San Francisco, CA, is presently defined as a separate wage area for pay-setting purposes for Federal blue-collar workers who are paid from nonappropriated funds. The Department of Defense (DOD) notified the Office of Personnel Management (OPM) earlier this year that the Federal activity that hosts local wage surveys in the San Francisco wage area, Fort Mason Officers' Club, has closed, and there is no other NAF employer in the wage area capable of hosting local wage surveys. San Francisco County no longer meets OPM's regulatory criteria to be established as a separate wage area. Under 5 CFR 532.219, there must be at least 26 NAF FWS employees in a county for it to be established as an FWS wage area. The only remaining NAF employer in San Francisco County, the Department of Veterans Affairs Canteen Service, has fewer than the required 26 NAF FWS employees. Therefore, San Francisco County must be defined as an area of application to an existing NAF wage area for pay-setting purposes.

OPM considers the following criteria when it combines two or more counties to constitute a single wage area:

(1) Proximity of largest activity in each county;

(2) Transportation facilities and commuting patterns; and

(3) Similarities of the counties in:

(i) Overall population;

(ii) Private employment in major industry categories; and

(iii) Kinds and sizes of private industrial establishments.

In selecting a wage area to which San Francisco County should be redefined, proximity favors the Santa Clara, CA, NAF wage area. The transportation facilities criterion does not favor one wage area more than another. The commuting patterns criterion favors the Santa Clara wage area. A review of the population, employment, and industry criteria shows that San Francisco County is more similar to the Santa Clara than other nearby wage areas. Based on these findings, OPM is defining San Francisco County to the Santa Clara wage area as an area of application.

OPM is abolishing the San Francisco wage area and defining San Francisco County to the Santa Clara wage area effective November 30, 2003, the date that the next wage schedule for the San Francisco wage area would have become effective if the wage area continued as a separate wage area. Remaining NAF FWS employees in San Francisco County will continue to be paid from the current San Francisco wage schedule until November 30. After that date, the employees will be assigned to the wage schedule for the Santa Clara wage area. The Federal Prevailing Rate Advisory Committee, the national labor-management committee that advises OPM on matters affecting the pay of FWS employees, reviewed and recommended this wage area redefinition by majority vote.

Pursuant to section 553(b)(3)(B) and (d)(3) of title 5, United States Code, I find that good cause exists for waiving the general notice of proposed rulemaking to accommodate changes necessitated by downsizing of the Federal workforce. The notice is being waived because it is necessary to abolish the present San Francisco wage area and redefine San Francisco County to the Santa Clara wage area as soon as possible because no Federal activity has the capability to conduct a local wage survey in the San Francisco wage area.

I certify that this regulation will not have a significant economic impact on a substantial number of small entities because it will affect only Federal agencies and employees.

This rule is issued under Marketing Agreement No. 84 and Marketing Order No. 905, both as amended (7 CFR part 905), regulating the handling of oranges, grapefruit, tangerines, and tangelos grown in Florida, hereinafter referred to as the “order.” The marketing agreement and order are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

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

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

This rule limits the volume of small red seedless grapefruit entering the fresh market. This rule restricts the volume of sizes 48 and 56 fresh red seedless grapefruit shipped during the first 22 weeks of the 2003-04 season by establishing a weekly percentage for each of the 22 weeks, beginning September 15, 2003. This rule supplies enough small red seedless grapefruit, without saturating all markets with these small sizes. This action should help stabilize the market and improve grower returns.

Section 905.52 of the order provides authority to limit shipments of any grade or size, or both, of any variety of Florida citrus. Such limitations may restrict the shipment of a portion of a specified grade or size of a variety. Under such a limitation, the quantity of such grade or size a handler may ship during a particular week is established as a percentage of the total shipments of such variety shipped by that handler during a prior period, established by the Committee and approved by USDA.

Section 905.153 of the regulations provides procedures for limiting the volume of small red seedless grapefruit entering the fresh market. The procedures specify that the Committee may recommend that only a certain percentage of sizes 48 and 56 red seedless grapefruit be made available for shipment into fresh market channels for any week or weeks during the regulatory period. The regulation period is 22 weeks long and begins the third Monday in September. Under such a limitation, the quantity of sizes 48 and 56 red seedless grapefruit that may be shipped by a handler during a regulated week is calculated using the recommended percentage. By taking the recommended weekly percentage times the average weekly volume of red seedless grapefruit handled by such handler in the previous five seasons, handlers can calculate the total volume of sizes 48 and 56 they may ship in a regulated week.

This rule continues to limit the volume of sizes 48 (3 9/16 inches minimum diameter) and 56 (3 5/16 inches minimum diameter) red seedless grapefruit entering the fresh market by instituting weekly percentages for the first 22 weeks of the 2003-04 season. This rule continues established weekly percentages at 45 percent for weeks 1 and 2 (September 15 through September 28, 2003), 35 percent for weeks 3 through 19 (September 29, 2003, through January 25, 2004), and 40 percent for weeks 20, 21, and 22 (January 26 through February 15, 2004). The Committee recommended this action unanimously at a meeting on July 1, 2003. This action is similar to those taken the previous six seasons.

The Committee believes the over shipment of smaller-sized red seedless grapefruit has a detrimental effect on the market. While there is a market for small-sized red seedless grapefruit, the availability of large quantities oversupplies the fresh market with these sizes and negatively impacts the market for all sizes. These smaller sizes, 48 and 56, normally return the lowest prices when compared to the other larger sizes. However, when there is too much volume of the smaller sizes available, the overabundance of small-sized fruit pulls the prices down for all sizes.

For the three seasons prior to the use of percentage size regulation, 1994-95, 1995-96, and 1996-97, returns for red seedless grapefruit had been declining, often not returning the cost of production. On-tree prices for red seedless grapefruit had fallen steadily from $6.87 per box (1 3/5 bushel) during the 1991-92 season, to $3.38 per box during the 1993-94 season, to $1.91 per box during the 1996-97 season.

An economic study done by the University of Florida—Institute of Food and Agricultural Sciences in May 1997, found that on-tree prices had fallen from a high near $7.00 per carton in 1991-92 to around $1.50 per carton for the 1996-97 season. The study projected that if the industry elected to make no changes, the on-tree price would remain around $1.50 per carton. The study also indicated that increasing minimum size restrictions could help raise returns.

The Committee believes the over shipment of smaller-sized red seedless grapefruit contributed to these poor returns for growers and to lower prices. Based on available statistical information, Committee members concluded that once shipments of sizes 48 and 56 reached levels above 250,000 cartons per week, prices declined on those and most other sizes of red seedless grapefruit. The Committee believed if shipments of small sizes were maintained at around or below 250,000 cartons a week, prices would stabilize and demand for larger, more profitable sizes would increase. Consequently, in 1996, the Committee recommended changing its rules and regulations to establish the procedures in § 905.153 to limit the volume of small red seedless grapefruit entering the market. The Committee has successfully used the provisions of § 905.153 to address the problems associated with the over shipment of small red seedless grapefruit, recommending percentage of size regulation during the first 11 weeks of the 1997-98, 1998-99, 1999-2000, and 2000-01 seasons, and for the first 22 weeks of the 2001-02 and 2002-03 seasons. Under percentage of size regulation, prices increased and movement stabilized when compared to seasons without regulation.

The Committee believes for the 2003-04 season small-sized red seedless grapefruit will negatively impact the market for all grapefruit if not regulated. By regulating the volume of small sizes entering the fresh market for the first 22 weeks of the season, shipments of sizes 48 and 56 can be maintained near the 250,000-carton per week level. To address the volume of small-sized red seedless grapefruit available and to prevent the over shipment of small sizes, the Committee voted to utilize the provisions of § 905.153 and establish percentage of size regulation for each of the 22 weeks of the regulatory period for the 2003-04 season.

In making its recommendation, the Committee considered the success of previous percentage of size regulations and their experience from past seasons. At the meeting, the Committee reviewed the results of a study commissioned to determine the merit of percentage of size regulation. The study completed by Robert E. Barber, Jr., Director of Economics, Florida Citrus Mutual, entitled “An Econometric Spatial Equilibrium Analysis of the 48/56 Red Grapefruit Rule,” dated July 1, 2003, evaluated the effectiveness of past percentage of size regulation.

One of the Committee's goals in establishing percentage of size regulation was to stabilize prices and increase returns. The Committee believes percentage of size regulation has been effective in this area, and the study shows this to be true. The study estimates that percentage of size regulation has increased total f.o.b. revenues for red grapefruit by a total of 12 percent or $18.9 million over the six-year period from 1997-98 to 2002-03, averaging $3.15 million per season. Each of the six seasons had an increase in f.o.b. revenues ranging from a low of $2.52 million during the 1999-2000 season to a high of $3.73 million for the 2002-03 season. The f.o.b. prices per carton are also estimated to have increased by an average of 17 percent or $1.00 per carton during this six-year period.

In the three seasons prior to the first percentage of size regulation in 1997-98, prices of red seedless grapefruit fell from a weighted average f.o.b. price of $7.80 per carton in October to a weighted average f.o.b. price of $5.50 per carton in December. In the six seasons utilizing percentage of size regulation, red seedless grapefruit maintained higher prices throughout the season with a weighted average f.o.b. price of $8.10 per carton in October, $7.06 per carton in December, and remained at around $6.90 in April.

Average prices for the season have also been higher during seasons with percentage of size regulation. The average season price for red seedless grapefruit was $7.00 for the last six years compared to $5.83 for the three years prior to using percentage of size regulation. The Barber study shows that prices for the past six seasons would have been from around $0.72 to $1.00 lower per carton without regulation.

On-tree prices for fresh red seedless grapefruit have also been higher during seasons with percentage of size regulation than for the three seasons prior to regulation. The average on-tree price for fresh red seedless grapefruit was $4.42 for the seasons 1997-98 through 2001-02 with percentage of size regulation compared to $3.08 for the three years prior to regulation.

The University of Florida, Citrus Research and Education Center published an estimated cost of production for grapefruit for the 2001-2002 season. The cost to produce grapefruit for the fresh market was estimated at $1,008.77 per acre for the Indian River area, the major grapefruit production area in Florida. Indian River grapefruit production has averaged around 417 boxes per acre. Based on the cost of production, and the average boxes per acre, growers need to earn a total on-tree value (fruit going both to the fresh market and to processing) of approximately $2.42 per box in order to break even. For the three seasons prior to percentage of size regulation, the total on-tree value averaged $1.78 per box. Comparatively, for the seasons with regulation, 1997-98 through 2001-02, the on-tree value has averaged $2.45 per box for Indian River grapefruit.

Small growers have struggled the last eight seasons to receive returns near the cost of production. For many, the higher on-tree returns produced under percentage of size regulation have meant the difference between profit and loss.

Another of the Committee's goals in establishing percentage of size regulation was to help maintain the price differential between the prices for larger sizes and those for smaller sizes. At the start of the season, larger-sized fruit command a premium price. The f.o.b. price can be $4 to $10 more a carton than for the smaller sizes. The last three seasons, the f.o.b. price for a size 27 has averaged around $13.50 per carton in October. This compares to an average f.o.b. price of around $5.80 per carton for a size 56 during the same period. In the three years before the issuance of a percentage size regulation, the f.o.b. price for large sizes dropped to within $1 or $2 of the f.o.b. price for small sizes by the middle of the season due to the oversupply of the smaller sizes.

Percentage of size regulation has helped sustain the price differential, maintaining higher prices for the larger-sized fruit. During the three years before regulation, the average differential between the carton price for a size 27 and a size 56 was $3.47 at the end of October and dropped to $1.68 by mid-December. In the six years with percentage of size regulation, the average differential between the carton price for a size 27 and a size 56 was $5.43 at the end of October, $3.78 in mid-December, and remained at around $3.10 the first week in May.

The Barber study also states that f.o.b. revenues for larger sized red grapefruit benefited substantially from percentage of size regulation. Of the $18.9 million increase in total fresh f.o.b. revenues for red grapefruit the last six seasons, nearly $16.7 million can be attributed to gains made by fruit larger than sizes 48 and 56.

According to the Economic Analysis and Program Planning Branch, USDA, the margins between the prices for the various sizes of red grapefruit have remained fairly constant throughout the seasons covered under percentage of size regulation. However, if the domestic market becomes glutted with too many small-sized grapefruit (48 and 56), these margins would be negatively impacted and total grower returns would be reduced.

The goal of this percentage of size rule is to reduce the volume of the least valuable fruit in the market and strengthen grower prices and revenues. Without this rule, the fresh grapefruit market will become glutted with small-sized fruit, which will have a negative impact on prices for larger-sized fruit and grower returns. Absent this rule, the price margins between sizes (23, 27, 32, 36, 40, 48, and 56) will diminish and ultimately result in lower grower returns. This rule is intended to fully supply all markets for small sizes with fresh red seedless grapefruit size 48 and 56, while avoiding oversupplying these markets to the detriment of grower revenues.

The Committee believes percentage of size regulation has also helped stabilize the volume of small sizes entering the fresh market. During deliberations in past seasons, Committee members concluded once shipments of sizes 48 and 56 reached levels above 250,000 cartons per week, prices declined on those and most other sizes of red seedless grapefruit. The last six seasons during the weeks regulated by a percentage of size regulation, weekly shipment of sizes 48 and 56 red seedless grapefruit remained near or below 250,000 cartons for nearly 90 percent of the regulated weeks. Also, based on the Barber study, while percentage of size regulation has been successful in controlling the volume of small sizes entering the fresh market, it has had only a limited effect on total shipments.

In addition, an economic study by Florida Citrus Mutual (Lakeland, Florida) dated April 1998, also found that the weekly percentage regulation was effective. The study stated that part of the strength in early season pricing appeared to be due to the use of the weekly percentage rule to limit the volume of sizes 48 and 56. It said prices were generally higher across the size spectrum with sizes 48 and 56 having the largest gains, and larger-sized grapefruit also registering modest improvements. The rule shifted the size distribution toward the higher-priced, larger-sized grapefruit, which helped raise average f.o.b. prices. It further stated that sizes 48 and 56 accounted for only 17 percent of domestic shipments during the same period in the 1997-98 season, as small sizes were used to supply export customers with preferences for small-sized grapefruit.

In addition to the success of past regulations, there are other circumstances warranting the consideration of establishing percentage of size regulation. For the three seasons, 1999-2000, 2000-01, and 2001-02, the percentage of the remaining crop represented by small sizes in February averaged around 53 percent. This compares to an average of 31 percent for the same month for seasons 1995-96 through 1997-98. These three seasons, 1999-2000 through 2001-02, averaged a greater percentage of smaller sizes across each month, October through February, than over the three seasons 1995-96 through 1997-98. For the seven seasons prior to the 2002-03 season there has been a movement toward an increased volume of small sizes as a percentage of the overall crop. For the 2002-03 season, grapefruit sized larger than in the previous seasons and small sizes were not as dominant a factor. However, while the crop sized well throughout last season, it is unclear how the 2003-04 crop will size. It is possible that the 2003-04 crop may produce the volume of small sizes represented in the majority of past seasons, making an even greater supply of small-sized fruit available for market.

Problems with the European and Asian markets could also impact the volume of small sizes available. These markets have shown a strong demand for the smaller-sized red seedless grapefruit. However, the reduction in shipments to these areas experienced during the last few years is expected to continue during the upcoming season due to their weak economies. This could result in a greater amount of small sizes for remaining markets to absorb.

The market for processed grapefruit is also a consideration. Approximately 48 percent of red seedless grapefruit is used for processing, with the majority being squeezed for juice. However, this outlet offers limited returns and is currently not profitable. Of the last six years, only 1999-2000 produced on-tree returns for processed red seedless grapefruit exceeding $1 per box. When on-tree returns for processed grapefruit drop below a dollar, there is pressure to shift a larger volume of the overall crop to the fresh market to benefit from the higher prices normally paid for fresh fruit. From 1977 through 2000, the differential between fresh prices and processed prices has averaged $3.55 per box. Consequently, growers prefer to ship grapefruit to the fresh market.

Statistics from the Florida Department of Citrus estimated that at the start of the current season over 35 weeks worth of grapefruit juice remained in inventory. Due to available inventories, on-tree prices for processed red seedless grapefruit for the 2003-04 season will most likely mirror prices from past seasons and remain below a dollar. A fair percentage of red seedless grapefruit shipped for processing are smaller sizes. With limited returns for processed grapefruit, an additional volume of small sizes could be shifted toward the fresh market, further aggravating problems with excessive volumes of small sizes.

Further, red seedless grapefruit production continues to exceed demand. This has contributed to the low returns and led to economic abandonment. According to information from the National Agricultural Statistics Service, the seasons of 1995-96, 1996-97, 1997-98, 2000-01, and 2001-02 had an average economic abandonment of two million boxes or more of red seedless grapefruit. Final data for the 2002-03 season will not be published until February 2004. However, it is likely some economic abandonment did occur last season.

Economic abandonment and prices falling below the cost of production support the use of percentage of size regulation to control the volume of small sizes. The percentage of size regulation has a positive impact on price and is intended to make the most economically viable fruit available to the fresh market without oversupplying small-sized fruit. The above considerations further support the need to control the volume of sizes 48 and 56 during the season to prevent small sizes from overwhelming all markets.

The Committee believes the volume of small red seedless grapefruit available will have a detrimental effect on the market if it is not controlled. Members believe establishing weekly percentages during the last six seasons has been effective and that problems successfully addressed by percentage of size regulation will return without regulation. Consequently, the Committee believes weekly percentage of size regulation should be established for each of the 22 weeks of the regulatory period for the 2003-04 season. The Committee recommended establishing weekly percentages at 45 percent for the first two weeks, 35 percent for weeks 3 through 19, and 40 percent for weeks 20, 21, and 22.

The Committee considered the percentages set last year as a basis for discussing percentages for the 2003-04 season. They believe the percentages set last year worked well, and decided to make their initial recommendation for each of the 22 weeks at the same levels. Committee members believed setting last season's percentages higher than the most restrictive level allowed of 25 percent had worked well, providing some restriction while affording volume for those markets that prefer small sizes.

Committee members believe if shipments of small sizes are maintained at around or below 250,000 cartons a week, prices stabilize and demand for larger, more profitable sizes increases. The Committee considered the 250,000-carton level when recommending the weekly percentages. The first two weeks were set at 45 percent because it was likely there would only be a limited volume shipped. In the last five seasons, total shipments of red seedless grapefruit have only exceeded 250,000 cartons once in the first two weeks of the season.

Setting weekly percentages at 35 percent for the majority of weeks provides a total allotment of 252,610 cartons (35 percent of the total industry base of 721,743 cartons) per week. While this is slightly more than 250,000 cartons, it is unlikely all available allotment will be used each week, and this allows individual handlers some additional flexibility. The increase to 40 percent for the last three weeks offers a little more allotment providing some transition to the period without regulation and helps to prevent the dumping of small sizes following the end of regulation. The Committee believes these percentages provide some flexibility while holding weekly shipments at sizes 48 and 56 close to the 250,000-carton mark.

The Committee recognized they could meet again during the regulation period, as needed, and use the most current information to consider adjustments in the weekly percentage rates. This will help the Committee make the most informed decisions as to whether the established percentages are appropriate. Any changes to the weekly percentages set by this rule will require additional rulemaking and the approval of USDA.

Therefore, this rule continues the weekly percentages at 45 percent for the first two weeks, 35 percent for weeks 3 through 19, and at 40 percent for weeks 20 through 22. This rule is intended to fully supply all markets for small sizes with fresh red seedless grapefruit sizes 48 and 56, while avoiding oversupplying these markets to the detriment of grower revenues. The Committee plans to meet as needed during the 22-week period to ensure weekly percentages are at the appropriate levels.

Under § 905.153, the quantity of sizes 48 and 56 red seedless grapefruit a handler may ship during a regulated week is calculated using the set weekly percentage. Handlers can fill their allotment with size 56, size 48, or a combination of the two sizes such that the total of these shipments is within the established limits. The Committee staff performs the specified calculations and provides them to each handler. The regulatory period began the third Monday in September, September 15, 2003. Each regulation week begins Monday at 12 a.m. and ends at 11:59 p.m. the following Sunday.

Section 905.153(d) provides the allowances for overshipments, loans, and transfers of allotment. These tolerances allow handlers the opportunity to supply their markets while limiting the impact of small sizes.

The Committee can also act on behalf of handlers wanting to arrange allotment loans or participate in the transfer of allotment. Repayment of an allotment loan is at the discretion of the handlers party to the loan. The Committee will inform each handler of the quantity of sizes 48 and 56 red seedless grapefruit they can handle during a particular week, making the necessary adjustments for overshipments and loan repayments.

Section 8e of the Act requires that whenever grade, size, quality, or maturity requirements are in effect for certain commodities under a domestic marketing order, including grapefruit, imports of that commodity must meet the same or comparable requirements. This rule does not change the minimum grade and size requirements under the order, only the percentages of sizes 48 and 56 red grapefruit that may be handled. Therefore, no change is necessary in the grapefruit import regulations as a result of this action.

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

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

There are approximately 75 grapefruit handlers subject to regulation under the order and approximately 11,000 growers of citrus in the regulated area. Small agricultural service firms, including handlers, are defined by the Small Business Administration (SBA) as those having annual receipts of less than $5,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

Based on industry and Committee data, the average annual f.o.b. price for fresh Florida red seedless grapefruit during the 2002-03 season was approximately $7.24 per 4/5 -bushel carton, and total fresh shipments for the 2002-03 season are estimated at 22.9 million cartons of red grapefruit. Approximately 25 percent of all handlers handled 75 percent of Florida's grapefruit shipments. Using the average f.o.b. price, at least 75 percent of the grapefruit handlers could be considered small businesses under SBA's definition. Therefore, the majority of Florida grapefruit handlers may be classified as small entities. The majority of Florida grapefruit producers may also be classified as small entities.

The overshipment of small-sized red seedless grapefruit contributes to poor returns and lower on-tree values. This rule continues to limit the volume of sizes 48 and 56 red seedless grapefruit shipped during the first 22 weeks of the 2003-04 season by establishing weekly percentages for each of the 22 weeks, beginning September 15, 2003. This rule sets the weekly percentages at 45 percent for weeks 1 and 2, 35 percent for week 3 through week 19, and at 40 percent for weeks 20, 21, and 22. The quantity of sizes 48 and 56 red seedless grapefruit that may be shipped by a handler during a particular week is calculated using the percentages set. This action supplies enough small red seedless grapefruit, without saturating all markets with small sizes. This action will help stabilize the market and improve grower returns. This rule uses the provisions of § 905.153. Authority for this action is provided in § 905.52 of the order. The Committee unanimously recommended this action at a meeting on July 1, 2003.

While the establishment of volume regulation may necessitate additional spot picking, which could entail slightly higher harvesting costs, in most cases this is already a standard industry practice. The Barber study indicates spot picking will only fractionally increase harvesting costs on just a small segment of the boxes picked. In addition, with spot picking, the persons harvesting the fruit are more selective and pick only the desired sizes and qualities. This reduces the amount of time and effort needed in sorting fruit, because undersized fruit is not harvested. This may result in a cost savings through reduced processing and packing costs. In addition, because this regulation is only in effect for part of the season, the overall effect on costs is minimal. Consequently, this rule is not expected to appreciably increase costs to producers.

If a 25 percent restriction on small sizes had been applied during the 22-week period for the three seasons prior to the 1997-98 season, an average of 3.1 percent of overall shipments during that period would have been constrained by regulation. A large percentage of this volume most likely could have been replaced by larger sizes for which there are no volume restrictions. Under regulation, larger sizes have been substituted for smaller sizes with a nominal effect on overall shipments.

In addition, handlers can transfer, borrow or loan allotment based on their needs in a given week. Handlers also have the option of over shipping their allotment by 10 percent in a week, provided the over shipment is deducted from the following week's shipments. Approximately 227 loans and transfers were utilized last season. Statistics for 2002-03 show that, in only 2 weeks of the regulated period was the total available allotment used. Therefore, with the weekly percentages for the 2003-04 season set at the same levels as last season, the overall impact of this regulation on total shipments should be minimal.

The Committee believes establishing percentage of size regulation during the 2003-04 season will have benefits similar to those realized under past regulations. Handlers and producers have received higher returns under percentage of size regulation. In the three seasons prior to the first percentage of size regulation in 1997-98, prices of red seedless grapefruit fell from a weighted average f.o.b. price of $7.80 per carton in October to a weighted average f.o.b. price of $5.50 per carton in December. In the six seasons utilizing percentage of size regulation, red seedless grapefruit maintained higher prices throughout the season with a weighted average f.o.b. price of $8.10 per carton in October, to an average f.o.b. price of $7.06 per carton in December, and remained at around $6.90 in April. Average prices for the season have also been higher during seasons with percentage of size regulation. The average season price for red seedless grapefruit was $7.00 for the last six years compared to $5.83 for the three prior years.

On-tree earnings per box for fresh red seedless grapefruit have also improved under regulation, providing better returns to growers. The average on-tree price for fresh red seedless grapefruit was $4.42 for the seasons 1997-98 through 2001-02 with percentage of size regulation, compared to $3.08 for the three years prior to regulation. Small growers have struggled the last eight seasons to receive returns near the cost of production. For many, the higher returns provided by percentage of size regulation meant the difference between profit and loss.

Shipments during the 22 weeks covered by this regulation account for nearly 60 percent of the total volume of red seedless grapefruit shipped to the fresh market. Considering this volume and the very limited returns from grapefruit for processing, it is imperative that returns from the fresh market be maximized during this period. Even a small increase in price when coupled with the volume shipped represents a significant increase in the overall return to growers.

The Barber study stated that prices rose anywhere from 12.9 percent or $.72 to 17.5 percent or $1.00 per 4/5 -bushel carton during percentage of size regulation. Even if this action were only successful in raising returns by $.10 per carton, this increase in combination with the substantial number of shipments generally made during this 22-week period, would represent an increased return of nearly $1.4 million. Consequently, any increased returns generated by this action should more than offset any additional costs associated with this regulation.

The purpose of this rule is to help stabilize the market and improve grower returns. Percentage of size regulation is intended to reduce the volume of the least valuable fruit in the market, and shift it to those markets that prefer small sizes. This regulation helps the industry address marketing problems by keeping small sizes (sizes 48 and 56) more in balance with market demand without glutting the fresh market with these sizes.

This rule provides a supply of small-sized red seedless grapefruit sufficient to meet market demand, without saturating all markets with these small sizes. This action is not expected to decrease the overall consumption of red seedless grapefruit. With supply in excess of demand, this rule is not expected to impact consumer prices or demand. The benefits of this rule are expected to be available to all red seedless grapefruit growers and handlers regardless of their size of operation. This rule will likely help small under-capitalized growers who need additional weekly revenues to meet operating costs.

The Committee considered several alternatives when discussing this action. One alternative discussed was changing the way loans and transfers are handled. Another alternative discussed was changing the way allotment base is calculated. The Committee agreed both alternatives should first be thoroughly reviewed by the Regulation Subcommittee to consider options to bring before the full Committee. Therefore, these alternatives were rejected.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection requirements contained in this rule have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sectors.

In addition, as noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule. However, red seedless grapefruit must meet the requirements as specified in the U.S. Standards for Grades of Florida Grapefruit (7 CFR 51.760 through 51.784) issued under the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 through 1627).

The Committee's meeting was widely publicized throughout the citrus industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the July 1, 2003, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

An interim final rule concerning this action was published in the Federal Register on September 9, 2003. Copies of the rule were mailed by the Committee's staff to all Committee members and grapefruit handlers. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. That rule provided for a 30-day comment period, which ended October 9, 2003. No comments were received.

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

After consideration of all relevant material presented, including the Committee's recommendation, and other information, it is found that finalizing the interim final rule, without change, as published in the Federal Register (68 FR 53015) on September 9, 2003 will tend to effectuate the declared policy of the Act.

This rule is issued under Marketing Agreement Nos. 85 and 124 and Order Nos. 916 and 917, both as amended (7 CFR parts 916 and 917), regulating the handling of nectarines and peaches grown in California, respectively, hereinafter referred to as the “orders.” The marketing agreements and orders are effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

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

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

This rule continues to increase the assessment rates established for the committees for the 2003-04 and subsequent fiscal periods from $0.19 to $0.20 per 25-pound container or container equivalent of nectarines and peaches.

The nectarine and peach marketing orders provide authority for the committees, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the programs. The members of the Nectarine Administrative Committee (NAC) and Peach Commodity Committee (PCC) are producers of California nectarines and peaches, respectively. They are familiar with the committees' needs and with the costs for goods and services in their local area, and are, thus, in a position to formulate appropriate budgets and assessment rates. The assessment rates are formulated and discussed in public meetings. Thus, all directly affected persons have an opportunity to participate and provide input.

The NAC recommended, for the 2002-03 fiscal period, and USDA approved, an assessment rate of $0.19 that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other information available to USDA.

The NAC met on May 1, 2003, and recommended 2003-04 expenditures of $4,173,438 and an assessment rate of $0.20 per 25-pound container or container equivalent of nectarines on a 7 to 1 vote. In comparison, last year's budgeted expenditures were $4,671,342. The assessment rate of $0.20 is $0.01 higher than the rate previously in effect.

The dissenting voter stated that the growers he represented did not support increasing the assessment rate. However, later in the meeting, following a discussion about the development of a nectarine fruit beverage, the dissenter indicated he no longer opposed the assessment increase because the CTFA intended to fund beverage development. He further stated that funds used to create more outlets for nectarines will provide a service to the industry.

