The Animal Welfare regulations contained in 9 CFR chapter I, subchapter A, part 3 (referred to below as “the regulations”) provide standards for the humane handling, care, treatment, and transportation, by regulated entities, of animals covered by the Animal Welfare Act (AWA, 7 U.S.C. 2131 et seq. ). The regulations in part 3 are divided into six subparts, designated as subparts A through F, each of which contains facility and operating standards, animal health and husbandry standards, and transportation standards for a specific category of animals. These subparts consist of the following: Subpart A—dogs and cats; subpart B—guinea pigs and hamsters; subpart C—rabbits; subpart D—nonhuman primates; subpart E—marine mammals; and subpart F—warmblooded animals other than dogs, cats, rabbits, hamsters, guinea pigs, nonhuman primates, and marine mammals. Transportation standards for dogs and cats are contained in §§ 3.13 through 3.19; for guinea pigs and hamsters, in §§ 3.35 through 3.41; for rabbits, in §§ 3.60 through 3.66; for nonhuman primates, in §§ 3.86 through 3.92; for marine mammals, in §§ 3.112 through 3.118; and for all other warmblooded animals, in §§ 3.136 through 3.142.

A carrier is defined in § 1.1 as “the operator of any airline, railroad, motor carrier, shipping line, or other enterprise which is engaged in the business of transporting animals for hire.”

While the Animal Care unit of the U.S. Department of Agriculture's (USDA's) Animal and Plant Health Inspection Service (APHIS) currently enforces the AWA regulations and standards on U.S. air carriers, foreign air carriers (as defined in 49 U.S.C 40102) operating in the United States have not been regulated as a matter of policy. We believe that animals being transported by foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia should be afforded the same protection under the AWA as if they were being transported by U.S. air carriers. This determination to regulate gives notice that APHIS intends to begin applying the AWA transportation regulations and standards to all foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia.

There are approximately 517 foreign air carriers which hold currently effective economic authority from the U.S. Department of Transportation to conduct operations in foreign air transportation to and from the United States. In order to ensure the widest possible notice of our determination to begin applying AWA regulations and standards on foreign air carriers, we intend to mail these carriers copies of this notice. In this way, the airlines will be informed that, beginning 180 days after the publication of this determination to regulate, they will be subject to the transportation regulations and standards of the AWA while in the United States, its territories, possessions, or the District of Columbia. Also, copies of this notice will be sent to trade organizations involved with air transportation of animals, such as the Animal Transportation Association, Air Transport Association, and International Air Transportation Association (IATA), with a request that copies be included in newsletters they send to their members. These organizations have been consulted with regard to this determination to regulate, and we have been coordinating with them on a regular basis.

Although we have been consulting and coordinating with the trade organizations cited above and, by extension, their member airlines, we believe it is appropriate to provide an opportunity for affected entities to comment prior to this determination to regulate becoming effective. Therefore, we are soliciting comments on this determination to regulate for a period of 60 days. If, through the comments we receive, substantial issues bearing on the effects of this action are brought to our attention, we will publish a notice in the Federal Register prior to the effective date of this determination to regulate to inform the public as to what action we will be taking to address those issues. Conversely, if the comments we receive yield no substantial issues, we will publish a notice in the Federal Register confirming the effective date.

Within 180 days after publication of this notice, each foreign air carrier will need to complete an AWA registration form pursuant to § 2.25 of the AWA regulations, which may be obtained by calling the APHIS Animal Care Western Regional Office at (970) 494-7478 or the Eastern Regional Office at (919) 716-5532. Registered foreign air carriers will need to provide Animal Care with a U.S. business address or the address of an agent where the records required to be kept pursuant to the AWA regulations will be available for inspection. Animal Care inspectors will conduct unannounced inspections of the overall health and condition of the animals being transported, their enclosures, environmental factors, and required records upon the foreign air carrier's arrival within the United States, its territories, possessions, or the District of Columbia. Carriers that violate the AWA by failing to meet the AWA transportation regulations and standards are subject to fines and/or penalties.

We believe that the 180-day delay in the effective date of applying AWA regulations and standards to the operations of foreign air carriers should allow adequate time for them to become familiar with the provisions of the AWA and the AWA transportation regulations and standards and to make any necessary changes in procedure. Many foreign air carriers are members of the IATA and may already be in compliance with most of the physical requirements of the regulations and standards of the AWA. The IATA regulations generally meet or exceed the intent of the AWA in ensuring the humane and safe transportation of animals, but diverge from the USDA regulations primarily in their recordkeeping requirements. Under this determination to regulate, where such divergences exist, the AWA regulations will take precedence.

This action will require foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia to meet certain requirements of the AWA transportation regulations and standards that are not contained in the IATA regulations. For example, various sections of the transportation standards in 9 CFR part 3 require that no live animals can be presented to a carrier more than 4 hours before the scheduled departure time of the flight on which the animal is to be transported. With prior arrangements, this time may be extended to 6 hours. The IATA regulations contain no such provision. Various sections of the transportation standards in 9 CFR part 3 also have specific primary enclosure requirements which differ from those of the IATA. Most often, the IATA space requirements for animals are consistent with the AWA requirements, but with at least one species—the guinea pig—the space requirements are not consistent with the AWA requirements. Various sections of the transportation standards in 9 CFR part 3 also have minimum and maximum temperature requirements for holding areas for animals in transit (usually 45 or 50 °F to 85 °F). The IATA regulations, in contrast, do not mandate minimum or maximum temperatures. Instead, guidelines are offered for acceptable temperature ranges for various species in transport.

In addition to the physical requirements, foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia, will have to meet recordkeeping requirements set out in the AWA regulations. Records that foreign air carriers will have to keep and maintain include a copy of the consignor's written guarantee of payment for transportation for C.O.D. shipments, a shipping document, and an animal health certificate executed and issued by a licensed veterinarian. In addition, depending on the species, the AWA regulations may require that instructions for the administration of drugs, medication, other special care, food, and water, as well as other shipping documents, be attached to the outside of the animal's primary enclosure.

This determination to regulate will not necessitate any changes to the current AWA transportation regulations or standards but will increase Animal Care's inspection activities. The increased burden on Animal Care is not likely to be significant, however, because Animal Care inspectors already perform inspections at the airports that foreign air carriers use.

This determination to regulate will ensure that any animal covered by the AWA, whether coming into, traveling from point to point in, or leaving the United States, its territories, possessions, or the District of Columbia, will be provided the protection of the AWA regulations and standards.

Therefore, unless substantial issues bearing on the effects of this action are brought to our attention, APHIS intends to begin applying the AWA transportation regulations and standards to foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia 180 days from the date of publication in the Federal Register of this notice.

This determination to regulate rule has been reviewed under Executive Order 12866. The determination to regulate has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.

This document gives notice that we intend to begin applying the AWA regulations and standards for the humane transportation of animals in commerce to all foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia.

For the reasons discussed earlier in this document, we do not expect that there will be any significant economic effects on entities affected by this determination to regulate ( i.e. , foreign air carriers and APHIS). We note that many foreign air carriers are members of the IATA and observe that organization's regulations regarding animal transport, which generally meet or exceed the intent of the AWA in ensuring the humane and safe transportation of animals. Thus, many foreign air carriers may already be in compliance with most of the physical requirements of the regulations and standards of the AWA. The primary aspect in which the IATA regulations diverge from the USDA regulations is in their recordkeeping requirements; as we note below under “Paperwork Reduction Act, “ we expect that the additional time that foreign air carriers will need to expend in order to comply with the reporting and recordkeeping requirements of the AWA regulations will be minimal. While the routine inspection of foreign air carriers will lead to an increased inspection burden on APHIS' Animal Care inspectors, that burden is not likely to be significant because those inspectors already perform inspections at the airports that foreign air carriers use.

As an alternative to this determination to regulate, we considered maintaining the status quo, i.e. , continuing with our policy of not applying the requirements of the regulations to foreign air carriers. While some foreign air carriers voluntarily comply with the regulations and many others observe the IATA's regulations regarding animal transport, such compliance or observance is not universal. To ensure that animals being transported to or from any point within the United States, its territories, possessions, or the District of Columbia are afforded consistent protection, regardless of whether they are being transported by foreign air carriers or U.S. air carriers, we have determined that it is necessary to begin applying the AWA transportation regulations and standards to all foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia.

We believe that the small additional costs associated with this determination to regulate will be outweighed by the benefits of ensuring that animals being transported by foreign air carriers operating to or from any point within the United States, its territories, possessions, or the District of Columbia are afforded the same protection under the AWA as if they were being transported by U.S. air carriers.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this determination to regulate will not have a significant economic impact on a substantial number of small entities.

In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection or recordkeeping requirements included in this determination to regulate have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments concerning the information collection or recordkeeping requirements included in this determination to regulate to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. 02-012-1. Please send a copy of your comments to: (1) Docket No. 02-012-1, Regulatory Analysis and Development, PPD, APHIS, Station 3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250.

Within 180 days after publication of this determination to regulate, every foreign air carrier operating to or from any point within the United States, its territories, possessions, or the District of Columbia will need to complete a registration form. Registered foreign air carriers will also be required to keep and maintain records required under the AWA regulations pertaining to animal transport. These records may include a copy of the consignor's written guarantee of payment for transportation for C.O.D. shipments; a shipping document; an animal health certificate executed and issued by a licensed veterinarian; and, if needed, an acclimation statement indicating that the animal being transported can withstand temperatures colder or warmer than the minimums or maximums specified in the regulations. In addition, depending on the species, the regulations may require that instructions for the administration of drugs, medication, other special care, food, and water, as well as other shipping documents, be attached to the outside of the animal's primary enclosure.

We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us:

(1) Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;

(2) Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

(3) Enhance the quality, utility, and clarity of the information to be collected; and

(4) Minimize the burden of the information collection on those who are to respond (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g. , permitting electronic submission of responses).

Estimate of burden: Public reporting burden for this collection of information is estimated to average 0.162037 hours per response.

Respondents: Foreign air carriers transporting animals covered by the Animal Welfare Act.

Estimated annual number of respondents: 20.

Estimated annual number of responses per respondent: 54.

Estimated annual number of responses: 1,080.

Estimated total annual burden on respondents: 175 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response.)

Copies of this information collection can be obtained from Mrs. Celeste Sickles, APHIS” Information Collection Coordinator, at (301) 734-7477.

The Animal and Plant Health Inspection Service is committed to compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible. For information pertinent to GPEA compliance related to this interim rule, please contact

On August 26, 2003, a Raytheon Model Beech 1900D twin-turboprop airplane was involved in an accident in the Nantucket Sound off southeastern Massachusetts. The Raytheon Beech Model 1900D is designed to carry 19 passengers. According to initial reports, the airplane took off of Runway 24 at Barnstable Municipal Airport on Cape Cod. The pilot immediately declared an emergency and, while en route to make an emergency landing on Runway 33, crashed into the water.

While there is no determination of the cause of the accident and the investigation is ongoing, FAA's review of the current maintenance procedures of the elevator trim system reveals the following:

Although the figures (figure 9 for the 1900/1900C and figure 201 for the 1900D) in the existing maintenance manuals are incorrectly depicted, following the step-by-step written instructions in the existing procedure and referring to the orientation of the parts removed would result in the correct installation and action of the elevator trim system.

An incorrectly installed elevator trim system component, if not detected and corrected, could result in difficulties in controlling the airplane or a total loss of pitch control.

Raytheon has issued Safety Communiqué No. 234, dated September 2003, to address this issue.

The safety communiqué includes information about the incorrect depictions of the figures in the applicable maintenance manuals and also references the following temporary maintenance manual revisions:

We have evaluated all pertinent information and identified an unsafe condition that is likely to exist or develop on other products of this same type design.

Since the unsafe condition described previously is likely to exist or develop on other Raytheon Beech Models 1900, 1900C, and 1900D airplanes of the same type design, this AD is being issued to detect and correct any maintenance-induced problems with the elevator trim system installation before problems occur during operation. Such a condition could lead to difficulties in controlling the airplane or a total loss of pitch control.

This AD requires you to:

On July 10, 2002, we published a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs FAA's AD system. This regulation now includes material that relates to altered products, special flight permits, and alternative methods of compliance. This material previously was included in each individual AD. Since this material is included in 14 CFR part 39, we will not include it in future AD actions.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any written relevant data, views, or arguments regarding this AD. Send your comments to an address listed under ADDRESSES. Include “AD Docket No. 2003-CE-43-AD” in the subject line of your comments. If you want us to acknowledge receipt of your mailed comments, send us a self-addressed, stamped postcard with the docket number written on it; we will date-stamp your postcard and mail it back to you. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the rule that might suggest a need to modify it. If a person contacts us through a nonwritten communication, and that contact relates to a substantive part of this AD, we will summarize the contact and place the summary in the docket. We will consider all comments received by the closing date and may amend the AD in light of those comments.

We have determined that this AD will not have federalism implications under Executive Order 13132. This AD 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.

For the reasons discussed above, I certify that this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. 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.

We prepared a summary of the costs to comply with this AD and placed it in the AD Docket. You may get a copy of this summary by sending a request to us at the address listed under ADDRESSES. Include “AD Docket No. 2003-CE-43-AD” in your request.

A proposal to amend 14 CFR part 39 by superseding AD 2001-18-13, Amendment 39-12439 (66 FR 47878, September 14, 2001), for the specified model helicopters was published in the Federal Register on June 5, 2003 (68 FR 33663). The action proposed retaining the requirements to add the AD or a statement to the Rotorcraft Flight Manual (RFM) informing the pilot to reduce power and land as soon as practicable if a thump-like sound followed by unusual vibration occurs during flight. Also, the action proposed retaining the requirements to visually inspect each strut for a crack or a break; to record the inspections in the historical or equivalent record; to re-mark and relocate the strut, as appropriate; to replace any unairworthy strut with an airworthy strut; and to establish or revise life limits for certain struts. In addition to the requirements in the current AD, that action proposed adding the ECD Model EC135 P2 and EC135 T2 helicopters to the applicability and replacing certain life-limited struts with titanium struts.

The Luftfahrt-Bundesamt (LBA), the airworthiness authority for the Federal Republic of Germany, advises that struts, (P/N) L633M1001 103 and L633M1001 105, should not be used beyond December 31, 2004. The LBA advises replacing those struts with torque struts, P/N L633M1001 104, after January 1, 2005.

ECD has issued Alert Service Bulletin EC135-63A-002, Revision 2, dated June 26, 2002 (ASB), which specifies inspecting for a crack, marking strut locations and serial numbers, and transferring the location side of the torque struts or replacing each strut, P/N L633M1001 103 or L633M10001 105, with a torque strut, P/N L633M1001 104, that is anodized and not coated with paint, which have no life limit. The LBA classified this ASB as mandatory and issued AD No. 2001-107/2, dated September 19, 2002, to ensure the continued airworthiness of these helicopters in the Federal Republic of Germany.

Interested persons have been afforded an opportunity to participate in the making of this amendment. No comments were received on the proposal or the FAA's determination of the cost to the public. The FAA has determined that air safety and the public interest require the adoption of the rule as proposed.

On July 10, 2002, the FAA issued a new version of 14 CFR part 39 (67 FR 47997, July 22, 2002), which governs FAA's AD system. This regulation now includes material that relates to special flight permits, alternative methods of compliance, and altered products. This material previously was included in each individual AD. Since this material is included in 14 CFR part 39, we have not included it in this AD action.

The FAA estimates that this AD will affect 50 helicopters of U.S. registry. The AD will take approximately l/2 work hour for the flashlight and mirror inspection; 2.5 work hours to remark, relocate, and inspect with a magnifying glass; and 1 hour to replace both struts. The average labor rate is $60 per work hour. Required parts will cost approximately $9,696 per helicopter. Based on these figures, we estimate the total cost impact of the proposed AD on U.S. operators to be $496,800.

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

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

The FAA published this direct final rule with a request for comments in the Federal Register on August 18, 2003 (68 FR 49349). The FAA uses the direct final rulemaking procedure for a non-controversial rule where the FAA believes that there will be no adverse public comment. This direct final rule advised the public that no adverse comments were anticipated, and that unless a written adverse comment, or a written notice of intent to submit such an adverse comment, were received within the comment period, the regulation would become effective on December 25, 2003. No adverse comments were received, and thus this notice confirms that this direct final rule will become effective on that date.

The Commission has issued the following Order:

In 1989, the Commission issued a series of orders pursuant to Rule 30.10 authorizing certain firms located in the U.K. to conduct brokerage activities for U.S. customers on certain non-U.S. exchanges without having to register with the Commission as a futures commission merchant or otherwise comply with certain other requirements set forth in Parts 1 and 30 of the Commission's rules. 1 The Orders were issued to the Securities Investment Board (“SIB”), the Investment Management Regulatory Organisation (“IMRO”), the Association of Futures Brokers and Dealers (“AFBD”), and The Securities Association (“TSA”). 2 The U.K. Rule 30.10 Orders applied to brokerage activities on or subject to the rules of Recognized Investment Exchanges (“RIES”) in the U.K. or any non-U.S. exchange designated by the SIB as an investment exchange (referred to as Designated Investment Exchanges or “DIEs”) undertaken by firms authorized to conduct investment business in the U.K. from a location in the U.K.

Since 1989, the Commission has amended and supplemented the U.K. 30.10 Orders to reflect changes in the U.K. regulatory structure, clarify the terms and conditions set forth therein, and provide related relief. First, effective April 1, 1991, the TSA and AFBD merged to form the SFA. Accordingly, the Commission issued an order acknowledging the substitution of SFA as a party to several ongoing information sharing and financial intermediary recognition arrangements entered into with the AFBD, TSA and SIB pursuant to Part 30 of the Commissions' rules. 3 In particular, the Commission acknowledged that all confirmations of Rule 30.10 relief previously extended to AFBD and TSA firms remained effective with respect to such firms in their capacity as members of SFA. 4

Second, in 1992, the Commission issued an order commonly referred to as the Limited Marketing Order. 5 The Limited Marketing Order permits firms that have received confirmation of Rule 30.10 relief, without prior notice to the Commission, to engage in limited marketing conduct with respect to foreign futures or option contracts within the U.S. through their employees or other representatives, subject to the terms and conditions set forth therein. As part of the Limited Marketing Order, the Commission confirmed that the relief set forth therein applied to those firms having received confirmation of relief under the Rule 30.10 orders issued to the SIB, SFA and IMRO.

