopted a final rule (36 CFR 3.24) for managing PWC use in areas of the National Park System. The regulation was implemented to ensure a prudent approach to PWC management that would potentially allow their use, yet protect park resources, sensitive natural areas, plants and wildlife, and reduce conflicts between park visitors. The final rule prohibited PWC use in all National Park System areas unless the NPS determined that this type of water-based activity was appropriate for a specific park based upon the legislation establishing the area, the park's resources and values, other visitor uses of the area, and overall management objectives.

Prior to 2000, PWC use was allowed throughout Assateague Island National Seashore, although as previously noted, the vast majority occurred adjacent to the northern end of the Island. In May 2000, most of the waters within the National Seashore were closed to PWC use consistent with 36 CFR 3.24 and a local determination by the superintendent that their continued use threatened the resources and values for which the park was established to protect. The authority for this closure was based upon 36 CFR Section 1.5, Closure and Public Use Limits. As established by the April 2000 National Park Service rule, PWC use is prohibited in all National Park System areas unless determined appropriate.

The process used to identify appropriate PWC use at Assateague Island National Seashore considered the known and potential effects of PWC on park natural resources, traditional uses, public health and safety. This rule is designed to manage PWC use within the National Seashore in a manner that achieves the legislated purposes for which the park was established while providing reasonable access to the park by PWC.

The Master Plan for Chincoteague National Wildlife Refuge (CNWR) (approved December 27, 1993) in the section entitled “Public Use Management—Access” states that “From September 1 through March 14, allow boating access to Fishing Point, Toms Cove and year round at Assateague Point Beach.” The Master Plan does not distinguish between boats and PWC in regards to access in the Assateague Point area of the CNWR. The Assateague Point Beach is the only area of the entire southern end of Assateague Island that is open to boat-in access during the summer months. The Seashore has identified the adjacent waters as open to PWC use in paragraph (c)(ii) of this regulation. CNWR and the Seashore work cooperatively to assure that unit specific regulations are as compatible as can be, given the somewhat different missions of the two agencies. Prohibiting PWC use in this area would substantially deprive PWC operators of any beach access within reasonable operating range for PWC from the town of Chincoteague and would conflict with the Refuge's allowance of PWC access at CNWR. Additionally, this would have a negative impact on the tourism-based economy the town of Chincoteague depends on.

The use of motor vessels is a traditional method of accessing Assateague Island for land-based recreational activities. As such, providing PWC owners with this opportunity is considered both desirable and compatible with park purposes. To identify areas of potential use, the effects of PWC were evaluated against a number of resource and public use issues. Only those areas with minimal, if any, potential for resource and visitor use impacts were selected. Under this rule, PWC use will be allowed only in the Ocean City Inlet and Horse Marsh areas primarily for the purpose of providing a transportation corridor to Assateague Island. Both areas have physical and biological characteristics that minimize the potential for adverse impacts to park resources and values, and both are located immediately adjacent to population centers and experience high levels of general boat traffic. The effect will be to provide island access for persons wanting to use PWC to travel to the National Seashore or for persons for whom a PWC is the only form of water access to Assateague Island.

The NPS published a proposed rule in the Federal Register on May 6, 2002 (67 FR 30339). The public was invited to comment on the rulemaking for 60 days. We received approximately 7,600 comments in the form of letters, faxes, emails and postcards on the rulemaking and supporting environmental assessment. Of the comments received, 7,264 support a complete ban on PWC use within the national seashore boundary. An additional 43 individuals support banning PWC use within the entire National Park System. Approximately 170 comments supported the proposed rule.

Comments that referred to the environmental assessment have been identified and responded to in the Finding of No Significant Impact. The following is a summary of the comments specific to the rulemaking and the responses by the NPS.

Comment 1: Personal Watercraft Industry Association (PWIA) would like to see a designated area along the ocean side of the island where PWC could come ashore, possibly south of where most beach-going visitors congregate.

Response: Ocean front use and beach access by personal watercraft was considered and rejected by the park. Concerns associated with such use/access included those related to visitor conflicts, safety, noise, and wildlife disturbance.

Comment 2: The park service can set aside a one or two mile stretch of beach, (the larger the stretch the more spread out the users will be, thereby enhancing safety), and designate it a PWC use area. This portion should be in the ORV zone where fishermen do not frequent.

Response: The Park Service is not considering access to the island by PWC via the ocean front for several reasons. Although ORV use does occur along the beach, use of PWC along that same stretch of ocean conflict with other uses in that area such as surf fishermen, sea kayakers, and surfers. These users are in that area in order to avoid conflicts with swimmers using beaches in other areas. Additionally, in order to launch from the ORV use area on the ocean front, it would be necessary to bring trailers out onto the beach and that is prohibited. Without launch capabilities, PWC would be forced to travel great distances along the coast in order to use that area, possibly causing a fuel shortage problem for the PWC. All of these issues and concerns lead the NPS to conclude that PWC use in the proposed area cannot be accommodated.

Comment 3: There are no enforcement powers established in the rule for personal watercraft violations. Until enforcement powers are established in the rule, the rule should not go into effect.

Response: In April of 2000, a service-wide rule became effective that defined a PWC and established the requirements for PWC use in the National Park System. That rule is located at Title 36 Code of Federal Regulations, Section 3.24. In April 2002, the authority for PWC to operate within Assateague Island National Seashore expired and PWC have been prohibited within the Seashore's boundaries pending the promulgation of this final rule. When this rule becomes effective, it establishes areas where PWC may operate within the boundaries of the Seashore and under what conditions. As codified, 36 CFR 3.24 establishes what areas of the Seashore are closed to PWC use and what craft meet the definition of a PWC. The regulations contained in 36 CFR 3.24 continue to apply to the areas where PWC use is prohibited within the Seashore and are enforceable by all commissioned rangers within the NPS.

Comment 4: The Town [of Chincoteague] feels that the distance from the shoreline in the Assateague Channel adjacent to Chincoteague should be decreased to as little as 25′ to accommodate a rather narrow navigable area. To compress the area available to personal watercraft only creates a safety hazard by overcrowding the area that would be available in this narrow waterway.

Response: The NPS is authorizing PWC use to occur in the water area along the western shore of Assateague Island near Horse Marsh. The use area will increase the total available area for PWC to operate within the bay and will not compress the navigable use area. This should help to alleviate any safety concerns related to PWC and other craft attempting to operate in the Assateague Channel, a narrow waterway.

Comment 5: The U.S. Coast Guard expressed concern if the PWC use area described in Sinepuxent Bay in Alternative A is prohibited in Alternative B then Alternative B leaves only the inlet area for use. That could send the wrong signal and push a lot of folks into a very tight area where the currents max out, large vessels transit and over the next couple of years there will be a large scale Army Corps of Engineers project.

Response: Following their initial comments, the U.S. Coast Guard met with park staff to discuss the proposed action. The U.S. Coast Guard Command then retracted their original statement.

The Coast Guard's initial concern was the ramification of a closed area in Sinepuxent Bay and how this would potentially increase traffic in Ocean City Inlet. The NPS reported that they had previously engaged the local PWC rental companies, discussed the proposed closure area and the impact this would have on their operation. The area in question is just west of Assateague and north of the 611 bridge. In alternative A, this area is indicated by the “PWC use area” markings. The PWC rental companies stated that this would not impact their operation, because the area in question is very shallow and would likely cause damage to their craft. Their renters are directed to stay in the deeper water to the west outside of the park boundaries. Therefore, the Coast Guard does not have a problem with the ban in that region, as it would negligibly impact inlet congestion.

Comment 6: Some provision for non-official emergency personnel rescue use should be allowed in Sinepuxent Bay, such as towing a drifting kayaker, windsurfer, swimmer, etc. There are no enforcement powers established in the rule for personal watercraft violations. Until enforcement powers are established in the rule, the rule should not go into effect. The EA does not take into account the considerable law enforcement burden caused by PWC users.

Water-based boundaries are difficult to define and enforce. A complete ban on PWC landings on Assateague Island National Seashore beaches and Chincoteague National Wildlife Refuge beaches and in these areas' respective waters would likely lead to less confusion and fewer enforcement actions. Once a community of PWC users understands that there is a complete prohibition on operating PWC in park and refuge waters, the demands on NPS enforcement personnel would be minimized.

Response: All mariners, regardless of type of vessel used, are obligated to render assistance to those in distress on the sea precluding the need for verbiage in the rule allowing such actions. The rule permits personal watercraft to beach on the ocean side of the island in case of injury or mechanical failure. The final rule will be enforceable pursuant to the authority provided in Title 36 Code of Federal Regulations, Sections 3.24 and 7.65. The limited amount of park water legally accessible by personal watercraft will make enforcement relatively easy.

Comment 7: The Town questions the right of the United States National Park Service or the United States Fish and Wildlife Service to regulate waters for which jurisdiction was granted to the Town by the Virginia General Assembly. The Town Charter as granted by the State gives jurisdictional authority over the surrounding waters of Chincoteague to the mean low water level of the Assateague shoreline.

Response: Congress in 16 U.S.C. 1a-2(h) has directed the NPS to regulate the waters within areas of the National Park System. The particular waters at issue are navigable waters which are clearly subject to the jurisdiction of the United States.

Public Law 89-195 September 21, 1965 authorized the establishment of Assateague Island National Seashore “together with the adjacent water areas not more than one-half mile beyond the mean high waterline.” Sec. 4 of that law required the Secretary of the Interior to publish the location of the seashore in the Federal Register . This was published in FR Vol. 50 No. 159 August 16, 1985.

Together with the authority the Commonwealth of Virginia may have granted to the Town of Chincoteague, the National Park Service has the authority to regulate activities in the waters surrounding Assateague Island. However, under the Supremacy Clause of the U.S. Constitution, federal law and regulations may supercede state and local laws when necessary to protect the federal interest. In this rule, the NPS has determined it is necessary to regulate the use of PWC in order to protect the resources of Assateague Island National Seashore and is consistent with the statutory direction to regulate boating and related activities.

Comment 8: One organization commented that the PWC industry has claimed that PWC are recognized by the U.S. Coast Guard (USCG) as “Class A” vessels and therefore cannot be regulated differently than other motorboats. However, the USCG states that the term “class A vessel” has no meaning insofar as USCG regulations are concerned. To date, the USCG has refrained from defining PWC and encourages other government agencies to define the craft. The NPS determined that PWC are different from conventional motorboats and finalized PWC-specific regulations in March of 2000.

Response: The NPS definition of PWC is as follows: Personal watercraft refers to a vessel, usually less than 16 feet in length, which uses an inboard, internal combustion engine powering a water jet pump as its primary source of propulsion. The vessel is intended to be operated by a person or persons sitting, standing or kneeling on the vessel, rather than within the confines of the hull.

The NPS agrees that PWC have sufficient individual characteristics to warrant regulations specific to this type of craft. With this in mind, the NPS evaluated and chose the best regulatory approach in the preferred alternative in order to maintain the opportunities for various types of recreation while protecting the resources of Assateague Island National Seashore.

Based on the preceding comments and responses, the NPS does not intend to make any changes to the provisions of this rule with regard to PWC operations.

This document is a significant rule and has been reviewed by the Office of Management and Budget under Executive Order 12866.

(1) This rule will not have an effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.

The National Park Service has completed the report “Economic Analysis of Personal Watercraft Regulations in Assateague Island National Seashore” (Law Engineering and Environmental Sciences, Inc.) dated March 2002. The report found that this proposed rule would not have a negative economic impact. In fact this rule, which will not impact local PWC dealerships and rental shops, may have an overall positive impact on the local economy. This positive impact to the local economy is a result of an increase of other users, most notably canoeists, swimmers, anglers and traditional boaters seeking solitude and quiet, and improved water quality. The economic analysis estimates that PWC users and related businesses to experience a net present value of $475,000-$506,600 in benefits over the next ten years as a result of implementing the preferred alternative. True social benefits are expected to be somewhat lower, since this estimate does not include increased park enforcement costs or potential adverse effects to non-PWC users due to lack of data.

(2) This rule will not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency.

Actions taken under this rule will not interfere with other agencies or local government plans, policies, or controls. This is an agency specific rule.

(3) This rule does not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients.

This rule will have no effects on entitlements, grants, user fees, or loan programs or the rights or obligations of their recipients. No grants or other forms of monetary supplements are involved.

(4) This rule raises novel policy issues. The proposed regulation was the first special regulation for managing PWC use in National Park Units. The National Park Service published the general regulations (36 CFR 3.24) in March 2000, requiring individual park areas to adopt special regulations to authorize PWC use. This regulation, and other PWC rules have generated considerable public interest because of potential environmental and economic impacts from these rules.

The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). This certification is based upon the finding in a report prepared by the National Park Service entitled, “Economic Analysis of Personal Watercraft Regulations in Assateague Island National Seashore” (Law Engineering and Environmental Sciences, Inc., March 2002). The focus of this study was to document the impact of this rule on two types of small entities, PWC dealerships and PWC rental outlets. This report found that small businesses would experience a small economic gain as a result of implementing the preferred alternative.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The National Park Service has completed an economic analysis to make this determination. This rule:

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

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

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

This rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local or tribal governments or the private sector. This rule is an agency specific rule and imposes no other requirements on other agencies, governments, or the private sector.

In accordance with Executive Order 12630, the rule does not have significant taking implications. A taking implication assessment is not required. No takings of personal property will occur as a result of this rule.

In accordance with Executive Order 13132, the rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

This proposed rule only effects use of NPS administered lands and waters. It has no outside effects on other areas and only allows use within a small portion of the park.

In accordance with Executive Order 12988, the Office of the Solicitor has determined that this rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

This regulation does not require an information collection from 10 or more parties and a submission under the Paperwork Reduction Act is not required. An OMB form 83-I is not required.

The National Park Service has analyzed this rule in accordance with the criteria of the National Environmental Policy Act and has prepared an Environmental Assessment (EA). Additionally, a Finding of No Significant Impact was completed and signed on January 30, 2003. A copy of that finding may be obtained by contacting the Superintendent of Assateague Island National Seashore.

In accordance with the President's memorandum of April 29, 1994, “Government to Government Relations with Native American Tribal Governments” (59 FR 22951) and 512 DM 2:

We have evaluated potential effects on federally recognized Indian tribes and have determined that there are no potential effects.

This final rule will be effective upon publication in the Federal Register . In accordance with the Administrative Procedures Act, specifically, 5 U.S.C. 553(d)(1), this rule (36 CFR 7.48 (g)) is exempt from the requirement of publication of a substantive rule not less than 30 days before its effective date.

As discussed in the preamble of this rule, the final rule is a Part 7 special regulation for Assateague Island National Seashore that relieves the restrictions imposed by the general regulation, 36 CFR 3.24. The general regulation, 36 CFR 3.24, prohibits the use of personal watercraft in units of the national park system unless an individual park area has designated the use of personal watercraft by adopting a Part 7 special regulation. The proposed rule was published in the Federal Register (67 FR 30339) on May 6, 2002, with a 60-day period for notice and comment consistent with the requirements of 5 U.S.C. 553(b). The Administrative Procedures Act, pursuant to the exception in (d)(1), waives the section 553(d) 30-day waiting period when the published rule “grants or recognizes an exemption or relieves a restriction.” In this rule the NPS is authorizing the use of PWCs, which is otherwise prohibited by 36 CFR 3.24. As a result, the 30-day waiting period does not apply to the Assateague Island National Seashore final rule.

The Attorney General's Manual on the Administrative Procedures Act explained that the “reason for this exception would appear to be that the persons affected by such rules are benefited by them and therefore need no time to conform their conduct so as to avoid the legal consequences of violation. The fact that an interested person may object to such issuance, amendment, or repeal of a rule does not change the character of the rule as being one ‘granting or recognizing exemption or relieving restriction’, there by exempting it from the thirty-day requirement.” This rule is within the scope of the exception as described by the Attorney General's Manual and the 30-day waiting period should be waived. See also , Independent U.S. Tanker Owners Committee v. Skinner, 884 F.2d 587(D.C.Cir. 1989). In this case, the court found that (d)(1) is a statutory exception that applies automatically for substantive rules that relieves a restriction and does not require any justification to be made by the agency. “In sum, the good cause exception must be invoked and justified; the (d)(1) exception applies automatically.” at 591. The facts are that Assateague Island National Seashore is promulgating this special regulation for the purpose of relieving the restriction, prohibition of PWC use, imposed by 36 CFR 3.24 and therefore, the (d)(1) exception applies to this rule.

In accordance with the Administrative Procedures Act, this rule is also excepted from the 30-day waiting period by 5 U.S.C. 553 (d)(3) and is effective upon publication in the Federal Register . As discussed above, the purpose of this rule is to comply with 36 CFR 3.24 requirement for authorizing PWC use in park areas by promulgating a special regulation. “The legislative history of the APA reveals that the purpose for deferring the effectiveness of a rule under section 553(d) was ‘to afford persons affected a reasonable time to prepare for the effective date of a rule or rules or to take other action which the issuance may prompt.’ S.Rep. No. 752, 79th Cong., 1st Sess.15 (1946); H.R. Rep. No. 1980, 79th Cong., 2d Sess. 25 (1946).” United States v. Gavrilovic, 551 F.2d 1099, 1104 (8th Cir. 1977). The persons affected by this rule are PWC users and delaying the implementation of this rule for 30 days will not benefit them; but instead will be counterproductive by denying them, for an additional 30 days, the benefits of the rule.

The rule has been developed in full compliance with section 553(b) and (c) rulemaking requirements. The proposed rule was published in the Federal Register and provided 60 days for public comments. The public comments received are summarized and analyzed in this rule. “In determining whether to invoke the exception, the agency is ‘required to balance the necessity for immediate implementation against principles of fundamental fairness which require that all affected persons be afforded a reasonable time to prepare for the effective date of its ruling.’ The Northern Arapahoe Tribe v. Hodel, 808 F.2d 741, 752 (10th Cir. 1987). Since the primary purpose of the 30-day waiting period is so the public can prepare for the changes caused by the new rule, this rule authorizes the continued use of PWCs at Assateague Island National Seashore and will not require any changes that will require a 30-day waiting period for the public to prepare itself. There is no need to utilize the 30-day waiting period for the benefit of the affected parties, instead there is good cause for making this rule effective upon publication so that affected parties can begin using PWCs again.