The rate increase was recommended to ensure that the NAC could meet its 2003-04 anticipated expenses and carry over a financial reserve that will provide adequate funds at the beginning of the 2004 season before assessment collections begin. A financial reserve carryover of about $400,000 is desirable because major expense outlays for seasonal promotions and other activities occur before assessments are received. Increasing the assessment rate from $0.19 to $0.20 per 25-pound container is expected to provide about $220,400 in additional assessment revenue, and will allow the NAC to start the 2004 season with about $438,374.

The major expenditures recommended by the NAC for the 2003-04 fiscal period include $226,121 for salaries and benefits, $142,612 for general expenses and industry activities, $1,210,220 for inspection, $138,929 for research, and $2,263,061 for domestic and international promotion. Budgeted expenses for these items in 2002-03 were $505,000 for salaries and benefits, $309,039 for general expenses and industry activities, $1,050,000 for inspection, $138,018 for research, and $2,574,160 for domestic and international promotion.

The 2002-03 and 2003-04 budgeted expenses differ somewhat because the NAC reorganized some expense categories for 2003-2004. NAC's total expenses are significantly lower this fiscal year compared to last fiscal year.

The 2003-04 NAC assessment rate was derived after considering the total NAC expenses of $4,173,438; the estimated assessable nectarines of 22,004,000 25-pound containers or container equivalents; the estimated income from other sources, such as interest; and the need for an adequate financial reserve to carry the NAC into the 2004 season. The committee decided that a financial reserve of $400,000 is necessary to meet its obligations in the early part of each season, before handler assessments are billed and received. To meet these goals, the NAC recommended an assessment rate of $0.20 per 25-pound containers or container equivalent. According to the committee, that assessment rate will result in an adequate financial reserve, yet one well within the maximum permitted by the order (one year's expenses; § 916.42).

The PCC recommended, for the 1996-97 fiscal period, and USDA approved, an assessment rate of $0.19 that would continue in effect from fiscal period to fiscal period unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other information available to USDA.

The PCC also met on May 1, 2003, and recommended 2003-04 expenditures of $4,086,316 and an assessment rate of $0.20 per 25-pound container or container equivalent of peaches on a vote of 12 to 1. In comparison, last year's budgeted expenditures were $4,678,883. The assessment rate of $0.20 is $0.01 higher than the rate previously in effect.

The dissenting voter stated that the growers he represented did not support increasing the assessment rate, and he, therefore, could not support the increase.

The rate increase was recommended to ensure that the PCC could meet its 2003-04 anticipated expenses and carry over a financial reserve for the PCC which will provide adequate funds at the beginning of the 2004 season before assessment collections begin. A financial reserve carryover of $500,000 is desirable because major expense outlays for seasonal promotions and other activities occur before assessments are received. Increasing the assessment rate from $0.19 to $0.20 per 25-pound container is expected to provide about $213,360 in additional assessment revenue, and will allow the PCC to start the 2004 season with about $530,586.

The major expenditures recommended by the PCC for the 2003-04 fiscal period include $226,121 for salaries and benefits, $144,743 for general expenses and industry activities, $1,206,414 for inspection, $138,930 for research, and $2,211,346 for domestic and international promotion. Budgeted expenses for these items in 2002-03 were $505,000 for salaries and benefits, $206,747 for general expenses, $1,100,000 for inspection, $142,186 for research, and $2,529,036 for domestic and international promotion.

The 2002-03 and 2003-04 budgeted expenses differ somewhat because the PCC reorganized some expense categories for 2003-2004. PCC's total expenses are significantly lower this fiscal year compared to last fiscal year.

The 2003-04 PCC assessment rate was derived after considering the total PCC expenses of $4,086,316; the estimated assessable peaches of 21,336,000 25-pound containers or container equivalents; the estimated income from other sources, such as interest; and the need for an adequate reserve to carry the PCC into the 2004 season. The committee decided that a financial reserve of $500,000 is necessary to meet its obligations in the early part of each season, before handler assessments are billed and received. To meet these goals, the PCC recommended an assessment rate of $0.20 per 25-pound container or container equivalent. According to the committee, that assessment rate will result in an adequate financial reserve, yet one well within the maximum permitted by the order (one year's expenses; § 917.38).

The assessment rates established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committees or other available information.

Although these assessment rates will be in effect for an indefinite period, the committees will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rates. The dates and times of committee meetings are available from the committees' website or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate the committees' recommendations and other available information to determine whether modification of the assessment rate for each committee is needed. Further rulemaking will be undertaken as necessary. The committees' 2003-04 budgets were reviewed and approved on August 27, 2003, and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

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

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

There are approximately 300 California nectarine and peach handlers subject to regulation under the orders covering nectarines and peaches grown in California, and about 1,800 producers of these fruits in California. Small agricultural service firms, which include handlers, are defined by the Small Business Administration [13 CFR 121.201] as those whose annual receipts are less than $5,000,000. Small agricultural producers are defined by the Small Business Administration as those having annual receipts of less than $750,000. A majority of these handlers and producers may be classified as small entities.

The committees' staff has estimated that there are less than 20 handlers in the industry who could be defined as other than small entities. For the 2002 season, the committees' staff estimated that the average handler price received was $9.00 per container or container equivalent of nectarines or peaches. A handler would have to ship at least 556,000 containers to have annual receipts of $5,000,000. Given data on shipments maintained by the committees' staff and the average handler price received during the 2002 season, the committees' staff estimates that small handlers represent approximately 94 percent of all the handlers within the industry.

The committees' staff has also estimated that less than 20 percent of the producers in the industry could be defined as other than small entities. For the 2002 season, the committees' estimated the average producer price received was $4.00 per container or container equivalent for nectarines and peaches. A producer would have to produce at least 187,500 containers of nectarines and peaches to have annual receipts of $750,000.

With data maintained by the committees' staff and the average producer price received during the 2002 season, the committees' staff estimates that small producers represent more than 80 percent of the producers within the industry. With an average producer price of $4.00 per container or container equivalent, and a combined packout of nectarines and peaches of 43,340,000 containers, the value of the 2002 packout level is estimated to be $173,360,000. Dividing this total estimated grower revenue figure by the estimated number of producers (1,800) yields an estimate of average revenue per producer of about $96,311 from the sales of peaches and nectarines.

This rule continues to increase the assessment rates established for the committees and collected from handlers for the 2003-04 and subsequent fiscal periods from $0.19 to $0.20 per 25-pound container or container equivalent of nectarines and peaches. The committees recommended 2003-04 expenditures of $4,173,438 for nectarines and expenditures of $4,086,316 for peaches and an assessment rate of $0.20 per 25-pound container or container equivalent of nectarines and peaches. The assessment rate of $0.20 is $0.01 higher than the rate previously in effect.

The quantity of assessable nectarines for the 2003-04 fiscal year continues to be estimated at 22,004,000 25-pound container or container equivalents. Thus, the $0.20 rate should provide $4,400,800 in assessment income. Income derived from handler assessments will be adequate to cover budgeted expenses and permit an adequate reserve.

The major expenditures recommended by the NAC for the 2003-04 year include $226,121 for salaries and benefits, $142,612 for general expenses and industry activities, $1,210,220 for inspection, $138,929 for research, and $2,263,061 for domestic and international promotion.

Budgeted expenses for these items in 2002-03 were $505,000 for salaries and benefits, $309,039 for general expenses and industry activities, $1,050,000 for inspection, $138,018 for research, and $2,574,160 for domestic and international promotion.

The NAC recommended an increase in the assessment rate to meet anticipated 2003-04 expenses and preserve an acceptable financial reserve. A reserve of $400,000 is needed to fund expenses for the following year until assessments for that year are received. The NAC reviewed and recommended 2003-04 expenditures of $4,173,438 and the increased assessment rate.

The quantity of assessable peaches for the 2003-04 fiscal year continues to be estimated at 21,336,000 25-pound container or container equivalents. Thus, the $0.20 rate should provide $4,267,200 in assessment income. Income derived from handler assessments will be adequate to cover budgeted expenses and permit a small increase in reserves.

The major expenditures recommended by the PCC for the 2003-04 year include $226,121 for salaries and benefits, $144,743 for general expenses and industry activities, $1,206,414 for inspection, $138,930 for research, and $2,211,346 for domestic and international promotion.

Budgeted expenses for these items in 2002-03 were $505,000 for salaries and benefits, $206,747 for general expenses, $1,100,000 for inspection, $142,186 for research, and $2,529,036 for domestic and international promotion.

The PCC recommended an increase in the assessment rate to meet anticipated 2003-04 expenses and preserve an acceptable financial reserve. A reserve of $500,000 to $550,000 is needed to fund expenses for the following year until assessments for that year are received. The PCC reviewed and recommended 2003-04 expenditures of $4,086,316 and the increased assessment rate.

Prior to arriving at these budgets, the committees considered information and recommendations from various sources, including, but not limited to: The Executive Committee, the Research Subcommittee, the International Programs Subcommittee, the Grade and Size Subcommittee, and the Domestic Promotion Subcommittee.

Each of the committees then reviewed the proposed expenses; the total estimated assessable 25-pound containers or container equivalents; and the estimated income from other sources, such as interest income, prior to recommending a final assessment rate. The NAC decided that an assessment rate of $0.20 per 25-pound container or container equivalent will allow it to meet its 2003-04 expenses and carry over an operating reserve of about $438,374, which is in line with the committee's financial needs. The PCC decided that an assessment rate of $0.20 per 25-pound container or container equivalent will allow it to meet its 2003-04 expenses and carry over an operating reserve of $530,586, which is in line with the committee's financial needs. The committees then recommended this rate to USDA with one dissenting vote from each committee.

A review of historical and preliminary information pertaining to the upcoming fiscal period indicates that the grower price for the 2003-04 seasons could range between $4.00 and $6.00 per 25-pound container or container equivalent. Therefore, the estimated assessment revenue for the 2003-04 fiscal period as a percentage of total grower revenue could range between 3.33 and 5.0 percent.

This action continues to increase the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs are offset by the benefits derived from the operation of the marketing orders. In addition, the committees' meetings were widely publicized throughout the California nectarine and peach industries and all interested persons were invited to attend the meetings and participate in the committees' deliberations on all issues. Like all committee meetings, the May 1, 2003, meetings were public meetings and all entities of all sizes were able to express views on this issue. Finally, interested persons were invited to submit information on the regulatory and informational impacts of this action on small businesses.

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

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

An interim final rule concerning this action was published in the Federal Register on August 15, 2003 (68 FR 48767). Copies of that rule were also mailed to committee members and made available as a link on the committees' Web site. Finally, the interim final rule was made available through the Internet by the Office of the Federal Register and USDA. A 60-day comment period was provided for interested persons to respond to the interim final rule. The comment period ended on October 14, 2003, and no comments were received.

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

After consideration of all relevant material presented, including the Committees' recommendations, and other information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

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

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

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

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

This rule continues to reduce the additional holding and storage payments regarding 2002 NS reserve raisins that were carried into the 2003 crop year and used as cattle feed. The crop year runs from August 1 through July 31. Under the order, handlers are compensated for receiving, storing, fumigating, and handling reserve tonnage raisins acquired during a crop year. The order also authorizes additional payments for reserve raisins held beyond the crop year of acquisition. The RAC met on July 2, 2003, and unanimously recommended that additional payments for reserve raisins used as cattle feed accrue beginning September 13, 2003, rather than August 1, 2003. This action continues to reduce expenses incurred by the 2002 reserve pool and thereby helps improve returns to 2002 equity holders, primarily raisin producers.

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

Section 989.66(f) of the order specifies that handlers be compensated for receiving, storing, fumigating, and handling that tonnage of reserve raisins determined by the reserve percentage of a crop year and held by them for the account of the RAC, in accordance with a schedule of payments established by the RAC and approved by the Secretary. Further, the RAC must pay rent to producers or handlers for boxes used in storing reserve raisins held beyond the crop year of acquisition. As previously mentioned, the crop year runs from August 1 through July 31.

Section 989.401(b) of the order's rules and regulations specifies additional payments to handlers for storing, handling, and fumigating reserve raisins held beyond the crop year of acquisition. Specifically, handlers must be compensated for such raisins at a rate of $2.30 per ton for the first 3 months (August through October), and at a rate of $1.18 per ton per month for the remaining 9 months (November through July).

Section 989.401(c) specifies further payment of rental on boxes and bins containing raisins held beyond the crop year of acquisition. Specifically, persons who furnish boxes or bins used for storing reserve raisins held for the account of the RAC on August 1 are compensated for the use of such containers as follows: For boxes, 2 1/2 cents per day, not to exceed a total payment of $1.00 per box per year, per average net weight of raisins in a sweatbox, with equivalent rates for raisins in boxes other than sweatboxes; and for bins, 20 cents per day per bin, not to exceed a total of $10.00 per bin per year.

Pursuant to § 989.67(b) of the order, the RAC implemented a program to dispose of about 38,000 tons of 2002 NS reserve raisins for use as cattle feed. The tonnage was stored at handler facilities and was adulterated to ensure that the raisins remain in non-commercial channels. The program helped the industry reduce its burdensome oversupply of raisins. It also helped to make available bins for storing raisins during the new crop year, which began August 1, 2003. Nearly all of the reserve tonnage that was used as cattle feed was removed from handler premises by mid-September 2003 (about 425 tons remained).

The RAC met on July 2, 2003, and unanimously recommended reducing the additional holding and storage payments regarding 2002 NS reserve raisins held by handlers on August 1, 2003, and used as cattle feed. Specifically, additional payments for such raisins were accrued beginning September 13, 2003, rather than August 1, 2003. Thus, additional costs were only incurred for such tonnage that remained at handler premises after September 12, 2003 (425 tons). Payments for storing and holding reserve raisins are deducted from reserve pool proceeds, and net proceeds are ultimately distributed to equity holders. Thus, reducing the expenses for 2002 NS reserve tonnage used as cattle feed will help improve returns to 2002 equity holders.

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

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

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

This rule continues to reduce the additional holding and storage payments specified in paragraphs (b) and (c) of § 989.401 regarding 2002 NS reserve raisins that were used as cattle feed. Specifically, additional payments for such raisins accrued beginning September 13, 2003, rather than August 1, 2003. Under the order, handlers are compensated for receiving, storing, fumigating, and handling reserve tonnage raisins acquired during a crop year. The order also authorizes additional holding and storage payments for reserve raisins held beyond the crop year of acquisition. This action continues to reduce these additional payments for 2002 NS reserve raisins held by handlers on August 1, 2003, that were used as cattle feed. Authority for this action is provided in § 989.66(f) of the order.

Regarding the impact of this rule on affected entities, handlers and producers, the order provides that handlers store reserve raisins for the account of the RAC. Net proceeds from sales of such reserve raisins are distributed to the reserve pool's equity holders, primarily producers. Handlers are compensated from reserve pool funds for their costs in receiving, storing, fumigating, and handling reserve raisins during the crop year of acquisition and for the subsequent crop year. Compensation is also paid for the use of bins and boxes for storing reserve raisins held beyond the crop year of acquisition.

Under the disposal program, 22,541 tons of reserve raisins remained at handler premises after August 1, 2003. About 525 tons were removed per day. The cost to store, handle, and fumigate the remaining tonnage at the rate of $2.30 per ton per month between August 1 and September 12, 2003, would have been about $66,256. Bin-rental costs for the same period at the current rate of $0.20 per day per bin would have been about $198,075.00. Thus, the RAC saved about $264,331 in costs that would have been used for holding and storing 2002 reserve raisins intended for use as cattle feed between August 1 and September 12, 2003. This rule continues to reduce these costs to zero and thereby reduce expenses incurred by the 2002 NS reserve pool. Handlers, however, will not be compensated this amount for holding and storing this tonnage.

Regarding alternatives to this action, one option would be to maintain the status quo and have the 2002 reserve pool incur these costs. However, this would not help to improve returns to 2002 equity holders. Another alternative would be to reduce the payments for the period August 1 through September 12, 2003, to figures lower than those currently specified in § 989.401. However, all RAC members supported reducing the additional holding and storage payments for 2002 reserve raisins intended for use as cattle feed so that such payments accrued beginning September 13, 2003, rather than August 1, 2003.

This rule imposes no additional reporting or recordkeeping requirements on either small or large raisin handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

Further, the RAC's Administrative Issues Subcommittee and RAC meetings on July 2, 2003, where this action was deliberated were both public meetings widely publicized throughout the raisin industry. All interested persons were invited to attend the meetings and participate in the industry's deliberations.

An interim final rule concerning this action was published in the Federal Register on July 31, 2003 (68 FR 44857). Copies of the rule were mailed by the RAC staff to all RAC members and alternates, the Raisin Bargaining Association, handlers, and dehydrators. In addition, the rule was made available through the Internet by the Office of the Federal Register and USDA. The rule provided for a 60-day comment period that ended on September 29, 2003. No comments were received.

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

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

Pet food rendering facilities process animal byproducts by cooking them down into various products that are used as ingredients in pet foods and animal feeds. Pet food blending facilities take different materials and mix them according to manufacturers' specifications. Pet food digest facilities produce enzymatic meals in powdered or liquid form for use as pet food flavor enhancers. Pet food spraying and drying facilities produce powdered materials, which are also used as flavor enhancers. Pet food manufacturing facilities combine and cook ingredients to produce the finished pet food, which is then packaged for sale in the United States or for export to another country.

Facilities that process or manufacture pet food ingredients or products for export, including manufacturing, rendering, blending, digest, and spraying and drying facilities, are required by the European Union (EU) and some other foreign regions to be inspected and approved by the Animal and Plant Health Inspection Service (APHIS). These inspections and approvals are carried out by APHIS in accordance with the regulations in 9 CFR part 156, “Voluntary Inspection and Certification Service.”

User fees to reimburse APHIS for the costs of providing veterinary diagnostic services and import- and export-related services for live animals and birds and animal products are contained in 9 CFR part 130. Section 130.11 lists flat rate annual fees for inspecting and approving pet food manufacturing, rendering, blending, digest, and spraying and drying facilities.

On July 9, 2003, we published in the Federal Register (68 FR 40817-40820, Docket No. 03-036-1) a proposal to amend the regulations by replacing the flat rate annual user fees currently charged for the inspection and approval of pet food manufacturing, rendering, blending, digest, and spraying and drying facilities in § 130.11 with user fees for inspections and approval based on the hourly rates in § 130.30. We took this action because APHIS was not recovering its full costs for providing these services under the flat rate annual user fees and because the flat rate annual user fees could not be adequately reformulated due to changes in the inspection and approval requirements of the EU for pet food facilities that export their products to the EU.

We solicited comments concerning our proposal for 60 days ending September 8, 2003. We received one comment by that date, from a pet food manufacturer. This commenter requested that, instead of establishing user fees for inspections and approval of pet food facilities based on hourly rates, we develop new flat rate annual user fees.

We realize that flat rate annual user fees aid pet food facilities by allowing them to know in advance what their costs for inspection and approval will be; in fact, we previously established the flat rate annual user fees for these activities at the request of pet food industry representatives. However, as we discussed in the proposed rule, the EU's new requirements make it infeasible to address the present unrecovered costs by simply recalculating the current flat rate user fees for inspection and approval of pet food facilities.

The amount of time needed to complete the inspection processes that are required by the EU varies widely between pet food facilities, even pet food facilities of the same type. Charging a flat rate user fee for inspections performed in accordance with these new requirements would thus be inequitable, as facility operators whose facilities could be inspected in a relatively short amount of time would, in effect, be subsidizing facility operators whose facilities required inspections of greater length.

Furthermore, under the EU's new requirements, pet food facilities that are not found to be in compliance at the initial inspection must, if they still wish to export pet food to the EU, undergo reinspection. The APHIS flat rate annual user fees for inspection and approval and for renewal of approval in § 130.11 are intended to cover APHIS' costs for all inspections required during the year. We developed these flat rate user fees based on an average of two inspections per year. However, the new EU requirements are likely to require more frequent reinspections for some facilities. The cost of these additional reinspections will not be recovered under the current flat rate user fees. A flat rate annual user fee that did take the possibility of these additional reinspections into account would also be inequitable; under such a fee, facility owners whose facilities required relatively few inspections would, in effect, be subsidizing those whose facilities required more inspections, to a far greater degree than under the EU's previous requirements.

Finally, we cannot predict what changes foreign governments may make to their requirements for inspection and approval of pet food facilities in the future, or what changes we might need to make in the flat rate user fees because of those changes. A more flexible system, using the hourly rates established here, will reduce the need for future rulemaking while ensuring that APHIS properly recovers its full costs for providing these services and that all customers are charged fairly.

These considerations have led us to conclude that the flat rate annual user fees for inspection and approval of pet food facilities, while providing cost certainty for facility operators, will not be able to achieve their primary goal: Ensuring that APHIS recovers the costs of inspecting and approving such facilities. Returning to an hourly rate user fee will allow us to charge facility operators an appropriate amount for the labor expended in inspecting and approving their facilities, will allow us to recover the costs of any reinspections that may be required, and will give us more flexibility should the requirements of importing countries for inspection and approval change in the future. We are not making any changes to the proposed rule in response to this comment.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, without change.

This rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

APHIS will be using the hourly and premium hourly rate user fees listed in § 130.30 to cover the cost of providing services for the approval of U.S. pet food manufacturing, rendering, blending, digest, and spraying and drying facilities in lieu of the current flat rate user fees contained in § 130.11. Facilities that process or manufacture pet food ingredients or products for export are required by the EU and other foreign countries to be inspected and approved by APHIS in order for the pet food to be imported. APHIS is replacing the flat rates with hourly rates to recover its full costs for these inspection and approval services.

User fees recover the cost of operating a public system by charging those members of the public who use the system, rather than the public as a whole, for its operation. It is justifiable to recover the costs of the inspection and approval of U.S. pet food manufacturing, rendering, blending, digest, and spraying and drying facilities through user fees. These facilities benefit from the inspection service as it provides the approvals required by the countries to which they export; user fees thus internalize the costs of this service to those who require the service and benefit from it.

APHIS user fees are intended to cover the full cost of providing the service for which the fee is charged. The cost of providing a service includes direct labor and direct material costs. It also includes administrative support, Agency overhead, and departmental charges. Due to changes in the inspection and approval requirements of certain countries, APHIS has found that providing these services can now require up to 1 1/2 times the labor estimated as being necessary when the flat rate annual user fees were set. Therefore, APHIS is not currently recovering all appropriate costs. In addition, the EU's requirements for inspection and approval of facilities that wish to export pet food to the EU changed dramatically on May 1, 2003. Inspections under these new requirements are more complex and thus require more labor, meaning that the labor estimates used for the current flat rates have become yet more outdated.

The amount of time required to perform an inspection can vary widely, depending on such factors as the size of the facility, the complexity of the operation, and the preparation that has occurred at the facility in anticipation of the inspection. However, the labor time associated with inspections is generally underrepresented by the current fees, and will become more so as requirements change. The current flat rate user fee of $404.75 for an initial inspection and approval at a pet food manufacturing, rendering, blending, or digest facility is the equivalent of approximately 5 hours at the hourly rate, but we have found it can easily take 10 or more hours to approve some facilities. It can, therefore, be expected that the total user fees charged under the hourly rate will be greater than the current flat rate for inspection and approval services.

To the extent that changes in user fees alter operational costs, any entity that utilizes APHIS services that are subject to user fees will be affected by a rule that changes those fees. The degree to which an entity is affected depends on its market power, or the ability to which costs can be either absorbed or passed on to its buyers. Without information on either profit margins and operational expenses of the affected entities, or the supply responsiveness of the pet food industry, 1 the scale of potential economic effects cannot be precisely predicted.

However, we do not expect that these changes in user fees will significantly impact users. Even at higher levels, the inspection fees represent a very small portion of the value of shipments from these facilities. In 1997, 2 dog and cat food manufacturers  3 had an average total annual value of shipments of $46.6 million, and even the smallest operations (1 to 4 employees) had an average total annual value of shipments of nearly $700,000. Other animal food manufacturers  4 had an average total annual value of shipments of $12.7 million, with the smallest operations (1 to 4 employees) having an average total annual value of shipments of $2.3 million. Renderers and other meat byproduct processors  5 had an average total annual value of shipments of $10.7 million, with the smallest operations (1 to 4 employees) having an average total annual value of shipments of nearly $800,000. Those processors specifically dealing with animal and marine feed and fertilizer byproducts  6 had an average total annual value of shipments of $16.2 million. Even if these hourly rate user fees were to triple the inspection and approval costs of pet food facilities, the fees charged to these facilities will continue to be very small compared to their revenues.

Because the EU and other countries require U.S. facilities that process or manufacture pet food ingredients or products for export be inspected and approved by APHIS in order for the pet food to be imported into those countries, those facilities directly benefit from the inspections, as they are a necessary element for exports of these products to occur. In addition, using hourly rates will allow the fee to be tied directly to the amount of time required to perform the service at a given facility.

The Regulatory Flexibility Act requires that agencies specifically consider the economic effects of their rules on small entities. The Small Business Administration (SBA) has set out criteria based on the North American Industry Classification System for determining which economic entities meet the definition of a small business. The entities potentially affected by this final rule will be U.S. manufacturers of pet food and pet food ingredients intended for export.

Under the SBA's criteria, an entity engaged in the manufacture of pet food or in rendering and meat byproduct processing is considered to be a small entity if it employs 500 or fewer employees. In 1997, nearly 99 percent of dog and cat food manufacturers would have been considered small under this criterion. Similarly, 100 percent of other animal food manufacturers and rendering and meat byproduct processors would have been considered small under this criterion. However, because, as discussed above, the inspection fees represent a very small portion of the value of shipments from these facilities, we expect that this change in user fees will have a minimal impact on users, whether small or large.

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

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This final rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

The National Poultry Improvement Plan (NPIP, also referred to below as “the Plan”) is a cooperative Federal-State-industry mechanism for controlling certain poultry diseases. The Plan consists of a variety of programs intended to prevent and control egg-transmitted, hatchery-disseminated poultry diseases. Participation in all Plan programs is voluntary, but flocks, hatcheries, and dealers must first qualify as “U.S. Pullorum-Typhoid Clean” as a condition for participating in the other Plan programs. The regulations in 9 CFR parts 145 and 147 (referred to below as the regulations) contain the provisions of the Plan. The Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture (USDA) amends these provisions from time to time to incorporate new scientific information and technologies within the Plan.

On May 23, 2003, we published in the Federal Register (68 FR 28169-28175, Docket No. 03-017-1) a proposal to amend the Plan by providing new or modified sampling and testing procedures, removing the requirements for the minimum weight of hatching eggs, changing the restrictions on animal protein used in mash and pellet feed, adding a reinstatement procedure to the U.S. S. Enteritidis Clean program, and adding new U.S. Avian Influenza Clean programs for turkey breeding flocks and products and waterfowl, exhibition poultry, and game breeding flocks and products.

We solicited comments concerning our proposal for 60 days ending July 22, 2003. We received one comment by that date, from a private citizen. This commenter raised several issues related to the proposed rule. These issues are discussed below.

The commenter objected to the fact that the changes we proposed to make to the Plan were developed by Federal and State animal health officials and industry representatives working cooperatively. The commenter stated that other groups with an interest in commercial poultry production, particularly animal protection groups, should have been invited to observe and contribute to the development of the Plan. Without adequate oversight from other groups, this commenter asserted, decisions could be made that would have a deleterious effect on poultry health and welfare.

On May 2, 2002, we published in the Federal Register (67 FR 22038-22039, Docket No. 02-039-1) a notice of the meetings of the General Conference Committee of the Plan, which was held on May 30, 2002, and the 2002 National Plan Conference, which was held on May 31 and June 1, 2002. The notice indicated that the meetings would be open to the public and listed the topics that would be addressed at these meetings. The decisions made at the meetings on how to address these topics became the basis of the proposed rule. Due to time constraints, the public was not allowed to participate in discussions during either of the meetings; however, the notice indicated that written statements on the meeting topics would be accepted either at the meetings or before or after the meetings. In addition, all interested parties had an opportunity to comment on the proposed rule during the 60-day comment period. We believe interested parties had adequate access to the deliberations of the General Conference Committee and the proceedings of the National Plan Conference and have had adequate opportunity to comment on the proposed changes.

The commenter objected to our proposed changes to the U.S. S. Enteritidis Clean and U.S. Salmonella Monitored programs for meat type chicken breeding flocks and products and the U.S. Sanitation Monitored program for turkey breeding flocks and products on the basis that animal protein should not be fed to chickens or turkeys. The commenter asserted that feeding animal protein to chickens and turkeys could spread illness to the chickens and turkeys or to other poultry.

The programs cited in the previous paragraph are intended to reduce the incidence of S. enteritidis and Salmonella in chickens and Salmonella in turkeys. These bacteria primarily pose a risk to human health, and as such are under the purview of the USDA's Food Safety and Inspection Service and the U.S. Food and Drug Administration. The Plan's programs are voluntary and provide flockowners with guidelines to reduce or eliminate the incidence of these bacteria in their flocks. If it became necessary to restrict or prohibit feeding animal protein to poultry due to a risk of animal disease transmission, such feeding would be restricted or prohibited elsewhere in APHIS's regulations. We have no evidence indicating that chickens and turkeys that are fed animal protein that meets the guidelines of these programs are at risk for animal disease transmission, and the commenter did not provide any such evidence. We are making no changes in response to this comment.

The commenter asserted that laboratories that perform the tests provided for by the Plan should be tested to ensure that they are providing accurate, unbiased results. All laboratories that perform tests provided for by the Plan must be authorized laboratories. An authorized laboratory, as defined in § 145.1 of the regulations, is a laboratory designated by an Official State Agency and subject to review by APHIS. The APHIS review may include, but will not necessarily be limited to, checking records, laboratory protocol, check-test proficiency, periodic duplicate samples, and peer review. Only after this review is a laboratory authorized to perform the tests provided for by the Plan. We believe that such a review adequately addresses the commenter's concerns in this regard.