Third, in 1997, the Commission clarified the procedures set forth in prior Rule 30.10 Orders applicable to the treatment of customer funds for transactions occurring on or subject to the rules of a board of trade located outside the jurisdiction of the recipient of the Rule 30.10 Order. In doing so, the Commission interpreted prior Rule 30.10 Orders to require firms having received confirmation of Rule 30.10 relief to comply with requirements consistent with the secured amount requirement applicable to futures commission merchants as set forth in Rule 30.7. 6 Specifically, the Commission interpreted Rule 30.7 to require each FCM and Rule 30.10 firm to: (a) obtain and retain in its files an acknowledgment from the depository maintaining customer funds or property that the depositor was informed that such money or property was held on behalf of foreign futures and foreign options customer funds in accordance with Rule 30.7; and (b) take appropriate action ( i.e. , set aside funds in a “mirror” account) in the event that it became aware that foreign futures and foreign options customer funds were not being held in the appropriate manner. With respect to the U.K., the Commission clarified the procedures with which SFA and IMRO members should comply when dealing on behalf of U.S. customers on a DIE. 7

Fourth, in 2000, the Commission further clarified the procedures applicable to the treatment of customer funds by FCMs and Rule 30.10 firms. In new Appendix B to Part 30  8 and an order amending prior Rule 30.10 orders, 9 the Commission revised its prior interpretation of the Rule 30.7 secured amount requirement. In particular, the Commission stated that, subject to an additional disclosure requirement, the Rule 30.7 acknowledgment only applies to the maintenance of the account or accounts containing foreign futures and foreign options customer funds by the initial depository, and not to the manner in which any subsequent depository holds or subsequently transmits those funds. Only if an FCM or Rule 30.10 firm fails to receive the required acknowledgment from the initial depository or provide the necessary disclosure statement, must it then set aside funds with an acceptable depository and receive from such depository the required acknowledgment. With respect to the U.K., the Commission clarified the procedures with which SFA and IMRO members should comply when dealing on behalf of U.S. customers on a DIE. 10

Prior to the issuance of the U.K. Rule 30.10 Orders, the Commission entered into the Financial Information Sharing Memorandum of Understanding (“FISMOU”) with, among others, SIB, AFBD, TSA and IMRO. 11 In order to facilitate the exchange of information related to the U.K. Rule 30.10 Orders, the Commission subsequently entered into the “Addendum dated May 15, 1989 to Financial Information Sharing Memorandum of Understanding” (“Addendum”) with, among others, SIB, AFBD, TSA and IMRO. 12 The Commission and SIB also exchanged letters, referred to as the Side Letter and the Note to the Side Letter, regarding the continued application of a separate information sharing arrangement between U.S. and U.K. regulators entered into originally in 1986. 13

On December 1, 2001, pursuant to the Financial Services and Markets Act 2000(“2000 Act”), the Financial Services Authority (“FSA”), as the successor organization to SIB, 14 assumed its role as the single U.K. regulator directly responsible for the regulation of investment business, including the offer and sale of commodity futures and options. Prior to the enactment of the 2000 Act, the responsibility for supervising commodity futures markets and intermediaries rested with FSA and certain SROs, including the SFA and IMRO. Pursuant to the 1986 Financial Services Act (“FSAct”), FSA regulated the U.K. financial markets and established general standards for investor protection. The SROs conferred the status of authorization for intermediaries and promulgated general fitness standards, financial requirements, sales practice rules and rules designed to ensure the integrity of the market. With the enactment of the 2000 Act, the responsibility for each of these tasks has been assumed by FSA as the single supervisory authority, the U.K. SROs have been wound up, and the members of these now-defunct organizations are deemed to have been authorized by FSA. In addition, the FSA Handbook replaces all prior rules and regulations regarding firm conduct and operations. In light of its new regulatory role, FSA has requested that the Commission amend the U.K. 30.10 Orders to reflect this change in regulatory oversight.

The Commission notes that the Commodity Futures Modernization Act  15 amended the Act to provide the Commission greater regulatory flexibility to streamline and eliminate unnecessary regulation for the entities regulated under the Act. With this in mind, Commission staff has reviewed the Commission Orders issued pursuant to Rule 30.10. As part of this review, Commission staff has discussed with each Rule 30.10 Order recipient how best to update, if necessary, the information contained in the Order, whether some or all of the terms and conditions of the order continue to be necessary, and whether new conditions may be required based upon developments in the relevant jurisdiction.

In response to Commission staff's discussion with it, FSA has requested further that the Commission amend certain terms and conditions set forth within the U.K. Rule 30.10 Orders. 16 Specifically, FSA requested the following changes:

Upon consideration of the foregoing, the Commission has determined to consolidate and amend the Orders into a single Order restating the terms and conditions for relief as requested by FSA. Accordingly, the Commission hereby:

In connection with the Rule 30.10 relief previously granted to the U.K. regulatory and self-regulatory organizations, Commission staff has issued certain no-action letters regarding the treatment of customer funds attributable to trading on the LME. 23 In light of the changes to the U.K. regulatory program, the Commission believes that it is appropriate to amend these letters by substituting all prior references to AFBD and SFA with FSA.

Based upon the Commission's prior determination to issue relief under Rule 30.10, the information provided to the Commission by FSA describing the recent changes to the U.K. regulatory framework, and the recommendation of Commission staff, the Commission has concluded that the standards for relief set forth in Rule 30.10 and, in particular, Appendix A thereof, generally have been satisfied and that compliance with applicable U.K. law and FSA rules may be substituted for compliance with those sections of the Act and rules thereunder more particularly set forth herein.

By this Order, the Commission hereby exempts, subject to specified conditions, those firms identified to the Commission by FSA as eligible for the relief granted herein from:

This determination to permit substituted compliance is based on, among other things, the Commission's finding that the regulatory scheme governing persons in U.K. who would be exempted hereunder provides:

This Order does not provide an exemption from any provision of the Act or rules thereunder not specified herein, for example, without limitation, the antifraud provision in Rule 30.9. Moreover, the relief granted is limited to brokerage activities undertaken on behalf of customers located in the U.S. with respect to transactions on or subject to the rules of an RIE, DIE, or a regulated Market for products that customers located in the U.S. may trade. 24 The relief does not extend to rules relating to trading, directly or indirectly, on U.S. exchanges. For example, a firm trading in U.S. markets for its own account would be subject to the Commission's large trader reporting requirements. 25 Similarly, if such a firm were carrying a position on a U.S. exchange on behalf of foreign clients, it would be subject to the reporting requirements applicable to foreign brokers. 26 The relief herein is inapplicable where the firm solicits or accepts orders from customers located in the U.S. for transactions on U.S. markets. 27 In that case, the firm must comply with all applicable U.S. laws and regulations, including the requirement to register in the appropriate capacity.

The eligibility of any firm to seek relief under this exemptive Order is subject to the following conditions:

Any material changes or omissions in the facts and circumstances pursuant to which this Order is granted might require the Commission to reconsider its findings that the standards for relief set forth in Commission Rule 30.10 and, in particular, Appendix A thereof, have generally been satisfied. In addition, if experience demonstrates that the continued effectiveness of this Order in general, or with respect to a particular firm, would be contrary to the public interest, or other circumstances to not warrant continuation of the exemptive relief granted therein, the Commission may condition, modify, suspend, terminate, withhold as to a specific firm or otherwise restrict, the exemptive relief granted, as appropriate on its own motion.

I. Introduction and Statutory Authority

The Drug Enforcement Administration (DEA) published a notice of proposed rulemaking in the Federal Register on February 18, 2003 (68 FR 7728) to adjust the registration and reregistration fees for controlled substances handlers. DEA's authority to collect registration fees derives from three statutory provisions.

DEA is authorized by 21 U.S.C. 821 to collect “reasonable fees relating to the registration and control of the manufacture, distribution and dispensing of controlled substances and to the registration and control of regulated persons and of regulated transactions.” Secondly, 21 U.S.C. 958(f) permits DEA to collect “reasonable fees relating to the registration of importers and exporters of controlled substances or List I chemicals.”

Thirdly and importantly, the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act of 1993 (Pub. L. 102-395) requires that DEA collect fees to ensure the recovery of the full costs of operating the Diversion Control Program (DCP). Section 111(b)(3) of the act, codified at 21 U.S.C. 886a(3), requires that “fees charged by the Drug Enforcement Administration under its Diversion Control Program shall be set at a level that ensures the recovery of the full costs of operating the various aspects of that program.” Section 111(b)(1) of the act also requires that “there shall be deposited as offsetting receipts into that account all fees collected by the Drug Enforcement Administration, in excess of $15,000,000, for the operation of its Diversion Control Program.”

Following an adjustment in registration fees in 1993, the American Medical Association (AMA) and others filed a complaint in the United States District Court for the District of Columbia objecting to the new fees. After the district court issued its final order granting the government's motion for summary judgment and disposing of all claims, the AMA appealed. In the ensuing case, AMA v. Reno , the United States Court of Appeals for the District of Columbia Circuit found DEA's rulemaking to be inadequate and remanded, without vacating, the rule to DEA, requiring the agency to provide an opportunity for meaningful notice and comment on the fee-funded components of the Diversion Control Program (DCP). In doing so, however, the court also confirmed the boundaries of the DCP that DEA can fund by registration fees ( AMA v. Reno , 57 F.3d 1129, 1135 (D.C. Cir. 1995)). More specifically, the court found that the current statutory scheme requires DEA to set registration fees to recover the full costs of the DCP, while requiring DEA to charge “reasonable” fees relating to the registration and control of the manufacture, distribution and dispensing of controlled substances and the registration and control of regulated persons and of regulated transactions.

DEA responded to the remand requirement through a notice in the Federal Register on December 30, 1996 (61 FR 68624), describing the fee-funded components and activities of the DCP with an explanation of how each satisfies the statutory requirements for fee-funding. A final rule was subsequently published on August 9, 2002 (67 FR 51988).

DEA, therefore, is bound by the above-referenced statutory requirements in setting fees that recover the full cost of the Diversion Control Program and its activities. DEA has developed its rulemaking according to these legislative mandates.

Following publication of the Notice of Proposed Rulemaking on February 18, 2003, DEA received 36 comments to the notice, objecting to the fee schedule contained in the proposed rule. Twenty-seven comments were received from physicians (5 comments) and veterinary (22 comments); two comments were received from pharmacists, and seven comments were received from national or state associations representing different registrant groups. Late comments were also sent by another national group after the close of the comment period. Its comments were already raised by other commenters and, therefore, are addressed accordingly in this final rule.

Most commenters objected to the proposed increase in registration and reregistration fees, most noting that the increase was “too much” despite the ten-year period since fees were last adjusted; one commenter wrote that he had no problem with the proposed fee increase for practitioners from $70 to $131. One commenter also raised concern that the proposed fees were based on estimated budgets for Fiscal Years 2004-2006 and that, because the fee schedule would extend only to Fiscal Year 2006, DEA could raise the fees again at that time. Several commenters inaccurately characterized the proposed registration fee as either a “tax” or as a “user fee.”

Four commenters expressed concern about the programmatic and operational costs of the DCP that necessitated the proposed increase in fees. Commenters specifically addressed why the DCP budget authority has doubled since Fiscal Year 1994 and what activities, including what new initiatives, would be supported through registration fees.

Three commenters expressed concern about the potential effect of the proposed increase in fees on small businesses, particularly in the current economy.

Three comments were received regarding individual registrations. One commenter wrote that the ability of residents and hospital- and clinic-based physicians to use their employer's registration number instead of being required by DEA to maintain individual registrations causes confusion with pharmacies. Another commenter argued that veterinarians unfairly support a disproportionate share of DCP costs because veterinary clinics as free-standing hospitals must purchase separate DEA registrations unlike physicians and other practitioners affiliated with human hospitals that may work under the hospital's registration under certain circumstances. Comments also noted that a fee increase would encourage practices, especially large practices, to forego licensure of all practitioners in the practice. Similarly, two commenters requested that registration fees be calculated based on the volume of controlled substances used, as usage differs by type of registrant.

Four commenters expressed concern that Internet pharmaceutical companies selling veterinary products at discounted prices are undermining veterinarian revenue. Other areas addressed by commenters included eliminating the mandatory annual $15 million transfer to the U.S. Treasury; finding alternative sources for funding the Diversion Control Program such as fines to violators of controlled substances laws, fines to insurance companies and health care providers that use DEA registrations for identification purposes, “taxes” on Internet pharmacies, fees to large drug companies that “have billions of dollars,” and Congressional appropriations; and the provision of additional time beyond the 30 days following publication of the final rule for the new fees to go into effect.

Each of the points raised by commenters is addressed below.

All but one of the commenters objected to the increase in registration and reregistration fees, many characterizing them as “arbitrary” and “exorbitant.” Multiple commenters noted that physicians and other practitioners have been experiencing declining reimbursements and increasing operating costs, malpractice insurance costs, and costs of complying with other Federal and State requirements combined with high medical school debt. Several commenters suggested that the fee be raised 1.6 percent consistent with the 2003 increase in Medicare reimbursements; others suggested a 3-4 percent annual increase or a flat $5-10 increase. One commenter questioned how the fee increase compares with the rate of inflation. One commenter alleged that DEA was “arbitrarily” raising fees, and several others commented that DEA had not provided adequate justification for the fee increase.

As described above, DEA's authority to charge registration fees to support the Diversion Control Program derives from three statutory provisions. DEA is authorized by 21 U.S.C. 821 to collect reasonable fees relating to the registration and control of the manufacture, distribution and dispensing of controlled substances. Secondly, 21 U.S.C. 958(f) permits DEA to collect reasonable fees relating to the registration of importers and exporters of controlled substances.

Thirdly, the 1993 Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act established the Drug Diversion Control Fee Account (DDCFA) and specifically mandated that fees “shall be set at a level that ensures the recovery of the full costs of operating the various aspects of that program.” 21 U.S.C. 886a(3). Congress, in using the mandatory term “shall” as opposed to the discretionary “may,” unambiguously required DEA to increase its then-existing registration fees resulting in registrants fully funding DCP expenses. DEA, therefore, lacks discretion in this matter and must fund its DCP totally from registration fees (that is, not from fines, Congressional appropriations or other potential sources). Assuming for the sake of argument that there is some doubt as to whether Congress intended DEA to entirely fund the DCP from registration fees due to its use of the phrase “various aspects” of the DCP as opposed to something like “all aspects,” the House Conference Report notes that the act's language “requires the Drug Enforcement Administration to set fees to recover the full cost of their Diversion Control Program.” H.R. Conf. Rep. No. 918, 102nd Cong., 2d Sess. 44 (1992).

Congress also mandated fulfillment of the requirements of the Appropriations Act “(n)otwithstanding (a)ny (o)ther (p)rovision of (l)aw,” thus making its provisions supersede all other provisions of law that would otherwise prevent or impede DEA's recovery of the full costs of the DCP through registration fees. H.R. 5678, 102nd Cong., 2d Sess. 111 (1992).

Accordingly, while DEA recognizes the economic pressures facing practitioners such as declining Medicaid reimbursements and increasing operating, equipment, and insurance costs, the current statutory scheme requires DEA to set registration fees to recover the full costs of the DCP, while limiting DEA to charge “reasonable” fees relating to the registration and control of the manufacture, distribution and dispensing of controlled substances. DEA does not have the discretion to partially fund the DCP or to find alternative sources of funding for the program. Rather it is mandated by law to fund the DCP fully through registration fees.

DEA has not adjusted the registration and reregistration fees since March 22, 1993 when it published a final rule in the Federal Register , establishing registration fees for controlled substances registrants (58 FR 15272). (This fee schedule then went into effect for all registration applications postmarked on April 21, 1993 or later and all renewal applications with an expiration date of May 21, 1993 or later). Following publication of the final rule, the American Medical Association (AMA) and others filed a complaint in the United States District Court for the District of Columbia objecting to the new fees. The district court issued its final order granting the government's motion for summary judgment and disposing of all claims. Following an appeal by the AMA, the United States Court of Appeals for the District of Columbia Circuit found DEA's rulemaking to be inadequate and remanded, without vacating, the rule to DEA, requiring the agency to provide an opportunity for meaningful notice and comment on the fee-funded components of the Diversion Control Program. DEA responded to the remand requirement through a final rule published in the Federal Register on December 30, 1996 (61 FR 68624). DEA then published its Final Rule on the Drug Diversion Control Fee Account and Diversion Control Program funding, responding to comments and clarifying the activities to be funded as part of the DCP, on August 9, 2002 through publication in the Federal Register (67 FR 51988).

Over the period of ten years the costs of operating the Diversion Control Program (DCP) have increased, necessitating a review of fees and an increase in those fees that support the program as mandated by statute. Such increase in operating costs, detailed below, include a greater number of diversion investigators, increased investigation costs, additional diversion control efforts such as controlling diversion of licit controlled substances on the Internet, inflation, and increases in salaries and compensation for employees. In setting the fees, DEA is mandated to recover the “ full costs ” (emphasis added) of the DCP and does not have the discretion to adjust the fees according to Medicare reimbursements or inflation as suggested by some commenters. DEA is also mandated to charge “reasonable” fees. Because the fees do not represent a significant financial burden on registrants (see discussion below regarding the impact on small businesses), DEA has determined that the fees contained in this final rule are reasonable. The individual effect on registrants is minimal, representing from 0.21% to as little as 0.01% of average annual sales (or income) for those registrants qualifying as small businesses. For registrants that are large businesses with higher sales, the impact of the fee is even less.

