The Secretary of Agriculture cooperates with other Federal, State, and local agencies in the recovery from natural disasters such as hurricanes, tornadoes, fires, drought, and floods through implementation of the EWP Program (authorized by Section 216 of The Flood Control Act of 1950, Public Law 81-516, 33 U.S.C. 701b-1; Section 403 of the Agricultural Credit Act of 1978, Public Law 95-334, as amended by Section 382, of the Federal Agriculture Improvement and Reform Act of 1996, Public Law 104-127, 16 U.S.C. 2203). EWP, through local sponsors, provides emergency measures for run-off retardation and erosion control to areas where a sudden impairment of a watershed threatens life or property. The Secretary of Agriculture has delegated authority for administration of EWP to the Chief of NRCS.

The Office of Management and Budget has determined that this proposed rule is a “significant action” for the purposes of Executive Order 12866. Pursuant to § 6(a)(3) of Executive Order 12866, NRCS has conducted an economic analysis of the potential impacts associated with this proposed rule. The economic analysis concluded that NRCS is conducting the EWP program in a manner that provides significant benefits related to costs. A copy of this cost-benefit analysis is available upon request from the address listed above.

It has been determined that the Regulatory Flexibility Act is not applicable to this rule since it does not contain a major proposal requiring preparation of a regulatory analysis. These proposed regulations will not have a significant economic impact on a substantial number of small entities.

This proposed draft rule is supported by a Programmatic Environmental Impact Statement (PEIS) that was made available in draft form for public review on December 16, 1999 (64 FR 70212). NRCS will consider both the comments received on the draft PEIS and this rule in formulation of the final regulation. Copies of the draft PEIS may be obtained from the Watersheds and Wetlands Division, Natural Resources Conservation Service, USDA, P.O. Box 2890, Washington, DC 20013-2890.

NRCS is committed to compliance with the GPEA, which requires Government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

This draft final rule does not change the reporting or record-keeping burden previously required.

This draft rule complies with Executive Order 13132 “Federalism.” In pursuing the revision of this rule, NRCS prepared a PEIS in accordance with the National Environmental Policy Act (NEPA) guidelines. Preparation of the PEIS included an extensive “scoping process,” which included six public meetings held in different regions of the country; contact with State agencies, primarily the emergency management and fish and wildlife divisions; and publication of the draft PEIS in the Federal Register . Concerns in response to the publication of the draft PEIS primarily centered on compliance with historic preservation requirements of individual States. In particular, it was recommended that NRCS coordinate all activities with the respective State historic preservation officer. Much praise was received for the program from government officials at all levels and the public. Through the NEPA process, consultation is done on a routine basis. NRCS established policies that require “pre-disaster planning” be carried out with all affected State and Federal agencies to ensure everyone understands what NRCS will do in the event of a disaster.

This draft rule has been reviewed in accordance with Executive Order 12998. The provisions of this rule are not retroactive. Furthermore, the provisions of this draft rule pre-empt State and local laws to the extent that such laws are inconsistent with this proposed rule. Before an action may be brought in a Federal court of competent jurisdiction, the administrative appeal rights afforded persons at 7 CFR parts 614 and 11 must be exhausted.

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

The Emergency Watershed Protection (EWP) Program helps remove threats to life and property that remain in the nation's watersheds in the aftermath of natural disasters such as floods, hurricanes, tornadoes, and wildfires. The EWP Program is administered by the U.S. Department of Agriculture (USDA) Natural Resources Conservation Service (NRCS), which provides technical and financial assistance to local sponsoring authorities to preserve life and property threatened by disaster for runoff retardation and soil-erosion prevention. Funding is typically provided through Congressional emergency supplemental appropriations. Threats that the EWP Program addresses are termed watershed impairments. These include, but are not limited to, debris-clogged stream channels, undermined and unstable streambanks, jeopardized water control structures and public infrastructure, wind-borne debris removal, and damaged upland sites stripped of protective vegetation by fire or drought. If these watershed impairments are not addressed, they would pose a serious threat of injury, loss of life, or devastating property damage should a subsequent event occur.

NRCS is initiating proposed rulemaking to codify existing EWP program implementation and institute programmatic changes that allow the repair of enduring conservation practices, limit repeated site repairs, allow additional easement purchases, address environmental justice issues, and limits treatments on Federal lands. To implement the proposed action, NRCS would incorporate changes in program administration and in project execution dealing with traditional watershed impairments. It would expand the program by providing for floodplain sediment deposition removal, and repair damaged structural conservation practices to the list of watershed impairments EWP currently addresses. Additionally, the proposed changes include allowing for up to 90 percent cost-share for limited resource areas, limit repair to twice in a ten year period, eliminate the single beneficiary requirement, funds will not be used on Federal lands, purchase of easements on non-agricultural lands, and establish one easement category.

The purpose and need for the NRCS proposed action are to provide administrative transparency that ensures that the public is fully informed of program operations. Program delivery improvements are designed to enable NRCS field and State office personnel to provide EWP assistance more effectively and efficiently. NRCS believes that these improvements would more fully, equitably, and consistently meet the needs of people requiring emergency assistance. Program improvements are designed to address environmental, economic, and social concerns and values.

Proposed changes were identified, discussed, and refined in an ongoing comprehensive program review that NRCS initiated. The process included extensive opportunities for public participation and identified substantive ways to improve the environmental, economic, social, and technical soundness of Program activities. NRCS is now initiating the proposed rulemaking needed to implement the changes to the codified EWP regulations. The National EWP Manual (policy), and Handbook (procedures) will also need to be revised to reflect the changes that NRCS has already instituted, and those that will be adopted if the policies proposed in this rulemaking are adopted in a final rule after the opportunity for public comment.

Section 624.1 Purpose. This proposed section would modify the existing section to clarify the purpose of the EWP Program.

Section 624.2 Objective. This proposed section would modify the existing section to state that NRCS assists sponsors in the implementation of “emergency recovery measures.”

Section 624.3 Scope. This proposed section would revise the existing section and combine subparagraphs (a) and (b) in the current regulation.

Section 624.4 Definitions. The proposed section would rename the current section and would modify the section to provide definitions for the EWP program. The ability to provide assistance on Forest Service lands as identified in the existing § 624.4 is being eliminated from the rule to avoid inappropriate augmentation of appropriations for Forest Service restoration activities. Assistance on National Forest System lands or other Federal lands can be provided in situations where appropriate safeguards are followed to avoid such augmentation.

Section 624.5 Coordination. This proposed section would include a discussion of NRCS coordination in both presidentially declared and State conservationist-declared disasters.

Section 624.6 Program administration. This proposed section now describes the NRCS administration of the EWP Program, eligibility, and sponsor responsibilities.

Section 624.6(b)(1) Exigency. This proposed paragraph has been modified to clarify exigency situations. NRCS has encountered various cases where the term “exigency” (previously found in § 624.5(a)(1)(iv)) is applied too liberally and implemented for purposes for which it was not intended. Interpretations of the terms “exigency” and “non-exigency” (previously found in § 624.5(a)(1)(B)) vary widely within NRCS. In some cases, an “exigency” allowed certain contracting procedures to be waived inappropriately; in others, “exigency” was used to fund projects inappropriately; and in still others, “exigency” is used inappropriately to qualify for a U.S. Army Corps of Engineers (USACE) nationwide general permit.

NRCS did not intend these interpretations when the two categories (exigency and non-exigency) were established. Rather, the original intent was to allow NRCS to respond quickly to only those situations that needed immediate attention and that could be addressed within 30 days. Current regulations tie cost-sharing to this designation, although NRCS has not applied the higher cost-sharing rate originally set for exigencies for the past 7 years. Instead, NRCS has applied a single cost-share rate of 75 percent to exigent and non-exigent situations. However, NRCS recognizes there may be unique situations that require a waiver from this cost-sharing rate. We had added Section 624.11 Waivers which allows the NRCS Deputy Chief for Programs to waive any provision of these regulations to the extent allowed by law. Examples may include allowing up to 100 percent cost-sharing with limited resource areas or communities, or situations involving environmental justice.

Under the proposed action, the term exigency would be clarified and the term non-exigency would be eliminated since all eligible sites would be considered watershed emergencies and the purpose of the current and proposed exigency classification is to expedite EWP recovery measures where an immediate threat exists. NRCS believes this clarification would result in more uniform delivery of the EWP Program. Clarification of exigency and removal of the term non-exigency would ensure consistent interpretation, and the change should not affect program funding.

Recognizing that certain situations require immediate attention, this proposed section would modify the current regulation to add language that clarifies “exigency” situations that require immediate attention. Exigency situations typically exhibit an extremely high potential for loss of life or significant property damage unless immediate action is taken.

Occasionally, a site affected by a natural disaster demands immediate action to minimize potential threats of life and/or property, including when another event may occur shortly thereafter. Two examples of such a situation are (1) debris jamming into a bridge or culvert, causing water to back up and possibly endanger nearby buildings or the bridge and associated road; and (2) a streambank undercutting a building that, if not stabilized immediately, could result in the loss of the building.

This proposed clarification to the regulations still ensures immediate action when no reasonable alternative is available. The NRCS State conservationist would be authorized to carry out the needed recovery work to alleviate the exigency situation immediately when:

• A damage survey report is completed

• Procurement authority is secured

• EWP funds are available

• A sponsor is selected and local funds are available

• Necessary land rights have been acquired

The clarification proposed by this section would limit the number of situations where immediate action is taken to those that are of an extremely critical nature, which was the intent of the existing regulations. The proposed changes would save time by focusing on actions requiring immediate attention during emergency recovery efforts and allowing NRCS state offices to be more responsive to local needs.

Section 624.6(b)(2) Limitations. NRCS is proposing to add this new paragraph to describe the number of times an impacted location may be eligible for EWP assistance. This proposed paragraph also contains limitations found in the current regulations at § 624.7. Repeat disasters may strike an area and require EWP recovery assistance frequently at one location. Under this proposed rulemaking, NRCS would limit repairs under EWP to twice within a 10-year period for the same cause ( i.e. , flooding) at the same site. If a site already has been restored twice with EWP assistance and less than 10 years has elapsed between the disaster that triggered the first repair and the disaster triggering a third repair, the only option available under EWP would be purchasing a floodplain easement on the damaged site. Under this proposed regulation, The Department of Agriculture (USDA) would review the prospective site to ascertain the frequency of EWP recovery assistance at the location.

For example, if a structure was protected from destruction twice using EWP assistance for two separate events, regardless of the practice used or the location of the protection efforts, EWP funds would not be available for a third protection effort within the 10-year period for the same cause. However, for repairs of dikes, levees, berms, and similar structures, because these structures can run contiguously for miles, a specific location on a structure is considered one EWP site to determine whether future impacts to this site on the structure are eligible for EWP funds. Thus, repairs can be made repetitively so long as the same location is not repetitively repaired more than twice within 10 years.

EWP focuses upon disaster recovery efforts while other USDA programs, as well as programs administered by other Federal and State agencies, are available to plan and implement protective practices to solve recurring problems. This proposed EWP Program change would encourage individuals and project sponsors to seek more appropriate programs to solve existing long-term and recurring resource problems.

NRCS believes the impacts of limiting the number of times EWP funds can be used to repair the same site will be minimal, but the change is necessary to avoid those cases where funds may be used for repetitive repairs.

Section 624.6(b)(2)(iv). This proposed paragraph would clarify that NRCS can only provide EWP assistance on Federal lands in situations where safeguards are followed to avoid inappropriate augmentation of appropriations.

Section 624.6(b)(3). This proposed paragraph describes those sites that will be eligible for EWP where structural/enduring/long-life conservation practices exist. This proposed change to the regulations currently found in § 624.7(d) would provide for a blanket policy exception first established by the NRCS Chief in 1996 for NRCS-assisted flood control structures. The EWP Program regulations currently prohibit providing assistance for these projects unless the NRCS Chief grants an exception. In 1996, the Chief granted a blanket exception to this requirement, and assistance has been provided as needed. This proposal section would allow repair of NRCS-assisted structural practices, such as dams and channels, constructed under the Small Watershed Protection and Flood Control Program (authorized by the Watershed Protection and Flood Prevention Act of 1954, Public Law 83-566, 16 U.S.C. 1001-1008), Flood Prevention Program (authorized by the Flood Control Act of 1944, Public Law 78-534), Resource Conservation and Development Program, and the Pilot Watershed Program.

When a disaster strikes, NRCS-assisted flood control structures may be damaged beyond the level that would normally be expected to be repaired under routine operation and maintenance activities and may be beyond the sponsor's ability to make necessary repairs. For example, when an auxiliary spillway is damaged, extensive repairs may be required to prevent catastrophic failure that could result in loss of life or property and to provide an opportunity for the dam to function properly in the future.