We proposed to add a reinstatement process to the U.S. S. Enteritidis Clean program. The commenter argued that flockowners who would seek to have their flocks reinstated under such a program should be required to pay for all testing themselves. The authorized laboratories that would perform such testing are operated by State, educational, or commercial entities, and it is beyond the scope of the regulations to require that these entities charge user fees for testing. We are making no changes in response to this comment.

However, we are making one change to the proposed rule that has been necessitated by a regulatory action taken since the proposed rule's publication. On June 20, 2003, we published in the Federal Register (68 FR 36898-36900, Docket No. 00-107-2) a final rule that, among other things, removed the regulations governing Salmonella enteritidis serotype enteritidis in 9 CFR part 82, subpart C (§§ 82.30 through 82.38). In the proposed rule, we had proposed to update a reference to the U.S. Salmonella Monitored program in § 82.34 by replacing it with a reference to the U.S. Salmonella Clean program to reflect a previous change in the name of that program. Since § 82.34 has been removed, it is not necessary to include that proposed change in this final rule.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the change discussed in this document.

This rule has been reviewed under Executive Order 12866. The rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

The objective of the NPIP is to provide a cooperative Federal-State-industry program through which new technology can be effectively applied to the improvement of poultry and poultry products throughout the country. The provisions of the Plan, developed jointly by industry members and State and Federal officials, establish standards for the evaluation of poultry breeding stock and hatchery products with respect to freedom from hatchery-disseminated diseases. Participation in the program is voluntary. Currently, the NPIP has active control programs for pullorum, fowl typhoid, avian mycoplasmas, Salmonella enteritidis, and avian influenza.

Periodically, the provisions of the Plan are amended to keep current with the development of the poultry industry and the utilization of new information as it becomes available, based on the recommendations of representatives of member States, hatcheries, dealers, flockowners, and breeders who take part in the Plan's National Plan Conference. Accordingly, this final rule changes some of the Plan's provisions to keep the provisions of the Plan current with changes in the poultry industry, establish new certification programs, modify current disease control practices, and provide for the use of new sampling and testing procedures. The changes were voted on and approved by the voting delegates at the Plan's 2002 National Plan Conference. The changes have been generated by industry representatives, Official State Agencies, or Federal representatives with the goal of reducing disease risk and increasing product marketability.

The United States is the world's largest producer and exporter of poultry meat and the second-largest egg producer. In 2001, U.S. producers held a total of 441.1 million chickens, excluding commercial broilers, whose estimated value was $1.068 billion. Broiler production, which primarily comes from chickens raised under contract with a broiler processor, totaled 8.262 billion broilers with a combined live weight of 41.5 billion pounds. The value of broiler production for that year was $13.9 billion. The United States is also the world's largest turkey producer. In 2001, turkey production totaled 269 million birds with a combined live weight of 6.98 billion pounds and value of $2.8 billion. Finally, in 2000, the United States produced approximately 84.4 billion eggs worth an estimated $4.3 billion. 1

The U.S. poultry industry plays a significant role in international trade. In fact, the United States is the world's largest exporter of both broilers and turkey products. In 2001, broiler exports totaled 5.5 billion pounds, valued at $1.8 billion. Turkey exports for the same year totaled 487 million pounds and were valued at $257 million. In addition, 191 million dozen eggs and egg products were exported in 2001. 2

Participation in the Plan serves as a “seal of approval” for eggs and poultry producers in the sense that tests and procedures recommended by the Plan are considered optimal for the industry. As such, while participation in the Plan is voluntary, many foreign nations, such as Russia, do not accept poultry products unless they have originated from flocks participating in the Plan. 3 Consequently, participation in the Plan increases product marketability both domestically and internationally, which in turn increases the economic benefits received by the poultry industry from participation in the Plan.

The Regulatory Flexibility Act requires that agencies consider the economic impact of their regulations on small entities. Under the North American Industry Classification System (NAICS) used by the Small Business Administration, chicken egg operations are considered small entities if they have $10.5 million or less in annual receipts (NAICS code 112310). All other poultry products and meat operations are considered small entities if they have $750,000 or less in annual receipts (NAICS code 112320). 4 As this final rule only makes minor changes in a continuing program in an effort to better safeguard poultry health, the economic effects on poultry producers are not expected to be significant.

The last agricultural census estimated there were 63,246 domestic poultry and poultry products farms. 5 Unfortunately, the size distribution of these farms is not known. However, because most poultry production is carried out by small farms working under contract with larger processors or marketing firms, we can assume a fair amount of poultry production is carried out by small operations.

However, only those producers that voluntarily participate in the Plan will be affected. As is the case in the majority of voluntary control programs, individuals are likely to remain in the program as long as the costs of implementing the program are lower than the added benefits they receive from the program. In any event, the changes in this final rule will not have a significant economic effect on Plan participants.

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

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. ( See 7 CFR part 3015, subpart V.)

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This final rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

These final rules address four different issues. First, the Commission confirms that political committees automatically become multicandidate committees once certain statutory requirements are met. Second, the Commission updates the annual limit on contributions from persons other than multicandidate committees to national party committees to conform to the change made by Congress in the Bipartisan Campaign Reform Act of 2002 (“BCRA”). Third, the Commission implements a separate conforming change to the limits on contributions to candidates running for more than one Federal office. Finally, the Commission corrects its rules governing the biennial limit on aggregate individual contributions in light of BCRA. These final rules implement the provisions of the Federal Election Campaign Act of 1971, as amended (“FECA” or the “Act”), 2 U.S.C. 431 et seq.

The Notice of Proposed Rulemaking (“NPRM”), on which these final rules are based, was published in the Federal Register on August 21, 2003. 68 FR 50,488 (August 21, 2003). The comment period was originally set to close on September 19, 2003, but the Commission extended the comment period until September 29, 2003. The Commission received seven comments on the proposed rules. 1 The Commission held a public hearing on this and three other rulemakings on October 1, 2003. Seven witnesses testified during the hearing. Transcripts of the hearing are available at http://www.fec.gov/register.htm. Please note that, for purposes of this document, the terms “commenter” and “comment” apply to both written comments and oral testimony at the public hearing.

Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), agencies must submit final rules to the Speaker of the House of Representatives and the President of the Senate, and publish them in the Federal Register at least 30 calendar days before they take effect. The final rules that follow were transmitted to Congress on November 7, 2003.

Section 441a(a)(4) of the FECA provides that, “the term ‘multicandidate political committee’ means a political committee which has been registered with [the Commission or Secretary of the Senate] for a period of not less than six months, which has received contributions from more than 50 persons, and except for any State political party organization, has made contributions to 5 or more candidates for Federal office.” 2 U.S.C. 441a(a)(4). On the basis of this statutory provision, the Commission's rules at 11 CFR 100.5(e)(3) define a “multicandidate committee” as a political committee meeting these three requirements.

To monitor compliance with the contribution limits for multicandidate political committees set out at 11 CFR 110.2, the Commission has required such committees to file FEC Form 1M to certify that they satisfied the criteria for becoming multicandidate political committees. See discussion below regarding revisions to 11 CFR 110.2. Specifically, 11 CFR 102.2(a)(3) formerly required that this certification be filed before a political committee may avail itself of the multicandidate committee contribution limits.

In the NPRM, the Commission proposed amending 11 CFR 102.2(a)(3) to eliminate the requirement that a political committee file Form 1M with the Commission before making any contributions under the increased contribution limits with respect to candidates in 11 CFR 110.2(b). The only comment on this issue indicated that the Commission's approach would be consistent with a determination that multicandidate status is mandatory rather than elective, but would not be consistent with a general rule permitting political committees to choose their status.

For the reasons stated in the Explanation and Justification for 11 CFR 110.2, the Commission views multicandidate committee status as automatic once all three necessary criteria are satisfied. Therefore, the Commission is revising 102.2(a)(3) to specify that a political committee must certify its status as a multicandidate committee within ten days of satisfying the requirements of 11 CFR 100.5(e)(3). This certification provides clear notice of the political committee's status to recipients of contributions from the committee, and to the Commission. The ten-day requirement was selected because it corresponds to the analogous time requirement for a political committee to report any changes to its Statement of Organization. See 11 CFR 102.2(a)(2).

The Commission specifically sought comment on how it should address a situation where a political committee qualifies for multicandidate status, yet does not certify its status within ten days, and, once so qualified, makes a contribution exceeding $2,000 to a candidate for Federal office. None of the commenters addressed this issue. Because the previous rule at 11 CFR 102.2(a)(3) required a committee to certify its multicandidate status prior to making a contribution in excess of the limit for non-multicandidate committees, failure to comply with the previous rule resulted in both a reporting violation and an excessive contribution. Given the removal of the ban on making contributions of (in the previous rule) more than $1,000 without filing the certification, the Commission concludes that failure to comply with the new rule is a violation of the reporting requirements of 2 U.S.C. 433, but not an excessive contribution so long as the amount is within the contribution limits prescribed for political committees with multicandidate committee status.

In section 307(a)(2) of BCRA, Congress raised the annual aggregate limit on contributions by persons other than multicandidate political committees to national political party committees from $20,000 to $25,000. 2 U.S.C. 441a(a)(1)(B). The Commission proposed revising the corresponding regulation in 11 CFR 110.1(c)(3) to reflect this statutory change. 68 FR 50,490. The Commission received no comments on this proposal. The Commission is therefore revising 11 CFR 110.1(c)(3) as proposed in the NPRM to reflect accurately the new annual aggregate limit.

In BCRA, Congress raised the per election limit on contributions to candidates from persons other than multicandidate committees from $1,000 to $2,000. 2 U.S.C. 441a(a)(1)(A). The Commission is accordingly revising 11 CFR 110.1(f) to conform its regulations to this new statutory limit. Because the Commission's rules must accurately reflect Congress's decision to adjust this contribution limit, which took effect on January 1, 2003, it is appropriate to implement this higher limit in the final rules. This provision was not discussed in the NPRM. The Commission determines that, under section 553(b)(3) of the Administrative Procedure Act, good cause exists to implement this technical and conforming change without delay. It is not necessary to seek public comment at this point when the Commission obtained and fully considered public comment on the underlying rules at 11 CFR 110.1(a) implementing the contribution limits. See Final Rules and Explanation and Justification for Contribution Limitations and Prohibitions, 67 FR 69,928 (Nov. 19, 2002). Accordingly, the Commission is issuing this final rule without notice and comment.

11 CFR 110.2 sets forth contribution limits for multicandidate political committees in accordance with 2 U.S.C. 441a(a)(2). FECA, prior to BCRA, provided significantly higher limits on contributions to candidates for political committees with multicandidate status than for those without that status ($5,000 per election versus $1,000). BCRA raised and indexed for inflation the contribution limit for non-multicandidate committees (to $2,000 per election). As the Commission explained in the NPRM, due to the inflation adjustment this non-multicandidate committee limit may eventually exceed the limit imposed on multicandidate committees. See 2 U.S.C. 441a(c). If this occurs, it will create a disincentive for attaining multicandidate political committee status.

In addition, BCRA increased the limit on non-multicandidate committee contributions to national party committees from $20,000 to $25,000 per year. Yet Congress did not similarly adjust the limit on multicandidate committee contributions to the same national party committees. That limit remains $15,000 per year, as it was prior to BCRA. 2 U.S.C. 441a(a)(1)(B) and (2)(B). Furthermore, Congress did not index for inflation the contribution limit for multicandidate committees, which means that over time the current $10,000 difference in the respective contribution limits to national party committees will increase. 2 U.S.C. 441a(c).

In light of these statutory changes, the Commission sought comment on whether political committees may elect to opt out of multicandidate committee status even if they meet the three criteria of 2 U.S.C. 441a(a)(4) and 11 CFR 100.5(e)(3). Two commenters addressed this question. One commenter asserted that the language of 2 U.S.C. 441a(a)(4) clearly indicates that multicandidate status is automatically conferred when the three criteria are met. This commenter urged the Commission to adopt the changes to its regulations as proposed in the NPRM. While acknowledging the potential disadvantages of multicandidate status created by Congress through BCRA, this commenter observed that political committees may still elect to “opt out” of multicandidate status by refraining from meeting one or more of the three criteria ( i.e. , by only contributing to 4 candidates).

On the other hand, a different commenter opposed mandatory status, arguing that the Commission should change its regulations to ensure that political committees are not forced to accept multicandidate status if they do not perceive that status as beneficial. The criteria in 2 U.S.C. 441a(a)(4), this commenter asserted, were “selected by Congress to identify committees entitled to preferred treatment” because “it believed that committees with these attributes were less likely to be employed by individuals for the purpose of circumventing the individual contribution limit.” This commenter agreed with the Commission's assessment in the NPRM that post-BCRA multicandidate status could become a liability, rather than a benefit, in some circumstances. Therefore, this commenter cautioned that multicandidate status should not be mandatory unless the Commission is “extremely confident” that Congress now intends to disadvantage multicandidate committees.

The Commission notes that Congress did not take certain steps with regard to multicandidate committees that it took with regard to other political committees and individuals, such as indexing contribution limits for inflation and increasing the contribution limit to national party committees. The Senator who offered the amendment to increase the contribution limits for non-multicandidate committees explained its purpose shortly before the Senate voted to approve the BCRA in its near final form:

Accordingly, the final rules adopt the approach that best comports with the plain language of 2 U.S.C. 441a(a)(4): A political committee becomes a multicandidate committee once it has been registered with the Commission or Secretary of the Senate for a period of not less than six months, has received contributions from more than 50 persons, and has made contributions to 5 or more candidates for Federal office. Specifically, the Commission is adding a sentence to 11 CFR 110.2(a) to confirm this result. To address situations where a multicandidate political committee achieves multicandidate status through affiliation with a pre-existing multicandidate committee, the Commission is adding additional language to 11 CFR 110.2(a)(3) to specify that both affiliated committees would automatically be multicandidate committees at the time of affiliation.

It is important to note that the only “disadvantage” that multicandidate committees currently face is the lower limit on contributions to national political party committees. Notwithstanding the latter commenter's assertions that “[t]his unexplained different treatment is more likely the result of a political compromise than it is a product of a considered judgment,” Congress clearly set lower limits even before BCRA for multicandidate committee contributions to national party committees than for other political committees' contributions to national party committees. The multicandidate committee contribution limits with respect to all Federal candidates, however, still remain $3,000 per election higher than the contribution limits for other political committees. To the extent that some future disadvantage actually emerges from the fact that multicandidate committee contribution limits are not indexed for inflation, it would be for Congress to reconsider the contribution limits it established. The Commission has submitted a legislative recommendation urging Congress to do so. FEC Annual Report 2002, at 46. At present, the Commission implements what it deems the most straightforward reading of the language of 2 U.S.C. 441a(a)(4).

The same commenter also noted, under current law, State party committees are automatically treated as multicandidate committees regardless of whether they make contributions to five or more candidates. See 11 CFR 100.5(e)(3). Thus, a State party committee could be negatively impacted to the same extent as other multicandidate committees by Congress's conspicuous choice to index one set of contribution limits to inflation but not the limits of multicandidate committees. The commenter urged the Commission to permit State party committees to opt out of multicandidate committee status for the same reasons set forth above. The Commission declines to do so for the reasons explained above.

Prior to BCRA, total contributions by an individual were limited to $25,000 in any calendar year. Also, any contribution made to a candidate with respect to an election in a year other than the calendar year in which the election is held was considered to be made during the calendar year in which the election is held. 2 U.S.C. 441a(a)(3) (2001). Thus, when individuals made contributions to candidates for elections to be held in years after the calendar year the contribution was made, those contributions counted against the contributor's $25,000 annual contribution limit for the year of the future election, instead of the year the contribution was actually made. The Commission implemented this statutory provision in 11 CFR 110.5(c).

After BCRA, section 441a(a)(3) provides that contributions made in a specified two-year period ( i.e. , “the period which begins on January 1 of an odd-numbered year and ends on December 31 of the next even-numbered year”) may not exceed $37,500, in the case of contributions to candidates and the authorized committees of candidates, and $57,500 in the case of other contributions. Also, in BCRA, Congress removed the language of former section 441a(a)(3) that treated some contributions as made in a year other than the year in which actually made ( i.e. , the year the election is held).

In the NPRM, the Commission noted that, despite these statutory changes, it had retained 11 CFR 110.5(c) when it revised section 110.5 in 2002 after passage of BCRA. See Contribution Limitations and Prohibitions; Final Rules, 67 FR 69,928 (November 19, 2002). The NPRM proposed to amend section 110.5(c) to state that, for purposes of the biennial contribution limits in section 441a(a)(3) and 11 CFR 110.5(b), a contribution to a candidate will be attributed to the two-year period in which the contribution is actually made, regardless of when the election with respect to which it is made is held. 68 FR 50,488, 50,490.

In the final rules, the Commission has bifurcated 11 CFR 110.5(c) into two paragraphs. New paragraph (c)(1) of section 110.5 applies to contributions made on or after January 1, 2004. The Commission chose this date for two reasons. First, beginning the operation of the new rule with the new year will minimize confusion. Second, it will insure that the change will occur at the beginning of a reporting period for most filers. The final rule is otherwise the same as the proposed rule in the NPRM. New paragraph (c)(2) applies to contributions made before January 1, 2004. It otherwise is the same as the rule in previous 11 CFR 110.5(c). New paragraph (c)(2) is included in the final rules to preclude any question of the retroactive application of paragraph (c)(1) to contributions made before the effective date of the regulation in reliance on the Commission's previous interpretation of post-BCRA section 441a(a)(3).

For example, under new paragraph (c)(1) of section 110.5, a contribution made in 2004 to a candidate in a 2006 Senate race is attributed to the individual's biennial limit for the 2003-2004 period. Similarly, a contribution made in 2005 to a candidate in the 2008 presidential race is attributed to the individual's biennial limit for the 2005-2006 period. In addition, a contribution made during 2007 to retire debt from a 2006 House election is attributed to the individual's biennial limit for the 2007-2008 period. Under new paragraph (c)(2), as under the previous language of 11 CFR 110.5(c), a contribution made in 2003 to a candidate in a 2006 Senate race would be attributed to the individual's biennial limit for the 2005-2006 period.

There was no consensus among the commenters in response to the NPRM. One commenter supported the Commission's proposals, stating that the language of section 441a(a)(3) as amended “plainly attributes candidate contributions by individuals to the aggregate limit for the two-year period in which such contributions are actually made.” This commenter opined that “conforming the FEC's regulation [at section 110.5(c)] to the revised statute's clear requirement that individuals' hard money contributions to candidates tally against their aggregate limit for the two-year period in which such contributions are actually made would eliminate the confusion (and inadvertent donor violations) that prevailed under the previous approach.” As such, this commenter asserts that the NPRM's proposed change would lessen, not increase confusion.

On the other hand, several commenters were opposed to the NPRM's proposed changes. Some commenters asserted that confusion will ensue for both contributors and recipient candidates. A commenter observed that if the proposed changes were made, contributors may have multiple contributions to the same candidate that would count toward different biennial limits and this may be very confusing to contributors. To mitigate any confusion, the Commission has decided to continue to apply the previous rule prior to January 1, 2004, and to apply the new rule on and after that date. This approach ensures that the new rules will not have retroactive application.

Some comments asserted that the Commission should not penalize donors who may have inadvertently exceeded the $37,500 limit for the 2003-04 two-year period, to the extent that the donor exceeded the limit as a result of contributions made before the effective date of the Commission's proposed new rule to candidates that are not running in the 2003-04 two-year period. Because the Commission's final rule does not change the treatment of contributions made prior to the effective date of the new rule, contributors will not have inadvertently exceeded the $37,500 limit for the 2003-04 two-year period based on the Commission's new rules.

Several commenters focused on the reliance interest that contributors, candidates and political committees have in the current language of section 110.5(c), and suggested either a deferred effective date for the new rule ( e.g. , January 1, 2005), or adoption of a transition rule that fairly treats those who have reasonably relied upon the existing regulation. Commenters asserted that a deferred effective date is needed because changing the rule in the middle of an election cycle could cause inadvertent violations. In its final rule for § 110.5(c), the Commission accommodates contributors' reliance interest by preserving the previous language of section 110.5(c) for contributions made prior to January 1, 2004. However, the Commission does not interpret section 441a(a)(3), as amended by BCRA, to permit a transition period. The Commission is also concerned that any transition period is likely to engender additional confusion.

Some comments suggested that current section 110.5(c) is primarily related to candidates for the U.S. Senate, and that changing the provision would have an adverse impact on Senate candidate fundraising, because the proposed rule will limit a Senator's ability to raise funds in the first four years of his or her term. For example, a contributor who intends to contribute $37,500 every biennial period may be disinclined to contribute to a 2006 candidate during the 2004 election cycle if it counts against his or her 2004 aggregate biennial limit rather than the 2006 cycle limit. The Commission has considered these comments, but observes that it is required to respond to Congress's changes to section 441a(a)(3), and must give effect to Congress's deletion of the statutory provision on which the regulatory provision was based.

A commenter asserted that the Commission should not, before the effective date of the new rule, count contributions made to a candidate not running in the 2003-04 two-year period against the donor's aggregate limit for the cycle in which the candidate is running, asserting that such an application of the limit would “clearly be contrary to section 441a(a)(3)(A).” The Commission observes that under the previous language of section 110.5(c), a contribution made to a candidate not running in the 2003-04 two-year period was counted against the donor's aggregate limit for the two-year period in which the candidate is running. This comment suggests, in effect, that the Commission ignore, or suspend the operation of, the previous language of section 110.5(c) for contributions made before January 1, 2004. The Commission declines to either ignore or suspend the operation of the previous language of section 110.5(c) for contributions made before January 1, 2004.

The attached rules will not have a significant economic impact on a substantial number of small entities. The basis of this certification is that State and local party committees of the two major political parties and most other political committees are not small entities under 5 U.S.C. 601 because they are not small businesses, small organizations, or small governmental jurisdictions. Further, individual citizens operating under these rules are not small entities.

To the extent that any persons subject to these rules may fall within the definition of “small entities,” these rules do not impose a significant economic impact on those persons. These rules do not change the criteria for status as a multicandidate committee; they merely confirm that this status acquired automatically when the existing criteria are met. The one modified filing requirement merely replaces a similar filing requirement that is removed, and no new compliance efforts are required. The remainder of the final rules are conforming changes updating existing regulations to new contribution limits set by Congress. As such, these updates require no new or increased disclosure, or other requirements that would increase compliance costs.

In the months leading up to a general election, political party committees, or party committees in conjunction with the principal campaign committees of Federal candidates, may conduct phone banks to get out the vote (“GOTV”) or otherwise promote the party and its candidates. Such phone banks may involve the reading of scripted messages that include a statement asking the person called specifically to vote, or get their family and friends out to vote, for the named Federal candidate and that then make one or more general promotional references to the party's other candidates. An example would be: “Please tell your family and friends to come out and vote for President John Doe and our great Party team.” Given that no other Federal or non-Federal candidates are specifically mentioned, the question is whether the entire cost of the communication, or only a portion of the cost, should be attributed to the Federal candidate. The Commission is issuing final rules to provide clear guidance on how to attribute the cost of these communications.

Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), agencies must submit final rules to the Speaker of the House of Representatives and the President of the Senate and publish them in the Federal Register at least 30 calendar days before they take effect. The final rules on party committee phone banks were transmitted to Congress on November 7, 2003.

The Commission published a Notice of Proposed Rulemaking (“NPRM”) on September 4, 2003, in which it sought comment on proposed rules that would add a new section to 11 CFR part 106 to address telephone bank expenditures by political party committees and organizations. 68 FR 52529 (Sept. 4, 2003). The comment period was originally set to close on September 25, 2003, but the Commission extended the comment period until September 29, 2003. In addition to the comments concerning the proposed rules, the NPRM sought comments on a number of other issues including: (1) Whether the scope of the rulemaking should be expanded to include other types of communications such as broadcast or print media and to include candidates for the Senate or House of Representatives; (2) whether the final rules should explicitly state that a State party committee's use of its coordinated party expenditure authority to pay for these phone banks is subject to the restrictions of 11 CFR 109.33; and (3) whether the final rules should explicitly state that party committees are prohibited from using contributions designated for a particular candidate to pay for these phone bank expenditures.

The Commission received one comment in response to the NPRM. The Commission did not receive any requests to testify on the subject of party committee's disbursements for telephone banks at its hearing on October 1, 2003.

The Commission is adding new section 106.8 to address the costs of phone banks conducted by national, State and local party committees and party organizations on behalf of clearly identified Federal candidates. In Federal election years, party committees and organizations conduct such phone banks to encourage voters to support the entire ticket. Although the specific mention of the clearly identified Federal candidate provides something of value to the candidate being promoted, it also provides the party with a benefit. The final rules, discussed below, reflect that such communications benefit both the candidate and the party.

New section 106.8(a) begins by stating the conditions under which the special attribution rule in paragraph (b) would apply. Paragraphs (a)(1) through (a)(5) of new section 106.8 describe the communications that are subject to the final rule. The proposed rules would have limited the scope of the new section 106.8 to presidential and vice presidential nominees, although the Commission asked whether they should be expanded to include candidates for the Senate and the House of Representatives. The commenter urged that the rules be extended to these candidates while noting that the underlying coordinated party expenditure limits would differ for these candidates. Because there is no apparent reason to distinguish presidential and vice presidential candidates from other Federal candidates, and to maintain a consistent approach for all Federal candidates, the Commission is extending the final rules to all Federal candidates.

Consequently, the conditions set forth in 11 CFR 106.8(a)(1) through (a)(5) implement this approach. Under paragraph (a)(1) the communication must refer to a clearly identified Federal candidate. The term “clearly identified” is defined in 2 U.S.C. 431(18) and 11 CFR 100.17. Second, the communication must also refer to no other clearly identified Federal or non-Federal candidate under paragraph (a)(2). Third, under paragraph (a)(3), the communication must refer generically to the other candidates of the clearly identified Federal candidate's party without clearly identifying them. Generic references to “our great Republican team” or “our great Democratic ticket” would satisfy the latter requirement. The commenter suggested that the final rules make clear that the generic reference is to other candidates and not to the clearly identified Federal candidate. For instance, according to the commenter, a reference to the “great Presidential Candidate X team” with no other generic reference to other candidates should not fall within the scope of the final rules because the word “team” should be treated as a reference to the presidential ticket and not as a reference to other candidates of the same party. The language in paragraph (a)(3) is slightly different from the proposed rule to make clear that the communication must include another reference that generically refers to other candidates and not the clearly identified Federal candidate.

Under paragraph (a)(4), the communication must not solicit contributions, donations, or any funds from any person for any Federal or non-Federal candidate, or for any political committee or political organization, or any entity disbursing funds in connection with a Federal or non-Federal election. If such a solicitation were made, it would change the nature of the communication and may require a different determination as to the attribution of the party's spending for the communication among candidates or committees.

Under paragraph (a)(5), the phone bank must not be exempt from the definitions of “contribution” and “expenditure” under 11 CFR 100.89 and 100.149. These sections implement the statutory exceptions for certain voter registration and GOTV activities conducted by party committees under 2 U.S.C. 431(8)(B)(xi) and 431(9)(B)(ix). Consequently, a State or local party committee's voter registration and GOTV activities, including phone banks operated by volunteers under 11 CFR 100.89(e) or 100.149(e) conducted on behalf of a presidential or vice presidential nominee, which are exempt from the definitions of “contribution” and “expenditure,” are not affected by new section 106.8, provided that the conditions set forth in 11 CFR 100.89(a) through (g) or 100.149(a) through (g) are satisfied. Thus, State and local party committees may continue to spend on behalf of publicly financed presidential candidates for these purposes without making an expenditure or a contribution.

The Commission did not receive any comments in response to its question as to whether the final rules should specifically prohibit State and local party committees from using contributions that were designated for a particular Federal candidate to make expenditures for these phone banks. See 11 CFR 100.89(c) and 100.149(c). This situation is already governed by the “coattails” exception in 2 U.S.C. 431(8)(B)(xi) and (9)(B)(ix) and is not relevant to situations addressed in new section 106.8. The Commission therefore is not including this prohibition in the final rules. In answer to the Commission's question of whether 11 CFR 106.8 should include other forms of communications such as broadcast or print media, the commenter urged the Commission to defer consideration of extending the final rules to include other forms of communications. The Commission has decided to limit the scope of new section 106.8 to phone banks at this time because each type of communication presents different issues that need to be considered in further detail before establishing new rules.

The NPRM included two alternatives for new section 106.8(b) to establish the attribution of the party committee's payments for the phone bank. Under Alternative A, party committees and organizations would have attributed fifty percent of the disbursement to clearly identified presidential and vice presidential nominees, and the remaining fifty percent would not have been attributable to any Federal or non-Federal candidate but would have to be paid solely with Federal funds. Alternative B would have provided that 100 percent of the disbursement must be attributed to the clearly identified presidential and vice presidential nominees.

The Commission sought comment on which of these two alternatives would be preferable, or on whether the percentage should be based on the actual space or time used to refer to the presidential nominee, or some other factor. The commenter argued that a fifty percent attribution to the presidential or vice presidential nominee is permissible provided that the entire phone bank expenditure is paid for with Federal funds.

The Commission is incorporating Alternative A in the final rules. Because these phone bank communications contain two references—one to a clearly identified Federal candidate and one that generically refers to other candidates—it is appropriate that the disbursement for the communications be attributed evenly between the two references. Thus, new section 106.8(b)(1) states that fifty percent of the disbursement for the phone bank is not attributed to any candidate because the generic reference does not refer to any clearly identified candidate and therefore cannot be attributed to any specific candidate.