Several commenters inaccurately characterized the registration fee as a tax or user fee. One commenter expressed that the DCP is a program from which the general public benefits and from which physicians do not derive a benefit despite paying a fee. User fees are charges that may be assessed only when a fee-funded service provides special benefits to an identifiable recipient beyond those that accrue to the general public, pursuant to the Independent Offices Appropriations Act (IOAA) (OMB Circular A-25, July 15, 1993). Examples of such services include activities that: Enable the beneficiary to obtain more immediate or substantial gains or values than those that accrue to the general public ( e.g. , receiving a patent, insurance, or guarantee provision, or a license to carry on a specific activity or business); provide business stability or contributes to public confidence in the business activity of the beneficiary ( e.g. , insuring deposits in commercial banks); or that are performed at the request of or for the convenience of the recipient, and are beyond the services regularly received by other members of the same industry or group or by the general public ( e.g. , receiving a passport, visa, airman's certificate, or a Custom's inspection after regular duty hours).

However, the IOAA applies “only when there is no independent statutory source for the charging of a fee or where a fee statute fails to define fee-setting criteria” AMA v. Reno , 857 F. Supp. at 84 (D.D.C. 1994). Accordingly, the controlled substances registration fees that are the subject of this rulemaking do not constitute user fees because other statutory authority (as described above) set specific criteria and funding guidelines. Moreover, in the 1993 Appropriations Act, Congress mandated fulfillment of the requirements of the Act “(n)otwithstanding (a)ny (o)ther (p)rovision of (l)aw,” thus making its provisions supersede all other provisions of law that would otherwise prevent or impede DEA's recovery of the full costs of the DCP through registration fees. H.R. 5678, 102nd Cong., 2d Sess. 111 (1992).

However, with that said, registrants who pay the fees do receive special benefits not conveyed on the general public. Specifically by registering with the DEA, registrants are able to handle controlled substances, an immediate “gain or value” not provided to the general public. Because of the closed system of drug distribution and the diversion control activities of the DCP, there are some tangential public benefits as well, much in the same way that the system of driver's licenses (by which individual drivers receive a specific benefit not conveyed on the public at large) increases the general safety on public roads thus also conveying an ancillary public benefit.

Because Congress specified in the 1993 Appropriations Act (with collection and spending criteria established by prior law (21 U.S.C. 821 and 958(f)), that “(f)ees charged by the Drug Enforcement Administration under its Diversion Control Program shall be set at a level that ensures the recovery of the full costs of operating the various aspects of that program” and funds from the Drug Diversion Control Fee Account (DDCFA) to fund the DCP will be raised “in accordance with estimates made in the budget request of the Attorney General” (21 U.S.C. 886a(3) and (4)), the registration fees charged by DEA pursuant to this act are not user fees subject to the IOAA because the Appropriations Act and related statutory authorities constitute independent statutory sources for charging the fee and define fee-setting criteria, i.e. , to cover the full costs of the DCP. AMA v. Reno , 857 F. Supp. 80 (D.D.C. 1994).

Thus, the appropriate test for fee-funding DCP activities is not whether they convey a special benefit to registrants but whether the fees are “reasonable” and “relat(e) to the registration and control of the manufacture, distribution, and dispensing of controlled substances” or relate to the registration of importers and exporters, and are set “at a level that ensures the recovery of the full costs of operating the various aspects of (the Diversion Control) program.” 21 U.S.C. 821, 958(f) and 886a(3). DEA has concluded that the fees meet both of these criteria.

Several commenters wrote that DEA had not provided adequate justification for the fee raise with some requesting detailed descriptions of the costs and expenditures made by the DCP. Commenters questioned the programmatic and operational costs of the DCP and raised concern about the rising costs of DCP activities over the past ten years that necessitated the fee increase.

This section describes fee-fundable activities that constitute the DCP, the budget justification for the fee increase, and how the fees were calculated and addresses related comments regarding the operation of the DCP.

DEA's mission with respect to licit controlled pharmaceuticals is to prevent, detect and eliminate the diversion of controlled pharmaceuticals from legitimate channels to illegal use, while at the same time ensuring their availability for legitimate medical and scientific purposes. To facilitate these goals, Congress, through the Controlled Substances Act, established a closed system of controlled substance distribution encompassing manufacturers, distributors, pharmacies and practitioners; that is, within this closed system a controlled substance can be traced from the time it is manufactured to the time it is dispensed to the ultimate user. This system has proven effective in reducing the diversion of these substances from legitimate channels to the illicit market. Components of this closed system include scheduling of all controlled substances, registration of all controlled substance handlers, recordkeeping for accountability, security, and manufacturing quotas, all under the oversight of the DCP. (The DCP also possesses similar chemical control responsibilities pursuant to the Chemical Diversion and Trafficking Act (CDTA) and subsequent legislation. The chemical diversion control program and/or its registration and reregistration fees are outside the domain of this rulemaking and therefore are not affected by this rulemaking.)

The plain language of the 1993 Appropriations Act requires DEA to set and collect registration fees to cover the full costs of operating the DCP. In its 1993 final rule publication setting new registration fees, DEA examined all activities that relate to the registration and control of the manufacture, distribution and dispensing of controlled substances and to the registration (and control) of importers and exporters. DEA determined that “activities contained in the [diversion] program which give rise to the fees consist of diversion investigators, analysts, technicians, and clerical personnel salaries and expenses; and travel, rent, utilities, supplies, equipment and services associated with these positions for the registration and control of the manufacture, distribution and dispensing of controlled substances” (58 FR 15273). DEA determined that it would not fee-fund costs associated with chemical control efforts (see below), clandestine laboratory efforts, overseas staff (specifically diversion investigators assigned to foreign posts), DEA's Office of Chief Counsel or executive direction (58 FR 15273). DEA concluded that these activities were excluded from the Attorney General's budget delineation for the category of “Diversion Control” and thus not included in the determination of the fees. Id.

At the time this initial rule was published on March 22, 1993, 21 U.S.C. 821 did not extend to chemical control activities (“regulated transactions”). Accordingly, there were no registration or fee requirements for handlers of List I chemicals, and chemical control activities were not included among those to be supported by controlled substances fees. Congress amended 21 U.S.C. 821 on December 17, 1993 to require reasonable fees relating to “the registration and control of regulated persons and of regulated transactions.” Domestic Chemical Diversion Control Act of 1993, 3(a), Pub. L. 103-200, 107 Stat. 2333. Despite this amendment, to date DEA's chemical control activities have continued to be supported by appropriated funds and not by the controlled substances fees through the Drug Diversion Control Fee Account (DDCFA). Again, DEA's chemical control activities are not the subject of this rulemaking.

In its December 1996 Federal Register notice, DEA further excluded from fee-funding those activities that incidentally support the DCP but are funded elsewhere in the DEA Salaries Budget (and thus not fee-funded). Specific examples listed in the notice include “support provided by the Attorneys in DEA's office of Chief Counsel Diversion Regulatory Section; certain laboratory service support; DEA Automated Data Processing Systems support (except the Automation of Reports and Consolidated Orders System (ARCOS) and the Controlled Substances Act (CSA) database); Office of Training staff; DEA Management and Administrative Support; Office of Congressional and Public Affairs; Intelligence Support and Diversion Investigators assigned overseas” (61 FR 68631).

In its August 2002 Final Rule published in the Federal Register , DEA reviewed the history and statutory authority of fee-fundable activities in detail and further described what activities would be fee-funded via the DDCFA. These activities include: Scheduling, registration, investigation, inspection, data collection and analysis, training, establishing production quotas, cooperative efforts with state, local and other federal agencies, cooperative efforts with the regulated industry, international activities relating to the registration and control of the manufacture, distribution and dispensing of controlled substances, and attendant management, personnel, administrative and clerical oversight for the DCP because they too relate to the fee-funding criteria of 21 U.S.C. 821 and 958(f). Fee-fundable activities also include travel, rent, utilities, supplies, equipment and services associated with the above-listed activities (67 FR 51988).

Certain international activities also are supported through fee funds because they relate to the registration and control of the lawful manufacture, distribution and dispensing of controlled substances. Controlled substances lawfully imported or exported relate to Section 821 requirements because imported substances are subsequently distributed to other DEA registrants, and exported substances are initially manufactured and/or distributed domestically prior to export. As explained in the December 30, 1996 Federal Register notice, the Controlled Substances Act's closed system of controls over manufacturing, distribution and dispensing was not established and is not administered within the isolation of our domestic borders. Rather, the controls are part of a global system of national and international laws designed to establish an interrelated, worldwide structure of control over the manufacture, distribution, dispensing, import and export of controlled substances, so that controls or lack of controls in one country do not undermine controls in another. Congress found and declared that illegal importation, along with illegal manufacture, distribution, possession and improper use of controlled substances, has a detrimental effect on the health and welfare of the American people, recognizing that “(a) major portion of the traffic in controlled substances flows through interstate and foreign commerce.” 21 U.S.C. 801(2) and (3).

The international drug control treaties to which the United States is a signatory require that each party establish a program of controls relating to the registration and control of the manufacture, distribution, dispensing, import and export of controlled substances. The specific language of the Controlled Substances Act and its implementing regulations recognize the obligations of the United States under the international conventions. See 21 U.S.C. 801, 801a, 811(d)(1), 823(a) and 958(a), and 21 CFR 1307.02.

The Controlled Substances Act expressly recognized that the United States is a party to the Single Convention on Narcotic Drugs of 1961 and other conventions “designed to establish effective control over international and domestic traffic in controlled substances.” 21 U.S.C. 801(7). Likewise, Congress recognized that the abuse of psychotropic substances has become “a phenomenon common to many countries” that “is not confined to national borders,” making it “essential that the United States cooperate with other nations in establishing effective controls over international traffic in such substances.” (21 U.S.C. 801a(1)). Congress further recognized that the United States joined with other countries in executing the Convention on Psychotropic Substances, “which is designed to establish suitable controls over the manufacture, distribution, transfer, and use of certain psychotropic substances.” (21 U.S.C. 801a(2)). Congress acknowledged that before the Senate could ratify the convention, the Controlled Substances Act required amending to bring it into compliance with the requirements of the convention. Congress thus recognized that the conventions are an integral part of the United States' programs regarding the registration and control of the manufacture, distribution, and dispensing of controlled substances. By implementing and ratifying the international treaties, Congress recognized that a strong domestic program relating to the registration and control of the manufacture, distribution, dispensing, import or export of controlled substances depends on establishing and maintaining strong controls within other individual nations.

Thus, DEA is obligated to conduct, as part of its Diversion Control Program, certain international activities relating to the lawful manufacture, distribution, dispensing, import and export of controlled substances. DEA fee-funds most international diversion control activities that it had historically conducted since 1971, considering each related to 21 U.S.C. 821 and 958(f) criteria. Among those international activities that are excluded from DDCFA funding are international chemical control activities.

Additional detail on specific international activities supported through fee-funds as part of the DCP is contained in the August 9, 2002 Federal Register notice (67 FR 51988).

While diversion control and registration activities are conducted by DEA's Office of Diversion Control, other DEA elements undertake activities in support of the DCP in addition to supporting nonfee-fundable activities. As such, these other elements expend fee-funds to support those fee-fundable DCP activities. For example, the Office of Administration provides office space, makes appropriate office renovations and supplies the security guard force to the diversion groups. The Office of Administration pays rent and other expenses with fee funds. The Office of Resource Management expends fee funds for payroll and employment benefits for the DCP workforce. The Office of Training trains the DCP workforce and spends fee funds on training in support of fee-fundable activities, for example seminars for industry on controlled substances (but not on staff; see below).

Not included among fee-fundable diversion control activities are several elements of DEA operations that, though not part of the DCP, incidentally support the activities of the DCP. To date these activities have been funded through Congressional appropriations rather than through fee funds. Examples of such elements include two sections within the Office of Chief Counsel that (a) litigate administrative actions related to DEA registrants and (b) provide legal support on regulatory policy matters; staff salaries and related staff expenses within a section of the Office of Training that is specifically dedicated to the DCP (note, certain eligible training activities are fee-funded as noted above); a portion of the Office of Forensic Sciences Special Testing Laboratory that supports authentic sample analyses for licit drugs; and a portion of the budget for DEA's agency-wide computer network, “Firebird”, related to the work of the DCP. As was discussed more fully in previous rulemakings regarding the use of controlled substances fee funds, while these elements incidentally support diversion control efforts, because their overall function is not primarily devoted to diversion control, they have been included elsewhere in the DEA budget and not as part of fee-fundable activities. In the absence of specific guidance in the 1993 Appropriations Act as to which activities were encompassed within the DCP and thus fee-fundable, DEA has followed the plain language of the act and used the budget categories that had historically been included in the DCP budget request of the Attorney General. As described in DEA's 1996 Federal Register notice, for the purposes of budget formulation and appropriation, DEA historically has identified only those resources (with their overhead costs) that were specifically devoted to diversion control efforts as part of the DCP in its annual budget submission to Congress. Other resources which support a broad range of DEA activities, including diversion control, therefore have been included in the budget formulation and appropriation process and not funded through fee funds (61 FR 68631). At this time these activities will continue to be funded through appropriated funds as DEA considers how to better comply with the applicable laws in the future.

Several commenters questioned the justification for the budget increase necessitating the raise in registration and reregistration fees. Since the fees were last raised in 1993, costs of operating the Diversion Control Program (DCP) have increased. As described above, fee-fundable activities of the DCP include: scheduling, registration, investigation, inspection, data collection and analysis, training, establishing production quotas, cooperative efforts with state, local and other federal agencies, cooperative efforts with the regulated industry, certain international activities relating to the registration and control of the manufacture, distribution and dispensing of controlled substances, and attendant management, personnel, administrative and clerical oversight for the DCP. Fee-fundable activities also include travel, rent, utilities, supplies, equipment and services associated with the above-listed activities.

The costs of the DCP have increased due to both the rising costs of “doing business” over the past ten years as well as the implementation of a number of new initiatives and programs. One commenter raised concern that the increase in fees seemed to cover the increased costs of operating the DCP with less emphasis on new programs and activities. As summarized below, the increased costs of operating the DCP to date as well as the anticipated costs through Fiscal Year 2006 have included/include a number of new initiatives including: the creation of Tactical Diversion Squads in Fiscal Year 1997, responding to OxyContin® diversion, responding to Internet-based diversion, development of a system to permit electronic transmission of controlled substances prescriptions, development of controlled substances electronic order forms, upgrades to the Automation of Reports and Consolidated Orders System (ARCOS), significant improvements to registration customer/forms service, and increases in the number of diversion investigators.

In Fiscal Year 1994 the Budget Authority for the DCP was $57.1 million. The Budget Authority for Fiscal Year 2004, based on the President's Budget, is $ 118.6 million. The growth in the DCP has been driven by a number of factors some of which have been reflected in the DEA budget submissions such as the creation of Tactical Diversion Squads in Fiscal Year 1997. Other areas of DCP expansion include the costs of responding to the diversion of OxyContin® which involved opening 247 cases between October 1999 and March 2002, including 159 cases in Fiscal Year 2001 alone—a 270 percent increase from Fiscal Year 2000. These cases, for example, have led to 328 arrests.

DEA also has expended increased time and resources in responding to the diversion of licit controlled substances over the Internet, a concern of several commenters. DEA has opened a number of cases leading to arrests and convictions for illegal diversion over the Internet. In total the number of diversion arrests more than doubled in the five year period of Fiscal Year 1995 (444 arrests) to Fiscal Year 2000 (941 arrests). In Fiscal Year 2001 DEA made 871 diversion arrests. In Fiscal Year 2002 DEA made 714 arrests, and in the first six months of Fiscal Year 2003, DEA made 364 arrests.

The additional investigative and programmatic responsibilities to support investigations have required additional diversion investigators, headquarters staff and increased financial resources to support these staff and their efforts to prevent the diversion of licit controlled substances. Over the past ten years the costs of supporting personnel and the costs of simply “doing business” have increased as a result of inflation and general rises in costs. These increases affect staff salaries, benefits, as well as the cost of program-related travel, rent, utilities, supplies, equipment and services associated with diversion control activities. The increasing costs of personnel, activities and general operations— including new initiatives—are shown in the following table that outlines the budget authority for each year from Fiscal Year 1994 to Fiscal Year 2006 (estimated). Note these figures do not include the required $15 million transfer to the U.S. Treasury.

For Fiscal Years 2005 and 2006 the above budget authority estimates were derived using the President's Budget for Fiscal Year 2004. One commenter expressed concern that DEA was using estimated budget figures in its calculations for the Fiscal Year 2004-2006 period. Use of estimated budgets for future years is a common practice in budgeting to forecast future expenditures and plan future budgets. Because the President's Budget Request for the upcoming fiscal year is typically submitted to Congress in the spring of the prior year with approval following that, if DEA were to wait and use “actual”, Congressionally-enacted budgets on which to base the fee schedule as suggested by the commenter, significant delays would result in calculating the fees, resulting in potential shortfalls to the fee account which, by statute, must support all activities of the DCP. Importantly too, adjusting the registration and especially the reregistration fees each year would cause significant confusion among registrants as to the correct amount to pay, particularly as the adjustment often would be effective immediately in order to comply with the statute that fees support the “full costs” of the DCP. The process also would result in increased fee calculation, fee collection, and related operating costs for the DCP which would translate to higher registration fees.