Under the proposed action, existing structural/enduring/long-life conservation practices that are damaged during disaster events would be eligible for EWP Program technical and cost-share assistance. This provision would allow repair of conservation practices that may include grassed waterways, terraces, embankment ponds, diversions, and water conservation systems. Nonstructural and/or management practices such as conservation tillage would not be eligible. Additionally, natural disaster recovery practices where assistance is provided under the Emergency Conservation Program (ECP) administered by the Farm Service Agency would not be eligible for EWP assistance. EWP differs significantly from ECP because a sponsor is required for EWP recovery work, and unlike ECP, EWP recovery assistance does not provide financial assistance directly to individuals. NRCS is interested in receiving comments related to this proposed expansion of the eligibility of EWP assistance to allow repair of conservation practices.

Under this proposed paragraph, NRCS could provide EWP assistance toward upgrading damaged or undersized practices for structural/enduring/long-life conservation practices when technology advances or construction techniques warrant. All structural/enduring/long-life conservation practices for which the sponsor is required to obtain a permit issued by a Federal, State, or local entity shall be designed and installed to meet the permit requirements or NRCS standards, whichever is greater.

The benefits obtained by adopting this proposal include:

• Allowing repair work that would address conservation needs that may not be covered by other programs;

• Helping to ensure that practices will be repaired and remain functional rather than being abandoned and becoming a hazard;

• Allowing the EWP Program to assist more landowners so that a greater number of people will benefit from natural resource protection;

• Providing rapid treatment of natural resources by the EWP Program that might prevent further damage on and off site; and

• Encouraging needed repairs by sponsors by providing assistance through the EWP Program.

Section 624.6(c). This proposed provision would expand the areas now covered under the EWP Program. Currently, EWP Program work is normally confined to watercourses and areas immediately adjacent, except in case of drought or fire where work may be carried out on critical areas in upland portions of a watershed. However, agricultural productivity, public health and safety, and the environment are often threatened in the aftermath of disasters that occur outside these limits. NRCS proposes that the availability of EWP Program assistance expand to include practices needed on all privately owned lands. This provision of the proposed regulation would expand the EWP Program to include areas away from streams and would allow the removal of sediment and other debris from agricultural land (croplands, orchards, vineyards, and pastures) and windblown debris, particularly in areas considered environmentally sensitive. Environmentally sensitive areas may include lands especially vulnerable to damage from the products of erosion, points of groundwater re-charge, habitat of endangered or threatened species, or cultural resource sites. This provision of the proposed regulation also provides for EWP assistance for drought recovery activities.

Deposits of large quantities of sediments and other debris on floodplains usually occurs from major flooding. Such materials are usually coarse and infertile, and frequently destroy or smother plants and impair normal agricultural use. This is a normal occurrence in the dynamics of floodplain systems, but it can jeopardize the productivity of agricultural lands. Under this proposed regulation, NRCS would consider alternative practices to address the type of damage such as:

• Removing and disposing the sediment and other debris

• Incorporating the sediment into the underlying soil

• Offering to purchase a floodplain easement (see § 624.10)

Whether these sites qualify for EWP assistance and the most effective alternative treatment depends upon many factors: Size of the particles, depth of material deposited, lateral extent of the deposit, land use and soil type of the underlying material, and value of the land to the entire agricultural operation. Floodplain easements (see § 624.10) can provide disaster relief where there is too much debris to incorporate or haul off-site, or otherwise dispose.

Most debris that is deposited on upland areas is carried from winds of hurricanes or tornadoes. Such debris may cover portions of several watersheds and normally consists of downed trees, utility poles, and fence posts; livestock and poultry carcasses; or building materials, such as insulation, shingles, metal roofing, metal siding, and similar non-biodegradable materials. Similarly, ice storms may result in debris deposition and cause the death of livestock and poultry. Debris removal will typically be associated with the removal of debris from upstream of bridges and culverts, or in upland areas where buildup of debris in a waterway will cause flooding of homes and other structures.

The practice components adopted to address upland debris deposition could include, but not be limited to:

• Creating access when needed to move trucks and heavy equipment to a debris site

• Using chain saws, other power tools, winches, and other machinery and heavy equipment to gather and process the debris for onsite disposal or removal

• Disposing of debris in accordance with local rules and regulations on-site by burial, chipping, or burning

• Loading on trucks for removal and disposal off-site in approved sites or landfills based upon the composition of the material

• Obtaining special technical assistance and personnel to handle hazardous materials such as asbestos, petroleum products, propane, or other compressed gas containers, or other potentially hazardous or toxic compounds or materials

• Grading, shaping, and revegetating, by seeding or planting, any portion of the area affected by the debris removal operation

Drought recovery practices are generally temporary in nature and are intended to reduce the consequences of a drought. EWP assistance typically includes providing temporary water for livestock to reduce the use of drought impacted water sources, or prescribed grazing and/or purchasing and transporting hay, which allows rangeland to recover more rapidly. Planting vegetation may be used to reduce soil erosion. EWP assistance will not be used during drought situations to install permanent practices or structures, including water wells, irrigation systems, or purchase of portable equipment ( i.e. , water pumps). EWP practices during drought situations will not be conducted at the expense of another natural resource, such as pumping or releasing water from a water body to an extent that is environmentally detrimental.

Section 624.6(d) Documentation. This proposed paragraph would rename the existing section 624.6(d). The information found in this paragraph clarifies the language found in the existing regulation at § 624.6(b).

Section 624.6(e) Implementation. This proposed paragraph would rename the existing section 624.7(e) and would contain language previously found in the existing regulation at § 624.6(c).

Section 624.7 Cost share assistance. This proposed section would rename the existing section and establish a cost-share rate of up to 75 percent for implementation of EWP measures and up to 90 percent for limited-resource areas.

Under current EWP program regulations at § 624.5(c)(1)(ii) and § 624.5(C)(2)(i), impairments determined to be non-exigencies receive up to 80 percent Federal funding, and exigencies receive up to 100 percent Federal funding. The proposal to eliminate the exigency and non-exigency categories would also eliminate the differential cost-share rate. A single category of emergency would allow for a single cost-share rate. In addition, NRCS would reduce the general cost-share ceiling to align it with the 75 percent rate used in related Federal programs. However, some increase in the Federal cost-share rate may be warranted for sponsors within limited-resource areas. Without such assistance, NRCS believes that the needs of such areas will not be met if only 75 percent cost-share rate is available. Therefore, NRCS proposes in section 624.7(b) to allow sponsors of limited-resource areas to be eligible to receive up to 90 percent Federal funding.

The proposed definition of a limited-resource area (see proposed definition in 624.4(d)) is a county where average housing values are less than 75 percent of the State average, per capita income is less than 75 percent of the national per capita income, and unemployment during the preceding 3 years is twice the available U.S. average. All three criteria would have to be met to qualify. NRCS would use the most recent U.S. census and unemployment data to make this determination. Local data may be used for small communities.

If a natural disaster strikes a limited-resource community in a non-designated limited-resource area, the NRCS State conservationist would have the authority to document the limited-resource status using State census data for the three factors mentioned above and approve the 90 percent cost-share rate for that community. In no case would this procedure be used for a unit smaller than a “community,” as defined in proposed section 624.4(d).

Section 624.8(b). This proposed paragraph would clarify and replace language previously found in the current regulation § 624.10.

Section 624.8(c)(3) Funding Priorities. This proposed paragraph is being added to provide guidelines for establishing funding priorities to allow the most effective and efficient use of limited EWP funding. When a State conservationist declares a local disaster, he or she would typically follow these proposed priorities to determine the order in which sites would be recovered. In some cases, the State conservationist may deviate from the list of priorities due to the damage situation ( e.g. , a building may not be in immediate jeopardy but giving its repair a higher priority may avoid adverse impacts to a cultural resource) or based upon the sponsor's priorities and ability to undertake the project. NRCS priorities are listed in the following table.

Currently, in a presidentially declared disaster, NRCS coordinates with the Federal Emergency Management Agency (or the State agency with emergency recovery responsibilities). NRCS would continue to do so after the implementation of this proposed change and follow the priorities set by those agencies.

Section 624.9 Time limits. This proposed section has been renamed, and it would simplify time limits associated with the obligation of funds and certain limits for completion of work. NRCS proposes a single time frame (220 days after the date when the funds are committed to the State conservationist by the national office) to complete the work.

Section 624.10 Floodplain easement. This proposed section is being added to address administration of EWP floodplain easements.

Section 382 of the Federal Agriculture Improvement and Reform Act of 1996, Public Law 104-127, amended the EWP authority to provide for the purchase floodplain easements as an emergency measure. Since 1996, NRCS has purchased floodplain easements on agricultural lands that qualify for EWP assistance. Floodplain easements restore, protect, maintain, and enhance the functions of wetlands and riparian areas; conserve natural values including fish and wildlife habitat, water quality, flood water retention, ground water recharge, and open space; and safeguard lives and property from floods, drought, and the products of erosion.

NRCS may purchase EWP easements on any floodplain lands that have been impaired within a 12-month period or that have a history of repeated flooding ( i.e. , flooded at least two times during the past 10 years). Since offers into the program may exceed funding, NRCS maintains a list of easement offers that meet basic eligibility criteria at the time of application, and these offers continue to be eligible pending availability of funding.

Under the floodplain easement option, a landowner offers to sell to NRCS a permanent easement that provides NRCS with the full rights to restore and enhance the floodplain's functions and values. In exchange, a landowner receives an easement payment in an amount calculated as the least of one of the three following values:

(i) A geographic rate established by the NRCS State conservationist;

(ii) a value based on a market appraisal analysis for agricultural uses or assessment for agricultural land; or

(iii) the landowner's offer, if one has been made.

NRCS may pay up to 100 percent of the restoration costs of the easement. Restoration efforts include both structural and non-structural practices. To the extent practicable, NRCS may actively restore the natural features and characteristics of the floodplain through re-creating the topographic diversity, increasing the duration of inundation and saturation, and providing for the re-establishment of native vegetation. The landowner is provided the opportunity to participate in the restoration efforts.

Landowners retain several rights to the property, including the right of quiet enjoyment, the right to control public access, and the right to undeveloped recreational use such as hunting and fishing. At any time, a landowner may obtain authorization from NRCS to engage in other activities if NRCS determines it will be compatible with the protection and enhancement of the easement's floodplain functions and values. These compatible uses may include managed timber harvest, periodic haying, or grazing. NRCS determines the amount, method, timing, intensity, and duration of any compatible use that might be authorized. While a landowner can realize economic returns from an activity allowed for on the easement area, a landowner will not be assured of any specific level or frequency of such use, and the authorization does not vest any right of any kind to the landowner. Cropping would not be authorized as a compatible use, and haying or grazing would not be authorized as a compatible use on lands that are being returned to woody vegetation.

While NRCS currently only purchases floodplain easements on agricultural lands, NRCS is proposing purchasing floodplain easements on non-agricultural lands. NRCS plans to expand the availability of floodplain easements to low population density, non-agricultural lands. Structures within the floodplain easement may be demolished or relocated outside the 100-year floodplain, whichever costs less.

This element of the proposed rule would tend to increase program costs in the short-term, but reduce costs to the Federal government in the long-term, as people and structures in non-agricultural areas are relocated out of the floodplain. In addition, as more acreage is returned to open space, the floodplain would function in a more natural state with increased long-term public benefits.

Section 624.11 Waivers. This section is being proposed to provide NRCS with the opportunity to waive those provisions of the proposed rule that are not prohibited by the law. Situations may arise that could be addressed through the EWP Program but proposed provisions in this proposed regulation may restrict or not allow NRCS to provide EWP assistance. This section is being proposed to avoid these situations and to allow NRCS to provide assistance for disaster recovery.

Accordingly, for the reasons stated in the preamble, it is proposed that Title 7 of the Code of Federal Regulations be amended by revising Part 624 to read as follows:

The USGSA (7 U.S.C. 71 et seq. ) authorizes GIPSA to provide official grain inspection and weighing services, and to charge and collect reasonable fees for performing these services. The fees collected are to cover, as nearly as practicable, GIPSA's costs for performing these services, including related administrative and supervisory costs

GIPSA adopted its current fee structure (61 FR 43301) effective October 1, 1996, for services provided by GIPSA employees. This fee structure change was needed because advances in technology had allowed exporters to improve operational efficiencies, which, in turn, had reduced the number of GIPSA personnel required to service certain facilities. The fee structure was changed from primarily using hourly fees to recover costs to a method that uses a mix of hourly and unit fees for its inspection and weighing services. Direct service costs are recovered through hourly fees charged for employees providing the inspection and weighing services. Administrative costs are recovered by a tonnage fee applied to grain inspected and weighed as shipments from an export facility. Export grain companies are paying for direct labor costs and pay a share of the local and national administrative costs.

Since implementing the fees in 1996, GIPSA has adjusted hourly fees to correspond with annual Federal pay increases.

This action is necessary since employee payroll costs account for approximately 84 percent of GIPSA's total operating budget. The current USGSA fees were published in the Federal Register on June 2, 2003, (68 FR 32623) and became effective on July 2, 2003.

GIPSA regularly reviews its programs to determine if the fees are adequate. Since implementing the fees in 1996, GIPSA has only experienced one year where the revenues exceeded the costs. Annual losses have been between $1 million to $1.7 million since 1996 except for the one positive year GIPSA revenue exceeded the costs by $88,000.