The Commission has determined that Federal funds must be used to pay for all disbursements for telephone banks that fall within the scope of new section 106.8, even the portion that is not attributed to any particular candidate. Barring the unlikely event that the phone bank will involve 500 or fewer calls, a message such as, “Please vote for President John Doe and our great Party team,” would be a public communication that refers to a clearly identified Federal candidate and promotes that candidate. It would thus be a form of Federal election activity that must be paid for entirely with Federal funds, pursuant to 11 CFR 300.33(c)(1), if conducted by a State, district, or local party committee. See 11 CFR 100.24(b)(3), 100.26 and 100.28. It must also be paid for entirely with Federal funds if conducted by a national party committee, which only has Federal funds under 2 U.S.C. 441i(a) and 11 CFR 300.10. The amount that is not attributed to a Federal candidate, however, is not considered an in-kind contribution to any candidate, a coordinated party expenditure, or an independent expenditure by the party committee or organization.

Section 106.8(b)(2) requires that the remaining fifty percent of the disbursement be attributed to the clearly identified Federal candidate and that this portion of the disbursement must be paid for with Federal funds. Generally, party committees have several options in how to treat the attributed portion of a disbursement “ as an in-kind contribution, a coordinated party expenditure, or an independent expenditure, depending on the circumstances. They may also obtain reimbursement from the clearly identified Federal candidate of some or the entire attributed portion of the disbursement. Consequently, paragraph (b)(2) allows party committees and organizations to treat the portions of disbursements attributed to clearly identified Federal candidates as in-kind contributions, or as coordinated or independent expenditures, or as expenses to be reimbursed by the clearly identified Federal candidates, or a combination of any of these. Under paragraph (b)(2)(i), if the disbursement is treated as an in-kind contribution, it is subject to the contribution limitations of 11 CFR 110.1 or 110.2.

The Commission notes that a State party committee would be able to make coordinated party expenditures (under 2 U.S.C. 441a(d)) to pay for phone bank communications on behalf of its presidential candidate subject to new 11 CFR 106.8 only if the national party committee has made a written assignment of a specific amount of its coordinated party expenditure authority to the State party committee. See 11 CFR 109.33(a). Similarly, a district or local party committee may spend some of the amount authorized by the national or the State party committee upon receiving a written authorization to do so. See 11 CFR 109.33(b). The Commission did not receive any comments in response to its question on whether the final rule should refer to this requirement or whether it is understood that this final rule would not exempt a State, district, or local party committee from these requirements. The Commission is including a reference to 11 CFR 109.33 as well as to section 109.32 in new section 106.8(b)(2)(ii) to ensure that party committees understand that these sections apply to disbursements for phone banks that are treated as coordinated expenditures.

New section 106.8(b)(2)(ii) also provides for the disbursements attributed to the clearly identified Federal candidate to be treated as independent expenditures. As independent expenditures, they are also subject to the requirements of 11 CFR 109.10, and a reference to that section is included in paragraph (b)(2)(ii). This paragraph also includes a reference to 11 CFR 109.35 requiring party committees to choose between making either coordinated party expenditures or independent expenditures, but not both, on behalf of a Federal candidate after the party has nominated that candidate. Once, a party committee makes a coordinated party expenditure on behalf of a Federal candidate, it may not make an independent expenditure on behalf of that Federal candidate, and vice versa.

The following examples illustrate the scope and operation of new section 106.8.

Example 1: A week before the general election, a local party committee operates a phone bank through the use of volunteers and the message is: “You can show your support for the Green Party presidential nominee by going to the polls next Tuesday and contributing to the local party committee so that it can help others to get to the polls too.”

The costs of the phone bank would not fall within the scope of 11 CFR 106.8 for three reasons. First, by using volunteers to run a phone bank that seeks to get out the vote for the presidential and vice presidential nominee, and by complying with other requirements in 11 CFR 100.89(e) and 100.149(e), the local party committee does not make a contribution or expenditure under 11 CFR 100.89 and 100.149, and, therefore, these costs are excluded from the provisions of section 106.8. Second, the communication only contains a reference to the clearly identified Federal candidate (“Green Party presidential nominee”) and does not refer generically to other candidates. Thus, it does not meet the condition set forth in 11 CFR 106.8(a)(3). Finally, the message includes a solicitation for the local party committee, and, therefore, does not meet the condition set forth in section 106.8(a)(4).

Example 2: The Republican National Committee (“RNC”) operates a phone bank and the message is: “When you vote for Representative Jane Smith on Tuesday, remember to vote for the other Republican candidates.” The cost of operating this phone bank is $20,000. The RNC has already made an independent expenditure on behalf of Representative Smith but has not made any contributions to her authorized committee.

The costs of the phone bank would come within the scope of 11 CFR 106.8 because the communication: (1) Contains a reference to a clearly identified Federal candidate (“Representative Jane Smith”); (2) contains a generic reference to other Republican candidates; (3) does not include a reference to any other clearly identified candidate; (4) does not solicit a contribution or donation from any person; and (5) is conveyed by paid workers, not volunteers, and is thus not exempt from the definitions of “contribution” and “expenditure.” The RNC must attribute $10,000 to Representative Smith. Because the RNC has already made an independent expenditure on behalf of Representative Smith, it cannot treat this $10,000 as a coordinated party expenditure. See 2 U.S.C. 441a(d)(4)(A)(i); 11 CFR 109.35(b)(1). Rather it may treat the entire amount as an independent expenditure provided that it has not coordinated with Representative Smith or her authorized committee or agents. If the RNC or its agents coordinated this phone bank with Representative Smith or her agents, then it may treat $5,000 as an in-kind contribution to her authorized committee under the limits of 2 U.S.C. 441a(a)(2)(A), and it must seek reimbursement from her authorized committee for the other $5,000. The remaining fifty percent of the expenditure ($10,000) is not attributed to any candidate and the entire $20,000 must be paid for with Federal funds.

Example 3: A State party committee operates a phone bank and the message is: “Show your support for Senator John Doe and the great Democratic team by voting for them.” The cost of operating the phone bank is $34,000. The State party committee's coordinated party expenditure limit under 2 U.S.C. 441a(d) is $20,000 and it already spent $5,000 in coordinated party expenditures on behalf of Senator Doe. The State party committee is a multicandidate committee and has made a $1,000 contribution to his campaign.

The costs of this phone bank are within the scope of 11 CFR 106.8 because the communication: (1) Contains a reference to a clearly identified Federal candidate (“Senator John Doe”); (2) contains a generic reference to other Democratic candidates; (3) does not include a reference to any other clearly identified candidate; (4) does not solicit a contribution or donation from any person; and (5) does not qualify for the 11 CFR 100.89 and 100.149 exceptions. Because the State party committee has already made a coordinated party expenditure on behalf of Senator Doe after the nomination, the State party committee cannot make a subsequent independent expenditure on his behalf. See 2 U.S.C. 441a(d)(4)(A)(ii); 11 CFR 109.35(b)(2). The State party committee does not have to attribute $17,000 to any candidate but must still use all Federal funds to pay for that $17,000. The remaining $17,000 must be attributed to Senator Doe and must also be paid for with Federal funds. The State party committee may treat $15,000, which is equal to its remaining coordinated party spending authority, of the attributed amount as a coordinated party expenditure. The remaining $2,000 may be treated as an in-kind contribution because when aggregated with the earlier $1,000 contribution, it does not exceed the State party committee's $5,000 contribution limit under 11 CFR 110.2.

The attached final rules do not have a significant economic impact on a substantial number of small entities. The basis for this certification is that few, if any, small entities are affected by these rules, which apply only to committees of political parties and other party organizations. National, State and many local party committees of the two major political parties and other political committees and organizations are not small entities under 5 U.S.C. 601 because they are not small businesses, small organizations, or small governmental jurisdictions. The final rules simplify the determination as to the amount of a party committee disbursement that must be attributed to a clearly identified Federal candidate in the case of certain telephone bank communications and clarify what funding is permissible. Any increase in the cost of compliance that might result from these proposed rules would not be in an amount sufficient to cause a significant economic impact.

The FAA has determined that notice and opportunity for prior public comment hereon are impracticable because these procedures would significantly delay issuance of the approval design and thus delivery of the affected aircraft. In addition, the substance of these special conditions has been subject to the public comment process in several prior instances with no substantive comments received. The FAA, therefore, finds that good cause exists for making these special conditions effective upon issuance.

Interested persons are invited to submit such written data, views, or arguments, as they may desire. Communications should identify the regulatory docket or notice number and be submitted in duplicate to the address specified above. All communications received on or before the closing date for comments will be considered by the Administrator. The special conditions may be changed in light of the comments received. All comments received will be available in the Rules Docket for examination by interested persons, both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerning this rulemaking will be filed in the docket. Commenters wishing the FAA to acknowledge receipt of their comments submitted in response to this notice must include a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. CE200.” The postcard will be date stamped and returned to the commenter.

On March 04, 2003, Honeywell, Inc. made an application to the FAA for a new supplemental type certificate for the Pilatus PC-12/45 airplane. The PC-12/45 is currently approved under TC No. A78EU. The proposed modification incorporates a novel or unusual design feature, such as digital avionics consisting of digital barometric altimeters that are vulnerable to HIRF external to the airplane.

Under the provisions of 14 CFR part 21, § 21.101, Honeywell, Inc. must show that the Pilatus PC-12/45 aircraft meets the following provisions, or the applicable regulations in effect on the date of application for the change to the Pilatus PC-12/45: 14 CFR, part 21, §§ 21.29, 21.183(c) and 14 CFR part 23, Normal Category, effective February 4, 1991, including Amendments 23-1 through 23-42 and § 23.1305c(3) of Amendment 23-43 and § 23.1507 of Amendment 23-45 and §§ 23.49(c) and 23.562(d) of Amendment 23-44; § 23.479 paragraphs (b) and (c) of Amendment 23-45, Noise Certification—FAR 36 up to Amendment 10, as applicable. Fuel Venting Emissions—SFAR 27 up to Amendment 3, as applicable, and § 23.1301 of Amendment 23-20; §§ 23.1309, 23.1311, and 23.1321 of Amendment 23-49; and § 23.1322 of Amendment 23-43; exemptions, if any; and the special conditions adopted by this rulemaking action.

If the Administrator finds that the applicable airworthiness standards do not contain adequate or appropriate safety standards because of novel or unusual design features of an airplane, special conditions are prescribed under the provisions of § 21.16.

Special conditions, as appropriate, as defined in § 11.19, are issued in accordance with § 11.38 after public notice and become part of the type certification basis in accordance with § 21.101.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model already included on the same type certificate to incorporate the same novel or unusual design feature, the special conditions would also apply to the other model under the provisions of § 21.101.

Honeywell, Inc. will incorporate the following novel and unusual design features:

Protection of Systems from High Intensity Radiated Fields (HIRF):

Recent advances in technology have given rise to the application in aircraft designs of advanced electrical and electronic systems that perform functions required for continued safe flight and landing. Due to the use of sensitive solid-state advanced components in analog and digital electronics circuits, these advanced systems are readily responsive to the transient effects of induced electrical current and voltage caused by the HIRF. The HIRF can degrade electronic systems performance by damaging components or upsetting system functions.

Furthermore, the HIRF environment has undergone a transformation that was not foreseen when the current requirements were developed. Higher energy levels are radiated from transmitters that are used for radar, radio, and television. Also, the number of transmitters has increased significantly. There is also uncertainty concerning the effectiveness of airframe shielding for HIRF. Furthermore, coupling to cockpit-installed equipment through the cockpit window apertures is undefined.

The combined effect of the technological advances in airplane design and the changing environment has resulted in an increased level of vulnerability of electrical and electronic systems required for the continued safe flight and landing of the airplane. Effective measures against the effects of exposure to HIRF must be provided by the design and installation of these systems. The accepted maximum energy levels in which civilian airplane system installations must be capable of operating safely are based on surveys and analysis of existing radio frequency emitters. These special conditions require that the airplane be evaluated under these energy levels for the protection of the electronic system and its associated wiring harness. These external threat levels, which are lower than previous required values, are believed to represent the worst case to which an airplane would be exposed in the operating environment.

These special conditions require qualification of systems that perform critical functions, as installed in aircraft, to the defined HIRF environment in paragraph 1 or, as an option to a fixed value using laboratory tests, in paragraph 2, as follows:

(1) The applicant may demonstrate that the operation and operational capability of the installed electrical and electronic systems that perform critical functions are not adversely affected when the aircraft is exposed to the HIRF environment defined below:

or,

(2) The applicant may demonstrate by a system test and analysis that the electrical and electronic systems that perform critical functions can withstand a minimum threat of 100 volts per meter, electrical field strength, from 10 kHz to 18 GHz. When using this test to show compliance with the HIRF requirements, no credit is given for signal attenuation due to installation.

A preliminary hazard analysis must be performed by the applicant, for approval by the FAA, to identify either electrical or electronic systems that perform critical functions. The term “critical” means those functions whose failure would contribute to, or cause, a failure condition that would prevent the continued safe flight and landing of the airplane. The systems identified by the hazard analysis that perform critical functions are candidates for the application of HIRF requirements. A system may perform both critical and non-critical functions. Primary electronic flight display systems, and their associated components, perform critical functions such as attitude, altitude, and airspeed indication. The HIRF requirements apply only to critical functions.

Compliance with HIRF requirements may be demonstrated by tests, analysis, models, similarity with existing systems, or any combination of these. Service experience alone is not acceptable since normal flight operations may not include an exposure to the HIRF environment. Reliance on a system with similar design features for redundancy as a means of protection against the effects of external HIRF is generally insufficient since all elements of a redundant system are likely to be exposed to the fields concurrently.

As discussed above, these special conditions are applicable to the Pilatus PC-12/45 airplane. Should Honeywell, Inc. apply at a later date for a supplemental type certificate to modify any other model on the same type certificate to incorporate the same novel or unusual design feature, the special conditions would apply to that model as well under the provisions of § 21.101.

This action affects only certain novel or unusual design features on one model of airplane. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. For this reason, and because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Pilatus PC-12/45 airplane modified by Honeywell, Inc. to add digital barometric altimeters.

1. Protection of Electrical and Electronic Systems from High Intensity Radiated Fields (HIRF). Each system that performs critical functions must be designed and installed to ensure that the operations, and operational capabilities of these systems to perform critical functions, are not adversely affected when the airplane is exposed to high intensity radiated electromagnetic fields external to the airplane.

2. For the purpose of these special conditions, the following definition applies: Critical Functions: Functions whose failure would contribute to, or cause, a failure condition that would prevent the continued safe flight and landing of the airplane.

On August 20, 2003, the FAA proposed to amend part 71 of the Federal Aviation Regulations (14 CFR part 71) by amending Class E5 airspace at Rocky Mount, NC, (68 FR 50083). This action provides adequate Class E5 airspace for IFR operations at Nash General Hospital, Rocky Mount, NC. Designations for Class E are published in FAA Order 7400.9L, dated September 2, 2003, and effective September 16, 2003, which is incorporated by reference in 14 CFR part 71.1. The Class E designations listed in this document will be published subsequently in the Order.

Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the FAA. No comments objecting to the proposal were received.

This amendment to part 71 of the Federal Aviation Regulations (14 CFR part 71) amends Class E5 airspace at Rocky Mount, NC.

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

History

On August 20, 2003, the FAA proposed to amend part 71 of the Federal Aviation Regulations (14 CFR part 71) by amending Class E5 airspace at Smithfield, NC, (68 FR 50082). This action provides adequate Class E5 airspace for IFR operations at Johnston Memorial Hospital, Smithfield, NC. Designations for Class E are published in FAA Order 7400.9L, dated September 2, 2003, and effective September 16, 2003, which is incorporated by reference in 14 CFR part 71.1. The Class E designation listed in this document will be published subsequently in the Order.

Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the FAA. No comments objecting to the proposal were received.

This amendment to part 71 of the Federal Aviation Regulations (14 CFR part 71) amends Class E5 airspace at Smithfield, NC.

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

On Monday, September 22, 2003, the FAA proposed to amend 14 CFR part 71 by establishing a Class E airspace area designated as an extension to the Class E surface area and revising the Class E airspace area extending upward from 700 feet or more above the surface at Goodland, KS (68 FR 55015) [FR Doc. 03-24143]. Area Navigation (RNAV) Global Positioning System (GPS) Runway (RWY) 30, ORIGINAL SIAP; RNAV (GPS) RWY 12, ORIGINAL SIAP; RNAV (GPS) RWY 23, ORIGINAL SIAP; Instrument Landing System (ILS) or Localizer (LOC)/Distance Measuring Equipment (DME) RWY 30, ORIGINAL SIAP; VHF Omni-directional Range (VOR) RWY 30, AMENDMENT 8 SIAP; Nondirectional Radio Beacon (NDB) RWY 30, AMENDMENT 7 SIAP; and VOR/DME RWY 30, AMENDMENT 7 SIAP have been developed to serve Renner Field-Goodland Municipal Airport. The proposal was to provide appropriate controlled airspace to contain aircraft executing the approach procedures. Interested parties were invited to participate in this rulemaking proceeding by submitting written comments on the proposal to the FAA. No comments objecting to the proposal were received.

Class E airspace areas designated as an extension to a Class D or Class E surface area are published in Paragraph 6004 of FAA Order 7400.9L, dated September 2, 2003, and effective September 16, 2004, which is incorporated by reference in 14 CFR 71.1. Class E airspace areas extending upward from 700 feet or more above the surface of the earth are published in Paragraph 6005 of the same Order. The Class E airspace designations listed in this document will be subsequently published in the Order.

This amendment to Title 14 Code of Federal Regulations, part 71 (14 CFR part 71) establishes a Class E airspace area designated as an extension to the Class E surface area and modifies the Class E airspace area extending upward from 700 feet or more above the surface at Goodland, KS. These actions provide appropriate controlled Class E airspace for aircraft executing instrument approach procedures to Renner Field-Goodland Municipal Airport and segregate aircraft using instrument approach procedures in instrument conditions from aircraft operating in visual conditions. The airspace areas will be depicted on appropriate aeronautical charts.

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

On May 30, 2003, the FAA published in the Federal Register a notice proposing to amend R-2301, R-2304 and R-2305 (68 FR 14912). Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. No comments were received regarding this rulemaking. Except for editorial changes, this amendment is the same as that proposed in the notice. These rulemaking actions “are necessary in the interest of national defense,” as required under 49 U.S.C. 40103(b)(3)(A).

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 73 (part 73) to amend the designated time of use for R-2301, R-2304, and R-2305. Specifically, this action changes the designated time of use for R-2301E from “Monday-Friday, 0630-2230 local time; other times by NOTAM,” to “Daily, 0630 to 2400 local time; other times by NOTAM;” R-2304 from “0700-2200 local time; other times by NOTAM,” to “Monday-Saturday, 0630-2400 local time; other times by NOTAM;” and R-2305 from “0700-2300 local time; other times by NOTAM,” to “Monday-Saturday, 0630-2400 local time; other times by NOTAM.” Increased training requirements at Luke AFB have resulted in a continued need for restricted airspace availability until 2400 hours. This modification does not change the current boundaries or activities conducted in the airspace areas.

Section 73.23 of part 73 of the Federal Aviation Regulations was republished in FAA Order 7400.8L dated October 7, 2003.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1D, Policies and Procedures for Considering Environmental Impacts. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

The PBGC's regulations prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits of terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974. The interest assumptions are intended to reflect current conditions in the financial and annuity markets.

Three sets of interest assumptions are prescribed: (1) A set for the valuation of benefits for allocation purposes under section 4044 (found in appendix B to part 4044); (2) a set for the PBGC to use to determine whether a benefit is payable as a lump sum and to determine lump-sum amounts to be paid by the PBGC (found in appendix B to part 4022); and (3) a set for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology (found in appendix C to part 4022).

Accordingly, this amendment (1) adds to appendix B to part 4044 the interest assumptions for valuing benefits for allocation purposes in plans with valuation dates during December 2003, (2) adds to appendix B to part 4022 the interest assumptions for the PBGC to use for its own lump-sum payments in plans with valuation dates during December 2003, and (3) adds to appendix C to part 4022 the interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using the PBGC's historical methodology for valuation dates during December 2003.

For valuation of benefits for allocation purposes, the interest assumptions that the PBGC will use (set forth in appendix B to part 4044) will be 4.70 percent for the first 20 years following the valuation date and 5.25 percent thereafter. These interest assumptions represent an increase (from those in effect for November 2003) of 0.10 percent for the first 20 years following the valuation date and are otherwise unchanged.

The interest assumptions that the PBGC will use for its own lump-sum payments (set forth in appendix B to part 4022) will be 3.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. These interest assumptions are unchanged from those in effect for November 2003.

For private-sector payments, the interest assumptions (set forth in appendix C to part 4022) will be the same as those used by the PBGC for determining and paying lump sums (set forth in appendix B to part 4022).

The PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect, as accurately as possible, current market conditions.

Because of the need to provide immediate guidance for the valuation and payment of benefits in plans with valuation dates during December 2003, the PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

The PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.

Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

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 good cause exists for not publishing an NPRM because it is impracticable and contrary to public interest for the agency to do so. Information and intelligence regarding the potential for disturbances and hostile and violent acts by various protest groups continues to flow in and the Coast Guard expects this flow to increase as the commencement of the FTAA conference approaches. The Coast Guard must analyze the most current information and take appropriate actions to protect the public, the Port of Miami, and the FTAA participants.

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

Cities that have recently hosted trade conferences similar to the FTAA conference have experienced significant property damage, and their law enforcement officers and public citizens have sustained personal injuries from a segment of protestors engaged in violent demonstrations against those conferences and their agendas. Examples include the September 2003 World Trade Organization (WTO) Ministerial in Cancun, Mexico; the 2003 G-8 Summit in Calgary, Canada; the 2001 G-8 Summit in Genoa; Italy and the 1999 World Trade Organization in Seattle, Washington. These trade conferences experienced an influx of protestors, and in particular protest groups opposing international trade who have a propensity for violence and a desire to engage in hostile acts against, among others, conference attendees, conference venues, the general public, business and municipal buildings, and law enforcement assets. Information and intelligence indicate that there is a high potential for similar acts to be attempted during the upcoming November FTAA conference in Miami, Florida.

This history has heightened the need for the development and implementation of various security measures throughout the Port of Miami, Florida, particularly around venue areas established for the dignitaries and official parties attending the FTAA conference, the primary waterways used by commercial shipping within the Port of Miami and law enforcement staging areas. The Coast Guard has determined from information provided by local, state, and federal law enforcement officials that vessels or persons in close proximity to the FTAA conference may launch hostile or violent acts from the waters adjacent to the FTAA conference. The potential for these acts poses a security threat to the public, the FTAA and its participants, the Port of Miami and the flow of commerce within the Port of Miami. During similar past trade conferences, protestors have used personal watercraft (PWCs) to penetrate physical barriers surrounding conference venues and in attempts to launch various projectiles at conference venues and participants and law enforcement staging areas. They have also used Rigid Hull Inflatable Boats (RHIBs) to facilitate unauthorized boardings of commercial shipping and unauthorized entry into waterfront facilities and buildings, including commercial and government facilities. The use of high speed, highly maneuverable, shallow draft watercraft, such as PWCs and RHIBs, poses a significant security threat to FTAA conference venues, FTAA conference participants, the Port of Miami, commerce within the Port of Miami, the public, and law enforcement officers.

The temporary regulated navigation area and security zones are being established to mitigate these threats and are necessary to protect the public, the FTAA conference and attendees, law enforcement officers, the Port of Miami and commerce within the port from persons attempting hostile and violent acts, while preserving the rights of persons engaging in lawful free speech activities and ensuring that the flow of maritime commerce within the Port of Miami and on the Miami River is not impeded.

The temporary regulated navigation area (RNA) includes all waters encompassed in the following areas: beginning from a mid-point on the Fisher Island coast; thence running along the north shoreline of Fisher Island; thence westerly to a point south of Dodge Island; thence northwesterly to a point near Quick Flashing Green Marker “15”; thence southwesterly to the northeastern tip of Claughton Island; thence west along the shoreline of Claughton Island; thence southerly along the northern side of Claughton Island; thence westerly along the northern side of the bridge that runs between Claughton Island and Brickell Point; thence northeasterly along the eastern shoreline of Brickell Point; thence encompassing the entire width of the Miami River, from the mouth of the Miami River to the west side of the Flagler Street Bridge; thence along the shoreline to the point that land intersects the MacArthur Causeway Bridge; thence east to the point near the northwestern shore of Watson Island; thence southwest along the shoreline to a point near the southeastern tip of Terminal Island; thence southeasterly back to the original point on Fisher Island.

The temporary RNA is necessary to ensure the safety of the public, the Port of Miami, and the FTAA. All vessels within the temporary RNA are subject to control by the Coast Guard Maritime Operations Center (MOC). The temporary RNA requires all vessels greater than 100 feet to check in with the MOC prior to entering or transiting the temporary RNA via VHF Channel 12. It is recommended that all other vessels check in with the MOC via VHF channel 12 prior to entering or transiting the temporary RNA.

Essentially, the temporary RNA encompasses the waters that make up the two main shipping channels on the north and south side of Dodge Island and the Intracoastal Waterway on the west side of Dodge Island and Watson Island in close proximity to FTAA venues. Information and past experience indicate that FTAA demonstrators may attempt to interfere with commercial shipping, both underway and while moored. Attempts may include unauthorized boardings of vessels while underway or moored in an effort to interrupt commerce and port operations. Additionally, demonstrators may attempt unauthorized entry into or upon commercial and government facilities located along the main shipping channels throughout the Port of Miami for these same reasons. The temporary RNA, by regulating the movement of vessels, imposing a slow speed zone, and excluding personal watercraft and rigid hull inflatable boats, will assist law enforcement officers in ensuring the safety and security of the Port of Miami, the public and the FTAA.

The temporary RNA requires all vessels less than 100 feet within the regulated area to proceed continuously and at slow speed. Slow speed is defined as the speed at which a vessel proceeds when it is fully off plane, completely settled into the water and not creating excessive wake. In no instance should slow speed be interpreted as a speed less than that required to maintain steerageway. Requiring vessels within the temporary RNA to transit at slow speed will allow law enforcement officers to identify, respond to, stop, and query vessels that are suspected of presenting a threat to the public, the Port of Miami, and the FTAA. Specifically, the slow speed requirement will allow the Coast Guard to adequately protect against threats of hostile and violent acts carried out by smaller vessels against commercial vessels transiting within the Port of Miami. The slow speed requirement enhances the ability of the MOC to control the movement of vessels within the temporary RNA which will further provide for the safety of the public, the Port of Miami and the FTAA.

The temporary RNA prohibits all personal watercraft (PWCs) from operating within the regulated area. For purposes of this rule, personal watercraft refers to a vessel(s), less than 16 feet in length, which uses an inboard, internal combustion engine powering a water jet pump as its primary source of propulsion. PWCs are designed to be operated by a person or persons sitting, standing or kneeling on the vessel, rather than within the confines of the hull. The length is measured from end to end over the deck excluding sheer, meaning a straight line measurement of the overall length from the foremost part of the vessel to the aftermost part of the vessel, measured parallel to the centerline. Bowsprits, bumpkins, rudders, outboard motor brackets, and similar fittings or attachments, are not included in the measurement. Length is stated in feet and inches.

The rule prohibits PWCs from operating within the temporary RNA due to their maneuverability, high speed, and minimal draft, characteristics which may allow them to outrun law enforcement vessels, operate in shallow and restricted areas, and hurdle or dive under barriers erected by law enforcement officials. PWCs would thus allow protestors a means of unauthorized entry into restricted areas in which they can carry out hostile and violent acts, such as launching projectiles or throwing other dangerous objects at conference participants. PWCs' unique capabilities make them a preferred watercraft for persons attempting hostile and violent acts against the public, the FTAA conference and attendees, law enforcement officers, the Port of Miami and commerce within the port.

The temporary RNA prohibits Rigid Hull Inflatable Boats (RHIBs) from operating within the RNA, with the exception of RHIBs operated by licensed commercial salvors and RHIBs operated by designated law enforcement officials. RHIBs operated by licensed commercial salvors are excepted from this rule because they provide a vital maritime service that would be impeded if they were prohibited from operating in the RNA and because they present little or no threat of engaging in hostile or violent acts as they are licensed by the Coast Guard and known to the Captain of the Port of Miami.

For purposes of this rule, Rigid Hull Inflatable Boat refers to a vessel(s) that has an inflatable fabric or rubber collar or a foam collar surrounding the hull of the vessel. An RHIB's collar is normally joined to a fiberglass hull on larger models or a fabric hull on smaller models. Fabric hulls are often also themselves inflatable, or have an inflatable keel and sometimes have a soft floor or a reinforced floor slated with wood or other rigid materials. RHIBs are powered by both outboard and inboard-outboard propulsion and because of their light weight can easily be powered by oars as well. RHIBs' light weight and the enormous reserve buoyancy and stability provided by their collars gives them high performance features including speed and maneuverability coupled with large load-carrying capacity and the ability to operate in shallow areas. Additionally, models with inflatable collars can be quickly deflated and stowed in small spaces and even carry bags. The collars are also non-marking, making them a preferred vessel for coming alongside other vessels, piers, docks, or facilities for the purpose of onloading or offloading persons and cargo, including for persons attempting unauthorized boardings of shipping and unauthorized entries into waterfront facilities, or placing unauthorized cargo onto shipping and facilities within the port. RHIBs' unique characteristics make them a preferred vessel for persons attempting hostile and violent acts against the public, the FTAA conference and attendees, law enforcement officers, the Port of Miami and commerce within the port.