The AIPA was enacted into law on November 29, 1999. See Pub. L. 106-113, 113 Stat. 1501, 1501A-552 through 1501A-591 (1999). Among other things, the AIPA amended title 35 of the United States Code to provide for a request for continued examination (RCE) practice. See 35 U.S.C. 132(b). RCE practice is applicable to any utility or plant application filed on or after June 8, 1995. See 113 Stat. at 1501A-560 through 1501A-561. The Office amended the rules of practice in title 37 of the Code of Federal Regulations to implement the RCE provisions of the AIPA by an interim rule published in March of 2000 and a final rule published in August of 2000. See Changes to Application Examination and Provisional Application Practice , 65 FR 14865 (Mar. 20, 2000), 1233 Off. Gaz. Pat. Office 47 (Apr. 11, 2000) (interim rule), and Request for Continued Examination Practice and Changes to Provisional Application Practice , 65 FR 50091 (Aug. 16, 2000), 1238 Off. Gaz. Pat. Office 13 (Sept. 5, 2000) (final rule).

The AIPA also amended title 35 of the United States Code to provide, with certain exceptions, for the publication of pending patent applications (other than design applications) eighteen months after the earliest claimed filing date. See 35 U.S.C. 122(b). The eighteen-month publication provisions of the AIPA apply to utility and plant applications filed on or after November 29, 2000, including any CPA filed on or after November 29, 2000. The Office amended the rules of practice in title 37 of the Code of Federal Regulations to implement the eighteen-month publication provisions of the AIPA by a final rule published in September of 2000. See Changes to Implement Eighteen-Month Publication of Patent Applications , 65 FR 57023 (Sept. 20, 2000), 1239 Off. Gaz. Pat. Office 63 (Oct. 10, 2000) (final rule). That notice indicated that the Office must create a patent application publication of a CPA using the copy of the prior application that is contained in the Office's Patent Application Capture and Review (PACR) system database or microfilm records. See Changes to Implement Eighteen-Month Publication of Patent Applications , 65 FR at 57047, 1239 Off. Gaz. Pat. Office at 84 (comment 58 and response). The PACR system database or microfilm records for applications filed before November 29, 2000, however, are often inadequate for eighteen-month publication purposes. For example, the copy of the specification or drawings contained in the Office's PACR system database or microfilm records for applications filed before November 29, 2000, is often of too poor a quality for use in the eighteen-month publication process. Since the eighteen-month publication of a CPA often requires special handling, the Office has been obliged to create a special eighteen-month publication process for CPAs, which makes the eighteen-month publication of CPAs both costly and inefficient.

The Office revised the rules of practice in December of 1997 to permit applicants to effectively obtain continued examination of an application using a streamlined continuing application practice ( i.e. , CPA practice). See 37 CFR 1.53(d). CPA practice was a regulatory substitute for statutory authority to provide continued examination of an application for a fee. See Changes to Patent Practice and Procedures , 62 FR 53131, 53142 (Oct. 10, 1997), 1203 Off. Gaz. Pat. Office 63, 72 (Oct. 21, 1997) (final rule) (comment 17 and response). As a convenience to applicants, the Office did not eliminate CPA practice as to utility and plant applications when RCE practice was implemented. The Office, however, did make CPA practice a transitional practice as to utility and plant applications, by requiring that the prior application have been filed before May 29, 2000. See Request for Continued Examination Practice and Changes to Provisional Application Practice , 65 FR at 50100, 1238 Off. Gaz. Pat. Office at 20. This change to CPA practice was designed to cause CPA filings to phase out over time in utility or plant applications. See Changes to Implement Eighteen-Month Publication of Patent Applications , 65 FR at 57047, 1239 Off. Gaz. Pat. Office at 84 (comment 58 and response). Thus, CPA practice was retained only as a temporary transitional practice as to utility and plant applications after RCE practice was implemented.

CPA filings are in the process of being phased out, but the phasing out of CPA filings is resulting in an ever increasing percentage of requests for a CPA being improper because the prior application was not filed before May 29, 2000. Continuing to permit the filing of a CPA in utility or plant applications (filed before May 29, 2000) requires the Office to: (1) check every request for a CPA to determine whether it is a proper CPA; and (2) maintain a special eighteen- month publication process for an ever decreasing number of CPAs. Since CPA practice for utility or plant applications is largely redundant in view of RCE practice and is also costly and inefficient, the Office has determined that it is now appropriate to eliminate CPA practice as to utility and plant applications.

Title 37 of the Code of Federal Regulations, part 1, is amended as follows:

Section 1.53(d)(1) is amended to provide that an application may be filed as a CPA under § 1.53(d) only if the application is for a design patent (either an original or reissue design patent) and the prior nonprovisional application (of which the CPA is a continuation or divisional) is a design application that is complete as defined by § 1.51(b).

Section 1.53(d)(3) is amended to provide that the filing fee for a CPA filed under § 1.53(d) is the basic filing fee as set forth in § 1.16(f). Since § 1.53(d) no longer applies to utility or plant applications and a design application may contain only a single claim (§ 1.154(b)(6)), there is no need for § 1.53(d)(3) to provide for additional claims fees.

Section 1.53(e)(1) is amended to provide that if a request for an application under § 1.53(d) (a CPA) does not meet the requirements of § 1.53(d) because the application in which the request was filed is not a design application, and if the application in which the request was filed was itself filed on or after June 8, 1995, the request for an application under § 1.53(d) will be treated as an RCE under § 1.114. This change to § 1.53(e)(1) incorporates into the rules of practice the Office's current procedures for handling improper CPAs.

Experience has shown that such requests for a CPA may not satisfy the requirements of § 1.114 to be a proper RCE ( e.g. , the request may lack a submission as defined by § 1.114(c), or may not be accompanied by the fee set forth in § 1.17(e)). In such situations, the Office will treat the improper request for a CPA as an RCE (albeit an improper RCE), and the time period set in the last Office action (or notice of allowance) will continue to run. If the time period (considering any available extension under § 1.136(a)) has expired, the applicant must file a petition under § 1.137 (with a submission as defined by § 1.114(c), unless previously filed, and/or fee set forth in § 1.17(e)) to revive the abandoned application.

During the implementation of RCE practice, the Office indicated that if an applicant files a request for a CPA of an application to which CPA practice no longer applies and the applicant does not want the CPA request to be treated as an RCE ( e.g. , the CPA is a divisional CPA), the applicant may file a petition under § 1.53(e) requesting that the improper CPA be converted to an application under § 1.53(b). See Request for Continued Examination Practice and Changes to Provisional Application Practice , 65 FR at 50093-94, 1238 Off. Gaz. Pat. Office at 15. Since RCE practice has been in place for over three years and it is burdensome on the Office to treat petitions requesting conversion of a CPA into an application under § 1.53(b), the Office will no longer convert an improper CPA into an application under § 1.53(b) simply because it is requested by the applicant. Therefore, the Office will now convert an improper CPA into an application under § 1.53(b) only if the applicant shows that there are extenuating circumstances that warrant the burdensome process of converting a CPA into an application under § 1.53(b) ( e.g. , restoring the application to pending status and correcting the improper RCE is not possible because the application has issued as a patent).

In the event that an applicant files a request for a CPA of a utility or plant application that was filed before June 8, 1995, the Office will treat the improper CPA request as an improper application under the provisions set forth in the first sentence of § 1.53(e)(1).

Response to comments: The Office published a notice proposing changes to the rules of practice to eliminate CPA practice as to utility and plant applications. See Elimination of Continued Prosecution Application Practice as to Utility and Plant Patent Applications , 66 FR 35763 (July 9, 2001), 1248 Off. Gaz. Pat. Office 167 (July 31, 2001) (proposed rule). The Office received nineteen written comments (from intellectual property organizations, patent practitioners, and the general public) in response to this notice. The comments and the Office's responses to the comments follow:

Comment 1: One comment that supported the proposal to eliminate CPA practice (as to utility and plant applications) also suggested that RCE practice be extended to design applications so that the Office could also eliminate CPA practice as to design applications, thus completely eliminating CPA practice.

Response: Section 4404(b)(2) of the AIPA provides that the RCE provisions of 35 U.S.C. 132(b) do not apply to applications for a design patent. See 113 Stat. at 1501A-561. Therefore, the Office is prohibited by statute from making RCE practice applicable to design applications.

Comment 2: Several comments opposing the proposed elimination of CPA practice as to utility and plant applications argued that an RCE is not the equivalent of a CPA, and that the Office has acknowledged as much in its publications. The comments specifically indicate that an RCE is not equivalent to a CPA because: (1) One must file a CPA in an application filed before November 29, 1999, to take advantage of the common prior art exclusion in 35 U.S.C. 103(c) as amended by § 4807 of the AIPA; (2) one must file a CPA in an application filed before May 29, 2000, to take advantage of the patent term adjustment provisions of 35 U.S.C. 154(b) as amended by § 4402 of the AIPA; (3) one must file a CPA in an application filed before November 29, 2000, to take advantage of the eighteen-month publication provisions of the AIPA (without having to file a copy of the application by the Office's electronic filing system (EFS)); (4) one cannot file an RCE in an application filed before June 8, 1995; (5) one cannot file an RCE to obtain examination of a patentably distinct invention ( i.e. , analogous to a divisional CPA); (6) one cannot file an RCE to change inventorship without a request to correct inventorship under § 1.48; (7) one cannot file an RCE without a submission; and (8) one cannot file an RCE before prosecution in the application is closed.

Response: The Office recognizes that an RCE is not a complete equivalent to a CPA. The Office has addressed the public's concerns regarding the elimination of CPA practice by delaying the elimination of CPA practice (which was initially proposed in July of 2001) until July of 2003, after more than three years have passed since the enactment of the AIPA. Since CPA practice has remained in effect for over three years since the enactment of the AIPA, any applicant wishing to file a CPA to take advantage of the amendment to 35 U.S.C. 103(c) in the AIPA, the patent term adjustment provisions of the AIPA, or the eighteen-month publication provision of the AIPA, has had sufficient time to do so. Any applicant now wishing to file a CPA to take advantage of any provision of the AIPA should file a CPA before July 14, 2003, the effective date of this change to § 1.53(d).

The RCE provisions of 35 U.S.C. 132(b) do not apply to applications filed before June 8, 1995. See 113 Stat. at 1501A-560 through 1501A-561. Based upon the current low usage of § 1.129(a) submission practice, it appears that there are relatively few applications filed before June 8, 1995, that are still pending. In view of the patent term implications of abandoning an application filed before June 8, 1995, in favor of a continuing application, maintaining a streamlined practice (CPA practice) for filing a continuing application may result in applicants inadvertently taking this course of action to their detriment.

An applicant cannot obtain examination of a patentably distinct invention via an RCE ( i.e. , as with a divisional CPA). The Office's experience with divisional CPA practice, however, has shown that divisional CPA practice is less than desirable. See Request for Continued Examination Practice and Changes to Provisional Application Practice, 65 FR at 50100, 1238 Off. Gaz. Pat. Office at 20 (response to comment 10). Therefore, the “benefits” of divisional CPA practice do not warrant continuing to maintain a burdensome CPA practice.

An applicant cannot file an RCE to change inventorship without a request to correct inventorship under § 1.48 (as can be done in a CPA). The requirements of § 1.48, however, have now been streamlined sufficiently that this benefit of CPA practice does not justify maintaining a burdensome CPA practice.

A continuing application (unlike an RCE) can be filed without a submission and before prosecution in the prior application is closed. These courses of action, however, tend to extend application pendency and thus tend to have an effect that is contrary to the Office's goal of reducing patent application pendency. Therefore, the Office will not maintain CPA practice to allow applicants to easily file a continuing application without a submission to advance prosecution or before prosecution in the prior application is closed.

Comment 3: One comment opposed the proposed change to CPA practice on the basis that it was unnecessary to abruptly end CPA practice as CPA practice is being phased out (as to utility and plant applications). Another comment suggested that the Office wait until all of the applications filed before May 29, 2000, are no longer pending before eliminating CPA practice.

Response: The phasing out of CPA practice has resulted in many requests for a CPA now being improper because they are filed in utility or plant applications that were filed on or after May 29, 2000. The Office considers it appropriate to now eliminate CPA practice outright such that the Office can treat any subsequently filed request for a CPA as an RCE rather than continue the burdensome process of separately tracking proper CPAs and improper CPAs.

Comment 4: One comment that opposed the proposed change to CPA practice suggested that abruptly eliminating CPA practice will likely result in an increase in CPA filings immediately before the effective date of the change.

Response: The Office anticipates that eliminating CPA practice as to utility and plant application effective July 14, 2003, may result in an increase in the number of CPA filings between now and July 14, 2003.

Comment 5: One comment that opposed the proposed change to CPA practice stated that eliminating CPA practice will likely result in an increase in the number of applications that are abandoned when a CPA (now treated as an RCE) is filed without a submission.

Response: As discussed above, the practice of filing continuing applications without any submission to advance prosecution tends to extend application pendency and thus tends to have an effect that is contrary to the Office's goal of reducing patent application pendency. If an improper CPA (the CPA being improper because CPA practice has been eliminated as to utility and plant applications) does not satisfy the requirements of § 1.114 to be treated as a proper RCE, the Office will treat the improper request for a CPA as an RCE (albeit an improper RCE). If the applicant does not supply a submission as defined by § 1.114(c) and/or fee set forth in § 1.17(e) within the time period for reply set in the Office action or notice of allowance (considering any available extension under § 1.136(a)), the applicant will need to file a petition under § 1.137 to revive the abandoned application and supply a submission as defined by § 1.114(c) and/or fee set forth in § 1.17(e), unless previously submitted.

Comment 6: One comment that opposed the proposed change to CPA practice stated that the increased cost of handling CPAs is offset by the publication fee. Another comment that opposed the proposed change to CPA practice stated that if CPAs are more costly to process, the Office should not eliminate CPAs but just charge additional fees for CPAs.

Response: The Office cannot simply offset the additional costs of publishing CPAs under eighteen-month publication with additional fees (the publication fee or a higher publication fee for CPAs). The Office cannot spend the fees it collects absent authority from Congress to do so. Congress generally does not authorize the Office to spend all of the fees it collects; rather, Congress generally authorizes the Office to spend up to only a certain amount of the fees it collects and diverts the remaining fees to other programs. Thus, even if the Office collects additional publication fees (ostensibly to recover the Office's cost of publishing CPAs), such fee revenue would likely be diverted from the Office leaving the Office with no funding to actually cover the increased cost of publishing CPAs.

Comment 7: One comment that opposed the proposed change to CPA practice suggested that the Office provide by rule that a CPA will not be published (under 35 U.S.C. 122(b) and § 1.211). Another comment suggested that the Office require applicant to file a nonpublication request under § 1.213(a) with any CPA, or require that any applicant filing a CPA without a nonpublication request under § 1.213(a) provide a copy of the application by the Office's electronic filing system (§ 1.215(c)).

Response: 35 U.S.C. 122(b)(2) does not provide an exception to eighteen-month publication for CPAs. The Office cannot simply require every applicant filing a request for a CPA to also file a nonpublication request under § 1.213(a) because not every applicant can properly make the certification required by 35 U.S.C. 122(b)(2)(B)(i) and § 1.213(a). In addition, the current CPA filing levels do not justify engaging in further refinements of CPA practice (as opposed to simply eliminating CPA practice as to utility and plant applications).

Comment 8: One comment stated that after a notice of appeal has been filed but an agreement with the examiner is reached, the applicant cannot file an RCE and that a CPA is the most efficient mechanism to effect the agreement.

Response: An applicant can file an RCE after a notice of appeal has been filed to effect any agreement with the examiner (or to obtain continued examination of the application before the examiner). See § 1.114(a). There is no reason why a CPA would be a more effective mechanism than an RCE to effect any such agreement.

Comment 9: One comment questioned whether the examination given to an application after the filing of an RCE is the same as for a CPA.

Response: The examination given to an application after the filing of an RCE is the same as for a CPA, except that an applicant cannot file an RCE to obtain examination of a patentably distinct invention as in a divisional CPA. With regard to first action final practice, the action immediately subsequent to the filing of an RCE may be made final only if the conditions set forth in section 706.07(b) of the Manual of Patent Examining Procedure for making a first action final in a continuing application (such as a CPA) are met. See Request for Continued Examination Practice and Changes to Provisional Application Practice, 65 FR at 50096, 1238 Off. Gaz. Pat. Office at 17.

Comment 10: Several comments opposed the proposed change to eliminate CPA practice (as to utility and plant applications) on the basis that a continuing application under § 1.53(b) (non-CPA) requires the applicant to copy and file papers to generate a new file and this is burdensome when compared with the single paper necessary to file a CPA (which the Office recognized when implementing CPA practice). One comment also argued that continuing applications under § 1.53(b) place a greater burden on the Office than do CPAs because CPAs do not require any pre-examination processing and will be picked up by the examiner for action in a more timely fashion than continuing applications under § 1.53(b). One comment noted that applicants with “deep pockets” will be able to file a continuing application under § 1.53(b) but that small entities will be more severely impacted.

Response: While a continuing application under § 1.53(b) requires the applicant to copy and file papers to generate a new file, the Office must now publish applications (including CPAs) at eighteen months from its earliest claimed filing date and the application papers (specification, drawings, oath or declaration) are required for the eighteen-month publication process. In most situations in which an applicant would formerly have filed a CPA, the applicant will still be able to avoid filing the application papers necessary for a continuing application under § 1.53(b) by filing an RCE.

Comment 11: One comment opposing the elimination of CPA practice suggested that a substantial number of unnecessary CPAs are filed because the Office has failed to adequately warn the patent bar and its clients that a CPA can be more expensive for the client than an RCE. The comment stated that fewer CPAs would be filed if the Office were to better educate the public on that cost difference.

Response: The Office has a Web page ( http://www.uspto.gov/web/offices/dcom/olia/aipa/index.htm ) devoted to information concerning the AIPA and the Office's implementation of the AIPA. The Web page contains (among other information) a chart explaining the various differences (including fees) between a CPA, an RCE, and a submission under § 1.129(a) ( http://www.uspto.gov/web/offices/dcom/olia/aipa/comparison_of_cpa_practice.htm ). The Office also provided numerous presentations during fiscal years 2000 and 2001 (including a series of road show presentations) to educate the patent bar and general public about the AIPA and the Office's implementation of the AIPA (including RCE practice). Nevertheless, the elimination of CPA practice (as to utility and plant applications) will moot the issue of unnecessary CPAs being filed.

Comment 12: One comment opposing the elimination of CPA practice suggested that a substantial number of unnecessary CPAs are filed because the Office does not allow an applicant to voluntarily publish an application filed before but pending on November 29, 2000, unless a copy of the application is submitted under the new electronic filing system (EFS), and that EFS is impossible or extremely burdensome for many applicants, or for applications with many formulae or symbols, or for companies with “firewall” problems for transmissions of very large documents by electronic mail message. The comment stated that the filing of a CPA is by far the best way to obtain voluntary publications (and fully accurate reproductions) of most applications filed before November 29, 2000.