The President's Fiscal Year 2004 budget was calculated using the Fiscal Year 2003 budget as a base and adjusting for inflation, salary increases and programmatic increases or enhancements. The Fiscal Year 2004 budget of $118,561,000 for the DCP was submitted by the President to Congress on February 3, 2003. The Fiscal Year 2004 budget authority of $118,561,000 (that does not include the $15 million transfer to the U.S. Treasury) accounts for increases in program costs due to inflation, increases in federal staff salaries, and additional funds to undertake a number of new initiatives to prevent, detect and eliminate the diversion of controlled substances while ensuring an adequate supply for legitimate medical and scientific purposes. Additional funds would support diversion investigation (93 positions), OxyContin® diversion control, and implementation of a system to detect Internet sites that may divert controlled substances and investigation of those sites, as warranted. Because the registration fees have not been raised since 1993, in recent years the DCP has not been operating with the ideal staffing level of diversion investigators due to budget constraints. The additional funds for OxyContin® and improved Internet diversion control will permit DEA to conduct additional and more complex investigations into the diversion of pharmaceutical controlled substances. Additional funds also would support forty positions and the development of systems to permit the electronic transmission of controlled substances orders and controlled substances prescriptions. These electronic alternatives will provide a similar or higher degree of security/integrity than current paper-based systems and will help DEA to meet its legal mandates under the Government Paperwork Elimination Act. Several commenters highly praised the electronic systems and the increased efficiencies afforded to industry. By increasing reliance on technological resources, the electronic systems also will help to control DCP costs in the future; two commenters raised the issue of streamlining DCP operations and controlling costs through greater reliance on technological resources. The total cost of program enhancements for Fiscal Year 2004 is $27,062,000. Including the mandatory transfer to Treasury of $15 million, the total amount required to be recovered for Fiscal Year 2004 is $133,561,000.

To calculate the anticipated President's Budget Request for Fiscal Year 2005, DEA used a baseline of the Fiscal Year 2004 President's Budget of $118,561,000 (described above) and adjusted the baseline figure for increases in program costs due to inflation (including such items as postage rate increases, increases in cost of employee health benefits, increases in GSA rent, etc.), and costs of federal staff pay increases. The anticipated President's Budget Request for Fiscal Year 2005 is $139,364,000. This figure, revised since the Notice of Proposed Rulemaking in February 2003 because of new guidance on inflationary figures and updated capital asset planning and budgetary information, includes costs to support systems to permit the electronic transmission of controlled substances prescriptions and electronic orders of Schedule I and II controlled substances (systems highly desired and praised by industry, including commenters to the proposed rule), the support and operation of DEA's Internet investigations, a major upgrade to the Automation of Reports and Consolidated Orders System (ARCOS), significant improvements to registration customer/forms service, and 39 additional positions related to these activities. Other funds accounted for include liaison, policy, regulatory, and analytical activities of the Diversion Control Program. Including the mandatory transfer to Treasury of $15 million, the total amount required to be recovered for Fiscal Year 2005 is $154,364,000.

The anticipated President's Budget Request for Fiscal Year 2006 of $147,028,000 was calculated using the same method. This figure also has been revised since the proposed rule based on updated budget figures and reflecting changes in inflationary growth guidance from the Department of Justice. DEA used the anticipated budget request for Fiscal Year 2005 and adjusted that figure for inflationary growth and increases in federal staff salaries, rent and other overhead costs. Including the mandatory transfer to Treasury of $15 million, the total amount anticipated to be required to be recovered for Fiscal Year 2006 is $162,028,000.

In calculating inflationary growth, DEA used inflation figures of 1.5 percent for Fiscal Year 2004, 1.5 percent for Fiscal Year 2005 and 1.6 percent for Fiscal Year 2006 and salary increase assumptions of 4.1 percent for Fiscal Year 2004 and 3.4 percent for both Fiscal Year 2005 and Fiscal Year 2006, based on the Fiscal Year 2005 Department of Justice Modular Cost Standards and the President's Economic Assumptions, respectively.

To calculate the fee schedule for Fiscal Year 2004-2006, DEA used the total amount necessary to collect for the Fiscal Year 2004-2006 period of $449,953,000 and, based on specific statistical calculations, then calculated the fee for each registrant category. To comply with the law that DEA recover the full costs of the DCP, DEA then developed the specific fee levels for each registrant category.

To calculate the fee for each registrant category, DEA first estimated the number of paying registrants for the Fiscal Year 2004-2006 period and then used this figure combined with the full amount required to be collected for this period to set the new fee rate. To calculate the number of paying registrants, DEA used logarithmic regression analysis to project the yearly registrant figures based on historical registrant data for the period of Fiscal Year 1994 through Fiscal Year 2001.

DEA then estimated the number of registrants for each registrant category since different registrant categories pay different fees. Because there were insufficient data for some activities to perform regression analysis, DEA used the percentage for each category using data from the corresponding cycle years in the past.

Finally, based on the analyses conducted, DEA developed the fees for each registrant category consistent with its current fee structure. In doing so, DEA opted to set the fee level for a three-year period (Fiscal Years 2004-2006) to avoid the heavy burden on registrants and the additional administrative expenses to DEA that resetting the fee each year would impose. Accordingly, the fee schedule (see below) developed reflects the total amount necessary to be collected for the full three-year period (Fiscal Years 2004-2006) divided by projected registrants and accounting for projected registrant growth by category for each fiscal year. Because different categories of registrants pay different amounts, DEA weighted the number of registrants in each category to ensure the appropriate reflection in the fee schedule. Because the registrant fees reflect the total amount necessary to be collected for the Fiscal Year 2004-2006 period, there is the possibility that DEA may accumulate additional funds beyond those necessary for actual program operations in the initial year (Fiscal Year 2004), but in the final year of the period (Fiscal Year 2006) fee collections are anticipated to fall short of the amount necessary to cover expenditures in that year, so DEA will then draw down the previously collected surplus. The alternatives to this approach would be to reset the fee each year or to set a different fee for each fiscal year; both of these options would cause unnecessary confusion and would impose greater administrative burdens on DEA and registrants.

Because of the updated and slightly reduced budget figures for Fiscal Year 2005 and Fiscal Year 2006, it was necessary for DEA to recalculate the fee levels for each category of registrant. As a result, the resulting fee schedule reflects minor changes to the fee levels as indicated below. For most registrants, this change represents a reduction in fee from that included in the Notice of Proposed Rulemaking.

This rulemaking supplants the fee structure proposed in the Notice of Proposed Rulemaking published in the Federal Register on February 18, 2003.

Several commenters questioned the efficiency of DCP operations as related to the rising cost of operating the program, with some raising the issue of streamlining DCP operations through enhanced use of technology, computer upgrades, and improved business practices to negate the need for a fee increase. The mission of the DCP is to prevent the diversion of licit controlled substances which is done in the most efficient and streamlined manner possible. This mission requires the outlay of funds to support diversion investigations and monitoring of the closed system that was created by the Controlled Substances Act to ensure that registrants maintain controls over their activities with controlled substances to prevent and detect their diversion.

DEA works diligently to achieve administrative efficiencies in all of its programs, including the Diversion Control Program. Through a scheduled, periodic review process, virtually all aspects of the DCP are inspected to detect any waste, fraud or abuse. All expenditures charged to the DDCFA also are reviewed and approved by an independent unit charged with this task. Moreover, each of DEA's annual budget requests to Congress, which contains all components of each DEA program, including the DCP, is available for public review. Each budget request is examined and approved by both the Department of Justice and the Office of Management and Budget. DEA will continue to review expenditures through Fiscal Year 2006 and will adjust the fee schedule as necessary again at that time as a result of budget reviews. In February 2003 DEA also established a separate unit, the Diversion Fee Account Validation Unit, to review, approve, and audit fee-funded expenditures.

DEA has undertaken several initiatives to streamline aspects of the DCP both for the DEA and for registrants. For example, DEA is currently developing a system to permit the electronic transmission of controlled substances prescriptions which will significantly increase the efficiency by which prescriptions are transmitted from prescriber to pharmacy. This system, however, will not reduce the review requirements of DEA employees that monitor the prescription process for controlled substances. DEA also is developing a system to permit the electronic transmission of controlled substances orders which, again, will increase efficiencies for industry. DEA is also pursuing upgrades to the Automation of Reports and Consolidated Orders System (ARCOS) and other technological improvements to its information management systems to increase internal efficiencies. In general, consistent with the performance objectives and goals outlined in its Strategic Plan, DEA is constantly monitoring its operations for areas that can be improved through better use of technology and streamlining of business practices.

One commenter also questioned the exclusion of specific goals and performance standards in the notice of proposed rulemaking. Specific performance goals are included in DEA's Strategic Plan and are therefore not duplicated in rulemaking notices. Moreover, in terms of performance measures, as mandated by the Government Performance and Results Act (GPRA) and the President's Management Agenda, DEA, like all other agencies and components, is required to provide a budget summary that incorporates performance information on a quarterly basis. That is, DEA already integrates budget and performance in order to evaluate the effectiveness of programs relative to long-term, measurable outcome goals.

More specifically, in response to GPRA and the President's Management Agenda, the DCP has restructured its budgetary reporting on the Drug Diversion Control Fee Account (DDCFA) to include performance measures that are consistent with DEA's Strategic Plan and reflect the effectiveness of programmatic activities funded by registrant fees. Among the objectives included in the DEA Strategic Plan is continued support to the registrant population through improved technology, including E-commerce and customer support, while maintaining cooperation, support, and assistance from the regulated industry. These efforts, funded through registration fees, will provide immediate benefits to the registrant population such as streamlined processing and improved access to information. They also will reduce the paperwork burden on small businesses; reduce forged or stolen prescriptions; improve authenticity verification of the prescribing or ordering party and reduce processing time; increase overall security; and improve DEA's data quality, agency efficiency and responsiveness in carrying out its mission.

As part of its notice of proposed rulemaking published on February 18, 2003, DEA noted that the rulemaking does not constitute a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. While the actual fee collections as part of the registration fee process (independent of this rulemaking) result in an annual effect on the economy of $100,000,000 or more, the net effect of the fee changes captured in this rulemaking on the economy will be less than $100,000,000 and will not result in a major increase in costs or prices or cause significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets. Moreover, the individual effect on small business registrants is minimal ranging from $130 to $1,625 per year with the majority of affected registrants paying an annual fee of $130 (or $390 for three years). In categories of registrants qualifying as small businesses (see below), the fee represents less than 0.21% of average annual sales (or income) based on U.S. Census and Bureau of Labor Statistics data (latest available data from 1997). A breakdown of the effect of the fees on these categories of registrants is provided below.

Based on an evaluation of U.S. Census data, a certain percentage of manufacturers, hospitals/clinics, and pharmacies, narcotic treatment programs and all practitioners that are registrants with the DEA are likely to be small, as defined by the Small Business Administration. All distributors, importers and exporters are likely to be large. All exporters are likely to be large as they usually are also distributors or manufacturers, and only large manufacturers are likely to be involved in exporting. Researchers, teaching institutions, and analytical labs are assumed to be associated with large institutions or government entities and therefore not qualifying as small businesses.

Manufacturers fall into one of two industry classifications: pharmaceutical preparation or medicinal and botanical manufacturing. Based on DEA data on registered manufacturers, DEA estimates that 381 of the 460 manufacturers registered with DEA qualify as small businesses (Small Business Administration definition of less than 750 employees). For manufacturers in the small business category of 20-49 employees, the fee of $1,625 represents less than 0.02% of the average annual sales of $9.7 million (U.S. Census figures).

There are 61,463 pharmacies registered with the DEA and eligible to handle controlled substances. According to the National Association of Chain Drug Stores (NACDS) and census data on mail order prescription firms, there were 35,428 chain pharmacies, mass merchant pharmacies, supermarket pharmacies, and mail order pharmacies in 2001 (latest data available). It is assumed that the remaining 26,035 DEA registrants are independent pharmacies and that these independent pharmacies are small businesses. The chain drug stores, mass merchant pharmacies, supermarket pharmacies, and mail order pharmacies are assumed to be large establishments. For pharmacies in the $250,000-$499,000 category of annual sales, a fee of $130 per year represents 0.05% of average annual sales. In this category, the mean value of annual sales is $429,853 according to the U.S. Census data of which the annual registration fee represents 0.03%.

There are 14,796 hospitals registered with DEA to handle controlled substances. U.S. Census data indicate there are 6,590 hospitals; thus the remaining 8,206 registrants are assumed to be clinics. Census data also indicate there are 4,434 large hospitals; therefore, assuming all hospitals are registered with the DEA, DEA estimates there are 2,156 small hospitals. There are 3,260 clinics that can be defined as large. Thus, assuming that all large clinics are registered with DEA, DEA assumes that the remaining 4,946 clinics that are DEA registrants are small. For hospitals in the small business category of $1 million-$2.5 million in annual revenue, the annual fee of $130 represents less than 0.01% of average annual revenues. For clinics and narcotic treatment programs with annual revenues of less than $100,000 the annual fee of $130 represents 0.13% of annual revenue. Or for entities with the mean annual revenue of $61,909 in this group, the fee represents 0.21% of annual revenue. There are 1,166 narcotic treatment programs registered with the DEA.

Finally, there are 1,038,000 practitioners registered with the DEA to handle controlled substances—the largest registrant category. Because practitioners may hold multiple registrations and because practitioners register for three-year cycles, this figure may double count some practitioners and, accordingly, represents a high estimate. The majority of registered practitioners are physicians, followed by dentists and veterinarians. As of May 2003, there are 736,449 physician registrants, 164,630 dentist registrants, 51,101 veterinarian registrants, 44,800 nurse practitioner registrants, and 24,077 physician assistant registrants. Other practitioner registrants include optometrists, nursing homes, animal shelters, ambulances, naturopaths, euthanasia technicians, certain pharmacists in the state of Washington, certain veterinarian technicians in the state of California, and doctors of oriental medicine.

For the three largest groups of registrants in this category, data from the Bureau of Labor Statistics (2001 survey data) indicate the average annual salary of physicians to be $110,020, of dentists to be $110,790 and of veterinarians to be $69,150. For practitioners with average annual salaries of less than $100,000 the annual fee of $130 represents 0.13% of annual revenue. Of the mean annual salary of practitioners in this category ($63,688 per U.S. Census data), the fee represents 0.20%. For physicians and dentists which account for 87% of practitioner registrants, the fee represents 0.12% of annual average salary.

In summary, while the changes in fee structure will affect a substantial number of individual entities that qualify as small businesses, the impact will be minimal when evaluated as a percentage of average annual sales, revenue or income. Consequently, this rule does not create a significant adverse effect on a substantial number of small entities. In addition, the rule is not a discretionary action but rather responds to a statutory mandate to fully fund the costs of the Diversion Control Program through registrant fees.

Based on the methodology described in section V-D of this rulemaking and current calculations, to recover the full costs of the DCP as required by law, DEA plans to incrementally raise the fees in accordance the fee structure summarized in Section V. This fee structure replaces the fee structure proposed in the February 18, 2003 Notice of Proposed Rulemaking.

This fee schedule will go into effect on December 1, 2003. To be as clear as possible about the effective date and to ease processing, this effective date represents the first day of the month following the mandatory 30 days after the publication of the final rule in the Federal Register . The new fee schedule will be in effect for all new registration applications postmarked on or after December 1, 2003 and all reregistration applications postmarked on or after December 1, 2003. Registration or reregistration applications postmarked on or after this date must, therefore, include the new fee payment.

Because DEA is required by statute to recover through fees the “full costs” of the DCP, DEA will continue to monitor the costs and expenditures of the DCP and will revise the fee structure as necessary. DEA does not expect to revise the fee structure again until Fiscal Year 2006 (to be effective Fiscal Year 2007); however, DEA cannot anticipate events or other catalysts that may necessitate major diversion control initiatives by the DEA in future years.

Several comments were received relating to the use of individual registrations for practitioners as opposed to clinics or medical facilities. One pharmacist commenter objected to the ability of residents and hospital- and clinic-based physicians to use their employer's registration number instead of being required by DEA to maintain individual registrations. The commenter noted that use of an employer's number leads to confusion among pharmacists when the computer, cross-checking the number against the practitioner's name, indicates that they do not match. The commenter argued that the ability to use employer's registration numbers is unfair to those who must pay individual registration fees and suggested that before registration fees are increased that DEA require all prescribers of controlled substances to be individually registered. Two commenters noted that it is expensive to license multiple practitioners in a practice and that a fee increase would encourage practitioners to forego licensure of all practitioners especially in large practices. One also noted that it would be beneficial if practitioners could work under an umbrella license for the whole clinic.

The Controlled Substances Act requires that every person who manufactures, distributes or dispenses any controlled substance or who proposes to engage in the manufacture, distribution or dispensing of any controlled substance obtain an annual registration. 21 U.S.C. 822(a)(1) and 822(a)(2). However, the Controlled Substances Act also provides for certain exceptions, including “an agent or employee of any registered manufacturer, distributor, or dispenser of any controlled substance or list I chemical if such agent or employee is acting in the usual course of his business or employment.” 21 U.S.C. 822(c)(1).

More specifically, “an individual practitioner who is an agent or employee of another practitioner (other than a mid-level practitioner) registered to dispense controlled substances” may be exempted from securing his or her own registration but may “when acting in the normal course of business or employment, administer or dispense (other than by issuance of prescription) controlled substances if and to the extent that such individual practitioner is authorized or permitted to do so by the jurisdiction in which he or she practices, under the registration of the employer or principal practitioner in lieu of being registered him/herself.” 21 CFR 1301.22. That is, within a group practice, for example, one DEA-registered physician may take the responsibility for ordering a stock of controlled substances from which other physicians in the practice could dispense. However, only the DEA-registered physician would be authorized to issue prescriptions for controlled substances. That is, prescriptions written under a particular DEA number may only be written by the physician possessing that registration number.