Nothing in the temporary RNA relieves vessels or operators from complying with all state and local laws in the area, including manatee slow speed zones.

The temporary security zones prohibit all vessels from entering the waters of Biscayne Bay adjacent to the Intercontinental Hotel and the American Airlines Arena.

The Intercontinental Hotel Security Zone extends from the sea wall along the hotel's property easterly out to the edge of the Intracoastal Waterway channel. This security zone is necessary to ensure the waters surrounding the Intercontinental Hotel, which is the primary venue for the FTAA, are not used by persons attempting hostile and violent acts against the FTAA. Extending the security zone out to the edge of the Intracoastal Waterway is necessary to allow law enforcement officers ample opportunity to identify, stop and query vessels and persons suspected of attempting hostile and violent acts against the FTAA. The waters encompassed by this security zone range from a depth of zero to twelve feet and are subject to shoaling. Law enforcement vessels need a sufficient depth of water in order to operate safely and maneuver effectively. The shallow depth of water and shoaling within certain areas encompassed by the security zone precludes law enforcement vessels from being able to safely operate and maneuver in those areas. Co-locating the eastern boundary of the security zone with the western edge of Intracoastal Waterway is the best means to ensure law enforcement vessels will have sufficient room to operate, maneuver, and respond to shallow-draft vessels such as PWCs to provide effective security within the waters surrounding the FTAA venue.

The American Airlines Arena security zone encompasses all waters, shore to shore, within the American Airlines Arena Basin and extends outward to the intersection of the Intracoastal Waterway and the northern side of the Dodge Island Bridge. This security zone is necessary to ensure that the waters surrounding the American Airlines Arena are not used by persons and vessels attempting hostile and violent acts against the FTAA and law enforcement officers. The American Airlines Arena Basin will be used as law enforcement staging area. Information and intelligence indicates that FTAA protestors may attempt hostile and violent acts against law enforcement staging areas assigned to patrol the FTAA venue(s). Extending the security zone out to the northern side of the Dodge Island Bridge is necessary to allow law enforcement officers ample opportunity to identify, stop and query vessels and persons suspected of attempting hostile and violent acts against the FTAA and law enforcement staging areas and officials. This security zone is necessary to ensure adequate force protection is provided for law enforcement staging areas and law enforcement officers in the vicinity of the American Airlines Arena Basin.

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 temporary rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. The temporary regulated navigation area and security zones encompass a limited area and will be in place for a limited period of time. The temporary regulated navigation area allows all vessels, with the exception of PWCs and RHIBs, to transit through the RNA. RHIBs operated by licensed commercial salvors and designated law enforcement officials are not prohibited from operating within the temporary RNA. Vessels greater than 100 feet, upon checking in with the MOC, may transit through the temporary RNA. The security zones prohibit all vessels from entry; however, these zones are located outside of the navigable channels and will not interfere with commercial or other legitimate maritime interests.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this temporary rule would have a significant economic impact on a substantial number of small entities. The term “small entities” includes 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 temporary rule will not have a significant economic impact on a substantial number of small entities. The temporary security zones do not encompass waters typically transited by commercial vessels. Additionally, there are alternate routes to transit around the temporary security zones. All vessels are permitted to transit the temporary regulated navigation area, with the exception of PWCs and RHIBs. However, RHIBs operated by licensed commercial salvors are permitted to operate within the temporary RNA.

This temporary rule may affect the following entities, some of which might be small entities: the owners or operators of vessels intending to transit the RNA within the Port of Miami from November 16, 2003 to November 21, 2003. Before the effective period, we will issue maritime advisories widely available to users of the Miami River and the Port of Miami.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule so that they can better evaluate its effects on them. 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 businesses. 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 would not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.

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

This 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 have analyzed this rule under Commandant Instruction M16475.lD, which guides the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321-4370f), and we 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. Under figure 2-1, paragraph (34)(g), of the Instruction, an “Environmental Analysis Check List” and a “Categorical Exclusion Determination” are not required for this rule.

The SIP is a living document which the state can revise as necessary to address the unique air pollution problems in the state. Therefore, EPA from time to time must take action on SIP revisions containing new and/or revised regulations as being part of the SIP. On May 22, 1997 (62 FR 27968), EPA revised the procedures for incorporating by reference Federally-approved SIPs, as a result of consultations between EPA and the Office of Federal Register (OFR). The description of the revised SIP document, IBR procedures and “Identification of plan” format are discussed in further detail in the May 22, 1997, Federal Register document.

On February 12, 1999, EPA published a document in the Federal Register (64 FR 7091) beginning the new IBR procedure for Kansas. In today's document EPA is updating the IBR material.

EPA is also making minor corrections to the table in § 52.870(c) as follows:

On June 27, 2000 (65 FR 39551), we inadvertently removed a rule heading and K.A.R. 28-19-20 from the table. K.A.R. 28-19-20 had previously been incorporated by reference and was not rescinded by the June 27, 2000, action. We are restoring the heading and K.A.R. 28-19-20 into the table.

On May 18, 1988 (53 FR 17700) we updated K.A.R. 28-19-64. In the table under § 52.870(c) the Federal Register page citation for K.A.R. 28-19-64 is shown as being 53 FR 17000, and it is being corrected to 53 FR 17700.

On October 30, 2002 (67 FR 66060) we approved a VOC rule, K.A.R. 28-19-714, and revoked K.A.R. 28-19-75. K.A.R. 28-19-714 was incorrectly located in the table. K.A.R. 28-19-714 should be placed immediately before rule K.A.R. 28-19-717.

EPA has determined that today's rule falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedures Act (APA) which, upon finding “good cause,” authorizes agencies to dispense with public participation and section 553(d)(3) which allows an agency to make a rule effective immediately (thereby avoiding the 30-day delayed effective date otherwise provided for in the APA). Today's rule simply codifies provisions which are already in effect as a matter of law in Federal and approved State programs. Under section 553 of the APA, an agency may find good cause where procedures are “impractical, unnecessary, or contrary to the public interest.” Public comment is “unnecessary” and “contrary to the public interest” since the codification only reflects existing law. Immediate notice in the CFR benefits the public by updating citations.

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 13, 2004. 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).)

Throughout this document, “we,” “us” and “our” refer to EPA.

Table 1 lists the rules we are approving with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board (CARB).

On July 18, 2003 for SDCAPCD Rule 67.3 and March 15, 2002 for SJVUAPCD Rule 4605, EPA found these rule submittals met the completeness criteria in 40 CFR Part 51 Appendix V.

We approved a version of SDCAPCD Rule 67.3 into the SIP on March 27, 1997 ( see 62 Federal Register (FR) 14639). Similarly, we approved a version of SJVUAPCD Rule 4605 into the SIP on August 17, 1998 (see 63 FR 43884). Between these SIP incorporations and today, CARB has made no intervening submittals of these two rules.

VOCs help produce ground-level ozone and smog, which harm human health and the environment. Section 110(a) of the CAA requires states to submit regulations that control VOC emissions.

SDCAQMD Rule 67.3 is designed to reduce volatile organic compound (VOC) emissions at industrial sites engaged in metal parts and product coating operations. VOCs are emitted during the preparation and coating of the metal parts and products, as well as the drying phase of the coating process. Rule 67.3 establishes general emission limits in units of pound of VOC per gallon of coating (lb/gal), and grams of VOC per litre (gr/1) of coating, less water and exempt compounds as applied. Also, the rule allows the use of add-on emission controls whose combined capture and control efficiency must be 85 percent or better and specifies certain operating equipment. The rule also contains provisions for appropriate methods of analysis, exemptions, alternative emission control plans (pursuant to Rule 67.1), record keeping, and emission reduction credits.

SDCAPCD's April 9, 2003 amendments to Rule 67.3 included these significant changes to the May 15, 1996 adopted version within the SIP.

SJVUAPCD Rule 4605 is designed to reduce volatile organic compound (VOC) emissions at industrial sites engaged in manufacturing, assembling, coating, masking, bonding, paint stripping, surface cleaning, service, and maintenance of aerospace components. VOCs are emitted during the preparation, coating, and drying phase of any of the above listed processes. Rule 4605 establishes general emission limits of VOC per liter of coating less water and exempt compounds as applied. It also allows for the use of add-on emission controls with a combined capture/control efficiency of approximately 81 percent.

SJVUAPCD's December 20, 2001 amendments to Rule 4605 included the following significant changes to its 1998 SIP-limited approved/disapproved version.

The respective TSD each rule has more information about each rule and its revisions.

Generally, SIP rules must be enforceable ( see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for major sources in nonattainment areas ( see section 182(a)(2)(A)), and must not relax existing requirements ( see sections 110(l) and 193). Both the SDCAPCD and SJVUAPCD regulate an ozone nonattainment area ( see 40 CFR part 81), so each rule must fulfill RACT.

Guidance and policy documents that we used to help evaluate specific enforceability and RACT requirements consistently include the following:

1. Portions of the proposed post-1987 ozone and carbon monoxide policy that concern RACT, 52 FR 45044, November 24, 1987;

2. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook);

3. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook);

4. “Control of Volatile Organic Emissions from Existing Stationary Sources Volume VI: Surface Coating of Miscellaneous Metal Parts and Products,” USEPA, June 1978, EPA-450/2-78-015; and,

5. “Control of Volatile Organic Emissions from Coating Operations at Aerospace Manufacturing and Rework Operations,” USEPA, 1997, EPA-453/R-97-004.

We believe these rules are consistent with the relevant policy and guidance regarding enforceability, RACT, and SIP relaxations. While the revisions to SDCAPCD Rule 67.3 and SJVUAPCD Rule 4605 contain specific rule relaxations, SDCAPCD and SJVUAPCD have provided analyses demonstrating that the added emissions resulting from these rule relaxations are either a de minimis amount in the case of SDCAPCD Rule 67.3, or offset by emission reductions elsewhere in the case of SJVUAPCD Rule 4605. Given these analyses, we find that neither reasonable further progress towards, nor achievement of the air quality standards will be jeopardized.

The respective TSD for each rule has more detailed information on these analyses and our evaluation.

We have no additional rule revisions that do not affect EPA's current action, but are recommended for the next time the local agency modifies the rules.

As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this Federal Register , we are simultaneously proposing approval of the same submitted rules. If we receive adverse comments by December 15, 2003, we 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. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on January 13, 2004. This will incorporate these rules into the federally enforceable SIP.

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.

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

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

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

The Congressional Review Act, 5 U.S.C. section 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. section 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 January 13, 2004. 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).)

On April 12, 2002, the Delaware Department of Natural Resources and Environmental Control (DNREC) submitted a formal revision to its State Implementation Plan (SIP). The SIP revision consists of revisions to the State's regulations pertaining to the Control of Volatile Organic Compound Emissions, in particular, Stage I and Stage II vapor recovery at gasoline dispensing stations. The SIP revision went to public hearing on September 24, 2001 and became effective on January 11, 2002.

The 1990 Clean Air Act Amendments (CAAA) required states to develop regulations requiring owners or operators of certain gasoline dispensing facilities to install systems for recovery of gasoline vapor emissions. These requirements are also known as Stage I and Stage II Vapor Recovery and are required in areas classified as moderate and above ozone nonattainment. Stage I is the control of gasoline vapors when dispensing gasoline from tankers into gasoline storage tanks. Stage II is the control of gasoline vapors when dispensing gasoline into vehicle fuel tanks from the gasoline storage tanks.

The DNREC adopted definitions pertaining to the Control of Volatile Organic Compound Emissions (under Regulation 24, section 2), Stage I regulations (under Regulation 24, section 26) and Stage II regulations (under Regulation 24, section 36) on January 11, 1993 which became immediately effective. These regulations were submitted to EPA as a SIP revision on January 11, 1993. The definitions and the Stage I regulations were approved as a final rule by EPA on May 3, 1995 (60 FR 21707), and the Stage II regulations were approved as a final rule by EPA on June 10, 1994 (59 FR 29956).

The revisions to Regulation 24, sections 2, 26, and 36, submitted to EPA and the subject of this rulemaking establish:

(a) The requirements for using improved vapor recovery adaptors and connections,

(b) the requirements for annual vapor recovery testing; and,

(c) the minimum requirements applicable to compliance testing companies that perform compliance testing in the State of Delaware. These revisions also adopt by reference, the California Air Resources Board (CARB) executive orders for approved Stage II Vapor Recovery Systems.

EPA has reviewed the revisions to Regulation 24, sections 2, 26, and 36 and has determined that the revisions continue to meet the CAAA requirements for states to have approved Stage I and Stage II Vapor Recovery Systems. In addition, the revisions, in general, strengthen the SIP by providing additional clarification of certain provisions, requiring that records be maintained onsite and by incorporating by reference appropriate test methods for vapor recovery systems.

EPA is approving the revisions to Delaware's regulations that control VOC emissions, in particular those regulations related to Stage I and Stage II vapor recovery systems, submitted to EPA on April 12, 2002. EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment. 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 the SIP revision if adverse comments are filed. This rule will be effective on January 13, 2004 without further notice unless EPA receives adverse comment by December 15, 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, DE067-1041, 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 DE067-1041. 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:

1. Explain your views as clearly as possible.

2. Describe any assumptions that you used.

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

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

5. Provide specific examples to illustrate your concerns.

6. Offer alternatives.

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

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

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule also does not have tribal implications because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

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

The Congressional Review Act, 5 U.S.C. 801 et seq. , as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . 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, Revisions to Delaware's Stage I and Stage II vapor recovery regulations, must be filed in the United States Court of Appeals for the appropriate circuit by January 13, 2004. 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).)

Throughout this document “we,” “us,” or “our” means EPA.

In today's action we are approving into the Texas SIP revisions to Chapter 106—Permits by Rule, Chapter 116—Control of Air Pollution by Permits for New Construction or Modification, and Chapter 122—Federal Operating Permits. Some of these revisions were made to correct certain deficiencies identified by EPA in a Notice of Deficiency (NOD) for Texas' Title V Operating Permit Program. The EPA issued the NOD on January 7, 2002 (67 FR 732), under its authority at 40 CFR 70.10(b). The NOD was based upon EPA's finding that several State requirements for the Title V operating permits program did not meet the minimum Federal requirements of 40 CFR part 70 and the Act. Texas adopted rule revisions to address the potential to emit (PTE) requirements identified in the January 7, 2002, NOD. Texas submitted parts of these and other rule changes as revisions to its SIP on December 9, 2002, including revisions to section 106.6—Registration of Emissions, section 116.115—General and Special Conditions, section 116.611—Registration to Use a Standard Permit, and section 122.122—Potential to Emit.

The December 9, 2002, submittal also includes revisions to Texas' Title V Operating Permits Program. We will address these and other regulations which revise Texas' Operating Permits Program, in a separate Federal Register action.

The December 9, 2002, SIP submittal includes revisions to Texas' regulations for PBR and Texas' regulations for Standard Permits. The EPA is also approving earlier SIP submittals which include the adoption of Texas' programs for PBR and Standard Permits under Chapter 106—Permits by Rule; Chapter 116, Subchapter F—Standard Permits, section 116.14—Standard Permit Definitions in Chapter 116, Subchapter A—Definitions, and Sections 116.110 and 116.116 in Subchapter B—New Source Review Permits. Furthermore, the approval of the submitted provisions of Chapter 106 would replace the current SIP-approved section 116.6—Exemptions. Accordingly, we are removing section 116.6 from the SIP.

On July 9, 2003 (68 FR 40865), we proposed to approve into the Texas SIP the revisions to Chapter 106, Chapter 116, and Chapter 122, as described above. In response to our proposal, we received no comments.

In today's action, consistent with the following discussion, we are approving these revisions to Chapters 106, 116, and 122, as part of the Texas SIP.

A. What Was the PTE Registration Deficiency Which Required a SIP Revision?

Many stationary source requirements of the Act apply only to major sources, whose emissions of air pollutants exceed a threshold emissions level specified in the Act. However, such sources may legally avoid program requirements by taking Federally-enforceable permit conditions which limit their PTE to a level below the applicable major source threshold. Those permit conditions, if violated, are subject to enforcement by EPA, the State or local agency, or by citizens. Federal enforceability ensures that the conditions placed on emissions to limit a source's PTE are enforceable as both a legal and practical matter.

Texas has adopted regulations which enable a source to register and certify that its PTE is below the applicable major source threshold. These certified registrations contain a description of how the source will limit its PTE below the major source threshold and include appropriate operation and production limitations, appropriate monitoring and recordkeeping which demonstrate compliance with the operation and production limits which the source is certifying to meet.

In the NOD, we informed Texas that section 122.122 was not practicably enforceable because the regulation allowed a facility to keep all documentation of its PTE limitation on site without providing any notification to the State or EPA. Therefore, neither the public, TCEQ, nor EPA could determine the PTE limitation without going to the site. A facility could change its PTE limit several times without the public or TCEQ knowing about the change. Therefore, these limitations were not practically enforceable, and TCEQ has revised this regulation to make it practically enforceable. The NOD required that the revised regulation be approved into the SIP before it and the registrations are Federally enforceable. See 67 FR 735.

To address this deficiency, TCEQ amended section 122.122 to require certified registrations of emissions establishing a Federally-enforceable emission limit to be submitted to the Executive Director of TCEQ, the appropriate regional office, and all local air pollution control agencies having jurisdiction over the site. In addition, the Commission submitted the amended section 122.122 to EPA as a revision to the Texas SIP. Section 122.122 states that all representations with regard to emissions, production or operational limits, monitoring, and reporting shall become conditions upon which the stationary source shall operate and shall include documentation of the basis of emission rates (section 122.122(b)-(c)).

The TCEQ has revised Chapter 122 to require registrations to be submitted to the Executive Director, to the appropriate Commission regional office, and all local air pollution control agencies, and a copy to be maintained on-site at the facility. The rule therefore satisfies the legal requirement for practical enforceability which was cited in the NOD. Accordingly, we are approving section 122.122 as a revision to the Texas SIP and to find that the revision to section 122.122 satisfies Texas' requirement to correct the PTE registration deficiency identified in the January 7, 2002, NOD.

We are approving provisions of Subchapter A (General Requirements) under Chapter 106 which Texas submitted July 25, 2002, and revisions submitted December 9, 2002. This includes the following Sections: section 106.1—Purpose, section 106.2—Applicability, section 106.4—Requirements for Permitting by Rule, section 106.5—Public Notice, section 106.6—Registration of Emissions, section 106.8—Recordkeeping, and section 106.13—References to Standard Exemptions and Exemptions from Permitting.

Prior to 1993, Standard Exemptions were addressed in section 116.6 which we approved August 13, 1982 (47 FR 35193). In a SIP submittal dated August 31, 1993, Texas recodified the provisions for Standard Exemptions into Subchapter C of Chapter 116. In 1996, Texas subsequently recodified its provisions for Standard Exemptions into Chapter 106. In 2000, Texas redesignated the Standard Exemptions to PBR.

On July 25, 2002, Texas submitted Subchapter A which includes Sections 106.1, 106.2, 106.4, 106.5, 106.6, 106.8, and 106.13. On December 9, 2002, Texas submitted revisions to section 106.6 which address procedures by which registrations of emissions effectively limit a source's PTE. Because these Sections replace Subchapter C of section 116, as submitted August 31, 1993, there is no need for EPA to act on Subchapter C of section 116.

A PBR is a permit which is adopted under Chapter 106. Chapter 106 provides an alternative process for approving the construction of new and modified facilities or changes within facilities which TCEQ has determined will not make a significant contribution of air contaminants to the atmosphere. These provisions provide a streamlined mechanism for approving the construction of certain small sources which would otherwise be required to apply for and receive a permit before commencing construction or modification.

A PBR is available only to sources which belong in categories for which TCEQ has adopted a PBR in Chapter 106. A PBR is available only to a facility that is authorized to emit no more than 250 tons per year (tpy) of carbon monoxide (CO) or nitrogen oxides (NO X ); or 25 tpy of volatile organic compounds (VOC), sulfur dioxide (SO 2 ), or inhalable particulate matter (PM 10 ); or 25 tpy of any other air contaminant, except carbon dioxide, water, nitrogen, methane, ethane, hydrogen, and oxygen (section 106.4(a)(1)). A PBR is not available to a facility or group of facilities which undergo a change which constitutes a new major source or major modification under Title I of the Act, part C (Prevention of Significant Deterioration of Air Quality) or part D (Nonattainment Review) (section 106.(a)(2)-(3)). Such major source or major modification must comply with the applicable permitting requirements under Chapter 116, Subchapter B, which meet the new source review requirements of Title I, part C or part D of the Act. A facility which qualifies for a PBR must also comply with all applicable provisions of section 111 of the Act (Standards of Performance for New Stationary Sources or New Source Performance Standards (NSPS)) and section 112 of the Act (National Emission Standards for Hazardous Air Pollutants (NESHAP)) (section 106.4(a)(6)). Furthermore, a facility which qualifies for a PBR must comply with all rules and regulations of TCEQ (section 106.4(c)).

The PBR are approvable as meeting the requirements of 40 CFR part 51, subpart I—Review of New Sources and Modifications (subpart I). 1 Section 106.1 provides that only certain types of facilities or changes within facilities which do not make a significant contribution of air contaminants to the atmosphere are eligible for a PBR. This satisfies the requirements of 40 CFR 51.160(a) which provides that the SIP must include procedures that enable the permitting authority to determine whether the construction or modification will result in a violation of applicable portions of the control strategy or interfere with attainment or maintenance of a national ambient air quality standard.

Section 106.4 further provides additional requirements that a facility must meet to qualify for a PBR. Such requirements include:

• Limiting PBR only to facilities which are authorized to emit no more than 250 tpy of CO or NO X ; or 25 tpy of VOCs, SO 2 , or inhalable PM 10 ; or 25 tpy of any other air contaminant, except carbon dioxide, water, nitrogen, methane, ethane, hydrogen, and oxygen. This meets 40 CFR 51.160(e), which provides that the SIP must identify the types and sizes of facilities which will be subject to review.

• Any facility or group of facilities which constitutes a new major source of major modification under part C or D of Title I of the Act must be permitted under regulations for Nonattainment Review or Prevention of Significant Deterioration of Air Quality. Such sources are not eligible for a PBR. This meets 40 CFR 51.165 (Permit requirements) and 51.166 (Prevention of significant deterioration of air quality).

• Sources qualifying for a PBR must meet all applicable requirements under section 111 of the Act (NSPS) and section 112 of the Act (NESHAP), and must comply with all rules of TCEQ. This satisfies the requirements of 40 CFR 51.160(d) which require that approval of any construction or modification must not affect the responsibility of the owner or operator to comply with applicable portions of the control strategy.

• Subchapter A includes all the administrative requirements which support the issuance and enforcement of PBR. This includes registration of emissions which limit a source's PTE (section 106.6), and Recordkeeping, which requires each source subject to a PBR to maintain records sufficient to demonstrate compliance with all conditions of the applicable PBR (section 106.8). These provisions satisfy the requirements in 40 CFR 51.163, which require the plan to contain the administrative procedures that will be followed in making the determination under 40 CFR 51.160(a). It also meets the requirements of 40 CFR 51.211 which requires the owner or operator to maintain records and to periodically report to the State the nature and amounts of emissions and information necessary to determine whether a source is in compliance.

• All PBR must be adopted or revised through rulemaking to incorporate the PBR into the applicable Subchapters under Chapter 106. Such new or revised PBR must undergo public notice and a 30-day comment period, and TCEQ must address all comments received from the public before finalizing its action to issue or revise a PBR. This meets the requirements of 40 CFR 51.161, which requires the permitting authority to provide for opportunity for public comment on the State's analysis of the effect of construction or modification on ambient air quality.

The TSD contains further information on how Subchapter A of Chapter 106 meets the requirements of subpart I.

Texas submitted Subchapter A because that subchapter contains the process by which TCEQ will issue or modify PBR. Subpart A contains the provisions which apply to all PBR and which ensure that individual PBR meet the requirements of subpart I. The individual PBR are adopted in Subchapters B through X, of Chapter 106. 2 In 1996, Texas codified its existing Standard Exemptions into Subchapters B through X and redesignated them to PBR in 2000. Because these existing Standard Exemptions were adopted under section 116.6, which is currently SIP-approved, they meet the requirements of subpart I. Furthermore, new and amended PBR are adopted in accordance with the general requirements in Subchapter A, which meet the applicable requirements of subpart I as discussed above. Accordingly, our approval of Subchapter A of Chapter 106 is sufficient to assure that the PBR meet the requirements in subpart I.

The provisions for PBR in Chapter 106 replace the former provisions for exemptions from permitting which we had approved in section 116.6—Exemptions. Because Chapter 106 replaced the exemptions previously authorized under section 116.6, we are removing section 116.6 from the SIP.

We are approving section 116.14—Standard Permit Definitions. Section 116.14 includes definitions of the following terms as they are used in Chapter 116, Subchapter F—Standard Permits: Off-plant receptor, oil and gas facility, and sulfur recovery unit.

These definitions are approvable based upon their being comparable to corresponding terms defined elsewhere in EPA regulations. Specifically, the definition of “off-plant receptor” is consistent with the definition of “ambient air” in 40 CFR 50.1(e). The definitions of “oil and gas facility” and “sulfur recovery unit” are consistent with the terms “natural gas processing plant” and “sulfur recovery plant” as defined in 40 CFR 60.630 and 60.641 respectively. The TSD contains further information on our basis for approving these definitions. These definitions support the provisions of Subchapter F (Standard Permits) which we are also approving.

We are approving revisions to the following: section 116.110—Applicability; section 116.115—General and Special Conditions, and section 116.116—Changes to Facilities.

a. Section 116.110—Applicability. We are approving revisions to section 116.110  3 , which Texas submitted April 29, 1994; July 22, 1998; and September 11, 2000. These changes revise section 116.110 to add or revise references to provisions which relate to PBR and Standard Permits, which we are approving elsewhere in this action. We are approving the following:

• Approval of paragraph (2) of section 116.110(a) which incorporates references to conditions of Standard Permits. This meets 40 CFR 51.160(e), which provides that the SIP must identify the types and sizes of facilities which will be subject to review.

• Approval of nonsubstantive revision to section 116.110(a)(4), to change the reference from “exemptions from permitting” to “permits by rule.”

• Approve a nonsubstantive change to section 116.110(b) to remove a reference to flexible permits.

b. Section 116.115—General and Special Conditions. We are approving revisions to section 116.115  4 , which Texas submitted April 29, 1994; August 17, 1994; July 22, 1998; and December 9, 2002; as follows:

• Approval of Subsection (b) to section 116.115  5 , as submitted July 22, 1998; and December 9, 2002; which incorporates the General Provisions that holders of Permits, Special Permits, Standard Permits, and Special Exemptions must meet. Subsection (b) includes provisions relating to notification to the State concerning the progress of construction and start-up, requirements for sampling and recordkeeping, requirements to meet emissions limits specified in the permit, requirements concerning maintenance of emission control, and compliance with rules.

• Approval of paragraph (b)(2)(F)(vi) (submitted December 9, 2002) which requires that a person who certifies and registers a Federally enforceable emission limitation under section 116.611 must retain all records demonstrating compliance for at least five years.

• The above provisions meet the requirements of 40 CFR 51.163, 51.211, 51.212, and 51.230. See the TSD for more information concerning how these requirements are met.

c. Section 116.116—Changes to Facilities. We are approving revisions to section 116.116  6 , which Texas submitted October 25, 1999  7 ; and September 11, 2000; as follows:

• Approve nonsubstantive changes to section 116.116(d) and (d)(1)-(2) to change the existing reference from “exemptions from permitting” to “permits by rule.”

• Approve nonsubstantive changes to section 116.116(c)(4)-(5) to correct a cross reference from section 116.111(3) to section 116.111(a)(2)(C).

We are approving the following Sections in Subchapter F of Chapter 116: section 116.601—Types of Standard Permits, section 116.602—Issuance of Standard Permits, section 116.603—Public Participation in Issuance of Standard Permits, section 116.604—Duration and Renewal of Registrations to Use Standard Permits, section 116.605—Standard Permit Amendment and Revocation, section 116.606—Delegation, section 116.610—Applicability, section 116.611—Registration to Use a Standard Permit, section 116.614—Standard Permit Fees, and section 116.615—General Conditions.

A Standard Permit is a permit which is adopted under Chapter 116, Subchapter F. Subchapter F provides an alternative process for approving the construction of certain categories of new and modified sources for which TCEQ has adopted a Standard Permit. These provisions provide for a streamlined mechanism for approving the construction of certain sources within categories which contain numerous similar sources.

A Standard Permit is available to sources which belong in categories for which TCEQ has adopted a Standard Permit under Subchapter F of Chapter 116. A Standard Permit is not available to a facility or group of facilities which undergo a change which constitutes a new major source or major modification under Title I of the Act, part C (Prevention of Significant Deterioration of Air Quality) or part D (Nonattainment Review). Such major source or major modification must comply with the applicable permitting requirements under Chapter 116, Subchapter B, which meet the new source review requirements in Title I, part C or part D of the Act. A facility which qualifies for a Standard Permit must also comply with all applicable provisions of section 111 of the Act (NSPS) and section 112 of the Act (NESHAP). Furthermore, a facility which qualifies for a Standard Permit must comply with all rules and regulations of TCEQ.