Response: Any applicant wishing to file a CPA to effectively obtain publication of an application filed before November 29, 2000, would have filed a CPA for this purpose shortly after November 29, 2000. Nevertheless, the Office has received approximately 470 EFS submissions of a copy of an application for eighteen-month publication purposes (for publication of an application as-amended under § 1.215(c), for publication of an application as-redacted under § 1.217, for voluntary publication under § 1.221(a), and for republication of an application under § 1.221(a)). The Office has also received approximately 7,600 EFS submissions of new application filings. The Office has a Patent Electronic Business Center (EBC) to assist applicants who find EFS burdensome or have other problems using EFS. The Patent EBC Web page is located at ( http://www.uspto.gov/ebc/index.html ), and the EBC Customer Support Center can be reached by telephone at (703) 305-3028.

Comment 13: One comment opposing the elimination of CPA practice suggested that the Office could reduce the number of CPAs by changing the current Office practice of refusing to consider even the most minor of amendments under § 1.116 (not requiring any new art search).

Response: The Office did not propose to change the practice concerning amendments after final action or appeal under § 1.116. Section 1.116(c) permits entry of an amendment after final rejection or appeal upon a showing of good and sufficient reasons why the amendment is necessary and was not presented earlier. An applicant may file an RCE under § 1.114 to obtain entry of an amendment that was refused entry under § 1.116.

The Deputy General Counsel for General Law, United States Patent and Trademark Office certified to the Chief Counsel for Advocacy, Small Business Administration, that the changes in this final rule do not have a significant impact on a substantial number of small entities (Regulatory Flexibility Act, 5 U.S.C. 605(b)). This final rule eliminates CPA practice as to utility and plant applications. This change does not have a significant economic impact on any business because: (1) Any applicant (including small entities) in a utility or plant application filed before June 8, 1995, can obtain further examination of the application by filing either a continuing application under § 1.53(b) or a submission under § 1.129(a) (if the application is eligible for § 1.129(a) practice); (2) any applicant (including small entities) in a utility or plant application filed on or after June 8, 1995, can obtain further examination of the application by filing either an RCE under 35 U.S.C. 132(b) and § 1.114 or a continuing application under § 1.53(b); and (3) any applicant (including small entities) in a design application can continue to obtain further examination of the application by filing either a CPA under § 1.53(d) or a continuing application under § 1.53(b).

This rule making does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

This rule making has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

This final rule involves information collection requirements which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the Office submitted an information collection package to OMB for its review and approval of the proposed information collections under OMB control numbers 0651-0031 and 0651-0032. The Office submitted these information collections to OMB for its review and approval because this final rule will increase the number of RCEs. The principal impact of the changes in this final rule is to eliminate CPA practice with respect to utility and plant applications.

The title, description and respondent description of each of the information collections are shown below with an estimate of each of the annual reporting burdens. Included in each estimate is the time for reviewing instructions, gathering and maintaining the data needed, and completing and reviewing the collection of information.

OMB Number: 0651-0031.

Title: Patent Processing (Updating).

Form Numbers: PTO/SB/08/21-27/30-32/35-37/42/43/61/62/63/64/67/68/91/92/96/97/PTO-2053/PTO-2055.

Type of Review: Regular Submission (currently under review).

Affected Public: Individuals or Households, Business or Other For-Profit Institutions, Not-for-Profit Institutions and Federal Government.

Estimated Number of Respondents: 2,208,339.

Estimated Time Per Response: Between 1 minute 48 seconds and 8 hours.

Estimated Total Annual Burden Hours: 830,629 hours.

Needs and Uses: During the processing of an application for a patent, the applicant/agent may be required or desire to submit additional information to the United States Patent and Trademark Office concerning the examination of a specific application. The specific information required or which may be submitted includes: Information Disclosure Statements; Terminal Disclaimers; Petitions to Revive; Express Abandonments; Appeal Notices; Petitions for Access; Powers to Inspect; Certificates of Mailing or Transmission; Statements under § 3.73(b); Amendments; Petitions and their Transmittal Letters; and Deposit Account Order Forms.

OMB Number: 0651-0032.

Title: Initial Patent Application.

Form Number: PTO/SB/01-07/13PCT/17-19/29/101-110.

Type of Review: Regular Submission (currently under review).

Affected Public: Individuals or Households, Business or Other For-Profit Institutions, Not-for-Profit Institutions and Federal Government.

Estimated Number of Respondents: 454,287.

Estimated Time Per Response: Between 24 minutes and 10 hours, 45 minutes.

Estimated Total Annual Burden Hours: 4,171,568 hours.

Needs and Uses: The purpose of this information collection is to permit the Office to determine whether an application meets the criteria set forth in the patent statute and regulations. The standard Fee Transmittal form, New Utility Patent Application Transmittal form, New Design Patent Application Transmittal form, New Plant Patent Application Transmittal form, Declaration, and Plant Patent Application Declaration will assist applicants in complying with the requirements of the patent statute and regulations, and will further assist the Office in the processing and examination of the application.

Comments are invited on: (1) Whether the collection of information is necessary for proper performance of the functions of the agency; (2) the accuracy of the agency's estimate of the burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information to respondents.

Interested persons are requested to send comments regarding these information collections, including suggestions for reducing this burden, to Robert J. Spar, Director, Office of Patent Legal Administration, United States Patent and Trademark Office, Washington, DC 20231, or to the Office of Information and Regulatory Affairs of OMB, New Executive Office Building, Room 10235, 725 17th Street NW., Washington, DC 20503, Attention: Desk Officer for the United States Patent and Trademark Office.

Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number.

Section 111 of the Copyright Act, 17 U.S.C., places a statutory obligation on cable systems who retransmit over-the-air broadcast signals to submit royalty fees to the Copyright Office for such retransmissions. Distribution of the royalty fees is made to copyright owners whose works were embodied in those retransmissions made by cable systems. 17 U.S.C. 111(d)(3). In order to claim eligibility for a distribution of cable royalty fees, a claimant must submit to the Copyright Office a claim during the month of July following the calendar year in which the retransmission took place. 17 U.S.C. 111(d)(4)(A). The regulations governing the content and submission of cable claims are found at 37 CFR part 252.

Likewise, copyright owners whose works were embodied in over-the-air television broadcast signals retransmitted by satellite carriers may seek a distribution of the satellite royalty fees collected by the Copyright Office. 17 U.S.C. 119. Eligibility for satellite royalty fees is predicated upon the submission of a claim in the month of July following the calendar year in which the retransmission took place. 17 U.S.C. 119(b)(4)(A). The regulations governing the content and submission of satellite claims are found at 37 CFR part 257.

For both cable and satellite, a claim is considered timely filed with the Copyright Office if it is hand delivered to the correct office within the Copyright Office during the month of July, or if it is mailed to the correct address and it bears a July U.S. Postal Service postmark. See 37 CFR 252.4 (cable); 37 CFR 257.4 (satellite). The regulations do not provide for the filing of cable and satellite claims by alternative methods such as electronic submission.

Unfortunately, the Office has experienced disruptions of postal service since October 17, 2001. See 66 FR 62942 (December 4, 2001) and 66 FR 63267 (December 5, 2001). While mail delivery to the Office has resumed, the Office continues to experience delays in receipt of its mail, due in part to the diversion of mail to an off-site location for screening. Consequently, last year the office offered and recommended alternative methods for the filing of cable and satellite claims to the 2001 royalty funds. See 67 FR 21176 (April 30, 2002). The Office is offering and recommending the same alternative filing methods this year for claims to the 2002 royalty funds.

Moreover, claimants are strongly advised to send their claims early in the month of July. Persons submitting claims at the end of the month risk missing the deadline for submission of claims.

Claimants are further advised that this Notice covers only the means by which claims may be accepted as timely filed; all other filing requirements, such as the content of claims, remain unchanged, except as noted herein. See 37 CFR parts 252 (cable) and 257 (satellite).

Claims to the 2002 cable and satellite royalty funds may be submitted as follows:

In order to best ensure the timely receipt by the Copyright Office of their cable and satellite claims, the Office encourages claimants who do not file their claims electronically to deliver their claims personally by 5 p.m. E.S.T. on any business day, during the month of July, 2003, and no later than July 31, 2003, to the Office of the Copyright General Counsel, James Madison Memorial Building, Room 403, First and Independence Avenue, SE., Washington, DC. Private carriers should not be used for such delivery, as packages brought in by private carriers may be subject to screening at an off-site facility before being delivered to the Office and may be deemed untimely and rejected unless the treated package is received by the Office of the Copyright General Counsel by 5 p.m. E.S.T. on July 31, 2003. Thus, claims should be hand delivered by the claimant or a representative of the claimant ( i.e. , the claimant's attorney or a member of the attorney's staff) directly to the Office of the General Counsel.

Claimants hand delivering their claims should note that they must follow all provisions set forth in 37 CFR parts 252 and 257.

The Office has devised on-line electronic forms for filing both single and joint cable and satellite claims from July 1, 2003 through July 31, 2003. Claimants will be able to access and complete the forms via the Copyright Office website and may submit the forms electronically as provided in the instructions accompanying the forms. Cable forms will be posted on the Office Web site at “http://www.copyright.gov/carp/cable/claims.html”. Satellite forms will be posted at “http://www. copyright.gov/carp/satellite/claims.html”. Claimants filing a joint claim may list each of their joint claimants directly on the Office's on- line joint claim form or may submit the list of joint claimants as a file attachment to the submission page. Lists of joint claimants sent as an attachment must be in a single file in either Adobe Portable Document (“PDF”) format, in Microsoft Word Version 2000 or earlier, in WordPerfect 9 or earlier, or (in the case of text-only files) in ASCII text. There will be an “attach” button on the form that will allow claimants to attach the file containing the list of joint claimants and then to submit the completed form to the Office. The attachment must contain only the names and addresses of the joint claimants. See 37 CFR 252.3(b)(1) and 257.3(b)(1).

The cable and satellite forms will be available for use during the month of July. It is critically important to follow the instructions in completing the forms before submitting them to the Office. Claims submitted on-line using forms or formats other than those specified in this Notice will not be accepted by the Office. Claims filed on-line must be received by the Office no later than 11:59 p.m. E.S.T. on July 31, 2003. Specifically, the completed electronic forms must be received by the Office's server by that time. Any claim received after that time will be considered as untimely filed. Claimants who file electronically will receive an electronic mail message in response, stating that the Office has received their submission. Therefore, claimants utilizing this filing option are required to provide an e-mail address. Claimants submitting their claims on-line are strongly encouraged to send their claim no later than July 30, 2003, in order to better ensure timely receipt by the Office.

When filing claims on-line, all provisions set forth in 37 CFR part 252 and 257 apply except §§ 252.3(b)(5) and 257.3(b)(5), which require the original signature of the claimant or of the claimant's duly authorized representative on the claim. The Office is waiving this provision for this filing period because at this time the Office is not equipped to receive and process electronic signatures.

Sections 252.4(a)(2) and 257.4(a)(2) direct claimants filing their claims by mail to send the claims to the Copyright Arbitration Royalty Panel, P.O. Box 70977, Southwest Station, Washington, DC 20024. Claimants electing to send their claims by mail are encouraged to send their claims by certified mail return receipt requested, to have the certified mail receipt (PS Form 3800) stamped by the United States Postal Service, and to retain the certified mail receipt in order to secure the only acceptable proof of a timely filing. In the event there is a question as to whether the claim was deposited with the United States Postal Service during the month of July, the claimant must produce the certified mail receipt (PS Form 3800) which bears a United States Postal Service postmark, indicating an appropriate date. 37 CFR 252.4(e) and 257.4(e). Claimants whose claims were received after July 31, with only a business meter mark, and who have been unable to produce the certified mail receipt, have had their claims rejected as untimely.

As noted above, disruption of the mail service and delivery of incoming mail to an off-site screening center have reduced the timeliness of receipt of mail by the Copyright Office. Such delays may hamper the Office's ability to compile a claimant list, and may affect the Office's ability to make partial distributions of cable and satellite funds not in controversy. 1 Consequently, the Office suggests that claimants use the mail only if none of the other methods outlined above are feasible. Claims sent by mail should be addressed in accordance with §§ 252.4(a)(2) and 257.4(a)(2), and the Office again strongly encourages the claimant to send the claim by certified mail return receipt requested, to have the certified mail receipt (PS Form 3800) stamped by the United States Postal Service, and to retain the certified mail receipt, as it constitutes the only acceptable proof of timely filing of the claim. Claims dated only with a business meter that are received by the Office after July 31, 2003, will be rejected as being untimely filed. Claimants who have ignored this rule have had their claims rejected.

When filing claims by this method, claimants must follow all provisions set forth in 37 CFR part 252 for cable claims and part 257 for satellite claims.

Although the Copyright Office permitted the submission of 2002 Digital Audio Recording Technology (“DART”) claims via facsimile transmission, the Office has determined that, due to the high volume of cable and satellite claims received by the Office relative to DART claims, it is impractical to permit the faxing of cable and satellite claims. Consequently, any cable or satellite claims received by the Copyright Office via facsimile transmission will not be accepted.

The regulations governing the filing of cable and satellite claims require “the original signature of the claimant or of a duly authorized representative of the claimant.” § 252.3(b) (cable); § 257.3(b) (satellite). This Notice, however, waives these provisions as set forth herein solely for the purpose of filing claims to the 2002 cable and satellite royalty funds. The Office is not waiving the statutory deadline for filing either cable or satellite claims, a deadline the Office has no power to waive. See, United States v. Locke, 471 U.S. 84, 101 (1985). Thus, claimants are still required to file their claims by July 31, 2003.

Waiver of an agency's rules is “appropriate only if special circumstances warrant a deviation from the general rule and such deviation will serve the public interest.” Northeast Cellular Telephone Company v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990); see also, Wait Radio v. FCC, 418 F.2d 1153 (D.C. Cir. 1969), cert. denied, 409 U.S. 1027 (1972). Under ordinary circumstances, the Office is reluctant to waive its regulations. However, the continued problems with the delivery of the mail constitutes a special circumstance which has forced the Office to deviate from its usual mail processing procedures. Thus, given such uncertainties, the Office believes that the public interest will best be served by waiving, for this filing period only, the requirement that cable and satellite claims bear the original signature of the claimant or of a duly authorized representative of the claimant when, and only when, such claim is filed electronically.

On February 6, 2003, the Commonwealth of Kentucky, through the Department of Air Quality, submitted a request for parallel processing of a revision to the Kentucky SIP to replace the MVEBs for the Northern Kentucky Maintenance area for 2010. The revision to the MVEBs is allowable because of an available safety margin for volatile organic compounds and nitrogen oxides for the Northern Kentucky portion of the maintenance area. The Commonwealth also identifies subarea budgets for the Ohio portion and the Kentucky portion of the Cincinnati-Hamilton maintenance area for the purposes of implementing transportation conformity. This revision was in response to a request from the Ohio, Kentucky, Indiana Regional Council of Governments for revised MVEBs. Ohio will make a similar request for subarea budgets for this area in an upcoming revision to the Cincinnati-Hamilton maintenance plan.

The Commonwealth's comment period for this action closed March 26, 2003. The Commonwealth held a public meeting on March 26, 2003, to receive final comments on this requested action. With the exception of a request from EPA for a clarification to be provided in the final submittal, the Commonwealth did not receive any comments. On May 15, 2003, EPA received the final SIP revision request from the Commonwealth for final review and approval. As mentioned previously, EPA processed this request on a parallel track to the Commonwealth. On March 19, 2003, (68 FR 13249) EPA published a notice of proposed rulemaking (NPR) to approve the Commonwealth's SIP revision. That NPR provides a detailed description of this action and EPA's rationale for proposed approval. The public comment period for this action ended on April 19, 2003. No comments, adverse or otherwise, were received on EPA's proposal.

EPA is approving the Commonwealth's SIP revision because it meets all of the requirements of section 110 of the Clean Air Act. Additionally, this SIP revision meets the applicable requirements of the Transportation Conformity Rule.

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

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

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

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by July 29, 2003. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

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

• Crop production (NAICS 111)

• Animal production (NAICS 112)

• Food manufacturing (NAICS 311)

• Pesticide manufacturing (NAICS 32532)

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

1. Docket . EPA has established an official public docket for this action under docket identification ID number OPP-2003-0088. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.

2. Electronic access . You may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cfr180_00.html, a beta site currently under development.

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. 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 Unit I.B.1. Once in the system, select “search,” then key in the appropriate docket ID number.

In the Federal Register of August 14, 2002 (67 FR 52996) (FRL-7191-9), EPA issued a notice pursuant to section 408 of FFDCA, 21 U.S.C. 346a, as amended by FQPA (Public Law 104-170), announcing the filing of a pesticide petition 2E6441 by IR-4, 681 U.S. Highway #1 South, North Brunswick, NJ 08902-3390. That notice included a summary of the petitions prepared by Rohm and Haas Company, the registrant. There were no comments received in response to the notice of filing. In the Federal Register of March 21, 2003 (68 FR 13917) (FRL-7297-1), EPA issued a notice pursuant to section 408 of FFDCA, 21 U.S.C. 346a, as amended by FQPA (Public Law 104-170), announcing the filing of pesticide petitions (3E6527, 3E6528, and 3E6533) by IR-4, 681 U.S. Highway #1 South, North Brunswick, NJ 08902-3390. That notice included a summary of the petitions prepared by Rohm and Haas Company, the registrant. There were no comments received in response to the notice of filing.

The petitions requested that 40 CFR 180.544 be amended by establishing tolerances for residues of the insecticide methoxyfenozide, benzoic acid, 3-methoxy-2-methyl-, 2-(3,5-dimethylbenzoyl)-2-(1,1-dimethylethyl) hydrazide, in or on cranberry at 0.5 parts per million (ppm); okra at 2.0 ppm; pea, blackeyed, seed at 4.0 ppm; pea, southern, seed at 4.0 ppm; turnip, greens at 30 ppm; and vegetable, cucurbit, group 9 at 0.3 ppm.

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

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

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA, for tolerances for residues of methoxyfenozide on cranberry at 0.5 ppm; okra at 2.0 ppm; pea, blackeyed, seed at 4.0 ppm; pea, southern, seed at 4.0 ppm; turnip, greens at 30 ppm; and vegetable, cucurbit, group 9 at 0.3 ppm. EPA's assessment of exposures and risks associated with establishing these tolerances follow.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The nature of the toxic effects caused by methoxyfenozide is discussed in Unit II.A. of the Federal Register of September 20, 2002 (67 FR 59193) (FRL-7198-5).