GIPSA recognizes the need to reduce inspection and weighing costs as much as possible before increasing fees. Therefore, GIPSA has taken action through the years to minimize payroll costs. These actions include utilizing employee buyouts to remove high-salaried, senior employees from the active employment list; taking advantage of employee attrition to reduce total staff by not hiring to fill vacant positions; hiring and scheduling more part-time and intermittent employees to better manage staff costs during fluctuating work periods; and reducing the amount of paid overtime via creative scheduling processes. Although GIPSA has observed a 14 percent reduction in paid hours and has reduced overtime pay by 2 percent, this is not enough to avoid continued financial losses.

GIPSA has completed a review of the grain inspection and weighing programs and has determined it is necessary to amend the fees in order to replenish the retained earnings accounts and to maintain a 3-month operating reserve. The proposed changes are targeted to recover employee costs directly related to services provided and to recover the costs associated with administering and supervising the grain inspection and weighing programs. Maintaining GIPSA's financial stability will assure continued inspection and weighing services to the grain industry which will further facilitate the sound and orderly marketing of grain in domestic and export markets.

To minimize the impact of a fee increase, GIPSA has decided to propose fee rates that collect sufficient revenue to immediately cover operating expenses, while striving to create a 3-month operating reserve by FY 2010. These proposed fees are designed to collect sufficient annual revenue through FY 2007, to achieve an average estimated positive $1,000,000 balance annually based on an inspection volume of 80 MMT per year. The cost of living projections used in calculating future salary and benefits out to FY 2007 were supplied by OMB as set forth in their Federal Register publication (68 FR 12388) on March 14, 2003. GIPSA will evaluate the financial status of the grain inspection and weighing program on a continuous basis to determine if it is meeting the goal of obtaining a 3-month operating reserve by FY 2010 and to determine if other adjustments are necessary. While GIPSA may not fully replenish its 3-month reserve until FY 2010, it is critical that action is taken to start to replenish it. GIPSA proposes to gradually replenish a reserve rather than sharply increase fees in the short term to immediately replenish it. GIPSA welcomes all comments regarding the proposed action and encourages the public to submit comments regarding alternatives to the fee structure that would accelerate the replenishment of the retained earnings account and the 3-month operating reserve.

GIPSA is proposing changes to the fee schedule to collect fees to recover the cost of services and to recover the administrative and supervisory costs related to these services. The proposed changes include (1) eliminating provisions for the 3-month and 6-month contracts; (2) increasing the 1-year contract hourly rate by approximately 20 percent and the non-contract hourly rate by 47 percent; (3) increasing hourly rates for services not performed at an applicant's facility by approximately 11.5 percent; (4) increasing unit fees for additional tests provided by GIPSA; (5) eliminating the 6-level administrative tonnage fee and replacing it with regional administrative tonnage fees; (6) eliminating the unit fee charged to delegated States for export ships and replacing it with a tonnage fee; (7) increasing hourly fees for special weighing services by approximately 30 percent above the non-contract hourly rate; and (8) establishing a $500 usage fee per facility when the GIPSA test car is used to test track scales.

Contract and Hourly Rates. GIPSA has determined the hourly rates for services performed at export facilities by GIPSA employees do not cover total salary and benefits costs. Despite implementing changes to correspond to annual Federal pay increases totaling 30 percent over the years; salary and benefit costs have increased 36 percent due to increased employee benefit costs, longevity pay and locality pay. Increased employee cost (salaries and benefits) is not the only reason the hourly fees are not covering the costs of services at the export market.

When GIPSA established the hourly rates in 1996, certain assumptions were made to establish those rates. Those assumptions included the historic volume of grain moving through the export facilities, the number of hours needed to load that volume of grain, and the anticipated non-revenue producing time experienced by our employees. Hourly fees, both contract rate and non-contract rate, were established based on these assumptions. These assumptions, however, have not held true over the years due to the changes in grain marketing.

Grain marketing strategies and shortfalls in expected export volume have also had a negative effect on GIPSA's revenue. Since 1996, some grain exporting facilities have automated their material handling systems which requires fewer inspection and weighing personnel to provide service and makes the elevator more efficient. This improved efficiency has triggered a shift in locations where grain is loaded.

Since grain marketing strategies have shifted the movement of grain at the export market, GIPSA needs to re-evaluate the hourly rates charged at these facilities.

GIPSA established a 3-month and 6-month contract rate for facilities that had fluctuating workloads; however, GIPSA had only one 3-month contract and one 6-month contract during FY 2002 and had none of these contracts in FY 2003. GIPSA has learned through the years of contracting that it is extremely difficult to accurately project an employees non-revenue producing time when utilizing 3-month and 6-month contracts. Therefore, GIPSA has decided it is best to provide service with either a one-year contract or with the non-contract rate. Therefore, GIPSA plans to abolish provisions for the 3-month and 6-month contracts.

GIPSA conducted a detailed, port-by-port evaluation of its costs and revenue streams for both contract and non-contract employees. GIPSA found that payroll increases caused by grade increases, longevity pay, and locality pay have exceeded the cost-of-living increases that GIPSA has charged annually. Further, GIPSA found that changes in grain distribution have increased non-revenue periods for certain workers. The evaluation showed the actual level of revenue-producing time likely to be expected from contract and non-contract workers. Based on its evaluation, GIPSA has determined that to adequately cover service costs and start to replenish its reserves, it is necessary to increase the annual contract rate by approximately 20 percent and to increase the non-contract hourly rate by approximately 47 percent in order to recover the costs of the pool.

GIPSA also charges hourly fees for services performed at other than export facilities. These fees are designed to recover GIPSA employee salary and benefits costs along with a portion of administrative and supervisory costs. Again, despite fee increases to accommodate the annual Federal pay increases, the current fees do not sufficiently cover costs. Like the employee costs at export, employee service costs and employee administrative costs have increased due to increased employee benefit costs, increases in payroll caused by longevity pay, and increases in payroll due to locality pay. Costs not related to employees have also increased. These local and national administrative costs include rent, communications, utilities, and other administrative support services. Based on its evaluation, GIPSA identified the costs and determined these hourly rates need to increase by approximately 11.5 percent to recover the additional costs.

Unit Fees. In addition to hourly fees, GIPSA also charges unit fees for additional services. These unit fees are charged in addition to the hourly rate when the services are provided at an applicant's facility in an onsite laboratory. These unit fees are based on the cost of equipment and supplies needed to conduct the test. GIPSA also charges unit fees for services performed at other than an applicant's facility in a GIPSA laboratory and for some miscellaneous services. These unit fees are designed to recover the direct costs of the services (salary, equipment, and supplies) along with administrative and supervisory costs. GIPSA has not made any adjustments to the unit fees for services provided at an applicant's facility in an onsite laboratory since the fees were first promulgated in 1996. Due to the increased costs for providing services, GIPSA proposes to adjust the unit fees in section 800.71 to reflect these costs.

As GIPSA updates these unit fees, it also provides GIPSA a chance to remove obsolete services from the list. At one time, GIPSA offered aflatoxin tests using the thin-layer chromatography (TLC) method. GIPSA discontinued the use of this test in 1998 because of the hazardous chemical materials required to conduct the test and rapid test kits were available for field use which were safer and less expensive. GIPSA is removing the method from the fee schedule since this test is no longer available. The unit fee for aflatoxin will recover the costs of the quick test kits currently used at field offices.

Administrative Tonnage Fee. GIPSA also utilizes a 6-level tonnage fee designed to recover the local and national administrative and supervisory costs which are not covered by unit fees and hourly fees assessed at other than export facilities. This fee is only charged to facilities in the United States that have export grain inspected by GIPSA.

The 6-level administrative tonnage fee is designed to reduce fees as the inspection volume increases. These fees have also been adjusted through the years to reflect the annual Federal pay raises. The following table illustrates how the fee levels are structured and indicates what was originally implemented in 1996 and what is current for the same levels.

When GIPSA introduced the 6-level tonnage fee in 1996, the World Agricultural Outlook Board projected grain exports to increase 2.5 percent annually, and reach 131 MMT by 2001. With this in mind, GIPSA decided to use 85 MMT as the target level for setting fees. This would be the breakeven point. GIPSA could expect to recover costs if billable tonnage were 85 MMT or more. Conversely, costs would exceed the revenues if billable tonnage were less than 85 MMT. Since 1996, GIPSA had only one year where the billable tonnage reached the 85 MMT mark at 85.2 MMT. Although GIPSA recovered the costs that year, the other years had losses between $1 million and $1.7 million. The decision to use 85 MMT as the breakeven basis for the administrative tonnage fee has contributed to the revenue shortfall.

Other changes in market practices further reduced revenue collected. Exports handled by the New Orleans Field Office facilities increased from 72 percent of the total tons serviced by GIPSA in FY 1996 to 78.6 percent in FY 2002. During the same period, the League City Field Office export tonnage decreased from 13 to 12 percent and the Portland Field Office volume declined from 10 to 7 percent. In addition, the Baltimore Field Office was closed due to no volume in FY 2002. These market shifts resulted in less revenue being collected per metric ton than originally predicted since the shift in New Orleans resulted in more tons loaded at a lower per-ton cost due to the 6-level fee structure. Export volume increased and the revenue per ton decreased.

GIPSA's analysis of the financial information for the 6-level administrative tonnage fee shows the revenues from it are not recovering the costs. To better recover field office administrative and supervisory costs in today's export grain marketing environment, GIPSA analyzed three potential changes to the current administrative tonnage fee: Alternative 1: Specific field office tonnage fees; Alternative 2: A flat rate national administrative tonnage fee; and Alternative 3: Increasing the current 6-level tonnage fee by 27 percent. The analysis used actual FY 2002 costs, revenue, and volume of export grain inspected by GIPSA.

The specific field office tonnage fee (Alternative 1) was designed to recover local overhead costs and a part of the national administrative costs. Local administrative costs were divided by the tonnage observed by that field office to determine the cost per ton needed by the field office to cover expenses. National administrative costs were divided by the total export tons serviced by GIPSA at all field offices to determine the cost per ton needed to recover administrative costs at headquarters. The sum of the two per ton costs (local and national) was used to establish a specific field office tonnage fee. GIPSA determined the use of specific field office tonnage fees resulted in each field office collecting sufficient revenue to cover local administrative costs as well as headquarters administrative costs.

A flat rate national administrative tonnage fee (Alternative 2) was designed to recover total administrative costs but not necessarily each field office collecting revenues to recover the local costs. This tonnage fee was calculated by dividing GIPSA's total administrative costs (field offices and headquarters) by the total tons of U.S. export grain serviced by GIPSA. GIPSA determined the flat rate national administrative tonnage fee would collect the revenues to recover the total administrative costs but only the New Orleans Field Office received revenue to recover the field office administrative costs. All other field offices did not recover their local administrative costs.

GIPSA determined if increasing the current 6-level tonnage fee was to become a viable option, those fees would have to be increased by 27 percent (Alternative 3). Although all the field offices collected revenues to recover the total administrative costs of GIPSA; not all field offices collected revenue to offset their individual office costs. GIPSA is also concerned that shifting market trends may make the 6-level tonnage fee unreliable since the revenues are dependent on the volume of grain handled by each facility.

After considering these alternatives, GIPSA proposes adopting the specific field office administrative tonnage fee structure (Alternative 1). Under this fee structure, local export facilities financially support their field office administrative costs and every ton of grain exported from field office service areas is assessed an identical fee to cover headquarters costs. This will ensure that headquarters costs are collected regardless of where the grain is exported. This proposed tonnage fee also puts each field office in an independent financial position and encourages customers to work directly with each field office to continue the implementation of grain handling efficiencies while raising the awareness of local administrative and supervisory costs. This action should foster the further development and implementation of grain handling efficiencies by grain companies to reduce the cost of GIPSA services. Also, this process makes administrative and supervisory costs more transparent to the industry.

GIPSA developed the new administrative tonnage fees by projecting GIPSA costs to the FY 2007 level and assuming GIPSA billable tonnage will be 80 MMT. GIPSA determined the field office tonnage rates would be $0.167 per ton for elevators serviced by the League City Field Office, $0.067 per ton for elevators serviced by the New Orleans Field Office, $0.136 per ton for elevators serviced by the Portland Field Office, and $0.184 for elevators serviced by the Toledo Field Office.

When GIPSA implemented the administrative tonnage fees, it also provided for a monthly payment of administrative fees to level out the payments over the year based on the expected tonnage handled by a facility. This provision, located in section 800.73 (e) of the regulations, was used to level out the tonnage rates over a year instead of paying in incremental levels. GIPSA reviewed the need to preserve this regulation and determined it was no longer needed. Proposing specific field office tonnage rates that will not change due to increased volume does not require a monthly payment program to level the costs. Further, the provision for the monthly payment process has not been used by industry. Therefore, GIPSA is proposing to remove this provision from the regulations.

Delegated State Ship Fees. GIPSA also oversees the activities of delegated States and designated agencies that provide official services on behalf of GIPSA. To support this activity, GIPSA also charges a supervision fee to the agencies to recover this cost. The current fees for the supervision of inspection and weighing services performed by the agencies were published in the Federal Register on September 23, 1985, (50 FR 28303), and became effective on October 1, 1985. GIPSA currently assesses a $49.20 fee for every ship inspected by a delegated State. This fee is then passed on to the exporter by the delegated State.