Texas' Standard Permits are approvable as meeting the requirements of subpart I. Subchapter F under Chapter 116 provides the requirements that a facility must meet to qualify for a Standard Permit. Such requirements include:

• Any facility or group of facilities which constitutes a new major source or major modification under part C or D of Title I of the Act must be permitted under regulations for Nonattainment Review or Prevention of Significant Deterioration of Air Quality. Such sources are not eligible for a Standard Permit. This meets 40 CFR 51.165 (Permit requirements) and 51.166 (Prevention of significant deterioration of air quality).

• Sources qualifying for a Standard Permit must meet all applicable requirements under section 111 of the Act (NSPS) and section 112 of the Act (NESHAP), and must comply with all rules of TCEQ. This satisfies the requirements of 40 CFR 51.160(d) which requires that approval of any construction or modification must not affect the responsibility of the owner or operator to comply with applicable portions of the control strategy.

• Subchapter F includes all the administrative requirements which support the issuance and enforcement of a Standard Permit. This includes registration of emissions which limit a source's PTE and Recordkeeping, which requires each source subject to a Standard Permit to maintain records sufficient to demonstrate compliance with all conditions of the applicable Standard Permit. These provisions satisfy the requirements in 40 CFR 51.163 which requires the plan to contain the administrative procedures that will be followed in making the determination under 40 CFR 51.160(a). These provisions also meet the requirements of 40 CFR 51.211 which require the owner or operator to maintain records and to periodically report to the State the nature and amounts of emissions and information necessary to determine whether a source is in compliance.

• All Standard Permits are adopted or revised through the process described in Sections 116.601-116.605. Such new or revised Standard Permits must undergo public notice and a 30-day comment period, and TCEQ must address all comments received from the public before finalizing its action to issue or revise a Standard Permit. This meets the requirements of 40 CFR 51.161 which requires the permitting authority to provide for opportunity for public comment on the information submitted and the State's analysis of the effect on construction or modification on ambient air quality.

The TSD contains further information on how Subchapter F of Chapter 116 meets the requirements of subpart I.

We are not approving the following Sections in Subchapter F: section 116.617—Standard Permits for Pollution Control Projects, section 116.620—Installation and/or Modification of Oil and Gas Facilities, and section 116.621—Municipal Solid Waste Landfills. Approval of these sections is not necessary for our approval of Texas' PBR and Standard Permits regulations submitted to EPA on December 9, 2002. Sections 116.617, 116.620, and 116.621 will be addressed in a separate action.

As stated previously, we are approving changes which Texas submitted December 9, 2002, some of which address the deficiencies that we identified in our January 7, 2002, NOD. In that submittal, Texas submitted revisions to section 116.611—Registration to Use a Standard Permit. Section 116.611 is part of Subchapter F—Standard Permits. To date, we have not approved the provisions relating to Standard Permits, including the earlier submittals of section 116.611. Section 116.611 is part of, and dependent upon, other provisions of Subchapter F, and consequently section 116.611 cannot stand alone. Therefore, we must approve other provisions of Subchapter F, including the earlier submittals of section 116.611, which contain the process by which Texas issues and modifies Standard Permits when we approve the revisions to section 116.611 which Texas submitted December 9, 2002.

In order to approve section 116.611, we are addressing the provisions of Subchapter F which include the process for issuing and modifying Standard Permits. We are approving the provisions for issuing and modifying Standard Permits which are found in Sections 116.601-116.606, 116.610-116.611, and 116.614-116.615.

Sections 116.617, 116.620, and 116.621 are specific permits that Texas has issued. These Sections do not include any provisions relating to the process by which they (or any Standard Permit) must be issued or modified. The Sections which address the process for issuing and modifying Standard Permits (as identified above) are not dependent on the provisions of Sections 116.617, 116.620, and 116.621, and can be implemented without the approval of Sections 116.617, 116.620, and 116.621. Thus, today's final action does not include action on Sections 116.617, 116.620, and 116.621. We are also taking no action today on section 116.601(a)(1) which contains cross-references to Sections 116.617, 116.620, and 116.621. We will review and take appropriate action on Sections 116.617, 116.620, and 116.621, as well as section 116.601(a)(1), separately.

In addition, we are taking no action on section 116.610(d). Subsection (d) of section 116.610 addresses projects subject to Subchapter C of Chapter 116 (relating to Hazardous Air Pollutants: Regulations Governing Constructed or Reconstructed Major Sources (FCAA, § 112(g)). We have not completed our review of the provisions of Subchapter C. We will address Subchapter C and other provisions referring to Subchapter C (including section 116.610(d)) in a separate action.

We are approving section 122.122—Potential to Emit, as submitted December 9, 2002.

Section 122.122 contains provisions by which a source may register and certify limitations on its production and operation which would limit its PTE below the level of a “major source” as defined under 40 CFR 70.2. Texas revised the rule to address a deficiency identified in the NOD. The changes that were made and our evaluation of why the changes are approvable are discussed in section II of this preamble.

We are approving revisions of the Texas SIP to address Texas' SIP submittal dated December 9, 2002. This includes Sections 106.6, revisions to section 116.115, and Sections 116.611 and 122.122. These SIP revisions relate to Texas' programs for PBR, Standard Permits, and Operating Permits.

The regulations allow a source to limit its PTE of a pollutant below the level of a major source defined in the Act. This includes regulations which Texas revised to allow an owner or operator of a source to register and certify restrictions and limitations that the owner or operator will meet to maintain its PTE below the major source threshold. The changes require the owner or operator to submit the certified registrations to the Executive Director of TCEQ, the appropriate TCEQ regional office, and to all local air pollution control agencies having jurisdiction over the site. The changes to section 122.122 satisfactorily address the NOD by making the PTE limits in the certified registrations practically and Federally enforceable.

We are also approving other provisions of Chapters 106 and 116 which incorporate Texas' regulations for PBR and Standard Permits that Texas submitted to EPA on April 29, 1994; August 17, 1994; September 20, 1995; April 19, 1996; May 21, 1997; July 22, 1998; October 25, 1999; January 3, 2000; September 11, 2000; July 25, 2001; and December 9, 2002.

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 13, 2004. 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).)

States which have received Final authorization from EPA under RCRA section 3006(b), 42 U.S.C. 6926(b), must maintain a hazardous waste program that is equivalent to, consistent with, and no less stringent than the Federal program. As the Federal program changes, States must change their programs and ask EPA to authorize the changes. Changes to State programs may be necessary when Federal or State statutory or regulatory authority is modified or when certain other changes occur. Most commonly, States must change their programs because of changes to EPA's regulations in 40 Code of Federal Regulations (CFR) parts 124, 260 through 266, 268, 270, 273 and 279.

We conclude that Colorado's application to revise its authorized program meets all of the statutory and regulatory requirements established by RCRA. Therefore, we grant Colorado Final authorization to operate its hazardous waste program with the changes described in the authorization applications. Colorado has responsibility for permitting Treatment, Storage, and Disposal Facilities (TSDFs) within its borders, except in Indian Country, and for carrying out the aspects of the RCRA program described in its revised program application, subject to the limitations of the Hazardous and Solid Waste Amendments of 1984 (HSWA). New Federal requirements and prohibitions imposed by Federal regulations that EPA promulgates under the authority of HSWA take effect in authorized States before they are authorized for the requirements. Thus, EPA will implement those requirements and prohibitions in Colorado, including issuing permits, until Colorado is authorized to do so.

This decision means that a facility in Colorado subject to RCRA will now have to comply with the authorized State requirements instead of the equivalent Federal requirements in order to comply with RCRA. Colorado has enforcement responsibilities under its State hazardous waste program for violations of such program, but EPA retains its authority under RCRA sections 3007, 3008, 3013, and 7003, which include, among others, authority to:

• Conduct inspections; require monitoring, tests, analyses, or reports;

• Enforce RCRA requirements; suspend or revoke permits; and,

• Take enforcement actions regardless of whether Colorado has taken its own actions.

This action does not impose additional requirements on the regulated community because the regulations for which Colorado is being authorized by today's action are already effective and are not changed by today's action.

EPA did not publish a proposal before today's rule because we view this as a routine program change. We are providing an opportunity for the public to comment now. In addition to this rule, in the proposed rules section of today's Federal Register we are publishing a separate document that proposes to authorize the State program changes.

If EPA receives comments that oppose this authorization, we will withdraw this rule by publishing a document in the Federal Register before the rule becomes effective. EPA will base any further decision on the authorization of the State program changes on the proposal mentioned in the previous paragraph. We will then address all public comments in a later final rule. You may not have another opportunity to comment, therefore, if you want to comment on this authorization, you must do so at this time.

If we receive comments that oppose only the authorization of a particular change to the Colorado hazardous waste program, we will withdraw that part of this rule but the authorization of the program changes that the comments do not oppose will become effective on the date specified above. The Federal Register withdrawal document will specify which part of the authorization will become effective and which part is being withdrawn.

Colorado initially received Final authorization on October 19, 1984, effective November 2, 1984 (49 FR 41036) to implement the RCRA hazardous waste management program. We granted authorization for changes to their program on October 24, 1986, effective November 7, 1986 (51 FR 37729); May 15, 1989, effective July 14, 1989 (54 FR 20847); May 10, 1991, effective July 9, 1991 (56 FR 21601); and April 7, 1994, effective June 6, 1994 (59 FR 16568).

Colorado submitted a final complete program revision applications on December 31, 2002, seeking authorization of their changes in accordance with 40 CFR 271.21. We now make an immediate final decision, subject to receipt of written comments that oppose this action, that Colorado's hazardous waste program revision satisfies all of the requirements necessary to qualify for Final authorization. Therefore, we grant Colorado Final authorization for the following program changes (the Federal Citation followed by the analog from the Code of Colorado Regulations (6 CCR 7007-3), revised through September 1, 2002 ): Delisting [54 FR 27114, 6/27/89] (Checklist 17B.1)/260.22(b); Listing of Spent Pickle Liquor (K062) [52 FR 28697, 8/3/87] (Checklist 26.2)/261.32; Corrective Action for Injection Wells [52 FR 45788, 12/1/87] (Checklist 44C) 265.1(c)(2) and 100.21(b)(3)(i); Identification and Listing of Hazardous Waste; Technical Correction [53 FR 27162, 7/19/88] (Checklist 47)/261.5(e) and 261.5(f)(2); Farmer Exemptions; Technical Corrections [53 FR 27164, 7/19/88] (Checklist 48)/262.10(b), 262.10(d), 264.1(g)(4), 265.1(c)(8), and 100.10(a)(2); Identification and Listing of Hazardous Waste; Treatability Studies Sample Exemption [53 FR 27290, 7/19/88] (Checklist 49)/260.10 and 261.4(e) & (f); Identification and Listing of Hazardous Waste; Removal of Iron Dextran from the List of Hazardous Wastes Identification and Listing of Hazardous Waste [53 FR 43878, 10/31/88] (Checklist 56)/261.33(f) and Part 261, Appendix VIII; Identification and Listing of Hazardous Waste; Removal of Strontium Sulfide the List of Hazardous Wastes [53 FR 43881, 10/31/88] (Checklist 57)/261.33(e) and Part 261, Appendix VIII; Testing & Monitoring Activities [54 FR 40260, 9/29/89] (Checklist 67)/260.11(a) and Part 261, Appendix III; Reportable Quantity Adjustment Methyl Bromide Production Wastes [54 FR 41402, 10/6/89] (Checklist 68)/261.32 and Part 261, Appendices III & VII; Reportable Quantity Adjustment [54 FR 50968, 11/11/89] (Checklist 69)/261.31 and Part 261, Appendices VII & VIII; Changes to Part 124 Not Accounted for by Present Checklists [48 FR 14146, 4/1/83; 48 FR 30113, 6/30/83; 53 FR 28118, 7/26/88; 53 FR 37396, 9/26/88; and 54 FR 00246, 1/4/89] (Checklist 70)/100.12(a) & (c), 100.500(a), 100.60(a), (c)(1) & (3), & (d), and 100.502(c); Modification of F019 Listing [55 FR 05340, 2/14/90] (Checklist 72)/261.31; Testing & Monitoring Activities; Technical Corrections [55 FR 08948, 3/9/90] (Checklist 73)/260.11(a) and Part 261, Appendix III/Tables 2 & 3; Listing of 1,1-Dimethylhydrazine Production Wastes [55 FR 18496, 5/2/90] (Checklist 75)/261.32 and Part 261, Appendices III & VII; Criteria for Listing Toxic Wastes; Technical Amendment [55 FR 18726, 5/4/90] (Checklist 76)/261.11(a)(3); HSWA Codification Rule, Double Liners; Correction [55 FR 19262, 5/9/90] (Checklist 77)/264.221(c) and 264.301(c); Organic Air Emission Standards for Process Vents & Equipment Leaks [55 FR 25454, 6/21/90] (Checklist 79)/260.11(a), 261.6(c) & (d), 264.13(b)(6), 264.15(b)(4), 264.73(b), 264.77(c) & (d), 264.1030-1079, 265.13(b)(6), 265.15(b)(4), 265.73(b)(3) & (6), 265.77(d) & (e), 265.1030-1079, and 100.41(a) & (b); Toxicity Characteristic; Hydrocarbon Recovery Operations [55 FR 40834, 10/5/90; 56 FR 03978, 2/1/91; and 56 FR 13406, 4/2/91] (Checklists 80, 80.1, and 80.2)/261.4(b)(11); Petroleum Refinery Primary & Secondary Oil/Water/Solids Separation Sludge Listings (F037 & F038) [55 FR 46354, 11/2/90 and 55 FR 51707, 12/17/90] (Checklists 81 & 81.1)/261.31(a) & (b) and Part 261, Appendix VII; Toxicity Characteristic: Chlorofluorocarbon Refrigerants [56 FR 05910, 2/13/91] (Checklist 84)/261.4(b)(12); Removal of Strontium Sulfide from the List of Hazardous Wastes; Technical Amendment [56 FR 07567, 2/25/91] (Checklist 86)/261.33(e) and Part 261, Appendix VIII; Organic Air Emission Standards for Process Vents & Equipment Leaks; Technical Amendment [56 FR 19290, 4/26/91] (Checklist 87)/264.1030(a) & (b), 264.1033(f)(3), 264.1035(f)(3), 264.1035(b)(4)(ii), 264.1052(b)(1), 265.13(b)(6), 265.73(b)(3), 265.1030(b), 265.1034(c)(1)(vi), 265.1035(b)(4)(ii), 265.1035(c)(5), 265.1052(e)(3), 265.1064(c), 100.41(b)(11)(iv)(B), and 100.41(b)(12)(v)(B); Administrative Stay for K069 Listing [56 FR 19951, 5/1/91] (Checklist 88)/261.32; Revision to the Petroleum Refining Primary & Secondary Oil/Water/Solids Separation Sludge Listings (F037 & F038) [56 FR 21955, 5/13/91] (Checklist 89)/261.31(e); Exports of Hazardous Waste; Technical Correction [56 FR 43704, 9/4/91] (Checklist 97)/262.53(b) and 262.56(b); Liners & Leak Detection Systems for Hazardous Waste Land Disposal Units [57 FR 03462, 1/29/92] (Checklist 100)/260.10, 264.15(b)(4), 264.19, 264.73(b)(6), 264.221(c), (d), (f) & (g)-(i), 264.222(a) & (b), 264.223(a)-(c), 264.226(d), 264.228(b), 264.251(c)-(k), 264.252(a) & (b), 264.253(a)-(c), 264.254(c), 264.301(c), (d), & (f)-(k), 264.302(a)-(c), 264.304(a)-(c), 264.310(b), 265.15(b)(4), 265.19(a)-(d), 265.73(b)(6), 265.221(a), (c), (f) & (g), 265.222(a)-(c), 265.224(a)-(c), 265.226(b), 265.228(b), 265.254, 265.255(a)-(c), 265.259(a)-(c), 265.260, 265.301(a), (c) & (f)-(i), 265.302(a)-(d), 265.303(a)-(c), 265.304(a)-(c), 265.310(b), 100.46(a), 100.41(b), and 100.63, Appendix I; Hazardous Debris Case-by-Case Capacity Variance [57 FR 20766, 5/15/92] (Checklist 103)/268.35(e); Used Oil Filter Exclusion [57 FR 21524, 5/20/92] (Checklist 104)/261.4(b)(13); Recycled Coke By-Product Exclusion [57 FR 27880, 6/22/92] (Checklist 105)/261.4(a)(11); Lead-bearing Hazardous Materials Case-by-Case Capacity Variance [57 FR 28628, 6/26/92] (Checklist 106)/268.35(c); Used Oil Filter Exclusion: Technical Corrections [57 FR 29220, 7/1/92] (Checklist 107)/261.4(b)(13); Toxicity Characteristics Revisions; Technical Corrections [57 FR 30657, 7/10/92] (Checklist 108)/261.4(b)(6)(ii), 261.4(b)(9), and 265.301(d)(1); Coke By-Products Listings [57 FR 37284, 8/18/92] (Checklist 110)/261.4(a)(11), 261.32, and Part 261, Appendix VII; Chlorinated Toluene Production Waste Listing [57 FR 47376, 10/15/92] (Checklist 115)/261.32 and Part 261, Appendix VII; Hazardous Soil Case-by-Case Capacity Variance [57 FR 47772, 10/20/92] (Checklist 116)/268.35(c)-(e); Toxicity Characteristic Amendment [57 FR 23062, 6/1/92] (Checklist 117B)/261.3(a)(2)(i); Liquids in Landfills II [57 FR 54452, 11/18/92] (Checklist 118)/264.13(c)(3), 264.314(a), 264.314(c)(1)(ii), 264.314(e), 264.316(b) & (c), 265.13(c)(3), 265.314(a), 265.314(b)(1)(ii), 265.314(f), and 265.316(b) & (c); Toxicity Characteristic Revision; TCLP Correction [57 FR 55114, 11/24/92 & 58 FR 06854, 2/2/93] (Checklists 119 & 119.1)/Part 261, Appendix II; Wood Preserving; Revisions to Listings & Technical Requirements [57 FR 61492, 12/24/92] (Checklist 120)/261.31(a)/table, 264.570(a) & (c), 264.571(a) & (b), 264.572 thru 264.572(b), 264.573(a), (b), & (i), 265.440(a) & (c), 265.441(a) & (b), 265.442 thru (b), and 265.443(a), (b), & (i); Land Disposal Restrictions: Renewal of the Hazardous Waste Debris Case-by-Case Capacity Variance [58 FR 283506, 5/14/93] (Checklist 123)/268.35(e); Land Disposal Restrictions for Ignitable & Corrosive Characteristic Wastes Whose Treatment Standards Were Vacated [58 FR 29860, 5/24/93] (Checklist 124)/264.1(g)(6), 265.1(c)(10), 268.1(e)(4) & (5), 268.2(i), 268.7(a) & (b), 268.9(a), 268.37(a) & (b), 268.40(b), 268.41(a)/table CCWE, 268.42(a)/table 2, 268.43(a)/table CCW, and 100.64, Appendix I; Testing & Monitoring Activities [58 FR 46040, 8/31/93 and 59 FR 47980, 9/19/94] (Checklists 126 and 126.1)/260.11(a), 260.22(d)(1)(i), 261.22(a), 261.24(a), Part 261, Appendices II, III, & X, 264.190(a), 264.314(d), 265.190(a), 265.314(d), 268.7(a), 268.40(a), 268.41(a), Part 268, Appendices I & IX, 100.47(a), 100.41(b)(5)(iii)(3) & (4), and 100.22(c)(2)(ii)(A)(3) & (4); Wastes From the Use of Chlorophenolic Formulations in Wood Surface Protection [59 FR 00458, 1/4/94] (Checklist 128)/260.11(a) and Part 261, Appendix VIII; Revision of Conditional Exemption for Small Scale Treatability Studies [59 FR 08362, 2/18/94] (Checklist 129)/261.4(e)(2) & (3), and 261.4(f)(3), (4), & (6); Recordkeeping Instructions: Technical Amendment [59 FR 13891, 3/24/94] (Checklist 131)/Part 264, Appendix I/tables 1 & 2 and Part 265, Appendix I/table 1 & 2; Wood Surface Protection; Correction [59 FR 28484, 6/2/94] (Checklist 132)/260.11(a); Letter of Credit Revision [59 FR 29958, 6/10/94] (Checklist 133)/266.18(e) & (l); Correction of Beryllium Powder (P015) Listing [59 FR 31551, 6/20/94] (Checklist 134)/261.33(e), Part 261, Appendix VIII, 268.42(a)/table 2, 261.3(c)(2)(ii)(B), 261.4(a)(13), 261.6(a)(3)(iii), (v) & (vi), and 267.30(b)(2); Recovered Oil Exclusion [59 FR 38536, 7/28/94] (Checklist 135)/261.3(c)(2)(ii)(B), 261.4(a)(13), 261.6(a)(3)(iv)-(vi), and 267.30(b)(2); Universal Treatment Standards & Treatment Standards for Organic Toxicity Characteristic Wastes & Newly Listed Wastes [59 FR 47982, 9/19/94 and 60 FR 00242, 3/3/95] (Checklists 137 & 137.1)/260.30 intro & (b), 260.31(a) & (b), 260.32 intro, 260.33 intro-(b), 261.2(e)(1)(iii), 264.1(g)(6), 265.1(c)(10), 267.23(a), 268.1(e)(4) & (6), 268.2(g) & (i), 268.7(a), 268.7(b)(4)(ii) & (5)(iv), 268.7(d) & (d)(1), 268.9(a), 268.9(d), 268.38(a)-(e), 268.40(a)-(f), 268.40/table, 268.41 & table CCWE, 268.42, 268.42(a), 268.42(a)/tables 1-3, 268.42(c)(2), 268.42(d), 268.43, 268.43/table CCW, 268.45(b)(2), 268.46, 268.48(a), 268.48/table UTS, and Part 268 Appendix IV, V, & X; Testing & Monitoring Activities Amendment I [60 FR 03089, 1/13/95] (Checklist 139)/260.11(a); Carbamate Production Identification & Listing of Hazardous Waste [60 FR 07824, 2/9/95; 60 FR 19165, 4/17/95; and 60 FR 25619, 5/12/95] (Checklists 140-140.2)/261.3(a)(2)(iv)(E)-(G), 261.3(c)(2)(ii)(D), 261.32, 261.33(e) & (f), and Part 261, Appendix VII & VIII; Testing & Monitoring Activities Amendment II [60 FR 17001, 4/4/95] (Checklist 141)/260.11(a); Universal Waste: General Provisions [60 FR 25492, 5/11/95] (Checklist 142A)/260.10, 261.5(c), (f) & (g), 261.9, 262.10(b)-(g), 262.11(d), 264.1(g)(11), 265.1(c)(14), 268.1(f), 100.10(a)(14), 273.1(a) & (b), 273.5(a) & (b), 273.6, 273.10-273.12, 273.15-273.20, 273.30-273.32, 273.34-273.40, 273.50-273.56, 273.60-273.62, and 273.70; Universal Waste Rules: Specific Provisions for Batteries [60 FR 25492, 5/11/95] (Checklist 142B)/260.10, 261.6(a)(3)(ii)-(vi), 261.9(a), 264.1(g)(11)(i), 265.1(c)(14)(i), 267.80(a) & (b), 268.1(f)(1), 100.10(a)(14)(i), 273.1(a), 273.6, 273.13 & 273.14, and 273.33 & 273.34; Universal Waste Rules: Specific Provisions for Pesticides [60 FR 25492, 5/11/95] (Checklist 142C)/260.10, 261.9(b), 264.1(g)(11)(ii), 265.1(c)(14)(ii), 268.1(f)(2), 100.10(a)(14)(ii), 273.1(a)(2), 273.2(b), 273.6, 273.13(b) & 273.14(b) & (c), 272.32(a)(1) & (3), 273.33(b), and 273.34(b) & (c); Universal Waste Rules: Specific Provisions for Thermostats [60 FR 25492, 5/11/95] (Checklist 142D)/260.10, 261.9(c), 264.1(g)(11)(iii), 265.1(c)(14)(iii), 268.1(f)(3), 100.10(a)(14)(iii), 273.1(a)(3), 273.2(c), 273.6, 273.13(c), 273.14(d), 273.33(c), and 273.34(d); Liquids in Landfills III [60 FR 35703, 7/11/95] (Checklist 145)/264.314(e)(2)(ii) & (iii) and 265.314(f)(2)(ii) & (iii); Amendments to the Definition of Solid Waste; Amendment II [61 FR 13103, 3/26/96] (Checklist 150)/261.4(a)(13); Consolidated Organic Air Emission Standards for Tanks, Surface Impoundments, and Containers [59 FR 62896, 12/6/94; 60 FR 26828, 5/19/95; 60 FR 50426, 9/29/95; 60 FR 56952, 11/13/95; 61 FR 04903, 2/9/96; 61 FR 28508, 6/5/96; 61 FR 59932, 11/25/96] (Checklists 154 thru 154.6)/260.11, 261.6(c)(1), 262.34(a)(1)(i) & (ii), 262.34(d)(2), 264.13(b), 264.15(b)(4), 264.73(b)(3) & (6), 264.77(c), 264.179, 264.200, 264.232, 264.601, 264.1030(b) & note, 264.1033(a)(2), 264.1033(f)(2)(vi)(B), 264.1033(k)-(o), 264.1034(b), 264.1035(c)(9) & (10), 264.1035(d), 264.1050(b), (f) & note, 264.1055(a)-(c), 264.1058(e), 264.1064(g)(6), 264.1080(a)-(d), 264.1081, 264.1082(a)-(d), 264.1083(a)-(d), 264.1084(a)-(l), 264.1085(a)-(g), 264.1086(a)-(h), 264.1087(a)-(c), 264.1088(a) & (b), 264.1089(a)-(i), 264.1090(a)-(d), 264.1091, 265.1(b), 265.13(b)(6) & (8), 265.15(b)(4), 265.73(b)(3) & (6), 265.77, 265.178, 265.202, 265.232, 265.1030(b) & note, 265.1033(a)(2), 265.1033(f)(2)(vi)(B), 264.1033(j)-(n), 265.1034(b), 264.1035(c)(3),(9) & (10), 265.1035(d), 265.1050(b), (e) & note, 265.1055(a)-(c), 265.1058(e), 265.1064(g)(6), 265.1080(a)-(d), 265.1081, 265.1082(a)-(c), 265.1083(a)-(d), 265.1084(a)-(d), 265.1085(a)-(l), 265.1086(a)-(g), 265.1087(a)-(h), 265.1088(a)-(c), 265.1089(a) & (b), 265.1090(a)-(j), 265.1091, Part 265, Appendix VI, 100.46(a)(2)-(4), 100.41(a)(5), 100.41(b)(1)(v), 100.41(b)(2)(xi), 100.41(b)(3)(x), and 100.41(b)(13)(i); Land Disposal Restrictions Phase III—Emergency Extension of the K088 Capacity Variance [62 FR01992, 1/14/97] (Checklist 155)/268.39(c); Land Disposal Restrictions Phase IV—Treatment Standards for Wood Preserving Wastes, Paperwork Reduction and Streamlining, Exemptions from RCRA for Certain Processed Materials, and Miscellaneous Hazardous Waste Provisions [62 FR 25998, 5/12/97] (Checklist 157)/261.1(c)(9)-(12), 261.2(c)/table 1, 261.4(a)(14) & (15), 261.6(a)(3)(ii), 268.1(e) intro-(e)(4), 268.4(a)(2)(iv), 268.4(a)(4), 268.7(a)-(c), 268.9(d)(1)(ii), 268.30(a)-(e), 268.32-268.36, 268.40/table of treatment standards, 268.42/table 1, 268.44(o), and Part 268, Appendices I, II, III, VI, VII, VIII, & X; Testing & Monitoring Activities Amendment III [62 FR 32452, 6/13/97] (Checklist 158)/260.11(a), 264.1034(d)(1)(iii), 264.1034(f), 264.1063(d)(2), Part 264, Appendix IX, footnote 5, 265.1034(d)(1)(iii), 265.1034(f), and 265.1063(d)(2); Conformance with the Carbamate Vacatur [62 FR 32974, 6/17/97] (Checklist 159)/261.32/table, 261.33(f), Part 261, Appendices VII and VIII, 268.39(a) & (d), and 268.40/table; Land Disposal Restrictions Phase III—Emergency Extension of the K088 National Capacity Variance, Amendment [62 FR 37694, 7/14/97] (Checklist 160)/268.39(c); Emergency Revision of the Carbamate Land Disposal Restrictions [62 FR 45568, 8/28/97] (Checklist 161)/268.40(g) and 268.48(a)/table; Consolidated Checklist for the Wood Preserving Listings as of June 30, 1992 [55 FR 50450, 12/6/90; 56 FR 27332, 6/13/91; 56 FR 30192, 7/1/91; 57 FR 05859, 2/18/92] (Checklists 82, 91, 92, and 101)/260.10, 261.4(a)(10), 261.31(a), 261.35(a)-(c), Part 261, Appendix III/table 1, Part 261, Appendices VII & VIII, 262.34(a)(1) & (2), 264.190, 264.190(d), 264.570(a) & (b), 264.571(a)-(d), 264.572, 264.573(a)-(o), 264.574(a) & (b), 264.575(a)-(c), 265.190, 265.190(d), 265.440(a) & (b), 265.441(a)-(d), 265.442, 265.443(a)-(m) & (o), 265.444(a) & (b), 265.445(a)-(c), and 100.41(b)(9); Consolidated Checklist for the Recycled Used Oil Management Standards as of June 30, 1994 [57 FR 41566, 9/10/92; 58 FR 26420, 5/3/93; 58 FR 33341, 6/17/93; 59 FR 10550, 3/4/94] (Checklists 112, 122, 122.1, and 130)/260.10, 261.3(a)(2)(v)-(v)(B), 261.4(b)(13) & (14), 261.5(j), 261.6(a)(2)(iii) & (iv), 261.6(a)(3)(iii)-(iv), (vii) & (ix), 261.6(a)(4), 264.1(g)(2), 265.1(c)(6), Part 267, subpart E, 267.30(b)(1), and Chapter 279; Sharing of Information with the Agency for Toxic Substances and Disease Registry [Statutory Provision, 7/15/85] (Non-checklist SI)/C.R.S. 25-15-307, C.R.S. 25-1-122(4), C.R.S. 24-72-201, and 6 CCR 1007-3, Part 2.