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

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

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

The linear default risk methodology (Q*) is the primary method currently used by the Agency to quantify carcinogenic risk. The Q* approach assumes that any amount of exposure will lead to some degree of cancer risk. A Q* is calculated and used to estimate risk which represents a probability of occurrence of additional cancer cases (e.g., risk is expressed as 1 x 10 -6 or one in a million). Under certain specific circumstances, MOE calculations will be used for the carcinogenic risk assessment. In this non-linear approach, a “point of departure” is identified below which carcinogenic effects are not expected. The point of departure is typically a NOAEL based on an endpoint related to cancer effects though it may be a different value derived from the dose response curve. To estimate risk, a ratio of the point of departure to exposure (MOE cancer = point of departure/exposures) is calculated. A summary of the toxicological endpoints for methoxyfenozide used for human risk assessment is discussed in Unit II.B. of the Federal Register of September 20, 2002 (67 FR 59193).

1. Dietary exposure from food and feed uses . Tolerances have been established (40 CFR 180.544) for the residues of methoxyfenozide, in or on a variety of raw agricultural commodities including pome fruit, cottonseed, and animals (except poultry). Residues in plants, milk, meat and fat are regulated in terms of parent compound only. Residues in liver and meat byproducts (except liver) are regulated in terms of combined residues of methoxyfenozide and its glucuronide metabolite (RH-141,518). Risk assessments were conducted by EPA to assess dietary exposures from methoxyfenozide in food as follows:

i. Acute exposure . Acute dietary risk assessments are performed for a food-use pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1 day or single exposure. The Dietary Exposure Evaluation Model (DEEM TM ) analysis evaluated the individual food consumption as reported by respondents in the United States Department of Agriculture (USDA) 1989-1992 nationwide Continuing Surveys of Food Intake by Individuals (CSFII) and accumulated exposure to the chemical for each commodity. The following assumptions were made for the acute exposure assessments: No appropriate endpoint was identified in the oral toxicity studies including the acute neurotoxicity study in rats and the developmental toxicity studies in rats and rabbits.

ii. Chronic exposure . In conducting this chronic dietary risk assessment the DEEM TM analysis evaluated the individual food consumption as reported by respondents in the USDA 1989-1992 or 1994-1996, nationwide CSFII and accumulated exposure to the chemical for each commodity. The following assumptions were made for the chronic exposure assessments: A Tier 1 (assumptions: Tolerance level residues and 100 percent crop treated) chronic dietary risk assessment was conducted via DEEM TM . The established tolerances of 40 CFR 180.544 and the proposed tolerances were included in the analysis. DEEM TM default processing factors (from DEEM TM Version 7.76) were used for all processed commodities that do not have individual tolerances.

iii. Cancer . Methoxyfenozide is classified as a “not likely” human carcinogen.

2. Dietary exposure from drinking water . The Agency lacks sufficient monitoring exposure data to complete a comprehensive dietary exposure analysis and risk assessment for methoxyfenozide in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the physical characteristics of methoxyfenozide.

The Agency uses the Generic Estimated Environmental Concentration (GENEEC) or the Pesticide Root Zone/Exposure Analysis Modeling System (PRZM/EXAMS) to estimate pesticide concentrations in surface water and SCI-GROW, which predicts pesticide concentrations in ground water. In general, EPA will use GENEEC (a Tier 1 model) before using PRZM/EXAMS (a Tier 2 model) for a screening-level assessment for surface water. The GENEEC model is a subset of the PRZM/EXAMS model that uses a specific high-end runoff scenario for pesticides. GENEEC incorporates a farm pond scenario, while PRZM/EXAMS incorporate an index reservoir environment in place of the previous pond scenario. The PRZM/EXAMS model includes a percent crop (PC) area factor as an adjustment to account for the maximum PC coverage within a watershed or drainage basin.

None of these models include consideration of the impact processing (mixing, dilution, or treatment) of raw water for distribution as drinking water would likely have on the removal of pesticides from the source water. The primary use of these models by the Agency at this stage is to provide a coarse screen for sorting out pesticides for which it is highly unlikely that drinking water concentrations would ever exceed human health levels of concern.

Since the models used are considered to be screening tools in the risk assessment process, the Agency does not use estimated environmental concentrations (EECs) from these models to quantify drinking water exposure and risk as a %RfD or %PAD. Instead drinking water levels of comparison (DWLOCs) are calculated and used as a point of comparison against the model estimates of a pesticide's concentrations in water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and from residential uses. Since DWLOCs address total aggregate exposure to methoxyfenozide they are further discussed in the aggregate risk sections in Unit III.E.

Based on the PRZM/EXAMS model, the EECs of methoxyfenozide for surface water are estimated to be 43 parts per billion (ppb) for acute, and 30 ppb for chronic. Based on the SCI-GROW model the EEC of methoxyfenozide for acute and chronic exposures for ground water are estimated to be 3.5 ppb.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Methoxyfenozide is not registered for use on any sites that would result in residential exposure.

4. Cumulative exposure to substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of the FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA does not have, at this time, available data to determine whether methoxyfenozide has a common mechanism of toxicity with other substances. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to methoxyfenozide and any other substances and methoxyfenozide does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that methoxyfenozide has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the policy statements released by EPA's Office of Pesticide Programs concerning common mechanism determinations and procedures for cumulating effects from substances found to have a common mechanism on EPA's website at http://www.epa.gov/pesticides/cumulative/.

1. In general . Section 408 of the FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base on toxicity and exposure unless EPA determines that a different margin of safety will be safe for infants and children. Margins of safety are incorporated into EPA risk assessments either directly through use of a MOE analysis or through using uncertainty (safety) factors in calculating a dose level that poses no appreciable risk to humans.

2. Prenatal and postnatal sensitivity . The toxicology data base for methoxyfenozide included acceptable developmental toxicity studies in both rats and rabbits as well as a 2-generation reproductive toxicity study in rats. The data provided no indication of increased sensitivity of rats or rabbits to in utero and/or postnatal exposure to methoxyfenozide.

3. Conclusion . There is a complete toxicity data base for methoxyfenozide and exposure data are complete or are estimated based on data that reasonably accounts for potential exposures. EPA determined that the 10X SF to protect infants and children should be reduced to 1X for the following reasons:

• Based on weight-of-evidence considerations, EPA determined that a developmental neurotoxicity study in rats is not required to support the registration of methoxyfenozide.

• In developmental toxicity studies in rats and rabbits, no increased susceptibility in fetuses as compared to maternal animals was observed following in utero exposures.

• In a 2-generation reproduction study in rats, no increased susceptibility in pups as compared to adults was observed following in utero and postnatal exposures.

• The exposure assessments will not underestimate the potential dietary (food and drinking water) or non-dietary exposures for infants and children from the use of methoxyfenozide.

To estimate total aggregate exposure to a pesticide from food, drinking water, and residential uses, the Agency calculates DWLOCs which are used as a point of comparison against the model estimates of a pesticide's concentration in water (EECs). DWLOC values are not regulatory standards for drinking water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and residential uses. In calculating a DWLOC, the Agency determines how much of the acceptable exposure (i.e., the PAD) is available for exposure through drinking water e.g., allowable chronic water exposure milligrams/kilogram/day (mg/kg/day) = cPAD - (average food + residential exposure). This allowable exposure through drinking water is used to calculate a DWLOC.

A DWLOC will vary depending on the toxic endpoint, drinking water consumption, and body weights. Default body weights and consumption values as used by the EPA's Office of Water are used to calculate DWLOCs: 2 liter (L)/70 kg (adult male), 2L/60 kg (adult female), and 1L/10 kg (child). Default body weights and drinking water consumption values vary on an individual basis. This variation will be taken into account in more refined screening-level and quantitative drinking water exposure assessments. Different populations will have different DWLOCs. Generally, a DWLOC is calculated for each type of risk assessment used: Acute, short-term, intermediate-term, chronic, and cancer.

When EECs for surface water and ground water are less than the calculated DWLOCs, EPA concludes with reasonable certainty that exposures to the pesticide in drinking water (when considered along with other sources of exposure for which EPA has reliable data) would not result in unacceptable levels of aggregate human health risk at this time. Because EPA considers the aggregate risk resulting from multiple exposure pathways associated with a pesticide's uses, levels of comparison in drinking water may vary as those uses change. If new uses are added in the future, EPA will reassess the potential impacts of residues of the pesticide in drinking water as a part of the aggregate risk assessment process.

1. Acute risk . No appropriate endpoint was identified in the oral toxicity studies including the acute neurotoxicity study in rats and the developmental toxicity studies in rats and rabbits. Accordingly, no acute risk is expected from exposure to methoxyfenozide.

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to methoxyfenozide from food will utilize 20.5% of the cPAD for the U.S. population, 26.4% of the cPAD for all infant < 1 year old, and 46.4% of the cPAD for children 1-2 years old. There are no residential uses for methoxyfenozide that result in chronic residential exposure to methoxyfenozide. In addition, there is potential for chronic dietary exposure to methoxyfenozide in drinking water. After calculating DWLOCs and comparing them to the EECs for surface water and ground water, EPA does not expect the aggregate exposure to exceed 100% of the cPAD, as shown in the following Table 1:

3. Short-term risk . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Methoxyfenozide is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's level of concern.

4. Intermediate-term risk . Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Methoxyfenozide is not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's level of concern.

5. Aggregate cancer risk for U.S. population . The Agency has classified methoxyfenozide as a “not likely” human carcinogen according to the EPA Proposed Guidelines for Carcinogen Risk Assessment (April 10, 1996). This classification is based on the lack of evidence of carcinogenicity in male and female rats as well as in male and female mice and on the lack of genotoxicity in an acceptable battery of mutagenicity studies. Therefore, methoxyfenozide is not expected to pose a cancer risk.

6. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, and to infants and children from aggregate exposure to methoxyfenozide residues.

Adequate enforcement methods are available for determination of methoxyfenozide residues in plant commodities. The similar methods that are used vary depending on the matrices involved. The enforcement method TR 34-98-87 high performance liquid chromotography using ultra-violet detection (HPLC/UV) was used for data collection in all crop field trials on the subject crops. It measures residues of methoxyfenozide per se, and is considered to be a adequate both for data collection and for tolerance enforcement.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov.

There are no Codex, Canadian, or Mexican maximum residue levels established for residues of methoxyfenozide in or on the subject crops.

Therefore, tolerances are established for residues of methoxyfenozide, benzoic acid, 3-methoxy-2-methyl-, 2-(3,5-dimethylbenzoyl)-2-(1,1-dimethylethyl) hydrazide, in or on cranberry at 0.5 ppm; okra at 2.0 ppm; pea, blackeyed, seed at 4.0 ppm; pea, southern, seed at 4.0 ppm; turnip, greens at 30 ppm; and vegetable, cucurbit, group 9 at 0.3 ppm.

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

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2003-0088 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before July 29, 2003.

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

Mail your written request to: Office of the Hearing Clerk (1900C), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Rm.104, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (703) 603-0061.

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

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

3. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.1. Mail your copies, identified by docket ID number OPP-2003-0088, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.1. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

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

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

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

(a) * * *

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

• Crop Production (NAICS 111)

• Animal Production (NAICS 112)

• Food Manufacturing (NAICS 311)

• Pesticide Manufacturing (NAICS 32532)

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

1. Docket . EPA has established an official public docket for this action under docket identification (ID) number OPP-2003-0133. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Public Information and Records Integrity Branch (PIRIB), Rm. 119, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. This docket facility is open from 8:30 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The docket telephone number is (703) 305-5805.

2. Electronic access . You may access this Federal Register document electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/. A frequently updated electronic version of 40 CFR part 180 is available at http://www.access.gpo.gov/nara/cfr/cfrhtml_00/Title_40/40cfr180_00.html, a beta site currently under development. To access the OPPTS Harmonized Guidelines referenced in this document, go directly to the guidelines at http://www.epa.gov/opptsfrs/home/guidelin.htm.

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. 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 Unit I.B.1. Once in the system, select “search,” then key in the appropriate docket ID number.

In the Federal Register of November 14, 2001 (66 FR 57079) (FRL-6809-7), EPA issued a notice pursuant to section 408 of FFDCA, 21 U.S.C. 346a, as amended by FQPA (Public Law 104-170), announcing the filing of a pesticide petition (PP 1F6315) by Bayer Corporation, 8400 Hawthorn Road, Kansas City, MO 64120. That notice included a summary of the petition prepared by Bayer Corporation, the registrant. There were no comments received in response to the notice of filing.

The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the insecticide clothianidin, (E)-1-(2-chloro-1,3-thiazol-5-ylmethyl)-3-methyl-2-nitroguanidine, in or on canola, seed at 0.01 parts per million (ppm); corn, field, grain at 0.01 ppm; corn, pop, grain at 0.01 ppm; corn, sweet, kernel plus cob with husk removed at 0.01 ppm; corn, field, forage at 0.10 ppm; corn, sweet, forage at 0.10 ppm; corn, field, stover at 0.10 ppm; corn, sweet, stover at 0.10 ppm; corn, pop, stover at 0.10 ppm; and milk at 0.01 ppm. Following the review of all the data, tolerances are also required on the following rotational crops, which are used only for livestock feeds. These tolerances do not impact the dietary risk assessment since these residues are significantly lower than those in feed items from the crops which are treated directly with clothianidin and/or thiamethoxam. Tolerances are established on animal feed, nongrass at 0.02 ppm; grain, cereal, forage, fodder and straw at 0.02 ppm; grass, forage, fodder and hay at 0.02 ppm; soybean, forage at 0.02 ppm; and soybean, hay at 0.02 ppm.

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

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

Consistent with section 408(b)(2)(D) of the FFDCA, EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure, consistent with section 408(b)(2) of the FFDCA, for tolerances for residues of clothianidin on canola, seed at 0.01 ppm; corn, field, grain at 0.01 ppm; corn, pop, grain at 0.01 ppm; corn, sweet, kernel plus cob with husk removed at 0.01 ppm; corn, field, forage at 0.10 ppm; corn, sweet, forage at 0.10 ppm; corn, field, stover at 0.10 ppm; corn, sweet, stover at 0.10 ppm; corn, pop, stover at 0.10 ppm; and milk at 0.01 ppm, animal feed, nongrass at 0.02 ppm; grain, cereal, forage, fodder and straw at 0.02 ppm; grass, forage, fodder and hay at 0.02 ppm; soybean, forage at 0.02 ppm; and soybean, hay at 0.02 ppm. EPA's assessment of exposures and risks associated with establishing the tolerance follows.

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

The dose at which the NOAEL from the toxicology study identified as appropriate for use in risk assessment is used to estimate the toxicological level of concern (LOC). However, the LOAEL is sometimes used for risk assessment if no NOAEL was achieved in the toxicology study selected. An uncertainty factor (UF) is applied to reflect uncertainties inherent in the extrapolation from laboratory animal data to humans and in the variations in sensitivity among members of the human population as well as other unknowns. An UF of 100 is routinely used, 10X to account for interspecies differences and 10X for intraspecies differences. EPA has concluded that the toxicology database for clothianidin is not complete. Due to evidence of effects on the immune system and that juvenile rats appear to be more susceptible to these effects, EPA has determined that testing should be conducted to assess immune system function in adults and in young animals following developmental exposures. Therefore, a 10X database UF is to be applied to all dietary exposure endpoints for the lack of a developmental immunotoxicity study.

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

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

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

1. Dietary exposure from food and feed uses . Currently there are no tolerances established for clothianidin alone on any commodity. However, clothianidin is a major metabolite of thiamethoxam, and tolerances for the combined residues of thiamethoxam and its metabolite clothianidin have been established under 40 CFR part 180.565 for both plant and livestock commodities. Tolerances for thiamethoxam range from 0.02 ppm to 1.5 ppm. Risk assessments were conducted by EPA to assess dietary exposures from clothianidin in food as follows:

i. Acute exposure . Acute dietary risk assessments are performed for a food-use pesticide if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. The Dietary Exposure Evaluation Model (DEEM®) analysis evaluated the individual food consumption as reported by respondents in the United States Department of Agriculture (USDA) 1994-1996 and 1998 nationwide Continuing Surveys of Food Intake by Individuals (CSFII) and accumulated exposure to the chemical for each commodity. The following assumptions were made for the acute exposure assessments: The acute analysis was a conservative, Tier I assessment which was based on tolerance level residues and the assumption of 100% crop treated. Although the only proposed uses for clothianidin are on canola and corn, clothianidin is a major metabolite of thiamethoxam which has many registered uses and several pending uses. As a result, residues of clothianidin which would theoretically result from the metabolism of thiamethoxam were included in the analysis. In crop field trials and in animal feeding studies, the quantities of both clothianidin and thiamethoxam were measured. The ratio of clothianidin to thiamethoxam in each commodity was multiplied by the respective thiamethoxam tolerance level to arrive at the theoretical maximum clothianidin residue level which would be present. These maximum clothianidin residues were used in the acute analysis. For the commodities which have both thiamethoxam tolerances and proposed clothianidin tolerances (i.e., sweet corn, field corn, pop corn, canola, and milk), the proposed clothianidin tolerances were added to the residues which result from use of thiamethoxam.

As this is a Tier I assessment, dietary exposure and risk at the 95th percentile of exposure are reported. The general U.S. population and all population subgroups have exposure and risk estimates which are below EPA's LOC (i.e., the aPADs are all below 100%). The most highly exposed population subgroup is children 1 to 2 years of age, which utilizes 16% of the aPAD.

ii. Chronic exposure . In conducting this chronic dietary risk assessment, the DEEM® analysis evaluated the individual food consumption as reported by respondents in the USDA 1994-1996 and 1998 nationwide CSFII and accumulated exposure to the chemical for each commodity. The following assumptions were made for the chronic exposure assessments: The chronic analysis was a conservative, Tier I assessment which was based on tolerance level residues and the assumption of 100% crop treated. As stated previously, although the only proposed uses for clothianidin are on canola and corn, clothianidin is a major metabolite of thiamethoxam which has many registered uses and several pending uses. As a result, residues of clothianidin which would theoretically result from the metabolism of thiamethoxam were included in the analysis. In crop field trials and in animal feeding studies, the quantities of both clothianidin and thiamethoxam were measured. The ratio of clothianidin to thiamethoxam in each commodity was multiplied by the respective thiamethoxam tolerance level to arrive at the theoretical maximum clothianidin residue level which would be present. These maximum clothianidin residues were used in the chronic analysis. For the commodities which have both thiamethoxam tolerances and proposed clothianidin tolerances (i.e., sweet corn, field corn, pop corn, canola, and milk), the proposed clothianidin tolerances were added to the residues which result from use of thiamethoxam.

The general U.S. population and all population subgroups have exposure and risk estimates which are below EPA's LOC (i.e., the chronic population adjusted doses (cPADs) are all below 100%). The most highly exposed population subgroup is children 1 to 2 years of age, which utilizes 18% of the cPAD.

iii. Cancer . EPA has determined that clothianidin is not likely to be a human carcinogen and EPA, therefore, does not expect it to pose a cancer risk. As a result, a quantitive cancer dietary exposure analysis was not performed.