As GIPSA evaluated the administrative and supervisory fees needed to cover field office and national administrative and supervisory costs, GIPSA also considered the contribution of revenue collected from official agencies to cover the costs of administration and supervision of their programs. GIPSA initiated this review by determining the total administrative and supervisory costs of overseeing the official agencies ($2,330,343) and the total number of metric tons inspected by official agencies in both the domestic and export markets (150,650,608 metric tons) to determine the overall cost per ton needed to cover these administrative and supervisory costs. This resulted in a need to collect $0.016 per metric ton.

In FY 2002, delegated States inspected 37,586,754 metric tons of grain (655 ships) and GIPSA collected $32,226 in revenues from the $49.20 per ship fee. This makes the current ship fee equivalent to $0.00086 per metric ton. This is short of the $0.016 per metric ton GIPSA calculated as needed to recover costs. Since the current ship fee is contributing very little to recover the costs of administration and supervision of the delegation and designation program, GIPSA plans to change this fee from a unit fee to a tonnage fee. The tonnage fee would be set at $0.016 per ton since this is what GIPSA calculated as the amount needed to recover costs.

GIPSA proposes to change the fees shown in 7 CFR 800.71, Schedule C-Fees for FGIS Supervision of Official Inspection and Weighing Services Performed by Delegated States and/or Designated Agencies in the United States by removing the $49.20 unit fee for ships and replacing it with the $0.016 per ton fee which GIPSA determined is needed to help recover the cost of administration and supervision of the official agency program.

Special Weighing Services. GIPSA also provides special weighing services to the grain industry and other industries requiring accurate weights. These services include scale testing and certification, evaluations of weighing and material handling systems used to automate weighing functions, National Type Evaluation Program scale evaluations, mass standards calibration and reverification services, and special weighing projects. GIPSA provides these services through scale specialists located at certain field offices and in headquarters.

Scale specialists are highly specialized individuals who are trained in scale operation and the operation of test equipment. Scale specialists are in a different job classification and grade level than inspectors or weighers because of their unique responsibility. Consequently, they are classified at a higher grade level. On average, scale specialist costs are 30 percent higher than the cost of agricultural commodity graders. Therefore, GIPSA needs to set the hourly fee for special weighing services at a level approximately 30 percent higher than the fee established for non-contract services.

GIPSA also owns and operates five railroad test cars that are used to test and calibrate railroad master scales and commercial track scales. The National Bureau of Standards (NBS) master scale testing program transferred to GIPSA in 1980 under an agreement between NBS, the Association of American Railroads (AAR), and then, the Federal Grain Inspection Service. Under this agreement, GIPSA is responsible for maintaining the master scale in Chicago and annual testing and calibration of other railroad master scales located throughout the United States.

GIPSA's railroad track scale testing program is funded by the service agreement with AAR and by revenues collected from non-AAR customers. The railroad track scale testing program costs have exceeded revenue for the last several years by approximately $25,000 per year. This is due to hourly fees not fully recovering the cost of the service representative and an increase in the cost of maintaining the aging test cars and other equipment used in the program. Consequently, the total funding and revenue are not meeting the cost of the program.

Although the test cars GIPSA uses in this program are properly maintained to provide an accurate service, more frequent repair services are needed due to the age of the test cars. This is increasing the cost of the program. Eventually, GIPSA will need to replace test cars in order to continue providing this valuable service to the railroad industry. GIPSA had solicited bids to build a new car; however, the initial bid cost was in excess of $200,000 and GIPSA did not have the funds to cover that cost. To collect the funds needed to maintain and replace test cars, GIPSA proposes to implement a user fee of $500 per facility when the test car is used to test commercial track scales. Implementing a specific fee for the use of the test cars will assure that only those companies that use the test cars are contributing towards the expenses directly related to the test cars. These expenses include both the maintenance of the test cars and costs associated with the replacement of the test cars.

GIPSA has determined that applying a $500 service fee to the 50 locations serviced by GIPSA for using the GIPSA test car, in addition to the hourly fee for the service representative, should raise sufficient funds to recover the annual loses of $25,000. GIPSA, by recovering this annual financial loss, will be able to maintain the test cars in good repair and initiate retained earnings to contribute towards the purchase of new test cars in the future. GIPSA will not apply the $500 usage fee to the AAR scales tested under the agreement since AAR's costs are covered through the service agreement.

In summary, GIPSA is authorized by the USGSA to charge and collect reasonable fees for performing official inspection and weighing services. The fees are to cover, as nearly as practicable, GIPSA's costs for performing inspection and weighing services, including related administrative and supervisory costs. GIPSA has determined the current fees are not recovering these costs despite efforts to reduce these costs over the years.

Accordingly, GIPSA is proposing changes to the fee schedule. These proposed changes include (1) eliminating provisions for the 3-month and 6-month contracts; (2) increasing the 1-year contract hourly rate by approximately 20 percent and the non-contract hourly rate by 47 percent; (3) increasing hourly rates for services not performed at an applicant's facility by approximately 11.5 percent; (4) increasing unit fees for additional tests provided by GIPSA; (5) eliminating the 6-level administrative tonnage fee and replacing it with regional administrative tonnage fees; (6) eliminating the unit fee charged to delegated States for export ships and replacing it with a tonnage fee; (7) increasing hourly fees for special weighing services by approximately 30 percent above the non-contract hourly rate; and (8) establishing a $500 usage fee per facility when the GIPSA test car is used to test track scales.

These proposed changes should generate additional average annual revenues as noted in the following table.

These proposed changes are needed to restore the retained earnings accounts and to maintain a 3-month operating reserve. GIPSA has projected that the proposed changes to the fee schedule should gradually replenish the retained earnings account and the 3-month operating reserve. The following table illustrates how gradually restoring the fund is projected over time.

GIPSA will evaluate the financial status of the grain inspection and weighing program every six months to determine if it is meeting the goal of obtaining a 3-month operating reserve by fiscal year 2010. Using the projected information in the above table, GIPSA will assess if the revenue collection trend is comparable to the financial objectives of the table. GIPSA would consider further adjusting the fees if it becomes apparent that GIPSA's goal to restore the retained earnings accounts and to obtain a 3-month operating reserve is not achievable by fiscal year 2010.

Maintaining GIPSA's financial stability will assure continued inspection and weighing services to the grain industry which will further facilitate the sound and orderly marketing of grain in domestic and export markets.

This proposed rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget (OMB). GIPSA has prepared a Regulatory Impact Assessment (RIA) consisting of a statement of the need for the proposed action, an examination of alternative approaches, and an analysis of the benefits and costs.

Need for Proposed Action. The USGSA requires GIPSA to charge and collect reasonable fees for performing official inspection and weighing services. The fees are to cover, as nearly as practicable, GIPSA's costs for performing inspection and weighing services, including related administrative and supervisory costs.

GIPSA changed the inspection and weighing fees in 1996 (61 FR 43301) from using predominately hourly fees to the current method of using a mixture of hourly fees, unit fees, and tonnage fees. Hourly fees are designed to recover the salary and benefit costs for those employees (pool) that perform work at an export grain elevator. Unit fees are designed to recover the costs of tests along with administrative and supervisory costs. Tonnage fees are designed to recover local and national administrative and supervisory costs.

GIPSA implemented the new fees expecting exports to increase. Export volume is a critical condition since GIPSA determined a minimum of 85 million metric tons (MMT) of billable tonnage was needed to break even. Since implementing the fees in 1996, GIPSA has only experienced one year where the revenues exceeded the costs. That year the billable tonnage reached 85 MMT. The other years had billable tonnage below the 85 MMT target and costs exceeded the revenues in those years due to the changes in grain marketing. Annual losses have been between $1 million to $1.7 million since 1996; except for the one positive year GIPSA revenue exceeded the costs by $88,000.

The continued financial deficits prompted GIPSA to initiate a detailed analysis of the user fees and operating costs to determine why revenues were not supporting the costs and to determine what action was needed. At the same time, it must be recognized that the U.S. grain market is very dynamic and constantly changing which makes it difficult to precisely predict and project long-term market trends. Transportation costs, grain handling costs, global pricing, environmental conditions, crop quality conditions, phytosanitary issues, and crop production are some of the issues that influence the changing grain market.

Since implementing the fees in 1996, GIPSA has adjusted hourly fees to correspond with annual Federal pay increases. This action is necessary since employee payroll costs account for approximately 84 percent of GIPSA's total operating budget. Although these fee adjustments were made through the years, GIPSA costs continue to exceed its revenues.

GIPSA recognizes the need to reduce inspection and weighing costs as much as possible before increasing fees. Therefore, GIPSA has taken action through the years to minimize payroll costs. These actions include utilizing employee buyouts to remove high-salaried, senior employees from the active employment list; taking advantage of employee attrition to reduce total staff by not hiring to fill vacant positions; hiring and scheduling more part-time and intermittent employees to better manage staff costs during fluctuating work periods; and reducing the amount of paid overtime via creative scheduling processes. Although GIPSA has observed a 14 percent reduction in paid hours and has reduced overtime pay by 2 percent, this is not enough to avoid continued financial losses.

GIPSA's financial review detected where the program losses were occurring. GIPSA has determined the hourly fees for services performed at the export elevator are not recovering the full cost of the pool. The base salary and benefits for the pool have increased beyond the annual Federal pay increase adjustments. Locality pay was not factored into the yearly cost-of-living increases nor was longevity pay increases. When the current fee was first established in 1996, the base contract hourly fee was based on a GS-9, step 5 pay level which was the average pay level for the pool. Today the average pool pay level is a GS-9, step 8. This equates to an average additional annual salary cost of $3,500 per GS-9 inspector. Locality pay may also increase this cost by an additional 9 percent to 18 percent depending on the geographic location of the employee.

Benefits paid to employees have also increased. In FY 1996, employee benefit costs averaged 19 percent. Since that time, overall benefit costs have increased 6 percent and now average 25 percent. Many factors have led to this increase. Health and life insurance premiums have increased along with Office of Worker's Compensation Program (OWCP) costs. GIPSA pays all OWCP costs since the government is self insured. Since FY 1996, some employees have converted to the new Federal Employees Retirement System (FERS) and all new employees are in FERS. The FERS is patterned after a typical retirement system used by non-Federal companies in that the employer must pay into social security and matches contributions into a 401(k) plan.

Grain marketing strategies and export volume have also had a negative effect on GIPSA's revenue. Since FY 1996, some grain exporting facilities have automated their material handling systems which requires fewer inspection and weighing personnel to provide service and makes the elevator more efficient. This improved efficiency has triggered a shift in locations where export grain is loaded. For example, the New Orleans Field Office facilities increased their export capacity from 72 percent of the total tons serviced by GIPSA in FY 1996 to 78.6 percent in FY 2002. During the same timeframe, the League City Field Office export tonnage decreased from 13 to 12 percent and the Portland Field Office volume declined from 10 to 7 percent. These market shifts resulted in less revenue being collected per metric ton than originally planned because of the 6-level administrative tonnage fee. The New Orleans Field Office exports average revenue was $0.048 per ton in 2002 while League City average revenue was $0.090 per ton and Portland's average revenue was $0.098 per ton. GIPSA estimates this shift in grain movements resulted in a revenue loss of approximately $660,000. Further, billable tonnage is not reaching the 85 MMT targeted in the 1996 fee schedules as the break even point. Therefore, revenue predictions based on billable tonnage were higher than what was actually billed.

GIPSA has evaluated the administrative tonnage fee and determined it is not recovering its share of local and national administrative and supervisory costs because of increased employee costs not related to annual pay increases, shifting grain exports to lower revenue per ton markets, and exports not reaching the 85 MMT mark to break even. Local and national costs such as rent, communications, utilities, and other administrative support services have also increased since 1996. Adjustments to the fees during the years have not compensated for these cost increases.

As GIPSA reviewed its financial status, it also concluded that unit fees are not recovering the cost of providing the service, supervision fees charged to delegated States for ships are not sufficient compared to the quantity of grain that is inspected and weighed, and the track scale testing program is not producing the revenue needed to maintain the testing program.

GIPSA charges unit fees for additional services provided at an applicant's facility in an onsite GIPSA laboratory. These unit fees are charged in addition to the hourly rate. These unit fees are designed to recover the costs of the equipment and supplies needed to provide the service. GIPSA has not made any adjustments to these unit fees since they were first promulgated in 1996.

Currently, GIPSA assesses $49.20 per ship to delegated States for providing official inspection and weighing services. This fee is collected to recover administrative and supervision costs of the official agencies. GIPSA has determined the delegated States should be contributing $0.016 per ton towards administrative and supervisory costs. However, the $49.20 per ship fee is only recovering an amount equivalent to $0.00086 per ton.