Additionally, an individual practitioner who is an agent or employee of a hospital or other institution also may administer, dispense, or prescribe controlled substances under the registration of the hospital or other institution which is registered in lieu of being registered him/herself (much like a pharmacist operates under the pharmacy's DEA registration). However, such registration is permissible only if: (1) Such dispensing, administering or prescribing is done in the usual course of his/her professional practice; (2) Such individual practitioner is authorized or permitted to do so by the jurisdiction in which he/she is practicing; (3) The hospital or other institution by which he/she is employed has verified that the individual practitioner is so permitted to dispense, administer, or prescribe drugs within the jurisdiction; (4) Such individual practitioner is acting only within the scope of his/her employment in the hospital or institution; (5) The hospital or other institution authorizes the individual practitioner to administer, dispense or prescribe under the hospital registration and designates a specific internal code number for each individual practitioner so authorized; and (6) A current list of internal codes and the corresponding individual practitioners is kept by the hospital or other institution and is made available at all times to other registrants and law enforcement agencies upon request for the purpose of verifying the authority of the prescribing individual practitioner (21 CFR 1301.22). Other registrants would include pharmacies wishing to verify the identity and authority of individual practitioners to prescribe controlled substances. Note, state laws differ with regard to clinic registration and the use of “umbrella” registration numbers for employees of such clinics.

A separate registration is required for each principal place of business or professional practice at one general physical location where controlled substances are manufactured, distributed, imported, exported, or dispensed by a person (21 U.S.C. 822(e)).

Four commenters raised issues related to allocation of the registration fee according to usage of controlled substances. Three commenters wrote that, because veterinarians use a limited amount of controlled substances, they should not be expected to be equal partners with other practitioners in funding the DCP. Another commenter stated that, as staff write only 12 controlled substances prescriptions per year, the fee increase would dramatically increase the cost of each of these prescriptions per unit.

The Controlled Substances Act mandates that “every person” who manufactures, distributes or dispenses any controlled substance or who proposes to engage in the manufacture, distribution or dispensing of any controlled substance obtain an annual registration (21 U.S.C. 822(a)(1) and 822(a)(2)). This statute mandates such registration irrespective of the extent such persons handle controlled substances. Accordingly, DEA may not alter the fee structure to account for the extent to which registrants handle controlled substances.

Several commenters expressed concern that Internet pharmaceutical companies selling veterinary products at discounted prices are undermining veterinarian revenue, with one commenter alleging that Internet and catalog pharmacies sell prescription medications directly to consumers without a prescription from a veterinarian. Three commenters wrote that it is “not in my profession['s] best interest to pay such exuberant fees * * * while the internet companies undercut the veterinarian.” Another commenter stated that Internet pharmacies selling controlled substances to consumers without a prescription should be fined severely.

The mission of the Diversion Control Program, as outlined above, is to prevent the diversion of licit controlled substances in conformance with the Controlled Substances Act. All manufacturers, distributors and dispensers of controlled substances are required to obtain a registration with the DEA (21 U.S.C. 822(a)(1) and 822(a)(2)). This requirement includes Internet-based pharmaceutical companies that dispense controlled substances. No dispenser, including Internet-based companies, is permitted to dispense controlled substances without the prescription of a registered physician or other appropriate practitioner. DEA investigates and prosecutes violations of the Controlled Substances Act, including the dispensing of controlled substances without a legal prescription from an authorized and registered practitioner.

Four commenters, three from the same institution, objected to the ability of Internet pharmaceutical companies to sell veterinary products directly to consumers thus affecting sales directly through the veterinary clinics. Commenters expressed concern that clients were purchasing veterinary pharmaceutical supplies through the Internet companies when veterinarians “must write prescriptions,” thus eroding pharmaceutical sales by veterinarians and undermining the veterinarian-client relationship. One commenter also alleged that Internet pharmacies are selling pharmaceuticals without prescriptions from authorized practitioners. Three commenters from the same institution suggested that the DEA tax the Internet drug companies to fund the DCP and leave the current controlled substance handlers fees at the same level.

DEA assures the commenters that any violations of the Controlled Substances Act, including the unauthorized dispensing of controlled substances, are subject to prosecution to the fullest extent of the law. Over the past several years, DEA has undertaken a number of concerted initiatives to control and prevent the diversion of licit controlled substances over the Internet, with the number of diversion arrests more than doubling between Fiscal Year 1995 and Fiscal Year 2000. DEA's diversion control actions do not cover legal commerce transactions such as the legal dispensing of controlled substances through Internet sites or the sale of non-controlled substances (such as other veterinary products) which is outside the purview of the DEA. DEA also notes that Internet pharmaceutical companies, like other dispensers of controlled substances, must register with the DEA in order to handle controlled substances and as such already pay a registration fee like other registered dispensers.

One commenter objected to registrant fees supporting the mandatory transfer of $15 million to the U.S. Treasury, noting that this burden should not be placed on registrants and requesting that DEA petition Congress to appropriate the required $15 million, so that all fee funds are used to support DCP activities.

DEA is required by the Appropriations Act of 1993 to transfer the first $15 million of fee revenue to the General Fund of the Treasury each year (21 U.S.C. 886a(1)). Calculation of the fees, therefore, must account for this mandated transfer. That is, DEA has no discretion in that matter, and the fees collected by DEA must represent the total amount necessary to “fully fund” the DCP by law plus an additional $15 million. For the period of Fiscal Year 1993 through Fiscal Year 1998, Congress appropriated an additional $15 million to offset the transfer requirement (a total infusion to the DDCFA of $90 million). However, beginning in Fiscal Year 1999, Congress discontinued this additional appropriation, and the additional $15 million became an additional net expense to the DCP at that time. Congress has not agreed to appropriate the additional $15 million towards the mandatory transfer since that time.

Seven commenters raised the issue of finding alternative sources of funding for the DCP to replace the registration fees, including congressional funding and collecting fees from other non-registrant entities ( e.g. , health insurance companies). As has been detailed above, DEA's authority to charge registration fees to support the DCP derives from three statutory provisions. Of these provisions, the Appropriations Act of 1993 specifically mandates that DEA collect through fees an amount sufficient to ensure the recovery of the “ full costs ” (emphasis added) of the DCP (21 U.S.C. 886(a)(3)). That is, DEA is required by statute to fully fund DCP expenses through registration fees. For the period of Fiscal Year 1993 through Fiscal Year 1998, Congress appropriated an additional $15 million to the DDCFA to offset the annual mandatory $15 million transfer to the U.S. Treasury described in the previous section. Such appropriations were discontinued beginning in Fiscal Year 1999, and the DCP remains entirely funded through registration fees.

Certain registrants pay a single fee for a three-year registration period. Such registrants include dispensers (including practitioners, hospitals/clinics, and retail pharmacies) and teaching institutions. Since publication of the February 18, 2003 notice of proposed rulemaking, DEA has finalized a number of other regulatory actions which affect the CFR sections amended by this final rule. On June 24, 2003, DEA finalized regulations regarding the use of central fill pharmacies to fill controlled substances prescriptions on behalf of retail pharmacies (68 FR 37405). This final rule amended 21 CFR 1301.13(e)(1)(iii) to add “central fill pharmacy” as a business activity under dispensing (effective July 24, 2003). Consequently, central fill pharmacies are subject to the same fee as all other dispensers, including pharmacies and teaching institutions. Effective with this rulemaking, the registration/reregistration fee for dispensers, including central fill pharmacies, and teaching institutions is $390 for a three-year period.

Because other categories of registrants secure a registration on an annual basis, much of the discussion in this rulemaking addressed the value of annual registration. In such discussions, DEA often referred to an annual value of $130 which is one-third of $390.

The annual registration and reregistration fee for researchers, narcotic treatment programs (including compounders), effective with this rulemaking, is $130. These categories of registrants obtain a registration and pay the associated fee on an annual basis.

This rulemaking also establishes new annual registration/reregistration fee amounts for manufacturers of $1,625, for distributors of $813, for importers of $813, and for exporters of $813. Reverse distributors are subject to the same annual fee of $813 as distributors as a result of an interim rule published by DEA on July 11, 2003 defining “reverse distributor” and establishing reverse distributor as a new category of registration. (68 FR 41222). This interim rule amended 21 CFR 1301.13 by redesignating paragraph (e)(1)(iii) which contained dispensing activities as paragraph (e)(1)(iv) and adding a new paragraph (e)(1)(iii) “reverse distributors”. In its February 18, 2003 Federal Register notice proposing new registration and reregistration application fees, DEA inadvertently included language in the regulatory text regarding fees to be assessed to reverse distributors (referred to as “disposers” in the proposed rulemaking), although regulations establishing reverse distributor as a new registration category had not yet been established. As regulations establishing reverse distributors as a new category of registration have now been established, the fees included in this final rule are now accurate and apply as delineated above to this category of registrants. In its February 18, 2003 proposed rule DEA also inadvertently assigned an incorrect annual fee of $131 to disposers. As described above, reverse distributors or disposers, like other distributors, are subject to an annual fee of $813.

The Deputy Assistant Administrator hereby certifies that this rulemaking has been drafted in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation, and by approving it certifies that this regulation will not have a significant economic impact on a substantial number of small entities. DEA recognizes that this regulation will have a financial effect on a substantial number of registrants with the increase in fees; however, DEA believes that, based on the length of time between fee adjustment, the program growth and cost increases, and the overall size of the increase in fees, the change in fees is not significant, and the economic impact of the fees on individual registrants is not significant. The fee represents from 0.21% to as little as 0.01% of average annual sales (or income) for registrants qualifying as small businesses. Moreover, the fees have not been changed in ten years, and DEA is legally mandated to collect fees to cover the full costs of the Diversion Control Program. The appropriations process was used to determine the budget on which the fees are based. The increase in fees after ten years covers both inflation and enhancements to address additional responsibilities assumed by the Diversion Control Program.

In considering options for collecting the full costs of the Diversion Control Program as mandated by law (21 U.S.C. 886a(3)), DEA considered several alternatives to the approach used in this regulation. One alternative would be to reset the fee each year for each category of registrant according to the budget authority. Another alternative would be to set a different fee for each fiscal year. Commenters suggested both of these approaches. DEA determined that both of these options would cause unnecessary confusion with fee changes each year and would impose greater administrative and financial burdens on DEA and registrants than the approach used in this regulation. Moreover, resetting the fee each year, for example, would unfairly affect practitioners differently depending on their registration renewal year; some practitioners would pay more than others. Using actual budget authority figures instead of estimated budget authority figures, as used in this rulemaking, would not give registrants sufficient notice as to fee changes. Doing so also could result in DEA not collecting the full costs of the DCP as required by law in a timely manner. In calculating the fees contained in this rule, DEA used estimated budget authorities based on expected inflation and program enhancements as is standard government practice for forecasting future budgets.

The Deputy Assistant Administrator certifies that this rulemaking has been drafted in accordance with the principles in Executive Order 12866 Section 1(b). This action has been reviewed by the Office of Management and Budget.

This regulation meets the applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988 Civil Justice Reform.

This rulemaking does not preempt or modify any provision of state law; nor does it impose enforcement responsibilities on any state; nor does it diminish the power of any state to enforce its own laws. Accordingly, this rulemaking does not have federalism implications warranting the application of Executive Order 13132.

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate of $100,000,000 or more in any one year, and will not significantly or uniquely affect small governments. While it will affect the private sector in excess of $100,000,000 per year, the effect on individual entities is minimal. The majority of the affected entities will pay $130 per year (or $390 for a three-year registration period). Moreover, this rule is promulgated in compliance with Congressional mandate that the full cost of operating the DCP be collected through registrant fees as stipulated in the 1993 Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act (Pub. L. 102-395) and codified in 21 U.S.C. 886a(3). Detailed estimates and analyses, including specific fee amounts for individual registrants, are included in the preamble text.

This rule is not a major rule as defined by Section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. The net effect of the fee changes captured in this rulemaking on the economy will be less than $100,000,000 and will not result in a major increase in costs or prices or cause significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets. This rule is not a discretionary action but rather responds to the Congressional mandate that the full operating costs of the DCP be collected through registrant fees as described above. The individual effect on small business registrants is minimal ranging from $130 to $1,625 per year with the majority of affected registrants paying an annual fee of $130 (or $390 for three years). As discussed in detail in the preamble, the fee represents less than 0.21% of annual sales or income for the smallest categories of registrants qualifying as small businesses according to Small Business Administration definitions.

This final rule amends the regulations to allow you to:

• Use electronic signatures to sign certain forms you submit to us instead of using traditional handwritten signatures; and

• Submit certain forms to TTB electronically through an electronic document receiving system that we approve.

We believe that by giving you the option to submit certain forms electronically, instead of requiring paper documents, we can:

• Reduce the costs associated with submitting and maintaining large volumes of paper documents;

• Improve the quality and accessibility of data;

• Allow for the faster review and approval of a variety of documents; and

• Allow for a variety of our documents to be available around the clock.

Our authority to implement these regulations comes from:

(1) Government Paperwork Elimination Act (GPEA). GPEA was signed into law on October 21, 1998. GPEA directs Federal agencies to provide for the optional use and acceptance of electronic documents and signatures, and electronic recordkeeping, where practical, by October 2003. ( See Secs. 1702-1710 of Pub. L. 105-277.)

(2) Internal Revenue Code of 1986 (26 U.S.C.) The Internal Revenue Code of 1986 authorizes the Secretary of the Treasury to, by regulation, encourage electronic filing, address what constitutes a timely filed electronic document, and develop procedures for the acceptance of signatures in digital or other electronic form. ( See 26 U.S.C. 6011, 6061, and 7502.)

(3) Electronic Signatures in Global and National Commerce Act of 2000 (E-SIGN). E-SIGN provides that no contract, signature, or record relating to a transaction shall be denied legal effect solely because it is in electronic form, nor may a document be denied legal effect solely because an electronic signature or record was used in its formation. E-SIGN applies to documents that are created in a commercial, consumer, or business transaction. It does not cover transactions that are uniquely governmental such as a compliance report. ( See Public Law 106-229.)

(4) Office of Management and Budget Circular A-130. OMB's Circular A-130 requires agencies to employ electronic information collection techniques where such means will reduce the burden on the public, increase efficiency, reduce costs, and help provide better service. ( See Circular A-130, Para. 8.a.1(k).)

We are creating a new part 73 in title 27 CFR, chapter I, entitled “Electronic Signatures; Electronic Submission of Forms.” Part 73 explains our overall policy regarding electronic signatures and the electronic submission of certain forms to TTB.

Upon the effective date of this final rule, we recognize electronic signatures executed to certain electronic forms as the full equivalent of, and having the same legal effect as, traditional handwritten signatures executed on paper. We will notify you, by publishing a general notice in the Federal Register and on our Web site ( http:// www.ttb.gov ), when you may use electronic signatures to execute certain electronic forms. The general notice will provide you with specific instructions about how to submit and what technology will be acceptable to TTB.

We are in the process of developing the means to allow you to submit forms electronically. This is a lengthy process; we will need to develop the hardware and software components to accept each different type of form. Once we are able to accept a certain form, we will announce in the Federal Register and on our Web site that you may register to submit that form electronically. The announcement will provide you with instructions on how to register.

If the regulations require you to maintain certain documents in paper format, you must continue to maintain those documents in paper format even if you submit them to us electronically. Nothing in part 73 alters any other regulatory or statutory requirement that records be maintained in paper format. This part does provide that TTB may publish a general notice in the Federal Register authorizing you to maintain certain documents electronically instead of in paper form.

On April 11, 2003, we published a notice of proposed rulemaking, Notice No. 5, in the Federal Register (68 FR 17760) to solicit comments regarding our proposal to add the new part 73 to chapter I of title 27. The notice requested comments from interested persons by May 12, 2003.

We did not receive any comments as a result of Notice No. 5.

The provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this rule because there are no new reporting or recordkeeping requirements.

The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. , requires an agency to conduct a regulatory flexibility analysis of any rule that may have a significant economic impact on a substantial number of small entities. We certify that this final rule will not have such an impact because the electronic submission of forms to TTB and the use of electronic signatures are voluntary. This final rule only applies to those people who seek our approval to transmit certain forms electronically to us.

This regulation is not a significant regulatory action as defined by Executive Order 12866. Accordingly, this rule is not subject to the analysis required by this Executive Order.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires Federal agencies to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” This rule does not have federalism implications. This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. This rule will not require States to accept electronic reports. The effect of this rule will be to provide additional regulatory flexibility to States because States could choose to accept electronic data that would also satisfy our reporting requirements.

The principal author of this document is Lisa M. Gesser, Regulations and Procedures Division, Alcohol and Tobacco Tax and Trade Bureau.

On March 31, 2003, we published a notice of proposed rulemaking (NPRM) entitled “Special Local Regulations for Marine Events; Prospect Bay, Kent Island Narrows, MD” in the Federal Register (68 FR 15417). We received no letters commenting on the proposed rule. No public hearing was requested, and none was held.

Each year on the first Saturday and Sunday of August, the Kent Narrows Racing Association sponsors the “Thunder on the Narrows” powerboat races. The event consists of 75 Hydroplanes and Jersey Speed Skiffs racing in heats counter-clockwise around a 1.5-mile oval racecourse on the waters of Prospect Bay, Kent Island Narrows, Maryland. A fleet of approximately 200 spectator vessels normally gathers nearby to view the event. Due to the need for vessel control during the races, vessel traffic will be temporarily restricted to provide for the safety of the spectators, participants and transiting vessels.

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 the regulatory policies and procedures of DHS is unnecessary.

Although this regulation will prevent traffic from transiting a portion of Prospect Bay during the event, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via the Local Notice to Mariners, marine information broadcasts, and area newspapers, so mariners can adjust their plans accordingly. Additionally, the proposed regulated area has been narrowly tailored to impose the least impact on general navigation yet provide the level of safety deemed necessary. Vessel traffic will be able to transit Prospect Bay and Kent Narrows by navigating around the regulated area.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule will 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 Prospect Bay during the event.

This rule will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for only 2 days each year. Vessel traffic will be able to pass safely around the regulated area. Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly.

Under section 213 (a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small entities in understanding this rule so that they can better evaluate its effects on them and participate in the rulemaking. No assistance was requested and none was provided.

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 would not create an environmental risk to health or risk to safety that might 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 prepared an “Environmental Assessment” in accordance with Commandant Instruction M16475.1D, and determined that this rule will not significantly affect the quality of the human environment. The “Environmental Assessment” and “Finding of No Significant Impact” is available in the docket where indicated under ADDRESSES.