2. Dietary exposure from drinking water . The Agency lacks sufficient monitoring exposure data to complete a comprehensive dietary exposure analysis and risk assessment for clothianidin in drinking water. Because the Agency does not have comprehensive monitoring data, drinking water concentration estimates are made by reliance on simulation or modeling taking into account data on the physical characteristics of clothianidin.

The Agency uses the First Index Reservoir Screening Tool (FIRST) or the Pesticide Root Zone/Exposure Analysis Modeling System (PRZM/EXAMS), to produce estimates of pesticide concentrations in an index reservoir. The screening concentration in ground water (SCI-GROW) model is used to predict pesticide concentrations in shallow ground water. For a screening-level assessment for surface water EPA will use FIRST (a Tier I model) before using PRZM/EXAMS (a Tier II model). The FIRST model is a subset of the PRZM/EXAMS model that uses a specific high-end runoff scenario for pesticides. While both FIRST and PRZM/EXAMS incorporate an index reservoir environment, the PRZM/EXAMS model includes a percent crop area factor as an adjustment to account for the maximum percent crop coverage within a watershed or drainage basin.

None of these models include consideration of the impact processing (mixing, dilution, or treatment) of raw water for distribution as drinking water would likely have on the removal of pesticides from the source water. The primary use of these models by the Agency at this stage is to provide a coarse screen for sorting out pesticides for which it is highly unlikely that drinking water concentrations would ever exceed human health levels of concern.

Since the models used are considered to be screening tools in the risk assessment process, the Agency does not use estimated environmental concentrations (EECs) from these models to quantify drinking water exposure and risk as a %RfD or %PAD. Instead drinking water levels of comparison (DWLOCs) are calculated and used as a point of comparison against the model estimates of a pesticide's concentration in water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food, and from residential uses. Since DWLOCs address total aggregate exposure to clothianidin, they are further discussed in the aggregate risk sections.

Based on the FIRST and SCI-GROW models, the EECs of clothianidin for acute exposures are estimated to be 3.97 parts per billion (ppb) for surface water and 1.46 ppb for ground water. The EECs for chronic exposures are estimated to be 2.14 ppb for surface water and 1.46 ppb for ground water.

3. From non-dietary exposure . The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Clothianidin is not registered for use on any sites that would result in residential exposure. Clothianidin is a major metabolite of the insecticide thiamethoxam in plants and animals. Since there are also no residential uses of thiamethoxam, possible residential exposure to clothianidin due to thiamethoxam uses is not expected.

4. Cumulative exposure to substances with a common mechanism of toxicity . Section 408(b)(2)(D)(v) of the FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA does not have, at this time, available data to determine whether clothianidin has a common mechanism of toxicity with other substances or how to include this pesticide in a cumulative risk assessment. Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, clothianidin does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has not assumed that clothianidin has a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see the final rule for Bifenthrin Pesticide Tolerances (62 FR 62961, November 26, 1997).

1. In general . Section 408 of the FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base on toxicity and exposure unless EPA determines that a different margin of safety will be safe for infants and children. Margins of safety are incorporated into EPA risk assessments either directly through use of a MOE analysis or through using uncertainty (safety) factors in calculating a dose level that poses no appreciable risk to humans.

2. Prenatal and postnatal sensitivity . No quantitative or qualitative susceptibility was observed in either of the developmental rat or rabbit studies. Quantitative susceptibility was observed in both the reproduction and developmental neurotoxicity studies; however, the degree of concern for these studies is low because the observed effects are well characterized and there are clear NOAELs/LOAELs in each case. In addition, the endpoint of concern is the one that is being used for short-, intermediate- and long-term dietary and non-dietary exposure risk assessments. There are no residual uncertainties. Therefore, there are no to low concerns with regard to prenatal and/or postnatal toxicity.

3. Conclusion . The toxicology database for clothianidin is not complete for FQPA purposes. A complete complement of acceptable developmental, reproduction, developmental neurotoxicity, mammalian neurotoxicity and special neurotoxicity studies are available; however, due to evidence of decreased absolute and adjusted organ weights of the thymus and spleen in multiple studies in the clothianidin data base, and since juvenile rats in the 2-generation reproduction study appear to be more susceptible to these effects, EPA has determined that testing should be conducted to assess immune system function in adults and in young animals following developmental exposures. As noted previously, a 10X database UF was applied because of the lack of this study.

The FQPA factor is removed because there are no to low concerns and no residual uncertainties with regard to prenatal and/or postnatal toxicity. As stated above, no quantitative or qualitative susceptibility was observed in either of the development rat or rabbit studies, and the observed effects are well characterized and there are clear NOAELs/LOAELs in the reproduction and developmental neurotoxicity studies. In addition, the acute and chronic dietary food exposure assessment utilizes existing and proposed tolerance level residues and 100% crop treated information for all commodities. By using these screening-level assessments, acute and chronic exposures/risks will not be underestimated. Furthermore, the dietary drinking water assessment (Tier I estimates) uses values generated by model and associated modeling parameters which are designed to provide conservative, health protective, high-end estimates of water concentrations. Finally, there are no residential uses for either clothianidin or thiamethoxam.

To estimate total aggregate exposure to a pesticide from food, drinking water, and residential uses, the Agency calculates DWLOCs which are used as a point of comparison against the model estimates of a pesticide's concentration in water (EECs). DWLOC values are not regulatory standards for drinking water. DWLOCs are theoretical upper limits on a pesticide's concentration in drinking water in light of total aggregate exposure to a pesticide in food and residential uses. In calculating a DWLOC, the Agency determines how much of the acceptable exposure (i.e., the PAD) is available for exposure through drinking water (e.g., allowable chronic water exposure (mg/kg/day) = cPAD - (average food + residential exposure)). This allowable exposure through drinking water is used to calculate a DWLOC.

A DWLOC will vary depending on the toxic endpoint, drinking water consumption, and body weights. Default body weights and consumption values as used by EPA's Office of Water are used to calculate DWLOCs: 2 liter (L)/70 kg (adult male), 2L/60 kg (adult female), and 1L/10 kg (child). Default body weights and drinking water consumption values vary on an individual basis. This variation will be taken into account in more refined screening-level and quantitative drinking water exposure assessments. Different populations will have different DWLOCs. Generally, a DWLOC is calculated for each type of risk assessment used: Acute, short-term, intermediate-term, chronic, and cancer.

When EECs for surface water and ground water are less than the calculated DWLOCs, EPA concludes with reasonable certainty that exposures to the pesticide in drinking water (when considered along with other sources of exposure for which EPA has reliable data) would not result in unacceptable levels of aggregate human health risk at this time. Because EPA considers the aggregate risk resulting from multiple exposure pathways associated with a pesticide's uses, levels of comparison in drinking water may vary as those uses change. If new uses are added in the future, EPA will reassess the potential impacts of residues of the pesticide in drinking water as a part of the aggregate risk assessment process.

1. Acute risk . Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food to clothianidin will occupy 7.3% of the aPAD for the U.S. population, 5.4% of the aPAD for females 13 years and older, 11% of the aPAD for all infants (less than 1 year old) and 16% of the aPAD for children 1 to 2 years old. In addition, there is potential for acute dietary exposure to clothianidin in drinking water. After calculating DWLOCs and comparing them to the EECs for surface water and ground water, EPA does not expect the aggregate exposure to exceed 100% of the aPAD, as shown in Table 3 of this unit:

2. Chronic risk . Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that exposure to clothianidin from food will utilize 5.9% of the cPAD for the U.S. population, 9.8% of the cPAD for all infants (less than 1 year old) and 18% of the cPAD for children 1 to 2 years old. There are no residential uses for clothianidin that result in chronic residential exposure to clothianidin. In addition, there is potential for chronic dietary exposure to clothianidin in drinking water. After calculating DWLOCs and comparing them to the EECs for surface water and ground water, EPA does not expect the aggregate exposure to exceed 100% of the cPAD, as shown in Table 4 of this unit:

3. Short-term risk . Short-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Clothianidin and thiamethoxam are not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's LOC.

4. Intermediate-term risk . Intermediate-term aggregate exposure takes into account residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Clothianidin and thiamethoxam are not registered for use on any sites that would result in residential exposure. Therefore, the aggregate risk is the sum of the risk from food and water, which do not exceed the Agency's LOC.

5. Aggregate cancer risk for U.S. population . Clothianidin has been classified as a “not likely human carcinogen.” Therefore, it is not expected to pose a cancer risk.

6. Determination of safety . Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, and to infants and children from aggregate exposure to clothianidin residues.

Adequate enforcement methodology (example - liquid chromotography) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; e-mail address: residuemethods@epa.gov.

No Codex, Canadian, or Mexican maximum residue levels (MRLs) have been established for residues of clothianidin.

A developmental immunotoxicity study with comparative measures between the pups and the parents is required.

Therefore, tolerances are established for residues of clothianidin, (E)-1-(2-chloro-1,3-thiazol-5-ylmethyl)-3-methyl-2-nitroguanidine, in or on canola, seed at 0.01 ppm ; corn, field, grain at 0.01 ppm; corn, pop, grain at 0.01 ppm; corn, sweet, kernel plus cob with husk removed at 0.01 ppm; corn, field, forage at 0.10 ppm; corn, sweet, forage at 0.10 ppm; corn, field, stover at 0.10 ppm; corn, sweet, stover at 0.10 ppm; corn, pop, stover at 0.10 ppm; and milk at 0.01 ppm, animal feed, nongrass at 0.02 ppm; grain, cereal, forage, fodder and straw at 0.02 ppm; grass, forage, fodder and hay at 0.02 ppm; soybean, forage at 0.02 ppm; and soybean, hay at 0.02 ppm.

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

You must file your objection or request a hearing on this regulation in accordance with the instructions provided in this unit and in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number OPP-2003-0133 in the subject line on the first page of your submission. All requests must be in writing, and must be mailed or delivered to the Hearing Clerk on or before July 29, 2003.

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

Mail your written request to: Office of the Hearing Clerk (1900C), Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. You may also deliver your request to the Office of the Hearing Clerk in Rm.104, Crystal Mall #2, 1921 Jefferson Davis Hwy., Arlington, VA. The Office of the Hearing Clerk is open from 8 a.m. to 4 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Office of the Hearing Clerk is (703) 603-0061.

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

EPA is authorized to waive any fee requirement “when in the judgement of the Administrator such a waiver or refund is equitable and not contrary to the purpose of this subsection.” For additional information regarding the waiver of these fees, you may contact James Tompkins by phone at (703) 305-5697, by e-mail at tompkins.jim@epa.gov, or by mailing a request for information to Mr. Tompkins at Registration Division (7505C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

If you would like to request a waiver of the tolerance objection fees, you must mail your request for such a waiver to: James Hollins, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001.

3. Copies for the Docket . In addition to filing an objection or hearing request with the Hearing Clerk as described in Unit VI.A., you should also send a copy of your request to the PIRIB for its inclusion in the official record that is described in Unit I.B.1. Mail your copies, identified by docket ID number OPP-2003-0133, to: Public Information and Records Integrity Branch, Information Resources and Services Division (7502C), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave., NW., Washington, DC 20460-0001. In person or by courier, bring a copy to the location of the PIRIB described in Unit I.B.1. You may also send an electronic copy of your request via e-mail to: opp-docket@epa.gov. Please use an ASCII file format and avoid the use of special characters and any form of encryption. Copies of electronic objections and hearing requests will also be accepted on disks in WordPerfect 6.1/8.0 or ASCII file format. Do not include any CBI in your electronic copy. You may also submit an electronic copy of your request at many Federal Depository Libraries.

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

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

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

In FR Doc. 02-32503 of December 31, 2002 (67 FR 79966), there were a number of technical errors that are identified and corrected in the Correction of Errors section below. Additionally there are various revisions to Addenda B, C, D and E. The provisions in this correction notice are effective as if they had been included in the document published December 31, 2002.

1. In Addendum B, we assigned incorrect status indicators for the following CPT codes: Page 80111 for CPT code 67221; page 80143 for CPT codes 90723, 90740, 90743, 90744, 90746, 90747 and 90748; page 80158 for CPT codes 99026 and 99027; and page 80166 for HCPCS code J3370. We assigned incorrect status indicators and RVUS for the following CPT and HCPCS codes: Page 80147 for CPT code 92597; page 80149 for CPT codes 93315, 99315-TC, 99317 and 93317-TC; page 80156 for 95951 and 95951-TC, page 80158 for CPT code 99026 and 99027 and page 80163 for G0125 and G0125-TC. We also erroneously assigned RVUs to the following HCPCS codes that are not used for Medicare payment: Page 80164 for G0219 and G0219-26; page 80165 for G0255 and G0255-26. These corrections are reflected in correction number 12 to follow.

2. We indicated the incorrect global period in Addenda B and C for the following CPT codes: Page 80100 for CPT code 58550; pages 80074 and 80167 for CPT codes 33224; and page 80134 for CPT codes 77789, 77789-26 and 77789-TC. The corrected global period is in correction number 13 to follow.

3. In Addenda B and C, on pages 80044, 80165 and 80170, we erroneously assigned RVUs to a CPT code 0020T which is an emerging technology code and also created two new HCPCS codes (G0279 and G0280) with payments based on our valuation of this CPT code. However, assignment of RVUs for this CPT code is contrary to national policy established in the November 1, 2001 (66 FR 55269), final rule which stated that we would provide payment for emerging technology codes as determined by the carrier. In addition, based on the creation of these two G codes, we are not recognizing CPT code 0019T for Medicare purposes. Corrections for these services are in correction number 14.

4. In Addenda B on page 80097, incorrect work and practice expense RVUS were assigned to CPT code 53853. In addition, on page 80110 the RVUs listed under non-facility total and facility total were incorrect for the following codes: 66710, 66720, 66761 66762 and 66770. These corrections are reflected in correction number 15.

5. In Addenda B and C, incorrect practice expense RVUs were assigned for the following CPT codes: Page 80044 for CPT codes 10021 and 10022; page 80060 for CPT 26587; page 80084 for CPT code 42820; page 80092 for CPT codes 50080, 50081, 50236, 50240; page 80093 for CPT codes 50553, 50555, 50557, 50561, 50684 and 50690; page 80094 for CPT codes 50953, 50955, 50957, 50961, 51010, 51605, 51610, 51710, 51726 and 51726-TC; page 80095 and 80168 for CPT codes 51772, 51772-TC, 51784, 51784-TC, 51785, 51785-TC, 51792, 51792-TC, 51795, 51795-TC, 51798, 52000, 52005, 52010, 52204, 52214, 52224, 52265, 52270, 52275, 52276, 52281, 52282, 52283, 52285, 52310, 52315, 52317, 52330 and 52332; page 80096 for CPT codes 52647, 53025, 53040, 53080, 53085, 53200, 53265 and 53270; page 80093 for CPT codes 53850, 53852, 54000, 54001, 54015, 54055, 54060, 54105, 54111, 54115, 54120, 54125, 54130, 54135, 54160, 54205, 54300, 54304, 54308, 54312, 54324, 54328, 54332, 54360 and 54430; page 80098 for CPT codes 54500, 54700, 55100, 55250, 55450, and 55700; page 80099 for CPT code 55873; page 80100 for CPT code 58340; page 80109 for CPT code 65220; page 80110 for CPT code 66740; page 80110 for CPT codes 66821 and 66984; page 80111 for CPT codes 67820 and 67825; page 80117 for CPT codes 71275 and 71275-TC; page 80119 for CPT codes 72191 and 72191-TC; page 80120 for CPT codes 73206 and 73206-TC; page 80121 for CPT codes 73706 and 73706-TC; page 80122 for CPT codes 74175 and 74175-TC; page 80130 for CPT codes 76519 and 76519-TC; page 80141 for CPT code 88141; page 80145 for CPT codes 91122, 91122-TC, 92014, 92081, 92081-TC, 92083, 92083-TC, 92135 , 92135-TC, 92235; page 80146 for CPT codes 92235-TC, 92250 and 92250-TC; page 80148 for CPT code 93012; page 80153 for CPT codes 94014 and 94015; page 80163 for HCPCS codes G0124 and G0141; page 80165 and 80170 for HCPCS codes G0275, G0278 and G0281; page 80166 and 80170 for HCPCS codes G0283, G0289 and P3001. The corrected RVUs are in item number 16.

6. In Addendum D, on page 80171, the carrier numbers listed for Ohio and West Virginia are incorrect. The corrected numbers are reflected in number 17 to follow.

7. We are revising the title of Addendum E that appeared on the top of every column from page 80172 through page 80174, to read as follows: “Updated List of CPT 1 /HCPCS Codes Used to Define Certain Designated Health Services Under the Physician Self-Referral Prohibition (Section 1877 of the Act).” We are also correcting a number of typographical errors. On page 80172, in the second column, the last word in the second subheading concerning HCPCS level 2 codes for physical therapy/occupational therapy/speech-language pathology services is corrected to read “services”. On page 80173, in the third column, the description of CPT codes 93320 and 93321 is corrected to include a dash between CPT codes 93303 and 93308. On page 80174, in the first column, the description of CPT code 93325 is corrected to include a dash between 93303 and 93308. Also on page 80174, in the third column, under the first subheading, the description of CPT code 90657 is corrected to read “Flu vaccine, 6-35 mo, im.”

Also in Addendum E, we erroneously included or excluded certain codes. On page 80172, in the first column, we erroneously included HCPCS codes P2031 and P7001 as clinical laboratory services. We are removing these codes and their descriptors, because they are not payable by Medicare and therefore are not designated health services. On page 80172, in the second column, we inadvertently omitted CPT code 92597. This code is now covered as a speech-pathology service under Medicare and, thus, is being added as a designated health service. Also on page 80172, in the second column, we included CPT 0019T as a physical therapy service. Consistent with changes made elsewhere in this correction notice, we are removing CPT code 0019T and its descriptor because it is no longer valid for Medicare purposes. On page 80174, in the third column under the first subheading, we incorrectly included CPT code 90748 and HCPCS codes Q3021, Q3022, and Q3023 as vaccines to which the physician self-referral prohibition does not apply if certain conditions are satisfied. We are removing CPT code 90748 and its descriptor because it is no longer valid for Medicare purposes. We are removing HCPCS codes Q3021, Q3022 and Q3023 and their descriptors, as these codes have been discontinued. Because CPT codes 90740, 90743, 90744, 90746 and 90747 were reactivated to replace HCPCS codes Q3021-23, we are adding in numeric order CPT codes 90740, 90743, 90744, 90746 and 90747 and their descriptors in place of the removed Q codes.