GIPSA also provides special weighing services to the industry. These services include scale testing and certification, evaluations of weighing and material handling systems, National Type Evaluation Program scale evaluations, mass standards calibration and reverification services, and special weighing projects. GIPSA provides these services through scale specialists located at certain field offices and in headquarters. Scale specialists are in a different job classification and grade level than inspectors or weighers because of their unique responsibility. Consequently, they are classified at a higher grade level. On average, scale specialist costs are 30 percent higher than the cost of agricultural commodity graders. Therefore, GIPSA needs to set the hourly fee for special weighing services at a level approximately 30 percent higher than the fee established for non-contract services.

The track scale testing program also uses special weighing equipment (test cars) to test track scales. These cars require maintenance and need to be replaced in the future. To assist in recovering the costs associated with these railcars, GIPSA would charge a $500 unit fee each time the car is used at a facility.

GIPSA has concluded that despite efforts to reduce the cost of services, including administrative and supervisory activities, the revenues collected from the current user fees are less than the costs associated with these services. Consequently, GIPSA must re-evaluate the design and application of user fees to recover the costs of providing service in order to place the agency in a sound financial status. GIPSA is statutorily required to charge fees to cover the cost of service. To do this, GIPSA has projected the potential costs out to FY 2007 and plans to replenish the operating reserve fund back to its 3-month level by FY 2010. The cost of living projections used in calculating future salary and benefits were supplied by OMB as published in the Federal Register (68 FR 12388) on March 14, 2003. Additionally, GIPSA is also adjusting the projected billable tonnage to set full cost recovery from 85 MMT to 80 MMT. GIPSA believes that this revised projection is necessary because annual billable tonnage has averaged near 80 MMT from 1996 to 2002. The 80 MMT does not include export grain shipments serviced by delegated States, land carrier exports to Mexico and Canada serviced by designated agencies, small shipments exported under the 15,000 metric ton exemption program, or other export shipments not requiring Federal services.

GIPSA has determined that this action is needed to recover the costs of providing services and to maintain a professional workforce to inspect and weigh grain for the grain industry. In doing so, GIPSA will continue to facilitate the orderly marketing of grain in the domestic and export markets.

Alternatives. Various methods were considered by which the objectives of the rule could be accomplished. GIPSA thoroughly evaluated the method of structuring fees prior to the implementation of the last major fee schedule revision in 1996. GIPSA determined at that time that the combination of hourly fees and unit fees provided customers with the information they need to determine the costs of specific inspection and weighing services because the fees are more specific.

The design and implementation of the administrative tonnage fee to recover local and national administrative and supervisory costs is another important component of this proposal. GIPSA evaluated and compared three different alternatives for charging administrative tonnage fees: Alternative 1: Establishing an administrative tonnage fee specific to each field office, Alternative 2: Establishing a fixed rate national administrative tonnage fee, or Alternative 3: Increasing the current 6-level administrative tonnage rates by 27 percent.

GIPSA analyzed the various alternatives in relation to each field office area because each field office is unique when considering the number of employees, the number and types of elevators serviced, and the volume of grain exported from that area. Fiscal Year 2002 information for each field office was used to analyze and compare the expected revenues for the various alternatives because the information is the most current and is indicative of recent marketing trends. This information was used to detail the cost recovery by each field office.

Table 1 indicates the 5 GIPSA export field offices (the Baltimore office was closed in November 2002), the number of elevators in each field office area, the number of metric tons inspected, the amount of revenue collected from the tonnage fee for each field office, the field office administrative cost related to tonnage revenue, the headquarters administrative cost related to tonnage revenue, the amount of both the field office and headquarters administrative cost, and the amount each field office was deficient. Table 1 demonstrates that some offices did not cover their individual administrative and supervisory costs i.e. , Baltimore, Portland, and Toledo) and all failed to cover the total administrative and supervisory costs of the combined field office and headquarters cost as a result of the employee cost increases and the changes in grain marketing.

Table 2 indicates the average revenue per ton collected by each office, the component amounts of administrative and supervisory revenues per ton needed to meet field office and headquarters costs, and the estimated cost per metric ton calculated for each alternative. There are differences in the actual average revenue collected per ton in each office for FY 2002. This ranges from $0.048 per ton in New Orleans to $0.127 per ton in Baltimore. These differences are due to the 6-level administrative tonnage fee which decreases the amount per ton collected as the total tonnage increases. Under Alternative 3, these differences in revenue collected from each field office would continue because the current 6-level administrative tonnage fee would remain in effect.

The administrative and supervisory cost attributed to headquarters in Table 2 is $0.044 (rounded from $0.0438) per metric ton inspected. This amount is determined by dividing the amount of headquarters cost ($3,603,356 from Table 1) by the number of total metric tons inspected (82,268,405 tons from Table 1). The administrative cost of each office is determined by dividing the offices administrative cost (from Table 1) by the number of metric tons inspected by each office (from Table 1).

In Table 2, establishing an administrative tonnage fee specific to each field office (Alternative 1) is arrived at by combining the calculated field office tonnage rate with the headquarters tonnage rate. This results in the unique field office tonnage rate required to cover the entire field office administrative costs and the field office portion of the national administrative cost. Establishing a fixed rate national administrative tonnage fee (Alternative 2) tonnage rates is arrived at by taking the total administrative costs (all field office costs plus headquarters costs) divided by the total billable tonnage. This results in a single tonnage fee that is applicable to all GIPSA customers. Increasing the current 6-level administrative tonnage fee (Alternative 3) is arrived at by taking the current tonnage rate tables and increasing them by 27 percent. The 27 percent increase is what GIPSA determined the shortage was in the revenue to the costs.

Table 3 shows the projected administrative tonnage revenues based on the tonnage fees from Table 2. The projected information shows all offices collect sufficient revenues to cover the local administrative and supervisory costs as well as the headquarters cost when the regional tonnage fees are used (Alternative 1). The other alternatives cover the total cost of administration and supervision; however, some offices do not collect the revenues needed to support the field office costs and some do not cover the total of the field office cost combined with a portion of the headquarters administrative cost as a result of the employee cost increases and the changes in grain marketing.

All alternatives collect the targeted amount needed to fully fund both field and headquarters overhead in total. GIPSA believes each field office should collect sufficient revenue from customers to support the local field office administrative and supervisory costs in addition to their share of the national administrative and supervisory costs. This would put each field office in an independent financial position and would encourage customers to work directly with each field office and headquarters to continue the implementation of grain handling efficiencies while raising the awareness of local administrative and supervisory costs.

The national administrative fee approach (Alternative 2) relies heavily on the New Orleans Field Office to support the administrative and supervisory costs of the other offices. The alternative to increase the current 6-level tonnage fee structure by 27 percent (Alternative 3) results in the same situation. After a complete evaluation, GIPSA believes the regional tonnage method (Alternative 1) is the best approach to collect revenues for these costs. Under Alternative 1, users of the service would be paying their share of the local costs of operating and maintaining a field office in their port area. GIPSA proposes to establish new administrative tonnage fees based on the concept of Alternative 1. These tonnage fees are calculated to recover the projected increases in administrative and supervisory costs related to employee costs as determined by the OMB estimates and based on a minimum 80 MMT of billable tonnage.

Table 4 lists the expected tonnage and the expected administrative and supervisory costs for field offices and headquarters projected out to FY 2007. This information was then used to determine the specific field office tonnage rate needed to recover field office costs and the tonnage rate needed to recover the headquarters cost. The field office tonnage rate in Table 4 was arrived at by dividing the projected field office cost by the projected tonnage.

Table 5 combines the field office tonnage rates with the headquarters tonnage rates to calculate the specific field office tonnage rate that would be proposed. The projected tonnage rate was used to calculate the projected revenue for each field office by multiplying the projected tons for each field office by the specific field office rate. The projected revenue for each office was compared to the projected total costs (field office and headquarters) for each field office (from Table 4) to determine if each field office collected sufficient revenues to cover their costs.

Table 5 demonstrates that the projected tonnage fees produce revenues to cover, as nearly as practicable, overall costs for each field office. The Toledo Field Office calculated tonnage rate, however, does not cover their costs. Therefore, GIPSA increased their rate by one-tenth of a cent per ton to fully recover their costs.

As GIPSA evaluated the administrative and supervisory fees needed to cover field office and national administrative and supervisory costs, GIPSA also considered the contribution of revenue collected from official agencies to cover the costs of administration and supervision of their programs. GIPSA initiated this review by determining the total administrative and supervisory costs of overseeing the official agencies ($2,330,343) and the total number of metric tons inspected by official agencies in both the domestic and export markets (150,650,608 metric tons) to determine the overall cost per ton needed to cover these administrative and supervisory costs. This resulted in $0.016 per metric ton to cover administration and supervision of official agencies.

Currently, GIPSA assesses $49.20 per ship to delegated States for providing official inspection and weighing services. This fee is then passed on to the exporter by the delegated State. In FY 2002, delegated States exported 37,586,754 metric tons of grain (655 ships) and GIPSA collected $32,226 in revenues from the $49.20 per ship fee. This makes the current ship fee equivalent to $0.00086 per metric ton. This is far less than the $0.016 per metric ton GIPSA calculated was needed to recover costs. Since the current ship fee is contributing very little to recover the costs of administration and supervision of the delegation and designation program, GIPSA plans to change this fee from a unit fee to a tonnage fee. The tonnage fee would be set at $0.016 per ton since this is what GIPSA calculated as the amount needed to recover costs.

Summary of Benefits. This proposal would allow GIPSA to collect revenues from our customers to support direct service costs along with the administrative and supervisory costs of providing these services. The revenues collected from this proposal would provide GIPSA the resources needed to replenish the retained earnings account to a 3-month operating reserve. This proposed increase in fees is needed to recover the costs of providing service and to provide the financial foundation for GIPSA to maintain a highly skilled and professional work force to inspect and weigh grain. The proposed action would also foster further development of grain handling efficiencies implemented by grain companies. This would further reduce the cost of GIPSA services by reducing the number of employees needed to provide service.

These combined actions would assist GIPSA in fulfilling its mission to facilitate the marketing of grain in domestic and export markets by assuring continued inspection and weighing services to the grain industry.

User fees promote the internalization of the real cost of providing inspection and weighing services in consumer transaction decisions. User fees also achieve savings in Government expenditures, and, therefore, reduce the tax support necessary for the system to operate at a given level. These tax funds can then be used in other programs or to reduce taxes overall and, thus, diminish the efficiency losses associated with the generation of taxes (deadweight loss plus collection costs). The revision of user fees helps ensure that the user fees adequately reflect the cost of performing the services over time.

Summary of Costs. GIPSA has determined that the total cost to the grain industry to implement the proposed changes will be approximately $5,266,767 per year. This represents an approximate 21 percent increase in revenues or an average increase of 6.5 cents per ton. These calculations are based on the assumptions that the projected OMB employee costs for continued annual Federal pay increases will increase a total of 17.38 percent from FY 2002 to FY 2007 and GIPSA will collect revenue from a minimum of 80 MMT per year which was used to establish the tonnage fee. GIPSA would collect this additional revenue by (1) increasing the 1-year contract hourly rate by approximately 20 percent and the non-contract hourly rate by 47 percent and eliminating provisions for the 3-month and 6-month contracts; (2) increasing hourly rates for services not performed at an applicant's facility by approximately 11.5 percent; (3) increasing unit fees for additional tests provided by GIPSA; (4) eliminating the 6-level administrative tonnage fee and replacing it with regional administrative tonnage fees; (5) eliminating the unit fee charged to delegated States for export ships and replacing it with a tonnage fee; (6) increasing hourly fees for special weighing services by approximately 30 percent above the non-contract hourly rate; and (7) establishing a $500 usage fee per facility when the GIPSA test car is used to test track scales.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This action is not intended to have a retroactive effect. The USGSA provides in Sec. 87g that no subdivision may require or impose any requirements or restrictions concerning the inspection, weighing, or description of grain under the USGSA. Otherwise, this proposed rule would not preempt any State or local laws, regulations, or policies unless they present irreconcilable conflict with this rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to provisions of this rule.

In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for GIPSA, Washington, DC 20503. Please state that your comments refer to GIPSA Fees for Official Inspection and Official Weighing Services. Please send a copy of your comments to: (1) Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604, and (2) Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250. A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this proposed rule.

The proposed rule would require applicants to complete Form FGIS-4, Application and Agreement for Contract Services, if they intend to enter into a one-year contract service agreement with GIPSA.

We are soliciting comments from the public concerning our proposed information collection and recordkeeping requirements. These comments will help us:

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

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

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

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

Estimate of burden: Public reporting burden for this action is estimated to average 0.33 hours per response.

Respondents: Export grain companies.

Estimated annual number of respondents: 18.

Estimated annual number of responses per respondent: 4.00.

Estimated annual number of responses: 72.

Estimated total annual burden on respondents: 23.76 hours.

Copies of this information collection can be obtained from Tess Butler, GIPSA, USDA, 1400 Independence Avenue, SW., Room 1647-S, Washington, DC 20250-3604.