We also grant Colorado Final authorization for the following program changes (the Federal Citation followed by the analog from the Code of Colorado Regulations (6 CCR 7007-3), revised through September 30, 2003 ): Amendments to Interim Status Standards for Downgradient Ground-Water Monitoring Well Locations [56 FR 66365, 12/23/91] (Checklist 99)/260.10 and 265.91(a); Land Disposal Restrictions Phase IV—Hazardous Soils Treatment Standards & Exclusions [63 FR 28556, 5/26/98] (Checklist 167B)/268.2(k), 268.7(a), (b), & (e), 268.44(h)(3)-(5), and 268.49; Mineral Processing Secondary Materials Exclusion [63 FR 28556, 5/26/98] (Checklist 167D)/261.2(c)(3), 261.2(c)(4)/table, 261.2(e)(1)(iii), and 261.4(a)(17); Bevill Exclusion Revisions & Clarifications [63 FR 28556, 5/26/98] (Checklist 167E)/261.3(a)(2)(i) & (iii) and 261.4(b)(7) intro-(iii); Exclusion of Recycled Wood Preserving Wastewaters [63 FR 28556, 5/26/98] (Checklist 167F)/261.4(a)(10)(iii)-(iii)(E); Petroleum Refining Process Wastes [63 FR 42110, 8/6/98 & 63 FR 54356, 10/9/98] (Checklists 169 & 169.1)/261.3(a)(2)(iv)(C), 261.3(c)(2)(ii)(B) & (E), 261.4(a)(13)(i) & (ii), 261.4(a)(18) & (19), 261.6(a)(3)(iv)(C), 261.6(a)(3)(v), 261.31(a), 261.32, Part 261, Appendix VII, 268.35(a)-(c),and 268.40/table Emergency Revision of the Land Disposal Restrictions (LDR) Treatment Standards for Listed Hazardous Wastes from Carbamate Production [63 FR 47410, 09/04/98] (Checklist 171)/268.40(g), 268.40(j), 268.40/table, and 268.48(a)/table; Land Disposal Restrictions—Treatment Standards for Spent Potliners from Primary Aluminum Reduction (K088)—Final Rule [63 FR 51254, 9/24/98] (Checklist 173)/268.39(c) and 268.40/table; Post-Closure Permit Requirement & Closure Process [63FR 56710, 10/22/98] (Checklist 174)/264.90(e) & (f)-(f)(2), 264.110(c), 264.112(b)(8), 264.112(c)(2)(iv), 264.118(b)(4), 264.118(d)(2)(iv), 266.10(d) & (d)(2), 265.90(f), 265.110(c) & (d), 265.112(b)(8), 265.112(c)(1)(iv), 265.118(c)(4) & (5), 265.118(d)(1)(iii), 265.121(a) & (b), 100.10 intro & (d) [includes “state-initiated” changes that have been determined to be equivalent], and 100.41 intro & (b)(14); HWIR-Media [63 FR 65874, 11/30/98] (Checklist 175)/260.10 intro, “CAMU”, “facility”, “miscellaneous unit”, “remediation waste”, “remediation waste management site”, “staging pile”, 261.4(g), 264.1(j), 264.73(b)(17), 264.101(d), 264.552(a), 264.553(a), 264.554(c) intro-(m), 265.1(b), 268.2(c), 268.50(g), 260.10, 100.12(d)(1) & (2), 100.63, Appendix I, 100.20(c)(1), 100.27, 100.27(a)-(f); Universal Waste Rule—Technical Amendments [63 FR 71225, 12/24/98] (Checklist 176)/267.80(a) & table, 267.80(b), and 273.9 “small quantity handler of universal waste”; Petroleum Refining Process Wastes—Leachate Exemption [64 FR 06806, 2/11/99] (Checklist 178)/261.4(b)(15); Land Disposal Restrictions Phase IV—Technical Corrections and Clarifications to Treatment Standards [64 FR 25408, 05/11/99] (Checklist 179)/261.2(c)(3), 261.2(c)(4)/table, 261.2(e)(1)(iii), 261.4(a)(16) (1st Paragraph), 261.4(a)(17) intro & (v), 261.4(b)(7)(iii) & (iii)(A), 262.34(d)(4), 268.2(h) & (k), 268.7(a)(4)/table, 268.7(b)(3)(iii)/table, 268.7(b)(4)(iv), 268.9(d)(2) intro, 268.9(d)(2)(i), 268.40(j), 268.40/table, 268.48(a)/table, 268.49(c)(3) intro-(ii); Test Procedures for the Analysis of Oil & Grease and Non-Polar Material [64 FR 26315, 05/14/99] (Checklist 180)/260.11(a)(11) & (16); Land Disposal Restrictions Phase IV—Technical Corrections [64 FR 56469, 10/20/99] (Checklist 183)/261.32, 262.34(a)(4), 268.7(a)(3)(iii), 268.40(j), and 268.40/table; Accumulation Time for Waste Water Treatment Sludges [65 FR 12378, 03/08/2000] (Checklist 184)/262.34(a)(4) and 262.34(h)-(j); Petroleum Refining Process Wastes—Clarification [64 FR 36365, 06/08/00] (Checklist 187)/261.31(a)/table and Part 268, Appendix VII; and Exceptions to the Burning and Blending of Hazardous Waste [Statutory Provision, 11/8/84] (Non-Checklist BB)/261.4(a)(13)(i) & (ii).

The following rules/checklists were previously approved, but were inadvertently omitted from the Federal Register publications as noted (the Federal Citation followed by the analog from the Code of Colorado Regulations (6 CCR 7007-3): Permit Rules; Settlement Agreement [48 FR 39611, 9/1/83] (Checklist 2)/100.12(c)(1) & (3), 100.12(d), and 100.42(d); Interim Status Standards; Applicability [48 FR 52718, 11/22/83] (Checklist 3)/265.1(b); National Uniform Manifest [49 FR 10490, 3/20/84] (Checklist 5)/260.10, 260.20(a), 260.21, 262.50(b)(3) & (4), 262.50(d) & (e), Part 262, Appendix; Permit Rules; Settlement Agreement [49 FR 17716, 4/24/84] (Checklist 6)/no State analog; Definition of Solid Waste Corrections 1 & 2 [50 FR 14216, 4/11/85 and 50 FR 33541, 8/20/85] (Checklist 13.1 & 13.2)/260.30(a), 261.2(c)(1) & (2), 261.3(c)(2), 261.4(a)(8), 261.5(c), 261.6(c), 267.30(b), and 267.80(a) & (b); Listing of Spent Solvents Correction 1 [51 FR 02702, 1/21/86] (Checklist 20.1)/261.31; and Listing of Spent Pickle Liquor (K062) Correction 1 [51 FR 33612, 9/22/86] (Checklist 26.1)/261.32 were omitted from 54 FR 20847, 5/15/89, authorization effective July 14, 1989. Amendments to Part B Information Requirements Land Disposal Facilities, Correction 1 [52 FR 33936, 9/9/87] (Checklist 38.1) was omitted from 56 FR 21601, 5/10/91, authorization effective July 9, 1991.

Colorado has requirements that are more stringent than the Federal rules at (references are to the Code of Colorado Regulations, except where there is no State analog. Then the reference is to the Federal citation): 100.27(d)(5)(ii), 100.27(f)(1)(iv)(C), 100.60(d); 261.4(f)(1), (5), (8)(i), (10)(viii), (13), & (14); 261.5(f)(3) intro-(iv); 261.5(g)(3) intro-(iv); 264.113(e)(5); 264.251(g)-(k); 264.301(g)-(k); 264.314(a); 264.552(a)(3); 264.573(a)(5), 264.573(b)(2)(iii); 264.573(m) & (m)(1); 265.77(e); 265.113(e)(5); 265.221(g); 265.314(a); 265.443(b)(2)(iii); 265.443(m) & (m)(1); 268.1(c)(3)(ii) & (iii) (no State analogs); 268.39(c), 270.70(b) (no State analog); and 273.32(a) & (a)(2) (no State analogs);

Colorado is broader-in-scope than the Federal rules at: 261.32 (K140) and 268.40/table (K140 & U408).

Colorado is in the process of adopting the Federal regulations regarding Boilers & Industrial Furnaces (BIFs). Until the State is authorized for BIF regulations, some of the above approved rules do not include references to these type of facilities at this time.

In the State regulations entry for K088, at the 268.40 Table, the spelling for Acenaphthene is incorrect. The entry for the CAS Number for K111 should be “121-1-2”. Colorado is aware of these errors and will correct both in its next rulemaking. We are authorizing the State for the correct spelling and CAS Number.

The entry in the sixth column for K156, Acetonitrile, in the Federal 268.40 Table should be “38 mg/kg” rather than “1.8 mg/kg”. Colorado has made the correction in the State 268.40 Table.

Colorado will issue permits for all the provisions for which it is authorized and will administer the permits it issues. EPA will continue to administer any RCRA hazardous waste permits or portions of permits which were issued prior to the effective date of this authorization until Colorado has equivalent instruments in place. We will not issue any new permits or new portions of permits for the provisions listed in Item G after the effective date of this authorization. EPA previously suspended issuance of permits for other provisions on the effective date of Colorado's Final Authorization for the RCRA base program and each of the revisions listed in Item F. EPA will continue to implement and issue permits for HSWA requirements for which Colorado is not yet authorized.

Colorado is not authorized to carry out its RCRA program in “Indian country” as defined in 18 U.S.C. 1151. This includes: (1) Lands within the exterior boundaries of the following Indian reservations located within or abutting the State of Colorado, (a) Southern Ute Indian Reservation and (b) Ute Mountain Ute Indian Reservation; (2) any land held in trust by the United States for an Indian tribe, and (3) any other areas which are “Indian country” within the meaning of 18 U.S.C. 1151.

Codification is the process of placing a State's statutes and regulations that comprise the State's authorized hazardous waste program into the CFR. We do this by referencing the authorized State rules in 40 CFR part 272. We reserve the amendment of 40 CFR part 272, subpart G for the codification of Colorado's updated program until a later date.

The Office of Management and Budget has exempted this action from the requirements of Executive Order 12866 (58 FR 51735, October 4, 1993), and therefore this action is not subject to review by OMB. This action authorizes State requirements for the purpose of RCRA 3006 and imposes no additional requirements beyond those imposed by State law. Accordingly, I certify that this action 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 action authorizes pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). For the same reason, this action also does not significantly or uniquely affect the communities of Tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action 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 (64 FR 43255, August 10, 1999), because it merely authorizes State requirements as part of the State RCRA hazardous waste program without altering the relationship or the distribution of power and responsibilities established by RCRA. This action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks. This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866.

Under RCRA 3006(b), EPA grants a State's application for authorization as long as the State meets the criteria required by RCRA. It would thus be inconsistent with applicable law for EPA, when it reviews a State authorization application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. 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. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. 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 document 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 in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This action will be effective January 13, 2004.

This is a summary of the Commission's Report and Order , adopted October 29, 2003, and released October 31, 2003. The full text of this Commission decision is available for inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. This document may also be purchased from the Commission's duplicating contractor, Qualex International, Portals II, 12th Street, SW, Room CY-B402, Washington, DC 20554.

This is a synopsis of the Commission's Memorandum Opinion and Order in MM Docket No. 99-322, adopted October 29, 2003, and released October 31, 2003. The full text of this decision is available for inspection and copying during normal business hours in the FCC Reference Information Center at Portals ll,CY-A257, 445 12th Street, SW., Washington, DC. The complete text of this decision may also 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 qualixint@aol.com.

This rule amends DFARS subpart 204.70 to prescribe the use of a contracting office's DoD activity address code in the first six positions of a solicitation or contract number, instead of the DoD activity address number found in DFARS appendix G. DoD activity address codes are maintained by the Defense Logistics Agency and are available at http://www.daas.dla.mil/daashome/.

This rule removes appendix G from the DFARS, as there is no longer a need for maintenance of DoD activity address numbers. The two-position codes in appendix G, that contracting offices use when placing an order against another activity's contract or agreement, are now available at a separate location on the Defense Acquisition Regulations Web page (http://www.acq.osd.mil/dp/dars/dfars.html). For reference purposes, archived versions of appendix G are available in the HTML version of the DFARS on the Defense Acquisition Regulations Web page, by using the “Prior Version” option shown at the beginning of each appendix G part.

DoD published a proposed rule at 68 FR 34879 on June 11, 2003. Four sources submitted comments on the proposed rule. A discussion of the comments is provided below. Differences between the proposed and final rules are addressed in the DoD Response to Comments 1 and 5 below. In addition, DoD has made editorial changes at 204.7005 to update address information.

1. Comment: The text at 204.7000(b) should be revised to clarify that the numbering requirements of DFARS subpart 204.70 do not apply to solicitations and orders that precede issuance of communication service authorizations.

DoD Response: Concur. The text at 204.7000(b) has been revised to incorporate this clarification.

2. Comment: Some of the DoDAACs are not six characters. Will the remaining characters be filled in with zeros? Will this result in duplicate DoDAACs for two different locations?

DoD Response: DFARS subpart 204.70 prescribes use of only those DoDAACs assigned to contracting activities, which are all six characters in length.

3. Comment: The rule should retain the existing language at 204.7000(b) that allows for optional procedures when assigning numbers to solicitations, contracts, and related instruments that will be completely administered by the purchasing office or the consignee.

DoD Response: Optional procedures are no longer permitted, as a result of the interim FAR rule published at 68 FR 56679 on October 1, 2003 (FAC 2001-16, Item III), which requires agencies to assign a unique identifier to every procurement instrument.

4. Comment: DFARS 204.7001(b) requires that the basic procurement instrument identification number be unchanged for the life of the instrument. To prevent duplication of call and/or order numbers, this policy should be changed to allow contracting officers to re-issue contracts with new identification numbers for administrative purposes.

DoD Response: The comment is outside the scope of this case. However, DoD is considering this concept under a separate case (DFARS Case 2003-D052).

5. Comment: DFARS 204.7002(c) requires that the major elements of a contract number be separated by dashes. This policy is reflective of a paper-based environment and should provide an exception for instances where the contract number is transmitted electronically.

DoD Response: Concur. The final rule amends 204.7002(c) to clarify that use of dashes is unnecessary in electronic transmission of contract numbers.

6. Comment: Does DoD plan to change the numbers of any existing contracts? We presume modifications to long-term contracts would be required to continue to carry the basic contract number. If contract numbers are not changed, the maintenance of DFARS appendix G could not be eliminated.

DoD Response: The rule does not require change to the numbers of existing contracts. This final rule removes appendix G from the DFARS. However, an archived version of appendix G is available through the Defense Acquisition Regulations web page for reference purposes.

7. Comment: Some military bases have multiple DoDAACs. We assume DoD will publish a list of the ones that will be used to identify contracts.

DoD Response: Each DoD component listed in DFARS 204.7005(c) will maintain a list of the DoDAACs it uses for contracts and will provide this information upon request.

8. Comment: DoDAACs should be maintained with the same rigor as the DoDAANs to ensure that shipments and payments are not delayed.

DoD Response: The DoD Activity Address File, which contains all DoDAACs, is updated on a daily basis.

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

DoD certifies that this final rule will not 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. , because assignment of solicitation and contract numbers is an administrative function performed by the Government. The rule makes no change to the number of characters in a solicitation or contract number and, therefore, will not have a significant effect on the operation of automated systems.

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

This interim rule supplements the final FAR rule published at 68 FR 56669 on October 1, 2003 (FAC 2001-16; Item I). The FAR rule contained requirements for contractors to register in the CCR database prior to award of any contract or agreement. Similar policy had been in the DFARS since March 31, 1998 (63 FR 15316). Since the DFARS policy has been superseded by the FAR policy, this interim rule removes most DFARS policy pertaining to CCR. However, there is still a need to address requirements for CAGE code information to accommodate DoD payment systems. Therefore, this interim rule retains DoD requirements for inclusion of CAGE codes on contracts and in the CCR database.

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

DoD does not expect this rule to 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. , because the rule adds no new requirements for DoD contractors. The rule removes DFARS text that has become obsolete as a result of policy that has been added to the FAR, and retains existing DoD requirements for use of CAGE codes. Therefore, DoD has not performed an initial regulatory flexibility analysis. DoD invites comments from small businesses and other interested parties. DoD also will consider comments from small entities concerning the affected DFARS subparts in accordance with 5 U.S.C. 610. Such comments should be submitted separately and should cite DFARS Case 2003-D040.

The Paperwork Reduction Act does not apply because the rule does not impose any 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. This interim rule removes DFARS text that has become obsolete as a result of policy on Central Contractor Registration that was added to the FAR on October 1, 2003. In addition, this rule addresses DoD requirements for inclusion of CAGE codes on contracts and in the CCR database. The FAR does not address CAGE code requirements, and DoD payment offices cannot match to CCR without CAGE code information. Comments received in response to this interim rule will be considered in the formation of the final rule.

Section 811 of the National Defense Authorization Act for Fiscal Year 2002 (Pub. L. 107-107) added 10 U.S.C. 2410n, providing that (1) before purchasing a product listed in the FPI catalog, DoD must conduct market research to determine whether the FPI product is comparable in price, quality, and time of delivery to products available from the private sector; (2) if the FPI product is not comparable in price, quality, and time of delivery, DoD must use competitive procedures to acquire the product; and (3) in conducting such a competition, DoD must consider a timely offer from FPI for award in accordance with the specifications and evaluation factors in the solicitation.

DoD published an interim rule at 67 FR 20687 on April 26, 2002, to implement section 811 of Public Law 107-107. On December 2, 2002, section 819 of the National Defense Authorization Act for Fiscal Year 2003 (Pub. L. 107-314) amended 10 U.S.C. 2410n to (1) clarify requirements for conducting market research before purchasing a product listed in the FPI catalog; (2) specify requirements for use of competitive procedures or for making a purchase under a multiple award contract if an FPI product is found to be noncomparable to products available from the private sector; (3) specify that a contracting officer's determination, regarding the comparability of an FPI product to products available from the private sector, is not subject to the arbitration provisions of 18 U.S.C. 4124(b); (4) specify that a DoD contractor may not be required to use FPI as a subcontractor; and (5) prohibit the award of a contract to FPI that would allow an inmate worker access to classified or sensitive information.

DoD published a proposed rule at 68 FR 26265 on May 15, 2003, to further implement the requirements of section 811 of Public Law 107-107, to implement section 819 of Public Law 107-314, and to address public comments received in response to the interim rule published on April 26, 2002. A discussion of the comments received in response to the proposed rule published on May 15, 2003, is provided below. DoD has adopted the proposed rule as a final rule without change.

1. Comment: FPI is not a small business concern and should not be permitted to participate in small business set-asides.

DoD Response: Concur that FPI is not a small business concern. The small business set-aside procedures in the rule apply only when an FPI product is found to be noncomparable to private sector products. In these situations, competitive procedures must be used and FPI must be given an opportunity to compete. Because the definition of competitive procedures in 10 U.S.C. 2410n includes procurements conducted in furtherance of the Small Business Act, the DFARS rule permits restriction of the competition to FPI and small business concerns.

2. Comment: The rule should prohibit a Federal contractor from being required to specify FPI products in the designs, specifications, or standards it develops for DoD.

DoD Response: Concur. Section 208.670 of the rule prohibits such an action.

3. Comment: The rule should clarify that DoD contracts, particularly architect-engineer contracts, should specify that FPI goods must be used to supply DoD unless excepted by 208.602. For example, DoD would not be permitted by law to procure office furniture as part of a consolidated or prime contract for the construction or renovation of a building if such a contracting method is used to preclude the necessity for a comparability determination or competitive procedures under sections 811 and 819.

DoD Response: Concur that consolidation of requirements merely to avoid a comparability determination or competitive procedures would be improper, as would any other action taken to circumvent statutory or regulatory requirements. However, consolidation where appropriate appears to be consistent with 10 U.S.C. 2410(e), which addresses the issue of subcontracting and specifically prohibits DoD from requiring a contractor to use FPI as a subcontractor or supplier. The provisions of 10 U.S.C. 2410(e) are reflected in the rule at 208.670.

4. Comment: A paragraph should be added to 208.670 to state that nothing in that section prohibits FPI from voluntarily entering into a subcontract with, or from being accepted as a subcontractor by, any prime contractor doing business with a DoD component.

DoD Response: Nothing in the rule precludes FPI from acting as a subcontractor. Specific mention of this subject in the rule is unnecessary.

5. Comment: The rule should clarify that use of multiple award schedule contracts is a legitimate competitive procedure.

DoD Response: This point is clear from the definition of “competitive procedures” at 208.601-70, which permits use of the procedures in FAR 6.102, to include the use of multiple award schedule contracts.

6. Comment: The first sentence of 208.602(a)(i) should make it clear that it is mandatory for contracting officers to conduct market research before purchasing a product listed in the FPI Schedule.

DoD Response: The first sentence of 208.602(a)(i) is an imperative statement and is clearly mandatory.

7. Comment: The way the rule is written, if FPI's product is found to be noncomparable in price, quality, and delivery time, FPI is given a second chance to meet these criteria through the competition phase. The rule should be revised to eliminate the second redundant step.

DoD Response: Do not concur. The two-step process is consistent with 10 U.S.C. 2410n(b), which clearly establishes an “if-then” situation, i.e. , if DoD makes a noncomparability determination, then competitive procedures must be used.

8. Comment: The rule should emphasize the two-step nature of the procedures, add a definition of “comparable” to 208.601-70, and clarify that DoD purchasers may request waiver if an FPI product has been determined to be comparable.

DoD Response: The rule is clear with regard to the two-step nature of the procedures. A definition of “comparable” is unnecessary, as this term is already used throughout the FAR and DFARS with its common dictionary meaning. If an FPI product is determined to be comparable to a private sector product, the rule requires use of the procedures in FAR subpart 8.6, which addresses clearance/waiver provisions. It is unnecessary to repeat these provisions in the DFARS.

9. Comment: The requirement for a written comparability determination takes discretion away from the contracting officer and should be eliminated.

DoD Response: Do not concur. It is common business practice to document the decision-making process.

10. Comment: The “unilateral decision” language at 208.602(a) should be removed. It does not provide any guidance to contracting officers in exercising their discretion.

DoD Response: Do not concur. This language clarifies the contracting officer's role in the determination process and is consistent with the provisions of 10 U.S.C. 2410n(d).

11. Comment: The rule should include language requiring FPI to adhere to its contractual obligations to the same extent as any other DoD contractor.

DoD Response: Concur that FPI should be held accountable for its performance. In accordance with FAR 8.607, the Government may collect past performance information for use in supporting a clearance request for future purchases. However, it is unnecessary to address this issue in this DFARS rule.

12. Comment: The rule overlooks the statutory requirement to give NIB second priority, behind FPI, for sales of products to the Government. The language at 208.602(a)(iv) should be revised to state that in the event that FPI is found to be non-comparable, JWOD products would be given first priority; if the product is not on the JWOD Procurement List, then competitive procedures may be used.

DoD Response: Do not concur. In accordance with 41 U.S.C. 48, NIB is given priority only if the required supplies or services are not available from FPI. If FPI can fulfill the requirement, even though it is determined to be noncomparable, 10 U.S.C. 2410n requires use of competitive procedures that include FPI.

13. Comment: The requirement in 208.602(a)(iv)(C)(1), to “Establish and communicate to FPI the requirements and evaluation factors that will be used as the basis for selecting a source, so that an offer from FPI can be evaluated on the same basis as the schedule holder” is too solicitous of FPI, exceeds the requirements of the law, and should be removed.

DoD Response: Do not concur. Since a formal solicitation will not be issued for purchases made using multiple award schedules, there must be a means of communicating this information to enable FPI to compete in accordance with 10 U.S.C. 2410n.

14. Comment: The language at 208.602(a)(iv) should specify how FPI will be notified of a solicitation.

DoD Response: Do not concur. This level of detail is more appropriately left to the discretion of the contracting officer.

15. Comment: The FPI Board of Directors adopted a resolution that directs FPI to grant waivers in all cases where the private sector provides a lower price for a comparable product that FPI does not meet. The rule should clarify that, because of sections 811 and 819, DoD contracting officers are exempt from this resolution and are therefore not required to obtain a waiver from FPI.

DoD Response: Section 208.606 of the rule provides a blanket exception from FPI clearance requirements, to apply when a contracting officer determines that an FPI product is not comparable to private sector products and the procedures at 208.602(a)(iv) are used. A specific exemption from the Board of Directors resolution is unnecessary.

16. Comment: The initial regulatory flexibility analysis concluded that the rule could benefit small business concerns that offer products comparable to FPI. The analysis should also consider and include the impact on FPI and the small business concerns that support FPI.

DoD Response: Concur. The final regulatory flexibility analysis addresses FPI and the small business concerns that provide supplies and services to FPI.

This rule was 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. , because the rule will permit small entities to compete with FPI for DoD contract awards under certain conditions. A final regulatory flexibility analysis has been prepared and is summarized as follows:

This rule amends DoD policy pertaining to the acquisition of products from FPI. The rule implements 10 U.S.C. 2410n. The net effect of the rule is unknown at this time. The rule is expected to benefit small business concerns that offer products comparable to those listed in the FPI catalog, by permitting those concerns to compete for DoD contract awards. The rule could also have a negative impact on small business concerns that provide supplies or services to FPI in support of its products. There are no known significant alternatives to the rule that would meet the requirements of 10 U.S.C. 2410n.

A copy of the analysis may be obtained from the point of contact specified herein.

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

This final rule provides for the payment of provisional award fees within an evaluation period prior to a final evaluation for that period. The provisional payments would be based on (1) successful evaluations for prior evaluation periods, and (2) the expectation that payment of provisional fee amounts will not reduce the overall effectiveness of the award fee incentive. A training module on the use of provisional award fee payments is available on the Defense Acquisition University Web site at http://www.dau.mil, under “Continuous Learning.”

DoD published a proposed rule at 67 FR 70388 on November 22, 2002. Seven respondents submitted comments on the proposed rule. A discussion of the comments is provided below. Differences between the proposed and final rules are explained in the DoD Response to Comments 5 and 10.

1. Comment: The proposed policy appears to conflict with the Defense Finance and Accounting Service (DFAS) DFAS-IN Regulation 37-1, Table 8-1, which states that award fee must not be obligated until its amount is determined. If provisional award fee is allowed, the DFAS regulation should be revised to preclude confusion.

DoD Response: Concur that DFAS may need to review its regulations to determine if revisions are required based on this DFARS rule.

2. Comment: It is not clear what the difference is between doing provisional award fee determinations and simply doing more frequent final award fee determinations. Presumably, the process for doing a provisional award fee payment would not be as formal as that for doing a final award fee determination. Suggest that the policy state that the agency should use a streamlined process for doing a provisional award fee determination.

DoD Response: DoD concurs with using a streamlined process for doing a provisional award fee determination, but this approach ( i.e. , the payment of part of available award fee without using all the formalities of a full-scale award fee determination) is already implied by the wording of the rule. The rule provides a framework, with the flexibility for contracting officers to implement the rule using processes that best fit their particular business needs.

3. Comment: It may be advisable to establish a ceiling on the amount that may be given as a provisional award fee.

DoD Response: Concur that there should be a ceiling; however, the rule already establishes a ceiling at 216.405-2(b)(3)(B) (1) and (2). The rule states that provisional award fee payments may not exceed 50 percent of the award fee available for the initial award fee period, and may not exceed 80 percent of the evaluation score for the prior evaluation period times the award fee available for the current period. Contracting officers are free to establish lower provisional award fee amounts if they deem it to be in the Government's best interests.

4. Comment: The policy should recognize that provisional award fees might not be feasible or appropriate in all situations. The agency may need to consider the ability of the vendor to provide data on incurred costs. It is common for a vendor with subcontractors to be several months behind in billing. Thus, a provisional determination linked to the value of work performed might be inaccurate. Or if the award fee is based on achievement of a milestone by a particular date, the argument could be made that giving a provisional award fee payment would actually reduce the effectiveness of the incentive. Therefore, the policy should cite examples of situations in which a provisional award fee payment would be appropriate.

DoD Response: Partially concur. DoD agrees that provisional award fee payments may not be feasible or appropriate in all situations and, therefore, should be optional. The rule provides contracting officers the flexibility to determine where and how provisional award fee payments can best be employed. The rule reflects this position at DFARS 216.405-2(b)(3), which states “The CPAF contract may include provisional award fee payments.” (emphasis added) However, it is not prudent to cite examples of situations in which a provisional award fee payment would be appropriate, because examples may be misinterpreted as the only situations in which this type of payment may be used.

5. Comment: If the provisional award fee payment process is too informal, it would be subject to abuse or misapplication, e.g. , if given without adequate justification or if given based on inaccurate data. This could lead to overpayment of award fee. Therefore, the policy should address recovery of any overpayment ( e.g. , by setoff or reduction in future award fee payments).

DoD Response: Concur that the rule should address recovery of an overpayment. The proposed rule, at 216.405-2(b)(3)(C), required the contractor to either credit any overpayment on the next payment voucher or refund any overpayment, in accordance with directions from the contracting officer. Since the overpayment is actually a debt due the Government, the final rule contains a change in this paragraph to require the contracting officer to collect the debt in accordance with FAR 32.606, Debt determination and collection.