Lastly, we note that on page 80172 in the third column, we included HCPCS code G0281 as a physical therapy service. In accordance with the Medicare Program Memorandum Transmittal B-03-001 issued on January 17, 2003, Medicare coverage for this service will not begin until April 1, 2003. Although this effective date differs from the March 1, 2003, effective date for the rest of the codes that appear in Addendum E, we have left the code on the list because it is a designated health service subject to the physician self-referral prohibition. Because payment cannot be made before April 1, 2003, there are no self-referral implications until that date.

The corrections to Addendum E are shown in correction numbers 18 and 19 to follow.

In FR Doc. 02-32503 of December 31, 2002 (67 FR 79966), make the following corrections:

1. On page 79966, in column three, in the Comment date section, the seventh sentence is revised as follows to correct the referenced table number: “* * * identified in Table 9, the interim work. * * *”

2. On page 79969, in column two in section E, “Delay in Effective Date”, the last sentence is revised as follows to correct the effective date: “* * * March 1, 2003 * * *”

3. In Table 6, on page 80004 for CPT code 51798, replace the value listed under the column labeled “2003 Work RVU” with “0.00” to agree with discussion on page 80009.

4. On page 80007, fifth paragraph remove the following language “* * * 21740 Reconstructive repair of pectus excavatum or carinatum; open and * * *” and add “and “ 21743 Reconstructive repair of pectus excavatum or carinatum; minimally invasive approach (Nuss procedure), with thoracoscopy ” at the end of the paragraph.

5. On page 80013, in column two, under the discussion of G0279, G0280 and CPT code 0020T, we incorrectly discuss assignment of RVUs for this CPT code contrary to national policy established in the November 1, 2001 (66 FR 55269) final rule. (Based on this we also assigned RVUs to G0279 and G0280). Replace existing language beginning at the last paragraph in column two (“We are creating and establishing a” * * * through the sentence prior to the discussion of Electrical Stimulation for Wound Care in the third column (* * * “total treatments or weekly intervals.”) with the following:

“We are creating two new G codes describing extracorporeal shock wave therapy for the musculoskeletal system. Because we have created these two G codes, we will not recognize CPT code 0019T. Creation of these G codes does not imply that the services will be covered by Medicare. We believe these services are similar to other physical therapy modalities, and when covered, will be paid under the therapy fee schedule and be carrier priced.”

6. On page 80016, in the second paragraph of the second column, the phrase “for January 1, 2003” is revised to read “March 1, 2003.”

7. On page 80017, Table 9—“Additions and Deletions to the Physician Self-Referral Codes” is amended as follows:

a. Under the title, the subheading “HCPCS” is corrected to read “HCPCS/CPT  1 ” and the subheading “CPT  1 /Descriptor” is corrected to read “Descriptor”.

b. Under the subheading “Additions,” CPT code 0019T and HCPCS codes Q3021, Q3022 and Q3023 and their descriptors are removed and the following CPT codes and their descriptors are added in numeric order:

c. Under the subheading “Deletions,” CPT codes 90744, 90746 and 90747 and their corresponding descriptors are removed and CPT code 90748 and its descriptor “Hep b/hib vaccine, im” is added in numeric order.

8. On page 80018, Table 9 is amended as follows:

a. Under the title, the subheading “HCPCS” is corrected to read “HCPCS/CPT  1 ” and the subheading “CPT  1 /Descriptor” is corrected to read “Descriptor”.

b. HCPCS codes P2031 “Hair analysis” and P7001 “Culture bacterial urine” are added in alphanumeric order.

c. In the footnote to Table 9, the words “copyrighted in the” are corrected to read “copyright”.

9. On page 80018, the first column after Table 9 is amended as follows:

a. The first sentence is revised to read: The “Additions” section of Table 9 generally reflects changes to the lists of designated health services to conform them to the most recent publications of CPT and HCPCS codes.”

b. In the second sentence of the first paragraph: the first 2 words of the sentence are removed and replaced with, “One”; and, “0019T,” is removed.

c. In the third sentence of the first paragraph, the phrase “while CPT codes 0019T and 0020T are therapy codes” is revised to read, “while CPT code 0020T is a therapy code.”

d. In the second paragraph that continues into column two, the beginning of the third sentence through the parenthetical phrase “(Q3021, Q3022 and Q3023)” is revised to read, “Table 9 also reflects the addition of 2 vaccine codes (CPT 90740 and 90743)”.

10. On page 80018, the second column is amended as follows:

a. At the end of the partial paragraph at the top of the column, the following sentence is added: “CPT codes 90740 and 90743 were inadvertently omitted from prior years’ lists of codes identifying the preventive screening tests, immunizations, and vaccines that may qualify for this exception.”

b. The first sentence of the first full paragraph is revised to read, “The “Deletions” section of Table 9 generally reflects changes necessary to conform the code list to the most recent publications of CPT and HCPCS codes.”

c. The second sentence of the first full paragraph is revised by adding the word “also,” after the word “We.”

11. On page 80018, in the second column, following the first full paragraph, a new paragraph is added to read as follows:

“We are deleting CPT code 90748 (“Hep b/hib vaccine, im”) and HCPCS codes P2031 (“Hair analysis”) and P7001 (“Culture bacteria urine”). CPT code 90748 is not valid for Medicare purposes. HCPCS codes P2031 and P7001 are not payable by Medicare.”

12. In Addendum B, the following codes are corrected to read as follows:

13. In Addenda B and C, the following codes are corrected to read as follows:

14. In Addenda B and C, the following codes are corrected to read as follows:

15. In Addendum B, the following codes are corrected to read as follows:

16. In addenda B and C, the following codes are corrected to read as follows:

17. In the table of addendum D the following carrier numbers are corrected as follows:

18. In Addendum E, the following CPT codes and their descriptors are added:

19. In Addendum E, the following CPT and HCPCS codes and their descriptors are removed:

We ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the provisions of a notice take effect. We can waive this procedure, however, if we find good cause that notice and comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporate a statement of the finding and the reasons for it into the notice issued.

We find it unnecessary to undertake notice and comment rulemaking because this notice merely provides technical corrections to the regulations. Therefore, we find good cause to waive notice and comment procedures.

I. Background

In FR Doc. 03-7236 of March 28, 2003 (68 FR 15268), there were a number of technical errors that are identified and corrected in the Correction of Errors section below. The provisions in this correction notice are effective as if they had been included in the document published March 28, 2003. Accordingly, the corrections are effective March 28, 2003.

The errors involve the phone number of the agency contact and 5 HCPCS codes: 21365, 36819, 42415, 52355 and 54512. These codes either have incorrect payment groups or incorrect status indicators.

In FR Doc. 03-7236 of March 28, 2003 (68 FR 15268), make the following corrections:

1. On page 15268, in the 2nd column, the FOR FURTHER INFORMATION CONTACT section the phone number is corrected as follows: 410-786-4645.

2. On page 15280, HCPCS code 21365, the 2nd column, the status indicator is corrected to read as follows: “D”.

3. On page 15296, HCPCS code 36819 is corrected as follows:

a. The payment group in the 4th column is “3”.

b. The payment amount in the 5th column is “$510”.

4. On page 15298, HCPCS code 42415 is corrected as follows:

a. The payment group in the 4th column is “7”.

b. The payment amount in the 5th column is “$995”.

5. On page 15303, HCPCS code 52355, the 2nd column, the status indicator is corrected to read as follows: “A*”.

6. On page 15304, HCPCS code 54512 is corrected as follows:

a. The payment group in the 4th column is “2”.

b. The payment amount in the 5th column is “$446”.

We ordinarily publish a notice of proposed rulemaking in the Federal Register to provide a period for public comment before the provisions of a notice take effect. We can waive this procedure, however, if we find good cause that notice and comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporate a statement of the finding and the reasons for it into the notice issued.

We find it unnecessary to undertake notice and comment rulemaking because this notice merely provides technical corrections to the rule. Therefore, we find good cause to waive notice and comment procedures.

This is a summary of the Commission's Memorandum Opinion and Order, ET Docket No. 98-142, FCC 03-69, adopted March 27, 2003 and released April 2, 2003. The full text of this document is available on the Commission's Internet site at www.fcc.gov. It is also available for inspection and copying during regular business hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., Washington, DC 20554. The full text of this document also may be purchased from the Commission's duplication contractor, Qualex International, Portals II, 445 12th St., SW., Room CY-B402, Washington, DC 20554; telephone (202) 863-2893; fax (202) 863-2898; e-mail qualexint@aol.com.

1. We find Globalstar's concerns regarding the possibility of NGSO MSS systems being constrained by a shortage of feeder downlink spectrum to be unfounded for the reasonably foreseeable future. Globalstar's NGSO MSS system in the 1610-1626.5/2483.5-2500 MHz bands (“Big LEO” system) is authorized to use the 6875-7055 MHz band for feeder downlinks. At the time Globalstar filed its petition, its feeder downlink band was potentially subject to significant sharing with other NGSO MSS systems that were authorized overlapping feeder downlink spectrum. The need to share the majority of that band with those NGSO MSS systems in the foreseeable future has been reduced as a result of license cancellations. Thus, Globalstar's Big LEO system, which previously faced the immediate need to share the 6875-6975 MHz band with three competing NGSO MSS systems, is currently the only feeder downlink user of that 100 megahertz of spectrum. In addition, Globalstar will have the option of using the 6975-7025 MHz band on a shared basis with ICO Global Communications (Holdings) Ltd.'s (“ICO's”) NGSO MSS system in the 1990-2025/2165-2200 MHz bands (“2 GHz MSS” system), along with Globalstar's grandfathered use of the 7025-7055 MHz band from its two currently-operational gateways. Under these circumstances, we affirm our statement in the R&O, 67 FR 17288, April 10, 2002, that “325 megahertz of primary spectrum, along with 50 megahertz of primary spectrum limited to grandfathered systems, will accommodate the existing need for feeder downlink spectrum.”

2. Thus, we deny Globalstar's reconsideration petition to allocate the 7025-7075 MHz band to FSS downlink operations and its request for use of the 7025-7075 MHz band for any purpose other than gateway use by Globalstar's two existing earth stations, particularly given the availability of spectrum allocated for gateway use below 7025 MHz. We further find no need to permit ICO's 2 GHz MSS system to use the 7025-7075 MHz band for any purpose other than gateway use by its one existing earth station.

3. In the R&O, we concluded that NGSO MSS gateway earth stations could share part of the 7 GHz band with TV BAS operations because such earth stations would be limited in number and because coordination between those co-primary operations should ensure successful spectrum sharing. The R&O noted that parts 74 and 78 of the Commission's rules, which govern TV BAS, do not have coordination procedures for sharing with satellite operations, but concluded that parts 25 and 101 coordination procedures would serve to protect such earth stations from fixed BAS operations as an interim measure until uniform coordination procedures could be adopted in a separate proceeding. The R&O further noted that, while existing coordination procedures are inadequate to address NGSO MSS gateway earth station sharing with mobile TV pickup (“TVPU”) BAS operations, sharing is nonetheless possible because gateway earth station and TVPU use of the 7 GHz band are both limited, and because TVPU stations can use two BAS channels that are not overlapped by the new NGSO MSS allocation. Therefore, the R&O placed ad hoc coordination requirements on NGSO MSS gateway earth stations with both fixed and mobile TV BAS operations, until completion of a Commission proceeding to establish coordination rules specific to TV BAS/gateway sharing.

4. In seeking reconsideration, SBE requests that the Commission: (1) Require use of the part 101 frequency coordination protocol by a 7 GHz TV BAS fixed station with an NGSO MSS gateway earth station only if that TV BAS station is located within 145 kilometers (“km”) of the earth station; (2) require 7 GHz TV BAS stations to protect only the portion of the 7 GHz feeder downlink band that is being used by an NGSO MSS provider at the time of frequency coordination; and (3) establish the release date of the R&O (February 7, 2002) as the benchmark date to grandfather 7 GHz TVPU stations; i.e. , provide that TVPU stations authorized by February 7, 2002 would not be required to protect the three incumbent NGSO MSS gateway earth stations. SBE also challenges the R&O 's Final Regulatory Flexibility Certification (“Certification”).

5. Coordination Distance. The record indicates that different coordination distances are required to protect each existing NGSO MSS gateway earth station from harmful interference caused by 7 GHz TV BAS fixed stations. Further, we agree with ICO's assertion that the necessary coordination distance between TV BAS stations and earth stations depends on a number of parameters particular to each earth station. According to ICO, these include rain climatic zone, the gain of the earth station antenna toward the horizon, and the maximum permissible interference that the earth station will tolerate for a given percentage of the time. To specify in this proceeding the same coordination distance for existing and future earth stations without examining the particulars of each earth station would be arbitrary and could lead to instances of inadequate interference protection or unnecessarily large coordination distances. Indeed, we intend to explore further issues relating to the appropriate coordination distances and procedures for TV BAS stations and NGSO MSS gateway earth stations in a forthcoming Notice of Proposed Rule Making in ET Docket No. 98-206. Accordingly, only as an interim measure pending a final decision in our forthcoming proceeding, we are specifying for 7 GHz TV BAS fixed stations coordination with the three existing NGSO MSS gateway earth stations, but do so using the maximum coordination distances found to be required by the Comsearch studies presented in the record of this proceeding; i.e. , we specify a maximum coordination distance of 145 km from Globalstar's Clifton, TX earth station, a maximum coordination distance of 519 km from Globalstar's Finca Pascual, PR earth station, and a maximum coordination distance of 319 km from ICO's Brewster, WA earth station.

6. Frequencies Protected. We find that fixed TV BAS and mobile TV BAS (TVPU) require distinct considerations. As pointed out by ICO, the Commission recently addressed the issue of protecting earth stations from potential harmful interference caused by fixed TV BAS use by deciding that such protection should be based on the earth station spectrum assignment, rather than the spectrum actually used by earth stations. In IB Docket No. 00-203, the Fixed Wireless Communications Coalition (“FWCC”) argued that the Commission was according FSS earth stations preferential access to several bands, including 6425-7125 MHz, that are shared with terrestrial fixed services. Specifically, FWCC argued that interference protection to FSS earth stations should be based upon FSS spectrum use, just as interference protection to fixed services is based upon fixed spectrum use. However, the Commission denied FWCC's petition, finding that fixed and satellite services have significantly different requirements for access to the spectrum in order to meet their business needs, and further finding that there was insufficient evidence that terrestrial fixed users have been harmed by frequency sharing with the FSS. We find no need to revisit that recent decision, as we see no evidence that circumstances have changed since that time. Accordingly, regarding fixed TV BAS use, we deny SBE's request that coordination and protection of NGSO MSS gateway earth stations be based upon current spectrum use.

7. With regard to protecting the entire NGSO MSS gateway earth station spectrum assignment from potential harmful interference caused by mobile TV BAS use, rather than the spectrum actually used by the earth stations, we find it necessary that mobile TV BAS users protect the entire NGSO MSS gateway earth station spectrum assignment as an interim measure, pending the outcome of the forthcoming Notice of Proposed Rule Making referenced in paragraph 5, herein. We note that certain characteristics of mobile TV BAS may permit some flexibility in coordination and interference protection. Specifically, we note that mobile TV BAS is often used to cover “breaking news” on a short-term, temporary basis. While a NGSO MSS gateway earth station licensee may resist giving up a portion of its authorized spectrum for a new permanent TV BAS operation, we expect that the NGSO MSS gateway earth station licensee will be able to accommodate a temporary mobile TV BAS operation if it is not operating across the whole authorized bandwidth at the time of the request. As long as the temporary mobile TV BAS does not cause interference to the gateway earth station, TV BAS use would not constrain the growth and long-term functionality of the gateway earth station. Accordingly, regarding mobile BAS use, we deny here SBE's request that coordination and protection of NGSO MSS gateway earth stations be based on current spectrum use, but we will explore whether, and under what circumstances, temporary mobile TV BAS use of the 7 GHz band within interference range of such earth stations could be permitted in the Notice of Proposed Rulemaking referenced in paragraph 5, herein.

8. Grandfathered TVPU. Grant of SBE's request to permit TVPU stations authorized after Globalstar's and ICO's three existing NGSO MSS gateway earth stations to operate without regard to harmful interference to those earth stations would disregard the Commission's long-standing policy that authorized and coordinated stations have rights to protection from subsequently authorized stations of the same status (primary or secondary). SBE's request appears to be based on the premise that, because Globalstar's and ICO's NGSO MSS feeder downlink spectrum assignments were conditioned on the outcome of the allocation decision in this proceeding, their earth stations' interference protection rights do not commence until the date of release of the R&O. However, the waiver grants to Globalstar and ICO authorized primary feeder downlink use of the 6875-7055 MHz and 6975-7075 MHz bands, respectively, as of the dates of the waivers, which are November 18, 1996 and July 17, 2001, respectively. Subsequently, Globalstar's and ICO's earth stations were individually authorized. The R&O allocated the 6700-7025 MHz band for NGSO MSS feeder downlinks and grandfathered the three existing Globalstar and ICO earth stations in the 7025-7075 MHz band, including facilities in the process of being built, but did not modify the waiver grants or earth station authorizations. Accordingly, those earth stations have maintained primary status since the grant of the waivers. Therefore, we deny SBE's petition for reconsideration with respect to this issue.

9. Final Regulatory Flexibility Certification. We find that SBE has presented no evidence to contradict our finding that there would be a de minimis burden on TV BAS stations in the 7 GHz band. SBE simply cites the number of TV translator, LPTV, Class A TV, and full service TV stations within 145 km of Globalstar's and ICO's three existing NGSO MSS gateway earth stations that might use 7 GHz TV BAS stations that might be subject to protecting the three earth stations from harmful interference. However, SBE fails to recognize that only those 7 GHz TV BAS stations located in relatively close proximity to an NGSO MSS gateway earth station and that were authorized after the earth station would have to bear the cost of frequency coordination with the earth station, nor does SBE recognize that new TV BAS stations must already coordinate with all existing primary licensees in the band, including other TV BAS stations and FSS uplinks. SBE does not estimate the number of 7 GHz TV BAS stations likely to be affected by coordination with existing or future NGSO MSS downlinks, nor does it estimate the cost burden on the affected TV BAS stations attributable to such coordination.

10. Because the 7 GHz FSS downlink allocation is limited to serving the feeder link needs of NGSO MSS systems, the number of gateway earth stations constructed will be very small and most likely will be deployed away from major populated areas where the 7 GHz TV BAS band is used most. Further, it is incumbent upon the new entrant in any shared band to perform coordination, so that a coordination burden on TV BAS stations located in the vicinity of an existing NGSO MSS gateway earth station would affect only new TV BAS stations, and SBE has not demonstrated that we should expect a substantial number of small entities to have new TV BAS stations. Moreover, because of the existing co-primary FSS uplink allocation in the 7 GHz band, any new TV BAS station would already have to coordinate with FSS operations and bear the associated costs. Therefore, new 7 GHz TV BAS stations locating near an NGSO MSS gateway earth station will not be confronted with a significant additional satellite coordination requirement as a result of our action.