GIPSA is committed to compliance with the Government Paperwork Elimination Act, which requires Government agencies, in general, to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

In promulgating this regulation, GIPSA considered the potential civil rights implications on minorities, women, or persons with disabilities and prepared a Civil Rights Impact Analysis to ensure that no person or group shall be discriminated against on the basis of race, color, sex, national origin, religion, age disability, or marital or family status. GIPSA has considered potential civil rights implications of this proposed rule on minorities, women, or persons with disabilities to ensure that no person or group will be discriminated against on the basis of race, color, sex, national origin, religion, age, disability, or marital or familial status. The proposed rule will apply in the same manner to all persons and groups whose activities are regulated, regardless of race, gender, national origin, or disability. Information indicates that the proposal will have no effect on protected populations.

GIPSA has determined that this proposed rule will not have a significant economic impact on a substantial number of small entities, as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). The USGSA (7 U.S.C. 71 et seq. ) authorizes GIPSA to provide official grain inspection and weighing services, and to charge and collect reasonable fees for performing these services. The fees collected are to cover, as nearly as practicable, GIPSA's costs for performing these services, including related administrative and supervisory costs

GIPSA adopted its current fee structure (61 FR 43301) effective October 1, 1996, for services provided by GIPSA employees. This fee structure change was needed because advances in technology had allowed exporters to improve operational efficiencies, which, in turn, had reduced the number of GIPSA personnel required to service certain facilities. The fee structure was changed from primarily using hourly fees to recover costs to a method that uses a mix of hourly and unit fees for its inspection and weighing services. Direct service costs are recovered through hourly fees charged for employees providing the inspection and weighing services. Administrative costs are recovered by a tonnage fee applied to grain inspected and weighed as shipments from an export facility. Export grain companies are paying for direct labor costs and pay a share of the local and national administrative costs.

Since implementing the fees in 1996, GIPSA has adjusted hourly fees to correspond with annual Federal pay increases. This action is necessary since employee payroll costs account for approximately 84 percent of GIPSA's total operating budget. The current USGSA fees were published in the Federal Register on June 2, 2003, (68 FR 32623) and became effective on July 2, 2003.

GIPSA regularly reviews its programs to determine if the fees are adequate. Since implementing the fees in 1996, GIPSA has only experienced one year where the revenues exceeded the costs. Annual losses have been between $1 million to $1.7 million since 1996 except for the one positive year GIPSA revenue exceeded the costs by $88,000.

GIPSA recognizes the need to reduce inspection and weighing costs as much as possible before increasing fees. Therefore, GIPSA has taken action through the years to minimize payroll costs. These actions include utilizing employee buyouts to remove high-salaried, senior employees from the active employment list; taking advantage of employee attrition to reduce total staff by not hiring to fill vacant positions; hiring and scheduling more part-time and intermittent employees to better manage staff costs during fluctuating work periods; and reducing the amount of paid overtime via creative scheduling processes. Although GIPSA has observed a 14 percent reduction in paid hours and has reduced overtime pay by 2 percent, this is not enough to avoid continued financial losses.

GIPSA has completed a review of the grain inspection and weighing programs and has determined it is necessary to amend the fees in order to replenish the retained earnings accounts and to maintain a 3-month operating reserve. The proposed changes are targeted to recover employee costs directly related to services provided and to recover the costs associated with administering and supervising the grain inspection and weighing programs. Maintaining GIPSA's financial stability will assure continued inspection and weighing services to the grain industry which will further facilitate the sound and orderly marketing of grain in domestic and export markets.

To minimize the impact of a fee increase, GIPSA has decided to propose fee rates that collect sufficient revenue to immediately cover operating expenses, while striving to create a 3-month operating reserve by FY 2010. These proposed fees are designed to collect sufficient annual revenue through FY 2007, to achieve an average estimated positive $1,000,000 balance annually based on an inspection volume of 80 MMT per year. The cost of living projections used in calculating future salary and benefits out to FY 2007 were supplied by OMB as set forth in their Federal Register publication (68 FR 12388) on March 14, 2003. GIPSA will evaluate the financial status of the grain inspection and weighing program on a continuous basis to determine if it is meeting the goal of obtaining a 3-month operating reserve by FY 2010 and to determine if other adjustments are necessary.

Under the provisions of the United States Grain Standards Act, grain exported from the United States must be officially inspected and weighed. Mandatory inspection and weighing services are provided by GIPSA at 32 export facilities and by delegated States at 19 export facilities. All of these facilities are owned by multi-national corporations, large cooperatives, or public entities that do not meet the requirements for small entities established by the Small Business Administration. Further, the regulations are applied equally to all entities.

The USGSA (7 U.S.C. 87f-1) requires the registration of all persons engaged in the business of buying grain for sale in foreign commerce. In addition, those individuals who handle, weigh, or transport grain for sale in foreign commerce must also register. The USGSA regulations (7 CFR 800.30) define a foreign commerce grain business as persons who regularly engage in buying for sale, handling, weighing, or transporting grain totaling 15,000 metric tons or more during the preceding or current calendar year. At present, there are 90 registrants registered to export grain. While most of the 90 registrants are large businesses, we assume that some may be small.

GIPSA also provides nonmandatory inspection and weighing services at other than export locations. Approximately 75 different applicants receive nonmandatory inspection services each year and approximately 50 different locations receive track scale tests as a miscellaneous service each year. While most of these applicants are large businesses, we assume that the proposed increases should not significantly affect many small businesses requesting these official services. Furthermore, any of these applicants that wish to avoid the fee increase may do so by using an alternative source for these services. Such a decision should not prevent the business from marketing its product or conducting business as usual.

GIPSA has determined that the total cost to the grain industry to implement the proposed changes will be approximately $5,266,767 per year. This represents an approximate 21 percent increase in revenues or an average increase of 6.5 cents per ton. These calculations are based on the assumptions that the projected OMB employee costs for continued annual Federal pay increases will increase a total of 17.38 percent from FY 2002 to FY 2007 and GIPSA will collect revenue from a minimum of 80 MMT per year which was used to establish the tonnage fee.

Most users of the official inspection and weighing services do not meet the requirements for small entities. Further, GIPSA is required by statute to make services available and to recover, as nearly as practicable, the costs of providing such services. Additionally, GIPSA has not identified any other Federal rules which may duplicate, overlap, or conflict with this proposed rule. Therefore, Donna Reifschneider, Administrator, GIPSA, has determined that this proposed rule will not have a significant economic impact on a substantial number of small entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

For the reasons set out in the preamble, 7 CFR Part 800 is proposed to be amended as follows:

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2003-16342/Airspace Docket No. 03-AAL-15.” The postcard will be date/time stamped and returned to the commenter.

All communications received on or before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of comments received. All comments submitted will be available for examination in the public docket both before and after the closing date for comments. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the Internet at http://dms.dot.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov or the Superintendent of Document's web page at http://www.access.gpo.gov/nara.

Additionally, any person may obtain a copy of this notice by submitting a request to the Federal Aviation Administration, Office of Air Traffic Airspace Management, ATA-400, 800 Independence Avenue, SW., Washington, DC 20591 or by calling (202) 267-8783. Communications must identify both docket numbers for this notice. Persons interested in being placed on a mailing list for future NPRM's should contact the FAA's Office of Rulemaking, (202) 267-9677, to request a copy of Advisory Circular No. 11-2A, Notice of Proposed Rulemaking Distribution System, which describes the application procedure.

The FAA is considering an amendment to the Code of Federal Regulations (14 CFR Part 71) to establish additional Class E airspace over Southeast Alaska. The intended effect of this proposal is to: (1) Provide adequate controlled airspace for commercial air carriers and others conducting Instrument Flight Rules (IFR) operations in Southeast Alaska, (2) Validate new operational procedures and equipment in the IFR environment, (3) Provide an enroute IFR structure for operations that can be flown safely at significantly lower altitudes than those permitted on airways based on land based NAVAIDS, and (4) Provide IFR access via Public and Special approach and departure procedures to airports not otherwise able to connect to the IFR infrastructure. The Flight Standards Division within the Alaskan Region will authorize the use of specific Special procedures for properly equipped aircraft where the flight crews have received the appropriate training.

Satellite-based navigation and positioning is a core element of our National Airspace System (NAS) modernization plans, and is critical to achieving a seamless, efficient global aviation system. Over the period of the past few years, the Federal Aviation Administration (FAA) has been working with commercial, military, and general aviation (GA) users to develop a global satellite-based navigation system independent of conventional ground based navigation aids. Alaska was selected to expand this program through a Research & Development demonstration program called Capstone.

The selection of Alaska for the demonstration project was recommended by the National Transportation Safety Board (NTSB) in their 1995 “Safety Study of Aviation Safety in Alaska.” In part this study concludes:

From the time of its conception, the FAA Alaskan Region's Capstone Program has been an accelerated effort to improve aviation safety and efficiency. Capstone will further the program through installation of GPS based avionics and data link communications suites in most commercial aircraft serving Southeast Alaska. Up to 200 aircraft will be equipped. Compatible ground systems, equipment, and services will also be provided. The name “Capstone” is derived from the program's effect of drawing and holding together concepts and recommendations contained in reports from the Radio Telecommunications Conference of America (RTCA), the National Transportation Safety Board (NTSB), the MITRE Corporation's Center for Advanced Aviation System Development (CAASD), and Alaskan aviation industry representatives. In addition to the avionics suites, Capstone will deploy a ground infrastructure for weather observation, data link communications, surveillance, and Flight Information Services (FIS) to improve safety and enable implementation of new procedures.

Under the Capstone program, the FAA will develop Area Navigation (RNAV) GPS-based instrument approach and departure procedures to remote communities, including those serviced by seaplanes, such as Angoon. In addition, the FAA will develop an enroute IFR structure in Southeast Alaska that will be available to suitably equipped and trained IFR commercial and private operators. This enroute structure will provide GPS low altitude routes that access existing public and Special instrument approach and departure procedures at Ketchikan, Klawock, Wrangell, Petersburg, Kake, Sitka, and Juneau. The minimum enroute altitudes available on the segments of the Capstone enroute routes will be significantly lower than those available on the public Federal Airway system. In the future, additional IAPs will be considered for development for additional airports and waterlanes in Southeast Alaska.

The purpose of this proposal is to create controlled airspace within Southeast Alaska that is sufficient to contain the new IFR enroute and terminal procedures being developed by the Capstone program. This controlled airspace is needed to provide air traffic control services for the new enroute and terminal public and special instrument procedures. If this action is adopted, it will enhance flight safety by reducing the potential for midair collisions, provide more accurate aircraft navigation, enable flight tracking for ATC and commercial operators, provide better communications, enable transfer of weather and flight information between pilots and ATC, enable surveillance and the use of radar separation standards for ATC IFR separation and tracking, and will improve access to airports in Southeast Alaska.

The proposed new Class E airspace in areas that are currently Class G airspace will have an impact on pilot's flight visibility and cloud avoidance requirements when flying under Visual Flight Rules (VFR), during the day above 1,200 feet AGL. The flight visibility requirement for VFR operations in the new Class E airspace below 10,000 feet MSL will increase to three (3) statute miles. VFR weather minimums are shown in the following table extracted from 14 CFR 91.155 Basic VFR weather minimums:

The area would be depicted on aeronautical charts for pilot reference. The coordinates for this airspace docket are based on North American Datum 83. The Class E airspace areas designated as 700/1200 foot transition areas are published in paragraph 6005 in FAA Order 7400.9L, Airspace Designations and Reporting Points, dated September 2, 2003, and effective September 16, 2003, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document would be published subsequently in the Order.

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.

We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking [CGD07-03-147], indicate the specific section of this document to which each comment applies, and give the reason for each comment. Please submit all comments and related material in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying. If you would like to know they reached us, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.

We do not plan to hold a public meeting. But you may submit a request for a meeting by writing to MSO Savannah (see ADDRESSES ) explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at the time and place announced by a later notice in the Federal Register .

The port of Savannah is currently receiving Liquid Natural Gas (LNG) tankships, ranging from two to eight vessels per month, at the Southern LNG Elba Island facility. The Coast Guard currently has a regulated navigation area (RNA) in effect for LNG tankship transits which restricts vessel movement from Fort Jackson, which is upriver from the Elba Island LNG facility, and continues down the length of the Savannah River and extends offshore to the Savannah River Channel Entrance Sea Buoy. After nearly two years of experience with LNG tankship transits on the Savannah River, the Coast Guard is proposing to change the current RNA to allow vessels of 1600 gross tons or greater to enter the RNA during LNG tankship transits, provided they come no closer than 2 nautical miles to the LNG tankship. Vessels less than 1600 gross tons will still be permitted to transit the RNA during LNG tankship transits provided they maintain a safe distance from transiting LNG tankships. This proposed rule would potentially reduce port congestion during LNG transits and decrease delays to vessels, facilities and terminals on the Savannah River. A safe distance of two nautical miles for vessels 1600 gross tons and greater is necessary to protect the safety of life and property on the navigable waters from hazards associated with LNG activities.

During the movement of an LNG tankship, other vessels of 1600 gross tons or greater would be required to maintain a safe distance of two nautical miles ahead of, or astern of, the transiting LNG tankship. All other requirements in the existing RNA remain unchanged. Except for a vessel that is moored at a marina, wharf, or pier, and remains moored, no vessel 1600 gross tons or greater could approach within two nautical miles of a Liquid Natural Gas (LNG) tankship that is underway within the RNA without the permission of the Captain of the Port (COTP). This proposed change would improve traffic flow on the Savannah River by limiting delays caused by the current requirement, which restricts vessels of 1600 gross tons or greater from entering any part of the RNA during the transit of an LNG tankship. The four nautical mile zone (two miles upriver and downriver) centered on a transiting LNG tankship will maintain public and maritime safety by minimizing the risk of collision, allision or grounding and the possible release of LNG.