Regulatory Information

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM. A Final Rule, which established safety zones around fireworks displays for the Captain of the Port Portland area of responsibility, was recently published in the Federal Register (CGD13-03-008, 33 CFR 165.1315, 68 FR 32366, May 30, 2003). An amendment cannot successfully be made to 33 CFR 165.1315 in time to ensure the safety of vessels and spectators gathering in the vicinity of this fireworks display. The Coast Guard intends to amend 33 CFR 165.1315 using normal rule-making procedures in the near future by adding this safety zone to that regulation.

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 . Waiting 30 days for this rule to be effective is contrary to public interest. Due to the complex planning and coordination of the event, the event sponsor was unable to provide the Coast Guard with notice of details of the event in time to allow for notice and comment and a 30-day waiting period prior to the effective date after publication. Because immediate action is necessary to ensure the safety of vessels and spectators gathered in the vicinity of the fireworks launching barge it is in the public interest to make the rule effective less than 30 days after publication in the Federal Register .

The Coast Guard is establishing a temporary safety zone regulation to allow for a safe fireworks display. This safety zone will be in effect from 8:30 p.m. (PDT) to 9:30 p.m. (PDT) on October 12, 2003 located on the Columbia River. This event will result in a large number of vessels congregating near the fireworks launching area. This safety zone is needed to provide for the safety of spectators and their watercraft from the inherent safety hazards associated with fireworks displays. Without providing an adequate safety zone, the public could be exposed to falling burning debris and would likely be within the blast range should a catastrophic accident occur on the launching barge. This safety zone will be enforced by representatives of the Captain of the Port, Portland, Oregon. The Captain of the Port may be assisted by other federal and local agencies.

This rule, for safety concerns, will control vessel movements in a regulated area surrounding a fireworks launching barge. Entry into this zone is prohibited unless authorized by the Captain of the Port, Portland or his designated representative. Coast Guard personnel will enforce this safety zone. The Captain of the Port may be assisted by other federal and local agencies.

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. The Coast Guard expects the economic impact of this 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 considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” include small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule would 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 area at the corresponding time as drafted in this rule. This safety zone will not have a significant economic impact on a substantial number of small entities for the following reasons. This rule will be in effect for one hour in the evening when vessel traffic is low. Traffic will be allowed to pass through the zone 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.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process. If the rule will affect your small business, organization or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule calls for no new collection of information requirements under the Paperwork Reduction Act 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 regulatory actions not specifically required by law. 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. Although this rule would 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 would not create an environmental risk to health or risk to safety that might disproportionately affect children.

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

We 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. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The Coast Guard has considered the environmental impact of this action and has concluded that under figure 2-1, paragraph 34(g) of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. A final “Environmental Analysis Checklist” and a final “Categorical Exclusion Determination” is available in the docket we have indicated under ADDRESSES.

We did not publish a notice of proposed rulemaking (NPRM) for this regulation. Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing an NPRM, and under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register . Publishing an NPRM and delaying its effective date would be contrary to public interest since immediate action is needed to protect participants, vessels and mariners from the hazards associated with the 2003 Tall Stacks Heritage Festival.

The Captain of the Port Louisville is establishing a safety zone for all waters of the Ohio River extending 900 feet from Ohio shoreline beginning at mile marker 469.6 and ending at mile marker 470.5. The event requires a safety zone due to the number of commercial vessels that regularly transit the area, the potential for a large spectator vessel turnout and the need to control vessel traffic in the vicinity of the 2003 Tall Stacks Heritage Festival. 17 paddle wheel vessels will be moored in this zone. Over 25,000 waterborne spectators are expected to be in the vicinity of these paddle wheel vessels at any one time. Unauthorized access by a recreational or commercial vessel could create a hazardous condition that would endanger the safety of participants or spectators. Entry into this zone is prohibited unless specifically authorized by the Captain of the Port Louisville or a designated representative.

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

This rule will only be in effect for a short period of time and notifications to the maritime community will be made through broadcast notice to mariners. The impacts on routine navigation are expected to be minimal as this safety zone will only extend 900 feet from the Ohio shoreline. Vessels intending to transit between miles 469.6 and 470.5 may do so if they transit at a distance no closer than 900 feet from the Ohio shoreline.

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 recreational and commercial towing vessels intending to transit within 900 feet of the Ohio shoreline from mile marker 469.6 to mile marker 470.5, from 8 a.m. on October 14, 2003 until 1 p.m. on October 20, 2003. This safety zone will not have a significant economic impact on a substantial number of small entities because this rule will be in effect for only a short period of time, and the safety zone will not extend the entire width of the river. Vessels intending to transit between miles 469.6 and 470.5 may do so if they transit at a distance no closer than 900 feet from the Ohio shoreline.

If you are a small business entity and are significantly affected by this regulation please contact LT Tom Lake, Marine Safety Office Louisville, Planning Department, at (502) 582-5194.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 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. 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 determined 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 this rule is not expected to result in any significant adverse environmental impact as described in NEPA. Paragraph (34)(g) is applicable because this rule is establishing a safety zone that will be effective for a period greater than one week. A final “Environmental Analysis Check List” and a final “Categorical Exclusion Determination” are available in the docket where indicated under ADDRESSES .

On October 21, 2001, EPA approved Pennsylvania's 1-hour ozone attainment demonstration SIP for the Philadelphia area (66 FR 54143). As part of that approval action, EPA required the Commonwealth to revise the SIP to include a recalculated 2005 attainment year motor vehicle transportation conformity emission budget. This 2005 highway mobile budget was to be updated using the latest version EPA's newest emission factor model (MOBILE6) within one year of the availability of that new version of the model. EPA released the MOBILE6 model on January 29, 2002, and therefore Pennsylvania was required to submit its revised mobile budget SIP for the Philadelphia area by January 29, 2003.

On January 17, 2003, Pennsylvania formally submitted a revision to its SIP containing the updated mobile budget, revising using MOBILE6, for the Philadelphia ozone nonattainment area. On May 28, 2003, EPA published a notice in the Federal Register (68 FR 31700) declaring this revised Philadelphia mobile budget adequate for transportation conformity purposes.

MOBILE is an EPA emissions factor model for estimating pollution from on-road motor vehicles in states (with the exception of California, which has developed its own model). The MOBILE model calculates emissions of volatile organic compounds (VOCs), nitrogen oxides (NO X ) and carbon monoxide (CO) from passenger cars, motorcycles, buses, and light-duty and heavy-duty trucks. The model accounts for the emission impacts of factors such as changes in vehicle emission standards, changes in vehicle populations and activity, and variation in local conditions such as temperature, humidity, fuel quality, and air quality programs. Among other uses, the MOBILE model helps to calculate current and future inventories of motor vehicle emissions at the national and local level. These inventories are used to make decisions about air pollution policy and programs at the local, state and national level. Inventories based on MOBILE are also used to meet the federal Clean Air Act's SIP and transportation conformity requirements.

The MOBILE model, first developed in 1978, has been updated many times to reflect changes to motor vehicles and fuel composition, to incorporate better understanding of vehicle emissions, and to reflect new emissions programs. EPA announced the release of the MOBILE6 version of the MOBILE model in the January 29, 2002 edition of the Federal Register (67 FR 4254), as a replacement for a MOBILE5 version of the model.

In November of 1999, EPA issued two memoranda  1 to articulate its policy regarding states that incorporated MOBILE5-based interim Tier 2 standard  2 benefits into their attainment demonstration plans and those plans' associated motor vehicle emissions budgets (or budgets).

EPA has implemented this policy in all ozone nonattainment areas where a state assumed federal Tier 2 benefits in its attainment demonstration plans according to EPA's April 2000 MOBILE5 guidance, “MOBILE5 Information Sheet #8: Tier 2 Benefits Using MOBILE5.” States whose attainment demonstrations or maintenance plans include interim MOBILE5-based estimates of the Tier 2 standards were required to revise and resubmit their budgets within either one or two years of the final release of MOBILE6.

EPA's October 21, 2001 (66 FR 54143) approval of Pennsylvania's 1-hour ozone attainment demonstration plan for the Philadelphia area was based upon an interim mobile budget, with projected reductions from Tier 2 motor vehicle standards estimated using the MOBILE5 model. EPA's October 2001 approval of Pennsylvania's 1-hour ozone attainment demonstration for the Philadelphia area required a MOBILE6-based motor vehicle emissions budget SIP revision within one year after EPA released the MOBILE6 model. EPA released the MOBILE6 model on January 29, 2002, therefore Pennsylvania's MOBILE6 mobile budget SIP was due January 29, 2003.

On January 17, 2003, the Commonwealth of Pennsylvania submitted a SIP revision containing updated inventories of emissions of the ozone precursors VOC and NO X from highway mobile sources operating in the Philadelphia ozone attainment area. These summertime inventories were generated for summertime periods in 1990 and for 2005, the year Philadelphia is to attain the 1-hour ozone standard. This updated motor vehicle emissions modeling was generated through use of the newly released MOBILE6 model. The 2005 motor vehicle emissions inventory projection also serves as the motor vehicle emissions budget, or mobile budget, for transportation conformity planning. The Commonwealth's January 2003 SIP revision is intended to demonstrate that the updated projections of motor vehicle emissions (calculated using the MOBILE6 emissions factor model) continue to support the demonstrations of attainment of the 1-hour ozone NAAQS for the Philadelphia area by 2005.

Table 1 below contrasts Pennsylvania's revised MOBILE6-based motor vehicle emissions inventories with the previously approved MOBILE5-based inventories for the Philadelphia area, by pollutant, expressed in units of tons per summer day (tpd). These revised inventories were developed using the latest available planning assumptions, including 1999 Pennsylvania Department of Transportation vehicle registration data and 1999 traffic data and information vehicle miles traveled (VMT). Updated information was used for atmospheric model input ( i.e. , temperature and humidity conditions). Rates of growth for highway mobile sources have also been updated.

EPA's articulated its policy regarding its policy on the use of MOBILE6 modeling for purposes of SIP development in several guidance documents entitled “Policy Guidance on the Use of MOBILE6 for SIP Development and Transportation Conformity” 3 and “Clarification of Policy Guidance for MOBILE6 in Mid-course Review Areas.” 4

Pennsylvania's January 17, 2003 SIP revision includes an explanation of the differences between the MOBILE5 and MOBILE6-based inventories. The SIP also provides a comparison of the relative reduction, by percentage, between the 1990 and 2005 inventories generated using the two different versions of the models to ensure that the approved Philadelphia 1-hour ozone attainment demonstration will continue to demonstrate attainment by 2005. The methodology for this relative reduction comparison consists of comparing the revised MOBILE6 baseline and attainment case inventories, by pollutant, with the previously approved (66 FR 54143) MOBILE5 inventory totals for the 5-county Philadelphia area to determine if attainment can still be predicted by the attainment date. The Commonwealth then compared these relative reduction percentages for the MOBILE5 versus MOBILE6 inventories for 1995 and 2005. It should be noted that since the latest available planning assumptions were used the revised, MOBILE6-based modeling, this relative reduction comparison is not an exact comparison of only the differences between the different versions of the MOBILE models.

Pennsylvania's relative reduction comparison shows that the reduction in VOC emissions, on a percentage basis, is greater in the revised MOBILE 6-based inventories than in the previously approved MOBILE5 inventories. However, the there is a slight increase, on a percentage basis, in NO X in the revised MOBILE6-based inventories compared to the previous MOBILE5 inventories. The Commonwealth argues that the benefit of additional reduction in VOCs outweighs the slight NO X increase—which the Commonwealth justifies quantitatively by using a 1.3 to 1 VOC to NO X substitution ratio to weigh directly the actual VOC to NO X emissions resultant from the MOBILE5 and MOBILE6-based inventories. This method of weighting VOC versus NO X emissions shows that the increased reductions in VOC emissions outweigh the increase in NO X emissions demonstrated by the MOBILE6-based inventories. Pennsylvania's choice of VOC to NO X substitution ratios for this comparison stems from its use in New Source Review emission trading in the Philadelphia ozone nonattainment area.

EPA's relevant policy guidance also required the Commonwealth to consider whether growth and control strategy assumptions for other sources ( i.e. , point, area, and non-road mobile sources) were still accurate at the time the revised MOBILE6 budget SIP submission ( i.e. , January 2003). Pennsylvania's SIP revision states that growth and control strategy assumptions for these other emissions sources have been reevaluated, with the conclusion that these assumptions for growth and control strategies continue to be valid for the Philadelphia 1-hour ozone attainment demonstration.

Pennsylvania's January 17, 2003 SIP revision satisfies the conditions outlined in EPA's MOBILE6 Policy guidance, and demonstrates that the new levels of motor vehicle emissions calculated using MOBILE6 continue to support achievement of the projected attainment of the 1-Hour Ozone NAAQS by the attainment date of 2005 for Pennsylvania portion of the Philadelphia-Wilmington-Trenton area.

For Pennsylvania's Philadelphia area attainment plan, the mobile budgets are the on-road components of VOC and NO X emissions of the 2005 attainment inventories. Table 2 below summarizes Pennsylvania's revised budgets contained in the January 17, 2003 submittal. These budgets were developed using the latest planning assumptions, including 1999 vehicle registration data and VMT. Because Pennsylvania's January 2003 submittal satisfies the conditions outlined in EPA's MOBILE6 Policy guidance, and demonstrates that the new levels of motor vehicle emissions calculated using MOBILE6 continue to support achievement of the projected attainment of the 1-Hour Ozone NAAQS, EPA is taking rulemaking action to approve this mobile emissions budget.

Pennsylvania has adequately demonstrated to EPA that its 1-hour attainment demonstration SIP for the Philadelphia area (as revised in by the January 2003 MOBILE6-based highway emissions inventory) will continue to demonstrate attainment of the ozone NAAQS with the incorporation of the updated highway emissions inventory. EPA is therefore approving the Pennsylvania SIP revision submitted on January 17, 2003 to revise the Philadelphia 1990 and 2005 highway mobile VOC and NO X emissions inventories and the revised 2005 motor vehicle emissions budget.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment, as this revision serves the purpose of updating the highway mobile emissions inventory using the latest version of EPA's mobile source emission factor model and the most recently available emissions modeling planning assumptions. This SIP revision is the result of a requirement to update the highway mobile inventory using MOBILE6 specified by EPA's October 26, 2001 approval of the Pennsylvania's 1-hour ozone attainment demonstration for the Philadelphia area. Also, EPA declared the mobile source inventory adequate for transportation conformity purposes on May 28, 2003.

However, in the “Proposed Rules” section of today's Federal Register , EPA is publishing a separate document that will serve as the proposal to approve this SIP revision if adverse comments are filed. This rule will be effective on December 9, 2003 without further notice unless EPA receives adverse comment by November 10, 2003. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

You may submit comments either electronically or by mail. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number (PA 201-4401) in the subject line on the first page of your comment. Please ensure that your comments are submitted within the specified comment period. Comments received after the close of the comment period will be marked “late.” EPA is not required to consider these late comments.

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

i. E-mail. Comments may be sent by electronic mail (e-mail) to: morris.makeba@epa.gov, attention PA 201-4401. EPA's e-mail system is not an “anonymous access” system. If you send an e-mail comment directly without going through Regulations.gov , EPA's e-mail system automatically captures your e-mail address. E-mail addresses that are automatically captured by EPA's e-mail system are included as part of the comment that is placed in the official public docket.

ii. Regulations.gov. Your use of Regulation.gov is an alternative method of submitting electronic comments to EPA. Go directly to http://www.regulations.gov, then select “Environmental Protection Agency” at the top of the page and use the “go” button. The list of current EPA actions available for comment will be listed. Please follow the online instructions for submitting comments. The system is an “anonymous access” system, which means EPA will not know your identity, e-mail address, or other contact information unless you provide it in the body of your comment.

iii. Disk or CD ROM. You may submit comments on a disk or CD ROM that you mail to the mailing address identified in the ADDRESSES section of this document. These electronic submissions will be accepted in WordPerfect, Word or ASCII file format. Avoid the use of special characters and any form of encryption.

2. By Mail. Written comments should be addressed to the EPA Regional office listed in the ADDRESSES section of this document. For public commenters, it is important to note that EPA's policy is that public comments, whether submitted electronically or in paper, will be made available for public viewing at the EPA Regional Office, as EPA receives them and without change, unless the comment contains copyrighted material, confidential business information (CBI), or other information whose disclosure is restricted by statute. When EPA identifies a comment containing copyrighted material, EPA will provide a reference to that material in the version of the comment that is placed in the official public rulemaking file. The entire printed comment, including the copyrighted material, will be available at the Regional Office for public inspection.

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

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

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

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 (Public Law 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 . This rule 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 December 9, 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).)

Sections 111(d) and 129 of the Clean Air Act (CAA or the Act) require States to submit plans to control certain pollutants (designated pollutants) at existing solid waste combustor facilities (designated facilities) whenever standards of performance have been established under section 111(b) for new sources of the same type, and EPA has established emission guidelines (EG) for such existing sources. A designated pollutant is any pollutant for which no air quality criteria have been issued, and which is not included on a list published under section 108(a) or section 112(b)(1)(A) of the CAA, but emissions of which are subject to a standard of performance for new stationary sources. However, section 129 of the CAA also requires EPA to promulgate EG for hospital/medical/infectious waste incinerator units (HMIWIs) and large municipal waste combustors (MWCs) that emit a mixture of air pollutants. These pollutants include particulate matter, opacity, sulfur dioxide, hydrogen chloride, oxides of nitrogen, carbon monoxide, lead, cadmium, mercury, and dioxins and dibenzofurans. The EG for HMIWI were published in final form on September 15, 1997 (62 FR 48348), and are located at 40 CFR part 60, subpart Ce. The EG for large MWC were promulgated on December 19, 1995, and are located at 40 CFR part 60, subpart Cb ( see 60 FR 65387). On August 25, 1997, EPA amended subpart Cb to apply only to MWC units with an individual capacity to combust more than 250 tpd of MSW ( see 62 FR 45116).