11. We also note that, typically, a frequency coordinator will charge a fee to a new TV BAS station based on the number of existing station links that must be coordinated. It is unclear how much coordination with an NGSO MSS gateway earth station would add to that cost, but in reply comments in ET Docket No. 01-75, Viacom, Inc. indicates that a single coordination costs no more than $1,000 per frequency to a BAS station. This relatively low cost combined with the limiting factors discussed above leads us to affirm our conclusion that the impact of our action is de minimis on TV BAS operations as a whole.

12. In summary, we find that only a relatively small number of TV BAS stations in the 7 GHz band will be affected by the R&O's decision to authorize NGSO MSS feeder downlink use of that band because only a new 7 GHz TV BAS station locating in the vicinity of an NGSO MSS gateway earth station will have to protect the earth station from harmful interference attributable to the operation of the new TV BAS station. A 7 GHz TV BAS station authorized prior to the authorization of an NGSO MSS gateway earth station will not be affected. The majority of TV BAS stations are, or will be, located at a sufficient distance from the small number of NGSO MSS gateway earth stations to have no additional burden. Even with respect to the relatively limited number of 7 GHz TV BAS stations in the vicinity of an NGSO MSS gateway earth station authorized, or that will be authorized, subsequent to the authorization of that earth station, it is unclear whether coordination costs attributable to the existence of the earth station will be significant relative to coordination costs attributable to the existence of other authorized 7 GHz stations. Finally, new BAS stations locating in an NGSO MSS gateway earth station area will not be confronted with an unprecedented satellite coordination requirement. Taking into account all of these factors, we find that the R&O's decision authorizing NGSO MSS gateway earth stations in the 7 GHz band does not impose on TV BAS stations as a whole a coordination burden that will be more than de minimis , as stated in the Certification.

13. Accordingly, we are persuaded by only one of SBE's contentions set forth in its petition for reconsideration—namely, that 7 GHz TV BAS licensees located in the vicinity of Globalstar's Clifton, TX NGSO MSS gateway earth station need to coordinate with that earth station only if they are located within 145-km of it. That coordination distance, and the other coordination distances specified in paragraph 5, herein, will be used as an interim measure pending a final decision in the forthcoming proceeding. In all other respects, we deny SBE's petition for reconsideration.

14. Pursuant to sections 1, 4(i), 303(f), 303(g), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 303(f), 303(g), and 303(r), this Memorandum Opinion and Order is adopted.

15. The petitions for reconsideration of the Report and Order in the proceeding, filed by Globalstar, L.P. and Globalstar USA, LLC and by the Society of Broadcast Engineers, Inc., are denied, except to the extent that SBE's petition is granted with respect to the coordination distances.

16. The Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of the Memorandum Opinion and Order to the Chief Counsel for Advocacy of the Small Business Administration.

On February 22, 2002, the Research and Special Programs Administration (“RSPA” or “we”) published a notice of proposed rulemaking (NPRM) (67 FR 8220) under Docket HM-218A. The NPRM proposed to permit, for an interim period and subject to certain conditions, the unloading of intermodal (IM) portable tanks transporting certain liquid hazardous materials when those tanks are not equipped with a thermal means of remote activation of the internal self-closing stop-valves fitted on the bottom discharge outlets.

The NPRM was based on the appeal of a denial of a petition for reconsideration and a petition for rulemaking regarding the provisions in § 177.834(o) of the Hazardous Materials Regulations (HMR; 49 CFR parts 171-180), permitting an IM portable tank to be unloaded while it remains on a transport vehicle. The petitions were in response to a final rule under Docket RSPA-97-2905 (HM-166Y; 63 FR 37454; July 10, 1998) which incorporated miscellaneous changes into the HMR based on petitions for rulemaking and our own initiative. The effective date of the final rule was October 1, 1998. Among other provisions, the HM-166Y final rule allows an IM portable tank transporting a liquid hazardous material that is flammable, pyrophoric, oxidizing, or toxic, to be unloaded while remaining on a transport vehicle with the power unit attached, provided the outlet requirements in 49 CFR 178.345-11 and the attendance requirements in 49 CFR 177.834(i) are met. Section 178.345-11 includes requirements for loading/unloading outlets on cargo tanks to be equipped with self-closing systems with remote means of closure capable of thermal activation at temperatures not exceeding 250 °F. Section 177.834(i) includes requirements for ensuring that cargo tanks are attended by a qualified person during loading and unloading. The intent of the unloading provision in the HM-166Y final rule was to provide regulatory relief for operators of IM portable tanks equipped with a thermal means of remote activation of the internal self-closing stop-valves fitted on the bottom discharge outlets (known as “fusible links”). The outlet requirement provides an automatic means to shut down unloading in a fire situation when an operator is not able to manually activate the closure.

In response to industry concerns about the need for additional time to equip portable tanks with fusible links, an NPRM in this docket was published on February 22, 2002. The NPRM proposed to permit IM portable tanks not currently equipped with fusible links to be unloaded while remaining on a transport vehicle under certain conditions. Specifically, we proposed that the shipper and the carrier would share responsibility for verifying that the consignee's facility conforms to the Department of Labor's Occupational Safety and Health Administration's (OSHA) fire suppression and emergency shutdown requirements, OSHA's and the Environmental Protection Agency's (EPA) emergency response planning requirements, and an emergency discharge control procedure. Alternatively, conformance to equivalent non-federal requirements would be authorized. The NPRM proposed to permit such unloading operations until October 1, 2003, providing a total of five years from the October 1, 1998 effective date of the July 10, 1998 final rule to equip the portable tanks. Additionally, the shipper and the carrier would be responsible for compliance with the attendance requirements in § 177.834(o), ensuring that public access is denied during unloading, ensuring that persons performing unloading functions are trained in handling emergencies, and ensuring that the operator of the vehicle has determined that all of the above conditions have been met prior to unloading.

We received comments to the February 22, 2002 NPRM in this docket from the Dangerous Goods Advisory Council (DGAC), the American Chemistry Council (the Council), Air Products and Chemicals, Inc. (Air Products), and Merck & Co., Inc.

DGAC, the Council, and Air Products request that we authorize the proposed interim unloading conditions as a permanent option to retrofitting IM portable tanks. These commenters believe that we should be in alignment with international standards and that a domestic-only requirement would cause “difficult logistic problems for foreign shippers trying to serve the U.S. market.” DGAC and the Council ask whether foreign shippers would “be compelled to retrofit part of their fleets that would be reserved for the U.S. market.” They also state that the retrofitting requirement may create confusion for foreign markets not familiar with U.S. operations and maintenance. DGAC and the Council state that if the interim provisions allow an equivalent level of safety, it would be “far simpler” and “more efficient” to authorize the interim provisions on a permanent basis. Air Products adds that “safety can be achieved” by either the retrofitting requirement or by adopting the proposed interim conditions on a permanent basis.

As stated in the HM-218A NPRM and the June 21, 2001 final rule published under Docket HM-215D (66 FR 33316), we continue to believe that if a portable tank is to be unloaded in the same manner as a cargo tank, it should be equipped with the same emergency shutdown devices required for cargo tanks. To accommodate industry concerns about the amount of time required for retrofits, the NPRM proposed alternative unloading conditions for an interim period for IM portable tanks not currently equipped with a thermal means of remote activation of the internal self-closing stop-valve fitted on bottom discharge outlets. We never intended to make the alternative unloading procedures permanent because we do not believe that the alternative unloading procedures provide the same level of safety as a fusible link.

DGAC, the Council, and Air Products do not dispute the need for extra safety measures, but now assert that the interim provisions provide an equivalent level of safety to retrofitting and should be allowed as a permanent alternative to retrofitting. We disagree. In the February 22, 2002 NPRM, we stated that the conditions, as discussed later in this preamble, provide an acceptable level of safety during an interim period by reducing the possibility of fire and release of hazardous materials during the unloading of IM portable tanks. We do not believe that the conditions provide an equivalent level of safety on a long-term or permanent basis. A fusible link operates to shut down an unloading operation automatically, without the necessity for human intervention. The alternative procedures provided in the NPRM depend on human intervention to handle a fire during an unloading operation. While this is acceptable in the short term, we do not consider that the safety level provided is equivalent to that achieved by an automatic means to shut down unloading.

With respect to the comments that the requirement should be in alignment with international standards, we agree that, generally, harmonization of domestic and international transportation requirements is a beneficial and worthy objective. However, as with all safety regulations, we review and consider each amendment to the international standards on its own merit. There are a number of instances where we impose more stringent requirements for the domestic transportation of hazardous materials than the international requirements. Our goal is to harmonize without sacrificing the current HMR level of safety.

In the HM-215D final rule, we estimated that the cost of installing a fusible link at the time an IM portable tank is manufactured is approximately $40.00 to $70.00 per portable tank; based on information provided by tank, tank valve, and component manufacturers. Installation at the time of manufacture avoids downstream retrofitting costs, costs associated with shipping delays, and logistical problems at a later date. In previous discussions, DGAC and the Tank Container Association stated that retrofitting portable tanks would cost approximately $200.00 to $250.00 per portable tank. We reiterate our earlier statements that, on the basis of these costs, it makes economic sense to install the devices at the time of manufacture.

DGAC and the Council ask whether we intend to compel foreign shippers to “retrofit part of their fleets that would be reserved for the U.S. market.” Just as U.S. exporters of hazardous materials are responsible for compliance with international and individual country requirements regarding hazardous materials transportation, foreign shippers are responsible for compliance with U.S. variations from international standards. If foreign shippers choose to operate in the U.S., they must comply with the HMR.

DGAC, the Council, and Air Products also oppose requiring shippers and carriers to share the responsibility for ensuring that unloading facilities are in compliance with OSHA and EPA regulations. They state that doing so will:

The commenters believe that we should require the consignee to be the responsible party.

Federal hazardous materials transportation law (Federal hazmat law; 49 U.S.C. 5101 et seq. ) requires the Secretary of Transportation to prescribe regulations for the safe transportation of hazardous material in intrastate, interstate, and foreign commerce. 49 U.S.C. 5103(b). Those regulations apply to persons transporting hazardous materials in commerce, persons who cause hazardous materials to be transported in commerce, and persons who manufacture and maintain packagings represented as qualified for use in transporting hazardous materials in commerce. 49 U.S.C. 5103(b)(1)(A). Thus, the HMR generally do not prescribe regulations for facilities to which hazardous materials are consigned; rather, the HMR apply to persons who prepare hazardous materials for transportation or who transport hazardous materials in commerce. For this reason, we are requiring a shipper and/or a carrier, rather than a consignee, to assure compliance with the conditions established for unloading a portable tank without removing it from the transport vehicle. Persons interested in a more detailed discussion of the applicability of the Federal hazardous materials transportation law and the HMR to specific functions and activities should review the NPRM published under Docket HM-223 on June 14, 2001 (66 FR 32420).

In addition, DGAC asks whether shippers and carriers would be held partly responsible should a problem occur during unloading, and fire or shutdown capabilities prove less than adequate. Any person, domestic or foreign, engaged in an activity regulated by federal, state or local requirements must understand and comply with all applicable regulations. Shippers and carriers engaged in the transportation of hazardous materials in commerce must be trained in the applicable requirements of the HMR and, additionally, are responsible for all applicable federal, state or local requirements. If an incident occurs when “fire or shutdown capabilities prove less than adequate,” upon investigation, it may be determined that either or both parties are responsible. We do not consider it burdensome for shippers and carriers to contact facilities to determine whether the applicable OSHA and EPA requirements have been met. The requirements in the HM-166Y final rule granted relief from the longstanding prohibitions in the HMR against unloading portable tanks while on transport vehicles with the power units attached. The relief was intended for operators of portable tanks equipped with fusible links carrying flammable, pyrophoric, oxidizing, or toxic liquid hazardous materials. This final rule grants further relief by permitting such unloading for an interim period when portable tanks with bottom outlets are not equipped with fusible links. Nevertheless, operators retain the option to equip their portable tanks with the fusible links.

The Council also suggests the requirement for a portable tank to be contained entirely within the horizontal outline of the vehicle, without overhang or projection of any part of the tank assembly, when it is loaded onto a highway or rail transport vehicle is more appropriately addressed as a vehicle size requirement under the Federal Highway Administration (FHWA) regulations applicable to vehicle size and weight (23 CFR, Section 658). We do not agree. The portable tank is not part of the transport vehicle and, therefore, is not covered by FHWA requirements concerning vehicle size. The manner in which a portable tank is loaded onto a transport vehicle prior to its transportation in commerce will have a direct impact on the safety of hazardous materials during transportation and, thus, should be regulated under the HMR. Further, this was not a proposed requirement. This has been a requirement since we adopted the IM portable tank standards. The requirement is currently in § 173.32(g)(1) and, prior to the HM-215D final rule, was located in § 173.32c(m).

A fourth commenter, Merck & Co., supports the limited time extension; however, Merck requests regulatory text clarifications. Merck and Co. asks us to clarify that the retrofitting requirement applies to subsidiary, as well as primary, hazards of flammable, pyrophoric, oxidizing and toxic hazardous materials. In this final rule, we are clarifying that the retrofitting requirement applies to primary and subsidiary hazards for liquid materials of Class 3 (flammable), PG I and II, and PG III with a flash point less than 100 °F (38 °C); Division 5.1 (oxidizer), PG I and II; and Division 6.1 (poisonous/toxic), PG I and II. Application of the retrofitting requirement is identified in the appropriate proper shipping name entry in the § 172.101 Table by assignment of a T Code in Column (7) authorizing a bottom outlet when a packaging authorization section (§ 173.242 or § 173.243) in Column (8C) contains a requirement specifying that the tank's bottom discharge outlet must be equipped with an internal shut-off device in conformance with § 178.275(d)(3). Consistent with cargo tank exceptions, certain low hazard liquids assigned to the packaging authorization section, § 173.241, are excepted from the retrofitting requirement. In addition, we removed pyrophoric hazardous materials from the retrofitting requirement because bottom openings are prohibited on portable tanks transporting these materials. We are making the clarifications in §§ 173.32(h)(3), 177.834(o)(3) and 178.275(d)(3)(iv), as well as the packaging authorization sections §§ 173.242(c)(4) and 173.243(c).

We are also revising certain paragraphs, as noted in the Section-by-Section Review portion of this preamble, to clarify that UN, as well as IM, portable tanks are subject to the retrofitting requirement. In the HM-215D final rule published June 21, 2001, we applied the requirement to UN portable tanks.

Finally, due to the delay in issuing this final rule, we are extending the proposed October 1, 2003 interim date to October 1, 2004.

Based on the above discussion, we are authorizing the unloading without removal from a transport vehicle of IM and UN portable tanks transporting certain liquid hazardous materials and not equipped with a thermal means of remote activation of the internal self-closing stop-valves fitted on the bottom discharge outlets until September 30, 2004, provided certain conditions are met. This date provides manufacturers, lessors, and users of the affected portable tanks a total of six years from the October 1, 1998 effective date of the July 10, 1998 final rule to equip the tanks with a thermal means for remotely activating bottom discharge outlets. Because these tanks undergo periodic inspection every five years, the date also provides the opportunity for the retrofitting to be done at the time of the periodic inspection, thereby minimizing cost impacts. Many of these tanks should already be equipped with thermal links. On and after October 1, 2004, an affected IM and UN portable tank, with a bottom outlet, may not be unloaded while remaining on a transport vehicle with the power unit attached unless it fully conforms to the outlet requirements in § 178.275(d)(3).

Section 171.12 and 171.12a. We are adding a new paragraph § 171.12(b)(21) and § 171.12a(b)(20) to clarify that UN and IM portable tanks unloaded while remaining on a transport vehicle with the motive power unit attached must meet the requirements in § 177.834(o).

Section 173.32. In § 173.32, we are revising paragraph (g)(1) by removing the reference to § 177.834(i)(2). The referenced section, which addresses attendance and unloading requirements, is no longer necessary with the adoption of § 173.32(h)(3). Section 173.32(h)(3) references a more appropriate section for portable tanks; § 177.834(o). New paragraph (h)(3) alerts shippers of their shared responsibility for ensuring that portable tanks not conforming to the requirements in § 178.275(d)(3) are unloaded only at facilities conforming to the applicable OSHA and EPA requirements. The paragraph also clarifies which hazardous materials are subject to these requirements.

Sections 173.242 and 173.243. We are adding a new § 173.242(c)(4) and adding a sentence to § 173.243(c) to clarify when the retrofitting requirement applies to IM and UN portable tanks.

Section 177.834. We are revising § 177.834(o) to permit, until October 1, 2004, the unloading of IM and UN portable tanks not meeting the outlet requirements in § 178.275(d)(3), provided certain unloading conditions are met. The shipper and the carrier share responsibility for verifying that the consignee's facility meets certain conditions and that the following requirements are met:

(1) The facility at which the portable tank is to be unloaded must have systems in place that conform to: Applicable OSHA fire suppression requirements in 29 CFR 1910.106(e); the emergency shutdown requirements in 29 CFR 1910.119(f); and OSHA's and EPA's emergency response planning requirements in 29 CFR 1910.119(f) and 40 CFR part 68. In addition, the facility must have an emergency discharge control procedure in place applicable to unloading operations, including instructions for handling emergencies that may occur during the unloading operation. Alternatively, equivalent or more stringent non-federal requirements are authorized.

(2) There must be no public access to the unloading area during the unloading process.

(3) The attendance requirements in § 177.834(o) must be met.

(4) Prior to unloading, the operator of the vehicle on which the portable tank is transported must ascertain the conditions in § 177.834(o) are met.

(5) Persons performing unloading functions must be trained in handling emergencies that may occur during the unloading operation.

We are also changing the outlet section reference for portable tanks from § 178.345-11 to § 178.275(d)(3). In the HM-215D final rule, we added § 178.275(d)(3) to address the requirements for equipping UN portable tanks with a thermal means of remote activation of the internal self-closing stop-valves fitted on the bottom discharge outlets. Although the two sections contain the same requirements, the addition of § 178.275(d)(3) into the HMR now makes it a more appropriate reference because it is specific to portable tank requirements.