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.

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

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. Delays for inbound and outbound traffic due to LNG transits will be minimized through this change and through pre-transit conferences between the pilots and the Coast Guard Captain of the Port. The RNA requirements are less burdensome for smaller vessels, which are more likely to be small entities.

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

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

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

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

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

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

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

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that 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. It has not been designated by the Administrator of the Office of Information and Regulatory Affairs as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

We considered the environmental impact of this rule and concluded that, under figure 2-1, paragraph (34)(g), of Commandant Instruction M16475.1D, this rule is categorically excluded from further environmental documentation. A “Categorical Exclusion Determination” is available in the docket where indicated under ADDRESSES.

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

1. The Regional Office has established an official public rulemaking file available for inspection at the Regional Office. EPA has established an official public rulemaking file for this action under MT-001-0005, MT-001-0006. The official public file consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public rulemaking file does not include Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. The official public rulemaking file is the collection of materials that is available for public viewing at the Air and Radiation Program, EPA Region 8, 999 18th Street, Suite 300, Denver, CO. EPA requests that if at all possible, you contact the contact listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. You may view the public rulemaking file at the Regional Office Monday through Friday, 8 a.m. to 4 p.m., excluding Federal holidays.

2. Copies of the State submittal are also available for public inspection during normal business hours, by appointment at the State Air Agency. Copies of the State documents relevant to this action are also available for public inspection at the Montana Department of Environmental Quality, Air and Waste Management Bureau, 1520 E. 6th Avenue, Helena, Montana 59620.

3. Electronic Access. You may access this Federal Register document electronically through the Regulations.gov Web site located at http://www.regulations.gov where you can find, review, and submit comments on, Federal rules that have been published in the Federal Register , the Government's legal newspaper, and are open for comment.

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, 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.

You may submit comments electronically, by mail, or through hand delivery/courier. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number by including the text “Public comment on proposed rulemaking MT-001-0005, Mt-001-0006” 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). Please send any comments simultaneously to long.richard@epa.gov and dygowski.laurel@epa.gov and include the text “Public comment on proposed rulemaking MT-001-0005, MT-001-0006” in the subject line. EPA's e-mail system is not an “anonymous access” system. If you send an e-mail comment directly without going through “Regulations.gov” (see below), EPA's e-mail system will automatically capture 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 Regulations.gov is an alternative method of submitting electronic comments to EPA. Go directly to Regulations.gov at http://www.regulations.gov, then click on the button “TO SEARCH FOR REGULATIONS CLICK HERE,” and select Environmental Protection Agency as the Agency name to search on. 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 Section 2, directly below. 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. Send your comments to: Richard R. Long, Director, Air and Radiation Program, Mailcode 8P-AR, Environmental Protection Agency (EPA), Region 8, 999 18th Street, Suite 300, Denver, Colorado 80202-2466. Please include the text “Public comment on proposed rulemaking MT-001-0005, MT-001-0006” in the subject line on the first page of your comment.

3. By Hand Delivery or Courier. Deliver your comments to: Richard R. Long, Director, Air and Radiation Program, Mailcode 8P-AR, Environmental Protection Agency (EPA), Region 8, 999 18th Street, Suite 300, Denver, Colorado 80202-2466. Such deliveries are only accepted Monday through Friday, 8 a.m. to 4:55 p.m., excluding Federal holidays.

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.

The Thompson Falls area was designated nonattainment for PM 10 and classified as moderate under section 107(d)(3) of the Clean Air Act on December 21, 1993. 1 See 57 FR 43846 (September 22, 1992), 58 FR 67334 (December 21, 1993) and 40 CFR 81.327 (Sanders County (part)). The Thompson Falls designation became effective on January 20, 1994. The air quality planning requirements for moderate PM 10 nonattainment areas are set out in subparts 1 and 4 of title I of the Act. Subpart 1 applies to nonattainment areas generally and subpart 4 applies to PM 10 nonattainment areas. At times, subpart 1 and subpart 4 overlap or conflict. We have attempted to clarify the relationship among these provisions in guidance entitled the “General Preamble” (see 57 FR 13498, April 16, 1992, and 57 FR 18070, April 28, 1992) and, as appropriate, in today's notice.

Our “General Preamble” describes our preliminary views on how we will review SIPs and SIP revisions submitted under title I of the Act, including State-submitted SIPs for moderate PM 10 nonattainment areas (see generally 57 FR 13498, April 16, 1992, and 57 FR 18070, April 28, 1992). In this document, we are applying our interpretations considering the specific factual issues presented.

A State containing a moderate PM 10 nonattainment area designated after the 1990 Amendments is normally required to submit several provisions within 18 months of the effective date of the designation. These provisions were due for the Thompson Falls area by July 20, 1995. They include an emissions inventory, control measures, an attainment demonstration, quantitative milestones for reasonable further progress (RFP), and contingency measures. Requirements for the control measures include: Provisions to assure that reasonably available control measures (RACM), including reasonably available control technologies (RACT), shall be implemented no later than four years after designation, which was January 20, 1998, for Thompson Falls. However, under the PM 10 clean data areas approach that we are proposing to use here, we are only proposing to require the control measures (including the provisions for enforcing those measures) and the emissions inventory for Thompson Falls.

The clean data areas approach applies EPA's clean data policy concept, already in place for ozone nonattainment areas  2 , to selected PM 10 nonattainment areas in order to approve control measures for these areas into the SIP. The approach only applies to PM 10 areas with simple PM 10 source problems, such as residential wood combustion and fugitive dust problems. If an area meets the following requirements, the state will no longer be required to develop an attainment demonstration, contingency measures or a RFP demonstration. The area must meet the following requirements:

(a) The area must be attaining the PM 10 NAAQS with the three most recent years of quality-assured air quality data.

(b) The state must continue to operate an appropriate PM 10 air quality monitoring network, in accordance with 40 CFR part 58, in order to verify the attainment status of the area.

(c) The control measures for the area, which were responsible for bringing the area into attainment, must be approved by EPA as meeting the CAA requirements for RACM/RACT.

(d) A PM 10 emissions inventory must be completed for the area.

Whether an area has attained the PM 10 NAAQS is based exclusively upon measured air quality levels over the most recent and complete three calendar year period. See 40 CFR part 50 and 40 CFR 50, appendix K. On November 1, 2001 (66 FR 55102), we published a final rulemaking action declaring that the Thompson Falls PM 10 nonattainment area was in attainment of the PM 10 standard based on 1998-2000 monitoring data and that the area had attained the standard by its attainment date. The applicable attainment date as required by the CAA for Thompson Falls was December 31, 2000. If you wish to obtain more information regarding our attainment determination, please see our November 1, 2001, Federal Register document.

To use the PM 10 clean data areas approach, an area must be attaining with the three most recent years of quality assured data at the time of the proposed notice. In this case, the three most recent years are 2000-2002. During the 2000-2002 period, data was collected at the Thompson Falls High School station (AQS identification #30-089-0007). The regulatory requirement for data capture in 40 CFR part 50, Appendix K, is 75 percent on a quarterly basis. The 2000-2002 monitoring data shows no exceedances of either the 24-hour or annual PM 10 NAAQS during this period, and data capture met the 75 percent criterion with the exception of two quarters. Data capture was 73 percent during the third quarter of 2000 and 71 percent during the fourth quarter of 2001. According to the “Guideline on Exceptions to Data Requirements for Determining Attainment of Particulate Matter Standards” (see EPA document #405-/4-87-005, April 1987), when data capture is at least 50 percent but less than 75 percent, data may be substituted for the missing data. Per the above-referenced guideline, monitoring data from the same quarter in any one of the years use to determine attainment may be substituted for missing PM 10 data. The maximum PM 10 value that was observed in that quarter over the last three years is substituted for missing scheduled sampling days. When we apply data substitution per the above-referenced guideline, we find no exceedances of the 24-hour or annual PM 10 NAAQS for the 2000-2002 period.

The Montana Department of Environmental Quality (MDEQ) will continue to operate its PM 10 air quality monitoring network in accordance with 40 CFR part 58, in order to verify the attainment status of the area. We approved Montana's state-wide air quality monitoring program on March 9, 1981 (see 46 FR 15686). This approval established the state and local air monitoring station (SLAMS) network, the maintenance requirements for the monitoring stations, and the method of data reporting and annual review for the stations. The stations are to monitor ambient levels of criteria pollutants (for which NAAQS have been established). All SLAMS are to be operated in accordance with the criteria established in 40 CFR 58, subpart B, and are to be sited according to 40 CFR 58, appendix E. Reference or equivalent monitors are to be used as defined in 40 CFR 50.1 and the quality assurance procedures are to be followed as outlined in 40 CFR 58, appendix A. On December 21, 1993 (see 58 FR 67324), we approved revisions to the state-wide monitoring SIP to update the existing monitoring SIP.

Monitoring in Thompson Falls for PM 10 is currently performed at the Thompson Falls High School station (AQS identification #30-089-0007). EPA Region VIII conducts periodic reviews of Montana's ambient air network, which includes the Thompson Falls site. Based on these reviews, our monitoring staff has approved this monitoring station.

The moderate PM 10 nonattainment areas, designated after the 1990 Amendments, must submit provisions to ensure that RACM is implemented no later than 4 years after designation, which was January 20, 1998 for Thompson Falls (see sections 172(c)(1) and 189(a)(1)(C)). The General Preamble contains a detailed discussion of our interpretation of the RACM requirements (see 57 FR 13539-13545 and 13560-13561).

The State should identify available control measures to make sure they are reasonable and that they meet the area's attainment needs, (see 57 FR 13540-13544). A State may reject an available control measure if it is technologically infeasible or unreasonably expensive. In addition, RACM doesn't require controls on emissions from sources that are insignificant ( de minimis ) and doesn't require an area to use all available control measures if it demonstrates timely attainment and if using additional controls wouldn't expedite attainment.

Montana's SIP revisions for Thompson Falls contain control measures for sources of re-entrained fugitive dust that were adopted on June 24, 1997, and are part of a maintenance agreement between the city of Thompson Falls, the Montana Department of Transportation (MDT) and the MDEQ. The maintenance agreement is applicable inside the Thompson Falls PM 10 nonattainment area, which encompasses the majority of the city. Per the maintenance agreement, street sweeping is the primary PM 10 control strategy, as Thompson Falls experiences high concentrations of PM 10 during the late winter and early spring. The maintenance agreement also specifies the type of sanding or chip seal material that may be used by the MDT and the city of Thompson Falls on paved roads and parking lots, and includes provisions for the paving of parking lots, alleys and unpaved roads within the Thompson Falls central business dustrict.

Street Sweeping Requirements. The MDT is responsible for approximately 4.83 km of street sweeping on Highway 200 from the western limits of the PM 10 nonattainment area boundary through the city to the Harvest Food store east of town. The city of Thompson Falls is responsible for street sweeping 5.8 km of local priority routes as listed below.

During winter months, the MDT is required to commence street sweeping on Highway 200 on the first business day that the highway becomes temporarily or permanently ice-free and the temperatures are expected to remain above 35° F for a 24-hour period. Unless interrupted by additional snowfall or temperatures below 35° F, the MDT is required to have Highway 200 swept clean within two business days. During winter months, the city of Thompson Falls is required to commence street sweeping on priority routes on the first business day that the highway becomes temporarily or permanently ice-free and the temperatures are expected to remain above 35° F for a 24-hour period. Unless interrupted by additional snowfall or temperatures below 35° F, the city of Thompson Falls is required to have priority routes swept clean within four business days. During summer months, priority routes and Highway 200 will be swept on an as needed basis. In the event that a PM 10 exceedance occurs within the Thompson Falls nonattainment area, the maintenance agreement includes contingency measures that will remain in effect until such time as the SIP control measures are revised and approved by EPA. In the event of a PM 10 exceedance, the city of Thompson Falls shall increase its frequency of street sweeping on priority routes from four business days to two business days and the MDT shall increase its street sweeping frequency on Highway 200 from two business days to one business day.

Both the city of Thompson Falls and the MDT will only apply sanding or chip seal material on paved roads and parking lots that has a durability of greater than or equal to 9 as defined by the Montana Modified L.A. Abrasion test. The sanding or chip seal material will have a material content smaller than 200 mesh that does not exceed 4.0 percent oven dry weight as determined by a standard wet sieving method.

Other Requirements. The maintenance agreement also includes provisions for the paving of streets and parking lots. Within the central business district of Thompson Falls, the city of Thompson Falls may not construct any new street or road unless it is paved or construct any new parking lot with a capacity greater than 15 vehicles or more than 50 vehicles/day turnover unless the parking lot is paved.