Subpart B of 40 CFR part 60 establishes procedures to be followed and requirements to be met in the development and submission of State plans for controlling designated pollutants. Also, 40 CFR part 62 provides the procedural framework for the submission of these plans. When designated facilities are located in a State, the State must then develop and submit a plan for the control of the designated pollutant. However, 40 CFR 60.23(b) and 62.06 provide that if there are no existing sources of the designated pollutant in the State, the State may submit a letter of certification to that effect ( i.e. , negative declaration) in lieu of a plan. The negative declaration exempts the State from the requirements of subpart B for the submittal of a 111(d)/129 plan.

The Nevada Division of Environmental Protection has determined that there are no designated facilities subject to the HMIWI EG requirements in its air pollution control jurisdiction. The American Samoa Environmental Protection Agency and the Commonwealth of the Northern Mariana Islands Division of Environmental Quality have determined that there are no designated facilities subject to the large MWC EG requirements in their respective air pollution control jurisdictions. Accordingly, each air pollution control agency has submitted to EPA a negative declaration letter certifying this fact. EPA is amending part 62 to reflect the receipt of these negative declaration letters from the noted air pollution control agencies. The submittal dates of these letters are listed in the following table:

After publication of this Federal Register notice, if a large MWC or HMIWI facility is later found within these jurisdictions, then the overlooked facility will become subject to the requirements of the appropriate Federal 111(d)/129 plan, contained in 40 CFR part 62. The Federal plan would no longer apply if EPA subsequently were to receive and approve a 111(d)/129 plan from the jurisdiction with the overlooked facility.

EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. This action simply reflects already existing Federal requirements for State air pollution control agencies under 40 CFR parts 60 and 62. In the Proposed Rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve each negative declaration should relevant adverse or critical comments be filed.

This rule will be effective December 9, 2003 without further notice unless the Agency receives relevant adverse comments by November 10, 2003. If EPA receives such comments, then EPA will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. The EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, then EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

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 certifications 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 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 State certifications 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 111(d)/129 plan 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 111(d)/129 plan submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a 111(d)/129 plan submission, to use VCS in place of a 111(d)/129 plan 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 . This rule 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 December 9, 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 approving the section 111(d)/129 negative declarations submitted by the air pollution control agencies in Nevada, American Samoa, and Northern Mariana Islands may not be challenged later in proceedings to enforce its requirements ( see section 307(b)(2)).

Regulated Entities. Categories and entities potentially regulated by this action include:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. To determine whether your facility is regulated by this action, you should examine the applicability criteria in § 63.9881 of the final rule. If you have any questions regarding the applicability of this action to a particular entity, consult the person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

Docket. The EPA has established an official public docket for this action including both Docket ID No. OAR-2002-0043 and Docket ID No. A-2002-0027. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. All items may not be listed under both docket numbers, so interested parties should inspect both docket numbers to ensure that they have received all materials relevant to the final rule. Although a part of the official docket, the public docket does not include Confidential Business Information or other information whose disclosure is restricted by statute. The official public docket is available for public viewing at the EPA Docket Center (Air Docket), EPA West, Room B-102, 1301 Constitution Ave., NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

Electronic Docket Access. You may access the final rule electronically through the EPA Internet under the “ Federal Register ” listings at http://www.epa.gov/fedrgstr/. 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 view public comments, access the index 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 EPA Dockets. Once in the system, select “search,” then key in the appropriate docket identification number.

Worldwide Web (WWW). In addition to being available in the docket, an electronic copy of the final rule will also be available on the WWW through the Technology Transfer Network (TTN). Following signature, a copy of the final rule will be posted on the TTN's policy and guidance page for newly proposed or promulgated rules at http://www.epa.gov/ttn/oarpg. The TTN provides information and technology exchange in various areas of air pollution control. If more information regarding the TTN is needed, call the TTN HELP line at (919) 541-5384.

Judicial Review. Under CAA section 307(b)(1), judicial review of the final NESHAP is available only by filing a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit by December 9, 2003. Only those objections to the NESHAP which were raised with reasonable specificity during the public comment period may be raised during judicial review. Under CAA section 307(b)(2), the requirements established by today's final action may not be challenged separately in any civil or criminal proceeding brought by the EPA to enforce these requirements.

Outline. The information presented in this preamble is organized as follows:

Section 112 of the CAA requires us to list categories and subcategories of major sources and area sources of HAP and to establish NESHAP for the listed source categories and subcategories. The category of major sources covered by today's final NESHAP for Primary Magnesium Refining, was listed on July 16, 1992 (57 FR 31576). Major sources of HAP are those that emit or have the potential to emit greater than 10 tons per year (tpy) of any one HAP or 25 tpy of any combination of HAP. Additional information on the NESHAP development process can be found in the preamble to the proposed rule (68 FR 2970).

We received one letter with substantive comments on the proposed NESHAP. Today's final rule reflects our full consideration of the comments we received. Additional information is available in the Response to Comments document in Docket No. OAR-2002-0043.

In addition to responding to comments, we made two minor clarifications from the proposed rule that are discussed in the final rule summary. These minor clarifications are not new requirements but simply ensure consistency in the final rule.

The affected source is each new or existing primary magnesium refining facility. An existing affected source is one constructed or reconstructed on or before January 22, 2003. We have identified one existing affected source (US Magnesium Corporation) that will be subject to the final rule. This plant produces magnesium from brine (salt water) taken from the Great Salt Lake. A new affected source is one constructed or reconstructed after January 22, 2003. The final rule covers emissions from spray dryers, the melt reactor system, the launder off-gas system, and magnesium chloride storage bins. The final rule also covers fugitive dust emissions.

The owner or operator of an existing affected source must comply by October 11, 2004. New or reconstructed sources that startup on or before October 10, 2003 must comply by October 10, 2003. New or reconstructed sources that startup after October 10, 2003 must comply upon initial startup.

The final rule includes mass rate emission limits in pounds per hour (lbs/hr) for chlorine, hydrochloric acid (HCl), particulate matter (PM), and particulate matter less than 10 microns (PM 10 ). Additional emission limits in grains per dry standard cubic foot (gr/dscf) apply to magnesium chloride storage bins. We clarified that both the mass emission rate limit and concentration limit for PM 10 and HC1 apply to emissions from magnesium chloride storage bins. This clarification was made to be consistent with the requirements in the current operating permit for the affected source. The emission limits are shown in Table 1 of this preamble.

The final rule also includes an emission limit for each melt/reactor system of 36 nanograms of dioxin/furan toxicity equivalents per dry standard cubic meter (ng TEQ/dscm) corrected to 7 percent oxygen. Dioxins/furans include a group of 17 chemicals or congeners that share certain similar chemical structures and biological characteristics. The 2,3,7,8-tetrachlorodibenzo-p-dioxin (TCDD) congener is the most well studied and the most toxic of these compounds. Scientists believe that dioxins cause effects in similar ways. Because of this and because exposure is typically to variable mixtures of dioxin-like compounds, we use toxicity equivalency factors (TEF) that compare the potential toxicity of each of the individual dioxin-like compounds to the relative toxicity of TCDD. With such factors, the toxicity for a mixture can be expressed in terms of its TEQ, which is the amount of TCDD it would take to equal the combined toxic effect of all the dioxin-like compounds found in the mixture. To calculate the TEQ, the concentration of each dioxin-like compound is multiplied by its respective TEF. We examined a beyond-the-floor alternative for dioxins/furans and determined that the high cost coupled with the small reduction in dioxin/furan emissions does not justify the beyond-the-floor alternative.

The emission limitations include operating limits for control devices. All owners or operators using a wet scrubber to meet an emission limit in the final rule must establish and meet operating limits for pressure drop and scrubber water flow rate.

The work practice standards require owners or operators to prepare a written plan that describes the measures that will be used to control fugitive dust emissions from all unpaved roads and other unpaved operational areas. The fugitive dust emissions control plan must be approved by the Administrator, and the requirement to operate according to the provisions in the plan must be incorporated by reference in the title V operating permit. In the final rule, we clarified the compliance and recordkeeping requirements for the fugitive dust control plan to be consistent with the work practice requirements in general, such as those in the operation and maintenance plan. The control of fugitive dust emissions will reduce PM which is a surrogate for metal HAP.

All owners or operators of plants subject to the final rule are required to prepare and implement a written startup, shutdown, and malfunction plan according to the requirements in § 63.6(e) of the NESHAP General Provisions (40 CFR part 63, subpart A). A written operation and maintenance plan is also required for control devices subject to an operating limit. The plan must describe procedures for monthly inspections and preventative maintenance requirements for control devices.

The final rule requires a performance test for each control device to demonstrate initial compliance with the applicable emission limits of chlorine, HCl, PM, PM 10 , and dioxin/furan. The EPA Method 26 or 26A in 40 CFR part 60, appendix A, is the reference method for chlorine and HCl. The reference method for PM is EPA Method 5 or 5D in 40 CFR part 60, appendix A. The reference method for PM 10 is EPA Method 201 or 201A in 40 CFR part 60, appendix A. The EPA Method 23 of 40 CFR part 60, appendix A, is the reference method for dioxin/furan. The final rule also requires owners or operators to establish operating limits for scrubber pressure drop and scrubber water flow rate concurrent with the initial performance tests.

The final rule requires primary magnesium refineries to conduct performance tests at least twice during each title V operating permit term (at midterm and renewal) to demonstrate continuous compliance with the emission limits. Owners or operators are also required to monitor operating parameters for control devices subject to operating limits and carry out the procedures in their fugitive dust emissions control plan and their operation and maintenance plan.

For wet scrubbers, owners or operators are required to use continuous parameter monitoring systems (CPMS) to measure and record the hourly average pressure drop and scrubber water flow rate. To demonstrate continuous compliance, owners or operators must keep records documenting conformance with the monitoring requirements and the installation, operation, and maintenance requirements for CPMS.

We selected the notification, recordkeeping, and reporting requirements to be consistent with the NESHAP General Provisions (40 CFR part 63, subpart A). One-time notifications are required by EPA to know what facilities are subject to the final standards, if a facility has complied with the final rule requirements, and when certain events, such as performance tests, are scheduled. Semiannual compliance reports containing information on any deviation from the final rule requirements are also required. These reports include information on any deviation that occurred during the reporting period; if no deviation occurred, only summary information is required. Consistent with the NESHAP General Provisions, we also require an immediate report of any startup, shutdown, or malfunction where the actions taken in response were not consistent with the startup, shutdown, and malfunction plan. This information is needed to determine if changes need to be made to the plan. By-passing the control device for maintenance activities is not considered a startup, shutdown, or malfunction event. Records of information needed to document compliance with the final rule requirements are required. These notifications, reports, and records are the minimum needed to ensure initial and continuous compliance.

We received substantive comments from only one commenter, and this commenter represents the primary magnesium plant affected by the final rule.

Comment: The commenter stated that a dioxin/furan emission limit is not appropriate for the primary magnesium industry because EPA has applied these limits primarily to facilities that burn wastes. Other industries, such as petroleum refineries and iron and steel foundries, are known to emit dioxin/furan; however, EPA did not propose limits for them. The commenter also stated that the dioxin/furan limit cannot be justified on the basis of health risk because the facility is in a remote location, and the nearest resident is 25 miles away. The commenter recommended that EPA use PM as a surrogate for dioxin/furan emissions from the melt reactor because: EPA established MACT for dioxin/furan as the PM control devices on the melt reactor, PM is used as a surrogate for other pollutants in the final rule and has been used as a surrogate for dioxin/furan in other rules, the dioxin/furan emissions are mainly in particulate form, the dioxin/furan limit will obtain no additional reduction beyond that obtained using PM as a surrogate, and the dioxin/furan limit will add significantly to the cost of stack testing with no apparent gain.

Response: We set a dioxin/furan limit because it is a HAP of concern with respect to toxicity. We have adequate test data (two tests composed of three runs each) to characterize emission control performance, and dioxin/furan formation and control is not always correlated to PM formation and control. First, the formation of dioxin/furans in combustion devices with an available source of chlorine is well documented, and it is not a concern only for facilities that burn waste. The test data from this industry confirm the formation and emissions of dioxin/furans from this emissions source. Second, we do not agree that the control device for PM will adequately control the emissions of dioxin/furans. There are factors other than the PM control device which may affect the formation and control of dioxin/furan, such as the composition and concentrations of precursors, temperature, and process conditions. Dioxins are formed in acid gases leaving the combustion device, and the means of control is not necessarily the particulate control system but quenching of gases to control the temperature in the device (to assure that temperature does not fall in the range which optimizes dioxin/furan formation).

The MACT control system for dioxin/furans is the entire scrubber train—the packed tower scrubbers (for HCl control) and the venturi scrubber (for PM control)—and not just the PM control device. That is, the control of dioxin/furans includes the rapid cooling of the exhaust gas that occurs in the packed tower absorbers, which limits the dioxin/furan formation. Therefore, we believe a dioxin/furan limit is necessary to ensure that process and control device operations do not change in the future in a manner that might increase the formation and release of dioxin/furan, even if the overall PM control level remains the same.

The dioxin/furan emission limit is not based on a determination that health risks exist; it is based on technology and the floor level of control that has been achieved. Stack testing every 2.5 years is not costly or unreasonable to provide assurance that the dioxin/furan limit is being achieved. Moreover, the commenter did not provide any information as to how this stack testing will add significantly to the costs of compliance with the final NESHAP.

Comment: The commenter disagreed with the approach used to set the emission limit for dioxin/furan and claimed it does not provide a reasonable margin of safety to ensure continuous compliance. The commenter suggests that a limit of 50 ng TEQ/dscm is statistically valid. However, the commenter recommended that a minimum safety factor of three be applied to the average of results from the two stack tests (21.5 ng TEQ/dscm) to develop a limit of 65 ng TEQ/dscm rather than a limit of 36 ng TEQ/dscm as proposed. The commenter stated this is reasonable because of the high variability in the test results and because of the inherent inaccuracies in the dioxin/furan sampling and analysis, especially at these extremely low levels of detection.

Response: We chose 36 ng TEQ/dscm because it was the highest result from any of the six runs. This approach accounts for inherent variability, and an additional margin of safety is provided by determining compliance from the average of three runs. The commenter estimated the 99th percentile for single test runs. The variability of the average of three runs is more appropriate than the variability of a single test run because compliance is determined from the average of three test runs rather than for each single test run.

To illustrate the impact of using the average of three runs, we performed a Monte Carlo simulation of 5,000 runs based on a normal distribution developed from the test results for six runs. From the simulation, the 99th percentile for individual runs was 44 ng TEQ/dscm compared to a 99th percentile of 32 ng TEQ/dscm for the average of three runs. Consequently, since the emission limit is enforced based on three-run averages, the proposed limit of 36 ng TEQ/dscm is close to the 99th percentile of performance. We believe that the limit as proposed (and included in the final rule) is achievable, and the simulation indicates it accounts for variability.

The commenter mentioned process variability and uncertainty associated with sampling and analysis as reasons for a higher limit. However, the variability in the process, sampling, and analysis are inherently included in the runs we used to derive the limit and using the highest run accommodates this variability. In addition, there is no need to artificially increase the limit by multiplying the average of the test results by three because the statistical simulation shows that the proposed limit is reasonable. With testing performed every 2.5 years and a limit at about the 99th percentile, the limit would be exceeded no more than once every 250 years if the process and control device are operated as they were during the two performance tests.

While we were evaluating the data discussed by the commenter, we discovered an error in the 1998 test report. The test contractor inadvertently switched the TEF for two congeners. The net effect is that the overall average for six runs is 18 ng TEQ/dscm instead of 21.5 ng TEQ/dscm. This correction had no effect on the highest run and did not change the limit that was originally proposed.

Comment: The commenter stated that the World Health Organization's 1998 TEF scheme should be used to assign toxic equivalency, and this scheme should be stated in the final rule.

Response: Based on our dioxin reassessment report, we agree with the commenter and have incorporated the updated TEF scheme in the final rule. The effect on the test results was small, and the highest run remained at 36 ng TEQ/dscm. Consequently, the level of the final standard remains as proposed.

Generally, we do not expect the impacts of the final rule to be very significant. Currently, the one operating primary magnesium plant has all of the required air pollution control equipment in place and operating. The only impacts will be the estimated cost of $43,000 for the additional monitoring, recordkeeping and reporting requirements required by the final rule.

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

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

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

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

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

It has been determined that the final rule is not a “significant regulatory action” under the terms of Executive Order 12866, and is therefore not subject to OMB review.

The information collection requirements in the final rule have been submitted for approval to OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. (ICR 2098.02). The information collection requirements are not enforceable until OMB approves them.

The information requirements in the final rule are based on notification, recordkeeping, and reporting requirements in the NESHAP General Provisions (40 CFR part 63, subpart A), which are mandatory for all operators subject to NESHAP. The records and reports required by the final rule are necessary for EPA to identify major sources and new or reconstructed sources subject to the rule, ensure that MACT is being properly applied, and ensure that the emission control devices are being properly operated and maintained on a continuous basis. Based on the reported information, EPA can decide which plants, records, or processes should be inspected. These recordkeeping and reporting requirements are specifically authorized by section 112 of the CAA (42 U.S.C. 7414). All information submitted to the EPA pursuant to the recordkeeping and reporting requirements for which a claim of confidentiality is made is safeguarded according to Agency policies in 40 CFR part 2, subpart B.

The annual average public reporting and recordkeeping burden for this collection of information over the first 3 years of the information collection request (ICR) is estimated to total 731 labor hours per year. This includes six responses per year from one respondent with an average of 122 hours per response. The total annualized cost burden to the facility is estimated at $43,000, including labor, capital, and operation and maintenance. No additional capital cost for monitoring devices or annual costs for operation and maintenance costs are attributable to the final rule because the affected plant has already installed all continuous monitoring systems as a result of State requirements.