6. Comment: The rule defeats the purpose of an award fee contract. By giving the contractor provisional payments on a monthly basis, you are in a sense turning an award fee contract into a fixed fee contract. The award fee pool is supposed to be tied to contractor performance, and provisional payments circumvent that by paying out a large percentage of the pool prior to the end of the evaluation period. Where is the incentive to perform? Furthermore, how can a contractor, deemed to have an adequate accounting system to support a cost-type contract, experience cash flow problems, especially when a large business can voucher for allowable costs every two weeks. In addition, has DoD considered the administrative burden of monthly provisional payments on the Government, i.e. , monthly modifications?

DoD Response: Provisional award fee payments do not turn an award fee contract into a fixed fee contract. The issue of entitlement is significantly different from the issue of timing. Provisional award fee payments only change the timing of the payments, not the entitlement to those payments. The contractor is incentivized, since the contractor must earn the award fee in exactly the same way as if there were no provisional award fee payments, i.e. , entitlement to the award fee continues to be tied to contractor performance. Should the Government determine that the contractor is not entitled to the award fee, the contractor must return the provisional payments to the Government.

As to the observation that contractors can voucher for all allowable costs on cost-type contracts every two weeks, it should be noted that not all unallowable costs are unavoidable. Contractors normally rely on the partial payment of fee for work accomplishment to cover unallowable costs, and to keep them out of a loss position on the contract as a whole. In particular, on high-dollar award fee contracts, the amount of award fee that is being held pending a formal award fee determination can be significant. As such, a standard award fee structure, instead of motivating and rewarding outstanding performance, can be a financial negative for a contractor. Without provisional award fee payments, some contractors may well prefer a smaller fixed fee that they know will arrive on a monthly basis to an award fee that, while possibly larger in amount, will be paid less frequently ( e.g. , not paid until the end of the award fee period).

The use of provisional award fee payments is entirely optional. Contracting officers may choose to not employ provisional award fee payments when they believe such use would dilute the effectiveness of the award fee in a particular contract, would be an undue administrative burden, or would otherwise not be in the Government's best interests.

7. Comment: Award fee administration is a very time consuming process. In accomplishing performance evaluations, great care is taken to adequately support awarding or withholding of award fee. This effort is done in a very careful, concise, and professional manner to avoid any appearance of arbitrary or capricious application of award fee criterion and to ensure that the contractor receives appropriate consideration for performance efforts.

The “Background” information in the Federal Register notice of the proposed rule stated, “Cost-reimbursement contracts containing award fees typically provide for an award fee payment no more frequently than every 6 months.” However, the respondent's experience in working with cost-reimbursement contracts is that “no more frequently” is more appropriately “no less frequently.” Many of these contracts begin with 6-month evaluation periods. As complexity or dollar value increase, evaluation periods are reduced to as low as 3-months (quarterly).

Prior to awarding cost-reimbursement contracts, audits are requested to ensure that the contractor has a financial system in place to support adequately identifying cost and that the company has the financial capability to perform the contract. Normally the proposed award fee periods are identified in a solicitation, putting the contractor on notice of the Government's intent for award fee evaluation. Also, there is no prohibition against a contractor requesting contracting officer consideration for reducing the length of award fee periods should the contractor begin experiencing “an undue financial burden.”

If a contracting officer implements this rule, it would result in an arbitrary determination of potential award fee earnings based on past performance. This practice would not only increase Government administration of the process, but could potentially allow a contractor the use of Government funds prior to a true determination of actual earnings with no consideration (such as interest) being afforded the Government, should the funds ultimately be credited back to the Government following a proper performance evaluation. Award fee should always be earned, not paid on a credit or assumptive basis in order to fulfill the intended purpose of award fee, which is to incentivize a contractor's performance. Unless the provisional payment is tied to some performance period, it could be construed as a form of advance payment. Also, since other remedies are available should a contractor (probably a large business) experience “undue financial burden,” no need exists for this provision.

DoD Response: Do not concur. Provisional award fee payments do not result in an arbitrary determination of potential award fee earnings based on past performance. The issues of entitlement, administrative burden, incentive to perform, and contractor cash flow are addressed in the DoD Response to Comment 6. With respect to the issue of interest on overpayments, as explained in the DoD Response to Comment 5, the final rule requires contractors to return any overpayment in accordance with FAR 32.606. FAR 32.610, Demand for payment of contract debt, states that any amounts not paid within 30 days from the date of the demand for payment will bear interest.

Furthermore, provisional award fee payments are different from advance payments, since the amount of the payment for periods subsequent to the first evaluation period is based on performance in the prior evaluation period.

8. Comment: The pitfalls associated with this proposal are greater than whatever benefits there may be for either party. The concept of award fees was established to provide incentive for performance such that if performance was provided in excess of certain thresholds, an award fee determining official would so declare after review of findings from an award fee board. The proposed change negates the concept of award fee to provide incentive for performance and, instead, establishes a means of cash payment to contractors for reasons other than incentive. In fact, this proposed change does nothing other than to establish cash flow expectations on the part of contractors that bear no relationship to fee earned in current periods until well after such determinations could be made AND related outlays have already been made.

The Government assumes a greater share of risk when using cost-reimbursable contracts, and compensates for this by providing the contractor with frequent billing provisions to cover all aggregated costs and fees incurred in each billing period (usually on a monthly basis). Therefore, contractor cash flow considerations are NOT factors in deciding whether or not to have award fee provisions in the first place, and they are also NOT factors in determinations of performance in award fee periods.

The proposed change, if adopted, would pressure program managers to incorporate these provisions into existing contracts, especially those large systems contracts involving millions of dollars. Such adoption would subsequently give rise to the inherent presumption of entitlement during current award fee periods, even though actual entitlement determinations would not take place until after funds have been disbursed. As a result, additional administrative burdens on top of those already created by award fee provisions would be placed on program managers and contracting officers. This would be especially true in instances cited in proposed DFARS 216.405-2(b)(3)(C).

This change would also create potential legal problems, especially in instances where DFARS 216.405-2(b)(3)(D) would be imposed. How does one protect the contracting officer determination from being appealed as being “arbitrary and capricious,” and how would such disputes alter or hinder ongoing contract performance until such matters are resolved?

DoD Response: Do not concur. With respect to the comments on the incentive for performance, cash flow, entitlement, and administrative burden considerations, see the DoD Response to Comment 6.

With respect to the comment on modifying existing contracts to include the requirement for provisional award fee payments, such modification could only be considered if the contracting officer obtained adequate consideration. For future contracts, the rule relies upon agency procedures and contracting officer business judgment to determine if provisional award fee payments are appropriate for a particular contracting environment, rather than a “one size fits all” requirement.

As to the respondent's perceived legal problems, the provisional award fee payment requirement falls within the award fee provisions of the contract, including the requirements in the FAR. FAR 16.405-2(a) states “* * * The amount of the award fee to be paid is determined by the Government's judgmental evaluation of the contractor's performance in terms of the criteria stated in the contract. This determination and the methodology for determining the award fee are unilateral decisions made solely at the discretion of the Government.” Although the determinations are unilateral, the United States Court of Appeals in Burnside-Ott Aviation Training Center v. Dalton, Secretary of the Navy, 107F.3d 854 (Fed. Cir. 1997), held that disputes concerning the amount of the award fee are subject to the Contract Disputes Act. The Court also held that award fee determinations could continue to be committed to the discretion of contracting officers under the terms of the contract and would be upheld as long as they were not arbitrary or capricious. Therefore, the rule cannot state that provisional award fee payments are or are not disputable, since that determination may depend on other factors.

This rule does not impose any significant additional risk of litigation. For periods subsequent to the initial evaluation period, the payments are based on the evaluation for the prior period. Thus, provided the prior evaluations are not arbitrary and capricious, there would be little, if any, basis for determining the provisional award fee payments to be arbitrary and capricious.

However, should a dispute arise, such dispute would not alter or hinder ongoing contract performance. Paragraph (i) of the clause at FAR 52.233-1, Disputes, states “The Contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the Contracting Officer.”

9. Comment. There is a need for an initial assessment of contractor performance by the fee determining official before the contracting officer pays any provisional award fees. This initial assessment can be done during the first interim evaluation. In return (for the initial wait), recommend up to 80% (vice proposed 50%) be awarded. In addition, also recommend that provisional award fee payments apply to fixed-price contracts with award fees.

DoD Response: Do not concur. The role of the fee determining official in the provisional award fee payment process should be determined by the DoD department or agency based on the particular contracting environment. Accordingly, there is no standard guidance on the role of the fee determining official or even a standard award fee clause used throughout DoD. Buying activities may provide implementing guidance to the extent they deem it necessary to provide additional information regarding the role of the fee determining official in the payment of provisional award fees.

Since the contractor's “track record” of performance on the contract will be limited for the initial award fee evaluation, it may be difficult to conclude that the contractor's performance for the initial contract period reflects a reasonable expectation of the performance for subsequent periods. Thus, it would not be prudent to build a higher limitation ( i.e. , 80 percent) for the initial period.

Although DoD does not concur with increasing the ceiling for the initial period, a DoD department or agency may consider granting an individual, one-time deviation to this requirement if the department or agency believes that a specific contract is essentially a continuation of prior contracts for the same item or service and, hence, the 50 percent limitation on the initial provisional payment is not really needed to protect the Government's interests.

As to the use of provisional award fees in fixed-price-award-fee contracts, it should be noted that FAR 16.404(a)(1) indicates that a fixed-price-award-fee contract is a fixed-price contract that already has a normal profit included in the fixed price, which is paid for satisfactory performance. When other types of incentives cannot be used, a separate award fee provision can be added to a fixed-price contract to provide additional motivation and reward to a contractor for various achievements. The rationale that a provisional payment of award fee is necessary in order to allow the contractor to receive some profit or fee on work accomplished is greatly diminished, because a normal profit is already included within the fixed-price-award-fee contract structure. However, it is within a DoD department's or agency's deviation authority, on a one-time basis, to permit the use of provisional award fee payments under a fixed-price-award-fee contract if it is in the best interests of DoD.

10. Comment: The following sentence from the rule (DFARS 216.405-2(b)(3)) is misleading: “A provisional award fee payment is a payment made within an evaluation period prior to an interim or final evaluation for that period.”

The fee determining official must make a determination that contractor performance warrants payment of the interim award fee amount. This “interim evaluation” may be confused with any interim performance evaluations called out in the award fee plan that are not linked to periodic billings (and which may or may not occur before a periodic award fee billing).

Suggest changing the sentence in the rule to read: “A provisional award fee payment is a payment made within an evaluation period prior to the final determination for that period.”

DoD Response: Concur that the rule may not be clear as to the timing of a provisional award fee payment. The rule was intended to define a provisional award fee payment as any payment made prior to an evaluation for the period. The language in the proposed rule could be misinterpreted to mean that, when provisional payments are used, they must provide for payments prior to any interim evaluation period. The rule is intended to provide flexibility to contracting officers in determining when to permit provisional payments, rather than requiring such payments prior to interim evaluation periods. Therefore, the sentence has been revised to read: “A provisional award fee payment is a payment made within an evaluation period prior to a final evaluation for that period.”

11. Comment: Recommend DFARS address the following:

a. Contractor's performance must be commensurate with the provisional award fee payment.

b. Contractor shall liquidate the debt as prescribed in FAR 32.6, Contract Debts, for overpayments made to the contractor by the Government.

c. Provisional award fee payment determinations are/are not disputable.

d. Role of the fee determining official in the provisional award fee payment process.

DoD Response:

a. Concur. The proposed rule already contained language at 216.405-2(b)(3)(D) that ties the payment of provisional award fees to the contracting officer's determination that the contractor is performing at an appropriate level commensurate with the proposed provisional award fee payment. This language has been retained in the final rule.

b. Concur. DoD has added a reference to FAR 32.606 in the final rule at 216.405-2(b)(3)(C). Also see the DoD Response to Comment 5.

c. Do not concur. See the DoD Response to Comment 8.

d. Do not concur. See the DoD Response to Comment 9.

12. Comment: The proposed change should not be incorporated as drafted. The reason stated for the change is that cost-reimbursement award fee contracts typically provide for an award fee payment no more frequently than every 6 months and that this may place an undue financial burden on a contractor. This premise seems unfounded. It is hard to rationalize that a contractor faces an undue financial burden under a contract arrangement that provides for the Government to reimburse all allowable contract costs as frequently as every two weeks (FAR 52.216-7, Allowable Cost and Payment). In cost-reimbursement contracts, it is the Government that assumes a greater share of the risk and compensates for this by providing the contractor with frequent billing provisions. Furthermore, contractor cash flow considerations are not factors in determining whether or not to have award fee provisions in the first place and are not factors in determinations of performance in award fee periods.

DoD Response: Do not concur. See the DoD Response to Comment 6.

13. Comment: This change would have the unintended consequence of defeating a prime benefit of an award fee contract. In an award fee type contract, the Government is able to hold the contractor's motivation and focus, since the contractor knows the award fee is not a given and is only obtained through successful performance each and every period. The proposed change diminishes this performance incentive concept and instead establishes a means of cash payment to contractors for reasons other than incentive. In fact, the proposed change does nothing other than to establish cash flow expectations on the part of contractors that bear no relationship to fee earned in current periods until well after such formal determinations and related outlays have been made. Also, there is no mention of base fee in this proposed change. Recommend, if this change is incorporated, that the provisional award fee payment only be used in cost-plus-award-fee contracts with zero base fee.

DoD Response. Do not concur. See the DoD Response to Comment 6 for a discussion of performance incentive and cash flow. Regarding the recommendation that provisional award fee payments only be employed in contracts with zero base fees, the rule leaves that determination to the management discretion of DoD departments and agencies.

14. Comment: Although there are procedures in the proposed rule for reimbursing the Government if the actual award fee determination is less than the provisional payment, the reality is that once received, the contractor is not going to be motivated to give the money back, thus leading to increased probability of disputes and potentially requiring significant additional time and effort to resolve. This type of “tug of war” will not add value to the contract administration process or to Government/contractor relationships.

DoD Response: Do not concur. The maximum amount permitted for provisional payments (after the initial payment) is calculated at 80 (not 100) percent of the evaluation score for the prior evaluation period times the award fee available for the current period. Therefore, it is anticipated that a very limited number of provisional award fee payments will be more than the actual award fee determinations for the current period. However, for those limited situations in which there are overpayments, see the DoD Response to Comment 5, which addresses Government procedures for collecting debt, and to Comment 8 for a discussion of contractor disputes.

15. Comment: The change could create potential legal problems when the instances of DFARS 216.405-2(b)(3)(D) are imposed, whereby the contracting officer reduces or discontinues the provisional payment. Since this is proposed as a contracting officer determination, without mention of the award fee board or fee determining official, how does one protect the contracting officer's determination from being appealed as being arbitrary and capricious, and how would such disputes alter or hinder ongoing contract performance until such matters are resolved?

DoD Response: As indicated in the DoD Response to Comment 14, it is anticipated that the overpayment of a provisional award fee payment will happen in a limited number of circumstances. However, when it does occur, it is expected that the contracting officer will have a reasonable basis for making such a decision. When the decision is based on a probability that the contractor is not going to earn the award fee, the contracting officer almost certainly will have obtained input from the award fee board or the fee determining official. However, there could be other instances, such as pending bankruptcy proceedings, which may make it necessary for the contracting officer to act without first consulting the award fee board or the fee determining official. In any case, it is anticipated that the contracting officer will use sound business judgment and will not make an “arbitrary and capricious” decision. If there is a dispute, the dispute would not alter or hinder ongoing contract performance, as explained in the DoD Response to Comment 8.

16. Comment: The need for additional documentation and funding tracking will put an additional burden on program offices and may discourage the use of award fee arrangements, since the Government may not believe that the expected benefits are sufficient to warrant the additional effort and cost involved with managing and administering a more resource demanding award fee process. Program offices may also believe that the process of giving the contractor part of the award fee without having the payment tied to an interim evaluation (based on the award fee plan's criteria) dilutes the effectiveness of interim evaluations as motivators for increased performance.

DoD Response: Partially concur. Although this type of payment may be administratively burdensome, its use is entirely optional. However, as explained in the DoD Response to Comment 6, DoD does not concur that provisional award fee payments will dilute the effectiveness of the interim evaluations.

17. Comment: This proposed change blurs the line between a cost-plus-award-fee and a cost-plus-fixed-fee type contract. A cost-plus-award-fee contract should not be used when a cost-plus-fixed-fee contract is more appropriate, but since there is a 15% statutory fee limitation on a cost-plus-fixed-fee contract, but not on a cost-plus-award-fee contract, contractors may use this change as an increased opportunity for optimal fee by pushing the Government to use a cost-plus-award-fee contract when a more appropriate type would be cost-plus-fixed-fee. Because the contract types are distinctively different, the payment of fee on a cost-plus-award-fee contract was not intended to be handled the same way it is handled on a cost-plus-fixed-fee contract. This proposed change moves award fee payment from the realm of subjective evaluation of fee earned to a type of numerical calculation (which is based on projected performance). A policy of interim payments based on assessments of contractor performance and fee determining official concurrence provides a much better framework than that set forth in the DFARS language.

DoD Response: Do not concur. Provisional award fee payments do not change the contract from a cost-plus-award-fee to a cost-plus-fixed-fee contract. As explained in the DoD Response to Comment 6, provisional award fee payments only change the timing of the payments, not the entitlement to those payments.

Payment of a provisional award fee is not based purely on a numerical calculation. The numerical calculation merely establishes the maximum amount that might be paid as a provisional award fee. The actual amounts of provisional award fee payments are based on the assumption that the contracting officer has determined that those provisional payment amounts are commensurate with the contractor's performance.

The rule does not provide specific procedures or rigid requirements. Thus, contracting officers have significant flexibility to implement provisional award fee payments as they deem appropriate for their particular contracting environments, e.g. , using interim payments based on assessments of contractor performance and fee determining official concurrence.

18. Comment: There are some differences between one DoD department's guidance and the proposed DFARS language. For example, DFARS—

a. Does not restrict provisional award fee payments to cost-plus-award-fee contracts with zero base fee;

b. Does not prescribe a monthly payment option;

c. Treats provisional payments almost as a normal business practice, which is appropriate since provisional payments benefit both the contractor and the Government. The contractor gets increased cash flow and the Government gets an increase in expenditures;

d. Does not reference FAR Subpart 32.6 with respect to overpayments;

e. Permits a smaller percentage ( i.e. , 50 percent) for the initial period;

f. Does not say the contracting officer has the unilateral right to reduce or suspend, but does say payments may be reduced or discontinued; and

g. Does not prescribe provisional award fee payments for fixed-price-award-fee contracts.

DoD Response: Concur that there may be differences between guidance issued by DoD departments and agencies, and the DFARS. DoD departments and agencies will be able to continue using their guidance, provided such guidance does not fall outside the general framework of this DFARS rule. Since the DFARS rule does not provide specific procedures or rigid requirements, DoD departments and agencies have significant flexibility to implement provisional award fee payments as they deem appropriate for their particular contracting environments. This includes specifying when provisional award fee payments are appropriate ( e.g. , only when there is zero based fee) and the frequency of payments ( e.g. , monthly, every two months). Zero based fee is also addressed in the DoD Response to Comment 13.

DoD concurs with adding a reference to FAR Subpart 32.6 (see the DoD Response to Comment 5), and that the contracting office has certain unilateral rights (see the DoD Response to Comment 8). DoD does not concur with permitting the use of a percentage rate higher than 50 percent for the initial period (see DoD Response to Comment 9), or to the use of provisional award fee payments for fixed-price-award-fee contracts (see DoD Response to Comment 9).

19. Comment: The Financial Management Regulation and paragraphs 4.1 and 45.2 of the Air Force Material Command Award Fee guide may need to be revised to be consistent with the DFARS rule. Will the DFARS be revised to allow provisional award fee payments and interim payments on fixed-price-award-fee contracts also?

DoD Response: Other regulations and department/agency guidance may need to be revised based on implementation of this DFARS rule. However, as indicated in the DoD Response to Comment 18, DoD departments and agencies will be able to continue using their guidance, provided such guidance does not fall outside of the general framework of this rule.

Regarding the use of provisional award fee payments for fixed-price-award-fee contracts, as noted in the DoD Response to Comment 9, DoD does not concur with revising the DFARS to permit this type of payment under fixed-price-award-fee contracts.

20. Comment: There is concern that the financial incentive/motivation for outstanding performance will decrease if the contractor is paid a percentage of the potential award fee on a monthly basis prior to any type of formal evaluation/determination. What was once a true incentive contract is now a highbred cost-plus-fixed-fee type contract (with minimum incentive to control costs) with no financial tie into any type of performance based criteria (or at least not until much later in the award fee period).

DoD Response: Do not concur. See the DoD Response to Comment 6.

21. Comment: This puts the Government in a position to deal with additional administrative burden ( i.e. , modifications to add funding to a contract—as well as documentation to confirm that the contractor is performing successfully on a monthly basis) to pay the contractor a percentage of the award fee on a frequent basis. The intent is to use provisional award fee payments on a case-by-case basis, but will this really be true?

Will the contracting officer authorize the monthly payments unilaterally or will the fee determining official have input on the decision (along with documentation)? If it is a contracting officer determination, what will happen if the contracting officer discontinues the payments and the contractor disputes it? There are also serious concerns over the potential situation of having to collect overpayments if the contractor does not earn the fee determining official's final determination for the period. What happens if the contract is terminated? Or if the contractor files bankruptcy? How will the fiscal year rules apply to overpayments?

The Government is being placed in a position to relieve the financial burden (on a cost contract?) of a contractor. FAR 52.216-7 permits payments on reimbursable costs as frequently as every two weeks. It is difficult to believe that a contractor would be put into an undue financial burden when in this position. Will the contractor be required to provide justification to the Government on their undue financial burden?

If it has been determined that reducing the length of time between award fee periods is not feasible due to contract restraints, recommend that, if any type of partial payment is authorized, it should be tied directly to the interim evaluation based on the contractor successfully completing the evaluated performance criteria ( i.e. , one-time interim evaluation payment). This could be done approximately mid-point through the award fee period with the remainder of the potential award fee paid to the contractor at the end of the period, based on the fee determining official's final determination.

DoD Response: Do not concur. The use of provisional award fee payments is entirely optional. DoD departments and agencies may choose not to employ provisional award fee payments when they believe such use would dilute the effectiveness of the award fee in a particular contract, is an undue administrative burden, or is otherwise not in the Government's best interests.

Under the rule, provisional award fee payments can be discontinued or reduced as deemed appropriate by the contracting officer. In applying this rule, it is anticipated that the contracting officer will have a reasonable basis for making such a decision. When the decision is based on a probability that the contractor is not going to earn the award fee, the contracting officer almost certainly will have obtained input from the award fee board or fee determining official. However, there could be other instances, such as pending bankruptcy proceedings, which may require the contracting officer to act without first consulting the award fee board or fee determining official. In any case, it is anticipated that the contracting officer will use sound business judgment and not make an arbitrary and capricious decision.

For further information, see the DoD Response to Comment 6 (administrative and financial burden), Comment 9 (role of the fee determining official), Comment 8 (contractor disputes), Comment 5 (overpayments), and Comment 10 (timing of provisional payments).

22. Comment: The incentive effect and cash flow benefits of provisional award fee payments will be achieved only if the provisional award fee payment provision is introduced as a customary practice. Fee is paid during performance on cost-plus-fixed-fee and cost-plus-incentive-fee contracts, and it should be the same for cost-plus-award-fee contracts. Since the Government is protected from risk by the terms included in the provisional award fee payment provision, there should be no hesitancy in making its use a customary and desirable incentive feature. Successfully performing contractors should be able to benefit from the improved cash flow that provisional award fee payments facilitate. Establishing criteria that standardize use of the provisional award fee payment, subject to the contracting officer's determination of continued successful performance, will encourage use of this important new provision, while not diminishing the ability of the contracting officer to discontinue or reduce the provisional award fee payment if the contractor's performance warrants a reduction. Recommend changing the last sentence in 216.405-2(b)(3) of the proposed rule to read: “The contracting officer should include provisional award fee payments in a cost-plus-award-fee contract when the period of performance for the contract exceeds 12 months, provided those payments * * *.”

DoD Response: Do not concur. As indicated in the DoD Response to Comment 4, the rule is optional, because a mandatory requirement to use provisional award fee payments could result in such payments being applied in situations where they would be inappropriate.

23. Comment: DoD should strive to establish parity in how fee is billed for cost-plus-award-fee contracts, compared to how fee is billed under other incentive arrangements. Cost-plus-incentive-fee and fixed-price-incentive contracts both include provisions for billing target fee or profit at a rate consistent with contractor performance. Just as contemplated in the provisional award fee payment approach, there is a provision for adjusting the fee or profit if the contractor's performance is above or below the projected target. In the case of the cost-plus-award-fee contract, where there is no pre-set formula, the best indication of projected performance is the contractor's performance evaluation from prior periods. Successfully performing contractors should continue receiving provisional award fee payments at the level they have demonstrated in prior periods, similar to the target with appropriate adjustments made in cost-plus-incentive-fee and fixed-price-incentive-fee contracts. This approach poses no risk to the Government, since the contracting officer can reduce or eliminate the provisional award fee payment when performance is not commensurate with the provisional payment, and any overpayment is fully recoverable. Such an approach will also simplify administration of the provisional award fee payments. Recommend replacing paragraph 216.405-2(b)(3)(B) (1) of the proposed rule with the following: “For subsequent award fee periods, the evaluation score for the prior evaluation period shall be used as the provisional award fee payment rate.”

DoD Response: Do not concur. The rule establishes a reasonable outside boundary, i.e. , not to exceed 80 percent of the evaluation score for the prior evaluation period, assuming continued contractor performance at current levels of performance. The rule is not intended to create an automatic entitlement to award fee at the same level as that previously earned for the prior evaluation period. In addition, as indicated in the DoD Response to Comment 14, a ceiling of 80 percent should reduce the number of overpayments.

24. Comment: Follow-on contracts represent a continuation of effort from the prior contract. Assuming successful performance on the prior contract, continuation of provisional award fee payments at the same rate experienced on the prior contract is appropriate, instead of reducing the rate to 50% for the first period of the follow-on contract. Suggest the following language be added to 216.405-2(b)(3)(B) (3) : “ (3) For follow-on contracts, the rate for the initial period will be the same as that awarded in the last period of the immediately preceding contract.”

DoD Response: Do not concur. See the DoD Response to Comment 9.

25. Comment: The training of the acquisition workforce and industry counterparts is essential for success and for achieving the desired result.

DoD Response: Concur that training is important. A training module on the use of provisional award fee payments is available on the Defense Acquisition University Web site at http://www.dau.mil, under “Continuous Learning.”

26. Comment: Recommend that DoD initiate the process to make these provisions applicable on a Governmentwide basis through FAR revisions.

DoD Response: Do not concur, since individual agencies ( e.g. , the National Aeronautics and Space Administration) craft their own versions of award fee provisions, and their own guidance for the use of those provisions. Governmentwide application of this coverage would only be appropriate if it is someday deemed advisable to create a single award fee provision and policy for use by all Government agencies.

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

DoD certifies that this final rule will not 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. , because the rule applies only to cost-plus-award-fee contracts. Most contracts awarded to small entities use simplified acquisition procedures or are awarded on a competitive, fixed-price basis.

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

On July 10, 2002, the National Highway Traffic Safety Administration (NHTSA) published a final rule implementing the early warning reporting (EWR) provisions of the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act, 49 U.S.C. 30166(m) (67 FR 45822).

We received a number of petitions for reconsideration of the final rule, and have responded to most of them in three separate rulemaking notices. These notices were published on April 15, 2003 (Notice 4, 68 FR 18136), and on June 11, 2003 (Notice 5, 68 FR 35132; Notice 6, 68 FR 35145). Notice 6 amended the EWR reporting dates. In response, we received one petition for reconsideration of the due date for the filing of the one-time historical report. We now make a technical correction in light of that petition.

Notice 6 deferred the initial reporting dates of EWR information for a calendar quarter and the date for submitting the one-time historical report required by 49 CFR 579.28(c), 68 FR 35148. Currently, the latter report must be filed no later than December 31, 2003. On July 28, 2003, the Alliance of Automobile Manufacturers (Alliance) petitioned for reconsideration of this date, asking that it be changed to January 15, 2004. The Alliance asserted that the December 31 date “falls during a traditional winter holiday period, during which most Alliance member offices in the United States are closed.” This request does not affect the initial due date for filing of the initial quarterly report, which remains December 1, 2003.

At the time that we published Notice 6, we were primarily concerned with deferring reporting by one quarter and with adopting a schedule that staggered the submission of field reports and one-time historical reports to dates later than the reports of incidents and statistical data. We did not specifically consider whether a December 31 due date would pose any problems. If we had taken into account the practices noted by the Alliance, we would not have adopted that date. We do not believe that safety will be compromised by deferring the reporting date of historical information by two weeks in order to accommodate the practice of members of the Alliance, as well as other vehicle and child restraint system and tire manufacturers, and are amending the introductory text of subsection 579.28(c) accordingly.

Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477) or you may visit http://dms.dot.gov.

This notice extends, by 15 days, a reporting date adopted in Notice 6. The changes made to the EWR regulation by this notice do not alter the burdens and impacts discussed in the Regulatory Analyses of Notice 6. To the extent that Regulatory Analyses may be relevant to this minor technical change, the Analyses of Notice 6 (68 FR at 35147) are hereby incorporated by reference.