The Thompson Falls nonattainment area does include significant emissions from point sources; however, the MDEQ chose not to implement any RACT measures at these sources and to focus on reducing emissions from area sources. This approach is allowed under the Clean Air Act due to the fact that Montana has demonstrated that Thompson Falls did not need to implement RACT for point sources in order to attain the 24-hour PM 10 standard; the implemented control measures (RACM) were enough to bring the area into attainment. See 57 FR 13541 of the General Preamble.

We have reviewed the State's documentation and have concluded that it adequately justifies the control measures that are being used. The implementation of Montana's PM 10 nonattainment plan for Thompson Falls resulted in the attainment of the PM 10 NAAQS. The Thompson Falls control plan was adopted on June 24, 1997, and implemented by the applicable implementation date of January 20, 1998, specified by the CAA. We are approving the Thompson Falls PM 10 plan control strategies as satisfying the RACM requirement.

As required under the CAA, all measures in the SIP must be enforceable by EPA and the State (see sections 172(c)(6) and 110(a)(2)(A) of the Act and 57 FR 13556). Our criteria addressing the enforceability of SIPs and SIP revisions were stated in a September 23, 1987, memorandum (with attachments) from J. Craig Potter, Assistant Administrator for Air and Radiation, et al. (see 57 FR 13541). Nonattainment area plan provisions also must contain a program to provide for enforcement of control measures and other elements in the SIP (see section 110(a)(2)(C) of the Act). When a State relies on a local government for the implementation of any SIP provision, the State is responsible for ensuring adequate implementation of the provision. See section 110(a)(2)(E) of the Act.

The maintenance agreement between the city of Thompson Falls, the MDT and the MDEQ provides new requirements for street sweeping, determines the type of sanding or chip seal material that can be used on paved roads and parking lots and specifies requirements for the paving of new streets, roads or parking lots within the Thompson Falls central business district. In order to make these requirements an enforceable part of the Thompson Falls PM 10 SIP, the State adopted and incorporated the maintenance agreement requirements in a Board Order to be approved as part of the State of Montana Air Quality Control Implementation Plan. We have reviewed the maintenance agreement for enforceability and determined that it meets all the criteria included in the September 23, 1987, Potter Memorandum.

The MDEQ has the authority to implement and enforce the maintenance agreement adopted by the Montana Board of Environmental Review (MBER). Any failure by the city or the Montana Department of Transportation to perform their specific obligations under this agreement would warrant enforcement by MDEQ.

The State also submitted a State Attorney General's opinion interpreting the authority of MDEQ to enforce any State and local air quality provisions if a local air quality program fails to do so. In practice, MBER issues a board order when it approves a local program or amendments to a program. Since the Montana Clean Air Act (MCAA) authorizes MDEQ to enforce board orders issued by MBER, MDEQ has the authority to assume jurisdiction over, and implement, an approved local program. However, the MCAA also requires a hearing before MBER before such an assumption of jurisdiction and authority can be taken.

Section 172(c)(3) of the Act requires that nonattainment plan provisions include a comprehensive, accurate, current inventory of actual emissions from all sources of relevant pollutants in the nonattainment area. MDEQ submitted an emissions inventory for Thompson Falls on June 26, 1997, withdrew that inventory on February 28, 1999, and resubmitted it with revisions on June 13, 2000.

MDEQ chose July 1990 through June 1991 as the Thompson Falls base year inventory of PM 10 emissions. The results of the emissions inventory indicate that area sources contribute approximately 77 percent of the total emissions for the area, of which re-entrained road dust (from paved roads) contributes approximately 59 percent and woodburning contributes approximately 14.4 percent. Stationary sources accounted for 23 percent of the emissions inventory (this figure includes 2.8 percent for industrial road dust). 3

EPA is proposing to approve the emission inventory for Thompson Falls because it is accurate and comprehensive, and consistent with the requirements of sections 172(c)(3) and 110(a)(2)(K) of the Act. 4

In addition to the above requirements for the use of the clean data areas approach, any requirements that are dependent solely on designation or classification, such as new source review (NSR) and RACM/RACT, will remain in effect. New source review requirements have been approved as part of the Administrative Rules of Montana, title 17, chapter 8, subchapters 8 and 9 and were approved as part of the SIP on August 13, 2001 (see 66 FR 42427). New source review requirements that were approved into the SIP will continue to be in effect. However, the requirements under CAA section 172(c) for developing attainment demonstrations, RFP demonstrations, and contingency measures are waived due to the fact that the areas which are eligible under this approach have already attained the PM 10 NAAQS and have met RFP. Any sanctions clocks that may be running for an area due to failure to submit, or disapproval of, any attainment demonstration, RFP or contingency measure requirements, are stopped. In addition, areas are still required to demonstrate transportation conformity using the build/no-build test, or the no-greater-than-1990 test. The emissions budget test would not be required, because the requirements for an attainment demonstration and RFP, which establish the budgets, no longer apply. The applicable tests for general conformity still apply. The use of the clean data areas approach doesn't act as a CAA section 107(d) redesignation, but only serves to approve nonattainment area SIPs required under part D of the CAA.

We are proposing to approve State Implementation Plan (SIP) revisions submitted by the Governor of Montana on June 26, 1997, and June 13, 2000. The June 26, 1997, submittal revises the SIP by adding the Thompson Falls Air Pollution Control Plan and an emissions inventory for the Thompson Falls PM 10 nonattainment area. On February 28, 1999, the Governor of Montana withdrew all chapters of the Thompson Falls Air Pollution Control Plan submitted on June 26, 1997, except chapters 45.2, 45.10.10 and 45.10.12 and the emissions inventory. The June 13, 2000 submittal contains corrections to chapter 45.10.10 of the Thompson Falls Air Pollution Control Plan and the emissions inventory submitted on June 26, 1997. Chapters 45.2, 45.10.10 and 45.10.12 of the Thompson Falls Air Pollution Control Plan include the PM 10 control measures, control demonstration and enforceability sections of the plan. We are proposing to approve the emissions inventory for Thompson Falls and chapters 45.2, 45.10.10 and 45.10.12 of the Thompson Falls Air Pollution Control Plan using the PM 10 clean areas data approach.

We are soliciting public comments on the issues discussed in this document, or on other relevant matters. If you submit comments, they will be considered before we take final action. Interested parties may participate in the Federal rulemaking procedure by submitting written comments to the EPA Regional office listed in the ADDRESSES section of this document.

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

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

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

I. Background

On May 7, 1997 ( 62 FR 24826), EPA approved Pennsylvania's redesignation request and ten year plan for continued maintenance of the 1-hour ozone NAAQS in the Reading area as a revision to the Pennsylvania SIP. This maintenance plan included, among other things, MOBILE5-based motor vehicle emissions budgets (MVEBs).

On October 14, 2003, the Pennsylvania Department of Environmental Protection (DEP) submitted a request that EPA parallel process revisions to the Pennsylvania SIP's 1-hour ozone maintenance plan for the Reading area.

The maintenance plan identifies and establishes the applicable MVEBs for the Reading area to which the area's transportation improvement program and long range transportation plan must conform. Conformity to MVEBs in a SIP means that transportation activities will not produce new air quality violations, worsen existing violations, or delay timely attainment of the NAAQS. The Reading area maintenance plan identifies and establishes the applicable MVEBs for the Reading area for both volatile organic compounds (VOC) and nitrogen oxides (NO X ), which are precursors of ground level ozone, for the years 1992, 2004, and 2007.

The MOBILE model is an EPA emissions factor model for estimating pollution from on-road motor vehicles. The MOBILE model calculates emissions of VOCs, NO X and carbon monoxide (CO) from passenger cars, motorcycles, buses, and light-duty and heavy-duty trucks. The model accounts for the emission impacts of factors such as changes in vehicle emission standards, changes in vehicle populations and activity, and variation in local conditions such as temperature, humidity, fuel quality, and air quality programs. The MOBILE model is used to calculate current and future inventories of motor vehicle emissions at the national and local level. These inventories are used to make decisions about air pollution policies and programs at the local, State and national level. MOBILE-based inventories are also used to meet the Federal Clean Air Act's SIP and transportation conformity requirements.

The MOBILE model was first developed in 1978. It has been updated many times to reflect changes in the vehicle fleet and fuels, to incorporate EPA's growing understanding of vehicle emissions, and to cover new emissions regulations and modeling needs. EPA released MOBILE6, a new version of the motor vehicle emissions factor model on January 29, 2002 (67 FR 4254). Although some minor updates were made in 1996 with the release of MOBILE5b, MOBILE6 is the first major revision to MOBILE since MOBILE5a was released in 1993. Beginning in January of 2004, all conformity determinations for new Transportation Improvement Programs and/or Transportation Plans will be required to use the MOBILE6 emissions model to demonstrate conformity.

In the original maintenance plan approved for the Reading area on May 7, 1997 (62 FR 24826), emissions growth was projected for all source categories (point, area, and highway mobile) starting with the year that the area attained the NAAQS (1992). Those original mobile emissions budgets were projected based on the MOBILE5 emissions model. The October 14, 2003, proposed SIP revision amends the mobile inventories for the attainment year (1992) and the MVEBs for 2004 and 2007 using MOBILE6.

In the original maintenance plan for the Reading area, the Commonwealth's motor vehicle inspection and maintenance (I&M) program was identified as a contingency measure. The October 14, 2003, proposed SIP revision moves the I&M program from the contingency measures portion of the plan and makes it part of the maintenance strategy. Improved rule effectiveness will remain as a contingency measure in the maintenance plan.

The DEP's October 14, 2003, proposed revisions revise the 1992 attainment year motor vehicle emissions inventories and the 2004 and 2007 MVEBs using the MOBILE6 model. EPA has articulated its policy regarding the use of MOBILE6 in SIP development in its “Policy Guidance on the Use of MOBILE6 for SIP Development and Transportation Conformity”  1 . EPA's review of the DEP's October 14, 2003, submittal indicates that it has appropriately applied this policy. EPA policy guidance also requires the Commonwealth to consider whether growth and control strategy assumptions for non-motor vehicle sources ( i.e. , point, area, and non-road mobile sources) were still accurate at the time the October 14, 2003, proposed revision was developed. Pennsylvania has reassessed the growth and control strategy assumptions for non-motor vehicle sources, and concluded that these assumptions continue to be valid for the 1-hour ozone maintenance demonstration for the Reading area.

Table 1 summarizes the MOBILE6-based motor vehicle emissions inventories in tons per summer day (tpd) for the 1992 attainment year in the Reading area.

For the Reading area maintenance plan, the MVEBs are the projected on-road mobile source components of the 2004 and 2007 maintenance inventories. Table 2 below summarizes Pennsylvania's proposed revised MOBILE6-based budgets. These budgets were developed using the latest planning assumptions, including 2002 vehicle registration data, vehicle miles traveled, speeds, fleet mix, and SIP control measures. Because DEP's October 14, 2003, submittal satisfies the conditions outlined in EPA's MOBILE6 Policy guidance, and demonstrates that the new levels of motor vehicle emissions calculated using MOBILE6 continue to support maintenance of the 1-hour ozone NAAQS, EPA is proposing to approve these budgets.

The October 14, 2003, submittal demonstrates that the new levels of motor vehicle emissions calculated using MOBILE6 continue to support the demonstration of maintenance of the 1-hour ozone NAAQS for the Reading area. This is evidenced by the fact that the 2004 and 2007 MVEBs shown in Table 2 continue to be well below the 1992 MOBILE6 based MVEBs for their attainment year.

EPA is proposing to approve the Commonwealth of Pennsylvania's proposed revisions to the maintenance plan for the Reading area which were submitted on October 14, 2003. Long term maintenance of the NAAQS is deemed to be demonstrated when total projected growth in emissions in all categories remains below the level of emissions that occurred in the attainment year. EPA's review of the DEP's October 14, 2003, submittal indicates that the proposed revisions to the maintenance plan continue to demonstrate long term maintenance of the 1-hour ozone standard for the Reading area. These revisions are being proposed under a procedure called parallel processing, whereby EPA proposes rulemaking action concurrent with the Commonwealth's procedures for amending its SIP. If the proposed revisions are substantially changed in areas other than those identified in this notice, EPA will evaluate those changes and may publish another notice of proposed rulemaking. If no substantial changes are made other than those areas cited in this notice, EPA will publish a Final Rulemaking Notice on the revisions. The final rulemaking action by EPA will occur only after the SIP revisions have been adopted by Pennsylvania and submitted formally to EPA for incorporation into the SIP.

EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action. Interested parties may participate in the Federal rulemaking procedure by submitting either electronic or written comments. To ensure proper receipt by EPA, identify the appropriate rulemaking identification number PA 210-4302 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 Kramer.Robert@EPA.gov, attention PA 210-4302. 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 Regulations.gov at 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 proposed action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This proposed action merely proposes to approve Commonwealth law as meeting Federal requirements and imposes no additional requirements beyond those imposed by Commonwealth law. Accordingly, the Administrator certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ). Because this rule proposes to approve pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

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

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

This rule proposing to approve Pennsylvania's proposed revisions to the Reading area's maintenance plan for the 1-hour ozone NAAQS, submitted to EPA on October 14, 2003, for parallel-processing, does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).