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

An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control number for EPA's regulations in 40 CFR part 63 are listed in 40 CFR part 9. When the ICR is approved by OMB, the Agency will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number for the approved information collection requirements contained in the final rule.

The EPA has determined that it is not necessary to prepare a regulatory flexibility analysis in connection with the final rule. The EPA has also determined that the final rule will not have a significant economic impact on a substantial number of small entities. For purposes of assessing the impacts of today's final rule on small entities, small entity is defined as: (1) A small business according to Small Business Administration (SBA) size standards for NAICS code 331419 ( i.e. , Primary Magnesium Refining) of 1,000 or fewer employees; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of today's final rule on small entities, EPA has concluded that this action will not have a significant economic impact on a substantial number of small entities. Based on the above definition of small entities, no small entities are subject to the final rule and its requirements.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any 1 year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires the EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least-burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows the EPA to adopt an alternative other than the least-costly, most cost-effective, or least-burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before the EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

Today's final rule contains no Federal mandate (under the regulatory provisions of the UMRA) for State, local, or tribal governments. The EPA has determined that the final rule does not contain a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments, in the aggregate, or to the private sector in any 1 year. The maximum total annual cost of the final rule for any year has been estimated to be less than $48,000. Thus, the final rule is not subject to sections 202 and 205 of the UMRA. In addition, the EPA has determined that the final rule contains no regulatory requirements that might significantly or uniquely affect small governments because it contains no requirements that apply to such governments or impose obligations upon them. Therefore, today's final rule is not subject to the requirements of section 203 of the UMRA.

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

The final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. None of the affected facilities are owned or operated by State governments. Thus, Executive Order 13132 does not apply to the final rule.

Executive Order 13175 (65 FR 67249, November 6, 2000), requires the 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.”

The final rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes. No tribal governments own facilities subject to the final rule. Thus, Executive Order 13175 does not apply to the final rule.

Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any rule that: (1) Is determined to be “economically significant,” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the EPA must evaluate the environmental health or safety effects of the planned rule on children and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that are based on health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. The final rule is not subject to Executive Order 13045 because it is based on technology and not on health or safety risks.

The final rule is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

Section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) of 1995 (Public Law 104-113; 15 U.S.C 272 note ), directs the EPA to use voluntary consensus standards in their regulatory and procurement activities unless to do so would be inconsistent with applicable law or otherwise impracticable. Voluntary consensus standards are technical standards (such as material specifications, test methods, sampling procedures, business practices) developed or adopted by one or more voluntary consensus standard bodies. The NTTAA directs EPA to provide Congress, through annual reports to OMB, with explanations when an agency does not use available and applicable voluntary consensus standards.

The final rule involves technical standards. Therefore, the EPA conducted a search to identify potentially applicable voluntary consensus standards. However, we identified no such standards as alternatives to EPA Methods 1, 2, 2F, 2G, 3, 3A, 3B, 4, 5, 5D, 23, 26, 26A, 201, and 201A and none were brought to our attention in comments. The search and review results are available in Docket OAR-2002-0043.

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement 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. The EPA will submit a report containing the final 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 final rule in the Federal Register . The final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

(b) You must prepare and operate at all times according to a written operation and maintenance plan for each control device subject to an operating limit in § 63.9890(b). Each plan must address preventative maintenance for each control device, including a preventative maintenance schedule that is consistent with the manufacturer's instructions for routine and long-term maintenance.

(c) You must maintain a current copy of the operation and maintenance plan required in paragraph (b) of this section on-site and available for inspection upon request. You must keep the plan for the life of the affected source or until the affected source is no longer subject to the requirements of this subpart.

This is a summary of the Commission's Report in IB Docket No. 02-30, RM No. 7246, FCC 03-197, adopted August 6, 2003. The complete text of this decision is available for inspection and copying during normal business hours in the FCC Reference Information Center Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554, and also may be purchased from the Commission's copy contractor, Qualex International Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone (202) 863-2893, facsimile (202) 863-2898, or via e-mail, qualexint@aol.com.

The Federal Communications Commission has adopted a Report and Order that will discontinue the Alaska Bush Policy. This action eliminates a long-standing exception to the Commission's general policy favoring open entry for facilities-based competition in the provision of interstate MTS telecommunications services. We believe that allowing facilities-based competition of interstate MTS in Alaska Bush communities will encourage improvement in the quality of service available in those communities, promote more efficient delivery of service, and reduce incentives for overcharging for use of these facilities.

A complete history of the Alaska Bush Policy may be found in the Notice of Proposed Rulemaking in this proceeding and will not be repeated here. See Policy for Licensing Domestic Satellite Earth Stations in the Bush Communities of Alaska, Notice of Proposed Rulemaking, 67 FR 37750 (May 30, 2002). Briefly, the policy of licensing only one satellite earth station in each Alaska Bush community to provide conventional interexchange MTS was formulated in the Commission's Tentative Decision in 1982. Pursuant to the Alaska Bush Policy, Alascom, Inc. (Alascom), now a wholly owned subsidiary of AT&T Corp., alone or in partnership with United Utilities, Inc. (United), a local exchange carrier, was authorized to construct and operate the earth station facilities in the Alaska Bush communities and to provide MTS service. The Alaska Bush Policy was based on the principle that duplicative proposals for facilities in the Alaska Bush communities are mutually exclusive because one facility could provide all the services provided by either party, and there was no public interest benefit in the construction of duplicate MTS facilities.

When the Commission formally adopted the Alaska Bush Policy in 1984, no MTS competition, in any form, had been authorized in Alaska. See Policies Governing the Ownership and Operation of Domestic Satellite Earth Stations in the Bush Communities in Alaska, 49 FR 9727 (March 15, 1984), Final Decision. In 1990, however, the Alaska legislature opened most of the State's telecommunications markets to facilities-based competition, but not the Alaska Bush communities. See Act of June 7, 1990, 1990 Alaska Sess. Laws Ch. 93; see also Regulations Governing the Market Structure for Interstate Interexchange Telecommunications Services, 10 APUC 407 (1990). Five years later the Regulatory Commission of Alaska (RCA) granted General Communication, Inc. (GCI), an Alaskan facilities-based interstate long distance carrier, a temporary waiver, allowing it to install earth stations in 50 Alaska Bush communities and to provide intrastate MTS in competition with Alascom on an experimental basis. The following year the FCC's International Bureau (Bureau) granted GCI's request to waive the Alaska Bush Policy in the same 50 Alaska Bush communities, thus allowing GCI to use its earth stations to provide both interstate and intrastate MTS in these 50 communities. See Petition of General Communication, Inc. for a Partial Waiver of the Bush Earth Station Policy, Memorandum Opinion and Order, 11 FCC Rcd 2535 (Int'l Bur. 1996) (GCI Waiver). The Bureau concluded that the potential public interest benefits of providing the 50 Alaska Bush communities with increased service options, improved quality, and lower rates outweighed a rigid adherence to a policy that does not provide for technological advancements and market changes.

In 2000, the RCA found that allowing GCI to construct duplicate earth stations in the 50 Alaska Bush communities had, in fact, led to a more efficient use of available satellite resources, resulting in consumers benefiting from lower retail rates and improved service quality. In view of its finding, the RCA eliminated Alaska's restrictions on facilities-based MTS competition in the Alaskan Bush. See Consideration of the Reform of Intrastate Interexchange Telecommunications Market Structure and Regulations in Alaska, Docket R-98-1, Order No. 6 (RCA, Nov. 20, 2000) (not published in the Federal Register ). Thus, the FCC's Bush Policy remains the only significant regulatory barrier to facilities-based MTS competition throughout Alaska.

On February 15, 2002, the Commission released the NPRM in this proceeding, proposing to discontinue the Alaska Bush Policy. The Commission noted in the NPRM that the Alaska Bush Policy is based on the proposition that applications for “duplicative” Alaska Bush earth stations are mutually exclusive. It also noted that the Alaska Bush Policy was formulated prior to the advent of MTS competition, and is based on a regulatory policy designed to prevent non-dominant carriers from investing in facilities at their own expense to compete with a carrier with an established facilities monopoly. Finally, the Commission pointed to the fact that the RCA has removed the parallel intrastate entry barrier. Consequently, the Commission tentatively concluded that the time has arrived to remove the barrier against facilities-based interstate MTS in the Alaska Bush as well. The Commission also tentatively concluded that facilities-based competition in the provision of interstate MTS in Alaska Bush communities will result in public interest benefits comparable to those that were realized in the 50 Alaska Bush communities in which GCI has been allowed to provide competitive MTS service. Accordingly, the Commission invited comment on its proposal to abolish the Alaska Bush Policy.

Three parties, Alascom and AT&T, GCI, and the RCA, have filed comments in response to the NPRM. All three commenters support the Commission's proposal to eliminate its prohibition on the installation or operation of more than one satellite earth station in any Alaska Bush community for the competitive carriage of interstate MTS.

The RCA submits that since 1995, when both the RCA and the FCC waived applicable Alaska Bush facility restrictions to allow GCI to construct duplicate earth stations in Bush communities, consumers have benefited from lower retail rates and improved service quality. According to the RCA, these benefits are what ultimately motivated it to eliminate the State's restrictions on facilities-based intrastate MTS competition in Bush Alaska in 2000. Moreover, the RCA says that facilities-based MTS competition in Alaska Bush communities will also establish an incentive for Alascom to operate more efficiently.

GCI provides specific examples of how competition between it and Alascom has benefited the Alaska Bush communities with improved telecommunication efficiency and new service offerings. According to GCI, the first and perhaps most significant technological improvement was the implementation of its Demand Assigned Multiple Access (DAMA) satellite transmission system, which allows bandwidth to be used more efficiently. Before DAMA, all channels were assigned exclusively to a certain community and could not be used for other communities; DAMA also eliminated the need for a “double hop” configuration, where two satellite hops were needed to complete a call, resulting in signal delay and frequency echo, and rendering facsimile transmission unreliable and data transmission impossible. GCI states that the success it has achieved with DAMA has caused Alascom to upgrade many of its Alaska Bush earth station facilities to digital DAMA technology. GCI also states that greater facilities efficiency has enabled it to offer telemedicine in Alaska Bush communities, as well as reliable Internet connection for schools and libraries in nearly all of the Alaska Bush communities it serves. In addition, GCI says all customers in Alaska have benefited significantly from decreased long-distance rates since it entered the market.

Alascom and AT&T also support repeal of the Alaska Bush Policy, but contend that other deregulatory actions, which they requested in a March 10, 2000 Petition, “are indivisible aspects of the [Alaska] Bush Policy” and thus, must be acted upon simultaneously. See Public Notice, Pleading Cycle Established for Comments on AT&T and Alascom Petition for Structural and Other Regulatory Relief in DA 00-603, released March 17, 2000 [not published in the Federal Register ]. In this Petition, Alascom and AT&T requested, among other relief, that the Commission eliminate structural separation and tariffing requirements under which Alascom has been providing certain carrier-to-carrier services in Alaska. On January 7, 2003, Alascom filed a petition for waiver from the requirement that it annually file revised cost-based rates for these carrier-to-carrier services. See also Public Notice, Pleading Cycle Established for Comments on AT&T and Alascom Petition for Structural and Other Regulatory Relief in DA 00-603, released March 17, 2000 (not published in the Federal Register ). Alascom and AT&T point out in these petitions that Alascom now must disaggregate all of its service costs within Alaska by location, resulting in more than 900 separate cost points. Alascom and AT&T contend that no other carrier has ever been forced to provide a service based upon stand-alone location-specific costs. The present tariff requirements, they submit, impose unwarranted competitive regulatory burdens that are preventing Alascom from providing its customers with improved service. These petitions are under consideration in separate dockets.

The need for the Alaska Bush Policy is over. As was noted in the NPRM, the “Alaska Bush Policy is an isolated exception to the Commission's interstate MTS open-entry policy.” NPRM, 67 FR 37750 (May 30, 2002). It was based on the assumption that authorizing more than one earth station in an Alaska Bush community would be duplicative and thus needlessly expensive, since a single earth station is sufficient to accommodate all the calls placed to or from the community. The GCI experience has demonstrated that the concern underlying the Alaska Bush Policy is no longer warranted. GCI has provided us with what we believe to be a preview of the public interest benefits that will be realized by allowing open-entry, facilities-based competition in the provision of interstate MTS in Alaska Bush communities. We believe that by eliminating the Alaska Bush Policy, citizens of the Alaska Bush communities will benefit from improved telecommunications services provided by both Alascom and its competitors at lower prices. For these reasons, we eliminate the Alaska Bush Policy.

Finally, we note that this proceeding was established for the limited purpose of considering the elimination of the Alaska Bush Policy. Consequently, we decline to address at this time other potential changes to our regulatory requirements for Alaska. In particular, because, as indicated previously, eliminating the Alaska Bush Policy would promote important public interests, we decline to defer this deregulatory step pending our consideration of Alascom's and AT&T's March 2000 and January 2003 petitions.

For the reasons set forth on the record in this proceeding, we abolish the Alaska Bush Policy, thus eliminating the restriction on facilities-based competition in the Alaska Bush.

The Regulatory Flexibility Act of 1980, as amended (RFA), See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601 et seq., has been amended by the Contract With America Advancement Act of 1996, Public Law 104-121, 110 Stat. 847 (1996) (CWAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996, (SBREFA) requires that a regulatory flexibility analysis be prepared for rulemaking proceedings, unless the agency certifies that “the rule will not have a significant economic impact on a substantial number of small entities.” 5 U.S.C. 605(b). The RFA generally defines “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” 5 U.S.C. 605(6). In addition, the term “small business” has the same meaning as “small business concern” under the Small Business Act. [ See 5 U.S.C. 605(3) (incorporating by reference the definition of “small business concern” in the Small Business Act, 15 U.S.C. 632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after the opportunity for public comment, establishes one or more definitions of such term that are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register .] A small business concern is one that: (1) Is independently owned and operated; (2) is not dominant in its field or operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA). Small Business Act, 15 U.S.C. 632 (1996).

The Report and Order repeals a regulatory policy that prevented companies from obtaining licenses to operate earth stations in rural Alaska that would carry telephone calls between users in certain Alaskan communities and users in other states if such service was already available in those communities via facilities provided by an established carrier. Because the Report and Order does not impose any regulatory burden, we certify that it will not have a significant economic impact on a substantial number of small businesses. The Commission will send a copy of the Report and Order, including a copy of this final certification, in a report to Congress pursuant to the Small Business Regulatory Enforcement Fairness Act of 1996. See 5 U.S.C. 801(a)(1)(A). In addition, the Report and Order and this final certification will be sent to the Chief Counsel for Advocacy of the SBA and will be published in the Federal Register .

The Alaska Bush Earth Station Policy, formally adopted by the Commission in Policies Governing the Ownership and Operation of Domestic Satellite Earth Stations in the Bush Communities in Alaska, Final Decision, 49 FR 9727 (March 15, 1984) is discontinued.

The Commission's Consumer and Government Bureau, Reference Information Center, shall send a copy of this Report and Order, including the Final Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the Small Business Administration.

This interim rule establishes requirements for contractors to furnish unique item identifiers, or other item identification, and to provide the Government's acquisition cost of items that are to be delivered under a DoD contract.

The rule requires contracting officers to include appropriate administrative requirements in contracts so that the Government's acquisition cost of the delivered items can be captured in DoD's property accountability, inventory, and financial management information systems.

The rule requires that all items delivered to the Government be delivered under a contract line item and that the Government's acquisition cost of each item be identified under a contract line item or subline item or an informational subline item.

The rule assumes that MIL-STD-130, Identification Marking of U.S. Military Property, will be revised to be compatible with this unique identification requirement no later than the implementation date of January 1, 2004.

DoD will make changes to its processes and information systems, in accordance with the requirements of this rule, necessary to comply with the financial reporting requirements imposed by the Federal Accounting Standards Advisory Board.

DoD is particularly interested in receiving comments on the following topics:

1. The use and definition of the term “item” or some more appropriate term throughout the rule.

2. The valuation portion of the rule, particularly as it applies to cost-type contracts and the treatment of non-recurring costs.

3. The statement that the rule does not impose any new information collection requirements.

4. The impact of the rule on small business.

This rule was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

This rule may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. DoD has prepared an initial regulatory flexibility analysis, which is summarized as follows:

This interim rule adds requirements for contractors to provide unique identification for all items delivered to DoD, through the use of item identification marking. In addition, the rule adds requirements for DoD contracts to provide for identification of the Government's acquisition cost of all items built or acquired by the contractor and subsequently delivered to DoD under the contract. This rule will facilitate DoD compliance with the Chief Financial Officers Act of 1990 (Pub. L. 101-576) and the financial reporting requirements imposed by the Federal Accounting Standards Advisory Board. The objective of the rule is to improve management of DoD assets. The rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known significant alternatives that will enable DoD compliance with the Chief Financial Officers Act of 1990 and the Federal Accounting Standards Advisory Board reporting requirements.

The Paperwork Reduction Act does not apply because the rule does not impose any new information collection requirements that require the approval of the Office of Management and Budget under 44 U.S.C. 3501, et seq.

A determination has been made under the authority of the Secretary of Defense that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. DoD considers the implementation of unique identification—also known as UID, to be a strategic imperative, necessary to efficiently move supplies to warfighters. This interim rule adds requirements for contractors to uniquely mark items and to provide for identification of the Government's acquisition cost of items that are to be delivered to DoD. It will enhance logistics, contracting, and financial business transactions supporting U.S. and coalition troops. Through the new policy, DoD can consistently capture the value of items it buys, control these items during their use and combat counterfeiting of parts. It will further enable DoD to make appropriate entries into its property accountability, inventory, and financial management information systems toward achieving compliance with the Chief Financial Officers Act. DoD issued UID policy by memorandum dated July 29, 2003, requiring implementation by January 1, 2004. Immediate publication of this rule is essential to allow effective implementation of the policy by January 1, 2004. Comments received in response to this interim rule will be considered in the formation of the final rule.