Finally, we are revising § 177.834(o) to clarify that the requirement for a thermal means of remote activation of bottom discharge outlets applies to IM and UN portable tanks containing liquid hazardous materials of Class 3 (flammable), PG I and II, and PG III with a flash point less than 100 °F (38 °C); Division 5.1 (oxidizer), PG I and II; and Class 6.1 (poisonous/toxic), PG I and II, when the appropriate proper shipping name entry in the § 172.101 table is assigned a T Code in Column (7) authorizing a bottom outlet and a packaging authorization section (§ 173.242 or § 173.243) in Column (8C) requiring internal valves in conformance with § 178.275(d)(3). In this way, we are limiting the applicability to materials posing a risk of fire or acute health and environmental risks. This revision is consistent with the current requirements located in §§ 178.345-11 and 178.275.

Section 178.275. We are revising paragraph (d)(3) to clarify when IM and UN portable tanks are subject to the retrofitting requirements.

This final rule is not considered a significant regulatory action under section 3(f) of Executive Order 12866 and, therefore, was not reviewed by the Office of Management and Budget. The rule is not considered a significant rule under the Regulatory Policies and Procedures of the Department of Transportation [44 FR 11034]. Benefits resulting from the adoption of the alternative interim provisions in this final rule include providing the industry additional time to come into compliance with existing regulatory requirements for those portable tanks intended to be unloaded in the same manner as cargo tanks. There is no requirement in the current regulations, and we are not incorporating one in this final rule, for an IM or UN portable tank to conform to the outlet requirements if it is not intended to be unloaded while it remains on a transport vehicle with the power unit attached. Because this final rule eases the regulatory compliance burden for operators of portable tanks by providing an alternative interim provision, a regulatory analysis or a regulatory evaluation is not warranted. Any adverse safety impacts that may occur from the regulatory relief provided by this amendment would be minimized by conformance with the interim provisions adopted herein.

This final rule was analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This final rule preempts state, local and Indian tribe requirements but does not incorporate any regulation that has substantial direct effects on the states, the relationship between the national government and the states, or the distribution of power and responsibilities among the various levels of government. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

Federal hazardous material transportation law, 49 U.S.C. 5101-5127, contains an express preemption provision (49 U.S.C. 5125(b)) preempting state, local, and Indian tribe requirements on certain covered subjects. Covered subjects are:

(1) The designation, description, and classification of hazardous materials;

(2) The packing, repacking, handling, labeling, marking, and placarding of hazardous materials;

(3) The preparation, execution, and use of shipping documents related to hazardous materials and requirements related to the number, contents, and placement of those documents;

(4) The written notification, recording, and reporting of the unintentional release in transportation of hazardous; and

(5) The design, manufacture, fabrication, marking, maintenance, recondition, repair, or testing of a packaging or container represented, marked, certified, or sold as qualified for use in transporting hazardous material.

This final rule addresses covered subject items (2) and (5), above, and would preempt state, local, and Indian tribe requirements not meeting the “substantively the same” standard.

Federal hazardous materials transportation law provides at § 5125(b)(2) that if DOT issues a regulation concerning any of the covered subjects, DOT must determine and publish in the Federal Register the effective date of federal preemption. The effective date may not be earlier than the 90th day following the date of issuance of the final rule and not later than two years after the date of issuance. The effective date of federal preemption will be November 26, 2003.

This final rule was analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this final rule does not have tribal implications and does not impose substantial direct compliance costs, the funding and consultation requirements of Executive Order 13175 do not apply.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires an agency to review regulations to assess their impact on small entities unless the agency determines a rule is not expected to have a significant impact on a substantial number of small entities. This final rule applies to manufacturers, operators, lessors and users of IM and UN portable tanks, some of whom are small entities. This final rule benefits such persons by further relaxing an existing regulatory requirement for an interim period. Therefore, I certify this rule will not have a significant economic impact on a substantial number of small entities.

Under the Paperwork Reduction Act of 1995, no person is required to respond to a collection of information unless it displays a valid Office of Management and Budget (OMB) control number. This final rule does not impose any new information collection burdens. The information collection associated with information specified in § 177.834(o) of this final rule is currently required by other Federal regulations. In § 177.834(o)(2)(i) and (o)(2)(iii), the information collection requirements pertaining to fire suppression and emergency shutdown are currently required by the Department of Labor's OSHA. Finally, in § 177.834(o)(2)(iv), the emergency response planning requirements are currently required by the Environmental Protection Agency. Based on the above discussion, this final rule does not require any additional incremental burden hours.

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

This final rule does not impose unfunded mandates under the Unfunded Mandates Reform Act of 1995. It does not result in costs of $100 million or more to either state, local or tribal governments, in the aggregate, or to the private sector, and is the least burdensome alternative that achieves the objective of the rule.

The National Environmental Policy Act of 1969 (NEPA) requires Federal agencies to consider the consequences of major federal actions and prepare a detailed statement on actions significantly affecting the quality of the human environment. We developed an assessment to determine the effects of this revision on the environment and whether a more comprehensive environmental impact statement may be required. Our findings conclude there are no significant environmental impacts associated with this rule. Allowing the unloading of IM and UN portable tanks for an interim period, provided the unloading conditions in this rulemaking are met, permits operators to minimize the potential for environmental damage or contamination and allows manufacturers, lessors and users the needed time to properly equip the IM and UN portable tanks. For interested parties, an environmental assessment is available in the public docket.

The U.S. Atlantic highly migratory species (HMS) fisheries are managed under the Fishery Management Plan for Atlantic Tunas, Swordfish, and Sharks (HMS FMP). Implementing regulations at 50 CFR part 635 are issued under the dual authority of the Magnuson-Stevens Act (codified at 16 U.S.C. 1801 et seq. ) and the Atlantic Tunas Convention Act (ATCA; codified at 16 U.S.C. 971 et seq. ). Regulations issued under the authority of ATCA carry out the recommendations of ICCAT.

Background information about the need for revisions to the HMS regulations was provided in the preamble to the proposed rule (67 FR 78404, December 24, 2002), and is not repeated here. By this final rule, NMFS modifies the target catch requirements for pelagic longline vessels to land incidentally caught BFT, adjusts the Longline category North/South division line and adjusts the Longline category subquotas for each area, and provides NMFS inseason authority to modify the BFT retention limits for pelagic longline vessels.

This final rule changes three of the proposed revisions to the regulatory text. In the proposed rule, two tiers of target catch requirements were proposed at 2,000 lbs. (907 kg) and 6,000 lbs. (2,727 kg) to allow the landing of one and two incidentally caught BFT, respectively. The final rule adds a third tier of target catch requirements by requiring the landing of 30,000 lbs. (66,138 kg) of target fish to land three BFT. In addition, the proposed rule would have adjusted the Longline category subquotas to allocate 70 percent to the southern area and 30 percent to the northern area. The final rule divides the Longline category subquotas to allocate 60 percent to the southern area and 40 percent to the northern area. Finally, the advance notice for in season adjustment to target catch requirements was reduced from 30 days to no less than 21 days. These changes were made to further reduce dead discards of BFT, minimize negative social and economic impacts to the fishery, and to respond to comments regarding the changed fishing patterns of the pelagic longline fleet.

Comment 1: Numerous comments supported establishing a target catch requirement in terms of a specific weight versus a percentage to allow for the retention of incidentally caught BFT. Comments stated that the pelagic longline fishery has changed since the two-percent target was implemented and having one set of target catch requirements coastwide will simplify regulations and facilitate compliance. A specific weight tolerance will also assist enforcement agents in assessing compliance.

Response: The final action establishes target catch requirements as specific weights, rather than as percentages, with the intent of reducing BFT discards in all areas, and at the same time minimizing confusion and providing positive economic impacts to longline vessels in both southern and northern management areas. NMFS believes that a specific target weight regardless of geographic location would simplify regulation and facilitate compliance.

Comment 2: NMFS should allow for a third and/or fourth tier of target catch to allow vessels to land three and/or four BFT for those vessels conducting longer trips. For example, NMFS should establish a target catch requirement for all areas, at all times of 20,000 lbs. (44,092 kg) to retain three BFT, and of 30,000 lbs. (66,138 kg) to retain four BFT. Other comments suggested NMFS allow full retention of all catch to eliminate all discards and bring the agency into full compliance with the Magnuson-Stevens Act.

Response: NMFS has modified the final action to include a third tier of target catch allowance in the final action, explicitly allowing the retention of 3 BFT with 30,000 lbs. (66,138 kg) of target catch. This additional tier of target catch is consistent with the previous percentage-based target catch requirements that allowed a few vessels to land three BFT in conjunction with 30,000 lbs. (66,138 kg) of target catch. The proposed rule for this action would not have allowed these few vessels to retain three BFT regardless of the target catch onboard. Although only a handful of vessels are large enough to complete trips with target catches greater than 30,000 lbs. (66,138 kg), allowing these vessels to retain three BFT would further meet the intent to reduce discards of BFT, avoid incentives to target BFT, and not risk overharvest of the incidental catch quota.

Comment 3: The preferred alternatives may not be providing a reasonable opportunity for pelagic longline vessels to harvest the quota allocated to that category. The inseason adjustment authority should not be limited to a range of zero to three BFT per trip and/or by 25 percent of the target catch requirements.

Response: Under the Atlantic Tunas Convention Act, NMFS is required to provide U.S. fishermen a reasonable opportunity to take the BFT quota allocated to the United States by the ICCAT. Pelagic longline vessels are not allowed to target BFT and thus there is no directed fishery on BFT. However, due to the incidental catch of BFT in pelagic longline operations targeting other species, NMFS has provided a quota and target catch requirements to provide pelagic longline vessels a reasonable opportunity to land their incidentally caught BFT in order to reduce discards and provide positive economic impacts to the pelagic longline fishery.

Comment 4: Numerous comments stated support for the relocation of the boundary line separating the northern and southern management areas to 31°00′ N. lat., near Jekyll Island, Georgia. This is an area with little longline activity and should reduce confusion regarding the area in which incidental BFT were harvested. Other comments stated that the Gulf of Mexico should be off limits to all retention of BFT by pelagic longline vessels and a boundary line should be established in the Straits of Florida.

Response: NMFS' final action maintains the proposed location of the boundary line at 31°00′ N. lat., near Jekyll Island, Georgia. The intent of the line is to account for seasonal differences in the fisheries within each area and to prevent one area from consuming all available quota. The location of the line was chosen in an area with little longline fishing activity to facilitate enforcement and reporting. Eliminating the incidental retention of BFT by pelagic longline vessels operating in the Gulf of Mexico would not meet the intent of this rulemaking, as it could increase discards, and have negative impacts to pelagic longline fishermen.

Comment 5: Comments stated support for a reallocation of the Longline category quota based on the new location of the North/South boundary line. Comments suggested the preferred alternative of 30 percent for the northern area and 70 percent for the southern area should be reconsidered. The proposed allocation may not reflect the current fishing pattens of the pelagic longline fishery and may lead to increased effort and mortality on spawning BFT in the Gulf of Mexico, which has been designated by ICCAT as a spawning area in the Western Atlantic Ocean. Some comments suggested NMFS should re-calculate the North/South subquota allocation based on the number of hooks versus the number of sets. Some comments suggested a quota split of 50/50, while others suggested a split of 40 percent for the northern area and 60 percent for the southern area.

Response: Based on the analysis conducted in the Environmental Assessment, Regulatory Impact Review, and the Regulatory Flexibility Analysis, NMFS has determined that an adjustment to the Incidental Longline category subquota allocation between areas is warranted. Due to the movement of the boundary line and the adjustments in the target catch allowances in both the northern and southern areas, and the apparent redistribution of longline effort in response to bycatch reduction measures, NMFS adjusts the Longline category subquota to allocate 60 percent to the southern area and 40 percent to the northern area. This adjustment is made to reflect the estimated additional landings likely to be applied in the northern area based on the above analysis. The amount of BFT landed is expected to approach the subquota levels of the Longline category fishery, but not exceed them.

Comment 6: Some comments stated that NMFS should increase the number of observers in the Gulf of Mexico pelagic longline yellowfin tuna fishery. Response: ICCAT requires five percent of the pelagic longline trips to be selected for observer coverage. Vessels are selected based on a random five percent sampling of sets. Actual deployment of observers on vessels in the past had been constrained by a number of factors including logistic requirements and safety concerns and thus it has not been possible to place observers on all selected trips. NMFS is working towards improving observer coverage by increasing the sampling of trips to eight percent and facilitating increased communication between vessel operators and observer program coordinators, particularly in regards to safety requirements for the placement of observers (see 50 CFR 600.746), and the need to have all safety equipment on board as required by the U.S. Coast Guard.

Comment 7: Numerous comments stated support for the inseason adjustment authority, but stated that the 30-day delayed effectiveness prior to the regulation changes is too long. NMFS should employ a 2-week notice to be timely responding to resource concerns.

Response: In the proposed rule, NMFS had proposed adjusting the limits through an inseason action, with 30 days public notice. However, NMFS agrees that the highly migratory nature of BFT could result in rapid changes of fishing gear interaction rates. In order for in-season adjustments to work effectively, NMFS must respond quickly. In addition, NMFS is concerned about providing adequate notice of changes to fishing vessels at sea. Therefore, NMFS has reconsidered the balance between prompt action and notification and reduced the public notice period to no less than 21 days, which is the expected trip length for larger vessels fishing further offshore.

Comment 8: NMFS should define “target catch” so as to prohibit the landing of unmarketable species just to reach a minimum threshold to retain a BFT and encourage the release of all live BFT caught by pelagic longline vessels.

Response: The current regulations addressing target catch limits at 635.23 (f)(1) state that species other than BFT must be legally caught, retained, and offloaded from the same trip and recorded on the dealer weighout slip as sold. The current regulatory language meets the intent of preventing the landing of unmarketable species just to reach a minimum threshold. In regard to release of BFT retrieved alive by pelagic longline vessels, NMFS is currently working on a national bycatch reduction strategy. To view the goals, objectives, and strategies please visit www.nmfs.noaa.gov .

Comment 9: NMFS should consider various physical oceanographic parameters and re-examine the Mid-Atlantic closure area because it is not used as a spawning area. Forcing vessels to move further offshore may produce a safety issue. Other comments stated that NMFS should analyze data gathered during the Northeast Distant experimental fishery to adjust management measures for the pelagic longline fishery in the future.

Response: NMFS′ intent in creating the Mid-Atlantic closure area was to ensure compliance with ICCAT recommendations to reduce the bycatch and dead discards of BFT by pelagic longline vessels, not to protect a potential BFT spawning area. The available data, based on logbooks submitted by fishermen, indicate a substantial decline in BFT bycatch throughout the year, indicating the closed area may be effective at reducing discards. Although NMFS realizes that it may be necessary to adjust the time and/or area of the closure based on new data including changed physical oceanographic patterns, fishing activity etc., available information does not warrant such changes at this time. NMFS will continue to analyze logbook and observer data from the Northeast Distant experimental fishery in order to consider possible adjustments to target catch requirements for landing BFT by longline vessels, or to make other adjustments as necessary in order to minimize dead discards.

These regulatory amendments are published under the authority of the Magnuson-Stevens Act and ATCA. The Assistant Administrator for Fisheries, NOAA (AA), has determined that the regulations contained in this final rule are necessary to implement the recommendations of ICCAT and to manage the domestic Atlantic highly migratory species fisheries.

NMFS has prepared a Final Regulatory Flexibility Analysis (FRFA) for this final rule. An Initial Regulatory Flexibility Analysis was prepared for the proposed rule and submitted to the Chief Counsel for Advocacy of the Small Business Administration. No comments were received on the IRFA concerning the economic impact of this rule. The analyses of the FRFA found that the final actions under this rule would have beneficial impacts; therefore, consideration of alternatives to minimize impacts to small entities is contrary to the purposes of the Regulatory Flexibility Act. The proposed rule (67 FR 78404, December 24, 2002) sets forth the purpose and need for this action and a description of the alternatives considered and impacts of those alternatives, which are not repeated here. There are approximately 171 pelagic longline vessels that are permitted to retain Atlantic tunas and swordfish, all of which are considered small entities, and average annual gross revenues per vessel are approximately $168,000. Annual gross revenues from the Atlantic pelagic longline fishery are approximately $29 million. NMFS selected this final action because the selected target catch requirements will minimize BFT discards while allowing retention of truly incidentally caught BFT and preventing a directed fishery. One target catch alternative considered was rejected because it would not reduce BFT discards as much as the final action, and it would have negative economic impacts. While the other alternatives generally had positive economic impacts, NMFS did not select them because they maintained differential target catch requirements, which no longer seemed warranted based on available data, or because they would not have reduced BFT discards as much as the final action. The final action will have a positive economic impact on revenues approximately a 1.2 to 1.5% increase of pelagic longline vessels. While the new north/south boundary line and inseason adjustment authority will not have any direct economic impacts, NMFS selected these measures as part of the final action because they could help prevent negative impacts on small entities due to closures. In addition, the new boundary line was selected to address confusion regarding the applicability of regulations. A copy of the FRFA and other analytical documents prepared for this rule are available from NMFS (see ADDRESSES ).

NMFS prepared an EA for this final rule, and the AA has concluded that there would be no significant impact on the human environment. The EA presents analyses of the anticipated impacts of these final actions and the alternatives considered. A copy of the EA and other analytical documents prepared for this rule, are available from NMFS (see ADDRESSES ).

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

The regulations implemented through this final rule are not expected to have any additional impact on sea turtles or other endangered species or marine mammals as this action is not likely to increase or decrease pelagic longline effort, nor is it expected to shift effort into other fishing areas. A Biological Opinion (BiOp) issued June 14, 2001, concluded that continued operation of the Atlantic pelagic longline fishery is likely to jeopardize the continued existence of endangered and threatened sea turtle species under NMFS jurisdiction. On July 9, 2002 (67 FR 45393), NMFS implemented the reasonable and prudent alternative required by the BiOp. None of the actions in this final rule would have any additional impact on sea turtles as these actions would not likely increase or decrease pelagic longline effort, nor are they expected to shift effort into other fishing areas. No impacts are expected from this final action that would adversely affect the implementation of the requirements of the BiOp.

NMFS has determined that the final regulations would be implemented in a manner consistent to the maximum extent practicable with the enforceable policies of those Atlantic, Gulf of Mexico, and Caribbean coastal states that have approved coastal zone management programs. The proposed regulations were submitted to the responsible state agencies for their review under Section 307 of the Coastal Zone Management Act. As of May 15, 2003, NOAA Fisheries has received 11 responses, all concurring with NOAA Fisheries' consistency determination. Because no responses were received from other states, their concurrence is presumed.

The area in which this final action is planned has been identified as essential fish habitat (EFH) for species managed by the New England Fishery Management Council, the Mid-Atlantic Fishery Management Council, the South Atlantic Fishery Management Council, the Gulf of Mexico Fishery Management Council, the Caribbean Fishery Management Council, and the Highly Migratory Species Management Division of NOAA Fisheries. It is not anticipated that this action will have any adverse impacts to EFH and, therefore, no consultation is required.